Vale to dismantle 10 tailings dams in wake of accident in Brazil

January 30, 2019

Vale announced that it will decommission 10 tailings dams like the one that collapsed in Brazil on Jan. 25 and will suspend operations at the mines associated with those dams.

The company's decision is that it can no longer live with this type of dam. The Jan. 25 collapse killed at least 85 people with more than 250 still missing as of Jan. 30. It was the second dam failure in Brazil in less than four years.

Vale, the world's biggest iron ore producer, said it plans to offset the lost production by lifting output elsewhere, but with the company facing mounting costs from the disaster, legal action, investigations and a $US1.3 billion project to decommission dams - the company faces massive challenges. Making up for lost production will not be straightforward.

Vale chief executive Fabio Schvartsman said the operations in question produced 36 Mt/a (40 million stpy) of iron ore. This equals about 10 percent of Vale's annual output.

“We decided the company should, once and for all, do what it takes to remove any doubt about the safety of Vale’s dams,” he said. “The company's decision is that we can no longer live with this type of dam,” he said.

Vale's now infamous Feijao dam in Brumadinho failed suddenly last week, releasing a torrent of mud that rushed down the countryside and swept up hundreds of people.

Shares in Australia's biggest iron ore miners surged on the news that Vale would shut 10 tailings dams and suspend mining at some of its operations, the Sydney Morning Herald reported.

More than $5.1 billion was added to the market capitalization of the three biggest Australian iron ore miners, Rio Tinto, BHP and Fortescue Metals Group, on expectations that the Vale move would reduce the amount of iron ore the Brazilian miner could produce and lead to a tighter global iron ore market.


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