Securing the Cost of Mine Clean-up


“[S]ecurity now being taken under the Mines Act is inadequate to remediate the known mines sites in BC where contamination exists.

–        BC Auditor-General (2003) 1

Overall, total pollution abatement and control expenditure (i.e. public and private, investment and current) reaches 1.1% GDP [in Canada], on the lower side among G7 countries. … Concerning the polluter pays principle, to which Canada subscribes, further progress could be made in internalising pollution externalities and reducing government financial assistance to pollution abatement and control, thereby increasing the cost-effectiveness of environmental policies and contributing to an environmental “level playing field.2

–          OECD (2004)

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.3

TERMINOLOGY: Different jurisdictions have adopted different terminology to describe security. This terminology includes “bonds”, “rehabilitation bonds”, “guarantees”, “assurance”, “financial assurance”, “financial warrantees”, “reclamation insurance” and “surety.”

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. Cost estimates must be accurate to ensure that sufficient funds are available at end of mine life should site clean-up become a government responsibility; otherwise, these costs will become a burden on the public purse.4  Canada’s taxpayers will pay an estimated $1 billion to remediate the Giant Mine near Yellowknife,5 and an estimated $700 million to clean-up the Faro Mine in the Yukon.6  In BC, over $70 million taxpayer dollars have already been spent to remediate the Britannia Mine; that mine, which began operations before BC had enacted security provisions in its mining legislation, required extensive remediation to address the toxic drainage that destroyed surrounding ecosystems. Further, although high, these costs are likely an underestimate.  For example, at the Britannia Mine the long‐term water treatment costs are only covered for the next 20 years; after this time, additional taxpayer dollars will be needed to assess and likely carry out continued treatment.7  At the Mt. Washington copper mine on Vancouver Island, the more than $6 million spent on rehabilitation did not include the independent contributions made by numerous individuals, the annual $2 million loss from the destroyed Tsolum River salmon runs, or the possible long‐term water treatment costs.8

Despite advancements, gaps remain in BC’s regulation of mine securities. Most notably, under the law, the Chief Inspector is granted significant discretion in setting the form and amount of security.9 Notably, a review of securities required in the US revealed that the lowest estimated reclamation costs (which are used in calculating required securities) occurred in those states where laws were general and limited in scope and where the regulators, like BC’s Chief Inspector, were granted substantial discretion with respect to the interpretation and application of the laws.10 Similar problems exist in BC, as noted in a 2002 report by the Auditor General: “security now being taken under the Mines Act is inadequate to remediate the known mine sites in British Columbia where contamination exists.”11 Although security provisions have been included in provincial law since the 1970’s, unsecured reclamation liabilities continued to pose deficit problems, as evidenced by the bankruptcies of the Cassia Asbestos Corporation and Westmar Mining Limited in BC in the 1990’s.12

Legal provisions adopted in other jurisdictions uphold the polluter-pays principle in a more comprehensive and effective manner than under BC mining legislation.

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