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* Inquiry follows Brazilian collapse that killed hundreds
* Of 726 companies contacted by investors, 43% replied
* 166 dams around world found to have had stability issues
* Anglo boss: industry has 'moral imperative' on safety
(Adds Anglo American CEO)
By Barbara Lewis and Ernest Scheyder
LONDON, Oct 31 (Reuters) - A global inquiry into how mining
companies store billions of tonnes of waste in huge dams,
launched after a collapse in Brazil killed hundreds, shows about
a tenth of the structures have had stability issues, investors
said on Thursday.
The research was led by the Church of England (CoE) and fund
managers after the collapse of a Vale dam in January
unleashed an avalanche of mining waste on the Brazilian town of
Brumadinho, killing an estimated 300 people.
The investor review, which found at least 166 dams have had
stability issues in the past, relied on companies' disclosures
about their dams holding mining waste, known as tailings.
However less than half of the 726 companies contacted have
responded, with most Chinese and Indian miners not providing
information, leaving a significant hole in efforts to create a
global picture of safety risks posed by these dams and avoid
another disaster.
"Tailings dams are amongst some of the largest engineered
structures in the world and we have seen the catastrophic
consequences earlier this year in Brazil when they collapse,"
said Adam Matthews, ethics director at the CoE Pensions Board, a
global investor with assets worth more than $3 billion.
"We note that many companies already operate to a very high
standard as evidenced by some of the disclosures, but this is
not universal across the sector and dams are continuing to fail,
putting lives and the environment at risk."
Tailings dams are the most common waste disposal methods for
mining companies, whether they're extracting iron ore, gold or
copper. Some tower dozens of metres high and stretch for several
kilometres.
There are no established global mining industry standards
defining what a tailings dam is, how to build one and how to
care for it after it is decommissioned.
The major investors, who manage assets worth a combined
$13.5 trillion across a range of industries, wrote to mining
companies in April asking for information about tailings dams to
be disclosed about every mine they control.
They warned they might have to divest their shares unless
they had clear information on potential risks, in what has
become one of the largest shareholder mobilisations in history
in reaction to a single event.
The CoE and the some other funds sold their Vale shares
after the Brumadinho dam collapse, and the Brazilian miner lost
a quarter of its market value immediately after the disaster.
'MORAL IMPERATIVE'
Of the 726 companies contacted by investors, 43% responded.
All the major listed miners, including Vale, were among those
who replied, according to the investors, jointly led by the CoE
Pensions Board and the Swedish AP Funds Council of Ethics.
Initial analysis of company disclosures found tailings dams
across the globe hold more than 44 billion square metres of
waste.
The disclosures so far showed 166 out of 1,635 of tailings
dams have had stability issues in their history, although it was
unclear how severe those issues had been and the miners said the
problems had been addressed, the investors said.
The investors aim to complete a global database of risks
posed by dams by the first anniversary of the Brazilian disaster
on Jan. 25, and ultimately create global safety standards. Many
dams will have to be forcibly closed, investors told Reuters.
John Howchin, secretary general of the Council on Ethics of
the Swedish National Pension Funds, said the investors would
redouble efforts to secure the missing disclosures.
"There is simply no excuse to not disclose on a material
risk, that as owners of these companies, we need to urgently
understand. It is clear that investors' patience with
non-disclosing companies will not remain for much longer," he
said.
Anglo American CEO Mark Cutifani said the sector
faced a "clear ethical and moral imperative" to use new
technologies to ensure the highest safety standards for
tailings.
"Rather than simply scaling up mining's processes to meet
demand, the industry will need to find new, more efficient and
more sustainable ways of working," he told a meeting of
executives in London.
INDIA AND CHINA
While the Americas are home to most of the world's tailings
dams, India and China also store vast amounts of waste in these
structures, including the Weikuang dam in northern China which
is about 11 km long.
The Weikuang dam is owned by Baotou Iron & Steel Group
, which did not respond to the investors' request for
data or a Reuters request for comment.
Coal India Ltd and Metallurgical Corp Of China Ltd
, two of the world's largest coal miners, said they
were not aware of the investor initiative and never received the
request. Both companies are controlled by their respective
governments.
The CoE said it aimed to work with Chinese and Indian miners
over time to compile a truly global database.
"There is, we hope, a cumulative effect where bit by bit in
personal relationship with these countries, we hope there'll be
a tipping point," said David Urquhart, the CoE's Bishop of
Birmingham and a former BP executive.
The eventual aim of the initiative is to set the global
standards for tailings dams, together with the International
Council on Mining and Metals (ICMM) industry group. The ICMM
said in March it was working on new standards with the U.N.
Environment Programme (UNEP) and the ethical investors.
(Reporting by Barbara Lewis and Ernest Scheyder; Additional
reporting by Tom Daly, Sudarshan Varadhan, Min Zhang, Moira
Warburton, Helen Reid, Suzanne Barlyn and Jeff Lewis; Editing by
Pravin Char)
