New mine closure regulations for WA
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The Australian Journal of Mining
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Jun 10, 2011 09:24 AM
The Department of Mines and Petroleum (DMP) has released an options paper proposing a fidelity fund to reform the system of public liability for mine closure and rehabilitation in the state. Currently mines pay a bond against unsuccessful closure and rehabilitation costs.
The DMP said that bond rates had risen prohibitively, precipitating the need for a revised system to tackle the issue of public liability. Bond rates have increased by 25% since 2010 and under the current schedule are set to reach 50% of full closure costs by 2014.
Under the current system, the government is required to meet at least 75% of the rehabilitation costs if a company defaults. The DMP said current exposure is considered potentially ‘catastrophic,’ in that the cost to government could amount to a huge financial loss for a large and complex mine site failure.
The DMP has designed a fidelity fund as a solution. The fund will finance closure only on mine sites where all reasonable compliance options have been explored and another operator cannot be found to take over the liability.
The proposed fund is intended to build up to the target amount within five to seven years. Expenditure will be constrained, so that the capital of the fund is predominately preserved and scheduled rehabilitation expenditure equates to the growth of the fund, above the target amount.
The establishment of the fund will provide for an extraordinary levy to be imposed on tenement holders if a major event occurs and the target fund balance does not provide sufficient coverage.
Initial DMP modelling recommends that the annual fidelity fund fee be set at 1.5% of a mine site’s total rehabilitation cost. This fee will be set by regulation and reviewed each year.
The DMP said payments will be self-assessed and companies will calculate their current liability based upon the rehabilitation cost that would be borne by that operator.
More broadly, new overarching mine closure guidelines have also been released by the WA Government and will take effect for new operators on July 1 2011. Existing operators must have their mine closure plans up to speed by June 2014.
The DMP said the guidelines will target efficiency of the assessment and approvals process by harmonising the requirements of DMP and the EPA. The aim of the guidelines is to ensure that for every mine in WA a planning process is in place to close and decommission the mine and rehabilitate it in an ecologically sustainable manner.
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