The mine closure challenges for government and industry
Minerals and metals are critical to the products and technologies of modern society, and those needed for the transition to a low-carbon economy.
By Dawn Brock, Closure Lead, ICMM and Rob Stevens, IGF.
For mining to be truly sustainable, the industry must provide these natural resources without compromising the integrity of the environment or the wellbeing of local communities in the future. Well-planned and executed mine closure can help achieve this desired outcome.
Mine closure is a complex multidisciplinary undertaking, requiring several years of planning and a coordinated effort from government and industry stakeholders, ideally right from the start of mine planning. It includes:
- Establishing a shared vision for post-mining land use (developed in consultation with communities and government).
- Developing rigorous mine closure plans with representative closure cost estimates that are updated regularly.
- Planning for the social transition of workers and communities post closure.
- Providing adequate financial assurance for government so that closure plans can be completed even if the mining company goes bankrupt or otherwise abandons the site.
- Relinquishing the site back to government or a third- party post closure where possible.
There are just a few examples globally of mines that have received closure certificates (acknowledging the site has been rehabilitated by the company to a level agreed by the governing body) and where the site has been transferred to government or a third party. Both industry and government are building experience and expertise with mine closure and many jurisdictions are still developing their understanding and policies that provides for the comprehensive closure of a mine operation.
In 2018, the International Council on Mining and Metals (ICMM) surveyed its members to assess the status and profile of mine closure across its membership. Although there are several new mines coming onstream on an ongoing basis, the survey found that over the next 25 years, more than 40 per cent of the operations that responded to the survey are expected to close based on commodity prices and mine life estimates at that time, and almost 20 per cent are expected to close in the next 10 years. With many mines expected to close around the world in the coming years, there is an opportunity for industry and government to work together to ensure a sustainable transition to post-closure land uses that leave behind a sound and stable environment and self-sustaining communities.
In 2019–2020, the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF) also undertook a survey of its member governments to assess their readiness for these expected mine closures. The results from this survey combined with Mining Policy Framework (MPF) assessments undertaken by the IGF since 2014, show that while governments are aware of the importance of mine closure, many do not have the policies, regulations, enforcement, or capacity to manage and regulate it. For example, only 45 per cent of the countries that responded to the survey, require adequate financial assurance for mining operations to rehabilitate, decommission and close the operation in its current state. The regulator closure cost estimate is used to determine the required amount of financial assurance to be covered by a financial assurance mechanism (which might include insurance, guarantee, bond etc). Without financial assurance regulations, there is considerable risk that governments will have to bear the significant costs to close abandoned mine sites. Another challenges that some jurisdictions face is the ability to manage assurance, and to manage it at arms length from government. Or where assurance is held outside of the country, that governments are guaranteed access to funds when legitimately needed.
The social challenges of mine closure are common to both government and industry stakeholders and an area that both parties are still grappling with. Involving communities is essential to develop a common framework and vision for the post mining landscape. Host communities that have grown dependent on mining operations are especially vulnerable, experiencing considerable socio-economic impacts at closure. This is often the case for mines in remote areas or in developing countries where an operation may be the primary local economic driver. To give a sense of how common dependence is, of those operations surveyed by ICMM in 2018, 43 per cent of the operations expected to close in the next 25 years, have a high to very high relative contribution to the local and regional economy. This suggests mine closure could have a major impact on local mine communities if not planned and regulated properly.
The IGF survey highlighted that only 23 per cent of governments reported that there is a high-level of community involvement in developing and implementing mine closure plans and the post-mining transition, while 37 per cent report no involvement of communities.
Further challenges common to both industry and government include the inadequate or uncertain policy and regulatory landscape, obscuring the responsibilities and expectations of both industry and regulators. For example, the pathway or process to relinquish a closed mine site is often uncertain even in some of the world’s leading mining jurisdictions. There is no such thing as a zero-risk closure, but risk can be managed, minimised, and transferred. Without that, the transfer of a closed mine back to the original or alternative landowner can remain in limbo for years.
The IGF survey results also showed that 75 per cent of jurisdictions do not have adequate records of the number of mines that have closed and surrendered their leases. This information is important in assisting both industry and government in understanding the lessons learnt so that these can be adopted for future mine closures.
The lack of experience in closing mines, and for some governments the lack of human resources to manage mine closure, is also hindering progress. While governments need to ensure they dedicate sufficient resources to manage mining, there are opportunities to learn from the expertise and experience that exists within industry, consulting companies, development agencies and non-governmental organizations. International best practices and recent detailed guidance documents produced by the ICMM, IGF1, governments and organizations such as APEC and the World Bank can help both industry and government to benchmark their current approaches and advance their state of practice. The availability of these resources gives mining companies a clear responsibility to implement best practices, regardless of the context within which they are operating.
A closed mine site has many opportunities for beneficial future land uses for people and the environment when planned together by industry, government and communities.
Although significant advances have been made in planning and executing mine closure, there is still a way to go. Challenges remain related to governing policies and regulations, allocating adequate resources and integrating social closure into the post-mining transition. The release of detailed guidance shows that there is a positive trend focused on addressing these challenges and examples of modern mine closures are increasing alongside the experience of governments and industry.
The wave of pending mine closures means industry and governments need to keep mine closure front of mind and work together to learn from each others experience and gain lessons from previous closures to address the outstanding challenges.
Both ICMM and IGF are supporting this process with the development of best practice guidance, training and training materials and facilitating discussions at the regional level to drive post closure planning.
1. Global Review: Financial Assurance Governance for the Post-Mining Transition: Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development, 2021 (still to be published).