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Big Mining Companies Disclose Questionable Stability of Dams

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06/07/2019 | 05:17pm EDT

By Alistair MacDonald

Some of the world's largest mining companies said more than a dozen dams under their authority have at times failed stability assessments by outside experts, some of them in locations where a dam break would pose a risk to lives.

The disclosures, in detailed inventories released Friday, follow the deadly collapse of a mine-waste dam in Brazil, owned by Brazilian company Vale SA, earlier this year, which killed 270 people. Since then, regulators and investors have demanded more transparency about the safety of dams designed to hold back the tailings, or waste, from mining operations.

The Church of England and several Swedish pension funds, which invest billions of dollars in global sectors including mining, had encouraged big mining concerns to disclose details about their dams by Friday. In response, Anglo American PLC, Barrick Gold Corp., Newmont Goldcorp Corp., BHP Group Ltd. and Glencore PLC each issued documents tallying up details about their dams, including their location, size and type of design.

Among a set of questions the companies were asked to answer was whether each facility, at any point in its history, had ever failed to be confirmed or certified as stable by an independent engineer, or experienced notable concerns about its stability. Such dams are typically inspected regularly to assess their stability.

Four of Toronto-based Barrick's dams had come under question, the company said. For instance, a recent independent review of a dam in Ontario showed "an inadequate factor of safety against liquefaction," according to footnotes on Barrick's disclosure. Liquefaction, a process whereby seemingly solid materials suddenly behave like a liquid, occurred during the Brazil disaster. Barrick said in its notes that it plans to add a buttress to further stabilize the dam.

That dam has a current so-called hazard classification of high, which means that any collapse could result in up to 10 lives being lost and high economic losses to the area.

This isn't a safety rating of the dam itself but a measure of the potential damage to property and life in the event a dam failure. Another Barrick dam whose stability was questioned had a hazard classification of very high, meaning up to 100 lives could be lost and very high economic losses incurred if it were to fail.

In a letter accompanying Barrick's disclosure, Chief Executive Mark Bristow said: "Where issues are encountered...the company will develop and conduct the necessary programs to address knowledge gaps and, if required, improve estimated stability."

Switzerland's Glencore also disclosed several dams that outside engineers had questioned. Two of those dams, both in Peru, had a hazard classification of extreme, indicating that the collapse of either could cost more than 100 lives and cause significant damage to local infrastructure.

Glencore said in footnotes to its disclosure that one of those two dams may suffer from deformations under extreme earthquakes and that a detailed assessment was under way. The other didn't meet guidelines for extreme flooding and remedial work was in progress, it said.

In a statement with its release, Glencore said it uses outside experts to independently audit its dams and conducts its own regular dam safety inspections. A spokesman didn't respond to requests for comment.

London-based Anglo American said 12 of its dams fit that category. According to footnotes, that number was based on past reviews or incidents, sometimes occurring when Anglo wasn't operating the mine. The company said in its disclosure that all of the issues had been remedied. According to the document, for instance, "stability concerns were identified" at a diamond mine in South Africa, run by De Beers, a unit of Anglo American. A buttress was added to address the concern, it said, without disclosing when.

"We have confidence in the integrity of our facilities around the world, which are subject to the highest global safety and stewardship standards, " a spokesman for Anglo American said in an email.

Five of BHP's dams are classed as extreme. A BHP spokesman said the classification is based on a hypothetical worst-case scenario, not on a probability of a collapse. A 2016 review concluded "no immediate concerns regarding dam integrity across the portfolio," he said in an email.

Australian mining giant BHP was the only company of those whose disclosures were reviewed by The Wall Street Journal that didn't disclose any dams as having come under question from outside experts. Newmont listed five of its dams as uncertain, adding all of them were inactive.

Prompted by the investors' request, the mining companies also disclosed how many of their dams were so-called upstream dams, a type that has been involved in some of the worst recent accidents, including the January dam in Brazil.

Upstream dams are considered the cheapest type to build, but are also seen by experts as the most prone to failure. They are built from the same mining waste they are designed to hold back. Unlike other dam types, upstream structures mainly depend on the actual waste, or tailings, for their stability, whereas in other types the waste is contained behind an engineered structure.

Out of the 91 tailings dams managed by Anglo American, 15 are upstream, the company said. Barrick disclosed that 28 of its dams are either upstream or a mixture of upstream and another design. Of the 67 tailings dams operated by BHP, 29 are upstream. Glencore disclosed more than 80 upstream dams.

Upstream dams are banned in Chile, Peru and, since January, Brazil. Provinces in Canada and the state of Alaska discourage their use. Some such dams are located around the world, including in the U.S.

Companies have said such dams can be safe, but their safety depends on widely varying conditions around the world, such as climate and seismic activity. Wet weather and seismic activity can increase risks to stability.

Other information in the companies' disclosures includes the size of the dams and whether they are still active.

Following January's disaster, mining companies rushed to recheck their dams, while industry bodies and regulators looked afresh at how the sector manages risk from these structures. The International Council on Mining and Metals, an industry group that includes 26 of the world's largest metals-and-mining companies, set up a review to produce a global standard for managing waste dams. It is expected to include a system for independent reviews of the structures.

The Association of State Dam Safety Officials, a trade body that seeks to improve U.S. dam safety, is considering recommending the addition of specific information about tailings, or mine waste, facilities for the first time as it helps update the U.S. Federal Emergency Management Agency's guidance on dam safety regulation.

Stocks mentioned in the article
ChangeLast1st jan.
ANGLO AMERICAN -0.43% 2196 Delayed Quote.26.07%
ANGLO AMERICAN PLC 0.12% 380.85 End-of-day quote.21.29%
ANGLO AMERICAN PLC End-of-day quote.
BARRICK GOLD CORP 2.95% 21.71 Delayed Quote.14.11%
BHP GROUP LTD 1.41% 41.74 End-of-day quote.20.25%
BHP GROUP PLC 0.15% 2033.5 Delayed Quote.22.91%
EURO / BRAZILIAN REAL (EUR/BRL) 0.04% 4.2258 Delayed Quote.-4.72%
GLENCORE -0.84% 270.6 Delayed Quote.-6.40%
GLENCORE PLC 0.75% 47.26 End-of-day quote.-9.34%
GOLD 1.15% 1421.648 Delayed Quote.10.39%
LME COPPER CASH -0.64% 5959 End-of-day quote.2.06%
NEWMONT MINING CORPORATION 1.21% 39.18 Delayed Quote.13.04%
PLATINUM 0.91% 848.09 Delayed Quote.6.18%
SILVER 2.15% 15.883 Delayed Quote.-0.43%
VALE 0.68% 53.05 End-of-day quote.4.02%
WTI -0.69% 57.17 Delayed Quote.32.38%
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