NEW YORK (Reuters Breakingviews) - A lethal dam collapse wiped $18 billion off Brazilian miner Vale’s market capitalization. It may also derail newly elected President Jair Bolsonaro’s plans to bolster business by rolling back environmental and other regulations. Angry Brazilians and skittish lawmakers may want to go in the opposite direction.
At least 60 people died and hundreds more were feared lost in Friday’s disaster, which buried a small community in the southeastern state of Minas Gerais in mud after a tailings dam failed. The exact cause of the incident was not immediately known. Vale Chief Executive Fabio Schvartsman, who has headed the world’s biggest iron ore producer since May 2017, pledged to tighten safety procedures “beyond any national or international standards” to prevent a recurrence.
Bolsonaro’s environment minister, Ricardo Salles, called for new regulations for mining dams, while Mines and Energy Minister Bento Albuquerque said the country’s laws should be changed to fix blame for any accidents on those certifying dams as safe. The country’s top prosecutor said she would pursue criminal prosecutions.
Some of that may be sincere, and some of it knee-jerk reaction. A similar dam disaster occurred in Minas Gerais in 2015, also involving Vale and BHP in a joint venture called Samarco. Brazilians have reason to wonder what has changed since then and what may change now.
Bolsonaro won election last October on a pro-business platform that decried government regulation and environmental protections. Brazil does suffer from red tape, ranking 109th out of 190 countries in the World Bank’s latest survey on the ease of doing business, even after significant improvements under Bolsonaro’s predecessor, former President Michel Temer. But not all regulation is bad.
So far, Bolsonaro has issued a slew of decrees to advance his policies. One, for example, put the country’s agriculture ministry in charge of land claims by indigenous people, raising fears among environmentalists that his government will open up ecologically sensitive areas to greater commercial exploitation. To remain in force, such decrees have to be approved by lawmakers within 120 days. That may have seemed like a good bet following Bolsonaro’s thumping election victory. But in the wake of the latest mining disaster, congressional representatives may be much less likely to give the president a free hand.
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