Study of the aluminum production chain in northern Brazil by Instituto Observatório Social

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

Sﾃグ PAULO DECEMBER | 2008

INDEX

Introduction

1. International and Brazilian Overview of the Aluminum Sector:

Production, Consumption and Exports 1.1. Leading Companies on the International Scene

1.2. Production and Foreign Trade of Aluminum in Brazil

1.3. The Standard of Foreign Insertion of Brazilian Aluminum

1.4. The Brazilian Insertion Model: Advantages and Challenges

2. The Aluminum Production Chain in Northern Brazil

2.1. Whoâ&#x20AC;&#x2122;s Who in the Aluminum Chain in Northern Brazil?

2.2. Economic Dynamic

2.3. Limits and Potential for Local Development

3. Environmental Impacts of the Aluminum Production Chain

in Northern Brazil 4. Comparative Analysis of the Social-Labor Behavior

of the Aluminum Companies 4.1. Freedom of Association

4.1.1. Relationship between Unions and Companies

4.1.2. Discrimination for Union Participation

4.2. Collective Bargaining

4.3. Salaries

4.4. Labor Health and Safety

4.5. Gender

4.6. Color | Race

5. Final Considerations

INTRODUCTION

n 2007 the Social Observatory Institute (SOI) concluded a study of the Aluminum Production Chain in Northern Brazil, the largest conducted in its ten-year existence. The main goal of the study was to analyze the labor and environmental situation at four companies in the mining-metallurgical sector which compose the aluminum production chain in northern Brazil. The process that initiated the study began in 2005 with an exchange trip of Brazilian workers from the sector to Germany. Later, in September of that year, the Brazilian unions and confederations that represent the workers in the sector approved the realization of the study, at a seminar held in Santarém, Pará. At this seminar it was decided to begin the study in the northern region of the country, where the control of the aluminum chain is exercised by large multinational companies such as Alcoa, Alcan, BHP Billiton, Vale and NAAC. The companies studied, controlled by these large corporations that operate in the region, are: Mineração Rio do Norte (MRN), a bauxite producer located in Oriximiná (PA), Alumínio do Norte (Alunorte), a producer of alumina and Alumínio Brasileiro (Albras), a producer of primary aluminum, both in Barcarena (PA) and the Consórcio Alumínio do Maranhão (Alumar), a producer of alumina and primary aluminum, located in the industrial district of São Luis (MA). Most of the production of these companies is exported to markets such as the United States, the European Union and China. In November 2006 an international seminar was held in Belém (PA), as part of the study and promoted by the SOI and the German union DGB, with the support of the union centers, FNV (Holland) and LO (Norway). It had participation from the National Confederation of Metalworkers (CNM/CUT), the mineworkers (CNTSM), chemical workers (CNQ), CUT Pará, German metalworker unions, and company representatives. The realization of this seminar allowed an exchange of information and discussion of various issues of interest to workers. In a first step, visits to companies were realized, as well as workshops with union staff and metal workers, chemical workers and miners, to identify the principal labor and environmental problems. Second, field work at the companies took place in October 2006. Interviews were conducted with directors, managers and bosses and a questionnaire was issued to workers to learn their opinions about the issues that SOI works with - basic labor rights, the International Labor Organization (ILO), health and safety, the environment and social responsibility. The SOI believes that the involvement and participation of workers is essential in the entire research process. It is the worker representative entities that approve and indicate the companies and the units to be studied. It is the local union leaders who report on the relationship between the entity and the companies and indicate the main problems experienced by the workers. In addition, they accompany the field research, participate in debates and read and approve the final research report. The SOI also believes that the collaboration of companies is important, and for this reason, since the beginning, has invited them to participate in the process. It is important that the companies collaborate by providing records of their employees, to help prepare the data and a questionnaire to be issued to workers; that they facilitate access to workers when the questionnaires are issued and make their directors available for interviews, which seek to understand their views about the various issues being analyzed. In addition, the companies also participate in the reading and approval of the final report. In this aspect, both the companies and the unions completely fulfilled the methodological requirements defined by SOI, and were involved in the entire research process.

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

The study about the aluminum production chain in northern Brazil lasted three years, from the trip of the workers from this sector to Germany, until the final approval of the research reports, This long duration was due, in part, to the extensive negotiation process with the companies over participation in the study, and to the long period that the companies and unions need for the reading and return of the final reports. The process of negotiation with the companies culminated with the signing of a document containing the commitment that each party (SOI and the companies) should make until the end of the process. Basically, the four companies agreed to supply the information requested by SOI and facilitate the issuing of the questionnaires to the workers at their respective industrial facilities. The SOI agreed to publish the reports only after approval by the companies and unions, without, however, giving up its autonomy to define the final content of the reports. This publication presents a comparative analysis of the four companies in relation to the issues worked with by SOI, based on the results obtained at each one. The complete report about each company is available on the SOI website: www.os.org.br. This publication also presents an overview of the Brazilian and international aluminum sector, information about the aluminum production chain and some considerations about its implications for local and regional development. The principal motivation for the project is the opportunity for articulation by Brazilian and German unions (IG Metall and DGB) and of worker representatives on the Administrative Board of the Norwegian company Norsk Hydro Aluminio. The long term objective is the creation of national and international worker networks at aluminum companies. One of the possible repercussions of the articulation of the unions at the Brazilian level is the unification of collective accords negotiated for the entire production chain located in the North. Considering this goal, seminars were conducted involving unions and confederations, but the process has not been concluded. One of the political benefits until now was the promotion of social dialog between one of the companies and the union, which until then did not occur in an integrated manner. The debate about the organization of the quite complex production chain places the workers as a fundamental part of the entire process, they need to be heard and to have their requests considered. It is important to emphasize that due to the changes in the compositions and investments of the companies in the mining-metallurgical sector, stemming from the U.S. financial crisis, and also, the recent political changes in the workers unions in the region, the employment conditions and the local labor relations are already being strongly affected. Therefore, the accompaniment of this process of change is essential for the union movement and for the maintenance of social dialog.

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1. INTERNATIONAL AND BRAZILIAN OVERVIEW OF THE ALUMINUM

SECTOR: PRODUCTION, CONSUMPTION AND EXPORTS

n analysis of the change in global aluminum production in the ten years from 1996 - 2005 found accumulated growth of 53% (graph 1), or an average annual expansion of 4.8%. To have an idea of what this means, it can be compared with growth in total world production during the same period of only 2.9%. In 2005, global aluminum production reached a record level of nearly 32 thousand tons (Abal, 2006). There was a clear positive burst in production from 2001 - 2005 , given that average annual production growth increased to 7%, compared with an annual average from 1996 - 2001 of 3.1% (graphs 1 and 2). This can be explained by the revival of the world economy and by the large expansion of Chinese production and consumption. This rhythm of growth was maintained in the first semester of 2006 when production expanded 6% in relation to the same period in the previous year1. In parallel, this process is related to an increase in prices, pressured by greater demand for aluminum. This is due both to Asian consumption - especially Chinese - as well as to substitution of other industrial raw materials (such as steel) by aluminum, especially in the civil construction, automobile and packaging sectors which together account for nearly 2/3 of aluminum consumption.

1 Sources: International Aluminium Institute www.world-aluminium. org, accessed in August 2006

Price levels did not grow throughout the period. Graphs 1 and 2 indicate price drops at times of decelerating global demand - from 1997 - 1999, as a consequence of the Asian economic crisis and between 2000 - 2002, during the deceleration of the U.S. economy. Since then, there was a strong price recovery, which in 2005 was at a level 40% higher than at the lowest level in 2002 and 24% above that 10 years earlier. The year 2004 deserves highlighting, when prices rose 20% in relation to the previous year. In graphs 3 and 4 below, other changes are seen among the main primary aluminum producing countries from 1995 - 2004. The United States lost its leadership, reducing its participation from 17% to 8% in the period. Russia and Canada also lost relative shares, although they remained in second and third place respectively. The important new development was the rise of China from 4th to 1st place in terms of global production. By 2005, China accounted for 22% of total production. Concerning Brazil, note that the country remained in 5th position in the ranking

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

of global producers of primary aluminum, having, nevertheless, its participation reduced from 6% to 4.9% of the global total. Upon analyzing the proportion of Brazilian production in relation to the Chinese, it was proven that this percentage dropped from 70% to 22% from 1995 to 2004. That is, China took market from the developed countries and prevented production growth in developing countries such as Brazil. The drop in participation by Brazil and other leading aluminum producers was not caused by reduced production in absolute terms, except in the case of the United States (which had a 25% drop) and Venezuela, where production remained stagnant. In practice, the growth of Chinese production was separate from the other countries. This trend continued: estimates for the period from 2001 - 2007 point to an expansion in Chinese production that represented 50% of total world growth in production2. When comparing the 11 largest global producers, note a 300% accumulated expansion of Chinese production from 1995 to 2004 - with stronger growth after 2000 - and an expansion of nearly 50% for Australia and Norway, although, close to the global average. Brazil raised its production by 19% in the period, a level 2.5 times lower than the global average, for this reason its share in global production dropped from 6% to 5%.

2 Source: CRU Group, www.crugroup.com

The expansion of the two less important producers also deserves mentioning, South Africa and India, which in 2004 were in the 8th and 9th positions respectively. In the case of India, production expanded by 61% compared to 277% growth for South Africa, which began from lower levels (graph 5).

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It is also interesting to note that the expansion of Chinese production is to a large degree related to domestic consumption in this large Asian country, and not to exports, which makes the rhythm of growth more sustainable and less subject to brusque changes in the international economy., Chinese demand already accounts for nearly 20% of global consumption and for half of the growth in global demand for aluminum(graph 6), although this is lower than the nation’s share in consumption of iron ore and steel. The available data indicate that China stands out for the elevated production of aluminum for its domestic market and for growing exports, concentrating its imports on products at the beginning of the chain or on aluminum transformed into higher added value. This is seen in the two graphs below. First, when considering the aggregate of the largest importing regions China, the United States and the European Union – it was noted that the Asian power, despite its growth, accounted for only 10% of aluminum imports among the 3 largest. In the case of alumina, its participation in the accumulated imports by these geographic regions jumped from 39% to 63% from 2002 - 2005 (graphs 7 - 8). That is, the importance of Chinese demand is felt especially in the case of alumina imports, the import tariffs for which fell relatively since China’s entrance in the WTO, and were at 8% in 2004. This is related with the fact that this country tends to take advantage of its production scale to manufacture goods at the end of the production chain, imposing low prices on its suppliers of low added value products (Barbosa and Mendes, 2006). China thus tends to become transformed into a large producer of aluminum and aluminum products, dislocating other competitors and establishing complementary relations with the raw material suppliers. Only aluminum products of greater added value are imported by China, generally from developed countries as we will see below. In the case of global exports, the greater participation of developed countries is clearly noted. In 2004, of the nearly US$ 85 billion exported, 60% was from advanced economies of North America and Western Europe (graph 9), highlighted by the manufacture of products of greater added value and by intra-company trade. In individual terms, the principal exporters are Germany, Canada and the United States in decreasing order. Brazil appears in the 15th position in terms of exported value in 2004. Nevertheless, without counting China and Russia, Brazil

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

is the largest exporter among the developing countries (table 1). In any case, Brazil’s participation is marginal – less than 3% of the total sold by the 20 largest exporting countries.

1.1. LEADING COMPANIES ON THE INTERNATIONAL SCENE The two tables below indicate that Vale, Brazil’s leading mining company, was in 5th place in terms of global production value in this sector. Recently, after its purchase of the Canadian company Inco, the Brazilian multinational jumped to second place in terms of market value. When only the aluminum sector is analyzed, Vale does not appear among the largest global companies. Its operation in Brazil is undertaken through productive partnerships with other leading companies, including Alcoa, Alcan, Norsk Hydro and BHP Billiton, which account for the 1st, 3rd, 5th and 7th positions respectively, in the ranking of the world’s leading aluminum producers. This joint participation by Vale with some global companies from the sector is verified in some of the companies in the aluminum production chain in northern Brazil, such as MRN and Alunorte. In the case of Albras, the Brazilian company acts jointly with a Japanese consortium while in the case of Alumar, the multinationals mentioned above – with the exception of Norsk Hydro, present in Alunorte – operate jointly, but without the presence of Vale.

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1.2. PRODUCTION AND FOREIGN TRADE OF ALUMINUM IN BRAZIL Concerning primary aluminum in Brazil, after the end of the 1980’s, production stagnated during the 1990’s, peaking from 1997- 2000. After the crisis of 2001, there was a rapid recovery in production. This fact is related to the greater dynamism in the domestic market, but specifically to the recovery of the international market (which accounts for nearly 60% of the destination of Brazilian production). From 2001 to 2005, Brazilian aluminum production grew 32%.

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

In parallel, it can be seen that in the same period, from 2001 - 2005, the growth in exports – in a context of stagnated imports – caused the balance of trade in aluminum to double from US$ 715 million to US$ 1.464 billion. In the case of alumina, the commercial balance reached nearly US$ 600 million, beginning from quite low amounts in the late 1990’s. In the case of bauxite, there was growth in the balance of trade, which was some US$ 250 million in 2005. That is, the entire production chain accounted for a US$ 2.3 billion balance of trade surplus, which represented nearly 5% of the total surplus obtained by the country that year (GRAPHs 11 - 13). Therefore, unlike China, manufacturing activity in the Brazilian aluminum chain is quite dependent on international demand, because the domestic market is not sufficient to guarantee expanded production.

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Another source of concern, when analyzing the rhythm of growth of foreign sales by Brazil, is that Brazilian exports grew particularly in segments of lower added value in the chain, principally alumina. From 1997 – 2005, while aluminum exports grew 40%, those of alumina grew nearly 10 times (Graph 14). A profile of regressive production specialization can be identified in Brazil, by the announcement in 2004 of the implantation of an alumina factory in Barcarena, the result of a partnership between the Chinese company Chalco and the Brazilian based Vale, and which has the potential to become the world’s largest alumina producer. The project also reinforces Brazil’s international presence in the segments of lower added value, as in the case of alumina. As can be seen in the chart below, Brazil has a better position in the ranking of global production to the degree that it advances in the initial stages of the production chain, notably those of lower added value. This position by the country suggests a dependence on the markets for the destination of bauxite exports, on one hand, and a difficulty of insertion in the global aluminum chain, in order to take advantage of production specialization to guarantee participation in the alumina and primary aluminum segments.

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

1.3. THE STANDARD OF FOREIGN INSERTION OF BRAZILIAN ALUMINUM Upon analyzing Brazilâ&#x20AC;&#x2122;s insertion in the principal markets - the United States, the EU and China - for the three principal products in the aluminum production chain, note that Brazil is found well inserted in aluminum and bauxite exports - or that is, on the extremes of the chain - for the U.S. market. In the case of aluminum, it jumped from 12th place in 2002 to sixth in 2005. It is important to note that 2/3 of the U.S. market for aluminum is dominated by imports from Canada, Russia and China. In the case of bauxite, Brazil stands out as the largest exporter to the United States, accounting for 1/3 of U.S. bauxite imports. Everything indicates that much of MRNâ&#x20AC;&#x2122;s exports were aimed at the U.S. When evaluating aluminum imports by the European Union, intracompany specialization is noted, with this region consuming products of greater added value produced in the various European countries. Brazil appears only as the 15th largest exporter to the European Union. Nevertheless, its position did rise since 2002. In the case of alumina, Brazil was better located, appearing as the 4th largest supplier to the European Union, accounting for nearly 8% of imports to this region. Once again, the country wound up specializing in intensive activities in natural resources, of low added value, with few direct and indirect jobs, and which have limited impacts on the rest of the production chain.

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In the Chinese case, Brazil already appeared as the seventh leading exporter of alumina to the Asian giant in 2005, rising from an irrelevant position in 2002. A strong loss is also seen by Australia, to the Chinese market, even if Australia continues to account for more than half of Chinese alumina imports. It is also worth emphasizing that Brazilian alumina exports to China are already 43% higher than its sales to the European Union - US$ 60.4 million compared with US$ 42.2 million.

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

This data allows emphasizing that the large investments in the aluminum chain in Brazil are concentrated in the initial steps of the chain – bauxite and alumina – with the country serving as a marginal exporter of aluminum, generally of lower added value, to the U.S. and European markets. To alter this form of foreign insertion, the stimulation of Brazil’s domestic market, together with increased investments made possible by a sectoral industrial policy – which would allow aggregating more value to production – and by the realization of bilateral accords with other developing countries, could bring greater foreign competitiveness to sectors with greater technological development, occupying larger portions even in developing country markets. An industrial policy of this type would have a positive impact on the generation of jobs on a local and regional level and would stimulate new segments linked to the end of the production chain such as suppliers for civil construction, the aluminum laminate industry and many other small and medium companies with new technical-professional profiles.

1.4. THE BRAZILIAN INSERTION MODEL: ADVANTAGES AND CHALLENGES The international aluminum market had a strong recovery in the first half of this decade, combined with high prices and accelerated global production, which were due to the post 2002 recovery and to Chinese production and consumption. Although Brazil has taken advantage of this international situation, with a rise in production levels and in its balance of trade in all products in the chain, a good part of the export expansion was in the sale of bauxite and particularly alumina. Unfortunately, in the steps with greater added value, Brazilian performance is not as significant, with the country being a marginal exporter of primary aluminum to the United States and the European Union, while establishing itself as the largest exporter of bauxite to the U.S. market and as the fourth largest exporter of alumina to the European Union and the seventh largest supplier to the Chinese market – and growing strongly. There is certainly space for an alteration in the form of the country’s foreign insertion, which depends on a set of macroeconomic factors related to a strong recovery in the domestic market and to

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an industrial policy and foreign trade that would allow the country to enter niches of greater added value both in developing and developed country markets. For the purposes of the Social Observatory Institute study â&#x20AC;&#x201C; which focuses on an analysis of the social and labor behavior in the aluminum chain in northern Brazil â&#x20AC;&#x201C; the elements described above allow presenting this question: how is this productive structure and the foreign insertion of the aluminum chain affecting or how can it affect the environmental performance, the potential for local development and particularly the social and labor relations of those linked directly and indirectly in the various aluminum production phases? Or, what is the relationship between a subordinated insertion to the global aluminum chain and the environmental and social sustainability of the aluminum business and of the segments in which Brazil is directly involved? Is it possible to speak of sustainability in the aluminum production chain in Brazil and its economic, social and environmental impacts?

2. THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

he aluminum production chain is understood as the sequence of operations needed to manufacture finished aluminum products, beginning with the raw materials. The various processes are independent and conducted in different industrial plants. A summary of the entire aluminum production chain can be seen in Figure 1 below.

The production of primary aluminum involves only the three initial steps of the aluminum production chain, that is, the extraction of bauxite (mining), the transformation of bauxite into alumina (refining) and the forging of alumina into primary aluminum (reduction)3. The mining process is highly mechanized and involves the operations of deforestry, soil removal, extraction and transport of bauxite to the grinding mill, where the ore is reduced in size, to then be processed (washed and dried). Bauxite is a type of red clay, which contains from 45% - 60% alumina4 (aluminum oxide), and is found principally in tropical and subtropical regions.

3 Four to five tons of bauxite are needed to produce two tons of alumina, which when reduced, produce a ton of primary aluminum. 4 Alumina is a specific chemical term to define aluminum oxide (Al2O3). Nevertheless, in commercial practice, there is a wide variety of types of alumina that receive a series of adjectives such as calcined, low soda, fused, tabular, smelter grade and others.

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

The second refining step is conducted in five principal stages: crushing, digestion, filtration/evaporation, precipitation and calcination. Figure 2 below displays the process:

Part of this process is conducted in the so-called red area (bauxite input) and part in the white area (input of rich liquor).

Chart 2 shows the inputs necessary for alumina production.

The third phase of the primary aluminum production chain is Reduction. In this step, realized in reduction pots at temperatures that reach nearly 1,000Âş C and in a cryolite/alumina mixture, the alumina is transformed into metallic aluminum through the socalled Hall-HĂŠroult process, where the electrolysis reactions occur. The metallic aluminum is formed into ingots, sheets or bars (primary aluminum), to facilitate transport. The two primary inputs of this final phase of the process are the alumina and the electrical energy, with the latter responsible for more than 40% of the production cost of the primary aluminum. For this reason, refineries are usually located in regions of abundant electrical energy. Of all industrial processes, the conversion of bauxite into primary aluminum is that which consumes the most energy. A BNDES study (2002) indicated that aluminum, among the electro-intensive segments of industry, accounts for Âź of energy consumption in Brazil, ahead of iron and steel, paper and cellulose, cement, petrochemical and other industries. In this sense, various companies in the aluminum sector are investing in the generation of their own energy, which in the year 2000 represented 13% of total energy consumed.

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Along the rest of the production chain, metalworking companies manufacture semi-finished products such as sheets, rolls, wire and cable and later finished products, generally linked to the machinery and equipment, beverage, pharmaceutical, chemical, automobile and civil construction sectors as well as for the transmission and distribution of electrical energy. The final step in the production chain is the recycling of aluminum. Aluminum has physical characteristics that favor its use: it is a resistant, anti-corrosive, very light and malleable metal, and is an excellent conductor of heat and electricity.

2.1. WHO’S WHO IN THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL? The four companies studied by SOI - MRN, Albras, Alunorte and Alumar - form the production chain for primary aluminum in the Brazilian north and are linked to large multinational companies, which are global leaders in the mining and steel sector. The main companies in terms of participation in Brazil are: Alcoa, BHP Billiton, Vale, Nippon Amazon Aluminium Corporation - NAAC, Norsk Hydro and Alcan. Alcan (Aluminium Limited of Canada) was the first company to confirm the existence of bauxite reserves of high commercial potential in the municipality of Oriximiná, in Pará State, in the 1960’s. It created Mineração Rio do Norte - MRN, in 1967, to mine the mineral, but the project was interrupted five years later with the company blaming unfavorable international market conditions. In 2007, when Rio Tinto purchased Alcan for US$ 38 billion and created Rio Tinto Alcan, this company became world leader in the aluminum business. It annually produces 30 million tons of bauxite, 8.7 million tons of alumina and 4.3 million tons of aluminum and employs nearly 65,000 employees in 59 countries and regions. In Brazil, the company has a 10% share in the Consórcio Alumínio do Maranhão - Alumar and 12% in the bauxite mine at the Porto de Trombetas (PA). Alcoa is currently the world’s ninth leading mining company. In 2001, the company was in second place, It operates in 44 countries and employs nearly 130 thousand people. In 2006, the company produced 15 million tons of alumina and 3.5 million tons of primary aluminum. The two commodities represent 35% of its total revenue. The company has operated in Brazil for 40 years, through Alcoa Alumínio S.A, a closed capital company. It has units in six states: Pará, Maranhão, Pernambuco, Minas Gerais, São Paulo and Santa Catarina. With the exception of the Consórcio de Alumínio do Maranhão (MA), all of the other Alcoa units are wholly owned. Alcoa Alumínio also participates in two hydroelectric projects in the country - Machadinho (31%) and Barra Grande (42%). The two power plants generate approximately 268 MW, guaranteeing the company 40% energy self-sufficiency to supply 100% of the demand for 220 MW at the Poços de Caldas (MG) plant and send the excess (nearly 10%) to Alumar, whose demand is 470 MW5. The rest of the energy needed by Alumar is supplied by Eletronorte’s Tucuruí hydroelectric plant, with which Alcoa renewed its supply contract in 2004, extending it until 2024. Alcoa also participates in the Consórcio Estreito Energia (CESTE), which includes other companies, for the construction of a hydroelectric dam on the Tocantins River, on the border of Maranhão and Tocantins States, which will have capacity to generate 1.080 MW, in 2010.

5 Alcoa América Latina - Relatório de Sustentabilidade 2005/2006 e 2006/2007.

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

6 BHP Billiton, Relatório de Sutentabilidade, 2006.

BHP Billiton is an Anglo-Australian company, the world’s sixth largest producer of primary aluminum, and employs nearly 38 thousand people in 25 countries including Australia, Mozambique, South Africa and Suriname. It produces approximately 1.3 million tons of primary aluminum per year. In 2006, 15.5% of its global income was generated by the aluminum business, with South America the next to the last region in terms of contribution to this total. On the other hand, it is interesting to highlight the increased participation of South America in the company’s total income from 2005 - 2006, rising from US$ 55 million to US$ 729 million6, which means that aluminum production is not the company’s main business in the region. In addition to the participation in Alumar, BHP Billiton also has a 14.8% share in MRN, which represents only 18% of global bauxite production by this company. In 2006, it completed the sale to Vale of its 45.5% share in Valesul. It also has a 50% share in Samarco, in Espírito Santo, State, Brazil, which produces iron ore pellets. Vale, the world’s largest producer of iron ore, and the world’s second largest diversified mining company, is the largest private company in Brazil and Latin America (US$ 130 billion). Aluminum is one of its fields of action. It operates in 32 countries and employs 62 thousand people, with 47 thousand of these in Brazil.

7 Vale - Relatório de Sutentabilidade, 2006.

Brazil accounts for 16% of its gross income and aluminum represents 8.2% of income and is the third largest business for Vale7. In the Brazilian aluminum business, Vale has participation in Albras (51%), Alunorte (57%), MRN (40%) and in Valesul (100%). The company also operates a large logistical system, including rail transport, ports and terminals. In addition, it operates in the generation of energy, integrated to operations in the aluminum, mining and steel sectors. Company activities began in 1942, when Vale was created by the federal government with the goal of exploring iron ore in Brazil. In 1952, the Brazilian government assumed definitive control of Vale’s operating system, reformulated the company by-laws and consolidated the company as a government agency. In May 1997, Vale was privatized through an auction at the Rio de Janeiro stock exchange. Vale’s production grew considerably in the past 6 years, principally in iron ore (176%), alumina (252%) and kaolin (145%). Aluminum is the third largest business in Vale’s portfolio. In 2007, it generated a gross income of R$ 5,529 billion and net profit of R$ 2,101 billion. In that year production was 9.1 million tons of bauxite; 4.3 million tons of alumina and 551 thousand tons of primary aluminum. NAAC is a consortium of Japanese companies and entities, among them large consumers of the metal, a private bank, trading companies and the Japanese government, which is the largest shareholder, through the Japan Bank for International Cooperation - JBIC (formerly OECF). Norsk Hydro is a Norwegian company that produces aluminum and finished products. It employs 23 thousand people in 40 countries on all continents. In the aluminum production chain, it also participates in the generation of energy. It has operated in Brazil since 1974, when it purchased 5% of the shares of MRN. It has a 34% share in Alunorte (34%) which is responsible for 7% of world alumina production and now produces 6.26 million tons per year. Norsk Hydro has 435 employees in Brazil.

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The companies studied:

MRN MRN was created in 1979 as a joint-venture formed by Vale (at the time Companhia Vale do Rio Doce), which held 49% of the capital and by Alcan with 19%. Since then, MRN has undergone various changes in shareholder composition. The most important was the entrance of Alcoa Alumínio S.A in 1991, with the transfer of part of the shares of Aluvale (formerly held by Vale, which managed the business related to the aluminum segment) and of Alcan to Alcoa and BHP Billiton. Currently, MRN’s capital is held by Vale (40%), BHP Billiton (14%), Alcan (12%), CBA (10%), Alcoa Alumínio S.A (8.6%), Alcoa World Alumina (5.0%), Norsk Hydro do Brasil S.A (5.0%) and Abalco S.A (4.6%). Considering that the Alcoa group has 60% of the shares of Abalco, Alcoa’s participation in MRN is 18.2%. Vale and Alcan have greater influence in the management of MRN, and can name its directors, although Alcan does not have a larger share. The Director President and Commercial Director are named by Vale, the Administrative and Financial Directory by Alcan. Other personnel are indicated by MRN itself. According to one of the company representatives, this condition was established in the shareholders agreement, which indicates that there is no direct relationship between greater shareholder participation and greater power of influence in company management. When it was created, MRN’s production capacity was 3.35 million tons of bauxite per year. At the end of the 1990’s, the company produced 11 million tons a year and in 2005 reached 17.2 million tons. The bauxite produced by MRN is delivered to its shareholders according to long term contracts that establish the agreements to purchase the ore. Nearly 60% of production is aimed at the domestic market, basically for Alunorte and Alumar. The other 40% is destined to the foreign market, with most sent to Alcan in Canada and the rest to other destinations such as Mexico and Europe. ALBRAS E ALUNORTE Albras (Alumínio Brasileiro S.A.) and Alunorte (Alumina do Norte do Brasil S.A.) were born from a confluence of interests involving the Brazilian and Japanese governments. The increase of the already high costs of energy due to the petroleum crises in the 1970’s led Japan to encourage the transfer of its aluminum companies abroad, especially to countries where there was abundant energy, and also, cheaper bauxite, as in the case of Brazil. In addition, the Brazilian government, interested in the consolidation of agriculture and mining in the region through the Polamazônia project (Agriculture and Agromineral Program for the Amazon)8, created Eletronorte and took control of the construction of the Tucuruí hydroelectric dam to facilitate the coming of the Japanese companies to the country. Thus, Albras was created in 1978 by NAAC (49%) and Vale (51%), but its operations began only in 1985. This company has the largest installed production capacity in Brazil. In 2005, it produced 445,393 tons of primary aluminum. The company’s operating markets were defined during the conception of the project, aimed nearly exclusively at export.

8 Polamazônia was created by the Brazilian government in 1974 to spur development in the Brazilian Amazon and facilitate the implantation of export projects.

Alunorte was also established in 1978, but in this case, the Japanese desisted from the investment and Vale had to seek new partners for the company, such as Norsk Hydro from Norway. For this reason, its operations began only in 1995. Vale now has 57% of the business, the Norwegian company 34% and the Japanese consortium 5% of the shares. In the 10-year period from 1985 - 1995, the supply of alumina to Albras was mainly from imports. In practice, the Japanese should participate in the entire consortium - both productive and energy portions - but assume only a portion of the capital of Albras and a marginal share of Alunorte.

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

ALUMAR In parallel, under the command of Alcoa, the Consórcio do Alumínio do Maranhão (Alumar) was being constructed for the production of alumina and primary aluminum, in the city of São Luís. Since the beginning, the Consortium included participation of Billiton Metais S.A., a company in the BHP Billiton Group. Alcoa and BHP Billiton now have 35% and 36% respective shares in the reduction. Considering that the Alcoa Group has 60% of the shares of Abalco, whose participation in the refinery is 19%, Alcoa’s share increases to 54.0%. In this case, the policies, strategies, and management of Alumar are defined by Alcoa, the majority shareholder. Alumar is the world’s largest integrated alumina and aluminum complex and is located in the industrial district of São Luis. Its construction began in 1980 with an investment of US$ 1.7 billion and is composed of three units: the port, the refining factory (for alumina production) and the reduction factory (for transformation of alumina into aluminum). The complex began operations in 1983 and 1984 and with the most recent expansion in the reduction area, in August 2006, Alumar’s productive capacity grew from 377 thousand to 440 thousand tons of primary aluminum, making it the second largest metal factory in Latin America. The production of alumina is 1.5 million tons per year, and should reach 3.5 million tons in 2009 when the refinery expansion is completed. Alumar’s viability is due in part to fiscal and credit guarantees, in addition to funds provided by the Maranhão State government for the infrastructure needed for the project. In addition, the federal government conceded reduced income taxes for all industrial projects in the Brazilian Northeast, at the time of implantation. The energy consumed by ALUMAR was subsidized for a period of 20 years and in 2004 was renovated for another 20 years, after negotiations with the federal government. It is thus observed that the principal multinational companies operate in the activities from the beginning of the chain. Controlling capital shares in MRN, Vale controls one link of the chain, from the Alunorte and Albras plants, and Alcoa and BHP Billiton, together with other multinationals, command the other link in the chain formed by Alumar.

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Figure 3 below indicates the organization of the aluminum production chain in Northern Brazil in its various stages.

These chains, however, do not exist in a vacuum. They act on a regional production space, which depends on a set of infrastructure works, involving activities such as transportation and electrical energy generation, with the latter the principal production input in the three initial steps of the aluminum production chain. In this way, the flow of bauxite extracted by MRN - at the world’s third largest bauxite mine - is realized by a 30-km railway and by means of cargo ships that distribute it abroad or to the production centers in Barcarena and São Luís. Transport to foreign markets is conducted through ports at these two cities. The energy is supplied directly by the Tucuruí Hydroelectric Dam by means of high voltage power lines. Both industrial complexes count on the supply of energy for this company at subsidized prices. A company town was constructed at Barcarena called Vila dos Cabanos to house the employees of Alunorte and Albras. For a long time, the village was administered by the two companies until it became a district of the municipality of Barcarena. The perspectives for market expansion and for the global prices of alumina and aluminum have led to the launching of new bauxite extraction projects and others for the generation of electrical energy. This is the case of the Juruti mine, to be operated by Alcoa, and that of Paragominas, under the control

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

of Vale. The expansion of the processing capacity at the industrial complexes, in turn, will depend on the creation of new mines such as that of Belo Monte in Paragominas. In the case of the Paragominas mine, the bauxite will be sent to the Alunorte plant by means of an ore-duct. The Juruti mine, in western Para, will be linked to the expansion project at the Alumar refinery. This mine is controlled by Alcoa, which plans to act as an investor in the mega-dam at Belo Monte (Schaefer & Studte, 2005). 2.2. Economic Dynamic The creation of the aluminum chain in northern Brazil was not an autonomous or isolated process, having resulted from a set of international, national and local forces. Together with other mining activities, the Amazon, since the 1950’s, would be integrated to the general process of capitalist expansion, breaking the standard of expansion by “cycles” such as that of rubber in the previous century and that had weak connections through the social fabric and with local production, but also with the national economy. Now, in this new context, a “deregionalization of the regional economy” was being prepared. This created a new “capital frontier” (Correa, 2006), linked to the interests of international elites and which would activate local actors who benefited from the new source of generation of wealth through the aluminum economy. A new speculative differentiation of space arose that was accompanied by a mercantile specialization that would articulate the Brazilian North with the integrated flows of foreign trade and productive investments (Santos, 2003). The concept of the capital frontier substituted the traditional concept of the frontier - which assumed that a traditional region, doted with natural resources and until then isolated, is incorporated to the modern system - because it realizes the precedence of mercantile and financial capital that led to the aggravation of the social conflicts (Becker, 2007). We begin with the set of elements that would allow the inclusion of the Amazon in the circuit of expanded reproduction of capital, based on capital intensive plants, and which take advantage of the existing natural resources and of the available energy sources. In the first place, international capital fulfilled an outstanding role. It should be emphasized that the aluminum industry was one of the pioneers in the process of internationalization of production. In the mid 20th century, a reasonably well structured global oligopoly was already in place, formed by six companies - Alcoa, Alcan, Reynolds, Kayser, Pechiney and Alusuisse - which purchased 88% of the bauxite produced globally (Ciccantell, 2005). From then on, these companies sought to diversify their sources of raw material (bauxite) and energy. Bauxite mining had become increasingly decentralized. As a consequence, the trade in alumina that represented 27% of global production jumped to a share of 49% in 1992 (Ciccantell, 2005). This decentralization of alumina production attended the interests of the large multinational companies, because the transportation costs were reduced significantly. In a related manner, the same took place with the aluminum smelting process. Following this economic logic, the multinational companies began to realize an integration of the initial stages of the chain. This is because there was no use in advancing in terms of product and process technology, if there were bottle necks at the initial steps. Therefore, they made use of a new coordination mechanism, joint-ventures, with the goal of reducing costs, decreasing risks and dividing the investments needed to integrate the chain.

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While these practices were common in the global economy after the 1980’s, the aluminum industry had been using them since 1940, since the consortiums between Alcan and Swedish and Indian companies (Ciccantell, 2005). Instead of only competing among each other, the large multinationals also began to develop cooperation strategies in various international enterprises. On the other hand, the high cost inputs (transportation and energy) created the opportunity for the formation of Brazilian companies, usually with State capital, which would assimilate the new technologies and develop partnerships, even with companies and governments from countries that wanted to “break into” this oligopoly”, which had a market structure controlled by a few companies with strong capacity to set international aluminum prices. The first case of industrial mineral exploration in the Brazilian Amazon was at the Serra do Navio, in the 1940’s. Located in the current state of Amapá, it involved manganese reserves. This began a story that would be repeated with aluminum. A Brazilian company, ICOMI, received authorization to exploit the mine, associating it to a multinational, the U.S.-based Bethlehem Steel Group. Together with the industrial installations, arose infrastructure - port facilities and a railway - and a company town, which included worker housing (Monteiro, 2005). The freedom to sell labor power was constrained by the issue of extra-monetary “benefits”, which actually contributed to reducing the cost of labor power. In the case of the industrial center at Trombetas, the government action was more intensive. The government entered through Vale - which was then a government owned company, and the leader of various consortiums in the aluminum sector - and with infrastructure expenses: the construction of dams and ports. The Japanese government and Alcoa put off investments, so that the government would provide the needed capital, or that is, part of the fixed capital for both equipment and and infra-estrutura), since one does not exist without the other (Santos, 2003), while the production costs were subsidized (energy), or very low in relation to the productivity levels. In the case of energy, the government assumed the responsibility for construction of the hydroelectric power plant, and offered below market prices for electricity to the large multinational groups. In this period, the mid 1970’s, the military government entered its II National Development Plan, with the goal of completing its industrial matrix. There was also a shift in the discourse, which passed from regional planning to a perspective aimed at the production of space for state-owned companies (Becker, 2007). The investments could not be put off. The fiscal and credit benefits provided to the multinationals must be “paid back” through the development of the region based on added value to the production chain. This was the proposal at the base of the Agricultural and Agromineral Pole Program for the Amazon (POLAMAZÔNIA). In parallel, the Amazon region became integrated to the international economic circuit, through the mining and metallurgical sector and to the domestic economy, since it began to receive equipment and consumer goods (Correa, 2006). With the rise of the Superintendcy of Amazon Development (Sudam) and the Banco da Amazônia S.A, (BASA) another portion of invested capital was supplied, with resources from the Amazon Investment Fund (FINAM) or from the concession of lower income taxes, that is, from public finances - exponentially increasing the profit of investors (Oliveira, 1998), usually Brazilian, who should supposedly industrialize the Amazon. Since the 1990’s, with the combination of redemocratization, economic liberalization and the removal of the government from productive activities - as well as a decentralized developmentalist discourse - but based on supposed regional vocations - some important changes were implanted.

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

The most important was Constitutional Amendment no.6, which eliminated the requirement for majority participation of Brazilian capital in mining companies (Monteiro, 2005). It also exempted companies that produced primary or semi-manufactured products from collecting ICMS [sales tax], but ended the possibility of corporate income tax (IRPJ) exemptions. (Monteiro, 2005). In general terms, multinational companies, Brazilian or foreign based, tend to have greater autonomy in their production decisions, and were “subsidized” by the cheap purchase prices of the old state companies (Ciccantell, 2005). In parallel, no expressive changes were perceived in the approach to regional development, during either the administration of President Fernando Henrique Cardoso, or that of President Luis Ignacio “Lula” da Silva, With the later’s Program for Acceleration of Growth (PAC), the state has returned to prominence, in the sense of potentializing the profitability of private investments to be channeled to the region, without offering the emergence of new socio-economic dynamics based on regional realities. That is, an approach that emphasizes the generation of balance of trade surpluses appears to take prominence over a regional and industrial policy focus. This winds up reinforcing the competitive insertion of the aluminum chain to the trade and investment flows of this important extractive industry, in a subordinated manner.

2.3. Limits and Potential for Local Development Two factors were particularly emphasized - especially during the military period - as potentially positive due to the implantation of the mining sector in the Amazon. On one hand, the opportunity to add value at the final points of the chain, on the other, the ability to generate employment and income in the region. As we will see below, these promises were largely frustrated. The stimulation of production of finished aluminum and the creation of a local-regional cluster focused on the development and generation of employment and income were projects that could not be concluded without a stronger domestic market and lower dependence on exports of bauxite and alumina. In addition, the negative environmental impacts and the resulting standard of inequality would compromise the possibility to develop alternative socio-economic projects based on the local reality. This does not involve a necessary result or one demanded by capital. Obviously the multinational companies found support in the Brazilian government during the military regime, through the design and implementation of public policies focused on the creation of the aluminum production chain. Nevertheless, alone, they are incapable of promoting added value and irradiating the benefits of the business to the generation of employment, with a focus on local development. It is important to emphasize that in virtue of the subordinated productive integration of the peripheral countries in the global aluminum chain, in a context of consolidated technological innovations, it became difficult to advance new links of the chain, either forwards (towards transformed aluminum or finish products), or backwards (in machinery and equipment). According to Monteiro (2005), only 42% of Brazilian bauxite is regionally processed and even so only in the first production steps, as in the case of primary aluminum. The segments that concentrate the added value in the chain - and which are outside of the country - are not intensive in labor and natural resources. It in fact becomes a big challenge to assimilate them to the regional economic dynamic, given that this involves the coordination and planning of various public policies over time, the confrontation of the interests of multinational groups and of the portion of national and local capital, in addition to the immediate interests of economic policy, substantiated on the need for generation of commercial surpluses.

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Tax waivers and reduced tariffs alone proved to be insufficient to promote the verticalization of the aluminum production chain at a regional level, as could be seen by the results of the policies executed in the 1970’s. In addition, it became cheaper to transport primary aluminum, which occupied less space, than finished products. The lack of agglomerated economies in the region would tend to elevate the cost structure of these projects, at least in the short term (Coelho & Monteiro, 2003). With the implantation of large projects, new regional centers emerged, specialized in industrial activities or in services for agriculture and mining (Corrêa, 2006), but have proved to be incapable of attending the needs for employment and social policies. Concerning the level of employment, the capacity generated by the aluminum sector at the Trombetas Industrial Pole, was found to be quite limited, which probably indicates a general trend in the mineral-metallurgical activities in the Amazon. This is related to the low integration of the various links of the production chain in the national space, but also to a high concentration of capital, property and income, which winds up not generating multiplying effects outside the region. The tables below aggregate the volume of formal jobs (RAIS) in the municipalities of Oriximiná, Óbidos, Curuá, Alenquer, Barcarena, Abaetetuba, Tucuruí and Breu Branco - which are the municipal bases of the extractive projects for industrial transformation and infrastructure at the Trombetas Pole (MRN, Alunorte, Albras, Tucuruí and the port of Vila do Conde), as determined by Coelho and Monteiro (2003). It is supposed that this standard is not very different from that found at São Luiz, where there is another center of the aluminum production chain, that of Alumar. Upon analyzing this micro-region, it is noted that of the total formal jobs existing in 2005 43,822 - the mineral extraction and metallurgical industries represent 7.6% of the total, with 3,338 work posts. These two sectors combined were as important as the wood and chemical complex, which account for 7% of the jobs. The largest generator of jobs in the region was the public sector with 40% of all jobs, followed by civil construction (15.2% of the jobs) and retail trade (12.1% of jobs). That is, 2/3 of the formal jobs are not directly created by the dynamic sector of the economy, but first by those that allow the creation of basic infrastructure and circulation of goods.

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

The agriculture sector, which is important in the region, is not captured by the data from RAIS. The labor in this sector is composed of small famers and those who occupy small plots who live in a subsistence economy, with a marginal connection to the market, but pressured by increases in the price of land. In table 5, it is seen that woman represent 37% of the employees in the micro-region. They are mostly inserted in public administration, where they account for 63% of the jobs, but also in healthcare, education and lodging and food services. In the industrial sectors, the participation of feminine labor is quite reduced, being only 11% in the mineral extraction industry and 6.5% in the metallurgy industry, in which the activities of the aluminum chain are involved.

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Note that it is precisely in the activities of public administration that there is a high concentration of low salaries â&#x20AC;&#x201C; 70% of those employees receive up to 3 minimum wages. That is, precisely in the sector that houses a good portion of the feminine occupations of the region. It is impressive that at least 7 of 10 women employed in the formal sector are linked to the public sector. In the case of mineral extraction and metallurgical activities, it is found that 71% and 69% of the male and female workers respectively receive from 3 to 10 minimum wages, while 25% and 19% respectively, have income higher than 10 minimum wages for each one of these activities,. This is explained by the fact that the capital intensive industries have labor costs that have very low participation in total costs, and can pay salaries above the average in the region. Even so, the existence of pressure from inactive and unemployed workers, and those linked to the informal sector explains why these salaries are quite inferior to those found in the same activities in the developed countries, and have no relation to the advances in terms of productivity.

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

Concerning the distribution of formal employed workers by degree of education in this microregion, nearly Âź did not complete elementary school. This percentage is much lower in the two segments of the aluminum chain - 7.9% in the mineral extractive industry and 5.4% in the metallurgical industry - which shows the concern of these large companies with the selection of workers of average schooling. More than 60% of the employees in these segments have completed high school, while 13% have taken some upper level courses. In civil construction, in agriculture and in various industrial segments, the participation of groups with lower schooling is still expressive, while they are underestimated in table 7, because it only includes the formal sector. In reality, there is nearly no interaction between the professional training of the individuals employed in a company, with high school or superior education, and latent local knowledge, which are undervalued either by capital, or by the public development initiatives. In other words, the education required of workers in the aluminum chain has little impact on the possibility for improvement of the regional knowledge base (Monteiro, 2005), and serves only to improve the productivity indicators of the companies in the chain.

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In terms of labor relations, it can be noted that the region is marked by a model based on the precariousness and informality of labor, with remains of authoritarianism and paternalism in social relations. The ingress of large capital from the aluminum sector, led to the reproduction of a quasi-Fordist model in the region. That is, there is control, division and supervision of activities, but without a salary relation typical of that constructed in European countries after World War II. The company town strategy, as in the case of MRN, in Oriximiná – takes planning to the maximum, providing the “city” modern and essential services, where everything is under direct and indirect control of the company, but which maintain class distinctions by dividing neighborhoods by occupational attributes (Corrêa, 2006). In this sense, it involves a super-Fordism, given that there is no life outside the workplace. But recently, the multinational companies and Vale began a set of organizational changes (in relations between companies, within a company and in the production and labor processes) which make this standard of labor relations even more complex in the aluminum chain in northern Brazil. The control of total quality – and its tools and concepts, such as quality control, statistical control, quality guarantee, zero defects, flexibility and integration – came to be assimilated by these companies in the 1990’s. The adoption of this new organizational culture is a paradox in an “environmentally dirty” industry responsible for risks to life and health in the environments within and outside of the factories (Carmo, 2000). In any case, in an industry with a semi-continuous process, with a high level of automation at the companies, attributes such as skills, knowledge and responsibility are required of the workers.

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

Despite these changes, the situation is thus far from being post-Fordist. This is perceived by the workers themselves who, on one hand, are persuaded by an efficient action of social and psychological persuasion, while, on the other, indicate that “they believe what the company says”. The rhetoric of organizational culture “conflicts head on” with the culture of class (Carmo, 2000), which does not mean to say that the conflict is not unsurmountable, and that forms of consensus can’t emerge. There are also various ways to perceive the discourse of the company by part of the various internal social and occupational groups. In any case, in the supposedly most advanced space for democratic and autonomous labor relations, what is found is an imposition of total quality controls – a contradiction in terms. More grave still is the constant turning to subcontracts, which leads towards a segmentation of labor, which makes unviable much of the corporate discourse and increases the income disparities.

3. ENVIRONMENTAL IMPACTS OF THE ALUMINUM CHAIN IN THE BRAZILIAN NORTH

he mineral extraction and metallurgical industry is known to be one of the most polluting and a generator of negative social impacts in the region where it is installed.

The refining, mining and smelting activities contaminate aquifers and streams with bauxite residue – the so-called “red mud”, lead to the deforesting of the mining areas and the pollution of air by gases, caustic aerosols and other corrosive dusts, etc. The smelting activity (transformation of alumina into primary aluminum) is the most polluting in the aluminum production chain. The most evident problems are the atmospheric emissions, residues from the process and other solid residues (Switkes, 2005). In the opinion of some specialists, some negative effects stemming from the environmental impacts are practically irreversible, even if actions are taken to mitigate them. This is the case, for example, of the mined areas. According to specialists, even if the upper level of these areas are restored after mining, the soil has lost its capacity to retain water, making it unsuitable for annual crops. It is also very difficult to get the forest to return to its previous biodiversity after the suspension of the mining activities (Switkes, 2005). MRN itself, which has undertaken a forestry program in the mined areas since 1981, recognizes that these areas will not have the same biodiversity of an intact primary tropical forest. Nevertheless, considering the standard of external insertion of Brazilian aluminum, in which the country stands out as a large exporter of the metal for environmentally demanding markets such as the United States and the European Union, since the 1990’s the mineral extraction industry has been pressured to meet international and national environmental standards. The companies’ rush to obtain international ISO 14000 certification from the Environmental Management System is the most evident expression of this new competitive scenery where the environmental issue came to have greater importance. In 2005, the financial resources applied by MRN to environmental control actions totaled R$ 25,5 million between investments and expenses, which represented 2.6% of its net income at the end of that year. One of the company’s most important investments was in the rehabilitation and monitoring program at Batata Lake, begun in 1989, and in which it has invested approximately R$ 350.000,00 per year. In the first ten years of MRN’s activities (1979 - 1989), the company dumped waste from the mining process into Batata Lake, leaving the population in the region without the ability to consume

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the water. At the time, the company sought to alleviate the problem by building other water supply systems. Alumar, annually invests R$ 3 million in environmental projects, including the obtainment of new technologies. In 2005, this total represented 1.3% of net income. At Alunorte, investments in the environment increased from R$ 4,32 million in 2005, to R$ 6,87 million in 2006, however, that is below the 2004 level, when the company invested R$ 8,88 million. As a percent of company net income in these years, environmental investments have diminished from 0.52% in 2004 to 0.29% in 2005 and 0.25% in 2006. Alunorte has a solid waste dump, an area specifically prepared to treat the “red mud”, a highly toxic substance that can contaminate underground water. In partnership with the State University of Pará, it has been studying new alternatives and opportunities for use of the mud. One of the possibilities is to use this residue as a raw material for the production of bricks and roof tiles. Albras has invested nearly 1/5 of the total invested in its implantation in the Amazon region (US$1 billion) in the environmental field, with part aimed at the purchase of pollution control equipment. The 2006 Annual Report indicates that the company invested R$ 16,5 million to improve the company’s environmental control. Thus, in relation to the impacts in the physical environment, it can be said that the companies in the sector invest in actions and programs for restoring the environment, and that, therefore, the situation is reasonably controlled. Nevertheless, the same is not true in relation to the impacts caused by the population expansion in the cities in the aluminum chain and in the resulting urban network, which has precarious infrastructure and where predatory land use predominates a model of high land concentration. The analysis of some variables of regional development – population, living conditions, poverty and income inequality, presented in the tables below, indicates the situation of the population in the municipalities where the four companies studied are found. Some cities such as Barcarena (where Albras and Alunorte are located ) and Tucuruí (where the hydroelectric power plant is located that supplies energy for the companies in the region), urban population growth was higher than 10% per year in the 1970’s. In the 1980’s, only Barcarena continued to grow at this pace, while Tucuruí and Oriximiná where MRN is located, suffered the effects of the conclusion of construction and reduced volume of income in circulation (Coelho and Monteiro, 2003). In the case of MRN, it is necessary to highlight that due to the precarious condition of the location of company installations at the beginning of the process, it was necessary to build, along with its port for the shipping of production, the Vila de Porto de Trombetas. The Vila is a model company town, which includes special infrastructure in relation to the region. In this way, most of the population which does not live in the company town remains removed from this progress, living in much inferior conditions. Since it was not possible to gather specific data about Porto de Trombetas to compare conditions at the Vila de Porto Trombetas with those at Oriximiná, the indicators for Oriximiná are certainly benefitted by the data from Porto Trombetas. In the 1980’s, the population of Barcarena continued to grow at an annual rate much higher than that of the country and the state of Pará. One of the factors that can explain this data is that during the time of Albras’ inauguration there was also an expectation for the construction of Alunorte,

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

which was founded in 1978, but which only entered operation in 1995. Even after this date, the population growth in the city continued to increase, possibly because of the expansion at Alunorte from 2000 to 2003, and because of the approval of a new expansion in 2005. In S.Luiz, where Alumar is located, the average annual rate of population growth in the period from 1970 to 2007 is higher than that of the state and the country, but has been decreasing and returning to these levels. In the industrial district of Sรฃo Luis, there are other large companies in addition to Alumar, therefore, it is not the only one to exercise influence on the local and regional socio-economic conditions as in the case of the other three companies.

In relation to the literacy and death rates, there was significant improvement in the three municipalities, in the period from 1991 - 2000, placing them in a better situation than the respective states and even in relation to the country. The per capita income also improved in these municipalities, but only in Oriximinรก did it remain below the level of Parรก and Brazil.

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Meanwhile, in relation to the data for poverty and inequality (difference of income between the 20% most wealthy and the 20% most poor), there is a small drop in the rate of poverty in the region of operation of the four companies and the inequality increased significantly during the 1990â&#x20AC;&#x2122;s, even in the states.

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

Oriximiná is the municipality that had the greatest increase in inequality in the period, with a change of 135.4%, a rate well above the state of Pará (80.3%). S.Luis, once again, given the specificity of the municipality, has the lowest rate of inequality (37.8%), even when compared to the state of Maranhão (152%). In Barcarena, the rate of growth of inequality was 50.6%, therefore, much lower than that of the municipality of Oriximiná. A possible explanation for this difference is the presence of Albras and of Alunorte in the central region of the city of Barcarena, close to Belém, allowing a greater quantity of people to benefit from the economic cycle of the city. Contrary to what took place in Oriximiná, where the installations of MRN are located in an isolated region of the city, making its presence be directly felt only by those who live at the complex of Porto Trombetas, or that is, the workers in the company themselves and their dependents. This fact points to a regional growth dynamic that concentrates income, which allows expansion, on one hand, of the level of employment and income, and on the other increases the restriction of the flow of growth to a reduced number of economic agents. The urban network dependent on the aluminum chain has been established, altering the trajectory of the local cities, but not in the sense of allowing their socio-economic diversification. Nevertheless, any interpretation based on the theory of enclaves is insufficient to capture this transformed regional dynamic. Perhaps this functions only for the case of Oriximiná. This totally artificial city isolates the workers from any social coexistence outside the company and does not have any positive impact – not to mention the negative environmental impacts – on the quilombolas [villages originally settled by escaped slaves] and ribeirinhos [river communities] who live in an economy that is only tangential to the market (Schaefer 7 Studte, 2005). Concerning taxes, even if the municipalities that concentrate the extractive, industrial and infrastructure activities receive greater fiscal resources (through ICMS and ISS [service taxes] ) than the others in the region – which, after all, contributes to increased regional inequality – the tax income is not expressive, when compared to company sales and profits. In this context, the expansion of the rates of royalties on bauxite extraction – by means of the Financial Compensation for Mineral Exploration (CEFEM) – is viable, particularly in a context of locational rigidity of the plants and of the high competitiveness of the Brazilian product abroad (Monteiro, 2005).

4. COMPARATIVE ANALYSIS OF THE SOCIO-LABOR BEHAVIOR OF THE ALUMINUM COMPANIES

he field study of the companies in the aluminum chain addressed the issues of basic labor rights, healthcare, health and safety and the environment. A questionnaire was issued to the workers at the four companies studied (an average of 200 questionnaires at each) and interviews with the directors, managers and bosses at the companies, The comparative analysis of the results allowed providing better details about the standards of labor relations in one of the most dynamic industries in the Amazon region. The study was conducted in October 2006.

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4.1. UNION FREEDOM Before beginning the analysis about the freedom to organize workers at the companies in the aluminum sector, a profile of the unions that represent these workers will be presented and then, questions particularly relevant to the Brazilian reality will be addressed linked to the union organization and activity at the workplaces. In keeping with a characteristic of the Brazilian union structure, the workers at the companies studied are mostly represented by local unions, with a municipal base. The unions are affiliated to different union centers. The Metallurgical Workers Union of Barcarena/PA (SIMETAL) represents most of the ALBRAS workers and the workers of six other companies in the municipality: Alubar, Usipar, WL Engenharia, Oficina São João, Conaf, Empresa Renascer and Minas Cromo. The fact that SIMETAL represents most of the ALBRAS workers explains the use of the Collective Labor Accord as the instrument that governs labor relations and not a Collective Labor Convention. The Metallurgical Workers Union of São Luis/MA (SINDMETAL) represents, in addition to ALUMAR, other small and medium size companies in São Luís, including Gerdau. But since a large part of the contingent of workers at the union base are from ALUMAR, for the union entity, this is the most important company for its activity. The instrument that guides the labor relations is the Collective Labor Convention. The Chemical Workers Union of Barcarena/PA (STIQMB) is the only union that exclusively represents the workers of one of the companies researched, ALUNORTE, and can be characterized as a company union. The Non-Ferrous Metal Extractive Industry Workers Union of Oriximiná/PA (STIEMNFO) was created in July of 1989 and resulted from the breakup of the Extractive Industries Workers Union of Pará and Amapá (STIEPA), which was based in Macapá, AP and to which the workers of MRN have belonged since 1980. At that time, the argument of the leaders for the split was the difficulty directors had in relation to the workers at Porto de Trombetas, given the large distance between the entity’s main offices in Macapá and the union office at PTR9.

9 www.stiemnfo.org.br

STIEMNFO represents the majority of the MRN workers. The others in its base (some 140), are from a company contracted by ALCOA to undertake the work of mineral research for a project at the Juruti mine. According to one of the union directors, the union intends to expand its base and scope of operation, coming to represent the mining workers in the municipalities of Oriximiná, Terra Santa, Faro, Óbidos, Santarém and Juruti.

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

The table below indicates the unions involved and their respective numbers:

The rate of unionization at the four companies is similar and quite significant, led by MRN with 60.1% of the workers unionized. This rate shows the dependence of the unions on the respective companies, but also indicates the active union presence in the mobilization of the workers. In addition, depending on each union, its actions and policies, the rate reveals a strong concern for the generation of employment and income and the struggle for benefits that reduce inequality. If the unions undertake convergent policies, the companies even less so. ALUMAR declares that freedom to unionize is part of its policy of relations with the employees, nevertheless, union directors affirm that the company prohibits the association of employees with union leaders. proíbe a associação de funcionários com cargo de confiança. In the case of ALBRAS, ALUNORTE and ALUMAR, although there are differences in the relations between the unions and the companies, the unionization of workers is not affected. The differences are marked, for example, by the degree of worker participation in union activities and the level of information about union activities and affairs. In the specific case of MRN, the relationship between the union and the company positively influenced worker unionization. But the fact is that, given the economic and social weight of the aluminum industry in the region, the size of the companies studied and the high rate of unionization of workers, all these industries are of great strategic importance for the work of the unions. They become stronger and undertake outstanding activity in relation to the companies, but at the same time, create links of dependence that do not allow them to promote policies that question the extractive model implanted in the region.

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4.1.1. RELATION BETWEEN UNIONS AND COMPANIES The table below shows the number of union leaders who are company employees and the number of leaders released to exercise union activity with pay by the companies - that is they receive their salary, 13th salary and vacations.

Of the four companies studied, ALUMAR is that which most imposes working restrictions on the union directors and thus is where the participation of workers at union assemblies and meetings is lowest. Nearly half of the workers interviewed said that they never participate in these activities (table X). The action of the directors is limited to one day per month, as long as it is requested in writing 48 hours in advance, and when it coincides with the work shift. The company that imposes the fewest restrictions on union activity is MRN, where union leaders have access to the workplace, and workers are allowed to meet on company property, without previous authorization from the company. As a result, the rate of participation of MRN workers at assemblies and meetings called by the union is greater than that at the other companies. Only 6.6% of the workers said they never participate in this type of activity. At the other three companies workers are also not permitted to meet inside the factory, the assemblies are held at the factory gate or at the union office. But the bulletins can be freely distributed and posted for display. According to representatives of MRN and the union, the union bulletins can be delivered on company property, as long as labor safety norms are respected. The sample study showed that only 2.4% of the MRN workers said that they did not have knowledge of the union activities and issues, a rate lower than at the other four companies.

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

In any case, the union bulletins, pamphlets or newspapers are important sources of information for the workers, even if they are not distributed inside the companies. The study showed that this option is most common, followed by conversations with work colleagues. The exception, once again, is MRN, where the information gained at union assemblies and meetings appears as the second option.

Of the companies studied, ALUNORTE had the highest degree of responses to the “sound truck” option which, on one hand, confirms the difficulty the union has in working on company grounds and on the other, reveals the effectiveness of this tool, given that it reaches more than one third of all the workers. ALUNORTE also has the highest rates for the options of communication with work colleagues showing that, although the relationship between the company and the union is combative, there is no limit to the flow of union information that prevents this issue from being raised in the interpersonal relations of workers.

10 It was mentioned, for example, the case of a worker who was called by his direct supervisor to a private meeting to tell him that if he was associated to the union, he would not be promoted.

Meanwhile at ALUMAR, the flow of information is limited to the degree that the company had the lowest rates in nearly all the options, with the exception of means of communication that come from beyond the factory – TV, radio and sound truck. These results reveal the low level of union freedom found at the company by the field study and confirmed through reports by unionists10. Although it is much lower than at ALUMAR, the proportion of workers who never appear at meetings and assemblies is quite significant at ALUNORTE (22.9%). During the study, the unionists interviewed asked for greater freedom for activities. One employee reported that he was called to a meeting and was told that he should stop participating in union activities, and if not, his promotion within the company would be prohibited. Another union director said that he suffered reprisal for assisting in a worker strike at a contracting company that provided services to ALUNORTE. In relation to ALBRAS, the results of the table indicate a satisfactory degree of union information considering the “harmonious relationship” between the company and the union.

4.1.2. DISCRIMINATION FOR UNION PARTICIPATION In general, considering the limited freedom of action of the unions at the companies studied – except at MRN – and the reports of some workers, it is possible to affirm that there is veiled discrimination in relation to the workers who participate in the union activities. One way to measure the opinion of the employees of the units studied about this type of discrimination was to ask them what are the criteria that the respective managements use for promotion, pre-

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senting a series of options, including the non-participation in union activities. Note that the percentage reached for this alternative at most of the companies was low (from 1.2 – 5.7%). In two other questions about the same issue, one sought to know if at any time the employees felt discriminated against at the company and in another, if they had witnessed or had knowledge of a case of discrimination. Various options for responses were given, including discrimination for union participation.

The table below shows all of these rates related to the issue of discrimination:

In general, the number of workers who felt discrimination for participation in union activity is minimal, which suggests a very large proximity between the companies and worker representation. That is, only a small number of workers maintain that non participation in union activities is a criteria for promotion and that there is veiled discrimination for participation in union activity, but few felt harmed for this reason. This phenomenon may be the fruit both of concern in reporting if this had occurred, or of repercussions which a case of discrimination can cause within the company. In any case, for this issue and in the question of non union participation as a criteria for promotion, MRN is the company that presents the highest rates. Nevertheless, it is the company that adopts the most receptive posture in relation to the union, which creates opportunities for union meetings inside the factory, a high rate of unionization and unlimited access of union directors to the company. There is discrimination, therefore, but it is not ostensive and indiscriminate.

4.2. COLLECTIVE BARGAINING Brazilian labor regulations are codified in the Consolidated Labor Laws (CLT) and in various decisions of the Labor Court. As a complement, workers unions negotiate collective agreements (conventions) with owners unions that are valid for a sector and territorial base, or directly with companies, signing agreements valid for that company, in the union’s territorial base. Among the companies studied, ALUMAR is the only one governed by a Collective Labor Convention (CCT), involving SINDMETAL and the Metallurgical Machinery and Electrical Material Workers Union of São Luís. In addition to ALUMAR, some small and medium companies participate in the convention. The contracts expire each March 1. At ALBRAS, ALUNORTE and MRN the tool that governs the relationship between the company and the union is the Collective Labor Accord (ACT). At ALBRAS, the ACT is discussed between SIMETAL, the company and the Metallurgical, Machinery and Electrical Material Workers Union of Pará State (SIMEPA). The contracts expire each June 1 and the negotiations occur annually. The same is true at ALUNORTE, where the ACT is negotiated annually between the STIQMB and the company, given that they expire each November 1. At MRN, the contracts expire on May 1.

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

The two normative instruments have differences and similarities. The CCT, as a collective bargaining instrument, is broader and less specific than the other ACTs. It has 75 general clauses, with less subitems. The ACT at ALBRAS, for example, has only 12 clauses, although with much more specificity for each issue. Some clauses deserve to be highlighted, because they demonstrate advances in certain issues. At the CCT at ALUMAR, for example, one of them specifically concerns the non-discrimination against workers with AIDS. Nevertheless, there are no clauses for the need to overcome discrimination by color or race that also applies to all the other companies researched. In the ACT at ALBRAS, the union is mentioned in numerous clauses that guarantee the consultation, and in some cases participation of workers representatives in the day to day issues of the company. This is not found in the ACTs at ALUNORTE and MRN, which are much sparser in terms of diversity of the points raised and of the guarantee for representativeness at the union. In relation to the negotiating process, once again ALBRAS and MRN appear as the companies with easier dialog with the union. The unionists maintain that there is a relationship of respect and that the parties make an effort to achieve positive results at the end of the process. Therefore, they believe that the negotiating meetings are productive, even when some of their demands are not met. SIMETAL affirmed that ALBRAS supplies the union the information needed for negotiation and that there never has been lack of compliance with the ACT clauses. In the case of MRN, unionists mentioned a certain difficulty in obtaining information, but they believe that workers have achieved many victories. The dialog is more difficult at ALUNORTE and at ALUMAR. At the first, the union representatives affirm that they often send lists of demands to the company with questions of specific interest to workers, but they are rarely approved. They say that the negotiating meetings with the company or with the owners union are generally unproductive due to the little effort made by company representatives to reach acceptable results. One example of this was the treatment of the union requests for the last ACT: of the 25 proposed, only 10 were approved in whole, given that two of those excluded were specifically about union freedom, more precisely about the right to information and to unionization. At ALUMAR, the directors of SINDMETAL maintain that the negotiations are difficult and slow and that the company has even used police force to intimidate workers, to impede entrance of unionists and of a salary negotiating commission to the company. The CCT 2006/2007 was concluded 90-days late and only after 22 negotiating rounds with the ownersâ&#x20AC;&#x2122; union. The company maintains that given the bilateral nature of the negotiation process, the delay is also the unionâ&#x20AC;&#x2122;s responsibility. The unionists also report that the relationship with the company is, historically, very combative. The most emblematic case of this relationship is that of the change in the labor regime, which took place in 2005, passing from alternating to fixed shifts. The decision was taken unilaterally by ALUMAR and until today is a polemical issue and one of the principal struggles of SINDMETAL. In the opinion of ALUMAR representatives, the introduction of the new regime took place transparently and calmly for the workers, despite the resistance manifest publically by the union. At that time, the union president lamented the attitude taken by ALUMAR by having made a decision without a dialog with workers. The company justified its position by maintaining that according to the law, the implantation of a fixed system does not need to be negotiated with the union. For this reason, it was evident that the union directors felt this decision as a loss of negotiating power. The importance of dialog and of union participation in the issues of interest to workers was demonstrated, for example, in the evaluation made by SIMETAL in relation to the Salary and Job Plan. At

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ALBRAS, the union participated in the Preparation of the Salary and Job Plan, the union directors gave a positive evaluation and considered it a union “victory”. At MRN, the decision about union participation is made unilaterally by the company, when it finds discussion about a given issue is needed. In the case of preparation of the Salary and Job Plan, the company merely communicated the finished plan to the union. In the case of ALUNORTE, there is no participation and or discussion about the Salary and Job Plan. The union directors interviewed said that the Salary and Job Plan for the company was never presented to the union and was never registered at the Regional Labor Precinct. It is thus supposed that the different situations found at the companies in relation, for example, to the process of negotiating the Salary and Job Plan, directly influence the employees’ view of the opportunities for promotion. We can see this in the table below that shows the opinion of the employees at the four companies studied, collected in the sample study. ALBRAS which, as we saw above, has a good relationship with the union, involving it in the process of discussion and Preparation of the Salary and Job Plan, has the best results. In this specific case, the union suitably represents workers’ concerns. Therefore, there appears to be two quite distinct behaviors here. On one hand, companies where the unions undertake transparent negotiations and achieve rights in a cooperative manner. On the other, companies that impede relations with the union, making the process more combative, a more traditional behavior and farther from the model for the production chain. This is reflected in the perception of the opportunities for promotion. In the first case, the workers feel that they have better opportunities, which influences the level of satisfaction and productivity. In the second case, the reverse is true, the employees feel that they do not have as many opportunities, this can be reflected in the productivity and satisfaction indicators.

4.3. SALARIES In general terms, the salaries paid at the companies studied are lower than those paid in their respective sectors11, in the region where they are located. The company closest to its regional range of salaries is Alunorte.

11 The classification of the sectors used as its reference the National Classification of Economic Activity (CNAE) of the IBGE. The metallurgical industry refers to division 24 (METALLURGY) and the extractive industry refers to section B (EXTRACTIVE INDUSTRIES).

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

The table indicates that, invariably, the salaries paid by the companies studied are on average below those paid by the same sector in the same region. This salary profile and the difference found in relation to the sector and region are not in keeping with the level of education of the workers, which is relatively higher than that found in the respective industries (Table 7). That is, although the workers at the companies studied have an average degree of schooling above that of the sector and the region, they are paid below the average. This can be explained by the dependence of the unions on these companies. The data about schooling of employees was collected both in the sample study as well as through a list sent to the companies. Nevertheless, the results from the sample study are used here for two reasons. First, because it is not know exactly the period in which the data were collected by the companies, which can compromise the precision of comparability. Second, because it was found that the data supplied by the companies were different that those found in the sample study. That is, many workers responded to the questionnaire used in the study by informing a level of schooling superior to that reported by the company.

The degree of schooling at the companies studied is, on average, similar. MRN is the company that concentrates the most workers in the lower ranges of schooling, accompanying the rates found in the region where it is located. ALUNORTE, meanwhile, is that which has the best educated personnel, with only 0.4% who are not high school graduates. It is also the company that most exceeds the rates found in the region.

4.4. LABOR HEALTH AND SAFETY The comparative statistical analysis of this issue was based on the data collected in the field research, because the information supplied by the companies and union has differences relative to dates and measures (rate of frequency or absolute number of accidents) that prohibit the construction of a standard for comparability.

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In relation to accidents, for example, the table below shows the proportion of workers that suffered accidents at the companies and the most frequent types and consequences.

First, it can be said that the frequency of accidents in the four companies is not high, and, according to the data supplied by the companies and the unions, all the accident indicators have show a drop in the past 5 years. In second place, the type of accident and the most frequent consequences are similar, and correspond to the type of industrial activity undertaken by the companies. MRN is the only one that has activities different than the other three companies and a larger number of employees said they had suffered some type of accident in the past five years. The company representatives justified this percentage alleging that this rate includes those who suffered accidents treated with first aid. At ALUMAR, where the refining and reduction take place, the variety of types and consequences of accidents is greater. For this reason, the most frequent accidents have lower rates than those at the other companies. In general, the evaluation of the employees of the four companies in relation to the action of the Internal Accident Prevention Commission (CIPA) was positive, as seen in the table below:

The CIPA at ALBRAS received the best evaluation, given that more than 70% classified its action positively. The worst evaluation for a CIPA was at ALUNORTE. At all the companies, the composition of the CIPA meets the requirements of Regulatory Norm nยบ 5 of the labor legislation, with 50% of the worker representatives elected directly by the workers and 50% named by the company. In addition, none of the unions had any significant problems in relation to the CIPAs. The participation of the union in health and safety issues differs from company to company. Contrary to what its high degree of union liberty suggests, ALBRAS is the company most criticized by the unionists when the issues are work accidents and worker health. The unionists said that the company is the only one among those studied that does not send a copy of Labor Accident Communications (CATs) to

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

the union, as required by law. They also affirm that the union is impeded from accompanying the analysis of the labor accidents. In addition, they allege that ALBRAS does not make itself available to discuss with the union any problems and requests related to health and safety at the work place of workers in the production chain. The information about the issue that reaches the union come from the workers. The theme of labor health and safety is also considered a critical issue at ALUNORTE by the unionists of STIQMB. They say that the company does not pass along to the union information about labor accidents and health problems that occur with company workers. As a result, the union directors are excluded from the discussions related to the health and safety problems at the workplace. They also say that the company does not allow workers representatives to accompany inspections of health and safety conditions and that the union accompanies inspections by the National Social Security Institute (INSS). The union directors also declare that the results of environmental evaluations by physicists, chemists and biologists are not available to worker representatives. MRN is the only company whose union participation in the issues of Health and Safety take place without significant problems. The union directors affirm that they have ample access to information about labor accidents and health problems that occur to company workers, even to those that are subcontracted. The information is sent by the company security division, via e-mail. In addition, the copy of the CAT is always sent to the union and to the CIPA. The union leaders also report that if an employee does not report an accident, he and the manager are fired. When an employee has an accident, he must fill out daily reports about the accident, its causes and consequences. The workersâ&#x20AC;&#x2122; evaluations of their working conditions considered the following factors: temperature, lighting, noise, air quality, organization of work space, cleaning and comfort. The table below shows the rates of evaluation for each of these items:

On average, the worst evaluations of working environment were at ALBRAS and the best at ALUMAR. In general, the factors with the best grades were lighting and cleanliness, while those with the most problems were temperature, noise and air quality. Individually, noise is the item with the worst evaluation at three of the four companies. MRN has the highest rate of dissatisfaction in relation to this factor. The problem is recognized by the company representative for health and safety, classifying it as the factor most likely to cause occupational illness. At ALBRAS and ALUMAR the main problem mentioned by workers was the question of temperature. These two companies are precisely those that produce aluminum through the reduction process, which during the electrolysis step, reaches temperatures of nearly 1.200Âş C in the furnaces. That is, the type of industrial activity appears to have a decisive influence in the result.

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In relation to occupational illnesses, the tables below indicate the types of illnesses presented by the workers and the symptoms of illness felt, at least in the six months before the study.

According to the sample study, ALUMAR is the company that presents the best rate in relation to health problems: 63.5% of the workers say that they never had any type of health problem. MRN had the worst result with 44.1% of the workers affirming that they have had some health problem since they entered the company. MRN also has a greater frequency of skin and respiratory illnesses and allergies, confirming what Switkes (2005) indicated as the principle health risks generated in the initial phase of the aluminum production chain, or that is, in bauxite mining. According to this author, the mining activity requires special care, due to the constant contact of workers with the bauxite. Except at ALUNORTE, back problems were the illnesses most cited by workers at the companies, and at MRN and ALBRAS, the rate was a concern: nearly 1 in 4 employees have presented this problem. At ALUNORTE the most frequent problems are depression and stress and at a higher rate than at the other companies. The occupational diseases were not related, by the workers to the work pace at the respective companies given that, on average, 65.9% of the workers said that the pace is not harmful to their health.

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

12 The author maintains that aluminum refinery workers are exposed to various chemical products and many suffer from what is called “multiple chemical sensitivity”. The workers at the aluminum smelters are subject to the effect of fluoride poisoning.

In terms of symptoms of diseases, the result is repeated among the companies: ALUMAR had the best performance (53.6% of the workers do not feel any symptoms) and at MRN, the worst (73.3% felt some symptom in the past 6 months). At all the companies, the most frequent symptoms were joint pain and burning in the stomach. According to Switkes (2005) these are symptoms characteristic to workers at refineries and at aluminum smelters12. The relationship between the symptoms and the activity undertaken at the company is not very clear for the workers. On average, the responses are divided equally among the responses “yes”, “no’” “don’t know” and “I can’t respond”, with a light preference for “yes”. That is, based on these results, it is not possible to draw definitive conclusions; although the analysis can assist in the identification of potentially critical health risks. For example, MRN has the most frequent rates for symptoms such as chronic headache, joint pain, burning stomach and throat and dizziness than at the other companies – once again, these are problems typical to mining activities. The data suggests greater urgency in the steering of company policies to the health and safety issues, which are shown to be unsatisfactory.

4.5. GENDER The composition of the population employed at the companies studied is quite similar in terms of gender. At all of them the large majority of workers are men, and women account for less than 10% of the work force. The company that has the most women is MRN with 9.1% of the work force being women (Table 28). The concentration of men at these companies reproduces the traditional sexual division of labor that determines that men should hold those positions involving “heavy work”.

(*) The survey included the metallurgical sector of the microregions of Cametá and Belém for ALBRAS and ALUNORTE; the metallurgical sector of the metropolitan region of São Luís for ALUMAR; the metalic-mineral extraction industries of the mesoregion of the Lower Amazon for MRN, according to the divisions established by the (National Classification of Economic Activities).

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ALUMAR is the company that most differed from the official results, showing a difference of 1.7% between the employment of women at the company and in the sector/region. ALBRAS is that which was closest to the reality of the sector/region with a difference of only 0.2%. ALUMAR is the only one of the four companies that has an affirmative action program for the integration of women on its staff. At the other three, there is only an intention to increase the proportion of women employed, but no defined goals. The ALUMAR program is called Project Harmony, the object of which is to attract the interest of women who are taking college entrance exams in technological, technical and engineering fields that may lead to the possibility of employment at ALUMAR. Those who classify in the top positions on the college entrance exams in the areas related to the company receive study grants for English courses, while they are in college. The project began in 2004, and the results are expected for 2008. In addition, the company has a program to train machine operators. According to ALUMAR, there was a growth in hiring of women from 2005 (5%) - 2006 (7.2%), and the goal is for women to reach 10% of the staff. A MRN representative said that in recent years there has been a “natural” growth in hiring of women to work in various fields, which exempts the company from taking any position in this issue. With the exception of ALUMAR, the fact is that if the companies do not have any guidelines for gender among the corporate actions and programs planned and executed, it means that they passively reproduce the sexual division of labor found in society in general. Beyond the composition of the population employed, the research also sought to know if there is gender discrimination at the companies in the sector. Some of the results show that there are indications of discrimination in relation to women. In the opinion of some of the women workers at ALUMAR and MRN, for example, promotions only took place for men. At ALBRAS and MRN, some workers said that they have felt harmed or discriminated because they are women.

The discrimination can also be identified in the occupation of management positions. Although on average they have better qualifications, it is not always women who occupy these positions. At ALUMAR for example, the proportion of women in these positions is lower than that found in the profile of the group of employees as a whole. The data in the table is reinforced by the fact that 5.6% of the women believe that “being a man is a criteria for promotion”. According to the field study results, ALUNORTE is the only company that does not have any indication of the existence of discrimination in relation to women. Nevertheless, it is important to emphasize in the case of this company that, in the ACT-2006, the clause that defines quotas for women and people with special needs was removed. This stiuation indicates that discrimination appears in a veiled manner for the workers.

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

Although they are minorities and subject to discrimination at all the companies, women have a higher level of schooling than men. This can be explained by the fact that women traditionally occupy, in this type of industry, administrative positions that require higher qualifications. ALBRAS is the company in which there was a greater difference between the level of schooling among men and women, with 73.7% of women having completed a superior level course and only 14.7% of the men. In addition, at ALBRAS, the proportion of women who have completed a superior level course is much higher than at other companies, about 30 - 50%. In addition, women have relatively higher salaries than men, which can be explained by the fact that they occupy positions that require more training and because on average they have more education.

Nevertheless, the only two companies in which the superiority of women in terms of qualification is clearly reflected in the salary difference in terms of men are ALBRAS and ALUNORTE. At ALBRAS, while most of the men earn from R$ 761,00 - R$ 1.500,00, most of the women have salaries between R$ 1.501,00 and R$ 2.500,00. While 31.3% of the women receive more than R$ 2.500,00, this percent is only 9.9% among the men. At ALUNORTE, although there is greater equality, the salary difference is also considerable: 40.0% of the women receive more than R$ 2.500,00, but only 21.4% of the men. At ALUMAR and at MRN, where the female labor force is better qualified and where there is a greater frequency of women in administrative positions, the distribution of men and women by salary range is proportionally similar, indicating remuneration not in keeping with the position of the women. One of the factors that can explain this salary similarity is that men have a longer time of employment than women, At ALUMAR, the majority of the women (60.0%) have worked at the company for less than 5 years, compared to only 24.4% of the men. Men are found better distributed among the ranges of time of employment, highlighted by the older employees who have worked more than 15 years at the company - 41.0% of the men. The same occurs at MRN, where according to the company human resources representative there is a growth in hiring of women only in recent years. While nearly 34.4% of the men have worked for the company for more than 15 years, among the women, this percentage is only 12.0%. This same ratio can be found at ALBRAS and ALUNORTE. At the first, women are more concentrated in the range from 1 - 5 years (39.5%), and there is a strong concentration of male employees who have worked from 16 - 20 years at the company (42,0%), while among the women it is only 14.5%. Since the ALUNORTE operations began only in July of 1995, the oldest employees work at most 11 years at the company. Nevertheless, a considerable portion of the women (31.3%) are employed for less than one year, while among the men this proportion is quite low (7.6%).

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4.6. COLOR | RACE The racial profile of the workers at the four companies studied was prepared from the data that the companies provided about the color and race of their employees and from the data collected among the workers, through questionnaires, in the field research. In both the sources, the collection methods used involved self-classification, according to the indications of the Brazilian Institute of Geography and Statistics (IBGE), and both adopted the five categories defined by the institute: yellow, white, indigenous, “parda” [brown] and black. A comparison of the information found in the two sources, determined that in three of the four companies studied the racial profile the companies made of their employees was the reverse of the profile built from the data collected by SOI. Only at ALUMAR was the data from the two sources similar, as indicated in the table below:

That is, at ALBRAS, ALUNORTE and MRN, the companies reported that the absolute majority of their workers are white, while at ALBRAS, this rate is 96.8%. The study found exactly the opposite: that the large majority of the workers at the three companies are black13, with rates above 70%. This difference leads to the supposition that these companies do not properly adopt the IBGE self-classification method, because, in addition to the enormous difference found in the black and white portions, the results presented by the companies at times indicate that there are no yellow or indigenous employees.

13 The total of blacks and pardos is considered as the black population.

Therefore, it was decided to prepare the racial profile of the workers at the four companies using the data obtained in the sample study and then compare the profile of each one of them with the information about color and race with the populations in the respective regions where they are located. To do so, the data were used from the last national census conducted by IBGE in 2000. Despite the difference in the year of collection of the data by the SOI (2006), it was found that in the past years, the racial characteristics of these populations have not suffered large changes, given that there is no news of any factor that could cause such a change. With the exception of Oriximiná - located in the microregion of Óbidos, according to the classification of IBGE - the metropolitan regions were selected, because these are the labor markets for the employees at the companies analyzed.

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

Note that in general, the racial profile of the companies is quite similar to that in the population in the regions wehre they are located, considering the margin of error. In addition, with the exception of MRN, the companies have black workers in proportions higher than that in the local population. This is the case, for example, at ALUMAR which, in addition to having the largest contingent of blacks on its staff, 75.1% of the workers are black, while in the SĂŁo Luis metropolitan region the rate is 67.9%. The study also sought to detect among the employees any indication of discrimination by color or race, through the questions related to the criteria for functional promotion and the cases of discrimination. The results show that this is not a problem for most workers at the four companies. The highest percentage found was 2.9% of the workers at ALUMAR, who said that they had witnessed or had news of a case of discrimination.

Although there is no perception of this problem, there is a complete absence of policies aimed at the racial issue at the companies, and the unions also do not analyze this issue, or include it on their negotiating agenda. Particularly at two companies - ALBRAS and ALUNORTE â&#x20AC;&#x201C; rates of discrimination can be perceived because of the difference in salaries paid to black and white employees. A much higher rate of whites earn more than R$ 1.500 per month (Table 35), while at ALBRAS, the proportion of whites in this salary range is 4 times higher than among blacks. That is, even if discrimination is not perceived by the employees at these two companies, there are clear indications that salaries are not paid equally to whites and blacks.

It was not possible to determine if this inequality also applies to the distribution of jobs at the companies, given that the lists supplied do not include the employees at the managerial level, thus making it impossible to verify the proportion in relation to gender and color or race in management positions.

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5. FINAL CONSIDERATIONS

razil occupies a special position in the ranking of world producers of primary aluminum despite the drop of its share from 6% to 4.9% of the world total from 1995 - 2004. But the important novelty is the rise of China from 4th to 1st place in terms of global production, responding in 2005 for 22% of total production. The expansion of Chinese production is to a large degree related to domestic consumption in the country and not to exports of primary aluminum. Its imports, meanwhile, are concentrated in the products at the base of the aluminum chain, which it them transforms into higher added value products. From 1989 to 2005, the production of primary aluminum in Brazil remained stagnated, but after the crisis of 2001, there was a fast recovery in production. This fact is related to the greater dynamism in the domestic market, but especially to the recovery of the international market (which accounts for nearly 60% of the destination of national production). From 2001 – 2005, national production of aluminum grew by 32%. Nevertheless, it is important to emphasize that the large investments in the aluminum chain in Brazil are concentrated in the initial steps of the chain – bauxite and alumina – with the company acting as a marginal exporter of aluminum, generally that of lower added value, to the U.S. and European markets. The principal multinational companies in the sector have shares of capital in MRN, Vale controls one link of the chain, based on the Alunorte plants and Albras and Alcoa and BHP Billiton, together with other multinationals, command the other link of the chain formed by Alumar. These chains act on a regional production space, dependent on a set of infrastructure works such as transportation and electrical energy generation, with the later a principal input for the production of three initial steps of the aluminum production chain. The complete production chain in Brazil accounts for R$ 2,3 billion in the trade surplus, or nearly 5% of Brazil’s total trade surplus in 2005. Therefore, contrary to China, the activity of transformation of the aluminum chain in Brazil is quite dependent on international demand, because the domestic market is not sufficiently dynamic to guarantee an expansion of production. The possibility to alter the profile of foreign insertion of the country depends on a set of macroeconomic factors – related to a strong recovery of the domestic market – and on industrial and foreign trade policies that make viable the country’s entrance into niches of greater added value in both developing and developed country markets. In relation to the form of approaching regional development, expressive changes are not seen in the current government compared with the previous governments, to the degree that the State continues to seek to give potential to the profitability of private investments to be channeled to the region, without making possible the emergence of new socio-economic dynamics based on regional realities. This reinforces the idea that the competitive insertion of the aluminum chain to the flows of trade and investment of this important extractive industry take place in a subordinated manner. Until today it is noted that the perspective for adding value at the value points of the chain and the capacity to generate employment and income in the region – two factors emphasized as potentially positive due to the implantation of the mining sector in the Amazon – are promises which to a large degree have still not been realized. This is because the subordinated production interaction of the peripheral countries in the global aluminum chain, in a context of consolidated technological innovations, makes it difficult to advance in new links of the chain, either to the front (in transformed aluminum or finished products), or behind (in machinery and equipment).

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

The inability to generate jobs is related to the low integration of the various links of this productive chain in the national space, but also to a profile of high concentration of capital, property and income, which winds up not generating multiplying effects outside of the region. In addition, the negative environmental impacts and the resulting standard of inequality compromise the possibility to develop alternative socio-economic projects from the local reality. In general terms it can be said that the implantation of the mining-metallurgical sector on the regional level, in order to stimulate the development of local social capital, is very far from being a spontaneous process, given that it depends on coordinating policies for foreign trade, financing and regional development. On one hand, one perceives a verticalization process that is frustrated by the inequality of the international aluminum chain, given that it destines lower added value activities to countries of the periphery. On the other, long lasting initiatives for economic diversification are not established based on the support for other typically regional activities. This is because until now there has not been defined a development policy for the various sub-regions of the Amazon to substitute the traditional policy of regional occupation. More recently, new actors have come to intervene on the regional logic – beyond the nation State and the multinationals, which both have short term visions – such as the populations of the region, state governments and international civil society (Becker, 2007), creating new opportunities for sustainable development aimed at the region and with public and social regulation of market interests. In relation to the situation of workers at the companies that form the aluminum production chain, some considerations should be highlighted. First, the rate of unionization at the four companies studied is similar and quite significant, highlighted by MRN with 60.1% of the workers in the union. On one hand this index shows that the unions have a dependence on the respective companies. On the other hand, there is an active union presence in the mobilization of workers. Although there are differences in the relations between the unions and the companies, the unionization of workers is not affected by this. The differences determine, for example, the degree of participation of workers in the union activities and the level of information that reaches workers about union activities and issues. The freedom of action of the unions at the companies studied is still limited – except at MRN – and the reports of some workers indicate that there is veiled discrimination in relation to those who participate in the union activities. Concerning the collective bargaining, it can be said that there are two distinct situations. On one hand, there are companies where the unions undertake transparent negotiations and achieve rights in a cooperative manner. On the other, there are companies that impede the relationship with the union, making the process more combative, a more traditional behavior yet more distant from the model in this production chain. Using as an example the perception of workers about opportunities for promotion, we find that, in the first case, they feel that they have greater opportunities, and this influences levels of satisfaction and productivity. Inversely, in the second case, if employees feel that they do not have as many opportunities, this can be reflected in the levels of productivity and satisfaction. Another important factor is that, with the exception of Alumar, the companies do not have any guidelines concerning gender among the corporate actions and programs planned and executed, which means that they passively reproduce the sexual division of labor found in society in general.

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It was also seen that there is a complete absence of policies aimed at the racial question at the companies, and the unions also do not work with this issue, or include it on the negotiation agenda. In particular, at two companies studied, indications were found of racial discrimination by the difference in salaries paid to white and black employees. The same is not true in relation to health and safety and the environment. The companies studied have well defined policies and invest permanently in these fields. The low frequency of accidents and the tendency for the indicators of accidents to drop in the past five years reflect this concern, also identified by the workers interviewed. This does not mean that there are no problems in these fields. The difference is that in these issues the interests of the companies and the unions converge. Finally, the fact is that given the economic and social weight of the aluminum industry in the region, the size of the companies studied and the high rate of worker unionization, all of these industries are of great strategic importance to the action of the unions. The unions are strengthened and undertake important activities at the companies, but at the same time there are ties of dependence that do not allow the unions to promote policies that question the extractive model implanted in the region.

Bibliographic References

• Barbosa, Alexandre e Ricardo Camargo Mendes (2006), Economic Relation Between Brazil and China: a Difficult Partnership, FES Briefing Papers, Berlin: FES, january. • Becker, Bertha (2007), Amazônia: Geopolítica na Virada do III Milênio, Rio de Janeiro: Garamond. • Bermann, Celio (2002), Exportação brasileira de produtos intensivos em energia: implicações sociais e ambientais, Fórum Brasileiro de ONGs e Movimentos Sociais para o Meio Ambiente e o Desenvolvimento, Rede Brasileira pela Integração dos Povos (REBRIP). • BNDES (2002), Setor Mínero-Metalúrgico: Relevância do Consumo Energético, in: Mineração e Metalurgia, n.3, maio. • Carmo, Eunápio Dutra do (2000), Modelos de Gestão em Empresas Transnacionais de Alumínio: Novas Relações de Trabalho na Amazônia?, mimeo, 2000. • Ciccantell, Paulo (2005), Globalização e Desenvolvimento Baseado em Matérias-Primas: o Caso da Indústria do Alumínio, in: Novos Cadernos NAEA, v.8, n. 2, dezembro. • Claude Machline, Fernando Garcia de Freitas, José Bento Amaral Junior e Wilson Nobre Filho (2002), Analysis of the Aluminium Production Chain in Brazil, in: Revista RAEeletrônica, v. 1, n.1, jan-jun. • Coelho, Maria Célia Nunes e Maurílio de Abreu Monteiro (2003), Verticalização da Produção e Variedade de Situações Sociais no Espaço Funcional do Alumínio nos Baixos Vales do Amazonas e Tocantins, in: Revista Território, ano VII, nos. 11, 12 e 13, set/out. • Corrêa, Roberto Lobato (2006), Estudos sobre a Rede Urbana, Rio de Janeiro: Bertrand Brasil. • Monteiro, Maurílio de Abreu (2005), Mineração Industrial na Amazônia e suas Implicações para o Desenvolvimento Regional, in: Novos Cadernos NAEA, v. 8, n. 1, junho. • Oliveira, Francisco de (1998), Os Direitos do Antivalor: a Economia Política da Hegemonia Imperfeita, Petrópolis: Vozes. • Santos, Milton (2003), Economia Espacial, São Paulo: Edusp, 2ª. Edição. • Schaefer, Suzana e Martin Studte, (2005), A Produção de Alumínio e a Sociedade Civil no Brasil em 2005, ASA Programa, dezembro. • Switkes, Glenn (2005), Impactos ambientais e sociais da cadeia produtiva do alumínio na Amazônia, International Rivers, acessado em 28/10/2007. • http://internationalrivers.org/files/Foiling2005_po_0.pdf

STUDY OF THE ALUMINUM PRODUCTION CHAIN IN NORTHERN BRAZIL

Carregamento de bauxita Bauxite ship loading

Primeiro passo da cadeia: retirada da bauxita (extração) Chain’s first stage: extracting bauxite

Manganês na Serra do Navio Deposit of manganese at Serra do Navio

Terminal da Albrás, no Rio Pará Albrás’ terminal, at Rio Pará

Silo de Alumina Alumina silo

Entrada da Rio Doce Manganês (subsidiária da Vale do Rio Doce) Entrance to Rio Doce Manganês (Vale’s subsidiary)

Terminal de Carga da Alunorte Alunorte’s loading terminal

Fábrica da Alunorte Alunorte’s factory

Assembléia na Alunorte Trade union meeting at Alunorte

Vista aérea da cidade de Barcarena Aerial view of Barcarena city

Navio Transportando Bauxita da MRN Ship carrying MRN’s bauxite

Fábrica da Alunorte Alunorte’s factory

Carregamento de alumínio Aluminum loading

Entrada da Fábrica da Alunorte Entrance to Alunorte’s factory

Abertura do Seminário Cadeia Produtiva Do Alumínio Opening session of the Aluminum Production Chain Seminar

Moradia na Vila dos Cabanos Housing at Vila dos Cabanos

Vista da Cidade de Oriximiná Oriximiná city’s view

Entrada da Fábrica da Alunorte Entrance to Alunorte’s factory

Seminário Cadeia Produtiva do Alumínio Aluminum Production Chain Seminar

Albrás Albrás

Madeiras cortadas e licenciadas pelo IBAMA para outras utilizações Wood logs licensed by IBAMA to other purposes

Depósito de bauxita seca pronto para embarcar Deposit of dry bauxite ready to be ship loaded

Mineradora Rio do Norte (MRN) MRN