Anglo American secures future of Minas Rio iron mine
Brazilian authorities grant miner a key tailings dump licence, ensuring uninterrupted production
Anglo American secured an important licence from Brazilian authorities for the use of a newly constructed tailings dam at its Minas Rio iron ore mine.
Analysts had pointed out that future production at Minas Rio would be severely curtailed if Anglo were unable to raise the level of the tailings dam. Anglo said on Monday the Brazilian authorities had granted it the licence to operate the raised dam.
After a tailings dam owned by Vale collapsed in January 2019, inundating the nearby town of Brumadinho with millions of tons of mud and killing at least 155 people, Brazilian authorities have become stricter in granting licences for these facilities.
Tailings store a watery sludge that comes out of processing plants that extract minerals. The waste mud is stacked in tailings, often containing tens of millions of tonnes of finely ground waste. Without them, no mining company can operate. These facilities have become the most spoken about aspect of mining in 2019, with all companies assessing how secure and stable they are to avoid a repetition of the Vale disaster. All listed mining companies have endeavoured to reassure investors at presentations about the safety of their tailings facilities.
Anglo completed the work to raise the Minas Rio tailing dump in August 2019 and CEO Mark Cutifani has used every public platform to explain the close relationship between Brazilian authorities and mine officials to ensure the work was of the highest standard and that securing the licence should not be problematic.
The licence unlocks the potential of the mine, said Seamus French, CEO of Anglo’s bulk commodities division. “Minas-Rio has a long asset life of 48 years and produces a high grade, premium quality product for our customers, supporting lower emissions in the steel industry,” he said.
For the full year, Minas Rio was forecast to produce 23-million tons of iron ore, which is sent to the coast in slurry form down a 523km long pipe to a port, where it is dewatered and placed on ships. Anglo expects to deliver the ore on a ship at a total cost of $24 a ton.
The benchmark 62% iron content ore delivered to China is fetching around $90/ton. Minas-Rio has a higher iron content and fetches a premium over that price. It is one of the most closely watched assets in Anglo because of the more than $13bn (R185bn) it cost to buy and build, with numerous cost overruns and production delays that strained the company's balance sheet.
Safest dam design
There are three basic design methods for tailings dams — upstream, downstream and centreline, which experts say is a compromise between the first two methods. The upstream type of dam is seen as problematic, particularly in areas of seismic activity or where there is a risk of the dam being flooded. The wall of the dam is raised on dried tailings stored behind the wall. It needs highly disciplined management of how differently sized fractions of tailings are deposited on the dam, with careful monitoring of water levels close to the dam wall to avoid failures.
The Tailings.Info website notes that among the more than 3,500 tailings dams around the world, half are of the upstream design variety. The website draws on a PhD thesis on tailings submitted to the University of Leeds by Jon Engels in 2006. “The upstream method is the lowest initial costs and most popular design for a raised tailings embankment in low risk seismic areas,” the website says, noting that these dams are the most prone to failure.
Anglo has built the Minas Rio dam using the downstream method, which is regarded as safer and can hold more water than the upstream design. The downstream design entails the wall being raised on the side away from the tailings. “This is a conservative and high-quality design for a tailings dam, being designed and built as a water-retaining type of dam,” Anglo said.
The centreline method of tailings dam design is not widely used, Tailings.info says.