Exclusive | BHP DAM DISASTER
Senior executives working for mining giants BHP and Vale were aware of significant problems at their jointly owned Samarco dam years before it burst, causing one of Brazil’s worst environmental disasters, court documents allege.
The 2015 collapse of the tailings dam killed 19 people and spilled about 40 million cubic metres of sludge into 600 kilometres of river, causing economic and environmental chaos as well destroying the villages of Bento Rodrigues, Paracatu de Baixo and Gesteira.
Court documents including board meeting minutes and expert reports suggest Samarco executives and board members, including BHP and Vale-appointed directors, knew of mounting problems with the dam’s structure and were aware of adverse risk assessments years before the collapse. However, the directors did not have downstream villages including Bento Rodrigues relocated despite the board repeatedly expressing concerns about the dam and asking for relocation costs.
The documents form part of a criminal case against 21 Samarco employees and directors, whom Brazilian federal prosecutors accuse of negligent homicide and environmental crimes. Individuals charged include BHP’s former nominees to the Samarco board Jimmy Wilson, Margaret Beck, Jeff Zweig and Marcus Randolph.
Mr Wilson and Mr Randolf have both served on BHP’s group management committee but no longer work at the company.
Mr Wilson is now at grain growers co-operative CBH while Mr Randolph moved on to chair US-based Boart Longyear. Ms Beck, a 33-year BHP veteran, left the company last month.
Several Samarco executives, the company, BHP Billiton Brazil and Vale were also charged. The charges are expected to be strongly contested, with BHP publicly vowing to staunchly defend the case.
The minutes of meetings held in Perth, London, Melbourne, Dubai and in Brazil, and obtained by the Herald, suggest the Samarco board was aware of problems shortly after the dam began operating in late 2008.
Minutes from a July 2009 meeting attended by Mr Randolph and another BHP representative, John Slaven, note the board was “worried about the efficacy of the proposed solution” to fix seepages at the dam. Seepages can be an early sign of potential dam weakness.
The board appointed a Vale team to supervise Samarco’s investigation and report back.
That report was presented in Melbourne later that year. The board, including BHP’s representatives Mr Randolph, Mr Slaven and Ian Ashby,were told investigators had concluded the leaks were caused by a construction fault, remediation had commenced and plans were in place to restart operations. The board approved the report, but problems persisted.
Mr Slaven said he left the board in 2010 and declined to comment on matters subject to legal proceedings, as did Mr Randolph. Mr Ashby and other directors did not reply to requests for comment. Neither Mr Slaven nor Mr Ashby have been charged.
In 2011, an independent Tailing Review Board panel recommended to the board that Samarco improve the dam and communicate an emergency plan to nearby villages.
The board then requested Samarco “evaluate the cost and implications of relocating of downstream communities” and investigate alternative solutions for storing mining waste, given its plans to expand the mine’s output and thus increase waste volume.
Crucially, it requested Samarco “maintain focus on the identified catastrophic risks, taking necessary steps to avoid them”.
Another call for Samarco to talk to the local communities about emergency plans and set up a warning siren came again in 2013. A technical report that had been commissioned by state authorities as part of the company’s operational licence renewal process made an emergency contingency plan conditional for approval “given the presence
of [nearby] Bento Rodrigues”.But a siren was not installed and local residents say drills never took place even though the licence was granted.
The board, meeting in Dubai that year, was recorded as emphasising that “the tailings were still a point of great preoccupation, especially considering future storage needs”. They requested a contingency plan by the following meeting.
The minutes of that and subsequent meetingsdo not record any such discussion.
Two years later and four months before the dam failed, two external inspectors and a Samarco employee observed further leaks.
Monitoring equipment showed the dam’s risk rating was at 1.3, exceeding a baseline 1.5 rating which was the minimum to avoid failure. Even so, consultants VOGBR issued a report declaring the dam stable. Prosecutors point to this as a “false and misleading declaration of stability”.
At the last board meeting before the dam collapsed, held in Perth on August 8, 2015, minutes record a recommendation for a study to potentially raise the dam wall further to “delay requirements for a new dam … until 2023”.
On November 5, the dam failed.
Brazilian federal prosecutor Jose Adercio Sampaio told the Herald late last year he was confident of securing convictions.
“The accusation is that they knew the risks. They knew it could burst,” he said.
“They should have taken steps to avoid the crime; instead, they increased production.” A BHP spokesperson said the company had “no reason to believe BHP people knew the dam was at risk of failing”. “We reject outright criminal charges … and will continue in our defence and support of affected individuals.”
Phi Finney McDonald principal lawyer Brett Spiegel said the firm was “looking forward to holding BHP accountable” through the Impiombato class action in Melbourne.
The disaster has cost the joint venture close to $2 billion in compensation to date, on top of fines and production losses. An additional $55 billion civil lawsuit brought by Brazilian prosecutors is suspended until 2020.
Last month, another Vale-owned tailings dam collapsed killing an estimated 300 people, also without alarms sounding.
The latest disaster put Vale and all its operations on notice. It also put a hold on new licences, including the one Samarco was hoping to obtain to restart operations this year.
Over the weekend, Vale chief executive Fabio Schvartsman and several other senior executives resigned after state and federal prosecutors recommended their removal late on Friday.
At results announcements this month, BHP chief executive Andrew Mackenzie said “we are committed to learn from this”.
“We will act with even greater care and attention to make sure our employees and communities are not in harm’s way.”