Mining Dam Collapse: Mining company trying to recover from Brumadinho disaster
Vale on Wednesday reported fourth quarter earnings which jumped nearly five fold. But 2019 profits would be hurt by the deadly Brumadinho mining dam collapse. Could the disaster have been prevented? CGTN’s Paulo Cabral reports.
Right after the Brumadinho dam collapse, shares of Brazil’s mining giant Vale SA plummeted more than 25 percent. In 24 hours, the company lost about 19 billion dollars in market value.
But measures taken by Vale SA in the aftermath of the incident were enough to calm financial markets – despite the human and environmental tragedy.
Share prices began to climb and are now close to pre-disaster levels. Vale SA stopped all of its mining operations in the state of Minas Gerais to assess risks. In the end, producing less had a positive impact on the company’s finances.
RAFAEL PASSOS INFRASTRUCTURE ANALYST “This caused international iron prices to go up. So, the price went up in one week from around 75 U.S. dollars to 85 U.S. dollars per metric ton. So, it was an important appreciation that was good not only for Vale SA but also for other mining companies.”
PAULO CABRAL SAO PAULO “The Brumadinho dam failure was especially shocking to Brazilians – coming a little more than three years after another major mining disaster – a dam break in the city of Mariana. In both cases, Vale SA was involved. The big discussion taking place now is how to make sure such tragedies don’t happen again.”
After that incident, authorities in Minas Gerais ordered a halt on operations of all dams built using the techniques adopted in Mariana and Brumadinho. Additional local and federal legislation is under consideration.
LETICIA MARQUES, ENVIRONMENTAL CONSULTANT PEIXOTO & CURY LAW OFFICE “I think this accident will lead to changes in environmental legislation that surely will affect every investor in Brazil.”
However, one engineering professor who specializes in mining dams, says Vale SA will need to change its priorities if it wants to fix its operations.
ARTHUR CHAVES, ENGINEERING PROF.UNIV. OF SAO PAULO “The problem is that they operated with a short-sighted view of looking for big profits in the short run. This is not the mindset of mining engineers but of managers and economists. Vale SA has a fantastic technical body, but the executive board that was running the company at the time of the Brumadinho disaster had only one engineer. All the other executives were from marketing, communications or finance.”
Inspecting and fixing its dams will require major investments from Vale SA. Brazilians hope the company will do it not only for long-term business reasons but to provide safety for those who live near the mines. Paulo Cabral, CGTN, São Paulo.
China Global Television Network (CGTN), Transcript, 18:01, 28-Mar-2019