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Brazil pays a high price for its mining industry



For months the residents of Brumadinho laid sullied garments and makeshift crosses around a monument at the entrance to their small, hillside town.

The clothes had been pulled from the muddy wreckage of a collapsed tailings dam just kilometres away, which had unleashed a tidal wave of industrial sludge that killed more than 270 of the town’s residents and employees of the dam.

The mining cataclysm early last year was Brazil’s worst — but it was not the first. Three years earlier, another waste dam at the nearby Mariana township in the state of Minas Gerais, also ruptured and collapsed, claiming 19 lives and causing widespread environmental damage.

Almost exactly five years on from that accident, waste from the Mariana mine is still being detected in Brazil’s rivers and along its coastline.

The disasters have been pivotal moments for Brazil’s mining industry, which under massive public pressure has been forced quickly to adopt new safety standards and protocols. Legislation has been passed at a federal and state level banning the type of perilous “upstream” dams that collapsed in both Brumadinho and Mariana.

Brumadinho residents survey the damage after a tailings dam operated by mining company Vale collapsed in January 2019. The disaster claimed the lives of more than 270 people © Victor Moriyama/Bloomberg

Investors, too, have played a key role, with a handful of players — including the Church of England Pensions Board — spearheading new global standards for the industry.

But within Brazil many challenges remain, including ensuring that disaster victims and their families receive proper compensation and making sure that new checks and balances function.

A less publicised side of Brazil’s mining industry — illegal gold extraction — is also now attracting growing international scrutiny. Deep in the Amazon rainforest, small-scale miners, known as garimpeiros, are increasing their activity to benefit from the soaring gold price during the coronavirus crisis.

This activity is responsible for a chunk of the growing deforestation in Brazil and has been closely linked to violence against tribal communities in the rainforest. Many believe that federal government enforcement is now necessary, although it does not appear to be forthcoming.

“Mining is a violent activity. It is an activity that makes impact, violent impact,” says Luiz Jardim Wanderley, a professor of geography at the Federal Fluminense University. “And Brazil is becoming more and more a mining country. Iron ore is one of our biggest commodities and gold and copper are growing too.”

New priorities

At the heart of the industry is the Rio de Janeiro-headquartered Vale — the world’s largest iron ore company — which operated the dam in Brumadinho and jointly ran the dam in Mariana with mining group BHP.

Almost two years after the Brumadinho collapse curtailed operations,
the company has again begun to increase production of iron ore, which is used to make steel. Chief executive Eduardo Bartolomeo recently said he expects Vale to be producing 400m tonnes a year by the end of 2022. Before the disaster, the company produced 385m tonnes.

The group’s net profit, meanwhile, soared 75 per cent year on year in the last quarter to $2.9bn.

Executives insist, however, that safety — and not profit — is the company’s priority.

“Safety has become an obsession. We experienced the most difficult moment in our history, which has been a catalyst for changes,” says Luiz Eduardo Osorio, director of sustainability, communication and institutional relations.

The company says it is abiding by federal laws to decommission its remaining “upstream” tailings dams within the next three to five years and that it has signed up to a UN-backed industry standard on managing the waste from its operations.

Adam Matthews, director of ethics and engagement at the Church of England Pensions Board, which divested its Vale shares after the disaster last year, says: “I do see change at Vale, so it would be wrong to say otherwise. They are obviously trying to address the legacy of tailings and across the sector this is a continuing issue. The whole disaster has also been a wake-up call for investors.”

He adds, however, that this is still not sufficient for the board to reinvest in Vale. “We talk a lot to the communities affected by the disasters in Brazil and we do feel a significant disconnect between what the company says and what we hear from the communities [in terms of support offered to victims],” he says.

A Vale mine in Minas Gerais. Following the Brumadinho disaster, the company has started to increase iron-ore production again, while insisting that safety is its priority © Dado Galdieri/Bloomberg

Last month families of the victims of Brumadinho accused Vale and the state government of negotiating reparations in secret — a claim both the company and the government of Minas Gerais deny.

Alberto Sayão, a professor of geotechnical engineering at the Catholic University of Rio de Janeiro, says that although “upstream” dams have been banned, the industry still needs to ensure better checks and balances, including with third-party safety inspectors.

He points out that auditors had deemed the Brumadinho dam safe only months before it failed.

“The problem is the inspectors cannot guarantee that their recommendations will be followed,” Prof Sayão says. “Their reports should be handed to the chief executive of the mining company, not to a middle manager, and the CEO should sign the report saying he is aware. Then he will be subject to responsibility.”

For Daniel Sasson, a mining analyst at investment bank Itaú BBA, the disasters will weigh on the industry’s image for some time — a notion accepted by Vale’s Mr Osorio, who acknowledges that the company has a “long way to go” to rebuild its reputation.

Gold fever

Thousands of kilometres away, however, far from Vale’s operations in Minas Gerais, a different kind of mining — small-scale and mostly illegal — is having a devastating effect on the Amazon.

In the past 18 months, large numbers of garimpeiros have surged into protected areas of the rainforest, in the hope of profiting from the sharp rise in gold prices over that period. Many bring heavy equipment to raze the trees and excavate the ground, and process the gold using mercury — a toxic metal that seeps into the water and atmosphere and has been linked to a spate of illnesses in the rainforest’s indigenous communities.

A garimpeiro prepares to sell his gold in a village in Brazil’s Pará state. The recent surge in gold prices has prompted an increase in illegal mining in the Amazon region © Nacho Doce/Reuters

These tribes — particularly the Munduruku and Yanomami — have also found their traditional lands under threat from the miners, who can be violent and are sometimes linked to organised crime. Murders are common, say federal police.

Last year, forest equivalent in size to 10,000 football pitches was razed by illegal gold miners alone, according to environmental protection group Ibama. Much of the gold extracted was laundered into Brazil’s legitimate supply of the precious metal through lightly regulated purchase shops in the rainforest.

The surging illegal activity has triggered a string of police raids in recent weeks, which often involve military hardware including helicopters and explosives.

“In the past few months, with the higher price of gold, we’ve seen greater demand and more illegal miners,” says Debora Toci Puccini, director of the National Mining Agency.

“It has become a situation for the police. We don’t like to have to deal with it this way, but we have no choice.”


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Emerging Markets

Ebay to sell South Korea unit for $3.1bn as local rivals target Coupang




Ebay is set to sell its South Korea business to a local consortium for $3.1bn, according to people with knowledge of the matter, as rivals seek to turn up the heat on SoftBank-backed Coupang in the world’s fourth-largest ecommerce market.

The consortium, which consists of South Korea’s biggest bricks-and-mortar retailer E-Mart and internet group Naver, plans to buy an 80 per cent stake in eBay Korea for Won3.5tn ($3.1bn) with the US company retaining the remainder, said the people.

The purchase could help the consortium to overtake fast-growing Coupang, which raised $4.6bn in an initial public offering in New York in March to become the biggest player in South Korea’s highly competitive ecommerce market. Japanese technology group SoftBank is a large investor in Coupang.

Ebay Korea was the country’s third-largest ecommerce company with a 13 per cent market share last year, according to research group Euromonitor. Its three platforms — Gmarket, Auction and G9 — recorded Won20tn in transactions last year, data from Meritz Securities showed.

Euromonitor has forecast that South Korea’s ecommerce market will grow by 11 per cent this year to $116bn. But it is a fragmented market of more than a dozen players, with Coupang and Naver controlling 19 per cent and 14 per cent shares in terms of transaction volume, respectively.

South Korea is one of the world’s largest and fastest-growing ecommerce markets, driven by its tech-savvy population, high-speed internet infrastructure and densely populated environment. Ecommerce accounted for 35.8 per cent of the retail market last year, compared with 28.6 per cent in 2019, Euromonitor data showed.

E-Mart plans to fund the deal with Won3tn of asset-backed loans with the remainder paid by its cash holdings, while Naver will contribute Won100bn, according to an industry official close to the situation.

“Despite the funding structure, E-Mart needs Naver to make up for its weak online networks,” said the official.

Conglomerate Lotte Group and E-Mart were the final bidders for eBay Korea. Both have struggled to catch up with Coupang, which is investing heavily in logistics to boost its delivery times. Coupang almost doubled its revenues last year to $12bn as more consumers shifted to online shopping during the Covid-19 pandemic.

“Both Lotte and E-Mart were eager to take over eBay’s operations but E-Mart offered about Won500bn more,” added the industry official.

Naver is one of Korea’s most popular internet portals and more than 40 per cent of eBay Korea’s customers access it via the former’s search engine.

Shinsegae, E-Mart’s parent company, and Naver partnered in March by swapping stakes in each other worth Won250bn.

Ebay Korea declined to comment. E-Mart said in a regulatory filing that it was in talks with eBay but a sale had not been finalised. Naver said in a separate filing that the deal had not been concluded.

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ByteDance revenues more than doubled in 2020 to $34.3bn




ByteDance increased its revenues 111 per cent last year to $34bn and had 1.9bn monthly users across its apps at the end of the year, said its incoming chief executive Liang Rubo on Thursday, according to people familiar with the matter.

The owner of the short-video apps TikTok and Douyin recorded a surge in users as coronavirus lockdowns across the world left people searching for more entertainment online. Douyin, the Chinese sister app to TikTok, was ByteDance’s largest driver of revenue and has become a destination for shoppers looking to buy products from livestreaming presenters.

Facebook, the world’s biggest social media group, reported 2.85bn monthly users as of March 31.

ByteDance recorded an annual gross profit of $19bn but a net loss of $45bn for the year because of non-cash items including share-based compensation and fair-value changes of its shares, and heavy investment in new businesses, the people said. The company had 110,000 employees at the end of they year.

The financials were first reported by the Wall Street Journal and Chinese media.

Its chief rival in China, Kuaishou, reported a net loss of $15.4bn on $8.5bn in revenue last year — four times less than ByteDance — and 481m monthly users during the period. Kuaishou is trading in Hong Kong at a market capitalisation of HK$801bn ($103bn), while ByteDance has yet to reveal its plans for an initial public offering.

ByteDance raised about $5bn in December at a $180bn valuation, according to people familiar with the matter. The Beijing-based company is the world’s most valuable start-up, according to CB Insights. 

Liang made his first all-hands staff meeting speech on Thursday after he began the transition to chief executive last month, following founder Zhang Yiming’s announcement that he would step down at the end of the year. Zhang said he wanted to focus on innovation and “longer-term initiatives”.

Liang, a ByteDance co-founder who staff regard as Zhang’s loyal right-hand man, was previously head of human resources. Even after a six-month handover period, staff said they expected him to not make big changes and to continue taking direction from Zhang.

As Beijing increases its scrutiny of tech giants, several high-profile founders and chiefs have stepped back this year. Colin Huang stepped down as chair of ecommerce platform Pinduoduo in March, days after Eric Jing resigned as chief of Ant Group.

Liang told employees he was disclosing the financial figures as part of a drive for greater transparency at the company.

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Coronavirus latest: Royal Caribbean delays inaugural sailing of ship due to Covid cases




Monique Roffey in London with a poster of her novel ‘The Mermaid of Black Conch’
Monique Roffey in London with a poster of her novel ‘The Mermaid of Black Conch’, which is published in paperback this month by Vintage © Monique Roffey

In April 2020, as coronavirus spread around the world, Monique Roffey published her seventh book.

She went with UK-based Peepal Tree Press, a small Caribbean-focused independent company, to publish The Mermaid of Black Conch after the majors rejected her fantastical tale of a mermaid from another era.

“Indie published me in the eye of the storm,” Roffey says. “I did everything I could to get it noticed.”

The Trinidadian-born author crowdfunded £4,500 for a publicist for her novel but as the healthcare crisis took hold she feared her mermaid tale would slide by unnoticed.

She was struggling to pay the rent while the Covid-19 crisis cancelled book tours and festivals.

“Covid was potentially disastrous for my book,” she says. “It was in danger of falling into the Covid chasm.”

But then the lyrical tale of loneliness, love and otherness caught the attention of the literary world and judges applauded it. In January, the novel won the prestigious £30,000 Costa book award, with judges calling it “extraordinary”, “captivating” and “full of mythic energy and unforgettable characters”.

And, bingo, suddenly everyone wanted to read about the mermaid Aycayia, says Roffey, who (full disclosure) attended the same school in the outskirts of Port-of-Spain as I did. 

The story has sold about 60,000 copies in print and online and this month it is published in paperback format by Vintage. For two consecutive weeks this year the novel topped The Times bestseller list. Film rights could well be next.

“Against all the odds, I have done well during Covid,” Roffey says from her home in London. “In 20 years of writing, with many ups and downs, I have seen nothing quite like this.”

Her novel of fantasy and folklore tapped into a desire for reading and imagination during the dark days of coronavirus-induced lockdowns. Roffey joined many authors pivoting online with book launches and literary festivals, which meant she gained global readers.

“In 2020, the nation turned to books for comfort, escapism and relaxation,” says the Publishers Association, the UK’s trade organisation that serves book and journal publishers. “Reading triumphed, with adults and children alike reading more during lockdown than before.”

Income from fiction rose 16 per cent last year to £688m, while the total for consumer publications rose 7 per cent in the UK to £2.1bn, the UK trade body says. 

“Basically a book, which was roundly ignored, rejected, published in the first Covid wave and that nobody registered,” was relaunched, Roffey says.

From nobody wanting the book, suddenly billboards of its cover are cropping up around town, she adds.

This is the sixth article in a series for the blog that explores the effects of the pandemic on people and businesses around the world

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