Brumadinho one week on; 110 dead, sirens “were engulfed by mud”

Good morning! Brumadinho one week on; 110 dead, sirens “were engulfed by mud.” Congress returns from holidays and elects its leaders. A strong January for Brazilian markets.

Brumadinho one week on; 110 dead, sirens “were engulfed by mud”

One week after the tailings dam failure at a Vale-controlled

mine in Brumadinho, Minas Gerais, the death toll has risen to 110 and 238 are still missing. At this late stage, the chances of finding any survivors are almost impossible. No-one has been found alive since Saturday. The human tragedy of the catastrophe cannot be understated. The town of Brumadinho has a population of less than 40,000 and is heavily connected to the Vale mining operations, meaning that there will be very few families that have not been directly affected by the dam failure.

According to the rescue efforts, the vast majority of bodies found so far have been near the surface of the mud spill, meaning that the remaining missing persons are likely to be buried deep under the toxic tailings. The operations will now focus on excavating the soil to find the remaining dead, a much slower process. Speaking to the press yesterday, Vale CEO Fábio Schvartsman discussed the fact that the dam warning sirens did not sound during last week’s failure. According to him, they were “already engulfed by mud.” “Something unusual happened, the dam burst very quickly.” The employees responsible for reporting such a failure were also killed.

The Brumadinho dam was designed in a so-called “upstream” format, which consists of embankments—made from tailings—being piled on top of each other in an upstream direction, creating a sort of staircase effect. This type of dam is considered to be the most cost-effective and the least safe, and it was the same type used for the tailings dam in Mariana which collapsed in 2015. Vale has declared that it will decommission its 10 remaining upstream raised dams, all of which are located in the same region of Minas Gerais.

Congress returns from holidays and elects its leaders

This afternoon sees the federal and state legislatures get back to work, swearing in new members of Congress and, crucially, electing the heads of legislative chambers. In Brasilia, all eyes are on the elections for House Speaker and Senate President. Last night, veteran political operator Renan Calheiros was confirmed as the official candidate of the Brazilian Democratic Movement (MDB) party in the race to preside over the Senate. As the largest party in the chamber, Senate conventions state that the MDB has the prerogative to occupy the presidency, a tradition to which even opposition parties tend to adhere.

Mr. Calheiros won the nomination after a bitter internal dispute with party colleague Simone Tebet, who is still serving her first term as Senator and gathered support from other parties beyond the MDB. With 24 years in the Senate, Renan Calheiros has presided over the chamber four times, meaning he knows the terrain very well indeed. With Ms. Tebet’s withdrawal, barring any huge surprises, Mr. Calheiros should be victorious for the fifth time. Once Mr. Calheiros’ nomination had been announced, he received a phone call from Pres. Jair Bolsonaro to congratulate him.

In the lower house, all signs point towards the re-election of incumbent Rodrigo Maia. Having managed to gather the official support of a vast majority of parties in the house, including Jair Bolsonaro’s Social Liberal Party (PSL), Mr. Maia is expected to coast to victory.

Why this is important

Anything but decorative positions, the heads of both the Senate and House of Representatives are two of the most powerful political offices in the country. Each has the power to control the voting schedule of Congress, choosing which bills go on the docket and when they are submitted to a floor vote. They are also automatically placed on the presidential line of succession: if the president and vice-president were to leave office or travel abroad, the House Speaker would become the head of state.

Furthermore, the leaders get to choose who presides over the permanent committees of each chamber—every bill in Congress must pass through at least two committees in each House. However, these are not personal selections, they are often agreed politically, often in exchange for votes in today’s election. For instance, in return for its support, Mr. Maia has promised the PSL the much coveted Committee of Constitution and Justice (CCJ), the only committee through which every single lower house bill must pass.

A strong January for Brazilian markets

As we move into February, we can look back at what has been an impressive start of the year for the Brazilian markets. The São Paulo stock exchange saw an accumulated growth of 10.8% throughout the first month of 2019, while breaking all-time nominal records.

On January 24, Ibovespa closed the day at 97,394 points—a record high for São Paulo’s stock exchange. Had it not been for the Brumadinho disaster (which took place the following day, January 25), it is expected Ibovespa would have posted even better results and surpassed 98,000. On January 28, the first trading day after the mining collapse which has now claimed over 100 lives, Vale stock fell an astonishing 24%, pushing Ibovespa down with it. One week on, the company appears to have absorbed the financial hit and its share prices are rising.

What else you need to know today

• Car Wash. Operation Car Wash launched a new phase on Thursday, going after the payment of bribes in contracts to Transpetro, a subsidiary of Petrobras. The suspicion is that they benefitted political agents connected to the Brazilian Democratic Movement (MDB) party. Two arrest warrants were issued.

• Pensions.Sources within the Social Security department say that the government will submit its pension reform bill to the lower house within the next two weeks. They are waiting for President Jair Bolsonaro to return to Brasilia after recovering from his surgery, as the plan is for the head of state to deliver the bill to the House Speaker in person.

• Unemployment.Brazil’s unemployment remained stable in 2018, according to final year figures released by IBGE. The rate for the last quarter of the year stood at 11.6%, a fall of 0.2% in comparison with the fourth quarter of 2017. Brazil’s unemployed population stands at 12.1 m people.

• Statement.In a bizarre statement released yesterday, the Ministry of Education attacked journalist Ancelmo Gois, of O Globo, accusing him of having connections to the KGB and having been “taught Marxism and Leninism by the Soviet Communist Party.” The outburst, published entirely in capital letters and littered with incorrect punctuation, was quickly lampooned by Brazilians on social media. The Ministry was responding to a report from Mr. Gois which observed that videos on the teachings of Marx, Nietzche, and Engels had been removed from the Ministry’s website.

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