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Federal prosecutors in Brazil’s Minas Gerais state are seeking a court order for miner Vale SA to replace executives they accuse of disregarding safety methods in the aftermath of two deadly mining disasters.
They have asked a court in Minas Gerais to name an interventor to take charge of Vale’s safety program, according to a statement the prosecutors’ office shared with Reuters.
The prosecutors have also asked all dividend payments be suspended until the interventor confirms Vale is cooperating. Vale plans to resume payouts next month, which Fitch estimates will come in at more than $2 billion for the year.
Brazil’s Senate passed a bill on Wednesday that tightens the safety rules and inspection for dams
The request would require approval by the court.
Vale said in a statement it has not been formally notified and will respond in court when it is, adding that it had learned about the developments via the media.
Prosecutors said they want the interventor to identify within 15 days executive managers and other top management members who should be replaced in a corporate reshuffle.
The interventor would be charged with drawing up a plan to reshape Vale’s governance system to comply with international standards for disaster prevention, the prosecutors said.
The governance system currently adopted by the mining company has generated extensive damage to society and to the environment, the prosecutors say.
The so-called Brumadinho task force of prosecutors was set up after a January 2019 disaster at a Vale mine where a dam burst, killing 270 people. An earlier dam burst occurred in 2015 at a mine in Mariana owned jointly by Vale and BHP Group Ltd causing Brazil’s worst environmental disaster.
The prosecutors said that, contrary to what Vale has stated and the data it discloses, it has developed over time an internal culture that is unable to recognize safety threats.
The company acts on “corporate irresponsibility,” they say, and needs a reshuffle to change its culture to start taking preventative safety measures.
Earlier on Wednesday, Vale said it put on watch three dams and three dikes after failing to meet the security requirements during regular reviews by third party auditors.
Brazil’s Senate passed a bill on Wednesday that tightens the safety rules and inspection for dams in the mining industry, setting fines of up to 1 billion reais ($187 million) for failure to comply.
The legislation reinforces the prohibition of the use of upstream dams for tailings ponds, like one that burst in January 2019 killing 270 people at the Brumadinho mine.
The bill goes to President Jair Bolsonaro’s desk to be signed into law.
“Dams of this type will have until February 2022 to be de-commissioned and changed under a security and demobilization plan,” said Senator Antonio Anastasia, the bill’s sponsor in the upper chamber.
A first version of the law presented by Anastasia in 2019 set fines of up to 10 billion reais, but that figure was reduced in committee.
The bill also bans the construction of any tailings dams close to communities that are within 10 kilometers distance or a 30-minute drive below the dam.
Upstream dams were banned in February 2019 and companies were given deadlines to decommission dozens of similar structures in the country. At first, the National Mining Agency set until 2021 for companies to dissemble the dams.
In August 2019, the regulatory agency extended the deadline by almost six years, to 2022, 2025 and 2027, depending on the size of the structure.
(By Marta Nogueira and Sabrina Valle; Editing by Stephen Coates, Himani Sarkar and Andrea Ricci)
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