One year on, Brumadinho still cries for justice

One year on, Brumadinho still cries for justice Photo: Ricardo Stuckert/FP

Walking on the streets of Brumadinho, the small town south-west of Brazil’s sixth-largest city Belo Horizonte, the overriding sensation is of a community in mourning. At the entrance to the town, sitting atop a neatly mowed grassy knoll is a monument bearing the name of the municipality, which over the last 12 months has been vandalized time and time again. Currently, it reads: “Vale, murderers! 270 dead, it hurts so much!”

The target of this outrage is Brazilian mining giant Vale, which was once the biggest employer in Brumadinho. Around town, billboards bearing the company’s name have been desecrated, with locals painting over the Vale logo, daubing “murderers” and “we want justice!” in its place.

</p> <p>On January 25, 2019—one year ago to the day—an <a href="">iron ore tailings dam belonging to Vale collapsed</a> to the east of Brumadinho. The incident caused approximately 12 million cubic meters of mud to spill into the surrounding region, tearing through the Vale mine cafeteria and killing 270 people—11 of whom have yet to be found.</p> <p>The sludge that rolled into the nearby Paraopeba river <a href="">traveled all the way to the São Francisco river</a>—some 200 kilometers away as the crow flies and considerably further following the river&#8217;s course—which is one of the most important sources of water for Brazil&#8217;s impoverished Northeast region.</p> <p>While Brumadinho itself did not suffer structural damage from the dam failure—as it is built on high land, overlooking the river valley—the human damage in the small town was unfathomable. In a municipality of fewer than 38,000 people, almost every resident lost a family member or friend in the tragedy.</p> <p>Astoundingly, 365 days later, rescue operations are still in progress, as firefighters continue to excavate the area still buried in mud in what is now the biggest search mission in Brazil&#8217;s history. Medical examiner&#8217;s offices in Brumadinho are still receiving fragments of corpses for identification.&nbsp;</p> <h2>Cry for justice</h2> <p>Police investigations found that Vale and German consultancy Tüv Süd had been issuing <a href="">fraudulent safety reports</a> for at least ten of the company&#8217;s mining dams—including that which collapsed in Brumadinho—and the Brazilian firm had also been considered amiss in its planning for emergencies, principally with regard to the decision to install the mine&#8217;s cafeteria facilities directly downstream from the dam.</p> <p>The main cause of the catastrophic loss of life in the dam failure was that the collapse happened at lunchtime. The cafeteria was obliterated by the wave of iron ore tailings.</p> <p>Until today, no-one has been punished for the tragedy. As of last week, no charges had even been brought against Vale, that is, before Minas Gerais state prosecutors filed a complaint on Tuesday against the mining company, Tüv Süd, and 16 individuals for 270 counts of first-degree murder.</p> <p>The accusation states that Vale and Tüv Süd were aware of the critical situation of the Brumadinho dam and worked together to hide this information from the public. The German company audited the dam and signed the reports attesting to its safety, the contents of which the prosecution believes to have been forged.</p> <p>Willian Garcia Pinto Coelho, one of the prosecutors responsible for filing the complaint, said that Vale had a &#8220;system&#8221; of putting pressure on auditing companies. &#8220;It was based on retaliation and reward. Companies that did not agree to enter into collusion and disagreed with the corporate objectives of the work were retaliated against and removed from the contracts. Tüv Süd gave into the pressure from Vale. </p> <p>It deliberately chose to enter into illicit collusion and was rewarded for it. Tüv Süd began to take a leading role in the risk management of the dam, in a position that contradicted the independence and autonomy that should be given in an audit,&#8221; he said.</p> <h2>Trying to rebuild Brumadinho</h2> <p>Brumadinho is today living with a peculiar mixture of grief, indignation, commercial expansion, and business as usual. While on the one hand, compensation payments have allowed a part of the population to consume material goods or open businesses, the use of antidepressant medications in the town has increased 59 percent. </p> <p>The town&#8217;s economy is thriving due to the influx of work to rebuild the surrounding area, but <a href="">suicide risks have increased five-fold</a>, and attempted suicides have risen over 50 percent.</p> <p>All the while, the shuttle buses taking workers over to Vale&#8217;s operations outside town still run like clockwork, a daily reminder to many locals that they will never see their loved ones again.</p> <h2>A &#8220;money-making machine&#8221; </h2> <p>Exactly 354 days after the Brumadinho disaster, Vale shares recovered their pre-tragedy prices on the São Paulo stock exchange. While initially shocking that the company would recuperate its market value so quickly, our October 20 story explains that Vale&#8217;s stock price is much more connected to the valuation of iron ore, which jumped last year, partly due to the shortage caused by the tragedy in Brumadinho.</p> <p>What&#8217;s more, Vale collects its revenue in USD, which became more valuable in Brazil over the last year with the devaluation of the Brazilian Real.</p> <div class="flourish-embed" data-src="visualisation/1268417"></div><script src=""></script> <p>Before the disaster, the Vale board had approved a comprehensive plan to slash debt and control investment; just as the Brumadinho dam collapsed, the company was set to become a major dividend payer. Now, 12 months on, it is ready once to pay out to its shareholders. An estimated BRL 7.25 billion in dividends is set to go to the owners of Vale stock this year. In comparison, the company has so far only paid out USD 1.6 billion (BRL 6.67 billion) in compensation to the families of Brumadinho victims.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p> <p>Among financial analysts, the overall feeling is that the mining giant has weathered the storm. A Bradesco BBI report from January 13 called Vale an “underestimated money-making machine”, according to Valor Econômico newspaper. The analysts believe Vale stocks are undervalued considering their international peers and believe its stocks may reach levels of BRL 87.00—currently standing around BRL 55.00.&nbsp;</p> <p>The <a href="">indictment of the company and 11 former employees</a> has caused somewhat of a wobble, with share prices dropping back to 2.24 percent below pre-Brumadinho levels. However, analysts are confident the company&#8217;s business strategy will not be affected, as those to be held culpable are no longer part of the management structure.</p> <p>Back in Brumadinho, however, the profitability of Vale&#8217;s shares on the stock market is the least of the locals&#8217; concerns. Eleven victims are still missing; the Paraopeba river—once a source of drinkable water—is still umber-colored and practically dead, and the people responsible for the death of 270 people are still walking free.

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Euan Marshall

Originally from Scotland, Euan Marshall is a journalist who ditched his kilt and bagpipes for a caipirinha and a football in 2011, when he traded Glasgow for São Paulo. Specializing in Brazilian soccer, politics and the connection between the two, he authored a comprehensive history of Brazilian soccer entitled “A to Zico: An Alphabet of Brazilian Football.”

Natália Scalzaretto

Natália Scalzaretto has worked for companies such as Santander Brasil and Reuters, where she covered news ranging from commodities to technology. Before joining The Brazilian Report, she worked as an editor for Trading News, the information division from the TradersClub investor community.

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