Lawsuits Accuse Big Banks of Promoting Vale’s Environmental Damage in Brazil
Milberg has filed a pair of proposed class action lawsuits in New York federal court alleging that several large banks provided financing to mining company Vale, S.A. that promoted environmental degradation and exacerbated the risk of catastrophic dam collapses in the Brazilian state of Minas Gerais.
The plaintiffs in the cases, the City of Ouro Preto and the Antonio Pereira and Pasargada Associations, claim that, since 2011, Merrill Lynch, Barclays Capital, Citibank, Citigroup Global Markets, JPMorgan, and JPMorgan Securities LLC have lent $17.2 billion to Brazilian mining company Vale S.A., which has built high risk tailings dams in an area known as the “Iron Quadrangle.”
Without the defendants’ funding, the suits say, the construction and operation of Vale’s dams—and the harms they’ve caused to the environment and class members—would not have been possible.
The physical, financial, and emotional toll continues to mount, transforming what was once a thriving region into a landscape echoing with sirens, shrouded in dust, and etched with the worry lines of its people.
The financing enabled Vale to expand its mining operations in the Iron Quadrangle, resulting in significant air and noise pollution. In addition, the suits say, Vale’s tailing dams in Minas Gerais contain toxic waste from mining operations that are at risk of failure.
“The relentless threat of dam collapses in Minas Gerais casts a long, deep shadow over the municipalities and residents alike,” the complaints allege. “The physical, financial, and emotional toll continues to mount, transforming what was once a thriving region into a landscape echoing with sirens, shrouded in dust, and etched with the worry lines of its people.”
The plaintiffs’ concerns are well-founded. Vale is behind the largest environmental disaster in Brazil’s history—the collapse of the Fundão Dam in 2015. Another major collapse of a Vale-owned dam occurred in 2019. In both instances, Vale ignored warnings that the dams were at high risk of failure.
“This ever-present risk of injury, death, and destruction has, and continues to, damage the health, safety, and well-being of plaintiff,” the suits claim. “This creates adverse conditions for their social and economic activities by devaluing plaintiff’s property, community, health, welfare, and environment.”
Defendants could have demanded accountability from Vale by requiring it to assess the environmental risks of its mining operations, plaintiffs say. Instead, they “did absolutely nothing” and, “mesmerized by their profits,” went on unconditionally funding Vale’s Iron Quadrangle operations.
As defendants fund each dam, they enable Vale’s continuing malfeasance and the resulting harm and damages to plaintiff while they, as major investors in Vale, continue to garner huge profits.
Plaintiffs are suing under Brazil’s National Environmental Policy Act in U.S. District Court for the Southern District of New York, citing the banks’ financial agreements with Vale that state the debt securities are to be governed by New York law. They further assert violations of their Brazilian constitutional rights to security, property, and social well-being.
Milberg’s lawsuits could not only provide relief for ongoing damages suffered by class members, but also ensure greater accountability moving forward. As the complaints note, Vale is constructing the Belo Monte dam in Amazonia that will displace 40,000 locals and has obtained a license for a new iron ore dam in Brucutu. Vale expects to products 36 to 40 million tons of iron ore in 2023 and 50 to 55 million tons in 2026.
“As defendants fund each dam, they enable Vale’s continuing malfeasance and the resulting harm and damages to plaintiff while they, as major investors in Vale, continue to garner huge profits from the increased stock values generated by Vale’s dangerous construction, maintenance, and improper storage practices that have injured plaintiff,” the suits conclude. “Their only hope is for the success of this litigation.”
Previously, Milberg worked to expand justice for victims of the 2015 Fundão Dam collapse in a class action lawsuit being pursued in UK courts. That case—like these cases—involves the issue of competing international jurisdictions.
In a globalized world, corporate polluters and the companies that finance them are not always local. Corporations that operate transnationally have expanded reach—and expanded ability to cause harm. To effectively check the power of corporations that operate in many countries, law firms today must be able to serve a broad range of clients across national borders.
Milberg’s Environmental and Toxic Torts Litigation practice is a global force for environmental justice that holds corporations accountable for harming natural resources and public health. As an internationally-recognized plaintiffs’ firm, Milberg has the strength, attorneys, and resources to represent clients seeking to enforce their environmental rights against well-financed corporations—wherever they operate.