Brazilian iron ore mines move toward dry stacking as regulations tighten

The regulations that govern the Brazilian mining industry are tightening after the recent major accident at one of miner Vale’s units, and iron ore producers are slowly adjusting their operations in the country to move toward dry stacking of waste material.

This is considered to be safer than the use of traditional tailings dams, such as the one operated by Vale that collapsed on January 25.

CSN Mineração, Mineração Usiminas, Vallourec Mineração, ArcelorMittal Mineração and Gerdau – all mining companies affiliated with steelmakers – have announced either that they already operate with dry stacking, or that they plan to switch to this method soon.

All the mines involved in this readjustment are in the south-eastern Brazilian state of Minas Gerais, where there was an earlier similar accident in 2015 at a mine operated by Samarco. That company was a pellet producer jointly owned by Vale and BHP, but it has since been closed by the authorities.

After the rupture of a dam on January 25 this year at Vale’s Córrego do Feijão mine, located in Minas Gerais, authorities began inspections on a number of tailings structures in Brazil. This ultimately resulted in the country imposing a ban on dams like the one that failed, the “upstream” variety.

But as well as upstream dams, there are also downstream and centerline dams in Brazil. Dry stacking of tailings, however, is less common.

The latest accident made Vale decide to decommission all its upstream dams over the next three years, even though this would have the consequence of eliminating 40 million tonnes per year out of iron ore output.

The miner’s production suffered a separate further decrease of 30 million tpy when the environmental agency in Minas Gerais, SEMAD, canceled a permit for the tailings dam at its Brucutu mine.

Iron ore prices shot upward amid the disruption to seaborne supplies. Fastmarkets’ MB 62% Fe Iron Ore Index reached $90.58 per tonne cfr on February 11, up from $74.69 per tonne on the day of the accident, January 25. The index has since corrected and was at $87.05 per tonne on March 6.

Steel tube producer Vallourec was the only company in the industry whose mining division had already completely switched from the use of a tailings dam to dry stacking. Vallourec Mineração produces 6 million tpy of iron ore and uses a press filter to dry its waste material.

Brazil’s second-largest iron ore producer, CSN Mineração, already had plans for the handling of dry waste material. The company invested 250 million Reais ($66 million) in 2017 and 2018 in filtering and magnetic separation operations, and reported that it had around 40% of its tailings under dry stacking by the beginning of 2019.

“By the end of 2019, CSN Mineração will be processing 100% of tailings under dry stacking, erasing the need for dams,” the steelmaker said on Tuesday February 5. Once that is achieved, its Casa de Pedra dam will be decommissioned.

The mining unit of Companhia Siderúrgica Nacional (CSN) has seven dams, of which six are inactive. The only one currently in operation is a downstream dam. Five dams are in the process of being decommissioned, and similar work on the sixth will start this month.

CSN holds 87.52% of the mining company and a consortium of Asian steelmakers owns the remaining 12.48%. The group sold 29.59 million tonnes of iron ore to third parties in 2018, and used 5.19 million tonnes in its own steel mill.

Usiminas will also adopt dry stacking of iron ore tailings. Its mining division, in which Sumitomo has a 30% stake, plans to spend 140 million Reais to begin using the waste disposal method in 2020, the company said on February 15.

Iron ore sales volumes by Mineração Usiminas totaled 759,000 tonnes in the domestic market during 2018; 3.27 million tonnes in exports; and 2.44 million tonnes used in the output of its own steel products.

Its facilities comprise three tailings dams – two upstream ones, both already inactive, and a downstream one. Use of the remaining waste deposit structure will be gradually reduced in favor of dry stacking.

Usiminas has not yet approved its budget for mining in 2019, but Carlos Rezzonico, the new director in charge of the unit, believes that output will be a little more than 8 million tonnes this year.

Another investment will be made by Gerdau, of around 300 million Reais. By 2021, the company wants to completely deactivate one of the two tailings dams still used by its mining division, and to use dry stacking for all of its production by then.

Dry processing is already used for half of the current output, chief executive officer Gustavo Werneck said on February 21.

The company sold 2.92 million tonnes of iron ore to third parties in 2019 and used 4.68 million tonnes for its own steel operations.

The world’s largest steelmaker, ArcelorMittal, also wants to stop using dams for its mining units in Brazil. Almost half of its production is already functioning without wet waste material, a press representative for the company told Fastmarkets on February 19.

ArcelorMittal Mineração had to evacuate a city near its Serra Azul mine in Minas Gerais on February 8 following a safety alert at the tailings dam, which has been inactivate since 2012. The operation will move toward the use of dry stacking from now on.

The group produces some 3.6 million tpy of iron ore at the Serra Azul mine, and 3.5 million tpy at the Andrade mine. Serra Azul’s output comprises granulated iron ore and concentrates, while Andrade’s products are mostly sinter feed.

Felipe Peroni in São Paulo contributed to this report.