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News > Latin America

Brazil Seeks $5.2B from BHP to Rebuild After Dam Burst

  • Villages were left destroyed and deserted in the aftermath of the dam spill in Mariana, Minas Gerais, Nov. 5, 2015.

    Villages were left destroyed and deserted in the aftermath of the dam spill in Mariana, Minas Gerais, Nov. 5, 2015. | Photo: Reuters

Published 2 December 2015

BHP Billiton is set to receive a major fine from the Brazilian government to the tune of US$5.2 billion.

BHP, the world's largest mining and metals company, is deemed responsible for the Nov. 5 dam burst in Minas Gerais which is widely regarded as Brazil’s largest ever mining disaster.

The burst saw 60 million cubic meters of mud and mine waste seep into the surrounding area killing more than 14 people, displacing at least 500 and demolishing a nearby village. The burst was so significant it reached the Atlantic Ocean via the state of Espirito Santo.

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"The scale of the environmental damage is the equivalent of 20,000 Olympic swimming pools of toxic mud waste contaminating the soil, rivers and water system of an area covering over 850 kilometers," the U.N. agency's special rapporteur John Knox said in a statement.

The governments of Brazil and the states affected by the dam burst have sued iron ore operator Samarco and its co-owners, BHP Billiton Ltd and Vale SA, the world's biggest iron ore miner.

Brazilian President Dilma Rousseff, speaking at the COP21 climate change conference in Paris this week, held the companies totally accountable for the disaster and said that Brazil is “severely punishing those responsible for this tragedy."

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It is thought Brazilian authorities are looking to gain a settlement in similar fashion to the US$20.8 billion agreement reached by the U.S. government with oil firm BP Plc following the 2010 Deepwater Horizon spill in the Gulf of Mexico.

BHP, like BP, could face further penalties should private businesses pursue damages.

In addition to the agreement with the U.S. government, BP had to pay approximately US$18 billion to other entities on top of payments made to the U.S.

The US$5 billion lawsuit stipulates that payments to the government should be received via a private fund over a 10 year period to pay for the full recovery of the environmental disaster.

The Bento Rodrigues district after a dam owned by Vale SA and BHP Billiton Ltd burst. | Photo: Reuters

Chief prosecutor for the coastal state of Espírito Santo, Rodrigo Vieira, said that if Samaraco cannot pay the desired compensation “Vale and BHP will be held responsible for providing their shares."

BHP recorded a profit of US$6.42 billion from June 2014 to June 2015 and agreed to pay US$260 million through their Brazilian subsidiary Samarco to the Brazilian government for damages caused by the environmental catastrophe. Prosecutors and analysts say that the amount pledged by the companies was too little to cover the cost of the cleanup.

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