Posted by & filed under Impact Investing, Mining.

By Daniel McConvey, Rossport Investments LLC

Environmental, social and governance (“ESG”) has become a major focus for investors in the mining space as a result of three major tailings dam failures.  These tragic dam failures include Vale’s Corrego do Feijão mine in Brumadinho, Brazil in January 2019, Samarco Mineracao SA (a joint venture of Vale and BHP Billiton) in November 2015 and Mount Polley in British Columbia in August 2014.  Especially as a result of the Brumadinho dam failure there has been a huge push, including from investors, to make a step change in the governance of mine tailings dams. A large impetus behind these efforts is coming from ESG minded European pension funds such as the Church of England and the Swedish National Pension Fund.  In February 2019, the London-based International Council of Mining and Metals created a Global Tailings Review (“GTR”) in cooperation with the United Nations Supported Principles of Responsible Investment. The GTR’s aim is to create an international standards and best practices for tailings dams by the end of 2019.  

ESG concerns are quickly becoming important to investors and other corporate stakeholders.  Some of these concerns relating to mining companies include social responsibility, carbon emissions, NOx emissions, hazardous material transport, footprint size, water usage, mine tailings, etc.  An article on “the dangers of tailings dams” can be found in the January 28, 2019 edition of The Economist linked here.

A tailings dam is typically a mainly rock, gravel and sand embankment dam used to store the waste from the mine process plant operations. Tailings can be liquid, solid, or a slurry of fine particles, and are often toxic. 

One tailings dam expert told me this year: “Tailings dams include some of the largest and least understood structures on earth.  Yet they are one of the least regulated.” As an investor traveling to mines in the developing world, I have long worried about tailings dams in countries where regulatory oversight is poor or worse and local awareness and skills in environmental areas are in their infancy.  

On July 24, 2019, I wrote a letter to the Canadian Securities Administrators and its members including the Ontario Securities Commission, asking them to regulate a requirement for an Independent Review of every tailings dam of every Canadian listed company as well as requiring the disclosure of the Engineer of Record.  To see a full copy of this letter please click here.  I believe increasing the accountability by requiring the disclosure of an Engineer of Record and having an Independent Review of tailings dams every year or two would materially reduce the risk that mining companies, especially junior and distressed ones, escape scrutiny if they build substandard tailings dam or poorly operate and maintain them. 

Rossport Investments LLC specializes in the metals and mining sector. If you would like more information on our work and views, please contact Daniel McConvey at (646) 722-4119 or by email at

Note: Past performance is not necessarily indicative of future results.  Forward-looking statements reflect the Investment Manager’s views as of such date with respect to possible future events.  Actual results could differ materially from those in the forward-looking statements as a result of factors beyond the manager’s control.  Investors are cautioned not to place undue reliance on such statements.  No party has an obligation to update any of the forward-looking statements in this document.

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