Brazil state prosecutors seek to block expansion of Anglo American mining dam

SAO PAULO, March 3 (Reuters) - Brazilian state prosecutors filed a lawsuit on Tuesday requesting that miner Anglo American PLC's license to expand a mining dam be suspended, following a fatal mining disaster last year.

The state of Minas Gerais passed a law last year commonly called "Sea of Mud, Never Again" to change mining rules following the collapse of a dam at a Vale SA facility that released a torrent of mining waste, killing at least 270 people.

Based on that law, Minas Gerais prosecutors are seeking to block the planned expansion in capacity of Anglo's Minas-Rio facility, which includes raising the height of a dam that contains mining tailings. The company received the last license it required in December to increase the complex's total capacity to 26.5 million tonnes of iron ore annually, from roughly 23 million tonnes as of last year.

The prosecutors' office said in a statement on its website that the environmental license granted to Anglo for the expansion should be blocked and all further licenses withheld until those living in three communities downstream from the dam secure the right to be relocated.

Anglo American said in a statement that relevant authorities had recognized the validity of its license and the part of the new law in question does not apply in this case. The company said it already established a voluntary relocation program for families near the dam.

The Anglo dam is constructed in "downstream" technique, considered safer than Vale's "upstream" style dam that collapsed. (Reporting by Roberto Samora; writing by Jake Spring Editing by Leslie Adler)