Brazil Dam Burst: BHP Shares Take a Plunge After Threatened Lawsuit Against Dam Owners

BHP shares have taken a plunge after Brazil threatened a lawsuit against the Australian mining giant. Shares in BHP Billiton Ltd. had fallen to what was a ten-year low on Monday. The Brazilian government is suing the Australian mining company along with their Brazilian partner, Vale, over a deadly Brazil dam burst earlier in November.

The Telegraph reported that The Brazilian Federal Government will begin their legal proceedings against Anglo-Australian company, BHP, and its partner, Vale, to cover the clean-up costs as well as damages from the waste water flood that devastated a village and polluted the River Doce on November 5. The Brazilian mine is operated by Samarco, in which both BHP and Vale each own a 50pc stake.

BHP confirmed on Monday that the death toll had risen to 13, with six people still missing. However, the missing people have long been presumed dead. Samarco continues to work closely with the Brazilian government and its authorities in efforts to relocate those who have been displaced by the flood from temporary shelters to rented housings. 

Just last week, the Australian mining giant had denied claims from the UN that high levels of toxic metals as well as other toxic chemicals had found their way to the River Doce. The company added that they were working closely with the UN in order to understand the basis of the report.

BHP and Vale have also announced that they have set up a voluntary, non-profit fund for the rehabilitation of the River Doce. The company did not specify as to how much money they would pledge towards the cause. The fund would reportedly be used to seek additional financial aid from other organisations.

The fallout from the Brazil dam burst comes as BHP, along with the rest of its peers, continue to battle declining prices in commodity that are forcing miners to cut back operations.

BHP Billiton is now feeling the pressure to end its progressive dividend, The Wall Street Journal reports. This means that the company is committed to either increase or maintain its payout to its shareholders, which is being given out twice a year. Last year, the mining group paid out $6.6bn in dividends.

Financial analysts at Investec said that a tragedy of this scale and caliber will be of high political interest and that BHP has to do all it can to repair the damage and to protect the interests of its shareholders, as well.