this publication - Environmental Law Centre

this publication - Environmental Law Centre

Inadequate
Securities
for Mines in
British Columbia
ž Security
for mines
v what & why
v when taxpayers have paid
ž What’s
legally required in BC?
v the good & the bad
ž Spotlight
on Quinsam Coal Mine
v a warning for Raven Coal
Security is a type of guarantee given by the mine
company to government (aka financial assurance, bond)
Purpose:
To ensure costs of mine
decommissioning & reclamation are borne
by the mine company rather than
by government and the public purse
Security instrument = the form of guarantee:
Hard Security (e.g. cash deposit, letters of credit)
Soft Security (e.g. corporate guarantee, financial test)
Costs paid by taxpayers to remediate mines
in North America
450
$ 436 million
~$ 400 million
400
350
Millions ($)
There needs to be
strong financial
securities for mines.
300
250
> $ 195 million
200
Evidence suggests
YES!
150
100
$ 33 million
> $ 70 million
50
0
Security
Posted
Total Clean-up
Cost
Amount paid
by Taxpayers
Summitville
Mine
(Colorado)
$ 6 million
ZortmanLandusky
Mine
(Montana)
Faro Mine
(Yukon)
~$ 1 million
Giant Mine
(Northwest
Territories)
Mine
Mt.
Washington
(BC)
Britannia
Mine (BC)
Union Mine
(BC)
Mt. Washington Mine – 4 decades later
Taxpayers pay $6 million for environmental clean-up costs
And it doesn’t end there ...
Ø Numerous individuals made independent contributions
Ø $2 million annual loss from destroyed Tsolum River salmon runs
Ø Possible $ for long-term water treatment
ž
Today, securities are generally required for BC mines
(but still not a mandatory legal requirement)
ž
Security can cover broad range of costs
In BC, costs may include:
$ mine reclamation
$ protection of watercourses
$ protection of cultural heritage resources
$ carrying out mine permit conditions, orders & directions
ž
Policy (but not law) requires 100% security for sites
needing long-term ARD treatment
ž
Recent increases in securities for coal mines
(but increases not triggered by law)
ž
Security does not cover:
•
•
•
•
off-site contamination & damage to buildings from blasting
environmental impacts from mine truck traffic
unexpected occurrences (e.g. spills)
government administrative costs
ž
No higher securities for mines using cyanide or
other toxic chemicals
ž
Significant discretion with respect to:
• which costs must be covered
• acceptable security instrument
• reducing security for wealthy companies
Results in lower estimated reclamation costs
ž
Inadequate progressive reclamation
Area disturbed & reclaimed at coal mines in BC: 1969 - 2008
source = Chief Inspector of Mines 2008 annual report
ž Confidential
ž Inflation
ž No
reclamation estimates
adjustments not mandatory
victim compensation scheme
ž Insufficient
ž Infrequent
amounts
reviews
“[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.
Unsecured liabilities for mines in BC
(excludes abandoned mines)
Total Security for BC mines
Net liabilities for BC mines
Difference - What taxpayers pay
600
the problem persists ...
consistently over $100 million
in unsecured liabilities
500
400
Million $
300
200
100
0
2000
2001
2002
2003
2004
YEAR
2005
2006
2007
2008
2009
2010
Securities for coal mines in BC
$50,000,000
$45,000,000
$40,000,000
Security ($)
$35,000,000
$30,000,000
Take Home Message
Securities only
increased substantially
in recent years ...
no guarantee this will continue.
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
28-Aug-76
18-Feb-82
11-Aug-87
31-Jan-93
24-Jul-98
14-Jan-04
06-Jul-09
Date (dd-mmm-yy)
Quinsam Coal
Fording River
Coal Mountain
Line Creek
Willow Creek
Brule
Wolverine
Trend
Greenhills
27-Dec-14
Securities for coal mines in BC (<$16 million)
$16,000,000
Take Home Messages
$14,000,000
Historically infrequent reviews of
securities resulted in sudden
significant increases.
$12,000,000
Security ($)
$10,000,000
$8,000,000
Doubt remains whether
securities accurately reflect
full environmental risk
(e.g. long-term water treatment).
$6,000,000
$4,000,000
$2,000,000
$0
28-Aug-76
18-Feb-82
11-Aug-87
31-Jan-93
24-Jul-98
14-Jan-04
06-Jul-09
27-Dec-14
Date (dd-mmm-yy)
Quinsam Coal
Coal Mountain
Line Creek
Greenhills
Willow Creek
Brule
Wolverine
Trend
Total value of coal production in BC since 2000
> $18 Billion
Total current security held for coal mines in BC
less than 0.6%
total value of coal production since 2000
Is that how much
clean land & water is worth?
Quinsam Coal Mine on Vancouver Island
Quinsam Coal Mine
Total Security
$6,000,000
1986
Start of
Operations
$4,000,000
$3,000,000
$2,000,000
$1,000,000
1986
$400,000
YEAR
2015
2010
2005
2000
1995
1990
1985
$0
1980
Financial Security ($)
$5,000,000
Quinsam Coal Mine
Total Security
$6,000,000
1986
Start of
Operations
1990
U/G begins
$4,000,000
$3,000,000
$2,000,000
~1990
$900,000
$1,000,000
1986
$400,000
YEAR
2015
2010
2005
2000
1995
1990
1985
$0
1980
Financial Security ($)
$5,000,000
Quinsam Coal Mine
Total Security
$6,000,000
1986
Start of
Operations
1996
Mine
Expansion
1990
U/G begins
$4,000,000
$3,000,000
$2,000,000
~1990
$900,000
$1,000,000
1986
$400,000
YEAR
2015
2010
2005
2000
1995
1990
1985
$0
1980
Financial Security ($)
$5,000,000
Quinsam Coal Mine
Total Security
$6,000,000
1986
Start of
Operations
1996
Mine
Expansion
1990
U/G begins
$4,000,000
$3,000,000
$2,000,000
2001
$1,000,000
~1990
$900,000
$1,000,000
1986
$400,000
YEAR
2015
2010
2005
2000
1995
1990
1985
$0
1980
Financial Security ($)
$5,000,000
2001
Tailing Dam
Raise
Quinsam Coal Mine
Total Security
Sulphate concentrations in Long Lake (1 m depth)
$6,000,000
180
170
1986
Start of
Operations
1990
U/G begins
$5,000,000
2001
Tailing Dam
Raise
1996
Mine
Expansion
160
120
BC water quality criteria for
sulphate = 100 mg/L
100
90
$3,000,000
80
$2,000,000
60
40
$1,000,000
2001
$1,000,000
25
~1990
$900,000
20
1986
$400,000
2
YEAR
2015
2010
2005
2000
1995
1990
0
1985
$0
1980
Financial Security ($)
$4,000,000
Sulphate Concentration (mg/L)
140
Quinsam Coal Mine
Total Security
$6,000,000
1986
Start of
Operations
1996
Mine
Expansion
1990
U/G begin
2002
Tailing Dam
Raise
$4,000,000
$3,000,000
$2,000,000
2001
$1,000,000
~1990
$900,000
$1,000,000
1986
$400,000
YEAR
2015
2010
2005
2000
1995
1990
1985
$0
1980
Financial Security ($)
$5,000,000
2001
Tailing Dam
Raise
Quinsam Coal Mine
Total Security
$6,000,000
1986
Start of
Operations
1996
Mine
Expansion
1990
U/G begins
2002
Tailing Dam
Raise
$4,000,000
2006
Phase I
Mine
Extension
$3,000,000
$2,000,000
2001
$1,000,000
~1990
$900,000
$1,000,000
1986
$400,000
YEAR
2015
2010
2005
2000
1995
1990
1985
$0
1980
Financial Security ($)
$5,000,000
2001
Tailing Dam
Raise
Quinsam Coal Mine
Total Security
$6,000,000
1986
Start of
Operations
1996
Mine
Expansion
1990
U/G begins
2002
Tailing Dam
Raise
$4,000,000
2006
Phase I
Mine
Extension
$3,000,000
2009
5S U/G
Expansion
(↑ S)
$2,000,000
2001
$1,000,000
~1990
$900,000
$1,000,000
1986
$400,000
YEAR
2015
2010
2005
2000
1995
1990
1985
$0
1980
Financial Security ($)
$5,000,000
2001
Tailing Dam
Raise
Quinsam Coal Mine
Total Security
$6,000,000
1986
Start of
Operations
1996
Mine
Expansion
1990
U/G begin
2002
Tailing Dam
Raise
$4,000,000
2006
Phase I
Mine
Extension
$3,000,000
2009
5S U/G
Expansion
(↑ S)
$2,000,000
$1,000,000
2010
$1,250,000
2001
$1,000,000
~1990
$900,000
1986
$400,000
YEAR
2015
2010
2005
2000
1995
1990
1985
$0
1980
Financial Security ($)
$5,000,000
2001
Tailing Dam
Raise
Quinsam Coal Mine
Total Security
$6,000,000
1986
Start of
Operations
1996
Mine
Expansion
1990
U/G begins
2002
Tailing Dam
Raise
$4,000,000
2006
Phase I
Mine
Extension
$3,000,000
2009
5S U/G
Expansion
(↑ S)
$2,000,000
March 2011
$1,500,000
$1,000,000
2010
$1,250,000
2001
$1,000,000
~1990
$900,000
1986
$400,000
YEAR
2015
2010
2005
2000
1995
1990
1985
$0
1980
Financial Security ($)
$5,000,000
2001
Tailing Dam
Raise
Quinsam Coal Mine
Total Security
$6,000,000
1986
Start of
Operations
1996
Mine
Expansion
1990
U/G begin
2002
Tailing Dam
Raise
$4,000,000
2006
Phase I
Mine
Extension
$3,000,000
2009
5S U/G
Expansion
(↑ S)
$2,000,000
March 2011
$1,500,000
$1,000,000
2010
$1,250,000
2001
$1,000,000
~1990
$900,000
1986
$400,000
YEAR
2015
2010
2005
2000
1995
1990
1985
$0
1980
Financial Security ($)
$5,000,000
POSSIBLE
June 2011
$5,500,000
2001
Tailing Dam
Raise
Significant discretion & confidentiality
+
Historical trends
• insufficient amounts
• infrequent reviews
• inadequate instruments
• insufficient progressive reclamation
+
Lack of victim compensation scheme
Raven Coal
Time to pull our wallets out again?