The Brazilian mining disaster of 2015 was the worst environmental catastrophe in history but many are still pushing Vale to pay for its toxic effects. The miner’s families who have been sickened by the pollution say they will continue fighting until justice is served and their demands met, even if it takes another decade.
The “vale dam collapse 2019” is a disaster that occurred in Brazil on January 25th, 2015. Three years later, the “Deadly Mining Disaster Still Tests Vale Three Years Later.”
Costs associated with the incident have continued to rise, Brazilian authorities have been hesitant to allow further mining due to safety concerns, simmering tensions between the miner and locals have resulted in a slew of lawsuits, and some investors believe it is too early to reinvest in the company.
Vale’s effort to emerge from the shadow of its history comes at a time when the world’s biggest iron-ore producer is attempting to define its future. According to a source familiar with the situation, the firm is expected to decide before an investor conference in November whether to develop its battery-metals business, a diversification aimed at tapping demand for electric cars, or split it off and focus on its main iron-ore business.
“Brumadinho will always remain in our thoughts as a reminder of how things may go wrong,” Chief Executive Eduardo Bartolomeo said at a late-year investor conference. “Everything that we are going through within Vale has been driven by the calamity,” says the narrator.
Vale’s dam at Brumadinho collapsed on January 25, 2019, dumping the equivalent of 4,700 Olympic swimming pools of muddy tailings—the rock left over after the iron ore has been extracted—down the valley.
Vale has now settled with state and federal authorities for almost $7 billion in related obligations, but the money will continue to flow from its bank account for many years.
Residents of Brumadinho are planning festivities to commemorate the 270 people murdered when the dam collapsed.
In Nova Lima, an abandoned house at the foot of a dam.
Furthermore, Vale anticipates additional expenses of $300 million to $500 million each year for the next decade as it tries to demolish the other 23 buildings with the same upstream architecture as the Brumadinho dam.
Remote-control diggers guided from an office hundreds of kilometers away help chip away at piles of debris from decades of mining at certain locations to assure safety.
Since the Brumadinho accident, a Vale representative claimed the firm has strived to become a safer and more sustainable corporation. It has implemented new risk rules, established responsibilities to guarantee more safety, and strengthened the security of its other tailing dams, she noted.
Vale has built signs at its most vulnerable dams, suggesting escape routes in the event that they fail and directing inhabitants where to run if they hear a warning siren.
Vale’s mission continues to increase in scope. Prosecutors warned last month that following the region’s greatest rain in years, 18 dams owned by Vale in Minas Gerais state, where Brumadinho is situated, required additional steps to assure their safety.
Vale’s representative said that the business will follow the rules.
According to experts, safety worries caused one Brazilian local government to take longer than anticipated to grant Vale a permission to expand its Brucutu iron-ore mine. According to a Vale spokesman, the project will now start in the fourth quarter.
Vale also has to deal with the unforeseen implications of some of its safety procedures.
The trees near the riverbank in Nova Lima have been scarred by recent floods. The floods are being blamed on a massive wall erected by Vale in 2020 to protect the valley in the event that a neighboring dam falls. The wall blocked water from running down the valley during exceptionally strong downpours during Brazil’s rainy season, resulting in severe flooding.
A farmer and community leader in Nova Lima, Leonardo Tolentino, examines maps of the dams that encircle his property. ‘Vale has taken over and screwed up a lot of this area,’ he adds. Locals say they now feel like they are living in a big mining complex, with warning signs strewn across the countryside and tall stone barriers erected downstream from the most hazardous dams.
Sandra Ribeiro’s house looks out over Vale’s massive stone wall, which was constructed to protect people and rivers farther down the valley if the dam were to fail. Vale said it is looking at ways to enhance its drainage system after a recent rainfall caused the wall to hold so much water that it flooded all of the roads leading to Ms. Ribeiro’s house, leaving her and her neighbors stuck for days.
Ms. Ribeiro stands in her yard, where she and her husband have been constructing a modest evangelical church. She claims that following the Brumadinho tragedy, many residents have turned to God for solace. ‘Every second, I think about God,’ she adds. ‘We’re in his hands,’ says the narrator.
Vale built a 700-foot-wide stone barrier as tall as a 10-story building at Nova Lima to prevent the probable collapse of another mine-waste dam, which the firm claims is on the verge of collapsing.
However, amid heavy rains earlier this month, the building blocked water from flowing down the valley, resulting in floods that kept residents for days without power, running water, or an escape route.
“It was horrifying,” Sandra Ribeiro, who lives near the massive wall, said. No one could get in or out of her remote village since all of the roads were flooded. “We were utterly stranded in this place.” She noted that many residents still live in terror, waiting for the sound of a warning siren to signal the collapse of another dam.
Vale is evaluating the barrier to see if adjustments are needed, according to the spokesperson.
In addition, the corporation may face high-profile judicial actions in the aftermath of the accident. In 2020, state prosecutors indicted Vale’s former CEO, Fabio Schvartsman, and ten other employees with murder and environmental offences. They’ve denied any misconduct, and the matter has been moved to federal courts.
Meanwhile, some investors are hesitant to invest in Vale due to growing pressure to apply environmental, social, and governance (ESG) principles to the firms they invest in.
“While we recognize the company’s improvement, we believe it is too soon to revisit investments,” said Adam Matthews, director of ethics and engagement at the Church of England Pensions Board, which manages $3.3 billion. In the aftermath of Brumadinho, the fund, which has long been vociferous on ESG concerns, divested its holding in Vale. It said it wanted to see independently verifiable proof that Vale was following global tailings standards and that local communities’ concerns had been addressed.
Investors are increasingly noticing the adjustments Vale has made in relation to ESG problems, according to a Vale representative.
According to RBC Capital Markets, Vale’s stock trades at a discount to its rivals, with 5.2 times expected profits for this year against 8.4 times for a basket of significant miners. To be sure, others argue that Vale’s discount reflects the fact that the company is based in a growing nation with an upcoming election.
Mr. Bartolomeo, who took over as CEO of Vale soon after the tragedy, claims that Vale’s base-metals sector, which mines nickel and copper, is undervalued by investors. Nickel and copper are two commodities viewed as critical for the move to cleaner energy.
According to a source familiar with the situation, Vale aims to determine whether it should only concentrate on its core iron-ore business before a November investor conference in New York. According to the individual, the corporation might spin off its base-metals business, sell it, or seek an initial public offering of the unit. Vale’s base-metals industry, according to RBC, may be worth $17 billion on its own.
Vale might also go at a number of base metals joint ventures, such as with Glencore PLC for nickel production and First Quantum Minerals Ltd. for copper, according to the source.
Mr. Bartolomeo seems to be in favor of making Vale more diverse. “I believe being in one geography in one mineral is a really perilous bet to make,” he remarked at the company’s investor day in November last year. The overwhelming bulk of Vale’s profits come from its iron-ore activities.
Analysts believe Brumadinho will have a role in the decision. According to Tyler Broda, an analyst at RBC, the tragedy has “helped to underscore the advantages of diversification.” “Vale’s road to rehabilitation has undoubtedly been a difficult one.”
Following recent flooding, residents in Nova Lima have expressed fear that neighboring rivers and streams may carry mining waste.
Alistair MacDonald and Samantha Pearson may be reached at [email protected] and [email protected], respectively.
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