This year’s Investing in African Mining Indaba had Sustainable Economic Growth on the agenda. At the conference, thousands of government representatives, mining companies, investors, interest groups, non-governmental organisations and consultants discussed topics such as environmental sustainability, local content, community development, economic opportunities, resource nationalism, responsible investments and mine closure.
Discussions on mine closure revealed that:
- Abandoned and orphaned mines is a vast problem. Canada alone has tens of thousands. In South Africa, 6,000 mines were abandoned over the last two decades, and a large number are expected to be closed in the next ten years. Drops in commodity prices have led to expected increase in closures all over the world.
- There is a lack of regulations and standards for mine closure. Governments in many countries lack capacity to implement mine closure plans. Governments must make sure that there are local agencies with skilled people responsible for ensuring that mine closure is carried out as it should be.
- Mine closure is not planning for an event, it is a process. Mining activities can go on for decades and the nature of the activities may change over time. The surrounding environment and the mining activities’ impact on the surroundings can also change. In order to plan for mine closure decades away, plans must be under continuous revision.
- Reclamation and closure is technical and complex. Insufficient funding is the largest barrier to land and environmental remediation. There is a need for regulation on financial obligations for rehabilitation and environmental management.
- The mining industry’s effect on people’s livelihood is the biggest of all industries. Whereas mine closure used to be associated with only environmental concerns, closure is now seen as concerning also land use, social, economic and sustainability issues.Mining must be seen as beneficial to the communities, and the communities must be involved in issues of mine closure. Stakeholder engagement used to take place after closure. Now it is commonly agreed that it should take place before, during and after closure. Even legacy sites require stakeholder engagement, regardless of how long ago they were abandoned.
At a side event to the Mining Indaba, the International Council on Mining and Metals (ICMM)1 launched an Integrated Mine Closure – Good Practice Guide, with the purpose of increasing uniformity of good practice across the industry. The guide highlights progressive closure, where monitoring and review feeds into planning and design, in an iterative process. The process will consider environmental, social and economic concerns. ICMM believes the suggested disciplined approach to integrated closure planning will result in:
- Consistent and transparent engagement with stakeholders
- Community participation in planning and implementing actions that underpin successful closure
- Stakeholder support of closure decisions
- Better management of closure throughout the mining life cycle
- More accurate closure cost estimates
- Early identification of risks and mitigation strategies
- Progressive reduction of liabilities
- A shared vision for the post-closure period
- A better social transition for affected stakeholders as the mine moves from operations to closure
- Opportunities for lasting benefits being recognised and planned for adequately
The guide explains in detail how mine closure can be planned, implemented, monitored and governed, and also includes a collection of tools for monitoring, measurements and inspections, minimum closure plan contents and more.
The good practice guide has a chapter on closure costs. However, the ICMM has also launched a document on Financial Concepts for Mine Closure,which aims to enhance the understanding of key financial concepts as they relate to mine closure. The document explains in further detail the applicable international standards, key concepts in mine closure accounting, and the different types of mine closure cost estimates and their key elements, such as use, considerations, calculations, method, cost basis, update requirements, success factors and more.
At the seminar, reference was also made to the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF).2 IGF’s Mining Policy Framework, a non-binding policy guidance tool, lays out international best practice in six key pillars of mining law and policy. The pillar on Post-mining Transition describes what governments should do with regards to ensuring that mining entities prepare and update closure plans, ensuring the development of financial assurance mechanisms for mine closure, and accepting a leadership role for orphaned and abandoned mines in their jurisdiction.
Reference was also made to the Asia-Pacific Economic Cooperation’s (APEC) Mine Closure Checklist for Governments, which provides policy makers with essential elements of a successful mine closure governance framework, including developing policy for the closure plan, developing policy for managing closure and implementing the closure policy. Some characteristics of good policy highlighted in the document are:
- Ensure adequate financial assurance
- Avoid prescriptive regulations
- Update mechanisms (regular closure plan and financial assurance updates and approvals)
- Define outcomes (defined by key stakeholders)
- Legislate stakeholder involvement
- Alignment (with existing regulatory framework and with development targets, strategies and plans)
During the sessions there was also mention of various tools and software that companies can use in order to plan for, monitor and report on environmental and social issues including mine closure. Among those mentioned was Towards Sustainable Mining (TSM) and Initiative for Responsible Mining Assurance (IRMA) Mine Measure self-assessment tool. Global best practice for mining companies is to use such tools, which would also make it easier for government to follow up.
So why should SAIs care about such non-binding guidelines and best practice tools? As auditors, we should naturally seek to find our criteria in laws and regulations. However, the global development of such regulations has been uneven. Where sufficient criteria is lacking, we must turn to guidelines, best practice tools and industry standards. These documents do not merely inform us about what we should expect from government, companies and other stakeholders when it comes to mine closure. They also provide updated facts and data, possibilities for benchmarking with other countries or regions, glossaries of relevant terms, useful tools, models and illustrations, good sources for further reading, and plenty of inspiration for audit topics and audit recommendations.
By Annicken Tvenge – Senior Audit Adviser, OAG Norway and Resident Adviser, Audit Service Sierra Leone
1 ICMM is an international organisation working to strengthen environmental and social performance in the mining and metals industry.
2 IGF is a voluntary initiative supporting its member nations to leverage mining for sustainable development to ensure negative impacts are limited and financial benefits are shared.