BHP investors dial up scrutiny of fatal dam disaster remediation

Australian mining giant BHP is facing pressure from investors to accelerate the clean-up and reparation works in the areas of Brazil left devastated by the deadly collapse of a mine waste dam in 2015.

During two weeks of talks with communities still dealing with the fallout from the disaster, the chairman of a coalition of 86 British pension funds managing $630 billion heard from residents and other stakeholders who said that BHP’s efforts to rebuild housing and improve water quality in the affected areas were taking too long.

“One of the purposes of the trip to Brazil was to escalate engagement,” said Doug McMurdo of the Local Authority Pension Fund Forum (LAPFF), which represents about 40 BHP shareholders.

“Having seen the impact of the dam collapse with our own eyes, LAPFF can ask more targeted and hard-hitting questions now,” he said.

The bursting of the Fundao tailings dam in Mariana, which BHP owned with Brazilian miner Vale through their 50:50 Samarco iron ore joint venture, is considered Brazil’s worst ever environmental disaster. Its collapse in November 2015 killed 19 people and spewed millions of tonnes of waste into the local waterways.

Loading

McMurdo, who met with Vale representatives in Brazil, said he was “beyond being disappointed” that BHP had chosen to decline an invitation to meet despite providing the investor group with many years of regular engagement.

“To be denied access for a completely incomprehensible reason hits a very raw nerve,” he said. “It also raises a lot of questions for LAPFF members, and other investors, about how effective the company’s leadership and corporate governance are when the company refuses to engage on reasonable – and, in LAPFF’s view, important and necessary – investor asks.”

McMurdo said he believed shortcomings in the structure of BHP and Vale’s Renova Foundation, established in 2016 to progress remediation and compensation programs for the environment and communities affected by the Samarco tragedy, was contributing to the “poor and drawn-out” execution of necessary works.