Pará state to investigate Vale activities

Brazil’s Pará state has started a probe into mining giant Vale‘s activities in the region, focusing on mining costs and benefits.

Pará is important for iron ore, manganese, copper, gold and nickel production.

“The legislative house is fulfilling a demand of society of decades: an investigation in relation to Vale’s activities,” the chief investigator, Eraldo Pimenta, said in a statement. 

The investigative commission comprises seven legislators and will interview company representatives, former employees, and current and former local government members to gain insights into company operations, the impacts of mining, and the benefits offered to Vale in recent years. 

Issues to be investigated include tax incentives, transfers to municipalities, environmental compliance, and safety conditions at tailings dams. The probe will last 90 days but can be extended for another 30.

In the first quarter, 44% of Brazilian mining revenues were generated in Pará state, according to mining association Ibram. 

Vale operates Carajás (pictured), the world’s largest iron ore mine, in the state.

The company will collaborate and provide all details about its operations, a spokesperson told BNamericas. 

Vale has come under increasing pressure as high iron ore prices led to record earnings while most business sectors and local governments have faced financial difficulties due to the COVID-19 pandemic.

In March, Pará increased its TFRM tax on iron ore, copper, manganese and nickel, which will see Vale having to pay 2.2bn reais (US$415mn) per year instead of around 700mn reais.

In addition, there are proposals in the national congress to raise the 9% CSLL income tax for mining firms. Earlier this year, the federal government increased the CSLL for the banking sector, which also withstood the pandemic relatively well.

But tax pressures are also criticized. 

“When a mining company establishes itself in a region, it positively impacts the economy, it has a multiplier effect in the region and this needs to be shown,” Antônio Carlos Marcial Tramm, the president of Bahia state mineral research company CBPM, told BNamericas in a recent interview. 

“It is not only the calculation of royalties or taxes paid directly by the company, there is also a secondary contribution that the sector generates to the entire economy where a project is located,” he added.