Brazil Extracts Billions from Mining Giants

When multinational mining companies are implicated in disasters in the Global South they often get away with paying minimal amounts in compensation to the communities or workers involved. Brazil recently broke that pattern by negotiating a settlement worth over US$30 billion.

That amount will be paid out by mining giants BHP and Vale in connection with the 2015 Mariana disaster in which a tailings dam at the iron ore mine operated by their joint venture Samarco collapsed and unleashed a torrent of waste that killed 19 people and contaminated 400 miles of the Doce River.

Under the agreement, BHP and Vale, which have already been compelled to pay out about US$8 billion, will provide another US$23 billion over the next 20 years to affected communities and public authorities. The amounts cover water clean-up costs, health programs infrastructure repairs and improvements, and a flood response fund. Also included are funds for education, the needs of women, fishing, food security, and income support for vulnerable populations. The companies are, in effect, being compelled to finance a parallel social welfare system.

BHP and Vale both have histories of harmful impacts that extend well beyond the Mariana disaster. BHP, headquartered in Australia, took its current form as a result of the 2001 merger of the company previously known as Broken Hill Proprietary and Billiton, originally a Dutch company. It has been at the center of environmental controversies concerning its operations in countries such as Chile, Guatemala, India, and the United States. For example, in 2022 it was fined the equivalent of US$8 million by environmental authorities in Chile for damage caused by excessive water extraction in the Salar de Atacama salt flat.

Vale, headquartered in Brazil, was implicated in another even worse mining disaster in its home country. Three years after the Mariana incident, a tailings dam near Brumadinho in the state of Minas Gerais collapsed, releasing a mudflow that engulfed houses, farms and roads and killed more than 250 people, most of whom were company employees. The toxic deluge also destroyed 300 acres of native forest and polluted 200 miles of the Paraopeba River.

In 2021 Vale agreed to pay US$7 billion in compensation to the state government. It probably got off easy, given that evidence emerged suggesting that Vale executives had been warned about safety risks with the dam. In the wake of those revelations, Brazilian authorities brought homicide charges against the chief executive of the company, Fabio Schvartsman. Those charges were dismissed earlier this year, but relatives of the victims are seeking to have them reinstated.

Apart from the environmental penalties, Vale got in trouble with the U.S. Securities and Exchange Commission for making false and misleading statements to investors about the safety of its dams. In 2023 the company had to pay US$55 million to settle the matter.

The substantial penalties being paid in Brazil by BHP and Vale will provide needed relief to the affected communities, yet it is unclear whether the amounts are enough to get corporations with annual revenues in the $40-50 billion range to fundamentally change their ways.