AP funds stress importance of engagement over burst Brazilian dam
Sweden’s AP funds have emphasised the importance for long-term planning in the wake of one of Brazil’s largest mining accidents, which led to scrutiny of its holdings in mining giants BHP Billiton and Vale.
John Howchin, director general of the Ethical Council, responsible for the engagement efforts of the four buffer funds, said the asset owners were monitoring the plan being proposed to ensure the rehabilitation of a region in the southern Brazilian state of Minas Gerais.
The scrutiny comes after a dam at an iron ore mine run by Samarco – jointly owned by Australia’s BHP Billiton and Brazil’s Vale – burst in November, destroying a nearby village, poisoning the Rio Doce river and triggering a BRL20bn (€4.6bn) lawsuit by the Brazilian government.
The four funds have come under pressure to divest their holdings in the parent company after recent scrutiny from local media.
Howchin, however, told IPE the buffer funds had been monitoring the emergency measures put in place since November’s disaster.
“Secondly,” he said, “it’s important for the people around Rio Doce that there is a long-term plan in place regarding the rehabilitation of villages and the river itself.”
He said initial surveys had shown it would take years to improve the river’s water quality in the wake of the accident, adding that the most important matter now was for a long-term plan for the rehabilitation of the river and surrounding area to be agreed.
“Discussions between the companies and Brazilian authorities regarding how the social and environmental programmes will be financed long term is ongoing.
“Hopefully, they can reach an agreement soon to start these programmes.”
He pointed out that there would still be investigations by authorities to determine whether there had been any negligence by Samarco that resulted in the accident.
He also agreed that, if the authorities rule found evidence of negligence, the funds would “absolutely” reassess their combined SEK1.7bn stake in both parent companies.