The death of 270 people caused by the collapse of the Vale dam in Brumadinho, Minas Gerais, which turns five years old this January 25, has done nothing to compromise the profits of the Brazilian mining sector.
On the contrary. Since 2019, Brazil’s largest mining companies have earned more than R$ 1 trillion brazilian reais (around $ 200 billion dollars), not even considering the second half of 2023.
The data is compiled and published by the Brazilian Mining Institute (IBRAM), which represents 90% of the companies in the sector. The record was set in 2021, with R$339 billion in revenues, followed by R$250 billion in 2022, R$120 billion in the first half of 2023, R$209 billion in 2020 and R$153 billion in 2019, the year of the disaster.
Despite Brumadinho, therefore, considered the worst “labor accident” in Brazil’s history and one of the most lethal disasters in the mining industry in the world and the Covid-19 pandemic, the mining sector has broken profit records in the last five years.
This is explained, among other factors, by the fact that the world is going through a new “commodities boom”, with some mineral commodities on the rise on the international market and the high average price of the dollar.
Photo: Isis Medeiros
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Vale made a profit of R$ 265 billion in 5 years
Vale, responsible for the Brumadinho dam, as the largest mining company in Brazil and among the top 5 in the world, has a huge influence in the results of the mining sector. Vale recovered quickly from losses of R$6.6 billion in 2019, the year of the dam collapse.
In these five years, discounting the aforementioned loss, Vale has made an impressive R$265 billion in profits, with the results for the last quarter of 2023 still to come in. More than a quarter of the results of the entire mining sector in the period.
In 2021, Vale recorded an all-time record profit of R$121 billion, the highest result in the history of a publicly traded company in Brazil. In simple terms, in 2021 alone, Vale made a profit of R$331 million per day, R$13.7 million per hour and R$228,000 per minute.
Much of the profit recorded by Vale in these 5 years has gone into the pockets of shareholders. Vale has paid out around R$147 billion to shareholders in the form of dividends and interest on equity since 2019.
In 2021, Vale ranked eighth among the largest dividend-paying companies in the world. Its partner in Samarco, the mining company BHP, has regularly been at the top of the ranking of the largest global dividend payers.
Problematic reparation for Brumadinho. Dams continue to cause concern.
The reparation agreement was signed in February 2021 between Vale and the government of Minas Gerais, criticized for the discount granted, for not including those affected in the process and for favoring the re-election of Romeu Zema (Novo) with infrastructure works throughout the state. 68% of the R$37.7 billion planned has been executed so far.
According to Vale, 15,400 compensation agreements have been closed so far and at least one family member of all the deceased employees – own and outsourced – has signed a compensation agreement.
This week’s Repórter Brasil story, however, warns that of the 319 cases judged between January 2019 and March 2023 by 11 civil chambers of the Minas Gerais State Court of Justice (TJMG), 75% of the decisions were unfavorable to those affected. Following Vale’s appeals, the courts cut up to 80% of each compensation amount.
Among the activities marking the five-year anniversary of the dam collapse, the Brumadinho Tragedy Lawsuits Observatory was launched, making it easier to keep track of ongoing legal proceedings in Brazil and around the world. Fábio Schvartsman, the former CEO of Vale, for example, could be freed from criminal prosecution for the Brumadinho collapse by a writ of habeas corpus. Schvartsman already has a favorable vote in the TRF6.
Vale claims that, since 2019, it has eliminated 13 upstream dams, a legal requirement.
The de-characterization of all the upstream dams – the cheapest and least secure method used in Brumadinho and Mariana, which has already had its deadline extended by the National Mining Agency – will still take time, with the deadline set for 2035.
UPDATE: Final figures for 2023 released after the publication of this article indicate that Vale closed last year with a profit of R$40 billion, adding up to R$277 billion in profit over 5 years and the mining sector had a turnover of R$248 billion in 2023, according to IBRAM, reaching around R$1.2 trillion over the last 5 years.
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