News

The Fundão dam burst has completed a year and a half this May. This happening profoundly affected the impacted communities, the environment and Samarco`s trajectory. During this period of time, we have made unquantifiable efforts to fulfill our obligations. We have been dedicated to assist people and to remediate the environmental damages – both are currently under the management of the Renova Foundation.

From the outset, we have also focused on reinforcing the dams` remaining structures and we have reviewed our emergency actions plan. In partnership with the civil defenses, we strengthen our alert system and dam monitoring center, with prevention, dialogue and simulated measures in the communities.

After the emergency phase, Samarco expects to restart its operations with maximum operational safety, and thus continue to honor its commitments to society. However, today, after 18 months without operating, we still can not state a precise date for the resumption of our activities. There are many uncertainties and steps to take, that can further increase the consequences of our inactivity.

For Samarco’s recovery, two environmental licenses to be granted by the environmental agencies of Minas Gerais are required. One of them is the Alegria Sul pit for the disposal of tailings. It is a safer solution resulting from many engineering research. This option integrates our studies of new tailings disposal solutions, the stacking of tailings after filtration as well as their use in the production of other products. Those are alternatives to be applied together.

The Environmental Licensing Process of the Alegria Sul pit is already under way. Public hearings were held in December last year in the cities of Ouro Preto and Mariana, with a massive participation of the communities.

In October 2016, Samarco had all the licenses of the Germano complex suspended – until now, they were only seized after the breakup. Because of this, the company was also invited to carry out the Corrective Operational Licensing (LOC) of the existing structures in the Germano complex in Mariana. This is a process requested by the State of Minas Gerais for all permits to be reviewed.

To initiate the corrective operational licensing, Samarco has to present letters of compliance from the municipalities in its direct area of influence. All the declarations have already been obtained, except in Santa Bárbara. The prefectures of Mariana, Ouro Preto, Catas Altas and Matipó have already granted the respective letters.

The declaration of compliance of the Santa Barbara Municipality is necessary because it is in this municipality that Samarco has captured water for part of its production process, since 2014. Although there is no change in the catchment system, which already operated with all necessary licenses and grants, the Santa Barbara Municipality must declare whether or not the enterprise is in accordance with the Municipal Land Use and Occupancy Act. On May 11th, the Minas Gerais Court of Justice published a partial injunction granting a 10-day deadline for Santa Bárbara to issue a declaration that the enterprise is in compliance with municipal legislation.

The uncertainty regarding the restart of the operations further widens the social and economic impacts produced by our inactivity. From June, a part of the company’s workforce, currently representing about 1,800 employees, will be placed in layoff (temporary suspension of employment contracts). Samarco`s and the unions`proposal was approved by the employees in assemblies and perceived as the best solution for the maintenance of the jobs, since the company has had its operational activities paralyzed since November of 2015. This is already the third period of layoff.

The uncertainties scenario interferes in our employees’ lives and in the lives of their families, in the business perspectives of the suppliers and customers, and compromising the economy of several municipalities in the states of Minas Gerais and Espírito Santo. According to a study recently released by Tendências Consultoria Integrada, the stoppage of Samarco`s activities puts at risk around 20 thousand direct and indirect jobs. Still according to the same study, Minas Gerais would be the most affected state, with a potential impact of about 14,500 jobs, while Espírito Santo may not have more than 4,000 jobs. Without these jobs, the consultancy points out that the loss of income mass in one year can reach R $ 1.2 billion.

This is a domino effect that really impacts society. There is a decrease in the supply of jobs and a fall in municipal revenues that affect, directly or indirectly, the commerce and services of the regions. This can lead to a lack of perspective in people and companies, provoking the need for geographic changes, reducing the circulation of wealth and making difficult the development of the communities.

When Samarco was operating at 100% of its capacity, it significantly contributed to the Brazilian economy. Indeed, In 2015, the company was the 12th largest exporter in the country, according to data from the Ministry of Development, Industry and Foreign Trade (MDIC), with revenues of US $ 2.061 billion in exports of 25.4 million tons. With our stoppage, in 2017, a loss of almost R $ 2.5 billion in Brazilian exports is projected. Samarco’s revenue is equivalent to 1.5% of Minas Gerais GDP and 6.4% of Espírito Santo GDP.

Given this scenario and all mitigation and compensation actions already taken or underway, we believe in the legitimacy of the company’s resumption and its importance for the economies of Minas Gerais, Espírito Santo and Brazil. Samarco needs to go back operating to continue fulfilling its commitments to social and environmental reparation. The operation is also important to maintain and generate jobs and to continue with the socioeconomic development of the municipalities and states where the company operates.

We have always assumed our responsibility. We are living a learning process, every single day, but we need the sense of urgency and speed of the processes that are involving our resumption.

Roberto Carvalho

CEO