Vale: Corporate Rap Sheet

Vale

By Philip Mattera

Over the past decade, Brazil-based Vale (previously known as CVRD) has evolved from a large but little known producer of iron ore to one of the world’s mining leviathans—the only one based in the global south. The major factor in its growth was the US$19 billion acquisition of Canada’s big nickel producer Inco in 2006. Originally a government-owned firm called Companhia Vale do Rio Doce (literally, “sweet river valley company"), Vale was privatized in 1997. Since then it has been more aggressive in its exploration and its labor policies, coming into conflict with indigenous groups, environmentalists and trade unions both in Brazil and abroad.

While it was government-owned, Vale tended to follow paternalistic policies towards its workers and the communities in which it operated. Those policies, some of which were mandated by Brazilian law, tended to disintegrate after the company was privatized. Vale also inherited a new set of labor and environmental controversies after it took over Canada’s Inco. In January 2012 Vale was one of the companies singled out by Greenpeace Switzerland and the Berne Declaration for environmental and human rights abuses.

 

Environment and Product Safety 

In 2003 Brazilian authorities fined Vale the equivalent of US$3.5 million after one of the company’s trains derailed and spilled more than 185,000 gallons of various toxic chemicals into the Congohas River in Minas Gerais. The spill also caused an explosion and a fire.

In July 2008 officials in Brazil fined Vale the equivalent of about US$3 million for the illegal sale of timber felled in the course of clearing land for a bauxite mine. The company denied the allegation.

Vale has been widely criticized by groups such as International Rivers, Amazon Watch and the Xingu Alive Movement for its involvement in Brazil's controversial Belo Monte Dam.

In November 2015 a containment dam in Brazil operated by Samarco, a joint venture of Vale and BHP Billiton, burst, releasing a torrent of mining waste that killed a dozen people and contaminated the Doce River and the water supply of more than 200 towns. It was called the worst environmental disaster in Brazil's history.

 

Labor

Labor relations at Vale’s Brazilian operations became more strained after the government sold off its share of the company. Management “has to treat its workers better,” said a union official quoted in a July 7, 2003 article in the newsletter Business News Americas. The article noted that workers were pressing for bigger wage increases both by carrying out brief work stoppages and by staging a protest in which they waved bananas to symbolize the meager nature of management’s contract offer.

When Vale took over Inco in 2006, it inherited a company with tumultuous labor relations at its Canadian operations. After Inco’s competitive position began to erode in the 1960s and management responded by resisting wage increases, strikes became more common. When the company implemented drastic job cuts in 1978, Inco’s unions staged a walkout that lasted for eight months.

After Vale clinched the deal for Inco, the Canadian Steelworkers union sent a delegation to Brazil to learn about the labor practices of the new parent company. The group found that Vale had been “outsourcing union jobs and restraining wage increases.”

The Brazilian and Canadian unions began ongoing consultations about conditions at Vale. In March 2007, the Canadian Steelworkers hosted a meeting with other trade unions representing Vale workers not only in Brazil but also in Mozambique and New Caledonia. The unions approved a Unity Accord.

In August 2008 the Canadian unions met in Manitoba with their Brazilian counterparts to discuss solidarity measures during contract negotiations. Two months later, Vale Inco workers in northern Manitoba reached agreement with the company on the first new labor contract since Vale took over Inco. The pact provided workers with pay increases of about 14 percent over three years.

In December 2007 workers at Vale Inco’s operation in Indonesia won significant pay and other contract improvements after staging an 11-day strike.

In July 2009 workers at Vale Inco operations in Ontario went on strike to resist company demands for contract concessions. In October the company resumed operations using non-union employees. The Steelworkers escalated their pressure campaign against the company and finally won a new contract that union members approved in July 2010.

 

Human rights

With the purchase of Inco, Vale took over responsibility for the Canadian company’s controversial mining operations in Indonesia and the French-controlled South Pacific island of New Caledonia.

Working in partnership with some Japanese companies, Inco started developing an open-pit nickel site on the Indonesian island of Sulawesi in 1973 and officially began mining in 1977. According to various independent and academic reports, the project caused significant dislocation of communities whose members were not given fair compensation for their land. The Indonesian government was also said to be receiving substandard royalties on the mine’s output.

Expansions of the operation in more recent times have also exacerbated relations with local communities. In 2005 protesters held a hunger strike and a blockade at the mine to publicize the ongoing dispute over compensation for displaced families. In 2008 the Indonesia government called for a summit meeting to review the company’s latest plans.

Inco became embroiled in similar controversies at its Goro nickel project in New Caledonia, which uses a difficult and allegedly hazardous process involving acid and high temperatures to separate the nickel from the ore. The company has come into conflict with the indigenous Kanak people, some of whom blockaded the site for a period of time in 2006. A Kanak advocacy organization called Rheebu Nuu also filed suit to have the company’s mining license revoked. In 2006 a French court issued an injunction that forced Inco to halt construction of a waste storage facility on the site, but in February 2007 the company, by then owned by Vale, won its appeal, and construction resumed. The mine was expected to begin production in 2009 but has faced numerous delays, including several acid spills.

Vale has also had conflicts with indigenous peoples in its home country. In October 2006 members of the Xikrin tribe occupied portions of Vale’s operations in the company-run town of Carajas in Brazil in an effort to increase the compensation paid by Vale to the indigenous community. The protest ended after two days, but the company sought to punish the tribe by filing a lawsuit seeking US$10 million in damages.

In March 2008 protesters from the Landless Rural Workers Movement (MST) occupied and vandalized a Vale pig iron plant in northeastern Brazil to demand the closing of some 70 charcoal furnaces. That same month, protesters from MST and Via Campesina blockaded a Vale rail line to protest the company’s construction (with a partner) of a hydroelectric dam that displaced several thousand people from their homes.

In July 2008 the Brazilian government accused a Vale subsidiary of illegally paying peasants to move off land that they were cultivating but which was technically owned by the National Institute of Colonization and Land Reform (Incra).

Also in 2008, several Vale facilities in Brazil were among the sites targeted by protestors during widespread demonstrations over commodity speculation and rising food prices.

A February 2012 report by Southern Africa Resource Watch criticized Vale’s coal operations in Mozambique for poor accountability practices and for mishandling of the resettlement of villagers.


Taxes

In November 2013 Value agreed to pay the equivalent of more than $9 billion in taxes on overseas profits to settle a dispute with Brazilian revenue authorities.

 

Watchdog Groups and Campaigns

Amazon Watch

Mining Watch Canada

Mines and Communities

IndustriAll

International Rivers

Mines and Communities

Southern Africa Resource Watch

United Steelworkers Canada

Xingu Alive Movement

 

Key Books and Reports

Dirty Profits 2: Report on Companies and Financial Institutions Benefiting from Violations of Human Rights (Facing Finance, 2013).

Note: This page draws from a corporate profile originally prepared by the author for the Crocodyl website in December 2008.

Last updated November 23, 2015.