Underfunding for mine cleanups rises to more than $1.27 billion
The Vancouver Sun
Underfunding for the clean-up of mines inched up to $1.273 billion in 2015, upping the level of financial risk to taxpayers above what it was the year before.
The estimate is up from $1.263 billion in 2014 and may continue to increase, according to B.C. Energy and Mines Minister Bill Bennett.
B.C. law requires mining companies to post security, for example a bond, to cover the costs of reclamation and any continuing treatment of tailings pond water, which contains mine waste, when a mine closes.
In a report last year, B.C. auditor general Carol Bellringer said the shortfall meant taxpayers could be on the hook if a company couldn’t pay for cleaning up a closed mine.
Bellringer recommended mine-by-mine details be reported and that government “safeguard” taxpayers by ensuring the estimate of the reclamation liability is accurate and that security demanded by government is sufficient to cover potential costs.
On Thursday, for the first time, the mine-by-mine details were posted publicly in the province’s chief inspector of mines annual report — a practice that will continue, said Bennett. Last year, the mine details were made public following a request by The Vancouver Sun.
To address the auditor’s other concerns, the B.C. Ministry of Energy and Mines is determining how to tighten requirements on security for mine clean-up, which includes an analysis by Ernst and Young.
In an interview Thursday, Bennett characterized the past process to determine how much money mines needed to post as security as somewhat ad-hoc.
“We are going to have to establish some concrete, specific, measurable objectives and principles or parameters — whatever you want to call it — on how do we actually assess the amount of financial security we need to have full assurance for the taxpayer,” he said.
A plan is meant to be in place by April.
However, Bennett said there was no way to give assurances that the amount of underfunding would decrease over time, particularly as new mines are started when the estimated liability may be at its greatest. The amount of bonding posted by mines has increased over time — from $200 million in 2006 to $1 billion in 2015 — but has not kept pace with estimated reclamation costs.
Bennett said the approach in B.C. has been to not require security for the full estimated reclamation cost, particularly if companies are considered a low financial risk. Some jurisdictions, such as Alaska and Nevada, require 100-per-cent funding.
Mining giant Teck, which has a long history in B.C., had an underfunded reclamation liability of $874 million in 2015, up from $742 million in 2014. It accounted for nearly 70 per cent of the provincial mining total.
Although Teck’s bonding increased from $463 million in 2014 to $525 million in 2015, the estimated reclamation cost for its numerous coal and metal mines increased nearly $200 million to $1.4 billion over the same period.
In a written statement, Teck spokesman Chris Stannell said the company has met reclamation-bonding security required by the province.
“We are committed to meeting our obligation to responsibly close and reclaim our mine sites — at no cost to taxpayers — and ensuring that reclamation bonding security never needs to be accessed,” Stannell said in an email.
Global mining giant Barrick Gold saw a more than $100-million decrease in its underfunded liability to $107 million in 2015, as it undertook reclamation work on the closed Eskay Creek silver mine in northwest B.C., said ministry officials.
Barrick spokesman Andy Lloyd noted the reclamation costs were also over-stated in 2014.
Walter Energy, which entered bankruptcy protection in 2015 and was purchased last fall by U.S.-based Conuma Coal Resources Ltd., saw its underfunded liability increase by $44 million to a total of $62 million.
Asked if that was a concern for a company coming out of bankruptcy proceedings, Bennett said yes.
The B.C. auditor general’s office declined to comment on the increase in the underfunded liability.
“The auditor general doesn’t comment beyond what’s published in her reports,” spokeswoman Sara Van Steinburg said in an email.
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