Photo source: Ashton 29 – CC BY-SA 4.0

The BHP Group, like other mining giants, has a lot of explaining to do about the way 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 simply sale its oil and gas business to Woodside Petroleum in 2021 instead of withdrawing them); and, as was recently learned, a ruthless negotiator and litigator over contentious claims.

After nine years of negotiations and grueling legal proceedings, BHP has reached an agreement with Brazilian authorities over its role in the collapse of the Fundão tailings dam in Mariana, Minas Gerais. The results, which took place on November 5, 2015, were catastrophic for human life and nature, leaving 19 people dead and spilling toxic sludge over some 700 kilometers of land. The Samarco-owned facility, which held some 26,000 Olympic swimming pools (50 million cubic metres) worth of tailings, was a joint venture between BHP and Vale. In addition After killing 14 company employees and five residents, the released tailings quickly reached Bento Rodrigues and part of the Paracatu communities of Baixo and Gesteira and, to a large extent, flooded the city center of Barra Longa.

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

In response to the collapse, BHP, Vale and Samarco established the Renova Foundation, intended to compensate individuals and small businesses for losses and ostensibly improve environmental impacts. This was not a concession on the part of BHP as the culprit. “Conveniently” write the authors caustically in a Nature conservation study on the disaster in August, “the company creates its basis to repair its own damages. Through the dense patchwork of multiple lawsuits filed in Brazil, Australia, the United States and the United Kingdom, BHP has repeatedly denied any central culpability in the collapse.

To date, the Fund’s payment of compensation to victims has also been scandalously delayed. He BHP Annual Report 2024 points out that as of June 30 of this year, 17.5 billion reais (3.5 billion US dollars) had been paid to 430,000 people, and 12.2 billion reais (2.5 billion US dollars) to 110,000 people under the Novel system, or “simplified court-ordered compensation system” . The company praises this agreement because it allowed “informal workers” (carton drivers, sand miners, artisanal miners and street vendors) to receive compensation despite having “difficulty proving the damages they suffered.”

Which BHP? fails to emphasize is that those under the Novel system had to wait seven years after the dam collapse to receive cash, and 40% of them only paid in the last two years. Of the 430,000, some 290,000 received a paltry 1,050 reais each for the interruption of their water supply for seven to ten days after the dam collapsed. And to add insult to injury, replacement housing for victims has been of questionable quality. It is not surprising that Thatiele Monic, president of the Quilombolas Association of Vila Santa Efigênia and Adjacências, is suspicious of the efforts of the Renova Foundation.

The stage of the procedure in the United Kingdom, which began in November 2018, is positively Dickensian in its legal twists. It began as a High Court lawsuit against BHP involving 240,000 claimants, including Brazilian municipalities and indigenous Krenak communities. In November 2020, the court dismissed the lawsuit, with Judge Turner making a memorable comment: “I predict that the task facing the management judge in England would be akin to trying to build a house of cards in a wind tunnel.” Several impediments were cited, including the size and scale of the claims, including “jurisdictional cross-contamination” and abuse of process.

In March 2021, the Court of Appeals upheld the decision, arguing that the plaintiffs were already seeking legal redress in Brazil. In July, the London appeal court overturned the decision and granted permission to appeal on the basis that the case had “real prospects of success”. Failure to do so would risk real injustice. In July 2022, a Court of Appeal ruled that the English courts could hear the case. observing that “the vast majority of plaintiffs who have recovered damages have only received very modest sums in non-pecuniary damages for the interruption of their water supply.” The start of the judicial process was set for April 2024.

In March 2023, the scale of the class action lawsuit increased further, with the addition of 500,000 plaintiffs. BHP attempts to delay demand until mid-2025 were rejected by a London court in May 2023. On October 21 of this year the trial finally began. It would last almost a few days.

The agreement signed on October 25 includes BHP, Vale, Samarco and around half a dozen Brazilian authorities. Of the 42 civil claims against BHP, the October 25 settlement covers the most monumental and contentious. Its value – 170 billion reais ($31.5 billion) – is deceptive. Brazilian authorities may have reason to celebrate the result, as it comes close to the 175 billion reais sought in civil lawsuits in 2016. BHP CEO Mike Henry also seemed suspiciously pleased. claiming that the agreement would offer a long list of benefits including “expanded and additional programs for the environment and for people, including designated financing for the health system, economic recovery, infrastructure improvement and extensive compensation measures and income support, including for farmers, fishermen, Indigenous and Traditional communities and communities.”

TO sharp analysis by Tony Boyd Australian financial reviewhardly a forum known for its humanitarianism and bleeding hearts, it offers a quite different reading of the Brazilian efforts and the tactics employed by the mining giants. For Boyd it was evident “that during the last decade, BHP and Vale have surpassed the Brazilian federal government, and the statements of Minas Gerais and Espírito Santo, as well as the federal and state Prosecutors’ and Public Defender’s Offices.”

Much of this has to do, as Boyd points out, with the time value of money. Around 60% of the final agreement of R$ 100 billion will be paid over 20 years. Taking this time horizon into account, the nominal value reaches a net present value of R$ 48 billion. Using the net present value analysis also means that the commitment of R$ 32 billion to cover the cost of tailings extraction from the Río Doce and the compensation of R$ 30,000 for individuals and small businesses that opt ​​for the agreement, amounts to R $25 billion.

The financial burden arising from BHP’s compensatory commitments has has also been decreased due to the almost decade-long dispute resolution process, which in the meantime allowed the reopening of the Samarco iron ore mine to occur with healthy annual returns of $750 million.

Even now, BHP’s bland description of the catastrophe receives a coldly confident assessment. The company website. grades that since the dam break, Samarco operates “with a strong focus on safety and sustainability.” Relieving the use of dams has been possible thanks to the implementation of a “new filtration system”, while 80% of the tailings arising from operations “are now dry stacked, and the rest deposited in a confined rock pit” . Weak security for the hundreds of thousands of people affected that fateful November 2015.