MercoPress. South Atlantic News Agency

Brazil is suing BHP and Vale 'at least' US$ 5bn for Minas Gerais mining disaster

The action against the two mining giants relates to the catastrophe that hit Samarco iron ore operation in Minas Gerais, Brazil on 5 November.

A Brazilian federal court has ordered BHP Billiton and Vale to set aside US$ 491.5 million, with the possibility of billions more, has frozen the mining giants' assets in the country, and ordered it to carry out extensive environmental and social work in the region hit by a dam burst at its joint venture.

 The action against the two mining giants relates to the catastrophe that hit Samarco iron ore operation in Minas Gerais, Brazil on 5 November. Each of the companies own 50% of Samarco.

The disaster saw a dam collapse and release 60 million cubic meters of mud downstream into the water systems of hundreds of towns and cities. Brazil's President has compared the disaster to the 2010 BP oil spill in the Gulf of Mexico and described it as Brazil's worst ever environmental disaster.

The death toll of the collapse has risen to 17, from an earlier estimate of 13. Two people remain missing.

Brazil's government is suing BHP and Vale for “at least” 20 billion Brazilian Reais (US $4.9bn and, as part of the proceedings, a Brazilian court has made some preliminary demands of the pair.

BHP says it has been ordered to: Deposit BRL 2 billion (US$491.5 million) to a Court-managed bank account within 30 days. That's 10% of the total reparations the government is after. Samarco faces a daily fine of BRL 1.5 million (US$370,000) for non-compliance with this deadline; Restrictions have been placed on the mining exploration concessions held by Samarco in Brazil, meaning the mining rights can't be sold or transferred — in other words, the assets are frozen; The pair must undertake extensive remediation plans including: “preventing leakage of waste from the Fundão tailings dam, engaging a consultant to evaluate contamination of fish and implement pest control, removal of mud from the Rio Doce banks, adoption of measures to prevent sludge from reaching the lagoon, and presentation of a comprehensive plan for environmental recovery and socio-economic recovery.”

BHP said in an update that additional water quality testing shows the material leaked into the water system is non-toxic, although it does contain traces of heavy metals. The company has also drafted in a veteran executive to lead its Brazilian team on the ground and hired New York law firm Cleary Gottlieb Steen & Hamilton LLP to investigate just what went wrong with the dam.

BHP says in the statement that “Samarco continues to work with the government authorities in Brazil to relocate displaced people from temporary accommodation to rented housing and to distribute living wage debit cards to those who have been impacted. All displaced people will have been given the opportunity to relocate before 25 December 2015. Community access bridges are being rebuilt and public service centres have been established in affected communities. Planning for the reconstruction of impacted communities has also commenced.”