Vale faces renewed safety concerns after mine water overflows

Brazilian iron ore miner Vale SA confirmed a second water overflow happened over the weekend at its operations in Minas Gerais, a state hit by dam collapses in 2015 and 2019.

The overflows have been controlled, the top mining firm said in a filing, adding that only water with sediments — not waste materials known as mine tailings — were released. Causes of the incidents are still being investigated, according to the company.

“The lessons learned will be promptly incorporated into rainfall management plans,” the company said.

Brazil’s Mines and Energy Ministry called for “strict measures” from the country’s mining regulator, including suspending the operations if needed. Minas Gerais state government said it has identified environmental damages in a nearby river and ordered Vale to take emergency measures “including actions to clean up the affected area, as well as monitoring the affected waterway.”

Vale said the incident does not involve any of its tailings dams in the region, and the dams remain stable and safe. Overflows will not impact production, the company added.

Vale shares closed down 2.3% on Monday in Sao Paulo, leading the losses in points of Brazil’s Ibovespa stock index.

The incidents at Vale’s Fabrica and Viga mines come seven years after the Brumadinho dam collapse in January 2019. Mine water from Fabrica reached some areas of Pires, a unit of rival CSN Mineração.

Vale has grappled with the fallout from two dam disasters that killed as many as 289 people, contaminated waterways and cost it the title of world’s biggest producer of the the key steel-making ingredient. In September, the company announced a plan to invest 67 billion reais ($12.3 billion) into iron ore safety upgrades in Brazil as it looks to finally put the dam collapses in the rear-view mirror.

“The news reignites concerns about the safety of the company’s operations, and the market is punishing the shares today,” Ativa Investimentos said in a note to clients.

(By Mariana Durao)