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Australian mining giant BHP Group (ASX: BHP) has agreed to a $110 million shareholder class action settlement relating to the Fundão dam disaster in Brazil in 2015, averting a Federal Court trial due to start today to decide the matter.
While BHP has made no admission of liability, the agreed settlement sum includes interests and costs and it follows a US$31.7 billion ($48 billion) settlement last year with Brazilian authorities for reparations and compensation for the disaster.
The collapse of the Fundão dam in Brazil, part of the Samarco iron ore mine, led to a mudslide that killed 19 people and severe pollution of the Rio Doce River on 5 November 2015.
The Samarco iron ore mine, a joint venture between BHP and Brazilian mining group Vale, as since resumed operations after safety concerns by authorities in Brazil were satisfied.
The Federal Court shareholder class action, brought against the company in 2018, was led by law firm Phi Finney McDonald.
The case represented investors who bought shares in BHP Group Limited or BHP Group Plc, which is now known as BHP Group (UK) Ltd, from 8 August 2012 to 9 November 2015.
The class action alleged that BHP had failed to disclose to the ASX any knowledge of the dam failure risks and the potential for serious adverse human, environmental and financial consequences.
It was also alleged BHP had engaged in misleading and deceptive conduct by claiming safety was its highest priority and that it had effective systems and processes in place to identify and manage risks to people, the environment and communities across its operations and subsidiaries, including the Samarco mining operation.
BHP has denied the allegations made in the proceedings and says the conditional settlement does not constitute any admission of liability
The action sought recovery of investor losses, alleging breach of disclosure obligations and misleading and deceptive conduct in contravention of the Corporations Act following the Fundão dam collapse.
“This is a significant outcome for BHP investors,” says Brett Spiegel, principal lawyer at Phi Finney McDonald.
“It is one of the few settlements to exceed $100 million in Australian shareholder class action history.
“It comes on the eve of the 10th anniversary of the Fundão dam collapse that devastated downstream communities and the surrounding environment.”
The BHP class action compares with $189.4 million for the WA stolen wages class action, $132.7 million for the PFAS settlement and $112 million for the Robodebt settlement.
“After a hard-fought battle that included two High Court appeals, this $110 million settlement is a welcome result for BHP investors wherever they are located,” says Cameron Myers, principal lawyer at Phi Finney McDonald.
In a statement to the ASX, BHP says it expects to recover the majority of the settlement amount from its insurers.
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