• Prosecutor says state supervision is lacking at Brazil mines
  • Samarco says dams were deemed to be safe in July inspection

If past tragedies are any indication, mining companies in Brazil can expect a tightening of regulation and oversight following the bursting of dams at a mine owned by BHP Billiton Ltd. and Vale SA.

That’s the view of Danilo Miranda, a lawyer at Marcelo Tostes Advogados, which represents mining companies in the country.

In 2001, a semi-submersible drilling rig operated by Petroleo Brasileiro SA, the largest of its kind at the time, sank off the Brazilian coast, killing 11 people and ushering in tighter safety and maintenance procedures. After a plane operated by Tam SA overran a runway in Sao Paulo in 2007, killing nearly 200 people, flight numbers at the airport were cut and restrictions were placed on charter flights and private jets.

“This kind of disaster always has impacts on regulation,” Miranda said in a telephone interview on Friday. “Even if the legislation isn’t changed, you have more inspections, more punishment, more oversight from the public sector on the activity.”

Miranda said mining companies probably will have a harder time obtaining environmental permits after the Nov. 5 incident in which two dams at the Samarco Mineracao SA iron-ore venture burst, sending a wall of mud that crashed into small towns.

700 Dams

Samarco said it’s too early to say what caused the accident, with its top priority helping to locate and care for victims. Owners Vale and BHP expressed solidarity with those affected and is offering support and assistance to local authorities. BHP Chief Executive Officer Andrew Mackenzie will travel to the scene of the incident this week to meet with Samarco’s response team, authorities and members of affected communities.

Minas Gerais has more than 700 dams similar to those that ruptured, newspaper Globo cited state Governor Fernando Pimentel as saying on Sunday. 

“There’s going to be a huge amount of scrutiny, based on the integrity of the tailing dams of the rest of the Brazilian iron-ore mines in the southern system,” Paul Gait, an analyst at Sanford C. Bernstein & Co., said by phone from London.

While Samarco said an inspection of the dams in July found them to be safety compliant, prosecutors investigating the dam collapse said state supervision is lacking.

“We need to change this system, so that the state grants the license and then oversees the conditions imposed to prevent such disasters,” Carlos Eduardo Pinto, a prosecutor in Mariana, where the accident took place, told reporters on Friday.

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