The federal prosecutors’ office, state prosecutors and the state government of Minas Gerais, where Feijão is located made most of the complaints. Additionally, the company is subject to around 350 million Reais in fines and penalties.
Dam I of the mine failed on January 25 and flooded Vale’s own facilities as well as part of the local community and the Paraopeba river. Authorities confirmed that upto the time of publication 110 people have died and 238 more are missing.
The accident has prompted Vale to decommission its 10 dams in Minas Gerais that operate through the upstream method, which is considered to be riskier.
Vale, the world’s largest iron ore producer, also decided to temporarily halt the mining facilities associated with those dams, representing 40 million tonnes per year, which boosted iron ore prices.
Fastmarkets’ 62% Fe iron ore price index hit $85.53 per tonne cfr in Qingdao, China, on February 1, up 14.5% from $74.69 per tonne on January 25, before the incident.
Aside from restrictions from the Brazilian courts, Vale is trying to sign deals with residents of the city of Brumadinho, where Feijão is located. The miner’s chief executive officer Fabio Schvarstman met with Brazilian prosecutor-general Raquel Dodge to discuss this on January 31.
The company will also pay 100,000 Reais to each family of every victim of the accident. Brumadinho’s municipality should also continue to receive mining royalties from Vale, even though Feijão has been closed.
Vale said it is cooperating with authorities to find the causes of the accident.
A special committee with independent members was formed by the company to run internal investigations and former Brazilian Supreme Court judge Ellen Gracie was called to coordinate it. Law firm Skadden, Arps, Slate, Meagher e Flom has bee hired to aid this committee.
Brazil’s metal market has come under scrutiny due to its effect on the environment after Hydro’s alumina refinery, Alunorte, when the Brazilian government reduced the facility’s output capacity by 50% due to environmental concerns.
But concerns that Vale’s dam rupturing could delay things at Alunorte remain rife in the alumina market. Although most agree it is not having an immediate effect on prices, any hint of delay could send the market spiraling again.
“It is a valid concern in my opinion that this could delay the restart further. Any extra research, any further study – and the market has to wait,” a third trader said. “And it’s waited long enough. February and March there are spare cargos available but if Alunorte is not at full capacity after then, the market will be tight again.”
An article by one of Brazil’s main newspapers, Folha de S. Paulo, showed on February 1 that Vale’s emergency plan in case of a rupture already predicted a flood of the industrial facilities at Feijão. The report from the miner was written on April 18.
“All of [Vale’s] dams have an emergency plan,” the company responded. “The plans are based on technical studies of hypothetical scenarios in case of a rupture.”
According to Vale, dam I of Feijão had its emergency plan approved in July, August and September of 2018. There were reports attesting the dam’s stability and twice-monthly inspections, the miner added.
Brazilian federal police arrested five people involved in the dam’s approval on January 29, three of whom worked with Vale while another two worked from TÜV SÜD, the German audit firm that certified the structure had met safety standards.