Brumadinho: R$290 million agreement will end lawsuit against Vale.

Brazil Agency - In a statement to the market, Vale announced that it has reached an agreement to settle a lawsuit in the United States related to the tragedy that occurred in Brumadinho, Minas Gerais. The mining company will pay a total of US$55,9 million [approximately R$287 million], but may refute the accusations. According to a statement released on Tuesday (28), the agreement will take effect as soon as it is ratified by the United States District Court for the Eastern District of New York.

The lawsuit had been ongoing since April 2022 and was filed by the Securities and Exchange Commission (SEC), the agency responsible for regulating the stock market in the United States. Vale was accused of misleading investors about the safety of its dams between 2016 and 2019, leaving them without adequate information to conduct risk assessments.

>>> TRT-17 orders Vale to compensate technician after Brumadinho tragedy.

The SEC argued that audits were manipulated to issue fraudulent stability certificates, concealing the true condition of several structures, including the one that collapsed in Brumadinho in January 2019, causing 270 deaths and environmental and social damage in several municipalities in the Paraopeba River Basin. According to the lawsuit, after the tragedy, the mining company lost more than US$4 billion in market capitalization, generating losses for those who acquired its bonds.

"For years, Vale knew that the Brumadinho dam, built to contain potentially toxic byproducts of mining operations, did not meet internationally recognized dam safety standards. However, Vale's public sustainability reports and other public records fraudulently assured investors that the company adhered to the 'strictest international practices' in assessing dam safety and that 100% of its dams were certified as stable," the SEC alleged in filing the lawsuit.

From the outset, the mining company denied the accusations and stated its commitment to repairing the damage. "Vale remains committed to remedying and repairing the damage caused by the Brumadinho dam collapse in 2019," it reiterated in a statement to the market. In January of this year, on the fourth anniversary of the tragedy, those affected demanded greater participation in the reparation process.

If found guilty, the mining company could be convicted of violating anti-fraud provisions and federal securities laws and be required to repay the damages with interest, in addition to other penalties. With the agreement, the lawsuit should be dismissed. In the negotiations, the SEC agreed not to oppose a motion in which Vale will reject all allegations that it acted with fraudulent or reckless intent in relation to its disclosures.

The issuance of a false stability report was highlighted in several investigations that took place in Brazil regarding the tragedy in Brumadinho. In the first stage of the Federal Police investigation, concluded in September 2019, seven Vale employees and six from TÜV SÜD, the German consulting firm that signed the dam's stability report, were indicted. They were accused of falsifying documents and using false documents, for ignoring the appropriate technical parameters and forging inspection reports and the stability declaration.

The complaint filed by the Public Prosecutor's Office of Minas Gerais (MPMG), which resulted in the criminal case opened in the Minas Gerais courts, also pointed to collusion between Vale and TÜV SÜD. The two companies were accused of concealing the true situation of the dam from the public authorities and society. This process was suspended at the end of last year after the Supreme Federal Court (STF) ruled that the case was not within the jurisdiction of the state courts. However, the complaint filed by the MPMG was resubmitted by the Federal Public Prosecutor's Office (MPF) to the federal courts.