Securing the Cost of Mine Clean-up


Security is a type of guarantee intended to ensure that there are sufficient assets available to cover the costs associated with any outstanding reclamation or decommissioning work should a mining company default on its obligations. These costs can be very high: Canada’s taxpayers will pay an estimated $1 billion to remediate the Giant Mine near Yellowknife, and an estimated $700 million to clean-up the Faro Mine in the Yukon. In BC, over $70 million taxpayer dollars have already been spent to remediate the Britannia Mine. Further, these costs are likely underestimates and do not include future costs to taxpayers. The extensive environmental disturbance caused by mining activities, coupled with the fluctuating nature of mineral markets makes it imperative that adequate funds be secured in advance to cover any outstanding mine reclamation and decommissioning costs.

Despite advancements, gaps remain in BC’s regulation of mine securities. Chapter 10: Securing the Cost of Mine Clean-up compares BC’s laws regarding mine securities with laws from other jurisdictions that uphold the polluter-pays principle in a more comprehensive and effective manner.

Under the Mines Act, the Chief Inspector is empowered to require that the mining company deposit sufficient security to cover costs for government to complete outstanding reclamation work if the company defaults on its obligations. The actual amount of security is negotiated between the provincial government and the miner using the reclamation cost estimate that the miner submitted in the mine permit application.

BC law states that the reclamation cost estimate must include the costs of long-term monitoring and maintenance. Provincial policy sets out specific additional factors to be considered in reclamation cost estimates and additional guidance. Additional securities may also be required as a condition of licences issued under other provincial laws.

The availability of funds to carry out site remediation is heavily dependent on the type of security instrument used. The selection of an appropriate security instrument should be based on the level of assurance it provides that the miner will take all necessary and reasonable measures to protect the environment, balanced with the need to minimize tying up capital required for progressive reclamation. BC law does not provide adequate guidance to the regulatory authority regarding the selection of appropriate security instruments or how accessible the security deposit must be. To address similar issues, some jurisdictions have imposed legal limits on the regulatory authority’s discretion in accepting different types of security instruments by specifying factors that must be taken into account in choosing an acceptable security instrument. Also, recognizing that securities need be easily and quickly converted into cash, legal provisions in other jurisdictions provide that any proposed form of security can be rejected if it is not convertible to cash within 180 days.

Securities have been required of most of the mines currently operating in BC. However, under provincial mining legislation, there is no mandatory legal requirement to post security. Instead, the Chief Inspector has the discretion to require security as a condition of the mine permit. Laws in other jurisdictions require security to be posted for all mines, require mandatory posting of security for mineral exploration activities, require mandatory timelines for posting security and impose consequences for failing to meet these timelines.

Further, in BC, policy provides that the amount of security required is determined on a case-by-case basis, based on the miner’s reclamation estimate and negotiations carried out between the miner and the lead government agency. Other jurisdiction have laws that set minimum mine securities applicable to all mines, require a preliminary site inspection before setting security and require consideration of site-specific conditions and probability of successful reclamation when setting security amount. In addition, other jurisdictions only allow security amounts to be reduced in specified cases, such as where a miner’s past performance warrants reduction or to promote a reduced site ‘footprint’. Some jurisdictions apportion security relative to the degree of disturbance of lands across the mine site, require security for reclamation of tailings impoundments, require calculation of security based on independent contractor rates and/or government rates, require professional certification of reclamation cost estimates, and adjust the security amounts annually for inflation. Some jurisdictions also have laws which provide for additional security to cover administrative costs, require security for unexpected occurrences, require security to cover the costs of alternate water supplies, require additional security for mines using cyanide and toxic chemicals, apportion security relative to the degree of disturbance of lands and require professional certification of reclamation cost estimates. Similar laws are needed in BC to ensure that adequate funds are secured to cover remediation costs.

In BC, miners can, and often do, request that the reclamation cost estimate submitted as part of the mine permit application be kept confidential. Consequently, the public is unable to evaluate whether the cost estimate is reasonable or adequate to cover all necessary site remediation activities. Other jurisdictions have laws that mandate public disclosure of reclamation cost estimates and base security on consultation with local municipal governments, landowners and Indigenous people.

The amount of security held by the government should be reviewed periodically, as environmental conditions at mine sites are continuously changing. These changes include when new deposits are developed, mining activities are expanded, or new extractive technologies are introduced. BC law grants the Chief Inspector power to amend security whenever he or she considers it necessary. Further guidance is provided in provincial policy, which recommends a review every five years or whenever significant changes occur at the mine. However, security reviews are not always consistently carried out: a recent review of coal mine permits in BC found that lapses of 10 to 20 years occurred between mine security increases.

Other jurisdictions provide for regular reviews of securities by requiring reviews of security at frequent intervals, providing broad legal powers to review and re-calculate security – especially where site inspections indicate deviations from closure plans, mandating fees to cover administrative costs of security review and requiring public notice and public review when miners request security reductions.

When a miner doesn’t complete reclamation, or fails to meet permit conditions, the government needs to access the security funds. In BC, the Chief Inspector may, after giving notice, apply all or part of the security toward the cost of the work required. Although these are relatively strong legal requirements, they remain largely dependent on the Chief Inspector’s discretion, without any oversight. Other jurisdictions set more specific rules on the circumstances in which the regulatory authority should apply the security to complete work. Examples include requiring forfeiture of security where mine reclamation is not completed within set time limits, allowing government to access security when a miner fails to comply with government-issued orders and making the miner liable for government clean-up costs that exceed the available security.

In BC, security is returned to a miner once all legal conditions under the legislation and mine permit have been fulfilled to the satisfaction of the Chief Inspector and there are no on-going inspection, monitoring, mitigation or maintenance requirements. Mine securities in other jurisdictions are not released until the miner has gone through more comprehensive checks and balances. For example, other jurisdictions require public involvement, and a site inspection, before security is released. By releasing security in stages, other jurisdictions have greater assurance of proper re-vegetation and groundwater restoration. This type of provision is often accompanied with a requirement to retain a set percentage of the security for a minimum of five years after completion of reclamation. Similar provisions require the demonstration of self-sustaining re-vegetation for a set time period before release of security.

In conclusion, mine securities in BC are vulnerable. Policy, rather than law, forms the backbone of the current system, and the Chief Inspector of Mines has discretion in all aspects of the mine security process. BC needs to tighten up its security requirements, to do otherwise risks the future financial wellbeing of the province.

  1. Introduction
  2. Overview of BC Law
  3. Types of Security Instruments
  4. Requirement to Post Security
  5. Adequate Amount of Security
  6. Public Participation
  7. Regular Reviews and Updates of Securities
  8. Government Access to, and Use of, Security Funds
  9. Return of Security
  10. Conclusion
  11. Footnotes

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