Custodial Transfer of Mined Lands

by: Dr. A. Robertson and S. Shaw

Introduction

Mining is a temporary use of the land. A mining company's interest in the land usually terminates with the implementation of the Closure Plan. The succeeding custodian's (and associated stakeholder's) interest is in the continued sustainable use of the land and commences only when the Closure Plan is completed. 'Mine Closure Plans' while an advance on 'Mine Abandonment Plans' suggest a short term planning perspective that appears shortsighted to the Succeeding Custodian. Custodial transfer of mined land, post mining, requires an extension of the concept of 'designing for closure' and the development of a 'Post mining Sustainable Use Plan' as part of the 'Closure Plan'. Inclusion of the succeeding custodian in the closure planning as well as periodic technical review and audit, throughout a mine's life (feasibility, design, construction, operation and closure stages), will provide a basis for minimizing the risk development of an accepted Closure Plan. However, defects in the Plan, which may become apparent only after a time, become the liability of the Succeeding Custodian.

Poor experience with the success of Closure Plans, as well as the recognition that many defects ar not apparent (or not recognized) at the time of custodial transfer has resulted in reluctance by the Succeeding Custodians to accept transfer of mined lands. This applies particularly to mine sites where significant risk of physical instability (tailings dams which could breach) or chemical instability (leaching of contaminants) could result in substantial liability. The potential for sustainable land use, including sustained revenue generation and sustained custodial care, becomes particularly important when the reclaimed mining lands require sustained or perpetual care and maintenance (active or passive). The mining industry can do much to limit the liabilities associated with operating a mine by actively participating in, or leading efforts to define the custodial transfer process, and by developing sustainable post mining land uses.

'People do not plan to fail - they fail to plan'. Planning initial mine development in a manner that fully considers final closure and post mining sustainable land use is an essential step in limiting future liability and in identifying the concerns and requirements of the future custodian of the land. In so doing, the mining industry can also provide motivation and guidance to assist in the rationalization of the often widely disbursed, largely uncoordinated administration and control of post mining sustainable land use.

The objective of this section of the Mine Closure section on EnviroMine is to discuss the concept of Custodial Transfer and present an approach for the development of sustainable land use post mining. Definitions for the terms used here are provided in pdf form.

Changing Perspective

In many parts of the world, much of the mine development has occurred on essentially undeveloped land. Prior to mining, the land was essentially 'self sustaining' in that it required no intervention by man to maintain this use. There has been a tendency to require mining companies to return mine sites to this condition post closure (to reclaim lands to achieve a land use equivalent to or better than that which existed prior to mining). Figure 6a illustrates this cycle. If the land had been developed prior to mining then the options would include reclaiming to the prior usage, to either an alternative usage, or to self sustainable use as illustrated in Figure 6b. A developed use may require either passive care, such as would apply to rangeland or forestry, or active care, as would apply to any industrial site.

Figure 6a. Reclamation to self sustainable use.

Figure 6b. Reclamation to a developed sustainable use.

Figure 7 provides an illustration of successive cyclic use of land and its reclamation. If, on completion of mining, the site can be returned (economically) to a sustainable land use then the cycle illustrated for Active Developed Use 1 is achievable. If, on mine closure, it is found that passive or active care must be maintained then it may be necessary or appropriate to reclaim to an alternative developed land use such as illustrated for Active Development Use 2. Mining, since it depletes a finite resource is inherently a temporary use of the land. The alternative (active or passive) development may be sustainable over a much long period if the activity involves renewable resources, such as a nature or recreational park, forestry or similar.

Figure 7. Land use and custodian succession.

The willingness of a New Custodian to undertake the responsibility of a reclaimed site, which requires continued interaction, will be much greater if the long term sustainability of the site under the alternative development can be demonstrated. If the alternative development is fiscally not of itself sustainable then the development plan should include an appropriate endowment (trust fund) to finance continuing maintenance. The ultimate acceptance of a Post Mining Sustainable Land Use Plan may come more readily than for a Closure Plan, and the ultimate cost of long term interaction and/or custodial transfer terms may be significantly less if a suitable long term use plan can be demonstrated.

In order to minimize the various risks and liabilities a mining company faces, it is in the mining company's as well as society's best interest to consider all the impacts, both positive and negative as early in the process as possible and anticipate, to the degree possible, potential future liabilities and risks. This should involve, at least at a conceptual level, the development of potential post mining sustainable land use options at the feasibility stage of a mine's development. By so doing, the mining company can begin to identify post closure land use and hence potential succeeding custodians and seek their input. This will allow the mining company to gain the confidence of the succeeding custodian, and visa versa, and minimize the risks and liabilities that may be transferred with the land.

Progressive reclamation and custodial transfer, as reclamation units become available for reclamation, has the advantages that terminal closure liability is reduced, closure technology can be deomonstrated and the potential of discovering 'hidden defects' and correcting them, prior to terminal closure, is increased. The risk to both the mining company and the successor custodian is reduced. Progressive reclamation and transfer provides a 'test' of the succeeding custodian's willingness to accept custodial responsibility and risk. If a successor custodian cannot be realized during the period when the mining company is operating (and is able to negotiate with economic and political strength) then the mining company's potential for negotiating conditions for transfer will reduce.

Financial assurance provisions for terminal and premature mine closure has become a standard for hard rock mines for most Canadian provinces and the United States of America. To provide the company owners with the technical and financial information they need to make such provisions, it is appropriate for the closur planning to also address premature closure liability.

Achieving Custodial Transfer.

The following steps are proposed in order to help achieve successful custodial transfer.

Establish project (Closure Plan) goals:

The overriding goals for the closure plan developoment and implementation are:

  • Operate in an economical, safe and responsible manner
  • Reclaim the landscape on an on-going basis; progressive reclamation
  • Provide a landscape that will be physically and chemically sustainable for the long term
  • Provide a healthy sustainable ecosystem suited to an agreed land use
  • Achieve closure and custodial transfer in an economical, timely and secure manner

Establish a procedure to screen options:

Mining companies should review and formalize their approach to screening closure options. The screening process should involve:

  • Knowledge of the relevant factors;
  • Involve multi-disciplinary input;
  • Involve all stakeholders to identify option selection and design objective criteria (see MAA webpage, and related papers);
  • Address the full life cycle of all interacting components;
  • Identify work and cost vs. time for each option;
  • Have the ability to deomonstrate viability, monitor (verify) performance, take corrective action if necessary, and to achieve an early reclamation certificate;
  • Include a probability and risk analysis (see webpage on Failure Modes and Effects Analysis);
    • Of work to be performed,
    • Of cost,
    • Of probability of success.
  • The methods, procedures, and criteria should be documented clearly and concisely to provide a 'transparent' view of the process to the stakeholders and concerned public.

Establish a closure path:

Establish, early in the life of the project, the project closure path - knowing that it will be adjusted with time. To the maximum extent, broaden the group that will establish this path to those likely to be involved in the final path definition (regulatory authorities and stakeholders) such that there is increased probability of the path being correct and durable.

Establish success indicators for closure and custodial transfer:

Seek binding agreement with stakeholders and the final custodian on what will be considered succes in closure. Developers are entitled to know what the rules of the game are, use what political/financial leverage the operator has to have the rules defined and adhered to.

Establish economic evaluation tools:

Standards exist for conducting normal economic evaluations. However, they do not esixt for situations that involve potential environmental liabilities - especially if it is possible to defer corrective action for a decade or more. The operator should establish procedures to conduct economic evaluations of different reclamation/remediation options. The procedures should be shared with, and be veted by, key stakeholders.

Realize public partnership:

There needs to be better understanding of how the public benefits from a profitable operation and why it is in the public interest to seek responsible and ecnomical solutions for closure.

The public is a major benefactor from a profitable operation project. A large percentage of each profit dollar flows to the public (as circulating wages and supplies payments, company tax and through income tax). In a similar manner the public pays a large percentage of the cost of reclamation through foregone tases on profits. It is very much in the public interest that the project be profitable and that it be operated and reclaimed in a manner that is responsible and economical.

Realization of the public partnership is needed to facilitate progress on other issues required to achieve satisfactory closure.

Identify the next Custodian and mechanism for custodial transfer of reclaimed land:

The mechanism to transfer land ownership (and responsibility), when a site has been reclaimed, but will require perpetual care, is not always well defined. It should be. This may require that mining companies work actively with stakeholders to define the regional post mining land use as well as the custodian(s) that will manage that land use.

If necessary, establish an endowment for residual care:

Perpetual care is one closure option. It may be the only option for some sites.

Economic evaluation should determine if it is the preferred option or not.

This cannot be done until the post mining land use, succeeding custodian and mechanism to establish an endowment to fund perpetual care is understood. If the current laws discourage this option (e.g. by taxing money earned by the endowment), the problem should be identified and the laws changed.

Some stakeholders, mining company owners included, may insist that reclaimed land be maintenance free. Mining companies should be prepared to educate them about the impracticality and cost of the maintenance free option.

Establish a mechanism to identify and transfer residual assets and liabilities:

There is a need to establish the 'value' of any residual assets/liabilities

  • To identify requirements for financial assurance (to ensure that liabilities are addressed);
  • To identify the asset value of a project (when sold to a new owner- even during the operating phase);
  • To identify funding needed to carry on perpetual maintenance (i.e. to establish sustainable land use

An agreed upon mechanism should be established to identify and to transfer full custodian responsibility, including potential liabilities, to the succeeding custodian.

Establish a mechanism for independent technical review:

Independent technical review and audit should be part of the entire mine development, operation and closure process and would facilitate the acceptance of closure and custodial transfer. Key focus areas include:

  • Adequacy of plans for closure and custodial transfer;
  • Adequacy of success indicators;
  • Appraising if conditions for satisfactory closure have been met;
  • Identifying residual liabilities and plans to deal with them;
  • Determining if economic evaluations of options are realistic;
  • Establishing the 'value' of residual liabilities;
  • Establishing the amount that should be entered into an endowment fund to provide perpetual care - if needed;
  • Determining that a property is ready for custodial transfer and that terms associated with it are reasonable;
  • Suitability of the plan to the objectives of the receiving custodian.

In the future, it may be difficult to achieve agreement on closure and custodil transfer without an independent review (audit) in the same manner as corporate financial auditors have become an essential component of corporate fiscal governance and assessment.

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