Four years after tragedy, Mariana town sees economic improvement
In the last few years, the first days of November have brought difficult memories to Mariana, the historical town in Minas Gerais state, Southeast Brazil. Tuesday (Nov 5) marks four years since the biggest tragedy in the country’s history: 39 million cubic meters of sludge was unleashed after a failure at a tailings dam of company Samarco, Vale’s partner in iron ore extraction.
Four years after the incident—which led to the deaths and the disappearance of the districts of Bento Rodrigues and Paracatu—this is the first anniversary on which the city is releasing a positive report. The financial plight may ease off after local mining activities are resumed, as they were brought to a halt right after the disaster. The resumption is likely to take place 2020.
Efforts to reconstruct the devastated communities have proved to make a positive impact by increasing the Tax on Services (ISS). Another factor is the regulation of the amounts linked to the Tax on the Circulation of Goods and Services (ICMS). In April this year, after three months of negotiations, the state government and the Minas Gerais Association of Municipalities (ANM) signed a deal stipulating that the debts owed to the city and the municipalities affected—$1.75 million in all—must be paid in 33 installments, starting in January next year. Overdue payments are also expected to reach Mariana coffers.
“This year, the town has witnessed a different reality. The state government has normalized remittances. The reconstruction of Bento Rodrigues and Paracatu increased the amount collected as ISS. The return of Samarco is bringing hope too. Our unemployed reached 26 percent. Today, we have some 11 percent. After the firm was halted, the town lost some $16 million in a single year; but now it’s well adjusted. Any new revenues may be used as investment,” said Mariana Mayor Duarte Júnior.
Changes
Today scenario’s is in sharp contrast to what had been announced before this year began. In March, the city declared state of financial calamity, which was not revoked until an agreement was reached with Vale on compensations for the losses linked to the suspension of the activities at the Alegria mine. Vale is among Samarco’s shareholders, and was implicated in yet another large-scale environmental tragedy in January in the city of Brumadinho, also in Minas Gerais. As a result, other mining facilities were reassessed and had their operations interrupted. Alegria was among them.
The suspension made an impact on the amount of Financial Compensation for the Exploration of Mineral Resources (CFEM), also referred to as mining royalties, collected, which had plunged after the tragedy in Mariana. Late in 2017, the city also announced difficulties stemming from the reduced amount coming from the ICMS. A number of businesses in Mariana were supported by contracts with Samarco, suspended when the mining giant had its activities halted.
These corporations have now returned to Mariana after inking deals with Fundação Renova—a foundation created through an agreement between Samarco and the federal government as well as those of Minas Gerais and Espírito Santo states, to administer all damage repair initiatives. Reconstruction projects in the Bento Rodrigues and Paracatu districts, for instance, were carried out with the aid of multiple construction companies. Business tourism, which no longer kept the town’s hotel sector warm, is also displaying signs of recovery following the foundation’s programs.
From July 2018 to August 2019, Renova reported, subcontracting totaled $5.4 million in ISS for municipal coffers. What took place, Mayor Duarte Júnior pointed out, was the return to a prior situation. “That’s exactly how much we received from Samarco and stopped receiving after activities were suspended. So no increase in revenues came from this tax,” he said.
The return of Samarco
The resumption of the activities at Samarco is seen by municipal authorities as crucial in the consolidation of a not so bleak scenario. This, however, cannot occur immediately, as the company changed its plans.
Originally, the idea was to keep mining waste in Alegria do Sul’s pit. The pit is a structure formed as a result of the extraction process itself, regarded as safer than the dam, as the waste is stored in confinement. Later on, a decision was made to restart operations using new technology for dry waste piling. Thus, a mere 20 percent of the waste will be deposited in the pit, whose preparation was concluded last month.
The resumption hinges on the implementation of a waste filtering system, slated to happen by the end of 2020. This technology enables dry waste piling, a move backed by Duarte Júnior. “Filtering ensures new tragedies will not take place.”
Minas Gerais prosecutors have stressed the need for compensation to be paid as well as damage repair. “We’re sorry that Samarco is coming back and not even ten percent of the repair has been completed yet,” said Prosecutor Guilherme Meneghin.
