Global mining giants BHP Group and Vale have proposed a settlement of approximately $1.4 billion to resolve a class-action lawsuit in the United Kingdom stemming from the 2015 Mariana dam collapse in Brazil, according to a report by the Financial Times on Thursday. The disaster, considered one of the worst environmental catastrophes in Brazilian history, triggered legal action from an estimated 400,000 individuals.

The current London lawsuit against BHP, led by Pogust Goodhead, a British law firm, has been valued by claimants’ lawyers at up to £36 billion ($48.29 billion).The proposed settlement comprises roughly $800 million in compensation for those affected and $600 million to cover legal expenses related to the High Court proceedings.

Negotiations reportedly advanced during a June 2023 meeting in New York between representatives from Pogust Goodhead, their financial backer, Gramercy Funds, and executives from BHP and Vale. Gramercy Funds, a U.S.-based hedge fund specializing in distressed debt,provided crucial funding for the litigation.

Neither BHP, headquartered in Melbourne, Australia, nor Vale, based in Rio de Janeiro, Brazil, promptly responded to requests for comment from Reuters. In October 2023, BHP publicly refuted allegations that prioritizing profits over safety contributed to the dam’s failure, labeling such claims as “far-fetched and unjustified.”

The Mariana dam, owned and operated by Samarco, a 50/50 joint venture between BHP and Vale, released approximately 40 million cubic meters of iron ore tailings – a slurry of waste material – into the Doce river, devastating communities and ecosystems across approximately 560 kilometers (350 miles) to the Atlantic Ocean. The collapse resulted in at least 19 fatalities and displaced hundreds of families from their homes in the states of Minas Gerais and Espírito Santo.

Background: mining Disasters in Brazil and Global Tailings dam Safety

Brazil has experienced several major tailings dam disasters in recent decades, highlighting systemic issues within the country’s mining industry and raising concerns about global tailings dam safety standards. The 2015 Mariana disaster was followed by the Brumadinho dam collapse in January 2019, also operated by Vale, which resulted in the deaths of over 270 people. These incidents prompted increased scrutiny of tailings dam construction, monitoring, and regulation.

Tailings dams are engineered structures used to store the waste materials (tailings) left over from mineral processing. They are frequently enough located in populated areas and near waterways, posing notable environmental and social risks if they fail.The Global Tailings Review, launched in 2019 following the Brumadinho disaster, identified critical gaps in tailings dam management and called for a new global standard for tailings storage facilities.

The consequences of tailings dam failures extend beyond immediate loss of life and environmental damage. They can include long-term health impacts, economic disruption, and loss of livelihoods for affected communities.The legal battles following these disasters often take years to resolve, and the financial burden of remediation and compensation can be substantial.

Frequently Asked questions