The mine dam break in Brazil has been under constant concern around the world since the weekend. According to the latest news, the Brazilian fire department reported on the evening of the 27th local time, Minas Gerais state in the southeast of the dam failure accident has killed 58 people, 19 of whom have been confirmed. So far, 192 people have been rescued, but 305 are still missing. The Brazilian Institute of Environment and Renewable Resources, which is responsible for environmental law enforcement, has decided to fine Vale a fine of 250 million reais (US $1). The Minas Gerais state justice department said it would ask for a freeze of 6 billion reais in the company's funds for accident compensation and post-disaster reconstruction.

According to port data tracked by SMM, as of last week, Brazilian powdered ore stocks (including card powder, BRBF, SFLA, SSFG, SFHT, SFHG, etc.) in Qingdao, Rizhao, Jingtang, Caofeidian, Tianjin and Lianyungang 6 ports totaled about 17.7 million tons. Brazil's fine ore stocks fell by nearly 4 million tons, or about 18 per cent, compared with the same period in 2018. Short-term supply is tight, and later attention should be paid to the impact of event handling on production.

1. What role does Vale play in the mining industry?

1. The world's largest iron ore producer and exporter, the largest nickel supplier

Vale do Rio Doce of Brazil is the world's largest iron ore producer and exporter, as well as the world's largest supplier of iron ore (ore) and the largest supplier of nickel, and one of the main negotiators in global iron ore price negotiations. It is also the largest mining company in the American continent, known as Brazil's "crown jewel" and "Amazon engine".

Vale iron ore production accounts for 80 per cent of Brazil's total output. Its iron ore resources are concentrated in the "Tiesijiao" region and the state of Bara in northern Brazil. It has Tingbo Pepe iron ore, Cappanima iron ore, Caracas iron ore and so on. It retains about 4 billion tons of iron ore reserves, and its main minerals can be mined for nearly 400 years.

In July 2018, the Fortune 500 list was released, and Vale do Rio Doce of Brazil ranked 325th among the Fortune 500 in 2018. In December 2018, the World Brand Laboratory released the "Top 2018 World Brands" list, with Vale ranked 393rd.

2. China is Vale's largest market, 200 million tons of iron ore sold to China every year.

In the 74 years of development history of Vale, more than 40 years have the shadow of China. Vale's freighters first arrived in China in 1973 and set up an office in Shanghai in 1994. Now China has become Vale's largest market, producing 340 million tons of iron ore in 2017, about 200m tons of which were sold to China.

Second, what are the similarities and differences between the accident and three years ago: the casualty rate is high, but the impact of current production is small.

1. The two mine accidents occurred in two cities in the same state

1) Dam break accident of Samak tailings in 2015

In November 2015, a tailings reservoir near Mariana, Minas Gerais, broke a dam, leaking 60 million cubic meters of waste and killing 19 people. The tailings reservoir is part of a joint venture between Vale and BHP Billiton of Australia.

The dam break in 2015 led to the temporary closure of Samarco. Samarco has an annual production capacity of 30 million tons of pellets, and the accident of the year directly affected the production of 11 million tons.

2) the No. 1 tailing dam in the Feij ã o mining area is 60 miles from the Samak tailings

It is understood that the breakwater broke at the dam of the Brazilian company Vale do Rio Doce in the local C ó rrego do Feij ã o iron ore waste mine. The iron ore is a medium-sized open-pit mine that is part of Vale's Palaupeba (paraopeba) complex.

The iron ore, located near the city of Belo Horizonte in the Brazilian state of Minas Gerais, was shut down in 2014 because its reserves had been exhausted. Vale then carried out new exploration activities in the area and identified additional reserves, allowing the iron ore to resume operation in 2017. According to the data, the iron ore produced 7.8 million tons in 2017, accounting for about 30 per cent of the output of the Palaupeba (paraopeba) complex, where it is located.

According to relevant data, the output of the Palaupeba (paraopeba) comprehensive mining area in 2017 is about 26.3 million tons, accounting for about 7 per cent of the total annual output of Vale2017. As of September 2018, Vale's iron ore production in the complex area totaled about 20.6 million tons, an increase of 670000 tons from 19.93 million tons in the first three quarters of 2017 compared with the same period last year.

The annual output of the mining area is 7.8 million tons in 2017, accounting for 2.13% of the total output of Vale in that year. However, we need to note that mining accidents have occurred continuously in the areas where the accidents occurred in recent years, and all of them have caused very serious negative effects. After this accident, we do not rule out that the Brazilian government will further strengthen the safety regulation of the VALE mining areas. As a result, it has a long-term impact on the iron ore supply of VALE.

2. The casualties in the accident are more serious, but the environmental damage is likely to be smaller.

Judging from the current casualty rate and environmental impact, the accident looks more serious than in 2015, depending on the extent of the impact on the main mining area.

A United Nations report has found that the iron ore waste that broke the dam three years ago contains high concentrations of toxic heavy metals. Waste contaminated rivers, leaving 250000 people without drinking water, killing thousands of fish, and an estimated 60 million cubic meters of contaminated water eventually flowed into the Atlantic Ocean.

The tailing dam is about to be scrapped and contains 1/5 of the waste that broke the dam three years ago, said Vale's chief executive, Mr Schwarzman. According to him, this time more people were killed or injured than three years ago, and the environmental damage is likely to be small.

III. Vale another dam warning

According to SMM Steel, Vale issued an alarm at the C ó rregodoFeij ã o mining area in Brumadinho (MG) around 5:30 Sunday morning after monitoring equipment at Dam 6 (Dam 6) detected a rise in the water level. The dam is part of the Brumadinho complex. The authorities have been informed that preventive measures are already being deployed and that communities in the area are being transferred to areas previously identified by the emergency plan. Vale will continue to monitor the situation with the Civil Defence Department. The company will continue to provide information as soon as it is confirmed.

Vale said it had suspended dividends, share buybacks and executive bonuses because of the Brumadi dam break; it had set up an independent commission to investigate the dam break and oversee follow-up relief work.

Note: the accident occurred at Dam No. 1 last weekend.

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