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Vale's decomissioned Brazil dam at risk of collapse, labor body says

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(Adds Vale, Environment Department comments)

By Marta Nogueira

RIO DE JANEIRO, June 9 (Reuters) - Iron ore miner Vale SA's decomissioned Xingu dam is at "imminent risk of collapsing," according to a statement on Wednesday by the Regional Labor Department for the southeastern Brazilian state of Minas Gerais. The Xingu tailings, or mining waste, dam in the town of Mariana, already devastated by a 2015 dam rupture which killed 19 people, had its risk level elevated last October by Brazil's National Mining Agency. Although the Xingu dam stopped receiving mining waste in 1998, Vale still employs workers there to monitor its stability ahead of a planned decommissioning procedure.

Labor auditors responsible for mandating the closure and evacuation of the surrounding area said a potential collapse at Xingu could happen via a process known as liquefaction, in which water weakens the solid materials composing a dam.

Liquefaction was previously pinpointed as a key cause of the 2019 collapse of Vale's dam at Brumadinho, which killed 270 people.

Vale disclosed on Friday in a regulatory filing that it had halted production at its nearby Timbopeba mine and part of its Alegria mine after prosecutors ordered the evacuation of an area around Xingu, but did not mention the labor auditors' warning. The company also said the dam was not at "imminent risk" of collapsing. The Regional Labor Department said in the statement on Wednesday that the area was closed after a request for documents on April 27 and an inspection on May 20. The company will have to take various technical measures to get permission to reopen the area.

"Documents presented by Vale show the Xingu dam is not stable (...), presenting a significant risk of collapse", the surveillance group said. "The situation is extreme and puts workers at risk." Engineers and technicians told the auditors that the tailings at Xingu had not been properly drained and had been deposited in the dam in an uncontrolled manner.

"It is possible there has been more granular material deposited together with layers of fine (non-draining) material", the statement added, boosting pressure on the dam in certain places in a way similar to conditions at Brumadinho.

Vale asked on May 27 for the area to be reopened, but the request was denied. Responding to a Reuters request for comment, Vale once again denied the imminent risk of collapse of the dam, saying it has been classified as emergency level 2, adding that the dam is "continually monitored" by the company.

But Vale said it has complied with the Labor Department determination to evacuate the area and said it is taking measures agreed with the department to guarantee workers safety and resume activities.

The National Mining Agency said it had requested changes in Xingu's structure last year after elevating its risk level following an audit.

"Vale has complied with some changes and asked for a deferral to comply with the others", the agency said, adding it is following the closure that complied with labor laws. Minas Gerais state Environment Department said it has identified problems in the Xingu dam last year and the emergency level was raised to 2. Considering the dam stability "is not guaranteed", the department has forbidden disposal of new waste in the structure.

Vale closes mine after prosecutors order evacuation (Reporting by Marta Nogueira in Rio de Janeiro and Tatiana Bautzer in Sao Paulo; Editing by Christian Plumb, Marguerita Choy and Diane Craft)

+55-119-4210-4173; Reuters Messaging: tatiana.bautzer.thomsonreuters.com@reuters.net))

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