Brazil Gave Away World’s Second Largest Mining Complex. The People Want it Back

A CVRD train

In a plebiscite organized by 200 social organizations from Brazil, almost
four million people demanded that the CVRD (Companhia Vale do Rio Doce), the
second largest mining company in the world, be put back in the hands of the
Brazilian government.

The Landless Rural Workers’ Movement (MST), the Unified Workers’ Federation (CUT), and about 200 other social organizations celebrated the first week of September (the week of Brazilian Independence Day), with a plebiscite that would rebuild the sovereignty of the country almost two centuries after its independence. Then, on October 8, they released the results. It was a resounding victory for those opposed to privatization.


Referendum polls were open from September 1-9. Citizens were asked whether they wanted the Vale do Rio Doce Company, CVRD, (or “a Vale” as it is known in Brazil) to remain in private hands or be returned to the control of the state and the Brazilian people 10 years after its privatization. Of the 3,729,000 people who participated in the vote, 94% checked the “no” box, stating that they wanted “a Vale” to be returned to public control.


A Bargain


The issue decided by almost four million citizens is not a banal one. The CVRD is the second most prosperous mining company in the world in terms of its commercial value. Worth approximately US$ 100 billion, it is the largest iron ore producer in the world and is present in some way on all five continents.


According to its website, in Brazil alone, the Vale controls one-third of all goods entering and leaving the country by sea through the six ports that it owns. It also owns 10,000 kilometers of railroads and transports 16% of all goods traveling by train within Brazil.


Furthermore, the CVRD owns several power plants that supply electricity only to the company itself, and, according to various allegations, it has been able to increase its cost-effectiveness by receiving energy subsidies. It is one of the leading aluminum mines in Latin America and it owns Inco, one of the largest mines in Canada.


The company was founded in 1942 during the government of Getúlio Vargas. When it was privatized in 1997, it was already one of the largest companies in the world, worth approximately US$ 40 billion. However, the government of Fernando Henrique Cardoso sold it for a mere tenth of that amount in a transaction that, according to those opposed to the sale, was plagued with irregularities.


It Is Up to the Courts


Besides the sale of the Vale for a price much lower than it was actually worth, lawyer Fábio Konder Comparato, professor at the University of São Paulo, says that among the many other irregularities is the fact that the legal requirements for justifying the alienation of state property in areas of public interest were not complied with.


“The order of alienation of control of CVRD was limited to declaring that the ‘destatization’ of the company is incorporated in the objectives of the National Destatization Plan.” However, no justification was given for the function of this plan, nor in what way it would contribute to the wellbeing of the country.


Konder Comparato, along with the other lawyers advocating on behalf the hundreds of claims against the sale of the Vale that are still in the courts, believe that these two facts alone would warrant that the Judiciary annul the sale.


But there is more. In an interview with the InterPress news agency, João Pedro Stédile, leader of the MST, stated that “the firm that assessed the value of CVRD for Brazil’s National Economic and Social Development Bank (BNDES) was the same one that advised the Bradesco bank,” which is one of CVRD’s current owners. For the peasant leader, “This means that the appraisers advised both the vendor and the buyer.”


Some of the courts agreed with Stédile and his colleagues. For example, an appellate court judge already issued a sentence on one of the claims in December 2005. He determined that fraud was committed during the sale of CVRD and that the sale should therefore be annulled. This was a positive outcome.


However, those seeking to have the Vale returned to the control of the Brazilian people and the state are aware that “the next steps could take years,” especially as there are still several claims that need to be resolved.


PT Says Yes, Government Says No


Even before the MST, the CUT, and the other campaign participants had announced the poll results and voters gave a resounding “no” to the privatization of the CVRD, the plebiscite itself had already provoked several reactions that demonstrated a gap between the political class and its grassroots, as well as between the government and its supporting organizations.


Among the actions that showed strong support, the Cry of the Excluded, the widespread demonstration held annually across Brazil, was carried out in tandem with the plebiscite on this occasion. According to the organizers, a million participants mobilized nationwide.


Furthermore, the plenary session of the Third Congress of Workers Party (PT), (the party to which Brazilian president Luiz Inácio Lula da Silva belongs), also joined in the effort. Some of the top leaders of the party even supported the poll directly. For example, the Governor of the state of Pará, Ana Júlia Carepa, voted in the plebiscite.


However, not all the leaders of the PT wholly share in the idea of taking strong actions to reclaim the Vale for Brazilians. In an interview with the Folha de S. Paulo newspaper on September 2 (the day that the polls began), PT Party President Ricardo Berzoini, said that the plebiscite “is an action on the part of social movements supported by the PT, but this does not mean that the results are directly associated with the party.”


President Lula agreed with him. During the plebiscite, he stated that “any discussion on the topic of the CVRD shall not reach my desk.” He went on to say that this issue “shall not be discussed in the government as there is a firm act of law that the government shall respect,” despite the legal actions taken by several of Konder Comparato’s colleagues. Essentially, this means that the party in power is for renationalization of the CVRD, but the government is not.


Not an Easy Task


The task of returning the Vale back into the hands of all Brazilians will be a long and difficult one. CUT National President Artur Henrique acknowledged that after the plebiscite, “a new phase of the struggle” would begin. However, he also observed that the Brazilian people have once again “denounced the concepts of privatization and submission to imperialism.”


This could turn out to be a great success. The fact that 3.7 million voters were mobilized with very few resources is in itself a victory. However, the opponents that have to be confronted are powerful ones. One only needs to look at the CVRD’s holdings structure.


For example, since September 2003, the Japanese corporation Mitsui, one of the most powerful on the Japanese archipelago, has held 15% of Valepar shares, the shareholders group that controls 53% of the CVRD holdings’ vote.


Furthermore, as published in the newspaper A Jornada and based on data published on the Vale’s own website, a fourth of CVRD’s ordinary capital is in the hands of foreigners. Only 7% is owned by Brazilians and the state barely controls another 7%. Almost two-thirds of its total capital is reliant on the stock markets in New York and Brazil.


However, this does not scare the MST, the CUT, nor the millions of Brazilians that have done their part to ensure Brazil’s independence by demanding that it be true and complete. This year’s Cry of the Excluded slogan, a wordplay on the Vale name, summarized well how they feel: “Isto Não Vale!” (This will not do!


Eugenio Fernández Vázquez is a freelance journalist and Americas Policy Program contributor (www.americaspolicy.org).


Translated from “Pueblo brasileño dice “No” a la minería privada
by Andreea Modrea.

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