BRASILIA/SAO PAULO, (Reuters) – Iron ore miner Vale SA’s chief financial officer and its former chief executive should be indicted for murder, a Brazilian Senate committee probing a deadly dam collapse recommended yesterday.
The committee is also seeking the indictment of Vale and dam stability auditor TÜV SÜD for environmental damages and corporate responsibility for actions of their employees in the late-January disaster that killed nearly 250 people.
The 400-page report recommended that a total of 15 individuals, including the two executives, be indicted for murder, wrongful bodily injury, environmental damages and pollution.
Fabio Schvartsman stepped down as Vale’s CEO under pressure from prosecutors in March. Luciano Siani, also targeted by the committee, continues to serve as CFO.
The committee’s initial report recommended manslaughter charges but at a hearing it approved an amendment to upgrade the charges to murder and add a 15th individual to its list for recommended indictments.
Vale, a formerly state-owned Brazilian “national champion” which is a leading exporter and employer, said it “respectfully disagrees” with the indictment recommendations.
A “forensic, technical and scientific conclusion about the causes of the dam burst” should be arrived at before holding certain people responsible, the company asserted in a statement.
TÜV SÜD said it was cooperating in full but declined to comment further, citing ongoing investigations.
Vale shares, which early in the session touched their highest since before the Brumadinho disaster, closed down 4.2%.
The nonbinding recommendations could influence prosecutors in their ongoing probe of Vale and its executives for negligence regarding the disaster.
“Vale’s tragedy is a series of tragedies,” the committee said in its report. “The immeasurable human loss; the countless dead animals; the environment destroyed for years, perhaps decades; the dreams and heritage of a lifetime buried by the carelessness, neglect, greed, usury, irresponsibility, indifference and sloppiness of a company that used to be a role model.”
Brazil must take action to ensure that “never again” will such a disaster occur, it said, recommending three laws that would require congressional approval.
One would outlaw all tailings dams for mining and industrial waste. That would go far beyond a ban instituted in February on the specific type of “upstream” dam that ruptured. It would allow for 10 years to decommission the hundreds of existing tailings dams around the country, a costly move for miners.
A separate bill would hike taxes calculated on mineral production, with a tax of up to 40% on more profitable or larger scale mines.
The investment banking unit of Brazil’s Bradesco said such a tax is unlikely to be implemented given that comparable taxes in Australia and Mexico are up to 7.5%. But the bank said the rate is likely to rise for Brazilian miners from the current 3.5%.
A third proposed law would expand the list of environmental crimes.
Barclays analyst Amos Fletcher said he doubted that Congress would follow through on shutting down all types of tailings dams, a move that would halt a significant amount of mineral production, which Brazil counts on for a large portion of its GDP, he said.
The recommendations may be depressing Vale’s stock price more than the indictments because of worries that such changes “would lead to more supply being squeezed,” he said.
Vale’s tailings dam ruptured in the city of Brumadinho in the mining state of Minas Gerais in late January, releasing a torrent of mud that buried hundreds of people, including a cafeteria full of workers at lunchtime.
In the following months, investigators and regulators pointed toward a risky “upstream” style of dam construction, improper maintenance and negligence.
TÜV SÜD certified the dam as stable in 2018 despite pointing out concerns about drainage and monitoring systems.
Vale has argued that it followed all the required safety measures.
While authorities have yet to conclude the cause of the rupture, a Minas Gerais state official and other experts suspect liquefaction, in which solid materials such as sand lose strength and become more like liquid.
That was the same cause of a 2015 rupture of another upstream Vale dam that killed 19.
