SANTIAGO – The deadly collapse of a Vale tailings dam in Brazil is serving as a wake-up call for an industry that regularly cuts costs by storing mining waste in the cheapest possible way.

The slurry of ground rock and effluents left over after companies extract marketable minerals from the ground has been stored for decades in massive ponds held back by embankments or dams. Their safety, though, depends very much on the design of the ponds, and on the cost of building them.

The Vale dam that collapsed in Brazil last week, and a previous dam that failed there three years earlier, were both built on the go using the “upstream” method, typically the cheapest by far. Under that technique, the wall containing the pond is primarily constructed of tailings, and it’s designed to grow as more effluents are pumped in. A costlier method pre-builds the walls and insulates them.

“There are a lot of calculations people can use for the cost of a failure,” said Dirk van Zyl, a professor of mining engineering at the University of British Columbia. “You not only have the real cash cost to the company, but you also open the whole discussion of what a human life is worth?”

This week, the mining sector is coming face-to-face with the math. On top of the 99 dead and the 259 missing, Vale, the world’s largest iron-ore producer, could face damages as high as $7-billion for the current disaster, according to Bloomberg Intelligence. That’s more than twice the $3.3-billion liability at the Samarco joint venture following the failure of another upstream dam in Brazil in 2015. 

Although it’s not yet clear what caused last week’s dam failure, Vale said on Tuesday it will decommission 10 "upstream" dams in the next three years. In the case of Samarco, Brazil’s worst environmental disaster, the miner allegedly ignored warnings of potential risk and altered the dam’s structure improperly as it sought to keep production levels high.

At least one legislator, Joao Vitor Xavier, in Brazil’s mineral-rich Minas Gerais state, has previously tried to pass legislation banning upstream dams. In July, his measure was defeated without mining companies bothering to join the debate, he said.

Some countries have already moved to abandon the upstream pond method. For instance, in Chile, where mining is a pillar of the economy, no large tailings dams have ever collapsed. In 1970, upstream ponds were banned by that country, which has suffered some of the strongest earthquakes ever registered.

SUBMISSIONS REQUIRED

Companies in Chile are required to submit their designs for new tailings ponds to authorities for approval. Once built, the installations are closely monitored with companies mandated to submit data regularly to government agencies.

Antofagasta monitors its largest tailings deposits using 76 instruments installed on the wall that constantly send information on stability and safety metrics, the company said in an emailed response to questions.

Meanwhile, Brazil’s system of monitoring how mining waste is safely stored involves the miners themselves paying independent consultants to inspect their dams. The companies then present these reports to local officials.

The fluidity of the waste is also key, experts have said. A third option to ensure that the waste is safely stored is by drying the tailings out and stacking them, instead of directly storing the slurry of materials. Dry-stack tailings are more stable and allow miners to recycle some of the water, which can be used in mining processes.

At the same time, that method can be as much as ten times more expensive, according to Van Zyl. He declined to speculate on the cause of the Vale disaster, which is under investigation.

Governance is key: 2016 recommendations by The International Council on Mining and Metals, as well as the Mount Polley panel, call for independent monitoring of tailings.

The panel was set up after a design fault in the foundation of a dam at Imperial Metals’ Mount Polley mine in central British Columbia led to a breach in the wall. The accident released billions of gallons of water into local rivers and lakes and sparked debate across Canada about safety and environmental rules governing resource projects.