The party’s over, now what? - ME Feature Article

Technological advances in mine equipment and milling processes have enabled mining companies to exploit ever lower grades of ore. The result has been larger disturbances, greater volumes of waste, a complex web of infrastructure, and an overall trend toward mega projects that can extend over several square kilometers. This explosive growth in a mining operation’s disturbance footprint provokes an obvious question: What is it going to cost to reclaim all of this? At face value, this can be an enormous financial liability for a company, but since the timing of reclamation may be years in the future for many operations, these costs can be heavily discounted, thereby limiting the burden on the corporate balance sheet. Nonetheless, mining companies are eager to remove these liabilities as quickly as possible; conversely, regulators want assurance reclamation will, in fact, occur. How might one bridge these competing interests? Navigating the practical and financial requirements of a post-closure landscape requires foresight, judgement and assumptions; however, companies that do not adequately plan for these future expenditures when there is no offsetting income stream will likely face some difficult decisions. Simple risk analysis tools and utilizing the time value of money can help bring some clarity to this end-of-mine life phase.