By Alistair MacDonald and Rhiannon Hoyle
Some of the world's largest miners are calling for an
independent global body to monitor the risks posed by waste dams,
as the sector scrambles to react to a collapse in Brazil that left
at least 171 people dead.
Last month's accident has raised questions about whether safety
auditors, like the one Vale SA employed at its dam in Brumadinho,
can be independent when they also compete for consulting fees from
the same company.
The chief executives of BHP Group Ltd., Anglo American PLC and
Glencore PLC, and a spokesman for ArcelorMittal SA, the giant
steelmaker that operates mines, have said they would back an
independent body to oversee dams. A spokesman for Newcrest Mining
Ltd. said the gold miner was also supportive of the idea.
Since the disaster nearly a month ago, miners say they have
rechecked their dams. Some have laid out how many of their
structures are so-called upstream dams, the most widespread and
cheapest method to store tailings, or mine waste, and the most
prone to failure, according to experts.
Even if such a monitor is formed, it may be difficult to get a
global industry to agree to set standards and decide on its powers.
Miners also worry that as the demand for safety auditors increases,
there won't be enough experts to go around.
"We welcome a common, international and independent body to
oversee the integrity of the construction and operation of all
dams" and support the call for increased openness, said Andrew
Mackenzie, chief executive of BHP, the world's largest listed miner
by market value.
The members of the International Council on Mining and Metals,
an industry group that includes most of the world's largest miners,
meet on Tuesday in Miami to discuss any action they will take.
"It is clear that following the Brumadinho tragedy, a step
change is needed in how the mining industry manages tailings
facilities," said Tom Butler, the ICMM's CEO.
The dam's collapse unleashed a torrent of sludge that swallowed
an employee canteen, offices and nearby homes. Around 139 people
are still unaccounted for.
The Wall Street Journal has reported on the close relationship
between Vale, Brazil's largest company, and Germany's TÜV SÜD,
which passed the Brumadinho dam as stable, despite finding numerous
red flags.
TÜV SÜD said in a statement that it is cooperating with probes
and supports increased safety standards. Vale declined to comment.
Vale has said the dam was repeatedly inspected and monitored not
only by TÜV SÜD but by other external companies and Vale
itself.
Some investors are now pressing for an independent safety system
and say miners ignored their calls for more independent safety
audits and greater transparency following another dam collapse in
Brazil, that left 19 dead in 2015.
"We need independent mine safety systems to address tailings
...It is something systematically that needs to be addressed," said
Adam Matthews, director of ethics and engagement at the Church of
England Pensions Board, which has around $3.3 billion under
management, including Vale shares before last month's accident. It
has since sold the shares.
Many large miners, including Freeport-McMoRan Inc., Newmont
Mining Corp. and Rio Tinto, declined to comment about whether they
would support such a body.
Mining companies will need to change their mind-set and be more
open for such a body to work, said Alastair McIntyre, CEO of
Malagash Metals and Mining Advisory, a consulting firm.
"Historically, this has not been the case in an industry who value
keeping data close to the company chest," he said
Some miners questioned whether an international body would have
enough authority. They said the establishment of a common set of
standards, like those used by the Mining Association of Canada,
would be more realistic.
But while this would give companies a standard, Mark Cutifani,
CEO of Anglo American, said, "How do we know you are operating to
that standard?"
Graham Kerr, the CEO of Australian miner South32 Ltd., said he
would push for a common reporting framework "so companies that are
doing well or better can be clearly identified, and shareholders
can ask questions about the ones that aren't."
A wider concern is that as the mining industry increases the
number of audits, there won't be enough auditors to go around.
Anglo American already conducts daily and fortnightly inspections
of its dams, with quarterly external audits performed by
specialized consulting firms, and an annual inspection performed by
a so-called Engineer of Record, an external expert assigned to that
dam, who are themselves also subject to reviews.
"The issue is that if people do go to the standard we use, there
probably wouldn't be enough tailings experts in the world," Mr.
Cutifani said.
--Scott Patterson contributed to this article.
Write to Alistair MacDonald at alistair.macdonald@wsj.com and
Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
February 25, 2019 11:42 ET (16:42 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
BHP (ASX:BHP)
Historical Stock Chart
From Feb 2024 to Mar 2024
BHP (ASX:BHP)
Historical Stock Chart
From Mar 2023 to Mar 2024