Industry Trend Analysis - Samarco Disaster To Fuel Regulatory Developments - MAR 2016


BMI View: Brazil ' s mining sector will see increasing regulation surrounding tailings dams over the next few years due to the deadly Samarco dam burst. Parent firms Vale and BHP Billiton will absorb billions of dollars in environmental and community damage costs, legal fees and reputational damage.

Brazil's mining sector will come under tightening environmental regulation, as the dam burst in November gives momentum to new legislation as well as long-delayed proposals. The dam failure at the Samarco iron ore mine, a joint-venture between Vale and BHP Billiton, released two mine-waste ponds of toxic tailings down the Rio Duce, killing several people and dislocating over 600 in Brazil's Minas Gerais state ( see: ' Dam Breach To Hurt BHP & Vale ' , November 19 2015). This environmental disaster will engender political will to pass the overhaul of Brazil's mining regulatory framework, which has been stalled in Congress since 2013, and add legislation targeting the regulation of mine tailings dams. For instance, Brazil's National Department of Mineral Production (DNPM), which has remained underfunded due to the political tie-up of the legislation, received USD2.4mn in emergency funding immediately following the dam burst to ramp up inspections in Minas Gerais through 2016.

According to Brazilian Congressman Leonardo Quintao, the proposed regulations may include a requirement for miners to use dry processing of iron ore, to avoid tailings pond dams altogether. Dry processing will becoming increasingly preferable to tailings dams, as miners look to invest in new technology that lowers costs in the long term and reduces environmental impact. For instance, Vale's upcoming S11D iron ore project will feature truckless technology and long-distance conveyor belts in turn allowing for a dry process plant, which will reduce water consumption by 93.0% compared to conventional operations.

Bureaucracy To Hinder Regulatory Developments
Select Countries - Bureaucratic Environment Index
Source: BMI

This article is part of our Americas coverage. To access this article subscribe now or sign up for free trial