Nine months on from the Feijao dam collapse in the city of Brumadinho, we are still awaiting the ultimate judgement of the Extraordinary Independent Consulting Committees. Since our initial engagement report regarding the incident in the first quarter of the year, we have met and engaged with various stakeholders at Vale. These meetings have ranged from conversations with the new Safety & Operational Excellence department, to visiting the site at Brumadinho to examine the work being undertaken.

Alongside trying to gain greater insight into the operational changes made, we have met with those in Vale’s top management including Sandra Guerra, an independent director of Vale. Separate to our individual engagement efforts, ASI has been involved in the PRI collaborative engagement with Vale, and with the Church of England initiative, conducted with the International Council on Mining and Metals, to produce a global disclosure standard for tailings dam safety.

During our engagements, we have prompted Vale to adopt more prudent margins for safety than the minimum required under Brazilian regulation. We have learned that Vale’s prior position was to apply Brazilian standards and it had not planned to exceed what was mandated locally. Recently, we have been pleased to hear, following our conversations, that Vale is now beginning to benchmark against Australian and Canadian standards.

Vale has approved an investment programme to increase the ‘factor of safety’ across geotechnical structures from 1.5 to 2.0. Following the completion of the program, Vale’s factor of safety will exceed Brazilian standards, demonstrating the new conservatism being applied by company management. We believe this will help to bring the company more closely aligned to the best practice against which it aims to benchmark itself.

From a governance perspective, following the tragedy Vale has adopted a ‘three lines of defence’ model. The newly-created Safety & Operational Excellence office sits within the second line, overseeing the application of technical standards and driving best practice within the company. The area reports directly to the CEO, sits independently from operations and has the authority to halt operations. We welcome these changes to create robust oversight and help to minimise potential conflicts of interests.

As responsible stewards of our clients’ capital, we strive to ensure that the companies in which we invest implement and maintain best practice. The impact of Brumadinho emphasised the need for robust standards to be adopted, and emphasised the role active engagement can play to drive the adoption of these standards at our holdings. We will continue our ongoing engagements with Vale and seek to drive positive momentum at the company.