Vale Targeted by Extortionist Couple in Iron-Rich Amazon

(Bloomberg) -- While cyberattack extortion is in vogue the world over, in Brazil's Amazon region old-school shakedowns are no thing of the past.

A couple was arrested after allegedly unscrewing the bases of energy towers belonging to Vale SA near the city of Parauapebas and demanding as much as 15 million reais ($4.8 million) from the mining company in exchange for abandoning plans to continue such attacks, federal police said Monday. 

Federal police took over the investigation after connecting the same couple with the bombing of a section of railway the company uses to haul iron ore to port. Vale didn't negotiate with or pay the extortioners despite more than a dozen attacks, Globo reported. The Rio de Janeiro-based company didn't immediately respond to a request to confirm the Globo report. Vale did say that it's collaborating in the investigation.

The area of Para state is no stranger to illicit activity related to mining. Because the city rakes in more in mining royalties than any other in Brazil, thanks to its proximity to Vale iron-ore operations, it has long been cited in corruption cases related to those attempting to siphon funds from the industry or government programs. There are nearly 300 open corruption investigations in the 10 top-earning mining cities in the state, according to prosecutors.

Vale has focused its investments in new high-grade deposits in northern Brazil to help bring down costs and offset its geographical disadvantage with Australian iron mines that are closer to Chinese steel mills.

Shares in the company gained 4.4 percent in Sao Paulo on Monday as iron-ore and steel benchmarks advanced.

(A previous version of this story corrected spelling of the city in second paragraph)

To contact the reporter on this story: R.T. Watson in Rio de Janeiro at rwatson71@bloomberg.net.

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Joe Richter