A view from above of the dam failure owned by Brazilian miner Vale SA in Brumadinho. (Photo: Washington Alves/Reuters)

Brazil’s Vale SA will invest about US$70 million in dam management in 2019, an increase of around 180% when compared to the US$30 million that was invested in 2015. This comes after a tailings dam collapsed on January 25 at Vale’s Córrego de Feijão mine in Brumadinho, Minas Gerais, killing at least 150 people and leaving more than 180 still missing when part of its contents reached the company’s administrative area and part of the Vila Ferteco community.

The amount will be invested in maintenance services, monitoring, improvements, audits, risk analysis, revisions of the Emergency Action Plan for Mining Dams (PAEBM), implementation of alert systems, video monitoring and instrumentation, according to the company. Vale plans to increase the share of dry processing in its production to 70% by 2023, and reduce the use of dams in its operations. Starting in 2020, Vale will invest about US$390 million in the implementation of dry stacking disposal technology.

The civil court of Belo Horizonte required the company to refrain from disposing tailings or practicing any activity that might increase the risk at its Laranjeiras, Menezes II, Capitão do Mato, Dique B, Taquaras, Forquilha I, Forquilha II and Forquilha III dams.

Vale said there is no technical basis nor risk assessment to justify these actions. As a result of halting the Laranjeiras dam, located at the Brucutu mine, the company said about 30 million tons of iron ore per year will be impacted.

Vale said it has also temporarily suspended operations at the Vargem Grande Complex to further accelerate the process of decommissioning previously mentioned. The suspension accounts for approximately 13 million tons of wet-processed iron ore per year, according to the company.

Vale will be decommissioning all its dams built by the upstream method. In 2015, Vale had 19 upstream dams in operation, but made them inactive, initiating the decommissioning process. However, there were still 10 active upstream dams. It should take up to three years with an investment of US$1.3 billion to decommission the dams, according to Vale.

On February 5, Vale had three membranes installed in the Paraopeba river to protect the water withdrawal and supply system of the city of Pará de Minas, located 40 km from Brumadinho. This preventative measure is part of the plan presented by Vale to the Public Prosecutor’s Office and environmental agencies. Vale also installed 46 monitoring points along the Paraopeba river until it reaches the São Francisco river mouth. The tailings that leaked from Dam 1 are concentrated in the Feijão e Carvão stream as well as in the confluence of the steam and the Paraopeba river, according to the company.

The dam contained 11.7 million cubic meters of tailings, but was inactive, according to Vale. Plant facilities, the loading terminal, the maintenance workshops and the administrative buildings of the Córrego de Feijão mine were damaged.

The company has also established two independent consulting committees. The first independent committee will be dedicated to follow up on the measures taken to support the victims and the recovery of the areas affected by the breach of the dam. The second independent committee will be dedicated to investigating the causes and responsibilities for the dam breach. Vale also faces legal and criminal actions for the dam failure.

As of January 30, the Minas Gerais Court had blocked about US$3.2 billion to guarantee the recovery of damages caused by the dam breach. In addition, sanctions by IBAMA and the state of Minas Gerais amounted to approximately US$95.8 million, according to Vale.

A preliminary injunction was granted after the Public Ministry of Labor filed a civil action, freezing about US$437.5 million to secure compensation for direct and third-party employees that worked in the Córrego de Feijão mine at the time of the dam breach; 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; payment of funeral expenses, transfer of body, burial of all direct and third-party employees; and other administrative measures.

Also, on January 28, a class action complaint was filed against Vale, its CEO Fabio Schvartsman, and CFO Luciano Siani Pires in the United States District Court for the Eastern District of New York. The complaint alleged the company made false and misleading statements, and omitted to make disclosures, concerning the risks and potential damage of a dam breach, violating the Securities Exchange Act of 1934.

“The proceeding is still in early stage, Vale intends to defend vigorously against the claims,” the company said in a statement. Several people have also been arrested in connection with the dam failure. On Tuesday, January 29, three employees of Vale and two contractors were arrested. Two of those arrested were Vale’s senior managers at the Córrego de Feijão mine. Vale said it is fully cooperating with the authorities.

“The company will continue to contribute to the investigations to find out the facts, along with the unconditional support to the affected families,” the company released in a statement. “Three employees of Vale were detained together with two people responsible for the audit company that testified to the stability of Dam I.”

This is the second dam failure by a company owned by Vale. The first occurred in 2015 at Samarco, also in Minas Gerais, owned by Vale and BHP. That disaster killed 19 and devastated the local community.