Samarco Disaster

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In November 2015 Brazil experienced its worst ever environmental disaster, when a dam in the state of Minas Gerais ruptured. The dam was located in a waste reservoir owned by the Company Samaroc. The operation was joint venture by Australian mining company BHP Billiton and Brazilian mining company Vale. This caused devastation and destruction to the surrounding communities and environment. The Samarco disaster has raised issues relating to role of shareholder and stakeholder theory in relation to management decision making. These theories will be discussed and what action BHP should take in order in order to balance the interests of their shareholders while ensuring they have adequately compensated the stakeholders who have been affected by …show more content…

Reports showed that the dam had a history of problems that was linked to poor construction in 2007. In 2014 the original designer of the dam was asked to review the dams condition. He reported that he saw ruptures in the dam wall and that Samarco needed to install monitoring devices, to ensure that if further deterioration occurred action could be taken to correct the problem. It appears that Samarco ignored this advice. The dam also had problems with drainage causing to much water in the tailing. Which eventually caused the eastern wall of the dam to collapse. Production had also been increased to minimise the impact on the company of a significant fall in the iron ore …show more content…

Samarco had their mining licence suspended by the Minas Gerais Government. They will be liable to pay for compensation to the individuals affected and for the remediation of communities and environment. They will also face legal claims in the form of criminal charges, potential civil charges from families and affected parties and class actions for communities. They will will face costs of rebuilding the dam if reopened. Their corporate reputation is jeopardized as they have had a had a disaster occur at one of their sites. This could mean that they have issues with safety standards and tailings at their other sites which may need to be

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