Brazil Dam Rupture Shows Relentlessness of a Tragic Crisis

Thom Weidlich 01.31.19


Last Friday, a dam near Brumadinho in Southeast Brazil burst, unleashing a river of mud and other debris that killed dozens of people. The nonstop events over the weekend for Vale S.A., the mining company that owns the dam, illustrate the unrelenting nature of a major, tragic crisis.

Vale is the world’s biggest iron-ore producer. Early afternoon Brazil time on Jan. 25, one of its dams, filled with mining waste and sludge, collapsed, engulfing buildings and a cafeteria where about 100 Vale employees were lunching. The death toll is at least 84 and is expected to go as high as 300, mostly Vale workers.

Since the horrible incident, the company has issued reams of statements — more than a dozen by Monday, and they’re still coming. It also set up a page on the tragedy at its website, and has provided updates on Twitter and Facebook.

Alas, it has had to keep repeating in those messages that it doesn’t know the disaster’s cause. So, while Vale has apologized, it hasn’t taken responsibility. The company faces an especially fraught situation because it had a similar accident three years ago. Brazilians are furious.

On Friday, Vale announced the breach without providing much information, including whether there were injuries. “The company deeply regrets the accident and is making every effort to provide relief and support to those affected,” it said in an update.

Also on that Friday afternoon, it uploaded a video statement from CEO Fabio Schvartsman. The company had worked hard to make sure its dams were in good shape, he said, especially after the previous incident.

Apparently not hard enough.

Mariana Dam

The earlier accident occurred in Mariana in November 2015, when a dam owned by Vale and BHP Billiton burst, killing 19 people. When Schvartsman became CEO in 2017, he said his motto was “Mariana, never again.”

So much for that.

The company deeply regrets the accident and is making every effort to provide relief and support to those affected.

— Vale S.A.

The third statement Vale issued Saturday was the first to give details about the dam, including age, capacity, and testing history. That information should have been provided earlier. A crisis plan should include at-the-ready data sheets about a company and its facilities.

Also on Saturday Vale posted the video from a press conference Schvartsman held (pictured). “It was a huge tragedy that took us completely by surprise,” he told reporters. That was because the dam was certified as stable; that testing is becoming a major sticking point in the crisis. Unfortunately, when it came time to answer journalists’ questions, Schvartsman didn’t have a lot of answers.

On Sunday, the crisis deepened. Another dam overflowed with water, and residents had to be moved and rescue operations halted. The company was able to get the levels lowered by later in the day.

Frozen Assets

Then on Monday Vale announced that, already, court orders froze US$2.94 billion of its assets, and state and federal agencies fined it tens of millions of dollars. The company’s board suspended dividend payments, share buybacks, and executive bonuses (the stock dropped as much as 24 percent on Monday).

Vale also had to cryptically deny a statement one of its lawyers made; he wasn’t authorized to speak for the company. In a crisis, it’s essential to ensure everyone knows who can and cannot do that.

Finally, on Tuesday Vale was forced to comment on the fact that three of its employees and two contractors from the German company that inspected the dam had been arrested. Its short statement emphasized the company’s continuing cooperation in the investigation.

So, Vale’s situation shows how much can happen in such a tragic crisis. We’re not saying it aced its crisis communications, but it did try to keep people informed.

Photo Credit: Vale S.A.

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