ROBERTO CARVALHO
Director-President-in-office
We understand that we are responsible for the major task expressed in the Framework 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 29 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 Framework Agreement (TTAC in the Portuguese acronym) 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 result of this Framework Agreement is the creation of a private Foundation which will be responsible for the implementation of programs focused on two main types of actions – socioeconomic and socioenvironmental. Named Renova, the Foundation started operating on August 2nd 2016, as established. 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.
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03
OVERVIEW OF ACTIONS All families who have lost their homes are installed in temporary houses or temporary accommodation chosen by them. Families from Bento Rodrigues, Paracatu de Baixo and Gesteira have chosen the place for the reconstruction of the community. 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. Water quality monitoring at 120 points along the Doce River basin, of which 64 on the river itself. Seven damaged bridges were rebuilt within 90 days, that being one at every 15 days. 7,761 emergency financial assistance cards have been distributed to affected individuals. Dams are stable, with real-time monitoring. *Data updated on October 21th, 2016
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THE FRAMEWORK AGREEMENT The Framework Agreement (TTAC in the Portuguese acronym) 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 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.
Framework Agreement signed on March 2nd, 2016
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THE FRAMEWORK 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.
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FOUNDATION As provided for in the Framework Agreement, the Renova Foundation started operating on August 2nd 2016. It is a private law foundation and it is responsible for the social, environmental and economic recovery programs of the impacted regions. Its headquarters are located in Belo Horizonte and 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.
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FOUNDATION Composition The Foundation consists of a Board of Trustees, an Executive Board, an Advisory Council and a Fiscal Council. In addition, it is composed of technical experts and independent audits.
AREA
RESPONSIBILITY
The Foundation’s Board of Trustees
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
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
Responsible for supervising the management and assessment of the accounts, besides monitoring compliance of the actions.
Advisory Council
It is 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.
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COMMUNITY VOICE
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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. Six 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
INTERFEDERATIVE COMMITTEE
PANEL OF EXPERTS
ADVISORY COUNCIL
EXTERNAL AUDIT EXECUTIVE BOARD
EXTERNAL
INTERNAL
Establishment of Foundation 06/30 Framework Agreement signature
Start of operations 08/01
MONTHLY REPORTS UNTIL THE 10TH WORKING DAY OF EACH MONTH.
AGO/16
OUT/16
03/02
MAR/16
ABR/16
03/17
Ongoing Emergency Actions Report
04/02 Audit Hiring
October 21th, 2016
MAI/16
JUN/16
JUL/16
06/02 Accounting, financial and purposive audit plan
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
SOCIO-ENVIRONMENTAL PROGRAMS
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DO entais
SOCIOECONOMIC PROGRAMS
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SOCIO-ECONOMIC ACTIONS Reconstruction - Bento Rodrigues One of the actions provided for in the Framework 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
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SOCIO-ECONOMIC ACTIONS Reconstruction - Gesteira Representatives of families from Gesteira, district of Barra Longa, elected, in 25 June, the site for reconstruction of the eight homes and public facilities impacted by the collapse of the FundĂŁo dam. Among these are a church, a parochial meeting hall, and a soccer field. With 95% of the votes, the area called Fazenda Gesteira was the one chosen. The site has an area of 7 hectares and is located next to the main block of the district, in compliance with the requests of the community. During the process of election of the site, the families from the Gesteira district were heard and the voting was carried out in two phases. First, the families that lost their homes chose the land for the reconstruction of the houses. Next, the community, jointly, defined the site where the public facilities would be rebuilt. After today, discussions will focus on the architectural and urbanistic design, along with the construction standards of the residences. An individual dialogue will also be held with the families for the definition of details such as exact location, structure and finishing details of each home. Once these individual agreements have been made, it is expected that the engineering design will be ready by the end of the year.
With 95% of the votes, the area called Fazenda Gesteira was the one chosen
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SOCIO-ECONOMIC ACTIONS
The families visited the sites before the election
Reconstruction - Gesteira Representatives of 103 families of Paracatu de Baixo (district of Mariana) elected, in September 03, the new site for the reconstruction of the district impacted by the rupture of the FundĂŁo dam. With 65% of the valid votes, the chosen site was the one known as Lucila. The area covers 84.8 hectares and is located in the district of Monsenhor Horta, in Mariana. It offers suitable topography, water availability, easy access to public transportation, and good quality soil for planting and raising livestock. The criteria for the voting were defined together with the residents of the district and representatives of the Public Prosecution Service. This decision represents one more phase of the reconstruction actions developed by Samarco after the dam break. Next steps Now, with the site defined, Samarco will start the dialogues about the architectural and urban development aspects (location of the school, the health service unit, the soccer field, configuration of the streets, etc.) as well as the construction details for the new homes.
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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.
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SOCIO-ECONOMIC ACTIONS Family housing • All affected families are 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 the affected cities, 1,320 local workers have been hired via Samarco’s “Occupation, Work and Income” Front. (Data until July/2016)
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SOCIO-ECONOMIC ACTIONS Financial Support • 567 financial aid cards were delivered to families in the communities of Mariana and Barra Longa; • 7,193 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, in accordance with the Dieese form Minas Gerais and Espírito Santo.
Financial aid cards are given to communities and riverine population
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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
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SOCIO-ECONOMIC ACTIONS In Barra Longa • 98 of 111 houses have been renovates. • 33 of 36 commercial establishments have been renovated.
Gabion Wall, Morro Vermelho - Barra Longa
NOVEMBER, 2015
MAY, 2016
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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. • More than 188,000 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). October 21th, 2016
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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. • More than 5,500 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
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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
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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 • 1,475 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). • 1,195 people trained within the archaeological scope. Data until July/2016
All students from the impacted schools have started the 2016 school year
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SOCIO-ECONOMIC ACTIONS Dredging in Candonga • In October, Samarco expanded dredging activities in the region of the Risoleta Neves Hydropower Plant (Candonga dam). • Construction began on a new sediment containment structure which will be part of the local emergency system for solids retention. • The Candonga dam retained a good portion of the tailings discharged by the Fundão dam. • 80% of the tailings released by the dam break remained between Fundão and the power plant. Of this, 10.5 million cubic meters were deposited in its Candonga reservoir. • So far, some 400 thousand cubic meters of tailings have already been removed from Candonga. By July 2017, Samarco will finish removing 1.3 million cubic meters of sediments from the site. • This volume represents the cleaning out of the first 400 meters of the dam, working backwards from the plant´s gates, which is necessary for the plant to be able to resume generating energy. • Samarco has an emergency action plan in place in conjunction with the Candonga Consortium and Civil Defense, in the event it is necessary to deploy it during the coming rainy season. However, all of the containment and dredging work is sufficient to cope with this period.
10.5 million cubic meters of tailings were deposited in the Candonga dam
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ENVIRONMENTAL ACTIONS Revegetation • Emergency revegetation along the rivers Doce and Gualaxo, in Minas Gerais. 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
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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 61,000 reports issued. The total number of analyzed parameters accumulate over 1,6 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). Water Monitoring • Water quality monitoring at 120 points along the Doce River basin, of which 64 on the river itself. • Turbidity plume monitoring by means of overflights (3 times per week).
120 monitoring points throughout the Doce River basin
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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
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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. • Start-up of the work on the construction of dike S4 by Samarco, in the district of Bento Rodrigues, in Mariana. Dike S4 is part of the emergency system for retaining sediments, along with dikes S1, S2, and S3, in addition to the Axis 1 dams of Fundão and Nova Santarém.
NOVEMBER, 2015
APRIL, 2016
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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. Percentage of Samarco's revenue against MG's GDP
1,6%
Percentage of Samarco's revenue against ES's GDP
6,4%
Sources: MDIC, IBGE (2013), SEFAZ-MG, SEFAZ-ES (IPVA+ICMS+ITCD), Agência Brasil and Samarco
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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$8.2 billion).
30 BILLION
BELO MONTE HYDROELECTRIC PLANT (from 2011 to 2016)
9.1 BILLION
SAMARCO’S INVESTMENTS IN BRAZIL (from 2011 to 2015)
8.2 BILLION
INVESTMENTS ON THE TRANSFER OF THE SÃO FRANCISCO RIVER (from 2007 to 2016)
October 21th, 2016
8.0 BILLION
COST TO BUILD AND REFORM ALL STADIUMS FOR THE 2014 WORLD CUP (from 2010 to 2014)
7.0 BILLION
FIAT CHRYSLER INVESTMENTS ON BUILDING THE JEEP PLANT IN PERNAMBUCO STATE (from 2014 to 2015)
5.0 BILLION
INVESTMENT BUDGET ON SALVADOR’S UNDERGROUND TRANSPORT SYSTEM
(12 years. The construction work started in 1999, was halted, then resumed in 2010, and delivered partially concluded in 2014).
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BRAZIL´S ECONOMY Exports Samarco was the 12th largest export company in the country in 2015, according to the Ministry of Development, Industry and Foreign Trade (MDIC). The Company’s exports represented 1% of Brazil´s total exports in 2015. Without the Company’s exports, the deficit in the Brazilian trade balance would have tripled in 2015.
Brazilian exports in 2015
191,134,324
Samarco revenue in 2015
1,921,460
Samarco's export representation
1%
Samarco's equity in the trade balance
10%
Amounts in R$ thou
Sources: MDIC, IBGE (2013), SEFAZ-MG, SEFAZ-ES (IPVA+ICMS+ITCD), Agência Brasil and Samarco
Samarco: 12 th largest exporting company in the country in 2015
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www.samarco.com