Mining tsunami hits after tailings dams burst in BrazilPublished by MAC on 2015-11-07
Source: Reuters AFR, Boomberg, statements, SMH
BHP Billiton and Vale must be held to account
Although, at the time of publishing, casualty figures from this week's mining disaster in Brazil are not confirmed, it is likely that scores of people have been buried alive, deep beneath the five mile long torrent of mud, water, and toxic elements that poured out of two collapsed tailings ponds on 5th November 2015.
In any event, it is unquestionably one of the worst mining-related events ever in Brazil - and among the most egregious to have struck the mining industry anywhere in recent years.
Management of the Minas Gerai state's Samarco iron ore mine was shared between the Australian-British BHP Billiton and Brazil's Vale. These are respectively the world's second- and first-ranked iron producers.
In a savage irony, BHP Billiton - the globe's premier diversisifed mining oufit - had only two weeks earlier held its London Annual General Meeting, where it tried to put a highly optimistic gloss on its current and future operations. See: The Two Degrees: Yet another BHP Billiton AGM
Now, it has been forced to admit joint responsibility for causing human misery and environmental destruction on (for this company at least) an unprecedented scale.
While international media understandably rushed into print, and via the internet, to break the appalling news, many of their versions of the disaster leave a lot to be desired - notably their description of the constituents of the tailings avalanche as "a mining waste product of metal filings (sic!), water and occasionally chemicals", coming from a single dam (see Reuters story below).
But, as Bloomberg noted, two dams, Fundao and Santarem, ruptured between the towns of Mariana and Ouro Preto, and the number of people impacted could reach a figure of 2,000.
The contents of the dams - as with virtually every other such land-based containment - would have mainly been earth, rocks, mud, water, discarded low-grade metals, sediments, and probably some overburden, laced with as-yet unidentified chemicals. (See fourth article, below, for an initial estimate of what the release of these materials may mean in health and environmental terms).
Educated - and loose - comment
Speculation will inevitably continue - and accelerate - over coming weeks, if not months, as to how and why this tragedy occurred. It would be unwise to second-guess the outcome of any enquiry. All we should demand is that it be truly independent, and decidely not left to Vale and BHP Billiton alone.
Meanwhile, one 'expert', professor Saleem Ali of the University of Queensland Centre for Social Responsibility in Mining* has pontificated that tailings dams pose "hazards that we all have to accept to some degree", and asked why people were living downstream of those dams at the Samarco mine?
To say the least, these are ill-conceived utterings, coming from a man who should definitely know better. How can one blame the Samarco residents (many of whom will have been workers) for daring to live within the mine's footprint and thereby implicitly acquit the management of prime responsibility when it all turns to mud and water?
Highlighting the disconnect of Saleem's comment from reality is a recent report into the extent and nature of global catastrophic mine waste "failures". It shows that they are increasing in frequency and severity, not in spite of - but because of - modern mining techniques. (See: D. Chambers, The Risk, Public Liability & Economics of Tailings Storage Facility Failure)
While it could not predict last week's Brazilian disaster, the report makes clear that one of similar severity was virtually inevitable.
For a graphic depiction of the immediate outcome of the disaster, see: http://g1.globo.com/minas-gerais/ao-vivo/2015/barragem-se-rompe-em-mariana.html)
A video with English language commentary can be seen here - http://www.bbc.co.uk/news/world-latin-america-34742272
* Note: Professor Saleem Ali wrote to MAC on 9 November 2015, in response to our critically quoting him in the above introduction, as follows:
"[W]hen asked questions by a journalist about whether tailings dams should be built or not, I did state that any large-scale mine will likely have a tailings facility. The situation of the facility is always a hazard at some level and we have to make sure that the risk to communities is minimized through a better planning process which includes zoning, resettlement and risk management of habitable areas. This is not to blame the community but the planning process itself. The direct downstream path of a tailings flow should never be a habitable area. Alternatives to tailings dams pose their own risks to the environment such as submarine disposal etc."
Deadly mudslide at BHP Vale mine in Brazil
Sydney Morning Herald
6 November 2015
A dam holding back waste water from an iron ore mine in south-eastern Brazil that is owned by BHP Billiton and Vale has burst, devastating a nearby town with mudslides, killing at least 17 people and injuring more than 50.
"The number of missing is going to surpass 40 but that is not official," said Adao Severino Junior, fire chief in the city of Mariana in south-eastern Minas Gerais, the famous Brazilian mining state.
The village of Bento Rodrigues near the dam was practically buried in mud, the fire chief said.
Samarco said it had not yet determined why the dam burst or the extent of the disaster.
"The situation is grim. It is dark. There is a lot of mud," Mr Severino said.
Television images showed a torrent of thick red mud several hundred metres long that had swamped houses as it surged down valleys in the hilly region near Mariana, a city of 58,000 residents. The incident has stunned a country that relies heavily on dams to produce electricity and on mining
to generate export revenue.
Television images showed a torrent of thick red mud several hundred metres long that had swamped houses as it surged down valleys in the hilly
Samarco, a venture between BHP and Vale that has mining operations in Minas Gerais and pellet plants in Espirito Santo, said in a statement it had not yet determined why the dam burst or the extent of the disaster. It is yet to confirm whether there were any fatalities.
"We need rigour in determining what happened," Carlos Eduardo Ferreira Pinto, a prosecutor in Minas Gerais, told reporters on Thursday. "No dam bursts by chance."
Hydropower complexes provide about three-quarters of the country's electricity and much of the energy used to run some remote mining sites. The city council told Globo News it was evacuating about 600 people to higher ground from the village of Banto.
A solemn BHP chief executive Andrew Mackenzie said the company did not yet fully understand what had caused the "very tragic circumstances" in Brazil, meaning he was unable to confirm speculation that a tailings dam had failed.
Nor was he able to comment on the number of fatalities.
"First and foremost our thoughts are with Samarco's employees and contractors and their families, and then the local community of Bento Rodrigues which has been devastated by the flooding and we are deeply concerned for all their welfare," he said.
Globo reported more than 200 people were involved in the search effort.
"We still don't know the full extent of the situation, it happened shortly before dusk and of course it is still night there, but we are working very closely with Samarco and with Vale, who are our joint venture partner in Samarco so we can understand the circumstances better as quickly as practicable."
Mr Mackenzie said there had been some public speculation that weather or seismic activity may have played a role in the incident, but he said he did not want to participate in the speculation.
"We need to do a full investigation," he said.
"When day does break (in Brazil) our biggest imperative is to secure the safety of the community and obviously our workforce and then to start planning how we can restore the community to health in the wake of this terrible accident," he said.
Risk of more landslides
The city council told Globo News it was evacuating about 600 people to higher ground from the village of Banto, which was flooded as a result of the accident at about 4.20pm local time. Globo reported more than 200 people were involved in the search effort, which was continuing through the night. Brazilian army units nearby stood ready to help the search and rescue effort and the minister of national integration, Gilberto Occhi, planned to visit the state on Friday to provide assistance, according to a note from the presidency.
The situation was very serious and there was a risk of more landslides, Mariana's Secretary of Social Defence, Bras Azevedo, reportedly said.
The G1 news service of the Globo Media group initially reported that between 15 and 16 people had died and 45 others were missing, citing the local union. The civil defence arm for Mariana could not confirm casualty numbers but said numbers reported in Brazilian media were speculative.
The dam, which broke between the old colonial towns of Ouro Preto and Mariana, was holding so-called tailings, a mining waste product of metal filings, water and occasionally chemicals. It was located near the Gualaxo do Norte river, adding to fears of potential water contamination.
River of mud
Aerial images broadcast on the Globo television network showed a river of mud stretching for several hundred metres in a valley near the dam.
"We have flown over the whole area. All the access routes are blocked by the torrent of mine waste," a member of the Mariana military police told AFP by phone.
Samarco said in a statement it was making "every possible effort to help people and minimise damage to the environment".
Samarco produced 29 million tonnes of iron ore pellets in the 2015 financial year, with 14.5 million tonnes of that belonging to BHP.
That result was about 33 per cent better than during the 2014 financial year, on the back of a fourth pellet plant being introduced and firing up to full capacity.
BHP's global workforce suffered five fatalities in the 2015 financial year, with the deaths occurring in Chile, South Africa and Australia.
Despite those deaths the company's total recordable injury frequency performance was 2 per cent better than in the 2014 financial year.
â€‹BHP chief executive Andrew Mackenzie spoke about the impact of workplace fatalities just two weeks ago at the company's annual meeting of London shareholders.
"We have engaged tens of thousands of our people across the company in discussions to upgrade their health and safety leadership, to make their workplaces healthier and safer, free from fatalities, serious injuries and long term health effects," he said.
BHP executives will front their Australian shareholders at the second annual meeting of shareholders in Perth on November 19.
with Reuters, AFP and New York Times
Dam burst at Vale, BHP mine devastates Brazilian town
By Anthony Boadle
6 November 2015
BRASILIA - A dam holding back waste water from an iron ore mine in Brazil that is owned by Vale and BHP Billiton burst on Thursday, devastating a nearby town with mudslides and leaving officials in the remote region scrambling to assess casualties.
The mining company Samarco, a joint venture between top iron ore miners Brazil's Vale and Australia's BHP, said in a statement it had not yet determined why the dam burst or the extent of the disaster at its Germano mine near the town of Mariana in Minas Gerais, south eastern Brazil.
Civil defense authorities in Mariana said they were evacuating about 600 people to higher ground from the village of Bento Rodrigues, where television footage showed dozens of homes destroyed by the mudslide. A car rested on top of a wall where the roof of a building had been ripped off.
They said the flood had also reached another village further down the hill, called Paracatú de Baixo, and that inhabitants there were being evacuated.
The dam was holding tailings, a mining waste product of metal filings, water and occasionally chemicals. It was located near the Gualaxo do Norte river, adding to fears of potential water contamination.
The G1 news service of the Globo Media group reported that between 15 and 16 people died and 45 others were missing, citing the local union.
Civil defense authorities could not confirm casualties and said numbers reported in Brazilian media were speculative. A city hall official confirmed one death and 16 injuries, adding that dozens more were missing.
At a news conference in Melbourne, Australia, BHP Billiton's chief executive, Andrew Mackenzie, said a full assessment of casualties and damage was being hampered by darkness.
"Most of what happened there has been under the cloak of darkness," he told reporters. "At daybreak, clearly we will do an awful lot more and give you further updates."
Rescue crews continued to search the muddy waters after nightfall.
Brazilian army units nearby stood ready to help the search and rescue effort and the minister of national integration, Gilberto Occhi, planned to visit the state on Friday to provide assistance, according to a note from the presidency.
Miners are struggling amid a collapse in prices of iron ore and other commodities due to concerns about demand from China, the world's top consumer of industrial raw materials.
Samarco produces about 30 million tonnes per year of iron ore, just under 10 percent of Brazil's output. Iron ore is transported down a slurry pipe from Germano to Espirito Santo, where it is turned into pellets.
Vale has directed media questions to Samarco.
(Reporting by Anthony Boadle; Additional reporting by Raquel Stenzel and Natália Scalzaretto in Sao Paulo, Sonali Paul in Melbourne and James Regan in Sydney; Editing by Chris Reese, Tom Brown, Ken Wills and Ed Davies)
Samarco tragedy stains BHP Billiton
Dam bursts at Vale, BHP mine
by Matthew Stevens
Should the Samarco tragedy prove to be as tragically deadly as has been reported then it stands to be both the most deadly incident in BHP Billiton's long history in mining and a devastating stain on the Global Australian's international reputation.
Samarco is a business owned in equal share by BHP and Brazil's iron ore king, Vale. It was set up to run an iron ore pellet business whose product is made from iron ore dug up at Minas Gerais in the heartland of Brazil's iron ore country.
As part of that mining operation, Samarco maintained a tailings dam. It is reported that the dam burst on Thursday evening causing a mudslide that has reportedly swamped land around the city of Mariana, killing 17 people and injuring a further 50. There are reports that 40 more people are missing.
There is evidence enough to suggest this is an incident as deadly as has been reported. It seems fair to speculate that this is already an environmental calamity only matched in BHP's hall of shame by the Ok Tedi mine in PNG.
There, with the approval of the PNG government, tailings from a copper mine were systematically poured into a river system over more than two decades. But at Minas Gerais something has failed. And frankly, unless there is some extraordinary circumstance, like an earthquake or an unexpected deluge, then dam walls should not fail unexpectedly in this modern age of mining.
In a rushed press conference on Friday evening BHP's chief executive Andrew Mackenzie said that his immediate focus was on the well-being of all those affected by this disaster. It seems likely that expression of concern is reinforced by deed. There is speculation Mackenzie was to be Brazil-bound by close of business Friday. Certainly that sense of urgency is fully appropriate.
Mackenzie avoided questions about the cause of the collapse and the liability it might trigger. This too is sensible. The facts matter in situations as bleak as these. BHP and its almost equally powerful partner Vale need first to bring succour to the communities swamped by this accident. They then need to understand what went wrong and to know whether management could have, or should have, anticipated the breach of the dam wall.
And, with that done, there will be no room to wonder whether the legal liability stretches to BHP and beyond or is contained within the joint venture. Both BHP and Vale have a certain moral obligation to clean up this mess and fully compensate those who have lived through it and the families of those who have not.
BHP 'deeply affected' by Brazilian mine sludge disaster as hopes fade for missing
Matt Wade, Senior writer
Sydney Morning Herald
8 November 2015
Hopes are fading for people missing from settlements inundated by a torrent of thick sludge in south-eastern Brazil after two tailings dams ruptured at a mine jointly owned by resources giant BHP.
The accident, described by local officials as the worst ever environmental disaster in Brazil's minerals-rich Minas Gerais region, threatens to damage BHP's reputation and cost it a fortune. The clean-up bill, potential fines and compensation for affected families and those injured or killed could run into the hundreds of millions.
At least two people are reported to be dead, and about 25 missing, including 13 mine workers. That includes at least three children and an elderly woman in the hard-hit village of Bento Rodrigues, where reports say only 10 of 200 houses were left standing. Hundreds of emergency workers including firefighters and soldiers continue to scour the area immersed in floodwater and viscous mud after the dams holding mine waste failed early on Friday.
"The death toll will rise for sure," said Duarte Júnior, mayor of the nearby town of Mariana.
The inundation has affected settlements about 80 kilometres downstream from the iron ore mine. A local gymnasium is being used as emergency accommodation for those left homeless.
BHP Billiton and the Brazilian resources firm Vale SA each have a 50 per cent stake in the mine's operator, Samarco. BHP and Vale shares both took a beating in trade on Friday. BHP fell 5.7 per cent in London while Vale also lost 5.7 per cent in New York. BHP and Vale are already grappling with the lowest iron ore prices in a decade.
A statement by BHP Billiton's board of directors on Sunday said it has extended "immediate support" to Samarco and would continue to provide all the assistance necessary to support the response effort.
Chief executive Andrew Mackenzie will visit the devastated area in the next few days "to understand firsthand" the human, environmental and operational effects of the accident.
"Our first priority is to assist Samarco in safely and effectively responding to this terrible tragedy," he said.
People carry an injured dog they rescued in the small town of Bento Rodrigues, which flooded after a dam burst in Minas Gerais state, Brazil.
The chairman of BHP Billiton, Jac Nasser, also expressed his sympathy to those affected.
"Words cannot describe the impact of this tragedy on the employees and contractors of Samarco, their families and the community," he said.
Bob Burton, who monitors the impact of mining for environmental group the Earth Island Institute, said the clean up and rehabilitation cost to BHP following the accident was likely to be "substantial". The accident may also cast doubt on the dependability of tailings dams at other mines owned by BHP Billiton and Vale.
"It raises the question: are all of their other tailings dams across the world structurally sound?" Mr Burton said. "This could raise eyebrows about how they are managing the risks at other operations."
In the late 1990s BHP admitted that waste discharged from the Ok Tedi copper and gold mine it operated in Papua New Guinea had caused widespread environmental damage.
Mr Burton said BHP "had form" when it came to causing environmental damage in developing countries. "This conforms to a pattern where their operations result in environmental damage," he said. "BHP goes on about its corporate social responsibility but the public is entitled to treat that with some suspicion."
Dramatic aerial footage of the disaster area in Brazil showed homes and cars engulfed by the viscous mud along with stranded horses and cattle. The mine operator, Samarco, said the dams had been inspected in July and found to be safe.
There are reports that locals fear the sludge from the dams may be toxic. But Samarco claims the mine waste is "inert".
"It consists mostly by silica [sand] from the iron ore processing and presents no chemical that is harmful to health," the firm's statement said.
Samarco has started collecting water samples in the areas hit and authorities are running their own tests.
Mr Mackenzie said BHP Billiton employees have been "deeply affected" by the event.
with Amanda Saunders
Another trail of destruction and death in the history of mining and Vale S.A.
Note published by the International Articulation of People Affected by Vale S.A.
8 November 2015
On November 5, 2015, yet another shocking and terrible report involving a large mining company and Vale S.A.
Two dams of the Samarco mining company Minera SA, a joint venture of Vale SA (50%) and BHP Billiton Brazil Ltda (50%), and also a recipient of waste from other mines of Vale SA in the region, including the Alegria mine, ruptured in the state of Minas Gerais, in Bento Rodrigues district, between the cities of Mariana and Ouro Preto.
The District is completely buried under toxic sludge, now the only possible access to the site is by helicopter. There are countless homeless families, and so far there are at least 16 dead, 45 missing and countless buried. The situation on the ground remains very serious and there is risk of new landslides. Initially, only the Bento Rodrigues district had been affected, but the flood of waste continues, reaching other districts and municipalities 60 km from the site.
The rupture of a tailings dam – a structure that is intended to retain the solid waste, which has a high level of toxicity and water from ore beneficiation processes – does not occur randomly and is not new in the state Minas Gerais, nor in the mining sector. The severity of the case requires rigorous investigation into the incident, strict accountability of perpetrators and full redress and compensation to all affected.
What happened was a CRIME. The regulatory agencies and companies have full responsibility for the tragedy. The amount of waste proves that companies had passed the dam’s capacity. The technical report conducted by the Instituto Prístino at the request of the prosecutor during the licensing of the project had already identified problems, such as the dam of Fundão and waste dump Union Fábrica Nova Mine Vale border on each other, with overlapping areas of direct influence, impacting synergy In addition, geotechnical and structural monitoring of the dikes and the dam must be carried out periodically with an interval less than one year to indicate any accident risks. These two points alone announced the tragedy and prove the cruel policy of Samarco, Vale S.A. and the bodies responsible for project license.
Vale S.A. is a company widely known by social movements, communities, trade unions, academics, NGOs and other social groups for its constant disregard of social and environmental rights. This tragedy also shows the disrespect for fundamental issues such as the safety of both their workers, as the nearby communities that face growing intensity of mining and unbridled quest for profit of large mining companies.
Currently a New Mineral Code for Brazil, which will allow the further advancement of mining in the country is under consideration. With its approval there are real chances of growth in scale and numbers of deaths, disrespect of rights, illegal appropriation of land, contamination of water sources and tragedies like this.
In Minas Gerais Bill No. 2946/2015 is up for a vote, authored by the current governor Fernando Pimentel, which further weakens environmental licensing in the state. This bill would reduce the time required to grant environmental licenses in the state, a fact that will benefit enterprises considered strategic by the government, further expanding the legal uncertainty, environmental damage and social conflicts associated with large projects.
This tragedy once again alerts us to the constant social and environmental impact of mining. This disaster urgently calls for a public debate on large-scale mining in the country and the accountability mechanisms of the companies. The politics of mining companies regarding workers and communities is the most perverse possible. These companies have billion in profit every year and invest too little on safety, the workers and the cities.
There are several reports of irregularities in the construction and expansion of tailings dams. An example is the structural irregularities at the dam’s Casa de Pedra mine in Congonhas / MG, owned by the Companhia Siderúrgica Nacional and the illegalities in the granting process for the construction of the dam at the Minas-Rio waste system, to be installed between the municipalities of Alvorada de Minas and Conceição do Mato Dentro, the responsibility of the Anglo American mining company.
For us of International Articulation of People Affected by Vale S.A., what happened in Bento Rodrigues district is not an isolated case but one more tragedy in this sector. Large companies such as Vale S.A. have the practice of outsourcing their operations or creating joint ventures where the hiding their name and omit commitments and responsibilities. We cannot let those responsible for the tragedy leave unpunished.
We demand investigation and civil penalties. The environmental and criminal enterprises of Samarco, Vale S.A. and BHP Billiton Brazil Ltda, must be held responsible, its leaders held personally responsible. There must be full reparation and compensation to the population of Bento Rodrigues.
The International Articulation of People Affected by Vale S.A. sends solidarity to the people of Bento Rodrigues, Paracatu de baixo, Mariana and region.
We cannot allow even one more death!
International Articulation of People Affected by Vale S.A.
Dam Breach Floods Parts of Mariana Municipality in Minas Gerais State; Casualties Reported
Daily Intelligence Brief
6 November 2015
Minas Gerais, Brazil - A tailings dam breach caused extensive damage and fatalities in the small town of Benito Rodrigues in the Mariana Municipality in Minas Gerais State. The incident occurred shortly after 1600 Nov. 5. The containment area formed by the Fundao dam receives tailings from Samarco's nearby Germano-Alegria iron ore mine (Mina Germano-Alegria). The company has not identified the cause of the breach, although construction to raise the height of the dam - which is one of the largest of its kind in Latin America - had been ongoing since July.
The facility is about 60 km (37 miles) southeast of the Minas Gerais capital, Belo Horizonte. At least two fatalities were confirmed after torrents of mud swept through Benito Rodrigues and destroyed a number of homes, although local Metabase union sources have claimed that the disaster may have killed more than a dozen people. Metabase officials have also claimed that as many as 45 people may be missing, including a number of construction workers employed at the dam. Civil defense teams have evacuated survivors, and Samarco has mobilized resources to provide assistance to local residents and mitigate environmental damage. The breach could be the worst in the country's history in terms of casualties, if those missing are confirmed dead.
iJET Analysis:The mining waste has some degree of toxicity. Contact with pollutants in the water may present considerable health risks to humans and livestock, although a large amount of the contaminated water and sediment might be able to be contained before it reaches other communities downstream from Bento Rodrigues. Although the headwaters of the Rio das Velhas are in the Iron Quadrangle (Quadrilatero Ferrifero), the spill should not threaten water supplies in the Belo Horizonte metropolitan region. The Minas Gerais Sanitation Company continues to monitor the situation, however. Tailings and contaminated water have been documented 8 km (5 miles) from the breached dam along the Rio Gualaxo do Norte, although pollutants could seep further downstream toward the Rio Doce, particularly if rainfall occurs in the days ahead.
Brazil Hunts for Mudslide Victims After BHP-Vale Mine Dam Bursts
Andrew Willis, Yasmine Batista, Gerson Freitas Jr.
5 November 2015
Brazilian authorities stepped up efforts to locate and care for victims of ruptured dams at a mine owned by BHP Billiton Ltd. and Vale SA in an environmental disaster described as Minas Gerais state’s worst ever.
The Samarco Mineracao SA iron-ore joint venture said 569 people were placed in hotels as the army, police and firefighters helped the injured and homeless in the town of Mariana after two tailings dams ruptured, causing massive mudslides. Two deaths were confirmed and at least 13 workers were missing.
While Samarco said it couldn’t confirm the cause of the accident, state prosecutors said the missing personnel were working on heightening one of the dams at the time of the collapse. Prosecutors plan to request the suspension of the mine’s operating licenses on Monday and said the company should pay indemnity regardless of responsibility.
“We will recommend the state secretary to suspend the license for the whole enterprise until its compliance is assessed and safety for communities is guaranteed,” Carlos Eduardo Pinto, a prosecutor in Mariana, told reporters. “We filed a public civil investigation into an event that caused the most environmental damage in the history of our state.”
Shares in BHP, the world’s biggest mining company, and Rio de Janeiro-based Vale both fell 5.7 percent on Friday. Samarco’s $1 billion in bonds due 2022 tumbled 6.7 cents to 76.7 cents on the dollar. Standard & Poor’s placed Samarco’s BB+ rating on CreditWatch with negative implications.
BHP Chief Executive Officer Andrew Mackenzie told reporters Friday in Melbourne that the biggest imperative was to secure the safety of the community and the workforce, while Vale said it has offered support and assistance to local authorities. A full investigation would be required to establish the cause of the incident, Mackenzie said.
Four earthquakes measuring 2.0 to 2.6 on the Richter scale hit areas near Samarco before the collapse, University of Sao Paulo’s Center of Seismology said in its social media page. "The magnitudes were very small and it is still not possible to establish a relationship between earthquakes and the dam break," the institute said.
Dams called Fundao and Santarem ruptured between the towns of Mariana and Ouro Preto. Footage on the Globo news website showed extensive mud flows engulfed dozens of homes in a nearby village and left a car precariously balanced on top of a wall of a ruined house.
“We cannot at the moment confirm the causes or the extent of the incident or the number of victims,” Samarco CEO Ricardo Vescovi said in a video posted on the company’s Facebook page. “Our focus is on assuring people’s safety and protecting the environment.”
The wall of mud hit Bento Rodrigues, with about 600 inhabitants, and the number of people affected in the area could rise to 2,000, according to Globo, citing estimates from the prefecture. More than 200 rescue workers were searching for victims. The mud flow was eight kilometers (five miles) long and 2.5 meters deep, Globo said, citing military police.
“Terrible news for those involved,” Investec Plc analysts wrote in a note to clients, adding that the business generated earnings before interest, tax, depreciation and amortization of $695 million for BHP last year. “A break in operations is therefore expected to have a negligible impact on forecast earnings, although associated reputation risk/sentiment impact could be worse,” the firm said.
The disaster may support some iron ore prices, though the effect could be less pronounced on benchmark iron ore, which has slumped 32 percent this year as expansions by the biggest suppliers, including Vale and BHP, overwhelm faltering demand in China, the largest consumer. Samarco provides pellets, used in steel output, to about 20 countries, with dominant markets in the U.S. and Europe, researcher AME Group says.
Any disruption may support the current premium for pellets of about $30 a dry ton, Caue Araujo, iron ore industry director at AME Group in Sydney, said by phone Friday. “Unless there’s a stoppage for a significant period, I can’t see this having an impact” on benchmark prices, he said.
Iron ore fines with 62 percent content delivered to Qingdao fell 1 percent to $48.21 a dry ton on Friday, the lowest in four months and taking losses to 32 percent this year, according to Metal Bulletin Ltd. data. The price of 65 percent content blast-furnace pellets delivered to the same Chinese port declined 2 percent to $67.92 a dry ton.
Samarco, which churned out 25 million metric tons of mostly pellets last year, uses water-filled pipelines to transport ore from its mines in the states of Minas Gerais and Espirito Santo to processing plants near its port.
Liberum Capital Ltd. had forecast BHP’s share of Ebitda from Samarco of $290 million for fiscal 2016, 58 percent lower than last year due to falling premium for iron ore pellets having a “major influence on profitability,” analyst Richard Knights said.
“The dam failure is a major concern and could have a material impact on the near-term production outlook for Samarco,” Macquarie Group Ltd. analysts wrote in a report. They had forecast Samarco to generate 3 percent of BHP’s earnings.
Vale, the world’s biggest iron-ore producer, and BHP, the largest mining company, each own a 50 percent stake in Belo Horizonte-based Samarco. Mining at Samarco’s Germano mine began in 1977, according to BHP filings.
The incident raises the question of why people were living in the area, Saleem Ali, a professor at the University of Queensland’s Center for Social Responsibility in Mining, said by phone Friday. Dams bursting at mines are more likely in places with significant rainfall and landslides, he said.
Dams in the mining industry are “hazards we all have to accept to some degree,” Ali said. “The hazard becomes a risk when you’ve got communities living downstream. That’s what I was surprised by. You had a town downstream of this tailings dam which should never have been there.”
Samarco said in a statement Friday that the dams were deemed “totally safe” by authorities in July. It said the waste material is mostly silica and doesn’t contain chemicals that are harmful to health.
If the mud is found to be toxic, those responsible would be punished, Governor Fernando Pimentel told reporters on Friday from a shelter for victims.
Fatal Brazilian mine waste disaster shows modern mining is increasingly dangerous
New research validated: mining disasters on the rise because of modern mining techniques
Earthworks press release
6 November 2015
Washington, D.C. -- A mine waste dam at the Germano open-pit iron ore mine in Brazil’s state of Minas Gerais breached yesterday, flooding the downstream area with mining waste and causing fatalities. The Germano facility is co-owned by two of the world’s largest mining companies, Brazilian Vale SA and Anglo-Australian BHP Billiton.
A recent report, The Risk, Public Liability & Economics of Tailings Storage Facility Failure,demonstrates that catastrophic mine waste failures are increasing in frequency and severity because of -- not in spite of -- modern mining techniques, and will continue to do so until regulators and mining companies take active steps to prevent them.
“Our research shows that more mining waste disasters like Brazil’s Germano spill are inevitable,” said David Chambers, report co-author and director of the Center of Science in Public Participation. He continued, “If mining practices continue as usual, we are going to see more severe spills, more frequently. These spills each will cost the public hundreds of millions to billions of dollars to clean up - if cleanup is possible at all. And sometimes, like the Germano spill, they will cost people's lives.”
Chambers’ report, co-authored with Lindsay Newland Bowker, was researched in response to the 2014 Mount Polley mine waste disaster in British Columbia, another waste impoundment failure which released roughly 24.4 million cubic meters of mine tailings waste into the Fraser River watershed. An expert panel commissioned by the BC provincial government recommended the global mining industry make significant changes to how it handles mining waste. To date those recommendations have been largely ignored.
“The Mount Polley disaster should have been a wake-up call to the mining industry,” said Earthworks’ mining director Payal Sampat. She continued, “But mining companies and government regulators failed to act - and tragically, now mining spills are killing people as well as wildlife. We cannot afford to wait for the next mining disaster before we protect communities and the environment from risky mining practices.”
There are 839 mining waste tailings dams in the United States and approximately 3,500 around the world, according the U.S Army Corps of Engineers and the United Nations, respectively. Large dams built to contain mining waste, among the largest structures in the world, must stand in perpetuity. Yet there is no federal agency in the U.S., nor global entity, responsible for oversight of mining waste tailings dam safety. 38 civil society organizations around the world urged the United Nations Environment Programme (UNEP) to push companies and national governments to address the threats mine waste dams pose. UNEP Director Achim Steiner responded with plans to review current guidance and work with stakeholders to examine next steps. Efforts are also underway to pressure US and Canadian governments to take stock of mining waste tailings dams.
Primary findings of The Risk, Public Liability & Economics of Tailings Storage Facility Failure include
- The rate of serious tailings dam failures is increasing. Half (33 of 67) of serious tailings dam failures in the last 70 years occurred in the 20 years between 1990 and 2009.
- The increasing rate of tailings dam failures is propelled by, not in spite of, modern mining practices. The increasing rate of tailings dam failures is directly related to the the increasing number of TSFs larger than 5 million cubic meter capacity necessitated to allow the economic extraction of lower grades of ore.
- 11 catastrophic failures are predicted globally from 2010 to 2019. Predicted total cost of these 11 failures is approximately $6 billion.
- The average cost of the these catastrophic tailings dam failures is $543 million. Regulator attempts to recoup cleanup costs from mining operators reveal -- through court records and other official documents -- dollar totals for cleanup and recovery.
- Mining companies cannot afford, and cannot secure insurance to cover, the costs of catastrophic failures: Losses, both economic and ecological, are in large part either permanent and non-recoverable, or recovery -- to the extent physically possible -- is funded by public monies.
Contacts: Payal Sampat, Earthworks Mining Program Director, 202-247-1180, psampat[at]earthworksaction.org
David Chambers, PhD, Center for Science in Public Participation,406-585-9854, dchambers[at]csp2.org