10 de noviembre de 2015 / 16:22 / en 2 años

UPDATE 1-Brazil dam burst muddies outlook for pulp industry

(Adds Cenibra pulp maker that suspended operations)

By Priscila Jordão

SAO PAULO, Nov 10 (Reuters) - Brazil’s leading wood pulp producers are on alert after dams at an iron ore mine upstream of their operations collapsed over the weekend, sending thousands of tonnes of mud down rivers that supply local communities and industry with water.

Fibria Celulose SA, the world’s largest producer of eucalyptus pulp, said on Tuesday it had sufficient water reserves to last 100 days at its Aracruz plant in Espirito Santo state, downstream from the mine where the dams burst in the neighboring state of Minas Gerais.

Mid-sized pulp maker Cenibra suspended operations at two of its production lines in Belo Oriente, Minas Gerais, after mud neared the company’s water intake site on the Rio Doce River over the weekend.

The company had no forecast for when operations would resume but said it was putting together contingency plans to minimize the impact of the accident.

Two dams burst at a mine operated by Samarco, a joint venture between mining majors Vale SA and BHP Billiton.

Water from a tailings pond broke through the dams last Thursday, sending a spate of red mud down into the valley below. At least four people died and 22 others are still missing.

Credit Suisse analysts said the interruption in Cenibra’s production, which has already affected supply, would put upward pressure on pulp prices, but added that operations were expected to return to normal in the short term.

The analysts did not expect Fibria, which captures water resources from the same river, to be as affected by the mud as Cenibra.

Fibria shares on the BM&FBovespa exchange gave back some of their earlier gains on the day but were still trading up 2.8 percent.

Samarco was ordered by the local court on Tuesday to take emergency measures to help mitigate the environmental impact of the mud moving downstream. Among other measures, the company must fly a helicopter over the region to track the descent of the mud. (Writing by Reese Ewing; Editing by Chizu Nomiyama and Alden Bentley)

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