MAC: Mines and Communities

Brazil: Who should take main blame for the Samarco mining tsunami?

Published by MAC on 2015-11-13
Source: Sydney Morning Herald, Mining.com, AFP, WSJ (2015-11-12)

Further information has emerged over the week following the catastrophic collapse of two tailings dams at the Samarco iron ore mine in Brazil. (See: Mining tsunami hits after tailings dams burst in Brazil)

At least nine people died, and another 19 are still missing. The wave of wastes has descended more than 440 kilometres downstream, impacting on eleven communities, and potentially threatening over half a million inhabitants in the states of Minas Gerais and Espirito Santo. Aerial views are starting to be published illustrating the extent of the damage.

Brazilian president, Dilma Rousseff, has charged the two mine owners, BHP Billiton and Vale, with all the costs involved in rehabilitating the devastated area, although the amount of fines or compensation they will have to pay has not yet been determined.

In Australia, BHP Billiton's share price fell by 13% - its lowest level since 1998.

Why did the disaster happen?

Unsurprisingly, the ground is thick with speculation as to why the two dams burst at the moment they did. However, it appears that claims that excessive rains or seismic disturbances were the major factors, can be dismissed.

This is especially the case in light of the dams "design faults" which had been spotlighted by a Brazilian academic report published in 2013. Although the report spelled out a number of measures that should be taken to compensate for these deficiencies, it would seem they had not been addressed. 

Who's to blame?

The Samarco mine was jointly owned by BHP Billiton and Vale; most attention outside Brazil has focussed on the former; it's not only the bigger of the two, but also the one which should have been better-equipped to anticipate disaster on such a huge scale.

Nonetheless, at the time of writing, the giant Australian-British outfit has done little to defend its reputation - actually issuing a statement which described the event as a mere "incident".

Worse still, it has hidden behind the claim that it didn't actually "operate the asset" (Samarco) - seemingly a ploy to spread the responsibility and the burden of compensation and reclamation costs.

This is something that BHP Billiton cannot be allowed to get away with.

By its own acknowledgment, it carries out regular reviews and audits of tailings dams at wholly- or part- owned facilities; indeed the Samarco dams were already on a list the company held, denoting "critical instructures". 

Next week, BHP Billiton hosts its Australian AGM. Doubtless it will be challenged by many shareholders over what has happened in Brazil (and not least the impact the Samarco tsunami will have upon the company's long-term share price and their own dividends.)

Corporate "damage control"

On 9 November, the seasoned industry commentator, Dryblower, predicted that, after Samarco: "BHP Billiton will not be the same company after blame has been apportioned and punishment dispensed".

He goes on to say that :"[T]he Samarco dam burst could not have come at a worse time – on a number of levels.

"First hint of damage minimisation can be found in the formal statement from BHP Billiton, a terse six-line announcement to the Australian stock exchange on Friday which contained a number of hints that BHP Billiton is keen to shift the focus to its Brazilian partner".

Dryblower noted that: "An expanded statement was released this morning but an astute reader will see the hand of professional damage control-experts in the way the blame has already been subtly shifted away from BHP Billiton, and in the way the flood is simply referred to as an incident.

"The timing, from a BHP Billiton management perspective, could not be worse.

"Not only are commodity prices depressed but the company is being criticised for refusing to trim iron ore production despite worldwide over-production, and for persisting with a generous dividend policy to please shareholders despite the prospect of needing to raise debt to keep its dividend promise.

"But, the criticism which will hurt most is when someone draws a link between the heavy-duty cost cutting which BHP Billiton and all other miners have been undertaking and the Samarco disaster, and no matter how unfair that might be it will happen and it is most likely to start with allegations from the union movement about how cost cutting has raised mine-site risk levels".

Samarco mine disaster: BHP refuses to admit knowledge of report of 'design faults'

Amanda Saunders, Lia Timson, Matthew Stevens and James Thomson

Sydney Morning Herald

12 November 2015

While the official cause of the catastrophic tailings dam failure is not yet clear,a 2013 report, by Brazilian academics, predicted the circumstances that could lead to a dam burst at the Samarco operation, which is owned by BHP and Brazilian iron ore giant Vale.

The dam's collapse last week unleashed a mudslide that has claimed six lives, left hundreds homeless and cut off drinking water for hundred of thousands of people. The death toll could still rise with 22 people missing mostly from the village below the dam.

The publicly available Instituto Pristino report was published around the time the state of Minas Gerais renewed Samarco's operating licence for the dam system.

Pointing to the report on Monday, Minas Gerais state environmental prosecutor Carlos Eduardo Pinto said the bursting of the dams was "no accident".

"What happened was a mistake in the operation and negligence in the monitoring," Mr Pinto told Brazil's top broadcaster, Globo TV.

At the time of the licence renewal the company was seeking to expand its operation as it increased iron ore production. The operation's output increased almost 40 per cent last year.

BHP would not comment when asked if the miner had been aware at any level of the concerns raised by the report, including if its directors on the Samarco board had heard of or read the report.

"As you will appreciate, an issue like this will be relevant to any investigations that follow this tragic incident," a BHP spokesman said.

"In those circumstances we need to let those investigations take their course. So it's not appropriate to comment any further."

BHP shares are down 10.7 per cent in the last five days and on Wednesday fell 2.7 per cent to $20.95, the lowest since November 2008.

The Instituto Pristino, which is a not-for-profit environmental and geotechnical modelling institute linked to the Federal University of Minas Gerais, was commissioned to do the work by the state's Environment Ministry.

The report recommended a contingency plan be drawn up and made conditional of any licensing "because of the existence of a rural community, the town of Bento Rodrigues" downstream.

It said the contingency plan was a legal requirement, but it had not been mentioned in the renewal application by the applicant nor the government department issuing it.

It warned that the tailings waste piles could come in contact with the dam perimeter as the operation was expanded.

They said the two structures should never have been adjacent because they had diverging physical characteristics.

The waste pile needed low humidity and good drainage, while the tailings dam provided exactly the opposite. "Their contact is not recommended given their physical nature", they said.

It called for further investigation into the potential contamination of the dam by the waste pile that could result from regular rain patterns and water table rises.

"[Rain] would cause the surging of water up the face of the waste pile ... resulting in the collapse of the structure".

It said depending on the extent of the any breaches, several collapses could occur, creating a massive waste flow towards the dam's wall and neighbouring areas.

The technical report said the granting of a licence to Samarco happened even though design defects in waste pile and tailings dam had been pinpointed in previous technical reports but not included in the application.

"Some of the risk mitigation measures should have been conditional to the granting of the licence," four of the institute's scientists wrote in their seven-page report.

It recommended further studies of the impact of the structures be presented and that the agency responsible for issuing the licence answer to the safety of the construction.

It suggested a geotechnical analysis of the dam structure and regular monitoring reports be undertaken, highlighting these reports should have been presented with the application paperwork.

Deutsche Bank analyst Paul Young had estimated the cost of the clean-up could exceed $US1 billion. Reuters reported that insurers could pay up to $US600 million in claims, citing a source with direct knowledge.

Samarco's bond rating was cut to junk on Tuesday by Moody's Investors Service. Its $US2.2 billion of notes, which have lost a third of their value since November 5, now trade at US56¢ on the dollar.

[The 2013 technical report mentioned above can be downloaded in Portuguese here: http://www.meioambiente.mg.gov.br/images/stories/URCS_SupramCentral/RioVelhas/69/9.1-laudo-tecnico.pdf]


BHP, Vale owners tour villages devastated by Samarco

Michael Allan McCrae 

Mining.com

11 November 2015

A week after the Samarco's tailings dam collapsed sending a wall of water and mud into villages killing six and leaving 21 more unaccounted for, the CEOs for BHP Billiton and Vale toured the site.

Vale and BHP Billiton are 50/50 owners of Samarco. BHP Billiton posted a YouTube video of CEO Andrew Mackenzie making a statement after his tour.

The companies have not determined a reason for the failure. BHP Billiton broadly outlined the chain of events:

The Samarco operations include a three tiered tailings dam complex. Within this complex, the Fundão dam failed and the downstream Santarém dam has been affected. This resulted in a significant release of mine tailings, flooding the community of Bento Rodrigues and impacting other communities downstream. The third dam in the complex, the Germano dam, is being monitored by Samarco. At this time, there is no confirmation of the causes of the tailings release.

State prosecutor for the region, Carlos Eduardo Ferreira Pinto, said the companies were negligent. He has opened an investigation.

BHP Billiton issued a statement on their website after the visit:

Together with Jimmy Wilson, BHP Billiton President Iron Ore and Peter Poppinga, Vale Executive Director, Ferrous Minerals, we spent this morning on site at the Samarco mine with CEO, Ricardo Vescovi De Aragão, and meeting with community leaders.

Our immediate priority is to understand the full extent of the consequences of the tailings dam breach and how we can provide further help.

We visited the tailings dam complex, including the site of the failed Fundão dam and affected downstream Santarém dam as well as the Germano dam which is being closely-monitored by Samarco.

We also met with the Samarco incident response teams and civil authorities who have worked tirelessly to evacuate the local community and search for missing people.

On behalf of all of the employees of Vale and BHP Billiton, we offer our profound sympathies to the family, friends and loved ones of the people who died as a result of this tragic incident. We are deeply concerned for the welfare of the employees, contractors and members of the local community who are still missing. Our thoughts are with you all in this distressing and uncertain time.

We were overcome when we saw the devastation in and around Bento Rodrigues. We cannot rebuild the lives of the families who have lost loved ones but we redouble our commitment to Samarco to support the response effort.

As an immediate step, Vale and BHP Billiton pledge to support Samarco in creating an Emergency Fund for rebuilding works and to help the affected families and communities. It is our intention to work with the authorities to get this fund functioning as soon as practicable.

Vale and BHP Billiton also have health, safety, environment and geotechnical experts onsite supporting Samarco’s response. We have also had discussions with Samarco and authorities about the additional support we can provide. Investigations are continuing and Samarco will provide further updates relating to the response and operations.

Again, as joint shareholders in Samarco, we would like to offer our sympathies and prayers to the people of Minas Gerais, Espírito Santo and the people of Brazil.

Murilo Ferreira Andrew Mackenzie

Chief Executive Officer, Vale Chief Executive Officer, BHP Billiton


Rousseff to present mine disaster bills to Vale, BHP Billiton

By Frederico Barbosa

Business News Americas

12 November 2015

Brazilian President Dilma Rousseff arrived on Thursday afternoon in the city of Governador Valadares, Minas Gerais state, after a flight over the nearby areas affected by the burst dams that killed eight people and left 21 missing.

The the two tailings dams that burst on November 5, releasing a massive flood of iron-mining waste and toxic sludge that flattened the village of Bento Rodrigues, were operated by pellet maker Samarco, jointly owned by Brazil's Vale and Australia's BHP Billiton.

On Wednesday, Rousseff called the CEOs of Vale and BHP to charge the companies for all the costs related to the reconstruction of the affected areas, paper Valor Econômico reported.

Rousseff also ordered her chief-of-staff, Jacques Wagner, to set up a meeting with representatives of the companies and from the civil defense unit, part of the national integration ministry, together with other ministries to discuss spending on water supply for the residents affected by the mudslide, the report said.

The president was expected to hold a conference call on the accident Thursday afternoon.

The cause and extent of the worst environmental disaster in the history of Minas Gerais have yet to be determined, according to information released by the company and officials.

SAMARCO FINED

Environmental regulator Ibama handed a 250mn-real (US$66mn) preliminary fine to Samarco, local press reported.

Compensation for property, environment and human damage may reach the billion-real mark. The option of a heavy fine was a personal decision of Rousseff and environment minister Izabella Teixeira, the report said.

However, Fitch Ratings said on Wednesday that potential fines are difficult to project.

"The level of negligence, if any, will be a key determinant. Previous precedents in Brazil for environmental disasters involving oil companies with severe environmental damage during the last few years have resulted in settlements of around US$100-150mn, on average," Fitch said in a note.

"The unfortunate loss of life as a result of the flood will require recompense, the village will have to be rebuilt, and the clean-up cost over a large area will result in a significant amount being spent to address these items."

The agency sees lawsuits against Samarco as highly likely.

"The ultimate cost of these charges and costs relative to the amounts received from insurance and/or parent companies will determine the extent of the rating action taken by Fitch."

Vale and BHP Billiton announced in a joint statement on Wednesday afternoon that they will support Samarco in creating an emergency fund for rebuilding works and to help the affected families and communities.


 

BHP to run extra checks on all tailings dams in wake of Brazil disaster

Amanda Saunders and Matthew Stevens

Sydney Morning Herald

10 November 2015

BHP Billiton is running extra checks of tailings dams across its copper, coal and iron ore divisions, after a "catastrophic" tailings dam failure at its Brazil iron ore site that caused a deadly mudslide to engulf villages.

The billion-dollar clean-up foreshadowed for BHP's Brazilian disaster at Samarco could also push the miner to run a formal review of the two other South American joint ventures that are presently operated on an arm's-length basis by management independent of any of the shareholders.

Those ventures are Colombian coal crown jewel Cerrejon, and giant copper mine Antamina in Peru, while the third is Samarco.

A spokesperson for the miner said "as a result of this incident we are further checking the tailings dams across our sites", beyond the checks routinely run.

"It is important to note that BHP Billiton tailings dams are operated, monitored and assessed to manage material risks and the majority are governed by regulatory requirements, which can vary between states. Our existing processes include risk reviews and audits, which are done at regular intervals."

Beyond the tailings dam checks, BHP said it was "too soon to comment" on whether the Samarco incident would trigger other reviews across the business.

The tailings dam system at Samarco in Brazil that failed is thought to be on BHP"s "critical infrastructure" list, which is reviewed by the executive committee and the board.

BHP shares have fallen 13.1 per cent during the past month, and 21.6 per cent since the start of the year. It rose 0.7 per cent on Tuesday to $21.57.

Citi analyst Clarke Wilkins said a "catastrophic failure" had occurred at Samarco, and "scrutiny will inherently get applied to all tailings dam sites at every mining site around the world". Most mining operations have a tailings dam.

"Take the Maconda with BP, which resulted in a change for drilling practices required for all operators in the Gulf of Mexico," he said.

Former BHP chairman Don Argus defended the miner's safety record, telling Fairfax Media, "There are protocols that have been rigorously applied in all of the mines".

"We went through a period in the '90s where you could say the oversight of the mines could have been better, but when Paul Anderson came on board he introduced some principles where nothing was left untouched in terms of the health and safety issues of all the mines," Mr Argus said.

"I don't know whether this [Samarco incident] is a one off, or what it is, until all the information comes out."

BHP has long preferred to directly manage whatever it owns and it is understood that in recent years the company moved to restructure arrangements at Cerrejon and Antamina to ensure that at least one of the owners was directly responsible for the operation of the mines.

Concern over the risks implicit in the independence of these JVs saw BHP invite Xstrata (which has since merged with Glencore) to a proposal that would have firmly allocated operational responsibility to one of the owners. The idea was that BHP would have ended up managing one of the mines and Xstrata the other. But internal pressures at Xstrata stopped progress on the proposal.

BHP owns a third of the joint venture behind Antamina, as does Glencore, while Teck owns 22.5 per cent and Mitsubishi 10 per cent. Under the Cerrejon set-up, BHP, Glencore and Anglo American each own a third.

If BHP were to look to adopt a policy that it would be involved in an asset only if it were the operator, that would mean their three South American joint ventures would need to be restructured or sold.

Mr Wilkins said the incident will probably lead to BHP trying to increase the management oversight and due diligence of its South American joint ventures, but it was unlikely to take the "knee-jerk" reaction of divesting Cerrejon and Antamina because of the Samarco disaster.

"Most companies want to operate the assets because it gives them control of a whole lot of facets – especially safety. Would BHP rather be the operator, yes. Would Cerrejon and Antamina just be divested on the basis that this has happened – I don't think so."

Mr Argus said the disaster would throw up lessons for the miner.

"There are some learnings from the Ok Tedi piece, and I don't know whether there are similarities or not, and I'm sure there will be lots of learnings here, when they can finally disclose what really happened."

At Ok Tedi, with the approval of the PNG government, tailings from a copper mine were systematically poured into a river system for more than two decades. That occurred after a tailings dam, albeit empty, collapsed at the site.


 

BHP-Vale dam burst toll rises

AFP

11 November 2015

Brazilian authorities investigating last week's fatal collapse of a mine-waste reservoir have ordered operator Samarco to take emergency measures to deal with the catastrophic aftermath.

The announcement came as officials said at least six people were killed in the disaster, raising an earlier death toll of four. Twenty-one people remain missing and 631 displaced.

The company, a joint venture between Australian mining giant BHP Billiton and Brazil's Vale, has been issued a court order requiring it to collect and preserve evidence related to the dike failures that triggered the deadly mudslide, prosecutors say.

The measure is aimed at ensuring victims can obtain compensation for the environmental and human damage the incident is causing in the state, prosecutors said on Tuesday.

The firm must also provide a helicopter for an indefinite period of time to inspect areas of the state affected by the nearly 60 million cubic metres of ochre sludge.

Samarco will face a daily fine of 50,000 reals (about $A18,500) if it fails to comply.

The mud and mining waste burst through the retaining walls at the Samarco iron ore mine on Thursday and flattened most of the nearby village of Bento Rodrigues, in the state of Minas Gerais.

Fears were mounting that the sludge, which has flowed into local rivers, could contaminate the water supplies of more than half a million people in Minas Gerais and neighbouring Espirito Santo.

Residents in the area complained of a strong chemical smell coming from the local water. They posted photos on social media of ruined plantations and dead wildlife, including fish and turtles smothered in mud.

Authorities in Minas Gerais have ordered Samarco to halt operations. The company has put 85 per cent of its employees in the two states on paid leave.

The sludge, which has already flowed 400km, is expected to reach Espirito Santo on Tuesday.

The court order also requires state officials in Espirito Santo to test the water of the Rio Doce river for contamination.

Shares in BHP Billiton and Vale have fallen sharply since the disaster.

BHP Billiton's chief executive Andrew Mackenzie was due to visit the affected area "to understand first-hand the human, environmental and operational impacts of the incident", the company said.

The clean-up could cost more than $US1 billion ($A1.42 billion), Deutsche Bank analysts have warned.

Carlos Eduardo Ferreira Pinto, a state prosecutor specialising in environmental cases, alleged there was "negligence" involved.

"A dike doesn't break by chance. The responsibility of the company is key," he told the Globo television network.

"Prosecutors are now trying to judge the scale of the damage so that the public can be compensated."

Ratings agencies warned that the cut in iron and mineral production after the accident, as well as possible fines it could face if sued, threatened Samarco's position.

Moody's stripped Samarco of its investment-grade credit score, while Fitch put the firm on negative watch for a possible downgrade.

Threatening legal action, the state prosecution service in Minas Gerais called for Samarco to start paying to re-house displaced families and to help them start rebuilding their lives.


 

Five Questions Facing BHP Following Deadly Brazil Spill

BHP Billiton and Vale are facing increased scrutiny over a deadly dam spill at the Samarco iron-ore mine in Brazil, which they jointly own. Here are five questions facing BHP and its investors following the disaster on 5th November.

Wall Street Journal

8 November 2015

What is the immediate earnings impact from the mine disaster?

BHP’s Brazilian operations aren’t as big as its Australian mines, but they still make a significant contribution to profits. UBS expected Samarco to earn $189 million before interest and taxes in the financial year through June, 2016: 2.8% of BHP’s total profit. Morgan Stanley estimates Samarco accounts for 3.5% of BHP’s revenue. However, analysts are wary of making definitive forecasts because of the limited information about the spill’s impact, including the death toll.

For how long will the mine remain shut?

The scale of the disaster and future cleanup have led analysts to expect the mine will remain closed for years. Deutsche Bank doesn’t expect mining to resume until the 2019 fiscal year at the earliest. Morgan Stanley is also anticipating a prolonged outage, although it stopped short of putting a date on a restart. But it said, “Potentially, the Samarco JV will have to reapply for its operating and environmental licenses.”

How much will it cost to clean up the spill?

This is proving hard to call. Samarco is a remote operation in the hilly state of Minas Gerais, and analysts are relying on photos of the aftermath of the spill to make any estimate of cleanup costs. Deutsche Bank says the dam contained 150 million cubic meters of tailings, which are a mix of water and iron-ore waste. It estimates costs may exceed $1 billion and would be shared between BHP and Vale. In addition, there will likely be “a long-term negative impact on the reputations of these two companies,” brokerage Jefferies said.

How have BHP’s investors reacted?

With great alarm. BHP is dual-listed in Australia and London, and its shares have fallen sharply since the mine disaster first become known. On Friday, BHP’s London-listed stock fell more than 5%. On Monday, the company’s Australia-listed shares were down 4.5%, accelerating from a 2.5% decline on the final trading day of the previous week. A big issue for investors is how this will affect BHP’s ability to keep paying its dividend, a key attraction of the stock. Analysts at Jefferies said Monday it was “at risk of being cut or changed to a partially scrip dividend.”

What does the Samarco mine closure mean for the global iron-ore market?

The suspension of exports from the Samarco mine will help ease a glut in iron-ore supply that has weighed on prices. Deutsche Bank estimates that Samarco accounts for around 2% of the 1.55 billion tons of iron ore traded by sea each year. The broker expects prices to increase, especially if other mines owned by Vale in Brazil come under extra scrutiny. Citi also thinks iron-ore prices aren’t headed lower and the US$44-a-ton low in July will be its nadir for 2015. Still, Citi predicts further falls to come in 2016.


Who should we blame for the Brazil mining dam disaster?

Saleem H. Ali Chair in Sustainable Resource Development, The University of Queensland

The Conversation

12 November 2015

[Disclosure statement: Saleem H. Ali receives funding for research from a variety of public and private sector organizations, none of which have any influence on the content of this article.]

The catastrophic collapse of the Samarco iron ore tailings dam in Brazil that flooded the small town of Bento Rodrigues with mud last week is a sobering reminder that mineral extraction is a perilous business. At least six people are dead with more than 20 still missing.

The Samarco iron ore mine is a joint-venture between Brazilian mining company Vale and Australian company BHP.

Fresh reports indicate that Brazilian researchers had reported on the risk the Samarco dam collapsing two years ago. BHP has not commented on whether it was aware of the report.

When such disasters happen our first impulse is often try and ascribe culpability. No doubt there must be accountability if any confluence of human errors was involved in this failure.

However, in the rush to blame we must consider the complexity of how such failures might occur.

Ruling out natural causes

Seismic events and excessive rain and wind can be the natural triggers of what might be a chain of human errors in disaster prevention and response.

The US Geological Survey (USGS) did not record any major earthquake in the region at the time and this part of Brazil is not prone to large tremors. Some reports suggested a very small tremor on a scale of 2.6 on the Richter scale but USGS has noted that dam failures can usually not be attributed to any quake below 4.5.

Minas Gerais state in Brazil is known for its rainfall. However there was no abnormal rainfall or major storm system at the immediate time of the event.

Once we rule out direct natural factors the investigation must focus on the human factors which could have led to this disaster.

We also need to consider separately warning systems that could have prevented deaths and injuries.

The current interviews from the survivors suggest that the only warning they got of the tsunami of mud heading their way was the sheer sound of the collapse.

A good emergency response system would automatically trigger warning alarms, mobile text messages and other radio or TV system alerts. Why did that not happen?

Diagnosing disaster

The “bowtie method” is often used to analyse both the prevention and the response of such calamitous events.

This method will likely be followed to identify all the possible ways in which this tragedy could have been triggered. A detailed investigation of this kind can take several months.

Last year, The Mount Polley spill in Canada caused a major environmental hazard but thankfully there was no direct loss of human life, although drinking water quality for around 300 people was affected. The investigative panel which was set up following the spill took a year to issue its report.

The panel concluded that the tailings dam collapsed in that case because its engineering plan had neglected a layer of glacial till underneath the dam body. Fortunately there were no human habitations downstream of the spill path.

In Brazil though there were people living beneath the dam. The community residents cannot be blamed for living where they did. The planning process for the mine is the responsibility of the companies and the government collectively.

If there was a preexisting settlement in harm’s way of a tailings dam, what community engagement was undertaken by the company and the government to configure the facility to minimise harm and dislocation? Were adequate resettlement options provided? These are all essential questions which must be answered.

Mining dam disasters on the rise

There is a long history of dam failures and calamitous events from hydropower stations. The worst loss of life in this regard occurred in China when the Banqiao dam collapse in 1975 killed more than 170,000 people.

However, while hydropower dam breaches and deaths have been decreasing in recent years, mining tailings dam breaches have been on the rise. These failures are not just occurring in developing countries.

The US has endured massive failures, including the Church Rock uranium mine spill in 1972 on Navajo indigenous lands and the 2012 spill in Finland which prompted the establishment of a “Network on Responsible Mining.”

In July 2015, the Centre for Science in Public Participation issued a comprehensive report that found 33 of 67 of all serious tailings dam failures in the last 70 years occurred in the 20 years between 1990 and 2009. The International Commission on Large Dams has even had a specialised working group on mining dams for the past several years but clearly more concerted efforts are needed.

The United Nations Environment Program and the mining industry have developed guidelines for disaster preparedness, including comprehensive monitoring.

Up-to-date guidelines published in 2005 include a need to monitor:

the probability of individual events; the probability of simultaneous events (such as an earthquake resulting in rupture of a pipeline); and complications from unique environmental considerations, such as severe terrain, location on a major river, frozen conditions and so on.
Blame for the current disaster will partly depend on whether guidelines such as these have been followed.

Assuming responsibility

There was initially some speculation about whether Vale and BHP would be responsible for the spill since their joint venture Samarco (established 40 years ago) that operated the mine is “a limited-liability company”. Joint venture companies can be a risk management mechanism but as the Wall Street Journal recently noted, current regulations will not protect BHP and Vale from responsibility.

The research process to investigate the spill has begun by independent experts, including the American Geophysical Union which has set up an online blog to consider causality.

At the end of the day companies like BHP and Vale should approach this matter with humility. If there is blame to be ascribed they should accept and learn from any lapses.

Broader questions of why best practice guidelines and voluntary industry covenants are not adequate to prevent such massive failures must also be asked. Most mining companies remain profitable despite a decline in the level of profits during industry downturns and yet social and environmental performance budgets are often the first to be cut.

Whether or not culpability in such disasters is assumed, companies and governments should take the moral high ground and assume responsibility for ensuring such calamities become far less likely to repeated.

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