Belo Monte Dam construction halted

By Helen Wright16 August 2012

Construction of the controversial 11.2 GW Belo Monte Dam on the Xingu River in the Amazon, Brazil, has been ordered to stop after a Brazilian judge intervened.

Judge Souza Prudente ruled that construction must halt on the US$ 16 billion government-supported project after finding that native communities must be consulted.

"The Brazilian Congress must take into account the decisions taken by the indigenous communities. Legislators can only give the go-ahead if the indigenous communities agree with the project," Judge Prudente said.

The judge has imposed a fine of US$ 250000 a day should the company continue work.

The Norte Energia consortium is building the dam, which is located in the Northern state of ParĂ¡, Brazil. The consortium, which is led by state-owned electricity company Chesf, with a 49.98% stake and construction companies Queiroz Galvao, with a 10.02% stake, J Malucelli (9.98%), Cetenco Engenharia (5%), Mendes Junior (3.75%) and Serveng (3.75%), is reported to be considering appealing the decision.

With a generation capacity of 11.2 GW, the Belo Monte power plant would be the third largest hydropower facility in the world behind China's Three Gorges dam and the Itaipu plant on the border between Brazil and Paraguay.

This is not the first time that the project has sparked controversy, with protests about its environmental impact. In April 2010 this led to a suspension in the bidding process when the dam's environmental license was revoked.

Norte Energia has repeatedly asserted that building the dam would not impact the lands of any indigenous group, but local communities disagree and have argued that they have not been consulted.

Norte Energia has conceded that about 5000 families would need to be relocated for the project, but claims an area less than 1600 km2 would be flooded by the dam, while local communities and environmental groups suggest that the flooded area could reach 4000 km2.

Potential repercussions

The suspension of construction work could have knock-on effects for other companies involved. Construction equipment manufacturer Metso, for instance, signed a US$ 40 million contract in February this year to supply crushing and screening equipment for the project.

The equipment was scheduled to be delivered by the first quarter of 2013.

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