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February, 22nd 2019

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JAN 30
14:06

Vale begins decommissioning of upstream dams, cuts production

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Brazil’s Vale has begun to decommission all of its dams built by the upstream method, the miner tells Kallanish. Vale has ten such dams, all of which are currently inactive. During the process the company will temporarily cut its iron ore and pellet production. This measure follows the rupture of Dam 1 at the Córrego do Feijão mine in Brumadinho on 25 January. 

“The estimated impact of the halted output will amount to 40 million tonnes/year of iron ore including the pellet feed needed for the production of 11 million tonnes of pellets,” Vale says. This volume is nearly 10% of the miner`s estimated 400mt iron ore output for 2019. The impact will be offset by an increase in production at other of the company’s units, Vale adds. The miner recently said that it expects to raise production from its S11D facility, pushed by the increasing Chinese demand for high grade ores.

In order to carry out the decommissioning of the dams, Vale will temporarily halt its iron ore and pellet production at its Abóboras, Vargem Grande, Capitão do Mato and Tamanduá units. Output will also be discontinued at the Vargem Grande and Paraopeba complexes, and the Jangada, Fábrica, Segredo, João Pereira and Alto Bandeira operations. Vale estimates that the decommissioning process will last three years and will cost BRL 5 billion ($1.34 billion).

In a separate statement, Vale said that on 28 January a securities class action complaint was filed against the company in the US District Court for the Eastern District of New York. Vale ceo Fabio Schvartsman and cfo Luciano Siani Pires were also included in the action, “… putatively brought on behalf of certain purchasers of Vale securities,” the miner says. According to the complaint “… the miner made false and misleading statements, and omitted to make disclosures, concerning the risks and potential damage of a breach of the dam in the Córrego de Feijão mine in Brumadinho.”

Brazilian media reports suggest that Córrego do Feijão dam incident has resulted in 84 fatalities with a further 276 people unaccounted for as a result of the ensuing mudslide.