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BHP hit by huge Brazil lawsuit, stock plunges
[SYDNEY] Miners BHP Billiton and Vale have been hit with a US$43 billion lawsuit from Brazilian prosecutors over the Samarco disaster, it was announced Wednesday, sending the Australian resources giant's share price sharply lower.
A dam at the mine they co-own broke on November 5 last year, spewing a deadly wall of mud and water that swamped a village, killed at least 17 and polluted a huge swath of river basin.
BHP said in a statement to the market the lawsuit for 155 billion Brazilian reals was for "social, environmental and economic compensation".
The announcement sent its share price plunging 7.38 per cent to Aus$19.20 in morning trade.
"BHP Billiton remains committed to helping Samarco to rebuild the community and restore the environment affected by the failure of the dam," BHP said, adding that it was still awaiting formal notice of the claim.
The amount being claimed is a vast increase on a settlement BHP and Brazil's Vale agreed with authorities in March, which is yet to be ratified in court.
That agreement, for US$6.2 billion, was earmarked for damages and investments aimed at providing compensation for irredeemable losses.
At the time, Brazilian President Dilma Rousseff said the settlement would help heal "a tragedy without precedent." But a federal prosecutor also warned he would challenge the settlement, arguing that not enough care was taken in assessing the true costs of the disaster.
"We believe that the agreement (once approved by the court) provides the long-term remedial and compensation framework for responding to the impact of the Samarco tragedy and the appropriate platform for the parties to work together," BHP said on Wednesday of the March deal.
The November accident near Mariana in Minas Gerais state began when a tailings dam at Samarco's mine failed, unleashing the flood of polluted water and mud into the River Doce, one of the most important in Brazil.
A village was destroyed, drinking water supplies for hundreds of thousands of people were interrupted and damage reached as far as the river's mouth on the Atlantic coast, with wildlife, tourism businesses and fishing communities all suffering.
Seventeen people were confirmed killed and two are missing, presumed dead.