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Brazil Slaps Miners with Billions Lawsuit Over Dam Collapse

By Charles Riley: Money.cnn.com:

The fallout from a deadly Brazilian dam collapse is far from over for two of the world’s biggest miners.

Federal prosecutors have filed a civil lawsuit against Brazil’s Vale (VALE) and Anglo-Australian miner BHP Billiton, seeking 155 billion reais ($44 billion) in damages over the dam collapse in November 2015 that killed 19 people.

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The disaster unleashed a wave of toxic mud and sludge that buried a village and washed downriver to the ocean in what officials have called the worst environmental disaster in the country’s history.

BHP (BBL) shares trading in Sydney plummeted nearly 10% on Wednesday. In a statement, the company said it had not yet been formally notified of the suit.

Investors had hoped that a $6 billion settlement announced by President Dilma Rousseff in March 2016 would shield the miners from further claims.

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But federal prosecutors operate independently of the government in Brazil. The prosecutors, who have been conducting their own investigation into the dam collapse, said that the previous settlement was inadequate and failed to include input from victims.

The deal “does not completely, adequately and sufficiently cover the collective rights of the victims, and violates their constitutional rights,” the prosecutors said.

Prosecutors said they arrived at $44 billion in damages by comparing the dam collapse to the Deepwater Horizon disaster that killed 11 people and caused a massive oil spill in the Gulf of Mexico. That disaster cost BP (BP) more than $55 billion.

Brazil’s federal prosecutors have previously filed multi-billion dollar suits in the wake of environmental disasters, only to later settle for smaller payments.

BHP said in a statement that it believes the original $6 billion agreement “provides the long-term remedial and compensation framework for responding to the impact of the … tragedy and the appropriate platform for the parties to work together.”

Vale made similar comments in support of the existing agreement and said it “will take all necessary steps to defend itself.”

Mining operations usually create a negative environmental impact, both during the mining activity and after the mine has closed.

Hence, most of the world’s nations have passed regulations to decrease the impact. Worker safety has long been a concern as well, and modern practices have significantly improved safety in mines.

The environmental impact of mining includes erosion, formation of sinkholes, loss of biodiversity, and contamination of soil, groundwater, surface water by chemicals from mining processes. In some cases, additional forest logging is done in the vicinity of mines to increase the available room for the storage of the created debris and soil.

Besides creating environmental damage, the contamination resulting from leakage of chemicals also affect the health of the local population. Mining companies in some countries are required to follow environmental and rehabilitation codes, ensuring the area mined is returned to close to its original state. Some mining methods may have significant environmental and public health effects.

Erosion of exposed hillsides, mine dumps, tailings dams and resultant siltation of drainages, creeks and rivers can significantly impact the surrounding areas, a prime example being the giant Ok Tedi Mine in Papua New Guinea.

In areas of wilderness mining may cause destruction and disturbance of ecosystems and habitats, and in areas of farming it may disturb or destroy productive grazing and croplands. In urbanized environments mining may produce noise pollution, dust pollution and visual pollution.

Safety has long been a concern in the mining business especially in sub-surface mining. The Courrières mine disaster, Europe’s worst mining accident, involved the death of 1,099 miners in Northern France on March 10, 1906. This disaster was surpassed only by the Benxihu Colliery accident in China on April 26, 1942, which killed 1,549 miners.

While mining today is substantially safer than it was in previous decades, mining accidents still occur. Government figures indicate that 5,000 Chinese miners die in accidents each year, while other reports have suggested a figure as high as 20,000.

Mining accidents continue worldwide, including accidents causing dozens of fatalities at a time such as the 2007 Ulyanovskaya Mine disaster in Russia, the 2009 Heilongjiang mine explosion in China, and the 2010 Upper Big Branch Mine disaster in the United States.