Brazil Mine Disaster Shows Value (and Harm) of Public Relations Responses

January 4, 2016 by Stephen Eisenhammer

Within hours of a deadly mining spill in November that would become Brazil’s worst environmental disaster, BHP Chief Executive Andrew Mackenzie was in front of a camera offering his sympathies to those affected.

Meanwhile, his counterpart at joint venture partner Vale SA, Murilo Ferreira, took nearly a week after the mine wastewater flood to talk to the press, setting the tone for a media strategy experts say has been slow and clumsy.

While both companies’ legal strategies seem similarly aimed at limiting their direct liability for the dam collapse that caused the disaster, a divergence in public relations tactics has left Vale, the world’s biggest iron ore miner, taking the brunt of social media outrage and street protests over the tragedy, which killed 17 and left hundreds homeless.

The Brazilian company regularly denies responsibility for the accident in interviews and press conferences, putting the blame solely on Samarco, the joint venture with BHP Billiton which ran the iron ore mine where it occurred. In contrast, Australia-based BHP tends to avoid discussing the subject, focusing instead on offering condolences and explaining the facts.

“Instead of being proactive and taking responsibility, they stuck their head in the sand,” one ex-Vale employee said of his former employer.

Vale and BHP have both lost a quarter of their market value since the dam burst on Nov 5.

For sure, Vale, as a household name in Brazil, has been under more intense public scrutiny in the country than BHP, and any company could have struggled to deal with the fallout of a disaster that saw enough thick mining waste to fill 20,000 Olympic swimming pools spread across two states.

In Rio and London, protesters took to the streets, some covered in mud and others carrying pictures of dead fish, with banners reading “Vale kills.” The company’s response has been improving. Ferreira struck an emotional cord towards the end of last month, promising to dedicate his days both as CEO and in retirement to cleaning up the Rio Doce river, heavily polluted by the mud flow.

Nonetheless, critics who spoke to Reuters, including the ex-Vale staffer and another former executive who both asked to remain off the record, as well as external public relations consultants, said Vale’s particular missteps are emblematic of Brazilian companies’ perceived unwillingness to communicate.

“It’s this perception of who’s in charge, who’s responsible that is so important in these matters,” said Gary Davies, professor of Corporate Reputation at U.K.’s Manchester Business School. Davies explained that different language is needed for the courts and the public, a separation Vale appears to have struggled to get right.

In an email to Reuters, BHP declined to comment on whether it was seeking to put the blame purely on Samarco, saying only that it is “committed to communicating transparently as it works with Samarco and Vale to restore the environment and help the community rebuild.”

Vale declined to comment for this piece, but has previously said its ability to talk about the disaster is limited by a Chinese wall between it and Samarco, which Vale and BHP both compete against in the iron ore pellet market.

“Lawyers have huge influence in crisis situations like this, but the communications team have to push back… It looks like Vale didn’t get the balance quite right here,” said Lais Guarizzi, president of crisis management firm G&A Comunicação.

Public Comment Backfires

In one recent example, Vale’s General Counsel Clovis Torres expressed the company’s position in an analogy that backfired.

“Samarco is not some little bar,” he told reporters, explaining that with revenue of $2 billion it could cover the damages itself.

Columnist Elio Gaspari countered in Rio de Janeiro’s main daily, O Globo, that this was an insult to bar owners who would have behaved better. “With schoolmaster arguments, Vale shows it is reluctant to become part of the solution,” he wrote.

On social media, one tweet showed the resemblance of Vale’s green and gold “V” logo to the lines formed where mining waste met the green Atlantic Ocean. “Nice publicity, it just cost the environment,” read the caption.

Vale has also suffered setbacks in court. Earlier this month a judge froze it and BHP’s assets in a decision that dragged both mining giants further into a damages lawsuit with the government.

Yet, Vale, which plans to appeal the decision, will probably stick to its strategy, legal experts say, as it fights to keep the 20 billion reais ($5.05 billion) liability being sought by the government off its already stretched balance sheet. With Samarco registered as a separate legal entity, it is an argument that could still succeed.

But the public have had little stomach for such legalese and sources close to Vale say the company underestimated how popular opinion can mold government and judicial decisions.

With the courts on recess over the holiday period, Vale has time to form its appeal.

Still, the ex-Vale employee said it faces an uphill battle to improve its public image, “They got their initial judgment of the situation very wrong and that’s going to be hard to correct now.” ($1 = 3.96 reais) (Additional reporting by Marta Nogueira; editing by Alden Bentley)

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