Posted on Feb 4, 2019 2021 at 18:39Updated Feb 4, 2019 2021 at 19:04
“ Largest compensation agreement signed to date in Latin America », Announce the authorities of Minas Gerais. This is the state located in the south-east of Brazil which was ravaged by the rupture of a mining dam in January 2019 that killed 270 people. The Vale group has agreed to pay 37.6 billion reais, that is to say more than 7 billion dollars, in “social and environmental” damages.
This amount could even be revised upwards, warn the authorities, because this is only an estimate. The iron giant will, among other things, pay $ 1.68 billion in direct aid to bereaved families, $ 1.2 billion in “environmental rehabilitation projects” and 868 million in “socio-economic rehabilitation projects”.
Although the authorities of Minas Gerais have asked for 10 billion in compensation, this agreement has the air of victory. It “ signifies recognition of corporate responsibility “, him “ imposes new obligations “And does not prejudge” individual actions that could be brought for compensation “, Estimates the Brazilian state.
For his part, Vale specifies that “ this agreement seals its commitment to pay full compensation for Brumadinho and support the development of Minas Gerais “. The iron giant has already started compensating families, relocating them, repairing environmental damage, and reviewing the safety of its dikes; shares that run into billions of dollars.
The safety of the dikes in question
At the São Paulo Stock Exchange, Vale shares rose 1.5% at midday, after gaining more than 3% the day before, driven by the imminence of an announcement. Not only is the agreement lower than what had been requested by the authorities, which demonstrates the group’s ability to negotiate, but in addition it is a sword of Damocles that disappears for investors. Insofar as Vale benefits from the surge in iron ore prices, supported by the appetite of China, the financial penalty does not endanger the future of the group or its investment projects.
The rupture of the Brumadinho dam more generally sowed doubts about the safety of all the dikes. The mining companies were forced to scrutinize them for safety, especially since this accident occurred a few years after another similar tragedy. In 2015, the rupture of a dam in Vale in Mariana left 19 people dead and also caused unprecedented environmental damage in Brazil.