Honbridge’s SAM confident $2bn Brazil iron mine will go ahead

Water of the Doce river in Galileia, Minas Gerais, Brazil, with the mud from the Samarco dam that broke in the city of Mariana on 5 November 2015. (Image from Wikimedia Commons)

Chinese mining company Sul Americana de Metais (SAM), a unit of China’s Honbridge Holdings , is confident it will receive the necessary permits to start up its $2.1 billion iron ore project in Minas Gerais, its chief executive told Reuters.

CEO Jin Yongshi said on Thursday he believed the Brazilian authorities will give the green light, despite the hurdles that have emerged in the wake of two fatal tailings dam disasters in Brazil in the last four years.

The company has lowered the environmental impact of the mine and increased operational security, he said in an interview.

The company has been trying to develop the deposit for about 10 years, but obtaining licenses was delayed after the two dam failures in Mariana and Brumadinho

With a capacity to produce 27.5 million tonnes of iron ore per year, with a 66.2% iron content, the project called Block 8 is planned in the north of Minas Gerais, Brazil’s iron ore producing state where the two deadly dam bursts occurred.

“We have had problems in the industry in the past, but we cannot stop because of that. We have to find solutions on how to make mining safer by learning from the disasters,” he said.

Jin said the company has been trying to develop the deposit for about 10 years, but obtaining licenses was delayed after the two dam failures in Mariana and Brumadinho.

The project had to undergo major changes and restructuring in this period to incorporate innovations, including plans for the social and economic development of the surrounding region.

To date, the company has invested $74 million in research and testing.

However, in a new setback last month, a court suspended environmental licensing for the project after public prosecutors questioned the authority of the state of Minas Gerais to carry out the licensing, arguing it should be done by the federal environmental agency Ibama.

Prosecutors also want Ibama to be in charge of licensing a 480-kilometer ore slurry pipe to be built by another company, called Lotus Fortune Holding, to transport output to Porto Sul on the Atlantic coast of Bahia state.

SAM has appealed against the suspension of the process.

Two dams are planned to receive the tailings, the larger one built by a technique called center line, with a capacity to store 845 million cubic meters of tailings, 17 times more than the Samarco dam, which broke up in 2015, in Mariana.

The dams are necessary, since the ore found in the region has only 20% iron content and the company plans to use wet processing to raise product content to 66.2%.

(By Marta Nogueira; Editing by Anthony Boadle and Daniel Wallis)

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