Tailings dams

Responsible Investment
Charalee Hoelzl
Investment Manager

We have been mining the world’s natural resources for thousands of years. Yet the global demand for these is only likely to increase in the future, given their role in supporting economic and social progress and enabling innovations and technologies that are needed to address climate change.

As a by-product of the mining process, the global mining industry produces billions of tonnes of mine tailings each year. This waste material is stored in tailings dams*, which are among some of the world’s largest engineered structures. It has been estimated that there are approximately 18,000 mine tailings storage facilities globally, of which 3,500 are currently active.1

Necessary hazards?

Several recent and catastrophic tailings dam collapses have brought into focus the complex interaction between a mine site and the local community and environment in which it operates. The failure of the tailings dam at the Córrego do Feijão iron ore mine in Brumadinho, Brazil, in January 2019 is one of the most devastating. When the dam collapsed, 12 million m3 of toxic mining waste surged through the mine site towards the town below, killing 270 people and causing widespread environmental and socio-economic damage.2 It followed another failure of the Fundão tailings dam in Mariana only four years earlier, in the same state in Brazil and by the same mine owners; at least 19 people were killed when the dam breached and abruptly discharged over 43 million m3 of tailings, polluting the region’s most important river, the Rio Doce, and causing what has been termed the biggest environmental disaster in the global mining industry.3

The subsequent rise in scrutiny and renewed sense of urgency to understand the risks posed by tailings facilities and their potential for failure has been preceded by decades of stakeholder campaigns along with calls for greater public disclosure and corporate accountability.4 Yet the failures at Mariana, and then Brumadinho, were evidence that change was not happening from within the industry.

In April 2019, efforts gained momentum when a group of institutional investors (now representing more than $13 trillion assets under management)5 governed through a steering committee chaired by the Church of England Pensions Board and the Council on Ethics of the Swedish AP Funds established an investor-led engagement initiative, known as the Investor Mining and Tailings Safety Initiative (the ‘Initiative’); Ruffer began supporting the Initiative in April 2019.

This has led to several key interventions.

An international safety standard

First, the Initiative called for a new, independent international standard for tailings dams.

In response, and in collaboration with the Principles for Responsible Investment (PRI), the United Nations Environment Program (UNEP) and the International Council on Mining and Metals (ICMM) a Global Tailings Review was commissioned. On 5 August 2020, the Global Industry Standard on Tailings Management (the ‘Standard’) was launched. The Standard establishes a first-of-its kind international benchmark and sets a new normative aspiration for the management of tailings facilities by declaring an ‘ultimate goal of zero harm to people and the environment, with zero tolerance for human fatality.’6 By establishing clear expectations around transparency, accountability and safeguarding the rights of affected people, it is hoped the Standard will mark a step-change in the industry.

Open letter requesting greater disclosure and a global tailings database

Secondly, the Initiative issued an open letter to 726 companies requesting public disclosure on specific questions about their tailings facilities. With this information, the world’s first global database of mine tailings facilities was launched in January this year, allowing public access to detailed information on more than 1,800 tailings dams around the world, categorised by location, company, dam type, height, volume and risk, among other factors.7

The first round of disclosures has captured many of the world’s largest tailings dams operated by publicly listed companies, but the project intends to increase the number of dams described and be ‘a global hub, providing up to date and reliable information on tailings storage facilities, in the public interest.’8

Next steps for Ruffer

As a supporter of the Investor Mining and Tailings Safety Initiative, we have been engaging with companies over the last 18 months on their disclosures and encouraging companies that have so far not yet responded, to do so. For some time, Ruffer has held a material weighting in gold mining companies. This issue of tailings management is therefore relevant to a number of the companies in which we are invested and we joined the Initiative as we agree with its aims and what it is trying to achieve.

Looking forward, it is hoped that the tailings database and the public disclosure provisions in the Standard will drive a new level of transparency in the mining sector and encourage companies, regardless of their size, to view tailings management as an industry problem that requires a collective industry solution. At the same time, it is expected that these disclosures will enable investors to develop an assessment framework to analyse companies’ tailings management and hold their management to account if necessary. At Ruffer, we will continue to include these factors in our engagements on environmental, social and governance considerations with mining companies in our portfolios.

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  1. Church of England
  2. vale.com 259 people have been officially confirmed dead and 11 people reported as missing
  3. The Córrego do Feijão mine was owned by Vale, the Samarco iron ore mine was operated by Samarco Mineração, a mining company jointly owned by Vale and BHP; Flávio Fonsecado Carmo et al (2017) ‘Fundão tailings dam failures: the environment tragedy of the largest technological disaster of Brazilian mining in global context’, Perspectives in Ecology and Conservation 15, 145–151
  4. Owen J.R., Kemp, D., Lebre, E., Svobodova K. and Perez Murillo, G. (2020) ‘Catastrophic tailings dam failures and disaster risk disclosure’, International Journal of Disaster Risk Reduction
  5. Church of England, 22 September 2020
  6. Global Tailings Review
  7. Global Tailings Portal, 22 September 2020
  8. Global Tailings Portal

* Physical structures used to store by-products from mining activities. Mined rock is ground and mixed with chemicals and water to extract the minerals and metals. Tailings are what are left once the minerals and metals have been extracted and usually take the form of a slurry of fine particles, but can be solid or liquid.

† Global Industry Standard on Tailings Management: I Affected Communities | II Integrated Knowledge base | III Design, Construction, Operation and Monitoring of the Tailings Facility | IV Management and Governance | V Emergency Response and Long-term recovery | VI Public Disclosure and Access to Information

The views expressed in this article are not intended as an offer or solicitation for the purchase or sale of any investment or financial instrument, including interests in any of Ruffer’s funds. The information contained in the article is fact based and does not constitute investment research, investment advice or a personal recommendation, and should not be used as the basis for any investment decision. This document does not take account of any potential investor’s investment objectives, particular needs or financial situation. This document reflects Ruffer’s opinions at the date of publication only, the opinions are subject to change without notice and Ruffer shall bear no responsibility for the opinions offered. Read the full disclaimer.

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