ROBERTO CARVALHO
Director-President-in-office
We understand that we are responsible for the major task expressed in the agreement and we will make every effort to comply with our obligations. Samarco has a great commitment to the impacted people and environment and will give full support to the Foundation and to the implementation of the programs in all work fronts, as provided in the signed document.�
SAMARCO Samarco is a Brazilian company, owned 50-50 by Vale S.A. and BHP Billiton Brasil Ltda., which has been producing iron ore pellets for almost 40 years. Its industrial facilities include three concentrators at the Germano unit in the municipalities of Ouro Preto and Mariana in Minas Gerais, and four pellet plants and a sea port in Ubu, Espírito Santo, on the coast. These two units are connected by three pipelines, of some 400 km each, which transport the iron ore slurry from Minas Gerais to Espírito Santo, crossing 25 municipalities. We deeply regret the Fundão Dam collapse in November 2015 and its impacts on the population, the communities and the environment. We understand that we are responsible for the huge task of trying to do what is right. To reiterate this commitment, in the beginning of March 2016 we signed an Agreement together with our shareholders, VALE and BHP Billiton, and the Federal Government as well as the State Governments of Minas Gerais and Espírito Santo. The document was homologated by the Brazilian justice on May 5th. The result of this Agreement is the creation of a private Foundation which will be responsible for the implementation of 41 programs focused on two main types of actions – socioeconomic and socioenvironmental. In addition to new proposed projects, the document encompasses all of the emergency actions which Samarco has already been carrying out since last November to provide relief for the impacted people and to mitigate the environmental impacts.
June 16th, 2016
03
OVERVIEW OF ACTIONS All families who have lost their homes are already installed in temporary houses or temporary accommodation chosen by them. Families from Bento Rodrigues have already chosen the place for the reconstruction of the community. Possible areas for the reconstruction of the Paracatu de Baixo district and Gesteira district have also been identified. All students from the affected communities in the Mariana and Barra Longa region have concluded the 2015 school year and are up to date with the 2016 school year. 800 hectares of emergency reforested areas along the rivers Doce, Carmo and Gualaxo. The measure protects the margins and prevents sediments from being dragged into the riverbeds. Water quality is being monitored at 94 different sites along the Doce River and in marine areas near the mouth - 37 sites at sea and another 57 along the Doce River. Seven damaged bridges were rebuilt within 90 days, that being one at every 15 days. 7.279 emergency financial assistance cards have been distributed to affected individuals. Dams are stable, with real-time monitoring. *Data updated on June 16th, 2016
June 16th, 2016
04
THE AGREEMENT Agreement Homologated The Agreement established between Samarco, its shareholders, Vale and BHP Billiton, the Federal Government, as well as the state governments of Minas Gerais and EspĂrito Santo was homologated by the Brazilian Justice on May 5th. Signed on March 2nd, 2016, it is considered a milestone in post-environmental accident recovery and reparation processes. The document focuses on socio-environmental and socioeconomic actions, maintaining what is being adopted by Samarco since November, besides establishing clear commitments, defining deadlines for the submission and execution of any new projects and also setting transparency and accountability rules. More than 90% of the socio-environmental and socioeconomic programs have already been started. They may all be accompanied by the affected populations, there will be external audits and an ombudsman will be created to serve the citizens.
Agreement homologated by the Brazilian justice on May 5th
June 16th, 2016
05
THE AGREEMENT Socio-economic and socio-environmental highlights
SOCIO-ENVIRONMENTAL COMMITMENTS Availability of resources, as compensation of BRL500 million, for certain affected municipalities, to use in the preparation and execution of plans for sewage collection and treatment and landfills.
Compensatory recovery of 5 thousand springs to be defined by the Basin Committee of the Doce River.
Recovery of Permanent Protection Areas (PPAs) of the Doce River and tributaries through the compensatory reforestation of 10 thousand hectares and conduction of natural regeneration of 30,000 hectares in a period of ten years in the amount of BRL1.1 billion.
SOCIO-ECONOMIC COMMITMENTS Reconstruction of the affected locations, such as Bento Rodrigues, Paracatu de Baixo (Mariana) and Gesteira (Barra Longa), ensuring their participation in the dialogue process with the affected communities to define measures for the recovery or relocation.
Running a compensation program and compensations through coordinated negotiation, designed to repair and compensate the people affected, with optional adhesion.
Cultural material recovery and preservation of the cultural heritage affected.
Implementation of actions for the recovery of economic and productive activities affected, such as agriculture, fishing, services and commerce.
Implementation and maintenance of measures to support the indigenous people affected.
Creation of permanent channels of communication and dialogue with the community, as well as carrying out agendas to present the progress and results of the programs to be implemented.
The health, social protection and education programs for the restoration of affected public services and the follow up of individuals and families affected are foreseen.
June 16th, 2016
06
FOUNDATION The private Foundation will be responsible for the programs of social, environmental and economic rehabilitation of the affected regions. The deadline to start operations is August 2, 2016. Its headquarters will be located in Belo Horizonte and it will be maintained with funds from Samarco. Until the Foundation is fully constituted, the company remains responsible for the implementation of all programs and emergency actions in progress. How will the financial management of the Foundation be carried out?
R$
4,4 BILLION
+ R$500 million for sanitation to be passed on in the first 3 years
R$ 2 bi
(R$ 240 million*)
2016
+ R$ 50 million**
R$ 1,2 bi
(R$ 240 million*)
2017
+ R$ 200 million**
R$ 1,2 bi
(R$ 240 million*)
2018
+ R$ 250 million**
Subsequent years
2019 a 2021
2022 a 2030
R$ 800 million a R$ 1,6 billion (R$ 240 million*)
Total to be defined *** (minimum of R$ 240 million*)
*for compensation actions. This value is part of the Foundation’s annual budget / ** Value part of the R$ 500 million for basic sanitation. This value is not part of the Foundation’s annual budget. *** from deepening, studies and technical analyses.
June 16th, 2016
07
FOUNDATION Composition The Foundation will consist of a Board of Trustees, an Executive Board, an Advisory Council and a Fiscal Council. In addition, it will hire from technical experts and independent audits.
AREA
RESPONSIBILITY
The Foundation’s Board of Trustees
Will be responsible for the annual and multi-annual planning, budgets and contracts, as well as the approval of plans, programs and projects proposed by the Executive Board.
Executive Board
Will be responsible for developing, proposing, enabling and implementing plans, programs and projects approved by the Board of Trustees, and adopting the specific actions required to their implementation, as well as being responsible for the Foundation’s routine activities.
Fiscal Council
It will be responsible for supervising the management and assessment of the accounts, besides monitoring compliance of the actions.
Advisory Council
It will be the Foundation’s advisory body, able to give its opinion concerning plans, programs and projects, and indicate proposed solutions of the damage caused by dam burst. It will also be up to it establish civil society participation channels and may, for this purpose, call specific meetings and hear interested organizations. The Advisory Council will be composed of representatives appointed by the Doce River Hydrographic Basin Committee (CBH-Doce), by the Interministerial Commission for Sea Resources (CIRM) and by the affected communities (both from the Minas Gerais and Espírito Santo states), as well as members representing educational and research institutions or experts with outstanding knowledge indicated by the Federal Public Prosecutor’s Office, the State Public Prosecutor’s Office of Espírito Santo and Minas Gerais, by the Foundation’s Board of Trustees and by the Interfederative Committee.
June 16th, 2016
COMMUNITY VOICE
08
INTERFEDERATIVE COMMITTEE It was instituted an inter-federative Committee, external and independent body of the Foundation, which will follow up, monitor and supervise the projects to be executed. Five meetings were already held. The Interfederative Committee shall consist of representatives of the Ministry for the Environment, the Federal Government, the State of Minas Gerais, the state of Espírito Santo, Minas Gerais and Espírito Santo municipalities impacted by the dam burst, the Doce River Hydrographic Basin Committee and the Public Defenders of the Union.
GOVERNANCE STRUCTURE
BOARD OF TRUSTEES
FISCAL COUNCIL
PANEL OF EXPERTS
INTERFEDERATIVE COMMITTEE
ADVISORY COUNCIL
EXTERNAL AUDIT EXECUTIVE BOARD
EXTERNAL
INTERNAL
Establishment of Foundation 06/30 Agreement Homologation 05/05
Agreement signature
03/02
MAR/16
ABR/16
03/17
Ongoing Emergency Actions Report
04/02 Audit Hiring
June 16th, 2016
MAI/16
JUN/16
JUL/16
06/02 Accounting, financial and purposive audit plan
Start of operations 08/01
MONTHLY REPORTS UNTIL THE 10TH WORKING DAY OF EACH MONTH.
AGO/16
OUT/16
SET/16
09/02 3 years planning
NOV/16
11/30 2017 budget
DEZ/16
JAN/17
01/20 2016 annual report
09/30 2017 plan
09
DO entais
PROGRAMS Socioenvironmental Programs: 80% have already been initiated
1. TAILINGS HANDLING 2. TAILINGS CONTAINMENT AND RIVER TREATMENT SYSTEMS 2. TAILINGS CONTAINMENT AND RIVER TREATMENT SYSTEMS 4. RECOVERY OF PERMANENT PRESERVATION AREAS (APPS) 5. RECOVERY OF SPRINGS 6. BIODIVERSITY CONSERVATION 7. WILDLIFE RECOVERY 8. TERRESTRIAL FAUNA AND FLORA 9. SEWAGE COLLECTION AND TREATMENT 10. WATER SUPPLY SYSTEM IMPROVEMENT 11. ENVIRONMENTAL EDUCATION 12. INFORMATION TO THE POPULATION 13. NATIONAL/INTERNATIONAL COMMUNICATION 14. ENVIRONMENTAL RISKS MANAGEMENT 15. DOCE RIVER BASIN MONITORING 16. CONSERVATION UNITS 17. RURAL ENVIRONMENTAL REGISTRY (CAR) AND ENVIRONMENTAL REGULARIZATION PROGRAMS (PRAS)
18. MANAGEMENT OF SOCIO-ENVIRONMENTAL PROGRAM
Initiated program
June 16th, 2016
Uninitiated program
10
PROGRAMS
RDO entais
S
Socioeconomic Programs: 95% have already been initiated.
1. REGISTRATION OF AFFECTED 2. COMPENSATION AND INDEMNITY TO AFFECTED 3. PROTECTION AND RECOVERY OF INDIGENOUS PEOPLES’ LIVING STANDARDS 4. LIVING STANDARDS OF OTHER TRADITIONAL PEOPLES AND COMMUNITIES 5. SOCIAL PROTECTION 6. SOCIAL DIALOGUE 7. ASSISTANCE TO ANIMALS 8. VILLAGES RECONSTRUCTION 9. RISOLETA NEVES HPP RESERVOIR 10. RECOVERY OF OTHER IMPACTED COMMUNITIES AND INFRASTRUCTURES 11. RECOVERY OF SCHOOLS AND REINTEGRATION OF SCHOOL COMMUNITY 12. HISTORIC, CULTURAL AND ARTISTIC MEMORY 13. TOURISM, CULTURE, SPORTS AND LEISURE 14. PHYSICAL AND MENTAL HEALTH OF THE AFFECTED POPULATION 15. SOCIOECONOMIC TECHNOLOGIES 16. RESUMPTION OF AQUICULTURE AND FISHING ACTIVITIES 17. RESUMPTION OF AGRICULTURAL ACTIVITIES 18. DIVERSIFICATION OF REGIONAL ECONOMY 19. MICRO AND SMALL BUSINESSES 20. LOCAL HIRING INCENTIVE 21. EMERGENCY FINANCIAL ASSISTANCE 22. MANAGEMENT OF SOCIOECONOMIC PROGRAMS 23. REIMBURSEMENT OF EXTRAORDINARY PUBLIC EXPENSES
Initiated program
June 16th, 2016
Uninitiated program
11
SOCIO-ECONOMIC ACTIONS Reconstruction - Bento Rodrigues One of the actions provided for in the Agreement is the reconstruction of communities. On May 7th, 2016, representatives of 223 of the 226 families that used to live in Bento Rodrigues elected the place where the new community will be built. With 92% of votes, the area known as Lavoura was chosen. The voting criteria were defined with the participation of the residents and of representatives of the Public Prosecutor’s Office of Minas Gerais (MPMG). Given a MPMG request, technical area feasibility studies will be deepened. The next step, also with community participation, will be the definition of the community’s urban project.
Families from Bento Rodrigues have already chosen the place for the reconstruction of the community
June 16th, 2016
12
SOCIO-ECONOMIC ACTIONS Steps for reconstruction Definition. of the land Design, with the community, the new plant of each district. In this stage, the conceptual project, defining the localization of equipment, such as churches, schools, health centers, parks and soccer fields, will be elaborated. The criteria to define the size of the land and construction standards of the homes will also be decided – still without individual decisions. Individual dialogue with the families to decide details, such as location and structure of each residence and finishing standards. Once the individual agreements are closed, the reconstruction will start.
Moving and monitoring the families in new homes.
June 16th, 2016
13
SOCIO-ECONOMIC ACTIONS Family housing • All affected families are already installed in temporary homes or other types of temporary accommodation chosen by them, in Mariana and Barra Longa. • The transferring of the families to the new housing followed the prioritization criteria and methodology defined by the Commission of Representatives of the Impacted Communities.
Steps for the delivery of houses to families
Occupation, Work and Income • On all work fronts, priority is given to hiring locals. • Until May, 528 people have been trained in construction, gastronomy, sewing, beauty/ aesthetics and computing qualification courses. • In Mariana and Barra Longa, from the 312 people eligible for work, 225 were hired through Samarco’s “Occupation, Work and Income” Front.
June 16th, 2016
14
SOCIO-ECONOMIC ACTIONS Financial Support • 562 financial aid cards were delivered to families in the communities of Mariana and Barra Longa; • 6.717 financial aid cards were directed to fishermen and riverines along the Doce River in Minas Gerais and in Espirito Santo; • The aid includes the monthly payment of a minimum wage to each person in the household who has suffered income loss per work activity as a direct result of the dam burst, plus an additional 20% of the minimum wage for each dependent and a basic foods hamper.
Financial aid cards are given to communities and riverine population
June 16th, 2016
15
SOCIO-ECONOMIC ACTIONS infrastructure • Seven damaged bridges were rebuilt within 90 days, that being one at every 15 days. Águas Claras Bridge – Mariana
NOVEMBER, 2015
DECEMBER, 2015
June 16th, 2016
16
SOCIO-ECONOMIC ACTIONS In Barra Longa • 76 houses have been renovates and another 25 are under the process. • 27 of all commercial establishments have been renovated and another 6 are under the process. • Cleaning and public spaces reconstruction works continue. Manoel Lino Mol Square - Barra Longa
NOVEMBER, 2015
MAY, 2016
June 16th, 2016
17
SOCIO-ECONOMIC ACTIONS Gabion Wall, Morro Vermelho - Barra Longa
NOVEMBER, 2015
MAY, 2016
June 16th, 2016
18
SOCIO-ECONOMIC ACTIONS Rural property • 278* rural properties were mapped and integrate the Agribusiness Reestablishment Plan, which aims at supporting producers so that each property affected by the accident is able to regain sustainability. • Teams consisted of zootechnicians, agronomists and farm technicians are performing soil analysis of the properties, as well as soil preparation and correction with the use of limestone and fertilizers, crop cultivation and weeding. • Approximately 177,000 meters of fencing has been accomplished on affected rural properties.
Rural properties get new fences
*Inside area 1, from Mariana (MG) to the Risoleta Neves HPP in Rio Doce (MG). June 16th, 2016
19
SOCIO-ECONOMIC ACTIONS Animals • More than 6,900 animals have been attended to by Samarco. • Currently, 1,178 large animals, in farms, are under the company’s care. • Over 4,700 tons of inputs have been distributed to animals in Barra Longa, Pedras, Barretos, Paracatu de Baixo, Paracatu de Cima, Camargos, Ponte do Gama, Campinas, Mariana, Bento Rodrigues e Águas Claras.
Rescued and assisted animals
June 16th, 2016
20
SOCIO-ECONOMIC ACTIONS Health • Samarco has hired 82 qualified professionals – doctors, psychologists ans other – to assist the people impacted.
Health professionals were hired in Mariana and Barra Longa
June 16th, 2016
21
SOCIO-ECONOMIC ACTIONS Education • All students from the affected schools, in Barra Longa and in the Mariana districts, have completed the 2015 school year and have started 2016 up to date, as planned. • The company carried out a number of renovations in order to receive students and also offered school transportation. • The students received kits comprising of backpack, pencils, crayons, pens, paint, play dough, and other school supplies. • Teachers and students received psychological support.
Patrimony • Approximately 400 sacred art pieces rescued from the Chapels of São Bento and Nossa Senhora das Mercês (Bento Rodrigues), Santo Antônio (Paracatu) and Nossa Senhora da Conceição (Gesteira). • 282 training sessions were given to people involved in the rehabilitation activities, including members of the community, in order for them to be able to handle any findings.
All students from the impacted schools have started the 2016 school year
June 16th, 2016
22
ENVIRONMENTAL ACTIONS Revegetation • 800 hectares of emergency reforested areas along the rivers Doce, Carmo and Gualaxo. • This stage of the work promotes the improvement of soil conditions and allows future recovery actions, the minimization of dust dispersion and assists in the containment of sediments reaching the watercourses.
NOVEMBER, 2015
MARCH, 2016
June 16th, 2016
23
ENVIRONMENTAL ACTIONS Water • Water supply reestablishment in all cities affected by the passing of the turbidity plume. • Coagulant usage in water treatment plants. The Doce River’s color and turbidity level recovery • Daily monitoring of the river’s - 22 points set by IBAMA. • More that 48,000 reports issued. The total number of analyzed parameters accumulate over 1 milion results. • Current results indicate that the river’s water quality is similar to the patterns observed in 2010, as indicated in the December report by the Brazilian Geological Service (CPRM) and the National Water Agency (ANA). The Doce River turbidity between Governador Valadares (MG) and Regência (ES)
NOVEMBER, 2015
APRIL, 2016
June 16th, 2016
24
ENVIRONMENTAL ACTIONS Water Monitoring • Water quality monitoring at 94 points along the Doce River and in the marine areas near the river mouth - 37 points at sea and 57 points on the Doce River. • Turbidity plume monitoring by means of overflights (3 times per week).
94 monitoring sites along the Doce River and in the ocean
June 16th, 2016
25
DAMS Monitoring • Real-time radar, laser scanning, camera, water level meter (piezometer) and accelerometer monitoring, among others. • New Mining Dam Emergency Action Plan completed, including the installation of sirens along the Mariana and Barra Longa communities. • Drills – execution of assisted emergency drills, in March, 2016, with participation of 1,327 residents of the Mariana and Barra Longa communities. Conducted by the state and municipal Civil Defenses.
Monitoring room at the Germano Unit
June 16th, 2016
26
DAMS • The Germano and Santarém dam structures are stable. • Structural reinforcement works completed - Selinha dyke and Santarém dam. • Three containment dykes built to prevent tailings from reaching rivers Carmo, Gualaxo and Doce. • Permanent contention is being built in this drought period.
NOVEMBER, 2015
APRIL, 2016
June 16th, 2016
27
BRAZIL´S ECONOMY Taxes From 2010 to 2014, Samarco generated R$ 6.3 billion in taxes. In 2014 alone, the company paid R$ 1.5 billion in tax. This is equivalent to almost 20% of what the federal government expects to raise annually with the new CPMF.
Expected CPMF revenue over 4 years
32,000,000
Samarco's direct taxes 2014 (1 year)
1,500,000
% Equivalence Samarco taxes/CPMF
19%
Amounts in R$ thou
Taxes paid by Samarco and headed to the safes of the City Halls * are equivalent to: Taxes Mariana/MG
20,552 (54% of revenue)
Taxes Ouro Preto/MG
19,335 (35% of revenue)
Taxes Anchieta/ES
29,437 (50% of revenue)
Amounts in R$ thou
* Quota part of the FPM, IPTU, ICMS, CFEM and ISS (2014)
Samarco’s sales revenue is equivalent to about 6.4% of the GNP of Espírito Santo and 1.5% of the GNP of Minas Gerais.
% Equivalência Receita Samarco ao PIB MG
1,6%
% Equivalência Receita Samarco ao PIB ES
6,4%
Sources: MDIC, IBGE (2013), SEFAZ-MG, SEFAZ-ES (IPVA+ICMS+ITCD), Agência Brasil and Samarco
June 16th, 2016
28
BRAZIL´S ECONOMY Investments in Brazil In the last five years (2011 - 2015), Samarco invested R$ 9.1 billion in Brazil, of which R$ 6.4 billion refer to the 4th Pelletizing Project. This value is more than what Brazil spent on the construction and renovation of all of the football stadiums for the 2014 World Cup (R$ 8.1 billion) or on the Transposition of the São Francisco River Project (R$8.2 billion).
30 BILLION
BELO MONTE HYDROELECTRIC PLANT (from 2011 to 2016)
9.1 BILLION
SAMARCO’S INVESTMENTS IN BRAZIL (from 2011 to 2015)
8.2 BILLION
INVESTMENTS ON THE TRANSFER OF THE SÃO FRANCISCO RIVER (from 2007 to 2016)
June 16th, 2016
8.0 BILLION
COST TO BUILD AND REFORM ALL STADIUMS FOR THE 2014 WORLD CUP (from 2010 to 2014)
7.0 BILLION
FIAT CHRYSLER INVESTMENTS ON BUILDING THE JEEP PLANT IN PERNAMBUCO STATE (from 2014 to 2015)
5.0 BILLION
INVESTMENT BUDGET ON SALVADOR’S UNDERGROUND TRANSPORT SYSTEM
(12 years. The construction work started in 1999, was halted, then resumed in 2010, and delivered partially concluded in 2014).
29
BRAZIL´S ECONOMY Direct and indirect Jobs • Samarco has 3,027 employees (data from 12/31/2015), of which 1,736 are in Minas Gerais. • According to the Brazilian Mining Institute (Ibram), for each direct job in the sector, another 13 are generated in the production chain. That is, more than 39,000 jobs are related to Samarco’s operations. Purchases and suppliers In 2014 and 2015, Samarco spent more than R$ 5.5 billion in purchases. VALUE OF PURCHASES 2014
2015
ES
722.9 MM
ES
621.11 MM
MG
1.45 BI
MG
1.13 BI
Source: Supplies Samarco
At the end of 2015, Samarco had about 7,000 active suppliers. Of these, 41% were located in the direct area of influence of the Ubu and Germano units.
June 16th, 2016
30
BRAZIL´S ECONOMY Exports Samarco was the 12th largest export company in the country in 2015, according to the Ministry of Development, Industry and Foreign Trade (MDIC). The Company’s exports represented 1% of Brazil´s total exports in 2015. Without the Company’s exports, the deficit in the Brazilian trade balance would have tripled in 2015.
Brazilian exports in 2015
191,134,324
Samarco revenue in 2015
1,921,460
Samarco's export representation
1%
Samarco's equity in the trade balance
10%
Amounts in R$ thou
Sources: MDIC, IBGE (2013), SEFAZ-MG, SEFAZ-ES (IPVA+ICMS+ITCD), Agência Brasil and Samarco
Samarco: 12th largest exporting company in the country in 2015
June 16th, 2016
31
www.samarco.com