Six years after the tragedy, the city of Mariana sees ore collection shoot up

Impacted by the two major tragedies with mining dams that occurred in Minas Gerais in recent years, Mariana (MG) saw its collection with royalties on mineral production soar in 2021.

According to data from the ANM (National Mining Agency), the city has already collected BRL 347.2 million in the year, double the amount registered in 2019. The increase reflects the resumption of operations and the escalation in the price of ore in the market International.

Even with the operations still far from full capacity, the 2021 revenue is almost three times that verified in 2015, before the failure of the Fundão dam on November 5 of that year, operated by Samarco, even considering the inflation of the period.

After the tragedy that left 19 people dead and a trail of destruction, Samarco was forced to halt operations in the Germano Complex, where the dam that collapsed was located.

Vale, which shares control of the company with BHP Billiton, also had to suspend operations in the city in 2019, after the tragedy in Brumadinho (MG), which left 272 dead and led to a reinforcement of the national dam safety policy.

“This period was really quite tragic. We had to cut not only the meat, but also the muscle”, says the secretary of Planning, Supply and Transparency of the city, Marlon Figueiredo. “But now we have a new horizon.”

In parallel to the loss of revenue due to the suspension of operations, the city saw increased pressure on expenses, as the drop in income pushed families that previously had health insurance or paid private schools for public services.

With the recovery of revenue, says Figueiredo, it was possible to adopt measures to mitigate the impacts of the pandemic on the municipal economy and resume investments, which were practically zeroed in the period of restrictions on the activities of the mining companies.

Samarco’s operations resumed in December 2020, with production limited by the capacity to dispose of dry tailings, a safer technology than that used in the two dams that broke in the state.

Currently, the complex operates at 26% of its capacity, equivalent to 8 million tons per year. Since the beginning of operations, it has shipped 6.1 million tons of pellets and the so-called “pellet feed”, which are ultra-fine particles of ore.

The company says that the resumption was guaranteed by the adoption of new technology for the final disposal of the tailings, now carried out in a pit from which it extracts ore and with a filtering system for dry stacking.

“[A Samarco] resumed operation without the use of dams, supported by new technologies through the adoption of safer and more sustainable practices”, states, in a note, the company, which avoids predictions about the resumption of full capacity.

Vale had to suspend operations at two mines in the Mariana Complex, Alegria and Timbopeba. The first was resumed in November 2019, still with restrictions, and the second in April 2020. In 2021, the complex produced 15 million tons, well below the 50 million it can produce per year.

For the municipality’s revenue, production lower than capacity was offset by the rise in the price of ore, which for the first time surpassed the barrier of US$ 200 per ton in the second quarter, leading Vale to record profit of R$ 40.1 billion in the period.

“It has a macroeconomic effect there, with the exchange rate devaluation and the great Chinese demand for ore, which raised prices,” says the secretary. Revenue, however, tends to fall in the second half with the retreat of the international price, which is currently below US$ 100 per ton.

Still, the scenario is more optimistic, adds Figueiredo, since the perspective is for production growth in the coming years.

In a statement, Samarco says that “it is focused on the gradual and safe expansion of its activities until it reaches 100% of its production capacity, which will occur in a few years, keeping an eye on technological and product developments in order to meet the needs of the Marketplace”.

The company is facing a troubled judicial recovery process, marked by a legal dispute between its controllers and creditors, who accuse Vale and BHP of trying to get rid of responsibility for financing the repair of damages.

They question the inclusion, among the credits for judicial recovery, of R$ 23 billion contributed by the parent companies to keep the company during the period without operations. For creditors, part of this amount should have been transferred directly to Renova, the foundation that takes care of the repair.

Samarco defends that it follows the law by including all its debts in the process. In note to sheet, states that the judicial reorganization was decided after the company “became the target of very hostile lawsuits in Brazil and abroad made by financial creditors”.

Currently, creditors are auditing the company’s numbers and projections and, to keep the negotiations going, a lawsuit extended the protection period against lawsuits by 180 days.

“The company reaffirms its commitment to all its creditors and is committed to completing the entire process within the legal deadlines,” he said.