In February 2001 Arcelor, the world’s third largest steel producer (2002 sales: $27bn), announced the construction of a production facility near São Francisco do Sul in the Brazilian state of Santa Catarina. The Vega do Sul plant is now a reality: $420m has been invested to produce 880,000 tonnes of steel a year, creating 550 direct and indirect jobs. The plant’s output is intended mainly for the automotive industry in southern Brazil (Curitiba, Porto Alegre) and for other countries in the Mercosur free trade area. By Christian Caubet
The Vega do Sul plant was built without considering local needs, although the project’s initiators heavily advertised
how the project would benefit the region’s economic development. The state’s authorities signed a contract that breached various legal obligations, notably those regarding the guaranteed distribution of potable water and environmental protection. The way the plant was located and constructed, and basic operating conditions, ignored the area’s real socio-economic and environmental requirements. It was sited on an island with no freshwater supply. Arcelor funded the construction of a water supply pipeline from the mainland, which runs a few hundred
metres from a village for which no branch-off has been provided. Local reaction, backed by a number of ngos, was only considered late in the planning process, and did not have a positive influence.
The plant’s location offered Arcelor many advantages: a strategic site for receiving raw materials and delivering
products to customers, well-maintained rail and road networks, satisfactory port facilities, skilled local labour, obliging local and state authorities (which granted tax and structural incentives under the pretext of promoting
job creation). The plant’s construction has already weakened the area’s social fabric, generating petty crime and prostitution and precarious living conditions. Protected natural areas have also been destroyed.
The community has been deprived of important elements of its wellbeing in the name of improving quality of life. For years they were promised that they would be connected to the water distribution network, but they have now lost any chance of seeing the situation improve. Arcelor has taken over water resources that have to be sourced from several springs, thus breaching federal law 9433/97, which gives priority to the people’s requirements. The plant’s first production tests have already caused toxic leaks. To control the social consequences of the harmful effects of the plant’s operation, Arcelor has even ousted the civil representatives from the process to define the local Agenda 21, due to start in November 2004.
Christian Caubet is a Professor of environmental law at the Federal University of Santa Catarina, Brazil.