Prosecutors to pursue charges after deadly disaster; company's
shares fall nearly 25%
By Paulo Trevisani and Jeffrey T. Lewis
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (January 29, 2019).
BRUMADINHO, Brazil -- Brazil's top prosecutor said she would
pursue criminal charges against executives at Vale SA, the world's
largest iron-ore miner, and the government said it was ordering
inspections at dams across the country after a deadly disaster at
one the company owned.
Vale's shares plunged nearly 25% on Monday and the company said
it would suspend dividend payments and share buybacks after the
miner's second deadly dam collapse killed at least 65 people on
Friday. Iron-ore prices jumped, fueling speculation of lower supply
The miner said it would immediately donate $27,000 to each
Prosecutor General Raquel Dodge said the company should be
severely punished for the dam's collapse, its second such incident
in less than four years. The government also said it would publish
an official order on Tuesday to demand state governments
immediately inspect 140 or so dams similar to the one that burst in
the town of Brumadinho in the southeastern state of Minas
"The government will do everything possible to make sure this is
the last time something like this happens in Brazil," Attorney
General André Mendonça said. It is possible the government will
also demand higher damages than it did over the 2015 dam collapse
because so many people died, he said in an interview with The Wall
Street Journal. Three years ago, Brazil's government sued Vale and
BHP Group for $5.3 billion when their dam burst at the Samarco
Israeli troops joined the search operation on Monday, using
equipment typically employed in submarines to hunt for cellphone
signals from the 279 people still missing. But even if the victims'
cellphones still have battery power, their owners have likely
perished, buried now for three days deep in mining waste, rescue
Fabio Noronha, a 34-year-old bar owner who volunteered to help
in the search, said it was becoming increasingly difficult to
extract corpses from the mud, which has begun to harden under the
The quickest way to spot them is "a dark spot in the mud, a body
part sticking out, or the smell," he said.
The dam's collapse, which is shaping up to be the most deadly
mining incident of its kind in more than 50 years, comes just over
three years after Brazil's worst environmental disaster, when the
Samarco mine dam burst 80 miles away in Mariana, killing 19 people.
At the time, Vale swore it would never happen again, employing the
country's best geotechnical engineers to verify its tailings dams,
used to hold the waste generated from mining.
"Mariana never again" had been the company's motto ever
But it happened again at midday Friday. A dam at the Córrego do
Feijão mine that was as tall as a 28-story building burst open,
unleashing an avalanche of reddish mud so powerful that it dragged
some workers having lunch at the on-site canteen more than a mile
down the valley.
Jefferson Ferreira dos Passos, 32, a local farmer, saved two
women who clung to tree trunks, wading neck-deep into the mud to
bring them to safety. "It was like swimming in jelly."
Vale said it doesn't know what caused the dam to burst, leaving
residents nervous over potential problems at other dams. German
safety certifier TUV SUD inspected the Córrego do Feijão mine in
September and found it to be stable.
"Just imagine how many more dams like this one are about to
burst," said Rosilane Maria Felipe, 47, whose cousin Wesley was
working as a machine operator at the mine when the dam burst. She
has lost hope he could still be alive.
Brazil's National Water Agency said in a 2014 report that the
country has more than 600 tailings dams, and about 144 of those are
large enough to cause catastrophic social environmental and
economic losses should they fail, said Lindsay Newland Bowker, the
founder and executive director of World Mine Tailing Failures, a
global team of experts who study causes and consequences of dam
The type of tailings dam generally used in Brazil, known as an
upstream dam, is the cheapest to build, but also carries a higher
risk of catastrophic danger, experts say.
Ms. Bowker said the dam may have burst as a result of a
phenomenon called static liquefaction. Tailings dams are made of
lawyers of mining waste that gradually dry out. If new layers are
added too early, the dam's contents can quickly turn into an
avalanche of mud.
"Brazil is totally locked into a portfolio of existing, very
large upstream dams," Ms. Bowker said. "They should be on the top
priority list for systematic reassessment by the government."
Judges have frozen about $3 billion of the company's assets in
response to Friday's disaster to fund relief efforts and structural
work to shore up the dam.
Brazil's environmental agency, IBAMA, has fined Vale $66
million, while the state of Minas Gerais has ordered the company to
pay $26 million as a penalty for the breach.
The dam disaster comes less than a month into the administration
of President Jair Bolsonaro, who underwent surgery on Monday to
reconnect his intestines after he was stabbed in the stomach while
The former army captain has won praise for his government's
quick reaction, setting up a crisis cabinet and sending troops and
rescue workers on the same day as the accident, and visiting the
site the following day.
But the market-friendly right winger has also been a vocal
advocate of deregulation, insisting on the need to reduce
government interference in the economy. After the catastrophe at
Brumadinho, Mr. Bolsonaro might have to scale back his plans, some
"It makes it harder for him to carry out his deregulation
agenda. Political attacks from the opposition, and public opinion,
will probably force him to change his plans," said Rafael Cortez, a
political scientist at São Paulo-based consulting firm
--Luciana Magalhaes and Samantha Pearson in São Paulo
contributed to this article.
Write to Paulo Trevisani at email@example.com and Jeffrey
T. Lewis at firstname.lastname@example.org
(END) Dow Jones Newswires
January 29, 2019 02:47 ET (07:47 GMT)
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