(Adds comments by regulatory official, company and industry background)
RIO DE JANEIRO, March 18 (Reuters) - Environmental licenses needed to maintain 100 million tonnes of annual iron ore production at Brazilian miner Vale SA are delayed but progressing, a senior official at the state environmental body told Reuters.
Vale said on Thursday it is awaiting licenses for 88 projects, which if not approved could result in the company being forced to cut half its production in the state of Minas Gerais, Brazil’s mining heartland.
Geraldo Abreu, subsecretary for regulation at the state environmental body Semad, said in an interview late Thursday that practically all of the licenses are delayed but that Semad was working closely with Vale to try to find a resolution.
“I‘m not going to deny that we have structural issues,” Abreu said, explaining that a long strike which ended last year and multiple layoffs had resulted in a stretched and inexperienced staff.
“But at the same time I can’t say that we’re ignoring the companies because it’s not true,” Abreu added.
The mineral-rich part of Minas Gerais, known as the iron quadrangle, is one of the most heavily mined areas in the world. It is, however, also highly populated compared with other mining regions such as the Pilbara in Western Australia, making environmental licensing increasingly complicated.
Abreu expects Vale to secure a temporary provision next week to operate a new dam at the Brucutu mine. The temporary license is needed to continue production at the 30 million-tonne-per-year mine and without it Vale warned it would have to close Brucutu in the coming months.
Meanwhile, the deadly dam burst in November at a mine run by Samarco, a joint venture between Vale and BHP Billiton, has led many to expect reforms in Minas Gerais’ licensing system, resulting in possible delays.
Following the disaster, which killed 19 people and polluted one of Brazil’s major rivers, a commission was set up with representatives from universities, industry and environmental bodies to improve rules and regulations for tailings dams.
When the committee’s findings are published in April, Abreu said he expected rules to be tightened on tailings dams that use the upstream design, in which the outer wall is raised in segments built into the dam. The Samarco dam used the upstream design.
“The conclusion being reached is that dams using this upstream engineering technique should be subject to new rules that avoid further accidents,” Abreu said.
Reporting by Marta Nogueira; Writing by Stephen Eisenhammer; Editing by Matthew Lewis