Controversies - ESG
Mining and Mining Rights on Indigenous Lands
Mining and Mining Rights on Indigenous Lands
Vale has no Mining Rights on Indigenous Lands in Brazil. In 2021, Vale relinquished all its mining rights on Indigenous Lands in Brazil and has also given up requests for research authorizations and mining concessions. Vale's relinquishment is based on the understanding that mining on Indigenous Lands can only be carried out with the Free, Prior and Informed Consent (FPIC) of the Indigenous People themselves and based on legislation that adequately regulates the activity.
Currently, Vale develops activities in traditional territories in countries where regulations are in force, such as Canada, always in strict observance of the principles mentioned above, with emphasis on Free, Prior and Informed Consent (FPIC).
Human rights - Pico Mine, Brazil
Vale decided to relinquish its mineral rights in Indigenous Lands in Brazil, which includes applications for exploration permits and mining concessions. The company is taking the appropriate actions with the ANM (National Mining Agency) to comply with the necessary procedures.
Pico Mine, Brazil
In February 2015, Ouro Verde Locações e Serviços S.A., which provided transportation services for finished products between Pico and Fábrica mines to Vale S.A., had their workplaces, both owned by Vale, inspected by Ministry of Labor and Employment, currently the Ministry of Economy.
After said inspection, the Ministry of Labor pointed out the non- compliance with several labor obligations related to the conditions of the locker room, cleaning, access to water, working hours, among others.
Upon learning of the notifications, Vale followed all corrective measures and subsequently terminated the contract with the transport company. It so happens that, adopting an extensive interpretation of the legislation, the Ministry of Labor and Employment considered that the outsourcing of the transport activity was illegal, under the argument that it would be considered among the main activities of the contracting company and, therefore, the employees of the carrier company should be considered Vale's employees. It is important to highlight that the service provider's employees were never deprived of the right to come and go, were properly registered and received transportation to and from their homes, in conditions superior to those provided by public transport, had their work cards signed, they did not have their documents withheld, nor indebtedness to the company; being certain that they were not kept in degrading conditions analogous to slave labor. Due to the extensive interpretation of the legislation, adopted by the Ministry of Labor and Employment, Vale was assessed for alleged irregularities committed by Ouro Verde, including the illegality of outsourcing and maintaining employees in conditions similar to slave labor. As the assessments did not match the reality of the work of those service providers, the company presented defenses and administrative appeals.
Since 2016, Vale has reinforced the work of internal groups for the identification and realization of continuous improvements in facilities and workplaces, and the improvements and their results have been monitored in meetings of leaders in the areas. In addition, the contract management area reinforced inspections on contracted service providers to verify compliance with labor criteria. These actions are in line with Vale's position of repudiation of any and all forms of disrespect for human rights and unworthy working conditions; and aim to avoid, and ensure, that cases like Ouro Verde do not reoccur.
Also in 2016, Vale filed annulment actions against the infraction notices that addressed the (i) illegality of outsourcing and (ii) the maintenance of employees in conditions similar to slavery.
Firstly, it obtained an injunction to suspend the effects of the assessments until the final decision in the judicial decisions handed down in the records of the proposed annulment actions. In December/2018, the 6th Panel of the Regional Labor Court of MG accepted Vale's appeal, to annul the tax assessment notice on illegal outsourcing and recognize the validity of hiring transport services. Since outsourcing is lawful, there is no longer any basis for drawing up the tax assessment notice due to a degrading work condition against Vale, given that it was recognized that the workers were not Vale employees.
However, despite the fact that the employment relationship between Vale and the employees of Ouro Verde Locações e Serviços S/A was removed, this fact had given rise to Vale's assessment of the degrading work conditions, the 4th Panel of the Regional Court MG's Labor Court, through a non- unanimous decision, maintained the tax assessment notice. Vale is taking the appropriate legal measures to reform it, given that it is inconsistent with the decision issued by the 6th Panel of the same court.
Indigenous Peoples - Carajás Railway, Brazil
Carajás Railroad, Brazil
The Carajás’ Railway (EFC) is 892 km long, connecting the largest open-pit iron ore mine in the world, in Carajás, in southeastern Pará, to the Port of Ponta da Madeira, in São Luís (MA). Through its tracks, 200 million tons of cargo and 350 thousand passengers are transported per year, representing the main means of transporting passengers and fuel between the states of Pará and Maranhão. Inaugurated in the 1980s, the Estrada de Ferro Carajás leads the ranking of the most efficient railroads in Brazil thanks to constant investment in technology.
In the states of Maranhão and Pará, the railroad passes in the vicinity of different traditional communities. They are indigenous peoples, quilombolas and coconut breakers. These populations are recognized for their unique relationship with the territory, which involves not only physical and socioeconomic aspects, but also cultural and spiritual ones.
Vale acts with respect for the rights of these populations, managing risks and impacts of its operations and proposing actions, in a participatory manner.
Since the 1980s, as part of the construction of the Carajás Railway, Vale has maintained a relationship with these populations, which is carried out by dedicated professionals, with indigenous training and experience, in the public, private and academic sectors.
Vale signed agreements with the Awá, Guajajara and Ka´apor indigenous peoples of the Caru, Rio Pindaré, Awá and Alto Turiaçu indigenous peoples, which have an interface with the EFC's area of influence in the state of Maranhão. These agreements support actions on territorial protection, preservation and conservation of natural resources, economic sustainability, income generation, cultural and institutional strengthening, productive activities and others that contribute to the ethnodevelopment of these communities. Fundação Nacional do Índio, a governmental entity responsible for the protection of the rights of indigenous peoples, and which appears as an intervening party in the different instruments entered into, participated in the development and monitoring of these agreements.
Among the actions carried out by Vale, on a voluntary basis, was support provided for the construction and supply of equipment for 03 (three) Basic Health Units, in partnership with the Special Indigenous Sanitary District (DSEI) of Maranhão and BNDES - Banco Nacional do Desenvolvimento (“BNDES”). The units were installed in two villages of the Awá people and a village of the Guajajara people, located in the Indigenous Territory Caru in the state of Maranhão.
The specificities of indigenous peoples are respected throughout the expansion process of the Carajás Railway (EFC) in accordance with Brazilian legislation, international principles, and Vale's internal policies. The works for the expansion of the EFC started only after the conclusion and approval of the Indigenous Component Study (ECI – Estudo do Componente Indígena in Portuguese) - carried out with the direct participation of indigenous peoples, external consultancy and through FUNAI, a complementary part of the environmental licensing process for the project expansion, conducted by IBAMA.
The Specific Studies (ECI) were conducted by independent consultancy with the participation of the indigenous peoples and addressed important adjustments to the original project, including the non-installation of construction sites with employee housing in stretches close to these communities, and the hiring indigenous workers to operate in these same stretches, thus reducing the impact in these locations.
As expected, the Basic Environmental Plan for Indigenous Component (PBA CI) is still being implemented for the Awá and Guajajara Indigenous Peoples.
In another stretch of the EFC, in the state of Pará, in the municipality of Bom Jesus do Tocantins, Vale has been in contact with the Parkatêjê, Kyikatêjê and Akrãtikatêjê Indigenous People, from the Mãe Maria Indigenous Land, since the 1980s.
Over the years, different forms of partnership and support for indigenous people have been formalized, including actions in the areas of health, education, productive activities, protection, and surveillance.
Vale has always valued the respect for these populations and keeping a permanent relationship and dialogue. In this context, it supported the elaboration of the Life Plan of the indigenous people of the Mãe Maria Indigenous Land, with a participatory methodology that promoted reflection and discussion on strategies to be adopted in order to guarantee the quality of life of these peoples and guide ongoing projects and activities.
As part of the environmental licensing process for the duplication works of the Carajás Railway, the Basic Environmental Plan for the Indigenous Component (PBA CI) is being prepared, which is conducted with the support of specialized consultancy and previously approved by the indigenous peoples. The PBA aims to propose programs to mitigate the impacts of the duplication of the EFC, in the stretch that borders the Indigenous Land. Among the programs foreseen in the PBA, we highlight those of productive activities, cultural strengthening, strengthening of indigenous organizations, territorial protection, environmental and territorial management, among others.
In the same way that the indigenous people approve the processes related to environmental licensing, they also authorize all Vale activities that may impact them. This occurs in line with the Company commitments laid out in its Global Human Rights Policy, which is aligned with the main international requirements related to indigenous rights - such as FPIC (Free Prior and Informed Consent).
With the quilombola communities of Maranhão, the Quilombola Component Study (ECQ) was prepared in a participatory manner and with the monitoring of the competent governmental authorities, which included the territorial, socioeconomic, and cultural characterization of the communities located at a distance of up to 1km from the EFC. The studies made it possible to identify and assess the potential impacts of the railway duplication works and to propose the Basic Environmental Plan Quilombola Component (PBACQ) to mitigate the potential impacts of these works.
These programs involve a set of territorial protection and management actions, communication, environmental education, cultural and institutional strengthening. Committees were established according to the social organization and policies of these communities, which plan the execution, monitor and evaluate the actions developed, considering the objectives, expected results and related indicators of each program. The PBACQ was developed and is being carried out in a participatory manner, guaranteeing the listening of quilombola communities and the possibilities of monitoring actions, evaluating their results and planning activities for each year of work.
Despite pending the authorization to carry out the PBACQ in 07 of the 15 quilombola communities with which we have a relationship, due to questionings from the DPU (Federal Public Defender Office) within the scope of the EFC licensing process, Vale remains engaged with them. Several projects were implemented, including support for productive activities, cultural heritage, health and infrastructure, such as installation of a water supply system, fish farming projects, agro-industries and agro-ecological programs. Vale reiterates its commitment to comply with the determinations in the environmental legislation and requested the release of the seven communities so that it can also carry out the actions provided for in the PBACQ. The company awaits the response of the competent bodies.
The respect for the way of life of Indigenous Peoples and Traditional Communities is guided by Vale's Global Human Rights Policy. The Policy is aligned with the main international standards related to the theme and guides the work of the professionals responsible for the relationship with these populations. Vale believes in supporting ethno-development and in respectful, mutually beneficial, and long-term relationships.
Indigenous Peoples - Onça Puma Nickel Mine, Brazil
Onça Puma Nickel Mine, Brazil
Vale does not carry out mineral research or mining activities of any kind on indigenous lands in Brazil, strictly respects current legislation, and the company is committed to Free, Prior, and Informed Consent (FPIC) with indigenous communities. Vale further declares that mineral resources or mineral reserves in indigenous lands in Brazil are not being considered in its current production plan.
Vale's relationship with Indigenous Peoples and Traditional Communities is guided by its Vale’s Global Human Rights Policy, which is aligned with the leading international references related to the theme, such as the UN Guiding Principles on Business and Human Rights, the Equator Principles, the Position of International Council on Mining and Metals Positioning on Mining and Indigenous Peoples, Convention No. 169 of the International Labor Organization, the UN Global Compact, the Global Reporting Initiative (GRI), the International Finance Corporation (IFC) Performance Standard No. 07, and the UN Declaration on the Rights of Indigenous Peoples, as well as the legislation provided for in the countries where Vale operates. Please access our commitment, management, and targets here for further information.
Regarding the legal proceedings involving the Xikrin do Cateté people and Vale, negotiations were held with this community under the supervision of the Federal Prosecutors (MPF) and, following a comprehensive dialogue process, an agreement was entered into in December 2021, validated by the judges of the Federal Courts of Redenção and Marabá, in the public civil actions related to the Onça Puma, S11D and Salobo projects. With respect to the Kayapó indigenous community, part of the Onça Puma Class Action (ACP), in October 2022, the agreement celebrated with Kayapós Indigenous People was ratify by Brazilian authorities.
This Agreement establishes payments for investments in structuring projects and funding for the villages and provides for extinguishing the legal proceedings related to it. The Agreement also foresees the establishment of a fund for future generations, to be defined between the indigenous people and the Federal Prosecutors (MPF) through a revision of the Adjustment Term of Conduct (TAC), currently maintained by the office with the indigenous people.
Concerning the environmental contamination allegations of the Cateté River resulting from the Onça Puma project, these were proven to be unfounded, as evidenced in reports prepared by experts from the VCF-Redenção court.
It is important to highlight that the Itacaiúnas Hydrographic Basin, which encompasses the Cateté river, its streams, and contributors, is located in a geological region with a natural presence of metals, such as iron, nickel, copper, among others, and therefore, such metals are inherent characteristics of the region’s soil, occurring in volumes naturally higher than those estimated in the parameters of the legislation. The information was recorded and confirmed in the Environmental Impact Study (EIA) and the Environmental Impact Report (RIMA), prepared in 2004, which subsidized the project's license. The preparation of such documents used the monitoring data from the systematic monitoring points of the Onça Puma operational unit for surface water located in the Cateté River channel between 2003 and 2005, taken as a quality reference, for comparison between possible interferences on the characteristics of the waters, before and after the start of the enterprise implementation and operation of the unit.
In addition, Vale has a systematic monitoring program for surface water and effluent quality, which has a historical series from 2008 to the present day. It is important to emphasize that the past data and the historical series of monitoring supported the background study carried out through the statistical analysis of these results, being formally recognized by the environmental licensing agency.
It is important to clarify that Vale has been in the Amazon for over 40 years, helping to protect, in partnership with the Chico Mendes Institute for Biodiversity Conservation (ICMBio), about 800 thousand hectares of forest, in the Carajás Mosaic, an area equivalent to five times the city of São Paulo, which represents a stock of 490 million tons of carbon equivalent and the largest area of continuous forest in the south and southeast regions of Pará.
The importance of the partnership with ICMBio can be evidenced through satellite images over time that demonstrates the evolution of land use and occupation and shows that the landscape of forested areas in the region is restricted to the conservation units in which Vale works together with the environmental organ and the Xikrin do Cateté Indigenous Land.
Vale remains fully committed to ensuring efficient management of the environmental control systems of its projects, as well as being imbued with the purpose of strengthening its relationship with Indigenous Peoples, maintaining a structured and transparent dialogue and supporting initiatives focused on specific rights, such as health, education, culture, territorial protection and ethno-development, to improve the quality of life of these peoples.
In this sense, in 2021, Vale's Social Ambition for 2030 was released: "To be a partner company in the development of resilient communities, engaged in issues relevant to humanity and committed to sustainable mining."
Among the commitments made is to support the Indigenous Peoples neighboring its operations in the elaboration and execution of their plans in search of the rights foreseen in the UN Declaration on the Rights of Indigenous Peoples (UNDRIP).
Piquiá de Baixo, Maranhão State, Brazil
Piquiá de Baixo
Maranhão State, Brazil
Vale's purpose is to improve life and transform the future, respecting the environment and the communities where we operate, listening actively and engaging in permanent dialogue with all of the parties involved. Therefore, there is a continuous approach to relevant topics, with a focus on mutual engagement and long-term relationships.
Vale does not own a steel mill dedicated to pig iron production in the Chemical Industrial Park of Açailândia (PIQUIÁ), in Maranhão, and does not have any relationship of dependence or subordination with the steel companies located in the territory. Its relationship with the companies in the sector is strictly commercial, when demanded to supply iron ore. In this context, Vale has always sought to comply strictly with environmental standards, maintaining controls and monitoring in all its ore-related operations, and is always mindful of the social claims of the community, participating actively in discussions and solutions together with the public authorities and steel mills.
In fact, Vale's operations in the region take into consideration environmental aspects and all applicable legislation, and manage its processes, employing available technology for environmental control, preventing and mitigating impacts. Vale's social actions are based on a permanent process of risk management in the communities, and on the promotion of a positive social legacy. Through alliances and partnerships, we are always searching for ways to articulate solutions to the challenges faced by the surrounding communities and society.
Vale's actions in the Piquiá region are carried out in a participative manner, with a focus on the integrated development of the region, and with various actions that contribute to the territory, and its initiatives are organized in the following priority areas: Housing, Environmental and Social, all of which are the result of the company's permanent dialogue with the community and are also part of the actions agreed in the Piquiá Sustainability Committee, created by Açailândia City Hall.
Vale and the Vale Foundation, through voluntary investments, have been executing cooperation agreements with the Piquiá Community Association and Caixa Econômica Federal (CAIXA) since 2010 to build 312 houses for the creation of a new neighborhood for the community - "Piquiá da Conquista".
In the first phase of the work, an initial investment of R$6MM was made by the Vale Foundation Urban Quality Seal Program, which aims to encourage social housing projects under the “Minha Casa, Minha Vida Program”, with financial complementation per housing unit.
In 2022, in response to a request from the Piquiá Community Association, Vale made a new financial contribution of R$33 million from CAIXA to ensure the continuity of the construction work in the new neighborhood, in view of the budget impacts suffered and project updates, including basic sanitation infrastructure, paving, and adequate public lighting, among other infrastructure items, speeding up the work, which is scheduled for completion in 2023.
The voluntary socio-environmental investment totals R$39 million (thirty-nine million reais).
As for the report issued by the International Federation of Human Rights - FIDH pointing out socio-environmental issues in the Piquiá region, corroborated by the Justice on Tracks movement, all allegations were evaluated, and visits were made by members of the Sustainability Committee of Vale to the site, with constant monitoring by local teams.
Vale monitors the actions of revitalization of construction yards on the BR, installation of truck collectors, shutdown of operations in pig iron production plant near the community of Piquiá, etc., adopted by the mills as measures to address the issues raised in the report, ratifying Vale's commitment to be engaged in discussions aimed at the well-being of Piquiá de Baixo.
Vale acts in an articulated manner in the territory of Piquiá, considering the following dimensions:
Focusing its actions on the promotion of sustainable and territorial development, Vale has been contributing and investing in social actions such as, for example, the participative social and territorial diagnosis of the region. Among other products, the diagnosis identified the need to carry out urban drainage in the region of Piquiá de Cima, where this action was also prioritized and where Vale entered as a partner to make it viable. The project is currently under development, with physical progress of 70% to be delivered in July 2023.
Vale and the Vale Foundation, through the Ciclo Saúde and Fortalecer Proteção Social projects, supported the infrastructure, acquisition of inputs and equipment, and the professional qualification of health and social assistance professionals in the three Basic Health Units and the CRAS (Reference Center for Social Assistance) in the region.
Vale contributed with training for the public school network in the state and municipalities of Maranhão, through an initiative of the Vale Foundation in partnership with FGV in the Literacy Trails project. This partnership benefits the Piquiá region, and supported the renovation of the Almirante Barroso Piquiá de Baixo school, benefiting 136 students. The Vale Foundation, through the Routes and Literary Networks program, also refurbished and equipped reading rooms at schools in Piquiá, donating books and training education professionals in reading-related subjects. In total, about 6 thousand books were donated to the schools in Açailândia, 630 of which to Piquiá.
4.4 Employment and income generation:
Aiming to promote local entrepreneurship and income generation, the Vale Foundation promotes the Income Generation Support Program (AGIR), which supports five community businesses in Açailândia. Through AGIR, entrepreneurs receive specialized consultancy in business management and operation, customized training for their type of activity, support in articulating partnerships and funding, and seed capital for structuring and expanding the business. In Piquiá, the AGIR program supports the Feira Livre do Piquiá, a business composed of 26 entrepreneurs who produce and commercialize local products, besides promoting the rescue of the region's culture and the occupation of its public spaces. Besides the Feira Livre, in Piquiá there are also other entrepreneurs supported by AGIR, such as the beekeepers who are part of the AAVA - Agroindustrial Association Vale do Açailândia. The honey is produced in an apicultural pasture ceded by the company Suzano, through a technical cooperation partnership with the Vale Foundation.
Vale reaffirms its commitment to continue dialoguing and building social development solutions with the community of Piquiá, civil society in general, public authorities and other private companies, in order to promote the guarantee of human rights, the empowerment of the community and the strengthening of public policies and management, thus seeking evolution in sustainable results for the region.
Dust Emissions, State of Espírito Santo, Brazil
State of Espírito Santo, Brazil
Tubarão Port, in the municipality of Vitória, Espírito Santo, is an iron ore port and a coal dock, which imports coal and exports iron ore from the Minas Gerais Iron Quadrangle, as well as steel to ArcelorMittal's operations in Brazil. A police investigation conducted in January 2014 revealed that Vale's operations at the Tubarão Port had resulted in the release of dust in its surrounding bodies of water and air.
The municipal government of Vitória subsequently penalized Vale and ArcelorMittal with US$ 8.35 million each, as well as demanding that both companies repair any damage resulting from the dust release. The companies appealed the fine.
In May 2018, Vale and ArcelorMittal received a study made by the São Paulo State Environmental Company of São Paulo (Cetesb) containing over 190 targets to reduce pollution based on an agreement signed by the companies and the local regulators until 2023.
Vale operates and continually invests in environmental control systems. The entire productive system of the Tubarão Complex - from the arrival of the ore to the shipment - has the latest environmental control technology. By 2023, Vale will have invested approximately R$ 1 billion in environmental control measures in its operations at the Tubarão Complex, adding the amounts invested in recent years.
With regard to health, Vale informs that it monitors the health effects of its employees related to the exposure to the iron ore present in the workplace environment. It emphasizes that there are no records of current employees, or retirees, with health problems, or who have been removed from work, due to exposure to iron ore at the Tubarão Complex.
It is noteworthy that, according to a Social Security report, there have been no records of respiratory diseases related to the exposure to iron ore in Vale employees in Brazil.
Samarco, Fundão Dam, Brazil
Fundão Dam, Mariana, Brazil
The mining tailings dam of Fundão, owned by Samarco Mineração S.A., collapsed in November 2015 in the Bento Rodrigues sub-district, 35 km from the center of the Brazilian municipality of Mariana, Minas Gerais.
Vale and BHP Billiton each hold 50% of Samarco mining company’s shares. As a shareholder, Vale has always emphasized the importance of implementing policies and standards in line with its own and has supported Samarco in its efforts to recover the damage caused by the Fundão Dam breach in the State of Minas Gerais.
From the first day of the breach, Vale and its employees committed to responding to the emergency and, shortly thereafter, to the remediation of human rights and environmental recovery.
After the signing of a Conduct Adjustment Transaction Term (TTAC) between Samarco, Vale and BHP Billiton, with the Federal Government and the governments of the States of Minas Gerais and Espírito Santo and their autarchies, the Renova Foundation, an institution responsible for conducting the repair, restoration and socio-economic and socio-environmental recovery programs in the areas impacted by the Fundão dam failure, was created. This term was later ammended by the Conduct Adjustment Term, TAC -Governance.
It is important to note that the TTAC instituted the Interfederative Committee (CIF), a collegiate system that brings together representatives of public bodies and society, led by Ibama and the Ministry of the Environment, which works as an independent entity, external from the Renova Foundation, with the function of guiding, monitoring and supervising the execution of the remediation measures provided for in the TTAC. The CIF also has eleven Technical Chambers, which are consultative bodies, created to assist it, in specific matters, for the performance of its purpose.
By establishing an organization dedicated exclusively to the reparation process, such as Renova Foundation, a robust governance model was also created, with the participation of dozens of entities. Since June 2018, with the signing of the TAC Governança, the Renova Foundation, its sponsors - Samarco, Vale and BHP Billiton - and the ministries and public defenders at the federal level and in the states of Minas Gerais and Espírito Santo, there has been an increase in participation of the affected people in the decision-making processes of reparation, improving the model of collective construction of solutions, and giving the affected communities the opportunity, with the right to vote, to participate effectively in decisions on the reparation process.
TAC Governança established the creation of regional chambers and local commissions, which are being organized to represent the affected communities. Representatives of these chambers and commissions are part of the Interfederative Committee, the Board of Trustees and the Advisory Board of the Renova Foundation. Since the creation of the Renova Foundation, its activities have been monitored by the Public Ministry of Foundations of Minas Gerais, which oversees the fulfillment of the objectives and the functioning of this model of reparation, hitherto unprecedented in Brazil.
Internally, the Foundation's Board of Trustees is empowered to approve the plans, programs and projects proposed by the Executive Board of the Renova Foundation, in accordance with its bylaws, which were also approved by the Public Ministry. The Advisory Board, with positions for the participation of representatives of the affected communities, basin committees, Ibama and academic institutions, has the ability to represent society within the Renova Foundation, and its role is to give an opinion on plans, programs and projects, in addition to indicating solution proposals for damage caused by the dam failure. Internal governance also has a Fiscal Council, Independent Audit, and Compliance and independent Ombudsman areas. Vale, observing the governance structure created, has always supported Samarco and Fundação Renova in all necessary areas and has been guaranteeing funding and the implementation of more than 40 programs that were established in the agreement with the federal and state governments, together with the mining company BHP Billiton.
Vale also implemented an area dedicated to geotechnics, with the purpose of evaluating and improving the company’s dam management processes, with action plans and goals. The company also revised its emergency plans, including clarifications on evacuation and mobilizing the surrounding community on how to act in the event of an accident. All remediation and recovery actions taken by Samarco and, now, by the Renova Foundation are in line with national and international standards and best practices, in addition to the National and State Dam Safety Policy.
More information about the reparation process conducted by the Renova Foundation may be accessed on the webpage: https://www.fundacaorenova.org/.
Belo Monte, Brazil
In June 2011, Vale became a shareholder of Norte Energia S.A. (Norte Energia), holding company of the Belo Monte Hydroelectric Power Plant (HPP), by acquiring a 9% stake. In March 2015, Vale sold 49% of its 9% stake in Norte Energia to CEMIG. Currently, Vale holds an indirect stake of 4.59% in Norte Energia's capital.
Since the auction notice for the Belo Monte Hydroelectric Plant, launched in 2009, the project has been debated by society. The current configuration of the enterprise reduced the area that would have been flooded by 58% of the original proposal to avoid affecting indigenous lands.
The use of approximately 100 km of unevenness of Volta Grande do Xingu was studied and debated, resulting in the Water Availability Reserve Declaration - National Water Agency (ANA - Agência Nacional das Águas, in Portuguese) Resolution no. 740, of 10/06/2009 and in conditions of the Preliminary License (LP) Ibama (Portuguese acronym for Brazilian Institute for the Environment and Renewable Natural Resources) no. 342/2010, of 02/01/2010, which dictates the rules relating to the hydrogram and navigability, with emphasis on the test period of 06 (six) years after installation of the full generation capacity of the Main Powerhouse is completed, which occurred in November 2019.
Based on information available in Norte Energia's Sustainability Report, there is a monitoring plan, with identification of the resulting impacts, which has been implemented, configured by the Integrated Management Plan of Volta Grande do Xingu. This plan was consolidated in 2011, when the Basic Environmental Project – PBA was presented, then composed of 05 (five) subprograms, among them the Navigability and Living Conditions Monitoring Program, in addition to the Aquatic and Terrestrial Ecosystem Conservation Plans and the Water Resources Management Plan. Norte Energia discloses on its website regular bulletins of flows and levels of the Xingu River, with maps and explanatory notes, providing access to information.
The Social monitoring forum of the Belo Monte HPP (FASBM, Fórum de Acompanhamento Social da Usina Hidrelética de Belo Monte, in Portuguese) was implemented in 2011 as well, with a joint board formed by local and regional stakeholders, with periodic meetings to clarify doubts and exchange information about the Belo Monte Hydroelectric Plant. According to information provided by Norte Energia in its Sustainability Report, meetings, participative workshops, or technical visits are held with representatives from the communities, where civil society, local municipalities, Ibama, and other interested parties participate. The FASBM also counts on other participatory instances, among them Volta Grande do Xingu commission – CVGX (Comissão da Volta Grande do Xingu, in Portuguese) and Fisheries and aquaculture commission – CPA (Comissão da Pesca e Aquicultura) and promotes meetings of commissions and specific thematic committees to enable the appropriate amplitude of the dialogue.
As indicated in Norte Energia's Sustainability Report , the Belo Monte HPP meets all the requirements and the conditioning factors of the Environmental Licensing process, through the Environmental Impact Study (EIA/RIMA), conducted in conjunction with Ibama teams dedicated to the analysis of the documents, participating in meetings in the region and in regular inspections. The Belo Monte HPP also complies with the requirements of the Equator Principles referenced by the International Finance Corporation (IFC).
Norte Energia also reports quarterly compliance with the Performance Standards on Socio-Environmental Sustainability, according to the standard established by the IFC, and this process is audited by an independent consulting firm of the financing banks. Therefore, given the environmental licensing process, monitoring, development of participatory processes and independent monitoring, it is demonstrated that all socio-environmental measures have been observed, and the foreseen and generated impacts have been mitigated, compensated and monitored, in compliance with legal requirements and those agreed upon with society (Source: Sustainability Report).
In addition to the commitments established under the environmental licensing process, Norte Energia in its first ten years of execution (2011-2021) supported 363 projects distributed over 342 thousand km² of area of operation and the amount of approximately R$ 305 million, distributed as follows: 48.8% of the projects were executed in the sphere of civil society, 32% in actions in the municipal government, 8.5% in the Federal Government, 8% in the state government and 2.8% in the management of actions and projects directed to the Plan for the Sustainable Regional Development of the Xingu-PDRSX. These are voluntary actions that seek to contribute to and strengthen the socioeconomic development of the region and the environmental protection of the Xingu basin. In 2022, it valued ESG aspects in its management, presenting a letter of request to join the UN Global Compact. (Source: Norte Energia's 2022 Sustainability Report).
Corruption, Republic of Guinea
Republic of Guinea
Considered to be one of the best unexploited iron ore deposits in the world, Simandou was acquired by Vale in April 2010 as part of a joint venture with BSG Resources Limited (“BSGR”). At the time, the project was announced as a major impetus for the company’s faster growth in iron ore production.
Prior to entering the joint venture with BSGR, Vale conducted a thorough and in-depth due diligence, with support from internationally renowned companies and law firms, to understand how BSGR obtained its mining concessions and to assure itself that BSGR had not engaged in any corruption activities in that regard. BSGR repeatedly attested and assured Vale that BSGR had lawfully obtained its mining rights in Guinea and followed proper procedures in obtaining its rights. Vale diligently requested, prior to the formation of the joint venture, personal anti-corruption statements from representatives of BSGR, including Mr. Benjamin Steinmetz, and such statements were regularly provided by them to Vale.
Vale paid BSGR an initial purchase price of US$ 500 million, to become a partner of BSGR and invested over US$ 700 million more in developing the mining concession, principally in Zogota.
In October 2012, the new Guinean government began investigating the way BSGR obtained its mining rights.
At the same time, in 2013, investigations conducted by the U.S. Department of Justice and the FBI resulted in the arrest of a BSGR intermediate who had attempted to bribe the wife of Guinea's late dictator to destroy evidence of his relationship with BSGR.
The new Guinea government's investigation concluded that BSGR had obtained the rights to Simandou through corruption and bribery of Guinean officials. In April 2014, the Guinean government revoked the mining concessions after determining that BSGR had engaged in bribery and corruption in obtaining such concessions. The Guinean government explicitly concluded that Vale had played no role in any of BSGR’s corrupt activities, which would have been carried out even before Vale became a partner in the business. In March 2015, Vale transferred the interest of the mining joint venture stake in Guinea back to former partner BSGR.
In April 2014, Vale initiated an arbitration against BSGR before the London Court of International Arbitration (“LCIA”) seeking to terminate the contracts then in force with BSGR and also to recover over US$ 1 billion in damages suffered due to BSGR’s fraud in inducing Vale through false statements and representations to invest in the joint venture and develop mining rights in Guinea that, unknown to Vale at the time, BSGR had obtained through bribery and corruption. On April 4, 2019, an LCIA arbitral tribunal rendered a fully favorable arbitral award for Vale, ordering BSGR to pay Vale over US$ 1.2 billion in damages (with interest, correction and expenses the value totals more than US$ 2.0 billion), and expressly declaring that Vale was never involved in the illegal practices related to BSGR's obtaining of mining concessions, on the contrary, the Tribunal attested that Vale was a victim of the fraud perpetrated by BSGR. Vale promptly commenced legal proceedings to enforce its award against BSGR in the High Court of Justice of England and in the United States District Court for the Southern District of New York. The arbitral award was recognized in both the United Kingdom and the United States by Court decisions that are final and not subject to appeal. On the other side, the attempts made by the BSGR to set aside the arbitral award have been unsuccessful, with the international Courts rejecting BSGR's applications to set aside the arbitral award.
On January 22, 2021 a Swiss Court convicted Beny Steinmetz on criminal charges of bribery and forgery in connection with his company BSGR procurement of valuable mining rights in Simandou. Two Steinmetz’s associates were also found guilty, one was found guilty of bribery and forgery and the other of bribery. The court sentenced Steinmetz to 5 years of imprisonment and ordered forfeiture of CHF 50 million. The decision of the Swiss Court to hold Steinmetz personally accountable for his corrupt acts follows the April 2019 award of the London Court of International Arbitration, which found that BSGR defrauded Vale by concealing its bribery and corruption from Vale to secure Vale’s investment in Simandou.
In an attempt to recover at least some part of the losses it suffered from the JV with BSGR, Vale filed a fraud claim in 2019 with the High Court of England and Wales in London, alleging fraud in the Simandou deal. The action was brought against certain individuals and entities related to BSGR, including Mr. Benjamin Steinmetz, seeking forfeiture of personal property of these individuals and entities. In December 2019, the English Court granted a worldwide freezing order on the assets of Steinmetz, his foundation, and other defendants to secure payment of Vale's JV losses with BSGR. However, due to a change in English case law regarding the limitation period for such claims, Vale had to file to discontinue this fraud action against the BSGR-related individuals and entities. As a result, the personal assets of the defendants were released due to the dismissal of the case as the claims were time-barred.
In the meantime, Vale is still seeking to receive from BSGR amounts through the other ongoing legal proceedings in London and New York against BSGR.
In the context of the proceedings initiated by Mr. Benjamin Steinmetz in Brazil, Vale is confident that the Brazilian authorities will likewise not be misled by Steinmetz’s continued efforts to shift blame and attention away from his corrupt acts.