On Monday, the government of Brazil banned new upstream mining dams. It is also set to impose a ban on all mine dams that as just like the one which burst last month.
The dam that is operated by miner Vale SA , the largest iron ore miner in the world, collapsed. It unleashed a wave of mud that bulldozed nearby structures and has possibly killed more than 300 people.
The mining regulator of the country said that it will force the firms to decommission all their upstream dams, which are utilised to gather waste from the mining process.
The dams, which hold mining by-products, are considered to be cheaper to build. However, they present higher security risks since their walls are constructed over a base of muddy mining waste rather than on solid ground.
The regulator said that the dams, of which there are already 50 in the state alone, will be taken out of use by August 2021.
It declared the changes as the official death toll from the Brumadinho disaster rose up to 169, with 141 people still missing and are presumed to be dead since the end of last month.
Georgi Slavov, the head of research at Marex Spectron, said that the news will possibly push up the cost of iron ore.
The prices have already increased by approximately a quarter since the disaster that occurred three weeks ago.
Slavov stated: “This will cut supply and it will cut supply of very high quality iron ore. Any further disruption cannot be price negative, it will be very price positive.”
Brazil produces high-quality iron which is popular among steel mill owners in China as it creates less pollution.
However, the decommissioning of the dams will potentially reduce the quality of the iron ore, as the mines will not be able to use water to wash away the impurities in the ore.