Loyola University Chicago School of Law, JD 2020
At 12:28pm on January 25, 2019, a thirty-story high tailings dam operated by Brazilian mining giant Vale suffered a catastrophic failure, unleashing an estimated 12 million cubic meters of mining waste on the town of Brumadinho, Brazil. The collapse killed 177 people, and 133 others are missing and presumed dead. Perhaps the most devastating part of this tragedy is the simple fact that it should have never happened.
Brazil: Land of minerals and corruption
Brazil is a nation richly endowed with minerals, metals, and precious stones. The mining industry is crucial to its economy, comprising approximately 3.5% of the country’s GDP. Brazil is also a country that is grappling with rampant corruption at the highest levels of government and corporate elite. Prior to his defeat in the 2018 election, President Michael Temer signed into law a decree establishing stricter environmental policies and royalty payments to municipalities impacted by mining activity. The changes came after several severe mining-related environmental disasters, but the law was met with skepticism. Of the 52 congressmen who approved the new rules, it was revealed 31 were financed by mining companies. BBC also found that a law firm that represents Vale and BHP Billiton wrote parts of the legislation.
Mariana dam collapse
BHP and Vale were also co-operators of a dam in Mariana, Brazil that collapsed in 2015 and killed 19, displaced hundreds, and released 62 million cubic meters of mud contaminated with toxic iron ore waste from a nearby mine. Brazilian prosecutors allege the two companies failed in their duties to safely operate and maintain the dam, yet more than three years later nobody has accepted responsibility. An internal worst-case assessment accurately predicted a “liquefaction break” could result in 20 deaths, $3.4 billion of damage, and severe harm to biodiversity and water resources. Civil litigation is ongoing, but in 2016 21 people were charged with qualified homicide, including the CEO of the joint venture and representatives from Vale and BHP’s board of directors. As of March 2018, none of the 375 families who had lost their homes had found permanent housing.
Pressure to sign off on Dam 1 in Brumadinho
While Vale was still dealing with the fallout from the Mariana dam collapse, audits conducted by German certifications firm TÜV SÜD uncovered evidence indicating potentially risky conditions at the massive structure called “Dam 1” in Brumadinho. Senior TÜV SÜD engineering inspector Makoto Namba wrote “everything suggests [the dam] won’t pass” a key safety test in May 2018, but on September 26, 2018, he signed off on a certification that the dam was safe. He and other inspectors feared that failing to certify the dam would result in Vale retaliating and cutting off other contracts for safety audits that Vale had awarded TÜV SÜD. Refusing to sign also would have halted Vale’s adjacent mining operations and triggered a mass evacuation. These operations produced an estimated $1 million of iron ore per day and support hundreds of jobs.
Not an accident
Following the devastating collapse of Dam 1, authorities arrested 13 employees of TÜV SÜD and Vale, with eight Vale employees remaining in custody on suspicion of murder. The lead prosecutor alleges that Vale employees did not act on information it had about the safety risk and employees of the two companies colluded to present stability declarations that did not accurately reflect the safety of the dam. Prosecutors believe they have gathered evidence that “shows in a very convincing way that this was not an accident.”
Dam 1 concerns raised back in 2010
Concerns about Dam 1 had been raised as early as 2010, and Vale even hired a consulting company to devise a plan to close down Dam 1 and remove the waste in 2012. A slump in iron ore prices led Vale to put the project on hold. The following year, TÜV SÜD acquired the consulting firm and took over its projects. After the 2015 Mariana collapse, Vale revived plans to close Dam 1 and even stopped dumping mine waste there in 2016.
Issues with mining regulatory environment in Brazil and beyond
Mine-safety rules in Brazil do little to prevent troublesome relationships between inspection firms and mining companies. The country’s National Mining Agency only employs 34 field inspectors, and just 20 of those inspectors specialize in dams. With over 770 dams across the country, this leaves mining giants like Vale and BHP with wide latitude to contract independent auditors like TÜV SÜD. The past decade has seen at least 50 dam failures globally, with 10 of those considered major. There is a concerning lack of information on dam failures, with the Responsible Mining Foundation calling for an international database of tailings dams and more independent audits. These seemingly moderate requests have proven difficult to achieve, as mining laws vary widely from country to country, global best practices endorsed by industry associations are not legally binding, and the industry largely relies on self-policing.
Better oversight needed
On February 19, BHP said it would welcome the establishment of an independent, international body to oversee the integrity of tailing dams. The role of external auditors needs to be revisited as well, as TÜV SÜD relied heavily on Vale and was not truly independent. The audit uncovered what it was supposed to uncover, but it ultimately failed because of Vale’s weak internal compliance controls and heavy influence over its independent external auditor. The lack of a chief compliance officer at Vale meant the company lacked a senior decision-maker focused on compliance matters as well. Past calls for action to better regulate the mining industry have failed, with companies reverting back to the status quo after things blow over. With the Dam 1 death toll set to exceed 300 lives, it is time for Vale and others across the mining industry to recognize the need to act more responsibly and enact lasting change.