February 26, 2019 / 11:28 PM / 2 months ago

Rattled by Vale disaster, mining CEOs move to change industry

HOLLYWOOD, Fla. (Reuters) - After last month’s deadly tailings dam disaster at a Vale SA facility in Brazil, Freeport-McMoRan Inc Chief Executive Richard Adkerson sent a memo to his 29,000 employees telling them to immediately report any safety concerns about the scores of dams his company operates.

FILE PHOTO: Members of a rescue team search for victims of a collapsed tailings dam owned by Brazilian mining company Vale SA, in Brumadinho, Brazil February 10, 2019. REUTERS/Washington Alves/File Photo

The disaster, which killed more than 300, has sparked a push to set global standards for the construction and inspection of tailings dams, which store the muddy detritus of the mining process, as well as emergency preparations. The move reflects a radical departure from the way the facilities have operated for more than a century.

Freeport, the world’s largest publicly traded copper producer, spends several hundred millions of dollars per year on tailings dams upkeep and has not had a tailings dam failure since it acquired Phelps Dodge in 2007. Adkerson’s directive underscored his desire not to blemish that record.

“I told my people, ‘If you know of a problem, don’t try to solve it yourself,’” Adkerson told Reuters. “Report it.”

On Tuesday, Adkerson and 26 other CEOs, including leaders from BHP Group Ltd, Vale SA and Glencore Plc, agreed as their first step since the Vale disaster to form a panel that will set international design and maintenance standards for dams and study ways to reduce the volume of water stored behind the dams in waste rock.

“We recognize our responsibility to offer more than just words,” said Donald Lindsey, CEO of Canadian miner Teck Resources Ltd and chair of the International Council on Mining and Metals, the industry trade group that set the standards.

“We owe it to the families impacted (by the Vale disaster) and to our stakeholders to take meaningful action,” he said.

In the weeks after the accident, Brazil’s government banned new upstream mining dams - the type of dam involved in the Vale disaster - and ordered the decommissioning of all such dams by 2021.

But Brazil and the broader mining industry have grappled with how best to codify uniform tailings dam standards, conscious of not only the safety implications but of growing public resentment over the use of tailings dams.

Right now for instance, there are no global mining industry standards defining what a tailings dam is, how to build one and how to care for it after it is decommissioned.

“I’m paranoid about tailings dams,” said Mark Bristow, CEO of Barrick Gold Corp, the world’s largest gold miner, which has assigned full-time engineers to each tailings dam.

In addition to setting global standards for the construction and inspection of tailings dams, the ICMM panel will also study ways to require so-called dry-stack tailings, where water is removed before tailings are stored, thus bolstering a dam’s safety. That likely can happen relatively soon, the ICMM said.

Longer term, ICMM said that in situ mining - in which an acid is pumped underground to leach out copper and other minerals - could become the industry standard, thus eliminating the need for tailings dams entirely.

“We absolutely agree that a fundamental change is required in the industry’s collective approach to safe tailings management,” said BHP CEO Andrew Mackenzie at the BMO Metals & Mining Conference in Florida, where the ICMM approved the panel’s formation.

The new standards to be set by ICMM will apply to all members, regardless of location. Past practices favored a more tailored approach.

FILE PHOTO: Members of a rescue team search for victims of a collapsed tailings dam owned by Brazilian mining company Vale SA, in Brumadinho, Brazil February 13, 2019. REUTERS/Washington Alves

The Vale disaster “led us to reconsider how we look at tailings dams and acknowledge we need a step-change,” said Tom Butler, ICMM’s CEO.

Tailings dams in wet locations, for instance, had been held to a higher standard because they were more prone to erosion. But the new standards will favor a uniform approach that industry CEOs hope will greatly reduce the potential for another disaster.

“We cannot have a sense of complacency about this,” Freeport’s Adkerson said.

Reporting by Ernest Scheyder; Editing by Tom Brown

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