Samarco:

Samarco, a company with equally shared ownership by Brazilian and Australian capitals, produced iron ore pellets used in steel-making processes. In 2003, Samarco held a 17% share in the world’s market and ranked second among that commodity’s overseas exporters. Its 1,286 employees worked in Samarco’s plants located in Germano, a city in the Minas Gerais State, and in Ponta de Ubu, in the neighboring Espírito Santo State. Samarco’s Germano site consisted of a plant and a mine with a 5.6-trillion-ton iron ore reservoir. The company’s Ponta de Ubu site encompassed two pellet manufacturing plants and a sea port. Both sites were connected by a 396-kilometer-long (246-mile-long) pipeline with a capacity for 15.5 million tons a year.

From 1997 to 2003, Samarco managed and funded Bento Rodrígues’ Popular Environmental Education Program to promote community development in that district, located in Minas Gerais State’s Mariana County, by engaging dwellers in community problem definition and solutions. However, at first, the solutions found for community problems were largely elaborated by the company, with no local residents’ involvement. As a result, the local population failed to subscribe to the program, and results did not drive any significant changes in people’s living conditions.

Realizing this, the company changed its social intervention approach, primarily in terms of the way in which it reached out to the community. Still, Samarco continued to view its Bento Rodrigues program as a project that had failed to accomplish the development outcomes it had set out to achieve.

In 2003, the need to build a second pipeline provided Samarco with a new opportunity to interact with surrounding communities. The experience drawn from its Popular Environmental Education Program in Bento Rodrígues led the company to design a new social project, called Social Responsibility Education and Communication Program (PROECOS). This program, to be carried out in collaboration with GAIA (Interdisciplinary Application Learning Group), an NGO that specialized in social and environmental management projects, pursued a broad agenda: enhancing Samarco’s image among nearby dwellers, engaging local communities in the formulation of sustainable social and environmental projects, and building a partnership network to address local demands and to further development initiatives once the company left the program.

However, this view of Samarco’s need to get more involved with communities, acting as a social network driver was not unanimously welcomed at the company. Some managers believed that simpler, more technical projects had yielded more satisfactory results and fitted in more seamlessly with Samarco’s business strategy. Then, why change? Why shouldn’t the company stick to consolidated projects instead of shifting to such complex and broad programs? The case closes with this strong internal debate, as Samarco struggles with the dilemma of whether it should change its social approach or not.

This case urges students to question the boundaries and potential of companies’ role in sustainable social and environmental development promotion in the areas where they operate.