Brazil to sue mining companies BHP and Vale for $5bn over dam disaster

Brazil’s government has announced it will sue mining giants BHP Billiton and Vale for $US5.2bn after the deadly collapse of a dam at an iron ore mine sent 60 million cubic meters of mud and mine waste cascading into the Atlantic ocean and left more than 13 people dead.

Environment minister Izabella Teixeira said a lawsuit would be filed demanding that the companies and the mine operator Samarco, which they co-own, create a fund of 20 billion reais to pay for environmental recovery and compensation for victims.

“There was a huge impact from an environmental point of view,” Teixeira said at a press conference in the capital Brasilia.

“It is not a natural disaster. It is a disaster prompted by economic activity, but of a magnitude equivalent to those disasters created by forces of nature.”

The lawsuit will be filed on Monday, attorney general Luis Inacio Adams said.

At least 13 people died and some 11 remain missing from the flood of mud and wastewater triggered by the breaking dam at the Samarco iron ore mine near Mariana in south-eastern Brazil on 5 November.

The deluge swept down the river Doce to the Atlantic, sparking claims of major contamination, although the mining companies insist there is no serious pollution.

The size of the fund demanded by the Brazilian government dwarfs initial estimates by Deutsche Bank that a clean-up could cost about $1bn.

Adams said that the companies would be asked to pay the amount out gradually, as a percentage of their profits.

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“The measure should guarantee long-term financing for actions to revitalise the (river) basin,” Adams’ office said.

BHP, which is listed in London and Australia, has seen its shares fall sharply in the wake of the disaster and as commodity prices have weakened in recent months. At the end of trading in Australia on Friday, the shares were at a more than 10-year low of $18.77. In London they closed down 3% at 807p, meaning they have almost halved in the past 12 months.

Adams said he hoped the corporations - BHP Billiton is the world’s biggest miner and Vale is the world’s biggest iron ore specialist - would co-operate with the government.

Both have said they want to meet their obligations.

“The scale of the damage is very big but the companies have announced measures that show they are interested in repairing their image,” Adams said.

Teixeira described the environmental impact as devastating and difficult to repair.

Earlier on Friday Vale announced a compensation fund, but did not give figures.

Executives also sounded a defiant note, rejecting allegations that the Doce had been badly polluted.

Vania Somaville, director of human resources, health and safety at Vale, told a press conference that lead, arsenic, nickel and chrome had been detected at some points along the river.

However, Somaville argued that the potentially dangerous contaminants were not carried there by the wastewater from the mine.

That was in stark contrast to a report by two UN experts, which accused the corporations and the Brazilian government of failing to respond to a toxic disaster.

The UN’s special rapporteur on human rights and the environment, John Knox, said the equivalent of “20,000 Olympic swimming pools of toxic mud” spewed into the Doce.