Securing the Cost of Mine Clean-up

Overview of BC Law

Under the Mines Act, the Chief Inspector is empowered to require that the mining company deposit security “in the amount and form satisfactory to the chief inspector”.13 The purpose of the security is to cover costs for government to complete outstanding reclamation work if the company defaults on its obligations.14 Mine securities may be required for the following purposes:

  • mine reclamation;15
  • protection of, and mitigation of damage to, watercourses affected by the mine;16
  • protection of, and mitigation of damage to, cultural heritage resources affected by the mine;17
  • carrying out mine permit conditions, orders and directions relating to above matters;18 and
  • covering regulatory requirements of legislation, permits and approvals of other provincial agencies.19

The actual amount of security is negotiated between the provincial government and the miner, using the reclamation cost estimate (that the miner is required to submit in the mine permit application) as a basis for the negotiations. This method for determining the appropriate amount of security seeks to resolve the risk to the public purse in the event that the mine operator defaults on its obligations, with the need to ensure the amount is not so high that it prohibits or restricts the miner from funding progressive reclamation activities during mine operations.20 (For a discussion of progressive reclamation, refer to Chapter 9, Mine Closure and Post Closure).

BC law states that the reclamation cost estimate must include the costs of long-term monitoring and maintenance.21 According to provincial policy, these costs refer primarily to remediation costs associated with acid rock drainage (ARD).22 They may also include: dam inspections; maintenance of water diversion structures; waste material monitoring; water quality monitoring; and vegetation sampling.23 The policy also states that full (i.e., 100%) hard security will be required to cover outstanding liability and ongoing management where long‐term drainage treatment of ARD is at issue (regardless of the financial strength of the company).24 Provincial policy adds that “reclamation cost projections must normally include, but are not necessarily limited to:25

  • site preparation (re-sloping, re-contouring, scarification, soil/overburden replacement);
  • re-vegetation and fertilization;
  • disposal of structures and equipment;
  • construction of spillways, diversions and other water management structures;
  • removal of culverts;
  • sealing of underground workings;
  • disposal of fuel, contaminated soils, and toxic materials;
  • long-term maintenance and monitoring programs;
  • collection and treatment facilities;
  • environmental impact mitigation systems;
  • sealing of waste rock dumps;

mobilization and demobilization;

  • engineering re‐design costs; and
  • contingencies.”

The provincial government has developed spreadsheets to help miners calculate the reclamation cost estimates.26 These spreadsheets cover both indirect and direct costs such as equipment, materials and labour.27 Specific spreadsheets are available for:28

  • re-sloping of waste dump faces;
  • lump sums for items not related directly to an area of disturbance;
  • post-closure costs for costs extending more than five years beyond closure;
  • costs to neutralise ARD; and
  • ARD operating system costs, including costs to operate and monitor the ARD treatment system and plant.

Some additional guidance is provided in BC government policy. For example, according to policy, the practice for new mines is to set “the reclamation security annually at a level which reflects all outstanding decommissioning and closure obligations existing at that time”.29 Provincial policy also provides that security may be required to cover requirements under other laws and in permits and approvals issued by other provincial agencies.30 As such the BC Ministry of Energy and Mines will collect and hold security on behalf of both the Ministry of Forest and the Ministry of Environment.31 In addition, as mentioned above, provincial policy recommends that 100% security be deposited for sites needing long-term ARD treatment.32 This is of particular importance in BC where high-sulphur content ores are found throughout the province. However, as policy, these requirements carry little legal weight. Furthermore, provincial policy explicitly states that the mine security does not cover off‐site clean‐up costs.33 This unsecured liability may include a wide range of costly damages, including harm to buildings from blasting, ARD from access and haul roads, and health and environment impacts from mine truck traffic.

Finally, over two dozen licences may be required to operate a mine in BC. Additional securities may be required as a condition of licences issued under the Park Act,34 Water Act,35 Environmental Management Act36 and Forest Act.37

The following section delves into specific issues associated with mine securities: types of security instruments; requirement to post security; adequate amount of security; public participation; regular reviews and updates of securities; government access to, and use of, security funds; and return of security. The recommended solutions proposed below promote a more comprehensive approach to the ‘polluter pays’ principle than what currently exists under BC law.

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