February 10, 2009 / 8:24 PM / 10 years ago

Crisis spoils Carnival for Brazilian mining towns

SAO PAULO (Reuters) - Towns in mining-rich Minas Gerais state are canceling plans for Brazil’s most celebrated holiday, Carnival, as the global financial crisis takes a toll on public coffers and local employment.

Vale, the world’s largest iron ore miner and the main employer in many towns such as Itabira and Sete Lagoas in the southeastern state, has been trimming jobs and iron ore output since demand from world steel companies dried up in late 2008.

“The cuts in municipal spending on Carnival are necessary. We cannot toy with the crisis,” Joao Izael Querino Coelho, the mayor of one of the largest mining towns in the state, Itabira, said. “Itabira is different than the rest of Brazil. We depend a lot on Vale.”

Coelho estimated that Itabira, a city of 120,000 inhabitants, would save 1 million reais ($440,000) by slashing plans to spend public money on bands, entertainment and Samba parades during Brazil’s traditional pre-Lenten revelry, which falls on the last week of February this year.

Fun aside, the city council in Itabira said that tax revenues and royalties from Vale have fallen 40 percent from a year ago.

Estimates say that thousands have lost their jobs in the region from the downturn in the mining industry.

Reporting by Reese Ewing; Editing by Christian Wiessner

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