Miners will have to set aside substantially more cash to cover future mine site rehabilitation from next year, following a major overhaul of the state’s environmental bond regime.
Miners will have to set aside substantially more cash to cover future mine site rehabilitation from next year, following a major overhaul of the state’s environmental bond regime.
Miners are required to deposit funds in bond accounts upfront as surety they will meet their site rehabilitation obligations once a project is closed. Typically the bonds equate to a quarter of the expected cleanup cost.
In mid-2008, the minimum bond rate was set to double to $20,000 per hectare for a waste dump or tailings facility.
But given the impact of the global financial crisis, the new Barnett government enacted a moratorium on bond rate increases which will now expire at the end of December.
The Department of Mines and Petroleum has consequently announced a special taskforce to overhaul the environmental bonds regime over the coming months.
The overhaul is likely to draw on the recommendations of a prior review, most notably for bonds to be based on an independently verifiable estimate of total rehabilitation costs provided by the miners, rather than a flat area-based rate for different activities.
The resulting bond rate would also factor in inflation, equipment mobilisation costs and post closure monitoring.
Department environmental director Phil Gorey said higher bond rates were needed to bring WA into line with other states and meet changed public expectations.
“The thing we are looking for is to make sure that any potential financial exposure for the community is minimised,” he said.
“The reality is that WA, comparatively, has quite a low bond requirement.”
Dr Gorey stressed the taskforce would consult closely with industry through a dedicated liaison committee so that the changes did not stymie investment.
Chamber of Minerals and Energy director Nicole Roocke said the chamber was willing to explore an alternative bond regime, but said it was vital that that the taskforce give “genuine consideration” to the industry’s views.
In particular, the new model needed to factor in each company’s risk profile and past performance, avoid duplication of obligations, enable bonds to be retired fully according to clear guidelines, and be assessed on a whole of project basis rather than tenement by tenement.
“(Our) final endorsement will depend on the model addressing the needs of industry and delivering clear environmental benefits,” she said.
State mines and petroleum minister Norman Moore told WA Business News that it may take time to implement any changes, and said the government would not impose conditions that were so onerous as to discourage investment in WA.
He also said the government “would not favour retrospective measures”.
