Hundreds evacuated in Brazil on fears over mining dams safety

About 700 people were evacuated on Friday from two different towns in the Brazilian state of Minas Gerais where a dam collapse last month killed at least 157 people, with nearly 200 still missing and feared dead.

Brazilian mining giant Vale (NYSE:VALE) evacuated around 500 residents from a rural town near its Gongo Soco mine’s dam, by order of the country’s mining agency (ANM) after local consulting firm Walm refused to corroborate the safety of the dam, in the city of Barão dos Cocais.

Vale said it is increasing inspections of the Superior Sul dam, one of the ten the company has vowed to decommission, and is bringing foreign experts in to “re-evaluate the situation.”

In Vale's case, the move followed an order from Brazil’s mining agency after consultancy firm Walm denied the issuance of a stability condition report for the Superior Sul dam.

Concurrently, the world’s top steel producer ArcelorMittal announced Friday it had decided to momentarily relocate a 200-person community situated downstream at its dormant Serra Azul tailing dam, also in the state of Minas Gerais, as a precautionary measure.

The action follows an updated site-based assessment commissioned by ArcelorMittal Mining of the tailings dam, and carried out by the Independent Tailings Review Panel, following the recent incidents in the Brazilian mining sector, the company said.

“We apologize to the local community for the disruption; however we know this is the right and indeed the only decision that we could take and the authorities agreed,” ArcelorMittal chief executive said in the statement. “We will endeavour to get people back in their homes as soon as possible although at this point it is not possible to say when that will be.”

Mining dams are coming under increasing scrutiny in Brazil following the collapse at Vale’s Córrego do Feijão iron ore mine in Brumadinho last month, the second such accident involving the same company in about three years.

In 2015, a tailings storage facility burst at Samarco, a joint venture between Vale and  BHP, killing 19 people and becoming Brazil's worst environmental disaster.

Being so close in time from the last tragedy, this new fatal accident raises significant questions for Vale, for Brazil’s president Jair Bolsonaro, and the global mining industry, experts agree.

Beyond the devastation and the potential hole in Vale's coffers, the catastrophic event will trigger increased opposition to Bolsonaro's plan of unleashing the country’s full mining potential. Especially as he has said he would do that by easing environmental safeguards and allowing more operations in the Amazon rainforest.

Concerns regarding the resulting effect on iron ore output are also increasing. BMO Metals analysts say that roughly 40 million tonnes of annual production has already been halted, with the potential for that number to increase to 70 million tonnes depending on the decommissioning agenda for the remaining upstream dams. The Dalian iron ore price was limit up on Friday at $92.26 per tonne.

Click here for complete coverage of the dam burst at Vale's Córrego do Feijão mine.

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