Anger at Vale over Brazil mine accident fed by cautious, slow public response

By Stephen Eisenhammer

RIO DE JANEIRO, Dec (Shanghai: 600875.SS - news) 31 (Reuters) - 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 (NYSE: BBL - news)

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 (Other OTC: ITGL - news) '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 UK'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 (Other OTC: WWTH - news) 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 (Milan: NICE.MI - news) 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)