6-K 1 tm2115087d11_6k.htm FORM 6-K

 

United States

Securities and Exchange Commission

Washington, D.C. 20549

 

FORM 6-K

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the

Securities Exchange Act of 1934

 

For the month of

 

May 2021

 

Vale S.A.

 

Praia de Botafogo nº 186, 18º andar, Botafogo
22250-145 Rio de Janeiro, RJ, Brazil

(Address of principal executive office)

 

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

 

(Check One) Form 20-F  x  Form 40-F ¨

 

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1))

 

(Check One) Yes  ¨  No   x

 

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7))

 

(Check One) Yes  ¨  No   x

 

(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

 

(Check One) Yes  ¨  No  x

 

(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b). 82-   .)

 

 

 

 

 

 

 

 

 

 

 

Vale S.A.

 

Reference Form

 

 

 

 

 

 

 

 

 

1. Identification of the people responsible for the content of the form

 

1.1 - Statement and Identification of People in Charge

 

Name of the person responsible for the content of the form Eduardo de Salles Bartolomeo
Position of the person in charge Chief Executive Officer

 

Name of the person responsible for the content of the form

Luciano Siani Pires
Position of the person in charge Chief Investor Relations Officer

 

The aforementioned officers state that:

 

a. they reviewed the reference form;

 

b. all information contained in the form complies with the provisions of CVM Instruction 480, in particular articles 14 to 19;

 

c. the set of information contained therein is a true, accurate and complete portrait of the economic-financial situation of the issuer and the risks inherent to its activities and the securities issued by it.

 

 

 

STATEMENT OF THE CHIEF EXECUTIVE OFFICER

 

FOR THE PURPOSES OF ITEM 1.1 OF THE REFERENCE FORM

 

 

 

Eduardo de Salles Bartolomeo, a Brazilian citizen, married, engineer, bearer of Identity Card IFP/RJ no. 053253845, enrolled with the CPF/MF under no. 845.567.307-91, residing and domiciled in the city and state of Rio de Janeiro, with business address at Torre Oscar Niemeyer, Praia de Botafogo, 186, suite 701 to 1901, Botafogo, CEP 22250-145, in the city and state of Rio de Janeiro, in the capacity of Chief Executive Officer of Vale S.A., a corporation with its principal place of business in the city and state of Rio de Janeiro, at Torre Oscar Niemeyer, Praia de Botafogo, 186, suite 701 to 1901, Botafogo, CEP 22250-145, enrolled with the CNPJ/MF under no. 33.592.510/0001-54 ("Company”), hereby states that:

 

a. he reviewed the Company's Reference Form;

 

b. all information contained in the Reference Form complies with the provisions of the Securities and Exchange Commission Instruction no. 480, of December 7th, 2009, as amended, especially articles 14 to 19; and

 

c. the set of information contained therein is a true, accurate and complete portrait of the Company's economic-financial situation and the risks inherent to its activities and the securities issued by it.

 

 

 

 

 

 

Eduardo de Salles Bartolomeo

Chief Executive Officer

 

 

 

STATEMENT OF THE CHIEF FINANCIAL OFFICER AND CHIEF INVESTOR RELATIONS OFFICER

 

FOR THE PURPOSES OF ITEM 1.1 OF THE REFERENCE FORM

 

Luciano Siani Pires, a Brazilian citizen, married, mechanical engineer, bearer of Identity Card IFP/RJ no. 07.670.915-3, enrolled with the CPF/MF under no. 013.907.897-56, residing and domiciled in the city and state of Rio de Janeiro, with business address at Torre Oscar Niemeyer, Praia de Botafogo, 186, suite 701 to 1901, Botafogo, CEP 22250-145, in the city and state of Rio de Janeiro, in the capacity of Chief Financial Officer and Investor Relations Officer of Vale S.A., a corporation with its principal place of business in the city and state of Rio de Janeiro, at Torre Oscar Niemeyer, Praia de Botafogo, 186, suite 701 to 1901, Botafogo, CEP 22250-145, enrolled with the CNPJ/MF under no. 33.592.510/0001-54 ("Company"), for the purposes of item 1.1 of the Company Reference Form, hereby states that:

 

a. he reviewed the Company's Reference Form;

 

b. all information contained in the Reference Form complies with the provisions of the Securities and Exchange Commission Instruction no. 480, of December 7th, 2009, as amended, especially articles 14 to 19; and

 

c. the set of information contained therein is a true, accurate and complete portrait of the Company's economic-financial situation and the risks inherent to its activities and the securities issued by it.

 

 

 

 

 

___________________________________________________

Luciano Siani Pires

Chief Financial Officer and Chief Investor Relations Officer

 

 

 

1.2 - Individual statement of new holder of the position of Chief Executive Officer or Investor Relations Officer duly signed, attesting that:

 

Item not applicable.

 

 

 

2. Auditors

 

2.1/2.2 - Identification and Compensation of Auditors

 

Do you have an auditor? YES
CVM Code 2879
Type of auditor National
Name/Corporate Name PricewaterhouseCoopers Auditores Independentes
CPF/CNPJ (Individual/Corporate Taxpayer ID) 61.562.112/0001-20
Contract date for the services 02/15/2019
End of service provision Not applicable.
Description of contracted service

Provision of professional services related to the audit of the financial statements, both for local and international purposes, and work on certification of internal controls (in compliance with “Section 404” of the Sarbanes-Oxley Act of 2002), for the fiscal years from 2019 to 2023, and the Review of Quarterly Financial Information (ITR) from the period ended March 31, 2019 to the period ending December 31, 2023.

 

In addition, the scope of work also encompasses the provision of other audit-related services, such as issue of previously agreed procedural reports in accordance with NBC TSC4400.

Total amount of compensation for independent auditors separated by service The services contracted with the Company's external auditors for the fiscal year ended December 31, 2020 for the Company and its subsidiaries were as follows:
   
   

      In thousands of
reais
 
    Accounting Audit 26,561  
    Audit - Sarbanes Oxley Act 2,724  
    Audit-Related Services (1) 2,231  
    Total External Audit Services 31,517  
   

(1) Those services are mostly procured for periods of less than one year.

 

 

   
   
Reason for substitution Not applicable.
Reason presented by the auditor in case of disagreement with the issuer's justification Not applicable.

 

 

Name of
technician
responsible
Period of service
provision
CPF (Individual
Taxpayer ID)
Address
Patricio Marques Roche As from 01/01/2019 993.005.407-34

Rua do Russel, 804, 6º e 7º Ed.
Manchete – Glória, Rio de Janeiro/RJ,
22210-907

E-mail: patricio.roche@pwc.com

Telephone: (21) 3232-6112

 

 

 

Do you have an auditor? YES
CVM Code 418-9
Type of auditor National
Name/Corporate Name KPMG Auditores Independentes
CPF/CNPJ (Individual/Corporate Taxpayer ID) 57.755.217/0001.29
Contract date for the services 04/30/2014
End of service provision 12/31/2018
Description of contracted service

Provision of professional services related to the audit of the financial statements, both for local and international purposes, and work on certification of internal controls (in compliance with Section 404 of the Sarbanes-Oxley Act of 2002), for the fiscal years from 2014 to 2018, and the Review of Quarterly Financial Information (ITR) from June 30, 2014 to September 30, 2018.

 

In addition, the scope of work also encompassed the provision of other audit-related services, such as issuing previously agreed procedural reports in accordance with NBC TSC4400.

Total amount of compensation for independent auditors separated by service KPMG did not provide services to the Company in the last fiscal year ended December 31, 2020.
Reason for substitution The replacement of KPMG by PwC aimed to comply with the provisions of art. 31 of CVM Instruction 308/99, which determines the rotation of certifying accountants every five years, and was approved by the current auditors.
Reason presented by the auditor in case of disagreement with the issuer's justification Not applicable.

 

 

Name of
technician
responsible
Period of service
provision
CPF (Individual
Taxpayer ID)
Address
Manuel Fernandes Rodrigues de Sousa

From April 1, 2014 to July 25, 2018

 

783.840.017-15

Rua do Passeio, 38, setor 2, 17º andar – Centro/RJ

Edifício Passeio Corporate

20021-290, Rio de Janeiro, RJ

E-mail: mfernandes@kpmg.com.br

Telephone: (21) 2207-9400

Bernardo Moreira Peixoto Neto From July 26, 2018 to December 31, 2018 877.721.757-87

Rua do Passeio, 38, setor 2, 17º andar – Centro/RJ

Edifício Passeio Corporate

20021-290, Rio de Janeiro, RJ

E-mail: bmoreira@kpmg.com.br

Telephone: (21) 2207-9400

 

 

 

 

2.3 - Other relevant information

 

Vale's Board of Directors, at a meeting held on September 27, 2018, approved the hiring of PricewarterhouseCoopers Auditores Independentes (“PwC”), for the provision of independent auditing services for the Company's financial statements, for a period of five years from the year 2019. That service started to be provided as of the review of the quarterly information (“ITR”) for the three-month period ended March 31, 2019.

 

At a meeting of the Board of Directors, held on September 10, 2020, Vale's Policy for the Hiring of Independent Auditors was approved, which aims to establish the guidelines and principles for the contracting of audit services and audit-related or non-audit services for the consolidated financial statements of the Company and its subsidiaries, in compliance with the requirements provided for in applicable legislation.

 

Said policy sets forth specific internal procedures for the initial hiring of independent auditors, as well as the subsequent hiring of other services from the independent audit firm, based on principles that preserve the auditor's independence.

 

All contracts are assessed by the Audit Committee, which is responsible for recommending the hiring of independent auditors for the approval by the Board of Directors, as defined in the Company's Bylaws. The policy also contains the provision of specific services that are prohibited to the independent auditor, even though he/she declares to be independent for the service.

 

 

 

3. Selected financial information

 

3.1 - Financial Information - Consolidated

 

(In Reais) Fiscal year
(December 31, 2020)
Fiscal year
(December 31, 2019)
Fiscal year
(December 31, 2018)
Stockholders' equity 180,986,000,000.00 157,149,000,000.00 173,683,000,000.00
Total Assets 478,130,000,000.00 369,671,000,000.00 341,713,000,000.00
Net Revenue / Financial Intermediary Revenue /Insurance Premium Earned 208,529,000,000.00 148,640,000,000.00 134,483,000,000.00
Gross Profit or Loss 109,962,000,000.00 64,804,000,000.00 53,282,000,000.00
Net (Loss) Income 26,713,000,000.00 (6,672,000,000.00) 25,657,000,000.00
Number of Shares, Ex-Treasury 5,129,910,954 5,128,282,469 5,126,258,410
Equity Value of Shares (Reais/Unit) 35.28 30.64 33.54
Basic Earnings or Loss per Share 5.21 (1.30) 4.95
Diluted Earnings or Loss per Share 5.21 (1.30) 4.95

 

 

 

 

3.2 - Non-gaap measures

 

a. value of non-gaap measures

 

The Company uses Adjusted EBITDA, Adjusted EBIT, net debt (cash) and expanded net debt as non-gaap measures methods.

 

  Fiscal year ended on December 31,
(In R$ million) 2020 2019 2018
Adjusted EBITDA 87,340 42,307 61,065
Adjusted EBIT 70,661 27,556 48,825
Net debt (Cash) (4,666) 19,669 37,390
Expanded net debt 69,302 71,607 60,418

 

 

b. reconciliations between the amounts disclosed and the amounts of the audited financial statements

 

 

  Fiscal year ended on December 31,
(In R$ million) 2020 2019 2018
Net income (loss) attributable to the Vale's shareholders 26,713 (6,672) 25,657
Net income (loss) attributable to noncontrolling interests (1,810) (2,025) 117
Net income (loss) 24,903 (8,697) 25,774
(+) Income taxes 3,025 (2,509) (966)
(+) Financial result, net 24,140 13,446 18,058
EBIT 52,068 2,240 42,866
(+) Depreciation, amortization and depletion 16,679 14,751 12,240
EBITDA 68,747 16,991 55,106
Equity results and other results in associates and joint ventures(1) 5,436 2,684 693
Dividends received and interest on loans from associates and joint ventures(2) 1,338 1,870 1,433
Impairment and disposal of non-current assets(3) 11,819 20,762 3,523
Loss from discontinued operations - - 310
Adjusted EBITDA of the continued operations 87,340 42,307 61,065
Depreciation, amortization, and depletion (16,679) (14,751) (12,240)
Adjusted EBIT of the continued operations 70,661 27,556 48,825

 

(1) For the fiscal year ended December 31, 2018, this line included dividends received and interest on loans from associates and joint ventures, which started to be reported separately as from the fiscal year ended December 31, 2019.

(2) Includes the yield on the financial instrument in the coal segment.

(3) For the year ended December 31, 2018, this line was described as "special events".

 

 

(in millions of Reais)   On December 31,
  2020   2019   2018
Short-term loans and financing  (1)   4,602   4,895   3,889
Gross debt (1)   69,426   52,625   59,928
(-) Cash, cash equivalents and financial investments   70,086   29,627   22,413
(-) Short-term financial investments   4,006   3,329   125
Net debt (Cash)   (4,666)   19,669   37,390
(+) Lease liabilities (IFRS 16)  (1)   8,662   7,218   -
(+) Foreign exchange swaps  (²)   4,591   62   1,830
(+) Refinancing program (“REFIS”)  (1)   14,262   15,749   16,852
(+) Liabilities related to Brumadinho(1)   23,774   12,022   -
(+) De-characterization of dams  (1)   11,897   10,034   -
(+) Liabilities related to associates and joint ventures (1)   10,782   6,853   4,346
Expanded net debt   69,302   71,607   60,418

 

(1) Includes the amounts reported in current liabilities and non-current liabilities.

(2) It relates to asset and liability derivatives, related to interest rate and foreign exchange risk.

 

 

 

 

c. reason why the Company understands that such measurement is more appropriate for the correct understanding of its financial condition and the result of its operations

 

The Company calculated Adjusted EBITDA and Adjusted EBIT according to CVM Instruction No. 527, dated October 04, 2012, as amended (“CVM Instruction No. 527”).

 

The bodies in charge of making operational, resource allocation and performance evaluation decisions, which include the Board of Executive Directors or the Board of Directors, use Adjusted EBITDA as a performance measure. The Adjusted EBITDA corresponds to the operating profit or loss plus dividends received from investees and interest on loans from associates and joint ventures, excluding (i) depreciation, depletion and amortization, and (ii) impairment and write-off of non-current assets. The Adjusted EBITDA presents an approximate measure of the Company's cash generation, since it excludes non-recurring effects and non-cash.

 

Adjusted EBIT corresponds to Adjusted EBITDA, including depreciation, amortization, and depletion.

 

The definitions of Adjusted EBITDA and Adjusted EBIT used by Vale may not be compared to Adjusted EBITDA and Adjusted EBIT disclosed by other companies.

 

The Company evaluates Net Debt (Cash) and Expanded Net Debt in order to ensure the long-term continuity of its business. The Company has adopted the concept of Expanded Net Debt to manage its liquidity and cash flow, and includes, in addition to the obligations contracted with financial institutions, also the obligations to deliver cash to third parties outside its regular operating process, specifically the liabilities related to the liabilities of the Brumadinho event, Renova Foundation, Samarco and REFIS.

 

The Company reports Net Debt (Cash) and Expanded Net Debt as additional information and should be considered in conjunction with other measures and indicators for a better understanding of the Company's financial performance and conditions.

 

Adjusted EBITDA, Adjusted EBIT, Net Debt (Cash) and Expanded Net Debt are not measures recognized by the Accounting Practices Adopted in Brazil (BR GAAP) or by the International Financial Reporting Standards (“IFRS”), issued by the International Accounting Standard Board (“IASB”), nor do they represent cash flow for the periods reported and should not be considered as substitutes for net income, as indicators of operating performance or as substitutes for cash flow, as an indicator of the Company's liquidity. They do not have a standard meaning and may not be comparable to similar measures used by other companies.

 

 

 

 

3.3 - Events subsequent to the latest financial statements

 

The Company's Consolidated Financial Statements for the fiscal year ended December 31, 2020 were approved by the Company's Board of Directors and issued on February 25, 2021.

 

The Company's Consolidated Financial Statements, pursuant to the rules provided for in the Technical Pronunciation CPC 24, as approved by CVM Deliberation No. 593/09, contain the following subsequent events:

 

1.On January 20, 2021, the Company signed a Heads of Agreement (“HoA”) with Mitsui & Co., Ltd. (“Mitsui”), allowing the parties to structure Mitsui's withdrawal from Vale Moçambique S.A. and the Nacala Logistics Corridor (“CLN”). The HoA provides for that Vale will buy Mitsui's stake in the mine and logistics assets for an immaterial value and will commit to settling CLN’s Project Finance, the remaining balance of which is R$ 12,992 million (US$ 2,500 million) as of December 31, 2020. In the event of closing the transaction, Vale will also have control of CLN and, therefore, will consolidate its assets and liabilities in its balance sheet. The parties' objective is to conclude the transaction in 2021, which is subject to usual conditions precedent.

 

2.On February 4, 2021, Vale entered into a Judicial Agreement for Full Reparation (“Global Agreement”) with the State of Minas Gerais, the Public Defender's Office of the State of Minas Gerais, and the Public Prosecution Offices of the Federal Government and of the State of Minas Gerais, for full reparation of environmental and social damage resulting from the failure of the Brumadinho dam. Thus, the Company recognized an additional expense of R$ 19,924 million in income for the year ended December 31, 2020.

 

3.On February 9, 2021, the Company informed it had completed an investment of R$ 33 million (US$ 6 million) in Boston Metal to acquire a minority interest and promote the development of a technology focused on reducing carbon dioxide emissions in steel production. Boston Metal has a diversified shareholder base, which includes venture capital funds, mining companies and private investors.

 

4.On February 11, 2021, the Board of Directors resolved and submitted for approval to the General Shareholders' Meeting the partial spin-off of the wholly-owned subsidiary Minerações Brasileiras Reunidas S.A., with the merger of the spun-off portion into Vale S.A.

 

5.On February 23, 2021, Vale was assessed for the collection of IRPJ (Corporate Income Tax) and CSLL (Social Contribution on Net Income) and penalties, in the amount of R$ 3,423 million, related to the disallowance of interest on the stockholders’ equity expenses deducted in the base year of 2017. There was also a reduction in tax loss and negative base, whose tax effect is R$ 698 million, plus penalty and interest. The Company will file an objection within the appropriate term, and the prognosis for loss, based on the previous analysis of the tax treatment adopted, is classified as likely.

 

6.On February 25, 2021, the Board of Directors approved the remuneration to shareholders in the total gross amount of R$ 21,866 million, equivalent to R$ 4.262386983 per share, the payment of which was made on March 15, 2021, of which R$ 4,288 million was interest on the stockholders’ equity and R$ 17,578 million as dividends.

 

 

 

 

3.4 - Income Allocation Policy

 

  Fiscal year ending on December 31,
  2020 2019 2018
a. Rules on Earning Retention Pursuant to Articles 39 and 40 of the By-laws, after the legal reserve is established, the creation of (i) a tax incentive reserve, to be created in accordance with the legislation in force, and of a (ii) investment reserve, must be considered in the proposal for the distribution of profits, in order to ensure the maintenance and development of the main activities that make up the Company's corporate purpose, in an amount not exceeding 50% of net income distributable up to the maximum limit of the Company's capital stock.
a.i Values for Earning Retentions Out of the total net income of R$ 26,712,688,500.84 for the year, (i) R$ 1,335,634,425.04 were allocated to the legal reserve, (ii) R$ R$ 9,061,939.21 to the tax incentive reserve, and (iii) R$ 3,502,326,464.04 to the investment reserve. The loss of R$ 6,671,445,224.86 for the year was fully absorbed through investment reserves. Out of the total net income of R$ 25,656,525,836.23 for the year, (i) R$ 1,282,826,291.81 were allocated to the legal reserve, (ii) R$ 1,496,628,728.93 to the tax incentive reserve, and (iii) R$ 15,182,992,215.49 to the investment reserve.

a.ii Percentages in relation to total reported income

 

 

 

Out of the total net income for the year, (i) 5% were allocated to the legal reserve, (ii) 0.03% to the tax incentive reserve, and (iii) 13.11% to the investment reserve. Loss for the year 100% absorbed through investment reserve. Out of the total net income for the year, (i) 5% were allocated to the legal reserve, (ii) 6% to the tax incentive reserve, and (iii) 59% to the investment reserve.
b. Rules on dividend distribution

Pursuant to Article 41 of the By-Laws, at least 25% of the annual net profits, adjusted according to the law, will be used to pay dividends.

 

In the last three fiscal years, pursuant to Article 5, Paragraph 5, of the By-laws, the holders of preferred shares were entitled to receive dividends to be distributed, as calculated pursuant to Chapter VII of the By-laws, in accordance with the following criterion:

 

(a) priority in receiving the dividends corresponding to (i) a minimum of 3% of the net equity value of the share, as calculated based on the financial statements drawn up, which served as reference for the payment of dividends, or (ii) 6% calculated over the part of the capital constituted by this class of share, whichever of the two is greater;

 

(b) the right to share distributed profits, under equal conditions with the common shares, after being assured the latter a dividend equal to the minimum priority established in accordance with item "a" above;

 

(c) the right to share any bonuses, under equal conditions with the common shares, observing the priority established for the distribution of dividends.

 

c. Frequency of dividend distributions Out of the results for the fiscal year of 2020, R$ 4,288,000,000.00 were paid as interest on the shareholders' equity and R$ 17,577,665,672.55 by way of dividends, which were paid on March 15, 2021. None. Out of the results for the fiscal year of 2018, R$ 6,801,433,061.10 were paid as interest on the shareholders' equity and R$ 892,645,538.90 by way of dividends, which were paid on September 20, 2018.
d. Any restrictions on the distribution of dividends enforced by legislation or special regulation applicable to the issuer, as well as contracts and court, administrative or arbitration decisions. None. None. None.
e. If the issuer has a formally approved income allocation policy, stating the body responsible for approval, date of approval and, if the issuer discloses the policy, sites on the World Wide Web where the document can be consulted. The compensation policy applicable to the 2020 fiscal year is the compensation policy approved on March 29, 2018 by the Board of Directors, which is available for consultation at the CVM’s website (www.gov.br/cvm) and the Company's website (www.vale.com). Such policy was suspended on January 27, 2019, due to the failure of Dam I at the Córrego do Feijão Mine, in Brumadinho (MG), and was reinstated, without any changes, on July 29, 2020. For further information, see item 3.9 of this Reference Form. The compensation policy applicable to the 2019 fiscal year is the compensation policy approved on March 29, 2018 by the Board of Directors, which is available for consultation at the CVM's website (www.gov.br/cvm) and the Company’s website (www.vale.com). Such policy was suspended on January 27, 2019, due to the failure of Dam I at the Córrego do Feijão Mine, in Brumadinho (MG). For further information, see item 3.9 of this Reference Form.

The compensation policy applicable to the 2018 fiscal year is the compensation policy approved on March 29, 2018 by the Board of Directors, which is available for consultation at the CVM's website (www.gov.br/cvm) and the Company’s website (www.vale.com).

 

 

 

 

 

3.5 - Distribution of dividends and net income retention

 

(In Reais) Fiscal year 12/31/2020 Fiscal year 12/31/2019 Fiscal year 12/31/2018
Adjusted net income 25,367,992,136.59 (6.671.445.226,01) 22,877,070,815.49
Dividend distributed in relation to adjusted net income 86.193915 0.00 33.632272
Rate of return in relation to the issuer's net assets 14.759533 0.00 15.056415
Total distributed dividend 21,865,665,672.55 0.00 7,694,078,600.00
Retained net income 4,847,022,828.29 0.00 17,962,447,236.23
Date of approval of the retention 04/30/2021 04/30/2020 04/30/2019

 

01/01/2020 to 12/31/2020

  

Type of Share Class of Share Distributed Dividend Amount (Unit) Dividend Payment
Common Shares - Interest on the stockholders' equity 4,288,000,000.00 03/15/2021
Common Shares - Mandatory dividend 17,577,665,672.55 03/15/2021

 

01/01/2019 to 12/31/2019

 

Type of Share Class of Share Distributed Dividend Amount (Unit) Dividend Payment
- - - 0.00 -

 

01/01/2018 to 12/31/2018

 

 

Type of Share Class of Share Distributed Dividend Amount (Unit) Dividend Payment
Common Shares - Interest on the stockholders' equity 6,801,433,061.10 09/20/2018
Common Shares - Mandatory dividend 892,645,538.90 09/20/2018

 

 

 

 

 

3.6 - Report of dividends as retained earnings or reserves

 

 

  Fiscal year ending on December 31,

Dividends distributed to the account of

(in R$ thousand):

2020 2019 2018
Retained Earnings - - -
Realization of Reserves - 7,253,260(1) -

 

 

(1)On December 19, 2019, the Board of Directors decided on the statement of interest on the stockholders' equity for the calendar-year of 2019, calculated on the basis of the appropriated retained earnings of the balance sheet as of September 30, 2019. This decision does not change the Board of Directors' determination to suspend the Shareholders' Compensation Policy. The allocation of interest on stockholders' equity will be decided on in due course. For further information, see item 3.9.

 

 

 

 

3.7 - Level of indebtedness

 

Fiscal Year Sum of current liabilities and non-current liabilities Type of ratio Indebtedness ratio Description and reason for using another ratio
12/31/2020 R$198,903,885,563.00 Indebtedness ratio (0.05) Not applicable.
12/31/2020 0 Other ratios 0.81

Gross debt/Adjusted EBITDA. The ratio is based on the US Dollar. Gross debt consists of the sum of “Short-term loans and financing”, “Current installment of long-term loans” and “Long-term loans and financing”. Adjusted EBITDA is calculated as described in item 3.2.b of this annualized Reference Form for the last twelve months - ADJUSTED EBITDA.

 

The Gross Debt/Adjusted EBITDA ratio indicates the approximate time it would take for a company to pay all debts exclusively using its cash generation.

 

The Company adopts the Gross Debt/Adjusted EBITDA ratio and the interest coverage ratio of Adjusted EBITDA/Interest expenses. These ratios are widely used by the market (rating agencies and financial institutions) and serve as a benchmark for assessing the Company's financial situation, in addition to being included in covenant clauses in certain loan and financing contracts.

12/31/2020 0 Other ratios 20.85

Adjusted EBITDA/Interest Expense - This ratio is based on US Dollar. Adjusted EBITDA is calculated as described in item 3.2.b of this Reference Form. Interest expenses comprise the sum of all appropriated or capitalized interest, whether paid or not, in a given period, arising from the Company's indebtedness.

 

The interest coverage ratio (Adjusted EBITDA/Interest expenses) is used to determine the company’s capacity to generate sufficient cash flow to cover its interest expenses.

 

The Company adopts the Gross Debt/Adjusted EBITDA ratio and the interest coverage ratio of Adjusted EBITDA/Interest expenses. These ratios are widely used by the market (rating agencies and financial institutions) and serve as a benchmark for assessing the Company's financial situation, in addition to being included in covenant clauses in certain loan and financing contracts.

 

 

 

 

 

3.8 - Obligations according to nature and maturity

 

Latest Accounting Information (December 31, 2020)
Type of obligation Type of security Other security or liens Less than one year One to three years Three to five years Over five years Total
Debt securities Unsecured   1,371,463,600.82 5,624,649,878.17 239,464,740.80 38,899,087,808.64 46,134,666,028.43
Loans Unsecured   2,730,663,983.68 6,743,188,147.72 11,108,040,608.69 1,796,185,282.03 22,378,078,022.12
Loans Security interest   501,703,421.96 412,858,673.42 - - 914,562,095.38
Total     4,603,831,006.46 12,780,696,699.31 11,347,505,349.49 40,695,273,090.67 69,427,306,145.93
Note: The information contained in this item refers to the Company's consolidated financial statements. The debt securities field comprises debt securities and transactions in the stock market.

 

 

 

 

3.9 - Other relevant information

 

Additional Information on Financial Agreements

 

Part of the financing agreements entered into by the Company, as well as the outstanding debt securities issued by the Company (for more information on such securities, see item 18 of this Reference Form) contain clauses that determine the early maturity of outstanding installments in case of cross-acceleration of another financial agreement entered into with the same counterparty and/or any other financial agreement.

 

For more information related to contract covenants, see item 10.1 (f).

 

Additional Information on Remuneration Policies

 

At a meeting held on March 29, 2018, the Board of Directors approved a new Shareholders' Remuneration Policy, replacing the previous policy, the content of which is available for consultation at the CVM's website (www.gov.br/cvm) and the Company's website (www.vale.com). According to said approved policy:

 

§The Shareholders' remuneration will be composed of two semiannual installments, the first in September of the current year and the second in March of the following year, provided that the Board of Directors may declare interest on capital in the month of December of each year for payment in March of the subsequent year. Such amounts will be reduced from the March installment.

 

§The minimum amount of the remuneration will be 30% of the Adjusted EBITDA, less Sustaining Investments calculated based on the first-half of the year results for the September installment, and on the second-half of the year results for the March installment.

 

§The Board of Directors may approve additional remuneration through the distribution of extraordinary dividends.

 

According to the Press Release disclosed by the Company on January 27, 2019, due to the failure of Dam I of the Córrego do Feijão Mine, in Brumadinho (MG), the Board of Directors, in a extradordinary meeting held on January 27, 2019 decided for and approved, among other matters, the suspension of the Shareholders' Remuneration Policy and, consequently, the non-payment of dividends and interest on capital, as well as any other resolution on the repurchase of its own issued shares.

 

According to the Press Release disclosed by the Company on July 29, 2020, the Board of Directors decided, on the same date, to reinstate, without changes, the Shareholders' Remuneration Policy suspended in January 2019.

 

 

 

 

4. Risk factors

 

4.1 – Description of risk factors

  

(a)Risks related to a Dam Rupture

 

The rupture of a dam or similar structure can cause serious damage.

 

The Company has several dams and other geotechnical structures. Some of these structures were built using the "upstream" rising method, which presents stability risks, mainly related to liquefaction. The rupture of any of these structures can cause the loss of lives and serious off-balance sheet, material and environmental damage, and may have adverse effects on Company's business and reputation, as evidenced by the consequences of the Brumadinho dam rupture. Some joint ventures and investments, including Samarco and Mineração Rio do Norte S.A. (MRN), also have dams and similar structures, including structures built using the upstream rising method.

 

Recently approved laws and regulations require the Company to decharacterize all of its upstream dams on a specified schedule. Implementing the decharacterization plan will require significant expenses, and the decharacterization process can take a long time. As of December 31, 2020, the provision for the completion of the structural decharacterization plan is USD 2.289 billion and Samarco's structure is USD 221 million, subject to review, depending on new adjustments to the decharacterization projects.

 

Works related to the decharacterization process can impact the geotechnical stability of certain upstream tailings structures, increasing the risk of rupture of these structures especially in the early stages of this process. In extreme cases, this process, when associated with other conditions, can contribute to the rupture of structures. Thus, depending on the emergency level of the structure, the evacuation of areas downstream of critical dams, the construction of physical barriers (containment structures) to contain the tailings in case of failure and/or other safety measures are carried out.

 

The rupture of Dam I in Brumadinho has adversely affected the Company's business, financial condition and reputation, and the overall impact of the dam rupture is still uncertain.

 

In January 2019, the Brumadinho dam rupture resulted in 270 fatalities or presumed deaths, as well as off-balance sheet, material and environmental damage. This event has adversely affected and will continue to adversely affect Vale's operations. For further information, see item 7.9 of this Reference Form.

 

·Liabilities and legal proceedings. The Company is a defendant in several lawsuits and investigations related to the dam rupture, including criminal investigations in Brazil and securities litigation in the United States. Additional proceedings and investigations may be filed in the future. Unfavorable results in these proceedings may have a relevant adverse effect on the Company's business and financial condition. For more information, see items 4.3 to 4.7 and 7.9 of this Reference Form.

 

·Suspension of operations. After the rupture of the dam, several operations were suspended, which negatively impacted and may continue to affect the production and cash flows of the Company. It is possible that some of these operations may not be resumed, or that the schedule for resuming some operations is delayed. For further information, see item 7.9 of this Reference Form.

 

·Impact on financial performance. The dam rupture continues to have a significant impact on the Company's financial performance, which includes reduced revenues due to the suspension of operations, increased expenses with assistance and remediation, reduction in the recoverable value of fixed assets, provisions for costs of decharacterization, restoration and recovery and provisions for legal proceedings. For further information, see item 7.9 of this Reference Form.

 

 

 

 

·Increase in production costs and capital investments. The Company has made investments and adjustments to operations and it may be necessary to make additional investments and adjustments to increase production, mitigate the impact on suspended operations or comply with additional safety requirements. Alternative disposal methods may also have to be used to continue operating some of the mines and plants, particularly those that depend on tailings dams. These alternative methods may be more expensive or require significant capital investments in mines and plants. As a result, costs are expected to increase, which may have a relevant adverse effect on the Company's businesses and financial conditions.

 

·Additional regulation and restrictions to mining operations. The rules on mining activities and auxiliary activities, such as dam safety, became stricter after the rupture of Brumadinho dam. Additional regulation may be approved. The licensing process of the Company's operations became longer and subject to further uncertainties. In addition, external experts may be reluctant to attest to the stability and safety of the Company's dams, as a result of increased liability risks. If any of the Company's dams are unable to meet safety requirements or if the Company is unable to obtain the required certification for any of its dams, the Company may have to suspend the operations, evacuate areas around the dam, reallocate communities and take other emergency actions. These measures are costly,, and may have an adverse impact on the business, in addition to causing financial and image impacts on the Company.

 

·Additional environmental impacts. The full environmental consequences of the dam rupture remain uncertain and further damage may be identified in the future. In addition, failure to implement the Company’s decharacterization plan for dams and measures to prevent new accidents may also lead to additional environmental damages in our operations and result in additional claims, investigations and lawsuits against the Company.

 

·Reserves. New regulations applicable to the licensing and operation of dams have caused, and may still cause, reductions in reported reserves or in the reclassification of reserves proven as probable reserves.

 

·Increase in insurance costs. The Company's insurance cost is expected to increase, and the Company may not be able to obtain insurance for certain risks.

 

·Higher taxation and other obligations. The Company may be subject to new or increased taxes or other obligations to finance remediation measures and offset the direct and indirect impacts of rupture of dams.

 

·Social license to operate. The damages caused to the Company's image can affect its acceptance by the communities where it operates, making it difficult or even preventing its activities or obtaining essential licenses and authorizations.

 

 

 

 

(b) Risks related to the Company

 

Events related to the coronavirus pandemic may have a relevant adverse impact on the Company's financial conditions or operating results.

 

In December 2019, the outbreak of Coronavirus Disease 2019 (COVID-19) spread all over the world. In March 2020, the World Health Organization (WHO) declared a COVID-19 pandemic outbreak. The disease has caused multiple fatalities worldwide, including in Brazil and Canada, where the Company has its main operations. The consequences for the global economy and financial markets have been significant and the full impact is still uncertain. It is unclear how the COVID-19 pandemic will evolve over the course of 2021 and beyond.

 

·In 2020 and continuing in 2021, government authorities in several jurisdictions imposed blockages or other restrictions in order to contain the virus and several companies suspended or reduced operations.

 

·The Company, its customers, suppliers and service providers may face restrictions imposed by regulators and authorities. These restrictions can result in difficulties related to employee absenteeism and, consequently, in insufficient contingent to operate in some locations, interruption of our supply chain, deterioration in the financial health of customers, higher costs and expenses associated with the suspension of the work of contractors on non-essential projects, operational difficulties, such as the postponement of the resumption of production capacity due to delays in inspections, assessments and authorizations, among other operational difficulties. The Company may need to take other contingency measures or, where appropriate, suspend additional operations, which may have an adverse material impact on production and sales, result in additional costs and expenses, and possibly adversely impacting its financial conditions or operating results.

 

·In 2020, the Company reduced some operations and revised the plans of others. For further information, see item 7.9 of this Reference Form.

 

·The Company transferred a significant number of employees to the remote work regime in an effort to mitigate the spread of COVID-19. Remote work can magnify certain business risks due to increased demand for information technology resources combined with increased risk of phishing scams and other cybersecurity attacks, increased risk of unauthorized dissemination of sensitive personal or confidential information and increased risk of business interruptions. The Company may be more exposed to lawsuits from employees alleging unpaid overtime or other work-related claims. These risks may result in additional costs and expenses for the Company, affect its ability to operate effective internal control over financial reporting and adversely affect its reputation.

 

·As a result of the current coronavirus pandemic outbreak, commercial activities worldwide, including construction and manufacturing activities, which are two of the main demand factors for iron ore and other metals, have been significantly impacted and an overall recovery in these industries can take a long time. If the coronavirus outbreak continues and efforts to contain the pandemic, whether governmental or otherwise, further limit commercial activity or the Company's ability to transport its products to customers in general, over a long period of time, the demand for its products may be adversely affected. All of these factors may also have a relevant adverse impact on Company's financial conditions or operating results. For more information, see items 7.9 and 10.3 of this Reference Form.

 

 

 

 

Operational problems negativelly and significantly affect Company's business and financial performance.

 

Inefficient project management and operational failures may lead to the suspension or reduction of Company's operations, causing a general reduction in its productivity. Operational failures may lead to failure of plants and machinery. There can be no assurance that an inefficient project management or other operational problems will not occur. Any damage to the Company's projects or delays in its operations caused by inefficient project management or operational breakdowns can negatively and significantly affect its business and operating results.

 

The Company's businesses are subject to several operational risks that may adversely affect the results of its operations, such as: (i) unexpected weather conditions or other force majeure events; (ii) adverse mining conditions, delaying or hindering their ability to produce the expected amount of minerals and meeting the specifications required by customers, which can trigger price adjustments; (iii) accidents or incidents involving its mines, industrial facilities and related infrastructure, such as dams, power plants, railways and railway bridges, ports and ships; (iv) the Company may experience delays or interruptions in the transportation of its products, including railways, ports and ships; (v) tropical diseases, HIV/AIDS, viral outbreaks such as coronavirus, and other contagious diseases in regions where some of their operations or projects are located, imposing risks to the health and safety of their employees; (vi) labor disputes that may eventually disrupt its operations; (vii) changes from time to time in market conditions or regulations may affect the economic prospects of an operation and make it inconsistent with the Company's commercial strategy; (viii) failure in obtaining the renewal of required permits and licenses, or delays or costs higher than expected in obtaining them; and (ix) interruptions or unavailability of critical information technology systems or services resulting from accidents or malicious acts.

 

Legal proceedings and investigations may have a relevant adverse effect on Company's business

 

The Company is involved in legal proceedings in which the opposing parties sought preliminary injunctions to suspend some of its operations or claim substantial amounts. In addition, according to Brazilian law, a wide range of conducts that can be considered a violation of Brazilian environmental, labor or tax laws can be considered a crime. In this way, the Company's executive directors and employees may be subject to criminal investigations and criminal proceedings related to allegations of violations of environmental, labor or tax laws, and the Company or its subsidiaries may be subject to criminal investigations and criminal proceedings related to allegations of violation of environmental laws.

 

Defense in these lawsuits can be expensive and time-consuming. Possible consequences of adverse outcomes in some legal proceedings include suspension of operations, payment of significant amounts, triggering of creditors’ remediation and damage to reputation, which may have a relevant adverse effect on Company's operating results or financial situation. For additional information, see items 4.3 to 4.7 of this Reference Form.

 

Besides investigations and lawsuits related to the Brumadinho dam rupture, as a shareholder of Samarco, the Company also faces the consequences of the rupture of the Fundão tailings dam, in November 2015. Vale is involved in multiple lawsuits and investigations related to the rupture of Fundão tailings dam. Tax authorities or other Samarco creditors (which joined, on April 9, 2021, with a request for Judicial Recovery) may attempt to recover the amounts owed by Samarco, in case Samarco fails to meet its obligations or fails to restructure its debt. Failure to contain the remaining tailings in Samarco dams can cause additional environmental damage, additional impacts on operations and additional claims, fines and lawsuits against Samarco and against the Company. The Company has been funding Fundação Renova to support certain remediation measures undertaken by Samarco and also providing resources directly to Samarco to preserve its operations. If Samarco is unable to generate enough cash flows to finance the remediation measures required in these agreements, the Company will be demanded to continue financing such remediation measures. For further information, see item 7.9 of this Reference Form.

 

 

 

 

The Company's business may be adversely affected by the failure or unavailability of certain critical assets or infrastructure.

 

The Company has some critical assets and infrastructure to produce and transport its products to customers. Such critical assets include mines, industrial facilities, ports, railways, roads and bridges. The failure or unavailability of any critical asset, whether resulting from natural events or operational problems, may have a relevant adverse effect on its business.

 

Substantially all the iron ore production in the Northern System is transported from Carajás, in the state of Pará, to the Ponta da Madeira Port, in the state of Maranhão, through the Carajás Railroad (EFC acronym in Portuguese). Any interruption at EFC or Ponta da Madeira port may significantly impact the Company's ability to sell its Northern system production. Regarding EFC, there is a particular interruption risk on the bridge over Tocantins River, where trains run on a single railway line. At Ponta da Madeira port, there is a particular interruption risk in São Marcos access channel, a deep water channel that provides access to the port. In addition, any failure or interruption of the long-distance conveyor belt (TCLD) used to transport the iron ore production from the S11D mine to the processing plant could negatively impact operations at the S11D mine.

 

The Company's reserve estimates may differ materially from the quantities of minerals that the Company is able to recover; the Company's estimates of mine's service life may prove to be inaccurate; stricter regulations and fluctuations in market prices and changes in operating and capital costs may make certain ore reserves uneconomical for mining; the Company may not be able to replenish its reserves.

 

There are numerous uncertainties inherent in estimating quantities of reserves and in projecting potential rates of future mineral production, including factors that are beyond Company's control. The reduction in Company's reserves may affect future production and cash flow generation, affect depreciation and amortization and result in asset write-offs, which may have an adverse effect on the Company's financial performance. Below are the main risks related to the reserves:

 

·Mine estimated service life and reserve reports involve estimating mineral deposits that cannot be measured accurately, and the accuracy of any reserve estimate is a function of the quality of available data, engineering, market prices for minerals and metals, stricter regulations, cost estimates, investments, geotechnical analysis, interpretation and geological judgment. As a result, no assurance can be given that the indicated amount of ore will be recovered or that it will be recovered at the rates provided by the Company. The Company reviews its reserve estimates periodically in light of up-to-date information and changes in the regulatory environment, which may result in a reduction in reported reserves.

 

·The Company's inability to obtain licenses for new operations, support structures or activities (such as dams), or to renew its existing licenses, may cause a reduction in its reserves.

 

·Once mineral deposits are discovered, it can take several years, from the initial drilling stages, until production is possible, during which economic feasibility of production may change. If it is proven that a project is not economically feasible when it is able to operate it, Vale may suffer substantial losses and be forced to write off its assets. In addition, the possible changes or complications involving metallurgical and other technological processes arising during the life of a project may result in delays and costs extrapolation which, in turn, may render the project economically unfeasible.

 

·The Company engages in mineral exploration, which is highly uncertain in nature, involves many risks and is frequently non-productive. The Company's exploration programs, which involve significant expenditures, may fail to result in the expansion or replacement of reserves depleted by current production. If the Company does not develop new reserves, it will not be able to sustain its current level of production beyond the remaining service life of its existing mines.

 

·Reserves are gradually depleted in the ordinary course of a given open pit or underground mining operation. As mining progresses, distances from the primary crusher and tailings deposits become longer, pits become steeper, mines may change from being open pit to underground, and underground operations become deeper. In addition, for some types of reserves, mineralization grade decreases and hardness increases at greater depths. As a result, over time, the Company generally suffers an increase in extraction costs per unit at each mine, or it may need to make additional investments, including adaptation or constructing of processing plants and expansion and expansion or constructing of tailings dams. Several of Company's mines have been in operation for long periods, and it is likely that the Company will experience rising extraction costs per unit in the future in these operations in particular.

 

·As of the fiscal year ended on December 31, 2021, the Company will be required to comply with the new SEC reporting rules on mining activities. Vale is currently reviewing its declared mineral reserves and may need to adjust its declared reserves in order to report in accordance with the new rules.

 

 

 

 

The Company's projects are subject to risks that may result in an increase in costs or a delay in their implementation.

 

The Company is investing in maintaining and increasing its production and logistical capacity. Vale reviews, on a regular basis, the economic feasibility of its projects. As a result of such review, the Company may decide to postpone, suspend or interrupt the execution of certain projects. Its projects are also subject to a number of risks that may adversely affect its growth and profitability prospects, including the following: (i) the Company may not be able to obtain financing at attractive rates; (ii) the Company may encounter delays or costs greater than expected in obtaining the necessary equipment or services and implementing new technologies to build and operate a project; (iii) its efforts in developing projects on schedule may be hampered by the lack of infrastructure, including reliable telecommunications and power supply services; (iv) suppliers and contractors may fail to comply with their contractual obligations assumed before the Company; (v) the Company may face unexpected weather conditions or other force majeure events; (vi) the Company may fail to obtain or renew the necessary authorizations and licenses to build a project, or face delays or costs greater than those foreseen to obtain or renew them; (vii) changes in market conditions or regulations may make a project less profitable than expected at the time the work was started; (viii) there may be accidents or incidents during project implementation; and (ix) the Company may face a shortage of qualified labor.

 

Higher energy costs or energy shortages can adversely affect the Company's business.

 

Fuel oil, gas and electricity costs are a significant component of the Company's production cost, accounting for 9.0% of its total cost of goods sold in 2020. In order to meet its demand for energy, the Company depends on the following sources: oil byproducts, which accounted for 36% of total energy needs in 2020, electricity (31%), natural gas (13%), coal (16%) and other energy sources (4%).

 

Electricity costs accounted for 3.8% of its total cost of goods sold in 2020. In case the Company is unable to secure reliable access to electricity at acceptable prices, it may be forced to reduce production or experience higher production costs, which may, in either cases, adversely affect its operating results. The Company faces the risk of energy scarcity in the countries where it has operations and projects, especially in Brazil, due to lack of infrastructure or weather conditions, such as floods or droughts. Future shortages and government efforts to respond to or prevent scarcities may adversely impact the cost or supply of electricity for Company's operations.

 

Company's business may be adversely affected by the performance of its counterparties, contractors, joint venture partners or non-controlling joint ventures.

 

Customers, suppliers, contractors, financial institutions, joint venture partners and other third-parties may fail to comply with existing contracts and obligations, which may unfavorably impact the Company's operations and financial results. The ability of these third parties to fulfill their obligations may be adversely affected in times of financial and economic crisis.

 

 

 

 

Significant parts of Vale's iron ore, pelletizing, nickel, coal, copper, energy and other business segments are operated through joint ventures. This may reduce the Company's control degree, as well as its ability to identify and manage risks. Vale's projections and plans for these joint ventures and consortia assume that its partners will fulfill their obligations to make capital contributions, purchase products and, in some cases, provide qualified and competent managerial personnel. If any of its partners fail to fulfill their commitments, the affected joint venture or consortium may not be able to operate in accordance with its business plans, or it is possible that the Company may have to increase its investment’s level to put these plans into practice.

 

Some of the Company's investments are controlled by partners or have a separate and independent management. These investments may not fully comply with the Company's standards, controls and procedures, including health, safety, environment, integrity (including anti-corruption) and community standards. Failure by any of the contractors, partners or joint ventures in adopting appropriate standards, controls and procedures can lead to higher costs, reduced production or environmental, legal, reputational, health and safety incidents or accidents, which may adversely affect the Company's results and reputation.

 

Failures in the Company's cybersecurity controls, information technology, operational technology and telecommunications system may adversely affect the Company's business and its reputation.

 

The Company strongly relies on cybersecurity controls, information technology, operational technology and telecommunications systems for the operation of many of its business processes. Failures in these controls, whether caused by obsolescence, technical flaws, negligence, accident or cyber attacks, may result in the disclosure or theft of confidential information, loss of data integrity, misappropriation of funds, and interruption in the Company's business operations and impact the Company’s ability to report its financial results. The Company may be the target of attempts to obtain unauthorized access to information technology and operational technology systems through the Internet, including sophisticated and coordinated attempts, often referred to as advanced persistent threats. The interruption of critical controls on cybersecurity, information technology, operational technology or telecommunications systems, as well as data breaches, may damage the Company's reputation and have a significant adverse effect on the Company's operating performance, revenue and financial condition.

 

The Company is subject to data protection and privacy laws and regulations, including the European Union’s General Data Protection Regulation (GDPR) and Brazilian Law No. 13,709 (General Data Protection Law or LGPD). Any failure to comply with these laws and regulations may result in proceedings or lawsuits against the Company, the imposition of fines or penalties or reputational damage, which may have an adverse effect on the Company and its business, reputation and operating results.

 

Lower cash flows, resulting from the suspension of operations or prices’ reduction of Company's products, may adversely affect the Company’s credit ratings, as well as the cost and availability of financing.

 

Suspension of operations or a decline in the prices of the Company's products may adversely affect its future cash flows, credit ratings and its ability to obtain financing at attractive rates. It can also negatively affect its ability to finance its capital investments, including disbursements necessary to remedy and compensate for damages resulting from the rupture of Brumadinho dam, provide the necessary financial guarantees to obtain licenses in certain jurisdictions, pay dividends and meet financial commitments (covenants) in some of its long-term debt instruments. For more information, see items 4.2 and 10.1 of this Reference Form.

 

The Company's governance, internal controls and compliance processes may fail to prevent violations of legal, accounting, regulatory, ethical or governance standards.

 

The Company operates in a global environment and its activities extend across countless jurisdictions and across complex regulatory structures with growing inspection activities all over the world. Vale is required to comply with a wide range of laws and regulations in the countries where it operates or does business, including anti-corruption, international sanctions, anti-money laundering and related laws and regulations. The Company's governance and compliance processes, which include the review of internal controls over financial statements, may not identify or prevent future violations of legal, regulatory, accounting, governance or ethical standards. The Company may be subject to breaches of its Code of Conduct, anti-corruption policies or other internal policies, or violations of business conduct protocols and to cases of fraudulent behavior, corrupt practices and dishonesty by its employees, contractors or other agents. This risk is aggravated by the fact that Vale has a large number of contracts with local and foreign suppliers, as well as by the geographical distribution of its operations and the wide variety of counterparties involved in its business. Failure to comply with applicable laws and other standards by the Company may subject it to investigations by the authorities, litigation, fines, loss of its licenses to operate, return of profits, involuntary dissolution and reputational damage.

 

 

 

 

The Company may not have adequate insurance coverage for some of the business risks.

 

The Company's businesses are, generally, subject to a number of risks and hazards, which could affect persons, assets and the environment. The insurance that Vale maintains against risks that are typical in its business may not provide adequate coverage. Insurance against some risks (including liabilities for environmental damage, damages resulting from the rupture of dams, spillage or leakage of hazardous substances and interruption of certain commercial activities) may not be available at a reasonable cost or in any way. Even when available, the Company may self-insure in cases where it determines that this will bring it a higher cost-benefit ratio. As a result, accidents or other negative events involving its mining, production or transportation facilities may not be covered by insurance and may have a relevant adverse effect on its operations.

 

Labor disputes may interrupt the Company's operations eventually.

 

A substantial number of Company's employees and some of the employees of its subcontractors are represented by unions and are protected by collective labor agreements or collective negotiations, subject to periodic negotiation. Strikes and other labor stoppages in any of its operations are able to negativelly affect the operation of such facilities, the completion deadline and the cost of the Company's main projects. For more information on labor relations, see item 14 of this Reference Form. Furthermore, the Company may be adversely affected by labor stoppages involving third parties who provide it with goods or services.

 

It may be difficult for investors to enforce any court order rendered outside Brazil against the Company or any of its associates.

 

Company's investors may be located in jurisdictions outside Brazil and may file suits against it or against the members of the Board or executive officers in the Courts of their home jurisdictions. Vale is a Brazilian company, and the majority of its officers and directors reside in Brazil. The vast majority of Company's assets and the assets of its directors and Board memebers are likely to be located in jurisdictions other than those of its foreign investors. It might not be possible for investors outside Brazil to perform summons within their home jurisdictions against the Company or its officers or Board members who reside outside their jurisdictions. In addition, a conclusive foreign judgment may be enforced in Brazilian Courts without a new examination of the merit, only if previously ratified by the Superior Court of Justice, and ratification shall only be granted if the foreign judgment: (i) complies with all the formalities required for its enforceability under the law of the country where it was rendered; (ii) has been rendered by a competent court after the due summons upon the defendant, as required by applicable law; (iii) is not subject to appeal; (iv) does not conflict with a final and unappealable decision rendered by a Brazilian judicial authority; (v) has been certified by a Brazilian consulate in the country where it was rendered or is duly apostilled in accordance with the Convention Abolishing the Requirement of Legalization for Foreign Public Documents and accompanied by a sworn translation into Portuguese, unless such procedure has been exempted by an international treaty signed by Brazil; (vi) does not cover matters of exclusive competence of the Brazilian Courts; and (vii) is not contrary to Brazilian national sovereignty, public policies or good manners. Therefore, investors might not obtain a favorable judgment in legal proceedings against the Company or its directors and officers in court judgments in their home jurisdiction, based on the laws of such jurisdiction.

 

 

 

 

(c) Risks related to the Controller or Controlling Group of the Company and Risks related to Company's shareholders.

 

The Company does not have a controlling shareholder or control group, which may hinder certain decision-making processes

 

Since November 9, 2020, the Company does not have a controlling shareholder or a group of shareholders who jointly hold rights that permanently assure it the majority of votes in the resolutions of the general meeting of shareholders and the power to elect the majority of the members at the Company's Board of Directors. The absence of a control or a control group may hinder certain decision-making processes, as the minimum quorum required by law for certain resolutions at the General Meeting of Shareholders may not be reached, which may adversely affect the Company's business and operating results.

 

The Brazilian Federal Government has certain veto rights.

 

The Brazilian Federal Government holds 12 golden shares at Vale, which grants them limited veto power over certain matters involving the Company, such as changes to the corporate name, to the location of its headquarters and to its corporate purpose, regarding mining activities. For a detailed description of the veto power of golden shares, see item 18.1 of this Reference Form.

 

(d)Risks related to the Company's subsidiaries

 

For information on the risks related to the Company's investees, see the Risk Factor described in item (b) above: "Company's business may be adversely affected by the performance of its counterparties, contractors, joint venture partners or non-controlling joint ventures".

 

(e)Risks related to the Company's suppliers

 

For information on risks related to the Company's suppliers, see the Risk Factors described in item (b) above: "Higher energy costs or energy shortages can adversely affect the Company's business" and "Company's business may be adversely affected by the performance of its counterparties, joint venture partners or non-controlling joint ventures”.

 

(f)Risks related to the Company's customers

 

For information on the risks related to the Company's customers, see the Risk Factor described in item (b) above: "Company's business may be adversely affected by the performance of its counterparties, contractors, joint venture partners or non-controlling joint ventures".

 

 

 

 

 

(g)

Risks related to the Economic Sectors in which the Company operates

 

Adverse economic developments in China may have a negative impact on Vale's revenue, cash flow and profitability.

 

China has been the main driver of global demand for minerals and metals over the last few years. In 2020, China's demand accounted for 80% of global oceanic demand for iron ore, 60% of global demand for nickel and 54% of global demand for copper. The percentage of Company's net operating revenue attributable to sales to customers in China was 58% in 2020. Therefore, any contraction of China’s economic growth could result in lower demand for our products, leading to lower revenues, cash flow and profitability. Poor performance in the Chinese real estate sector, the largest consumer of carbon steel in China, would also have a negative impact on the Company's results. These risks may be intensified in 2021 due to the impact of the COVID-19 pandemic.

 

The Company's businesses are exposed to the cyclicality of global economic activity and require significant capital investments.

 

As a mining company, Vale is a supplier of industrial raw materials. Industrial production is cyclical and volatile, which affects the demand for minerals and metals. At the same time, investment in mining requires a substantial amount of financial resources in order to replenish reserves, expand and maintain production capacity, build infrastructure, preserve the environment, prevent fatalities and occupational risks and minimize negative social impacts. Susceptibility to industrial production, along with the need of significant long-term capital investments, are important risk sources to Vale's financial performance and growth prospects.

 

It possible that the Company will not be able to adjust production volume in a timely or cost-effective manner in response to changes in demand. Lower utilization of capacity during periods of weak demand may expose the Company to higher production costs per unit, since a significant portion of its cost structure is fixed in the short term, due to the capital intensity of mining operations. Besides, efforts to reduce costs in periods of weak demand could be limited by labor regulations or collective-bargaining agreements or by previous agreements with the government. Conversely, during periods of high demand, Vale's ability to rapidly increase production is limited, which could prevent it from meeting demand for its products. Moreover, it is possible that the Company will not be able to complete expansions and new greenfield projects in time to take advantage of the rising demand for iron ore, nickel or other products. When demand exceeds its production capacity, the Company may meet excess demand from customers by purchasing iron ore fines, iron ore pellets or nickel from third parties who process and resell them, which increases its costs and narrows its operating margins. If Vale is unable to meet the excess demand of its customers in this way, it may lose customers. In addition, operating close to full capacity may expose the Company to higher costs, including demurrage fees due to capacity restraints in its logistics systems.

 

(h)Risks Related to the Regulation of Sectors in which the Company operates

 

The political, economic and social conditions of the countries in which the Company maintains operations or projects, especially in Brazil, can adversely impact its business.

 

Vale may have its financial performance negatively affected by regulatory, political, economic and social conditions in the countries where it has significant operations or projects. In many of these jurisdictions, Vale is exposed to several risks, such as political instability, bribery, cyber attacks, extortion, corruption, robbery, sabotage, kidnapping, civil war, acts of war, guerrilla activities, piracy on international transport routes, and terrorism. Such problems may adversely affect the economic conditions and other conditions under which the Company operates in several manners, significantly hindering its business.

 

In Brazil, where a significant part of operations are concentrated, the economic policies of the Federal Government can have important effects on Brazilian companies, including Vale, and on market conditions and securitiy prices of Brazilian companies. The financial condition and operating results of the Company may be adversely affected, for example, by the following factors and by the Brazilian Federal Government’s response to these factors:

 

 

 

–         exchange rate movements and volatility;

–         inflation and high interest rates;

–         financing of the current account deficit;

–         liquidity of the domestic capital and loan markets;

–         tax policy;

–         pension, tax and other reforms;

–         political instability resulting from allegations of corruption involving political parties, elected officials or other public officials; and

–         other political, diplomatic, social and economic events in or that affect Brazil.

 

Historically, the country’s political situation has influenced the performance of the Brazilian economy, and political crises have affected the confidence of investors and the general public, resulting in economic deceleration, reduction in credit ratings of the Brazilian government and Brazilian issuers, and heightened volatility in the securities issued abroad by Brazilian companies. Political instability can aggravate economic uncertainties in Brazil and increase the volatility of securities of Brazilian issuers. Future economic, social and political developments in Brazil may impair the Company’s business, financial condition or results of operations, or cause the market value of its securities to decrease.

 

Disagreements with local communities may cause an adverse impact on Company’s business and reputation.

 

Legal disputes with communities located where the Company operates may arise. Accidents or incidents involving mines, industrial facilities and related infrastructure, such as the rupture of the tailings dam in Brumadinho, can significantly impact the communities where the Company operates. In some cases, Company's operations and mineral reserves are located on indigenous lands or on nearby lands owned or used by indigenous people or other groups of stakeholders. Some of the Company's mining and other operations are located on territories whose property may be subject to disputes or uncertainties, or in areas intended for agriculture or land reform purposes, which may lead to disagreements with landowners, organized social movements, local communities and the government. In some jurisdictions, the Company may be required to consult and negotiate with these groups as part of the process of obtaining the required licenses to operate, in order to minimize the impact on its operations or to gain access to lands. Disagreements or disputes with local communities and groups, including indigenous groups, organized social movements and local communities, can cause delays in obtaining licenses, increases in the planned budget, delays or interruptions in operations. These issues may have a negative effect on Company's reputation or even hinder its ability to work in the reserves and carry out its operations. For more information, see items 4.3 to 4.7 of this Reference Form.

 

The Company may be adversely affected by changes in public policies or by trends such as resource nationalization, including the imposition of new taxes or royalties on mining activities.

 

Mining is subject to government regulation, including taxes and royalties, which can have a significant financial impact on Company's operations. In countries where it is present, the Company is exposed to potential renegotiation, annulment or forced amendment of existing contracts and licenses, expropriation or nationalization of property, exchange controls,capital ownership requirements, changes in local laws, regulations and policies and audits and revaluations. The Company is also exposed to new taxes or increase in existing tax and royalties rates, reduction of exemptions and tax benefits, renegotiation of tax stabilization agreements or changes in the calculation base that are unfavorable to the Company. Governments that have pledged to provide a stable taxation or regulatory environment may alter or shorten the duration of such commitments. The Company also faces the risk of having to submit to the jurisdiction of a foreign or arbitration court, or having to enforce a judgment against a sovereign nation within their own territory. For more information, see item 7.5 of this Reference Form.

 

 

  

The Company is also required to meet internal beneficiation requirements in certain countries where it operates, such as local processing standards, export duties or restrictions, or charges on raw ores. The imposition or enlargement of such requirements, taxes or charges can significantly increase the risk profile and the operating costs in those jurisdictions. The Company and the mining sector are subject to rising trends of resource nationalization in certain countries where it operates, which may result in restrictions on its operations, increased taxation or even expropriations and nationalizations.

 

As a supplier of iron ore, nickel and other raw materials to the integrated global steel industry and other metal consuming sectors, such as battery production and other specific industrial end uses, the Company is subject to additional risks arising from the imposition of rights, customs duties, export and import control tariffs and other trade barriers, which affect the Company's products and the products that Company’s customers produce. World trade is subject to a growing trend of increased trade barriers, which could exacerbate commodity price volatility and, thus, result in price instability of Company’s products.

 

Changes in Brazilian tax policies and tax laws may have an adverse effect on the Company's financial condition, results and investments in securities

 

The Brazilian government has frequently implemented and can continue to implement changes in its tax policies, including, but not limited to, rates, fees, sector charges and, occasionally, the collection of temporary contributions. Changes in tax laws and the interpretation of tax laws by the Brazilian tax authorities may occur and may result in tax increases and revocation of tax exemptions. Currently, Brazilian legislators are considering a comprehensive tax reform, which may include the elimination or unification of certain taxes, creating new ones, repealing income tax exemptions on the distribution of profits and dividends, and changes related to interest on equity. The approval of these legislative proposals or changes in tax policies, tax laws and interpretations may impact on tax obligations and may have an adverse material effect on the financial condition and results, and on investments in Company securities.

 

The Company’s concessions, authorizations, licenses and permits are subject to expiration, limitations on renewal and various other risks and uncertainties.

 

Vale's operations depend on authorizations and concessions from governmental regulatory agencies in the countries in which it operates. The Company is subject, in many jurisdictions, to laws and regulations that can change at any time, and such changes in laws and regulations may require modifications to Vale's technologies and operations, resulting in unexpected capital expenditures.

 

Some of Vale's mining concessions are subject to fixed expiration dates and might only be renewed a limited number of times, for a limited period. Apart from mining concessions, it is possible that the Company has to obtain several authorizations, licenses and permits from public bodies and regulatory agencies in relation with the planning, maintenance, operation and closure of its mines, and related logistics infrastructure, which may be subject to fixed expiration dates or periodic revision or renewal. There is no assurance that such renewals will be granted when requested, and there is no guarantee that new conditions will not be imposed for the renewal. Fees for mining concessions might substantially increase over time, from the original issuance of each individual exploration license. Should this happen, the costs of obtaining or renewing the mining concessions may render the Company's commercial purposes unfeasible. Accordingly, the Company needs to continually assess the mineral potential of each mining concession, especially at the time of renewal, in order to determine whether the costs of maintaining the concessions are justified by the results of operations so far, and, thus, it may choose to let some of its concessions expire. There may be no guarantee that concessions will be obtained on terms favorable to the Company, or, in general, no guarantee for its intended exploration or mining goals.

 

 

 

In a number of jurisdictions where the Company has research projects, it is possible that it may be required to return to the State a certain portion of the area covered by the exploration permit as a condition to renew the license or to obtain a mining concession. Such obligation can lead to a substantial loss of part of the mineral deposit originally identified in the Company's feasibility studies. For more information on mining concessions and other similar rights, see "Mining Rights and Regulation of Mining Activities" in item 7.5 of this Reference Form.

 

For information on the risks related to environmental regulations, see the Risk Factors described in item (j) below: " The Company's business may be adversely affected by environmental and health and safety regulations, including regulations pertaining to climate change”.

 

(i)Risks related to the Company's ADS (American Depositary Shares)

 

If ADR holders exchange the ADSs for underlying shares, they risk losing the ability to remit foreign currency abroad.

 

The custodian of shares underlying the Company's ADSs maintains a registration with the Central Bank of Brazil, allowing the custodian to remit US Dollars outside of Brazil for dividend payments and other distributions related to the shares underlying, to the ADSs or by disposing of the underlying shares. If the ADR holder exchanges its ADSs for the underlying shares, they shall be entitled to rely on the custodian's registration for only five business days from the date of exchange. Thereafter, an ADR holder may not be able to get and remit foreign currency abroad upon the disposition of, or distribution relating to, the underlying shares, unless it obtains its own registration in accordance with the applicable regulation. Refer to item 18.8 for a better description of Vale’s ADSs. If the ADR holder attempts to obtain its registration, they may incur expenses or suffer delays in the application process, which could delay the receipt of dividends and other distributions relating to the underlying shares or the return of capital in a timely manner.

 

The custodian's registration or any registration obtained may be affected by future legislative changes, and additional restrictions applicable to ADRs’ holders, the sale of the underlying shares or the repatriation of the proceeds from the sale and taxation of dividends could be imposed in the future.

 

ADR holders may not have all the rights of Vale's shareholders and may not be able to exercise voting or preemptive rights related to the shares underlying their ADSs.

 

ADRs holders may not have the same rights that are assigned to the Company's shareholders under Brazilian law or under its bylaws, and the rights of ADR holders may be subject to certain limitations provided for in the deposit agreement or by the intermediaries through which the ADR holders hold their securities.

 

ADR holders do not have the rights of shareholders. They have only the contractual rights set forth for their benefit under the deposit agreements. ADR holders are not allowed to attend shareholders' meetings and may only vote by giving instructions to the depositary. In practice, the ability of an ADR holder to instruct the depositary on how to vote will depend on the timing and procedures for giving instructions to the depositary, either directly or through the holder's clearing and custody system. With respect to ADSs for which no instructions are received, the depositary may, being subject to certain limitations, grant a power of attorney to someone designated by the Company.

 

The ability of ADR holders to exercise their preemptive rights is not assured, particularly if the applicable law in the holder's jurisdiction (for example, the Securities Act in the United States) requires that either a registration statement be effective or an exemption from registration be available in relation to those rights, as is in the case of the United States. The Company is not obligated to extend the offer of preemptive rights to ADR holders, to file a registration statement in the United States, or to make any other registration in any other jurisdiction, relating to preemptive rights, or to undertake steps that may be needed to provide exemptions from registration, and cannot assure holders that it will make any registration statement or take such measures.

 

 

 

Legal protections for holders of the Company's securities differ from one jurisdiction to another and may be inconsistent, unfamiliar or less effective in relation to investors' expectations.

 

Vale is a global company with securities traded in several markets and with investors located in numerous countries. The legal regime for investors protection varies all over the world, sometimes in a substantial manner, and investors in the Company’s securities should recognize that the protections and safeguards available to them may be different from those they are used to in their home markets. The Company is subject to securities legislation in several countries, which have different standards, supervision and enforcement practices. The only Business Corporation Law applicable to Company's headquarters is Brazilian law, with its specific and substantive legal rules and procedures. The Company is subject to corporate governance standards in several jurisdictions where its securities are listed, however, as a foreign private issuer, the Company is not required to follow many of the corporate governance standards that apply to U.S. domestic issuers with securities listed on the New York Stock Exchange, and it is not subject to the U.S. proxy rules.

 

(j)Risks related to socio-environmental issues

 

The Company's businesses are subject to environmental, health and safety incidents.

 

The Company's operations involve the use, handling, storage, discharge and disposal of hazardous substances in the environment and the use of natural resources, resulting in significant risks and hazards, including fire, explosion, leakage of toxic gases, spillage of polluting substances or other hazardous materials, rockslides, accidents involving dams, failure of other operational structures, as well as activities involving equipment, vehicles or mobile machinery and other potentially fatal incidents and accidents. Incidents may occur due to deficiencies in the identification and assessment of risks or in the implementation of robust risk management and, once these risks materialize, they can result in significant environmental and social impacts, damage to or destruction of mines or production facilities, injuries, illness and fatalities, involving employees, service providers or members of the community surrounding the operations, as well as production delays, financial losses and possible civil liability. In addition, employees may be exposed to tropical and contagious diseases capable of affecting their health and safety. Notwithstanding the Company's standards, policies, controls and procedures, its operations remain subject to incidents or accidents, which may adversely affect its business, its stakeholders or its reputation.

 

The Company's business may be adversely affected by environmental and health and safety regulations, including regulations pertaining to climate change.

 

Nearly all aspects of activities, products and services associated with the Company's capital projects and operations around the world are subject to social, environmental, health and safety regulations, which may expose it to increased liability or costs. Such regulations require Vale to have environmental licenses, permits and authorizations for its operations and projects, and to carry out environmental and social impact assessments in order to obtain approval for its projects and permission for initiating construction and continue operating. Significant changes to existing operations are also subject to these requirements. Difficulties in obtaining or renewing licenses can lead to construction delays, cost increases, and may adversely impact the Company's production volumes. Socio-environmental and health and safety standards also impose standards, procedures, monitoring and operational controls on activities related to mineral research, mining, processing, pelletizing activities, rail and marine services, ports, decharacterization, decommissioning, distribution and commercialization of their products. Such regulation may give rise to significant costs and liabilities. Litigation related to these or other related matters may adversely affect the Company's financial condition or harm its reputation.

 

 

 

Social, environmental and health and safety regulations in many countries in which Vale operates have become stricter in recent years, and it is possible that more regulations or a stricter application of existing regulations may adversely affect it by imposing restrictions on its activities, products and assets, creating new requirements for the issuance or renewal of environmental licenses and work permits, resulting in licensing and operating delays, increasing their costs or requiring the engagement in costly recovery efforts. All these factors may affect Company's practices and result in increased costs or expenses, demand new capital expenditures, restrict or suspend operations, lower or write off the assets or reserves.

 

For a discussion of stricter rules related to the licensing and operation of dams after the rupture of the tailings dam in Brumadinho, see item 7.5 of this Reference Form. For additional information on national policies and international regulations related to climate change, which may affect a number of Company’s businesses in several countries, see item 7.5 of this Reference Form. For additional information on 2020 regulatory initiatives of the International Maritime Organization (IMO) Standard, which prohibits high sulfur fuel oil, as well as IMO's targets on greenhouse gas reductions in industry, see item 7.5 of this Reference Form.

 

Natural disasters may cause severe damage to Company's operations and projects in the countries where it operates and may have a negative impact on its sales to countries affected by such disasters.

 

Natural disasters, such as windstorms, droughts, floods, earthquakes and tsunamis, may have a negative effect on Vale's operations and projects in the countries where it operates, and may cause a contraction in sales to countries affected by, among other factors, power outages and destruction of industrial facilities and infrastructure. The physical impact of climate change on business remains uncertain, but it is likely that Vale may experience changes in precipitation standards, increased temperatures, floods, droughts, water scarcity, rising sea levels, increased incidence and intensity of discharges atmospheric conditions (lightning strikes) as a result of climate change, which may adversely affect its operations. On some occasions, in recent years, the Company has determined that force majeure events have occurred due to the effect of bad weather on its mining and logistics activities.

 

 

 

4.2 - Description of the main market risks

 

Significant Market Risks Applicable to the Company

 

Considering the nature of the Company's business and operations, the main market risk factors that it is exposed to are:

 

·        price of products and inputs;

·        foreign exchange rates and interest rates.

 

Price risk of products and inputs

 

The Company is exposed to market risks related to volatility in the prices of its production inputs and products, as follows:

 

Global prices for the Company's products are subject to volatility, which may affect negatively its own business.

 

Global prices for metals are subject to significant fluctuations and are affected by many factors, including current and expected global macroeconomic and political conditions, regional and sectorial factors, levels of supply and demand, the availability and cost of substitutes, inventory levels, technological developments, regulatory issues and foreign trade issues, investments by commodity funds, and actions of participants in the commodity markets. Persistent low market prices for products sold by the Company may result in the suspension of some of its projects and operations, the reduction of its mineral reserves and the loss of value of its assets, which may adversely affect its cash flows, financial situation and results of its operations The persistence of high prices for the products sold can result in new competitors entering, which can have deleterious long-term effects on prices. The Company expects the price of its products to be subject to additional volatility in the year 2021 due to the impact of the COVID-19 pandemic and relief measures.

 

Demand for iron ore, coal and nickel products depends on global demand for steel. Iron ore and iron ore pellets, which together accounted for 79% of the Company’s 2020 net operating revenue, are used to produce carbon steel. Nickel, which accounted for 8% of the Company's 2020 net operating revenue, is used mainly to produce stainless steel and alloys. The prices of different types of steel and the performance of the global steel industry are highly cyclical and volatile, and these economic cycles in the steel industry affect demand and prices for the Company's products. In addition, vertical backward integration of the steel and stainless steel industries and the use of scrap could reduce the global seaborne trade of iron ore and primary nickel. The demand for copper is affected by the demand for copper wire, and a sustained decline in the construction industry demand could have a negative impact on the Vale's copper business.

 

The Company is mainly affected by changes in iron ore prices. For example, a price reduction of US$ 1 per dry metric ton unit (“dmt”) in the average iron ore price would have reduced the Company's operating revenue for the year ended December 31, 2020 by approximately US$ 265 million. Average iron ore prices have changed significantly in the past five years, from USD 58.5 per dmt in 2016, USD 71.3 per dmt in 2017, USD 69.5 per dmt in 2018, USD 93.4 per dmt in 2019 and USD 108.9 per dmt in 2020, according to the Platts IODEX average (62% Fe CFR China). On January 5, 2021, the year-to-date average Platts IODEX iron ore price was US$ 164.5 per dmt.

 

For information on the risks related to inputs, see the Risk Factor described in item 4.1(b) above: “Higher energy costs or energy shortages would adversely affect the Company’s business”.

 

 

 

Foreign Exchange Risks

 

The Company's cash flow is subject to the volatility of several currencies, since the prices of its products are predominantly indexed to US Dollar, while a significant part of the costs, expenses and investments are indexed to other currencies, mainly Reais and Canadian Dollars, as highlighted in the risk below.

 

The Company also has debt instruments and other liabilities denominated in currencies other than US Dollar, mainly in Brazilian Reais.

 

Changes in the exchange rates of the currencies in which the Company conducts its operations may adversely affect its financial condition and results of operations.

 

A substantial portion of the Company's revenues, trade receivables and debt is denominated in U.S. Dollars, and considering that its functional currency is Brazilian Reais, changes in exchange rates may result in (i) losses or gains on its net U.S. dollar-denominated indebtedness and accounts receivable, and (ii) market value losses or gains on exchange derivatives used to stabilize its cash flow in U.S. Dollars. In 2020, the Company had net foreign exchange losses of US$ 523 million, while it had net foreign exchange gains of US$ 39 million in 2019. In addition, changes in the values of the Brazilian real, the Canadian dollar, the euro, the Indonesian rupiah, the Chinese yuan and other currencies against the U.S. Dollar affects the Company's results, since most of its costs of goods sold are denominated in currencies other than the U.S. dollar, mainly the Brazilian Real (39.5% in 2020) and the Canadian dollar (6.2% in 2020), while its revenues are mostly U.S. dollar-denominated. Exchange rate fluctuations are expected to continue to affect the Company's financial result, expenses and cash flow generation.

 

Significant volatility in currency prices may also result in disturbances in foreign exchange markets, which could limit the Company’s ability to transfer or to convert certain currencies into U.S. Dollars and other currencies for the purpose of making timely payments of interest and principal on its indebtedness. The central banks and governments of the countries in which Vale operates may institute restrictive exchange rate policies in the future and impose taxes on foreign exchange transactions.

 

Interest Rate Risk

 

The Company is also exposed to interest rates on loans and financings. Debts with fluctuating interest rates in U.S. Dollars consist mainly of loans, including export prepayment operations and loans from commercial banks and multilateral organizations. In general, these debts are indexed to the LIBOR (London Interbank Offered Rate).

 

Uncertainties regarding the discontinuation and replacement of LIBOR may adversely affect the Company.

 

In July 2017, the UK Financial Conduct Authority (“FCA”), the body that regulates the London Interbank Offered Rate (“LIBOR”), announced the effective discontinuation of LIBOR. After December 31, 2021, the FCA will no longer require panel banks to submit quotes for LIBOR settings other than overnight and 12-month U.S. dollar LIBOR and, after June 30, 2023, the FCA will no longer require panel banks to submit quotes for any U.S. dollar LIBOR settings. The Company is currently evaluating the potential impact of the possible replacement of LIBOR's interest. As of the date of this document, it is not possible to predict the effect of discontinuing LIBOR or replacing it with alternative reference rates or any other LIBOR reforms that may be enacted in the United Kingdom or elsewhere. The uncertainty related to the discontinuation, as to the nature of the alternative reference rates and as to possible changes or other reforms in LIBOR, may have a material adverse effect on the Company's financial condition and results of operations.

 

The Company is exposed, through its debt contracts, to the rates encompassed in the new term. Currently, around 25% of Vale's debt is tied to LIBOR. Floating debts denominated in Reais are indexed mainly to the Interbank Deposit Certificate (CDI), Long-Term Interest Rate (TJLP) and the National Consumer Price Index (IPCA), and part of these debts are converted to fixed interest rates in U.S. Dollars through swap operations.

 

 

 

On December 31, 2020, 81.34% of the Company's indebtedness was denominated in U.S. Dollars (US$), corresponding to R$ 56,470,464,004.39, of which R$ 40,056,776,799.22 at fixed interest, R$ 16,123,039,320.09 at variable interest and R$ 290,647,885.08 tied to LIBOR. Other 10.59% of the debt was denominated in Reais (R$), corresponding to R$ 7,349,093,806.97, of which R$ 4,510,621,066.65 tied to DI Rate and TJLP, and R$ 2,838,472,740.32 at fixed interest rates and others. The remaining 8.08% of debt, corresponding to R$ 5,607,748,334 at fixed interest rates, was denominated predominantly in Euros (€).

 

 

  

4.3 - Relevant non-secret legal, administrative or arbitration proceedings

 

Vale is a party involved in labor, civil, tax and other actions in the administrative and judicial spheres. The provisions for the losses arising out of these actions are estimated and updated by the Company, based on the opinion of legal advisors.

 

For the purposes of this item 4.3, the proceedings, among others, that may have a significant impact on the Company's equity or business, quantitatively representing the amount in dispute greater than the equivalent to 1% of the Company's Shareholders' Equity, as of December 31, 2020, have been considered as individually relevant proceedings. In addition, without prejudice to the materiality criterion highlighted above, relevant proceedings have also been included due to other aspects, regardless of the amount involved.

 

As of December 31, 2020, the provision for contingencies arising out of administrative and judicial proceedings of a tax, civil, labor and environmental nature, recognized in the Company's consolidated financial statements, totaled R$ 5.671 billions, and its composition can be summarized as follows:

 

Provisions for legal proceedings

(R$ million)

December 31, 2020
Tax 2,520
Civil 1,354
Labor 1,741
Environmental 56
Total 5,671

 

(i)Labor

 

As of December 31, 2020, the Company and its controlled companies were parties to 15,208 legal proceedings of labor nature, involving the total amount of R$ 33.470 billions. On that same date, the Company's consolidated financial statements were provisioned with R$ 1.741 billion to cover possible losses. The labor lawsuits brought against the Company relate to matters such as overtime, premium for unhealthy and hazardous work, outsourcing, among others.

 

The tables below present an individual description of labor proceedings considered relevant to the Company's and/or its subsidiaries' businesses as of December 31, 2020:

 

 

 

1) Case no. 0126600-17.2006.5.03.0012
Court 6th Panel of the Superior Labor Court (TST)
Instance Superior
Filed on Nov 27, 2006
Parties Labor Prosecution Office of Minas Gerais (“MPT-MG”) (plaintiff) and Vale (defendant)
Amounts, goods or rights involved R$ 19,373,213.29
Main facts

MPT-MG filed, on November 27, 2006, a public-interest civil action aimed at preventing the outsourcing of services of (i) operation of machinery and equipment for mining, such as loader, excavator and drill; (ii) monitoring and reading of instruments in tailings dams and sterile piles; and (iii) preparation and performance of a fire plan (detonation).

 

On August 20, 2009, a judgment was rendered (partially granted) ordering Vale to refrain from outsourcing the aforementioned services and, therefore, to conduct such activities through its own employees. The court understood that such services would be the Company's core activities and thus could not be outsourced.

 

On February 22, 2010, the Regional Labor Court of the 3rd Region ("TRT3") dismissed the appeal filed by Vale and partially granted the MPT-MG appeal, in order to grant the interlocutory relief for immediate enforcement of the judgment.

 

On May 18, 2010, Vale filed an appeal to the Superior Labor Court (“TST”), sustaining the violation of art. 129, III, of the Federal Constitution and art. 83 of Complementary Law No. 75/93, as well as jurisprudential divergence regarding the lack of collective interest to authorize the filing of the public-interest civil action by the MPT-MG, which would imply its illegitimacy to propose the action, and, consequently, the extinction of the proceedings without judgment on the merits (art. 267, I and VI and art. 295, V, of the Code of Civil Procedure). Vale also claimed breach of article 5, paragraphs XXII, LIV and LV, of the Federal Constitution, and article 899 of the Consolidation of Labor Laws (CLT), due to the unreasonable judicial mortgage determined by TRT3 without there being an execution procedure. Finally, Vale claimed breach of items II and XIII of article 5, and sole paragraph of article 170, both of the Federal Constitution, for disrespect to the right to free exercise of the job or legal profession, since the legal qualifications are met, considering that the activities performed by the service providers are specialized and can be legitimately contracted.

 

On May 21, 2010, in the action for a provisional remedy filed by Vale, TST granted an injunction request to suspend the interlocutory relief that determined the immediate enforcement of the judgment.

 

On July 19, 2010, Vale filed an interlocutory appeal with TST due to the denial of the Review Appeal by TRT3.

 

On March 18, 2015, the Interlocutory Appeal filed by Vale was granted, determining the consideration of Vale's Review Appeal.

 

On April 8, 2015, the Review Appeal was found partially favorable to Vale by annulling the decision of the Motion for Clarification issued by TRT3.

 

Despite the above decision, MPT-MG understands there is a fine for alleged noncompliance with the decision, and, as a precaution, Vale calculated the amounts sought by the Prosecution Office (approximately R$ 7.6 million), which would be added to the original requests of the case and classified with chance of remote loss. Due to the aforementioned questioning by MPT-MG, the amount involved in the case was reassessed in order to consider the new MPT-MG’s allegations regarding noncompliance with the court decision. Accordingly, the amount of the claim was revalued from R$ 856,000 on December 31, 2014 to R$ 12.8 million on December 31, 2015, although Vale does not agree with the determination of noncompliance and the application of the fine.

 

The documents returned to TRT3, for a new judgment of the Motion for Clarification. Once the Motion for Clarification was issued, a new Review Appeal was filed and, in view of its denial, an Interlocutory Appeal was filed, which is pending before the TST and was assigned to the 6th Panel.

 

In March 2018, Vale filed a petition before the TST requesting that the Court recognize that the action became moot, as Laws 13,429/17 and 13,467/17 authorize the outsourcing of the core activity. Subsequently, in the event of non-acceptance of this request, the Rapporteur of the appeal was requested to limit the adverse judgment until November 2017, when the mentioned law came into force.

 

In September 2018, the lawsuit was dismissed because it depends on the STF's judgment on the “outsourcing” matter. A situation that remains up to this date.

Chances of loss 1.90% of the total updated order was classified as Likely Loss, the remaining amount being classified as Remote Loss.
Impact analysis in case of loss / Reasons of the relevance of the lawsuit for the Company In case the court upholds the unfavorable decision, Vale will be obliged, in the region of Minas Gerais, to refrain from outsourcing the aforementioned services, and conduct such activities, therefore, through its own employees; and to cause the termination of outsourcing agreements that have such services as purpose. However, with the adoption of labor reform and consequent legal permission to outsource core activities, there is the possibility of the recognition of mootness of the action or, also, limitation of the adverse judgment until adoption of the new legislation.
Notes Not applicable.

 

 

  

2) Notices of Violation 20.588.905-1 and 20.589.903-0
Administrative Level Ministry of Labor and Employment (“MTE”)
Instance 2nd Administrative Instance
Filed on Feb 12, 2015
Parties MTE and Vale
Amounts, goods or rights involved R$ 602,665.51 (of which R$ 601,976.74 related to record 20.588.905-1 and R$ 688.77 related to record 20.589.903-0)
Main facts

In February 2015, the Ministry of Labor and Employment (MTE) supervised the activities of the company Ouro Verde Locação e Serviços S.A. ("Ouro Verde"), which provided services to Vale for the transportation of finished products between Pico Mine (Itabirito-MG) and the railway terminals in Fábrica Mine (Congonhas-MG).

 

The referred to inspection resulted in notices of violation issued by the MTE, related to alleged (i) inadequate hygiene conditions; (ii) violation of safety standards; (iii) excessive working hours; (iv) outsourcing of finished products considered as end activity not subject to outsourcing; and (v) due to all of the aforementioned violations, the MTE filed a notice of violation for practices similar to slave labor.

 

Although all the practices subject to the notices of violation refer to Ouro Verde, as the outsourcing was considered illegal, all the notices were issued against Vale.

 

Vale filed administrative defense before the MTE claiming: (i) that the transportation of products is outsourced; (ii) that there is no direct employment relationship between Vale and the employees of Ouro Verde; (iii) that there was a misunderstanding of the classification of alleged irregularities as “practice similar to slave labor”. The administrative defenses were not granted and Vale appealed to the second administrative instance. In April 2016, decisions were issued denying Vale's appeals.

 

Once the administrative level had been exhausted, Vale filed an Action for Provisional Remedy (case no. 0010627-83.2016.5.03.0005), in which it obtained an injunction in favor of Vale to suspend the enforceability of the fine. The main action, an Action for Annulment of Notices of Violation, was assigned to the same judge presiding over a connected lawsuit on May 27, 2016.

 

As a result of the notices of violation issued by the MTE, the Prosecution Office ("MPT") commenced Public Civil Inquiry No. 3212.2014.03.000/9-12 to investigate the alleged practice similar to slave labor in the services provided by Ouro Verde, upon Vale having signed with MPT Consent Decree no. 118/2015 ("TAC"), by means of which preventive and corrective measures were agreed to guarantee the labor rights of the employees of the companies that provide services. The commitments undertaken have been properly implemented. For information on said TAC, see item 4.7 of this Reference Form. Due to the fulfillment of the agreed commitments, the Civil Inquiry is provisionally closed.

 

By adopting a broad interpretation of the law, the Ministry of Labor concluded that the employees had been working under conditions similar to slavery. Upon becoming aware of the findings, the Company promptly remedied the issues and, subsequently, terminated the contract with the transportation company.

 

However, the Ministry of Labor filed an administrative proceeding against the Company. Vale presented its defense, which was rejected, the subsistence of the records being maintained. Against that decision, an administrative appeal was filed, which was not accepted, and the administrative proceeding was terminated.

 

In June 2016, Vale commenced a legal proceeding requesting the annulment of administrative notices of violation and that the Ministry of Labor refrain from classifying it as a company involved in practices similar to slavery. For information on such lawsuits, see items 4 and 5 below.

 

On April 30, 2018, the judgments regarding the annulment actions mentioned in items 4 and 5 et seq. were rendered, through which revoked, among other things, interlocutory relief that prevented the registration of the fines as overdue tax liability.

 

Against said judgments, the competent appeals were filed. After assessing the appeals filed by Vale S.A., the notice of violation No. 20.588.905-1 was annulled by the TRT of the 3rd region and the outsourcing of the activities provided by the company Ouro Verde Locações e Serviços S.A. was deemed lawful.

 

With regard to the lawsuit discussing the notice of violation No. 20.589.903-0, Vale S.A.'s appeal was dismissed and the Company remains appealing against the decisions.

Chances of loss Remote for notice no. 20.588.905-1 and likely for notice of violation no. 20.589.903-0
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company Low economic value, but relevant due to the impact to image.
Notes Not applicable.

 

 

 

 

3) Case no. 0010784-59.2016.5.03.0004
Court 5th Labor Court of Belo Horizonte/MG
Instance Trial Court
Filed on May 27, 2016
Parties

Vale S.A. (Plaintiff)

Federal Government (Defendant)

Amounts, goods or rights involved R$ 9,241.57
Main facts

The subject matter of this suit is the annulment of notice of violation No. 20.588.905-1, drawn up against Vale by the Ministry of Labor, and based on the understanding of the supervisory authority, that the transportation of ore in the section of Pico/Fábrica road would not be subject to outsourcing, which is why the contracting between the Company and employees of Ouro Verde Locação e Serviços S.A. ("Ouro Verde") would have been illegal.

 

On May 10, 2016, interlocutory relief was granted in favor of Vale by determining, through a Preliminary Injunction distributed on April 29, 2016, that the Ministry of Labor refrain from promoting the registration of the Notice of Violation in active debt, as well as executing it, "before the final decision on the annulment suit that will be filed by the plaintiff" (Vale).

 

On May 2, 2018, a judgment was issued dismissing the annulment action and repealing the injunction previously granted. Motion for Clarification was filed by Vale on May 9, 2018, to remedy omissions and contradictions, among which the point pertinent to revocation of the relief.

 

The Motion for Clarification filed has been accepted in part. Subsequently, Vale filed an Ordinary Appeal, and it was granted in December 2018 to render notice of violation No. 20.588.905-1 ineffective, considering the outsourcing to be lawful.

 

At the date of this Reference Form, Vale awaits the judgment of the appeal filed by the Federal Government, forwarded to the TST.

Chances of loss Remote.
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company The maintenance of the understanding of illegality, in principle, would compel the Company to prioritize the transportation of ore, even in the case of a finished product, in the Pico/Fábrica area. The adverse judgment in said lawsuit may cause financial and reputational losses to the Company.
Notes The subject matter of said lawsuit has correlation with lawsuit 5 below. Thus, see also the description and impacts of lawsuit 5 described below.

 

 

 

4) Case no. 0010787-11.2016.5.03.0005
Court 5th Labor Court of Belo Horizonte/MG
Instance Trial Court
Filed on May 27, 2016
Parties

Vale S.A. (Plaintiff)

Federal Government (Defendant)

Amounts, goods or rights involved R$ 18,136.62
Main facts

The subject matter of this action is the annulment of notice of violation no. 20.589.903-0 drawn up against Vale by the Ministry of Labor based on the understanding of the supervisory authority that employees of Ouro Verde Locação e Serviços S.A. ( "Ouro Verde") worked under conditions similar to slavery, subject to exhaustive working hours and degrading working conditions. Due to the understanding upheld by the auditors of the Ministry of Labor regarding the unlawfulness of the outsourcing between the Company and Ouro Verde, the notice of violation related to work similar to slavery was issued against Vale.

 

On May 10, 2016, interlocutory relief was granted, through a Provisional Remedy distributed on April 29, 2016, in favor of Vale, determining that the Ministry of Labor refrain from promoting the registration of the Notice of Violation in active debt, as well as before the final decision on the annulment suit filed by the plaintiff (Vale).

 

On May 2, 2018, the judgment dismissing the annulment action was published. On May 9, 2018, Vale filed motion for clarification, and it was decided, on May 21, 2018, that the repeal of the interlocutory relief will only take effect after the decision has been res judicata, which has not yet occurred in view of the fact that the case is in the appeal phase.

 

Vale filed an Ordinary Appeal on June 6, 2018. In February 2019, despite the fact that the employment relationship between Vale and the employees of Ouro Verde Locações e Serviços S.A. was dismissed, this fact was once again challenged, which had given rise to Vale's notification of the degrading conditions of work, the 4th Panel of the Regional Labor Court of MG, through a non-unanimous decision, maintained the notice of violation, denying the Ordinary Appeal.

 

Vale filed a motion for clarification, which has been deemed groundless. An Appeal was filed against the decision that upheld the aforementioned notice of violation, which was not entertained. An Interlocutory Appeal was filed against the decision that refused to entertain the Appeal, which is pending judgment by the TST.

 

At the date of this Reference Form, Vale awaits the judgment of the appeal filed by Vale S.A., forwarded to the TST.

Chances of loss Likely
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company The possible loss of said proceeding and that described in item 4 above may cause significant financial and reputational losses to the Company, especially as it could cause Vale to be included in the list of slave employers maintained by the Ministry of Labor.
Notes Not applicable.

 

 

 

5) Case no. 0001698-92.2014.5.03.0179
Court 41st Labor Court of Belo Horizonte/MG
Instance Higher Instance
Filed on May 29, 2014
Parties

Belo Horizonte Railroad Companies Workers Union (Sindicato dos Trabalhadores em Empresas Ferroviárias de Belo Horizonte) – STEFBH (Plaintiff)

Vale S.A. (Defendant)

Amounts, goods or rights involved Amount in dispute attributed by the Union was R$ 40,000.00. The updated amount in dispute (as of December 31, 2020), to the knowledge of the Company, was R$ 27,007,239.66.
Main facts

By means of the aforementioned labor claim, the Union intended that the following requests be granted to those replaced:

 

(i) individual mental distress damages;

(ii) collective mental distress damages;

(iii) 01 extra daily hour with 50% overtime premium or higher conventional rate for not granting the full intra-day interval;

(iv) payment of overtime premium for the whole period available as hours of commuting, standby and readiness;

(v) union fees;

(vi) mandatory injunction for abstaining from adopting a mono conduction system and to adopt a dual conduction system, to provide appropriate sanitary conditions, to adopt mono conduction with permission to use toilets during journeys or stops, to open stations in the travel sections so that they can be used for meal and satisfaction of physiological needs, all under penalty of fine to be determined by the court;

(vii) interlocutory relief for fulfillment of the obligations to do;

(viii) union fees.

 

On June 09, 2014, Vale presented its defense initially addressing the Union’s lack of standing to sue, and exclusion of the non-associate substitutes. It argued that the action is barred by the statute of limitations and on the merits it fully challenged all the pleas.

 

The evidentiary hearing was scheduled for November 26, 2014. At the evidentiary hearing, the testimony of Vale’s representative and the testimony of the plaintiff’s witness were gathered. The trial date was set for December 5, 2014.

 

In the judgment, the court dismissed the case in relation to those substituted in case records 0001784-59.2012.5.03.0106 due to the lis alibi pendens of the requests, it rejected the preliminary arguments, declared the statute of limitations of the claims prior to December 09, 2008, and ordered Vale to pay the following portions:

 

(i) interval between shifts and its reflexes;

(ii) handover time and its reflexes;

(iii) Union fees to the amount of 15% of the net value calculated in settlement of the case;

 

It arbitrated the award of R$ 30,000.00 with costs by VALE in the amount of R$ 600.00.

 

Vale filed an Ordinary Appeal asking for a review of the decision so that the lack of standing to sue with the union as plaintiff might be recognized and on the merits that the interval between shifts, handover time and union fees might be separated from the judgment.

 

The Union, as plaintiff, prepared an Ordinary Appeal asking for a revision of the judgment to determine that the defendant operate the locomotives with two drivers; ordering the defendant to pay individual and collective non-pecuniary damages; payment of the deferred portions with the inclusion of the portions yet to be paid.

 

In the TRT3, the relevance and public interest of the matters contained in the records was recognized and their submission to the Labor Prosecution Office, which manifested itself in favor of partial granting of the Ordinary Appeal filed by the Union, as plaintiff, to order the defendant to adopt the two-driver system and compensation for individual and collective non-pecuniary damages.

 

The appellate decision rejected the preliminary arguments and, on the merits, partially granted the Ordinary Appeal filed by Vale to separate the order to pay handover time and its reflexes.

 

However, the referred to appellate decision partially granted the Ordinary Appeal filed by the Union, as plaintiff, to add to the judgment:

 

(i) on one side, to abstain from adopting a single-driver system and to adopt the two-driver system of the locomotives as from the final decision under a penalty of a daily fine of R$ 2,000.00 for each adversely affected worker found in an irregular situation at each monthly observation of non-compliance;

(ii) compensation for individual non-pecuniary damages to the amount of R$ 10,000.00 for each one substituted;

(iii) compensation for collective non-pecuniary damages to the amount of R$ 500,000.00 reverted to the Workers’ Support Fund (FAT – Fundo de Amparo ao Trabalhador);

(iv) add the portions payable of the obligations of payment of interval overtime, while the situations that gave raise to them remain;

(v) collection of FGTS, specifying that they should consider, as a basis for calculation, the interval overtime already increased by the granted reflexes;

 

It raised the value of the judgment from R$ 30,000.00 to R$ 550,000.00 with consequent procedural costs in the amount of R$ 11,000.00.

 

The Union, as plaintiff, filed an Appeal for Review to change the appellate decision with regard to the rejection of the hours of readiness and standby.

 

Vale filed an Appeal for Review for a reversal of the judgment for recognition of the lack of standing to sue of the plaintiff Union, nullity of the appellate decision for lack of jurisdiction, to the extent that it has not analyzed the thesis addressed in the Ordinary Appeal, as well as the absence of exhaustive or analytical grounds of the appellate decision, a decision above and beyond the request; and on the merits a review with regard to the granting of interval overtime, an obligation to do or not do relating to the adoption of a two-driver system; compensation for individual and collective non-pecuniary damages and reduction of the compensatory amount and application of a fine for malicious prosecution.

 

The Regional Court of the 3rd Region received the Appeal for Review prepared by the Union, as plaintiff, and denied continuation of the Appeal for Review issued by VALE.

 

The Interlocutory Appeal filed by Vale was rejected by the TST. The Company filed an extraordinary appeal to the Federal Supreme Court. Awaiting judgment of the appeal on the date of this Reference Form. Case held by the judge under advisement. Provisory Execution suspended.

Chances of loss Likely (80%) and Remote (20%)
Impact analysis in case of loss / Reasons of the relevance of the lawsuit for the Company

The relevance of the case comes about because, if the decision of the Regional Court is upheld, Vale, in the territorial area of the STEFBH, will have to implement the two-driver scheme, that is, the drivers must be accompanied by another employee when traveling.

 

The loss of the referred to case could cause significant financial losses to the Company.

 

Notes Not applicable.

 

 

 

6) Case no. 0010261-67.2019.5.03.0028
Court 5th Labor Court of Betim/MG
Instance Trial Court
Filed on March 25, 2019
Parties Labor Prosecution Office (“MPT”)/Sindicato dos Empregados em Empresas de Asseio/ Sindicato dos Empregados em Empresas de Refeições Coletivas/Public Defender’s Office of the Federal Government/SINDIASSEIO/Sindicato dos Trabalhadores na Indústria da Extração de Ferro e Metais Básicos de Brumadinho e Região/ Sindicato dos Trabalhadores nas Empresas de Produção, Organização e Projetos de Eventos do Estado de Minas Gerais/ SITICOP MG/ FETICOM MG/ SINTRAL MG/ Sindados (Plaintiffs) and Vale S.A. (Defendant)
Amounts, goods or rights involved R$ 3,600,000,000.00 (amount in dispute)
Main facts

 

The subject matter of this suit is to provide for the protection of the employment contracts of those who worked in the Feijão mine at the time of the Brumadinho dam rupture, in addition to the pension of dependents of deceased/disappeared employees, payment of collective moral damages and compensation for social dumping. The initial hearing was scheduled for May 17, 2019 and later re-scheduled for June 03, 2019.

 

The amount of R$ 1,600,000,000.00 was blocked in Vale's accounts, due to a judicial order issued in the Interlocutory Relief, case no. 0010080-15.2019.5.03.0142, which preceded the filing of this Public Civil Action.

 

On July 15, 2019, an agreement was signed between Vale the MPT, with the participation of unions, through which the following indemnity parameters were established for the relatives of workers who were victims of the failure of the B1 Dam: (i) parents, spouses or partners, and children of deceased workers will individually receive R$ 500,000 for moral damages, and the payment of an additional insurance for work accidents in the amount of R$ 200,000, (b) brothers will receive R$ 150,000. There will also be the payment of pecuniary damage to the family of dependents, whose minimum value is R$ 800,000. The agreement also provides for the benefit of daycare assistance in the amount of R$ 920 per month for children of deceased workers up to 3 years of age, and education aid in the amount of R$ 998 per month for children between 3 and 25 years of age. There is also the granting of a lifetime health plan for spouses or partners and for children up to 25 years of age.

 

The agreement also provides for stability for own and outsourced workers, based at the Córrego do Feijão mine on the day of the failure, and for the survivors who were working at the time of the failure, for a period of 03 years, counted from January 25, 2019, which can be converted into cash. The agreement also provides for the payment of R$ 400.0 million as collective moral damages. Finally, the agreement also determined the release of Vale’s amount of R$ 1.6 billion, which was initially blocked.

 

On August 4, 2019, Vale proved in the records the deposit in court, as a result of the consent decree, in the amount of R$ 400 million as collective moral damage.

 

On September 26, 2019, a decision was issued, stating that “the termination of the employment relationship is a precondition (necessary precedent) for the exercise of the power to convert provisional stability into cash. With regard to the health plan, the approved agreement guarantees such benefit only to spouses, partners, children and dependents of employees who died or disappeared due to the failure of the B1 dam in Brumadinho (item 4 of the agreement), not reaching surviving employees who exercise the option to convert provisional stability into cash”, and the request for schedule of a hearing was rejected.

 

On February 10, 2020, in view of a statement by the MPT, Vale stated in the records elucidating the impossibility of discussing the terms of the ACP agreement, in view of the impossibility of investing against the approved instrument of conciliation, clarifying that any and all pending incident or issue is to be solved in the areas of qualifications.

 

On March 26, 2020, the judge granted the management committee's request for allocation of the amount of the indemnity for moral damages, so that part of the amount was allocated to fight Covid-19.

 

On August 20, 2020, the parties, in an amendment to the agreement signed on July 15, 2019, agreed that those interested in enforcing the terms of the covenant may do so by July 15, 2021, subject to the hypotheses already contained in the agreement. The time limit in question shall be set only for the enforcement of the terms of the agreement entered into in the record of that case by qualification of the interested person.

 

Chances of loss

Likely only for the collective moral damage object and for the other indemnity installments provided for in the agreement entered into on July 15, 2019, namely: daycare allowance, education aid, individual moral damages, pecuniary damages, additional insurance for occupational accidents, granting of health plan, job security, psychological/psychiatric assistance.

 

The other subject matters in the action have a remote "chance of loss."

Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company

The agreement of July 15, 2019 ended the public civil action. The proceeding is strategic for the Company, as it established, by consensus, the indemnity parameters for the relatives of workers who died and disappeared due to the accident.

 

Notes Not applicable.

 

 

 

7) Case no. 0010357-31.2019.5.03.0142
Court 5th Labor Court of Betim/MG
Instance Trial Court
Filed on April 10, 2019
Parties Metabase Brumadinho / SITICOP-MG / SEERC-MG / FETICOM / SINTEPOPE / Rental Companies MG Workers Union / SINDADOS-MG
Amounts, goods or rights involved R$ 10,000,000,000.00
Main facts

The subject matter of this lawsuit is the payment of compensation to the families of deceased or missing victims in the amount of R$ 10,000,000.00, as well as compensation of R$ 1,500,000.00 to rescued survivors and R$ 1,000,000.00 to survivors who were not on site, but that they had a relation of employment or work with Vale. The claim also covers the payment of compensation for material damages to the families of the victims and the surviving victims. At the end, there is still a claim for compensation for collective moral damages equivalent to R$ 4,000,000,000.00 and compensation for social dumping. Finally, the plaintiffs intend that Vale will be obliged to maintain the workers’ jobs, salaries and benefits until the on-site mining activity is resumed and, at least for a period of 3 years, during the period of decommissioning, condemning the Company to reintegrate the employees eventually dismissed after January 25, 2019.

 

A freezing of R$5,480,000,000.00 was requested in Vale’s accounts, which was rejected because the magistrate did not perceive the existence of risk of harm or risk to the useful outcome of the proceeding.

 

Initial hearing held, with the presentation of defense and documents by Vale. Hearing for attempted conciliation scheduled for August 19, 2019, postponed to February 17, 2020, when the Judge granted a new deadline for the parties to attempt at a conciliation, and scheduled an evidentiary hearing for March 27, 2020.

 

On said date, the proceeding was removed from the docket, due to the COVID-19 pandemic.

 

Subsequently, the Company entered into a partial agreement with SITICOP, SEERC, SINDIASSEIO, Union of Employees in Security and Surveillance Companies, FETICOM and SINTETOPE, which was duly ratified by the Court on 04/22/2020. Through that agreement, the following parameters have been established:

 

a)    Surviving employees, own and outsourced workers who were working at the Córrego do Feijão mine at the time of the B1 dam collapse (10/25/2019 at 12:28 pm), regardless of the formal functional allocation, will be paid the amount of R$ 100,000 for mental distress damages, R$ 150,000 for property damages and will be granted psychiatric and psychological treatment, in an accredited network, until January 2022 or while the employment contract that already contemplates an equal benefit lasts;

b)    Allocated employees, who are own and outsourced workers with an active contract as of 01/25/2019, and who actually worked at the Córrego do Feijão mine, although they were not at the said establishment at the exact moment of the B1 dam collapse, and who are not allocated in other Vale’s units or in other locations defined by their employers, even though, from time to time or occasionally, they have rendered services at the Córrego do Feijão mine and/or Jangada mine, will be paid the amount of R$ 40,000 for mental distress damages and R$ 40,000 for property damages;

c)    Allocated employees on leave, own and outsourced workers who, at the date of the B1 dam collapse (01/25/2019), were on leave for any reason for more than 30 days, will be paid an indemnity of R$ 40,000.

 

The execution of the agreement takes place through an enforcement action filed individually by each of the replaced beneficiaries.

 

As for the claims made by the Trade Unions that had not signed the agreement, the Court determined the suspension of the proceedings, due to the COVID-19 pandemic, the relevance and complexity of the proceedings, until the flows of face-to-face hearings were reestablished within the scope of the 3rd Region TRT, in order to designate the instruction hearing.

Chances of loss

Blocking of registration: Remote loss

Constitution of capital: Remote loss

Individual property damages: Possible loss

Individual mental distress damages: Possible loss

Collective mental distress damages: Remote loss

Social dumping damages: Remote loss

Obligation to abstain from dismissing employees with stability: Possible loss

Impact analysis in case of loss / Reasons of the relevance of the lawsuit for the Company The action may increase the damage to Vale’s reputation, either because it keeps in evidence all the facts that happened in Brumadinho due to the rupture of the dam and its serious repercussions, or because it continuously revolves the situation of the workers that survived the failure of B1 Dam, as well as the workers based at Córrego do Feijão Mine.
Notes Not applicable.

 

 

 

8) Case no. 0010319-76.2019.5.03.0026
Court 5th Labor Court of Betim/MG
Instance Trial Court
Filed on April 05, 2019
Parties SITRAMONTI-MG - Industrial Assemblies of Minas Gerais Workers Union
Amounts, goods or rights involved R$ 500,000.00.
Main facts

The subject matter of this lawsuit is the payment of compensation for material damages to dependents of deceased / missing employees; indemnity for material damages related to all the benefits provided in ACT/CCT, in a single installment; and, alternatively, in the form of pension. The union also intends the payment of compensation of not less than R$5,000,000.00 for each family group and, finally, the payment of legal fees.

 

Initial hearing held on July 7, 2019, with the presentation of defense and documents by Vale.

 

Judgment was handed down, which dismissed the proceeding without resolution on the merits, considering that the lawsuit represented a simulated dispute between the parties, as there is a class action in progress with other unions that address the subject matter of compensation for dependents of missing or deceased employees, and the Plaintiff of this lawsuit does not appear as plaintiff in said class action, and sentenced the parties (plaintiff and defendant) to pay a fine for malicious prosecution, in the amount of R$ 10,000.00 for each.

 

Vale filed an ordinary appeal, which was dismissed by the TRT. Vale filed a review appeal, whose entertainment was denied by the TRT.

 

Vale filed an interlocutory appeal, which was dismissed by the TST.

 

Currently, the case awaits judgment of the internal interlocutory appeal brought by Vale before the TST.

Chances of loss

Fine for malicious prosecution: Likely loss

Other subject matters: Remote loss

Impact analysis in case of loss / Reasons of the relevance of the lawsuit for the Company The case increases the damage to Vale’s reputation.
Notes Not applicable.

 

 

 

9) Cases no. 0000356-94.2019.5.08.0126 and 0000361-07.2019.5.08.0130
Court 2nd Labor Court of Parauapebas – PA
Instance Trial Court
Filed on Jul 16, 2019 and Jul 19, 2019 - respectively
Parties Vale S.A. (defendant) and Labor Prosecution Office of Pará (“MPT – PA”) (plaintiff)
Amounts, goods or rights involved Both R$ 134,483,000.00 (December 31, 2020).
Main facts

On June 16 and 19, 2019, the MPT-PA filed a Public-Interest Civil Action against Vale S.A., claiming several obligations and collective moral damage due to the Water Catchment Dams and Tailings Ponds, located in the Igarapé Bahia Mine - Parauapebas/PA. These obligations would be: (i) immediate declaration of the emergency of both dams; (ii) preparation of an independent technical audit report on the possibility of carrying out emergency activities remotely; (iii) implementing remote correction mechanisms and all necessary safety measures described in the report in favor of protecting direct and indirect workers; (iv) performing a special safety inspection prepared by a multidisciplinary team of experts, hired and paid by Vale; (v) preparing PSB and PAE/PAEBM for the aforementioned dams, containing specifications for the effective protection of workers' safety in the event of failure; (vi) implementing the entire PAE/PAEBM of these dams in the entire area, which could be affected by failure or serious misfortune, and carrying out capacity building and training of workers exposed to risk; (vii) hire an independent audit firm to review and certify the full compliance of the PSB and PAE/PAEBM; (viii) submitting monthly reports in court, signed by a multidisciplinary team of experts or a company hired for this purpose, until a significant reduction in the risk of rupture, and express declaration of workers' safety, or until the issuance of the stability certificate upon presentation of the DCE signed by a competent professional - all of these under penalty of a daily fine of one million reais (R$ 1,000,000.00).

 

With regard to action no. 361-07.2019.0130, Vale has the following obligations: (i) prove the hiring of companies responsible for the execution of all stages of the construction project, necessary to prevent risks of rupture/overtopping of the indicated dams; (ii) prove the hiring of a company responsible for the design and execution of temporary emergency measures, such as water pumping and control of the free board of dams; arranging for the hiring of a independent audit firm to monitor and certify the court on compliance with obligations; (iii) perform basic safety maintenance works/services at the dams; (iv) preparing and implementing a specific risk study; (v) perform risk mitigation measures, implementing the water pumping system, and control of free board of the dams; (vi) prepare a specific risk study; (vii) carry out the projects to implement the spillway systems of both dams; (viii) preparing and implementing a specific study of risks to which the workers who will carry out the measures will be exposed; (ix) execute mitigating measures recommended by the independent external audit; (x) disclose on major newspapers, as a relevant fact, the decisions on provisional and definitive relief; (xi) periodically submit - 30 days - progress report on the measures described in the previous orders; all of these obligations are linked to a fine of one million reais (R$ 1,000,000.00) in case of noncompliance; collective moral damage.

 

On July 19, 2019, a decision was issued on the request for injunction for Vale to declare the emergency situation of both dams, submit a report to be prepared by an independent technical audit, among others, under penalty of a daily fine of one million reais (R$ 1,000,000.00). A request for reconsideration was requested by Vale, which was accepted by the court that suspended the injunction.

 

On August 2, 2019, the first hearing took place, where the parties decided to reconcile (in both actions) with regard to some obligations, one of which being the declaration of an emergency situation (although it does not recognize it), in addition to several obligations, each with a specific term.

 

After several administrative meetings between MPF and MPT, an out-of-court agreement was ratified, in which Vale replaced the external audit company (Walm) with another that fit the concept of independent of the MPs (PCE). In return, MPT and MPF waived the portion of collective moral damage.

 

The settlement was ratified judicially and also reaches the two ACPs that are pending before the Federal Court (1002242-17.2019.4.01.3901 and 1002244-84.2019.4.01.3901).

 

Currently, the obligations are being complied with and some works have already been closed. Vale and PCE are holding meetings to debate the report issued, especially regarding the withdrawal of N1 from water catchment.

 

Chances of loss Remote
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company

The Company considers the lawsuits to be relevant and strategic because of the amount involved and the matter discussed in the suits, which is linked to the dam safety issue.

 

Notes These lawsuits are being processed together and serve the same subject matter on the same site - Igarapé Bahia and its water intake and tailings dams and ponds. A first agreement was formalized in both proceedings where the obligations of one complement the other.

 

 

 

10) Case no. 0001703-41.2014.5.08.0126
Court 2nd Labor Court of Parauapebas – PA
Instance Trial Court
Filed on 11/27/2014
Parties Vale S.A. (defendant) and Labor Prosecution Office of Pará (“MPT – PA”) (plaintiff)
Amounts, goods or rights involved R$ 500,000.00 (amount in dispute)
Main facts

The Labor Prosecution Office of the 8th Region has filed a Public-Interest Civil Action against Vale S.A. and the Metabese Trade Union of Carajás, claiming preliminary judgment as to the obligation to do and not to do so that the working hours of all employees who hold a higher education degree, managers and supervisors are recorded, under penalty of a fine in the amount of R$ 20,000.00, and the time of arrival and leave of employees under these categories begins to be immediately recorded, as well as granting an intra-day and inter-day break, correctly compensating with a 50% premium when there are overtime hours. Finally, it requested, on a preliminary basis, that Vale refrain from collectively agreeing clauses that do not require the working hours record.

 

In a judgment, the judge of the 2nd Labor Court of Parauapebas partially granted the request, obliging Vale to immediately implement the proper control of the working hours of employees with a higher education degree (invalidating the clause of the collective agreement), except for those who meet the requirements of art. 62 of the CLT. It has entered judgment against the trade union regarding the obligation to do and not to do, so that it is prevented from entering into clauses that exempt employees from signing their attendance.

 

Vale was also ordered to pay R$ 300,000.00 (three hundred thousand reais), as compensation for collective moral damages.

 

An ordinary appeal was filed against that decision, aiming at reversing the decision to be totally unfounded. The MPT appealed only against the issue of allocating the indemnity amount and increasing the amount.

 

The case record was assigned to the 3rd Panel of TRT8, where they decided to exclude the collective moral indemnity, but the invalidation of the clause that exempts higher-education staff, managers and supervisors from signing their attendance was upheld.

 

The case record is currently with TST, assigned to the 8th Panel, with Judge Maria Cristina as rapporteur. The case record is suspended due to the court decision of ARE 1.121.633 at STF – Topic 1,046, in which it will be decided on the validation/invalidation of clauses of the Collective Agreement/Convention.

Chances of loss Possible loss due to the pending judgment of Topic 1,046 at STF.
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company The Company considers the case to be strategic, as the MPT seeks to invalidate a clause included in the ACT that exempts higher-education staff, managers, supervisors, etc. from signing their attendance. If the decision is upheld, with the clause being invalidated, the financial reflexes will be highly expressive.
Notes Demand involving request for invalidation of the clause of the Collective Agreement.

 

 

 

(ii) Taxes

 

The tables below present an individual description of tax proceedings considered relevant to the Company's and/or its subsidiaries' businesses as of December 31, 2020.

 

As a result of the classification of tax cases as likely loss, the Company has constituted, over the years, a provision that added up to, on December 31, 2020, the amount of approximately R$ 2.520 billions related to the Company, subsidiaries and divested companies, whose liabilities remain under the responsibility of Vale.

 

1) Rescisory Action (Ação Rescisória) no. 2006.02.01001869-2
Court Superior Court of Justice (STJ)
Instance 3rd Instance
Filed on February 20, 2006
Parties Federal Government (plaintiff) and Vale (defendant)
Amounts, goods or rights involved Not applicable.
Main facts

In 2004, a judgement by the Superior Court of Justice (“STJ”) became unappealable in favor of Vale, granting Vale the right to deduct the amounts of social contributions over net income (“CSLL”) from Vale’s taxable corporate income (“IRPJ”).

 

In 2006, the Federal Government filed a rescisory action (ação rescisória) seeking the reversal of the 2004 final decision. The action was rejected by the Federal Court of Rio de Janeiro and by the Federal Court of Appeals (“TRF”) of the 2nd Region.

 

In 2008, the Federal Government filed motions for clarification in view of TRF’s decision, and such motions were denied.

 

In 2009, the Federal Government appealed to the STJ and the Federal Supreme Court (“STF”).

 

In 2012, the special appeal was denied, but an interlocutory appeal from this decision by the Federal Government was granted. That lead to the submission of an interlocutory appeal by Vale in 2014.

 

In 2016, Vale’s interlocutory appeal was dismissed and the STJ ordered that the case be referred to the TRF for a new judgment on the motions for clarification by the Federal Government in 2008.

 

In 2017, Vale presented its counter-arguments.

 

In 2019, the TRF, in a new judgment, granted the motion for clarification filed by the Federal Government, in order to dismiss the decision issued in 2004 that was favorable to Vale. In view of the new TRF decision, Vale filed a motion for clarification, which was not granted.

 

In 2020, Vale filed a Special Appeal and an Extraordinary Appeal, which were accepted by the Vice-President of the TRF. Vale is awaiting judgment on the Special Appeal.

Chances of loss Possible
Impact analysis in case of loss / Reasons of the relevance of the lawsuit for the Company In the event of a definitive judgement in the Rescission Action (Ação Rescisória) determining the annulment of the 2004 judgment, the Company will no longer be able to deduct the CSLL from taxable income.
Notes

Due to the developments of this action, Vale decided not to deduct CSLL from its taxable profit, as of the fiscal-year 2018.

 

See Item 4.3 sub-item 6, below.

 

 

 

2) Writ of Mandamus (Mandado de Segurança)  No. 2011.51.01.011763-1
Court 17th Federal Court of the Judiciary Section of Rio de Janeiro
Instance Trial Court
Filed on August 5, 2011
Parties

Inspector of the Federal Revenue Service of the State of Rio de Janeiro

(defendant) and Vale S.A. (successor of Valepar S.A. by merger, as of 2017,

plaintiff).

Amounts, goods or rights involved Total judicial deposits: R$2.5 billion (December 31, 2020) and R$ 533 million relating to the adhesion to Refis.
Main facts

In 2011, Valepar (merged into Vale in 2017) filed for a Writ of Mandamus with the purpose of safeguarding its right not to include the amounts received as interest on net equity (“JCP”) in the tax base for the calculation of PIS and COFINS from the year 2004 onwards. Valepar argued, in summary, inequality of treatment of taxpayers, based to the tax regime and/or domicile of the shareholder. Valepar deposited the amounts of PIS and COFINS on the JCP at each distribution.

 

The decision of the first instance court extinguished the lawsuit without judgment on the merits, in view of alleged lis alibi pendens of another Writ of Mandamus previously filed by the Company.

 

In 2012, the Appeal was filed by Valepar and denied by the court.

 

In October 2013, the Special and Extraordinary Appeals were filed by the Company. In December 2013, the company adhered to REFIS, instituted by Law no. 12,865/2013, and partially withdrew from the legal discussion regarding the taxable events of Oct/2004, Apr/2005, Oct/2005, Apr/2006, Oct/2006, Apr/2007, Oct/2007, Apr/2008 and Oct/2008. After the adhesion to REFIS, a judicial decision confirmed the Company’s partial withdrawal of the appeals related to the charges included in the REFIS.

 

In 2014, the Special and Extraordinary Appeals were denied, and Interlocutory Appeals were filed against the decisions.

 

In 2016, a favorable decision in Valepar’s Special Appeal dismissed the lis alibi pendens argument, annulling the judgment and ordering that the records of the proceedings be returned to the original court, so that it analyzes the merits of the case.

 

In 2017, an unfavorable decision ordered the conversion of all the deposits made into Federal Government income, subject to the lawsuit becoming unappealable. Motion for clarification was filed, and was dismissed.

 

In 2018, an Appeal was filed, and was denied. The Motion for Clarification filed against this decision was rejected.

 

In 2019, Vale filed a new Extraordinary Appeal, which was rejected by the Vice President of the Regional Federal Court of the 2nd Region. Thus, an Interlocutory Appeal was filed. Upon receiving the case, the Federal Supreme Court determined the overturn of the Writ of Mandamus due to the general repercussion in RE 607.642.

 

Vale has filed an Interlocutory Appeal against this decision, arguing that the general repercussion does not apply to the case, since the leading case discusses the constitutionality of the non-cumulative PIS tax established by Law no. 10,637/02 on the billing of legal entities that provide services.

 

In 2020, Vale informed that it requested the partial withdrawal of the process with respect to the remaining tax credit related to the taxable events occurred between October/2009 and April/2017 (which period was not included in the REFIS), thus waiving, in this part, any allegations of law on which the present action is based. The request for partial withdrawal was ratified and became final and unappealable on August 4, 2020.

 

Once the discussion on the merits of the case was concluded, Vale made the following requests: (i) as to the judicial deposits related to the first partial withdrawal (taxable events occurred between October/2004 and October/2008): the withdrawal, in favor of Vale, of the part of the judicial deposits related to the amounts forgiven due to the adhesion to REFIS and the conversion of the remaining balance into income of the Federal Government,; (ii) as to the judicial deposits related to the second partial withdrawal (taxable events occurred between October/2009 and April/2017): the conversion into income of the Federal Government.

 

The Federal Government opposed the request to withdraw in favor of Vale any amount deposited in court, alleging non-compliance with the REFIS adhesion requirements. Vale refuted this allegation. Vale is waiting a judicial decision on this issue and on the above requests.

Chances of loss Probable
Impact analysis in case of loss / Reasons of the relevance of the lawsuit for the Company In light of the withdrawal of the lawsuit: (i) the judicial deposits will be partially converted into income in favor of the Federal Government; and (ii) Vale's withdrawal claim for part of the amounts deposited due to adhesion to Refis may not be granted.
Notes Not applicable.

 

 

 

3) Administrative Proceeding No. 16682.720914/2019-17
Court Administrative Council for Tax Appeals ("CARF").
Instance 2nd Administrative Instance
Filed on November 26, 2019
Parties Federal Government (plaintiff) and Vale (defendant).
Amounts, goods or rights involved As of December 31, 2020, the total amount in dispute was R$1.58 billion, in addition to the reduction of tax losses and the negative CSLL taxable basis for the years 2015 and 2016, with a total tax effect of R$1.4 billion, plus fine and interest.
Main facts

In November 2019, Vale was assessed for the collection of corporate income tax (IRPJ) and social contribution on net income (CSLL), for the base years of 2015 and 2016.

 

This charge arises from the alleged unduly deduction of costs of intermediation in the Company’s determination of the transfer pricing basis related to exports of iron, copper and manganese to its subsidiary abroad.

 

Vale’s claim was judged unfounded and Vale is currently waiting the judgment of its voluntary appeal.

Chances of loss Possible
Impact analysis in case of loss / Reasons of the relevance of the lawsuit for the Company In case of an unfavorable final administrative decision, a guarantee may be required to secure payments of the amounts under discussion.
Notes Vale was assessed for the base-year 2017 (see item 4.7 for more information). It is possible that similar tax assessments may be received in relation to other years.

 

 

 

4) Tax Injunction No. 0021378-63.2018.4.01.380
Court Regional Federal Court of the 1st Region
Instance Appellate Court
Filed on June 5, 2018
Parties Federal Government (plaintiff) and Vale S.A. (defendant) and others.
Amounts, goods or rights involved The request deals with the seizure of assets and unavailability rights in order to secure the payment of tax and social security credits in the amount of approximately R$ 11 billion (as of June 2018).
Main facts

The Federal Government requested before the 27th Federal Court of Belo Horizonte, that Samarco shareholders' assets and rights become unavailable, as a precautionary measure to secure the payment of alleged tax and social security debts of Samarco, in the amount of R$ 11 billion (as of June, 2018).

 

Initially, an injunction was granted to seize Vale's assets and rights. This decision was reversed in all relevant aspects, because the enforceability of the debts covered by the injunction had been suspended under Brazilian law.

 

Vale’s summons was attached to the case record in January 2019, and the Company filed its defense in a timely manner. The defense was based on the lack of legal grounds for the filing of such lawsuit, in view of the suspended enforceability of the tax and social security debts, as well as in the non-occurrence of the legal hypotheses that would authorize Vale to be held liable for paying the amounts in question.

 

In May 2019, a favorable judgment was rendered for the dismissal of the case without prejudice, due to lack of interest in the suit. The Federal Government filed a Motion for Clarification against such decision.

 

In June 2019, a decision was issued that partially accepted such Motion for Clarification solely to restrict the confidentiality of documents attached to the records.

 

In July 2019, the Federal Government filed an appeal against that decision, and Vale presented its briefs. Vale is waiting judgment of the Federal Government’s appeal.

Chances of loss Possible
Impact analysis in case of loss / Reasons of the relevance of the lawsuit for the Company Seizure of assets and unavailability rights in order to secure the payment of tax and social security credits in the amount of approximately R$ 11 billion (as of June 2018).
Notes Not applicable.

 

 

 

5) Administrative Proceeding No. 16682.721173/2013-04
Court Higher Chamber of Tax Appeals of the CARF
Instance 3rd Administrative Instance
Filed on November 14, 2013
Parties Federal Government (plaintiff) and Vale (defendant).
Amounts, goods or rights involved R$ 1.85 billion (as of December/2020)
Main facts

Vale was assessed by the Brazilian Internal Revenue Service for the collection of an isolated fine due to alleged omissions and inaccuracies in magnetic files in the delivery of accessory obligations related to PIS and COFINS from 2008 to 2010, based on IN/RFB 86.

The collection considered as basis for calculation 1% of the gross revenue in the years 2008 to 2010.

A favorable decision was rendered at the first administrative level, which reduced the percentage of the fine on gross revenue from 1% to 0.2%.

At the second administrative level, Vale obtained another favorable decision, which maintained the fine percentage of 0.2% and limited the taxable basis so that only the billing for the month prior to the delivery of the magnetic files is considered.

The Federal Government filed an administrative appeal against this decision, which is pending judgment.

Chances of loss Possible
Impact analysis in case of loss / Reasons of the relevance of the lawsuit for the Company In the event of an unfavorable final administrative decision, Vale will have the opportunity to present a guarantee in order to continue the proceeding at the judicial level.
Notes Not applicable.

 

6) Infraction Notice no. 16682.721.163/2020-90
Court Regional Judgment Office (“DRJ”)
Instance 1st Administrative Instance
Filed on November 24, 2020
Parties Federal Government (plaintiff) and Vale (defendant)
Amounts, goods or rights involved R$ 2.3 billion (as of December/2020)
Main facts

In November 2020, Vale was assessed for the collection of R$2.3 billion in IRPJ and fines for the base years 2016 and 2017, related to the disallowance of the CSLL deduction from taxable income.

 

Vale contested the tax assessment in the first administrative instance, which is awaiting judgment.

Chances of loss Possible
Impact analysis in case of loss / Reasons of the relevance of the lawsuit for the Company In the event of an unfavorable final administrative decision, Vale will have the opportunity to present a guarantee in order to continue the proceeding at the judicial level.
Notes See Item 4.3 sub-item 1 above.

 

 

 

(iii) Civil

 

As of December 31, 2020, the Company's consolidated financial statements were provisioned with R$ 1.354 billion to cover possible losses in civil actions.

 

The tables below present an individual description of the civil cases deemed relevant for the business of the Company and/or of its controlled companies, filed up to December 31, 2020.

 

 

1) Case no. 0063023-34.2008.8.19.0001
Court 41st Civil Court of the State Appellate Court of Rio de Janeiro
Instance Trial Court
Filed on Mar 17, 2008
Parties Vale (plaintiff) and the Landless Workers’ Movement (“MST”) (defendant)
Amounts, goods or rights involved Protection of the Company’s assets and guarantee of its operational activities.
Main facts

Vale filed a lawsuit with the purpose of ceasing violent acts of violation or incitement by the MST that would cause the halting of the Company’s operational activities. The request for interlocutory relief was granted so as to determine that the MST refrain from such acts. The MST failed to comply with said judicial order, reason why Vale requested an increase to the fine established in case of non-compliance, which was granted by the court.

 

In 2012, the parties initiated efforts towards a possible settlement for the resolution of this case. On July 06, 2015, an order was published determining that the parties should state whether they were in fact interested in entering into an agreement, it being no longer possible for the parties to request the suspension of the case.Production of evidence phase started. By reason of the recent non-compliance with the judicial order that granted the interlocutory relief on the case, Vale requested a new application and increase to the fine previously established.

 

On September 30, 2016, the case left the sentencing group because the judge found that part of the order had not been complied with. Following that, the judge ordered the Plaintiff to request the collection of costs for the expedition of the letters rogatory intended to collect the testimony of the witnesses he called, a decision published on October 19, 2016.

 

On October 26, 2016, Vale filed the petition declining from the testimonial evidence due to the long time elapsed since the filing of the lawsuit, requesting the confirmation of the preliminary injunction granted in 2008 and the granting of the claim of the initial pleading, as well as the increase to the fine for failure to comply with the interlocutory relief, in view of the new non-compliances reported in the record.

 

On February 15, 2018, a judgment was entered in the record and, thus, Vale’s claim was granted to determine that the defendants abstain from inciting and promoting the practice of violent acts against the facilities of the plaintiff, as well as acts that might cause the interruption of the plaintiff company’s activities, within 72 hours counting from the disclosure of the judgment, under penalty of a fine of R$ 100,000.00 per act practiced in disagreement with this precept. The judgment also confirmed the order, making it definite, observing the increase to the applied fine. The defendants were also ordered to pay the procedural costs and attorney’s fees in favor of the plaintiff’s lawyer, which were set at 10% of the amount in dispute.

 

On April 20, 2018, the notary office certified that the decision was made final and unappealable.

 

In mid-2018, the execution of the judgment was begun to receive fines, costs and fees for loss of suit, and, on February 26, 2019, the issuance of a letter rogatory for subpoena and summons of the enforced parties was deferred, not having been dispatched.

 

On May 14, 2019, the Letter Rogatory is received at the TJ/SP and returns to the TJ/RJ in September 2019 with a negative result. As a result, the issuance of a new letter was requested, which has been granted.Such letter rogatory was issued on September 23, 2020.

Chances of loss Remote
Impact analysis in case of loss / Reasons of the relevance of the lawsuit for the Company The case was initiated with the purpose of guaranteeing the protection of the Company’s assets and its operational activities. Any unfavorable decision might increase the company’s exposure to the incitement acts of the MST.
Notes Not applicable.

 

 

 

2) Case no. 0009362-71.1997.4.02.5001
Court 5th Panel of the Regional Federal Court of the 2nd Region
Instance 2nd instance
Filed on November 10, 1997
Parties Public Prosecutors’ Office of Espírito Santo (plaintiff) and Federal Government, Gerdau Açominas S.A., Companhia Siderúrgica de Tubarão, Usinas Siderúrgicas de Minas Gerais S.A., Vale, Odacir Klein, Luis Andre Rico Vicente, Jorge Eduardo Brada Donato, José Armando Figueiredo Campos, Rinaldo Campos Soares, João Jackson Amaral, Claudio José Anchieta de Carvalho Borges, Ivo Costa Serra, and Companhia Docas do Espírito Santo (CODESA) (defendants).
Amounts, goods or rights involved Incalculable – Request to annul the port concession contract for Tubarão Complex’s terminals.
Main facts

This is a public-interest civil action that seeks to annul the authorization by which Vale and some of the other defendants operate Praia Mole Port Terminal in the state of Espírito Santo.

 

In November 2007, 10 years after the case was filed, a sentence was issued, deeming the case to be completely groundless and recognizing the validity of the concession contracts that permit the use of the port terminals located at Praia Mole.

 

On July 03, 2012, the judgment was upheld by the Regional Federal Court of the 2nd Region (TRF2) when judging an appeal filed by the Federal Prosecution Office. The latter, unhappy with the decision of the TRF2, filed a Special (STJ) and Extraordinary (STF) Appeal on October 23, 2012. Judgment of Special Appeal no. 1534854/RJ is pending before the STJ. Case under advisement for judgment since June 14, 2019.

Chances of loss Remote
Impact analysis in case of loss / Reasons of the relevance of the lawsuit for the Company Incalculable value, as it could impact Vale’s operations in the State of Espírito Santo, since this proceeding challenges the validity of the concession agreement for the exploitation of the Tubarão Complex Terminals.
Notes Not applicable.

 

 

 

3) Case no. 0024892-89.2011.8.13.0570
Court 1st Civil Court of the Judicial District of Salinas, Minas Gerais
Instance Trial Court
Filed on Sept 14, 2011
Parties Minas Gerais State Public Prosecutors’ Office (“MPMG”) (plaintiff); Vale S.A., Instituto de Terras de Minas Gerais (“ITER”), Manoel da Silva Costa Junior, Evandro Carvalho, Mauro Eurípedes Rocha Mendes, Ricardo de Carvalho Rocha, Luciana Rocha Mendes, Orozino Marques de Carvalho, Adelzuith Marques Santos, Altemar Alves Ferreira, and Breno Rodrigues Mendes (defendants).
Amounts, goods or rights involved Compensation for damages to the state government of Minas Gerais amounting to at least R$200 million, a civil fine of no less than R$600 million, and the ownership of lands acquired by Vale. However, it should be noted that these sums were attributed by the Plaintiff, and it is not possible at this time to estimate the possible amount to be settled by the Company.
Main facts

This is a public-interest civil action filed by the State Public Prosecutors’ Office against Vale and 10 other defendants. In short, the Public Prosecutors’ Office argues for the existence of an “organized group of people who have acted to illegally appropriate lands belonging to the state government of Minas Gerais.” The Public Prosecutors’ Office requested an injunction to seize the assets of the defendants, except Vale, up to the sum of R$200,000,000, to carry out a search and seizure of movable assets, and to remove their banking and tax confidentiality. The injunction was granted by the court and upheld by the Minas Gerais Court of Appeals. In the end, the Public Prosecutors’ Office requested the following: “the suspension of all effects – and consequent annulment – of all titles of legitimate agricultural use issued by ITER involving lands located in the municipalities of Salinas, Santa Cruz de Salinas, Padre Carvalho, Fruta de Leite and Rubelita, in the period between January 2007 and August 2011”; an order for ITER “to hire a specialized company, at its own expense, to carry out an audit of all the titles of legitimate agricultural use issued by the state government of Minas Gerais in the period between January 2007 and August 2011”; to condemn all the defendants “to the loss of illegally gained goods or sums”; to “provide full compensation for the harm imposed on the state government of Minas Gerais, whose minimum value must be R$200,000,000”; to levy a “civil fine of no less than R$600,000,000”; to “remove their public functions and positions”; to “suspend their political rights”; and to “prohibit them from entering into contracts with the public authorities or receiving benefits from them.”

 

Vale presented its defense (challenge) on March 15, 2012, but the fact-checking stage has not yet begun. On March 23, 2017, a conflict of jurisdiction was claimed. On May 8, 2017, the Judge raised a "positive conflict of jurisdiction", which is why the TJMG established the conflict of jurisdiction No. 0238729-84.2017.8.13.0000, defining the jurisdiction of the Judge of the 1st Civil Court of the Judicial District of Salinas to adjudicate the public-interest civil action.

 

On October 26, 2018, the Motion for Clarification filed by Vale was not accepted, which refuted the removal of the preliminary indictees, and a review was not filed due to the prohibition of art. 1015 of CPC/15. In any case, the Judge deferred the probation delay and the possibility of defining the object of the investigation to be performed at the time of the Instruction and Judgment Hearing, not causing damages to the Company. On May 3, 2019, the case was closed for dispatch.

 

A Pretrial Hearing, assigned for September 14, 2020, was cancelled due to the COVID-19. Reassignment is currently awaited.

Chances of loss Possible
Impact analysis in case of loss / Reasons of the relevance of the lawsuit for the Company Harm to the Company’s image by having its name associated with the practice of fraudulent appropriation of lands in the northern part of the state of Minas Gerais, the cancellation of land acquisitions, and the loss of sums paid by Vale (approximately R$35.0 million).
Notes Not applicable.

 

 

 

4) Extraordinary Appeal – 808621
Court Federal Supreme Court
Instance Superior
Filed on May 15, 2014
Parties Interunion Capitalização S.A. (plaintiff) and others; Companhia Paulista de Ferro Ligas (CPFL) (defendant)
Amounts, goods or rights involved R$ 1,890,847,736.83 (as of December 31, 2020)
Main facts

Interunion filed an enforcement procedure against Vale subsidiary CPFL to demand R$248,968,222.18, corresponding to 200 bonds that were the subject of a contract that despite being titled “Purchase and Sale of Bonds,” was in fact a bond lease contract. The defense (motion to stay execution) presented by CPFL was rejected, leading it to file an appeal with the Bahia Court of Appeals. In judging this appeal, the Bahia Court of Appeals upheld the decision to reject the appeal. CPFL then filed a special appeal with the Superior Court of Appeals. The Superior Court of Appeals accepted CPFL’s special appeal and ordered the annulment of the enforcement process, deeming that Interunion had not adequately demonstrated the calculation of the enforced amount, which is indispensable when requesting such an enforcement process. Interunion then filed a series of appeals against the Superior Court of Appeals’ decision (a motion for clarification, an appeal against a divergent decision, an internal interlocutory appeal, and a new motion for clarification), all of which were rejected in turn. Interunion then filed an extraordinary appeal with the Supreme Federal Court. When examining this appeal’s admissibility, the Superior Court of Appeals deemed that the appeal was groundless and did not allow it to progress to the Supreme Federal Court for analysis of the case’s merits, in line with the ruling published on March 10, 2014. Interunion filed an appeal against this decision of inadmissibility, and on April 22, 2014 it was submitted to the Supreme Federal Court. The Office of the Prosecutor General then issued an opinion, ruling that the extraordinary appeal should not be allowed to proceed.

 

After this opinion was issued by the Office of the Prosecutor General, a single-judge decision was handed down, rejecting the extraordinary appeal, published on August 30, 2016. On September 5, 2016, Interunion filed an internal interlocutory appeal against the single-judge decision. On September 13, 2016, permission was granted for the defendant to present its counterarguments. The appeal was judged on October 4, 2016. On the same date, in a subsequent act, the records were concluded with the Justice Rapporteur and are pending judgment.

 

On August 7, 2017, the internal interlocutory appeal was included in a virtual list to be tried, however, Interunion, due to the relevance of the case, filed a timely petition requiring that the judgment not be given virtually. This request was accepted by Justice Rapporteur Gilmar Mendes on August 23, 2017.

 

On August 21, 2017, it was deferred emphasis on face-to-face trial of the extraordinary appeal. As a result, the records returned for completion on September 15, 2017 and remain so until then.

 

Interunion's interlocutory appeal was judged and was dismissed by unanimous vote, and its judgment was published on May 17, 2021. Against this decision Interunion filed a motion for clarification and, as a result, a period was allowed for CPFL to manifest itself, whose term expires on June 2, 2021.

Chances of loss Remote
Impact analysis in case of loss / Reasons of the relevance of the lawsuit for the Company An unfavorable decision in the case would generate financial losses to the Company.  
Notes Not applicable.

 

 

 

5) Case no. 1024354-89.2019.4.01.3800 (former no. 0069758-61.2015.4.01.3400)
Court 12th Federal Court of Minas Gerais
Instance Trial Court
Filed on Dec 17, 2015
Parties Federal government, Brazilian Environmental Protection Agency (“IBAMA”), Chico Mendes Institute, National Water Agency (“ANA”), National Mineral Production Department (“DNPM”), State Government of Minas Gerais, State Forest Institute (“IEF”), Minas Gerais Water Management Institute (“IGAM”), State Environmental Foundation (“FEAM”), State Government of Espírito Santo, State Environment and Water Resources Institute (“IEMA”), and State Water Resources Agency (“AGERH”), and together with the other plaintiffs listed above, “Plaintiffs”), and Samarco, Vale, BHPB (collectively, “Defendants”).
Amounts, goods or rights involved Amount in dispute by the Plaintiffs of R$ 23,955,160,294.89, which, updated until December 2020, represents R$ 30,572,622,732.24. Given the subject matter and progress of the case, the Company deems the sum arising from a possible condemnation to be inestimable.  
Main facts

On December 17, 2015, the Federal Government filed a public-interest civil action aimed at forcing Vale, Samarco and BHPB to take a series of urgent measures, in order to repair alleged social and environmental damage arising from the failure of Samarco’s tailings dam in the municipality of Mariana (“Fundão Dam”) and to prevent potential future environmental damage. For information on this accident, see item 7.9 of this Reference Form.

 

On December 18, 2015, a decision was handed down, granting an injunction requested by plaintiffs, in order to: (i) determine that Samarco prevents (or proves that it is already contained) the leakage of the volume of tailings that are still in the collapsed dam; (ii) order the Defendants to: (a) hire companies to immediately start evaluating the contamination of fish by inorganic substances and any potential risks caused by human consumption of these fish, and to control the proliferation of species benefiting from the manmade occurrence; and (b) carry out studies and take measures to prevent the volume of mud discharged into the Doce River from reaching the Doce River lagoon system and to protect the mineral water sources mapped by DNPM; (c) carry out studies to map the different levels of potential resilience of the impacted locations; (iii) order Samarco to make an initial deposit in court of R$2.0 billion; (iv) freeze the Defendants’ existing mining concession licenses; (v) grant an injunction to force the Defendants to present an overall social and environmental recovery plan for the Doce River Basin and the entire degraded area; and (vi) order the provision of services to the people impacted by the disaster. Within the scope of the decision in question, a daily fine of R$150,000 was also established in the event of non-compliance with each of the measures imposed on the Defendants, and a daily fine of R$1.5 million was established in the event of a delay in making the aforementioned mandatory R$2.0 billion deposit in court.

 

On January 14, 2016, Vale, Samarco and BHP filed an interlocutory appeal against the injunction, requesting the suspension of the injunction’s effects and a comprehensive reversal of it.

 

On February 5, 2016, Samarco filed a challenge, arguing there was a lack of procedural assumptions and merit, also alleging that it has already been adopting the measures intended in the action on a voluntary basis, requesting the dismissal of the claims of the initial petition, through the revocation of the interlocutory relief and the provisional remedies granted provisionally.On March 2, 2016, the Federal Government, the State Government of Minas Gerais and various other governmental authorities entered into a Transaction and Conduct Adjustment Agreement (“TTAC”), which was submitted to the court on March 7 with a request for its judicial ratification.

 

On May 5, 2016, at a hearing attended by the parties to the case and the Federal Public Prosecutors’ Office, the TTAC was registered within the Federal Court Conciliation System, an organization that is part of the structure of the Regional Federal Court of the 1st Region, and the lawsuit was suspended during the period of execution of the obligations assumed by the parties within the scope of the TTAC.

 

On August 17, 2016, the 5th Panel of the Regional Federal Court of the 1st Region declared null and void the decision that approved the TTAC and rejected the interlocutory appeals made by Vale, BHP and Samarco, while upholding the injunction granted by the 12th Federal Court of Belo Horizonte on December 18, 2015, including the freezing of the Defendants’ mining concessions, but without limiting their production and sale activities.

 

On November 4, 2016, the Federal Courts ordered the Defendants to: (i) present evidence, within 90 days, that the leakage of waste from the Fundão Dam had been definitively contained; (ii) to submit conclusive studies within six months, endorsed by the relevant environmental agencies, regarding an action plan and the feasibility of removing the mud spread along the banks of the Doce River, along its tributaries and in areas near its estuary; and (iii) to make a deposit of R$1.2 billion, within 30 days, to guarantee future remedial measures. This cash deposit of R$1.2 billion was provisionally replaced by the guarantees provided for in Preliminary Conduct Adjustment Agreement I (“Preliminary Conduct Adjustment Agreement I”).

 

On January 18, 2017, the Federal Public Prosecutors’ Office, Vale, Samarco and BHPB filed a petition to: (i) report the signing of Preliminary Conduct Adjustment Agreement I by the parties; (ii) accept the guarantees provided for in this agreement for the purpose of provisional compliance with the requirement to make the deposit specified in the injunction granted within the scope of Public-Interest Civil Action 0069758-61.2015.4.01.3400; and (iii) request the suspension of the case.

 

On January 26, 2017, a decision was handed down, suspending the procedural timeframe related to the deposit of R$1.2 billion and providing five days for the plaintiffs to express their opinion on Preliminary Conduct Adjustment Agreement I, entered into by the defendants and the Federal Public Prosecutors’ Office.

 

On March 16, 2017, a decision was issued, which: (i) partially approved Preliminary Conduct Adjustment Agreement I, ordering the suspension of the case until a further judicial decision; and (ii) accepted, for the time being, the guarantees provided for in Preliminary Conduct Adjustment Agreement I, with the condition that they would not replace or modify the order for a cash deposit specified in the injunction.

 

On June 29, 2017, a decision was issued to grant the request to extend the deadline formulated by the parties and consequently to approve a partial alteration to the TAP, granting a deadline of October 30, 2017 for the parties to present the court with the terms of the final agreement (TACF). The same decision extended the legal and procedural effects of the Preliminary Consent Decree and of the confirmatory decision dated March 16, 2017.

 

On October 31, 2017, a decision was rendered which, by granting the request submitted by Samarco, Vale, BHP and the Federal Prosecution Office, ratified a partial amendment to the Preliminary Consent Decree, granting the deadline until November 16, 2017 for the submission of the terms of the final agreement (TACF). The same decision extended the legal and procedural effects of the Preliminary Consent Decree and of the confirmatory decision dated March 16, 2017.

 

On November 20, 2017, a decision was rendered which, by granting a request submitted by Samarco, Vale, BHP and the Federal Prosecution Office, ratified a partial amendment to the Preliminary Consent Decree, granting the deadline until April 20, 2018 for the submission of the terms of the final agreement (TACF). The same decision extended the legal and procedural effects of the Preliminary Consent Decree and of the confirmatory decision dated March 16, 2017.

 

 

On May 3, 2018, a decision was rendered authorizing the hiring of the Getúlio Vargas Foundation to act in the socio-economic diagnosis of the impacts resulting from the rupture of the Fundão Dam, as a technical assistant.

 

On August 8, 2018, the Consent Decree ("TAC Governance") was approved in its entirety and the amendment term to the preliminary adjustment term (TAP) was ratified in part and with interpretative/additive opinions. In view of these ratifications, the phase of knowledge of ACP No. 0069758-61.2018.4.01.3400 was dismissed with prejudice. It should be noted that the TAC Governance consists of an instrument signed on June 25, 2018 with the Federal Prosecution Office, Public Prosecution Office of the State of Minas Gerais, Public Prosecution Office of the State of Espírito Santo, Public Defender's Office of the State of Minas Gerais, Public Defender's Office of the State of Espírito Santo and other public entities, whose purpose is (a) to change the governance process provided for in the TTAC to define and execute the programs, projects and actions that are intended to provide full compensation for damages arising from the failure of the Fundão Dam; (b) improvement of mechanisms for effective participation of those affected by the failure, and (c) establishment of a negotiation process aimed at the possible renegotiation of the programs.

 

The TTAC remains valid and the parties will continue to fulfill their obligations already provided for.

 

For additional information on the main terms and conditions of the TTAC, Preliminary Consent Decree I and TAC Governance mentioned above, see "Terms Related to the Failure of the Samarco Dam" in item 4.7 of this Reference Form.

 

On December 11, 2019, a hearing was held to present the thematic axes defined as priorities by the stakeholders, in addition to any agreements or controversial points to be considered in due course, whereby the parties submitted such divergences in relation to the interpretation and/or compliance, by Renova Foundation, of the obligations provided for in the TTAC, for judicial consideration.

 

Such thematic axes were agreed upon in addition to the mechanisms provided for in the TTAC, which had been used, for administrative discussion within the scope of the CIF and the presentation of incidents of divergence, in order to speed up the solution of divergences of a priority nature.

 

In January 2020, the following decisions were rendered in the ACP case records in reference: (i) decision that granted the extension of the deadline for statement on the hiring of Technical Advisors by January 29, 2020 at 6:00 pm; (ii) decision that has granted the request made by Samarco and Vale and has determined the immediate dispatch of an official letter to ANM, determining the lifting of judicial encumbrances that from time to time fall on the mining concessions held by the defendants; (iii) determined the service of summons upon defendants to comment on the contracting of technical advisory services to those affected by January 17, 2020.

 

Furthermore, considering that, at the hearing held on October 15, it was established the obligation of the parties involved to submit to the court the thematic axes considered as priorities, in order to expedite the execution of the reparation and indemnity programs, on January 7, 2020, the creation of the following thematic axes was instituted, to be discussed in their own case record, but being linked to the case record of this action:

 

- Priority Axis #1: Extra and intra-gutter environmental recovery - case no. 1000242-22.2020.4.01.3800;

- Priority Axis #2: Human Health Risk and Ecological Risk arising from the collapse - case no. 1000260-43.2020.4.01.3800;

- Priority Axis #3: Resettlement of Gesteira in Barra Longa - case no. 1000321-98.2020.4.01.3800;

- Priority Axis #4: Infrastructure and Development - case no. 1000398-10.2020.4.01.3800;

- Priority Axis #5: Operational return of the Risoleta Neves Hydroelectric Power Plant - case no. 1000406-84.2020.4.01.3800;

- Priority Axis No. 6: performance and monitoring edition - case no. 1000412-91.2020.4.01.3800;

- Priority Axis #7: Registration and Indemnification of those impacted by the collapse - case no. 1000415-46.2020.4.01.3800;

- Priority Axis #8: Resumption of economic activities impacted by the collapse - case no. 1000417-16.2020.4.01.3800;

- Priority Axis #9: Water Supply for Human Consumption - case no. 1000462-20.2020.4.01.3800;

 

On January 31, 2020, a decision was issued determining the creation of Priority Axis no. 10, which aims to discuss the Contracting of Technical Advisors in favor of those impacted by the Collapse (case no. 1003050-97.2020.4.01.3800).

 

On April 03, 2020, the States of MG and ES filed a petition requesting the parties to release to the States the amount of R$ 100,000,000.00, deposited at the disposal of the Court, in proportion to the extent of socioeconomic damage.

 

On April 28, 2020, Vale certified the deposit of R$ 60,460,721.71, as partial advance of compensatory measures to the damages resulting from the overload of the State Health Systems caused by the failure. On the same date, AGU, representing the ANM, presented a statement in the case records suggesting that Vale check with the ANM any pending matters of an administrative nature for the lifting of encumbrances falling under Vale's mining rights. To that end, it indicated administrative proceedings no. 00786.000089/2020-76 and 00786.001036/2018-58.

 

 

On May 21, 2020, the Renova Foundation requested that the following claims be granted: a) the amount of R$ 150 million, to be used in actions to fight COVID-19 by the States of Minas Gerais and Espírito Santo, be considered as anticipation of compensatory measures for the impacts resulting from the breach of the Fundão Dam that do not involve reparation, under the terms of Clause 232, § 1, of the TTAC; b) the aforementioned financial resources are made available through a judicial deposit, in order to ensure that the amounts are used only in the fight against COVID-19 and its impacts, with different allocations being forbidden; c) the financial resources are made available to the states of MG and ES for actions in the municipalities affected by the collapse of the Fundão dam, which can be accessed through specific and detailed projects, with gradual disbursements linked to proof of compliance with the steps of the projects/demands, as detailed specification previously submitted and after ratification; d) the details of approved projects and the use of resources are made available on the transparency portals of the respective state governments; and) the Accounting Court be asked to audit the expenditures incurred in the execution of the approved projects.

 

On May 27, 2020, the Renova Foundation requested that “the costs to be incurred by the Renova Foundation in the actions previously described to fight the pandemic, as in the case of other similar situations, should be considered to be of a compensatory nature in relation to the effects of the collapse of the Fundão dam and, therefore, discounted from the obligations provided for in the TTAC.”

 

On June 5, 2020, the Public Defender’s Offices made a statement about the petition attached by the Renova Foundation on May 27, 2020. On the same date, the States of Minas Gerais and Espírito Santo required the Renova Foundation to report on the amount spent on compensatory actions, with information on the actions, dates and individualized amounts spent, in addition to the total amount used, two States reserving the right to express an opinion on Renova's proposal after said rendering of accounts. On the same date, the Federal Prosecution Office made a statement about the petition attached by the Renova Foundation on May 27, 2020.

 

On November 8, 2020, a decision was issued determining the opening of a specific procedure for priority axis no. 11, related to the measures of the Integrated Agenda.On July 9, 2020, AGU requested that SPECIFIC REMEDY IN EXECUTION OF THE JUDGMENT against the Renova Foundation be granted, so that: a) the Renova Foundation be ordered to suspend, pending a decision by the Court, or the CIF, after the Court is aware, always preceded by the due legal process and full merit analysis, the effective cancellation of Emergency Financial Aid (“AFE”); b) if the specific remedy requested is granted, the Renova Foundation be ordered to report, on its website and by public means, the suspension of the cancellation, referring to the judicial decision, in order to stop the social panic in the affected areas; c) the Renova Foundation be ordered to present the reasons and grounds for having unilaterally adopted the initiative to cancel the AFEs; d) a transition regime be established with the application of progressive effects, in favor of legal certainty and predictability of those affected, for any and all acts that reach Renova's current or future positions regarding Programs with individual or collective effects; On July 12, 2020, a decision was rendered granting the injunction required by the AGU on July 9, 2020.

 

On July 24, 2020, an order was issued in the records ordering the opening of specific proceedings, that is, Priority Axis 12 (no. 1029406-32.2020.4.01.3800), to address IEF Ordinance No. 40/2017, which provides for the prohibition of fishing in the basin of Rio Doce River, within the limits of the State of Minas Gerais. In this regard, it was determined the production of expert evidence for the purpose of assessing the current situation of the biodiversity of aquatic fauna (ichthyofauna) in the stretch of the Rio Doce River located in Minas Gerais and, consequently, generating technical and scientific information to support decision-making regarding the restriction of fishing for native species in the region, due to the collapse of the Fundão dam. The expert evidence is being produced by AECOM.

 

On August 4, 2020, the MPF, DPMG, DPES and DPU filed a motion for clarification of the decision that has suspended the cancellation of the AFE.

 

On August 24, 2020, the requests made by the State of MG were granted and the immediate transfer of the amounts of R$ 2,762,500.00 and R $ 3,010,000.00 was determined for the full payment of the lung ventilators. Up to this date, the amount of R$ 16,832,500.00 has been raised in favor of the State of Minas Gerais, related to the acquisition of lung ventilators.On November 4, 2020, the Municipality of Mariana requested that all measures taken, consistent with the subject matter of the dispute, be previously reported to the Municipality and that it be accepted as an assistant co-party.

 

The execution of terms and agreements for conducting courses and teaching programs, delivered by FGV, to its employees has been authorized; rejecting the motion for clarification of the MPF, DPU, DPE/MG and DPE/ES, regarding the alleged contradiction between the subsistence and artisanal categories; partially accepting the motion for clarification, just to establish that any and all cuts (or suspensions) of AFE mandatorily demand, on the part of the Renova Foundation, the observance of the due legal process, consisting of prior notification, the adversary proceeding and fair hearing, followed by individualized and substantiated decision, specifying in detail the reasons that led to the conclusion;

 

On January 27, 2021, the State of Minas Gerais submitted and requested ratification of the settlement between the Renova Foundation and the IEF. On the same date, the companies requested the rejection of the Mariana Municipality's request to join the lawsuit;

 

On February 11, 2021, the State of Espírito Santo requested the transfer of R$ 167,753.95 to the Health Fund. Up to this date, the amount of R$ 66,155,311.77 has been raised in favor of the State of Espírito Santo, related to works/adjustments of Silvio Avidos Hospital and Maternity – HMSA, acquisition of hospital equipment for HEUE – State Emergency Hospital, renovation works and physical adaptations carried out at Silvio Avidos Hospital and Maternity – HMSA and the General Hospital of Linhares – HGL.

 

On February 16, 2021, AGU attached a petition alleging that the Interfederative Committee and IAJ-AGU had received information that the Renova Foundation, upon the determination of Vale and BHP, would have canceled or reduced the payment of several emergency aid in Barra Longa, Santa Cruz do Escalvado and Chopotó District (Ponte Nova).

 

On March 5, 2021, AGU petitioned to withdraw the request regarding the unilateral cancellation of the AFE. On the same date, a decision was issued granting Samarco's request and authorizing the signing of terms and agreements for courses and educational programs, delivered by FGV, to its employees and authorizing the adoption of the necessary measures for the purposes of implementing and operating SAMU Leste/Vale do Aço.

 

On March 10, 2021, AGU requested the establishment of a new Compliance Axis for TTAC and TAC-GOV, aimed at remodeling and improving the Renova Foundation. On the same date, a decision was issued granting the request and requiring the opening of specific proceedings for Priority Axis 13 (1011729-52.2021.4.01.3800). The companies filed a motion for clarification in relation to said decision, requiring the inclusion of the CIF in the scope of the preliminary diagnosis to be carried out by Kearney, in view of the integrated and symbiotic management of the work of the Renova Foundation not only by its internal instances, but by the external management performed through the CIF, in accordance with the TTAC and the Governance TAC. It is awaiting the decision on this motion for clarification. The MPF filed an interlocutory appeal against that decision.

 

On March 22, 2021, the MPF requested the suspension of case no. 1016756-84.2019.4.01.3800 (former no. 0023863-07.2016.4.01.3800) until April 27, 2021, in order to initiate, in the period, the arrangements for a possible renegotiation of the measures for full reparation of socio-economic and socio-environmental damages arising out of the collapse of the Fundão Dam.

 

The institutions have promoted several measures against the judge and the Court – such as Writ of Mandamus and Complaints – claiming the existence of alleged decisions manifestly null and harmful to those affected, as well as omissions by the Court of the 12th VFBH to consider petitions filed by the Justice Institutions and consideration of requests in the various priority axes. The key measures in this regard are:

 

- 1008894-45.2021.4.01.0000 - MPF Writ of Mandamus, MPMG and Public Defender’s Offices: Aiming, on an interlocutory relief, the immediate consideration of the statements submitted by the Petitioners, as well as by the Companies and the Renova Foundation regarding dissent in relation to the methodological proposal presented by the Getúlio Vargas Foundation ("FGV") for the execution of primary data collection work related to the health of those affected (Work Front 5 – Damage to Health Based on Primary Data).

 

- 1035333-30.2020.4.01.0000 - Writ of Mandamus (Axis 7): The MPF filed a writ of mandamus, "with a preliminary injunction against repeated abusive conduct practiced by the judges of the 12th Federal and Agrarian Court of the Judicial Section of the State of Minas Gerais, resulting in the proliferation of proceedings and decisions manifestly null and harmful to those affected by the failure of the Fundão dam", due to decisions issued under secrecy of justice in the execution of judgments under Axis 7 and/or without prior testimony of the MPF.

 

- 1008884-98.2021.4.01.0000 - Writ of Mandamus (Axis 8): MPF, MPMG and Public Defender’s Offices – Aiming, on an interlocutory relief, the immediate consideration of the petition filed by the Petitioners, on November 25, 2020, in which they requested the maintenance of silage delivery until the final examination of the matter by the 12th Federal Court of Belo Horizonte to the affected persons who requested the receipt, but whose registration was not carried out, a measure that would be essential to ensure fundamental rights belonging to those affected (rural owners) located in several territories affected by the Fundão dam failure.

 

- 1008874-54.2021.4.01.0000 – Writ of Mandamus (Axis 3) – MPF, MPMG and Public Defender’s Offices: They claim that, since July 2020, the requests made in the incident of Priority Axis No. 3 (1000321-98.2020.4.01.3800) are awaited. They argue that the judge would be acting with “partiality and selectivity” by not appreciating their statements in that Axis.

 

- 1008899-67.2021.4.01.0000 – Writ of Mandamus (Axis 7) MPF, MPMG and Public Defender’s Offices – AFE: They require the granting of interlocutory relief on a preliminary basis with the objective of compelling the Renova Foundation, under penalty of daily penalties, to refrain from interrupting or ceasing the payment of the present and future Emergency Financial Aid (AFE) for those affected who decided to adhere to the new indemnity system as a consequence of signing a full and final settlement, among other claims.

 

- 1008877-09.2021.4.01.0000 - MP and Public Defender’s Office Complaint (Axis 02) - Require the granting of an injunction to determine to the Judge of the 12th Federal Court of the Judicial District of Minas Gerais material compliance with the decision by the trial court handed down by the Honorable Federal Appellate Judge Daniele Maranhão in the case record of the interlocutory appeal no. 1010332-43.2020.4.01.0000, notifying the companies to immediately continue the reparation process, based on the studies previously prepared by AMBIOS and Grupo EPA Engenharia e Proteção Ambiental for assessment of human health and ecological risks.

 

Chance of loss Possible
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company

The process is relevant by virtue of matter and value.

 

The parties entered in the TTAC, through which it was agreed to carry out programs needed for the environmental and social restoration of the areas impacted by the accident. For more information about the TTAC, see item 4.7 of this Reference Form. In addition, the Preliminary Consent Decree I was signed with respect to the guarantees and the TAC Governance that extinguished this lawsuit. For more information, see item 4.7 of this Reference Form.

Notes Not applicable.

 

 

 

6) Case No. 0007284-81.2016.4.01.3800 (former No. 0197171-92.2015.8.13.0521)
Court 12th Federal Court of BH (2nd Civil Court of Ponte Nova - TJMG
Instance Trial Court
Filed on November 17, 2015
Parties to the proceeding Núcleo Assessoria Comunidades Atingidas Por Barragens (NACAB) (“Plaintiff”); Samarco, Vale and BHPB (together “Defendants”)
Amounts, goods or rights involved Amount in dispute of BRL 119,568,504.25, which updated until December 2020, represents BRL 153,895,639.56. In view of the subject matter and progress of the proceeding, the Company considers the amount involved in a possible adverse judgment to be incalculable.
Main facts

On November 17, 2015, the Plaintiff filed a public-interest civil action requesting an injunction to force the Defendants to submit and execute, for the region of the municipalities of Santa Cruz do Escalvado, Rio Doce and Barra Longa, along the Carmo and Doce rivers: (i) recovery programs for the permanent preservation areas and springs affected by the mud that spilled from Samarco’s failed dam; and (ii) a database of impacted people and the respective damage, including plans for immediate social assistance and compensation. In other specific areas, the demand was to carry out long-term monthly monitoring and genetic population studies of the rivers’ aquatic fauna, and then submit an emergency recovery program. A request was also made to force the Defendants to pay compensation to all the people impacted by the accident, as well as environmental damage, totaling BRL100,000,000.

 

On November 18, 2015, a sentence was issued, assigning the case to the Belo Horizonte Federal Court District.

 

On November 23, 2015, the Plaintiff filed an interlocutory appeal, requesting an injunction against the decision made, a review of the first-instance decision, and the maintenance of the case record with the State Courts. In addition, NACAB requested an interim measure to oblige the Defendants to take several measures in order to remedy the damage caused by the accident. This included the submission, within 30 days, of a recovery program for the aquatic fauna of the Doce, Carmo and Piranga rivers in the municipalities of Santa Cruz do Escalvado, Rio Doce, Barra Longa and Ponte Nova, and the provision of social assistance to victims of the accident, among other things.

 

On November 26, 2015, a decision was issued that postponed the analysis of the request for the injunction until after the analysis of the Defendants’ challenge.

 

On December 17, 2015, the rapporteur issued an order convening an extraordinary conciliation session at the Minas Gerais Court of Appeals.

 

On January 7, 2016, the Federal Government petitioned in the case record to express its agreement with the decision that ordered the referral of the case record to the Federal Court, in view of its interest in the case.

 

On February 03, 2016, due to the express interest of the Federal government, the case record was sent to the 12th Federal Court, according to article 109, I of the 1988 Federal Constitution (“Federal Constitution”).

 

On February 16, 2016, the case record was received by the 12th case Federal Court of the Judiciary Section of Belo Horizonte.

 

On July 22, 2016, a decision was issued, calling for the case to be merged into Public Civil Action 23863-07.2016.4.01.3800, and to suspend the process.

 

On March 27, 2017, a decision was published that, considering the approval granted in cases 697586120154013400 and 238630720164013800, suspended the case until subsequent judgment.

 

On May 30, 2017, the suit was suspended, as per the decision of March 27, 2017.

 

Suspension maintained by decision rendered as of February 05, 2020.

 

On the date of this Reference Form, the action was still suspended.

 

Chances of loss Possible
Analysis of impact in the case of losing the suit / Reasons this case is significant to the Company The amount in dispute demanded by the Plaintiff is BRL100,000,000. However, it should be emphasized that the suit is still on a very preliminary stage, which makes it difficult to perform a more accurate analysis of the damages, in the event of loss.  
Notes Not applicable.

 

 

 

7) 0028358-94.2016.4.01.3800 (former number 0426085-72.2015.8.13.0105)
Court 12th Federal Court of the Judicial District of Belo Horizonte (former 7th Civil Court of Governador Valadares – TJMG)
Instance Trial Court
Filed on 12/14/2015
Parties MP-MG (“Plaintiff”) and Samarco and Vale (jointly, “Defendants”)
Amounts, goods or rights involved The amount in dispute claimed by the Plaintiff is BRL6,046,597,637.06, which updated by December 2020 represents BRL 7,716,932,222.36. In view of the subject matter and progress of the proceeding, the Company considers the amount involved in a possible adverse judgment to be incalculable.
Main facts

On December 14, 2015, the MP-MG filed this public civil action, through which intends the adverse judgment of the Defendants to adoption of several measures towards the mitigation of impacts resulting from the Fundão tailings dam breach. The Plaintiff motions for, in preliminary injunction, under penalty of a daily fine of BRL 2,000,000.00 Brazilian reais, that the defendants: (i) take steps to and maintain the measures granted by Civil Public Provisional Remedy No. 0395595-67.2015.8.13.0105, which preceded this suit, therefore presenting the same object (as described below in “Observations”),(ii) create and implement and executive project to construct collection stations, bombing and adduction of water from Suaçuí Pequeno and Grande rivers up to the stations of the Serviço Autônomo de Água e Esgoto (“SAAE”) (Autonomous Service of Water and Sewage) within 12 months maximum; (iii) provide regularly to SAAE the necessary polymers to treat the water of Rio Doce until the operation of the installations for collection and catchment mentioned above; (iv) install equipment to provisional water collection and catchment of water from Suaçuí Pequeno and Grande rivers, so as to diminish the collection in Doce River, within 45 days maximum; (v) install a water treatment station, with treatment capacity of 120 liters per second, for catchment in the Capim stream, within a maximum period of 45 days (vi) all their accounts are frozen to the minimum amount BRL 100,000,000.00 Brazilian reais, and (vii) a confirmation of the preliminary injunction and indemnification for collective mental distress claim amounting to BRL 5,000,000,000.00 Brazilian reais.

 

On December 17, 2015, there was a judgment partially granting the preliminary injunction to revert the burden of proof and ruling that the Defendants shall bear the expenses for monitoring the quality of the waters of Rio Doce and of the fresh water provided to the population, under penalty of a daily fine of BRL2.000.000,00 Brazilian reais. In addition, it was determined that the preliminary injunction granted in the case record No. 0395595-67.2015.8.13.0105, including the determination of water delivery in the residences, within 48 hours, as well as the presentation of a logistics regarding the delivery of water in the residences, within 10 days, should be fulfilled.

 

The MP-MG filed an interlocutory appeal against the preliminary decision, moving the interlocutory relief of appeals, for the adoption of provisional and emergency remedies within the regions impacted by the accident. On February 17, 2016, there was the judgment suspending the processing of the mentioned interlocutory appeal. Thus, the interlocutory appeal was suspended until the entry of the final judgment in the case record of the Positive Jurisdiction Dispute filed by Samarco, aiming at settling the discussion on the jurisdiction of Federal or State Court to judge matter regarding the city of Governador Valadares. The dispute originated from the fact that there are two Public Civil Lawsuits regarding the distribution and drinkability of the water in Governador Valadares, one pending before federal court and the other before state court. The Jurisdiction Conflict was not judged, however, there is a judgment that as long as there is not a final judgment, urgent measures shall be taken by the federal court.

 

On May 10, 2016, the following were included in the case record (i) a decision by the trial court, in appellate court, rendered in the case record of the interlocutory appeal filed by the MP-MG, from January 28, 2016, establishing the submittal of the case record - as well as that of connected appeals - to the 12th Federal Court of the Judicial District of Belo Horizonte; (iii) a motion from the Municipality of Governador Valadares, of February 16, 2016, showing interest in joining the suit as Plaintiff; (iii) official letter from the Judge of the 12th Federal Court of Minas Gerais moving for the inclusion in the case record of a petition from the Federal Prosecution Office (MPF) and decision of its execution, in face of the judgment in the Jurisdiction Dispute that was pending before the STJ.

 

On May 24, 2016, the case was assigned to the 12th Federal Court.

 

On July 04, 2016, there was the answer by VALE filed, arguing lack of interest of acting by the MPMG (Prosecutors Office of Minas Gerais) in face of the measures already implemented by the defendants, as well as the fact that the water quality of rivers has already returned to the same status as previous to the accident. Vale also alleged in its defense the legitimacy to be in the passive pole of the suit, in face of the lack of causal nexus between any action of omission on its part and the accident that happened. Vale also maintains the lack of collective mental distress claim and the impossibility of reversion of the burden of proof.

 

On July 04, 2016, there was also an answer filed by Samarco, o merits reasons similar to the ones alleged by Vale.

 

On March 21, 2017, a joint decision was entered into the case record of cases no. 0069758-61.2015.4.01.3400 and 0023863-07.2016.4.01.3800, approving in part the Preliminary Consent Decree I, only referring to the socio-environmental diagnosis (to be performed by the Instituto de Tecnologia para o Desenvolvimento - LACTEC and diagnosis and monitoring of programs in course (to be performed by Ramboll Brasil Engenharia and Consultoria Ambiental Ltda., granting the suspension of other suits connected to them, in order to avoid conflicting judgments.

 

On March 29, 2017, an order was published considering the probate decision rendered in the scope of lawsuits n. 69758-61.2015.4.01.3400 and 23863-07.2016.4.01.3800, suspending the feat until further legal resolution.

 

On January 23, 2020, after the restart of the proceeding due to the request for copies, the proceeding was once again suspended.

 

 

 

Chances of loss Possible
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company MPMG attributed the value of BRL5.100.000.000,00 (Brazilian reais) to the suit. However, it should be emphasized that the suit is still on a very preliminary stage, which makes it difficult to perform a more accurate analysis of the damages, in the event of loss.
Notes Public Civil Injunction No. 0395595-67.2015.8.13.0105 refers to preparatory provisional remedy for the above described suit 0426085-72.2015.8.13.0105. Such suit was filed on November 10, 2015 by the MPMG against Samarco, before the 7th Civil Court of Governador Valadares – TJMG and later sent to the Court. Judge of the 12th Federal Court of Belo Horizonte.

 

 

 

 

8) Case No. 0043356-50.2015.8.13.0400
Court 2nd Civil Court of the County of Mariana - (returned from the 12th Federal Court of the Judicial District of Belo Horizonte)
Instance Trial Court
Filed on 12/10/2015
Parties MP-MG (“Plaintiff”) and Samarco, Vale and BHPB (jointly, “Defendants”)
Amounts, goods or rights involved The amount in dispute claimed by the Plaintiff is BRL2,343,788,000.00, which updated by December 2020 represents BRL 2,410,639,865.12. In view of the subject matter and progress of the proceeding, the Company considers the amount involved in a possible adverse judgment to be incalculable.
Main facts

On December 10 2015, the MP-MG filed a public civil action, through which it motions, under penalty of a daily fine amounting to BRL 200,000.00 (Brazilian reais), the adverse judgment of the Defendants to the (i) adoption of several measures oriented to the mitigation of impacts from the Fundão tailings dam breach, (ii) implementation of a social communication program on the activities performed, (iii) provision of health and education assistance to those impacted, and (iv) support in retrieval of assets, animals and others; retrieval of tombs and mortal remains existing in places impacted, among others.

 

The main motion aims at the conversion of the preliminary injunction into a definitive one, so as to allow the whole reimbursement of the alleged individual material damages and mental distress suffered by those impacted by the accident and payment of a Reparation Plan, which allows the social and environmental recovery in face of the damages verified resulting from the accident at the Fundão tailings dam. The MP-MG also requires the resettlement and economic and social restructuring of the impacted families, and that the effects of the decision handed down in injunction No. 0039891-33.2015.8.13.0400, which preceded this demand and in which the freezing of the amount of BRL 300,000,000.00 was granted.

 

On December 16, 2015, there was an order postponing the appreciation of the preliminary injunction for after the settlement hearing. On the same date, the MP-MG moved for the amendment of the complaint so that it includes new motions, among them: (i) the granting of interlocutory relief, (ii) payment of BRL10,000.00 as a financial contribution to the victims (iii) identification and reestablishment of the sporting groups of the affected communities and of the other leisure practices developed by the affected people, (iv) increase and pay the amount of assistance to the victims, (v) pay a financial aid to the victims that have not been directly impacted in their income, and (vi) submit an immediate and concrete action plan, among other measures.

 

On December 23 2015, a hearing was held among the parties, approved by the judge, with discussions on: (i) the allocation of families in rented houses, observing that, regarding this matter, Samarco said that it had already fulfilled spontaneously part of said measure; (ii) emergency support, and Samarco said that it was already paying a minimum wage to each person of the family who lost their income due to the accident, accrued by 20% by dependent member of the family, in addition to the amount corresponding to a food parcel per family and having undertaken to support the referred to monthly amount for twelve months, according to the conditions of the term of the hearing; (iii) payment by Samarco of (a) BRL100,000.00 by family unit that lost family members in the event, and (b) BRL10,000.00 as indemnification advancement, per family unit, for those families that suffered physical displacement, that is, had their houses destructed, regardless of having lost income from such real estate; (iv) accountability by Samarco in court of the amount spent on indemnifications and recovery of the area by January 31, 2016. A permit amounting to BRL 5,500,000.00 was issued for the payment of the values mentioned above, except for the monthly support.

 

On January 20, 2016, there was a second hearing among the parties, confirmed by the judge, where the following was discussed, in addition to individual cases: (i) the advance of BRL10,000.00 to those persons impacted by the accident, and Samarco undertaking to advance the indemnification in said amount, as settled in the previous hearing, for those individuals that lost their real estate erected in their property, which were not used as their regular living place, according to the terms settled at the hearing; (ii) the indemnification for the loss of vehicles, and Samarco undertaking to indemnify individuals that lost their vehicles; (iii) the release permit, through which Samarco agreed to release BRL1.0 million to implement the aforementioned actions.

 

On February 17, 2016, due to the express interest of the Federal government, the case record was sent to the 12th Federal Court, according to article 109, I of the Federal Constitution. Pending trial.

 

On March 28, 2016, Vale filed an answer, moving for the dismissal of the suit, without appreciation of merits, due to the lack of interest in the suit by the Plaintiff. Considering the possibility that the suit is not dismissed without resolution of merits, Vale also moved for the judgment of the inappropriateness of the motions contained in the complaint; in addition to the adverse judgment of the Plaintiff to the payment of legal costs and attorneys’ fees.

 

On July 15 2016, the Federal Prosecution Office filed a petition moving for the decline of the jurisdiction of the Federal Court to the State Court, since: (a) in the actual Interlocutory Appeal that ordered the remittance the Appellate Judge reconsidered his decision; (b) according to decision by the STJ, on June 22, 2016, on the Jurisdiction Dispute No. 144.922/MG, referring to the suit on the accident in Mariana, the Federal Justice would have jurisdiction for the demands of diffuse and transindividual rights, as well as socieconomic and socio-environmental demands, while the State Court would have jurisdiction on individual homogeneous suits, such as the ones of this suit, referring to personal damages of families impacted by the Fundão tailings dam breach.

 

On August 23, 2016, at the 12th Federal Court of the Judicial District of Belo Horizonte/MG, a judgment was awarded establishing the devolution of the case record to the Judge of the 2nd Civil, Criminal and Criminal Execution Court of the County of Mariana/MG.

 

On September 12, 2016, the MP-MG filed a motion, at the 2nd Court of the County of Mariana, moving for the following, among others: (a) the reactivation of the Lawsuit at the State Court; (b) attachment of the technical assistance process to the case record of the main lawsuit and to the provisional remedy; (c) release of the amount of BRL3.5 million, through legal order, to Cáritas Brasileira Regional MG, a non-governmental organization, responsible for starting the works of technical assistance to the victims; (d) inclusion in the case record of several documents, including the receipt of the deposit of BRL500 thousand by Samarco; (and) assignment of a new settlement hearing.

On November 28, 2016, there was a settlement hearing, when there was the ratification of a settlement among the parties.

On April 07, 2017, a settlement hearing was held at the 2nd Civil Court of Mariana, Minas Gerais.

 

On May 15, 2017, the Public Prosecution Office filed a motion for subpoena of the defendants so that they, within 5 days, would: (i) reply on their agreement regarding the analysis methodology of the events of noncompliance, (ii) include into the case record the reply to the events of noncompliance, (iii) include into the case record copies of the deeds of the real estate properties purchased for the resettlement of Bento Rodrigues and Paracatu, referring to case No. 0400.15.004335-6.

 

 

On July 19, 2017, SAMARCO filed a motion for the proposal of a methodology of submittal of response to the affected people, who direct their questions to SAMARCO/Foundation.

 

On February 6, 2018, a settlement hearing among the parties was held, where there was an agreement on the reparation guidelines referring to the right of housing of the impacted by the Fundão tailings dam breach, through a partial settlement.

 

On March 27, 2018, a settlement hearing among the parties was held.

 

On June 26, 2018, the Public Prosecution Office filed a motion, asking for the raising of the amount of BRL5,477,850.04, which shall be used to continue the work of registration of all victims of Mariana, due to the Fundão tailings dam breach, which was granted on May 14, 2018.

 

On May 3, 2018, Vale, Samarco and BHP filed a motion in response to the motion for the raising of funds filed by the Public Prosecution Office, so that such measure would depend on the submittal of specific documents by Cáritas — report on the progress of the works and accountability.

 

On August 21, 2018, a conciliation hearing was held, setting a deadline of 10 days "for companies to express their opinion on the proposal for a generic indemnification agreement presented by the MPMG”.

 

On September 27, 2018, there was a summons to the parties to express their opinion on documents joined by the MPMG (proposal for Indemnification Transaction Agreement)

 

On October 2, 2018, a new conciliation hearing was held and the transaction approved.

 

On November 29, 2018, joint petitions were joined together with a proposal for a Transaction Agreement and a statement that those who have already expressed their interest in negotiating with the Renova Foundation may contact them for final indemnification negotiations.

 

On February 19, 2019, an order was issued that approved the agreement entered into by the parties, determining the issuance of a license to collect the amount on behalf of Rodrigo Ires Vieira, representative of Cáritas Brasileira Regional Minas Gerais.

 

On March 20, 2019, the MPMG requested FGV to present in detail the scope of its socio-economic diagnosis of the damage occurred in Rio Doce Watershed.

 

Hearing was held on June 27, 2019, an opportunity at which it was stated that 1) There will be a meeting of those affected from Bento Rodrigues, to decide on the readjustment of collective resettlement, on the location of the Sewage Treatment Plant, the readjustment of projects and the destination of vacant lots, the result of which will be brought at the next hearing; 2) The defendant companies will have a common period of 15 days to comment on the compensation proposals for collective and family resettlements, presented by the Public Prosecution Office at this hearing; 3) The defendant companies will have a period of 5 days to attach the updated schedule for the resettlement of those affected (family, community and reconstructions); 4) As of this date, Cáritas Brasileira will attach to the case record of those affected the instrument of refusal of inspection, or the reason why such inspection was not carried out. For previous registrations, the defendant companies, through the Renova Foundation, may request the instrument of refusal of inspection or the reason why such inspection was not carried out, directly to Cáritas Brasileira, which will have a period of fifteen (15) days for the response; 5) The Public Prosecution Office presented the following agenda for the next hearing: Analysis of the milestone and negotiations for the new family nuclei.

 

A hearing was held on August 6, 2019, it was stated that 1) The Public Prosecution Office informed the defendant companies of the result of the Meeting of those affected, of the change in the location of the Bento Rodrigues collective resettlement ETE, in accordance with proposal "10", under the terms of the SEMAD representative; 2) Cáritas must deliver the list of those affected who wish to relocate or readjust the lots of the Bento Rodrigues collective resettlement by September 5, 2019, directly to the Renova Foundation, without prejudice to the addition of those affected who are identified later; 3) The defendant companies must submit, at the next hearing, a counterproposal of an agreement related to the resettlement of those affected, addressing the change in the location of the ETE; 4) The Public Prosecution Office suggested as the agenda for the next hearing, the milestone for creation of new family nuclei.

 

A hearing was held on September 17, 2019, it was stated that 1) The matter regarding the reallocation or readjustment of Bento Rodrigues collective resettlement lots will be discussed at a specific hearing, with individual analysis of the cases presented by Caritas Brasileira. 2) Those affected will analyze the proposal submitted by the defendant companies with regard to compensation for missing, tested area and slope for families in the collective resettlement of Bento Rodrigues and Paracatu, and must submit a response by the next hearing; 3) Those affected will analyze the proposal submitted by the defendant companies regarding the deadline for completion of the resettlement of the communities of Bento Rodrigues and Paracatu and family resettlement, and must submit a response by the next hearing; 4) The defendant companies undertake to assess and submit a response to the proposal for compensation and conversion related to family resettlement, within fifteen (15) days, in the case record and directly to the Public Prosecution Office.

 

On October 8, 2019, Samarco commented on item 4 indicated at the hearing held on September 17, 2019, striving to set the compensation and conversion criteria under the terms set out by the Renova Foundation, in line with the terms of the agreed resettlement guidelines and with the applicable civil legislation, within the principles of reasonableness.

 

On October 22, 2019, Samarco clarified the situation and destination of one of the resettlement plots, as determined at the hearing, and the relevant clarifications were provided on the list of alleged dissatisfactions with collective resettlement plots.

 

On January 7, 2020, in the records of Enforcement of the Award III (0041497-28.2017.8.13.0400), the magistrate established the deadline for fulfilling the obligation to repair the right to housing (collective resettlements, family and reconstructions) to affected by the bursting of the Fundão dam, changing the date from August / 2020 to 02/27/2021, under penalty of a daily fine of R $ 1,000,000.00. This decision was the subject of an appeal which is pending judgment by the Court of Justice of Minas Gerais.

 

On July 20, 2020, an order was issued in the ACP case record ordering the defendant companies to make payments of indemnities due to certain persons, pursuant to the collective agreement approved in this case and the out-of-court agreement approved in the pre-procedural sector of CEJUS, within 15 days.

 

On August 24, 2020, an order was published that determined the issuance of a permit for the transfer of the amounts deposited in court in the name of those affected.

 

On November 5, 2020, the companies petitioned for the issuance of an official letter to Caixa Econômica Federal to open savings accounts in the name of the minors listed in a spreadsheet presented, considering the judicial and extrajudicial agreements the determination of transfer of deposits in court of indemnity amounts made for the benefit of those affected who have completed the age of majority and have open bank accounts, and the determination to transfer the updated amount of BRL 740,000.00 deposited in court to the Renova Foundation's bank account.

 

On May 5, 2021, the MPMG requested in the Enforcement of the Award III (0041497-28.2017.8.13.0400) the provisional execution, by means of a judicial deposit, of the fine fixed in court in the amount of R $ 1,000,000.00, for day of delay in the delivery of housing, as of 02/27/2021, totaling up to that moment the amount of R $ 76,901,628.19.

 

The companies present on a monthly basis an update of the Cáritas Dossiers for the calendar month.

Chances of loss Possible
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company

The amount in dispute claimed by the MPMG is of BRL2,000,000,000.00. The terms of the agreement, however, are illiquid, which makes it difficult to specify the exact figures involved.

 

As a result of the proceeding, individual and collective judgments were sent to the same Court.

Notes Not applicable.

 

 

 

 

9) Case No. 1012518-22.2019.4.01.3800 (formerly No. 0273073-38.2015.8.13.0105)
Court 12th Federal Court of the Judicial District of Belo Horizonte (origin: 5th Federal Court of Governador Valadares - Court of Appeals of the State of Minas Gerais ("TJMG")
Instance 1st instance
Filed on 12/28/2015
Parties to the proceeding MP-MG (“Plaintiff”) and Samarco, Vale, Serviço Autônomo de Água and Esgoto (“SAAE”, and, jointly with Samarco and Vale, “Defendants”)
Amounts, goods or rights involved Amount in dispute claimed by the Plaintiff of BRL 1,000,000.00, which, updated until December 2020, represents BRL 1,276,243.71. Due to the subject matter and the current stage of the suit, the Company understands that the amount involved is incalculable, in a possible adverse judgment.
Main facts

On December 23, 2015, o MP-MG filed a civil lawsuit aiming at the adverse judgment of the Defendants (i)to submit a management plan for the solid residues from the water treatment stations in the municipality of Governador Valadares, with the adequate final destination of those residues; as well as (ii) to abstain from allocating, in any way, residues from the water treatment in any water course or in natura, until the implementation of the management plan.

 

On December 25, 2015, there was a judgment granting the motioned preliminary injunction, establishing that the Defendants should submit a solid residues management plan on water treatment stations of the Municipality of Governador Valadares and that those should abstain to allocate residues from the water treatment in any water course in natura or in opencast until the implementation and operationalization of the mentioned plan, establishing a daily fine in the event of non-compliance and establishing the reversion of the burden of proof.

 

Against this decision, Samarco and Vale filed an interlocutory appeal, which was granted a partial supersedeas.

 

On January 29, 2016, Vale filed the answer alleging being legitimate party to be on the passive pole of the complaint, since SAAE is the single responsible for the public supply of water in Governador Valadares. Due to this, it moved for the dismissal of the suit, without appreciation of merits, due to the lack of interest of action by the Plaintiff. Considering the possibility that the suit is not dismissed without resolution of merits, Vale also moved for the judgment of the inappropriateness of the motions contained in the complaint; in addition to the adverse judgment of the Plaintiff to the payment of legal costs and attorneys’ fees.

 

On February 22, 2016, SAAE filed a motion for the judgment of inappropriateness of the suit, so that the obligation to give final destination to the mud extracted after the water treatment be attributed to Vale and Samarco.

 

On May 05, 2016, o MP-MG filed impeachment to the answers submitted by the defendants.

 

On May 17, 2016, there was an order subpoenaing the defendants to indicate the evidences they intend to produce.

 

On July 05, 2016, Vale, Samarco and BHPB filed a motion in the case record for the production of additional documentary and expert evidences.

 

On September 20, 2016, Samarco filed a motion into the case record for the submittal of the suit to the 12nd Federal Court of Belo Horizonte.

 

On November 1st, 2016, the appellate decision was included in the case record, accepting the injunction of non-jurisdiction of the 5th Civil Court of the County of Governador Valadares, ordering the remittance of the case record to the 12th Federal Court of Belo Horizonte. Then, the MP-MG had right to see the case record.

 

On March 27, 2017, the appellate decision was included into the case record regarding the interlocutory appeal No. 0040043-83.2016.8.13.0000, filed by VALE, accepting the injunction mentioned, to order the submittal of the case record to the 12th Federal Court of the Judicial District of Belo Horizonte.

 

On May 31, 2017, SAMARCO motioned for the submittal of the case record to the Federal Court, notwithstanding the granting of supersedeas to the special appeal submitted by the Public Prosecution Office, motioning for the amendment of the appellate decision that recognized the jurisdiction of the 12th Federal Court of Belo Horizonte to judge the suit.

 

On March 26, 2018, an order was issued that (i) granted the requested expert evidence and appointed the expert of the judgment, (ii) ordered the subpoena thereof to, in case of acceptance, submit a proposal for fees within 05 days; (iii) after the submittal of the proposal, determined the subpoena of the defendants to deposit the expert fees within five days. The decision did not examine the requests regarding the injunction.

 

On March 07, 2019, an order was issued, determining the remittance of the case record to the 12th Federal Court in Belo Horizonte. On May 10, 2019, there was a definitive archiving and the case record was sent to the competent court.

 

On May 27, 2019, the process was reactivated and a merely administrative order was issued, informing the impossibility of assigning the case record of the PJE, with the assignment returning from the Federal Court to the State Court. Thus, the case record returned for arrangements (scanning).

 

On August 7, 2019, an order was issued by the substitute judge of the 12th Federal Court in Belo Horizonte, determining that it was its jurisdiction, as it is an action related to the accident.

 

On October 3, 2020, a decision was handed down determining the stay of the proceedings until further decision and binding to the case record No. 69758-61.2015.4.01.3400 (PJE 1024354-89.2019.4.01.3800).

 

Chance of loss Possible
Analysis of impact in the case of losing the suit / Reasons this case is significant to the Company

The Public Prosecution Office alleges that the accident of the Fundão tailings dam impacted directly the water supply in the Municipality of Governador Valadares and intends to perform a continuous evaluation of the drinkability of the water supplied in that locality.

 

The action is still at a very initial stage in order to evaluate the impacts. Notwithstanding the above, the Company also considers the suit relevant on account of the subject discussed.

Notes Not applicable.

 

 

 

 

10) Case No. 1:15-cv-09539
Court New York Federal Court
Instance United States District Court for the Southern District of New York
Filed on 07/12/2015 (First Complaint) and 29/04/2016 (“Amended Complaint”).
Parties to the proceeding Alameda County Employees’ Retirement Association and Orange County Employees Retirement System (“Plaintiffs”) and Vale S.A., Murilo Pinto de Oliveira Ferreira, Luciano Siani Pires and Gerd Peter Poppinga (“Defendants”).
Values, assets or rights involved.  Final agreement approved by the Judgment in the total amount of USD25.0 million, with the dismissal of the action.
Main facts

Vale and some of its executives were considered defendants in class actions referring to securities before the New York Federal Court, moved by investors holding American Depositary Receipts issued by Vale, base of the American federal law on securities (U.S. federal securities laws). In legal suits it is alleged that Vale made false and deceitful affidavits or did not divulge the risks and dangers of the operations of the Fundão tailings dam of Samarco and the adequacy of the related programs and procedures. The plaintiffs did not specify a value for the alleged damages, in these suits, they have only motioned for the adverse judgment of the defendants in reimbursing the damages suffered, which shall be calculated during the expertise evaluation stage.

 

On March 7, 2016, the relevant judge in class actions related to securities ordered the consolidation of those actions and assigned lead plaintiffs and attorney.

 

On April 29, 2016, the leading plaintiffs of the action motioned for a complaint amended and consolidated, which shall be the complaint in the suit.

 

On July 25, 2016, Vale filed a motion to dismiss the amended and consolidated complaint, alleging basically (i) that the cause to ask from the plaintiffs does not justify a Securities Fraud Claim; (ii) that the plaintiffs did not identify which omissions had been perpetrated by the defendants; (iii) that the plaintiffs did not demonstrated malice from the defendants in swindling the market; and (iv) that the plaintiffs did not impute any illicit act to individual defendants.

 

On March 23, 2017, the Court issued a decision dismissing the suit with respect to most of the claims filed against Vale and the defendant individuals, in addition to judging that all the requests made against the Chief Executive Officer of Vale at the time, Mr. Murilo Ferreira, and concerning the personal liability of control of defendant individuals are extinct. The small part of the suit that remains limited to some declarations regarding the risk mitigation that were part of the Sustainability Report of Vale, in 2013, and isolated declarations regarding Vale’s liability for the Fundão tailings dam breach, made during a single telephone conference, in November 2015.

 

On April 06, 2017, a Vale moved for clarifications/reconsideration asking that other motions made by the plaintiffs shall be considered extinct.

 

On April 07, 2017, a Vale submitted a schedule proposal for the next measures regarding the action. The parties agreed regarding this schedule and, on April 14, 2017 they had a meeting with the judge in order to establish future term dates.

 

At end of April 2017, the discovery stage began, during which the plaintiffs submitted initial disclosures, asking the submittal of several documents and the referral of persons that may have knowledge of facts or bear documents related to the Fundão tailings dam breach.

 

On May 05, 2017, Vale submitted its Initial Disclosures, with the referral of persons that might furnish documents or render declarations regarding to facts alleged in the lawsuit.

 

During the period from August to December 2018, there were ten depositions of witnesses indicated by the plaintiffs, and the Fact Discovery phase was finalized on December 21, 2018.

 

On April 15, 2019, there was a mediation session determined by the Court, however, it was not possible to reach an agreement. With that, the phase of production of technical evidence (“Expert Discovery”) began, with the preparation of technical opinions by the experts of the Parties, as well as the testimony of all experts (“Experts depositions”), and this phase ended in October 2019.

 

On September 27, 2019, the Court denied the motion for class certification, without prejudice.

 

On December 26, 2019, the Court issued a decision stating that the parties had reached the early stages of an agreement.

 

On February 7, 2020, the parties submitted a request for approval of a proposed settlement.

 

On February 22, 2020, the Court accepted the proposal submitted by the parties, preliminarily approving the agreement and also ordered a public hearing to be held on June 10, 2020, in which the terms and final approval of the proposed settlement will be discussed. On June 10, 2020, the final agreement was approved and homologated by the Court, and the 30-day period elapsed without any challenge or appeal, and res judicata occurred. The case has been closed.

Chances of loss The value of the agreement was fully advanced and will be fully supported by the insurance company, under the terms of the D&O policy, which is why there was no provision for this amount.
Analysis of impact in the case of losing the suit / Reasons this case is significant to the Company. Eventual loss could result in financial damages and in the image and reputation of the Company. With the final approval of the proposed agreement, the action was dismissed.
Notes Not applicable.

 

 

 

 

11) Case no. 0073114-91.2016.4.01.3800 (formerly no. 0000640-06.2016.8.08.0014)
Court 12th Federal Court of Belo Horizonte (origin: 2nd Civil Court of Colatina – Court of Justice of the State of Espírito Santo)
Instance Trial Court
Filed on 01/15/2016
Parties to the proceeding Public Prosecution Office of the State of Espírito Santo (Plaintiff) ("MP-ES") and Samarco Mineração S.A. ("Samarco"), Vale S.A. ("Company" or "Vale”), and BHP Billiton Brasil Ltda. ("BHPB") (together, "Defendants")
Amounts, goods or rights involved Amount in dispute claimed by the Plaintiff of BRL 2,343,560,742.81, which, updated until December 2020, represents BRL 2,956,073,003.77. In view of the subject matter and progress of the proceeding, the Company considers the amount involved in a possible adverse judgment to be incalculable.  
Main facts

On January 15, 2016, the MP-ES filed a public interest civil action seeking the adverse judgment of Samarco for the payment of diffuse emotional distress, due to the alleged constraints experienced by the population of the municipality of Colatina, due to the rupture of the tailings dam in the city by Mariana. For information on this accident, see item 7.9 of this Reference Form.

 

The plaintiff has filed provisional remedies, through which it intends: (i) to freeze the amount of BRL 2 billion in the Defendants’ accounts, in order to guarantee future execution; (ii) removal of the fiscal confidentiality of the Defendants; (iii) provision of documentation relevant to the accident; and (iv) communication to the CVM regarding this demand.

 

In this regard, the MP-ES requested the disregard of the corporate entity of the shareholders of Samarco, claiming that, although there is no evidence that Samarco, owner and operator of the Fundão tailings dam, is in a state of insolvency, it could happen.

 

On January 22, 2016, the MP-ES filed an amendment to the complaint, whereby it included as a beneficiary the Municipal Consumer Protection and Defense Fund, in the amount of BRL 2,000,000.00.

 

On January 19, 2016, Samarco filed an answer whereby it argued that measures to protect those impacted by the accident had already been implemented and that the financial resources were being fully used to remediate the damages caused by the accident. In addition, Samarco argued that provisional remedies were not useful to justify their acceptance, and that, in addition, they could jeopardize additional efforts to mitigate the impacts caused by the accident.

 

On February 11, 2016, the decision denying the interlocutory relief requested by the MP-ES regarding the freeze of moneys of the defendants was handed down.

 

On February 17, 2016, the MP-ES filed an interlocutory appeal (“AI") against the decision that denied the provisional remedy, requesting the freezing of BRL 2.0 billion Reais and disregarding of corporate entity of the Defendants, among other measures.

 

On March 10, 2016, the decision that postponed the analysis of the active effect sought by the MP-ES was pronounced, so that, before the decision, the Trial Court Judge was notified to provide information, as well as summoned the Defendants to produce a statement.

 

On March 23, 2016, a decision was pronounced regarding the AI filed by the MP-ES, which maintained the decision that had been appealed. Since it is a decision by the trial court; however, one must await the trial of the appeal by a panel of judges.

 

On April 19, 2016, Vale filed an answer brief to the appeal, requesting its rejection.

 

On April 25, 2016, Vale filed an answer, requesting the judgment of insufficiency of the plaintiff's claims; in addition to the adverse judgment of the Plaintiff ordering the payment of legal costs and fees, in the absence of collective emotional distress to be indemnified.

 

On June 16, 2016, the MP-MG filed an objection to the answers presented by the defendants, reiterating in full the terms of the complaint.

 

On October 3, 2016, an order was issued, attesting to the existence of a positive conflict of jurisdiction regarding claims related to the dispute, and for this reason, determined the subpoena of the MP-MG for statement on the appellate decision.

 

On November 4, 2016, a decision was rendered determining the remittance of the case record to the 12th Federal Court, in compliance with the appellate decision rendered within the scope of the interlocutory appeal No. 000320103.2016.8.08.0014, filed by the MP-MG, which accepted the preliminary argument of lack of jurisdiction raised by the defendants and ordered the remittance of the case record to the 12th Federal Court.

 

On November 23, 2016, the case record was remitted to the 12th Federal Court of Belo Horizonte.

 

On March 29, 2017, a decision was issued that, considering the homologation decision handed down in proceedings 697586120154013400 and 238630720164013800, suspended the deed until further judicial resolution.

 

In the first instance, the Defendants have already filed a defense, requesting the denial of the claim.

 

On May 30, 2017, the suspension of the proceeding was determined, in accordance with the decision rendered on March 29, 2017.

 

On February 13, 2020, after the restart of the proceeding due to the request for copies, the proceeding was once again suspended.

Chances of loss Possible
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company The financial impact can reach up to BRL 2,343,560,742.81, which was the amount in dispute given by the MP-ES. However, it should be emphasized that the suit is still on a very preliminary stage, which makes it difficult to perform a more accurate analysis of the damages, in the event of loss.
Notes Not applicable.

 

 

 

 

12) Case no. 0062888-27.2016.4.01.3800 (old number 0016395-63.2016.8.13.0521)
Court 12th Federal Court of the Judicial District of Belo Horizonte (origin: 2nd Civil Court of the Judicial District of Ponte Nova – Court of Appeals of the State of Minas Gerais ("TJMG")
Instance Trial Court
Filed on 02/18/2016
Parties to the proceeding Public Prosecution Office of the State of Minas Gerais (Plaintiff) (hereinafter referred to as “MP-MG”) and Samarco, Vale and BHP (hereinafter collectively referred to as “Defendants”)
Amounts, goods or rights involved Amount in dispute claimed by the Plaintiff of BRL 696,658,960.41, which, updated until December 2020, represents BRL 870,726,829.11.In view of the subject matter and progress of the proceeding, the Company considers the amount involved in a possible adverse judgment to be incalculable.  
Main facts

On February 17, 2016, the MP-MG filed a public-interest civil action, whereby it intends to order that Defendants adopt certain measures aimed at recovering the damages allegedly caused to the urban environmental heritage of the Municipality of Barra Longa, District of Gesteira and Village of Barretos. The MP-MG intends to determine the compliance, by the Defendants, of generic obligations to do, as well as the preventive constriction of a sum in order to "guarantee" the future performance of measures still unknown.

 

On February 19, 2016, a decision was rendered by the TJMG, granting the preliminary injunction, in order to (i) partially grant the interlocutory relief determining the fulfillment of the following obligations, under penalty of a daily fine of BRL 500,000.00: (a) of basic, structural and executive projects for the full recovery of impacted public assets, and (b) to carry out works to contain the entire Rio do Carmo river bed in the necessary stretches, (ii) to determine the blockade of BRL 500,000,000.00, and (iii) to determine the submission of an agreement proposal, if any.

 

On February 18, 2016, Samarco filed a petition, whereby (i) it requested that (a) the case be remitted to the Federal Court, given the lack of jurisdiction of the TJMG to adjudicate the case, (b) the designation of a conciliation hearing between the parties before the examination of a possible preliminary injunction, as well as (ii) it stated that Samarco has already implemented several supporting measures, in addition to the execution of a preliminary commitment instrument with the Federal Prosecution Office and the MP-MG for the creation of a fund, in the amount of R$ 1.0 billion, to repair social and environmental damages resulting from the disaster.

 

Additionally, in the context of the above-mentioned petition, Samarco already clarified that documents that demonstrate the relevant deposits and guarantees have been provided, in the amount of R$ 2.3 billion, as well as the adoption of measures aimed at repairing alleged social and environmental damages of the Fundão tailings dam's accident. Furthermore, it argued that the granting of financial constraints could have negative effects on Samarco and on the obligations assumed by it to mitigate the impacts resulting from the Mariana dam breach. Therefore, it requested the dismissal of the injunction formulated at the initial.

 

On February 23, 2016, a decision was issued that determined the maintenance of the case record in the State Court.

 

On March 1, 2016, Samarco, on petition, stated its interest in settling on the terms of the claim.

 

On March 4, 2016, Samarco filed a petition with the purpose of expressing its opinion on the decision that granted the preliminary injunction, in which it stated that it had begun the works for the reconstruction, recovery and reparation of the public assets affected by the accident, as well as contracting specialized company, called 3T Construções, to act in this action.

 

On March 17, 2016, Samarco filed a petition in which it demonstrated the full compliance with the preliminary injunction, and it is certain that all necessary emergency measures are already being executed.

 

On March 18, 2016, Vale filed a petition with the purpose of evidencing compliance with the preliminary injunction, stating that Samarco hired specialized companies to start the Barra Longa infrastructure reconstruction activities, and the projects are in the elaboration phase.

 

Against the injunction, Vale, BHP and Samarco filed an interlocutory appeal, to which supersedeas was granted.

 

On April 8, 2016, Vale filed an answer in order to demonstrate that the measures pleaded by the Plaintiff have already been spontaneously complied with by Samarco. As a result, it requested the dismissal of the case, without prejudice, given the Plaintiff's lack of interest in the suit. Considering the hypothesis of the case not being dismissed without solving the merits, Vale also requested the judgment for the defendant of the requests formulated at the initial pleading, by means of the revocation of the granted injunction, in addition to the adverse judgment of the Plaintiff for the payment of attorneys' fees and costs.

 

On May 11, 2016, the plaintiff challenged the arguments presented by the defendants, reiterating the reasons stated in the complaint.

 

On March 30, 2016, a permit was issued for the withdrawal of the frozen amounts in Samarco’s accounts.

 

On June 8, 2016, a permit was issued for the withdrawal of the blocked amounts in Vale and BHPB’s accounts.

 

On June 27, 2016, the parties were summoned to indicate the evidence they intended to produce.

 

On July 5, 2016, Vale filed a petition stating that it intends to produce parol evidence, complementary documentary evidence, expert evidence and judicial inspection. Similarly, Samarco and BHPB have manifested themselves.

 

On October 11, 2016, a decision was issued that determined the submission of the case record to the 12th Federal Court of Belo Horizonte.

 

On October 25, 2016, the case record was received at the 12th Federal Court of Belo Horizonte.

 

On March 29, 2017, a decision was published that, considering the homologation decision issued in the scope of cases nos. 697586120154013400 and 238630720164013800, suspended the act until further decision.

 

On July 6, 2017, SAMARCO filed a petition requesting the issuance of a permit to collect the amounts still uncompleted in an account linked to the proceeding.

 

On September 15, 2017, the permit for the withdrawal of the amounts in favor of SAMARCO was issued.

 

On March 21, 2018, the proceeding was suspended in accordance with the decision rendered on March 29, 2017.

 

On February 11, 2020, after the restart of the proceeding due to the request for copies, the proceeding was once again suspended.

 

On October 16, 2020, Vale petitioned for an official letter to Banco do Brasil to provide clarification on the frozen amounts. The case record has been ready for a decision since October 26, 2020.

Chances of loss Possible
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company The financial impact may reach up to BRL696,658,960.41, which was the amount in dispute as determined by the Minas Gerais Public Prosecution Office (MP-MG). It should be noted; however, that no decision on merits has yet been made in respect of the claims made in the case, which makes it difficult to analyze more precisely the losses in the event of loss.
Notes Not applicable.

 

 

 

 

13) Public Civil Action No. 1016756-84.2019.4.01.3800 (formerly No. 23863-07.2016.4.01.3800)
Court 12th Federal Court of Belo Horizonte
Instance Trial Court
Filed on 05/03/2016
Parties to the proceeding The Federal Prosecution Office (“MPF” or “Plaintiff”) and Samarco, BHPB, Vale, the Federal government, Minas Gerais and Espírito Santo States, the Brazilian Water Agency (“ANA”), the Brazilian Institute of Environment and Renewable Natural Resources (“IBAMA”), the Brazilian Department of Mineral Production (“DNPM”), the Chico Mendes Institute of Biodiversity (“ICMBio”), the Brazilian Indian Foundation (“FUNAI”), the Brazilian Health Surveillance Agency (“ANVISA”), the Brazilian Institute of Historic and Artistic Heritage (“IPHAN”), the Brazilian Bank of Economic and Social Development (“BNDES”), the State Forestry Institute (“IEF”), the Minas Gerais Water Management Institute (“IGAM”), the State Foundation of the Environment (“FEAM”), the Minas Gerais State Institute of Historic and Artistic Heritage (“IEPHA”), the State Institute of Environment and Water Resources (“IEMA”), the Espírito Santo Institute of Agricultural and Forestry Defense (“IDAF”) and the State Agency for Water Resources (“AGERH”) (together, “Defendants”).
Amounts, goods or rights involved The amount in dispute claimed by the Plaintiff is BRL 155,052,000,000.00. In view of the subject matter and progress of the proceeding, the Company considers the amount involved in a possible adverse judgment to be incalculable.
Main facts

On May 03, 2016, the MPF filed a public-interest civil action, through which it requires (i) the adoption of measures aimed at mitigating the social, economic and environmental impacts resulting from the Fundão tailings dam breach, as well as other emergency measures; (ii) adverse judgment of the Defendants for the payment of compensation to the community for the time in which it would have been impossible to enjoy a balanced environment; and (iii) adverse judgment ordering the payment of collective personal injury. The following are among the requests made: that (i) the Defendants, mutually, within 30 days, deposit in their own private fund, under their own management and inspection by certifying accountant of a specialized company, the initial value of BRL 7,752,600.000,00, which will be intended for the execution of the socio-environmental and socio-economic initial and emergency programs; (ii) the defendant companies, mutually, within 30 days, present adequate bonds in the amount of BRL 155,052,000,000.00; (iii) the defendant companies, mutually, in the event of a blocking or restrictive measure on the values of the fund, pay, within 5 business days, an amount equivalent to the amount blocked, in order to recover the minimum available net balance; (iv) a determination of the prohibition of encumbrance or alienation of the fixed assets of the Defendant companies, and the measure shall include, but not limited to, real estate, mining rights and equity interests held in the national territory; (v) the prohibition of distribution of profits by the defendant companies be ordered, either on the form of dividends, interest on own capital, or any other means; (vi) the judicial blocking of amounts derived from the profits of the companies that have not been distributed to date be ordered; (vii) the defendant companies, mutually and, in a subsidiary manner, the public entities: a) present a plan for the recovery, mitigation and social and environmental compensation of the entire environmental impact occurred as a result of the rupture of the Fundão dam, within 90 days; b) present a plan for the recovery, mitigation, compensation and socioeconomic indemnity of the entire socioeconomic impact occurred as a result of the rupture of the Fundão dam, within 90 days; (viii) the defendant companies and, in a subsidiary manner, the public entities, who pay the expenses and fees of international bodies that may be involved in the definition processes the most appropriate economic, social and environmental reparation measures, especially in the intermediation and interlocution with the affected communities; (ix) the defendant companies start and implement, as soon as the technique permits, the necessary actions to reestablish the environmental balance, restoration of the environment affected by the rupture of the Fundão dam, and recovery, compensation and indemnification for socioeconomic damages, through the programs, projects and actions comprised in the environmental recovery plan of the entire environmental impact and in the socioeconomic recovery plan previously expected and duly approved by the Government, and this obligation must fall mutually between the defendant companies, and in a subsidiary manner to the public entities; (x) the Defendants adopt effective measures capable of permanently interrupting the dragging of mining tailings still retained in the Germano Complex or accumulated on the banks of the Gualaxo do Norte, Carmo and Doce rivers to their water bodies; (xi) the Defendant companies adopt effective measures capable of ensuring the stability and safety of the remaining structures used by Samarco in the city of Mariana and, within 30 days, present: a) proof of the adoption of measures to ensure the stability of the Germano Dam, the Santarém Dam and the other structures remaining in the Fundão (Dykes 2, Sela, Tulipa and Selinha); b) plan of emergency actions to be adopted in case of rupture of structures; c) systematized update of the existing Emergency Action Plan based on a new “Dam Break” study of the Germano Dam, Santarém Dam and other remaining structures of Fundão; d) improvement of the roads indicated for the displacement of the population potentially affected in the event of a new rupture, including by paving the expected escape route for the population of Barra Longa, which connects this municipality to that of Ponte Nova (MG); (xi) the companies, within 10 days, submit a detailed plan of short-term actions, without harm to the subsequent presentation of a definitive plan, for the management of the tailings from the Fundão dam; (xii) the Defendant companies carry out the environmentally appropriate disposal of mining waste that is removed from the area affected by the rupture of the Fundão dam, with its introduction into another production chain; (xiii) the defendant companies, within 10 days, submit a detailed short-term action plan, without harm to the presentation of a subsequent definitive plan, for emergency actions for revegetation, reforestation and restoration of permanent preservation areas; (xiv) the defendant companies present, within 60 days, a preliminary diagnosis of all permanent preservation areas degraded along the marginal riverbanks of the Doce River Hydrographic Basin and, based on the diagnosis, elaborate a plan of emergency actions of its full recovery; (xvi) the defendant companies, within 30 days, initiate the execution of a plan of emergency actions for the recovery and conservation of the aquatic fauna, which must contain at least the following lines of action: a) schedule of actions for temporary restocking of affected native species; b) measures to support entities that have conserved specimens collected in the Arca de Noé Operation for the conservation of genetic material and the development of research; (xvii) that, within 30 days, the defendant companies submit and initiate the execution of a plan of emergency actions for the recovery of cultural assets of material nature and preservation of the cultural heritage of the districts of Bento Rodrigues, Paracatu de Baixo and Gesteira, as well as the Municipality of Barra Longa, following at least the following parameters: a) development and implementation, through plaintiffized professionals, of archaeological project of the affected sites; b) dissemination of the scientific knowledge already produced regarding the archaeological heritage of the affected region, which access and continuation of research was made unfeasible by the changes in relief caused by the rupture; c) execution of works of recovery of the affected cultural heritage, preferably by means of school-sites that favor the use and training of local labor; d) actions for the rescue, the generational transmission and the promotion of the cultural activities of the communities, such as parties and celebrations, traditional knowledge and techniques, workmanship and cooking; (xviii) to the defendant companies that, within 30 days, complete the process of registration of all those affected, considering for this purpose all entities, individual or legal, and communities that have suffered material or immaterial impacts as a result of the rupture of the Fundão dam, located in the municipalities bathed by the Doce, Gualaxo do Norte, Carmo Rivers, Santarém creek and estuarine, coastal and marine areas between the municipalities of São Mateus (ES) and Aracruz (ES), among others.

 

On May 9, 2016, the case record was withdrawn by the Office of the General Counsel for the Federal Government, for statement purposes. Then, the Federal Government filed for the denial of the preliminary injunction claims.

 

On June 03, 2016, a petition was filed by BHPB, requesting the denial of the MPF's preliminary injunctions without first hearing the defendants. It was basically alleged: (i) the absence of periculum in mora (danger of delay); (ii) the absence of fumus boni iuris (appearance of truth); and (iii) the existence of significant reverse risk.

 

On June 21, 2016, the State of Minas Gerais filed a petition requesting the denial of the claims for interlocutory relief made by plaintiff and requesting the dismissal of the case without prejudice due to the lack of interest in the suit by the MPF.

 

In July 2016, the Court excluded all government authorities and BNDES as defendants in this proceeding. In addition to it, the decision postponed the examination of preliminary injunctions for after the preliminary conciliation hearing and gave Samarco a notice to clarify, within 30 days, the issue of containment of the mud carried by the rains, specifying the emergency measures to be adopted.

 

On July 26, 2016, a decision was rendered granting the motion for clarification from MPF to institute a fine of BRL 150,000.00 against defendants on the ground of failure to comply with the preliminary injunction.

 

On August 10, 2016, Samarco filed a petition stating that it would comply with the preliminary injunction and take all necessary measures to reinforce the remaining structures, in addition to the containment and management of the Fundão tailings. However, it stated that, given the complexity of the necessary measures, the definitive solutions take time, so that it would be unreasonable to comply with the MPF's preliminary injunction requesting that the defendants be ordered to pay a fine and to dredge and dry the tailings existing in the region.

 

In September 2016, a preliminary conciliation hearing was held.

 

On October 05, 2016, a new hearing was held among the parties and their lawyers to determine how to hire the firms specialized in expert evidence. Moreover, the compensation program developed by the companies was submitted and will be assessed by the MPF. A new meeting was held on October 28, 2016, in which the same topics were addressed.

 

On November 11, 2016, a decision was rendered shifting the burden of proof and notifying the experts to submit their fee proposals. In addition to it, the decision gave the defendants notice to file their defenses. On January 24, 2017, Vale filed an interlocutory appeal against the decision that shifted the burden of proof.

 

 

In January 2017, Samarco, Vale and BHPB entered into two preliminary agreements with the Federal Prosecution Office regarding this public-interest civil action and the public-interest civil action under No. 0023863-07.2016.4.01.3800 filed by the Brazilian government and others.

 

The Preliminary Consent Decree I, already partially ratified, has the purpose of defining the procedures and the negotiation schedule for the execution of a final consent decree, expected to occur by June 30, 2017. This Preliminary Consent Decree I creates the basis for the conciliation of two public civil actions that seek to establish socio-economic and socio-environmental reparations and compensations for the impacts of the Fundão tailings dam breach: (i) the Public Civil Action No. 0023863-07.2016.4.01.3800, filed by the MPF (the amount indicated by plaintiff of BRL 155 billion), and (ii) the Public Civil Action No. 0069758-61.2015.4.01.3400, filed by the Federal Government, by the States of Minas Gerais and Espírito Santo, and other government officials (amount of BRL 20.2 billion).

 

The Preliminary Consent Decree I further provides: (a) the hiring of "experts" chosen by the MPF and paid for by the companies to perform a diagnosis and monitor the progress of the 41 programs of the TTAC signed on March 2, 2016 between the companies, the Federal Government and the governments of Minas Gerais and Espírito Santo and other governmental authorities; and (b) the holding of at least 11 public hearings by April 15, 2017, 05 being in Minas Gerais, 03 in Espírito Santo, and the others in the indigenous lands of Krenak, Tupiniquim Guarani, Comboios and Caieiras Velhas, with the purpose of allowing the participation of the communities in the definition of the content of the final consent decree.

 

Additionally, a second Preliminary Consent Decree was executed, which establishes a timetable for the availability of funds for the programs of reparation of the socio-economic and socio-environmental damages caused by the rupture of the Fundão Dam in the municipalities of Barra Longa, Rio Doce, Santa Cruz do Escalvado and Ponte Nova, worth BRL 200 million ("Preliminary Consent Decree II"). This Preliminary Consent Decree II was ratified by the Judge of 12th Federal Court on March 23, 2017.

 

On January 26, 2017, a decision was rendered suspending the course of the procedural deadline for the deposit of BRL 1.2 billion and opened a five-day deadline for the plaintiffs to express their opinion on the Preliminary Consent Decree I, executed between the defendants and the MPF.

 

On March 16, 2017, a decision was rendered which (i) partially ratified the Preliminary Consent Decree I and II, determining the suspension of the case until further judicial deliberation, (ii) accepted, for the time being, the guarantees provided for in the Preliminary Consent Decree I, with the caveat that they do not replace or modify the preliminary injunction order for cash deposit.

 

On July 6, 2017, a joint petition of Samarco, Vale and BHP was filed requesting the extension of the term of suspension of the case until October 30, 2017.

 

On July 17, 2017, a decision was rendered which (i) reiterated the suspension of the case to safeguard the term for challenging the Federal Prosecution Office's answer, and (ii) failed to examine the request filed by the Public Defender’s Office for the Federal Government, towards joining the suit, as it will be the subject matter of resolution in the case record of the ACP (Public Civil Action) of BRL 20 billion.

 

On October 31, 2017, a decision was rendered which, by granting the request submitted by Samarco, Vale, BHP and the Federal Prosecution Office, ratified a partial amendment to the Preliminary Consent Decree, granting the deadline until November 16, 2017 for the submission of the terms of the final agreement (TACF). The same decision extended the legal and procedural effects of the Preliminary Consent Decree and of the confirmatory decision dated March 16, 2017.

 

On November 20, 2017, a decision was rendered which, by granting a request submitted by Samarco, Vale, BHP and the Federal Prosecution Office, ratified a partial amendment to the Preliminary Consent Decree, granting the deadline until April 20, 2018 for the submission of the terms of the final agreement (TACF). The same decision extended the legal and procedural effects of the Preliminary Consent Decree and of the confirmatory decision dated March 16, 2017.

 

On August 31, 2018, a joint decision was issued that (i) deemed the phase of the acquaintance of ACP No. O069758-61.2015.340O extinct, pursuant to article 487, item III, "b" and Article 354; both of the CPC; so that it may have its juridical and legal effects; (ii) suspended ACP No. 0023863-07.2016.4.01.3800 in relation to applications not contemplated in the Term of Conduct Adjustment (TAC Governance) and Amendment to the Preliminary Adjustment Agreement - which is intended to adjust the provisions of the TAP in what concerns the activities related to the socioeconomic axis, allowing the socioeconomic diagnosis and the contracting of the technical advisory services to the affected people -, duly homologated; (iii) immediately suspended ACP No. 0023863-07.2016.4.01.3800, until the MPF and the companies, by mutual agreement, define the remaining requests, submitting them to the deliberation of this judgment. Against this decision, a clarification request was made regarding the adequacy of the TAP and its amendment. This request for clarification was received as a statement of objection only with respect to that part of the judgment that is the subject of the request for clarification.

 

On September 27, 2018, a decision was issued that (i) denied the request for intervention of the Municipality of Ponte Nova as amicus curiae or joint litigant, (ii) denied the request of the Federal Government Public Defender’s Office ("DPU”) to enter the suit as a party, allowing only its admission in the deed as amicus curiae, (iii) denied the request of the Municipality of Mariana to join the proceedings as a simple assistant or joint litigant, (iv) denied the request for intervention by the Bar Association as amicus curiae, (v) dismissed the request for intervention of the Municipality of Ouro Preto for admission to the event by means of anomalous intervention, (vi) rejected the request for intervention from the Group of Socio-environmental Studies and Research GEPSA HOMA Centro de Direitos Humanos and Companies of ORGANON Núcleo de Estudo Pesquisa e Extensão em Mobilizações Sociais and Extensão Política Economia Mineração Ambiente e Sociedade POEMAS as amicus curiae, (vii) denied the request for intervention of the Municipality of Anchieta to join in the act by means of anomalous intervention, (viii) denied the request for suspension of the effects of the decision until the judgment of the requests now ready and devoid. The decision also emphasized that the additive interpretative legal reservations imposed by the court remain valid and determined the summons of other procedural interested parties for demonstration within the legal term of the motions for clarification. Finally, the institutional adhesion of the Prosecution Office of the State of Espírito Santo, the DPU of the Office of the Public Defender of the State of Minas Gerais and the Office of the Public Defender of the State of Espírito Santo to the Preliminary Adjustment Term (TAP) was homologated, so that it makes the legal effects. Following and in fulfillment of the decision of sheets 13884, it was determined the suspension of this suit until further judicial deliberation.

 

On April 27, 2020, the MPF reiterated the terms of the statement dated April 1, 2020 and reported that the restriction to data that the Renova Foundation has imposed on experts is not just limited to access to data from dashboards, but also to all information necessary to carry out the monitoring and diagnosis of the damage caused by the Fundão tailings dam breach.

 

On June 25, 2020, the defendants spoke jointly in the case record about the methodology and process of implementation of health studies, which addresses the item "Work Front 5 - Health Damage From Primary Data" of Proposal 3 and 4 EDTs - 12/30/2019". They requested for a hearing to be held aiming at conciliation and, if not obtained, that the realization of conceptual expertise be determined, through which the appropriate methodology and implementation process be defined to comply with the scope of work of the Work Front 5 of FGV's contracting, considering technical and specific clarifications to be presented in due course.

 

On June 25, 2020, in compliance with the decision that endorsed TAP, Vale requested that permission be granted to enter into a confidentiality agreement and continue with the negotiations for possible contracting of FGV Europe.

 

On August 14, 2020, the MPF spoke about the petition included in the case record by the defendants on the scope and methodology of the work of the expert Getúlio Vargas Foundation, claiming that the attitude of the companies impairs a correct assessment and diagnosis of the socioeconomic damage caused by the technological disaster caused by the Fundão tailings dam breach, in order to allow the beginning, continuity and implementation of studies on human health in this case, among them that of the Getúlio Vargas Foundation (Front 5), as conceived.

 

On August 25, 2020, on the basis of Clause 258 of the TTAC and Clause 103, paragraph 103, paragraph 103, of the TAC Governance, the defendants jointly presented an incident of divergence of interpretation in the implementation of the TTAC.

 

On September 30, 2020, the MPF, MPMG and Public Defender’s Offices expressed their opinions in the case record of the 155 bi, requesting the immediate return of the processing of the proceeding regarding the requests contained in the complaint, to address those that were not contemplated in the TAC-Gov, as well as those that have not been fulfilled, and those that have been implemented differently from the agreement, determining the subpoena of the defendant companies to express their opinions on the set of reports so far produced by their experts.

 

On October 29, 2020, the MPF requested the extension of the damage matrix set for the categories of affected persons recognized in Baixo Guandu/ES and Naque/MG in the respective enforcements of judgment of Axis 7, for all other territories affected by the Fundão tailings dam breach, qualifying the respective amounts as minimum indemnity, without requiring the signing of a full and definitive discharge term, as well as a withdrawal/waiver of indemnification claims contained in actions in progress in foreign countries.

 

On March 2, 2021, the DPU and the Rosa Fortini Alternative Center for Popular Formation included petitions in the case record alleging that the Renova Foundation has promoted mass cancellation of the AFE and requesting: the reinstatement of the full payment of all emergency financial aid cut down, in whole or in part, to quilombola families of the community of Degredo (Linhares/ES), or to the families of the municipalities of Santa Cruz do Escalvado/MG, Rio Doce/MG and Chopotó district (Ponte Nova/MG), after having suffered undue and unjustified reductions.

 

On March 10, 2021, the MPF requested the suspension of the action until April 27, 2021, with a view to starting, in the period, the negotiations for a possible renegotiation of the measures of full reparation of socioeconomic and socio-environmental damages arising from the Fundão tailings dam breach.

 

On March 19, 2021, the companies agreed to suspend the action by April 27th. The request for suspension was granted on March 25th.

 

In the same month of March 2021, the MPF filed a motion to recuse the Judge Mário de Paulo, objecting to the behavior of the Judge, which would indicate a biased conduct of the proceedings related to the reparation regarding the breach and the impossibility that the lawsuit would continue in an impartial manner, with the Judge who conducted the case so far.

 

On April 5, 2021, an order was issued acknowledging the motion to recuse, stating that the court will rule in legal time and suspending the process in accordance with article 313, item III of the Code of Civil Procedure.

 

On May 23, 2021, a decision was rendered by Judge of the 1st Region TRF, accepting the Suspicion Incident without suspensive effect, for not seeing any urgency that would justify its concession.

Chances of loss Possible
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company The process is relevant by virtue of matter and value. The parties entered into the TTAC, and subsequently the TAC Governance, through which it was agreed to carry out programs needed for the environmental and social restoration of the areas impacted by the accident. For more information about the TTAC, see item 4.7 of this Reference Form. In addition, the Preliminary Consent Decree I was signed with respect to the guarantees and the TAC Governance that extinguished this lawsuit. For further information, refer to item 4.7 of this Reference Form.
Notes Not applicable.

 

 

 

 

14) Case No. 16-CV-8800
Court New York Federal Court
Instance United States District Court for the Southern District of New York
Filed on 3/6/2017
Parties to the proceeding Holders of debt securities issued by Samarco Mineração S.A. (“Plaintiffs”), and Samarco, Vale and BHPB (collectively, “Defendants”)
Amounts, goods or rights involved Amount to be assessed during the pre-trial phase, if the appeal from the Plaintiffs is granted.
Main facts

In March 2017, the Plaintiffs filed a collective action claiming indemnification for alleged violations of bond laws and other credits related to the purchase and sale of debt securities issued by Samarco.

 

The Plaintiffs claim that Vale would have made false and misleading representations or omitted disclosures on the risks and hazards of the operations at Samarco’s Fundão dam and the adjustment of related programs and procedures.

 

After the Fundão dam rupture incident that took place in November 2015, the Plaintiff state that the bonds suffered a severe devaluation, so that the investors who had mistakenly purchased them should be indemnified.

 

On April 4, 2017, the Plaintiffs filed a petition voluntarily waiving any suits that had been raised against individual Defendants.

 

On June 26, 2017, Vale and the other Defendants collectively filed a motion to dismiss the suit.

 

On August 1, 2017, the motion to dismiss was disputed by the Plaintiffs.

 

On August 31, 2017, Vale and the other Defendants collectively filed a reply against the dispute filed by the Plaintiffs.

 

In March 2018, the judge handed down a decision that rendered the motion to dismiss as extinct without prejudice and determined that the Plaintiffs should submit an amendment of the complaint. The Plaintiffs have already submitted the amendment and on April 30, 2018 the judge defined a new schedule for the lawsuit, according to which a new motion to dismiss should be submitted on May 21, 2018 against the group of Defendants. On May 21, 2018 the Defendants submitted a motion to dismiss.

 

On October 5, 2018, there was a special hearing with the Judge, in which the parties presented verbal arguments on the case.

 

In June 2019, the Judge dismissed the case, accepting the motion to dismiss submitted by the Defendants.

 

In December 2019, the plaintiff submitted a protest informing that the decision would be appealed.

 

On March 10, 2020, the Plaintiff filed his reasons for appeal.

 

On March 20, 2020, the Defendants jointly submitted a petition to the Court of Appeals for the Second Circuit, requesting that June 8, 2020 is defined as the final date for joint submission of the answer brief for appeal, which was accepted by the Court of Appeals.

 

On June 8, 2020, the Defendants filed a response to the Plaintiff's appeal.

 

On January 13, 2021, a trial session was held to support the oral arguments by the parties.

 

On March 4, 2021, a decision was handed down by the Court of Appeals for the Second Circuit, denying the Plaintiff's appeal and thereby upholding the decision of invalidity of the Trial Court.

 

The Plaintiff did not file any appeal requesting a new judgment by the Court of Appeals, and the deadline for that measure has already elapsed. However, in theory, there is the possibility of appeal to the Supreme Court, still ongoing on the date of the filing of this Reference Form.

 

Chances of loss Remote
Analysis of impact in the case of losing the suit / Reasons this case is significant to the Company An ultimately unfavorable decision in the lawsuit could cause financial losses to the Company, as well as damage to its image.
Notes Not applicable.

 

 

 

 

15) Case No. 1002605-16.2019.4.01.3800 (formerly No. 0033942-91.2016.8.13.0400)
Court 1st Civil Court of Mariana/MG
Instance Trial Court
Filed on 09/28/2016
Parties to the proceeding Public Prosecution Office of the State of Minas Gerais (Plaintiff) (hereinafter referred to as “MP-MG”) and Samarco, Vale and BHP (hereinafter collectively referred to as “Defendants”)
Amounts, goods or rights involved Amount in dispute claimed by the Plaintiff of BRL 1,546,286.55, which, updated until December 2020, represents BRL 1,845,924.09. In view of the subject matter and progress of the proceeding, the Company considers the amount involved in a possible adverse judgment to be incalculable.
Main facts

On August 29, 2016, the Public Prosecution Office of the State of Minas Gerais filed this public civil action claiming that the suspension of Samarco’s activities might have prevented the City of Mariana from receiving the Financial Compensation for the Exploitation of Mineral Resources — “CEFEM”, which proceeds would be usually destined to health and education expenditures. This is the reason why it asks for the Defendants to be preliminarily required to make a monthly payment to the Government of the City of Mariana in the amount of BRL 1,394,308.39, corresponding to the monthly average amount of the City’s revenue from Samarco’s activities.

 

On September 12, 2017, a decision was handed down rejecting the temporary restraining order requested by the Public Prosecution Office of the State of Minas Gerais.

 

Against that decision, the Public Prosecution Office lodged an interlocutory appeal, the interlocutory relief of which was rejected (case no. 0766492-37.2016.8.13.0000)

 

On December 6, 2017, Samarco filed an answer stating that Public Prosecution Office’s request was unreasonable, since the Public Prosecution Office was not entitled to do so. Moreover, Samarco states that the payment of such compensation is not due, since its operations have been stopped.

 

On August 31, 2017, Vale submitted its answer, where it requested the litigation to be extinct, since the Public Prosecution Office is not entitled to claim any ownership rights inherent to the City of Mariana; and the requests to be judged with prejudice, as the payment of a compensation would not be applicable given the suspension of Samarco’s operations.

 

On November 7, 2017, an order was handed down summoning the parties and asking them to point out any questions of fact and law that they regarded as relevant to the judgment of the case.

 

On November 20, 2017, the petitions were filed in accordance with the order dated November 7, 2017.

 

On April 2, 2019, the case record was sent to the 12th federal court of BH.

 

Decision handed down on March 23, 2021, through which the Judge of the 12th Federal Court affirmed its jurisdiction for the judgment of the claim, emphasizing that the matter discussed through this ACP is included by the discussions held within the scope of the ACPs of 155 Bi and 20 Bi, in addition to the priority axes, thus determining the suspension of the process until further judicial resolution, subject to the possibility of continuing the action, if the particularities of the case so recommend it. Finally, it determined that the case was linked to the ACP of 20 Bi.

 

Chances of loss Possible
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company The financial impact may reach BRL1,546,286.55, which was the amount in dispute as determined by the Minas Gerais Public Prosecution Office. However, it should be emphasized that the suit is still on a very preliminary stage, which makes it difficult to perform a more accurate analysis of the damages, in the event of loss.
Notes Not applicable.

 

 

 

 

16) Case No. 0019601-77.2017.4.01.3800 (formerly No. 0041994-76.2016.8.13.0400)
Court 12th Federal Court of Belo Horizonte/MG
Instance Trial Court
Filed on 10/26/2016
Parties to the proceeding Public Prosecution Office of the State of Minas Gerais (Plaintiff) (hereinafter referred to as “MP-MG”) and Samarco, Vale and BHP (hereinafter collectively referred to as “Defendants”)
Amounts, goods or rights involved Amount in dispute by the Plaintiffs of BRL 165,968,116.41, which, updated until December 2020, represents BRL 197,674,565.67. In view of the subject matter and progress of the proceeding, the Company considers the amount involved in a possible adverse judgment to be incalculable.
Main facts

On October 26, 2016, the Public Prosecution Office of the State of Minas Gerais filed this public civil action in an attempt to have VALE, SAMARCO and BHP sentenced to recover any damages allegedly caused to speleological assets, such as shelters, grottoes, and caves.

 

On November 22, 2016, the conciliation hearing was held; however, the parties failed to reach an agreement.

 

On February 8, 2017, SAMARCO filed its answer asking for the lawsuit to be dismissed, as virtually all of the caves identified by the Plaintiff as affected are not legally protected. As for the other points, SAMARCO demonstrated the lack of evidence of the alleged damages as claimed by the Plaintiff. Moreover, Samarco asked the case record to be sent to the 12th Federal Court, given the interest of the Federal Government in this litigation.

 

On February 16, 2017, the oppositions submitted by VALE and BHP were adjoined, both of which requested the lawsuit to be dismissed.

 

On April 7, 2017, the case record was definitely sent back to the 12th Federal Court of Belo Horizonte.

 

On September 6, 2017, an order was published granting the MPF access to the case record, so that the MPF could submit its position on its entitlement to file this lawsuit.

On October 30, 2017, an order was published determining a stay of proceedings considering the decision handed down in the case record of cases no. 23863-07.2016.4.01.3800 and no. 69758-61.2015.4.01.3400.

 

On February 7, 2018, the suspension of the suit was determined, in accordance with the decision rendered on September 6, 2017.

 

On January 23, 2020, after access to the case record for copies was allowed, the case record was once again suspended.

 

Chances of loss Possible
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company The financial impact may reach BRL150,000,000.00, which was the amount in dispute as determined by MP-MG. It should be noted; however, that the lawsuit is still at a very early stage, which makes it difficult to analyze damages more precisely in the event of loss.
Notes Not applicable.

 

 

 

 

17) Case No. 1009492-23.2017.4.01.3400
Court 22nd Federal Court of the Federal District Chapter
Instance Trial Court
Filed on 8/9/2017
Parties to the proceedings Max Mauran Pantoja da Costa, Antonio Augusto de Miranda e Souza, Ronaldo Tedesco Vilardo, Silvio Sinedino Pinheiro, and Délvio Joaquim Lopes de Brito as the Plaintiffs, and Vale S.A., Valepar S.A., Banco Nacional do Desenvolvimento Econômico e Social – BNDES, BNDES Participações S.A. – BNDESPAR, Fundação dos Economiários Federais – FUNCEF, Fundação Petrobrás de Seguridade – PETROS, Caixa de Previdência dos Funcionários do Banco do Brasil – PREVI and the Federal Government, as the Defendants
Amounts, assets or rights involved Incalculable amount
Main facts

This citizen suit was filed by some FUNCEF executives and oil workers against Vale, Valepar, BNDES, BNDESPAR, the Federal Government, FUNCEF, PETROS and PREVI, with a request for an injunction, so that a suspension would be granted for: i) the conversion of Vale preferred stocks into common stocks; ii) the dismissal of the existing control block; iii) the merger of Valepar by Vale; and iv) all other acts and deliberations made at the Special General Meeting held on June 27, 2017, where the acts required for Vale to have access to the B3 Novo Mercado were approved. As for the merits, the annulment of said General Meeting was requested pursuant to the allegation that Vale’s new corporate structure and its access to the Novo Mercado would cause damage and losses to the Federal Government and the respective entities and controlled companies.

 

The injunction was rejected by the Court and as no appeal was lodged against it, it is now stabilized.

 

On January 22, 2018, Vale, on its own behalf and as a successor to Valepar, objected to the action. The other defendants then submitted their defenses.

 

On December 18, 2018, PREVI joined the lawsuit, requesting conformation in the process, since it was not yet mentioned. The plaintiffs did not file a counter-defense to the answers submitted by the Defendants, which was certified by the notary office.

 

On April 12, 2019, the Federal Public Prosecution Office filed a request with the Court to issue an official letter to the CVM, to inform the stage of Case no. 19957.006030/2017-13 before this agency, which addresses the object of this citizen suit, being the purpose of said administrative proceeding to ascertain alleged irregularities “in the process of resolution of the statutory bodies of Litel Participações S.A., Valepar S.A., and Vale S.A.”.

 

On July 4, 2019, the CVM responded to the Official Letter required by the MPF, informing about the stage of Proceeding no. 19957.006030/2017-13 and demonstrating that the investigation report stated that it was not possible, based on the plaintiff's statement, "to reach the conclusion that there was undue external interference in the process that decided for the Corporate Restructuring of the Company".

 

We inform that, according to the contact made by the Company with the CVM, said administrative proceeding is closed.

 

On October 18, 2019, after CVM's response to the aforementioned administrative proceeding before this Agency, the MPF submitted a statement to the Court giving its opinion on the judgment of the case in the state it is in, with the dismissal the plaintiff's request.

 

On March 23, 2020, a decision was rendered ordering the parties to make a statement on the opinion of the Federal Prosecution Office (MPF).

 

On May 21, 2020, Vale filed a petition reiterating the defense arguments, and reinforced the understanding of the MPF, so that the action is dismissed.

 

On September 19, 2020, a decision was handed down, ruling the action as fully groundless, thus acknowledging the regularity of all corporate acts relating to Vale's insertion in B3's Novo Mercado.

 

On September 25, 2020, motion for clarification regarding the ruling was filed by the plaintiffs, which were contested by Vale on May 27, 2021.

 

On May 20, 2021, the defendants were notified of the decision that determined the defendants' manifestation on the declaratory embargoes opposed by the plaintiffs.

 

On May 27, 2021, an objection to the aforementioned declaration embargos was presented. The Court is awaiting a decision on these embargoes.

Chances of loss Possible.
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company The lack of success in such lawsuit may cause relevant financial and reputational losses to the Company.
Notes Not applicable.

 

 

 

 

18) Cases No. 5010709-36.2019.8.13.0024 (ACP 5026408-67.2019.8.13.0024), 5044954-73.2019.8.13.0024 and 5087481-40.2019.8.13.0024
Court 2nd Court of the Public Treasury and Government Agencies of the Judicial District of Belo Horizonte 
Instance Trial Court
Filed on 01/25/2019
Parties to the proceeding State of Minas Gerais, Public Prosecution Office of the State of Minas Gerais and Public Defender’s Office of the State of Minas Gerais x Vale S.A.
Amounts, goods or rights involved

The amount in dispute of the ACP 5026408-67.2019.8.13.0024 was BRL20,000,000,000.00; however, there are illiquid orders and/or orders involving the adoption of several measures, which of course have an economic nature. The amount in dispute, adjusted for inflation until December 31, 2020, was BRL21,717,532,161.66.

 

The amount in dispute of the ACP 5044954-73.2019.8.13.0024 was BRL50,000,000,000.00; however, there are illiquid orders and/or orders involving the adoption of several measures, which of course have an economic character. The amount adjusted on December 31, 2020 was equivalent to BRL 54,293,830,404.15.

 

The amount in dispute of ACP 5087481-40.2019.8.13.0024 was BRL100,000,000,000.00; however, there are illiquid orders and / or orders involving the adoption of several measures, which of course have an economic character. The amount adjusted on December 31, 2020 was equivalent to BRL108,587,660,808.31.

Main facts

It concerns interlocutory relies of an advance nature, later amended to change in Public Civil Actions, filed by the State of Minas Gerais (5026408-67.2019.8.13.0024) and Public Prosecution Office of the State of Minas Gerais (5044954-73.2019.8.13.0024 and 5087481-40.2019.8.13.0024) against Vale SA due to the breach of tailings dam I of the Córrego do Feijão Mine in Brumadinho, and the damages caused to the environment and to the victims, aiming at the integral reparation for the environmental and socioeconomic damages resulting from the damaging event.

 

An injunction was granted in Relief 5010709-36.2019.8.13.0024 (ACP 5026408-67.2019.8.13.0024), on January 25, 2019 to determine the unavailability and freezing of BRL1,000,000,000.00 of Vale S.A. or any of its subsidiaries; as well as the execution of several emergency measures and the submission, within 48 hours, of the detailed report on the measures already taken; follow the general protocols for accidents of this nature in order to stop the volume of tailings and mud launched by the dam breach, informing weekly the activities carried out and the results obtained to the court and to the competent authorities; mapping of the different resilience potentials of the affected area, observing the thickness of the mud cap, grain size, and the pH of the material, in addition to the possible concentration of heavy materials; prevent the waste from contaminating sources of riverheads and water capture, as indicated by the DNPM, reporting on the initiatives adopted; to control the proliferation of synanthropic species (rats, cockroaches etc.) and vectors of diseases transmissible to humans and animals close to homes and communities by themselves or by a duly hired specialist.

 

There was an amendment to the complaint on January 25, 2019.

 

The following day, preliminary rulings were issued in actions 5044954-73.2019.8.13.0024 and 5087481-40.2019.8.13.0024. The first decision determined: (a) the adoption of all necessary measures to guarantee the stability of dam VI of the Feijão Mine Complex; (b) presentation of reports, every 6 hours or in the shortest time necessary, to SEMAD, the State Civil Defense and that of the municipalities at risk, and the Fire Department on the measures being taken and the situation of stability or not of Dam VI; (c) freezing of amounts found in Vale’s accounts in amounts not lower than BRL 5 billion. In case there is no available balance, it was requested the unavailability of automobiles through Renajud and real estate through dispatch of official letters to the registers of deeds of Belo Horizonte and Brumadinho.

 

While the second one defined: (a) the blocking of the amounts of R$ 5 billion of VALE's accounts, through BACENJUD system; (b) that VALE be responsible for the reception, sheltering in hotels, inns, rented properties, with the costs related to travel, transportation of movable property, people and animals, in addition to total cost of food, supply of drinking water, observing the dignity and adequacy of the places to the characteristics of each family, always in conditions equivalent to the status quo prior to the disaster, for all people who had their housing conditions compromised as a result of the disruption; (c) that people be heard about the choice of the place of shelter; (d) that the community of residents affected is provided with full assistance, and must provide a multidisciplinary team; (e) that adequate structure be made available for the reception of the relatives of victims who are missing and those already with confirmation of death, providing updated information to each family, food, multidisciplinary team support, transportation, burial expenses and all logistical and financial support requested by the families; (f) that missing persons newsletters are released, updated every six hours; and (g) that VALE weekly provides the Court with the list of families removed from their homes, places where they are sheltered, as well as a detailed report of all measures to support those affected.

 

Several court-appointed hearings were held, opportunities in which different agreements were executed between Vale and the plaintiffs, such as, for example, emergency payment for those affected, a procedure to reimburse State expenses, a work suggested by COPASA for water capture in the Paraopeba River in a different location from the current one, clearance of R$500,000,000.00 previously frozen in ACP 5026408-67.2019.8.13.0024.

 

The judgement that granted the injunction on January 25, 2019 was challenged by an interlocutory appeal, to which the grant of supersedeas was denied. Subsequently, the interlocutory appeal was partially provided, in order to determine that the amount deposited in court (R$ 500 million) is used only in cases of prior consent from the parties or a court decision. The appellate decision became final and unappealable on February 10, 2020.

 

On February 20, 2019, a conciliation hearing was held, in which the parties entered into the Preliminary Agreement for emergency payment to those affected. In these terms, Vale undertook to perform the emergency payment, in the amount of 1 minimum monthly wage for all adults, as well as 50% of this amount for adolescents and 25% for children: (a) all persons registered in the city of Brumadinho, up to the date of the failure of the Dam; (b) residents up to 1 km from the Paraopeba river bed, from Brumadinho to the city of Pompéu, at the Retiro Baixo dam. On that occasion, it was determined by the Judge of the 6th Court of Public Finance and Government Agencies of Belo Horizonte, current 2nd Court of Public Finance and Government Agencies of Belo Horizonte, the referral of the file of the first action filed by the Public Prosecutor’s Office (5044954-73.2019.8.13.0024), at the time in the process before the 1st Civil Court of the District of Brumadinho. The jurisdiction was effectively declined on March 21, 2019 and, once it was arrived at the 2nd Court of Public Finance of Belo Horizonte, ACP no. 5044954-73.2019.8.13.0024 began to process together with ACP no. 5026408-67.2019.8.13.0024.

 

On March 07, 2019, the parties entered into an “Agreement of Procedures for the Reimbursement and Supply of Emergency Measures to the State of Minas Gerais.” In this context, Vale has undertaken to reimburse the State's expenses with the remedial measures due to the failure of the dam, and contract services and provide equipment for any necessary measures.

 

On April 04, 2019, the TAC Pará de Minas as ratified, which provides for the preparation, the costing, and performance of the project and works for the construction of new systems of intake and supply of untreated water, suitable and sufficient to ensure at least flow of 284 liters per second, as a minimum, to be made available at the existing water treatment plant, located in Pará de Minas, in replacement of the abstraction that was made at Paraopeba River.

 

Subsequently, at a hearing held on May 9, 2019, Vale agreed to carry out at its expense new water intake from the Paraopeba River, indicated by COPASA, 12 km above the entity's current point of abstraction. In addition, the issuance of a R$ 500 million release permit was determined, by replacing this amount with a performance bond.

 

On June 10, 2019, the Judge of the 1st Civil Court of the District of Brumadinho, declared incompetence for the trial of the action of no. 5087481-40.2019.8.13.0024 and determined the referral of the documents to the competent court, that is, the 6th Court of Public Finance and Government Agencies of Belo Horizonte, current 2nd Court of Public Finance and Government Agencies of Belo Horizonte.

 

After the referral of the two ACPs proposed by the Public Prosecutor's Office of the State of Minas Gerais to the Court in which it proposed the ACP state, for prevention, the three ACPs have been proceeding together. Although already put into action (ACP 5026408-67.2019.8.13.0024), the antecedent interlocutory relief no. 5010709-36.2019.8.13.0024 remains active in the system. However, there are no specific applications pending for consideration in interlocutory relief, since their final claims are contained in the ACP.

 

A preliminary decision was given at a hearing held on July 9, 19, in which the merits were partially judged to, in the absence of opposition from Vale, declare its responsibility for reparation for the damages caused by the collapse. The other requests made in the initials were also appreciated, as well as the replacement of half of the blocked amount in the two ACPs proposed by the Public Prosecution’s Office of Minas Gerais (equivalent to R$ 5.5 billion) by performance bond or bank suretyship.

 

Then, the Public Prosecution’s Office of Minas Gerais and Vale filed interlocutory appeals of this decision.

 

The technical advisory services chosen by the community were approved, with the participation of the Public Prosecution’s Office, namely, AEDAS (Regions 1 and 2), NACAB (Region 3), and Instituto Guaicuy (Regions 4 and 5), at the hearings of May 21, 2019 and July 8, 2019.

 

TAC COPASA was also signed on July 8, 2019, for the purposes of monitoring AECOM on compliance with measures aimed at restoring water abstraction by COPASA for the Metropolitan Region of Belo Horizonte and other municipalities affected by the rupture. Two amendments to the instrument were subsequently approved, on September 24, 2019 and October 24, 2019.

 

On November 21, 2019, the instrument signed between the parties was ratified at the hearing, with the intervention of AECOM, IGAM and MPF, for monitoring of water management of the Paraopeba River.

 

On November 28, 2019, a decision was given at a hearing that approved the agreement signed by the parties, by which they adjusted the extension of the emergency payment agreed at TAP, for another 10 months, in which a minimum wage per adult, half minimum wage per adolescent and 1/4 minimum wage per child, for people who have been proven to reside, at the time of the breakup, in the communities of Córrego do Feijão, Parque da Cachoeira, Alberto Flores, Cantagalo, Pires and on the banks of the Ferro-Carvão Stream, as well as for those who, although they reside in locations different from those mentioned, are at that time participating in the following support programs developed by VALE: housing, social assistance, agricultural assistance, and assistance to local producers. For the other persons not contained in the above criteria and who already receive the emergency payment established at a hearing on February 20, 2019, continued payment, also for 10 months, of the amount equivalent to 50% of the amounts previously agreed.

 

On March 5, 2020, a conciliation hearing was held at which, among other issues, the working conditions of technical consultancy services, such as time and scope, and the economic and final audit of their work, to be carried out by E&Y remained adjusted. To that decision, the Company filed requests for clarification, which were partially provided.

 

On March 6, 2020, an Agreement Term was signed between VALE and the State of Minas Gerais, through which the Company agreed to make resources available, through the amounts deposited in court in these ACPs, so that the State could carry out temporary contracts for 24 months, counted from the publication of such notices of the simplified processes , to meet the increase in demand in its bodies. This agreement includes vacancies that will be filled by temporary public agents by the State of Minas Gerais, FHEMIG, IMA, FUNED, IGAM, IEF, FEAM, DER, IEPHA, EMATER and EPAMIG, as well as contractors. This term was signed on March 19, 2020.

 

Subsequently, the State of Minas Gerais requested the raising of R$ 500 million and, later, an additional R$ 1 billion, to help combat the COVID-19 pandemic. The Company agreed to the request, provided that the amounts were considered as an advance of the compensation for the damage caused by the failure of the B-1 dam, and both were deferred by the Court.

 

Hearings were held on May 14, June 23 and July 28, and the parties were in constant negotiation to solve the outstanding issues of the deal.

 

On June 22, a decision was issued ordering the parties to comment on which requests they understood to be technical evidence to be produced and for which there could be an early judgment of the merits. The plaintiffs presented their manifestation on August 25, when they filed a request, in a matter of interlocutory relief, for a freeze of R$ 26 billion in Vale's accounts, in guarantee of the reimbursement of alleged economic losses of the State. They also formulated a request for an immediate conviction of Vale in the payment of R$ 28 million in collective mental distress.

 

On July 23, 2020, the interlocutory appeals brought by the Public Prosecutor's Office and Vale against the decision of July 9, 2019 were devoid.

 

On July 28, 2020, a conciliation hearing was held in which the parties discussed issues relating to the cases, notably the supply of water to the affected population and the claims of traditional communities.

 

On September 3, 2020, a new conciliation hearing was held in which the parties discussed case-related issues, notably the online access platform provided by Vale to the Justice Institutions to obtain emergency payment data. Questions were also addressed regarding the works for the construction of a new water collection structure on the Paraopeba River. On the same date, the State filed a petition for reimbursement of expenses with temporary contracting, subject to the agreement approved by law on March 19, 2020.

 

On October 5, 2020, a decision was issued determining the transfer of resources to the cost of temporary contracts in August to the State of Minas Gerais. The Court also decided to refuse the request to freeze R$ 26 billion from Vale's accounts, considering the collaborative behavior the defendant has been showing in the process.

 

On October 6, 2020, a conciliation hearing was held in which the parties discussed the issues related to the process, specifically the supply of fresh water and water for human consumption – for which technical verification visits were designated – and the access, by technical advisory, to the information of the digital platform regarding those affected who so authorize.

 

On October 22, 2020, a mediation procedure was established before the CEJUSC-2nd degree and a conciliation hearing was held in which the present agreed to the designation of a new conciliation hearing for possible approval of an agreement to be drawn up by the parties, which shall observe the following premises: termination of requests for actions correlated with the objects of the agreement; the parties shall compose glossary for the drafting of the agreement; organised participation of the population in the draft to be presented will be ensured; agreements previously concluded in full; the ceiling of the agreement will include only actions of repair and socioeconomic compensation and environmental compensation of the damage already known; obligations to pay shall be paid immediately after the obligation has been complied with; agreement will not deal with the anticipation of administrative or criminal liability.

 

In the following days and weeks, mediation meetings of the parties were held with the CEJUSC-2nd degree of the Court of Justice of Minas Gerais for negotiations aimed at a possible global agreement.

 

On November 17, 2020, a new mediation hearing was held at CEJUSC-2nd degree in which progress in the negotiations was reported, and Vale undertook to extend emergency aid until December 30, 2020. The benefit was extended two more times before the signing of the Global Agreement: on December 9, 2020 and January 29, 2021, until the end of February 2021.

 

On November 24, 2020, a decision was issued approving the accountability submitted by the State and authorizing the deduction of the amount of R$ 7,357,249.98 in future claims for reimbursement.

 

In the following weeks, new mediation meetings of the parties were held with the CEJUSC-2nd degree of the Court of Justice of Minas Gerais for negotiations aimed at a possible global agreement.

 

On February 4, 2021, a mediation hearing was held in which the parties submitted the final draft agreement for signature and subsequent judicial approval. The Global Agreement, concluded with the State of Minas Gerais, the Public Defender's Office of the State of Minas Gerais and the Federal and Public Prosecution Office of the State of Minas Gerais has as its object the complete repair of collective environmental and social damage resulting from the failure of the B-1 dam in Brumadinho (MG), in the amount of R$ 37,689,767,329.00 (thirty-seven billion, six hundred and eighty-nine million, seven hundred and sixty-seven thousand and three hundred and twenty-nine reais). To this do so, the agreement includes an environmental recovery program, environmental compensation projects for the already known damages and socioeconomic repair projects for all collective and diffuse damage caused by the failure. Specifically in this socioeconomic aspect, the agreement includes demand projects of the affected communities (allocation of R$ 3 billion to execute projects to be defined by the affected themselves and implemented according to their decision and management of the Justice Institutions), income transfer program to the affected population (with R$ 4.4 billion) - in place of the current payment of emergency aid - and projects for Brumadinho and other municipalities affected by the Paraopeba Basin , in addition to resources for the execution, by the government of the State of Minas Gerais, of the Urban Mobility Program and the Public Service Strengthening Program. In socioenvironmental repair, the agreement establishes the guidelines and governance for the implementation, by Vale, of the Environmental Recovery Plan, as well as projects to be implemented to compensate for the already known environmental damage and projects aimed at the water security of the impacted region.

 

At the same hearing, the judge delivered a decision approving the Global Agreement, in view of providing full compensation for the damage, strengthening public services in reparation measures and centrality of those affected.

 

In the Global Agreement, the parties have ratified the various Terms of Agreement signed by Vale with the various Justice Institutions and/or the State of Minas Gerais to repair the damage caused by the collapse of Brumadinho. Among these agreements, the Term of Engagement concluded between Vale and the Public Defender's Office of the State of Minas Gerais on 04.05.2019 was ratified, in which the bases were established for the repair of individual damages caused by the disruption.

 

They were also ratified: the TAC Pará de Minas, signed on 03.15 and approved on 04.04.19; the COPASA TAC, signed on 07.08.19 and approved on 06.08.19, the Psychosocial TAC, signed on 02.18 and approved on 08.20.19; o Additive to Psychosocial TAC, signed on 07.29.19 and approved on 08.20.19; o Additive to TAC COPASA, signed on 10.21.19 and approved on 10.24.19; tac water management, signed on 13.11.19 and approved on 11.21.19; the Term of Engagement Water Resilience, signed on 02.07.20 and approved on 02.13.20; the Union TAC, signed on 13.03.19 and approved on 15.03.19 (the extension was on 13.04.20); the TAC signed at a judicial hearing on 19.06.19 (João Monlevade); the Civil Defense TAC, signed on 11.20.20; the TAC Bombeiros, signed on 17.11.2020; the Substitute Agreement Term of Environmental Penalty, signed on 07.11.19 and approved on 03.27.20; the Environmental Fine Substitute Agreement - IBAMA, signed on 07.06.20 and approved on 08.27.20; and the AECOM TAC, signed on 02.15 and approved on 04.04.19.

 

The Global Agreement also re-ractified the Agreement Term for Temporary Contracts signed on 02.28.20 and approved on 03.19.20, in view of the parties establishing a final value to be made available by Vale in compliance with the obligation, and managed by the State of Minas Gerais, as well as the Agreement for the Procedures for the Recovery and Supply of Emergency Measures to the State of Minas Gerais, signed and ratified on March 7, 2019. In addition, the Global Agreement renewed the IGAM Term of Engagement signed on 13.11.19 and approved on 11.21.19. Finally, the Global Agreement extinguished the General Fauna TAC signed on 09.23.19 and approved on 11.10.19, as well as the TAP, signed and approved on 02.20.19, with its extension of 11.28.19.

 

Due to the Global Agreement, all guarantees previously provided by VALE in the notice, including surety letter and performance bond, in addition to the blocked amounts were released.

 

The notices returned to the Trial Court on February 9, 2021, with the addition of the Global Agreement itself.

 

The appeal brought by the ANAB is dismissed and the notices are removed from all individual claims for emergency compensation payment, together with the documents attached to them.

 

On June 7, 2021, there was the certification of the res judicata of the judgment that approved the Global Agreement.

 

Chances of loss Possible.
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company With the conclusion of the Global Agreement and the full delimitation of environmental compensation and compensation for collective and diffuse socio-economic damage, the judicial discussion in the ACPs will only continue with regard to the assessment and quantification of individual damages, which have been excluded from the Global Agreement and will be the subject of the judicial investigations already designated in those ACPs.
Notes Not applicable.

 

 

 

 

19) Case no. 5012680-56.2019.8.13.0024
Court 6th Court of the Public Treasury and Government Agencies of the Court District of Belo Horizonte  
Instance Trial Court
Filed on 01/30/2019
Parties Network of Non-Governmental Organizations of the Atlantic Rainforest (“RMA”) v. Vale S.A.
Amounts, goods or rights involved The amount attributed to the case was R$30,000,000,000.00, however, there are illiquid orders and / or orders involving the adoption of several measures, which of course have an economic character. The value cited, updated until December 31, 2020, corresponded to R$ 30,966,684,000.00.
Main facts

It is a public civil lawsuit, which object is the indemnification for collective moral damages in the amount of R$30,000,000,000.00 and individual moral damages in the amounts of R$1,000,000.00 or R$500,000.00, depending on the severity of the damage. In addition, it requires the indemnification for property damage.

 

Proceeding suspended since March 11, 2019 until the trial of case no. 5010709-36.2019.8.13.0024. Proceeding re-assigned to the 2nd Court of the Public Treasury and Government Agencies of the Judicial District of Belo Horizonte, due to the termination of the judiciary unit.

 

In addition, there is a writ of mandamus filed against the decision of the court of the 6th Court of the Public Treasury and Government Agencies of Belo Horizonte, current 2nd Court of Public Treasury, which determined the suspension of the proceeding due to the previous pending lawsuit proposed by the State of Minas Gerais. Having the injunction requested under a writ of mandamus been rejected, the RMA filed an internal interlocutory appeal, an ordinary and special appeal. The internal appeal was not heard and the special appeal was dismissed. The ordinary appeal is pending judgment.

 

Chances of loss Possible.
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company Invaluable. The relevance of the lawsuits stems from the fact that it is a public civil lawsuit filed by the Network of Non-Governmental Organizations of the Atlantic Rainforest aiming at the indemnification for collective and individual moral damage, and losing the lawsuit may cause significant financial losses to the Company.
Notes Not applicable

 

 

 

 

 

20) Case no. 5000045-50.2019.8.13.0054
Court Sole Court of the Jurisdictional District of Barão de Cocais
Instance Trial Court
Filed on 02/25/2019
Parties Prosecution Office of Minas Gerais (“MPMG”), Public Defender’s Office of the State of Minas Gerais and Vale S.A.
Amounts, goods or rights involved The amount attributed to the case was R$ 20,000.00; however, there are illiquid orders and / or orders involving the adoption of several measures, which of course have an economic character. A request was granted for freezing in the amount of R$ 3,000,000,000.00, which adjusted for inflation until December 31, 2020, amounted to R$ 3,245,943,000.00.
Main facts

The generating fact of this lawsuit was the evacuation carried out by Vale at the dawn on February 8, 2019, determined by the National Mining Agency, of approximately 500 residents of the communities of Socorro, Tabuleiro, Piteiras and Vila Congo, all located in the Municipality of Barão de Cocais, downstream of the dam of the Gongo Soco Mine.

 

It is a Provisional Remedy in Antecedent Character with an Injunction Request in defense of the human rights of environmental refugees arising from the evacuation and those who suffered material and moral damages due to the risk of faliure of the tailings dam located in the municipality of Barão de Cocais.

 

On February 25, 2019, an injunction was filed seeking compensation for the damages caused as a result of the aforementioned evacuation.

 

An interlocutory appeal was filed by Vale against the decision, rendered on February 26 and March 1, 2019 (correcting a material error in the previous one), which partially granted the interlocutory relief requested in the statement of claim, with partial supersedeas to the appeal having been granted, to suspend the order to freeze R$ 3 billion.

 

After the filing of a petition by the MPMG, informing the risk of rupture of the Sul Superior Dam, a new preliminary decision was issued on March 25, 2019, determining the adoption of a series of measures to mitigate the damage deriving from the evacuation of the area. Then, the Company filed a new interlocutory appeal, which was also granted supersedeas, to override the part of the decision that determined the hiring of an entity to provide technical advisory to residents of Barão de Cocais and indemnify the residents of ZSS.

 

Interlocutory appeals were filed by the Public Prosecution Office, and another by the Federal Public Prosecution Office against the interlocutory decision, on July 17, 2019, which only partially granted the required preliminary measures. The interlocutory appeal by the Federal Public Prosecution Office was not heard, on the grounds that the body was an illegitimate party to the filing of the appeal, as it appears in the action only as amicus curiae.

 

In the main case records, the TAC signed between Vale, the Labor Prosecution Office, and the Public Prosecution Office of Minas Gerais was approved, with the dismissal of part of the requests contained in the statement of claim.

 

On November 5, 2019, a decision was issued, partly repealing the injunction issued on March 25, 2019, with regard to requests for immediate suspension of the operation of the other structures and activities of the mining complex where the Sul Superior Dam is located, to update and submit by VALE, within 72 hours, an updated dam break study, of review by VALE, within a maximum period of 5 days, of the safety factors of all the structures of the Sul Superior mining complex, of presentation by VALE, within a maximum period of 5 days, of the action plan aimed at ensuring the stability and safety of the Sul Superior Dam. In the remainder, the appellee decision was upheld. In relation to the aforementioned claims, the case was dismissed without resolution of the merits.

 

On October 26, 2020, a decision was issued determining the payment by Vale of monthly emergency aid, for an additional period of 01 year, to those affected who are displaced from their homes, as owners, owners, tenants or occupants of buildings in the Self-Rescue and Secondary Rescue Zones – in the import of 01 (one minimum wage) to each adult, 1/2 (half) minimum wage for each adolescent and 1/4 (one quarter) of minimum wage to each child, in addition to the payment of the value of a basic basket, established by DIEESE, to each family, allowing, at the end of this additional period, the reassessment of the facts and the situation of these people by the parties and the Court.

 

On November 13, 2020, a decision was given in the Interlocutory Appeal deferring the suspensive effect to the appealed decision that determined the payment of emergency aid.

 

On March 11, 2021, the decision was given determining the suspension of the case, due to the partial agreement related to the emergency payment, and mediation sessions are being held in the performed by a 2nd degree CEJUSC in the notices of n. 1.0000.19.038915-5/001-003-004-006 and 007.

Chances of loss Possible.
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company Invaluable. The relevance of the lawsuit stems from the fact that it is a public civil lawsuit filed by the Public Prosecution Office and by the Public Defender’s Office of the State of Minas Gerais, aiming at the reparation and adoption of measures in case of failure of the Gongo Soco dam, and losing the lawsuit may cause significant financial losses to the Company.
Notes Not applicable.

 

 

 

 

21) Case no. 5027434-03.2019.8.13.0024
Court 17th Civil Court of the Court District Belo Horizonte
Instance Trial Court
Filed on 02/26/2019
Parties Interstate Commission for the Defense of Human Rights and Citizenship – CIDDHC and Vale S.A.
Amounts, goods or rights involved The amount attributed to the case was R$ 8,710,000,000.00, however, there are illiquid orders and / or orders involving the adoption of several measures, which of course have an economic character. The amount adjusted on December 31, 2020 was equivalent to R$ 20,570,402,000.00.
Main facts

Public Civil Lawsuit of obligation to do c/c reparation for collective moral damages and request for interlocutory relief. It requires the intensification of the search and rescue of the bodies of the victims of the accident in the Córrego do Feijão dam.

 

On May 12, 2019, Vale filed a petition requesting the rejection of the injunction requests.

 

On May 25, 2019, Vale filed a new petition, in addition to the previous one, requesting the extinction of the deed.

 

On April 15, 2019, the Prosecution Office produced an opinion affirming that the jurisdiction for judgment of the lawsuit is of the District of Brumadinho.

 

On April 22, 2019, a decision was rendered determining the summons of the parties to manifest on the opinion of the Prosecution Office. Vale has already presented its manifestation.

 

On June 5, 2019, a CIDDHC petition was filed requesting the granting of interlocutory relief. 

 

On June 17, 2019, a decision was rendered declining jurisdiction, determining the reassignment of the case to the judicial district of Brumadinho. 

 

On August 9, 2019, a certificate was issued certifying the lack of statement by the plaintiff and the first defendant.

 

On August 13, 2019, a petition was filed informing the decision of the interlocutory appeal. 

 

On September 5, 2019, a petition was filed reinstating the request for the granting of interlocutory relief, and on November 10, 2019, a judgment was handed down dismissing the case without resolution of merit, due to the CIDDHC’s lack of standing to sue. In addition, the defendants' lack of standing to be sued and lis alibi pendens with other public-interest civil actions were recognized.

 

On December 10, 2019, CIDDHC filed an appeal, and on February 11, 2020, Vale filed its answer brief to the appeal.

 

On February 18, 2020, an order was issued upholding the decision and ordering the case records to be sent to the Court of Justice.

 

On March 4, 2020, a res judicata certificate was attached to the case records of the decision that did not hear the Interlocutory Appeal filed against the decision to decline jurisdiction.

 

On March 30th, Samarco added its answer brief to the appeal, and on April 1st, BHP added its answer brief to the appeal.

Chances of loss Possible.
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company Invaluable. The relevance of the lawsuit stems from the fact that it is a public civil lawsuit filed by the CIDDHC, aiming at a reparation and the adoption of measures due to the failure of Dams B1, BIV and BIV-A, and losing the lawsuit may cause significant financial losses the company.
Notes Not applicable.

 

 

 

 

22) Case no. 5000901-97.2019.8.13.0188
Court 2nd Civil Court of the Court District of Nova Lima
Instance Trial Court
Filed on 03/14/2019
Parties Prosecution Office, Public Defender’s Office of the State of Minas Gerais and Vale S.A.
Amounts, goods or rights involved The amount in dispute was R$ 2,000,000,000.00; however, there are illiquid orders and/or orders involving the adoption of several measures, which of course have an economic nature. The quoted amount updated on December 31, 2020 was R$ 2,152,340,000.00.
Main facts

It is a provisional remedy in advance with an injunction request in defense of the human rights of people who were evacuated, and those who, in any way, suffered material and moral damages due to the raised level of emergency of dam B3/B4, located in the District of São Sebastião das Águas Claras - Nova Lima - MG.

 

On March 15, 2019, a preliminary injunction granting the interlocutory relief requested by the MPMG, determining the freezing of R$1 billion was rendered, in addition to the adoption of several measures. From this decision, Vale filed an interlocutory appeal, which supersedeas was fully granted. Motion for clarification was filed by the Public Defender’s Office against the decision that granted supersedeas, which was rejected on June 4, 2019.

 

Negative conflict of jurisdiction has arisen due to the reassignment of the appeal by the Appellate Judge. The conflict was accepted, and the jurisdiction of the Appellate Judge was determined.

 

An interlocutory appeal was filed by the Public Defender’s Office against the trial court decision, given the partial granting of the preliminary injunctions, whose request for attribution of supersedeas was denied. On July 01, 2019, an amendment to the statement of claim of the Public Prosecution Office was filed.

 

Then, on July 2, 2019, a new preliminary decision was issued regarding the requests made in the amendment.

 

A new interlocutory appeal was filed by Vale against this decision, which also had its supersedeas granted on August 9, 2019. As a result, all obligations imposed in said decision were suspended, except for the payment of food voucher and the cost of food, lodging and transportation for the evacuees. The motion for clarification filed by Vale in this regard was dismissed on September 20, 2019.

 

An internal interlocutory appeal was filed by the Public Prosecution Office, aiming at amending the supersedeas granted to the preliminary decision. On February 13, 2020, Vale filed its answer brief.

 

The appeals were pending judgment of the conflict of jurisdiction. After the decision, the parties were notified to present their reply briefs to the appeals.

 

The parties jointly petitioned, on March 20, 2020, requesting the replacement of the food vouchers provided to those affected with payment, due to the emergency situation of COVID-19. After judicial approval; however, the Public Defender’s Office filed a motion for clarification, claiming that the Judge did not observe the situation of economic reduction due to the coronavirus when granting the reduction in the amount to be paid to those affected. For this reason, it requires again the granting of the measure presented by the agency, that is, bank deposit without reduction in the amounts.

 

On May 13, 2020, there was a judgment denying the Requests for Clarification filed by Public Defender’s Office.

 

On July 20, 2020, the report was presented monitoring the transition of the voucher to emergency payment by the Public Prosecutor's Office, joining the list of CRAS requested by the Public Defender’s Office.

 

On March 12, 2021, Vale requested the joining and approval of the Term of Engagement signed between VALE and the Public Defender's Office on March 4, 2021, which regulates and establishes broad and comprehensive criteria for the payment of cash, extrajudicial and individual compensation of individuals who were impacted by the evacuation, from which payments intake as emergency payment will not be discounted. The definition of reached for the purposes of eligibility for receipt of indemnity has been established under the terms of the agreement.

 

Before deciding on the approval, the court ordered the notice of the Public Prosecution’s Office to express its terms. The Public Prosecution’s Office said that it was not aware of the Term of Engagement, but that it is restricted to requesting the return of families staying in hotels to their homes.

 

On May 14, 2021, a decision was rendered that dismissed DPMG's request for the granting of emergency relief, on an incidental basis, alleging that the agreement entered into with MPMG on the substitute payment does not serve the interests of Macacos. In this way, requests for delivery of the value at people's homes, payment of voucher to all residents of Macacos, cost of health expenses were rejected.

 

On May 25, 2021, DPMG expressed its non-opposition with respect to the agreement with the MPMG for the return of families, residing in locations outside the Self-Rescue Zone, previously removed and who are currently in temporary hotels / housing.

Chances of loss Possible.
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company Invaluable. The relevance of the lawsuit stems from the fact that it is a public civil lawsuit filed by the Public Prosecution Office and by the Public Defender’s Office of the State of Minas Gerais, aiming at the reparation and adoption of measures in case of failure of the B3/B4 dam, and losing the lawsuit may cause significant financial losses to the Company.
Notes Not applicable

 

 

 

 

23) Case n. 5036049-79.2019.8.13.0024
Court 2nd Court of the Public Treasury and Government Agencies of the Judicial District of Belo Horizonte
Instance Trial Court
Filed on 03/21/2019
Parties Association of Servants of the Fire Department and Military Police of the State of Minas Gerais - ASCOBOM/MG v. Vale S.A. and the State of Minas Gerais
Amounts, goods or rights involved The amount attributed to the case was R$100,000.00, however, there are illiquid orders and / or orders involving the adoption of several measures, which of course have an economic character.
Main facts

It is a public civil lawsuit managed by the Association, aiming at the protection of all the military firefighters who worked in the search and rescue activities in the city of Brumadinho, due to the environmental tragedy.

 

Still without the appraisal of the injunction, the State of Minas Gerais requested the referral of the case records to the 6th Court of Public Treasury and Government Agencies of the Judicial District of Belo Horizonte, current 2nd Court of Public Treasury, so that the preliminary injunction could be considered in conjunction with the decisions of public-interest civil actions no. 5046408-67.2019.8.13.0024 and no. 5026408-67.2019.8.13.0024. The request was accepted on September 9, 2019 and the case records were sent to the 6th Court of Public Treasury and Government Agencies of Belo Horizonte, current 2nd Court of Public Treasury.

 

On October 16, 2020, a decision was taken to suspend the proceedings until the trial of the above-mentioned cases.

Chances of loss Possible.
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company Invaluable. The relevance of the lawsuit stems from the fact that it is a public civil lawsuit filed by the Association, aiming at the protection of all the military firefighters who worked in the search and rescue activities in the city of Brumadinho, due to the environmental tragedy, and losing the lawsuit may cause significant financial losses to the Company.  
Notes Not applicable.

 

 

 

 

24) Case no. 1:19-cv-526-RJD-SJB
Court Nova York Federal Court
Instance United States District Court for the Eastern District of New York
Filed on 01/28/2019 (First Complaint) and 10/25/2019 (“Amended Complaint”).
Parties Colleges of Applied Arts and Technology Pensions Plan (“Plaintiffs”) and Vale S.A., Murilo Ferreira, Fabio Schvartsman, Luciano Siani, Peter Poppinga and Luis Eduardo Osorio (“Defendants”).
Amounts, goods or rights involved The plaintiffs did not specify the values of the alleged damages.
Main facts

Vale and some of its current and former executives were considered defendants in class actions referring to securities before the New York Federal Court, moved by investors holding American Depositary Receipts issued by Vale, base of the American federal law on securities (U.S. federal securities laws). In legal suits it is alleged that Vale made false and deceitful affidavits or did not divulge the risks and dangers of the operations of Barragem I and the adequacy of the related programs and procedures. The plaintiffs did not specify a value for the alleged damages, in these suits, they have only motioned for the conviction of the defendants in reimbursing the damages suffered, which shall be calculated during the expertise evaluation stage.

 

On May 13, 2019, the Judge of the District Court of the East District of New York City decided on the consolidation of these suits and assigned the lead plaintiff for the case and respective attorney.

 

On October 25, 2019, the lead plaintiff of the action filed an initial complaint amended and consolidated, which shall be the statement of claim in the suit.

 

On December 13, 2019, Vale filed an opposition to the amended and consolidated motion to dismiss, alleging basically (i) that the cause to ask from the plaintiff does not justify a Securities Fraud Claim; (ii) that the plaintiff did not identify which omissions had been perpetrated by the defendants nor demonstrated that the alleged false statements were, in fact, false at the time in which they were published; (iii) that the plaintiff did not demonstrate malice from the defendants in swindling the market; and (iv) that the plaintiff did not demonstrate any causality nexus between the initial allegations and alleged damages which may have authorized any claims for compensation. The individual defendants were still not formally mentioned and, therefore, the defense was submitted only on behalf of the Company, and individual defendants must consolidate their defenses in a timely manner.

 

On January 31, 2020, the Plaintiff filed an Opposition to the Motion to Dismiss from Vale.

 

On February 21, 2020, Vale filed a counter-defense to the opposition.

 

On May 20, 2020, the Court delivered a decision to dismiss, in part, the Preliminary Objection filed by Vale (Motion to Dismiss), and finding the action extinguished only in relation to some of the Plaintiff's allegations.

 

In this sense, part of the statements cited by the Plaintiff were maintained by the decision of the Court, and, with this, the action will proceed to the stage of discovery, still without a term defined by the court.

 

On August 27, 2020, the individual defendants (“individual defendants”) filed a joint defense (“Joint Answer”) to the supplemented and consolidated initial petition presented by the Plaintiff in October 2019, ratifying the previous defense presented by the Company.

 

The Discovery phase is underway, with production of documentary evidence by the parties, still with no term for the closure of this phase. In parallel, on February 15, 2021, the Plaintiff filed a Motion for Class Certification.

 

On June 9, 2021, Vale submitted its Opposition to Class Certification. The Plaintiff’s deadline for submitting a reply to our objection (Reply to Opposition to Class Certification) will end on June 4, 2021.

Chances of loss Possible.
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company Eventual loss could result in financial damages and in the image and reputation of the Company.  
Notes Not applicable.

 

 

 

 

25) Case n. 5002549-18.2019.8.13.0090
Court 1st Civil, Criminal and Juvenile Court of the District of Brumadinho
Instance Trial Court
Filed on 10/17/2019
Parties Public Prosecutor's Office of Minas Gerais ("MPMG") and Vale S.A.
Amounts, goods or rights involved The amount attributed to the case was R$ 31,747,662,604.74
Main facts

The MPMG proposed a suit against Vale, based on Law 12.846/2013, because, according to the opinion of the Public Prosecutor's Office, Vale would have, through the actions of its employees, hindered activities of supervision of Public Agencies in the Mining Complex of the Córrego do Feijão, where the BI Dam was located, thus making the Company liable based on the administrative and civil sanctions provided for in Articles 6 and 19 of the said Law. The responsible court granted, on May 26, 2020, the MP's claim for an injunction, determining the presentation by the Company of guarantees in the total amount of R$7,931,887,500.00, within ten (10) days.

 

In June 2020, Vale filed an interlocutory appeal to oppose to this decision and the Court of Justice of Minas Gerais, through the deputy judge, suspended the effects of the injunction. There is a negative conflict of jurisdiction not yet judged by the Court of Justice of Minas Gerais. On June 8, 2020, Vale presented its answer in the Trial Court. Brumadinho's court accepted one of Vale’s preliminary arguments, declared itself incompetent to judge the case and ordered the referral of the case to the 2nd Court of the Public Treasury of Belo Horizonte. Vale filed requests for clarification to address the contradiction in this decision, which were accepted to determine the sending of the documents to the 1st Court of Public Treasury. The Public Prosecutor's Office of Minas Gerais filed an Interlocutory Appeal before the Court of Justice to defend Brumadinho’s jurisdiction. Due to the conflict of jurisdiction established when Vale's Interlocutory Appeal was filed in June 2020, the Public Prosecutor's Office’s Interlocutory Appeal was also not tried and awaits the definition of the class competent to judge both appeals.

Chances of loss Remote.
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company Invaluable. The relevance of the action stems from the fact that it is an Action for Damages filed by the Public Prosecution’s Office of MG, based on Law 12.846/2013. In addition to the reputational risk to VALE, the judgment may order the Company to pay a fine calculated on the annual gross revenue of 2018, in the percentage of 5 to 20%.
Notes Not applicable.

 

 

 

 

26) Case n. 5003202-20.2019.8.13.0090  
Court 1st Civil, Criminal and Juvenile Court of the District of Brumadinho
Instance Trial Court
Filed on 05/12/2019
Parties Norma Saraiva Soares and others (“Plaintiffs”); Vale S.A., COPASA, and the State of Minas Gerais (“Defendants”)
Amounts, goods or rights involved The amount attributed to the case was R$ 231,000.00. The amount updated on December 31, 2020 corresponded to R$ 243,007.15. This issue has implications on the water supply works of the metropolitan region of Belo Horizonte (obligation signed in "TC Água", with MPMG).
Main facts

The Plaintiffs proposed a Declaratory Judgement Action of Nullity of Expropriatory Decree with Request for the Display of Documents, requiring injunction the suspension of effects of State Decree No. 464/2019, the display of documents of the administrative process that originated the Decree and, alternatively, the determination for Vale to deposit judicially R$ 5,000,000.00 (five million reais) in order to pay compensation. They requested, in the end, the declaration of nullity of the Decree. This Decree declared the public utility of several properties in Brumadinho/MG, for the purpose of implementing the new water collection system of the Paraopeba River, necessary for the water supply of the metropolitan region of Belo Horizonte, which is the object of the Term of Commitment signed between Vale and the Public Prosecutor's Office of Minas Gerais ("TC Água").

 

Any declaration of nullity of the Decree would remove the nature of public utility of the properties. As a consequence, it could prevent the execution of works and activities in the areas, necessary for the implementation and maintenance of the new water collection network object of the "TC Água".

 

On January 15, 2020, the Plaintiffs amended the initial action, giving up only the request for Vale to deposit R$ 5,000,000.00 in court.

 

On May 12, 2020, Vale filed a preliminary statement requesting the rejection of the injunction requests by the Plaintiffs.

 

On March 9, 2020, there was a decision rejecting the injunction claims of the Plaintiffs.

 

On April 3, 2020, the Plaintiffs filed an Interlocutory Appeal against the decision rejecting the injunction.

 

On April 7, 2020, the State of Minas Gerais filed an answer, asking for the recognition of its illegitimacy to appear as a Defendant in the case and the trial for the dismissal of the action.

 

On April 13, 2020, Vale filed an Answer to the Interlocutory Appeal, requesting its rejection. COPASA and State of Minas Gerais filed an Answer in the same sense (on May 14 and June 9, 2020, respectively).

 

On April 15, 2020, the Court of Justice of Minas Gerais rejected the application for appellate relief filed by the Plaintiffs/Appellants.

 

On April 28, 2020, COPASA filed an answer, seeking a judgment of dismissal of the action.

 

On May 21, 2020, Vale filed an answer, asking for the recognition of its illegitimacy to appear as a Defendant in the case and the trial for the dismissal of the action.

 

Made in the fact-finding stage, awaiting court decision on request for early trial of the dispute.

Chances of loss Possible.
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company

Invaluable. The relevance of the action stems from the matter under discussion, since the continuity of the validity of the Decree is essential for the water supply works of the metropolitan region of Belo Horizonte and compliance with the TC Água signed with the MPMG. There are, therefore, implications to the Company's image. The object of the Decree is the declaration of the public utility of several properties in Brumadinho/MG, for the purpose of implementing the new water collection system of the Paraopeba River, necessary for the water supply of the metropolitan region of Belo Horizonte.

 

Any declaration of nullity of the Decree would remove the nature of public utility of the properties. As a consequence, it could prevent the execution of works and activities in the areas, necessary for the implementation and maintenance of the new water collection network object of the "TC Água".

Notes Not applicable.

 

 

 

 

27) Case n. 1000504-03.2020.4.01.3822
Court 12th Federal Civil and Agrarian Court of the SJMG of the Judicial District of Belo Horizonte
Instance Trial Court
Filed on 03/12/2020
Parties Federal Prosecution Office, Municipality of Barra Longa, Samarco Mineração, Fundação Renova, Vale, BHP Billiton Ltda.
Amounts, goods or rights involved The value attributed to the cause was R$32,588,712.00, which, updated until December 2020, represents R$34,395,102.34
Main facts

This is a public-interest civil action filed by the Public Prosecution Office, through which it seeks to have the defendants ordered to pay all the costs with the implementation of the Barra Longa Health Action Plan, in favor of the Unified Health System - SUS, including through transfers that are necessary to the municipality of Barra Longa.

 

On March 30, 2020, Renova filed a petition requesting the rejection of the request for provisional relief of urgency and that the competence of the 12th Federal Court of Belo Horizonte/MG and consequent referral is recognized by that Court.

 

On April 13, 2020, the Municipality of Barra Longa applied for registration as an interested third party.

 

On April 14, 2020, the MPF Opinion was filed, defending the jurisdiction of the Judicial Subsection of Ponte Nova and reiterating the request for granting the urgency relief.

 

On 16 April 2020, a decision was issued recognizing the lack of jurisdiction of the Judicial Subsection of Ponte Nova, determining the referral of the case to the 12th Federal Court of Belo Horizonte and not recognizing the claims for injunctions.

 

On May 26, 2020, the companies filed answers supporting the illegitimacy of the Federal Prosecutor's Office to propose the action.

 

On 29 July 2020, a judgment was delivered declaring that the process was terminated because of the lack of any procedural requirements, in accepting the active lack of standing of the MPF. On the same date, the Municipality of Barra Longa proposed a similar action in the amount of R$ 2,800,000.00 (no. 1024832-63.2020.4.01.3800), requiring the full cost of the implementation of the Barra Longa Health Action Plan, in favor of the Unified Health System – SUS, including through transfers that are necessary to the municipality of Barra Longa; and that the Renova Foundation be compelled to continue costing and transshipment of solid waste, as well as give final destination to them, until the CIF approves the request made by the Municipality of Barra Longa, and is delivered to the transfer station duly licensed to the Municipality. On September 10, 2020, the Agreement Term signed between the parties on the implementation of the Barra Longa Health Plan was approved by judgment; and, on October 5, 2020, the Agreement on the implementation of a definitive solution on the transshipment and final disposal of solid waste was approved, and the process was deemed to be extinguished.

 

On 19 August 2020, the MPF filed an Appeal against the Judgment. The companies submitted their Reply Briefs on February 10, 2021.

 

On March 19, 2021, the MPF requested that the case be referred immediately to the Federal Regional Court of the 1st Region, pursuant to paragraph 3 of art. 1,010, of CPC.

Chances of loss Remote.
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company Invaluable. The relevance of the lawsuit stems from the fact that it is a public-interest civil action filed by the Public Prosecution’s Office, requiring the funding of the implementation of the Health Action Plan, in the context of compensation for damage caused by the collapse of the Fundão dam.
Notes Not applicable.

 

 

 

 

28) Case n. 5000885-66.2020.8.13.0461  
Instance Trial Court
Filed on 04/07/2020
Parties Prosecution Office of the State of Minas Gerais v. Vale S.A.
Amounts, goods or rights involved The amount attributed to the case was R$ 1,000,000,000.00, however, there are illiquid orders and / or orders involving the adoption of several measures, which of course have an economic character.
Main facts

It is a provisional remedy in advance, assigned to the same judge presiding over a connected lawsuit to ACP Doutor (no. 5000435-60.2019.8.13.0461), aiming at the proper protection of individual, collective and diffuse economic, social and cultural rights of the existing communities downstream the Doutor dam, belonging to the Timbopeba Mine complex, which were surprised by a compulsory removal during the traffic restrictions imposed due to the pandemic of the new coronavirus.

 

On April 13, 2020, a decision was issued determining the random assignment of the action, as there is no relation between its requests and the other action to which it was linked. Then, the case records were assigned to the 1st Civil Court of the Judicial District of Ouro Preto. Vale filed a statement on the same date.

 

On April 14, 2020, the required protection was partially granted, imposing on Vale the fulfillment of several measures, as well as freeze, through BACENJUD, of R$ 50 million.

 

On May 8, 2020, Vale filed an answer.

 

On July 2, 2020, an amendment to the statement of claim of the Public Prosecution Office was filed. On June 15, 2020, a decision was issued deferring in part the main claims made in the statement, as well as those for urgent relief, increasing the amount of the freeze previously granted to R$ 100 million. On July 01, 2020, Vale filed an answer to the statement.

 

On 10 September 2020, a decision was passed in which the authors’ claims were partially granted, recognizing Vale’s liability for the damage caused by the process of removing the families resident in the area to be potentially affected in the event of the collapse of the Doctor dam in the District of Antônio Pereira in Ouro Preto and, consequently, condemning it to full reparation. It also reversed the burden of proof and rectified the process. On September 28, 2020, Vale filed the Requests for Clarification against such decision. On October 2, 2020, the Public Prosecutor's Office filed Requests for Clarification.

 

On October 15, 2020, the Public Prosecutor's Office presented the reply briefs to the Internal Interlocutory Appeal brought by Vale. On 26 October 2020, Vale presented the reply briefs to the Requests brought by MPMG.

 

On November 15, 2020, a decision was given taking cognizance of the Requests for Clarification and giving partial provision to the appeal of the first appellant (VALE S.A) and full provision to the appeal of the second appellant (Public Prosecutor's Office of the State of Minas Gerais).

 

On December 17, 2020, a letter was filed requesting the transfer of R$ 50,000,000.00, deposited in judicial account no. 2500118674749, as well as its legal additions, if any, for Vale's benefit.

 

On March 22, 2021, an order was issued approving the choice of the entity Instituto Guaicuy for the execution of independent technical advisory activities and determining Vale's noitce to make the judicial deposit in the amount of R$ 41,678.00, as advance fees.

Chances of loss Possible.
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company Invaluable. The relevance of the lawsuit stems from the fact that it is a public civil lawsuit filed by the Public Prosecution Office and by the Public Defender’s Office of the State of Minas Gerais, aiming at the reparation and adoption of measures in case of failure of the Gongo Soco dam, and losing the lawsuit may cause significant financial losses to the Company.
Notes Not Applicable.

 

 

 

 

29) Case no. 1035519-02.2020.4.01.3800
Court 14th Federal Civil Court of the SJMG/TRF1
Instance Trial Court
Filed on 08/31/2020
Parties FEDERAL PROSECUTOR’S OFFICE- MPF (plaintiff), VALE (defendant), CVM (defendant) and ANM (defendant)
Amounts, goods or rights involved The amount attributed to the case was R$20,000,000.00, but in practice, it is invaluable, given that the MPF requested judicial intervention in VALE's governance system.
Main facts

This is a public civil action filed by the Federal Public Prosecutor's Office in the face of Vale S.A., the National Mining Agency – ANM and the Brazilian Securities and Exchange Commission (CVM), requiring the condemnation of the defendant Vale S.A. to implement a complete restructuring of its internal policies of security and disaster prevention, through judicial intervention in its governance system, with the preparation and implementation of a governance restructuring work plan, as well as the appointment of an intervenor and the hiring of an independent audit, at VALE’s expense. Finally, it requested, as a compulsory measure, the prohibition of the payment of dividends or interest on equity. The plaintiff claims that VALE has developed an internal culture of disregard for environmental and human risks arising from the activity it performs. With this, it takes advantage of the profit of its operations and, at the same time, puts society at risk, suffering from the effects of the irresponsibility of the mining company, as in the disasters of Mariana and Brumadinho.

 

VALE presented its answer on October 28, 2020. ANM and CVM filed an answer on November 5, 2020 and November 20, 2020, respectively.

 

After analyzing the arguments, on March 5, 2021, the court delivered a judgment dismissing the requests of the Federal Prosecutor's Office.

 

Chances of loss Remote
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company Immeasurable, once it is a request, from the MPF, for judicial intervention in VALE's governance system.
Notes The judgment has not yet become final, and may be the subject of an appeal by the MPF.

 

 

 

 

(iv) Environmental

 

As of December 31, 2020, the Company's consolidated financial statements were provisioned, amounting to R$ 56 millions to meet the probable losses of environmental processes.

 

The tables below contain an individual description of the environmental lawsuits regarded as relevant for the businesses of the Company and/or its controlled companies.

 

1) Case no. 0317.02.002974-8 - 0029748-94.2002.8.13.0317
Court 2nd Civil Court of the Court District of Itabira - Minas Gerais
Instance Trial Court
Filed on 9/26/1996
Parties Government of the City of Itabira (Plaintiff) and Vale (Defendant)
Amounts, goods or rights involved R$ 7,139,048,461.89 As at December 31, 2020.
Main facts

The city of Itabira claims indemnification for the expenditures it might have incurred with public services rendered as a consequence of Vale’s mining operations.

 

The proceeding was suspended on that occasion, as it awaited the trial of a writ of mandamus filed by Vale so that a favorable evidence produced in another proceeding be used in this proceeding (item 2 below).

 

In January 2012, the writ of mandamus was judged to the detriment of Vale. However, this proceeding remained suspended at that time, since the first-instance court had not yet received any information from the Court of Justice of Minas Gerais related to the judgment of the writ of mandamus. Furthermore, the parties filed a joint petition on March 12, 2013 asking for the action to be put in abeyance until an agreement was reached.

 

On March 27, 2014, the proceedings were stayed by an agreement between the parties, but it was later resumed as the parties failed to reach an agreement.

 

On November 19, 2015 an order was published asking the City of Itabira to inform of the judgment of the writ of mandamus.

 

On March 29, 2016, the City of Itabira informed that Writ of Mandamus no. 1.0000.07.465984-8/000 was denied and summoned the already appointed Expert to produce an expert testimony.

 

On June 12, 2017, the subpoena of the municipality of Itabira was determined to express its opinion on the proposal of fees, under penalty of debarment of the evidence.

 

On November 20, 2017, the records of the municipality of Itabira were received, in which the plaintiff requested the appointment of a conciliation hearing, with the purpose of reaching a composition between the parties.

 

On June 11, 2018, the records were handed over to the Attorney General's Office and returned on June 20, 2018.

 

On August 15, 2018, the records were closed for the procedural order.

 

On October 14, 2019, a settlement hearing among the parties was held, but no settlement was reached. Awaiting the case recovery and eventual expert evidence.

 

On February 12, 2020, the records were taken to the municipal prosecution’s office.

 

On March 3, 2020, the Municipality of Itabira filed a petition, contesting the proposal of fees presented by the appointed expert, requiring at the end the setting of fees in compatible amounts for carrying out the expertise, and if it is not possible, requiring the appointment of another professional.

 

On March 6, 2020, Vale filed a statement requiring the Court to call the order, deciding on the preclusion of the expert evidence required by the Municipality since, when noticed for payment of fees, the Municipality remained inert.

 

On February 3, 2021, the records were sent to the Municipal Prosecutor's Office and received on February 12, 2021.

 

On February 25, 2021, the statement records were included, then, the completed records for order

 

Chances of loss Total amount as split between a possible loss (15%) and a remote loss (85%).
Analysis of impact in the case of losing the suit / Reasons this case is significant to the Company

An occasional unfavorable decision in the lawsuit would cause significant financial losses to the Company, but there is no risk that the operations might stop.

 

Considering that the purpose of the public civil action is declaratory in nature, there is no way to estimate, a priori, the total economic value involved in the cause.

 

Notes Not applicable.

 

 

 

 

2) Case no. 0317.02.007032-0
Court 1st Civil Court of the Court District of Itabira - Minas Gerais
Instance Trial Court
Filed on 8/22/1996
Parties Government of the City of Itabira (Plaintiff) and Vale (Defendant)
Amounts, goods or rights involved R$ 6,165,195,420.27 (on December 31, 2020)  
Main facts

The action initiated by the City of Itabira, in the State of Minas Gerais, claiming that the operations in the iron mines at Itabira caused environmental and social damages and demanding the restoration of the location and the conduction of environmental recovery programs in the region. An expert examined was made for this action and the expert report jointly issued by the Brazilian Environment and Natural Resources Institute (“IBAMA”) and the State Environment Foundation (“FEAM”) was favorable to Vale. However, the City requested new expert evidence to be produced, which was accepted by the judge. For this purpose, a multidisciplinary from the Lavras Federal University was designated. On November 6, 2012 a conciliation hearing was held, where the request for staying the proceedings until May 6, 2013 was accepted so that the parties would try to reach an agreement. In view of the length of the suspension period, the Municipality has been noticed to express its views on the value of the expert fees. In February 2014, the City of Itabira submitted its declaration regarding the proposal of expert’s fees and asked the amount of R$1,604,000.00 to be reviewed, considering that the City may provide some inputs, such as accommodations, meals and the plants, maps or sketches.

 

On May 7, 2015 a judicial order was published summoning the appointed expert to express himself and inform on the possibility of reducing the expert’s fees within ten (10) days. On January 19, 2016, the declaration petition was filed by Vale, which confirmed that the expert examination to be prepared for this action had been requested by the City of Itabira and, for that reason, the Company is not responsible for paying the expert’s fees, in accordance with Article 33 of the Brazilian Code of Civil Procedure. 33 do Case Code. On February 15, 2016 it was informed that the deadline for the Plaintiff—the City of Itabira—for filing its declaration had expired without any declaration being submitted. On June 6, 2016 another expert was appointed to replace the former one and the presentation of the respective fees is still pending. On January 30, 2017 the case records were sent to the City Treasury Attorney’s Office. On January 30, 2018, the records were prepared for a judicial order.

 

On June 11, 2018, the records were handed over to the Itabira Municipal Tax Attorney and returned on June 20, 2018, with a request for a conciliation hearing.

 

On February 14, 2019, a conciliation hearing was held. Vale expressed interest in conciliating, which resulted in the suspension of the proceeding until the technical report was joined in the records of Public Civil Action No. 0029771-40.2002.8.13.0317, at which time Vale will meet with the municipality and the Public Prosecutor to try to conciliate.

 

On February 22, 2019, a certificate was attached to the file, attesting the distribution dates of the lawsuits in which the municipality of Itabira and the company are held, and have cause for request and similar request.

 

On March 23, 2019, the case was suspended by judicial decision.

 

On August 23, 2019, the decision was given determining the suspension of the case until the report is attached to the case 0317.02.0029977-1.

 

On November 21, 2019, the records were taken to the Public Prosecutor's Office.

 

On December 31st, 2019, the records from the Public Prosecution’s Office were received.

 

On August 10, 2020, the dispatch from the Letter (pending the obtaining of copies, bearing in mind that due to the pandemic, secretarial assistance was and remains unavailable).

Chances of loss Total amount as split between a possible loss (7%) and a remote loss (93%).
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company

An occasional unfavorable decision in the lawsuit would cause significant financial losses to the Company, but there is no risk that the operations might stop.

 

Considering that the purpose of the public civil action is declaratory in nature, there is no way to estimate, a priori, the total economic value involved in the cause.

 

Notes Not applicable.

 

 

 

 

3) Case no. 26.295.47.2012.4.3700
Court 8th Federal Court of São Luís - Maranhão
Instance Trial Court
Filed on 7/22/2012
Parties Sociedade Maranhense de Direitos Humanos, Conselho Indigenista Missionário (CIMI), Centro de Cultura Negra do Maranhão - CNN (Plaintiffs) and IBAMA and VALE (Defendants).
Amounts, goods or rights involved Invaluable.
Main facts

The aim of a public civil action is to suspend the licensing process for the expansion of the Carajás railway. For that purpose, the Plaintiffs claim that the environmental licenses granted by IBAMA were based on an environmental study that was insufficient to characterize – globally - the impacts caused by the works, in addition to fragmenting the environmental licenses in order to replace the company’s obligation with the environmental compensation due as a consequence of the installation of the site. Finally, after some criticism against the required licensing model, the Plaintiffs required a declaration of invalidity of the licensing process.

 

In July 2012, the court granted the requested injunction by determining the suspension of all the building works and operations related to the expansion of the Carajás railway. Both Vale and IBAMA lodged appeals (bills of review) intending to revert the judicial decision, as well as submitted to the President of the TRF (Regional Federal Court) of the 1st Region (DF) a request for an injunction suspension by claiming (i) the risk of serious, irreversible economic losses that might occur if said injunction remained in force, as well as (ii) the fact that the environmental study prepared by Vale fully complied with CONAMA Resolution 237, so that there was no justification for the Plaintiff’s request related to the risk of a serious social and environmental unbalance. The request for suspension was accepted by the President of the TRF of the 1st Region and the Plaintiffs lodged an appeal against that decision. However, they were not successful in it and the decision in favor of Vale was maintained.

 

At the first instance, both Vale and IBAMA submitted their defenses claiming (a) the regularity of the licensing process, (b) that the study clearly defined all the diagnoses as to the impacts on the areas and communities under direct or indirect influence of the works (including traditional communities), and (c) the need for respecting the competence and technical discretion of IBAMA to conduct and complete the environmental study. In a recent decision, a federal judge has accepted the Federal Public Defender’s request to become a Plaintiff in the action. Vale lodged an appeal against that decision, which was in line with the opinion issued by the Federal Prosecutor Office (“MPF”), by stating that the Public Defender’s Office lacked legitimacy to appear in the action. The appealed decision was maintained, and the succession term was re-established for the Public Defender’s Office, IBAMA and VALE to submit their oppositions. The Public Defender’s Office corroborated the annulment of the Licensing and IBAMA was requested to submit new information on the operation of the railway and how the families would be removed from the area. After IBAMA declaration on August 12, 2014, the records were sent to the judge’s analysis. The injunction was rejected on September 15, 2014, and the State of Pará stated that it had no interest in the lawsuit. On February 27, 2015, an order was published informing the beginning of the term for Vale to submit its declaration on the licensing process produced by IBAMA.

 

On March 17, 2016 the production of expert evidence was accepted, as requested by Vale, which presented requisites and technical assistants on April 5, 2016.

 

On December 5, 2016, the MPF filed a petition opposing to the requisites presented by Vale.

 

On May 23, 2017, the records were prepared for the judge to decide on the acceptance of the requisites presented by Vale and the opposition submitted by the MPF.

 

The parties are still awaiting the above-mentioned order to be handed down and the requested expert examination to be provided.

 

The judicial expertise was designated for July 22, 2019, whose scope will be the analysis and verification of regularity of documents and information presented in the process of environmental licensing of the enterprise.

 

The experts petitioned in the records for an extension of the date for November 14, 2019, and the Judge granted the petition on the same day.

 

On December 9, 2020, the Expert Report was presented, which was in favor of the Company in the main aspects. For all Vale's questions, the report responded affirmatively and favorably. Regarding the consultation and impacts on the communities, the report states that there were meetings and the study met the reference term. The parties have not yet been noticed to comment on the report.

 

It is awaited migration of the process to the PJE to make manifestation protocol to the report, since physical petitioning in TRF1 is suspended by ordinance that restricted face-to-face activities throughout the Court due to COVID-19.

Chances of loss Possible
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company Despite the conclusion of the EFC expansion works, an eventual decision against Vale may affect the licensing process for the EFC expansion, as well as impact VALE’s logistic operations for the implementation of the distribution plan for the production originated from the S11D Project.  
Notes Not applicable.

 

 

 

 

4) Case no. 0013741-46.2017.8.08.0024
Court 5th State Court of the Treasury, City, Public Registers, Environment and Health
Instance Trial Court
Filed on 5/25/2017
Parties Associação Juntos SOS ES Ambiental (plaintiff) and Vale (defendant)
Amounts, goods or rights involved Loss and/or limitation of the right to exploit artesian wells, payment of damages (without liquidation at the complaint), material (without liquidation at the complaint) and moral losses (without liquidation at the complaint) due to the claim of diseases caused by an alleged contamination, as well as the payment of collective moral or material indemnification resulting from an alleged violation of diffuse rights (as liquidated at the complaint in the amount of R$ 12,039,001.20 on 12/30/2020). The value of the litigation is set in R$ 100,000,000.00.
Main facts

This Public Civil Action was filed by the Associação Juntos SOS ES Ambiental against Vale with a preliminary request for an urgent relief and a penalty involving an obligation to act, where the exploitation of artesian wells is question and the contamination of the Greater Vitória aquifers by Vale is claimed, as well as its operation of the Tubarão Complex. The urgency relief was requested for Vale to (i) suspend the exploitation of artesian wells, (ii) take measures to eliminate the alleged contamination of tanks, reservoirs and ponds of its industrial complex, (iii) submit evaluations at all water collection wells, tanks, reservoirs and ponds, (iv) implement an improvement plan for the sanitary treatment systems, (v) submit/execute implementation or expansion projects for high environmental risk undertakings and any other sources of great environmental impact (vi) submit a hydrological study to evaluate water availability and non-impact on the Greater Vitória aquifer, and (vii) submit an authorization for using underground water. The requests for an urgency relief were not granted. As for the merits, the Plaintiff requests that Vale should be sentenced to pay damages, property damages and those resulting from pain and suffering, to those who suffered from any diseases caused by the alleged contamination, as well as to pay an indemnification for personal or property damages, as a consequence of the alleged violation of diffuse rights, in the amount of R$ 10,000,000.00. The amount in controversy is established at R$ 100,000,000.00.

 

Vale was served process on October 10, 2017, and filed its answer. On January 31, 2019, the Plaintiff filed an objection to the answer.

 

On February 6, 2019, a pretrial order was issued that dismissed all preliminary actions argued by Vale and all parties were subpoenaed to submit any evidence discovered.

 

Vale interposed an Interlocutory Appeal after this decision, on March 2, 2019 and the Plaintiff filed its reply briefs. Pending trial.

 

In parallel, considering that no suspensive effect had been granted to the Interlocutory Appeal, on November 25, 2020, an order was issued requesting a statement about the application for expert evidence and the delimitation of its scope. Vale reiterated the terms of the Interlocutory Appeal and stressed that this burden should fall on the Plaintiff. A statement of court is pending.

Chances of loss Remote.
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company In an event of a negative outcome, the Company will suffer expressive losses and inestimable damages to its reputation.
Notes Not applicable.

 

 

 

 

5) Case no. 0002383-85.2012.4.01.3905
Court Federal Court of the Judiciary Subsection of the City of Redenção
Instance Trial Court
Filed on 5/28/2012
Parties Federal Government Attorney’s Office (“MPF” in Portuguese) (plaintiff); Kakarekré Indigenous Association of Defense of the Xikrin People of the Djudjeko, Tuto Pombo Indigenous Association, Porekro Indigenous Association of Defense of the Xikrin People of the Cateté, Pore Kayapó Indigenous Association, Bayprã Indigenous Association of Defense of the Xikrin People of the Oodja (“Associate Co-plaintiffs”); Vale, National Indian Foundation (“FUNAI”) and the State of Pará (“Defendants”).
Amounts, goods or rights involved The value is undefined, taking into consideration that it is a claim involving (i) indemnity value, which will depend on the expert examination for definition, as well as (ii) the request to stop the nickel operations of the Onça Puma Company, in the State of Pará.
Main facts

In 2012, MPF filed a Public Civil Action (“PCA”) against Vale, the State of Pará and FUNAI, pursuing the suspension of the nickel Company operations at the Onça Puma mine, in the State of Pará, due to the alleged impact over the Xikrin of the Cateté and Kayapó indigenous communities located near the mining site. MPF argues (i) that the Company’s operations would be contaminating the waters of the Cateté River which crosses the Xikrin indigenous land (“IL”), (ii) that the Company failed to meet certain conditions originating from the environmental licensing of the Onça Puma mine undertaking and (iii) that the State of Pará should not have granted an environmental license for said undertaking. Additionally, MPF has claimed the payment of indemnity in favor of the Indians and a monthly deposit of the amount of BRL 1.0 million, until the final and unappealable decision of the suit, in favor of the Xikrin and Kayapó indigenous villages.

 

On October 18, 2012, the court did not recognize the urgency of the preliminary injunction entered in the sphere of the PCA, having denied said injunction requested by MPF.

 

On May 25, 2015, past three years after the denial of the injunction, MPF filed a request for reconsideration by the court of Redenção, claiming that the operations of the Onça Puma mine undertaking would be contaminating the Cateté river, causing health damage to the indigenous tribes and, therefore, it reiterated the request to stop the undertaking and start payment of a monthly indemnity in the amount of BRL 1.0 million for the benefit of the Xikrin and Kayapó indigenous villages.

 

On June 02, 2015, the court of Redenção partially accepted MPF plea, determining that Vale would monthly deposit the approximate amount of BRL 400 thousand, to be received and divided proportionally among the villages integrating the Xikrin IL.

 

On July 14, 2015, the MPF filed an appeal requesting the increase of the monthly deposit obligation initially determined by the Redenção judge, requesting that Vale be required to deposit the monthly amount of R$1 million per village affected by the project, as well as such as the immediate stoppage of the Onça Puma mine project. The Rapporteur's Judge granted the preliminary injunction formulated and fully accepted the request formulated by the MPF.

 

On August 21, 2015, Vale entered a new Writ of Mandamus (“MS”), addressed to the President of TRF 1, against this new injunction for compensation increase and stoppage of the undertaking activities.

 

On August 28, 2015, Rapporteur Judge received the MS formulated by Vale, and granted an injunction in favor of the Company, determining the suspension of the effects of the order that determined the stoppage of the Onça Puma mine project and the (second) increase in the monthly value to be deposited.

 

On September 16, 2015, on account of this new decision regarding the WM, MPF filed a claim for stay of preliminary order before the President of the Superior Court of Justice (STJ in Portuguese), claiming a public order and health nature risk. After gathering the manifestation of all the interested parties (Vale, the State of Pará and the Indigenous Associations), the STJ Chief Justice Minister recognized the risks presented by MPF and granted an injunction, determining the suspension of the effects of the previous one obtained by Vale in a WM, deciding for a new stoppage of the Onça Puma mine and the resuming of the monthly BRL 7.0 million deposits.

 

On October 29, 2015, the State of Pará filed an appeal to suspend the injunction before the Federal Supreme Court (STF in Portuguese) Chief Justice, arguing that the paralysis of the undertaking would bring a series of damages to the State. The STF Chief Justice determined all the interested parties to manifest themselves about the request made by the State of Pará. In this opportunity, Vale complemented the information presented by the State.

 

On December 16, 2015, STF suspended the effects of the injunction granted by STJ, thus releasing the operation of the Onça Puma mine undertaking, also determining the implementation, in up to 120 days, of the Management Plan and the remaining mitigating and compensatory measures regarding the impacts of the Onça Puma undertaking over the ILs.

 

On June 15, 2016, the STF trial of the appeals filed by VALE (ED) and MPF (Internal Interlocutory Appeal - AGR) against the order issued by the Min. Chairman of the STF in the records of SL No. 933-PA/2016, which released the operation of the Onça Puma enterprise and determined the implementation of the management plan and other mitigating measures within 120 days, under penalty of return of the monthly deposit obligation. On account of some doubts from the part of the other participating ministers, especially Min. Barroso, which requested to see the records, the judgment was suspended.

 

On May 31, 2017, the judgment of SL no. 933/PA-2015 was resumed, and Min. Barroso submitted his vote to, diverging from the initial rapporteur of the case (Min. Ricardo Lewandowski), revoking the decision, which suspended the effects of the injunction which ordered the interruption of the undertaking and payment of R$1,000,000.00/month/village, thus returning the issue to the ordinary instances, for understanding that it was not the STF’s role to evaluate factual matters.

 

On September 13, 2017, the judgment of the AI no. 0042106-84.2015 took place, where the 5th Panel of the TRF 1st Region decided to partially accept the vote of the Appellate Judge-Rapporteur and, as a support to the Principles of Precaution and Prevention, determined the stoppage of the Onça Puma undertaking and decreased the amount of the compensatory sum of BRL 1 million/month/village to 1 minimum wage/Indian/month, until Vale implemented the PGE.

 

On September 15, 2017, Vale was summoned of the court decision issued by the 5th Panel of the TRF 1st Region and, in compliance with the decision, suspended the activities of the Onça Puma mines operations.

 

On September 22, 2017, Vale entered a Motion to Clarify (MC) against the decision issued by the 5th Panel of the TRF 1st Region, indicating its obscurities, since the 5th Panel failed to analyze several arguments displayed by the company, as well as the emphasized contradictions.

 

On January 28, 2018, an expert examination was carried out at the Onça Puma undertaking, in the specialties of Civil Engineering, Forest Engineering, Metallurgy, Limnology, Ichthyology, Geology and Social Assistance.

 

On October 23, 2018, the filing of the motions for clarification presented by Vale were judged and considered improper, and the integrity of the judgment handed down in the case file of instrument 00042307-42.2016, which resulted in the stoppage of the project and the payment of a monthly amount for the indigenous peoples.

 

On November 6, 2018, the reports of the assessments made up to that date - Civil Eng., Forestry, Metallurgy, Agronomy, Sociology, Geology, Limnology and Biology - were added to the Public Civil Action records, which concluded that the enterprise of Onça Puma does not contaminate the Cateté river.

 

On December 12, 2018, Vale filed an injunction (TC01 - Proc. 1036188-62.2018.4.01.0000), requesting the grant of suspensive effect to the Special and Extraordinary Appeal presented by Vale against the judgment that determined the stoppage of the Onça Puma mines and the payment of the monthly sum.

 

On January 7, 2019, Ourilândia do Norte City Hall joined the STF with a request for Suspension of Injunction (STP-PA 105/2019), presenting the losses that the municipality will suffer with the total stoppage of the Onça Puma enterprise in reason of the maintenance of the decision rendered by TRF1st R, in the records of the Appeal of Instrument No. 00042307-42.2016.

 

On January 12, 2019, Min. President of the STF ordered on the record the request for Suspension of the Provisional Relief presented by the Municipality of Ourolândia do Norte (STP 105-PA/2019), postponing the appraisal of the filing for an injunction after the manifestation of the other interested parties and determined to notice everyone.

 

On April 15, 2019, Min. President of the STF appointed a conciliation hearing for April 30, 2019.

 

On April 30, 2019, a conciliation hearing was held in the STF, where Vale submitted a proposal for an agreement, which was rejected by the indigenous people and MPF. Due to the refusal to conciliate, the documents were conclusive for the STF Minister President to decide on the application for release of the enterprise.

 

On September 16, 2019, the Chief Justice of the Supreme Federal Court drew up a monocratic preliminary decision of full permit for operation of the Onça Puma entrepreneurship, in addition to surveys by the Xikrin of the amounts deposited by Vale in a legal account.

 

On November 3, 2019, indigenous associations have emphasized the request for payment of differences in amount due to the population increase of the villages, pleading a supplementary payment around R$ 40 million. This request is still pending analysis by the Judiciary.

 

On December 12, 2019, Vale filed a legal reporting request, claiming that the indigenous associations failed to uphold the provisions of the decision from the 5th Panel of the 1st Region Federal court, in addition to the conditions settled in the Conduct Adjustment Term, entered into with the MPF/Redenção.

 

On 4 December 2020, the proceedings were suspended for one year at the request of the parties for dialog and discussions on the terms of an agreement closing all the actions in which the VALALE and the associations representing the Xikrin Indigenous Community are listed as parties.

Chances of loss Possible loss, since the proceeding is still in the fact-finding stage, and the technical expert examination requested by the parties is not yet concluded.
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company Possibility of considerable financial impact in case Vale is convicted, as well as in case of stoppage of the operations in the Onça Puma Mine.
Notes Not applicable.

 

 

 

 

6) Case no. 0001254-18.2016.4.01.3901
Court 2nd Federal Civil Court of the Judiciary Subsection of Marabá
Instance Trial Court
Filed on 5/12/2016
Parties Associação Indígena Kakarekré for Defense of the Xikrin do djudjêkô People, Associação Indígena Bayaprã Indigenous Association for the Defense of the Xikrin do O-Odja People and Porekro Indigenous Association for the Defense of the Xikrin do Catetê People (“Plaintiff Associations”) and Company, FUNAI, IBAMA and BNDES (jointly “Defendants”)
Amounts, goods or rights involved The value of the claim attributed by the Plaintiffs Associations is R$ 72,385,600,000.00. In view of the object and progress of the proceeding, the Company understands that it is the amount involved in an eventual condemnation to be invaluable.
Main facts

The Plaintiffs Associations filed a public civil action requesting (i) suspension of the environmental licensing process of the S11D project, (ii) settlement of pecuniary damages and emotional distress to be ascertained, and (iii) settlement of a monthly allowance of R$ 2,000,000.00/per village, by failure of performing the Indigenous Component Study (ECI) and the prior consultation with the indigenous Xikrin community.

 

On September 22, 2016, an order was filed in the records (i) designating November 7, 2016 for judicial inspection to superficially verify the alleged impacts; (ii) that Vale should provide the means necessary to transport representatives of the plaintiffs, the defendants and their respective attorneys and the Federal Attorney to the indicated site, and; (iii) certify the exclusion of lawyers.

 

On November 7, 2016, the judicial inspection of the S11D enterprise was carried out.

 

On January 24, 2017, the decision of the judge who accompanies the case denying the preliminary injunction, arguing, in a very brief summary, that at least in this preliminary phase it is not proven that the S11D enterprise causes any impact on the Xikrin indigenous lands.

 

On February 13, 2017, the Bayprã Association informed the trial court the filing of an interlocutory appeal challenging the decision that denied the S11D enterprise suspension injunction, requesting the reconsideration of the refusing decision of the pleaded injunction, alleging the new fact of Vale having received from IBAMA the Operating License of the S11D Mine. The Reporting Justice of AI (5755-44.2017) denied the preliminary injunction formulated by the Indigenous Associations.

 

On March 14, 2017, Vale filed its answer, restating the points presented in the preliminary manifestation and, complementing, emphasized the importance of the enterprise for the region and for the country, and lack of interest in the suit of the indigenous. On the merits, highlighted the absence of the impact alleged by the indigenous, as well as the presumption of legality and legitimacy of the administrative acts executed during the licensing. Lastly, required the termination of the case.

 

On June 14, 2017, the MPF/Marabá filed to the ACP court a motion for rehearing of the adverse decision of the preliminary injunction filed.

 

On June 20, 2017, the MPF/Marabá filed an Interlocutory Appeal against the adverse decision of the ACP court, requiring the granting of a preliminary injunction to make Vale to carry out the study of the indigenous component of the S11D enterprise.

 

On July 18, 2017, the case court partially reconsidered the disallowance of the initial request, under the argument that the performing of the study in nothing would impair the procedural relation, as well as the enterprise operation, and determined that Vale executed and presented in court within 180 days the indigenous component study of the S11D enterprise, keeping the disallowance of the standstill of the mine and of the payment of the monthly indemnification.

 

On July 20, 2017, Vale was given notice of the decision of the partial reconsideration of the refusing order of the preliminary injunction and went aware of the obligation to execute and present the indigenous component study of the S11D enterprise.

 

On November 28, 2017, there was a manifestation of the MPF suggesting the holding of a conciliation hearing for alignment of the questions related to the execution of the study determined.

 

On February 5, 2018, Vale presented a petition not opposing to the holding of the conciliation hearing to be assigned by the court.

 

On April 6, 2018, it was held the conciliation hearing for the definition of the representations for the accomplishment of the decision that determined the execution of the study of the indigenous component by Vale. The court accepted the arguments of the motion for clarification presented by Vale and rejected those presented by the Associations, as well as the reconsideration request presented by those, and a deadline of 60 days was established for Vale to present the work plan and the technical team to carry out the study. In addition, a period of 15 days was established for FUNAI to approve or require complementation to the work plan. Once approved the plan, it will be submitted to the indigenous for analysis and approval. The community does not have a deadline for this analysis.

 

On April 23, 2018, the Association presented instrument appeal against the decision that rejected the reconsideration request and postponed the decision for determination or not of the hiring of the technical team to assist the indigenous in the analysis of the study.

 

On April 27, 2018, Vale presented an appeal of instrument appeal against the decision that determined the company to execute the study of the indigenous component of the S11D enterprise.

 

On May 2, 2018, it was denied the preliminary injunction pleaded by the indigenous and kept the effects of the first instance decision that denied the stoppage of the enterprise and the payment of the monthly amount as Indemnification.

 

On June 8, 2018, Vale petitioned in the records informing that on the same date, it carried out the aforementioned protocol before FUNAI of the Work Plan and appointment of staff.

 

On August 16, 2018, the MPF requested: a) FUNAI's subpoena to present a statement on the documents submitted by Vale; and b) subpoena of the authorial Associations to make a sound statement regarding the work plan - technical staff - of Vale.

 

On August 22, 2018, the MPF petitioned for a request to attach Official Letter No. 437/2018/CGLIC/DPDS-FUNAI to the records and, considering the reservations pointed out by FUNAI, Vale's injunction to remedy them within 20 days before FUNAI.

 

On September 20, 2018, a petition was filed by the MPF to request to attach official letter No. 437/2018/CLIC/DPDS-FUNAI and be manifested by FUNAI's order to: a) clarify whether the additional information provided by Vale is satisfactory , and, if so, b) define the dates on which the municipality and Vale will present the work plan to the indigenous communities.

 

On February 15, 2019, FUNAI announced the designation of the dates of April 1 and 2, 2019 to hold the event to present the Work Plan of the Study of the Indigenous Component in the Xikrin villages.

 

On March 28, 2019, FUNAI informed Vale and the associations representing the Xikrin that it would have to postpone the meetings scheduled for 01 and 02 April 2019 and that the new dates for these meetings would be communicated in the future.

 

On July 16, 2019, a meeting was held at the Djudjekô village for presentation of the Work Plan (“PT”) of the Indigenous Component Study of the S11D project. The indigenous leaderships did not allow the event to be concluded and disagreed with the Work Plan, requesting that Vale paid for a technical team for the indigenous people, so that they could carry out the study themselves.

 

On July 29, 2019, Vale informed the court of the impossibility of the Work Plan presentation meeting and requested the dismissal of the study due to the contradictory stance of the indigenous people.

 

On July 30, 2019, FUNAI submitted a statement to the records, declaring that there is no obstacle to the work of a technical team hired to carry out the study; claimed that the request formulated by the associations and payment by Vale of technicians to represent the indigenous people on the study is irrelevant, and emphasized a regularity statement of the Work Plan.

 

On October 7, 2019, a procedural order was included in the records determining that FUNAI provides a statement on any pending matters on the Work Plan, if applicable, as well as deciding which legal expert would analyze the Work Plan and follow up on the performance of the study.

 

On January 16, 2020, FUNAI submitted a statement to court, declaring that the Work Plan was approved by the foundation and the technical team hired was ready to work.

 

On 4 December 2020, the proceedings were suspended for one year at the request of the parties for dialog and discussions on the terms of an agreement closing all the actions in which the VALALE and the associations representing the Xikrin Indigenous Community are listed as parties.

 

On January 28, 2021, VALE submitted the claim for suspension of the action on the grounds of the procedural agreement concluded with the MPF and Indigenous Associations within the scope of Public Civil Action 002383-85.2012.4.01.3905 and whose object was to interrupt the procedural procedure to enable the composition, so that an agreement can be signed that puts an end to the existing legal actions between the parties. The Company awaits the decision of the court on this claim.

 

Chances of loss Possible loss, considering the initial stage, still in the fact-finding phase, of the process.
Impact analysis in case of loss/ Reasons of the relevance of the lawsuit for the Company In case of loss or preliminary decision, there is a risk of suspension of the operation of the S11D mine venture, in addition to financial impact.
Notes Not applicable.

 

 

 

 

7) Process No. 0151584-90.2015.4.02.5111