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Brazil dam collapse spurs call to toughen rules



By Argus


Petroleumworld 01 29 2019

Just days after Brazil's largest iron ore miner Vale suffered its second major tailings dam disaster in three years, pressure is growing for tougher mining regulations.

"We need to change environmental regulations to focus more on high-risk events," mines and energy minister Ricardo Salles said today. He is a member of a government task force set up to respond to the 25 January dam collapse in Minas Gerais state that has killed 60 people, with another 292 missing.

Hamilton Mourao, who is serving as acting president while new president Jair Bolsonaro undergoes planned surgery, said today that the task force is considering the temporary removal of Vale directors during the investigation. The punishment needs to hit the company's wallet, he said, adding that if the investigations discover evidence of "imprudence or negligence of someone in the company, they should be held criminally responsible."

Brazil´s chief prosecutor Raquel Dodge confirmed that Vale executives could be held criminally liable. Dodge defended a complete review of the safety protocol for tailings dams, adding that there are 700 such dams in Minas Gerais state, all of which pose of some degree of risk.

Minas Gerais governor Romeu Zema also said protocols for the mining sector need to be reviewed.

According to Andressa Lanchotti, environmental coordinator for the Minas Gerais state public prosecutors' office, attributed the collapse at Vale's dam in Brumadinho to "deficiencies in Brazil's environmental management system" which she characterized as including "abuses in the licensing that lack sound technical studies". She added that the state government rejected a 2016 law that would have increased environmental oversight of tailings dams in the state.

Equities analysts at investment advisors XP Investmentos said the dam collapse could hurt Vale's future iron ore production as "authorities toughen the licensing process for dams and new mines."

Vale is likely to face a series of fresh legal battles going forward, with the securities and exchange commission (CVM) saying this morning that it had opened an investigation into the company's release of information during the crisis.

Local courts have already begun to freeze some Vale accounts at the request of public prosecutors. So far, a total of R11bn ($2.9bn) of the company's accounts have been frozen.

Bolsonaro took office on 1 January on a pro-business platform that included a streamlining of the country's environmental regulations that are seen by investors as cumbersome.


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