JOHANNESBURG (miningweekly.com) – Diversified mining company South32, which was spun out of BHP Billiton earlier this year, is reviewing its tailings dam risk in the light of the collapse that killed 11 and displaced 600 at Samarco, the iron-ore mine in Brazil owned jointly by BHP Billiton and Vale.

Under shareholder questioning at South32’s first annual general meeting (AGM), CEO Graham Kerr said the tailings-dam disaster’s big impact across the entire industry was being particularly felt by South32 “because of our heritage and where we’ve come from”.

The BHP Billiton and Vale joint venture (JV) is already facing its first civil lawsuit, an initial ten-billion reais ($3.69-billion) compensation claim for environmental damage caused by the wave of mine waste and mud at Samarco, which reportedly halted fresh water supplies to 260 000 people.

The share price of BHP Billiton has dropped below $20 a share, with more than 15% wiped off since the Samarco tragedy.

Kerr said South32’s review of its tailings dam exposure would take in the maximum foreseeable potential damage and loss that dam breaches could incur, “as you would expect, after the event in Brazil”.

“We will also go back and revisit the last time we had an independent review,” he assured.

In response to Creamer Media’s Mining Weekly Online, Kerr said the company periodically had external reviews and that there were probably five material tailings and water catchments that required close scrutiny.

“But we certainly don’t have the same exposure that exists at Samarco in terms of the location and volume of tailings but the incident is an opportunity for us to refocus and make sure we’re still comfortable where we are in that space.”

South32 Africa president and COO Mike Fraser said the company had around 34 tailings dams of various sizes across its portfolio of assets in Africa, including residue dams associated with the company’s smelters.

Detailed risk assessments had been done at all of the dams, which were of relatively low materiality.

“We do have a robust process of assessing the integrity of the tailings dams and we will again review those in light of what’s happened at Samarco,” Fraser added to Mining Weekly Online during the teleconference that followed the company’s AGM in Perth.

Through its coal, manganese, alumina, aluminium, silver, lead, zinc and nickel assets, South32 has been working in Africa for 78 years, Australia for 80 years and South America for 34 years.

South Africa Aluminium, South Africa Energy Coal, Mozal Aluminium and South Africa Manganese alone employ more than 16 000 people.

"South32, like the rest of the industry, is operating in a challenging environment. Our view is that market uncertainties are likely to persist for some time," chairperson David Crawford told the AGM on Wednesday, which saw the company’s shares fall by more than 5% in Johannesburg to 1 227c a share.

The company intends distributing a minimum of 40% of underlying earnings as dividends following each six-month reporting period, a pay-out ratio which the board sees as protecting the balance sheet when margins are compressed and rewarding shareholders as financial performance improves.

Its net debt has declined by $250-million to $196-million in the three months to the end of September.

South Africans on the board include Dr Xolani Mkhwanazi, Keith Rumble and Dr Futhi Mtoba.

South32 has had five fatalities in the last 18 months. 

Following a fatality at the Mamatwan manganese mine in the Northern Cape, its 60:40 Samancor manganese JV with Anglo American will remain closed until the completion of the ongoing strategic review.