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BHP Billiton is facing the threat of a class action suit in Australia over the Samarco mining disaster in Brazil, which knocked an estimated A$25bn (£14bn) off its market value in the course of a month.

Lawyers at Melbourne-based Phi Finney McDonald said it was preparing to file an action alleging that BHP engaged in “misleading or deceptive conduct” and breached its obligations to make “continuous disclosures” to its shareholders.

Brett Spiegel, principal lawyer, said that from 2013 BHP was aware that its Samarco joint venture in Brazil was “behaving in ways that they were not paying attention to” and that it “failed to ensure that appropriate safety measures were in place”.

On November 5, 2015 a dam at Samarco’s iron ore mine collapsed, releasing a wave of wastewater into a river valley that destroyed two towns and killed 19 people. Mr Spiegel claimed that the company “knew of the imminent risk that the dam would collapse”.

Samarco is a joint venture owned 50-50 by BHP and its Brazilian counterpart Vale, operated by a separate management team. The mine has been suspended since the accident and its owners are locked in protracted negotiations with the government of Brazil and state and federal prosecutors to reach a comprehensive settlement to competing civil claims.

Mr Spiegel said Phi Finney McDonald had spent six months combing evidence acquired from prosecutors in Brazil to build its case. The firm is looking to represent shareholders in Australia, South Africa and the UK who bought the stock between October 21, 2013 and November 9, 2015, and who lost out when the value of BHP’s shares plummeted in the weeks following the accident.

BHP’s Sydney-listed shares fell 22pc over the course of November 2015 and 23pc in London, though they are now trading well above those levels.

“We are liaising with institutional shareholders and we have had a strong response from them,” Mr Spiegel added.

Phi Finney McDonald was formed last year by a trio of former lawyers from Slater & Gordon.

Last month BHP and Vale said they had been granted an extension until June 25 to negotiate a settlement to civil claims relating to Samarco. The miners have been funding a foundation that has been working to restore the local environment and rehouse victims of the disaster.

BHP declined to comment on the class action suit.

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