Brazil’s mining industry needs radical change to avoid future disasters

mining brumadinho dam collapse

People learn by making mistakes. The same is true for companies and society as a whole—success depends on being able to internalize lessons and behave differently in the future, to avoid repeating the same errors. Firms tend to review their organizational structures and routine practices to flag problems before they occur, or respond quickly to unexpected problems and minimize their impact.

Apparently, this is not the case with Vale, the fifth largest mining company in the world. Vale is the planet’s biggest producer of iron ore and nickel and is also responsible for what may be the largest environmental disaster in Brazil’s history, after one of its tailings dams—an embankment built to hold back a vast reservoir of toxic mining byproducts—collapsed on January 25, 2019, at the Corrego do Feijão mine in southeastern Brazil.

</span></p> <p><span style="font-weight: 400;">Following the collapse, 186 people were confirmed dead and 122 are still missing. Official data from the Brazilian Environmental Agency says that the flow of sludge destroyed 270 hectares, of which more than half was native vegetation or protected forest. The swathes of natural habitat destroyed are equivalent to 300 football fields. Tragically, this happened only three years after a similar accident on another of Vale’s dams in the southern Brazilian state of Minas Gerais, near the city of Mariana, which killed 19 people.</span></p> <p><span style="font-weight: 400;">By any measure of business sustainability, the Brumadinho disaster came as a heavy blow to Vale’s performance and reputation. Since then, the company has had its credit rating downgraded, not to mention suffering perhaps irreparable damage to its public image.</span></p> <p><span style="font-weight: 400;">Vale appointed Fabio Schvartsman as its CEO after the </span><a href=""><span style="font-weight: 400;">Mariana disaster in November 2015</span></a><span style="font-weight: 400;">. Mr. Schvartsman took the job and announced his strong slogan to shareholders, employees and the Brazilian people: “Mariana, Never Again.” He failed miserably.</span></p> <p><span style="font-weight: 400;">Considering Vale’s recent history and the magnitude of these disasters, the corporate response to the Brumadinho tragedy is ludicrous. In a parliamentary session which assessed the condition of other mining dams in Brazil after the collapse at Brumadinho, Mr. Schvartsman told Congress that &#8220;Vale is a Brazilian jewel that cannot be condemned for an accident that took place in one of its dams, as it was considered a tragedy.&#8221;</span></p> <p><span style="font-weight: 400;">Despite his confidence, questions remain unanswered. Why didn’t the company move its cafeteria, which was located downstream from the dam in a high-risk area, according to the assessment of reports dated October 3, 2018?</span></p> <p><span style="font-weight: 400;">The precautionary principle states that if an operation has a risk that might cause severe or irreversible harm to the public or to the environment, that operation must be stopped—even if the likelihood of it happening is low. So why wasn’t this applied?</span></p> <p><img loading="lazy" class="alignnone size-full wp-image-14597" src="" alt="brumadinho mining disaster vale" width="754" height="503" srcset=" 754w, 300w, 610w" sizes="(max-width: 754px) 100vw, 754px" /></p> <h2>Moving forward</h2> <p><span style="font-weight: 400;">Since </span><a href=""><span style="font-weight: 400;">standards clearly did not improve</span></a><span style="font-weight: 400;"> over the last three years, how can Brazilians now trust the safety of other dams? During the incident, why did the sirens allegedly fail to work when the dam collapsed, to alert employees and the local community to evacuate?</span></p> <p><span style="font-weight: 400;">Vale must account for its operational failure with the same gravity as is the standard in developed countries. The Canadian mining company Imperial Metals is still suffering from the environmental <a href="">liabilities</a> of the Mount Polley mine disaster in 2014.</span></p> <p><span style="font-weight: 400;">There is a precedent for CEOs and executives to be forced to resign after serious errors, such as the former chief executive of BP, Tony Hayward, who resigned after the Deepwater Horizon disaster that killed 11 people in 2010. Schvartsman’s temporary resignation sends an unclear message about the company’s commitments to the lives of its employees and the communities it operates in.</span></p> <p><span style="font-weight: 400;">Vale’s next CEO will need to go beyond Schvartsman’s rhetoric and consider which stricter operating procedures might be necessary. Otherwise, it could only be a matter of time before the next “accident.” There are more than 50 similar dams still functioning under Vale’s operations in the state of Minas Gerais alone, each could be another tragedy waiting to happen.</span></p> <p><span style="font-weight: 400;">Vale cannot operate at the expense of lives and environmental destruction. Brumadinho can still be a turning point in the company&#8217;s history, giving it an opportunity to show it is able to learn to better avoid accidents and tragedies. It could still transform itself into a more responsible company. For that, however, it will need to urgently embrace change as never before.

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Breno Nunes

Senior Lecturer in Sustainable Operations Management, Aston University

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