Brazil’s federal and state governments will sue BHP Billiton (BHP), Vale, (the owners of the Samarco iron ore miner) for 20 billion reais ($7.2 billion) in damages caused by the burst of a tailings dam on November and killed and injured two dozen people and caused widespread damage, according to the country’s Environment Minister Izabella Teixeira.
The news came after trading in BHP shares around the world ended for the week.
BHP Billiton dropped 0.9% on Friday on the ASX, closing at $18.77, down from a day’s high of $19.24. It shed 8.4% in value for the week amid growing concerns about the company’s exposure in Brazil and fears about the sustainability of the dividend.
In London BHP shares fell 3% on Friday and 5.6% for the week.
The lawsuit was announced after the close of the Sao Paulo stock market early Saturday, our time. Vale shares lost 5.78% on Friday.
BHP and Vale had announced earlier on Friday that they would create a fund with Samarco to help in the clean-up of the Rio Doce and its tributaries affected by the disaster. They did not detail the size of the recovery fund.
The Brazilian government’s oversight watchdog, the Advocacia-Geral da União, or AGU, announced the move, which follows the collapse of the dam in Minas Gerais state on November 5 that set off a mud tsunami that has killed at least 13 people and devastated Brazil’s second-largest river system.
"The object is to use the resources to help with the containment of the impact, the revitalisation of the Rio Doce basin and the indemnification of people affected by the disaster," the AGU said in a statement. The states of Minas Gerais and Espírito Santo would join the federal government in the lawsuit.
"The action will propose to the court that any value paid by the miners will not be paid to the coffers of the federal government or the states involved in the disaster but to a fund that will be used to finance exclusively actions to repair the damages," the AGU said.
Reuters reported that Vale had said it would not comment on the proposed lawsuit as it was not familiar with its details.
But it said it was "surprised" by the choice of legal action because "Vale, BHP and Samarco had shown themselves to be open to dialogue on the issue".
Teixeira said the suit will be filed on Monday. The proceeds will be put in a fund and used for environmental cleanup in the Rio Doce Valley over 10 years, Attorney General Luís Inácio Adams said, according to media reports.
Samarco has already been fined 250 million reais by Brazil’s environmental agency, over the disaster. Fish died and drinking water supplies for a quarter of a million people had to be closed off.
