The BHP Group Ltd (ASX: BHP) share price has drifted lower this morning after being hit with a major damage bill in relation to the Samarco dam failure.
In morning trade the mining giant's shares are down almost 1% to $37.02.
What has happened?
According to the BBC, the company is facing a US$5 billion claim for damages over the dam collapse at Samarco, Brazil in November 2015.
Law firm SPG claims that the company "knew of the risks" at the mine and has filed the claim on behalf of 235,000 Brazilian claimants at Liverpool's High Court. This is the largest claim in UK legal history.
SPG's partner, Tom Goodhead, said: "The repeated warnings and recommendations of dam safety experts were acted upon too slowly, or sidestepped entirely."
He added: "Driven by concern for declining revenues amidst the falling market price of iron ore, the company took risks, increased production and turned a blind eye to dangers that ultimately claimed lives and destroyed communities."
Mr Goodhead believes "BHP was woefully negligent in its duty of care and the damages sought are entirely commensurate with the devastation the company has wrought upon the people of Minas Gerais, Espirito Santo and Brazil."
What now?
This morning the company responded to the news, confirming that it has been served with legal proceedings filed in the Business and Property Courts of Liverpool. The company advised that it "intends to defend the claim."
Whilst this claim could be a major blow to the company, I feel it is a little too soon to react to it.
For now, I would still be a buyer of BHP's shares and those of rivals Rio Tinto Limited (ASX: RIO) and South32 Ltd (ASX: S32), though it may be worth keeping a close eye on trade talks between the U.S. and China. If things escalate and it derails global economic growth, it could put pressure on commodity prices.
