Michigan Pension Leads Suit Against Mining Giant Over Dam Disaster

A municipal pension fund in Michigan is leading a lawsuit against BHP Billiton Ltd, accusing the mining company of misleading investors about the safety of a particular project that ended in disaster last year.

BHP Billiton owns a dam in Brazil that burst in November 2015, leading to numerous deaths and criminal charges. It’s considered the worst natural disaster in the country’s history.

More from Reuters:

In a complaint filed on Wednesday in the U.S. District Court in Manhattan, investors led by the Jackson County Employees’ Retirement System in Michigan said BHP inflated the price of its American depositary receipts by ignoring safety risks and overstating its commitment to safety before the disaster.

Four BHP officials were also sued, including Chief Executive Andrew Mackenzie and Chairman Jac Nasser.

BHP said in a statement emailed to Reuters on Thursday that it disputed the allegations of the complaint.

[…]

Wednesday’s lawsuit follows the Nov. 5, 2015 dam burst in Minas Gerais, Brazil’s main mining state, at the mine run by Samarco, a joint venture between BHP and Brazil’s Vale SA.

The burst unleashed huge quantities of mud and waste that destroyed a nearby village and killed at least 17 people, in Brazil’s worst environmental disaster.

The price of BHP’s ADRs closed that day 20 percent below where they traded before the dam burst, and the complaint said BHP should compensate ADR investors for that decline.

“Defendants knew or recklessly disregarded the precarious condition of the Fundão dam and Samarco’s tailings facilities,” causing harm to investors when the truth came out, it said.

The lawsuit seeks class action status for ADR investors between Sept. 25, 2014, when BHP touted its focus on safety in a U.S. regulatory filing, and Nov. 30, 2015, when Brazil sued.

The name of the case is Jackson County Employees’ Retirement System v. BHP Billiton Ltd et al, U.S. District Court, Southern District of New York, No. 16-01445.

Photo by  Lee Haywood via Flickr CC License