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BHP to be Sued by Brazilian Government over Samarco Accident

BHP to be Sued by Brazilian Government over Samarco Accident
Nov 30, 2015 By Simon Herrmann Tags: BHP

The mining giant BHP Billiton Limited (ASX:BHP) provided an update on the Samarco incident that occurred on 5 November 2015. The company also stated the intentions of the Brazilian Federal Government to commence legal proceedings against BHP, Samarco and Vale.

According to the announcement, the company confirmed that 13 fatalities have occurred and six people remain missing at the current stage. The emergency services continue to search for the six missing people and Samarco is working with the Brazilian Government authorities to relocate the displaced people from temporary accommodations to rented houses. The relocation process is expected to go on till February 2016. The company reported that the clean-up process has commenced in the Barra Longa area, focussing on access roads, housing and bridge repairs.

The Brazilian Federal Government and certain State governments have announced that they intend to commence legal proceedings against Samarco, Vale and BHP Billiton for clean-up costs and damages. The government seeks the companies to establish a fund of approximately $5.2 billion for environmental recovery and compensation. BHP has not received a formal notice of action at this stage.

Interim work to repair the damage of the dams and to reinforce parts of the structure has commenced. Samarco and local authorities continue to examine water quality in the Rio Doce river system. Samarco, along with the local authorities will supply clean water to the areas where the water supplies have been affected.

The company announced that tests were carried out by the Brazilian Geological Service (CPRM) on the sediments from samples taken at four points in the Rio Doce river system from 14 November to 18 November 2015. According to the announcement the report showed that concentrations of metals obtained at the sites do not differ from the results produced by CPRM in 2010. BHP also backs this report with a study by an environmental geochemistry company, SGS Geosol, which stated that the materials in the tailings are not hazardous to human health. The company confirmed that a large number of fish died due to the high volume of sand and clay tailings material that moved in the river system.

BHP last traded at $18.38 as at 11:45 AM (AEDT) and declined more than 2% since the announcement. 

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Simon Herrmann Author: Simon Herrmann Nov 30, 2015

Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.

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