Environmental Disaster in the Brazil Mine of Iron Core in 2015 - Case Study Example

Business Report Name Institution Affiliation Date Business report Developing and not developed countries have relied on natural resources to boost their economy development. Multinational companies have taken advantage of the situation in these countries due to the vast and cheap resources as well as skilled labor lowering the cost of production. Such operations have however resulted in environmental disasters that have in turn contributed to the loss of lives such as the Bento Rodriguez Dam Disaster. The paper will discuss the Bento Rodriguez Dam Disaster evaluating the response of the owners to the events before and after the disaster. Ethical dilemmas in the case will also be discussed. Brazil is a rich country in terms of distribution of minerals. One such mineral is the iron ore that has been used in making steel providing employment for thousands of individuals in the developing country. However, the country was faced with an environmental disaster in the mine of iron core on 5th November 2015 when a Fundao tailings dam burst in the mine in Bento Rodrigues in the town is located in Mariana district in the state of Minas Gerais (Szoke, 2015). The water from the mine estimated to be 32 million cubic meters washed away the mineral waste as runoff destroying the surrounding habitats (Szoke, 2015). From the hills through the valleys, the mineral waste polluted River Rio Doce, destroyed various homes as well as farming lands. During the incidence, the homes downhill in a town that had sprung as a result of the mine were submerged in the mud made of mineral waste resulting in the displacement of over 700 people, whose homes had been affected (Szoke, 2015). The huge force of water also resulted in the wiping away of the essential infrastructures in the area including roads, electricity cables, and bridges making the disaster one, if not the worst environmental crisis the country has ever faced. As the cars hung on to the roof of the houses and the houses were broken by the water, the disaster resulted in the death of 19 individuals, lucky not to have killed more. Most of the individuals who lost their lives as a result of the disaster were employees of Samarco, whereby 14 workers were affected (Szoke, 2015). The remaining five were people residing in the nearby area with one of them being a child, who was aged seven years. The mud also affected the economy of the country by destroying more than 4,900 acres of farmland. People who used to benefit economically by working in the mine or other activities related to the mine were also greatly affected. The mine was estimated to be the biggest employer in the region with 5,000 workers benefiting from the mine (Cowie, & Gerais, 2016). The disaster meant that the people were left unemployed and struggling to rebuild their hometown. As the mineral waste entered into the most important river in the region that is ranked fifth biggest river in the country, they polluted the aquatic and other components of the fish ecosystem. After three weeks the mud had been transported down the river into the Atlantic Ocean. Since the ocean is located 280 miles from where the disaster occurred, individuals who depend on the river through fishing, irrigation or consumption of the water were also affected. Although the some of the waste were drained into the Atlantic Ocean, the possibility of further damage to the marine life was slightly lowered due to the presence of another dam 50 miles downstream (Cowie, & Gerais, 2016). The second dam filtered some of the waste preventing the environmental damage. After the disaster, the role the owner of the mine, Samarco group in the events leading to the crisis and after the crisis was questioned. Samarco is fully owned by the multinational company BHP Billiton and Vale the Brazilian mining giant, each owning 50 percent stake in the company. Vale is known to be the biggest producer of the iron core in the world whereas BHP Billiton has been classified among the Fortune top 100 companies (Knight, Hichens, & Tozer, 2016). The Brazilian regulatory authority in the mining sector has also been blamed for the disaster for failure to oversight as well as failing to enact strict rules. The two companies are blamed for failing to safeguard environmental protection and consideration of the human welfare and their basic rights in the supply chain and other aspects of the business relationships. After the occurrence of the disaster, BHP Billiton through their chief executive officer Andrew Mackenzie claimed responsibility for the disaster (Cowie, & Gerais, 2016). During the press conference held at the headquarters of the company located in Melbourne, in Australia, he stated the company will try its best to help assist the community in recovering from the effects and the threats posed by the disaster. He also stated that he is heading to Brazil to assess the situation. On the other hand, the chief executive officer of Vale, Murilo Ferreira denied that the company was in any way responsible for the disaster. He stated in a press conference that the company cannot be held accountable for the disaster and the subsequent threats to the environment and the livelihood of the affected individuals since the owner, Samarco was managed independently of Vale (Szoke, 2015). The company profits were declining in the midst of harsh economic conditions that foresaw an increase in the production costs reducing the profit per commodity. The decline in the costs of the commodity in the domestic and international market further affected the benefits that could be derived per unit of the product. The claim that the company should not be involved in helping the communities recover from the effects of the disaster resulted in a mass action where protesters took it to the streets demanding a quick response from the government and the company. The protesters headed to the company headquarters in Rio de Janeiro with the slogan that Vale Kills whereas writing the slogan on the walls of the company building using mud (Yeomans, & Bowater, 2016). The company has been faced with various lawsuits by the affected members with the goal of restoring the communities to their former financial positions as well as catering for the losses they have endured. One such lawsuit is the one filled with the more than 8,000 fishermen who want to be rewarded with 25,000 reais each for the loss of livelihood (Yeomans, & Bowater, 2016). Although admitting that the spillage from the mine was non-toxic, they have disowned the claims that fish population is increasing as it has been published in various reports. The Brazilian government has also fined Samarco 5 billion pounds for the disaster taking into consideration the social, economic and environmental effects the disaster has posed to the country (Kiernan, 2017). Estimating the financial damage has acted as a challenge to the authority due to the lack of a standardized measure of evaluating current and future environmental and social impact of the disaster. Various researches have been carried out to identify the cause of the collapse of the dam to help in mounting responsibility on one party. Samarco, the company owning the dam has been blamed by several parties as the cause of the disaster for failing to prepare as well as carry out sufficient oversight of the project. The company failed to respond immediately to the disaster taking two weeks to communicate to the public of the threat the burst of the tailings dam posed to the two nearby dams. They also failed to inform the public of the threat posed by the spillage to the health of the communities in the region as well as those downstream in regard to the toxic iron core waste (Knight, Hichens, & Tozer, 2016). The companies are not only supposed to outline their clean-up plan but also come up with a plan of stopping the contamination of the water aquifers and other groundwater resources. Governmental agencies have also been blamed for failing to adequately regulate the mining sector of the country. A report that has been carried out in 2013 by an independent body known as the Brazilian Organisation Instituto Pristino pointed out various concerns in the tailings dam (Knight, Hichens, & Tozer, 2016). It recommended that the license should not be renewed by the government. However, the license of the tailings dam was renewed permitting the company to advance with its operations. The need for the government to create employment opportunities as well as generating wealth thus improving the standards of living has been blamed by some parties as the cause of lack of firm regulations and oversight (Knight, Hichens, & Tozer, 2016). The government is also blamed for enacting small firms that do not prevent risk taking. Since the returns that can be gathered from a risky project are much higher than the fine for taking the risks, multinational companies prefer taking the risks. Since BHP Billiton and Vale companies have originated from Australia and the Brazil countries, that are signatories to the international agreements and guidelines, they are bound to identify, mitigate and prevent social, economic and environmental impacts that the projects may pose. The companies did not act under the OECD guidelines and the United Nations Guiding Principles on Business and Human Rights that govern the companies (Cowie, & Gerais, 2016). Up to date, the aquatic ecosystem in the river is yet to recover with dead fish being spotted more than 270 Kilometers away from the site of the disaster in Periquito town (Kiernan, 2017). The high density of the sludge rather than the toxicity of the iron core waste have largely been attributed to the death in the aquatic animals such as fish population. Samarco with the help of the owner companies, BHP and Vale, has been enacting various projects aiming to help in the recovery of the region and the people who dependent on them (Yeomans, & Bowater, 2016). One such project includes the planting of fast growing crops to act as a source of livelihood for the communities. The company has also been providing the farmers with silage to support the crops before the land are fully recovered. Resettlement plans have been underway for the communities whose lands were extremely destroyed. Such communities include individuals coming from Bento Rodriguez, Paracatu and Gasteira (Yeomans, & Bowater, 2016). The government in collaboration with the owners of the Germano mine allowed the communities to choose their preferred resettlement areas where they plan on resettling them in 2017 (Kiernan, 2017). BHP has responded to the disaster by putting a manager in charge of overseeing the response to the disaster. The company through the program is planning to restore the dam prior to the rainy season to prevent further damage from occurring. In collaboration with the other parties, including Vale and Samarco, the company also made a deal with the government to give at least 5 billion pounds to the Renova Foundation, a non-profit group aiming to resort the environment of the region although the deal is yet to be implemented. It has also responded by allocating 1.7 billion pounds to assist Samarco to pay the Renova Foundation as part of the deal with the government (Kiernan, 2017). Various parties have aired controversial opinions withy some of the affected victims requesting for the resuming of operations by the mining company in the area. Some argue that the social impact of the disaster can be prevented by resuming operations thus resolving the unemployment crisis for the communities who are now living in rented houses without a source of income (Cowie, & Gerais, 2016). The local government also holds the view stating that a loss of almost half of tax revenue collected from the mine has further crippled the government from facilitating the recovery. With over 5,000 workers now being unemployed as result of the disaster as well as the fishermen and farmers losing their source of livelihood, a plan needs to be enacted to reduce the social impact (Yeomans, & Bowater, 2016). Other parties hold a contradicting opinion with some indicating that the city is not yet structured to support any economic activity. Some oppose Renova Foundation citing lack of public participation thus the lack of the contribution of the victims (Yeomans, & Bowater, 2016). The need to balance between mitigating the environmental impacts as well as reducing the social impacts is presenting major problems. The social impacts would be easily mitigated by restarting the mine thus providing employment to the communities whereas environmental mitigation can be enhanced by disallowing the reopening of the mine. References Cowie, S., & Gerais, M. (2016). Clearer picture emerging over Brazil's mining disaster | DW Environment | DW.COM | 27.01.2016. DW.COM. Retrieved 20 March 2017, from http://www.dw.com/en/clearer-picture-emerging-over-brazils-mining-disaster/a- 19006554 Kiernan, P. (2017). Brazil dam disaster lawsuit against BHP Billiton, Vale, suspended. Theaustralian.com.au. Retrieved 20 March 2017, from http://www.theaustralian.com.au/business/mining-energy/brazil-dam-disaster-lawsuit- against-bhp-billiton-vale-suspended/news-story/d17ae08d3f3108d08df21e050b7f963f Knight, B., Hichens, C., & Tozer, J. (2016). BHP's deadly dam collapse linked to ramping up production. ABC News. Retrieved 20 March 2017, from http://www.abc.net.au/news/2016-02-29/bhp-samarco-dam-collapse-brazil-linked-to- ramping-up-production/7201022 Szoke, H. (2015). Brazil mine disaster exposes BHP's failures. The Sydney Morning Herald. Retrieved 20 March 2017, from http://www.smh.com.au/comment/brazilian-dam- disaster-shows-bhp-falls-short-of-global-expectations-20151118-gl2i8c.html Yeomans, J., & Bowater, D. (2016). One year on, Brazil battles to rebuild after the Samarco mining disaster. The Telegraph. Retrieved 20 March 2017, from http://www.telegraph.co.uk/business/2016/10/15/one-year-on-brazil-battles-to- rebuild-after-the-samarco-mining-d Read More