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By Gram Slattery
RIO DE JANEIRO, May 31 (Reuters) - A closely watched embankment at a Brazilian iron ore mine run by Vale SA has begun to slide slowly into the bottom of a mining pit, the company said on Friday, reducing concerns that a sudden landslide would trigger a dangerous dam collapse.
Authorities had initially feared that a landslide at Vale's Gongo Soco mine could destabilize the nearby Sul Superior dam, wreaking havoc on a nearby town. However, the dam remains intact, Vale said.
An environmental official for the state of Minas Gerais had previously estimated a 10-15% chance of the Sul Superior dam losing integrity due to tremors from the expected landslide.
That put the nearby town of Barao de Cocais on high alert, with officials running evacuation drills to avoid a repeat of the tragedy about 40 miles (64 km) away in the town of Brumadinho, where a Vale dam burst in January, unleashing a torrent of mud that killed over 240 people.
The warnings about another possible dam collapse have underlined concern about the stability of Vale's tailings dams in general, after two deadly accidents in a little over three years put a spotlight on the world's largest iron ore miner.
The Brumadinho dam disaster and subsequent mine closures in Brazil had prompted Vale to slash its iron ore sales estimate for this year, pushing prices to record highs.
The Gongo Soco mine dam holds some 6 million cubic meters of mining waste, roughly half the amount that was released when the Brumadinho dam burst. Like Brumadinho, the dam at Gongo Soco was built using an 'upstream' technique, considered the cheapest and least stable type of tailings dam.
Vale said on May 18 it was unclear if a landslide in the Gongo Soco mine pit would trigger a collapse of the dam. Still, the company decided to build a concrete structure 6 km downstream to help contain fallout from a potential dam break.
Brazil-listed common shares in Vale jumped as much as 2.8% on the news, before immediately paring gains. Shares were down 0.7% in midday trade, while Brazil's benchmark Bovespa index was up 0.15%. (Reporting by Gram Slattery Editing by Chizu Nomiyama and Richard Chang)