Sustainability Report 2019

Sustainability Report 2019

Sustainability Report 2019

Sustainability Report 2019

About the Report


The Sustainability Report presents Vale’s actions and learnings from the breach of Dam I of the Córrego do Feijão mine, in Brumadinho (Minas Gerais, Brazil), which took place on January 25, 2019 resulting in 270 fatalities. It also describes the managerial changes made to business processes since the event, in addition to economic, environmental and social performance of the organization.

New Pact with Society – Proximity and Transparency

Vale is writing a new chapter in its history with a focus on transforming its future as a driver of social and economic development in the regions where it operates. The company is committed to facilitate this process and generate a positive and long-lasting legacy. As a strategic support for transformation and evolution, Vale seeks to ensure effective management of social and environmental risks and impacts, ultimately helping improve the industry’s safety and management standards, which are key factors in this journey.

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Material Topics

Vale has updated its materiality matrix according to topics from the previous cycle and inputs on relevant sectoral topics from its stakeholders – executives, employees, and other stakeholder groups including professional associations and other associations, communities, customers, suppliers, government, press, regulatory bodies, unions, universities, and research centers - considering relevant industry topics and benchmarking analysis.

The material topics were:

Accident Prevention and Emergency Response

Risk Management

Mining Waste Management and Dams

Human Rights

Climate Change

Energy Efficiency Air Emissions

Social Investment and Regional Development

Biodiversity

Corporate Governance

Ethics and Transparency, Anti-Corruption, and Illegal Practices

Human Capital Management

The first chapter is dedicated to the breach of Dam I at the Córrego do Feijão mine and its consequences. It describes the impact of this event on the territory and the community, and the measures taken by Vale with support from the Government and civil society to help those affected, give them access to their rights, repair the damage caused, and compensate society for the unrepairable damages.

In other chapters along the report, we will address how the Brumadinho dam breach has affected our approach to managing other topics, in addition to disclosures according to the GRI Standards – comprehensive option –, including the Mining and Metals Sector Supplement, covering the period between January 1 and December 31, 2019.

Chapter 1

Brumadinho: Reparation and Reconstruction Challenge

The Dam I breach at the Córrego do Feijão mine in Brumadinho (Minas Gerais) on January 25, 2019 left a permanent mark on Vale’s history and on its employees and the people and communities affected. Vale apologizes to society and deeply regrets the 270 fatalities, including two young pregnant women, and the 11 people who were still missing by the time this report was completed. The year was marked by mourning and the urge to establish emergency actions to tackle the adversities arising from this incident.

Below is a timeline with some of the main actions taken by Vale throughout 2019 to repair the damage caused on communities and the environment.


Timeline

2019

Creation of the Immediate Response and Humanitarian Aid Committee

Beginning of Emergency Works

Financial support to the City Government of Brumadinho, due to disruption of activities and to the expansion of humanitarian assistance in the municipality.

Creation of an Extraordinary Dam Safety Advisory Committee and Experts Panel

Temporary removal of executives

Signature of an agreement with the Mining Municipalities Association of Minas Gerais and Brazil (AMIG, Associação de Municípios Mineradores de Minas Gerais e do Brasil) for financial contributions to companies and maintenance of the provision of services totaling R$ 100 million

Construction of the Alberto Flores Bridge enabling safe traffic between Brumadinho and nearby communities

Closing of sheet piling curtains in Ribeirão Ferro Carvão

Beginning of the recovery of the Ferro-Carvão Stream at the confluence with the Paraopeba River

Beginning of the Water Supply System works in Pará de Minas

Completion of de-characterization at the first of the nine upstream dams

Conclusion of the de-characterization on the first out of nine upstream dams

Completion of Dike 2

01/25/2019 at 12:28 pm

Dam I collapses at the Feijão Mine in Brumadinho (Minas Gerais, Brazil)

Beginning of water and sediment monitoring in the Paraopeba River.

Creation of Advisory Committees:

Vale's Board of Directors creates two Independent Extraordinary Advisory Committees: verification and support and repair

Beginning of the riverside population mapping and water supply

Signature of the Preliminary Adjustment Agreement for emergency payment of indemnities for over 106,000 people throughout 2019.

R$20 million contribution to the Military Fire Brigade of Minas Gerais

Creation of Special Repair and Development Department

Signature of the agreement for emergency payments to the Pataxó indigenous community, in São Joaquim das Bicas

Start of operations of the Fluvial Water Treatment Station of the Ferro-Carvão stream

Creation of the Executive Department for Safety and Operational Excellence

Cleaning of the affected area and recovery of the Dam VI’s foot drain

Approved the extension, for a further 10 months from January 25, 2020, of the payment of emergency aid to those affected by the rupture of Dam I at Brumadinho

Hydraulic Barrier 0 (BH0) starts to operate

Completion of Hydraulic Barrier 1 (BH1)

Obtaining the Environmental Permit for disposal of tailings in the Córrego do Feijão pit


Vale acknowledges the support, solidarity, and dedication of several volunteers, community members, employees, and institutions such as the Fire Department, Civil Defense, Civil Police, the Forensic Medical Institute, and other municipal, state, and federal government agencies who have worked relentlessly on several fronts to assist all the people affected, both during the incident and in the period that followed. We take this opportunity to express our utmost respect and gratitude for everything they did for those affected and for the community of Brumadinho.

Check out testimonials of some of the people involved.

Videos: NITRO Visual Stories

R$ 3,6 billions paid for individual agreements, labour compensations and emergency aid

UR$2.6 billion invested in de-characterization of dams

R$ 258.7 million in 2019 as financial contributions to support the cities covered by the agreement with AMIG, where operations were shutdown, including 10 cities in addition to Brumadinho (Barão de Cocais, Belo Vale, Congonhas, Itabirito, Mariana, Nova Lima, Ouro Preto, Rio Acima, São Gonçalo do Rio Abaixo and Sarzedo)

R$ 200 million in financial contributions to support cities where operations were shutdown

Additionally, R$ 107 million per year transferred to the State Government as goods and services tax (ICMS, imposto sobre circulação de mercadorias e serviços) on sales of Vale's ore to steel companies from another state

R$ 80 million as financial compensation for the city of Brumadinho

R$ 70 million for the acquisition of 77 operational vehicles delivered to the public security agencies of Minas Gerais: 50 vehicles for the Military Police; 13 vehicles for the Fire Department (buses, trucks, and vans); two vehicles for Civil Police and 12 vehicles for Civil Defense (cars, vans, and trucks)

R$ 30 million allocated in Health Care and Social Assistance for those affected by the dam breach, via an agreement with the city government of Brumadinho

R$ 20 million donated for the Military Fire Brigade of Minas Gerais for equipment purchase, structural improvement, and professional training, in recognition of the prowess and work carried out by the unit

R$ 14.5 million transferred to the Tourism Association of Brumadinho

R$ 6.5 million investment in leading-edge equipment donated for the Forensic Medical Institute (IML) of Belo Horizonte

R$ 5 million for the Civil Defense of Minas Gerais and R$4 million for the Military Police of Minas Gerais for equipment purchase, infrastructure improvements, and professional training

R$ 2.6 million transferred to the city government of Brumadinho for the purchase of emergency equipment and hiring of healthcare and psychological and social assistance professionals

It is a long way to go before we can ease the pain of communities, employees, and families affected.

The dam breach in Brumadinho made Vale redirect its efforts to improve not only the reparation processes in several locations, but also the company's internal procedures concerning its relationship with communities, safety of operations, and risk management.

Accountability

The Accountability page compiles all social and environmental actions taken by the company.

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Reparation

The Reparation page gathers Vale's main reparation and development actions and projects, which have been divided into social, environmental, and dam safety actions.

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Chapter 2

Profile and Governance

Vale is the world's leading producer of iron ore, pellets, and nickel, with operations in 20 countries on five continents. By the end of 2019, Vale had 149,300 employees, 75,6% located in Brazil.

Breakdown of direct employees and third-party employees by country (2019)

Breakdown of direct employees and third-party employees by state (2019)

Global operations

Click to enlarge the map

ESG Portal

Vale is striving to build a relationship of trust and transparency with society. The ESG Portal - Environmental, Social and Governance - launched in 2019 contains the latest achievements and results related to environmental, social and governance aspects of the company. We will use this channel to update all the information required for establishing a relationship based on transparency and on sustainable commitments. Go to the ESG page to learn about our activities

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In the course of 2019, we also updated our sustainability goals for the coming years to meet the Sustainable Development Goals (SDGs) of the UN Agenda 2030. We are currently pursuing six goals that cover the main aspects of Vale's governance and social and environmental impact:

The latter goal develops into specific objectives, namely:

  • Audit Committee: established in 2020;
  • Nominating Committee: to be established by 2021;
  • Review of the Human Rights Policy: Consultation with main stakeholders (completed. New version of the Human Rights Policy was published in 2019);
  • Long Term Compensation linked to ESG: from 100% based on Total Shareholder Return to 80% on TSR and 20% on ESG metrics.

  • You can see our action plan for ESG gaps by clicking here.

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Chapter 3

Commitment to People and Human Rights

One of Vale's main commitments concerns respect and regard for people. The Dam I breach at the Córrego do Feijão mine in Brumadinho made the Company reevaluate and rethink its risk management model in place. Vale is fully redesigning its health and safety strategy to become the world’s safest mining company for its employees, the communities, and the environment.

Within this new context, the company redirected its 2019 efforts and set new goals for 2025, as follows:
  • ZERO recordable injuries with potential for fatality or lives changed;
  • Reduce by 50% the total number of employees exposed to the ten major risk factors in the work environment;
  • Ensure reliability of critical controls related to catastrophic risk scenarios.

In 2019, Vale Foundation reached out to approximately 770,000 people in 68 cities of six Brazilian states through its social projects.

Active engagement with 1575 communities globally, 27 indigenous communities, 42 quilombo communities and three traditional communities.

In 2019, the company maintained an active relationship with 1,575 communities worldwide. 992 Community Relationship Plans were developed, 947 of which in Brazil.

In the picture below, Wilma Gonçalves dos Santos, from the project Fortalecimento da Olericultura da APA do Igarapé Gelado, in Pará.

Vale’s activities are underpinned by the relationship with the communities in which the company operates



Its presence across many territories has spurred broad and diversified relations with the groups of communities in the areas of direct and indirect influence of its projects.

Such projects are implemented by Vale Foundation through social investments to boost Education, Healthcare and Generation of Income, in addition to strengthening local public policies. They are managed through partnerships between the Foundation and its executing partners, such as NGOs specializing in the issues concerned. Vale Foundation also manages associated museums and cultural centers.

The Núcleo Terra das Palmeiras project is part of the Rede de Mulheres do Maranhão initiative, formed by over 100 entrepreneurs, with the support of the Vale Foundation. Photo: Vale Foundation Archive


These plans drive the collaborative implementation of engagement, communication, relationship and social investment initiatives aimed at territorial development.


Case

Vale Fund

2020 marks Vale Fund’s 10th anniversary. The initiative is a non-profit organization controlled by Vale, governed by a Management Council and an Audit Board that monitors and approves its financial endeavors.

Vale Fund is currently focused on social and environmental impact business initiatives. It revolves around three main activities – creating and developing effective financial instruments, accelerating businesses that drive social and environmental impact, and innovation and strengthening the impact business ecosystem.

The Coaj-Carajás National Forest Extractive Cooperative was selected in 2019 for the PPA – Partners for the Amazon - Acceleration Program and received investments from the Vale Fund to develop and strengthen its business. Photo: Idesam archives

Acceleration Program

Developed by the Parceiros pela Amazônia platform, the project aims to strengthen business initiatives that drive sociobiodiversity, in contrast to illegal deforestation and predatory activities in the areas of sustainable agriculture and livestock, sustainable forest management and production, and socio-biodiversity products, in addition to education and wellness combined with environmental conservation. 15 business ventures were selected for the Acceleration Program in 2020.

Innovative Solutions

Created and developed by Climate Ventures, Lab Amazônia – Logistical Challenge and Sales of Sociobiodiversity Products – aims to raise the profile of impact businesses in the Amazon offering innovative solutions for breaking through logistical and commercial barriers. The project was launched in 2019 and has mapped out 10 solution prototypes.

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Chapter 4

Commitment to the Planet

Vale strives to avoid and mitigate hazards associated with its operational activities. Within this context, the company has an environmental management system covering the full cycle, from mapping of risks to processes for preventing potential impacts and recovery and compensation for actual impacts.

To fulfill its new pact with society, Vale adopted new, more challenging and ambitious sustainability goals involving climate change, energy and forests, in line with the UN Agenda 2030.

Photo: João Marcos Rosa, Nitro Agency

Dam De-Characterization

The Dam De-Characterization page displays the status of the proposed schedule and a walk through the process.

Click here to access the page

Investments reached approximately US$ 102 million in operational improvements and adoption of new technologies for controlling and managing atmospheric emissions in 2019.

Case

PowerShift

The initiative seeks to boost technological innovation to reduce GHG – Greenhouse Gas - emissions in operations, and is held in partnership with suppliers, academia and large companies. One of the building blocks of the program is the decarbonization of several production processes (mining, railroad, metallurgical processing, and navigation) through electrification, alternative fuels, and alternative processes. Vale has scheduled several field tests for the coming years in order to validate technologies under real operating conditions.

Photo: Vale Archive

The flora of Carajás

The Carajás ferruginous yoke was the subject of a study carried out by 145 researchers from 30 institutions in the country and abroad. As a result, the Carajás region now has one of the best studied floras in the country, which contributes to its conservation. 1,094 distinct species were identified, contained in 164 families.

One of the aspects that made the work unique was the collection of plant samples to produce genetic identifiers, known as DNA barcodes. This resulted in the production of a reference library for the flora, allowing a rapid and objective identification of species and their evolutionary relationships.

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Chapter 5

Economic Performance

Vale's economic performance was mainly impacted by the provisions and expenses incurred in connection with the breach of the Brumadinho Dam. The focus was to assist the people and families affected by the Dam I breach while providing all the necessary support to local governments and public entities for a speedy recovery of the affected areas. The Comprehensive Reparation Program was developed with open dialogue and structured upon Vale’s social, environmental, and infrastructure pillars, thus ensuring that actions and resources will effectively compensate individuals and communities, recover the environment, and foster sustainable development of Brumadinho and its surroundings.

Looking ahead, Vale plans to significantly reduce the use of dams by investing in alternatives to replace wet processing operations with safer and more sustainable processes.

Dry processing will account for 70% of the iron ore production by 2022. The company will also enhance development of new technologies, such as New Steel's dry magnetic separation, which is currently undergoing tests.

In 2019, Vale registered a US$ 1.683 billion loss compared to a net profit of US$ 6.860 billion in 2018. The US$ 8.543 billion decrease, which was partially offset by a reduced loss from foreign exchange fluctuation in the year (US$ 2.555 billion), is mainly due to:

  • Provisions and expenses incurred with the Brumadinho dam breach, including the de-characterization of dams and reparation agreements (US$ 7.402 billion);
  • Impairment registration and onerous contracts without cash effects, mainly related to the Base Metals and Coal segments (US$ 4.202 billion);
  • Provisions for the Renova Foundation and the de-characterization of the Germano dam (US$ 758 million)

2019 was a turning point for Vale. The incident in Brumadinho has accelerated several key initiatives. We have intensified our ongoing measures to strengthen our relationship with key stakeholders, including regular meetings with investors and representative investor organizations around the world to discuss a range of strategic and governance-related topics as well as ESG issues.

  • 380 interactions with ESG stakeholdes
  • Engagement with 70% of our free float
  • 5 webinars ESG 3 in partnership with UNPRI (UN Principles for Responsible Investment)

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