BHP pays $110m to settle class action brought by Australian investors over Samarco dam disaster in Brazil

BHP will pay $110 million to aggrieved local investors who bought shares in the Big Australian before the deadly Samarco dam collapse in Brazil.

The class action was launched by law firm Phi Finney McDonald in 2018 on behalf of shareholders who acquired BHP stock between August 8, 2012 and November 9, 2015 — just days after the Fundão tailing dam tragedy in the country’s south-east that killed 19 people.

Enough mine waste to fill 13,000 Olympic-size swimming pools poured into the Doce River, wiping away villages and causing tens of billions of dollars worth of destruction.

The suit, bankrolled by G&E KMTC Funding, sought to recover investor losses over an alleged breach of disclosure obligations to the Australian Securities Exchange about the dam’s failure risks and claims of misleading and deceptive conduct over safety in contravention of the Corporations Act.

BHP is a non-operating joint venture partner in the Samarco iron ore project along with Brazilian iron ore giant Vale

“Under the terms of the settlement agreement, BHP has agreed to pay the applicants $110m, inclusive of interests and costs, with no admission of liability,” BHP said on Tuesday.

“BHP expects to recover the majority of the settlement amount from its insurers.”

Phi Finney McDonald said the conditional settlement, which still needs a final sign-off by the Federal Court, followed seven years of litigation and came ahead of a trial that was scheduled to start on Tuesday.

“This is a significant outcome for BHP investors,” said Brett Spiegel, principal lawyer at the firm.

“It is one of the few settlements to exceed $100m in Australian shareholder class action history.”

Fellow principal lawyer Cameron Myers said the settlement came after two High Court appeals and was a welcome result for BHP investors.

BHP and Vale finalised a deal with Brazilian authorities in October last year to pay about $45 billion in damages over the disaster.

It included $26b in compensation to be paid over 20 years to the Federal Government, the States of Minas Gerais and Espirito Santo as well as affected municipalities.

The settlement also included the $10b already spent in compensation measures during the past few years, along with $8.4b for obligations including initiatives for resettlement and environmental recovery.

BHP is also facing a $75b lawsuit in the UK’s High Court involving as many as 620,000 people.

“As a result of its heavy involvement in Samarco’s operations, BHP had many opportunities to avert disaster but failed to do so and instead kept allowing and encouraging the dam to be raised by constantly pushing for ever greater production by Samarco,” lawyer Alain Choo Choy said in his closing argument.