Recovery and diversification of the economy in the city of Mariana, located in Minas Gerais, Brazil, are some of the challenges faced by the Renova Foundation. According to a study released by the Brazilian Institute of Geography and Statistics (IBGE), the municipality’s Gross Domestic Product (GDP) has registered a drop of 58% since the Fundao dam collapse in 2015. Moreover, this study shows that the town remains economically dependent on mineral extraction.
Therefore, the entity has developed actions to provide conditions for sustainable growth and to strengthen public funds. In the two and a half years that the Foundation has been operating in Mariana, the municipal revenue has collected more than R$ 13 million in ISS (Tax on Services). In 2018 alone, about R$ 8 million in ISS was collected. It is expected that these numbers are to be surpassed in 2019, in line with the progress of the reconstruction of Bento Rodrigues and the initiated works for the reconstruction of Paracatu de Baixo.
Progress is being made with the resettlement works of Bento Rodrigues and Paracatu de Baixo. In Bento, the plant suppression has been completed and the earthworks should be completed by the first quarter of 2019. The affected people work together with various teams of architects to redesign their homes. The community of Paracatu de Baixo follows the same procedures. The urban project was approved by most families and the construction site is underway.
After the approval of a judicial agreement signed on October 2, families in the region who were affected by the disaster and are interested in receiving a proposal from the Mediated Indemnity Program (PIM) can now contact the Renova Foundation to start negotiations.
The generation of new jobs is a concern in the hiring policy of the Renova Foundation, which guarantees 73% of local labor in the repair actions. It is expected that, at its peak, the reconstruction of the communities will employ 2,000 people.
To ensure that the workforce in the repair actions is made up of professionals from the impacted towns, the Renova Foundation has invested in training local labor. The professional courses that were held in Mariana, in partnership with Senai (National Service of Industrial Education), offered 800 spots for certification in several areas.
Suppliers and products from the region were also prioritized and this has stimulated the local economy. From January to September 2018, contracts totaled R$ 483.9 million in Mariana. There are currently 93 local companies providing service to the Foundation.
Among the series of measures to boost the local economy is the stimulus to increase the financial health of micro and small businesses through the Doce River Development Fund, a line of credit with lower interest rates. The fund made R$ 1.35 million available, which helped generate or maintain more than 200 jobs. In its 13 months of operation, the fund has already served 757 micro and medium-sized companies located in municipalities that were affected by the Fundao dam collapse.
As part of its activities to promote tourism, culture and sport, the Renova Foundation has become the main partner of the last three editions of Iron Bike Brazil, considered the largest mountain bike event in Latin America. Due to the event, the historic town was bustling, attracting sportspeople from other states and filling the hotels.
Christmas lights continued to shine and delight locals and tourists, brought about by the Foundation in partnership with the Christmas Lights project. Another attraction that was supported by Renova was the 10th Edition of the International Clown Event, organized by Circovolante, the same team that throughout 2018 brought fun and joy to the squares of Mariana during the Circus Nights.
The repair actions involve both emergency measures and the construction of a sustainable future. For this reason, a series of integrated and priority actions is being carried out by the Renova Foundation. As a compensation measure, R$ 500 million were made available for the treatment of sewage and solid waste disposal in the 39 municipalities of Minas Gerais and Espirito Santo. Of this total, Mariana received the largest share of the fund, about R $ 72 million.
Another initiative of the Renova Foundation is the restructuring of the sanitary landfill of the municipality. The works are expected to be completed within 15 months and are scheduled to begin in March 2019, shortly after the rainy season. Now, the Municipality of Mariana will submit the action plan for approval by the environmental agencies to authorize the interventions. A Fund of R$ 15 million will be created to guarantee that the municipality will have sufficient resources for the operation of the landfill for 5 years. Rural landowners in the municipality are engaged in a series of measures that seek the necessary restoration and, at the same time, redesign the production model with the use of sustainable technologies and strategies. The idea is that producers can assume the role of an economic activity appropriate to the local reality.
For this, the landowners received 1,562 hours of assistance by ATER (Rural Technical Assistance). Another initiative is the Renova Herd, a program which is being applied in 75 rural properties in Mariana. The actions aim to increase productivity, using artificial insemination technologies combined with management techniques. 403 animals were inseminated and there are 200 confirmed pregnancies.
Bento and Paracatu Resettlements are gradually taking form
The road to recovery involves the safeguarding of cultural identities, neighborhood relations and ways of life of the communities of the districts that were destroyed in Mariana – Bento Rodrigues and Paracatu de Baixo. It is not just a matter of rebuilding houses with bricks and concrete, but homes with all the elements that reinforce the idea of belonging and recover memories and rituals.
The construction of the Bento Rodrigues and Paracatu de Baixo resettlements is boosting the economy. The agreement that determines the hiring of 70% of local labor for interventions carried out in Mariana is reinserting people into the job market. At its peak, 2,000 professionals will be working on the reconstruction.
In Bento Rodrigues, construction works began in August. The plant suppression phase was completed in October and the earthworks should be completed by the first quarter of 2019. The affected people work together with various teams of architects to redesign their homes. As of November 2018, 128 meetings were held between the architects and the families. In total, 225 new homes will be erected in Lavoura, as well as public facilities, such as schools and squares.
The construction of Bento Rodrigues will follow the guidelines agreed upon in the project, which took into account the needs of those affected, such as neighborhood relations, patrimonial and cultural memory, respecting the specifics of the new site.
Likewise, the community of Paracatu de Baixo also follows the same guidelines, with an urban project approved by most families, a fundamental step so that the licenses can be granted and the works started.
The Municipality of Mariana issued the exemption of environmental licensing for the installation of the construction site in Lucila, the land chosen by the community. The works on site have already started. And the Town Council approved the bill that allows land parceling, with all the requirements of the Urban and Environmental Master Plan.
A fund to recover small businesses
Since the beginning of its activities in 2016, the Renova Foundation has provided conditions so that impacted communities can act autonomously and sustainably. Renova believes that the best way to do this is to stimulate entrepreneurship, diversify the economy and promote new local business chains.
Indebted companies that are located in Mariana and other municipalities in Minas Gerais that were affected by the Fundao dam collapse, have a new financing opportunity. The Doce River Compete Fund offers a line of credit dedicated to the financial recovery and creation of working capital at low cost for companies that were facing some restrictions by controlling agencies and did not have access to formal credit.
Privately owned, Compete is an addition to the Doce River Development Fund, with the same interest rate – starting at 9.9% per year – but exclusively for micro and small businesses that have tried to obtain resources through the first line of credit but were not eligible. Because these clients do not have access to financing, the resources employed will be 100% provisioned by the Renova Foundation and managed by the Minas Gerais Development Bank (BDMG).
Compete will initially direct R$ 10 million to the region. The goal is to maintain or generate 500 jobs in these companies.
Clients will receive technical advice and an indication of the capital requirement by Sebrae (Brazilian Support Service for Micro and Small Businesses), which will follow up throughout the process. The amount of financing will be defined by this consultancy, limited to 35% of the total billing over the last 12 months. This product is limited to companies that have sales of up to R$ 4.8 million per year.