Ethical tailings dam investigation shows mixed results

Published by MAC on 2019-11-02
Source: Reuters

Massive mining waste dams could pose deadly risks, say investors

Barbara Lewis, Ernest Scheyder

Reuters UK

31 October 2019

LONDON  - A global inquiry into how mining companies store
billions of tonnes of waste in huge dams, launched after a collapse in
Brazil killed hundreds, shows about a tenth of the structures have had
stability issues, investors said on Thursday.

The research was led by the Church of England (CoE) and fund managers
after the collapse of a Vale (VALE3.SA) dam in January unleashed an
avalanche of mining waste on the Brazilian town of Brumadinho, killing
an estimated 300 people.

The investor review, which found at least 166 dams have had stability
issues in the past, relied on companies’ disclosures about their dams
holding mining waste, known as tailings.

However less than half of the 726 companies contacted have responded,
with most Chinese and Indian miners not providing information, leaving a
significant hole in efforts to create a global picture of safety risks
posed by these dams and avoid another disaster.

“Tailings dams are amongst some of the largest engineered structures in
the world and we have seen the catastrophic consequences earlier this
year in Brazil when they collapse,” said Adam Matthews, ethics director
at the CoE Pensions Board, a global investor with assets worth more than
$3 billion.

“We note that many companies already operate to a very high standard as
evidenced by some of the disclosures, but this is not universal across
the sector and dams are continuing to fail, putting lives and the
environment at risk.”

Tailings dams are the most common waste disposal methods for mining
companies, whether they’re extracting iron ore, gold or copper. Some
tower dozens of meters high and stretch for several kilometers.

There are no established global mining industry standards defining what
a tailings dam is, how to build one and how to care for it after it is
decommissioned.

The major investors, who manage assets worth a combined $13.5 trillion
across a range of industries, wrote to mining companies in April asking
for information about tailings dams to be disclosed about every mine
they control.

They warned they might have to divest their shares unless they had clear
information on potential risks, in what has become one of the largest
shareholder mobilizations in history in reaction to a single event.

The CoE and the some other funds sold their Vale shares after the
Brumadinho dam collapse, and the Brazilian miner lost a quarter of its
market value immediately after the disaster.

‘MORAL IMPERATIVE’

Of the 726 companies contacted by investors, 43% responded. All the
major listed miners, including Vale, were among those who replied,
according to the investors, jointly led by the CoE Pensions Board and
the Swedish AP Funds Council of Ethics.

Initial analysis of company disclosures found tailings dams across the
globe hold more than 44 billion square meters of waste.

The disclosures so far showed 166 out of 1,635 of tailings dams have had
stability issues in their history, although it was unclear how severe
those issues had been and the miners said the problems had been
addressed, the investors said.

The investors aim to complete a global database of risks posed by dams
by the first anniversary of the Brazilian disaster on Jan. 25, and
ultimately create global safety standards. Many dams will have to be
forcibly closed, investors told Reuters.

John Howchin, secretary general of the Council on Ethics of the Swedish
National Pension Funds, said the investors would redouble efforts to
secure the missing disclosures.

“There is simply no excuse to not disclose on a material risk, that as
owners of these companies, we need to urgently understand. It is clear
that investors’ patience with non-disclosing companies will not remain
for much longer,” he said.

Anglo American (AAL.L) CEO Mark Cutifani said the sector faced a “clear
ethical and moral imperative” to use new technologies to ensure the
highest safety standards for tailings.

“Rather than simply scaling up mining’s processes to meet demand, the
industry will need to find new, more efficient and more sustainable ways
of working,” he told a meeting of executives in London.

India & China

While the Americas are home to most of the world’s tailings dams, India
and China also store vast amounts of waste in these structures,
including the Weikuang dam in northern China which is about 11 km long.

The Weikuang dam is owned by Baotou Iron & Steel Group [IMARGC.UL],
which did not respond to the investors’ request for data or a Reuters
request for comment.

Coal India Ltd (COAL.NS) and Metallurgical Corp Of China Ltd
(601618.SS), two of the world’s largest coal miners, said they were not
aware of the investor initiative and never received the request. Both
companies are controlled by their respective governments.

The CoE said it aimed to work with Chinese and Indian miners over time
to compile a truly global database.

“There is, we hope, a cumulative effect where bit by bit in personal
relationship with these countries, we hope there’ll be a tipping point,”
said David Urquhart, the CoE’s Bishop of Birmingham and a former BP
(BP.L) executive.

The eventual aim of the initiative is to set the global standards for
tailings dams, together with the International Council on Mining and
Metals (ICMM) industry group. The ICMM said in March it was working on
new standards with the U.N. Environment Programme (UNEP) and the ethical
investors.