Brazil’s Vale warns another dam is at risk

Brazil mining giant Vale says another of its dams risks collapse, adding to troubles that have lifted iron ore prices.

Brazilian iron ore miner Vale has told prosecutors in the state of Minas Gerais that a dam is at risk of rupturing at its Gongo Soco mine, about 65km from the site of its Brumadinho dam collapse that killed more than 230 people.

According to a document, prosecutors said Vale is predicting the dam in the city of Barao de Cocais may collapse next week if the current rate of movement in the embankment of the mine pit close to the dam is maintained.

The warning underlines ongoing concern about the stability of dams in Brazil’s mining heartland of Minas Gerais in the aftermath of the Brumadinho accident, which itself came less than four years after another deadly dam collapse at a joint venture between Vale and BHP Group.

Disruptions to iron ore production by Vale, which earlier this year suspended operations at a number of its mines because of dam failure fears, have contributed to rising world prices.

The share prices of major Australian iron ore miners BHP, Rio Tinto and Fortescue jumped in early trade today following the warnings of a possible new dam collapse in Brazil.

Vale said in a statement it remained unclear whether the slippage in the embankment would actually trigger a collapse of the nearby Sul Superior dam, but said it was raising its level of alert and readiness for such an extreme case.

Earlier this week, Vale had identified movement close to the mine - which has not been active since 2016 - the prosecutors said.

About 500 people viewed as being at risk from a collapse of the dam have been moved from their homes since February under orders from mining regulator ANM.

The dam holds six million cubic metres of mining waste - roughly half the amount that was released when the Brumadinho tailings dam burst in late January, burying nearby buildings including a company cafeteria and a bed and breakfast.

Vale shares fell 3.2 per cent, accelerating their drop after the reports on the potential dam burst.

Prosecutors ordered Vale to issue urgent warnings about the risks to the local population.

Reuters