Brazil’s Largest Newspaper’s Press For Truth & Full Accounting on Samarco Failure

Brazil’s largest newspaper, Folha De Sao Paolo, has been pressing hard  and with care and diligence to ask the right questions about the Samarco tailings dam failure on November 5th.  Their efforts serve not only the people of Brazil but the global community of leadership in responsible mining.   This post  provides the  full text of an interview between Lindsay Newland Bowker, Managing Director of Bowker  Associates Science & Research In The Public Interest, and Eleanora  Allgayer Canto  de Lucena . This interview was the basis of Ms. Lucena’s published article on December 12, 2015.  We are providing it here because there is no English translation of Ms. Lucenas  excellent article   and we felt it was important to bring forward both her excellent questions and our answers.

Chile, China, Peru and other nations are also allowing upstream tailings dam construction  which deviates  from well established and widely shared views  based on science and proof that this form of contsruction should not be used for any large dam.  In another Funha article also n December 12, there is a revelation that Samarco had been in the process of pre engineering to join the closed Germano Tailings Dam , also an upstream dam but buttressed and the then still exsting Fundao into one 225 million cubic meter mega dam. Folha reports that plan had never been mentioned to or or approved by Brazlian officials.  They report  that  Samarco had concluded that it could not create additional tailings storage capacity at the Fundao  through added height without also joining the two dams.

Any nation may under international law  enact any laws within the boundary of its recognized sovereignty. The repercussions of an event of this scale , however, are of global economic consequence  in financial markets.  The investors who relied on Fitch ratings glowing and seemingly informed July 2015 very positive review of bond offerings associated with  Samarco’s $3.2 billion expansion plan  were holding bonds rated as “junk” by Moody’s a few months later after the catastrophe.  In addition, the  thousands of investors, some of them unknowingly in the holdings of pension portfolios, or IRA’s have also suffered as yet unmeasured losses on their investments in BHP, Vale and Samarco.  A class action law suit in has been initiated and announced on behalf of U.S. investors. who  include  the school teachers, policemen, firemen, transit workers, and  blue collar workers to whom risk is ultimately passed through their pension fund managers.

When a nation such as Brazil, China, Peru , Chileg Canada allows deviations  from best science, best practice , best knowledge in order to facilitate and further  its own competitive advantage in world commodities markets and the continuance of royalties it earns on production it is essentially  transferring the public liability and financial risk risk beyond the  limits of its sovereignty.

In 1998, Samarco the first iron miner in history to meet the ISO 14 001 environmental standards and it has been monitored for compliance with World Bank and International Finance Bank (IFB) standards. Both Vale and BHP are  members  of the Mining Association of Canada ( MAC) who recently announced the recommendations of a year long task force  to strengthen its  member commiments to “zero failure” for TSF’s.  These recommendations and MAC’s policy does not contemplate rescinding Vale’s membership or BHP’s for its many violations of even existing guidelines of its members  operations in  foregin nations. ( Imperial metal owner of Mt Polley is also still  a member in good sanding of MAC)  So clearly there is no effective existing global mechanism that will prevent a transfer of risk consequence  from poorly framed national policy to citizens around the world.

Two nations, France and Norway  have transcended this gap in global checks and balances in financial markets through statutory programs of divestment.   While their national holdings are perhaps too small to deter miners, small and large , from practices that aim at quick  capital  and quick revenue through shortcuts on safety and envionmtal security, the quality of research and the established process benefit all markets all investors, all permitting authorities and other national policies on investment and management of publc funds.

 

 TEXT OF INTERVIEW BOWKER -LUCENA

 

Q What is your hypothesis about what caused the disaster in Brazil? Where did the the company fail? The President of Brazil has said the company was irresponsible. Do you agree?

 

Apriori we can say that all catastrophic dam failures are failed public private partnerships. The weakness in law and oversight that allows a the formation of a catastrophe sometimes over many years,is less frequently well examined or even acknowledged. But always in a failure of this magnitude government and miner are co –responsible. I read somewhere that funding had been crowd soured for a completely independent review.  It was a tiny amount and not sufficient to the task but that is what is needed to get to the whole truth of cause and I hope support will pour in from around the world to enable a truly expert , truly independent  multi disciplinary review.   The answers to your questions matter globally, not just in Brazil.

I know who I would hire. My expert panel would include experts on finance and economics as well as global experts on toxic torts and mining law. The Committees mandate would go well beyond the usual “proximate cause” of failure that is the customarily narrow scope of dam committee reviews.  Relying only on government contracted or miner issued data will never get to the whole truth.

 

It takes a very long time for a detailed and evidentiary analysis of “cause” to become “official”. Considering the scale of this disaster, the amount of “official” information on basic details is appalling and inexcusable. It falls to the permitting agencies and government to have this data in the first place and make it immediately public.

 

As a risk manager with more than a decades experience in risk management for high risk heavy construction  who has recently co -authored a major research paper on the risks , economics, and pubic liability of dam failures 1910-2010  I am  alarmed that there has been no official disclosure of any of the key and basic questions I have, that any risk manager  would  have about the failed dam:  its construction type, its total capacity, its height at failure vs its design height, the rate of raise of the dam height and the rate of deposition of waste materials as compared with design rates of deposition..

 

As with many large modern tailings facilities in Brazil, Peru, Chile and China the failed fairly new (c 2009) Fundao tailings dam may have been a super large un buttressed “upstream” construction. Upstream dams are the least stable and especially subject to loss and failure by non- seismic triggers related to rate of deposition of tailings,, height and the rate, of dam raise, active construction along the crest.  Certainly there is indisputable evidence that Samarco was using extremely high very steep upstream dams.  What isn’t clear is how that applies to the fairly new Fundao.

 

Bowker Associates is focused on that because of this “Culture of deviation” from known best practice which Samarco and some its consultants associated with the development and design of their mines within the Alegria complex describe as a “culture of innovation”. In official company statements and records it is clear that Samaco went ahead with its $3.2 billion expansion without adequate land surface area for the tailings and waste rock the dramatic expansion in production would generate. That’s almost universally the case.  It is also well documented that the reason Brazil, Peru, Chile are using the supersized  upstream dams is they are out of land surface area to manage the exponential increase in waste volume that attends each dramatic increase in production.

 

So, it is too early to have a pet theory but on the basis of an exhaustive review of all publicly available documents, I am looking most closely at the possibility that this was an upstream dam defying all established best knowledge and best practice in the name of “innvovation”

 

There is a fuller explanation and link to all doumentation we have found that may have a bearing in the catastrophe at my wordpress post.

Q  How do you compare this accident in Brazil with others around the world? In Your study of tailings dams and their accidents, do you find commonalities?

 

What is apparent here and what we have seen in our study of all tailings dam failures in recorded history at modern mines is that Samarco pushed ahead with a huge expansion in production without simultaneously developing and concurrently implementing an independently vetted plan for handling the wastes. In our research for Bowker Chambers 2015 we saw this pattern associated with smaller mines with lower quality ores by smaller less well capitalized miners.

 

Mt Polley is the prototype for that pattern.

 

The other commonality between the Samarco disaster and virtually all tailings dam failures in history is that it deviated from best knowledge, best practice and accepted standards and was completely predictable and avoidable.

Mt Polley, again is a very recent gravely consequential tailings dam failure where a pattern of deviation left unchecked for years finally ended in complete failure.

BHP, via a subsidiary , was responsible   for another man made modern tailings disaster at OK Tedi in PNG but the top 10 miners in general are better positioned to avoid the economic crunch junior and mid sized miners face. Their principal producing mines are larger and at higher grade deposits and the big miners have better revenue streams and better access to capital.

It is a major red flag to see this at a “top 10 miner” major production mine.

Very sadly, we may see more of this. I read recently that Codelco is investing $4.1billion to expand throuhput that will not even maintain their established level final metals output. This was also necessitated by declining ore grades and declining global prices.

These are the economics and realities that dramatically increase the potential for deviation from known best practice in tailings management and we predict will result in more and more severe catastrophic failures. of these super sized dams at these huge mines the “top 10 “control .

These failures will bring the consequence of failures to an entirely new level where as we see in the completely avoidable tragedy repair reclamation and remediation aren’t even feasible.

While these super dams have been in use (mostly not upstream construction) for more than a decade, Samarco was the first failure of a mega sized dam. Mt Polley’s dam was about half the size of the Fundao in total capacity and in dam height. The official record of ‘very serious” failures was almost entirely at smaller mines owned and operated by smaller and less well capitalized miners.

To me having just spent two years deeply and almost exclusively immersed in the ”official record” on tailings dam failures this is a very bleak landmark .

Even the big guys with much higher grade deposits are being defeated by falling ore grades and falling prices.

Q Are These Accidents Related to the End of Periods of High Prices?

Your study found a trend toward failures of increasing coseuqence in the modern times.Why Is That So?

 

Actually, the 100 year history of falling prices and falling grades for all metals over the past 100 years is about the costs to produce. On average over the 100 years until 2000, technology has lowered the average costs to produce sufficiently to more than off set falling prices.

 

The evolving modern trend to more serious failures had been mostly associated with smaller mines with  lower than average grrdes of ore  and  higher than average costs to produce ( the spot prices is the same for everyone on any given day )

 

What is happening now is that costs to produce are no longer offsetting lower grades even for the big guys as we see with Codelco. So it is really more a question of reaching the limits of what present technology has to offer to keep that spread between production costs and price working in ever and ever lower grades.

 

The equation of viability has broken down. It is beyond technology known and proven at this time to “fix”.

 

Q What is the best technology to handle iron mine tailings?

What companies use the best technologies and what are their costs?

 

 

Across all metals including iron, it is my advocacy that no new mine, no mine reopening, mine or mine expansion should be approved unless there is authoritatively vetted economic viability inclusive of all costs to properly manage wastes and conditioned upon the implementation of those best practices. That essentially was also Steven Vicks  commented in his capacity of Dam Review Committee member  for the Mt Polley failure in August 2014.

 

In other words, it is not a question of “best technology” it is more a question of whether there is any known proven technology for properly preventing harmful releases from all wastes of mining and from mining operations.

 

Q Should government take a stronger role in regulation and supervision of mining activities? Are there examples of better models of law and regulation that Brazil could look to in evaluating its own present policy?

                                                           

Can Mining be a “sustainable” activity?

 

What that does this disaster reveals about the mining model used in Brazil? How ishould Bazil’s Law and Regulation be modified?

 

Mt Polley had already moved the mining industry away from its long term insistence on  law counting on  responsible self regulation to a call for sound law and regulation as an essential enforcer of responsble self regulation.  This just puts that in bold, all caps with lots of exclamation points.

 

The problem is no one has actually yet framed what that would like.

 

The closes we have seen and studied is West Australia who have regs based on a very well informed search of best knowledge and best practice but even theirs is not complete. It is an excellent place to start and especially relevant for Brazil who also have an iron based metal sector. But it too needs lots of work.  I cannot say that it would have prevented this disaster that has tragically befallen Brazil.

No single permtting jurisdiction could ever have the level of competence and experience to address and evaluate all the public liabilities inherent in any mineralized deposit. So Bowker Associates, joining  many other longer established voices for responsible mining, and responsible well informed public policy , is calling for the use of expert panels life of mine including properly vetted  expertise in mine economics and mine finance and  clear standards for what “expert” means.

 

These panels need to be available life of mine with long continuity in membership to address the emergence of public liabilities, before they arise after a mine Is permitted: a significant event, a planned stand by, a planned reopening, a planned expansion, any deviation from design height, slope, rate of deposition or rate of raise for an approved tailings facility and a regular schedule monitoring of  review of changes in cash flow and balance sheets, a regular schedule of  audits and on site inspections.

 

Bowker Associates work now is on trying to develop vetted meaningful “triggers” that would prompt engagement and review by the expert panel.

The expert panel recommendations should be binding on both the government agency and the miner. All expenses should be paid by the miner but with no direct control or supervision by either miner or permitting agency. (ie actually independent but with a clear  and comprehensive mandate)

Such a panel may have prevented the Samarco disaster but it may also have disallowed approval of the expansion without a concurrent vetted plan for management of the additional wastes it would create.

The entire axis of permitting needs to be vastly re oriented . Applications shouldn’t even be accepted without independent verified proof of economics, technological and environmental viability.

 

 

 

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About lindsaynewlandbowker

Bowker Associates, Science & Research In The Public Interest, is an independent non profit providing self initiated pro bono analysis on key issues with a potential for massive adverse environmental impact . Bowker Associates has been an internationally recognized and cited voice in analysis of the Samarco failure, its consequence, and the possibilties for recovery. In 2015 Bowker Associates collaborated with globally respected geophysicist David M. Chambers to recompile global authoritative accounts of significant TSF failures in recorded history and to analyze these data in the context of gloal mining economics 1910-2010 ( Risk, Economics and Public Liability of TSF Failures, Bowker/Chambers July 2015) In 2014 Bowker Associates commissioned globally respected geophysicist and hydrogeologist Dr. David Chambers to undertake two technical works: (1) development of technical go no go criteria for vetting mine applications tp://lindsaynewlandbowker.wordpress.com/2014/01/05/a-new-statutory-regulatory-framework-for-responble-sulfide-mining-should-this-mine-be-built/ and (2) a case study of Maine's Bald Mountain, an un mined low grade high risk VMS deposit demonstrating the efficacy and accuracy of two risk assessment tools in vetting mine proposals https://lindsaynewlandbowker.wordpress.com/2014/02/28/mountain-x-would-you-issue-a-permit-to-this-mine/ In Maine, Bowker Associates has deeply engaged and been a public voice in the Searsport DCP LPG Tank, The Cianbro proposal for a Private East West Toll Road, JD Irvings rolling pipeline of Bakken crude to its plant in St. John and review of Phase II plans at The Callahan Superfund site in Brooksville, Maine, and Maine's revisitation of mining in statute and regulation... Our only “client”: is always “the pubic interest”. Our model is to focus on only one or two issues at a time so that we have a substantive command of the relevant field as our foundation for ongoing engagement. Our core work is in envirommental risk management, science and technology as well as bringing any available “best practices” models to the fore. The legal and regulatory history/best models are also a major thrust of our work in building and evaluating public policy. Director/Principal Lindsay Newland Bowker, CPCU, ARM is a recognized expert in Environmental Risk Management., Heavy Construction Risk Management and Marine and Transit Risks and has more than 3 decades of engagement in buiding public policy. Appointed by Governor Mario Cuomo to New York State Banking Board (served 1986-1996); President New York Chapter Chartered Property and Casualty Insurers; Environmental Committee, Risk and Insurance Management Society; Director, Convenor/Co-Chair Bermuda Market Briefing "From Captive to Cats" Hamilton Bermuda. Published Articles of Significance The Risk Economics and Public Liability of Tailings Facility Failures, co-authored with David M. Chambers, July 2015 Beyond. Polarization: Superfund Reform in Perspective, Risk & Insurance Managing Risk For Loss Prevention & Cost Control (Jan. 24, 1997). Lead Hazards and Abatement Technologies in Construction: A Risk Management Approach CPCU Journal 1997 Employee Leasing: Liability in Limbo Risk Management June 1 1997 Environmental Audit Privilege and the Public interest Risk & Insurance Managing Risk For Loss Prevention & Cost Control, April 1997 Asbestos:Holes In Abatement Policies Need To Be Plugged, Lloyd’s Environmental Risk International, May 1993 Editor Published Letters Evironmental Risk Management Beware of Facile Policies Like Fetal Protection Business Insurance 1995(?) High Court Review May Increase Sale of Bank Annuities Business Insurances August 8, 1995 Professional Profiles Protecting the Big Apple’s Core Managing Risk For Loss Prevention & Control December 1996 Major Career Highlights First rigorous analysis showing Relationship Between declining ore grades and TSF Failures of increasing consequence ( July 2015) FIrst Documentation that Gentrification Has Same Impacts as Unassisted Displacement from Urban Renewal Sites Direted Court Ordered EIS of FHA Mortgage Scandal Created Nation's First Homeownership Program for Low Income People (SHIP) Created Earliest Geographic Information Systems Using Defense Technology Developed By IBM Designed and Conducted Parallel Census Count to Show Systematic undercount in minority neighborhoods Documented Bias in ISO Territory Rating Plans for Private Passenger Auto Insurance Using ISO's own Rating Techniques Demonstrated Inherent Bias in Mortgage Policies of Banks With Inner City Branches Demonstrated that NY Telephones Plan for Area Code Split To accommodate anticipated cell phone demand was not efficient and would exhaust in 5 years ( which it did) Undertook First Systematic Evaluation of Child Protective Services Caseload Using Multi Variate Analyic Techniques Developed Child Protective Caseload Management and Tracking System (CANTS) and directed implementation in 4 client states including Illinois, Florida and New York Created and Ran Office of Risk Management for NYC DEP the Nations largest Water & Sewer Authority . Designed, Created and Administered Nation's First Owner Controlled Insurance Program (OCIP)for High Risk Tunneling Education Masters NYU Graduate School of Public Administration BSC New School For Social Research Maine Public Schools Deering High School
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