Mining Giant Vale Fined Over R$11B for Dam Burst in Brazil

By Lise Alves, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – In the wake of the Brumadinho dam disaster and while firefighters are still looking for more than 300 people missing since the Feijão dam burst on Friday afternoon, state and federal agencies announce heavy fines to be paid by the dam’s owner, Vale, totaling at this time at least R$11 billion (almost US$3 billion).

Of the R$11 billion, R$5 billion would be exclusively ‘to guarantee reparation of damages caused to the victims’, stated the Minas Gerais Prosecutors’ Office (MPMG).

“The mining company is responsible for hosting, sheltering in hotels and inns, leasing real estate, paying the costs related to transportation, transportation of movable property, people and animals, as well as total cost of food, supply of drinking water,” said the MPMG statement.

In the request, the prosecutors also point out that, according to the company’s own information,
‘Vale registered a net income of R$8.3 billion in the third quarter of 2018 alone and, in view of the occurrence, it is essential that such amounts are not distributed among shareholders and investors of the company, but reverted to the environmental recovery measures and repair of the damages’.

In a previous decision, on Saturday, a court in Minas Gerais had already blocked R$5 billion of Vale’s assets to be used to repair environmental damages.

Brazil’s Institute for the Environment and Renewable Natural Resources (IBAMA) has also fined Vale in R$250 million.

“Vale is being fined for causing pollution that could result in damage to human health; making an urban or rural area unfit for human occupation; causing water pollution that necessitates the interruption of water supply; causing, by the emission of effluents or materials, the perishing of specimens of the biodiversity and by throwing tailings of mining in water resources,” said the statement released by Ibama.

In a statement Sunday night (January 27th) Vale informed its investors that it had approved ‘the suspension of the Shareholder Remuneration Policy, and therefore the non-payment of dividends and interest on capital, as well as any other deliberation on shares buyback, and the suspension of the variable remuneration payment for executives’. 

The Feijão dam burst on Friday, January 25th, on the outskirts of Brumadinho, burying a great part of the surrounding countryside, houses as well as Vale’s administrative center and restaurant. More than 300 people are still missing.