Brazil Sues $BHP for $43 Billion, Shares Clown-Punched Lower

The Brazilian government is suing Samarco, who is owned by both BHP and VALE. As a result, shares of BHP are plummeting in Asian trade this evening, off by more than 8%. This is a massive decline for a mega cap stock.

The reason for the suit: Samarco caused a fucking dam collapse that resulted in the death of 19 people and subsequent pollution of the entire region.

The 359-page lawsuit, which is also against the two states impacted by the spill and the Federal Government, is the result of a six-month investigation led by a task force set up after the disaster, prosecutors said in a statement.

The total damages, prosecutors said, were calculated based upon the cost of the Deepwater Horizon oil spill in the United States — BP’s total pre-tax charge for that spill reached $US53.8 billion ($71.89 billion).

Prosecutors demanded an initial payment of 7.7 billion reals ($2.89 billion).

Vale and Australia’s BHP both said they had not received formal notice of the claim.

However, BHP said in a statement to the Australian Securities Exchange that it was “committed to helping Samarco to rebuild the community and restore the environment affected by the failure of the dam”.

It said that a separate lawsuit that Samarco, Vale and BHP settled with Brazil’s Government in March, in which the companies would pay an estimated 20 billion reals ($7.51 billion), was the best way to repair damage caused by the spill.

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“We believe that the agreement (once approved by the court) provides the long-term remedial and compensation framework for responding to the impact of the Samarco tragedy and the appropriate platform for the parties to work together,” BHP said.

Federal and state prosecutors did not form part of that settlement, which they criticised, saying it was insufficient and lacked the legal mechanisms to ensure the companies would fulfil their obligations, making it little more than a “letter of intent”.

Nothing to see here, other than criminal negligence on a monumental scale.

Both Asian markets and U.S. futures are indelibly lower.

“Equity market sentiment seems to be rolling over globally as the wind begins to come out of the oil price rally,” said Angus Nicholson, market analyst at spreadbetter IG, in a note Wednesday.