Bhp Billiton (ASX:BHP)
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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 email@example.com and Rhiannon Hoyle at firstname.lastname@example.org
(END) Dow Jones Newswires
February 25, 2019 11:42 ET (16:42 GMT)
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