Vale evacuates 500 people near Sul Superior tailings dam as ‘safety measure’

Vale (NYSE: VALE) is evacuating 500 people from an area below the Sul Superior dam, an upstream tailings dam that used to support production from the company’s Gongo Soco mine, where iron ore production was halted in April 2016.

The decision comes after the Walm consulting company denied the Stability Condition Report of the dam’s structure.

Vale said the decision to evacuate the surrounding community was made “as a preventive measure” and that the evacuation covers the communities of Socorro, Tabuleiro and Piteiras, all in the city of Barao de Cocais, 100 km from Belo Horizonte, a city in southeastern Minas Gerais state.

“As a safety measure, Vale is intensifying the inspections of the Sul Superior dam,” the Brazilian iron ore miner said in its Feb. 8 press release. The company added that “equipment that detects millimetric movements in the structure will also be installed,” and said it was bringing in international consultants “to perform a new assessment of the situation” on February 10.

The Sul Superior dam is one of the remaining ten inactive upstream tailings dams that Vale is decommissioning in Brazil.

“The retraction of independent certificates is no great surprise given that two of the engineers who certified Brumadinho have been arrested and are subject to criminal charges,” Edward Sterck, an analyst at BMO Capital Markets commented in a research note.

The collapse last month of the Brumadinho tailings dam at its Feijao iron ore mine has left 134 people dead and more than 150 others missing.

ArcelorMittal has also decided to evacuate a community of 200 people situated around its dormant Serra Azul tailings dam as a precautionary measure. The community is 5 km downstream from the dam.

The evacuation decision follows an updated site-based assessment that ArcelorMittal commissioned after the Brumadinho tragedy on January 25.

The assessment included stress tests on the Serra Azul pond, applying early observations available from the Feijao dam.

The Serra Azul mine is in Itatiaiuçu, also in Minas Gerais. The tailings dam, which is an upstream dam, has been idle since October 2012. It is the only upstream dam in the company’s mining portfolio.

“This is a decision we could see other operators in Brazil taking as they seek to minimize risks, given the significant repercussions from the failure of any tailings dams close to communities,” BMO’s Sterck said.

Earlier this week, Vale declared force majeure on a series of iron ore and pellets sales contracts after a Brazilian state court ordered it to suspend production from its Brucutu mine, also in the state of Minas Gerais.

The court order also bans Vale from storing tailings in the Laranjeiras dam at Brucutu.

The world’s largest iron ore miner said it will appeal the court decision and noted that the Laranjeiras dam is a downstream tailings dam, not an upstream tailings dam such as the one that collapsed on Jan. 25 at the Feijao mine.

Brucutu produces about 30 million tonnes of iron ore fines a year and is one of the country’s largest mines.

The court order also prohibits Vale from depositing any tailings in seven other dams — Menezes II, Capitao do Mato, Dique B, Taquaras, Forquilha I, Forquilha II and Forquilha III.

Vale says it plans to reduce the use of dams in its operations by increasing the share of dry processing in its production to 70% by 2023.

Starting in 2020, the company plans to invest about US$390 million on implementing dry stacking disposal.

In 2016, following the 2015 tailings dam disaster at Vale’s Samarco mine, which killed 19 people, the company decided to decommission all of its upstream tailings dams. The Samarco mine is a joint-venture with BHP Billiton.

Vale says it will take as much as 10% of its ore output offline in the decommissioning process.

The company is offering a donation of R$100,000 (US$27,021) to each of the families “with missing members or affected by the fatalities.”