GROUND TRUTHS:
TAKING RESPONSIBILITY
FOR AUSTRALIA’S MINING
LEGACIES
Charles Roche and Simon Judd
ACKNOWLEDGEMENTS
Research: Charles Roche, Simon Judd and Sangita Bista
We recognise and pay tribute to the communities, researchers and mining professionals
who have long understood the need for mining legacies reform in Australia.
This project was sponsored by a grant from the Australian Conservation Foundation.
Editors: Charles Roche and Simon Judd
Design and layout: Elbo Graphics
All images (c) MPI unless attributed
Cover artwork: Trying to Protect Our Land, Jacky Green Prints available,
monies raised will support community response to mining at McArthur River.
ISBN: 978-0-9946216-0-3
A publication by the Mineral Policy Institute
www.mpi.org.au |
[email protected]
GROUND TRUTHS: TAKING RESPONSIBILITY FOR AUSTRALIA’S MINING LEGACIES
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CONTENTS
Executive Summary
4
Recommendations
4
Mining In Australia
5
Mine Closure Or Mining Legacy?
6
Success or failure? Mine closures in Australia
6
Mining legacies
7
The Australian response to mining legacies
7
International recognition and response
9
Risk
11
Environmental and social risk
11
Financial Risk
12
Textbox 1. Yabulu Reinery
14
Examples Of Mining Legacies In Australia
15
New South Wales coal – case studies
15
Textbox 2. Financial risk at Russell Vale
18
Victorian coal – case studies
19
Textbox 3. A lack of closure planning at Anglesea
21
The Carmichael coal mine; project viability and closure risk
23
McArthur River Mine
23
Ranger Uranium Mine
24
Textbox 4. Burning rocks and technical risk at McArthur River
26
Regulation and Management of Mine Closure and Mining Legacies
Coordinated action on Australian mine closure
The state system and environmental inancial assurance
28
28
28
The bonds system
29
Mining levies
29
New South Wales
29
Textbox 5. The Hazelwood Mine Fire Enquiry – Victoria’s inadequate bonds
30
Victoria
31
Northern Territory
31
Queensland
31
South Australia
31
Western Australia
32
Tasmania
32
Textbox 6. Environmental Financial Instruments in Queensland
33
Summary
34
Recommendations
35
References
36
GROUND TRUTHS: TAKING RESPONSIBILITY FOR AUSTRALIA’S MINING LEGACIES
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EXECUTIVE SUMMARY
This report sets out to explain some of the current
and potential impacts of Australia’s mining
legacies to Australians. The aim was to bring
the reality of mining legacies, often hidden by
geographical remoteness or simply by fences, out
into the open. Using examples and case studies
to illustrate what mining legacies mean for people
and place, we reported on research, events and
key documents, collectively demonstrating the
need for reform of policy, regulation and practice
in Australia.
The dichotomy between successful mine closure
or enduring mining legacies is clear. Closure is the
responsible approach. Successful closure is where
the polluter pays for and undertakes efective
rehabilitation with criteria set by existing land
use, community expectations and government
regulation. Mining legacies are the opposite, the
growing shame of industry and community where
this generation carelessly takes without thought
for the planet or future generations.
Recent regulatory changes in Western Australia,
Queensland and the Northern Territory, and the
indings of the Hazelwood Inquiry all provide
further evidence to show that closure reform
is clearly needed. The transition to successful
mine closure demands coordinated action, a
requirement that has been stated frequently and
emphatically for more than a decade. The way
forward is for states to implement locally speciic
rules within a national framework; where risks
are acknowledged, impacts reduced and closure
and management activities covered by adequate
and secure inancial instruments. Encouraged
and guided by these changes, the mining industry
can then improve on current practices, address
the mistakes of the past and ultimately leave a
positive legacy.
RECOMMENDATIONS
State and Territory Governments, supported by
the Commonwealth, have the lead role in seeking
to halt and repair the damage done to people and
place by Australia’s mining legacies. The following
seven recommendations build on earlier work
carried out by the mining industry, researchers and
concerned communities. The recommendations
are based on the premise that Australia can, and
must take responsibility for addressing its mining
legacies.
Recommendation 1: Establish a national inquiry
into mine site rehabilitation and mine closure
practices. Such an inquiry must include in its terms
of reference: the adequacy of existing regulatory
regimes, the extent of inancial liability and
changes required to securely fund the long-term
management of mining sites, the environmental,
economic and social risks associated with unremediated sites and the role of mine rehabilitation
in providing employment opportunities in the postmining boom era.
Recommendation 2: Ensure all environmental and
inancial regulatory mechanisms that authorise
and govern mining activity are based on a
polluter pays principle and safeguard Australian
communities from future social, inancial and
environmental liabilities.
Recommendation 3: Implement a national legal
obligation for closure liability accounting and
reporting on a site-by-site basis, to be included in
annual inancial statements and as a separate line
item in company balance sheets.
Recommendation 4: Require mining proposals to
clearly identify and be assessed on closure costs
and post mine management requirements over the
life of the site (including perpetual management),
and identify a secure funding mechanism relevant
to management timeframes.
Recommendation 5: Remove the perceived
‘right to mine’. Apply full social, cultural and
economic impact assessment over the life of the
mine, including psychological costs of landscape
disturbance.
Recommendation 6: Encourage and facilitate
greater
jurisdictional
coordination.
Adopt
Australian minimum standards: (a) post-closure
assessment and reporting, (b) greater transparency
and independent assessment of mining proposals
and (c) environmental inancial instruments.
Recommendation 7: Legislate for and implement
national annual reporting on the impacts of mine
closure. This must include the inancial liability from
both mining legacies and post-mine management.
GROUND TRUTHS: TAKING RESPONSIBILITY FOR AUSTRALIA’S MINING LEGACIES
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MINING IN AUSTRALIA
There are 2075 known mineral deposits, 431
operating mines and 1373 historic mines in Australia
(Geoscience Australia, 2016). Figure 1 shows the
distribution of current and historical mines in
Australia. These mines have produced, and will
continue to produce, minerals, metals and energy
for Australia and for export. Mining contributes
8.5% to Australia’s GDP and is a fundamental part
of Australia’s economy with export earnings of
$195b in 2013/14. Despite the positive inancial
contributions of the mining industry, however,
Australia has a lamentable record on mine closure.
75% of Australian mines undergo premature or
unplanned closure.
Australia has ignored mining legacies for far too
long. This report examines mine closure, mining
legacies, and the post-mining impacts that the
mining industry is reluctant to mention. The
scale and impact of our mining legacies was not
apparent when mining irst started, but since then,
the evidence of impacts has accumulated steadily.
The frequency and severity of these impacts is
growing because of the increasing scale of the
industry. The trend toward mining lower quality
ore grades and the use of large open pits produces
desolate landscapes riddled with pits, dumps,
pollution and subsidence events that dwarf those
of earlier generations. These ticking time-bombs
of environmental, cultural and social impacts
will ultimately interact and accumulate and will
require technical and political solutions of great
complexity. These solutions need to be developed
before the beneits of the mining disappear.
HISTORIC MINES
OPERATING MINES
Figure 1. Map of operating and historic mines in Australia (Mines Atlas, 2016)
GROUND TRUTHS: TAKING RESPONSIBILITY FOR AUSTRALIA’S MINING LEGACIES
5
MINE CLOSURE OR MINING LEGACY?
remaining 75% were either premature or unplanned
closures resulting in unsatisfactory closures, mines
left in care and maintenance or simply abandoned with
no attempt at formal closure. Whichever is the case,
each mine adds to Australia’s growing mining legacy.
Mine closure describes the successful and effective
closure of a mine. It is often described as a plan or
process and is progressive, adaptive and responsive planning for and delivering positive outcomes. While
there are generic elements and common risks, the
outcomes sought are site-speciic and deined locally
by: regulations; mining company commitments;
original land use; post-mining use; surrounding
environment; community expectations; long-term or
perpetual management; economic impact; and, cultural
expectations. The process of achieving successful mine
closure is complex and dificult, with unplanned and
premature closures being the norm in Australia. These
unplanned closures or abandonments have created
residual negative environmental and social impacts and
a growing inancial liability for future generations. If
mine closures are to be successful, these impacts must
be eliminated, reduced or minimised. Key to reducing
these impacts is understanding what constitutes
successful mine closure and its more common opposite
- abandoned, orphan and derelict mines.
Figure 2 shows the reasons for closure and
demonstrates clearly that 44% of mine closures were
caused by economic factors (i.e. costs, receivership and
markets). Another 34% were the result of eficiency
issues (i.e. technical issues, low grades, metallurgical
issues). Less frequent were closures due to community
pressures (11% i.e. regulatory intervention, company
strategy), environment (6% i.e. loods) and safety (5%).
These failures in the mine closure process contrast
markedly with the image the industry portrays. For
example, the Minerals Council of Australia’s (2015)
report “The whole story - Mining’s contribution to the
Australian community” does not mention the impact,
scale or inancial liability of failed mine closures. It
certainly did not present the “whole story”. Similarly
in a subsequent report, Mine Rehabilitation in the
Australian Minerals Industry, designed to celebrate
good rehabilitation outcomes, the Council fails to
place the rehabilitation examples within the context of
the industry’s poor closure record and the number of
abandoned mines. For example, while containing two
WA sites, the report fails to mention that neither site,
nor any others have been handed back to the state in
the last ifteen years. The unwillingness of the Council
SUCCESS OR FAILURE?
MINE CLOSURES IN AUSTRALIA
Our understanding of mine closure in Australia has
been transformed by the work of Laurence (2006,
2011) who examined the reasons for the closure of
1000 mines. Laurence found that between 1981 and
2009 only 25% of mine closures were planned. The
Unclassiied
Metallurgical
Industrial relations
Poor grade estimation
Environment
Safety
Lack of exploration
Equipment technical diiculties
Production diiculties
Floods/wet weather inrush
Regulator/government interv
Loss of markets/downstream
Low grades
Did not it company strategy
0%
Geology/geotech issues
5%
Open cut depleted
10%
High costs/low prices
15%
Receivership/administration
20%
Resource Depleted
Percentage of Closures
25%
Primary Reason for Closure
Figure 2. Australian mine closures 1981- 2005 showing the primary reason for closure
(Source: Laurence, 2006)
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GROUND TRUTHS: TAKING RESPONSIBILITY FOR AUSTRALIA’S MINING LEGACIES
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to even mention mine legacies, despite the industry’s
long-term recognition of the problem, belies a lack
of awareness and undermines progress towards
reducing and ameliorating mining legacies.
MINING LEGACIES
This report uses the term ‘mining legacies’ to
represent the negative externalities and liabilities of
mines that continue to impact on the environment and
associated communities after mining operations have
ceased (Whitbread-Abrutat, 2008). This encompasses
all mined land, irrespective of land tenure or
license whether it has been abandoned, orphaned,
left derelict, or is a state of unmanaged ‘care and
maintenance’. Freed from a jurisdictional focus, the
term mining legacies directs attention towards the
remediation of existing impacts and the prevention
and reduction of potential mining legacies before they
occur (Pepper, Roche & Mudd, 2014).
The socio-cultural and environmental legacies of
mining have been recognised as a signiicant problem
for centuries. Agricola described ields devastated
by mining, the felling of timber, the extermination
of beasts and birds and the poisoning of brooks and
streams which made it dificult for local people to
procure the necessities of life (Agricola, 1556). While
the techniques of mining have changed, Agricola’s
list of mining legacies could apply equally to the
Australian waterways of today. See for example
the copper-blue creeks near Redbank Mine in
the Northern Territory or the red-oxide pollution
downstream of Mt Lyell in Tasmania.
The persistent impacts of mining are also evident in one
of Australia’s largest mining companies, the BritishAustralian company Rio Tinto. Rio Tinto operates 30
sites in Australia, producing coal, iron ore, bauxite
products, diamonds and salt. They are also the majority
owner of the Ranger Uranium Mine at Kakadu in the
Northern Territory (NT) (Rio Tinto, 2015). Ironically,
the name Rio Tinto, meaning “red river” is derived
from the group’s irst mine in the Heulva Province of
Spain. Thousands of years of mining has polluted the
Rio Tinto region, leaving a devastated landscape with
its infamous red river with a pH of 2.3 (Davis Jr et al.,
2000). Similar Acid Mine Drainage (AMD) issues and
wider environmental problems have been raised at Rio
Tinto’s former uranium mine-sites of Rum Jungle and
Mary Kathleen. The same problem is also reported at
Ranger (operated by ERA) and iron ore mines in the
Pilbara (Mudd, 2013).
There are many examples of mine legacies all over the
world (Sheldon & Strongman, 2002). In Australia, the
Mt Lyell mine in Tasmania is predicted to release AMD
into the Queen and King Rivers for hundreds of years.
The estimated cost of a 20 year neutralisation project
is $180m (Koehnken, Clarke, Dineen, & Jones, 2003).
The controversial Ok Tedi mine in Papua New Guinea,
developed by BHP, has practiced riverine waste and
tailings disposal for more than twenty years and as
a result has dumped more than 1000 million tonnes
of tailings and waste rock into the Ok Tedi River. It
has been estimated that it will take 200-300 years of
dredging and natural processes to remediate the Ok
Tedi River. Until they are successfully remediated, the
environmental and social legacies of both of these
rivers will continue to impact on local communities
and the inancial liabilities will continue to grow.
THE AUSTRALIAN RESPONSE TO MINING
LEGACIES
Australia, with 50,000 legacy mines (which are deined
differently to historic mines - see Figure 3) and worldleading mining experts, has both the incentive and
the expertise to become a world leader in effective
mine closure. Despite this, Australian jurisdictions
have responded slowly to the challenge presented by
mining legacies. The following paragraphs summarise
briely the attempts of state and Commonwealth
bodies to develop and implement effective mine
closure policies.
The importance of mine closure as a national issue was
irst recognised in 1992 by the Council of Australian
Governments (COAG) under the National Strategy
for Ecologically Sustainable Development (Australian
Government, 1992). In addition to overarching
ecologically sustainable development objectives, the
strategy developed and committed to three objectives
for effective rehabilitation. These related to the
need for appropriate community returns, improved
community consultation and social equity objectives.
This was followed by the Strategic Framework for
Mine Closure (Australian and New Zealand Minerals
and Energy Council & Minerals Council of Australia,
2000). The primary objective of this document was
to “encourage the development of comprehensive
Closure Plans that return all mine sites to viable, and
wherever practicable, self-sustaining ecosystems” in a
manner that was “adequately inanced, implemented
and monitored within all jurisdictions”. While the
Strategic Framework did not specify detailed closure
criteria, it was the irst attempt to develop a national
approach to mine closure. With sections spanning
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GROUND TRUTHS: TAKING RESPONSIBILITY FOR AUSTRALIA’S MINING LEGACIES
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ABANDONED MINE RECORDS
NO ABANDONED
MINES LAYER
15380
9870
3638
410
N
0
250
500
19010
1,000
KM
4226
Figure 3. The number and distribution of abandoned mines in each
state in Australia (Source: Unger, 2012)
stakeholder involvement, planning, inance, standards,
implementation and relinquishment, the framework
provided principles of closure to guide companies
and state legislators and regulators. For example, the
inancial section detailed a speciic objective (which
is yet to be achieved) “to ensure the cost of closure is
adequately represented in company accounts and that the
community is not left with a liability”. Both the National
Strategy for Ecologically Sustainable Development and
the Strategic Framework for Mine Closure encouraged
cross-jurisdictional cooperation, demonstrating the
long-term concern and involvement in mine closure at
COAG and Commonwealth levels.
In 2003, an Australian workshop on the Management and
Remediation of Mines (Bell, 2003) again reinforced the
need for better mine closure and an effective response
to mining legacies. With a range of papers and a list of
recommendations the conference has stood the test of
time. Two conference papers illustrated early shared
concerns about the impacts and liabilities from the Mt
Morgan mine in Queensland; one from a government
perspective and the other from the perspective of the
affected community. In 2006, the Commonwealth
Government again emphasised the importance of
improving mine closure with the publication of the
Mine Closure and Completion Handbook (Department
of Industry Tourism & Resources, 2006). Designed
as an operational guide, the handbook outlines a
business case for planned, structured and systematic
mine closure. An example of the guidance given was
the requirement for liability accounting, where the
costs of rehabilitation are recorded as liabilities, from
the date of actual disturbance. In the same year the
Commonwealth Government formed the Abandoned
Mines Working Group, under the Ministerial Council of
Mines and Petroleum Resources (MCMPR). The group
was comprised mainly of abandoned mine managers
from state jurisdictions and representatives from the
Minerals Council of Australia (MCA). The Working
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GROUND TRUTHS: TAKING RESPONSIBILITY FOR AUSTRALIA’S MINING LEGACIES
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Group and the MCA co-produced the Strategic
Framework for Managing Abandoned Mines in the
Minerals Industry (MCMPR & MCA, 2010) which again
highlighted the need for abandoned mine inventories,
improved reporting, better understanding of mine
legacy risks and liabilities and the standardisation of
processes and methodologies in assessing legacy risks.
Frustrated but undeterred, pressure from industry
professionals and community for the development of
an effective and coordinated response to mine legacies
continued to build. The Australian Institute for Mining
and Metallurgy (AusIMM) invested considerable
effort in an abandoned mines discussion paper (Unger
& Van Krieken, 2011) and a Survey Report (van de
Graaff, Unger, & Evans, 2012), before producing a
policy statement in 2013 (Australasian Institute of
Mining and Metallurgy, 2013). A survey of AusIMM
members found that 63% of respondents thought
the industry was responsible for creating abandoned
mines, with another 47% believing governments to
be responsible. Members also perceived that both
sectors (government and industry) were responsible
for rectifying negative impacts. The AusIMM actively
encouraged a positive government response, stating
that: “there is always the risk of future abandoned mines
being created if minerals businesses are poorly managed,
have underestimated rehabilitation and closure
liabilities, have unexpected changes in their inancial
viability as operating businesses or have unanticipated
changes in their site closure and rehabilitation
obligations as required by regulators and stakeholders”
(AusIMM, 2013, p.2).
INTERNATIONAL RECOGNITION AND RESPONSE
Australia’s growing awareness of mining legacies
is mirrored by the responses of the international
mining industry and major western countries with
signiicant mining industries. In recognising the
urgency and scope of the problem, the International
Council of Mines and Metals (ICMM) released a series
of mine closure documents in the 2000’s. Among
them is the comprehensive Planning for Integrated
Closure: Toolkit (ICMM, 2008). This was intended
to provide tools for mine operators. It described
effective mine closure as a management rather
than a technical challenge and suggested that while
technical knowledge was adequate, it was a lack of
management skills or perhaps a lack of willingness to
succeed that were at the heart of the problem. The
toolkit identiied a series of ‘practical’ reasons why
effective mine closure rarely happened - including
changes in management, mergers and acquisitions
and the disincentive created by the application of
perverse inancial instruments, such as Net Present
Value (NPV).
In the United States, two early reports from the World
Watch Institute (Young, 1992) and the Mineral Policy
Centre (Lyon, Bethell, & Hilliard, 1993) identiied
speciic legacies including: environmental decline;
equity and development issues; problems with
code enforcement; the number of sites and future
inancial liabilities. This was followed by reports from
Canadian civil society, with mining legacy focused
reports published by Mining Watch Canada (2000)
and the Canadian Institute for Environmental Law
and Policy (Chambers & Winield, 2000). Recognising
the growing environmental risks and the inancial
liabilities from legacy mine site, both papers called for
the adoption of the ‘polluter pays’ principle. Speciic
recommendations were made about establishing
an inventory of sites and potential regulatory and
legislative changes to address the problem. Within
the next two years, the Chilean Copper Commission
(Cochilco) and the United Nations Environment
Programme (UNEP) (Cochilco, 2002) and the World
Bank Group (WBG) (Sheldon & Strongman, 2002)
highlighted growing concerns about environmental
legacies and the potential legal and inancial liabilities
from old mines. Speciic mention was made about
issues around funding, risk, equity and environmental
impact. The two reports made it clear that mining
legacies represented a signiicant global problem,
describing them as: “a major unresolved environmental
and social problem…with a range of health and safety
problems, and extensive economic impacts due to
resource degradation and water pollution” (Cochilco,
2002, p. 19).
The WBG, normally a conservative, inancial growthfocused institution went further, stating that: “Over
the last few years, mine closure has become one of the
most dificult issues facing mining companies, mining
communities, and mining countries around the world.
For mining companies, safety, environmental, and
social risks can occur and signiicant liabilities can arise
if closure goes badly. For mining communities, mine
closure can cause severe distress because of the threat
of economic and social collapse – possibly of an entire
region. For governments, abandoned mines can bring
large environmental liabilities and clean-up costs unless
they set the right frameworks. In any case, for both
mining communities and government, mine closure
usually means a severe reduction in income at best,
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GROUND TRUTHS: TAKING RESPONSIBILITY FOR AUSTRALIA’S MINING LEGACIES
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Mining legacies are “a major unresolved environmental
and social problem…with a range of health and safety
problems, and extensive economic impacts due to
resource degradation and water pollution”
“and a huge cost in terms of social and environmental
mitigation at worst” (Sheldon & Strongman, 2002, p.
1) (emphasis added).
More recently, Pepper et al. (2014) identiied
common factors in responding to mine closure and
legacy issues at an international level. They identify
that mining legacies are increasing in number,
scale and complexity and that this relects poorly
on the mining industry, who are now subjected
to closer scrutiny based on increased community
expectations for successful mine closure. In order
to fulill these expectations there is a need for more
community involvement, agreed deinitions for
abandoned, orphan, historic and legacy sites, and
for higher quality data and data management. In
terms of regulation, Pepper et al. (2014) stated that
national and international collaborative was needed,
with particular attention on unsecure inancial
liabilities and the options available to governments
or communities in the event of abandonment or
unplanned closure.
Hanrahan Creek, downstream of Redbank copper mine (Phoebe Barton)
GROUND TRUTHS: TAKING RESPONSIBILITY FOR AUSTRALIA’S MINING LEGACIES
10
RISK
Central to the development of strategies for avoiding
the liabilities of unplanned closure is the concept of
risk. In addition to accurately capturing the extent
of unplanned closure, Laurence’s (2006, 2011)
assessment of the reasons for closure identiies key
risk areas, particularly the interrelated inancial and
technical issues that cause mining projects to fail.
Mining legacies are often caused by project failure or
company collapse, resulting in risk to non-company
stakeholders being a function of project or company
viability. While corporate self-interest should be
motivation enough to ensure rigorous internal viability
assessments, Tinsley (2007) showed that project due
diligence processes are consistently undermined
by consultant capture, poor professional standards,
idealistic industry belief/commitment, omissions from
scope of works, inconsistency and fragmentation.
The causal relationship between project viability and
mine closure means non-company stakeholders are
exposed to signiicant and under-valued risk. Indeed,
the undervaluation of non-company stakeholder risk
during due diligence and assessment processes has
become a major cause of unsatisfactory mine closure.
While companies’ exposure to risk is protected by
subsidiary entities and limited liability, governments
and the wider community have limited protection
against the social, environmental and inancial risks
when a project or company fails. The next section
uses recent examples to examine non-company
stakeholders’ risk from two perspectives; showing
the very real risks and impacts from mining legacies
on people and place and the growing inancial liability,
which inevitably falls to the taxpayer.
ENVIRONMENTAL AND SOCIAL RISK
Mine legacy impacts are mostly site-speciic, but they
are also embedded within complex social, cultural
and environmental landscapes which have inherent
dynamic, multiple and interdependent interactions
that are poorly understood. The task of isolating and
preventing complex and cumulative impacts is made
more dificult by a lack of baseline data and an absence
of clear state and federal reporting rules. Mudd
(2009) identiied the need for detailed information
on mine legacy risks and suggested that compulsory
reporting of the composition and stability of waste
was an imperative. Unfortunately, this is not relected
in current voluntary frameworks. Mudd et al. (2013)
concluded that the dominant reporting framework the Global Reporting Initiative (GRI) - was inadequate
to address legacy issues.
While mining legacies are a product of geological,
political, economic, social and environmental contexts
(Whitbread-Abrutat, Kendle, & Coppin, 2013), there
is a range of clearly-deinable, common impacts.
These are often divided into social, cultural and
environmental impacts, but they are also closely
related, such as when water pollution impacts on both
community health and economic activity. Clearly,
each of these certain or potential impacts presents
a quantiiable risk. Table 1 and Table 2 list some
potential environmental and social impacts. Some,
such as pit voids and waste dumps, are intrinsic to
most modes of mining and unavoidable. Other impacts
can be managed, avoided or controlled depending on
circumstances and management. Social impacts are
more site speciic, dependent on land use and the
values and expectations of host communities. For
example, some may see mining and remnant waste
dumps as a sign of progress, others may see them
as aesthetically offensive or even experience much
stronger feelings of dispossession and desolation that
directly affect their personal wellbeing.
The Redbank Mine, in the Northern Territory, displays
many of the environmental impacts shown in Table 1.
with contaminated water lows from the mine turning
Hanrahan’s Creek a vivid copper blue, making the
river unsafe for humans or animals. This is deeply
troubling to the Traditional Owners who live in and
manage the area. This spiritual-cultural impact is not
captured in risk assessments. Relecting the indings
of management failure as a cause of mining legacies in
the ICMM toolkit; the NT Environmental Protection
Authority (EPA) found that problems at Redbank
were caused by poor due diligence and disclosure,
a lack of continuity and long-term planning, lawed
environmental impact assessment, economic failure
and poor regulation (NT EPA, 2014).
At the McArthur River Mine, the incorrect
classiication and reporting of potential acid forming
(PAF) soils led to a burning waste rock dump. Although
the mine is still operating, communities have long-held
fears about ongoing and post closure impacts. In this
case, the smoke and associated leachate pollution
has had a major and adverse social impact on these
local communities. They are concerned not only
with the obvious and direct environmental impacts,
but also the indirect health impacts such as eating
contaminated ish from the McArthur River. The
cultural impact is highly signiicant, because the local
communities live out cultural obligations to protect
and manage Country, which, in turn, are important
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GROUND TRUTHS: TAKING RESPONSIBILITY FOR AUSTRALIA’S MINING LEGACIES
11
for collective and individual health and wellbeing
(Kingsley, Townsend, Henderson-Wilson, & Bolam,
2013). In cases like this, ecosystem distress is directly
related to human distress. In the case of Indigenous
communities, it exacerbates and reinforces other
forms of economic and social disadvantage.
The social impacts of mine development and legacies
are also signiicant for non-indigenous populations. In
the Upper Hunter Valley of New South Wales, social
researchers have documented cases of emotional
and psychological distress amongst residents living
in mining-affected landscapes. The term ‘solastalgia’,
which is now recognised internationally, was created
to describe the emplaced feelings of grief, loss and
anger felt by residents who perceived their loved home
environment to be under assault by vast open-pit
coal mining developments (Albrecht, 2005; Albrecht
et al., 2007). The concept of solastalgia captures the
hitherto ignored emotional and psychological costs of
mining and other developments that are perceived by
individuals to degrade their home environments and
threaten their sense of place. Such costs are rarely, if
ever, captured in existing Social Impact Assessment
frameworks and therefore represent a category of
social costs that remain under-reported and for the
most part invisible (McManus, Albrecht, & Graham,
2014).
FINANCIAL RISK
The ICMM has recognised non-company stakeholder
exposure to inancial risk through inadequate mine
closure for more than a decade. Financial Assurance for
Mine Closure and Reclamation (Miller, 2005) explored
environmental inancial assurance instruments as a
means of securing effective mine closure at the least
cost to mine operators. The document stressed the
apparent conlict between industry trying to reduce
operating costs and community and government
needing assurance. A second study acknowledged
the importance of perpetual management issues
and emphasised the need for high-level corporate
commitment and an integrated approach to mine
closure from the beginning exploration stage and
throughout the mine-life cycle (ICMM, 2006). The
recognition of perpetual management is particularly
important, as it requires cost estimates, inancial
plans and legal structures that exceed the ability
or longevity of existing institutions. This presents a
serious challenge to successful mine closure. Kempton
et al. (2010) identiied a number of vital questions that
need to be addressed. These included such diverse
issues as how can we create enduring and adaptable
inancial instruments and management mechanisms;
and who pays the cost of hundreds of years of AMD
monitoring and amelioration, or tens of thousands of
years of site exclusion and erosion management from
long-lived uranium mine tailings.
Designing and implementing an effective response
to the impacts and risks of mining legacies is
further complicated by the inancial structures
and disincentives that provide inadequate or even
perverse incentives to effective mine closure.
For example, the application of NPV in feasibility
assessments effectively devalues mine closure
costs and community impacts, making closure
costs irrelevant to project inancial feasibility
considerations or mine-life planning (ICMM, 2008).
Ironically, NPV is the preferred measure not just of
industry, but of government who recommend the use
of NPV despite acknowledging problems associated
with pricing non-economic costs or beneits (NSW
Treasury, 2007).
GROUND TRUTHS: TAKING RESPONSIBILITY FOR AUSTRALIA’S MINING LEGACIES
12
Table 1. Potential environmental impacts
contributing to mining legacies (Thanks to;
Worall et al, 2009; Cochilco, 2002; Roche and
Mudd, 2014)
Table 2. Potential social and cultural
impacts contributing to mining legacies
CERTAIN/COMMON IMPACTS
Waste dumps
Altered landscapes
Pits, voids and shafts
Tailings storage facilities
Vegetation and habitat loss
Ecosystem changes, loss of biodiversity
Air and dust pollution
Loss of economic activity/stimulus
Pollution of ground and surface water supplies
Subsidence
Dust and particulate pollution
Changed/scarred landscapes
Cultural loss/change
Change in ecosystem function
Altered/contaminated surface water lows
Unsecured sites/injury
Unproductive land due to loss of soils, change in slope, ph
Human health impacts
Acid mine drainage, metal leaching
Environmental and visual amenity
Introduction/spread of ire, weeds and feral animals
Sedimentation
Subsidence
Contaminated soils/lands
POSSIBLE IMPACTS
Spontaneous combustion
Solastalgia (changing sense of place)
Inability of lora/fauna to recolonise
Fire
Loss/contamination of groundwater
Radioactive pollution
Loss of infrastructure
Community fragmentation
IMPACTS FROM UNSATISFACTORY OR UNPLANNED CLOSURE
Abandoned plant and equipment
Failed rehabilitation
Perpetual management required
Failed rehabilitation/poor site management
Erosion
Perpetual management required
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13
TEXTBOX 1 - YABULU REFINERY
Among the conlicting goals of company proit
and closure assurance, the pricing of perpetual
management, and the perverse incentive of NPV,
it’s easy to lose sight of what inancial risk really
means. The Yabulu reinery and associated mine
workings in Queensland provides an example of the
interconnectedness of social-environmental risks and
potential inancial liability. The reinery, which has a
high production cost, is operating in a depressed nickel
market with new, more eficient competition (Mudd &
Jowitt, 2016). The environmental risks are signiicant
because the site is polluted with nickel, ammonia and
mercury. This represents a signiicant threat to the
adjacent Halifax Bay in the Great Barrier Reef World
Heritage Area.
recognised a signiicant rehabilitation liability with
an environmental restoration provisions in excess of
$200m since 2010. In September 2015, the provision
was reduced from $318m to just $42m, with a note
explaining a change in the standard of end land use
from the original undisturbed state to an industrial
site (Mudd & Jowitt, 2016). This meant that the
rehabilitation funds were no longer available for mine
closure and are unsecured if the company fails. This
demonstrates the insecurity of mine closure provisions
in Australia - a situation shared with Ontario, Canada,
where insecure funds and incremental provisioning
has led to a transfer of risk from the companies to
taxpayers (Hawkins, 2015).
Yabulu was sold by BHP to Clive Palmer’s company,
Queensland Nickel Resources (QNI) in 2009. Though
the exact price is unknown, it is reported to be
minimal because after they had closed (prematurely)
their Ravensthorpe nickel operations in Western
Australia, BHP regarded the site as a liability. At
the time, BHP estimated closure costs, including
shutdown, retrenchment, demolition and cleanup to be $1.4 billion. This included the backill of
pits, rehabilitation of mine area, the remediation of
contaminated soil/groundwater and the rehabilitation
of dams and evaporation cells (Hedley, 2015). QNI
Closure cost estimates for Yabulu range from the tens
to hundreds of millions of dollars. QNI’s ability to pay
is extremely low. It has debts of over $110m and is
currently operating at a loss with a production cost
of 60 cents per pound above the international nickel
price. While the inal outcome is uncertain, there
is evidence to suggest that poor management, high
production costs, an ageing facility and a depressed
nickel price will see the project and/or the company
fail. Unless a suitably qualiied and inancially viable
buyer is found, which is unlikely given the facts above,
the inancial liability for mine closure will most likely
be transferred to the Queensland Government.
GROUND TRUTHS: TAKING RESPONSIBILITY FOR AUSTRALIA’S MINING LEGACIES
14
EXAMPLES OF MINING LEGACIES IN AUSTRALIA
This section draws on information gained from the
investigation of ten Australian mines. These case
studies are shown in Table 3. They were selected
primarily because of community concern rather than
established closure or legacy issues. The aim of the
research was to explore the potential risk, liability
and impacts of mining legacies, including proposed,
operating and recently closed sites. None of the sites
discussed here could be described as well prepared
for closure, but the reasons are different in each case.
It was evident that there is a signiicant gap between
decades of research and industry awareness and onground outcomes. Signiicant issues include: the lack
of appropriate closure plans; inancially unviable
sites presenting signiicant social, environmental
and inancial risks; potential pollution of ground and
surface waters; subsidence; acid mine drainage and
uranium contamination; and a legacy of CO2 emissions.
In order to make this report as concise as possible,
the research has been summarised. The NSW and
Victorian coal mining operations are discussed in two
discrete sections, with the Carmichael, Ranger and
McArthur River mines presented separately. Unless
otherwise referenced, case study data were sourced
from the media, government and company documents
and websites. Brief descriptions of the various case
studies have been included below, with some issues
highlighted in the text boxes 2, 3 and 4. Note, while
some mine closure plans have become public as
part of the Hazelwood inquiry (see Textbox 5), at
time of research or request they were unavailable,
demonstrating rather than negating the need for
greater closure transparency.
Table 3. Case studies investigated in this report
State or territory
Mineral
New South Wales
Coal
Dendrobium
Coal
Metropolitan
Coal
Russell Vale
Coal
Springvale
Coal
Anglesea
Victoria
Mine
Coal
Loy Yang
Coal
Yallourn
Queensland
Coal
Carmichael
Northern Territory
Zinc-Lead
McArthur River
Uranium
Ranger
NEW SOUTH WALES COAL - CASE STUDIES
Three of the sites, Dendobrium, Metropolitan and
Russell Vale are located in the Wollongong District
of the NSW Southern Coalields, with the fourth site,
Springvale, located near Lithgow in the Western
Coalields. Dendobrium is a post-millennium mine,
producing up to 5 million tonnes per annum (mtpa) for
export and domestic use. Having started production in
2005 with a 20-year life, mine operator Illawarra Coal
is now seeking an expansion. This is being strongly
contested by communities concerned about impacts
on Sydney’s swampland ecosystems and water
supplies. Metropolitan, also known as the Helensburg
mine, produced 2.4 Mt of coking coal in 2014, though
additional production of up to 3.2 mtpa is planned.
The Russell Vale mine, also known as the NRE No. 1
Colliery, is situated on land that has been used for coal
mining since 1887. An underground expansion project
is currently being considered for the mine, which
having already been closed and restarted in 2015, has
again been in care and maintenance since September
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15
2015. Mining at Springvale commenced in 1992 and
has 40-50 Mt in reserves. In 2013 the mine produced
2.7 Mt and this increased to 3.5 Mt in 2014. The
Springvale site is complex with adjacent processing
and transport facilities along with many abandoned
collieries.
A LACK OF MINE CLOSURE PLANNING AND
FINANCIAL RISK
Of the four NSW sites only Springvale had a mine
closure plan available on their website or provided
one on request. While mine closure plans may exist for
the other sites, their unavailability seems to indicate
poor transparency and/or an absence of effective
closure planning. Wollongong Coal did acknowledge
the importance of closure planning at Russell Vale,
but preferred to defer planning to a time closer to the
planned mine close (see Text Box 2).
The operators of the Dendobrium mine, Illawarra Coal,
a wholly owned subsidiary of South 32, made reference
to a Landscape Management and a Conceptual Closure
Plan in their 2015 Annual Environment Management
Report. However, neither the closure plan nor the
annual environment report was readily available on
the website, nor were they supplied on request. This
contrasts with an earlier philosophy (under BHP)
when mine closure was seen as a continuous series
of activities that began with pre-planning prior to the
project design and construction and ended with the
long term site stability and the establishment of a self
sustaining ecosystem (Pinkster, 2004).
At Metropolitan, Peabody has made many documents
publically available, but again, a mine closure plan
was not readily available or supplied on request. The
absence of planning and reporting documents makes
it impossible to accurately assess potential legacy
Figure 4. Abandoned collieries near Springvale Coal Mine
(Source: Springvale Coal, Springvale Mine Final Rehabilitation Plan No. 6. 2015)
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GROUND TRUTHS: TAKING RESPONSIBILITY FOR AUSTRALIA’S MINING LEGACIES
16
impacts or the physical or inancial risks posed by
the operation. Furthermore, economic indicators
suggest the future of Peabody is anything but certain.
Peabody recorded a loss of A$2.5 billion in 2015,
and their share price dropped 98% to just A$2.50 in
the year to February 2016 (Khawar, 2016). Ongoing
speculation about imminent bankruptcy has also
been fuelled by massive debts, including a A$5 billion
self-bonded liability for mine clean-up costs in the
United States (Rucinski & Rucker, 2016). A lack of
planning, potentially inadequate bonds systems
and uncertainty over Peabody’s inancial viability
(bankruptcy proceedings were announced on the
14th April 2016) leave the Government and the
people of NSW exposed to an costs from unplanned
mine closure.
Centennial Coal made a Western Coal Service
Rehabilitation and Closure Plan available among
other Springvale documents, though it is dificult to
determine which parts of the company’s operations
it covers. The plan is a mixture of speciic details,
references to codes and planning instruments and
potential future actions. For example, while the plan
references the inancial provision sections of both the
Strategic Framework and the ICMM 2006 Financial
Assurance Guidance (discussed above), no details are
provided. Bonds are discussed with reference to NSW
cost estimation standards, which uses a commodity
and mining type based calculator, though no details
are available in the plan or in the 2014 Annual
Environment Report. Furthermore, no information
regarding the provision of bonds was provided by
the NSW Department of Industry. As a fully owned
subsidiary company, there is no public inancial
reporting available, nor is there any reference to
closure liabilities in their annual accounts of Banpu,
the parent company. Joint-venture partner, SK Kores
Australia, did not make any speciic reference to
closure liabilities in their 2014 inancial statement.
The area around the Springvale mine is littered with
abandoned colliery sites. Figure 4 shows thirteen
abandoned collieries (left to right: Huon, Western
Main, Eastern Main, Wallerwang, Commonwealth,
Cal, Armistice, Newcom, Reknown, Fernbrook,
Steelworks, New State Mine, State Mine) near
Springvale Coal Mine. This highlights the potential
cumulative impacts of mining legacies on communities
in the Springvale area.
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17
TEXTBOX 2 - FINANCIAL RISK AT RUSSELL VALE
The Russell Vale Coal mine is owned by Wollongong
Coal – an ASX listed company that is 82% owned by
Jindal Steel and Power (Mauritius), itself majority
owned by the Jindal Group based in New Delhi,
India. An underground expansion project currently
being considered for the mine, now looks unlikely
with the NSW Planning Assessment Commission
inding that: “the social and economic beneits of the
project as currently proposed are likely outweighed by
the magnitude of impacts to the environment.” (NSW
Planning Assessment Commission, 2016).
company did not provide any details, nor are they
supported by a mine closure plan.
There are contradictions in the company’s approach
to mine closure. While they refer to the AZMEC
Strategic Framework for Mine Closure within their
Rehabilitation Management Plan, the Plan then
dismisses the need for a mine closure plan, stating
that: “it is premature at this stage to develop speciic and
detailed plans for rehabilitation” (Wollongong Coal,
2015, p. 19). While the Plan does make reference to
a “Sudden (unplanned) Closure”, no documents or
details are made available. This demonstrates the lack
of a closure plan or an ongoing consultative planning
process. It contrasts markedly to the Strategic
Framework and ICC Toolkit, indicating at least a lack
of understanding, and, more likely, a total lack of
commitment to effective mine closure.
Perhaps more concerning than the lack of adequate
closure planning, is the inancial state of the company.
With Russell Vale currently in care and maintenance
and Wongawilli also in care and maintenance in
2015, the future of the company is questionable. The
company share price has fallen dramatically over
recent years, falling from a high of A$1.75 pre-2009 to
a current trading price of 1 cent. Financial statements
provide more cause for concern; the company posted
a $200 million loss in 2015. This follows an A$170
million loss the previous year. The liquidity ratio
(current ratio) is a low 0.03 with current assets of
A$23 million and a current liability of A$680 million.
Borrowings are also high, currently standing at A$587
million. The company is also vulnerable to impairment
or depreciation because over half of its A$883 million
in total assets are property, plant and equipment
valued on actual mine development costs of A$487m.
Valuing at cost ignores the falling commodity price and
market value of coalmines. A point reinforced by the
sale of the Isaac Plains Coal Mine to Stanmore Coal for
A$1 in 2014. Just two years after, Sumitomo bought a
half share of the mine for A$430 million, valuing the
mine at A$860 million.
Despite this lack of planning, the company reported
rehabilitation liabilities in its 2015 Annual Report. The
combined liability for Russell Vale and the Wongawilli
Colliery is reported to be $28 million – an $11 million
dollar increase on the previous year. It is dificult to
determine the accuracy of these igures because the
Russell Vale presents a high inancial risk for mine
closure with little detail to support the adequacy of the
current mine closure liability provisions. Risk that is
signiicantly heightened by the depressed state of the
coal market, contributing to Wollongong Coal’s recent
operating losses and very low liquidity ratio.
“the social and economic beneits of the project as
currently proposed are likely outweighed by the
magnitude of impacts to the environment.”
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18
VICTORIAN COAL - CASE STUDIES
A LACK OF MINE CLOSURE PLANNING
Three coal mines were investigated in Victoria: two
at Latrobe Valley (Loy Yang and Yallourn) and the
Anglesea mine located 40 km southwest of Geelong.
Loy Yang provides up to 30 mtpa to feed two adjacent
power stations that provide around 40% of Victoria’s
electricity. The mine, which opened in 1982, has an
estimated life span of 45 years and covers an 800
hectare site. Yallourn produces 18 mtpa of brown
coal from a seam 16 km across, 100 m thick and 60
km long. The coal also supplies an adjacent power
station. Mining commenced in 1974 and is expected
to continue until 2032. Anglesea is a brown coal mine
that produced coal for an adjacent power station for
the past 43 years. The power station closed in August
2015, rendering the Anglesea mine unviable (see
Textbox 3).
It is very dificult to assess the potential mining
legacies of Loy Yang and Yallourn as neither have
a mine closure plan or rehabilitation strategies
that are available to the public. Requests to obtain
these documents from the mine operators proved
unsuccessful. Similarly, neither company publishes
rehabilitation costs, provisions, bonds or liabilities
in their annual reports. It is possible, however,
that the costs are embedded in general line items.
Both companies publish sustainability reports, but
no detail on closure planning is provided. Energy
Australia’s Social and Environmental Performance
Summary Report does mention a Rehabilitation Master
Plan, but it is not clear whether this covers mine
closure planning. AGL Energy, the operators of Loy
Yang, were also responsible for a lack of reporting
Figure 5. Aerial image showing rehabilitation at the Yallourn coal mine (Energy Australia, 2015)
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19
“The ramiications of the ires at the Morwell
Mine however, will have a long reaching
impact in relation to rehabilitation on all of the
Mines in the Latrobe Valley”
on rehabilitation or associated costs when closing
the Kurnell LPG extraction plant. This suggests a
consistency in underreporting.
Energy Australia, the operator of Yallourn, discuss
progressive rehabilitation achievements, with a
graph showing disturbed area from 2005 to 2013.
Further details are available in annual rehabilitation
reports to the Victorian Department of Resources.
Figure 5 shows the area rehabilitated in 2014 in
relation to the total area disturbed. The proximity of
the mine to local communities is also clearly shown.
A similar report for Loy Yang, without statistics,
indicates a better rehabilitation to disturbance ratio.
Fires at the Hazelwood mine, 3 km to the south
of Yallourn, demonstrate how failure to manage
risk, either during or after operations, can result
in enormous impacts on human health, the local
economy and the surrounding environment. This
reinforces the need for continually updated longterm and sudden mine closure plans. Indeed, with the
signiicant and interrelated social, environmental,
technical and inancial risks associated with
coalmine ires, the management of ire will become
a key driver of mine closure design and completion
indicators, adding complexity and cost to planning
and implementation. The signiicance of the ire risk
for mine rehabilitation was recognised by Energy
Australia, who stated that: “The ramiications of the
ires at the Morwell Mine however, will have a long
reaching impact in relation to rehabilitation on all
of the Mines in the Latrobe Valley” (Energy Australia
Yallhourn, 2015, p. 2)
Coal mining brings some speciic environmental and
social impacts in addition to those tabled above.
Some, such as particulate pollution, are most severe
during operation, but can, unless properly addressed,
also affect communities near mines, power stations
and along transport corridors after closure.
Similarly, subsidence is usually a bigger threat during
operations, but post-closure incidences are not
uncommon. In 2012, fourteen homes were damaged
in subsidence events caused by a collapse in the Old
Lambton Colliery workings that closed in 1910. Five
of the homes were so damaged they were bought by
the Mine Subsidence Board at a cost of $3.8 million.
Because of poor or unavailable mine closure
planning; rehabilitation costs are unknown for most
of the case studies above. Recent estimates, however,
suggest a massive gap between costs and bonds. The
Hazelwood ire inquiry’s estimated closure costs of
A$100 m for Hazelwood mine and associated power
station, while AECOM (a mine closure specialist)
estimated costs of A$251 m for Hazelwood, A$196
m for Loy Yang and A$170 m for Yallourn if the sites
were abandoned. This is much higher than the bonds
set for Hazelwood (A$15 m) and Loy Yang (A$11.4 m)
or to the reported A$13.94 m for the much smaller
Anglesea site. If the coalmines were abandoned, the
gap between real closure costs and bonds would
most likely result in closure costs being transferred
to Victorian State Government. These indings are
supported by the strong response from the Victorian
Government to the Hazelwood Mine Fire Inquiry (see
textbox 5) which was handed down in April 2016.
GROUND TRUTHS: TAKING RESPONSIBILITY FOR AUSTRALIA’S MINING LEGACIES
20
TEXTBOX 3 - A LACK OF CLOSURE PLANNING AT ANGLESEA
The closure of coal mining at Anglesea illustrates how
current industry practice fails to prepare for mine
closure, leaving a town, government and company
unprepared and exposed to impact and risk. Fortunately,
Anglesea is a relatively small mine operated by a
inancial viable company that is committed to effective
closure – despite the lack of regulation and preparation.
Anglesea is a small seaside town adjacent to the Great
Otway National Park, 110km southwest of Melbourne.
Bordered by the south coast, bushland to the east and
heathland to the north and west, the town is situated
on a 2.5 km stretch of land between the coast and the
Anglesea mine.
Approved by State Agreement Act in 1961 and granted
a 50+50 year lease that was renewed in 2011, the
Anglesea mine produced 1.1 mtpa for an adjacent
power station which fed electricity to the Point Henry
Aluminium Smelter in Geelong. With the closure of the
smelter on 1st February 2014, the mine and power
station were offered for sale - some 45 years earlier
than expected. Following the mine and power station
closure, Alcoa estimated that the resulting restructure
would cost the company $58 million, with initial mine
closure and rehabilitation costed at A$25 million with
a further $44 million in later years. This compares to
media reports that a bond of A$13.94 million (20% of
Alcoa’s own igures) was held for the site. This is further
evidence of the inadequacy of bond systems in Australia
(Arup & Willingham, 2015).
The closure of the Anglesea mine exposes the community
and environment to a number of changes, some site
related and many stemming from the positive role
mine water discharge had in maintaining water lows
in a hydrological system with declining natural water
lows. The absence of mine related water discharges
of 4.5 million litres per day will bring many hydrological
changes, with longer-term environmental impacts
expected from (1) acid sulphate soils, (2) a reduction of
water lowing into the Anglesea River with subsequent
drop in river and estuary levels, (3) an increase in heavy
metals concentrations and (4) drying out of marshes
with further acidic effects. These are expected to alter
vegetation communities, increase the risk of algal
blooms and reduce water habitat and seagrass areas,
all with low on effects on ecological processes. Active
intervention with on-going pumping of water and runoff
buffering will be required to protect the sensitive river
and estuarine dependent eco-systems from deleterious
change (Victorian State Government, 2015).
Like many mines, Anglesea was unprepared for mine
closure. Remarkably, this occurred despite past
rehabilitation activities, the prior recognition, planning
and commitment to mine closure and the six months
notice given prior to closure. Indeed, the lack of planning
in 2014/15 is in contrast to earlier activities when Alcoa
identiied the environmental sensitivity of the site
and was as an early industry leader in rehabilitation
(Rolland, 1992). By 2011, there was an Anglesea Mine
Anglesea (Geelong Environment Council)
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21
“a diverse, self sustaining woodland ecosystem that
maintains or enhances surrounding land use such as
conservation, recreation and other natural values.”
Work Plan, marked as conidential and an associated
Site Closure Plan that provided a conceptual rather than
detailed plan, with the goal of establishing: “a diverse,
self sustaining woodland ecosystem that maintains or
enhances surrounding land use such as conservation,
recreation and other natural values.” (Alcoa Australia,
2011, p. 27).
The closure plan had few details and no real timeline but
it did indicate the existence of previous mine closure
plans. The plan’s brief reference to the possibility of
unplanned closure did little to prepare the company for
such an eventuality. In December 2015, four months
after closure, Alcoa released a fact sheet outlining a
process of developing a reined closure concept and the
identiication of detailed closure criteria. The closure
plan is currently open for community input and will be
submitted to the State Government for approval, with
closure work expected to begin during 2017.
The outcomes of the premature closure of Anglesea
Coal are as yet unknown. Best practice includes a
constantly evolving mine closure plan, including
provision for unplanned closure, with extensive
community and government consultation. The lack of
consultation and poor transparency to date give little
grounds for conidence that successful closure will be
achieved. The question is, therefore, will Alcoa’s new
commitment and mine closure plan overcome the poor
preparation and produce a successful mine closure, or
will the legacies from Anglesea continue to impact on
the people and place for decades to come.
GROUND TRUTHS: TAKING RESPONSIBILITY FOR AUSTRALIA’S MINING LEGACIES
22
THE CARMICHAEL COAL MINE; PROJECT
VIABILITY AND CLOSURE RISK
The proposed Carmichael coal mine is located in the
Galilee Basin in central Queensland, 160 km northwest
of the town of Clermont. Covering 45,400 hectares
and requiring extensive rail and port facilities, it has
an estimated output of 30-60 mtpa and a lifespan of
approximately 45-90 years (igures have varied in
different project iterations). One of nine proposed
mines in the Galilee Basin, Carmichael represents
one ifth of a total potential production of 300 mtpa.
This scale of production would represent additional
cumulative and interactive risks to the environment
and human health.
The temporal and geographic scale of the project
exposes the project owners, operators, stakeholders
and regulators to signiicant risk. The decline in the
price of thermal coal from a high of A$200 AUD in
2006 to $77 in December 2015 represents a return
to the long-term 30-year average of A$75, a fall of
over 60%. While assisted by recent falls in the value
of the Australian dollar, the Reserve Bank indicated
that costs for Australian thermal coal producers, on
average, are higher than international competitors,
with many companies operating unproitably at
current prices. The inancial uncertainty created by
industry factors is exacerbated by site-speciic factors
including: the low quality of Carmichael’s coal with
a potential 30% penalty against the Newcastle coal
benchmark; Adani’s inexperience and high level of
indebtedness; high capital expenditure of between
A$7.5 to A16.5 billion; high cost of production,
predicted to be A$80-100; with debt funding made
more dificult by community campaigns and the 11
Australian and international banks that have stated
they will not be funding the project.
From a mining legacy perspective, Carmichael involves
signiicant environment, social, technical and inancial
risks in an industry with a poor track record. These
risks are magniied by the sheer size of the operation,
increasing climatic variability, the likelihood of
perpetual impact and management, the project’s
inancial vulnerability, the inexperience of Adani, the
lack of clarity around their inancial structures and
uncertainty facing the global coal industry. Indeed,
the string of coal company bankruptcies in 2015/16,
including Peabody (parent company of Metropolitan)
and Moody’s downgrading of Adani Abbott Point
Terminal bonds to sub investment grade, indicate both
industry and entity weakness. On top of Adani’s other
inancial challenges, a closure bond of suficient size
and security would require billions of dollars, making
the project even less inancially viable. The risk is that
the Queensland and Commonwealth Governments
weaken or even guarantee the bonds, leaving
taxpayers to pay the inevitable closure and ongoing
management costs.
MCARTHUR RIVER MINE
The McArthur River mine is a zinc-lead mine 45
km south-west of Borroloola (Northern Territory)
situated in the country of the Yanyuwa, Garawa, Mara
and Gurdanji peoples. Reputed to be one of the world’s
largest zinc deposits, the mine has been controversial
since zinc deposits were irst discovered in the 1950’s
and named ‘Here’s Your Chance’. Mining leases
were granted in January 1993 after the project was
controversially fast-tracked by the NT government.
Ever since then, Traditional Owners have been raising
concerns about the impact of the mine (Howey, 2010;
A. Young, 2015) - highlighting the interconnectedness
of cultural obligations to protect and manage country.
These concerns were captured in the ilm Two Laws
(1981), made by the Borroloola Aboriginal Community
and more recently in the art of Jacky Green (see front
cover), a Garrawa elder.
In 2003 an Environmental Impact Statement (EIS)
was prepared for a proposal to begin open cut
mining. This included a diversion of the McArthur
River itself to allow access to minerals below the
riverbed. The proposal was rejected by the NT
Environmental Protection Authority (EPA) on the
basis of unacceptable environmental risk. Subsequent
National and Territory political intervention allowed
for revised proposal to be assessed at a lesser level.
The new proposal was essentially the same but
with a number of modiications to the proposed
river diversion, it was approved by the NT and
Commonwealth governments.
In 2012, the mine owners Xstrata were required to
produce a comprehensive mine closure plan as part
of an EIS. The plan estimated mine closure costs to be
A$141 m, with an additional 20% for contingencies.
The amount estimated for post-closure monitoring
and reporting was A$1.6 m, but there appeared to
be no allowance for post-closure maintenance. The
NT Government does not release information about
the amount of bonds it holds for the mine, but media
reports state it to be around A$100m.
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23
McArthur River (Monica Napper)
Community concerns increased in late 2013 when the
mine’s waste dump started smouldering and emitting
sulphur into the air; drawing attention perhaps to
a looming environmental disaster. Studies by the
Independent Mine Monitor (IM) conirmed inaccurate
sampling, requiring a reclassiication of problematic
waste rock. This was recognised by the NT EPA who
published comprehensive terms of reference for a
new EIS in September 2014. The terms of reference
expressly required consideration of the early closure
of the mine. The EIS, which had no deadline, is yet to
be submitted.
RANGER URANIUM MINE
The Ranger Uranium Mine (Ranger) is an open pit
mine and one of only three mines in the world to have
produced in excess of 110,000 tonnes of uranium
oxide (U308). It is situated 230 km east of Darwin
and surrounded by the World Heritage-listed Kakadu
National Park. The mine is operated by Energy
Resources Australia (ERA) which is majority owned
by Rio Tinto, which holds 68.4 % of shares. ERA also
holds a mineral title to the Jabiluka deposit, 22 km
north of Ranger. This deposit is under long term care
and maintenance and will not be developed by ERA
without the agreement of the Mirarr, the Traditional
Owners of both Jabiluka and Ranger.
Prior to mining Ranger was subject to a public inquiry
(The Ranger Uranium Environmental Inquiry also
known as the Fox Inquiry). The inal report delivered
in May 1977 underpinned the requirement for
comprehensive rehabilitation plans to be developed
and approved by the regulating authorities. The
rehabilitation requirements for Ranger were set
out in the original EIS and speciically written into
agreements between the Traditional Owners, the
Government and the mining company. License
conditions include a requirement to rehabilitate
the project area to a condition that would allow the
site to be included into Kakadu National Park, with
an unspeciied rehabilitation security held by the
Commonwealth Department of Industry and Science.
The amount is reassessed at every renewal of the
Mining Management Plan, usually once a year.
There have been long standing concerns that ERA
does not have the funds to fulil its rehabilitation
liabilities, which are estimated to be A$512 m, and
that securities held will be insuficient to meet the
shortfall. Rio Tinto has publicly committed to meeting
GROUND TRUTHS: TAKING RESPONSIBILITY FOR AUSTRALIA’S MINING LEGACIES
24
any inancial shortfall in the rehabilitation and in April
2016 formalised a $100 million rehabilitation credit
facility with ERA.
Mining in the Kakadu region has now ceased, although
processing of stockpiled ore continues. Rehabilitation
works at the site have begun and ERA’s lease requires
the company to end all mineral processing by January
2021. While concerns remain about the company’s
technical and inancial ability to rehabilitate to
the high standard required, Rio Tinto made strong
commitments to rehabilitating the site at its AGM in
May 2016.
With a radioactive half-life of tens if not hundreds
of thousands of years, uranium mines and waste are
a perpetual management challenge. The failure of
earlier rehabilitation efforts at uranium operations
at Rum Jungle (NT) and Mary Kathleen (Qld) after a
few decades highlights the high level technical and
management skills that will be required to successfully
and permanently rehabilitate a complex radioactive
and AMD site. This is further complicated in the
NT by remoteness, high seasonal climatic variation
and very high rainfall events. Beyond the current
rehabilitation costings the cost to the taxpayer of
perpetual management at Ranger remains uncosted
and unfunded.
Ranger Uranium Mine (Dominic O’Brien)
GROUND TRUTHS: TAKING RESPONSIBILITY FOR AUSTRALIA’S MINING LEGACIES
25
TEXTBOX 4 - BURNING ROCKS AND TECHNICAL RISK AT MCARTHUR RIVER
The McArthur River mine could be used to
demonstrate many of the contentious issues with
modern mining including: political intervention in
approvals; cultural insensitivity and dispossession,
contaminated ish and cattle; river diversion and
pollution; and Tailings Storage Facilities (TSF)
seepage. This section highlights the mine’s waste rock
dump as an example of poor science, overconident
company assertions and political support delecting
repeatedly stated and long-term concerns about
monitoring and regulation.
The identiication of technical mine closure risks
starts in the design phase. Key geological, physical
and chemical properties of ore bodies and overburden
determine mine design, processing and ultimately
the inancial viability of the mine. At McArthur River,
inaccurate classiication has created a monster of a
pollution problem that is potentially 11 km square and
80 m high. The problem is more complicated than acid
mine drainage caused by potential acid forming (PAF)
materials because the metals are also potentially
soluble in neutral and alkaline conditions. Collectively,
they can be labelled as reactive. In 2005, the EIS
stated that only 11% of the total overburden would
be PAF, with suficient nonreactive, or acid-consuming
material, to enable the impacts to be easily managed.
This view was rejected by the EPA who recommended
the mine not proceed, stating that: “There are concerns,
however, that the volumes of neutralising material
available and the neutralising capacity of the material
have been overestimated by the proponent” (Environment
Protection Agency (EPA), 2006, p. 19).
The EPA also raised other issues including the
structure of the overburden waste dump, highly
seasonal and adverse climatic conditions, and
concerns about the company’s commitment and
ability to implement effective closure. While concerns
were undoubtedly expressed elsewhere, the issue of
reactive classiication was then mentioned in the 2011
Independent Monitor (IM) report, which highlighted
a number of signiicant concerns that required
immediate action. Among them were shortcomings
in monitoring, the identiication of PAF treatment
options for the TSF and poor method of PAF/NAF
classiication.
Concerns within the company must have also been
growing as they commissioned an assessment by
Klohn Crippen Berger on PAF/NAF classiication, a
draft of which was received in 2012. The result of the
reassessment was to reclassify the waste rock, with
PAF material going from 11% in the mine proposal
McArthur River
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26
to 91% (reactive): the consequences of this for mine
operation, environmental impact and potential
legacies cannot be overstated. This change, which was
‘identiied’ (suggesting a less than transparent process)
during a review of the 2013-2018 Mine Management
Plan, resulted in the NT EPA requesting a new EIS for
the overburden facilities. The EIS, including a new
closure plan, is expected to be submitted late in 2016.
Concerns were also growing at the IM (Independent
Mine Monitor, 2016) about problems stemming from
the reclassiication. They identiied a number of key
risks/issues for mine closure including;
•
•
•
•
•
•
•
•
The long-term (500-1000 years) stability of the
North Overburden Emplacement Facility (NOEF).
Inability of the NOEF cover to meet design criteria.
Availability of non-reactive materials for
Overburden Emplacement Facility covers.
Contaminated discharge from mine pit into the
McArthur River.
The adequacy of 25 year post closure monitoring
and management and the dificulty in estimating
costs and bonds without adequate planning.
Lack of speciic closure criteria.
Flawed cost estimations.
Inadequate personnel requirements.
These issues indicate the extent of the problem
created by the initial poor classiication. The technical
challenge is enormous, with only two real options.
Return the waste to the pit, effectively stopping
mining, or ind suitable offsite material to construct
caps for the OEF and TSF that are able to maintain
integrity in the long-term by withstanding adverse
seasonal conditions and more extreme weather
events in the future. Neither option presents as a risk
free solution, with the very real prospect of the mine
site requiring perpetual management (IM, 2015). Until
a new closure plan is developed, the NT Department of
Mines and Energy (DME) is insisting that the bond be
calculated based on returning the waste rock to the pit
void. The status of the bond is unknown, as is the cost,
but is expected to be several times higher the current
bond estimated to be $140 million. These igures raise
concerns that the company will either not rectify the
problem or abandon the site.
Throughout this time the traditional owners and
local community continued to actively raise concerns
and push for a swift resolution, including the return
of waste rock to the pit. For them the prospect of a
mining legacy is very real. The last word is best left
to them: “We’re the ones we live down the river and
it’s affecting our children – that’s what we’re worrying
about”. Nancy McDinney, cited in Everingham (2015)
“There are concerns, however, that the volumes of
neutralising material available and the neutralising
capacity of the material have been overestimated by
the proponent”
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27
REGULATION AND MANAGEMENT OF MINE
CLOSURE AND MINING LEGACIES
COORDINATED ACTION ON AUSTRALIAN MINE
CLOSURE
Despite some recent attempts to develop a national
strategy or hub (Unger, 2012), mining legacies
remain a state/territory responsibility with little
national coordination or leadership. Every state
and territory seems to have different views about
mining legacies, different solutions, funding
arrangements, prioritisation of the issues and even
different government agencies that deal with mining
legacy issues. While some states and territories
have recently developed policies on legacy mines
and different strategies to raise funds to begin the
task of rehabilitating sites; a coordinated national
approach is no closer than it was a decade ago (Pepper
et al., 2014). The following section provides a short
summary of jurisdictional approaches, with more
detail on the case study states (New South Wales,
Victoria, Queensland and the Northern Territory) and
the recently reforming Western Australia.
At the Commonwealth level, there is no speciic mining
legislation as mineral resources are vested in and are
the responsibility of the states and territories. The
Environment Protection and Biodiversity Conservation
Act 1999 (EPBC Act), however, is relevant for mining
operations when any mining activities are determined
‘controlled actions’ under the EPBC Act. Whilst the
EPBC Act does not normally set the inancial assurance
amounts or act as the primary legislation governing
the rehabilitation of mines, conditions of approval
for mining projects often relate to rehabilitation.
These include specifying the content and timing of
rehabilitation plans as well as specifying the ecological
outcomes of rehabilitation. The Commonwealth
also has speciic requirements for uranium mine
closures. There is an argument for Commonwealth
mine closure or legacy legislation based on human
and environmental impacts and to ensure greater
cooperation between the States and Territories.
THE STATE SYSTEM AND ENVIRONMENTAL
FINANCIAL ASSURANCE
This section briely examines the principle regulatory
instruments and environmental inancial assurance
(EFA) systems governing mining in Australia. Each
state has its own laws and regulations relating to the
granting of mining leases and the control of mining,
mine rehabilitation and closure. To prevent ineffective
mine closure, state governments have enacted mine
closure legislation and procedures which prescribe
rehabilitation and closure requirements. The
guidelines provided by the relevant authorities are
outlined below. Much of the research comes from the
websites of the regulatory authorities and for the sake
of brevity is not referenced in detail, but references
to speciic guidelines are given where signiicant.
For those wanting to compare jurisdictions, a useful
summary table listing the rehabilitation guidelines is
available in Blommerde, Taplin, & Raval (2015).
Most state guidelines reference the Commonwealth
Government guidelines Mine Rehabilitation and Mine
Closure and Completion (Department of Resources
Energy & Tourism Australia, 2009a, 2009b). National
guidance is provided by the Australian and New
Zealand Minerals and Energy Council and the Minerals
Council of Australia (Australian and New Zealand
Minerals and Energy Council & Minerals Council of
Australia, 2000) who identiied six main objectives of
a mine closure plan. These should be to:
•
•
•
•
•
•
Enable all stakeholders to have their interests
considered during the mine closure process;
Ensure the process of closure occurs in an orderly,
cost-effective and timely manner;
Ensure the cost of closure is adequately represented
in company accounts and that the community is
not left with a liability;
Ensure there is clear accountability and adequate
resources for the implementation of the closure
plan;
Establish a set of indicators which will demonstrate
the successful completion of the closure process;
and,
Reach a point where the company has met agreed
completion criteria to the satisfaction of the
community and regulating agency.
EFAs can be applied at any stage of the mining cycle
and current practice is to require unconditional bank
guarantees with the amount of assurance based on
the estimated cost of the full cost of rehabilitation and
closure of mine sites. They are based on an estimation
of rehabilitation and closure costs derived from
spreadsheets provided by the regulatory agencies.
Financial assurance is used to solely guarantee
restoration or reclamation of disturbed areas and
not to regulate ongoing operations (Miller, 2005).
Traditionally, Australian jurisdictions have relied on
site-speciic bonds, with levies introduced alongside,
or to replace bonds, in the NT and WA respectively.
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THE BONDS SYSTEM
The dominant EFA used to ensure closure criteria
are met is a bond. This is an agreed sum, which can be
retained in full, or in part, in the event that mine closure
requirements are not met. These funds then become
available to the managing agency to implement
successful closure. There are various types of bonds
available, but simply put, bonds systems are an “upfront or gradual set-aside or guaranteeing of expected
clean-up cost” (Peck & Sinding, 2009). Between the
states and territories there is a diversity of bonds
arrangements and exemptions, with a growing trend
towards increasing bonds to 100% of estimated
closure costs. With WA’s Mining Rehabilitation Fund
(MRF), however, the intent is to remove requirements
for bonds but retain ministerial powers to require
bonds if it is considered appropriate.
When full mine closure costs are held in bonds it
provides an incentive to rehabilitate, especially if
supported by strong regulation and enforcement with
sites and provide a resource to reduce both existing
future and mine legacies. Levies have been used in
the NT to backill and cover the historic shafts and
to assess water quality impacts from Redbank mine.
In WA there are ive sites being rehabilitated, one of
which is the recently opened and abandoned Ellendale
diamond mine (Department of Mines and Petroleum,
2016). Levies implicitly endorse new mining to
generate funds, thereby potentially exacerbating
or deepening a real or perceived dependence on the
mining industry to address existing mining legacies.
NEW SOUTH WALES
Mineral titles are granted and governed under the
Mining Act 1992 (Mining Act) with the Department
of Trade & Investment (DTI) under the Division of
Resources and Energy (DRE) responsible for the
regulation of mining. Rehabilitation and environmental
performance conditions are attached to all authorities
issued under the Mining Act. Titleholders must
prepare an Environmental Impact Statement (EIS) and
“Ensure the cost of closure is adequately represented in
company accounts and that the community is not left
with a liability”
criminal liability and punitive inancial instruments.
A 100% bond can ensure that the company
responsible for mining is responsible for paying for
the rehabilitation. If rehabilitation and on-going
management costs are calculated accurately this
should avoid costing the taxpayer money and, thereby,
improve community conidence in mining. Despite
this, there are numerous examples, including those
from NSW and Victoria outlined above, of bonds being
insuficient to meet the actual cost of closure. In this
situation, where actual costs of closure are greater
than the loss of bonds, there is no inancial incentive
to rehabilitate and deliver a successful mine closure.
MINING LEVIES
Both the Northern Territory and Western Australia
have developed a 1% levy on new mines (and WA
retrospectively in exchange for bonds) to address
legacy sites. One of the beneits of a levy is that it could
potentially fund the rehabilitation of current legacy
submit and comply with an approved Mine Operations
Plan (MOP) which includes a rehabilitation plan.
This is used by the DRE for monitoring rehabilitation
progress and success. Rehabilitation must be
undertaken progressively over the life of the mine and
Annual Environmental Management Reports (AEMRs)
must be submitted.
EFAs are held in the form of cash or a bank guarantee
and cover the estimated cost of rehabilitation. A
government cost calculation tool is provided or
alternate rehabilitation cost estimate methodology
can be used based upon guidelines provided. Closure
criteria stipulate that the mined area must be safe,
stable and non-polluting and suitable for agreed post
mining land use. Guidelines for the rehabilitation
of mined areas (termed Secondary Domains) are
provided by the DTI (Department of Trade and
Investment, 2013) who require the construction of
a Rehabilitation Table. This is contained within the
MOP and has to be approved by the DRE prior to
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29
TEXTBOX 5. THE HAZELWOOD MINE FIRE ENQUIRY – VICTORIA’S INADEQUATE BONDS
The Hazelwood Mine Fire Inquiry was set up in
response to the 2014 Hazelwood mine ire that
burned for 45 days with a huge impact on the
health and wellbeing of the Morwell and greater
Latrobe Valley communities. The original inquiry
ran from the 21st March to the 29th August 2014,
with terms of reference including; the cause of
the ire, the ireighting response, ire prevention
and preparedness at the mine, and the health and
community impacts. The inquiry was reopened on
the 26th May 2015 with a new terms of reference,
examining; ire risk an Anglesea mine, mortality and
health in the Latrobe Valley, mine rehabilitation
options for Latrobe Valley coal mines and whether
the rehabilitation liability assessments are adequate,
and the effectiveness of the current rehabilitation
bond system.
After extensive consultation and investigation, the
inal report of the re-opened Hazelwood Mine Fire
inquiry was released on the 14th April 2016. The
report concluded that the current rehabilitation
bond system was ineffective and inadequate. Finding
that despite a policy of 100% bonds, these had
not been set or required by the Mining Regulator,
rather, the inadequate bonds were based on an
assessment of risk of default together with past
conduct and expected future conduct. Nor had the
Mining Regulator provided transparent reasons
for not increasing the bond levels, despite there
being increases in assessments of mine operators’
rehabilitation liabilities.
The report made 19 recommendations, many of
which were speciic to the Latrobe Valley including;
new rehabilitation liability assessments by accredited
auditors, increasing bonds to $34.2 m at Yallourn,
$36.7 m at Hazelwood and $56 m at Loy Yang as a
minimum interim measure, further bond review and
adjustment as necessary, immediately setting up a
Hazelwood Mine Fire Implementation Monitor to
implement the recommendations, then appointing
an independent Latrobe Valley Mine Rehabilitation
Commissioner in 2017 and inally, put in place a
Latrobe Valley Mine Rehabilitation Authority. More
general recommendations focused on; adequate
regulatory resourcing, skills, accreditation and use of
independent auditors, increased rate of progressive
rehabilitation, risk based assurance systems that
assess both history of compliance and future demand
for coal, progressive mine rehabilitation milestones
and the establishment of a post closure trust fund
to mitigate the costs of ongoing maintenance and
management of the sites.
The review provided a clear recognition of potential
scale of mining legacies and the cost to the
environment and human health. It also recognised
the inancial risk to Victoria, identifying 100%
bonds as a motivator and assurer of effective mine
closure. And relevant to other jurisdictions, it
recommended a post closure fund for long-term or
perpetual management costs, oficially recognising
the inancial liabilities today’s mines will have for
future generations.
The Victorian Government responded by committing
over $50 million to implement the recommendations.
Speciically on mine rehabilitation, the government
agreed to: (1) Develop a regional strategy for
rehabilitation of the Latrobe Valley coal mines and
modernise the regulation of Victoria’s coal mines to
ensure transparency and clarity for community and
industry, and (2) Increase the existing bonds to 50 per
cent of the mine’s self-assessed value by June 2016 and
100 per cent by January 2017, while developing a more
effective system to set future rehabilitation bonds.
GROUND TRUTHS: TAKING RESPONSIBILITY FOR AUSTRALIA’S MINING LEGACIES
30
mining. Blommerde et al. (2015) recommend that,
in order to achieve successful mine closure, more
guidance for mining companies is needed.
VICTORIA
In Victoria mining is regulated under the Mineral
Resources (Sustainable Development) Act 1990
(MRSD Act) and the Mineral Resources Development
Regulations 2002. The MRSD Act requires the
Department of Earth Resources (DEER) to set and
review rehabilitation bonds for mining and extractive
industries. The mining company must rehabilitate
the land in accordance with the requirements of the
approved work plan, license conditions or speciic
code of practice. To this end, the DEER has produced
an advisory document Guidelines for Environmental
Management in Exploration and Mining which points
out that completion criteria for rehabilitation and mine
closure are required (DEER 2004). The document,
however, does not explain what the criteria are, how
they should be developed or how they are applied
(Blommerde et al., 2015).
Section 80 of the MRSD Act requires payment of a
rehabilitation bond in the form of an unconditional
(irrevocable) bank guarantee prior to work
commencing with the amount determined by the
relevant minister. Bonds are periodically reviewed
by the DEER during the life of a mine, but will also be
reviewed when a work plan variation is submitted,
a tenement is transferred or when requested by
the tenement holder. In addition to the DEERs
scheduled bond review period, mine operators are
required to provide an annual self-assessment of the
rehabilitation liability of their operation. The Minister
has the authority to request a review at any time
during the life of an operation if it is perceived to be
insuficient. This may occur when a site inspection
indicates insuficient progressive rehabilitation has
been undertaken or the site has not been operated in
accordance with the approved work plan.
NORTHERN TERRITORY
Mining in the Northern Territory (NT) is governed
by the Mining Management Act and associated
Management Mining Regulations. The Department
of Mines and Energy (DME) conducts mine audits
and inspections to ensure compliance with Mining
Management Plans (MMP) and relevant standards.
MMPs form the main closure document and contain
the rehabilitation plans. The DME provides a template
for writing management plans (Department of Mines
and Energy, 2013). A remediation security with a
conditional bank guarantees is required and the
procedure for calculating it (MS Excel spreadsheet
calculator) is available on the DME website. Security
is reassessed at every renewal and approval of the
mining management plan (MMP), at least once per
year or after any MMP amendment is submitted for
approval. There is also a mine remediation levy of 1%
of the total security which is payable annually based
on the security held on the 1st of July in the year of
assessment. Information obtained from the DME
suggests that the total amount of remediation security
held for all current mining authorisations in the NT is
about A$983 million.
QUEENSLAND
In Queensland mineral titles are granted and governed
under the Mineral Resources Act 1989. A new Act,
the Mineral and Energy Resources (Common Provisions)
Act 2014, is scheduled to commence on the 27th
September 2016. A subsequent amendment has been
referred to the Infrastructure Planning and National
Resources Committee with a report due in May. At
the time of writing, an appropriate mining tenure and
an Environmental Authority (EA) is required under
the Environmental Protection Act 1994 (EP Act) to
conduct a mining activity. The Coordinator General’s
ofice reviews EAs and will prescribe speciic
conditions relating to rehabilitation and closure.
The Queensland Department of Environment and
Heritage (DEHP) may require an EA holder to provide
inancial assurance under Section 292 of the EP Act.
The DEHP is responsible for calculating, setting and
where appropriate, revising the amount of inancial
assurance required from mining company. It also
has responsibility for assessing success in meeting
rehabilitation objectives before accepting surrender
of an EA and returning inancial assurance to the EA
holder. In 2014, the DEHP published Rehabilitation
Requirements for Mining Resource Activities (Department
of Environment and Heritage Protection, 2014), a
document designed to assist mining companies in
planning and achieving successful rehabilitation.
Glenn et al. (2014) suggest that this document alone is
not suficient to help the industry achieve the required
rehabilitation objectives (see Textbox 6).
SOUTH AUSTRALIA
In South Australia the provision of mineral titles are
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31
governed and managed under the Mining Act, 1971.
All mining tenements are subject to a bond (usually in
the form of a bank guarantee) under Section 62. Once
a lease is granted the tenement holder must then
prepare a Mining and Rehabilitation Program (MARP)
which must be approved by the Department of Primary
Industry and Resources before mining commences.
Leaseholders are also required to produce a Program
for the Protection of the Environment (PERP) which
includes detailed plans relating to mine management
and control, mine closure and rehabilitation. This is
then used to assess the bond. The MARP is updated
during the life of the mine, but Blommerde et al.
(2015) are critical of the fact that there is no guidance
about the development of closure criteria. Proponents
are encouraged to look at MARPs prepared for other
developments and to use consultants with experience
of SA mining.
South Australia also has an Extractive Areas
Rehabilitation Fund (EARF) constituted under
Section 63 of the Mining Act which is administered
by the Department of State Development. Funds are
contributed to the EARF from part of the royalty paid
on extractive mineral production. The fund is designed
to facilitate the rehabilitation of abandoned mine sites.
WESTERN AUSTRALIA
In Western Australia mining is governed under the
Mining Act 1978 (Mining Act). The Department of
Mines and Petroleum (DMP) is part way through
implementing a series of reforms relating to
abandoned mines and mine closure. The previous
bonds system introduced in the 1980’s was
recognized as inadequate and representing only 25%
of the real cost of rehabilitation.
The key feature of the reform is the Mining
Rehabilitation Fund Act 2012, which replaces
performance bonds with a levy system designed to
cover costs of mine rehabilitation in the event of mine
companies not fulilling rehabilitation requirements.
The new levy is calculated on criteria based cost tables
and multiplied by disturbed area or feature. This
is supported by a series of legislative amendments,
policies and guidance statements including a new
abandoned mines policy. Companies are now required
to submit updated and costed closure plans, and
report on disturbance annually as part of the levy
assessment, all of which is publicly available.
created a perverse disincentive for companies
to abandon rather than close mine sites. The
abandonment of the Ellendale Diamond mine
illustrates both the danger of returning the bonds and
the utility of the Mining Rehabilitation Fund (MRF)
which has been used to stabilise the site. The MRF is
also funding the rehabilitation of four mining legacies
near Collie, Esperance and in the Goldields.
The changes do not apply to mining operations
where the state does not own the mineral rights or
to State Agreement Acts, these projects include;
Alcoa’s alumina reinery, the Argyle diamond mine,
Collie Coal, Woodside’s north-west gas project and
seventeen separate iron ore agreements.
With these reforms, the WA Government is clearly
demonstrating the need for action and is providing
leadership on tackling mine closure and mining
legacies in Australia. Whether other measures will
need to be implemented to overcome the lack of direct
inancial incentive to undertake mine closure is yet to
be seen.
TASMANIA
Mining in Tasmania is governed under the Mineral
Resources Development Act 1995. EFA bonds are
required in the form of cash deposit, bank guarantee,
term deposit or any other security the Minister may
determine. Unless a post mining land use is identiied,
return of the land in a condition compatible with the
surrounding land form is considered suficient. The
relevant government department estimates the cost
of reclamation and bonds are staged to provide for
development and relect progress of reclamation. A
decommissioning and reclamation plan is negotiated
with the mining company. This will include reclamation
speciications and validation criteria. The Tasmanian
EPA has recently produced the Decommissioning
and Rehabilitation Plan (DRP) for mine closure and
rehabilitation. According to Blommerde et al. (2015),
these documents do not contain any detail on
completion criteria. There is no speciic document
guiding mining rehabilitation and mine closure.
Nevertheless, mining companies have to develop DRPs,
update them regularly and carry out rehabilitation
throughout the life of the mining project.
While bonds may be still be applied at the Minister’s
discretion, the return of almost A$1billion in closure
bonds has left the state exposed and potentially
GROUND TRUTHS: TAKING RESPONSIBILITY FOR AUSTRALIA’S MINING LEGACIES
32
TEXTBOX 6. ENVIRONMENTAL FINANCIAL INSTRUMENTS IN QUEENSLAND
In Queensland the Department of Natural Resources
and Mines (DNRM) is responsible for collecting and
administering inancial assurances. These are held
as cash, bank guarantees or a combination of both.
A recent review of inancial assurance for mining
rehabilitation by the Queensland Audit Ofice
(Queensland Audit Ofice, 2014) found serious
problems with the administration of the process
and stated that: “Environmental rehabilitation at the
expense of those in the mining industry whose activities
cause the damage, continues to remain an unrealised
aspiration. Environmental rehabilitation does not always
happen once approved resources activities cease. This
means some sites go into care and maintenance and a few
operators forfeit the inancial assurance to the state. As
the inancial assurance is often insuficient to cover the
estimated cost of site rehabilitation, the state is left with
an increasing legacy of sites that are not rehabilitated.”
(Queensland Audit Ofice, 2014, p. 3)
This suggests that a mine might be abandoned or go
into care and maintenance as a means of avoiding
rehabilitation costs. The Queensland Audit Ofice
also found that there was no clear protocol between
the Queensland Department of Environment and
Heritage Protection (DEHP) and the DNRM about
the management of these sites. The report found
that there is often no clear record of EFAs because
some assurances are held by the DNRM and some
are held by DEHP. Inadequate communication and
processes between the two departments meant the
DEHP did not know whether the inancial assurance
they required from an environmental authority holder
had been requested, received or retained. This can
lead to mine sites remaining in care and maintenance
while the departments dispute administrative and
regulatory responsibilities.
The weakness of the existing system was recently
demonstrated by the potential liability arising from
Yabulu Reinery (see Text Box 1) and the pollution
and associated regulatory failings of Linc Energy. Both
sites have massive and unfunded pollution and cleanup liabilities, that previously could have fallen to the
state. In response the Queensland Government has
enacted the new Environmental Protection (Chain of
Responsibility) Amendment Act 2016, retrospectivity
backdated to March 15, 2016. Under the new Act, the
DEHP has new powers to peruse ‘related persons’
for civil and criminal liability, particularly directors or
those able to inluence the extent of environmental
compliance. While the ability of the Act to recover
funds has yet to tested, it demonstrates again both
the vulnerability of the community and government
to mining legacies and the need for regulatory reform.
Mount Morgan, Queensland’s most infamous mining legacy (Jessie Boylan)
GROUND TRUTHS: TAKING RESPONSIBILITY FOR AUSTRALIA’S MINING LEGACIES
33
SUMMARY
This report set out to explain some of the current
and potential impacts of Australia’s mining legacies
to Australians. The aim was to bring the reality of
mining legacies, often hidden by geographical
remoteness or simply by fences, out into the open.
Using examples and case studies to illustrate what
mining legacies mean for people and place, we
reported on research, events and key documents,
collectively demonstrating the need for reform of
policy, regulation and practice in Australia.
The dichotomy between successful mine closure
or enduring mining legacies is clear. Closure is the
responsible approach. Successful closure is where
the polluter pays for and undertakes efective
rehabilitation with criteria set by existing land
use, community expectations and government
regulation. Mining legacies are the opposite, the
growing shame of industry and community where
this generation carelessly takes without thought
for the planet or future generations.
Thanks to the work of Laurence, the extent of
unplanned or premature closure is much clearer.
We know that only 25% of mines close because of
resource depletion, therefore the responsibility is
upon the industry and regulatory authorities to
respond accordingly. The case studies of Russell
Vale, McArthur River and Anglesea all illustrated the
very real risks and impacts from mining legacies,
past, present or future. We also explored the
risks associated with unplanned closure, project
viability, environmental, inancial instruments
and perpetual management particularly from
AMD and uranium mining. Showing how a lack of
understanding and undervaluing of non-company
stakeholder risk results in avoidable, but very
real impacts. The perversity of using NPV as the
economic measure of choice, and the impossibility
of calculating and funding perpetual management
are both clearly elephants in the room. With NPV
assessments practically guaranteeing the need
for perpetual management by undermining longterm planning that understands and incorporates
non-economic impacts.
In 1992, Australia had mine closure objectives in
the National Strategy for Ecologically Sustainable
Development from COAG theses were closely
followed by ANZECC’s Strategic Framework for
Mine Closure. Both set down standards, such as
clear liability accounting that are still needed
today. In 2006, the Australian Government’s Mine
Closure and Completion Handbook was published,
providing a clear reference for miners the world
over. Internationally, NOAMI provided a template
for coordination, which despite funding cutbacks
and setbacks, set a standard with its principles
and objectives for rehabilitating existing legacy
sites. Research also continued with mine closure
articles and conferences reinforcing the need for
and methods of achieving change. Unfortunately
despite this history and apparent momentum, the
Australian response to mining legacies has been
slow, uncoordinated and inefective.
Queensland Nickel’s Yabulu reinery showed the
vulnerability of closure to poor management,
insecure mine closure funding arrangements
and global commodity prices. An illustration of
the transfer of risk, with the inal closure costs, in
all probability, to be paid for by the Queensland
Government and the taxpayer - and leaving the
Halifax Bay communities and the Great Barrier
Reef Marine Area threatened by pollution. The
NSW Government faces a similar situation with
the loss making, over-valued and under resourced
operation Russell Vale, another potential inancial
liability.
For the most part, the NSW and Victorian coal
mine case studies shared either a complete lack
of efective closure and/or a restriction in access
to the plans, with most sites having no plans
available even after repeated requests. Anglesea
was a curious example. Despite past commitments
from an industry major and a planned close,
there was again an absence of adequate mining
closure planning. If Alcoa can’t get it right, how can
Wollongong Coal or Queensland Nickel?
The other three case studies present very diferent
but very compelling reasons for concern about
mine closure. Ranger because of the massive
rehabilitation bill and the prospect for radioactive
poisoning. McArthur River mine with its burning
waste rock dump caused by poor science,
overconident company assertions and political
support that overturned community opposition
and long-term and repeated monitoring and
regulatory concerns. Both sites are situated on
Indigenous lands, where caring for Country is
a reality and individual and community health
is linked with the health of the environment.
Carmichael, also opposed by Indigenous Groups,
is a triumph of optimism over reality. Conceived in
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GROUND TRUTHS: TAKING RESPONSIBILITY FOR AUSTRALIA’S MINING LEGACIES
34
the coal boom amid record high prices, Carmichael
is an expensive operation with estimated costs of
production signiicantly lower than today’s coal
prices. A gigantic coal proposal with CO2 emissions
that rival small countries, requiring $7.5-16 b to
develop, owned by the inexperienced and debt
laden Adani Group with a poor environmental track
record. Without wishing disaster on anyone, all
three sites could become environmental disasters
and expose community and governments to
enormous inancial liabilities.
Recent regulatory changes in Western Australia
and the Northern Territory, and the indings of the
Hazelwood Inquiry all provide further evidence to
show that closure reform is clearly needed. The
transition to successful mine closure demands
coordinated action, a requirement that has been
stated frequently and emphatically for more than a
decade. The way forward is for states to implement
locally speciic rules within a national framework;
where risks are acknowledged, impacts reduced
and closure and management activities covered
by adequate and secure inancial instruments.
Encouraged and guided by these changes, the
mining industry would then improve on current
practices, address the mistakes of the past and
ultimately leave a positive legacy.
RECOMMENDATIONS
State and Territory Governments, supported
by the Commonwealth, have the lead role in
seeking to halt and repair the damage done to
people and place by Australia’s mining legacies.
The following seven recommendations build on
earlier work carried out by the mining industry,
researchers and concerned communities. The
recommendations are based on the premise that
Australia can, and must take responsibility for
addressing its mining legacies.
Recommendation 1: Establish a national inquiry
into mine site rehabilitation and mine closure
practices. Such an inquiry must include in its
terms of reference: the adequacy of existing
regulatory regimes, the extent of inancial
liability and changes required to securely fund
the long-term management of mining sites,
the environmental, economic and social risks
associated with un-remediated sites and the role
of mine rehabilitation in providing employment
opportunities in the post-mining boom era.
Recommendation 2: Ensure all environmental
and inancial regulatory mechanisms that
authorise and govern mining activity are based on
a polluter pays principle and safeguard Australian
communities from future social, inancial and
environmental liabilities.
in annual inancial statements and as a separate
line item in company balance sheets.
Recommendation 4: Require mining proposals
to clearly identify and be assessed on closure
costs and post mine management requirements
over the life of the site (including perpetual
management), and identify a secure funding
mechanism relevant to management timeframes.
Recommendation 5: Remove the perceived
‘right to mine’. Apply full social, cultural and
economic impact assessment over the life of the
mine, including psychological costs of landscape
disturbance.
Recommendation 6: Encourage and facilitate
greater
jurisdictional
coordination.
Adopt
Australian minimum standards: (a) postclosure assessment and reporting, (b) greater
transparency and independent assessment of
mining proposals and (c) environmental inancial
instruments.
Recommendation 7: Legislate for and implement
national annual reporting on the impacts of
mine closure. This must include the inancial
liability from both mining legacies and post-mine
management.
Recommendation 3: Implement a national legal
obligation for closure liability accounting and
reporting on a site-by-site basis, to be included
GROUND TRUTHS: TAKING RESPONSIBILITY FOR AUSTRALIA’S MINING LEGACIES
35
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