Brazil: Fallout from dam disaster piles up against Vale

Four months on, the ripples of the disaster in the rural town of Brumadinho are being felt worldwide. From the potential threat from Brazil’s courts to emboldened regulators and sceptical institutional investors, Vale, the world’s largest producer of iron ore, is facing an unprecedented crisis that could transform the way mining is conducted.

The rupture in January has triggered a far-reaching criminal investigation, amid claims that Vale had been warned about the fragile state of the structure yet did nothing. It came just over three years after a similar disaster in the nearby Mariana village, which killed 19 and caused Brazil’s biggest environmental catastrophe. Samarco, the operator of the mine and dam near Mariana, was a joint venture of Vale with BHP Billiton.

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In recent weeks the impact of the disaster has begun to weigh on global investors and markets. Several institutional investors have opted to walk away from Vale. These include Union Investment, Germany’s third largest asset manager, as well as Kommunal Landspensjonskasse, Norway’s largest pension fund.

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Furthermore, almost 100 large investors, led by the Church of England Pensions Board, are banding together to demand that 700 mining companies release detailed information on the size, scope and safety of their waste dams in a bid to improve practices. Estimates suggest there are about 3500 tailings dams worldwide.

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