Australian taxpayers could pay billions to clean up old mines, report says

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“Big mining companies [must]clean up their mess, not leave polluted water and land for generations to come”

Thom Mitchell | New Matilda

The Australian Conservation Foundation is backing calls for an inquiry into mine closures and rehabilitation in the wake of a report warning of serious gaps between the funds held by governments and the true cost of remediation.

The report [pdf file] from the Mineral Policy Institute recommended a national inquiry into the issue. It said the development of a nation-wide legal obligation for accurate site-by-site reporting of projected mine closure and rehabilitation costs should be included in company balance sheets.

Responding to the report, the Australian Conservation Foundation (ACF) called on all parties to commit to establishing an inquiry in the first 100 days of the next parliament. “Big mining companies [must]clean up their mess, not leave polluted water and land for generations to come,” said Paul Sinclair, the organisation’s National Campaigns Director.

According to the report authors:

“The trend toward mining lower quality ore grades and the use of large open pits produces desolate landscapes riddled with pits, dumps, pollution and subsidence events that dwarf those of earlier generations.”

Slipshod closures appear to be the norm: The report cites research which found that 75 per cent of mines in Australia are closed prematurely or in an unplanned way. There are thousands of abandoned mines around the country, and it is often the case that there is insufficient money held in government bonds to cover proper rehabilitation costs.

Sinclair said with the mining boom “fading fast” and many mining companies in considerable distress, the problem will inevitably get worse. The risk identified in the report is that taxpayers will be left to foot the  bill of cleaning up mines, which could conceivably run into the billions of dollars.

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(IMAGE: Mineral Policy Institute.)

“This report reveals a looming disaster that urgently requires national action if we don’t want to have a string of off-limits toxic sites around the country and the public left to pay for their ongoing maintenance,” Sinclair said.

If the report’s recommendations were taken up by government, they would have serious implications for mining companies already struggling with tumbling commodity prices. In the case of Adani’s controversial Carmichael Coal Mine, for example, “a closure bond of sufficient size and security would require billions of dollars, making the project even less financially viable”.

The Mineral Policy Institute report notes that state government regulations rarely require mining companies to fork out a bond which fully covers the costs of rehabilitation. Liability for costs is often avoided through networks of subsidiary companies.

The report cites a range of examples in different states to make the point that detailed closure and rehabilitation plans are rarely made public, if they exist at all.

Mining magnate Clive Palmer’s Yabula nickel refinery – which is located on the shores of the Great Barrier Reef – was offered as one example of a company that is unlikely to be able to foot its own clean up bill.

The Greens in particular have campaigned around the issue of mine-site rehabilitation in the run up to the 2016 election. They party has developed a policy which would have coal workers fill in the mines instead of excavating them. Neither major party has explained how they would rehabilitate the thousands of abandoned mines, or force existing mines to stump up ahead of their eventual closures.

The issue has been discussed between state and federal governments since at least 1992, but little progress has been made. This need for coordinated action, the report said, “has been stated frequently and emphatically for more than a decade”.

“The way forward is for states to implement locally specific rules within a national framework; where risks are acknowledged, impacts reduced and closure and management activities covered by adequate and secure financial instruments,” the report said.

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