For Gerdau to advance in mining investments in two municipalities in Minas Gerais, it will be necessary to convince local communities and NGOs

Um iron mining project of 1,5 billion reais ($283 million) from the Brazilian steelmaker Gerdau  is at risk due to an environmental controversy. The company planned to invest the amount until the end of next year, expanding the mining complex of Várzea do Lopes in the mining towns of Itabirito and Moeda.

Gerdau was waiting for the consent of state legislators, as the area is in an environmental preservation zone and mining requires a change in legislation. 

the state representative Antonio Carlos Arantes, who supported the project, saying that the area to be removed from the park would be 12,8 hectares or just 0,54% of the total protected zone, is no longer supporting the plan.

The legislator requires the company to discuss the matter with local communities and NGOs to find an amicable solution before the project is debated by state legislators.

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Controversy comes as pressure mounts from investors and banks for companies to adopt more ESG-friendly practices (from English Environmental, Social and Corporate Governance) all around the world. The tendency is to force companies to intensify dialogue with NGOs and society in general.

“Dialogue between companies and their value chain is increasingly present in ESG strategies and best practices, and technology and innovation tend to further improve this engagement,” Tatiana Assali, manager of institutional relations at the Brazilian Business Council for Sustainable Development (CEBDS), told BNamericas. .

Meanwhile, Gerdau believes it will solve the problem and move forward with the project. 

“Gerdau continues to believe in the importance of the project, which means the possibility of investing R$ 1,5 billion in the state, maintaining 5 direct and indirect jobs… 

The project aims to maintain mine in Várzea do Lopes operating at the same pace for another 10 years as it is reaching the end of its useful life. The company declined to provide production data.

All of the mine's iron ore is used in Gerdau's steel operations. The company based in Porto Alegre is the largest steelmaker in Latin America.