Brazil’s National Referendum Challenges Privatization of Mining Giant CVRD

Referendum on Vale do Rio Doce From September 1st to 9, social movements from all over Brazil held a popular plebiscite challenging the auction in which Brazilian mining conglomerate Vale do Rio Doce Company (CVRD) was sold, in 1997.  According to experts, there were many irregularities in the privatization process of the company, which was sold for 3.3 billion reais (US$ 1.69 billion), but was evaluated at US$ 40 billion at that time.

The Plebiscite is being organized by various organizations and movements from all parts of Brazil since the beginning of 2007. This action is part of the National Campaign for Nullifying the Vale do Rio Doce Auction. Today, the courts are still analyzing 69 class actions against the sale of the company.

The under-evaluation of Vale do Rio Doce is just one of the irregularities that gave rise to these actions. Among other things, when establishing the sale value before the auction, the company's railroad and port infrastructure and its reserves of titanium, uranium and other ores were not taken into account.

Having uranium reserves is unconstitutional, because it is a nuclear material which only the State can explore. Another illegality pointed out is that the Bradesco Bank, one of the institutions that evaluated Vale do Rio Doce, participated in the purchase of the company.

The company had public concessions in most mineral reserves of the country in large areas of the national territory. In the area around the Carajás' mineral reserves alone, it had a concession of 700,000 hectares inside the Amazon forest.

The company also held a concession for the three largest railroads in the country and for three large ports. The privatization of Vale do Rio Doce without consulting the Brazilian people jeopardized Brazil's sovereignty, because the assets involved belonged to Brazilian society at large.

Paulo Maldos, political advisor for the Catholic Church's organization Indianist Missionary Council (CIMI), pointed out that the required mobilization to recover this public asset will only be possible by building a Grassroots Project for Brazil, in which state resources are controlled by the people to be used in public policies (health care, education…).

"The proposal is not for Vale to resume the status of a state enterprise. The idea is that the people should be allowed to participate in the definition of its paths, so that it can benefit the whole nation without harming the environment and populations living in its surrounding areas, where various indigenous peoples and communities of descendants of runaway slaves live," he explains.

Other Issues

In addition to the issue of Vale's sale, the referendum addressed three other topics:

– The payment of interest rates on the foreign and internal debt, to the detriment of using public funds for investments in the country (health care, education, land reform…);

– The exploitation of electricity by private corporations, which increased their prices by almost 300% after the privatization process;

– The proposal for reforming the social security system aimed at, among other goals, putting an end to the special social security regime for rural workers.

The organizers of the plebiscite have already requested an audience with president Luiz Inácio Lula da Silva to deliver him the voting results. They also want to be received by the chief justice of the Supreme Federal Court, Ellen Gracie, and by the presidents of the Chamber of Representatives and of the Senate, Arlindo Chinaglia and Renan Calheiros (respectively).

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