A court in London has decided to allow a class action against BHP (BHP) to proceed, suing for damages over the 2015 Samarco dam failure in Brazil. The collapse of a tailings dam at an iron ore mine BHP co-owned with Vale (BR:VALE3) killed 19 people and caused massive environmental damage.
The Court of Appeal said the class action suit on behalf of 200,000 Brazilians could be heard in the UK, after a previous decision from 2020 said it was an “abuse of process” and Brazil was a better place for the legal fight.
The new judgment said there was a “realistic prospect of a trial yielding a real and legitimate advantage for the claimants such as to outweigh the disadvantages for the parties in terms of expense and the wider public interest in terms of court resources”.
The mining company, which left the FTSE 100 earlier this year after making the Australian Stock Exchange its primary listing, said it would now have to defend the same claims in two locations.
“BHP will continue to defend the UK group action, which BHP believes is unnecessary because it duplicates matters already covered by the existing and ongoing work of the Renova Foundation and legal proceedings in Brazil,” the miner said.
BHP has spent around $1.8bn (£1.5bn) on compensation and financial aid relating to the disaster already through the Renova BHP/Vale joint venture. Its shares were down 3 per cent on Friday afternoon on the news, as other major miners traded flat.
Friday’s judgment included criticism of the Renova compensation process that had come from a Brazilian judge: “There was legitimate dissatisfaction by victims with the inadequacies of redress, for which they had been waiting for almost five years, and should not have to wait any longer,” the court said, quoting Judge Mario Franco Junior, who had reported that claims filed with Renova in 2018 had still not had a response as of October last year.
RBC Capital Markets analyst Tyler Broda said the revival of the case “provided an uncertainty for the wider investment case”.
“This process is still likely to take some time, especially if BHP pursues an appeal to the UK Supreme Court,” he added.
A lawyer for PGMBM, which is running the class action, told the Financial Times this Court of Appeal decision would bring the victims “a step closer to justice”.
Like the other major miners listed in London, BHP has witnessed a major sell-off in recent weeks as global recession fears knock the copper price, often used as a proxy for China’s growth plans. Broda said as the miners entered a “down cycle” he expected BHP to raise cost estimates at next month’s 2022 financial year results release and also move more aggressively into M&A.
