Vale Showered Cash on the Mining Town It Buried. Now It’s Pulling Out.

Vale Showered Cash on the Mining Town It Buried. Now It’s Pulling Out.

BRUMADINHO, Brazil—About 10 months ago,

Nathalia Eleuterio’s

husband, Reinaldo,was buried alive.

Their 2-year-old daughter, Isabella, still asks when daddy will be home from work. He was among 270 people killed whenVale SA’s mining waste dam collapsed,spilling rock, dirt and sludge onto the town below.

Facing hundreds of potential lawsuits, the company released a flood of cash to compensate families in the region, setting off a consumer frenzy. Stores are packed with customers. New cars clog roads. Everything seems up for grabs, from plastic surgery to beach vacations to the first taste of sushi.

The windfall is a temporary balm. Vale has decided against reopening the Córrego do Feijão mine operation, which until 2016dumped its waste into the failed dam. The mine closure will eliminate at least 600 of the area’s steadiest jobs and reduce town tax revenues by about a fifth.

For Brumadinho, the closure amounts to an economic calamity piled atop personal tragedy. Still numb with grief, many residents aren’t thinking of what lies ahead. Instead, some live each day like it is their last, skipping work and splurging on luxuries.

“I think I’m making up for the loss of him by buying stuff for Isabella,” Mrs. Eleuterio said. “Life has no meaning anymore.” She teared up as she recalled her trip to the morgue and seeing her husband’s face, swollen with the mud that filled his mouth and throat as he tried to take in his last breath.

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Shoppers carried away a new TV Monday in Brumadinho, Brazil.

Marcelo Klein,

Vale’s recovery and development director, a position created to help after the disaster, said Vale can’t resume mine operations “out of respect for the victims.” Rescue workers found only body parts of some victims, leaving much of the Vale site a mass grave.

Town officials and Brazilian prosecutors say that Vale, the world’s largest iron-ore miner, is not only responsible for the dam’s collapse—the deadliest of its kind in half a century—but also the economic downturn to come.

“We’re heading for chaos,” said Brumadinho Mayor

Avimar de Melo Barcelos.

Like many of the town’s residents, he lost friends and takes sleeping pills and antidepressants for his grief.

Over the years, company operations contributed nearly $1 million a month to the municipal budget, the mayor said: “If it stops I’m going to have to close health clinics, hospitals, cut so many services.”

Vale has agreed to pay the town a total of about $20 million through December 2020 to compensate for the revenue loss. The company said it would also pay the salaries of workers from the closed mine operation for three years.

The death toll from a dam collapse in Brumadinho, Brazil, rose sharply on Wednesday, and with 259 still missing that number was expected to climb. Photo: Associated Press (Originally Published January 30, 2019)

“We’re not making promises for the long term, but we are committed to re-evaluating the situation with the necessary frequency,” Mr. Klein, of Vale, said of any future payments.

Unlike the town, Vale won’t take a big financial hit by closing the operation. Its Córrego do Feijão mine, acquired in 2001, accounted for 2% of the company’s total iron-ore production at the time of the Jan. 25 disaster. Vale can make up the loss by stepping up output elsewhere, analysts said.

Mr. Barcelos, the mayor, said the town was preparing to file a lawsuit in Germany against the dam’s German safety inspector, TÜV SÜD. A police investigation found the company shouldered responsibility by covering up structural dangers at the dam in last year’s safety audits.

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What more, if anything, should Vale do to compensate residents for the disaster?Join the conversation below.

The lawsuit could seek the company’s funding for as long as 20 years, the mayor said, giving the town ample time to develop another industry.

Mr. Klein said Vale was studying ways to help Brumadinho compensate for the loss. Repair work and the construction of a memorial will help, he said, but “the gravity of what happened in January sealed the region’s fate.”

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Atenagos Moreira de Jesus, gravedigger at a cemetery in Brumadinho, Brazil.

Atenagos Moreira de Jesus, a gravedigger at one of the town’s cemeteries, agreed it would be disrespectful to reopen the mine. He said Vale must bankroll the town until an alternative can be found.

The cash from Vale is “just hush money,” he said, taking a break from clearing land for new burial space.

The 64-year-old, who has worked at the graveyard for more than two decades, broke down in tears as he pointed out longstanding family tombs, freshly opened and marked for those who died Jan. 25. “I knew all of them,” he said.

Mariana, 80 miles east of Brumadinho, offers a glimpse into the future. In November 2015, another of Vale’s mine-waste dams, jointly owned with

BHP GroupLtd.

, collapsed and killed 19 people.

In the following year, unemployment soared to 26% from mid-single digits, Mayor Duarte Júnior said. Crime and drug abuse also escalated.

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VEN.

COLOMBIA

ECUADOR

PERU

BRAZIL

BOLIVIA

Brasilia

Atlantic Ocean

MINAS GERAIS

Pacific Ocean

Belo Horizonte

Brumadinho

Mariana

PAR.

CHILE

Rio de Janeiro

Sao Pãulo

500 miles

ARGENTINA

500 km

via newsapi.org

VEN.

COLOMBIA

Atlantic Ocean

ECUADOR

PERU

BRAZIL

BOLIVIA

Brasilia

MINAS GERAIS

Pacific Ocean

Belo Horizonte

Brumadinho

Mariana

PAR.

CHILE

Rio de Janeiro

Sao Pãulo

500 miles

ARGENTINA

500 km

via newsapi.org

VEN.

COLOMBIA

ECUADOR

Atlantic Ocean

PERU

BRAZIL

BOLIVIA

Brasilia

MINAS GERAIS

Pacific Ocean

Belo Horizonte

Brumadinho

Mariana

PAR.

CHILE

Rio de Janeiro

Sao Pãulo

500 miles

ARGENTINA

500 km

via newsapi.org

VEN.

Atlantic Ocean

BRAZIL

Brasilia

BOLIVIA

MINAS GERAIS

Belo Horizonte

Brumadinho

Mariana

PAR.

Rio de Janeiro

Sao Pãulo

ARGENTINA

500 miles

500 km

Within two years, as mining royalties fell, Mariana’s municipal revenue dropped by 21%. Businesses closed, the mayor said, and public services were squeezed at a time when more people, having lost jobs and health insurance, needed help.

Unlike in Brumadinho, Vale expects to resume its Mariana operations, bringing to many a bittersweet sense of relief.

“We lost 19 people and it was very difficult,” Mr. Júnior said. “But to lose 270?…our suffering is so great, but in Brumadinho it’s unimaginable.”

Payday promise

The Wall Street Journal reported in February that employees at Vale and its safety inspector TÜV SÜD knew for months of dangerous conditions at the dam. A spokeswoman for Vale said the company wasn’t aware of any imminent or critical risks to the structure. TÜV SÜD said only that it was cooperating with the authorities.

Weeks after the disaster, Vale gave each victim’s family $25,000. It paid an additional $175,000 in damages to relatives who agreed to settle out of court. It also gave $13,000 to anyone living next to the mine. Nearby farmers and some eligible businesses received $4,000.

via newsapi.org

Tractors and trucks removed mud Saturday as rescue workers continued their monthslong search for the remaining bodies of the 270 people killed in the dam disaster.

Vale agreed to pay more than 100,000 men, women and children in the region as much as $250 a month, equal to the salary of a full-time minimum wage job. The payments end next month.

Mr. Klein said the company has tried to persuade residents during community meetings to use the compensation money to prepare for the future. The advice has been widely ignored.

“The dam’s collapse was such a shock that people think, well, I don’t know if I’m even going to be alive tomorrow,” said Nadir Damasceno, 62. Sales at her furniture store so far this year are up 50% over last year. The surge began as soon as Vale announced the $250 monthly payments. Wardrobes and kitchen cabinets are in particularly high demand, she said.

Perfume and cosmetics sales soared at the nearby pharmacy, along with antidepressants and sleeping pills. “Sometimes people just want to buy something to feel better,” said owner

Luciano Passos.

He knew about 50 of the people killed in the dam collapse.

Customers are buying more expensive cuts of meat, butchers said. Some shoppers, game to try sushi, ask bemused cashiers how to cook it.

“Every weekend someone is throwing a barbecue. People are spending like crazy,” said

Fernando Santos de Jesus,

34, owner of a notary service. Registrations of new cars and motorcycles at his office are up about 70% over the same period last year, he said.

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A customer at a pharmacy owned by Luciano Passos in Brumadinho, Brazil.

Some residents who lost close family members are buying vehicles on credit, gambling that they will win substantial court settlements from Vale.

Since the dam collapse, the town’s population has grown to 42,000 from 38,000 as former residents return for the bonanza.

Manicurists, bricklayers and other lower-paid workers are almost impossible to find in Brumadinho. Many say they see no reason to work while they are getting what amounts to a monthly wage, said

Vânia Alves Estevão,

secretary of planning for Brumadinho’s municipal government.

“Many people have no notion of how to manage their finances,” she said. “Kids are going to school with the latest model cellphone, expensive sneakers.”

Art works

Since the discovery of iron ore here at the end of the 18th century, mining has become an economic pillar of Minas Gerais, the state where Brumadinho and Mariana are located. The state’s name translates to “general mines,” reflecting its abundance of ore and precious metals.

Over the past two decades, China’s appetite for ore enriched Brumadinho through mining royalties, largely from Vale. The town’s public schools and health services were among the best in the country.

Tourists discovered the region, which is scattered with colonial-era churches and nestled in verdant countryside. An open-air museum nearby, Inhotim, features such American artists as

Matthew Barney

and

Chris Burden

as well as Brazilian conceptual artists, including Cildo Meireles.

Bernardo Paz,

a local mining magnate, opened his private art collection in 2006 to create Inhotim. The museum helped build tourism into a stable revenue source for a local economy long tethered to the ups and downs of iron-ore prices.

Then at 12:28 p.m. on Friday Jan. 25, the dam collapsed, unleashing the equivalent of 4,700 Olympic swimming pools of mud traveling as fast as 50 miles an hour. The first wave obliterated mine offices and the canteen where workers were having lunch.

via newsapi.org

The mine’s canteen and administrative offices were located beneath the dam.

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The mud engulfed the mine’s main buildings at speeds of up to 50 miles an hour, obliterating the canteen as many workers were having lunch.


Photo:

Maxar Technologies (2)

Mrs. Eleuterio’s husband was among the dead. A marble-sized cyst has since appeared on her eyelid. Doctors suspect it was from bacteria in decomposing corpses temporarily kept on the soccer field next to her house.

Experts said the spill carried harmful levels of iron, manganese and other metals into the Paraopeba River. The government recommended that farmers, fishermen and indigenous communities as far as 155 miles away stop using river water.

Malu Ribeiro,

a water expert at the SOS Mata Atlântica Foundation, a nongovernmental organization, said some fish have returned. But while the water appears clear, many heavy metals remain, and fisherman downstream ignore government health warnings about the contamination.

Ms. Ribeiro said owners of boats and fishing clubs for tourists told her group to stop saying the water was tainted because “it was keeping away visitors, and they were losing money.”

Vale said its own studies show sediment from the dam didn’t travel as far as the 190-mile trajectory calculated by the SOS foundation. It said it delivered 100 million gallons of clean water through the end of September for drinking and irrigation.

The family of

Adriana Nunes,

29, which ran a farming cooperative near the foot of the mine, was left with little but Vale’s $4,000 payment and the $250 a month payment that ends in 2019.

The mud destroyed much of Ms. Nunes’s 18-hectare farm, including equipment she had recently bought on credit. A contaminated stream now runs through the property, which makes farming impossible.

“I saw a huge cloud of dust, a noise as if millions of bamboo sticks were breaking,” Ms. Nunes said. Her cousin helped her escape in the family’s truck.

Downtown Brumadinho and the Inhotim art museum were spared, but visitors were scared away. With $3.6 million from Vale, the local tourism association launched a nationwide TV campaign in May called Embrace Brumadinho.

via newsapi.org

Matthew Barney’s artwork “De Lama Lámina” (2009), a glass geodesic dome with a mud-encrusted tractor ripping up an artificial tree, at the Inhotim art museum.

“Only now, people are beginning to understand that the whole of Brumadinho is not covered in mud,” said

Karla Linhares,

34, who runs a local guesthouse. Many visitors to Inhotim still prefer to sleep farther away.

“When you’re on holiday you don’t want to come across bad stuff, things that remind you of the collapse, I don’t want to expose my family to that,” said

Telmo Dietrich,

on a day trip to Inhotim with his wife and 11-year-old daughter.

“If my mother-in-law had her way,” he said, “we wouldn’t even have come.”

Write toSamantha Pearson at[email protected]and Luciana Magalhaes at[email protected]

Copyright ©2019 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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