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Vale and the Brumadinho dam collapse

Companies and/or individuals involved: Vale S.A. (Brazil), TÜV Süd (Germany)

Charges: Homicide due to recklessness, “social and environmental” crimes 

Swiss lawyers used: N/A 

Countries affected: Brazil, Germany, Switzerland

Proceedings: Brazil, Germany 

Outcome: 

  • Brazil: Vale : Compensation agreement under which Vale has to pay R$37.6 billion (CHF 6.3 billion), for TÜV Süd: Pending
  • Germany: Pending

Asset recovery: No, but various class actions are pending

The case

The scene was apocalyptic. When the dikes of the Brumadinho dam gave way on 25th January 2019, the tide of mud and mining waste violently swept away in its path the trees, embankments and infrastructure of the Brazilian group Vale. Even worse, it was barely half past noon in this region in the state of Minas Gerais, and most of the miners were having lunch in the canteen when the 13 million m3 flow swooped down on them at a speed of 70 to 80 km/h. The final toll came to 272 people dead (taking into account the fact that two women were pregnant), most of them employed by Vale. Part of the community of Vila Ferteco was also affected. Three bodies would never be found.

This was a disaster for Brazil. For Vale, which operated the dam to store tailings from iron ore mining, this was the second such collapse in the region in just over three years. Updated the day before the tragedy, official statistics listed some 200 dams at risk, such as the Brumadinho dam. Vale, which set up its commercial office in Saint-Prex (Vaud), Switzerland in 2006, managed a quarter of those dams. The sense of indignation was at its peak against this company which was so used to stressing its close ties with Brazilian culture. 

All eyes quickly turned to those who were responsible for inspecting and assessing the condition of this type of infrastructure. In the case of Brumadinho, it was the technical inspection company TÜV Süd. While a rival company had refused to certify to the dam’s stability, Vale turned to the German group to give the dam a clean bill of health. Nine months before the disaster, an expert from TÜV Süd had already warned, via internal emails, about the imminent threat posed by the Brumadinho dam. But the fear of losing their client had forced the inspectors to issue their certificate to Vale. The Brazilian prosecutor’s office suspects that Vale officials had persuaded the auditors to “correct” their initial assessment. The accusations also related to a fundamental issue: the auditor’s dependence on the client who pays for the review.

Eventually, a court banned TÜV Süd, in May 2019, from carrying out any certification procedures on Brazilian territory. Five years after the dam collapsed, 1,400 plaintiffs – survivors and victims’ families – are still claiming half a billion euros in a German court. 

TÜV Süd, whose Brazilian subsidiary had certified the dam, denied any legal liability for its collapse. It passed the buck back to the mining group Vale. In early 2021, the conglomerate, which now displays the slogan “We will never forget Brumadinho” on its website, agreed to pay R$37.6 billion (CHF 6.3 billion) in compensation for environmental damage, as part of an agreement with the state of Minas Gerais. This was the largest agreement of its kind reached in Latin America at the time. In addition, 15,400 people have been compensated for a total amount of R$1.2 billion. Vale claims to have paid an additional R$2.2 billion in compensation. Proceedings against TÜV Süd are still pending in Brazil and Germany.

Documents related to this affair

Timeline

Date

Event

Source

5th November 2015Three years before the Brumadinho dam collapse, the Mariana dam in the state of Minas Gerais bursts, causing millions of tonnes of mud from the operation of an iron ore mine run by Vale and BHP to escape. 

This disaster is considered the worst ecological disaster in Brazil’s history, with effects on the local ecosystem due to last for up to 30 years. The final death toll is 19. CEO Fabio Schvartsman then sets Vale the goal of never experiencing such a tragedy again. 		France 24
10th April 2018Fabio Schvartsman states publicly that Vale’s dams are “perfect” because “sustainability is the company’s core business”.Globo
25th January 2019Shortly after noon, the Brumadinho dam collapses. Most of the victims worked in Vale’s mine, Corrego do Feijao. They are just having lunch in the company canteen when they are swept away by the mud slide.

The authorities wait several days before releasing the images from the CCTV cameras in order “not to cause widespread panic among the population”.		LeHuffPost (video)
30th January 2019Several dozen people protest in front of the Swiss headquarters of Vale International S.A. in Saint-Prex (Vaud). A mud-stained banner is unfurled by the demonstrators, who also condemn Vale’s tax privileges, saying: “Thank you for choosing Switzerland”. Swissinfo
2nd February 2019The toll rises to 115 dead and 248 missing. The final figure is 272 deaths.

This second disaster in three years for Vale occurred 65 kilometres from Belo Horizonte, capital of the state of Minas Gerais and birthplace of the company. This is very symbolic.		Le Monde
18th February 2019The Brazilian prosecutor’s office suspects Vale representatives of having put the inspectors under pressure to change their initial audit. In May 2018, an expert from TÜV Süd, a German technical inspection company, had warned at least three of his colleagues as well as a representative of Vale of the dam’s instability, also mentioning the need to start work that would put the mine completely out of action for “two to three years to achieve the desired effect”, according to the investigation conducted by the Brazilian judicial authorities. Vale was nevertheless issued with its certificate.

In the view of the Brazilian attorney general, Brumadinho is not an accident but a risk taken deliberately on purpose. 		Der Spiegel

18th March 2019

 

A Brazilian court orders Vale to freeze R$1 billion (about $260 million) in funds as compensation for the affected communities. 
Brazilian authorities say they discovered that Vale had hired the Brazilian division of Tractebel, a subsidiary of French giant Engie, to certify the stability of the Brumadinho dam in September 2018. This certification followed a more in-depth audit that TÜV Süd had signed off on in June. “However, Tractebel’s inspectors refused to approve the safety of the dam (...) After Tractebel’s refusal, Vale rehired TÜV Süd to carry out the September certification, according to the document. It certified the dam,” according to the Wall Street Journal’s report. 		Mining.com
17th May 2019The Brazilian judicial authorities ban TÜV Süd from carrying out any new certifications. They believe that it has been proven that the data and information provided by TÜV Süd concerning the operation of the dam that collapsed in January “was not reliable and was produced without the required credibility and technical impartiality”. Wiwo
9th July 2019A ruling issued at first instance by the state of Minas Gerais declares Vale liable for compensation for all damages. The judge does not set the amount, but stresses that the impact on the environment and the region’s economy must be taken into account.

Vale escapes a ban on its operations, but its billion of reais already frozen remains blocked. 		Wiwo
27th May 2020 A judge in the Brazilian state of Minas Gerais has partially granted an injunction sought by prosecutors by ordering Vale to set aside R$7.9 billion (CHF 1.3 billion) for paying potential fines related to the dam’s collapse.

This amount is in addition to the billion reais frozen in March 2019.		Reuters
24th January 2021 The Minas Gerais Public Prosecutor’s Office charges 16 executives linked either to the mining company Vale, including former CEO Fabio Schvartsman, or to TÜV Süd (5 individuals) with aggravated murder. Both companies are also charged with environmental crimes. Two years later, the charge is brought at federal level.

In addition to being charged with environmental crimes in Brazil, TÜV Süd is also on trial in its home country of Germany, where a lawsuit is being filed by 183 surviving workers and parents of deceased victims. The first hearing is due to take place in September 2022. 		Ministério Público Minas Gerais
4th February 2021 Vale announces that it has reached an agreement to pay R$37.6 billion (CHF 6.3 billions) in “social and environmental” damages in the wake of the Brumadinho disaster.Le Temps
24th January 2024 The number of lawsuits being brought against the German inspection group TÜV SÜD is growing. More than 1,400 plaintiffs are now claiming more than EUR 582 million in damages at the Munich District Court. A legal expert opinion on the admissibility of the complaints is expected by the end of the year.Der Spiegel
25th January 2024The Brazilian Federal Court orders Vale, BHP and Samarco to pay R$47.6 billion in compensation for the collective emotional distress caused by the collapse of the Fundão dam in Mariana.

The amount is to be allocated to a fund administered by the federal government and used exclusively in the areas affected by the disaster. An appeal is pending.		Globo
29th April 2024Vale, BHP and Samarco submit a USD 25 billion settlement proposal to the Brazilian authorities regarding reparations for the Mariana disaster.

Brazil and the state of Espirito Santo reject the above proposal on 7th May 2024, whereas the state of Minas Gerais, where the disaster happened, says it is ready to negotiate.		Business & Human Rights

Legislative loopholes

  • Neglect in maintaining infrastructure
  • Mining group and audit firm cast blame at each other
  • Lack of independence of critical technical controls (audit), under pressure from customers who want to avoid operations being put out of action. Risk of corruption
  • Failure (or inability) of State to exercise oversight over private companies
  • Lack of tightened controls for critical infrastructures
  • No specific supervisory authority in the commodities sector and no appropriate due diligence obligations for traders