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Who will eventually pay for mine rehabilitation?

Who will eventually pay for mine rehabilitation?

Fri, 11/29/2013 - 13:20

The linked story in the Daily Mail & Guardian illustrates very well how important it is for governments to not 'trade down' ageing mines into a situation where it becomes unclear who should pay for rehabilitation.  Governments should regulate and enforce some form of environmental bonding and should never release current mine owners from their responsibilities before allowing mines to be sold to a new owner.  As ore reserves are depleted and mines become less profitable, there is a tendency for them to be sold to smaller firms, who could probably operate with lower costs.  The possible resulting extended economic contribution of the mine, including continued employment, should however never be allowed to come at the cost of neglected rehabilitation.

This same sort of thing happens with the recycling of ships, being sold into other companies and jurisdictions, with hulks eventually being traded on the open sea, sometimes multiple times within a single week, and then finally being beached somewhere in Bangladesh where they are dismembered in extremely dangerous and unhealthy conditions.  Mines, tailings dams and polluted waterbodies can however not be towed away overseas.

Mining companies in various countries are managing to slip through some legal loopholes.  The examples in the linked article, from an old large-scale gold mining area in South Africa, are not unique to the companies named, or to the country.

Some short extracts from the article:

" ... there is a trend in the mining industry for larger, often listed mining companies to sell their operations when they become less profitable. They sell to smaller mining companies that pull out the last feasible deposits and then go belly-up before the environmental damage has been rehabilitated."

"... the minerals department is also remiss in having financial guidelines for remediation that are outdated and have not been increased to reflect inflation. In many cases, this meant the money set aside for rehabilitation was not sufficient. The department also does not have a formula for calculating the cost of ensuring that water resources are not contaminated, it said."

"... the cost of rehabilitation could be as much as 10% of the operational costs of a mine. [The Chamber of Mines] bemoaned the lack of government guidance. The new laws tell the industry what to do to minimise the environmental impact, but not how this should be done, it said. Each operation therefore had to work out how the laws applied as it went along.  The net result is that mines have to operate in an environment in which they are not sure about which department they must report to at different times. But it also means that, in cases of bankruptcy or liquidation, there is no clear imperative for remediation."

 

 

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