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Brazil's Vale to decommission all upstream tailings dams

  • Author
  • Anthony Poole
  • Editor
  • Geetha Narayanasamy
  • Commodity
  • Metals

New York — Brazilian mining group Vale is to decommission all of its upstream tailings dams and has presented its plans to do so to the Brazilian authorities after the fatal collapse of the Corrego de Feijao iron ore mine No. 1 tailings dam in Minas Gerais last Friday, the company said Tuesday.

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Last Friday's disaster killed at least 65 people and has left nearly 300 people unaccounted for, with most of them feared buried in the mud that spewed from the waste dam.

"The plan presented to the Brazilian authorities aims to de-characterize these structures as tailings dams in order to reintegrate them into the environment," Vale said in a statement. "Vale currently has 10 dams built by the upstream method, all of which are currently inactive. All of Vale's dams present stability reports issued by external, independent and internationally respected companies."

Vale estimates the cost of decommissioning the dams will be Real 5 billion ($1.3 billion), and it will take three years to complete.


Vale said it would temporarily halt production at the sites where the dams are located, namely: Aboboras, Vargem Grande, Capitao do Mato and Tamandua operations, in the Vargem Grande complex; and the Jangada, Fabrica, Segredo, Joao Pereira and Alto Bandeira operations, in the Paraopebas complex, also including the stoppage of the Fabrica and Vargem Grande pelletizing plants. The operation of the halted units will be resumed as the decommissioning works are completed, the company said.

The Brazilian government has already frozen Real 11.8 billion ($3.17 billion) of its assets to ensure indemnities and environmental compensation. This represents about half of Vale's available cash flow of around $6 billion.

Earlier on Tuesday, Brazil federal police arrested five people in connection to the disaster. The Minas Gerais state public prosecutor's office said three of those arrested were Vale employees responsible for the Corrego de Feijao mine and its tailings dam licensing, and two engineers from German company Tuv Sud, responsible for inspecting the dam.

The arrests are temporary, valid for 30 days, and "aim to establish criminal responsibilities for the rupture of dams in the Corrego de Feijao mine," the state public prosecutor said in a statement.

Documents and evidence found in the search and seizure warrants will be analyzed by the public prosecutor's office.

"With regards to the warrants served this morning, Vale informs that it is fully cooperating with the authorities," the company said in a statement. "Vale will continue to support the investigations in order to determine the facts, in addition to the unconditional support to the families."

Earlier Tuesday, Vale said it would donate Real 100,000 to victims' families Tuv Sud Brasil informed authorities that it made two inspections of the dam under the request of Vale, one being a periodical security revision, in June 2018, and the other a regular security inspection.

"Due to the ongoing investigations, Tuv Sud will not comment in this moment," it said in an emailed statement, adding that it is making available all the information requested by the authorities.

In a separate statement on Tuesday evening, Vale said the Public Ministry of Labor filed a Public Civil Action and a preliminary injunction was granted determining a freezing of Real 800 million to secure the indemnification of direct and third-party employees that worked in the Corrego de Feijao mine at the time of the dam breach. This move was also made to allow for the maintenance of the wage payments to the relatives of direct and third-party employees that are still missing, while the status of fatality is unconfirmed, and for the payment of funeral expenses, transfer of bodies, burial of all direct and third-party employees.


Vale also said a putative class action suit was filed on Monday against the company and its CEO Fabio Schvartsman, and CFO Luciano Siani Pires, in the United States District Court for the Eastern District of New York.

"The complaint, putatively brought on behalf of certain purchasers of Vale securities, alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934," Vale said.

The suit alleges the company made false and misleading statements and omitted to make disclosures concerning the risks and potential damage of a dam breach at the Corrego de Feijao mine in Brumadinho, Minas Gerais.

"The complaint seeks an unspecified amount of damages. Given the early stage of the proceeding, it is not possible at this time to predict the outcome of this matter. Vale intends to defend vigorously against the claims," it said.

-- Anthony Poole,

-- Edited by Geetha Narayanasamy,