(MENAFN- ProactiveInvestors)Shares in BHP Billiton Limited (LON:BLT ASX:BHP) sank back below the $20 mark by more than 9% after it emerged penalties associated with the Samarco dam disaster could be heavier than anticipated. The mining disaster at Brazil's Rio Doce was one of the worst environmental disasters in history. In November last year an iron ore tailings dam failed resulting in a catastrophic wave of mud that wiped out the town of Bento Rodrigues killing 19 people. The mining facility was operated by Samarco a Brazilian iron ore miner which is 50% owned by BHP. A preliminary deal with the Brazilian government was meant to cap the penalties at around 9.2bn Brazilian Real (£1.78bn) but the deal has not yet been fully ratified. However an independent Brazilian prosecutor announced he was pursuing BHP and joint owner Vale for 155bn Brazilian Real (£30bn) for compensation and reparations on behalf of the public which threatens to undermine the preliminary deal. BHP told the press that it had not received the new claim and was confident that the original deal with the authorities was the appropriate way to respond to the disaster. Prosecutors are demanding two companies and Samarco provide an initial payment of 7.8bn Reals within 30 days. An estimated 60mln cubic metres of toxic iron waste flowed into the Doce River after the dam failed reaching the Atlantic Ocean 17 days later and dispersed a mud plume 1.5 miles out to sea. The total environmental impact is unclear but plant and animal life in the area was devastated. Toxic heavy metals from the mud flow contaminated the river and surrounding area leaving it uninhabitable. In February police filed homicide charges against six Samarco executives - including the chief executive at the time of the incident. The civil suit called on its co-owners to completely compensate for the disaster. But Shore Capital expects that a much lower settlement is more likely. Further claims from Brazilian authorities will likely cause renewed market uncertainty around the company said analysts at Killik. Shares were down over 9% to AUS$18.79. -UPDATE ANALYST COMMENT DETAIL-
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