Brazilian authorities find erosion at Vale unit after water overflow

Brazilian inspection teams found that Vale’s Viga mine presented signs of erosion and ordered the iron-ore miner to shut its operation until further notice, Minas Gerais state government authorities said on Thursday.

On Monday, Vale announced it had halted operations at Viga and nearby mine Fabrica after heavy rains caused water overflows that impacted a local river and the operations of neighboring steelmaker CSN.

The suspension at Viga will last until the firm presents reports that show it can re-establish environmental control of the project, said Gustavo Endrigo, superintendent of inspection at Minas Gerais government.

It is unclear when Vale will be able to resume production at the mines, whose operating permits had also been suspended by the city of Congonhas. The two sites account for about 2% of Vale’s iron ore production outlook for this year, analysts say.

Vale did not immediately reply to a request for comment. It had previously said it was fully cooperating with authorities.

Vale has already received three fines totaling 1.7 million reais ($324,000) by the state government due to Sunday’s overflows, the authorities said.

Authorities said that as well as water, tailings from Vale’s iron ore mining operation at Fabrica had also reached the Maranhao River.

More heavy rain is expected in Brazil next week, according to LSEG data, with Minas Gerais expected to be among the hardest hit areas.

Vale has faced intense scrutiny since two major dam disasters in Minas Gerais in the 2010s.

($1 = 5.2438 reais)

(By Fabio Teixeira; Editing by Alison Williams)