Dam Disaster Strikes Brazil
Brazil’s government said yesterday it may fine Australia mining giant BHP and Brazil’s Vale for the “environmental catastrophe” caused by ruptured dams last week at an iron ore mine jointly owned by the companies in the state of Minas Gerais in one of Brazil’s worst mining disasters.
The government is increasingly concerned over the rising death toll and contaminated mud as a result of the disaster. It is studying the mine’s permits and will ensure the owners pay for cleanup costs, Environment Minister Izabella Teixeira said in Brasília. “There will be punishment, and under Brazilian law the environment has to be repaired.”
Thus far, the dam disaster has killed at least eight people and left another 21 missing in the mineral-rich state of Minas Gerais. Of those 21 missing, 13 are dam workers. At least 300,000 people are still without water a week after the disaster.
The dam broke at 4:20 pm on Thursday, November 5, at the Unidade Industrial de Germano mine near the town of Bento Rodrigues. The structure that failed is what is known as a “tailings dam,” used to hold water and discarded minerals, known as tailings, from the iron-ore mine. The failing of a dam is called a breach, and two dams that serviced the mine were breached. The dams that broke are the Fundão and Santarém dams.
The avalanche or tsunami of mud that resulted from the breaching of the two dams created a moving wall of mud that destroyed the region of Bento Rodrigues and continues to move downstream, threatening the water supplies of neighboring towns. Already, 19 cities are without water. New evacuations have been ordered in the region amid fears about the safety of a third dam at the Unidade Industrial de Germano mine. Because of the presence of tailings in the mud, there are fears of toxic contamination. The wall of mud is expected to reach the border of Minas Gerais and pass into the neighboring state, Espirito Santo.
The chief executives of Australia-based BHP, the world’s largest mining company, and Brazil’s Vale, the world’s biggest iron ore miner, took responsibility for the disaster. After surveying the devastated area together, BHP CEO Andrew Mackenzie and Vale CEO Murilo Ferreira told a news conference their companies would meet all their obligations as joint owners of the mine, which is legally run by a company called Samarco.
When BHP and Vale started a joint iron-mining venture in rural Brazil nearly 40 years ago, the mining giants created a new corporate entity: a limited-liability company called Samarco that in theory protects its owners from litigation in case of disaster. Anglo-Australian BHP and Brazil’s Vale say Samarco — not them — are responsible for the mine’s operations.
More than 500 people remain homeless and recovery crews are slogging through nearly 100 km (62 miles) of mud-caked floodplain in a search for more victims. Fernando Pimentel, the governor of Minas Gerais, said the companies were not doing enough to address the problems caused by the disaster, including the interruption of water service for hundreds of thousands of residents downstream.
“The company will have to make a greater effort,” Pimentel told reporters in Governador Valadares, a city of 300,000 residents that is now having its water trucked in. President Dilma Rousseff flew over the disaster area on Thursday, November 12, with her Environmental Minister Teixeira.
Neither the companies nor Brazilian officials have determined a cause for the ruptures. However, the companies acknowledged that workers were engaged in an expansion of one of the dams when it burst. The work was necessary because of increased output at the mine. Thirteen of the dam workers are still missing and are presumed dead.
A state prosecutor said investigators are probing reports that Vale contributed to higher water volumes behind the dam by sending waste from one of its nearby mines to the tailings pond. Brazilian prosecutors and local officials have said Vale may have been using Samarco’s reservoir to hold tailings from its nearby iron-ore mines. If that proves to be the case, it could raise questions about overcapacity at the dam system, which Samarco was expanding as it ramped up iron-ore production to offset falling prices. At a news conference, Mr. Ferreira declined to answer questions about whether his company, Vale, had been dumping its own mine waste, the tailings, into the Samarco system before it broke.
The disaster has become a public relations, regulatory, and financial nightmare for the companies. Politicians, environmentalists, and residents are calling for tougher rules on the mining industry, which employs hundreds of thousands of people and is a major source of export revenue. The mine employs about 1800 workers, most of whom are now on paid leave as operations have been halted.
Vale said Samarco has “a management team that’s completely independent from its shareholders and responsible for technical and financial matters.” Under Brazilian law, the company said: “Vale really doesn’t have any responsibility for the occurrence of the unfortunate and sad accident.”
If Samarco itself can’t cover the clean-up and legal costs, the Brazilian government can “go after the assets of the shareholders, Vale and BHP,” said Mario Werneck, an environmental lawyer who has represented people affected by pollution in Minas Gerais.
The chief executives of BHP and Vale have pledged to support Samarco in the creation of an emergency fund to help families and communities affected by the disaster. BHP and Vale own Samarco as a 50-50 joint venture, putting an equal number of members on the board of directors. Samarco had about U$700 million in cash and U$S4.9 billion in debt at the end of June. Investors appear to have decided the two companies will bear a heavy burden, selling their stocks in droves.
In Brazil, the companies face a legal system that allows for an array of entities to be held liable for an incident, including shareholders and firms that have provided technical assistance on a project, said Sergio Jacques, an independent Rio de Janeiro lawyer who has worked for several mining companies.
The companies could also face lawsuits in Australia, where BHP is headquartered and where it faced environmental litigation over a Papua New Guinea mine that it eventually exited. Through June 2015, BHP recorded five worker fatalities, compared with none the 12 months prior.
The last significant tailings dam failure at a mine owned by BHP was at Pinto Valley in Arizona in 1997. A dam was being covered with waste rock when its wall collapsed, sending a wave of tailings and rock into the creek below. There were no serious injuries. BHP sold that mine two years ago.
Mining accidents aren’t uncommon Minas Gerais. In January 2007, the collapse of a tailings dam owned by Mineração Rio Pomba Cataguases resulted in catastrophic flooding that rendered thousands homeless in the cities of Miraí and Muriaé.
The Brazilian government has announced preliminary fines of 250 thousand reais (U$66,200) against Samarco for last week’s catastrophe. The fines, announced after Dilma flew over the affected area on November 12, come as federal and state prosecutors make plans to investigate possible crimes that could have contributed to the disaster at the mine, jointly owned by BHP and Vale.
Dilma said the fines, imposed by Brazil’s environmental regulator for violations including river pollution and damages to urban areas where water service has been suspended, could be followed by additional penalties from other federal or state agencies.
[Research comes from the Wall St. Journal, The Guardian, and AFP and Reuters news agencies.]