Photo source: Ashton 29 – CC BY-SA 4.0

BHP Group, like other mining giants, has a lot of catching up to do in terms of how it has approached the environment. He has become a master of the greenwashing experiment, an adept promoter of false environmental responsibility (take, for example, his practice of for sale its oil and gas businesses to Woodside Petroleum in 2021 rather than spin them off); and, it has recently emerged, a ruthless negotiator and litigator of disputed claims.

After nine years of negotiations and drawn-out court proceedings, BHP has reached a settlement with Brazilian authorities over its role in the collapse of the Fundão tailings dam in Mariana, Minas Gerais. Occurring on November 5, 2015, the results were catastrophic for human life and nature, leaving 19 people dead and spewing toxic sludge over approximately 700 kilometers of land. The Samarco-owned facility, which held around 26,000 Olympic-sized pools of tailings (50 million cubic metres), was a joint venture between BHP and Vale. In addition to kill 14 company employees and five residents, the released tailings quickly reached Bento Rodrigues and part of the communities of Paracatu de Baixo and Gesteira and, for good measure, flooded the center of Barra Longa.

The disaster worsened, turning the Rio Doce basin a dirty brown and affecting dozens of municipalities and hundreds of communities that depend on the Rio Doce for drinking water. The pollution also destroyed wildlife, fish stocks, farmland, and churches, and affected various indigenous communities, including the Krenak, Tupiniquim, Guaranis, and Quilombola.

In response to the collapse, BHP, Vale and Samarco set up the Renova Foundation, aimed at compensating individuals and small businesses for losses and apparent amelioration of environmental impacts. This was not a concession of BHP’s guilt. “Convenient,” write the authors caustic in a Nature conservation August disaster study, “the company is building its foundation to repair its own damage. Through the thick mix of multiple lawsuits filed in Brazil, Australia, the United States and the United Kingdom, BHP has repeatedly denied any central culpability in the collapse.

Compensation payments to victims from the fund have, to date, also been scandalously delayed. The BHP Annual Report 2024 notes that R$17.5 billion (US$3.5 billion) was paid to 430,000 people as of June 30 this year, with R$12.2 billion (US$2.5 billion) paid to 110,000 people in the Novel system or “simplified court-mandated compensation system”. . The company praises this arrangement as one that has allowed “informal workers” (cart drivers, sand miners, artisanal miners and street vendors) to receive compensation despite having “difficulty proving damages”.

What BHP fails to emphasize is that those in the Novel system had to wait seven years after the dam collapsed to receive any cash, 40% of those paid in the last two years alone. Of the 430,000, about 290,000 received $1,050 reals each for a seven to 10-day water supply interruption after the dam collapse. And just to add to the ugliness of it all, the replacement victim housing was of questionable quality. It is no wonder that Thatiele Monic, president of the Vila Santa Efigênia and Adjacências Quilombola Association, is suspect of the efforts of the Renova Foundation.

The UK proceedings, which began in November 2018, are positively Dickensian in legal spins. It began as a High Court case against BHP involving 240,000 claimants, including Brazilian municipalities and Krenak indigenous communities. In November 2020, the court dismissed trial, Justice Turner making the memorable remark: “The task before the Chief Justice in England would be, I foresee, like trying to build a house of cards in a wind tunnel.” Various impediments were cited, not least the size and scope of the claims, including “jurisdictional cross-contamination” and an abuse of process.

In March 2021, the Court of Appeal upheld the decision, arguing that the claimants were already seeking legal redress in Brazil. In July, the Court of Appeal in London overturned the decision, granting leave to appeal on the grounds that the case had a “real prospect of success”. Not to do so would risk a real injustice. In July 2022, a Court of Appeal ruled that English courts could hear the case, noting that “The vast majority of plaintiffs who have recovered have received only very modest amounts in respect of non-pecuniary damages for the interruption of the water supply.” A date has been set for the start of the trial in April 2024.

In March 2023, the scale of the class action grew even further with the addition of 500,000 claimants. BHP’s attempts to delay the trial until mid-2025 were rejected by a London court in May 2023. On October 21 of this year, the trial finally began. It would only take a few days.

The settlement agreement signed on October 25 includes BHP, Vale, Samarco and about half a dozen Brazilian authorities. Of the 42 civil claims against BHP, the October 25 settlement covers the most monumental and contentious. Its value – R$170 billion (US$31.5 billion) – is misleading. Brazilian authorities may have reason to enforce the result, as it comes close to the R$175 billion sought in civil actions in 2016. BHP chief executive Mike Henry also appeared suspiciously pleased, claiming that the agreement will provide a full list of benefits, including “expanded and additional programs for the environment and people, including earmarked funding for the health system, economic recovery, improved infrastructure and expanded compensation measures and income support, including for farmers, fishermen . indigenous and traditional people and communities.”

A sharp analysis from Tony Boyd from Australian Financial Reviewhardly a forum known for its humanitarian and bleeding hearts, it offers a rather different reading of Brazilian efforts and the tactics employed by the mining giants. It was apparent to Boyd “that over the past decade, BHP and Vale have outmaneuvered the Brazilian federal government and the declarations of Minas Gerais and Espírito Santo, as well as the federal and state offices of prosecutors and public defenders.”

Much of this has to do, as Boyd notes, with the time value of money. About 60% of the R$100 billion final settlement is payable over 20 years. Taking this time frame into account, the nominal amount comes to a net present value of R$48 billion. Using net present value analysis also means that the R$32 billion commitment to cover the cost of removing the Rio Doce tailings and R$30,000 in compensation for individuals and small businesses that opt ​​into the arrangement is 25 billion R$.

The financial burden arising from BHP’s compensatory commitments has was also diminished through the nearly ten-year dispute resolution process, allowing the Samarco iron ore reopening to take place in the meantime, with healthy annual revenues of $750 million.

Even now, BHP’s bland description of the catastrophe is receiving a coolly confident assessment. Company website NOTES that since the dam broke, Samarco has been operating “with a strong focus on safety and sustainability.” The reduction in the use of the dams was made possible by the implementation of a “new filtration system”, while 80% of the tailings from the operations “are now dry-stacked, with the remainder stored in a closed rock pit”. Poor insurance for those hundreds of thousands of people affected that fateful November of 2015.