Mine disasters, impact on society and industry.

The mining company Vale SA, originally a Brazilian company with their headquarters in Rio De Janneiro, which is listed on various exchanges such as:
The Brazilian (BVMF) stock exchange under ticker VALE3
The New York Stock Exchange (NYSE) under ticker VALE
The NYSE Euronext Paris under ticker VALE3
The Madrid Stock Exchange (Bolsa de Madrid) under the ticker XVALO
has recently reached the news with another dramatic event.
Vale SA is a company that is active in several industrial branches but they recently made it to the news with a second mine disaster in barely 3 years,
On Friday, January 25th, a dam collapse in their Corrego do Feijao mine released more than 10 million m³ of wastewater from a wastewater reservoir.
The wastewater reservoir underwent a positive inspection last September in 2018.
The disaster occurred in their iron ore mine in the Southeast of Brazil.
The rust-colored waste water in the form of a toxic iron ore residue flooded Brumadinho and killed about 65 people.
Another 300 people are still been missing.
Nothing excludes that the death toll can increase even further.
Vale SA is the second largest company in Brazil and is active in the logistics sector, and particular in, railway, port and shipping.
In this way they support other activities within their business segment in the mining sector where they specialize in metals such as nickel, manganese, copper and iron ore.
In addition to their mining activities and logistics activities, theire also a steel producer and have a partnership with steel giant ThyssenKrupp from Germany.
A brief review to November 5, 2015 reminds us that at Vale SA and BHP Billiton, which together formed the joint venture Samarco Mineração SA, were faced with a double dam collapse, where no less than 50 million m³ of this residue was released.
As many as 19 people from the Bento Rodrigues district were killed and the drinking water of hundreds of thousands of people was polluted.
In 2016, the company was sentenced to a fine of billions of American dollars,

When we look at the recent history of South America and that of Brazil in particular, we can draw a number of peculiarities that might play an important role in this environmental disaster.

Peculiarity 1:
Only three years ago, the company was faced with the same catastrophe that caused a billion dollar loss and in 2016 they were condemned again to a fine of 6 billion American dollars. No company does like to lose a lot of money, and certainly not on such a large scale.
The mine was also closed for research for a long time, resulting in a severe financial loss aswell.
Every normal functioning management does everything in their power to avoid such scenarios and certainly if it happened to them before.
Peculiarity 2:
In September 2018 a positive inspection of the reservoir was done and the company could take it back in use for production.
Barely 4 months later, the new disaster happens.
Some engineers would already have been arrested for questioning.
Peculiarity 3:
The disaster occurred only two weeks after the appointment of Jair Bolsonaro as President of Brazil, who had already announced, before the presidential election that he would stimulate the country's economy.
Agriculture and mining would be positively encouraged.
This brought him the anger of environmental activists and certain remote and protected tribes.
The Nimby symptom was therefore felt in Brazil as well. Nimby is short for Not In My BackYard.
Nimby is a phenomenon that grows in a society that gains a better financial stimulus  and where  growht can be seen in its middle class. A population that can hardly make ends meet is not so concerned about the environment or charity.
They are mainly happy to have food and drinks every day and live in the hope that they can maintain their health.
A population in which the middle class gains more control does not want to be confronted with an industry that can disrupt their environment, which could temporarily jeopardize their luxury life.
They forget that everything that has ever been made or what will ever be made, that this can only be done by earthly raw materials, yet as long as they can not yet be mined from passing meteorites.
Our society would not have existed if there had been no agricultural revolution or mining evolution.
We would still hunt rabbits with a club and protect us from the cold with animal skins.
Our food would still consists of berries that we could pick, and by hunting where we always had to travel with the pray animals, who did not have a permanent place to stay.
We probably would not have known leeks and celery as vegetables and our standard of living had probably no place for mobile phones, computers and tech companies like Google and Facebook.
Amazon probably would not have been around to deliver your daily package of blueberries.
The first excisting society and all other societies could only develop through the manipulation of raw materials, whether they had to be extracted from the ground or could grow out of the ground. The development of a society was only possible if tribes no longer had to roam around with their prey animals in order to survive.
The complete Western civilization depends on raw materials. yet it is precisely this same civilization that goes against every form of exploitation and are protesting against precisely that what provides them all their living standards.
These protests sometimes have far-reaching consequences in which neither God nor command is respected and everything is done to enforce a "certain right".
A society has arose and has developed through cooperation, but our current society has specialized in debasing each other and always pointing directly to a public figure, be it a CEO, a politician or any other public figure. Without having carried out any kind of research into the how and why. If, after investigation, the blamed person nevertheless gets the right, nobody will stand up to apologize.
Peculiarity 4:
The political course in South America, including Brazil, has turned over in almost all South American countries from a left winggovernment to a right-wing government.
As one of the largest iron ore producers in the world, this disaster has an tremendous impact on the metalworking industry. The closure of this mine for the investigation will already cost the company billions of American dollars without the additional billions that will be imposed as fines and clean-up costs.
The shareprice of the company with ticker VALE3 on the Brazilian market went down from 56.05 Brazilian real on Friday to 45.00 Brazilian Real on Monday. At the time of writing this article it was listed at 42.38 Brazilian Real, a decrease of about 24%.
The production loss of the Corrego do Feijao mine would amount to only 1.5% of Vale's total iron ore capacity and would have little effect on the deliveries of the company.
But before drawing final conclussions about this disaster, it might be better to wait for further research first.
In the Chinese market, the futures of iron ore rose to a 16-month high peak.
At the Dalian Commodity Exchange, the trade in iron ore rose by 6%, the highest since September 2017.
China, as the largest steel producer, needs a high quality of iron ore and recently voted a new law requiring their metal producers to use more vanadium.
This new obligation came to improve the tensile strength and flexural strength of their steel.
In the event of a shortage of iron ore or vanadium ore, the Chinese steel industry would probably experience some hindrance.
If the 6% price increase of iron ore is to be maintained, it might be that consumption of goods made of steel can undergo a price increase.


- 2019 January 29 -