Vale shares plunge after WSJ says inspectors gave warning before dam collapse

  • A September report raised concerns about the dam that burst last month at Vale's iron ore mine in southeastern Brazil, the Wall Street Journal reports.
  • The report identified problems with the dam's drainage infrastructure and faulty monitoring systems.
  • The dam collapse has killed at least 150 people, and nearly 200 are still missing and feared dead.
Members of a rescue team search for victims after a tailings dam owned by Brazilian mining company Vale SA collapsed, in Brumadinho, Brazil January 28, 2019.
Adriano Machado | Reuters
Members of a rescue team search for victims after a tailings dam owned by Brazilian mining company Vale SA collapsed, in Brumadinho, Brazil January 28, 2019.

A report completed in September raised concerns about the dam that burst last month at Vale's iron ore mine in southeastern Brazil, killing at least 150 people and leaving nearly 200 others still missing and feared dead.

The inspection that led to the report identified problems with the drainage infrastructure in the dam and faulty monitoring systems. The Wall Street Journal obtained a copy of the report, completed by German consultant and inspections company Tuev Sued.

Shares of Vale fell 6 percent on Wednesday.

The dam collapse at Vale's Corrego do Feijao mine let loose a torrent of sludge that devastated the surrounding area near the city of Brumadinho. The dam held back tailings, or byproducts from the mining process.

The amount of water in a tailings pond is a significant concern, independent inspectors told the Journal. Too much water creates an issue called "liquefaction" that can contribute to a dam collapse, they said.

In the September report, Tuev Sued told Vale some of the systems used to monitor water levels in the tailings pond were faulty. The report also found that parts of the drainage system were clogged with vegetation or damaged due to trampling by large animals like cows.

The inspectors also said they could find little information about the 43-year-old dam, including its foundation, prior to Vale's 2001 purchase of the structure.

Despite those issues Tuev Sued ultimately concluded the dam was stable. The company declined to comment to the Journal, citing ongoing investigations.

Vale told the Journal it followed up on Tuev Sued's recommendations after its September inspections. It added that 130 devices were monitoring the dam and there are no records of increases in water in the dam.

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