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In the Dark Shadow of the Supercycle Tailings Failure Risk & Public Liability Reach All Time Highs

Authors:
  • World Mine Tailings Failures
  • Center for Science in Public Participation

Abstract and Figures

Examines the connection between the cowboy economics of the supercycle that left investors holding the bag for $billions. and the established upward trend of catastrophic mine failures post 1990.
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environments
Article
In the Dark Shadow of the Supercycle Tailings
Failure Risk & Public Liability Reach All Time Highs
Lindsay Newland Bowker 1and David M. Chambers 2, *ID
1Bowker Associates Science & Research in the Public Interest, 15 Cove Meadow Rd, Stonington, ME 04681,
USA; lindsaynewlandbowker@gmail.com or LNBowker@BowerAssociates.org
2Center for Science in Public Participation, 224 North Church Avenue, Bozeman, MT 59715, USA
*Correspondence: dchambers@csp2.org; Tel.: +1-406-585-9854
Received: 20 September 2017; Accepted: 18 October 2017; Published: 21 October 2017
Abstract:
This is the third in a series of independent research papers attempting to improve the
quality of descriptive data and analysis of tailings facility failures globally focusing on the relative
occurrence, severity and root causes of these failures. This paper updates previously published
failures data through 2010 with both additional data pre-2010 and additional data 2010–2015. All three
papers have explored the connection between high public consequence failure trends and mining
economics trends especially grade, costs to produce and price. This work, the third paper, looks more
deeply at that connection through several autopsies of the dysfunctional economics of the period
2000–2010 in which the greatest and longest price increase in recorded history co-occurred across
all commodities, a phenomenon sometimes called a supercycle. That high severity failures reached
all-time highs in the same decade as prices rose to highs, unprecedented since 1916, challenges many
fundamental beliefs and assumptions that have governed modern mining operations, investment
decisions, and regulation. It is from waste management in mining, a non-revenue producing cost
incurring part of every operation, that virtually all severe environmental and community damages
arise. These damages are now more frequently at a scale and of a nature that is non-remediable
and beyond any possibility of clean up or reclamation. The authors have jointly undertaken this
work in the public interest without funding from the mining industry, regulators, non-governmental
organizations, or from any other source.
Keywords:
tailings storage facility failures; supercycle; mining metric; tailings storage
failure predictions
1. Introduction
Deficiencies in the storage and management of tailings, the post processing wastes of metals,
hydrocarbons and fertilizer, are the largest source of high public consequence failures globally.
Although each tailings storage facility (TSF) is described and represented to regulators as capable
of meeting all applicable environmental and other regulations, and being fit for its intended use
and purpose, law and regulation in the permitting and oversight process provides very limited
regulatory scrutiny. Policy frameworks offer only broad standards and extremely limited life of facility
oversight. High severity failures, when they occur, have tended to be viewed and presented by
industry as unavoidable and unforeseeable. The assertion that local damages are more than offset by
the greater good of providing the world’s needs for metals, hydrocarbons, and fertilizers is unproven
and unprovable.
Though preceded by 40 catastrophic failure events globally, two highly visible catastrophic
failures, Mt Polley in Canada (2014) and the Fundao in Brazil (2015), have brought about the first
global revisiting of this antiquated implicit assumption that mining impacts are unavoidable and offset
Environments 2017,4, 75; doi:10.3390/environments4040075 www.mdpi.com/journal/environments
Environments 2017,4, 75 2 of 21
by greater public need and benefit. Both industry and governments are now recognizing that loss
prevention is both possible and imperative. The dramatic investor impact of the Brazil failure on two
of the world’s largest miners, BHP Billiton and Vale, has raised awareness in financial circles that the
consequence of mine failure at this scale is not just on local communities and environments. Miners are
aware that even with the protection of limitations of legal liability via subsidiaries, large-scale failures
can have companywide ramifications and affect all operations.
That emerging conversation between industry and communities on the “path to zero failures”,
as it is called, has tended to focus on those physical attributes of tailings storage facilities that insure
structural soundness during operations, and after closure into perpetuity. However, even before
these two major failures, there was a growing awareness that the root causes of failures lay in other
circumstances and conditions that shape the decisions made by miners on each facility, which are at
variance with design requirements and with Best Practice, Best Science and Best Knowledge. The World
Bank first made note that the key issue facing the industry and communities was the growing spread
between ore production volumes and volumes of metal output from mining as available grades or ores
fell globally [
1
]. That spread represents both a greater waste volume per unit of metal produced and
often, as at the Fundao, the largest failure in history, results in a significantly greater rate of tailings
deposition and more frequent and larger dam raises, undermining critical safety elements on which
the original design depends. These deviations from design were identified by both expert cause of
failure panels, Fundao & Mt Polly, as the principal physical cause of failure.
In 2001, long before these two notorious failures reached even small-town newspapers all over
the world, the International Commission on Large Dams (ICOLD) announced their conclusion that the
frequency and severity of tailings failures from metals, hydrocarbons and fertilizers was increasing
globally. To keep that trend in the spotlight, they created a global failures compilation. The database
for this work is developed partially from, and expands upon, the 2001 ICOLD database. In releasing
their 2001 database, ICOLD announced their finding that the majority of these failures were avoidable
and a matter of control and diligence by mine owners and operators. In their landmark 2001 report [
2
],
they stated:
“...the technical knowledge exists to allow tailings dams to be built and operated at low risk, but that
accidents occur frequently because of lapses in the consistent application of expertise over the full
life of a facility and because of lack of attention to detail.”
and;
“By highlighting the continuing frequency with which they are occurring and the severe consequences
of many of the cases, this Bulletin provides prima facie evidence that commensurate attention is not
yet being paid by all concerned to safe tailings management.” (emphasis in original)
and;
“...the mining industry operates with a continual imperative to cut costs due to the relentless
reduction in real prices for minerals which has been experienced over the long term, plus the low
margins and low return on capital which are the norm. The result has been a shedding of manpower
to the point where companies may no longer have sufficient expertise in the range of engineering
and operational skills which apply to the management of tailings.”
It is to a further exploration of these prescient observations by ICOLD and the World Bank
that this work, and the two prior works of this research partnership [
3
,
4
], have been addressed.
Prior work of this partnership had begun to piece together considerable evidence that financial risk
and environmental risk, as well as other public liabilities, are very closely related. This is suggested as
a root cause of failure, both in the observations and findings of the World Bank seminal study, and in
the very clear statement of findings by ICOLD. In the 2015 work by these authors, it was reported that
the data confirmed a greater need to more carefully and independently track initial and life of mine
economic viability as a key strategy for loss prevention.
Environments 2017,4, 75 3 of 21
Deeper inquiries and empirical evidence of what the World Bank and ICOLD pointed to as already
established as a trend before 2000 has been made possible by extensive improved data on failures prior
to and since 2000 and the development of an empirically based typology of failure severity and incident
type [
5
]. While claiming no statistical proof of causality, appropriate multivariate analytic methods
have been applied to explore root causes, and to identify areas in which changes in public law and
policy might be more effective in preventing public loss and liability. At the broadest level, the tailings
research work by these authors suggests that all high-consequence/high-severity failures are failed
public-private partnerships attributable to gaps in policy that fail to adequately identify, defend,
and protect the public interest. The authors see regulatory reform more focused on loss prevention
and pre-application risk assessment as a more fruitful, and possibly more effective, approach to better
outcomes than the presently prevalent use of fines and penalties as deterrent and punishment.
With a view to elevating conversation and deepening understanding of how to improve and
correct present trends of public loss from TSF failures, the three works of Bowker-Chambers 2015 [3],
Bowker-Chambers 2016 [
4
], and this paper, are pure research in the sense of not starting with a
hypothesis to be proved, but coaxing as much reliable information from what reliable data can be
assembled. The authors have set about to make a more complete description of what the World Bank
and ICOLD pointed to as the previously un-explored relationship between the economics of mining
and the history of tailings dam failures.
This paper presents an overlay of new analysis by industry experts on the 2000–2010 decade of
the previously studied period, 1946–2009. The period 2000–2010 has been described by the Hamburg
Institute of International Economics [
6
], as the longest and strongest supercycle in recorded history.
A supercycle is a period in which all commodities co-entrain in a sustained multi year period of
price increases.
It is customarily assumed that as prices rise, profits and performance also rise with a concurrent
effect of fewer high public severity failures. This paper challenges that notion through the authoritative
findings of top mine analysts who found that performance during the supercycle was actually very lax
as compared to the tight control in leaner times resulting in an unprecedented level of investor losses
and write offs as prices across all commodities pushed steadily upward to post-1916 highs in 2011.
Copper, the bellwether for base metals, reached a post-1916 high of $9411 ($2015) as compared to the
prior 50-year average price of $5133 ($2015) [
7
]. Looking at failures, the incidence of highest severity
TSF failures also reached a post-1916 high of 1.0 high-severity failures per year, as compared to the
previous 50 mostly lean years of 0.56 high-severity failures per year.
These indisputable facts challenge the notion that failures are mostly shaped by the squeeze of
falling prices.
This new data analysis by top mining economists, and analysts and the revised more
comprehensive failures data developed by the authors, shows that prices do not bring better
performance and fewer failures as many regulators continue to believe.
The consensus assessment by leading mine analysts Deloitte [
8
], McKinsey [
9
], Ernst & Young [
10
],
and Price Waterhouse [
11
] is that the unexpected price surge created by Chinas high demands for all
commodities lead miners to abandon business fundamentals and engage in a frenzied push for high
production at any cost. Several of these works specifically address the pushing of economically
marginal mines to achieve production goals as a contributing cause of massive investor losses.
The ICOLD 2001 attribution of depressed prices and falling grades as a root cause of failures might
reasonably lead to an assumption that as prices rose they would fund the restoration of the technical
and engineering capacity that was shed and lost in the long price fall, and result in fewer high public
consequence failures. In essence, what these top mine analysts concur is that instead of rebuilding
engineering and technical capacity and catching up on deferred infrastructure maintenance and
needed improvements, many miners counted on price alone to make up for these accrued dry times
deficiencies. They expected to achieve profits within the portfolios and corporate capacity that existed
at the very bottom of the long down ward leg of the preceding supercycle. In fact, the long and never
Environments 2017,4, 75 4 of 21
imagined surge in prices over the supercycle actually brought the worst performance in recorded
history not just as measured by the severity and number of high public consequence tailings failures,
but also in investor losses, massive write offs and an impairing level of miner debt.
Now, in the down leg of that 2000–2010 supercycle, with grades and prices well below 2011 peaks,
there is no within industry appetite to take on the loss prevention reforms summing several decades
of mine by mine failure analysis that were offered by the Mt Polley Expert Panel. The industry’s
first priority is on economic recovery and debt reduction, which has been demanded by investors.
From a public interest point of view, the first priority has been expressed as complete and immediate
commitment to the entire framework of reform offered by the Mt Polley Expert Panel.
Industry and mine regulators have avoided the major thrust of the Mt Polley framework for
reform. Neither the International Council on Mining and Metals, the Mining Association of Canada,
or any government known to the authors, has undertaken, or committed to, the key reforms necessary
to achieve TSF failure loss prevention. All mines since approved the government of British Columbia,
who commissioned Mt Polley Report, violated the main recommendations [12].
The possibility that this is more than a conflict in priorities as between public interest demands and
the industry (including its regulators), is suggested in a new work by a research team of leading experts
in the economics of extractive industries [
13
]. Their work was about examining how business decisions
are actually made by miners but the data they added provides a background to the failures history,
which suggests that the conflict has origins that are more fundamental. To lower debt as investors have
demanded and streamline operations, miners have been engaged for several years in a shedding of the
marginal assets they pushed into production during the supercycle. The Aguirregabiria & Luengo
study [
13
] suggests that the total portfolio of mines that are not presently viable and or likely to become
viable without significant new discoveries may be as high as 30% to 50% globally. These will become
further write offs if they cannot be marketed to new owners as possible future earners. It is reasonable
to assume that adoption of the Mt Polley reforms for all operating mines would make many of the
mines in this 30% to 50% of the global portfolio “stranded assets”. It would be difficult at the very least
to add value through a new or expanded permit or though transfer of existing permits. The public
interest sector does not accept that the reforms should only apply to new facilities and that all existing
facilities should be managed to closure in accordance with best practices. Thus, the reforms demanded
by the public interest sector may conflict fundamentally with the recovery strategy of the industry.
Adoption of the Mt Polley framework as policy for all tailings facilities, as the public interest sector
demands, could also necessitate closure and its associated capital and other expenses, something that
miners and regulators have resisted. This would be especially problematic for the 30% of technically
active mines that were not able to produce at all in the super cycle.
The Aguirregabiria & Luengo study also suggests that the relationship between price and failures
during periods of high price rises invites more participation in metals production by marginal and
poorly vetted mines, which is probably why we have not previously noted correlations between price
and other variables.
The authors of this study view this massive spinoff of marginal mines from deeper pockets to
more speculative and often less experienced miners as posing a fundamental and difficult to overcome
challenge to the public interest goal of reforms necessary to zero failures.
A major purpose of this paper is to describe this crisis of conflicting public interest and miner
priorities. The authors believe strongly that an all-stakeholders multi-disciplinary approach to
resolving this dilemma can resolve it to the satisfaction of all. The authors do not believe that
we need to accept the present high level of catastrophic failure as the new elevated cost of meeting
the words needs for metals, hydrocarbons and fertilizers. The partnership in research failure studies
that the authors have formed is premised on the belief that at the global level, the world’s needs for
metals, hydrocarbons and fertilizers can be met, responsibly in the short term, and sustainably in the
long term.
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2. Methods
This paper has three major analytic components:
(1) A reexamination of the findings and conclusions of two earlier papers [
3
,
4
] reporting on
failures for the period 1946–2009, in light of new failures data which had developed on pre-2009
failures as of July 2016. A primary objective of this component is to report notable changes in findings
especially with respect to failure trends and relationships to economics data.
(2) The reporting of new insights on the dynamics of price over the period 2000–2010, which has
been described as a supercycle, a period of price co entrainment of all commodities. In the 2000–2010
supercycle, commodities prices reached all-time highs. Because price itself had, and still has, very low
correlations with all other data elements, earlier work by the authors had not been able to directly
explore the role of price in failures trends and severity. Unfortunately, that has not changed. However,
a number of supercycle autopsies written by reputable mining analysts, by cross reference and overlay
reveal more about the dynamics of price in relation to failures, but more importantly have considerable
bearing on what could only be inferred about root causes of failure from previously available data.
(3) A reexamination of trends and predictions with both failures and economics data through
31 December 2015.
The failures data for all three analytic components of this paper is Chambers Bowker TSF Failures
Database as it existed on 15 August 2016. That version of the failures database, in downloadable excel
form, is the technical documentation for all failures-reported data in this current work. All technical
documentation, raw data, and technical analysis has a tab within the database bearing the same title as
the chart or table in the paper.
For all descriptive and analytic work on trends in failure severity, and in level of severity, the same
format and data elements are used for all charts and tables as presented in the two earlier works.
All notable confirmations and new insights are noted, but for the sake of brevity, old data and new
data are not presented side by side. This approach facilitates comparisons and evaluation by other
researchers, while keeping the focus on present conditions trends and new insights. The publicly
available database does include these side-by-side comparisons with notes and commentary.
All of the failures data is from our own tailings database, which is an enhanced, more complete,
version of the global World Information Service on Energy (WISE) Uranium Project database.
Enough additional authoritatively documented data on release volume and runout has been compiled
to present it as an independent measure of increasing severity.
Best fit is presented on trend lines with R2s for all chart data, not to establish or assert statistical
significance, or in the case of our regressions and multivariate analysis, to demonstrate causality,
but only to describe and characterize relationships and trends.
Bowker-Chambers 2015 [
3
] included an extensive documentation on the predictive methods and
on the use of Canonical Correlation Analysis (CCA) to explore the relationship between high severity
failures and global mining economics. That previous documentation is relied on as the technical
documentation for this paper, both for the CCA and our revised failure predictions. The new CCA
runs, with both CCA comparisons to the prior runs, are included with the publicly available database
on which this paper is based. In the paper itself, only changes in the key outputs of the CCA are
presented and analyzed, in comparison with the 2015 CCA.
Much of Hoteling’s work was addressed to the economics of extraction of non-renewable resources.
CCA is his creation, and intended to explore the dimensionality of relationship between two data sets
with no established prior interdependence. In the case of the author’s three works, the data sets are
the economics data and the failures data.
Copper ore production is used as the surrogate for all failures (not just all metals, but for all
reported failures, including hydrocarbons and fertilizers). Time will tell whether our success in
accurately predicting failure occurrence rates relies on the fact that all commodities were co-entrained
in the supercycle, or whether copper will remain a reliable way of expressing failure rates and
predicting all failures. It has proven itself reliable, so far. The analysis suggests that copper stands in
Environments 2017,4, 75 6 of 21
well pre- and post- 2000–2010 supercycle, for purposes of predicting future failures for all commodities
in the failures database, all other metals, hydrocarbons and fertilizers.
For one major 2014 failure, Mt Polley, the largest failure in Canada’s history, a pre-failure history
of the economics of the mine was developed using the annual reports and other publicly available
data presented by the owner.
The predictive methods developed in 2015 [
3
] are based on the loss-development methodology for
property and casualty ratemaking generally employed by the Insurance Services Office and by most
in-house rate-making by major insurers. This paper relies on the extensive prior documentation in our
other papers as adequate and relevant documentation for this work as well. This method accurately
predicted total Very Serious Failures for the period 2006–2015 based on the 1946–2009 data alone.
We report the revised prediction results using the same previously documented method. The raw data
runs, and annotation, are included in the publicly available database for this paper.
The Chambers Bowker failures database now includes mine specific data on throughput to date
of failure, resource grade by metal, and estimated Cu eq. (Cu eq. is the equivalent of Copper grade
taking into account saleable other metals). This data is not yet available for all failures in the database,
or for all high severity failures, but we have reported key statistics from what we have.
For this work, further exploring economics as a root cause of failure, the original mining economics
database-by-decade was expanded to a publicly available annualized global database of the main
economic descriptors; grade, copper production, price, ore production, and ore productions costs.
The database [
14
] includes complete technical documentation on sources and compilation methods,
as well as tabs with raw data for all charts and tables in this paper, which were produced from
that database.
While the two major original data compilations supporting this work may be the most
comprehensive set of data presently publicly available globally geared to TSF failure studies, both are
far from complete and still missing data on many variables for major failures. Still, we believe the
results have spoken usefully and reliably through our chosen methods and compilations.
3. Results & Discussion
3.1. New Insight on the Economics of the Previously Studied Period through 2010
The impetus for this paper and its title was the additional analysis on the economics of mining
over the previously examined period (1946–2009) in which the trend to catastrophic failure emerged.
This new information came in the form of many authoritative independent analyses of the dynamics
and fallout of the supercycle. They observed that the sustained and significant rise in prices brought
not stability, higher profits and success, but also massive write-offs and huge investor losses [
8
11
],
in addition to what had previously been documented from the public interest point of view as the worst
failure performance in recorded history [
3
]. An important independent work by Aguirregabiria and
Luengo [
13
] added further insight through its examination of 333 mines over the period of emergence
of the high public consequence failure trend.
3.2. Supercycle Dysfunctional Economics
The dysfunctional, reactive economics of the supercycle are expertly analyzed and well
characterized by Deloitte in their 2014 market trend analysis. In their relentless pursuit of growth
in response to pressure from investors and analysts, companies developed massive project pipelines. Some also
developed marginal mines, hoping commodity prices would buoy poor project economics. In their headlong
pursuit of volume, many mining companies abandoned their focus on business fundamentals. They compromised
capital allocation decision making in the belief that strong commodity prices would compensate for weak business
practices. Rather than maintaining a long-term view of the market, many acted opportunistically.” [8]
Price Waterhouse Coopers, looking at the performance of the top 40 over the supercycle, note that
much of the massive commitment of capital to expansion and production at any cost ended up as
Environments 2017,4, 75 7 of 21
impairment write offs: “
. . .
from 20102015, the top 40 have impaired the equivalent of a staggering 32% of
the capex incurred”. They note that $36 billion, or 68% of the total impairments, were taken by Glencore,
Freeport Vale and Anglo American and that “2015 saw the first widescale mothballing of marginal projects”.
The top 40 took a collective net loss of $27 billion and investors punished them for “squandering the
benefits of boom” and for “poor capital management and investment decisions“ [11].
It is in this dysfunctional “maximum production at any cost” dynamic of the supercycle that the
dramatic upturn in the frequency and severity of failures occurred, and in which there is with very
little doubt a higher global portfolio risk of accrued and unexamined public liability. As presented
in Section 3, changes in waste to metals ratios for gold suggest the possibility of a more than 100%
increase in the level of potential unexamined risk [15].
3.3. Additional Analysis on the Entire Period of Emergence of the Trend to High Severity Failures
A recent study of actual annual mine records of 330 mines comprising 85% of world copper
production sheds some light on the economics that may apply for all metals, and may hold keys to a
deeper understanding of the relevant economic red flags of possibly incubating failure conditions [
10
].
The study reports that on average only 52% of mines were active at any time in their study period,
1993–2010 (173/330) and that 32% produced no mined output at all during the supercycle (maximum
active was 226). This suggests the possibility that from 30% to 52% of all “still open” copper mines
globally may not be economically feasible and cannot be expected to generate revenue sufficient to
cover production costs. In many instances, perhaps mines should never have been developed in the
first place. Certainly, no one would dispute there are many mines which have never been profitable,
and have frequently been in and out of production due to price sensitivity.
As Figure 1shows, based on the Aguirregabiria & Luengo [
13
] report, in the run up of the
supercycle the active participation among the 330 mines swelled from 144 (44%) to 226 (68%), viz. an
average of 173 active at any one time. It is in this increased re-entry, and often expansion of economically
fragile mines (see Price Waterhouse Coopers [
11
]), that the trend to ever-increasing severity and
frequency of catastrophic TSF failures has manifested.
Environments 2017, 4, 75 7 of 21
It is in this dysfunctional “maximum production at any cost” dynamic of the supercycle that the
dramatic upturn in the frequency and severity of failures occurred, and in which there is with very
little doubt a higher global portfolio risk of accrued and unexamined public liability. As presented in
Section 3, changes in waste to metals ratios for gold suggest the possibility of a more than 100%
increase in the level of potential unexamined risk [15].
3.3. Additional Analysis on the Entire Period of Emergence of the Trend to High Severity Failures
A recent study of actual annual mine records of 330 mines comprising 85% of world copper
production sheds some light on the economics that may apply for all metals, and may hold keys to a
deeper understanding of the relevant economic red flags of possibly incubating failure conditions
[10]. The study reports that on average only 52% of mines were active at any time in their study
period, 1993–2010 (173/330) and that 32% produced no mined output at all during the supercycle
(maximum active was 226). This suggests the possibility that from 30% to 52% of all “still open”
copper mines globally may not be economically feasible and cannot be expected to generate revenue
sufficient to cover production costs. In many instances, perhaps mines should never have been
developed in the first place. Certainly, no one would dispute there are many mines which have never
been profitable, and have frequently been in and out of production due to price sensitivity.
As Figure 1 shows, based on the Aguirregabiria & Luengo [13] report, in the run up of the
supercycle the active participation among the 330 mines swelled from 144 (44%) to 226 (68%), viz. an
average of 173 active at any one time. It is in this increased re-entry, and often expansion of
economically fragile mines (see Price Waterhouse Coopers [11]), that the trend to ever-increasing
severity and frequency of catastrophic TSF failures has manifested.
Figure 1. Number of producing mines & increasing copper price.
In response to investor demands for miners to reduce debt, there has been an aggressive
campaign to clear these marginal mines from the portfolios of the top producers. Leading industry
economists agree that this is a healthy restructuring at the company level. From the public interest
point of view, however, this widespread cleansing is problematic because whatever risks have
accrued in the waste facilities of these non-performing mines, and mines pushed beyond design
capacity in the production fever of the supercycle, remain unexamined. Whatever problems exist
have not been corrected. Based on the Aguirregabiria & Luengo study, it appears that without
significant new discoveries, perhaps as many as 30% of all currently permitted mines may never
100
150
200
250
300
350
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Number of Producing Mines
Active Mines
Active Mine (Linear R2 = 0.76)
$2015 Cu Price (Linear R2 = 0.43)
$2,422
2003
$8,323
2010
SOURCES: USGS [7], Aguirregabiria-Luengo [13]
226
144
CORRELATION 0.8251
Figure 1. Number of producing mines & increasing copper price.
In response to investor demands for miners to reduce debt, there has been an aggressive campaign
to clear these marginal mines from the portfolios of the top producers. Leading industry economists
Environments 2017,4, 75 8 of 21
agree that this is a healthy restructuring at the company level. From the public interest point of
view, however, this widespread cleansing is problematic because whatever risks have accrued in
the waste facilities of these non-performing mines, and mines pushed beyond design capacity in the
production fever of the supercycle, remain unexamined. Whatever problems exist have not been
corrected. Based on the Aguirregabiria & Luengo study, it appears that without significant new
discoveries, perhaps as many as 30% of all currently permitted mines may never produce revenue
again, and have had a poor history of production. It is reasonable to assume based on what is known
about the history of TSF management that most are upstream construction, have slurry depositions of
unstudied stability, and by design or neglect have water covers, which are all markers of elevated risk.
Prior to transfer to new owners, regulators have avoided enforcement and ducked corrections at
these marginal mines hoping for a return of prices that will allow problems to be addressed out of mine
revenues. For the 30% of mines that were not able to produce at all during the supercycle, it seems
unlikely there will be any new revenue soon, or perhaps ever, without major new discoveries or major
new technology breakthroughs. Therefore, a healthy restructuring from the point of view of mine
companies effectively represents a transfer of the TSF failure risk of these mines to the public, as there
are no mechanisms in place to force corrections or closure outside of the application and permit process.
Even after re-openings, regulators fear that enforcement actions may trigger bankruptcy, as occurred
at the short-lived reopening of the Yellow Giant Mine in Canada.
Regulators who believe that rising prices will restore production and bring revenue to fund
negotiated correction and closure of any serious TSF problems will have either to fund it themselves or
accept the consequences of failure.
3.4. Updates to pre-2010 Failures Data and Revised Predictions 2010–2020
Between the release date of the 2015 paper, reporting analyzing failures 1946–2009,
and preparation of the current paper, a great deal of new information developed on the pre- 2009
failures and significant incidents. This new information included both the details of failures already
in the database, and the identification of previously unreported failures. It is normal in all loss
development for there to be an estimable amount of what insurers call incurred but not reported, but in
this case the identification of three additional high severity failures resulted in an unusually significant
change from 7 to 10, a 42% rate of unreported high-severity failures. This has resulted in an upward
revision of the predicted number of high-severity failures in 2020–2020 from 11 to 13.
Analysis on the impact of the revised data on earlier reported trends and descriptive statistics from
1946 to 2009 indicates that the chronic condition of incomplete reporting, even in the Chambers-Bowker
Failures Database, has no effect on the bottom line findings and conclusions. What did emerge, and is
reported in the next section, is a greater clarity on the second highest severity category, as well as some
very interesting changes in the relationship between the two databases, failures vs mining economics.
The unreported very significant failure that did not appear in WISE, or in any other compilation,
was in Brazil, and is well known throughout the mining industry. ICOLD’s wise design for the
data base, and the foundations it created on the initial 221 records, and the work WISE has done
stands up to even a 40% under-reporting rate of high severity failures. The database still tells
its story. The WISE database appears to be sourced mainly by direct reporting from the industry,
and often encompasses under-reporting or missing runout and release data. The publicly available
Chambers-Bowker database [
5
] is far more complete than the WISE database. It is sourced directly
from the communities where the mine is located through media accounts, technical reports, and court
records, and is supplemented through continuous multi-language scan available online, and by inviting
authoritatively documented corrections and additions. What has been added to the WISE database
from this process has made it possible to do deeper and broader analysis of failures and failure causes.
Environments 2017,4, 75 9 of 21
3.5. Failure Updates and Revised Analysis through 2015
There has previously not been sufficient data on the release volume or runout distance of failures
to conduct any meaningful analysis on these variables. By ICOLD’s design, all records of release events
were to have this data, but as of the Rico study in 2007, they had to look to other sources to gather
28 records with both release and run out [
16
]. The new data added to Chambers-Bowker has nearly
doubled that number, making it possible for the first time to make a preliminary report on severity,
as measured by release and run out, across all failure categories. As graphically illustrated in Figure 2,
the absolute number of major failures, and the severity of all failures as indicated by cumulative release
and cumulative runout per decade, has steadily escalated reaching all new highs. The present decade
(2006–2015) captures the steepest part of the price run up of the supercycle, and just the beginning of
the steep and sudden downward leg. It is important to note that the escalation of severity, as measured
in release volumes and run out distance for all recorded events, is nearly parallel with the slope of
the trend lines of the two high-severity classifications. This indicates the possibility of common root
causes, even for the lowest severity failure events. It also confirms that the magnitude of all significant
events is increasing, and is affecting ever-larger areas by the increasing runout and release of the
failure events.
Environments 2017, 4, 75 9 of 21
cumulative release and cumulative runout per decade, has steadily escalated reaching all new highs.
The present decade (2006–2015) captures the steepest part of the price run up of the supercycle, and
just the beginning of the steep and sudden downward leg. It is important to note that the escalation
of severity, as measured in release volumes and run out distance for all recorded events, is nearly
parallel with the slope of the trend lines of the two high-severity classifications. This indicates the
possibility of common root causes, even for the lowest severity failure events. It also confirms that
the magnitude of all significant events is increasing, and is affecting ever-larger areas by the
increasing runout and release of the failure events.
Figure 2. Increasing severity & frequency of tailings storage facility failures
Estimating major failures by proven actuarial methods [4] and projecting cumulative runout and
release by trend line, the overall severity profile for the coming decade, 2016–2025 (Table 1), will be
67% higher for both major failure categories and severity will reach all-time highs with more modest
projected increases of 5% and 8% respectively.
Table 1. Anticipated increases in frequency & severity 2016–2025.
Time Period Very Serious
>1 Mm3
Serious
>100 Km3
Cumulative
Release Mm3
Cumulative
Run Out km
2006–2015 (actual) 9 9 895 92
2016–2025 (predicted) 15 15 937 110
Projected % change +67% +67% +5% +8%
Although not statistically significant by normal standards of minimum observation size, the fit
to a linear trend line and the strong r-square values for both Serious and Very Serious failures and
for the two severity elements shown in Figure 2 completes the compelling and persuasive forensic
evidence of increasing frequency and severity of TSF failures.
The data set on all 290 events in the failures database is shown in Table 2 with predictions for
2010–2020 and for 2016–2025 on a per million tonnes of Cu ore production basis. The 2010–2020
projection has increased from 11 to 13 based on the additional five years of failures and substantially
1960 1970 1980 1990 2000 2010 2020 2030
Very Serious Failures Serious Failures
Cumulative Release Cumulative Runout
Linear (Very Serious Failures) R2 = 0.79 Linear (Serious Failures) R2 = 0.77
Linear (Cumulative RElease) R2 = 0.70 Linear (Cumulative Runout) R2 = 0.96
Figure 2. Increasing severity & frequency of tailings storage facility failures.
Estimating major failures by proven actuarial methods [
4
] and projecting cumulative runout and
release by trend line, the overall severity profile for the coming decade, 2016–2025 (Table 1), will be
67% higher for both major failure categories and severity will reach all-time highs with more modest
projected increases of 5% and 8% respectively.
Table 1. Anticipated increases in frequency & severity 2016–2025.
Time Period Very Serious
>1 Mm3
Serious
>100 Km3
Cumulative
Release Mm3
Cumulative
Run Out km
2006–2015 (actual) 9 9 895 92
2016–2025 (predicted) 15 15 937 110
Projected % change +67% +67% +5% +8%
Environments 2017,4, 75 10 of 21
Although not statistically significant by normal standards of minimum observation size, the fit to
a linear trend line and the strong r-square values for both Serious and Very Serious failures and for the
two severity elements shown in Figure 2completes the compelling and persuasive forensic evidence
of increasing frequency and severity of TSF failures.
The data set on all 290 events in the failures database is shown in Table 2with predictions for
2010–2020 and for 2016–2025 on a per million tonnes of Cu ore production basis. The 2010–2020
projection has increased from 11 to 13 based on the additional five years of failures and substantially
more complete information on pre-2010 failures. Predictions for 2016–2025 are 15 for both high severity
categories, an annual rate 67% higher than the 2006–2015 decade.
Table 2. TSF Related Failures & Events by Severity 1906–2015.
Decade Dam Failures “Significant Events“ “Other Events“ Total
Very Serious Serious Other Non-Fail Non-Dam
1916–1925 0 0 1 0 0 1
1926–1935 1 0 0 0 0 1
1936–1945 1 0 7 0 0 8
1946–1955 1 1 5 0 0 7
1956–1965 3 1 30 0 1 35
1966–1975 7 6 37 0 4 54
1976–1985 5 7 36 2 2 52
1986–1995 6 13 34 3 0 56
1996–2005 9 11 17 0 0 37
2006–2015 9 9 16 3 1 38
=======
=======
=======
=======
=======
=======
Occurred 42 48 183 8 8 289
Pred. 2010–2020 13 13 n/av n/av n/av n/av
Pred. 2016–2025 15 15 n/av n/av n/av n/av
Source: Chambers-Bowker TSF Failures [5].
3.6. Root Causes of Failure beyond Proximate Cause
Virtually all Very Serious Failures in recorded history were preventable, either by better design or
by better operational management. Although ICOLD was the first to authoritatively name it in 2001,
it is widely recognized now that proximate cause (the precipitating final physical cause of a major
failure) of failure is not a matter of force majeure, unforeseeable and uncontrollable events, black swans
(high severity loss that results unforeseeably from the cumulative effect of a large number of small
events or conditions), or ordinary human error, but a result of conscious decisions at odds with Best
Practice, Best Knowledge and Best Available Technologies. Of course, the proximate cause of all TSF
dam failures is geophysical and structural in nature, but the root cause is a failure to design, build
and manage TSFs to known Best Practice, Best Knowledge, and Best Available Technology. Though
few put it in these plain terms, the Mt Polley Expert Panel, convened by the Government of British
Columbia to examine causes of the Mt Polley failure, and to make recommendations for applicable to
all tailings facilities, was very clear.
In Brazil and British Columbia, professional practice and regulatory guidance allowed
unrestrained reliance on the Observational Method, a term of art in mining that refers to a continuous,
managed and integrated process of design, construction control, monitoring and review enabling
appropriate, previously-defined modifications to be incorporated during, or after, construction.
The Mt Polley Report notes:
“The Observational Method
. . .
relies on recognition of the potential failure modes, an acceptable
design to deal with them, and practical contingency plans to execute in the event observations lead
to conditions that require mitigation. The lack of recognition of the critical undrained failure mode
that prevailed reduced the Observational Method to mere trial and error.” [17]
Environments 2017,4, 75 11 of 21
The Fundão dam had serious construction flaws in the base drain and filters, concrete decant
galleries were structurally deficient, operational deviations allowed structurally weak slimes to be
deposited in areas where they were prohibited by the operating plan, and the dam crest was moved
and constructed over these slimes causing the dam failure [18].
At Mt Polley, the miner deviated from the construction design, and the review committee found
the dam would not have failed if the original design had been followed, despite the undiscovered
glacial lake beneath the dam [17].
All of the earthquake triggered failures in Chile in the 1960s were found to be associated with the
prevalent use of upstream construction for TSFs in an area known to be prone to frequent, high severity
earthquakes [19].
With the exception of recent updates to law and policy in New South Wales [
20
], Australia,
which requires use of the Australian National Committee on Large Dams (ANCOLD). Guidelines on
Tailings Dams Planning, Design, Construction, Operation and Closure [
21
]. We are not aware of any
other legal framework for mining that enforces a primary Best Practice/Best Available Technologies
performance standard life of mine. Regulatory agencies do not formally adopt existing guidelines
like ANCOLD, leaving industry to depend largely on their own or consulting engineers without
independent review to make key decisions affecting public risk and viability. As the Mt Polley Expert
Panel noted, the standard applied in this prevailing framework often puts economic exigencies and
production schedules ahead of the public interest.
It is widely acknowledged even by the industry and major industry trade groups that Best
Knowledge and Best Practice and Best Available Technology will not be universally applied without
a legal mandate. For example, the standards adopted by the Mining Association of Canada (MAC)
and [
22
] and the International Council on Mining and Metals (ICMM) [
23
] leave the final determination
to the individual mine site or company. The British Columbia Ministry of Energy and Mines (BC MEM)
response to the Mt Polley Expert Panel recommendations avoided several of the main recommendations
of the Mt Polley Expert Panel to the point where BC MEM requirements will not adequately protect
tailings dams from future failures [12].
The focus only on proximate cause in the autopsy of catastrophic events on the one hand, and
the determined avoidance of Best Available Technology, Best Knowledge and Best Practice in law and
policy on the other, sets up a system wherein it’s easy to look to short cuts on all aspects of waste
management practice without raising any concerns on the part of regulators or investors. To B.C.
Ministry of Energy and Mines’s credit, they did flag the exact location of failure two years before and
did press for a full buttress, which was resisted and contested [17].
More importantly, the focus on proximate cause fails to address or understand the more
fundamental root causes that result in these deviations where law does not require and enforce
adherence to the application of best practices in all phases of TSF design, construction, operation,
and closure, or to require expert independent review of key decisions affecting public risk and
economic viability.
3.7. The Directly Measureable Relationship between Failure Trends & Global Mine Economics
The global economic history of metallic mining is best and most frequently described with four
key variables: (1) volume of metals produced from mines, (2) realized price for that volume, (3) costs
to produce, and (4) grade of ore to the mill. Over the past 100 years, the key dynamic of metallic metal
mining globally for all metals has been declining grades and declining prices punctuated by a few
short-term supercycles. As grades fell across all metals for discoveries, reserves and head grades,
economic feasibility and the possibility of profit has turned mainly on the economics of ore production
made possible through open pit mining. The cost to move a tonne of ore from the ground to the mill is
completely independent of grade and of the ultimate price that will result.
This brings two additional key variables into play as the background economics that result in high
failure frequency and severity: (1) ore production volume, and (2) the mining cost per tonne of ore.
Environments 2017,4, 75 12 of 21
Mine economist Richard Schodde correctly mapped the major historic role the unit cost of ore
production has played in holding the line against falling grades, and against the long-term decline in
prices [
24
]. He calculated that while overall mine costs, from 1900–2010, had declined by 50% in real
dollars, that when distributed over ore volume, the per-tonne of ore production cost had declined 87%.
This is what made the mining metric workable and profitable for some but not all. Schodde argued that
the decline in ore production costs would continue to grow the resource even as grades continued to
fall (discovery, reserves, and as milled). What the World Bank detected was the dramatically widening
gap between ore production volumes and mined metals output [20].
This gap could also be described as declining yields on the economics side and exponential growth
in wastes on the environmental side. In only eight years, from 2005 to 2013, the decline in yields for
gold was 29%, from 1.68 g/t in 2005 to 1.20 g/t in 2013. On a waste to metals basis, that translates to
a 117% increase from 52 tonnes/oz. to 113 tonnes/oz. [
15
]. It is to this gap of ever-declining yields,
and its relationship to the emerging trends of catastrophic failures that prior research [
3
,
4
] and this
paper are addressed.
The previously established correlations between failure severity and these five key mining
economics parameters (Cu Ore, Cu Grade, Cu Metal, Cu Cost, Cu Price) is reaffirmed in failures
and mine economics data as of December 31, 2015, as shown in Table 3.
Table 3. Changes in correlations 1940–2009.
As Known July 2015 v As Known July 2016
Date/Severity Very Serious Serious Cu Ore Cu Grade Cu Cost
Very Serious July 2015 1 0.880 0.860 0.794 0.788
Very Serious July 2016 1 0.903 0.953 0.825 0.754
Serious July 2015 0.880 1 0.720 0.884 0.682
Serious July 2016 0.903 1 0.824 0.843 0.801
Sources: Bowker-Chambers Mine Economics Data Base [14], Chambers-Bowker TSF Failures [5].
What emerges with more complete data on pre-2010 failures than we had in July 2015 and
the additional six years of data (2010–2015) is an interesting, new view of the relative strength of
correlations in the two high severity failure categories. Ore production is reaffirmed as the most
dominant but with much higher correlations with both severity categories, 0.953 for Very Serious
Failures and 0.824 for Serious Failures. Grade clearly emerges as much more dominant for Very Serious
Failures and copper production cost (Cu Cost) emerges as much less important for Very Serious
Failures and much more important for Serious Failures. Overall, there is more clarity on Serious
Failures, and it is now apparent they are shaped by the same forces as Very Serious Failures.
As is clear in Figure 3, the rising trend of Very Serious Failures emerges despite the long-term
offsetting effects of lower ore production unit costs that accompany the plunge in as-milled grades.
The World Bank noted this shift in the relationship between finished metals production and ore
production as of 2000 [
1
]. As was previously mapped [
8
], that spread continued to widen through
2009 [
4
]. In the six years since 2009, the spread is even more pronounced, primarily as a result of an
even steeper and faster decline in available ore grades that the industry neither foresaw nor prepared
for. This increasing spread between metals production from mines and ore production needed to attain
that level of production very clearly begins around 1990, almost a full decade before the start of the
supercycle. See Figure 4. A closer look at what was happening to grades, in Figure 5, as prices rose
over the supercycle reveals the key impetus for failure.
Environments 2017,4, 75 13 of 21
Figure 3. Failure trend increases despite lower costs & exponential price rises.
Environments 2017, 4, 75 13 of 21
Figure 3. Failure trend increases despite lower costs & exponential price rises.
The World Bank noted this shift in the relationship between finished metals production and ore
production as of 2000 [1]. As was previously mapped [8], that spread continued to widen through
2009 [4]. In the six years since 2009, the spread is even more pronounced, primarily as a result of an
even steeper and faster decline in available ore grades that the industry neither foresaw nor prepared
for. This increasing spread between metals production from mines and ore production needed to
attain that level of production very clearly begins around 1990, almost a full decade before the start
of the supercycle. See Figure 4. A closer look at what was happening to grades, in Figure 5, as prices
rose over the supercycle reveals the key impetus for failure.
Figure 4. The shift in the mining metric from throughput to grade.
1910 1930 1950 1970 1990 2010
Cu Price 1910-2015 Cu Cost 1910-2015
VERY SERIOUS FAILURES Cu Price (Poly R2 = 0.46)
Cu Cost (Poly R2 = 0.92) Very Serious Failures (Linear R2 = 0.86)
Sources: Bowker-Chambers Mine Economics Data Base [14], Chambers-Bowker TSF Failures [5]
$4292
$42
1
9/$8,323
$21
1910 1930 1950 1970 1990 2010
Cu Metal Cu Ore
Cu Grade Cu Metal (Linear R2 = 0.88)
Cu Ore (Exp R2 = 0.97) Cu Grade (Linear R2 = 0.90)
Source Bowker Chambers Mining Economics Database [14]
Figure 4. The shift in the mining metric from throughput to grade.
Environments 2017,4, 75 14 of 21
Environments 2017, 4, 75 14 of 21
Figure 5. Global copper as-milled grade 1996–2015.
Over the entire period of the supercycle, as shown in Figure 5, “as milled” grades have dropped
significantly, affecting not only smaller economically marginal mines but the behemoth Chilean and
Top-40 producers as well.
As devised by ICOLD [23] and carried on by WISE [25], the tailings dam failures database
captures no data on geological, geochemical or econometric descriptors of the mines with failed TSFs.
The data on physical characteristics of the TSF facility (height, capacity, type of construction) and
severity (run out release deaths) is sporadically reported, even for catastrophic failures. It has
nevertheless been possible, with volunteer support from a colleague, to piece together some mine-
level econometric markers on some of the mines with Very Serious Failures post 1990. The data on 7
of 18 mines with Very Serious Failures post 1996 strongly indicate that the econometric markers of
these mines are significantly below global averages.
Average resource grade as of failure for the six mines which are primarily copper producers was
0.37 as compared with a global average head grade at producing copper mines of 0.76. Of 7 mines
with Very Serious Failures 1992–2010, the Cu equivalent grade (i.e., taking account of other metals
produced or translating all metals into Cu equivalent) was 1.10 as compared to a realized grade of
2.25, as reported by Aguirregabiria & Luengo [5] for their 330 producing copper mines, operating
from 1992 to 2010. These are imperfect and non-exact comparisons, but they are also strongly
persuasive that mines that produce Very Serious TSF Failures are poor performers viz. average global
econometrics. This in turn suggests a significant public interest in giving independent authoritatively
verified economic feasibility a specific and prominent place in mine and mine expansion approval,
and in life-of-mine and life-of-facility regulatory oversight.
These adverse grade deviations at the mine-level translate to, and are determinant of, higher
costs to produce, as well as of larger waste volumes per unit of metal produced.
The fundamentals of how this plays at the mine-level is simply and succinctly expressed by
Andrey Dashkov, Senior Analyst, Casey Research: “As a project moves to the development stage, the
higher the grade, the more robust the projected economics of a project. For a mine in production, the higher the
grade, the more technical sins and price fluctuations it can survive.” [26]. Continuing in this analysis,
Dashkov goes on to declare that volume and throughput (the Scholz foundation for profitability of
low grade mines) is no longer king, and that grade is now king in determining which mines will be
successful and which will fail. This was essentially validated by Bowker-Chambers [4] as the context
and main driver in the emerging prevalence of catastrophic failures.
Dashkov’s analysis is that a grade advantage is a critical determinant of ability to survive serious
technical flubs and dramatic unpredictable price fluctuations. As a norm for all metals, this means
0.50
0.55
0.60
0.65
0.70
0.75
0.80
0.85
0.90
0.95
1.00
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
MILLED GRADE
YEAR
Copper Grade 1996-2015
Cu Grade 1996-2015 (Linear R2 = 0.51)
Source Bowker Chambers Mining Economic Data Base [14]
Figure 5. Global copper as-milled grade 1996–2015.
Over the entire period of the supercycle, as shown in Figure 5, “as milled” grades have dropped
significantly, affecting not only smaller economically marginal mines but the behemoth Chilean and
Top-40 producers as well.
As devised by ICOLD [
23
] and carried on by WISE [
25
], the tailings dam failures database captures
no data on geological, geochemical or econometric descriptors of the mines with failed TSFs. The data
on physical characteristics of the TSF facility (height, capacity, type of construction) and severity
(run out release deaths) is sporadically reported, even for catastrophic failures. It has nevertheless
been possible, with volunteer support from a colleague, to piece together some mine-level econometric
markers on some of the mines with Very Serious Failures post 1990. The data on 7 of 18 mines with
Very Serious Failures post 1996 strongly indicate that the econometric markers of these mines are
significantly below global averages.
Average resource grade as of failure for the six mines which are primarily copper producers was
0.37 as compared with a global average head grade at producing copper mines of 0.76. Of 7 mines with
Very Serious Failures 1992–2010, the Cu equivalent grade (i.e., taking account of other metals produced
or translating all metals into Cu equivalent) was 1.10 as compared to a realized grade of 2.25, as reported
by Aguirregabiria & Luengo [
5
] for their 330 producing copper mines, operating from 1992 to 2010.
These are imperfect and non-exact comparisons, but they are also strongly persuasive that mines that
produce Very Serious TSF Failures are poor performers viz. average global econometrics. This in
turn suggests a significant public interest in giving independent authoritatively verified economic
feasibility a specific and prominent place in mine and mine expansion approval, and in life-of-mine
and life-of-facility regulatory oversight.
These adverse grade deviations at the mine-level translate to, and are determinant of, higher costs
to produce, as well as of larger waste volumes per unit of metal produced.
The fundamentals of how this plays at the mine-level is simply and succinctly expressed by
Andrey Dashkov, Senior Analyst, Casey Research: As a project moves to the development stage, the higher
the grade, the more robust the projected economics of a project. For a mine in production, the higher the grade,
the more technical sins and price fluctuations it can survive.” [
26
]. Continuing in this analysis, Dashkov
goes on to declare that volume and throughput (the Scholz foundation for profitability of low grade
mines) is no longer king, and that grade is now king in determining which mines will be successful
and which will fail. This was essentially validated by Bowker-Chambers [
4
] as the context and main
driver in the emerging prevalence of catastrophic failures.
Environments 2017,4, 75 15 of 21
Dashkov’s analysis is that a grade advantage is a critical determinant of ability to survive serious
technical flubs and dramatic unpredictable price fluctuations. As a norm for all metals, this means that
smaller, lower grade mines will suffer more and have more physical manifestations of their economic
stress than larger, higher-grade mines. Very simply, smaller, lower grade mines operated by junior
and midsize miners have less cushion. They must ride too close to the edge of financial viability viz.
global metals markets and major producers to try to stay in production. They also have less access
to high quality capital markets, paying more and operating under more onerous terms of credit than
the top producers. George Ireland has frequently cited this factor as creating financial instability and
uncertainty, when the due dates of credit do not match up with cash flow needs, expected revenue
generation, and production capacities of the mine. This mismatch can actually lead to failure or
involuntary investor takeover elevating uncertainty and instability [27].
In gold, as respected analyst Mark Fellows explains, a 10% fall in global average ore grade gives
rise to a $50/oz. rise in average global production costs [
28
]. At the mine-level, a difference between a
gold mine with 1.72 g/t and 2.2 g/t translates to a likely cost difference of $100/oz. in total production
costs. These are the actual differences at the Gold Ridge mine, Guadalcanal, in 2009. This mine
with complex anomalous ores never achieved profitability, not because of political unrest or weather,
but because of the low quality and complexity of the deposit compared to others shaping world
markets. Gold Ridge, with approximately 20 million cubic meters tailings storage capacity with a
long history of many owners, frequent interruptions, and continually falling recovery rates (another
emerging consequence of mining very low-grade ores), under ownership of landowners with limited
technical competence, has hovered on the brink of complete failure by overtopping for two years [
29
].
While its resource grade is still 1.70 (or was when last studied for Allied by Golder in 2011, the best
recovery rate Golder could project was 75% creating an effective (realizable grade) of only 1.4% [
30
].
That is still high compared to present global averages but the tailings problems have not been solved
and the feasibility of actually re-entering production has not been assessed. The new owner, AXF, is a
Chinese real estate company with no prior history or experience in mining [31].
3.8. Further Exploration of the Dimensionality of Relationship between Failures and Global Mining Economics
If the legal frameworks for mining mandated the maintenance of public information on the
tailings facilities and their larger context of mine and miner on the mines they have approved (or are
reviewing), it would be possible to directly compare mine-level with global economic profiles and
develop proven failure risk markers that might help intercept the incubation of failure conditions early
enough for correction before the failure occurs. This information does not exist in any permitting
regime we have seen. We know from the mine-level narrative of catastrophic failures that poor vetting,
shoestring economics, and production schedules ahead of safety were very much the key backstory at
Mt Polley, which never attained economic feasibility. From the outset, Mt Polley was plagued by low
grades and low recovery rates. A careful reading of all annual reports and of the NI 43-101 prepared
by an in-house geologist indicates that the reopening in 2005 was based on sparse 4-year old data that
was not independently verified or re-examined. Life of mine Average Cu Grade was 0.38 vs 0.70 global;
higher throughput did not achieve higher metals output as recovery grades constantly were below
expected. Imperial processed 29% more ore in 2013 as compared with 2006, its year of peak grade, but
produced 3.2% less metal. As is obvious in Figure 6falling grades parallel metals output. Life of mine
to failure, the Very Serious failure rate for Mt Polley is 0.011 per million tonnes of ore to the mill vs
0.0004 globally, that is 27 times higher than the global failure performance.
Environments 2017,4, 75 16 of 21
Environments 2017, 4, 75 16 of 21
Figure 6. Mt Polley economics pre-failure.
The amount of debt Samarco had amassed for the 2010 expansion put great weight on them
going forward. They did not stop to fix the Fundao dam or to create more long-term capacity onsite
[5]. Piecing this economic back-story together for all failures into a database has so far been
impossible. However, it is still possible to probe more deeply the dimensionality of the connection
between failures and global economics over time at the aggregate level via Canonical Correlation
Analysis (CCA). CCA is a way of exploring whether two data sets, in our case the failures data set
and the global economics data set, are independent. It can also help identify the dimensions of cross
influences or common unidentified external influences (e.g., technical incompetence, brain drain,
improper application of technology, geographic shifts in production advantage, excessive debt lost
productivity).
Prior research on failures 1940–2009 [4] utilizing CCA strongly indicated that TSF failures and
copper economics data sets are interdependent, and this is reaffirmed with data through 2015 (see
Database for technical documentation). More than 95% of the total variance is explained through the
two canonical variables for both the pre-2010 and pre-2015 data sets. In both, extremely high
eigenvalues (0.950 and 0.854), cumulatively explain 100% of the variation. These results strongly
indicate the presence of a clear and powerful correlation between failures data and economics data
that is linear in nature. The results also further suggest that there are no “missing variables” (no
external latent variables commonly affecting both data sets). The Wilks Lambda variables for the
entire CCA model for both pre-2010 (0.011) and post 2010 (0.007) data sets are extraordinarily low,
supporting the assertion that the two data sets, failures and econometrics, are not independent.
What is most notable though over only 6 years (2010–2015) is the change in the composition of
the canonical variables again pointing to the strong influence of grade, as shown in Table 4.
2005 2006 2007 2008 2009 2010 2011 2012 2013
Cu Ore Cu Metal
Cu Grade Cu Recovery
Cu Ore (Linear R2 = 0.88) Cu Metal (Poly R2 = 0.78)
Cu Grade (Poly R2 = 0.86) Cu Recovery (Poly R2 = 0.84)
Sources: Imperial Metals Annual NI 43-101 Reports
- avg grade .38 v.70 global
- avg CuEQ .9 v 2.25 global
- avg recovery rate 70%
- higher throuhput did not achieve higher metals outut
- never profitable
0.47%
85%
0.025 Mt
6.2 Mt
8.0 Mt
75%
0.30%
0.017 Mt
Figure 6. Mt Polley economics pre-failure.
The amount of debt Samarco had amassed for the 2010 expansion put great weight on them going
forward. They did not stop to fix the Fundao dam or to create more long-term capacity onsite [
5
].
Piecing this economic back-story together for all failures into a database has so far been impossible.
However, it is still possible to probe more deeply the dimensionality of the connection between failures
and global economics over time at the aggregate level via Canonical Correlation Analysis (CCA).
CCA is a way of exploring whether two data sets, in our case the failures data set and the global
economics data set, are independent. It can also help identify the dimensions of cross influences
or common unidentified external influences (e.g., technical incompetence, brain drain, improper
application of technology, geographic shifts in production advantage, excessive debt lost productivity).
Prior research on failures 1940–2009 [
4
] utilizing CCA strongly indicated that TSF failures
and copper economics data sets are interdependent, and this is reaffirmed with data through 2015
(see Database for technical documentation). More than 95% of the total variance is explained through
the two canonical variables for both the pre-2010 and pre-2015 data sets. In both, extremely high
eigenvalues (0.950 and 0.854), cumulatively explain 100% of the variation. These results strongly
indicate the presence of a clear and powerful correlation between failures data and economics data that
is linear in nature. The results also further suggest that there are no “missing variables” (no external
latent variables commonly affecting both data sets). The Wilks Lambda variables for the entire CCA
model for both pre-2010 (0.011) and post 2010 (0.007) data sets are extraordinarily low, supporting the
assertion that the two data sets, failures and econometrics, are not independent.
What is most notable though over only 6 years (2010–2015) is the change in the composition of
the canonical variables again pointing to the strong influence of grade, as shown in Table 4.
Environments 2017,4, 75 17 of 21
Table 4. Very Serious Failures correlations with Canonical Variables.
Variable 1940–2009 1936–2015
Copper Production (CUPROD) 0.8285 0.9136
Copper Grade (CUGRADE) 0.6064 0.8827
Copper Cost (CUCOST) 0.3982 0.5373
In the canonical variable most closely associated with Very Serious Failures, the correlations with
the three mining economics variables is stronger for all 3 post 2010 v pre- 2010. The most dramatic
change is with grade from 0.6064 pre- 2010, to 0.8827 post 2010.
The eigenvalues imply a very strong simple linear relationship between Very Serious Failures and
both grade and ore production volume.
We undertook examination of these relationships through linear regression, again not to establish
statistical significance but just to describe the relationships.
The regression of Very Serious Failures by grade explained 79% of the total variance as shown
in Figure 7. Each blue dot is an actual observation. The chart shows the dispersion of observation
with reference to the 95%confidence intervals. Again, this confirms the very strong influence of global
average mill grade on catastrophic failures.
Environments 2017, 4, 75 17 of 21
Table 4. Very Serious Failures correlations with Canonical Variables.
Variable 1940–2009 1936–2015
Copper Production (CUPROD) 0.8285 0.9136
Copper Grade (CUGRADE) 0.6064 0.8827
Copper Cost (CUCOST) 0.3982 0.5373
In the canonical variable most closely associated with Very Serious Failures, the correlations
with the three mining economics variables is stronger for all 3 post 2010 v pre- 2010. The most
dramatic change is with grade from 0.6064 pre- 2010, to 0.8827 post 2010.
The eigenvalues imply a very strong simple linear relationship between Very Serious Failures
and both grade and ore production volume.
We undertook examination of these relationships through linear regression, again not to
establish statistical significance but just to describe the relationships.
The regression of Very Serious Failures by grade explained 79% of the total variance as shown
in Figure 7. Each blue dot is an actual observation. The chart shows the dispersion of observation
with reference to the 95%confidence intervals. Again, this confirms the very strong influence of global
average mill grade on catastrophic failures.
Figure 7. Regression of Very Serious Failures by CUGRADE (R2 = 0.793).
The regression of Very Serious Failures by ore production volume (copper production—
CUPROD), essentially tailings waste volume, explained 76% of total variance as shown in Figure 8.
-5
-3
-1
1
3
5
7
9
11
13
15
0.5 0.7 0.9 1.1 1.3 1.5 1.7
Very Serious Failures
Copper Grade (CUGRADE)
Model (Very Serious Failures)
Conf. interval (Mean 95%)
Conf. interval (Obs 95%)
Number of Very Serious Failures vs. Copper Grade
Figure 7. Regression of Very Serious Failures by CUGRADE (R2= 0.793).
The regression of Very Serious Failures by ore production volume (copper production—CUPROD),
essentially tailings waste volume, explained 76% of total variance as shown in Figure 8.
Environments 2017,4, 75 18 of 21
Environments 2017, 4, 75 18 of 21
Figure 8. Regression of Very Serious Failures by copper production (R2 = 0.764).
4. Conclusions
Overlaying the supercycle autopsies of some of the world’s top mining analysts onto what we
previously documented in Bowker-Chambers [3] explains the extent and nature of dysfunctions in
global mine planning, development and operation that shaped what we previously had mapped and
inferred from our data.
In their independent examination of the supercycle, there is a clear consensus among the world’s
top mining analysts that we have crossed the threshold into a new and as-yet unclear era of mining.
If it is understood at all, the industry, its regulators and even its key investment analysts have not
publicly recognized that present discovery and as milled grades have reached levels that are beyond
presently known technology that had previously worked to create economic viability for low grade
large scale mines. No regulatory agency known to us has recognized the need to reexamine the large-
scale low-grade mining projects like KSM, Pebble, and PolyMet that were originated in the frenzy of
the supercycle on assumptions that were never proven in the first instance, and which are very clearly
no longer true. No regulatory agency known to us has recognized that the supercycle was a time of
pushing marginal mines and their existing infrastructure beyond design capacity and that, as at Mt
Polley and Samarco, those are practices in which failure incubates and matures.
Neither the industry itself nor its regulators are taking realistic account of the implications of the
fact that somewhere between 1/3 and 1/2 of all technically operating mines are no longer economically
viable or never were viable. Such a high incidence of stranded assets does not indicate wellness for
the industry as a whole. Regulators passively stand by while the wholesale dumping of these mines
continues assuming that production will resume, that jobs will be retained, and that new revenue
will finance identification and correction of any potential flaws in infrastructure aggressively pushed
into production levels beyond planned capacity. These are not assumptions supported by available
data or expert economic analysis.
There is not enough data to say what percentage of these no longer viable mines have TSF’s large
enough to cause catastrophic failure, but we have confidence in our prediction methods which
accurately predicted the 9 very serious failures 2006–2015. We have confidence that the fall out of the
supercycle dysfunctions will manifest in higher than previously expected Serious and Very Serious
Failures. The data and our proven method of prediction tell us that the expected number of high
severity failures is greater than previously estimated for the decade 2010–2020, and that we can expect
a record high of at least 15 in each high consequence category for 2016–2025.
We now can clearly see a significantly elevated and not fully examined global portfolio risk of
failure. History itself proves that characterization wrong. We had pieced together a patchwork quilt
-5
0
5
10
15
20
0 5,000 10,000 15,000 20,000 25,000 30,000
Very Serious Failures
Copper Production (CUPROD)
Model(Very Serious Failures)
Conf. interval (Mean 95%)
Conf. interval (Obs 95%)
Number of Very Serious Failures vs. Copper Grade
Figure 8. Regression of Very Serious Failures by copper production (R2= 0.764).
4. Conclusions
Overlaying the supercycle autopsies of some of the world’s top mining analysts onto what we
previously documented in Bowker-Chambers [
3
] explains the extent and nature of dysfunctions in
global mine planning, development and operation that shaped what we previously had mapped and
inferred from our data.
In their independent examination of the supercycle, there is a clear consensus among the world’s
top mining analysts that we have crossed the threshold into a new and as-yet unclear era of mining.
If it is understood at all, the industry, its regulators and even its key investment analysts have not
publicly recognized that present discovery and as milled grades have reached levels that are beyond
presently known technology that had previously worked to create economic viability for low grade
large scale mines. No regulatory agency known to us has recognized the need to reexamine the
large-scale low-grade mining projects like KSM, Pebble, and PolyMet that were originated in the frenzy
of the supercycle on assumptions that were never proven in the first instance, and which are very
clearly no longer true. No regulatory agency known to us has recognized that the supercycle was a
time of pushing marginal mines and their existing infrastructure beyond design capacity and that,
as at Mt Polley and Samarco, those are practices in which failure incubates and matures.
Neither the industry itself nor its regulators are taking realistic account of the implications of the
fact that somewhere between 1/3 and 1/2 of all technically operating mines are no longer economically
viable or never were viable. Such a high incidence of stranded assets does not indicate wellness for
the industry as a whole. Regulators passively stand by while the wholesale dumping of these mines
continues assuming that production will resume, that jobs will be retained, and that new revenue will
finance identification and correction of any potential flaws in infrastructure aggressively pushed into
production levels beyond planned capacity. These are not assumptions supported by available data or
expert economic analysis.
There is not enough data to say what percentage of these no longer viable mines have TSF’s
large enough to cause catastrophic failure, but we have confidence in our prediction methods which
accurately predicted the 9 very serious failures 2006–2015. We have confidence that the fall out of the
supercycle dysfunctions will manifest in higher than previously expected Serious and Very Serious
Failures. The data and our proven method of prediction tell us that the expected number of high
severity failures is greater than previously estimated for the decade 2010–2020, and that we can expect
a record high of at least 15 in each high consequence category for 2016–2025.
Environments 2017,4, 75 19 of 21
We now can clearly see a significantly elevated and not fully examined global portfolio risk of
failure. History itself proves that characterization wrong. We had pieced together a patchwork quilt of
costs and legal judgments on post 1990 Very Serious failures predicting $6 billion in 11 Very Serious
failures 2010–2020. Samarco alone has damages that exceed that hobbled together estimate by at least
3-fold from a TSF with only a capacity of only 60 Mm
3
. We now reasonably anticipate 13 not 11 Very
Serious failures and an additional 13 Serious Failures based on actual ore production volumes and
compilation and reconciliation of independent expert predictions post 2015.
Portfolio Public Liability Risk is Not Going to Simply Self-Correct to Less Elevated Levels
Nether MAC nor ICMM nor any mining jurisdiction we are aware of has undertaken any reforms
that will be effective in lowering public liability portfolio risk.
In risk management we live by that old adage “an ounce of prevention is worth a pound of cure”.
Waiting for revenue that will never come to fix broken and no longer serviceable infrastructure is
not in the public interest. It offers neither prevention nor hope of cure for whatever already formed
catastrophic losses are maturing to final event.
Continuing to advance and tout mega scale low-grade projects conceived in the supercycle and
based on its cowboy economics offers no reform, no future with better outcomes.
Regulators have clearly chosen protection and support for the mining industry over reducing
public risk and public liability. That, and past long-standing issues of enormous gravity, have brought a
loud public backlash in anti-mining anger in the form of extreme and reactive legislation with outright
complete prohibitions on all metallic mining, bans on open pit mining, bans of varying degrees on all
upstream construction. In the case of Maine, a state with only two modern era mines, both failures with
unresolved, unfunded, public consequence, recent legislative changes to mining law sponsored by a
statewide coalition of non-governmental organizations requiring upfront payment in cash-equivalent
for an independently verified worst-case scenario. This is the first evidence of reactive mining statutes
in the United States and Canada since passage of Wisconsin’s ”Prove-It” statute, which most in the
industry also regard as anti-mining.
If regulators and the industry do not address themselves more actively to public risk and public
liability than they have done to date, three years after Mt Polley and two years after Samarco, it is
reasonable to expect that elevated public outrage will spawn more of these public opinion-driven
reactionary extreme anti-mining proposals.
While all that unfolds as it may, our data say the public liability risk continues to elevate and the
consequence of failure continues to grow.
Acknowledgments:
We would like to dedicate this work to our colleague, Robert Moran, who tragically died in
an automobile accident in 2017. Bob was not only a colleague in working for the public interest, but was following
the development of this paper, and its associated tailings dam failure research. To us, and to most that knew him,
but was not only a colleague, but also a friend. He will be missed.
Author Contributions:
Lindsay Newland Bowker provided the canonical correlation analyses, developed the
mining economics database, and wrote the paper. David Chambers provided analyses and text on tailings storage
facility failures. Lindsay and David jointly developed the tailings dam failures database.
Conflicts of Interest: The authors declare no conflict of interest.
Funding: No external funding was provided for this research.
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When classified on the basis of severity using the three available severity of incident indicators recorded in the of World Information Service on Energy (WISE) and International Commission on Large Dams (ICOLD) compilations (total release volume, release run out distance, and resulting deaths), the history of reported TSF failures 1910‐ 2010 reveals the unmistakable emergence of a trend of “Serious”3 and “Very Serious”4 failures in the most recent decades. Public liability loss exposure is therefore steadily increasing. The possibility of a failure releasing more than 1 million cubic meters (our definition of Very Serious) arises with the increasing prevalence of TSF’s with a total capacity > 5 million cubic meters (Rico, Benito e. al. 2008). So in part the emerging increasing trend of such large failures is a result of the increasing prevalence of these much larger TSF’s. The economic consequence to the public of these very large failures is not systematically compiled for public review by any authoritative source. However, by examining public records of government attempts to recover their actual costs and damages from the at‐fault miners, we were able to determine that an average Very Serious Failure post‐1990 cost government 543million(543 million (2014) in uncompensated damages and expenditures.. Using loss development methods loosely based on those employed for insurance rate‐making, we estimate that global un funded un fundable public liability 2010‐2020 will be 6billionfrom11VerySeriousFailuresandasmuchas6 billion from 11 Very Serious Failures and as much as 1 billion from 12 Serious Failures (>100,00 m3<1X106m3). This paper is focused on the public liability of catastrophic and very significant Tailings Storage Facilities (TSF) failures, and the unexplored relationship between these large scale failures and specific aspects global economics that have affected the entire industry: (1) continually declining grades and prices; (2) costs to produce that are no longer declining; and, (3) the exponentially expanding waste volumes as grades decline faster than at any other time in global history. Tailings Storage Facilities present the largest source of potential consequential loss during active mine life at most mines, and therefore constitute the largest single public liability exposure both during operations and post closure. Fortunately, the availability of global reporting back to 1910, and a central compilation of TSF incidents, accidents and failures, provides a reasonable approximation of a public liability loss history in the sense that it documents the severity of off‐site consequences (release, run out and deaths) from which the entire recorded history of incidents can be classified by severity of off‐site damages. We would like to have also compared the degree of influence of selected macro‐economic trends with the degree of influence of the causes of loss most often examined and cited in engineering reports, but sufficient data is not available and the entire known inventory of failure is too small for in‐depth comparative analysis of the degree of influence among the primary different elements known to increase risk. When classified on the basis of severity using the three available severity of incident indicators recorded in the of World Information Service on Energy (WISE) and International Commission on Large Dams (ICOLD) compilations (total release volume, release run out distance, and resulting deaths), the history of reported TSF failures 1910‐ 2010 reveals the unmistakable emergence of a trend of “Serious”3 and “Very Serious”4 failures in the most recent decades. Public liability loss exposure is therefore steadily increasing. The possibility of a failure releasing more than 1 million cubic meters (our definition of Very Serious) arises with the increasing prevalence of TSF’s with a total capacity > 5 million cubic meters (Rico, Benito e. al. 2008). So in part the emerging increasing trend of such large failures is a result of the increasing prevalence of these much larger TSF’s. The economic consequence to the public of these very large failures is not systematically compiled for public review by any authoritative source. However, by examining public records of government attempts to recover their actual costs and damages from the at‐fault miners, we were able to determine that an average Very Serious Failure post‐1990 cost government 543million(543 million (2014) in uncompensated damages and expenditures.. Using loss development methods loosely based on those employed for insurance rate‐making, we estimate that global un funded un fundable public liability 2010‐2020 will be 6billionfrom11VerySeriousFailuresandasmuchas6 billion from 11 Very Serious Failures and as much as 1 billion from 12 Serious Failures (>100,00 m3<1X106m3). ( see technical reports at www.csp2.org for full paper which was presented at Norhern Latitudes Mining Recalamton Workshop , Juneau 2015
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Chile is one of the main copper producers in the world. It is located in a geographical area where mega-earthquakes occur and this fact, together with the development of larger and higher sand tailings dams (with some facilities currently under development having final heights in excess of 250 m), requires that careful attention be paid to the safety and security of these facilities. In this paper, the main failure mechanisms of these sand tailings dams that have generated incidents of different magnitude involving loss of human life, significant environmental damage, and economic losses are described. Some key characteristics of reported incidents in Chile are presented, including failures resulting from the mega-earthquake that occurred on 27 February 2010 (Maule Region, Chile). Finally, the engineering practice and present Chilean regulatory framework, which have allowed progressive improvements in the construction, operation, and closure of such deposits, are described.
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This study explores the dynamics of monthly metal prices during the past 100 years. On the basis of a unique data set, co-movement, price cycles and long-run trends are analyzed by means of common statistical methods and the results are compared to the �ndings in the literature. Due to its large number of monthly observations (1224) and high number of price series (20), this data set has a huge advantage. Findings suggest that some results in the literature are speci�c for non-ferrous and precious metals and do not necessarily carry over to other metals like steel alloys, electrical metals, light metals, steel or iron ore. However, other results in the literature can be con�rmed by the analysis of this comprehensive data set.
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This paper compiles the available information on historic tailings dam failures with the purpose to establish simple correlations between tailings ponds geometric parameters (e.g., dam height, tailings volume) and the hydraulic characteristics of floods resulting from released tailings. Following the collapse of a mining waste dam, only a part of tailings and polluted water stored at the dam is released, and this outflow volume is difficult to estimate prior the incident. In this study, tailings' volume stored at the time of failure was shown to have a good correlation (r2=0.86) with the tailings outflow volume, and the volume of spilled tailings was correlated with its run-out distance (r2=0.57). An envelope curve was drawn encompassing the majority of data points indicating the potential maximum downstream distance affected by a tailings' spill. The application of the described regression equations for prediction purposes needs to be treated with caution and with support of on-site measurement and observations. However, they may provide a universal baseline approximation on tailing outflow characteristics (even if detailed dam information is unavailable), which is of a great importance for risk analysis purposes.
Technical Report of the Feasibility Study to Australian Solomons Gold Limited Gold Ridge Project, Guadalcanal, Solomon Islands
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Ausenco 2007. " Technical Report of the Feasibility Study to Australian Solomons Gold Limited Gold Ridge Project, Guadalcanal, Solomon Islands, " Ausenco International Pty Ltd, 30 May 2007.
Management & Operational Background to Three Tailings Dams Failures in South Africa Slope Stability in Surface Mining
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Blight, Geoffrey (2010). " Management & Operational Background to Three Tailings Dams Failures in South Africa. " Chapter 42, Slope Stability in Surface Mining, ed. Hustrulid, W.A., McCarter, Kim, Van Zyl, Dirk, Society for Mining Metallurgy and Exploration, e‐book, 2010.
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Post‐Mount Polley Tailings Dam Safety in Transboundary British Columbia
Chambers 2015. " A Review of the Report on Mount Polley Tailings Storage Facility Breach, Independent Expert Engineering Investigation and Review Panel " David M. Chambers, August, 2015, http://www.csp2.org/technical‐reports#category‐id‐tailings‐dam‐failures Chambers 2016. " Post‐Mount Polley Tailings Dam Safety in Transboundary British Columbia, " David M. Chambers, March, 2016, http://www.csp2.org/technical‐reports#category‐id‐tailings‐dam‐failures Chambers‐Bowker 2017. "Tailings Dam Failures 1915 ‐ 2017" Microsoft EXCEL Spreadsheet, http://www.csp2.org/tsf‐failures‐1915‐2017
Brazil Mining Dam Reforms Unsettle Companies, Do Little for Safety
  • S Eisenhammer
  • M Nogueira
Eisenhammer, S and Nogueira, M (2016). " Brazil Mining Dam Reforms Unsettle Companies, Do Little for Safety. " Reuters, May 11, 2016