Mariana Dam disaster

Disaster

On 5 November 2015 the Fundão Dam near the city of Mariana in Southeast Brazil collapsed, unleashing 60 million cubic meters of iron ore waste and mud (called tailings), the by-products of iron ore mining operations in the area.

19 people were killed in the aftermath, and the incident has been described as “the worst environmental disaster in Brazilian history”. Around 600 people lost their homes.

A report commissioned by the company operating the dam, Samarco, published in August 2016, said the collapse of the tailings dam was caused by drainage and design flaws, but it “did not assign blame or highlight specific errors in corporate or regulatory practice”.

Samarco is a joint venture between two of the largest mining companies in the world: Vale a Brazilian company, and BHP Billiton an Anglo-Australian company listed on the London Stock Exchange, now known as BHP Group Ltd.

Ecological damage

The disaster produced serious ecological damage. Immediately after the dam collapse an article by the Wilson Center reports that there were mass die-offs among fish, and “once the mud reached the open ocean, a total of 29,000 fish carcasses were collected and recorded by the Federal Police”. The death of the fish also resulted in hundreds of birds dying from starvation.

In addition to the loss of native fauna, the Wilson Center article explains “80 percent of the native vegetation located near the tributaries and main channel of the Doce River was destroyed, leaving the river with only 13 percent of the Atlantic forest’s original vegetation”.

In November 2021, Reuters reported that a study undertaken by a company contracted by Brazilian prosecutors to measure the costs of the disaster estimated the “socio-environmental” damage as between 37.6 billion reais ($6.73 billion) and 60.6 billion reais ($10.85 billion).

There may be further long-term effects, Professor of biology at FAESA University in Brazil, Thiago Gaudio, has stated that the full environmental impact of the 2015 disaster in Mariana is still unknown, saying: “the toxic mud continues in the soil and water for many years. It is still unknown the disaster’s dimensions and future problems”.

Compensation and Brazil legal action

In October 2016, Brazilian federal prosecutors filed charges of qualified homicide against 21 people, including top executives of BHP Billiton, Vale and Samarco, for the 19 deaths resulting from the dam collapse. However, in July 2017 the federal court suspended the criminal case.

Within four weeks of the dam collapse legal proceedings were launched in Brazil. In 2016 these concluded with a settlement called the Transaction and Conduct Adjustment Agreement (TTAC), under which Samarco, BHP Brasil and Vale agreed to create the Renova foundation, to provide around 20 billion Brazilian reals (around £3.28 billion in today’s prices) in compensation for individuals and some small businesses, and to meet the costs of mitigating the environmental consequences.

According to a BHP spokesperson, by the end of 2022 “about $5.6bn (£4.7bn) will have been spent in Brazil on fixing the damage, including compensation programmes”.

The TTAC was later annulled by an appellate court in Brazil, as the compensation was seen to be insufficient, and replaced with a second agreement, although payments under the TTAC and the Renova foundation have continued. Legal proceedings are currently paused while negotiations take place over the size of the settlements under that second agreement, and the various Renova programs are evaluated and monitored.

Other legal claims by individuals, and various group litigations are also ongoing in Brazil.

UK Legal action

The disaster is now subject to legal action in the UK courts. Over 200,000 individuals affected by the disaster, as well as 530 businesses, 15 churches and faith-based institutions, 25 municipalities, and five utility companies, initiated legal action against BHP and Vale in London. They are seeking compensation for losses caused by the destruction of the dam. In March 2023, around 500,000 further claimants were added to the legal action, taking the total number to more than 700,000.

BHP has challenged the legal action, arguing among other things, that the legal claims should be brought in Brazil. In November 2020 the UK High Court ruled that the legal case should be dismissed, due in part to the fact there was ongoing litigation in Brazil, with many of the same claimants seeking identical remedies in each jurisdiction, and so the “risk of inconsistent judgments would be acute”, and the proceedings would be “a clear abuse of process” (an abuse of process is grounds for a court to strike out a valid claim).

However, the claimants appealed this decision and in July 2022 the Court of Appeal ruled that the case should be heard, arguing that even if the claims might become unmanageable this did not make it an abuse, and the claims were not “clearly and obviously pointless and wasteful”. In June 2023 the Supreme Court refused BHP permission to appeal that decision, deciding that the application did not raise “an arguable point of law”.

In May 2023, BHP requested that the hearings for the case be delayed until mid-2025 to give the company more time to prepare and allow Vale to participate in the case; the hearings were originally scheduled for April 2024. The High Court decided that the first stage trial date be revised to October 2024. This decision also stated that Vale has issued an application challenging the jurisdiction of the UK courts, and the hearing for this case is expected to be heard in July 2023.