Securing the Cost of Mine Clean-up

Regular Reviews and Updates of Securities

The volumes of material, metals and chemicals handled in the mining sector, and the long time period over which they can create contamination, suggest to us that adequate financial assurances are important to maintain and must be examined periodically.

– BC Auditor General, 2002128

Environmental conditions at mine sites are continuously changing, including when new deposits are developed, mining activities are expanded, or new extractive technologies are introduced. It is therefore important that securities are frequently updated to reflect changing conditions. The process of adjustment should be well understood and agreed to in advance.129 Mining policy experts have recommended that securities be reviewed when:130

  • successful exploration expands the mine life;
  • significant changes occur to product prices;
  • new technologies or management approaches that minimize pollution are adopted (this helps encourage industry to be more proactive);
  • innovations in modelling and prediction indicate that significant environmental problems are not included in the initial plan;
  • valuable historic, ecological or cultural resources are discovered at the mine;
  • the miner’s cooperative behaviour and/or compliance changes; and
  • the miner’s financial status changes.

In the following section, the current BC law on the review of securities is described, and Recommended Solutions are identified from other jurisdictions.

Overview of BC Law

Under BC legislation, the Chief Inspector has broad powers to amend a security whenever they consider it necessary.131  Provincial policy recommends a review of securities every five years or whenever significant changes occur at the mine.132 In addition, when there is a proposed change of mine ownership, the new miner must submit an application to amend the permit in their name.133 In such cases, the Chief Inspector may withhold approval of the transfer until he is satisfied that the new owner has sufficient security in place to cover outstanding liabilities.134 However, security reviews are not always consistently carried out as evidenced by a recent review of coal mine permits in BC that revealed lapses of 10 to 20 years between mine security increases.135 In contrast, stronger legal requirements for regular reviews of securities are provided in other jurisdictions as described in the following Recommended Solutions.


Review of security without clear legislation opens the process to inconsistencies and shortfalls.

Recommended Solutions

Legislate frequent reviews of securities

[Tags: Security; Bonds; Assurance; Surety; Time-lines; Trigger; Review Process; Annual]

Several jurisdictions require frequent reviews of mine securities. For example:

  • In Montana, the regulatory authority must conduct an overview of the amount of each bond annually and a comprehensive bond review at least every five years;136
  • In Washington, the security must be reviewed at minimum every two years;137
  • In Nova Scotia, the security may be reviewed and adjusted every two years;138
  • In Saskatchewan, the security must be reviewed at least every five years;139
  • In California and Minnesota, securities must be reviewed annually; and140
  • In Oregon, the regulatory authority must assess the overall cost of reclamation of chemical process mines on an annual basis.141
Broaden legal powers to review and re-calculate security – especially where site inspections indicate deviations from closure plan

[Tags: Security; Bonds; Assurance; Surety; Review; Calculate; Site Inspections]

Other jurisdictions have enacted legislation that clearly outlines the conditions in which a regulatory authority may review and adjust securities. For example, in Montana the regulatory authority is empowered to conduct additional comprehensive bond reviews “if, after modification of a reclamation or operation plan, an annual overview, or an inspection of the permit area, the department determines that an increase of the bond level may be necessary.”142

Mandate fee to cover administrative costs of security review

[Tags: Security; Bonds; Assurance; Surety; Fee; Service Charge; Administrative Cost; Review]

As with the initial security calculation, significant administrative costs may be incurred by the regulatory authority in reviewing proposed mine securities. Without adequate legal support for funding, the regulatory authority may not have sufficient capacity to conduct thorough reviews. This concern has been addressed in Idaho, where the law provides that a security review fee may be imposed and may even include a reasonable cost associated with employing a qualified independent party to verify the accuracy of the cost estimate.143

Require public notice and public review when miner requests security reductions

[Tags: Security; Bonds; Assurance; Surety; Public Consultation; Reduce Security; Notice]

Local communities are generally well aware of local environmental conditions, including conditions around local mines. As the most directly impacted by adverse environmental impacts, they should be notified whenever a miner submits an application to reduce the amount of security. This is recognized in Oregon, where the regulatory authority must publish a notice announcing the receipt of a request to reduce security at chemical process mines. The request must be distributed to all members of the public who participated in the initial consolidated application process and to any persons who request notification.144 Additionally, 60 days after notice of receipt of the request has been published, the regulatory authority must conduct an informal public hearing to determine whether to approve the request for reduced security.145

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