Sul Americana de Metais (SAM), a unit of Chinese miner Honbridge Holdings, signed a protocol of intent with the Brazilian state of Minas Gerais to construct a 2.2 billion U.S. dollar mining complex and iron ore pipeline.

"We are going to develop a mega iron ore project with an open-pit mine, and a beneficiation plant with an annual production capacity of 27.5 million tons/year (Average grading: Fe 66%+) in the State of Minas Gerais in Brazil," said Alvin Yeung, Honbridge Holdings CFO, to CGTN Digital by email.

The CFO admitted also that the company will try its "best to push forward the iron ore project in the coming months."

The initial report on the protocol was made by Brazilian newspaper O Estado de Sao Paulo, which revealed that the project called "Block 8" includes a 480-kilometer slurry pipeline. This pipeline starts in the mining city of Grão Mogol in Minas Gerais passing through 21 municipalities until it reaches Ilhéus, in the southern coastal region of Bahia.

The project includes one of the biggest tailing dams in Brazil with an 845 million square meter capacity. This dam capacity is 70 times bigger than the tailing dam that collapsed in the town of Brumadinho (12 million cubic meters) in January. The mud wave caused by the collapse killed 249 people. Back in 2015, another dam in Mariana had the same fate and 55 million cubic meters of tailings were released.

Tailings are the muddy waste produced in mining for iron ore and other minerals. The waste is often contained within a dam built using a variety of methods.

Various associations including the Movement of People Affected by Dams (MAB) have been skeptical of the project, but SAM insists the model is safe, according to the report.

Dam uses system to avoid mud waves in case of collapse

According to SAM official website, Honbridge Holding was the one that decided to restructure SAM business model in 2017, and with it came an upgrade in the "Block 8" project, since the initial plan was rejected in 2016. The upgrade focuses on reducing the environmental impact and increasing operational security. 

Gizelle Andrade, SAM Environmental director, assured that the project was restructured and is secure. The new project won't be using the upstream design applied in both collapsed dams, but a new method that includes a filter system capable of avoiding infiltrations in the dam structure.

In case of collapse, there will be an embankment system that will prevent the tailings from reaching and harming communities, said Germano Vieira, Minas Environmental Secretary, to the same Brazilian outlet.

Besides, the company has to respect the "Mud Sea Law" that prohibits the construction of residences or structures in a 10-kilometer line from an eventual mud wave.

The project is under pre-licensing process, which includes the environmental feasibility analysis. This phase is scheduled to end on February 2020.

The mining licensing will be handled by Minas environmental authority and the slurry pipeline, because it crosses several states, will be handled by the Brazilian Institute of the Environment and Renewable Natural Resources.

The slurry pipeline will be built and operated by a company independent from SAM, says the company.

The Brazilian government sees only benefits, having stated that the project will generate 1,200 direct jobs and four billion reais (around 972 million U.S. dollars) per year only in the mine. There are also royalties to be paid.

(With Reuters input)