A class action lawsuit against BHP Billiton's joint venture partner in the deadly Brazilian iron ore mine catastrophe has been filed in a New York court so investors can sue Vale for financial losses they have suffered.
Corporate litigation firm Bronstein, Gewirtz & Grossman initiated the legal action on Tuesday, accusing Vale of making false statements and failing to disclose material adverse facts about the Samarco iron ore project.
BHP, a 50 per cent partner in the Brazilian mine, is not named as a target in the lawsuit.
The securities class action has been launched to attract investors stung by share price losses since Samarco's tailings dam failure on November 5, and appears to be testing the water for shareholders to join as plaintiffs before a February deadline.
Vale's securities (American depository receipts) listed on the New York Stock Exchange have slumped 32.5 per cent since the disaster, including a 3.1 per cent fall on Tuesday after the class action was launched.
BHP's shares listed on the Australian Securities Exchange have plummeted more than 25 per cent over the same period. The shares were down 0.3 per cent to $17 at 11.09am AEDT on Wednesday.
The accident caused the equivalent of 20,000 Olympic swimming pools of mud waste to smash into a small town of 650 people and is affecting more than a dozen riverside towns and cities on its way to the Atlantic Ocean 500 kilometres downstream.
At least 11 people were killed and BHP said on November 19 that a further eight were still missing.
Vale and BHP are facing government probes and legal actions over the incident.
The latest complaint lodged in the US District Court for the Southern District of New York, alleges that Vale misled or failed to disclose the bursting of the Fundao Dam that resulted in the spillage of toxic waste.
BHP has refuted claims from the United Nations that waste unleashed into the River Doce by the dam-wall failure had high levels of toxic heavy metals, arguing the substances "will behave in the environment like normal soils" and are chemically stable.
It is understood BHP believes, based on advice from Vale and Brazilian government environmental experts, that the water and dirt was not toxic when it left the dam. The contrasting viewpoint to the UN may be attributed to the detection of high levels of metal collected from riverbeds downstream after the waste gushed through.
The corporate litigation firm also alleges Vale had a contract with Samarco that allowed Vale to deposit iron ore waste from its treatment plants from Vale's Alegria mine into the Fundao Dam. It is believed the arrangement had existed since the 1990s.
Thirdly, the lawsuit said Vale's programs and procedures to mitigate environmental, health and safety incidents were "inadequate".
EMERGENCY RELIEF FUND
A Vale spokeswoman said: "We have not reviewed any lawsuit that has been filed, but will make whatever response is merited in proper court pleadings, when they are due."
BHP and Vale have not disclosed what caused the accident or the estimated total cost. As an initial step, they have set up a $US100 million emergency relief fund, through Samarco, and agreed to pay a preliminary deposit bond of 1 billion reals to cover compensation and clean-up costs.
Vale's major overseas listing is in New York and the lawsuit will be an opportunity for American investors to seek redress. BHP has ADR's trading in New York, but the bulk of its shares are listed in Australia and London.
The class action is open to investors who bought shares in Vale between March 21 and November 30 this year.
Bronstein, Gewirtz & Grossman did not respond to requests for further information about the lawsuit. The firm markets itself as a boutique corporate litigator with expertise in the "aggressive pursuit of litigation claims on behalf of our clients, representing institutions and other investor plaintiffs in class action securities litigation".