Minas Gerais municipalities waiting on Vale royalties

The aftermath of the disaster in Brumadinho after Vale’s tailings dam collapsed. Photo by Felipe Werneck/Ibama, Wikimedia Commons.

Ten cities affected by the collapse of a tailings dam at Brumadinho in Brazil’s Minas Gerais state are still waiting for Vale (NYSE: VALE) to transfer funds as per an agreement to cover incurred losses in mining royalties.

After the disaster at Córrego do Feijão mine’s tailings dam that killed 270 people last year, Vale suspended mining operations in the cities of Barão de Cocais, Brumadinho, Belo Vale, Itabira, Itabirito, Congonhas, São Gonçalo do Rio Abaixo, Mariana, Sarzedo and Nova Lima.

“We have always had a clear and ethical relationship with Vale, especially after Brumadinho. The cities don’t want to live on donations, but on production”

Association of Mining Municipalities of Minas Gerais

The cities’ Mayors say the halt had a major impact on revenues in the municipalities, in which Vale has been operating for over 30 years.

In a document signed in April 2019, Vale agreed to pay compensation for losses in royalties. The miner transferred R$250 million (about $43.5 million) to the cities over a period until December 2019.

The mayors of the region held new meetings with Vale executives in 2020, but are still waiting for a decision on this year’s financial support.
 
“We have always had a clear and ethical relationship with Vale, especially after Brumadinho. The cities don’t want to live on donations, but on production,” the Association of Mining Municipalities of Minas Gerais said in a release.

“We have always made it very clear to Vale that municipalities do not work with any other option than continuity of financial support. Without that, the cities are at risk of bankruptcy,” the Association said.

Vale said it remains committed to carrying out actions that allow the routines of families affected directly or indirectly by the disaster to resume.

“The company is sensitive and fully aware of the economic impact and the stress that the dam rupture has been causing to the financial reality of the municipalities. Vale remains committed to adopting measures that can minimize the drop in revenue. Regular meetings have taken place to reach this understanding,” the company said in an email to MINING.COM.

Last week, the city of Brumadinho suspended Vale’s operating license after health agents said that the company’s onsite activities have “not respected the rules of social isolation” during the covid-19 pandemic.

The municipality also halted works to repair the Córrego do Feijão mine’s tailings dam.

Brazil received $1.03 billion in mineral royalties in 2019, according to the Brazilian Mining Agency.

Vale was the company that paid the most in royalties with $566 million – or 54.8%.

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