Brazil dam burst: Mine owners BHP, Vale tour devastation as new evacuations ordered over fears for third dam

Updated

The CEO of Australian mining giant BHP Billiton visited the site of a deadly iron ore dam burst in Brazil, as authorities said they were now concerned about the safety of a third dam at the site.

At least six people are dead and more than 20 people are still missing after the disaster, with hundreds of people displaced and 19 cities left without water as the iron-laced sludge from the tailings dam runs downriver.

Last Thursday's disaster saw two dams burst at the Samarco-owned Germano mine in southeastern Brazil, releasing nearly 60 million cubic metres of sludge and mining waste and flattening nearby towns in the state of Minas Gerais.

From correspondent Ben Knight at the disaster site

We knew we had reached the right place when the dirt road simply ended in front of us.



Around the bend, behind the hill, was what was left of the town of Bento Rodrigues.



But before us was the vast, deep scar of the mudslide after it had passed through, tearing a broad crevice as it surged through the valley and off into the distance.



Walking across the cow paddock, we came to the edge of the mud — where rounded piles of sludge had finally run out of momentum and stopped.



It was thicker than any mud I have ever seen.



We could see deep tracks where animals had walked into it; but the tracks went in no further than about a metre before whatever had left them decided this was not a place it wanted to be.



When I tapped the sludge with my boot, it was still wet, and still pliable — but with a strange, waxy texture. And beginning to harden.



And all I could think of was that somewhere out in all that, are 20 people who have now been missing for almost a week — and what a terrifying death it must have been.

BHP boss Andrew Mackenzie offered his sympathies to those affected by the accident while touring the devastated mining region.

After surveying the area together, Mr Mackenzie and Murilo Ferreira, the CEO of the mine's Brazilian joint owner Vale, told a news conference their companies would meet all their obligations as joint owners of the mine.

"We are 100 per cent committed to do everything we can do to support Samarco and make this right," Mr Mackenzie said. "We are deeply sorry to everyone who has or will suffer for this terrible tragedy."

"The devastation that we have witnessed on site this morning and around the community is quite heartbreaking.

"Please make no mistake. The people of Brazil, the people of [the city of] Mariana, have my absolute determination that we will fully play our part in helping to rebuild your homes, your community and your spirit, and we'll do this working hand-in-hand with Murilo Ferreira and Vale, and through Ricardo Vescovi [CEO of Samarco] and Samarco."

The executives visited the mine amid mounting questions on how the disaster could have happened.

New evacuations were carried out on Wednesday as emergency services made repairs to another dam at the site. More than 631 people had already been forced from their homes in the accident.

Meanwhile recovery crews continued to slog through the mud-caked floodplain in search for more victims.

Fears were mounting that the sludge, which flowed into 400 kilometres of local riverways, could be toxic and contaminate the water supplies of more than half a million people in Minas Gerais and the neighbouring state of Espirito Santo.

Brazil's government said it may the fine BHP and Vale for the "environmental catastrophe", as president Dilma Rousseff prepared to fly over the disaster area on Thursday.

Parent company owners see devastation

The two CEOs said they were helping Samarco create an emergency fund for reconstruction and for victims.

"It is our intention to work with the authorities in getting this fund working in as short a time as possible," said an earlier joint statement from the CEOs in Portuguese.

BHP and Vale have also provided experts in health, security and the environment, it said.

"The investigation is underway and Samarco will constantly update information on efforts to respond and on operations."

BHP is expected to contribute more than $100m to the emergency assistance fund.

Over the weekend, the Estado de S Paulo newspaper reported that a study commissioned by the state government in Minas Gerais in 2013 had warned that the dams that burst could be vulnerable.

A spokesperson for BHP declined to comment on the earlier warnings, saying the organisation's priority was letting investigations take their course.

Vale probed by prosecutor

Neither the companies nor Brazilian officials have determined a cause for the ruptures, though Samarco acknowledged that workers, 13 of whom were washed away by the torrent, were engaged in an expansion of the first dam when it burst.

The work was necessary because of increased output at the mine.

A state prosecutor on Wednesday said investigators were probing reports that the Brazil-owned Vale contributed to higher water volumes behind the dam by sending waste from one of its nearby mines to Samarco's tailings pond.

When a reporter asked about the reports at the news conference, the executives did not answer.

The disaster has become a public relations, regulatory and financial nightmare for the companies as they are expected to face steep fines and lawsuits at a time when iron ore prices are at their lowest point in a decade.

Sorry, this video has expired Video: Brazilian mining dam floods neighbouring towns in mud (ABC News)

Miners see dramatic shareholder flight

A person familiar with the insurance framework around the mine said on Tuesday that the disaster could trigger $850 million in insurance claims, on top of the $1.4 billion in clean-up costs estimated by Deutsche Bank analysts.

Moodys has already stripped Samarco of its investment-grade credit score and Fitch put the firm on negative watch for a possible downgrade.

It may well be that there's other tailings dams that they have that aren't up to scratch and require substantial and expensive remediation and structural integrity work. Environmental researcher Bob Burton

BHP Billiton's share price is down 37 per cent on a year ago, and as financial analyst Henry Jennings said: "This couldn't have come at a worst time".

"The problem they've got is to contain the disaster and then I guess, for the market's peace of mind, put some sort of quantifiable amount on the disaster as well," he said.

Environmental researcher Bob Burton told AM that BHP may now have to check the structural integrity of all of its tailings dams right across the globe.

"It may well be that there's other tailings dams that they have that aren't up to scratch and require substantial and expensive remediation and structural integrity work," he said.

"Just about at every mining operation there's problems that most investors don't know about, and once companies or management or even insurance companies take a more detailed look they find that they are dealt with a problem."

While not on the same scale, the Brazil mine disaster has already been compared to BP's Deepwater Horizon oil spill of 2010.

Brazilian officials are checking the toxicity of the waters and have warned residents who came in contact with the mud to throw out their clothing.

Biologists warn that the environmental impact may be permanent, devastating local fisheries and farms.

ABC/wires

Topics: mining-industry, mining-environmental-issues, disasters-and-accidents, accidents, brazil

First posted