Controversies

Brazil​

Vale has dealt with diverse indigenous people in Brazil and abroad for decades, always respecting these communities' rights, culture, interests and perspectives. Vale strictly complies with the legislation in all its aspects and faithfully follows the internationally recognized principle of Free, Prior and Informative Consent (FPIC), in the case of develop activities in homologated Indigenous lands.

Vale does not currently carry out any mineral research or mining activities in Indigenous Lands in Brazil, whether mining titles or legal expectations. Furthermore, Vale's production plan does not consider mineral resources or mineral reserves in Indigenous Lands in Brazil and, for this reason, the new Bill 191/2020, if approved, will not impact its business.

Vale currently has only 02 (two) mining titles granted that partially or totally interfere in Indigenous Lands. The first of these mining concessions are in the process of expiring with the Brazilian Mining Agency (ANM). Moreover, Vale recently filed with the regulatory Agency the partial renounce/withdrawal of the interfering portion of the second mining title concession, pending approval only. There are 02 (two) mining title requirements remaining in Indigenous Lands, obtained before the homologation of the respective Indigenous Lands, when Vale was a state-owned company.

Also, as an inheritance from the state-owned period, Vale has over 41 (forty-one) processes of Research Request in Indigenous Lands, i.e., processes that refer to the expectation of rights, but so far none of these titles (Research Permits) was granted. It is noteworthy that Vale has never carried out activities in these regions due to the absence of the title and regulation by the Government. Besides, most of these research requirements were filed before the approval of the respective Indigenous Lands.

Although there is a greater number of cases on behalf of the Vale Group companies on the website of the National Mining Agency (ANM), most of these cases were subject to Vale's renounce/withdrawal, pending only ANM approval or rejections by the Agency itself.

Notwithstanding Mining on Indigenous Lands in Brazil is currently irrelevant to Vale's business, it is important to remember that economic activities in indigenous areas are foreseen in the 1988 Constitution. National Congress is responsible for regulate such economic activities, as well as the conditions for conducting research, mining mineral and hydrocarbon resources (oil and gas), beyond the use of water resources to generate electricity in indigenous territories.

Regardless of eventual approval of any legislation concerning mining in Indigenous Lands, Vale reaffirms the commitment established in its Global Human Rights Policy to comply with the principles of "Positioning of Mining and Indigenous Lands" of the International Council for Mining and Metals (International Council on Mining and Metals - ICMM), with the mandatory observance of free, prior and informed consent of indigenous peoples to develop any activities in Indigenous Lands, in Brazil or anywhere in the world.

Nowadays, Vale develops activities in traditional lands in countries where there are regulations in force, such as Voisey's Bay in Canada, always with strict observance of the principles mentioned above, with emphasis on Free, Prior and Informed Consent (Free Prior Informed Consent - FPIC).

 

Pico Mine, Brazil

In February 2015, Ouro Verde Locações e Serviços S.A., which provided transportation services for finished products between Pico and Fábrica mines to Vale S.A., had their workplaces, both owned by Vale, inspected by Ministry of Labor and Employment, currently the Ministry of Economy.

After said inspection, the Ministry of Labor pointed out the non- compliance with several labor obligations related to the conditions of the locker room, cleaning, access to water, working hours, among others.

Upon learning of the notifications, Vale followed all corrective measures and subsequently terminated the contract with the transport company. It so happens that, adopting an extensive interpretation of the legislation, the Ministry of Labor and Employment considered that the outsourcing of the transport activity was illegal, under the argument that it would be considered among the main activities of the contracting company and, therefore, the employees of the carrier company should be considered Vale's employees. It is important to highlight that the service provider's employees were never deprived of the right to come and go, were properly registered and received transportation to and from their homes, in conditions superior to those provided by public transport, had their work cards signed, they did not have their documents withheld, nor indebtedness to the company; being certain that they were not kept in degrading conditions analogous to slave labor. Due to the extensive interpretation of the legislation, adopted by the Ministry of Labor and Employment, Vale was assessed for alleged irregularities committed by Ouro Verde, including the illegality of outsourcing and maintaining employees in conditions similar to slave labor. As the assessments did not match the reality of the work of those service providers, the company presented defenses and administrative appeals.

Since 2016, Vale has reinforced the work of internal groups for the identification and realization of continuous improvements in facilities and workplaces, and the improvements and their results have been monitored in meetings of leaders in the areas. In addition, the contract management area reinforced inspections on contracted service providers to verify compliance with labor criteria. These actions are in line with Vale's position of repudiation of any and all forms of disrespect for human rights and unworthy working conditions; and aim to avoid, and ensure, that cases like Ouro Verde do not reoccur.

Also in 2016, Vale filed annulment actions against the infraction notices that addressed the (i) illegality of outsourcing and (ii) the maintenance of employees in conditions similar to slavery.

Firstly, it obtained an injunction to suspend the effects of the assessments until the final decision in the judicial decisions handed down in the records of the proposed annulment actions. In December/2018, the 6th Panel of the Regional Labor Court of MG accepted Vale's appeal, to annul the tax assessment notice on illegal outsourcing and recognize the validity of hiring transport services. Since outsourcing is lawful, there is no longer any basis for drawing up the tax assessment notice due to a degrading work condition against Vale, given that it was recognized that the workers were not Vale employees.

However, despite the fact that the employment relationship between Vale and the employees of Ouro Verde Locações e Serviços S/A was removed, this fact had given rise to Vale's assessment of the degrading work conditions, the 4th Panel of the Regional Court MG's Labor Court, through a non- unanimous decision, maintained the tax assessment notice. Vale is taking the appropriate legal measures to reform it, given that it is inconsistent with the decision issued by the 6th Panel of the same court.

Carajás Railroad, Brazil

The Carajás Railroad is 892 kilometers long, linking the world's largest open pit iron ore mine in Carajás, in southeastern Pará, to Ponta da Madeira Port, in São Luís (MA). Its tracks transport 120 million tons of cargo and 350,000 passengers per year. Around 35 trains circulate simultaneously, including one of the largest freight trains in regular operation in the world, with 330 wagons and 3.3 kilometers in length.

Inaugurated in 1985, the Carajás Railroad is not only large: it also leads the ranking as one of the most efficient railroads in Brazil thanks to the constant investment in technology.

Vale seeks to maintain a respectful relationship and takes actions that avoid, mitigate and compensate the possible impacts of its operations on the people where the railroad passes. To achieve this, it has entered into agreements with the Awá and other indigenous peoples who live in the areas affected by the Carajás Railroad, through the legal responsible body, Funai, partners and directly with indigenous associations.

We maintain a Cooperation Agreement to support the Awá, Guajajara and Urubu Ka'apor peoples, who inhabit the Caru, Awá and Alto Turiaçu Indigenous Lands and support productive activities focused on the ethnic development of these populations.

The indigenous perspective is prioritized throughout the road expansion process of the Railroad and their consent is required.

The works for the expansion of the railroad only began after the conclusion and approval of the Indigenous Component Study - a study conducted with the direct participation of the indigenous peoples - by Funai. In addition, and necessarily with the participation of the Awá-Guajá Indigenous People, the Basic Environmental Plan is being implemented with the relevant mitigation measures, all in accordance with Brazilian law and taking into consideration the viewpoint of the ILO Convention 169.

The dialogue is permanent and other initiatives have been made possible, in addition to the Cooperation Agreement and the environmental licensing process. For example, support for the construction and supply of equipment for three Basic Health Units in partnership with the Maranhão Indigenous Special Health District and the BNDES, which were installed in two Awá villages and one Guajajara village in the Caru Indigenous Land.

Vale believes in supporting the ethnic development of Indigenous Peoples and in respectful, mutually beneficial and long-term relationships.

Onça Puma Nickel Mine, Brazil

Inaugurated in 2011, in the municipality of Ourilândia do Norte, in PA, Mineração Onça Puma is today one of the largest iron-nickel plants in the world, with a production capacity of 220 thousand tons per year.

Associations representing the Xikrin do Cateté and Kayapó Indigenous Peoples and Brazilian public authorities allege a negative impact on the health of communities near the Onça Puma nickel mine, as well as that the plant's residues polluted the Cateté River with heavy metals, which would have led to the fetal deformities and other serious diseases.

In September 2017, the Federal Court ordered the suspension of extraction activities in Onça Puma mines, conditioning its operational resumption on proof by Vale of the implementation of an economic and environmental management project to offset the indigenous communities affected by the activity.

Vale filed an appeal requesting the reform of the decision, and, based on the conclusions of the reports prepared by judicial experts in several scientific matters, especially limnology, biology, geology and metallurgy, which stated that there was no causal link between the mining operation of Onça Puma and the alleged contamination of the Cateté River, the undertaking not being the source and contamination of the referred watercourse, ratifying the efficiency of the operation control systems and the existing data in the reports periodically forwarded to the State Environment Secretariat do Pará (SEMAS), as the competent environmental agency to license and inspect the mining enterprise.

It should be noted that the Itacaiúnas Basin, which houses the Cateté River, its streams and contributors, is located in a geological region with a natural presence of metals such as iron, nickel, copper, among others, and therefore, such metals are inherent to the characterization of the region's soil, occurring in volumes naturally higher than those provided for in the parameters of the legislation.

In September 2019, the President of the Supreme Federal Court (STF), in a monocratic decision, considering the information in the reports prepared by the judicial experts and released, until the final decision that analyzes the merits of the lawsuit, the resumption of operations the Onça Puma mine. In addition, it ordered the release of judicial deposits to the Xikrin do Cateté and Kayapó indigenous people and the payment of monthly funds to them. In judgment, the STF plenary confirmed, by majority vote, of its president's monocratic decision, in its entirety.

At a conciliation hearing held within the scope of the Public Civil Action (ACP) pending at the Federal Civil Court of the Judicial Subsection of Redenção (PA), on November 4, 2020, a procedural agreement was signed between Vale, Xikrin do Cateté and Kayapó Indigenous Peoples, and MPF, counting on the positive manifestations of FUNAI and the State of Pará, also present in the ACP, the temporary suspension of the procedural course of ACP, its resources and developments, as well as other legal proceedings in which the company and these peoples, in jointly or separately, they appear as parties, for a period of 1 year, with the objective of creating a favorable and harmonious environment for construction, in a joint and participatory manner, in agreement that may close all these lawsuits.

This step is very important for the resolution of this controversy and for the consolidation of a partnership and trust relationship with these communities.

State of Espírito Santo, Brazil

Tubarão Port, in the municipality of Vitória, Espírito Santo, is an iron ore port and a coal dock, which imports coal and exports iron ore from the Minas Gerais Iron Quadrangle, as well as steel to ArcelorMittal's operations in Brazil. A police investigation conducted in January 2014 revealed that Vale's operations at the Tubarão Port had resulted in the release of dust in its surrounding bodies of water and air.

The municipal government of Vitória subsequently penalized Vale and ArcelorMittal with US$ 8.35 million each, as well as demanding that both companies repair any damage resulting from the dust release. The companies appealed the fine.

In May 2018, Vale and ArcelorMittal received a study made by the São Paulo State Environmental Company of São Paulo (Cetesb) containing over 190 targets to reduce pollution based on an agreement signed by the companies and the local regulators until 2023.

Vale operates and continually invests in environmental control systems. The entire productive system of the Tubarão Complex - from the arrival of the ore to the shipment - has the latest environmental control technology. By 2020, Vale will have invested approximately R$ 1 billion in environmental control measures in its operations at the Tubarão Complex, adding the amounts invested in recent years.

With regard to health, Vale informs that it monitors the health effects of its employees related to the exposure to the iron ore present in the workplace environment. It emphasizes that there are no records of current employees, or retirees, with health problems, or who have been removed from work, due to exposure to iron ore at the Tubarão Complex.

It is noteworthy that, according to a Social Security report, there have been no records of respiratory diseases related to the exposure to iron ore in Vale employees in Brazil.

Fundão Dam, Mariana, Brazil

The mining tailings dam, called Fundão Dam, owned by Samarco Mineração S.A., ruptured in November 2015 in the sub-district of Bento Rodrigues, 35 km from the center of the Brazilian municipality of Mariana, Minas Gerais.

Vale and BHP Billiton each own 50% of the shares of the mining company Samarco. Vale has always pointed out to Samarco the importance of implementing policies and standards in compliance with its own and has been supporting Samarco in its efforts to address the damage caused by the rupture of the Fundão Dam in the state of Minas Gerais.

From day one of the breach, Vale and its employees have been committed to responding to the emergency, with the remediation of human rights and the environmental recovery.

After the signing of a Conduct Adjustment Transaction Agreement (TTAC) between Samarco, Vale and BHP Billiton, with the federal and state governments of Minas Gerais and Espírito Santo, the Renova Foundation was created. This is an institution responsible for conducting the programs of repair, restoration and socioeconomic and socioenvironmental recovery in the areas impacted by the rupture of the Fundão dam.

Vale has always supported Samarco and the Renova Foundation in all the required areas and has guaranteed the funding and the implementation of over 40 programs that were established in agreement with the federal and state governments, together with the mining company BHP Billiton.

Following the rupture, Vale has internally created a Dam Department to evaluate and improve its dam management processes, with action plans and targets. The company has also reviewed its emergency plans, including the involvement and mobilization of the community in the event of an accident.

All the remediation and recovery actions adopted by Samarco and now by the Renova Foundation are in compliance with Brazilian and international standards and best practices, and also to the National and State Dam Safety Policy.

Pará, Brazil

Belo Monte is a hydroelectric power plant project located on the Xingu River with the objective of expanding the Brazilian generator park. It allows for a large energy production and a favorable condition for integration with the national electric system.

In June 2011, Vale acquired a 9% interest, originally held by Gaia, and became a shareholder of Norte Energia. At that time, the contract for the construction of the plant had already been signed. In March 2015, Vale sold 49% of its interest in the Belo Monte Hydroelectric Power Plant project to CEMIG and, therefore, the indirect interest of Vale in the capital of Norte Energia is 4.59%.

In December 2018, local communities with legal assistance from international civil society organizations, filed proceedings for a motion, presented in 2011, to the Inter-American Commission on Human Rights (IACHR), requesting that the Belo Monte project be officially labeled as a violation of human rights. In November 2018, the IACHR published its preliminary conclusions stating that the dam threatens the unique aquatic ecosystem of Volta Grande do Xingu and harms the local communities that depend on fishing from the Volta Grande do Xingu for their subsistence.

The project has provoked controversial reactions in relation to the social and environmental impacts and the well-being of the region's indigenous communities during the construction and operational stages. Vale believes, however, that Belo Monte is a sustainable project in all its aspects, despite the inherent impact of any hydroelectric project.

Since its entry into the Belo Monte project, Vale has hired professionals with extensive experience in the implementation and operation of hydroelectric projects, especially in studies of environmental and socioeconomic impacts and indigenous issues. This allows us to monitor and verify that these matters are being properly addressed from the planning to the execution of the project, seeking positive results and the improvement of the quality and living conditions of the communities in the region where the project is being built.

Republic of Guinea

Considered to be one of the best unexploited iron ore deposits in the world, Simandou was acquired by Vale in April 2010. At the time, the project was announced as a major impetus for the company's faster growth in iron ore production.

On April 30, 2014, Rio Tinto plc (“Rio Tinto”) filed a lawsuit against Vale, BSGR, and other defendants in the United States District Court for the Southern District of New York. It alleged violations of the U.S. Racketeer Influenced and Corrupt Organizations Act (RICO) in relation to Rio Tinto’s loss of certain Simandou mining rights, as well as the assignment of the Government of Guinea of these rights to BSGR, and also Vale’s subsequent investment in VBG.

In March 2015, Vale transferred the interest of the mining joint venture stake in Guinea back to the partner company BSG Resources Ltd. In addition, Vale stated that it retained the rights to pursue BSG Resources with respect to the loss of investment and that the transfer of interest does not represent any form of settlement with BSG.

In November 2015, the US court rejected the lawsuit. The Court ruled that the case was long overdue, and stated that the complaint was beyond the four-year legal deadline for the U.S. Racketeer Influenced and Corrupt Organizations Act (RICO).

On April 23, 2019, Vale commenced a proceeding against BSG Resources Limited (BSGR) in the United States District Court for the Southern District of New York, to enforce Vale's arbitral award against BSGR, totaling over US$ 1.2 billion (with interest and costs, exceeding US$ 2.0 billion). This decision was issued on April 4, 2019 by an arbitral tribunal under the auspices of the London Court of International Arbitration.

Since then, Vale paid BSGR an initial price of US$ 500 million, and invested over US$ 700 million, principally in Zogota, before the Guinean government withdrew the concessions, based on evidence that BSGR had obtained its rights to Simandou as a result of its bribery of Guinean officials. The Guinean government explicitly concluded that Vale had played no role in any of BSGR's corrupt activities.

Vale has commenced and will be commencing other proceedings in other countries to enforce the arbitral award against BSGR, as well as against persons connected with the ace, who Vale believes to be jointly and severally liable for the award, or have received Vale's payments to BSGR, or have otherwise been responsible for Vale's loss, as found by the arbitral tribunal. Vale is also investigating recent reports that BSGR has entered into an agreement with the Republic of Guinea through which the company would receive, through a company called Niron plc, the rights related to Zogota that, if confirmed, would be assets subject to compliance with the arbitral award against BSGR.

Vale New Caledonia (VNC), New Caledonia

Vale has nickel operations in New Caledonia, known as VNC.

VNC entered into an Agreement for the Sustainable Development in the Great South of New Caledonia on September 27, 2008. It is an agreement between Vale New Caledonia and the indigenous communities affected for a period of 30 years. In 2014, there was a spill of industrial effluent from Vale's operations in New Caledonia, which reached North Bay Creek, in the southern province. The leak was contained within a few hours, neutralizing the effluent and pumping it back to safe storage.

The License to Operate was suspended for 4 weeks by the Regulator. The immediate impact was a temporary acidification of the creek of 4km, leading to the killing of 50kg of fish. There were no significant lasting impacts on the environment or in the local indigenous populations. Following the spill, there were demonstrations by some local community residents that resulted in damage to Vale properties and delays in resuming production. A Sustainability Department was created to better promote social and environmental projects. In addition, monthly reports on VNC's environmental performance are shared with the local communities, for better transperancy.

Vale New Caledonia has implemented a set of action plans to protect the site, covering safety, organization, environment and quality. These plans were jointly established with the authorities of the Southern Province as part of a legal act requiring the implementation of measures to protect the environment and the communities

 

Sudbury, Canada

The Sudbury Basin in Canada contains one of the most important mining fields in the world, producing hundreds of millions of tons of copper and nickel per year. This location is also the center of Vale’s operations in Ontario.

Two miners died at Vale's Stobie Mine in Sudbury, Ontario, Canada, on June 8, 2011, after an uncontrolled emission of material (muck). Vale was not criminally charged as a result of this incident, but received charges under the Ontario Occupational Health and Safety Act, and pleaded guilty to three counts.

Following Vale's internal investigation into this incident, an action plan, including more than 40 recommendations, was implemented to address the contributing factors and to improve the control measures to protect the health and safety of its employees. These recommendations included actions in the fields of water management, operational controls, hazard identification and risk assessment, among others. These actions and their recommendations are intended to prevent similar issues in Vale operations.

Copper Cliff, Canada

Vale’s mining operations in the Sudbury Basin include mines, a mill, a smelter and a nickel refinery; collectively, these assets constitute one of the largest integrated mining operations in the Americas.

During the planned maintenance period of Vale’s smelter complex at Copper Cliff, in August 2015, as a result of the standard procedure for washing and draining the acid plant, there was a release of nitrogen oxide and nitrogen dioxide (NOx) mist during a standard procedure to wash Vale’s Acid Plant and to drain it. At the time, a yellow plume was visible above the Vale complex, but the levels that were registered during the event were very low and dissipated.

Emergency measures were activated as a precaution and the emergency siren was activated to notify residents from the region. The release was contained and there were no injuries or impacts on production. Since this event, the procedures to clean the acid plant have been adjusted to prevent a similar incident from happening.

Miski Mayo, Peru

Bahía de Sechura, in Peru, located near Mineradora Miski Mayo, a subsidiary of Vale until December 2016, was constantly monitored by OEFA – the Peruvian Environmental Inspection Agency, which proved that the particulate matter from the shipment of phosphate rock present in the truck loading area of the mining company was below the limits allowed by law.

Other competent institutes in the country, such as Instituto Tecnológico de la Producción (ITP) and the Instituto del Mar del Peru (IMARPE), confirmed that the contaminating factors of the Bahia de Sechura were not related to mining activity. Additionally, Vale informed that the phosphate transport process was carried out by conveyor belts in a completely covered structure, which prevented the contact of the product with the air. The abovementioned measure was part of the continuous improvement action plan implemented by Miski Mayo since 2011. The company reinforces its commitment to the preservation of the environment in the regions in which it operates.

In December 2016, Vale entered into an agreement with The Mosaic Company ("Mosaic") to sell: (i) the phosphate assets located in Brazil, except for the assets located in Cubatão, Brazil; (ii) the control in the Campañia Minera Miski Mayo S.A.C., in Peru; (iii) the potassium assets located in Brazil; and (iv) the potassium projects in Canada. In January 2018, Vale and Mosaic concluded the transaction, and Vale received R$ 3,495 billion (US$ 1,080 billion) paid in cash and 34.2 million shares of common stock, corresponding to 8.9% of Mosaic's shares of common stock after the issue of these shares (R$ 2,907 billion (US$ 899 million), based on Mosaic's share quotation on the closing date of the transaction). A loss R$ 184 million was recognized in the income statement of the discontinued operations, at December 31, 2018.