Audit of burst Brazil dam found issues with drainage, monitoring

Brazilian mining company Vale SA in Brumadinho

Brazilian mining company Vale SA in Brumadinho

The company faces a rising death toll in the country; it now stands at 134, with 199 people still unaccounted for. Iron ore prices have rallied more than $10 per metric ton in Singapore since January 25, when the dam broke.

The company faces a rising death toll, which now stands at 134 with 199 people still unaccounted for.

The civil defense authority in Minas Gerais state said on Twitter that 122 victims had been identified while the number of missing dropped to 194 after a tailings dam burst at an iron ore mining complex near the town of Brumadinho.

Laranjeiras, one of eight dams subject to a recent court-ordered suspension, is used by the Brucutu mine and its suspension had prompted Vale to declare force majeure earlier this week over some of its iron ore and pellet sales contracts, with up to 30 million tonnes of iron ore per year to be impacted by the Brucutu halt.

The decision comes two weeks after another dam storing mining waste collapsed in the village of Brumadinho - 160 kilometres - leaving at least 150 dead and 182 missing.

The company has said that the speed of the collapse was the reason why warning sirens did not go off to warn nearby workers and civilians, as the warning system itself was destroyed before anyone could raise the alarm.

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Following the Brumadinho disaster, Vale in a statement says over the years it has been continuously investing in the maintenance and safety of its dams, "with standards being updated and in continuous alignment with the most rigorous worldwide practices".

The report cited a deposition by an engineer for German inspection firm TÜV SÜD, whose job it was to monitor the dam's safety.

Vale said in a statement it had followed the recommendations in the report, which it described as "routine".

Since 2015, Vale has conducted important tailings dams construction projects, such as the Brucutu Norte dam (2015) and Forquilha V dam (2016) in Minas Gerais, and new projects have been started, such as the Maravilhas III dam (2016), also in Minas Gerais.

Vale's share price suffered a precipitous drop on the New York Stock Exchange in the immediate aftermath of the disaster, falling US$11.38 from a pre-disaster value of nearly US$15.

Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.

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