Answer

Vale’s Brumadinho Disaster

1.0 Introduction

            The saying is true, a company is only deemed successful when it delivers value to its stakeholders, values that supersedes even financial benefits. Well, the opposite is true. Stakeholders often feel offended, afraid, and angry whenever a franchise delivers the opposite of what is expected (Dufour, Andiappan and Banoun, 2019). This was the case in the recent Brazil disaster, the Brumadinho dam disaster, that left 270 people dead along with hundreds of others injured as others suffered property damage and loss (Rotta et al., 2020). Even more so, the company that was held responsible for the disaster – Vale S.A – had recently been involved in a similar catastrophe just three years prior. With this consistency in disaster occurrence, it is only appropriate to attribute these series of disasters to the syndicate’s management, leadership, engineering, and most of all stakeholder engagement. This begs the question, what could they have done or not done that caused the 2019 Brumadinho disaster? How would this be mitigated? How would they have engaged their stakeholders for a better outcome and communication? This paper seeks to answer these and many questions of the same regard. The paper seeks to critically analyse the Vale’s Brumadinho disaster of 2019. In doing so, the paper conducts an analysis of the same, explicate how the same analysis is conducted, and illustrate how I – as an engineering manager – would improve upon the engineering management stakeholder engagement practices.

2.0 The Case

            On the 5^th of November 2015, one of the most catastrophic disasters in Brazilian history befell Mariana City of Minas Gerias State (Queiroz et al., 2018). The disaster, also known as the Samarco disaster, produced a wave of mud due to the Fundao dam failure that swept several kilometres down the slope, reaching the second largest river in Brazil – Doce River – and turning it into a sea of red mud. The disaster killed about 20 people, caused mass death of fish, and polluted both the Doce river and the Atlantic Ocean, affecting the ecosystem and the local communities in general. It also caused an economic crisis estimated at $521 million per year, prompting rigorous and vigilant protocols aimed at assessing several other dams in the country in order to prevent the recurrence of such a disaster (Rotta et al., 2020). However, three years later, what can be called the worst disaster in the history of Brazil of even worse magnitude compared to the Samarco disaster befell the same state of Minas Gerias in the Brumadinho city.

            On the 25^th of January 2019, a tailings dam at the Córrego do Feijão iron ore mine suffered a catastrophic failure and released a mudflow that advanced through the mine’s offices along with houses, farms, and the roads. As a result, 259 people were confirmed dead as 11 others were reported missing never to be found till date (Rotta et al., 2020). According to Hinman (2019), the dam was classified as a small structure and a low-risk but with high potential damage. Even more so, the company reported that the same dam underwent a series of continuous bi-weekly inspections that affirmed its safety since it stopped receiving tailings in 2014. However, as was reported, the company owning the dam knew that the sensors monitoring the dam’s structural integrity had problems (García-Acosta, 2019). Most of the victims were Vale’s employees who were having lunch on a nearby restaurant. However, the mud destroyed 100 kilometres of railway track. Environmentally speaking, the dam released more than 12 million cubic meters of tailings that affected the whole region’s ecosystem (dos Santos Vergilio et al., 2020). As many agricultural areas and activities were adversely affected, the disaster caused a huge loss in the economy of the country, causing a downgrade in the market value that has never been experienced before. For this reason, the company faced a number of charges as some of its employees tasked with ensuring the integrity of the dam were arrested. The company was also fined R$250 million as it received strong critics from the public and the majority of its stakeholders (Munhoz, 2019).

3.0 Critical Analysis

            As has been substantiated, the disaster made the stakeholders and the affected parties angry and disappointed. Moreover, the same disaster attracted a series of punishments, court charges, and fines against the company itself and the stakeholders involved. Hamilton Murao, Brazil’s Vice President, succinctly mentioned that those held responsible for the disaster should be punished severely, reports BBC (2019). What is more, top prosecutors held hands to accuse the executives of the firm, claiming they should be held solely responsible for the disaster. All the same, it is evident that the stakeholders of the firm had a lot to lose due to the decisions made that led to this and the previous disaster. But who are the stakeholders involved? How are they affected? How was the firm’s stakeholder engagement process?

3.1 Stakeholders Involved

            The stakeholders in this case are not just the executives and the investors, they are all parties that are interested and affected by the company in general (Grünig and Kühn, 2018). While the mining facility was in service, it serviced the whole country’s economy along with the local community. This insinuates that the government was the major stakeholder in this project. Moreover, the employees and the investors specifically benefitted from this project and its profits thereof. The members of the local community were also another interested party as every decision made had direct consequences to them first (Munhoz, 2019). The leadership and the executives of the firm is another interested party that plays a huge role in the decision making of the firm and thus in the organisation and the development of the firm in general.

3.2 Impact on Stakeholders

            It is important to note that the Brumadinho disaster was the second of its kind to have happened under the company’s watch. What is more, many sources claimed that the company knew well enough that the sensors that assessed the dam’s structural integrity were not working (Du et al., 2020). Even more so, the engineers that were put in place to assess the same did not do their job well. This caused the devastating incident that will continue troubling the minds of many Brazilians. Therefore, pretty much every stakeholder was affected by the disaster that shook one of the many dams owned by Vale. The local community suffered the most; they lost properties, resources, and most of all, their lives. The company itself had hundreds of its employees buried alive when they were having lunch at a nearby cafeteria. Vale was also charged with several cases as they were fined millions of dollars, besides the loss they incurred due to the disaster. The government had even more losses in both economic and agricultural returns as a result of this disaster. Investors had their assets attract more losses than any other time during their investment in the same company.

3.3 Stakeholder Engagement

            Many reports illustrate that Brazil’s energy and mining sectors have one of the poorest stakeholder engagement techniques, which often lead to losses. In 2015, the Samarco disaster attracted criticism as many claimed that the firm failed to promptly respond to the disaster as they failed to provide information concerning health risks posed by the mud as well as the risk levels of other nearby dams (Bezerra, 2019). The dam burst was attributed majorly to the lack of preparation and oversight by the companies in charge. Many critics focused specifically on the executive’s level of preparedness and ability to respond to this level of disaster. What is more, there were various spokesperson who shared several contradicting and misaligned guidance. This could have been excused, giving the company the benefit of doubt since this was one of their first disasters of this magnitude. Many thought, logically, that the company learnt a great deal from this disaster in 2015.

            However, while this case was still under investigation, a second dam – the Brumadinho dam – collapsed in 2019, adding salt to injury. This was despite the promises from the company that no such incidence would occur again since they installed sirens and improved their techniques to warn the population of any possible case. This time, 270 people were deemed dead, un-warned and unwarranted. The fault was still on the company and its management. Even more so, similar mistakes were made during this second strategy in engaging the stakeholders and informing them of the progress of their efforts. Therefore, the company had poor transparency and preparedness as well as poor stakeholder engagement that put the local community and its stakeholders at a high risk. Can this be mitigated? How would the company improve its engagement with stakeholders and how would this affect the outcome?

4.0 Improving Stakeholder Engagement

            As was the case with Vale, it is clear that stakeholder engagement is one of the most important aspect towards the success of a company (Andriof and Waddock, 2017). Without the support of the stakeholders, any company, no matter how big, is doomed to failure. Nothing is more important to the stakeholders than clear and concise communication from companies they are interested in, it makes them own the situation and support the same syndicate towards its feet in case of a tragedy (Andriof and Waddock, 2017). This was majorly the failing point for Vale, who did not involve their stakeholders in improving their services and in educating them about the effects of an occurrence of such a strategy. Therefore, this section of the paper illustrates how I, as an Engineering manager, would improve the stakeholder engagement strategy.

4.1 Identifying Key Stakeholders

            Many successful companies know and appreciate their stakeholders, especially external stakeholders. Therefore, it is important to know who the shareholders are, what their interests are, what their influence on the company means, as well as how they should be approached during important communications (Shams et al., 2019). Understanding, in advance, each stakeholder’s position, their interests and influence play a huge role in communicating during critical and emergency situations. Therefore, in order to improve stakeholder engagement, the company must first name its stakeholders and understand their roles. This being the first step towards an open communication, several other steps are required to make the communication efficient and satisfactory.

4.2 Open Communication Channels

            As has been substantiated, communication with the stakeholders is as important as company sales themselves. As the engineering manager, I would open up several methods through which the identified and key stakeholder would communicate and help shape the decisions of the company. For instance, I would bring a direct communication link from the headquarters of the firm closer to the projects, making it easy to access brewing issues within the projects. What is more, continuous communication with the engineers managing the project is also essential in order to maintain a running and a safe project. This is also true to other external stakeholders such as the surrounding communities and the government at large. The community would be continuously educated about the dangers and the benefits of the project and how their response should be in case of an emergency or a disaster. Therefore, the company should open direct communication links with strategic external players so that they may also be aware in case of any impending situation.

4.3 Develop a Stakeholder Engagement Plan

            After identifying and classifying stakeholders based on their assistance and influence, it is important to develop a concise stakeholder engagement plan that will aid in the response of disasters (Crisafulli, Melnyk, Morrison-Beedy and Happ, 2019). In developing such a plan, I would first develop a power or interest grid of all the stakeholders; highlighting each stakeholders ability to stop or change the course of any project. Thereafter, I would define each stakeholder’s power and interest and prioritize their interest while considering the betterment of the community at large. I would later develop the engagement plan after analysing the power and influence of each stakeholder based on the magnitude and effects of a certain probable disaster. With this engagement plan, I would keep the stakeholders monitored and satisfied, while managing them closely and constantly keeping them informed. In case of any disaster, compared to the Vale’s, I would have a response plan and an engagement plan that would make the situation easier to handle.

5.0 Conclusion

            In conclusion, it is evident that a company succeeds only when it delivers value to its stakeholders. This paper has critically analyzed the Vale Brumadinho disaster while assessing stakeholder engagement in the project. As has been illustrated, the company had a poor stakeholder engagement plan that made its stakeholders angry and offended by the company’s management. The company failed to involve its stakeholders in the management of the dams, especially after the disaster of 2015. The disaster had tremendously adverse effects on the communities involved, the investors, the government, and the management at large. Many lives were lost and the ecosystem was destroyed. As has been explicated, in order to improve stakeholder engagement, it is eminent for the company to develop an engagement plan by first identifying and categorizing stakeholders, creating open communication channels, and using the same information to develop a working stakeholder engagement plan.