The 1998 dam breach at the Los Frailes mine in Spain
In April 1998, a dam breach accident occurred in the tailings pond at the Los Frailes mine in Spain, which was then owned by Boliden's subsidiary, Boliden Apirsa S.L. ("Apirsa"). Large and successful remediation efforts were carried out in the same year, however, legal disputes regarding the costs of these efforts remain and court hearings will begin in July 2023.
Background
In April 1998, the dam at Apirsa's mine, Los Frailes, breached, resulting in the release of large quantities of metal-bearing water and tailings sand along the river Guadimar. The accident impacted large areas of agricultural land and affected areas 40 km downstream from the mining area, although the Donana National Park was not affected.
Mining operations were halted immediately and all available resources were mobilized to clean up the affected area, to limit the damage done, and to restore the natural landscape. The area was cleaned up by Apirsa in collaboration with the central government and the local government (Junta de Andalucía). Apirsa undertook to take the area closest to the mine (0-12 km) where approximately 70-80 per cent of the tailings sand had been deposited. No agreement was reached regarding the costs of the clean-up. By the end of 1998, the major part of the area had been cleaned up. Apirsa's total costs in respect of the dam breach accident were approximately EUR 115 million.
Production restarted at the mine in 1999, but the accident resulted in increased production costs and other operational problems which, in combination with low metal prices, resulted in the mining operations being terminated after two years and Apirsa applying for a "suspensión de pagos", a form of composition proceedings. The composition agreement was reached in October 2002, when more than 250 creditors were paid in accordance with the agreement.
The question of liability
Following the dam breach the prosecutor initiated a criminal investigation and it was determined that the accident was caused by design and construction errors in the dam, not by Apirsa's handling of the operations at the mine. In 2002, following the result of the criminal investigation, Apirsa initiated an action for damages against the companies responsible for the dam's design and construction, and their insurance companies. However, the Spanish Supreme Court rejected in final Apirsa's claim in January 2012.
Claim by the Ministry of the Environment
The Spanish Ministry of the Environment submitted a claim against Apirsa to pay approximately EUR 45 million. This, together with other factors, resulted in Apirsa initiating insolvency proceedings in January 2005, with the aim of ensuring a comprehensive and orderly liquidation of the company.
The bankruptcy
The receivers in bankruptcy have, within the framework of the insolvency proceedings, requested that Apirsa's parent company, Boliden BV, together with Boliden Mineral AB and Boliden AB, be held liable for Apirsa's shortfall in an amount which, according to the receivers in bankruptcy, totals approximately EUR 141 million. The amount includes an alleged and untried claim of approximately EUR 89 million from the local government (Junta de Andalucía) (as described in more detail under the next section, "The current suit").
The Junta de Andalucia suit
In May 2015, Boliden Apirsa S.L. was served with a summons for approximately EUR 89 million. Claims are also directed towards Boliden BV and Boliden AB. The suit has been brought by Junta de Andalucía which, already in 2002, initiated a corresponding suit. The suit refers to costs that the Junta de Andalucía alleges it incurred on Boliden Apirsa S.L.'s behalf in conjunction with the clean-up after the dam breach.
Boliden has disputed these expenses and the matter will now be tried by the equivalent of the district court in Seville. Boliden's opinion is that it will not suffer any significant financial harm as a result of the claims.