Arab Today, arab today bhp vale shares slide on brazil mining lawsuit
Last Updated : GMT 12:40:45
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After Brazilian prosecutors

BHP, Vale shares slide on Brazil mining lawsuit

Arab Today, arab today

Arab Today, arab today BHP, Vale shares slide on Brazil mining lawsuit

The accident near Mariana in Brazil's Minas Gerais state
Sydney - Arab Today

Shares in Anglo-Australian mining giant BHP Billiton fell further Thursday after Brazilian prosecutors filed a US$43.4 billion lawsuit over a mine accident that killed 19 people and wreaked environmental havoc.

The firm sank 1.92 percent to Aus$18.43 -- but off intra-day lows -- following a 9.36 percent drubbing Wednesday as traders were taken aback by the sheer size of the claim.

Brazilian iron ore leader Vale, co-owner of the Samarco iron mine with BHP, was also hammered on Wednesday with its stock tumbling 5.34 percent in Sao Paulo.

Prosecutors in the state of Minas Gerais on Tuesday filed the suit for the accident at the Samarco pit on November 5, estimating "the preliminary value for repairs to be 155 billion reals".

"This has quite rightly spooked investors into pricing in the prospect of long and protracted litigation," said Mike van Dulken, head of research at Accendo Markets.

The two companies had already agreed to a separate settlement of US$6.2 billion with the Brazilian government in March.
Those funds were ordered to go toward compensating for social and environmental damage and to be paid over 15 years. But the deal was criticised by prosecutors, who said the amount was not calculated realistically.

In the latest suit, Brazilian prosecutors are demanding that the companies put up US$2.1 billion, or five percent of the estimated damages, in a private fund and to suspend earnings distributions as a guarantee of payment.

The accident near Mariana in Minas Gerais began when a tailings dam at Samarco mine failed, unleashing a flood of polluted water and mud into the River Doce, one of the biggest in Brazil.

A village was destroyed and drinking water supplies for hundreds of thousands of people were severed. The damage reached as far as the river's mouth on the Atlantic coast, with wildlife, tourism and fishing all suffering.

In February, police announced homicide charges against seven people, including six Samarco executives.

The civil suit filed Tuesday called on Samarco's co-owners to "completely" compensate for the disaster.

Prosecutors said they calculated the US$43 billion figure based on charges faced by BP after the Deepwater Horizon oil spill in the Gulf of Mexico in 2010.

BHP on Wednesday said it remained committed to helping Samarco rebuild the community and restore the environment, but that the previous settlement already ensured "the compensation framework" for responding to the tragedy.

Vale added that it would "take every measure to assure its right of defence" and stressed that Samarco had already taken "all necessary emergency measures in relation to the accident."

Source: AFP

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