Vale forced to halt operations at Brucutu, largest mine in Minas Gerais

A Brazilian court has ordered mining giant Vale (NYSE:VALE) to halt operations at its Brucutu iron ore mine, the largest in Minas Gerais state, following last month’s tailings dam disaster at Brumadinho, which left at least 134 dead.

The veredict, quoted by O Globo, one of the most respected Brazilian publications, includes an injunction that bans Vale from storing tailings in the Laranjeiras dam at Brucutu, part of the firm's Minas Centrais complex.

The court order also prevents Vale from disposing tailings or practicing any activity potentially capable of increasing the risks of Menezes II, Capitão do Mato, Dique B, Taquaras, Forquilha I, Forquilha II and Forquilha III dams, Vale said in a statement.

The Rio de Janeiro-based company added that only three of those facilities, Forquilha I, II and III, where built by the upstream method, adding they were already scheduled to shut down.

Vale noted it will take all legal measures necessary to overturn the decision, as the dams affected by the order have the correct licenses and documentation attesting to their stability and there is no technical reason that requires their closure.

With an annual capacity of 30 million tonnes of iron ore, Brucutu is Brazil's second largest mine.

Should the company fail in its appeal of the court decision on the Brucutu mine, Barclays Plc analyst Ian Littlewood said closing the operation could “wipe out almost all the global production growth” forecast by the bank this year. Littlewood had earlier predicted mine supply around the world will expand by 34 million tonnes.

“If Vale is able to continue to produce during the appeal, then there would be no fundamental impact but as we have stated previously, the risk premium is likely to sustain in the short term but diminish through the year,” Littlewood told Bloomberg.

The court decision comes the same day it was brought to light that Germany’s TUV SUD, the company that certified the safety of Córrego do Feijão mine’s tailing, had worked as both a consultant and an independent safety evaluator for Vale, raising questions among experts over potential conflicts of interest.

The president of the Mariana Metabase Union, Angelo Eleutério, who represents workers at the Brucutu mine, confirmed the information to Estado de Minas, adding that the shutdown was not part of the decommissioning plan announced by Vale last week.

On Jan. 29, the company said it would take as much as 10% of its ore output offline in order to decommission of all its upstream dams, such as the one that burst in Brumadinho.

Brucutu, which has an annual capacity of 30 million tonnes of iron ore and has been in operations for 13 years, is the second largest mine in the country, behind Vale’s Carajás.

The operation does not have an upstream type of dam, but by extending the ban to use dams to a different type of tailings storage design —  considered safer by many engineers — Brazilian officials seemed to show they are taking every possible measure to avoid another tragic incident.

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

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