And this is VALE's second such dam collapse in four years.
First up, the background from World Maritime News, January 28:
In Depth: Vale Dam Collapse and Impact on Shipping
Hundreds of people have been reported missing following the deadly dam collapse at Brazilian town of Brumadinho, in Minas Gerais, operated by the Brazilian miner giant Vale.
Specifically, as of January 27, 2019, 361 people have been found, 305 people are still missing, and 16 fatalities were confirmed by the Instituto Médico Legal, Vale told World Maritime News in a statement.
“Vale continues fully focused on relief efforts and on the support of those affected. Rescue and assistance to the victims on site continue being operated by the Fire Department and by the Civil Defense Corps,” the company said.
Vale is the world’s largest producer of iron ore, and runs several deep-draft ports in Brazil as well as Indonesia, Malaysia and Oman, equipped to receive Valemax ships, the biggest mineral vessels in the world, with capacity for 400,000 tonnes of ore. The company also owns and charters Capesizes and Very Large Ore Carriers (VLOCs) and its fleet primarily services the Asian energy needs.
The incident
The breach of the Dam I of the Córrego de Feijão mine occurred in the early afternoon of January 25, 2019. According to the latest information from Vale, the dam, built in 1976 and acquired by Vale in 2001, received the disposal of tailings from the production of the mine until 2015. Since then, it was inactive and a decommissioning project of the dam was under development.
The 86-meter high dam with a crest length of 720 meters was issued with Stability Condition Statements by TUV SUD do Brasil, an international company specialized in Geotechnics, on two occasions in 2018 following periodical reviews....With a few days to assess the effects it appears at least 35 bulk carriers are suddenly out of work.
***...Impact on shipping
Being a major player in the iron ore exporting market, the incident is expected to impact the dry bulk shipping industry due to production disruptions. As such, a likely effect is to be felt in the tonne mile demand.
It is still to early to assess the potential consequences on the company’s exports, as Vale is currently focused on relief efforts.
“The impact on the bulk market is first of all uncertainty. Secondly, the size of the disruption depends on Vale’s ability to source the ‘lost ore’ from other facilities and at what pace that will happen. Carriers may be re-directed to other loading ports,” Peter Sand, Chief Shipping Analyst at BIMCO told World Maritime News....MORE
Also from World Maritime News:
February 3
Drewry: Up to 40 Capesizes Could Lose Employment in 2019 due to Vale Dam Collapse
The latest disaster at the Brazilian mine Córrego de Feijão is likely to reduce Capesize demand by some 35-40 vessels in 2019, according to UK-based shipping consultancy Drewry.
To remind, the breach of the upstream Dam I of the Brumadinho-based mine occurred in the early afternoon of January 25, 2019, releasing a tsunami of toxic mud that swept across the area damaging buildings and trapping hundreds of people.
Based on the latest information from Vale, operator of the mine, 99 fatalities have been confirmed as a result of the dam collapse, 67 of which have been identified, while 259 remain missing. A total of 393 people have been found, and 192 rescued.
Drewry anticipates that the collapse of the dam will hurt Vale’s iron ore production from Minas Gerais in Brazil if the Brazilian government does not allow Vale to compensate the loss by increasing production at its other mines.
“While Vale wants to increase production at its other mines to compensate for the loss of the 40 million tonnes, a furious Brazilian government is unlikely to permit the company to increase operations in the near term. Allowing Vale to do so will only add to public resentment against both the company as well as the Brazilian government,” Rahul Sharan, Drewry’s lead analyst for dry bulk shipping, explained.
This is in particular due to the fact that this is the second incident in less than four years.
In November 2015, at Mariana, there was another disaster when a dam using the same old technology collapsed. After much criticism, Vale decided to decommission nine of its upstream dams and the process is still underway. But following the current disaster, Vale has decided to decommission all of the remaining 10 upstream dams as well. As of today, 40 million tonnes of iron ore production associated with the dams will be decommissioned, Drewry’s data shows.
As a result, Sharan expects that the loss of 40 million tonnes of iron ore on the Brazil-China route will leave an equivalent of 55-60 Capesizes unemployed, but will provide employment for some 20 Capesizes on the Australia-China route.
Australia’s port Hedland is 3,524 nautical miles away from Qingdao while the Brazilian port Itaqui, which ships most of the iron ore from Feijao, is 11,979 nautical miles from Qingdao.
In a year, one Capesize vessel ships two million tonnes of iron ore from Hedland to Qingdao, while the same vessel ships just 0.7 million tonnes in a year from Itaqui to Qingdao. Therefore, at 12 knots, it takes 30 days for a Capesize vessel to complete a round voyage between Hedland and Qingdao while it takes 85 days for it to complete a round voyage between Itaqui and Qingdao, Drewry’s data shows.
In the meantime, most of the iron ore produced at the affected mines is sold on a spot basis and exported to Asia....MORE
Replacing the 40 million tonnes will be difficult for any exporter (India, South Africa and Canada) other than Australia.
India for example will find it difficult to increase iron ore exports as its domestic demand has been on the rise and the country is fast becoming a major iron ore importer.
Elsewhere, South African mines are struggling with rail/road logistic issues to transport iron ore to ports...
