The Mariana tailings dam disaster: 'We want compensation to be paid as quickly as possible'

As compensation talks on the 2015 Mariana mining tragedy have now broken down after a year and a half, a new chapter will be opened in Brazilian courts, possibly leading towards the largest ever settlement of its kind in Latin America.

Representatives of Minas Gerais and Espírito Santo states, the mining firms responsible and prosecutors were unable to agree on the amount to be paid to victims of the tailings dam collapse, which killed 19 people and caused widespread environmental damage in around the city of Mariana. 

The dam was operated by iron ore pellet maker Samarco Mineração, a Vale-BHP joint venture. The episode was considered the worst environmental disaster to take place in the country, since the material in the tailings dam seeped into rivers in the region and even reached the Atlantic Ocean.

The states are seek a record 126bn reais (US$24.2bn) in compensation, while the companies only offered 112bn reais, according to unnamed sources involved in the talks consulted by BNamericas. But the key sticking point was the miners’ demand for the payment to be spread over 20 years.

The value demanded would make the Mariana considerably larger than the agreement reached by Vale with the government of Minas Gerais state over compensation for the collapse of the Brumadinho tailings dam. 

In February 2021, Vale agreed to pay out 37.7bn reais in compensation to local authorities. The The dam failed in January 2019 and became Brazil’s deadliest mining disaster, killing at least 272 people and again causing serious environmental damage.

Luisa Barreto, secretary of planning and management in the Minas Gerais state government, talks with BNamericas about the next steps in the dispute between the authorities and mining firms. In the interview, Barreto also discusses state governor Romeu Zema's plans for privatizations in the state if he is reelected in October.

BNamericas: Why have the negotiations been suspended between the government of Minas Gerais, other authorities and the companies regarding compensation for the Mariana tailings dam collapse?

Barreto: We had been discussing this agreement with the companies for more than a year, with the intermediation of the judicial oversight body CNJ, supported by the head of the supreme court, Luiz Fux, and our expectation was to reach an agreement by the end of the minister's term. 

[Editor's note: Fux left the post of president of the supreme court and his post at the CNJ on September 8, after the end of his two-year term]

We discussed all the technical and financial details of the agreement with the companies. The financial proposal presented by the companies came close to our demand, but the problem was that we didn't reach an agreement on the payment method, the term of the disbursement.

BNamericas: What was the proposed payment that led to the disagreement?

Barreto: Samarco, Vale and BHP wanted to pay the agreed amounts over 20 years, so a significant part of the sums would only have been be paid in the last few years of that period.

For us, that's not feasible, as we want this compensation to be paid as quickly as possible. Although it's a huge amount of reparations, exceeding 100bn reais, it makes no sense to sign an agreement with such a prolonged period. That's why we decided to withdraw from the negotiating table.

The reparations agreement we reached for Brumadinho was for disbursements over six years, which seems to us to be an ideal time frame.

BNamericas: What will be the next steps now?

Barreto: In the coming days, the government of Minas Gerais will start legal measures against the companies to seek the reparations in court. If at any time the companies want to renegotiate, they will have to recognize an important point in the dispute, which is the fact that these reparations have to be paid by Samarco, Vale and BHP together.

At the moment, the companies insist that this compensation is owed only by Samarco, but we're not so sure of this, as Samarco is a company that's currently under bankruptcy protection. This doesn't give us security that this company alone will fulfill any agreement.

BNamericas: Once the dispute goes to court, could the size of the reparation be increased?

Barreto: That's a real possibility. However, it's important to make it clear that the state government isn't fighting to collect the largest possible amount of financial resources. Governor Romeu Zema's aim is for fair and quick reparation for the damage suffered by the population and the environment. 

The Doce river, for example, needs to be used again by the people. It needs to be used again by the surrounding populations. That's the most important thing.

BNamericas: Part of the compensation paid by Vale for what happened in Brumadinho is being used by the government for infrastructure projects. In the case of Mariana, could the money also be used for those purposes?

Barreto: The Brumadinho case is an example of an excellent agreement for us, both considering the execution of the disbursements as well as the deadlines. Yes, we could use similar models.

BNamericas: Governor Romeu Zema is the front runner for reelection according to recent polls. If he is reelected, what will be the priorities in the government's agenda regarding privatizations?

Barreto: Governor Zema was elected with an agenda to reduce state machinery and favoring privatization. Each privatization operation depends on the political environment.

The governor's priority now is the privatization of Codemig, to allow the state to adhere to the fiscal recovery regime [promoted by the federal government].

BNamericas: Is there any intention to privatize Copasa and Cemig, in a possible second term of governor Zema?

Barreto: That could be on the agenda, but it will depend on a broad assessment at an opportune moment.