Wood Mackenzie estimated that Vale will produce around 50 metric tons (mt) less than planned this year. Following the dam failure, Vale announced a plan to decommission all of its 10 upstream dams by 2022 at a total cost of approximately US$1.7 billion. The whole program is set to impact close to 40 mt per year of the company’s total output. The company identified 35 tailings dams in Brazil as either an upstream type or unknown. “For the 35 dams, we have assessed weather disruption as a result of the decree will affect day-to-day mining operations of the associated mine site,” the company said.

“Our analysis indicates that, excluding Vale, close to 8 million mt of seaborne supply is at risk in 2019 with the new regulation,” the company added. The supply cutbacks will most likely come from Usiminas, Gerdau, Mineração Morro do Ipê and junior miners that sell run-of-mine ore to Vale and CSN, Wood Mackenzie said. Pellet feed production from Usiminas will account for half of the export declines, with the other half sinter feed from the remaining impacted producers.

Vale’s losses of 50 million mt — 20 million mt of net losses from decommissioning plus 30 million mt from Brucutu’s shutdown — indicates an incentive price of US$85/mt. A further 8 million mt of losses shifts the cost curve further to the left and suggests an incentive price of US$90/mt.

The International Council on Mining & Metals (ICMM), which is governed by a council comprising of CEOs of member companies, recently announced it will establish an independent panel of experts to develop an international standard for tailings facilities for its member companies. The standard will be informed by a review of current global best practices in the mining industry, and beyond, the ICMM said. The standard is expected to create a step-change for the industry in the safety and security of these facilities. The details of the standard are expected to include a global and transparent consequence-based tailings facility classification system with appropriate requirements for each level of classification; a system for credible, independent reviews of tailings facilities; and requirements for emergency planning and preparedness.

“ICMM CEOs have committed to creating a step-change for the industry in the safety of tailings facilities by developing a recognized international standard for member companies,” ICMM CEO Tom Butler said. “The standard will be based on best practices to ensure that tailings facility risks are managed appropriately, consistently, and transparently.” ICMM will engage with representatives from civil society, communities, industry, investors, and multilateral organizations to determine the detailed scope of the review. The review will be carried out by a team of experts from diverse disciplines, led by an independent chair and is expected to be complete by the end of 2019.

ICMM will initiate work to define technical guidance for the safe design, construction, operation, and closure of tailings facilities, by drawing upon existing technical best practice; develop capacity and a database to facilitate learning and knowledge sharing across the industry; and consider ways to leverage member resources to enhance and optimize the industry’s existing research and training initiatives.