BHP Billiton shares are back below $20 after sinking more than 8 per cent in response to revelations the penalties associated with the Samarco dam disaster may be worse than first thought.
A March quarter rally lifted BHP shares above $21 on April 21, but the stock slumped to $18.78 on Wednesday, down $1.96 or 8.2 per cent on the day.
BHP owns 50 per cent of Samarco, a Brazilian iron ore miner that shot to prominence after a tailings dam at its mine failed, creating a wave of mud that wiped out the town of Bento Rodrigues and clogged the Rio Doce river.
BHP told the market in March that a preliminary deal with the Brazilian government would cap the financial penalties for the Samarco partners at about 9.2 billion Brazilian Real, roughly $US2.58 billion ($3.4 billion).
The deal has not yet been fully ratified.
But this morning an independent Brazilian prosecutor announced he was pursuing BHP and Vale for 155 billion Brazilian Real, which according to BHP is the equivalent of $US43 billion.
The new claim is for compensation and reparations, and threatens to undermine the preliminary deal struck in March.
BHP said it had not received the new claim and was confident the March deal is the appropriate way to respond to the Samarco tragedy.
The March deal had the approval of Brazil's attorney-general and duly appears to have government support.
While the claim is being made on behalf of the Brazilian public, it is by an independent prosecutor with broad powers.
The prosecuting task force is demanding the two companies and Samarco provide ad initial payment of 7.8 billion reais within 30 days, according to a statement from the prosecutor's office.
The civil suit also challenges a previous agreement the companies signed with Brazil's federal and state governments.
In previous cases involving big corporations, large initial claims like this one have eventually been settled for much smaller amounts.
News of the Samarco lawsuit came as iron ore prices fell more than 4 per cent on Tuesday night, and copper prices also saw heavy falls. Tumbling metals markets sent BHP's London-listed stock down more than 6 per cent overnight.
Rio Tinto shares were down 6.47 per cent around midday, while Fortescue was also 4.5 per cent lower, despite revealing plans to pay down a further chunk of its debt.
Shares in OZ Minerals, Newcrest Mining and Whitehaven Coal were all more than 4 per cent lower.
One bright light for the sector is Mark Bennett's new exploration play S2 Resources, which has surged in recent days on strong drilling results.
S2 Resources' 13 per cent rise on Tuesday has been followed by a further 2 per cent rise today, as investors back the man who made Australia's best mineral discovery of recent times when he found the Nova nickel deposit in 2012.
While BHP shares have slipped sharply this week, the stock is still above the 10-year low of $14.20 recorded on January 21.
Meanwhile, Fortescue has revealed plans to repay $US650 million of the senior secured term loan that falls due in 2019.
Buoyed by stronger-than-expected iron ore prices, Fortescue said it would make the repayment despite the fact the debt was trading at around face value.
Many of Fortescue's recent debt repayments have been made when the debt is fetching less than its face value.
The repayment should be completed by May 16.
If completed successfully, Fortescue will have repaid a total of $US5.45 billion of its debt, and have gross debt of less than $US7 billion.
Wednesday's move comes after the miner announced plans to repay $US577 million of debt last week.
The company has paid back $US2.3 billion of debt this financial year, generating interest savings of $US164 million per year.
