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Integrated Mine Closure Planning Opens Up Opportunity

Authors

Ray MayneJason BeltranDanielle Kyan

interviewed by Australian Resource & Investment staff writer

Mining companies are incorporating integrated mine closure costings into their planning to better manage closure liability. But more can be done from the onset of mine development to mitigate potential mine closure risks and reduce ongoing and end-of-mine costs. 

That is the view of Ray Mayne, a principal environmental scientist at SRK Consulting who has advised numerous mines on closure-related projects in South Africa and other parts of Africa.

“Integrated mine closure planning is vital,” Mayne told Australian Resources & Investment. “There are long-term opportunities for companies that actively address mine closure aspects. And there’s the potential for costly risks and ‘unknowns’ for companies that do not adopt good international practices in this area.”

Integrated mine closure is a dynamic, interactive process that recognises environmental, social and governance (ESG) factors from mine planning through the life of mine (LOM). The process recognises that mine closure planning is an integral part of a mine’s core business – and central to its stakeholder relationships.

Done proactively and where possible, integrated mine closure planning can guide progressive rehabilitation strategies while a mine is operating. The goal: address impacts and reduce existing closure liabilities during mine life, and better understand and ultimately manage overall liability.

Effective mine closure planning can also provide consistent and transparent engagement with stakeholders, engage communities, and hopefully build early stakeholder support for closure decisions.

“It’s not just about cost savings,” Mayne said. “Closure planning is also about reducing the risk of future challenges when there are no quick or cheap fixes. Fundamentally, it’s about mine closure practices aiming to protect the future of communities and the environment.”

Discussion on mine closure planning is timely. Greater focus on current ESG reporting is requiring companies to have a deeper understanding of mine closure liabilities that affect company value. 

“Increasingly, investors and stakeholders want to know the position of companies on mine closure issues,” Mayne said. “They want to know whether their approach and liability cost is appropriate.”

Governments, too, are focusing more on mine closure planning. Taxpayers and regulators don’t want to be paying mine-rehabilitation bills for years or decades if a mining company becomes insolvent or closes prematurely due to a poor commodity market. Nor do communities want failed mine closures that damage the environment and risk public health and safety. 

“There has been a recent shift from Australian regulators to include more comprehensive closure planning and costing into mining applications, with a focus on progressive rehabilitation,” Danielle Kyan, a principal mine closure consultant with 18 years’ expertise in closure costing and closure related projects, said.

Queensland’s Mined Land Rehabilitation Policy includes progressive rehabilitation and closure plan (PRC) requirements. Introduced in 2019, the PRC requires mines that have a site-specific environmental authority (EA) to plan for how and when activities will be carried out to maximise progressive rehabilitation of the land. 

The regulation requires progressive rehabilitation milestones to be incorporated into a PRC plan at mine-lease application. 

“This is starting a shift for mine planning engineers to think about the closure requirements and final landforms in initial design phases,” Kyan said.

The New South Wales Government has implemented reforms to strengthen operational rehabilitation requirements for mines in that state – and is shifting to new regulations following industry consultation. 

This could include requirements for rehabilitation management plans, annual rehabilitation reports and forward-works programs.

The Western Australian government is incentivising rehabilitation by reducing mining rehabilitation fund (MRF) contributions on land considered “under rehabilitation” and rehabilitated land. 

“Around Australia, governments are introducing reforms that put more onus on companies to plan for mine closure and report on progressive rehabilitation,” Kyan said. “Mining companies must be prepared for this change.”

Before and after a mine closure
Before and after a mine closure

Obstacles 

Mayne said many mining companies were increasingly focused on closure planning and progressive site rehabilitation, while the accuracy of closure planning has vastly improved due to advances in geographic information system (GIS) technology and digitisation.

Jason Beltran, a senior mine closure consultant, said further change was needed. 

“Some companies only consider closure costs they can see and easily plan for,” he told Australian Resources & Investment. “They are potentially unaware of the complexities of ‘hidden costs’ such as site monitoring, human resource management or the social impact of mine closure.”

Closures can have significant socio-economic impacts. Locals can lose jobs and, in many instances, there are few work alternatives. Regional communities can struggle to maintain services as people leave. Health and wellbeing can suffer. 

“It’s important for companies to address socioeconomic transitioning as part of the closure vision and strategy, as the closure period for a mine approaches – and to work with communities and manage expectations,” Mayne said. “Stakeholder engagement on this issue is critical.”

The timing of closure costs is another issue. These costs have historically been regarded as an end-of-mine expense. They weren’t seen as a material cost to include in the early stages of mining-project evaluation. By including closure costs at the end of a project, they were often insignificant to a project’s net present value (NPV).

“In the last few years, we’ve seen a shift in this thinking across the mining industry,” Kyan said. “During project due diligence, and even at the scoping stage of project evaluation, more questions are being asked about how much a mine closure will cost, and what effect that will have on a project’s NPV.”

Mining incentives have been another obstacle to effective closure planning. Internal key performance indicators (KPIs) traditionally focus on lowering production costs to drive profit. That reduces incentives to invest in progressive rehabilitation, which is a cost. 

“We’re starting to see more companies introduce KPIs around mine closure and progressive rehabilitation targets,” Kyan said. “That’s created more buy-in from site managers on implementation of closure planning, and also on costing progressive rehabilitation into life-of-mine planning.”

Regulatory uncertainty is another factor. According to Kyan, much mine closure planning is still “open-ended” despite recent regulatory developments. 

“The concern is that the bar will be constantly moved and thus site rework will continually be needed,” she said. “There are also concerns about sterilising future resources (making them inaccessible for future use) or having to redo rehabilitation works if landforms have to be extended or even moved.”

Mine closure planning and implementation should be viewed as an opportunity, not a cost
Mine closure planning and implementation should be viewed as an opportunity, not a cost

Good practice

Mayne said mine closure planning should ideally be discussed and addressed during scoping and pre-feasibility studies – and considered throughout a mine’s development phases. 

“This way, companies can appropriately plan their mining expansions, create and profile mining landforms, such as waste-storage facilities, in the most practical and efficient way,” he said.

Regular interaction between mine closure teams and appropriate project stakeholders from the start can reduce risks, while Mayne said transparency in mine closure cost estimation and planning is key. 

“Closure-related planning requires integration and input from various disciplines within companies, and from company stakeholders,” he said. “Addressing closure issues in isolation will not yield optimal results. An open approach serves companies well with stakeholders.”

Kyan suggested mine closure teams should raise awareness of the benefits of integrated closure planning within their organisation. 

“Effective mine closure planning provides opportunities to work final landforms into mine planning and thus reduce long-term costs and risks,” she said. “It saves money. Most of all, well considered site-specific and integrated mine closure planning enhances corporate reputation and long-term organisation sustainability.”  

Seven ideas for mine closure planning and implementation

1. Know what’s at stake: Good closure planning can enhance financial performance and reputation. Poor planning can create a costly rehabilitation problem for years. 

2. Start early: Plan mine closure at the start of projects, where possible. 

3. Engage stakeholders: Mine closure planning requires a multidisciplinary approach within companies and an inclusive, communicative approach with affected communities is important, to listen to their needs as a mine approaches closure.

4. Governance: Mining closure planning and reporting of progressive rehabilitation should be discussed at board level, as part of risk-management oversight. 

5. Legal obligations: Management teams should stay informed of ongoing regulatory changes and industry approaches in mine closure planning and progressive rehabilitation opportunities and requirements. Understanding the impacts of obligations around issues such as socioeconomic transitioning is vital.

6. Progressive rehabilitation: Defining closure costing can provide opportunities for progressive rehabilitation when the mine is operating. This ongoing work to rehabilitate sites can potentially reduce future closure liabilities and risks.

7. Opportunity focused: Mine closure planning and implementation should be viewed as an opportunity, not a cost. Effective planning can improve existing rehabilitation approaches, reduce costs and help communities. The environment can benefit through better preservation of topsoil and integration of rehabilitated landforms.

 

original article