Vale Faces More Spill Costs as Brazil Lawmakers Seek Dam Ban – by R.T. Watson (Bloomberg News – July 8, 2016)

As miners globally look to squeeze more savings amid low prices, the biggest iron-ore miner Vale SA will face a sharp increase in costs if a group of legislators in Brazil’s mining heartland get their way.

Spurred by Brazil’s worst-ever environmental disaster, the proposal would toughen supervision and maintenance at existing waste storage facilities in Minas Gerais state and prohibit construction of the cheapest type of tailings dams. The draft bill cleared one commission on Thursday on its way to the state assembly, according to the office of state legislator Agostinho Patrus.

The current version would ban so-called upstream tailings dams, the method used at the Vale-BHP Billiton Ltd. joint venture Samarco, where a collapse in November killed 19 people and contaminated waterways in both Minas Gerais and Espirito Santo state.

“We have to balance economic activity with social risk,” said Patrus, one of the bill’s sponsors. He expects the ban on new upstream dams to survive alterations the proposal might incur on its way to a final vote. “We can’t be thinking about using a method that is 5 to 10 percent cheaper for the company, yet puts countless communities at risk.”

Patrus presides over a commission created to assess the state’s mining risks in the wake of the Samarco accident. That commission voted to send the proposal to a legislative committee that will decide if it should be put to a vote in the state assembly.

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