Ruptured Dam

Samarco resumes activities in Mariana without owning up to its legacy of destruction

Resumption creates jobs in the city, but maintains model that produces structural problems

Translated by: Ítalo Piva

Brasil de Fato | São Paulo |
After the mudslide, the minig sector has dominated all other economic activities in the region. None responsible for the crime have been punished - Pedro Stropasolas

The rupture of the Fundão Dam, in Mariana (MG), in November 2015, reinforced the town’s dependence on a mining model which creates crime and impoverishment. Today, five years after the Samarco / Vale / BHP dam rupture, there is no room for other economic activities in the municipality.

This is the analysis of specialists heard by Brasil de Fato evaluating the current economic reality within the city, which was only able to restart its labor market in 2018. This was achieved through increased activities in the municipality by the Vale corporation – one of Samarco's shareholders - and also through the transfer of funds from the Renova Foundation, linked to the mining companies.

Since 2015, the city of Mariana has announced a loss of 28% in revenues, failing to receive R$ 240 million from sales taxes and mainly, from the Financial Compensation for the Exploration of Mineral Resources (Cfem) tax. Before the crime, taxes generated by the mining companies’ activities corresponded to approximately 54% of the city's income.

In 2019, Mayor Duarte Júnior declared that the municipality was going through a financial crisis - after the shuttering of one of Vale's mines - announcing cuts in essential services and the dismissal of workers.

At the moment, he is suing BHP Billiton, Samarco's other parent company, for R$ 1.2 billion in compensation for extra expenses after the dam breach. The lawsuit is ongoing in a Manchester court, in the UK, where the company is headquartered.

“As soon as the tragedy happened, they stopped paying anything at all, though we charged them and as much as we could demonstrated that these resources were important for the maintenance of public services. Cfem or any direct or indirect funds related to Samarco's production have not been paid. I cannot understand the mindset of a shareholder who has been exploiting this place for 40 years. It's like the two of us being partners, but you get 98% and I get 2%. What kind of partnership is this?”, says the mayor about the relationship with the mining company.

Duarte Júnior cites the growing demand for public services, especially in health, as one of the main consequences of the crime. According to the mayor, people were no longer able to afford private health insurance. In addition, there was a notable increase in demand from the Secretariat for Social Assistance and costs with the recovery of roads.

"Samarco is a fantasy name. Vale and BHP are responsible for this tragedy. And these shareholders enjoy incalculable financial returns on Mariana," says the mayor.

Cfem

According to the Brazilian Constitution, mineral resources extracted by corporations are property of the State, and require compensation to states and municipalities in the form of tax collection. The main means of collecting these amounts is the Financial Compensation for the Exploration of Mineral Resources tax (Cfem).

Analyzing data obtained through the National Mining Agency (ANM) system, in 2015, the year of the crime, Mariana was the city that collected the most Cfem in the state of Minas Gerais, a total of R$ 104 million. In 2014, the tariffs paid by Samarco alone corresponded to 8.8% of Mariana's revenues. The mining company's net profit was R$ 2.81 billion in the same year.

With the suspension of activities at the Germano complex, where the Fundão Dam was located, the value of Cfem taxes collected fell from R$ 134 million in 2014, to R$ 68.5 million in 2017.

The scenario began to change in 2018, with incoming revenues of R$ 106 million due to an increase in the value of Vale's operations within the municipality, making Mariana, for the first time after the crime, have more income than expenses. These numbers can be accessed on the municipality's Transparency Portal.

Today, Samarco's shareholder activities in the region include mineral exploration in the Alegria, Fábrica Nova and Fazendão mines and the Capanema and Conta História projects. Only in the third quarter of 2020, in the middle of a pandemic, Vale recorded a net profit of R$ 5.3 billion. The city government estimates that today around 89% of its revenues come from mining.

Mineral dependency

Professor Tadzio Coelho, from the Department of Social Sciences (DCS) at the Federal University of Viçosa (UFV), is part of the Politics, Economics, Mining, Environment and Society study group (PoEMAS) at the school.

He explains that the expansion of open pit mining, as is the case of the Quadrilátero Ferrífero project in Mariana, already took away from other economic activities before the dam breach, due to factors such as the dynamics of the lowering groundwater, pollution and even real estate speculation that came with the arrival of housing developments. In addition to these effects, Coelho highlights the symbolic effect that mining activities have on the minds of the populace.

“The mineral dependency situation is not restricted to an economic issue, it is a set of power relations, and through this the mining companies establish a political structure which represents and guarantees their interests. In addition, it has a more symbolic dimension, one in which people cannot see other forms of social and economic activities as alternatives", explains the researcher.

In Mariana, the area used for the cultivation of traditional family farming crops such as coffee, bananas, manioc, beans, corn and sugar cane has undergone a drastic reduction after the mudslide. In 2015, according to data from the Brazilian Institute of Geography and Statistics (IBGE), 2,286 hectares were being planted. In 2017, the number decreased to 165 hectares, a reduction of 93%.

After the rupture, unemployment reached 28% in the municipality. Before, the percentage was around 6%, according to city hall. The data comes from the General Register of Employed and Unemployed Persons (Caged), and indicates that only in 2018, there began to be more admissions than people laid off in the city.

The improvement in the number of jobs is also related to the work being done by the Renova Foundation, which, as of 2017, employed approximately 6,500 people in repair works in 39 different towns. This supply of labor, however, is marred by precariousness.

This is what Eduardo Armond, director of the Heavy Construction Industry Workers’ Union of Minas Gerais (Siticop-MG), raises. He assesses that with the lack of the direct responsibility on behalf of the mining companies, working conditions worsened and with them oversight by the union has become more difficult.

“The trap that was set by Samarco to place Renova as a smoke screen worked, in the sense of deflecting direct responsibility from the company. So much so that, all the while, Samarco sought to continue production without any concern about issues related to the remediation of damages caused by the accident”, he says.

A new Samarco?

In September 2019, Samarco obtained the concession of Corrective Operational Licensing (LOC) for the resumption of activities in the Germano Complex. Environmental licenses were suspended since October 2016 by decision of the State Secretariat for the Environment and Sustainable Development (Semad), which called on the mining company to present a new LOC.

For Mayor Duarte Júnior, however, Mariana expects “bonanza years” to be on the horizon. He cites the municipality's revenue from August to September, which increased R$ 10 million and tends to become "perennial" due to Vale's operations.

The greatest expectation, however, is the resumption of Samarco’s activities. The city government estimates a monthly increase of R$ 2.3 million with the return of the company, which is scheduled for the second half of 2021.

"It is as if a new company was arriving in the city. And although it's not the correct way to think about mining, because we know that it has a validity period, but, at this moment, it is a new company, generating almost a thousand jobs and bringing to the local economy just over R$ 3.5 million in revenues for the municipality", says Júnior.

Samarco announced that their return will be gradual and without the use of dams, with the implementation of a waste disposal and treatment system for dry stacking. In the region, the mining company begins to make a broad mobilization for this resumption, of which one of the main selling points, is the announcement of job creation in the communities.

Recolonization

Luiz Paulo Siqueira, from the Movement for the People’s Sovereignty Over Mining (MAM), explains that the mining company has been announcing their return as "salvation for Mariana" and putting itself as a "cleaner" company, which "has been revamped" and will now engage in "a new type of mining".

"This is hammered daily in the media, in schools, in the workplace, in all hearings. Companies have a policy of maintaining and exercising hegemony in the territories they operate in. This battle of ideas, they do it in a very professional way, co-opting leaders, trying to stifle certain guidelines ", he explains.

For the MAM activist, the inability of public authorities and society itself to organize and guide alternatives to mining, opens the way for the company to use these narratives, even more so in an economic situation where poverty and unemployment are consolidated within the country.

"In a context of an extremely fragile economy, a mining company that announces the resumption of activities which brings about new jobs, is unlikely to face resistance to the implementation of these projects," says Siqueira.

The crime

The rupture of the Fundão dam marked the end of the mega cycle of commodities in Brazil, which occurred between 2003 and 2013, and registered an increase of 630% in global mining imports. For experts, there is consensus that changes in the chain of production meant to take advantage of mineral prices, was one of the factors that explain why the dam burst.

This was also observed in practice due to the intense pace of construction and expansion of the Fundão Dam, made without the necessary safety measures. In 2008, the dam received an operating license and, in 2011, it had already presented the Environmental Impact Study and Report for the optimization of the structure.

In the report, the project to increase the dam's capacity, between July 30th , 2014 and October 26th, 2015, had an elevation speed of 12.3 meters per year. The recommended rate for the sector is between 4.6 meters and 9.1 meters / year.

In Samarco's history of operations in the region, the damage caused by the Fundão dam rupture was not the first. From 1996 to 2015, Samarco accumulated 18 violations, almost one per year over these 20 years. The information was compiled in the book When the Silence Comes, by publishing company Expressão Popular.

"They are falling into the same trap. Everything we talked about, how this mining model, how this institutional and political dimension led to the rupture of dams. It’s important to point out that this structure hasn’t been dismantled, it remains intact", concludes Tádzio Coelho, one of the authors.

Edited by: Marina Duarte de Souza e Rogério Jordão