Mine closure risks – from a financial institution's perspective

Authors: Lwin, TA Download Paper

DOI https://doi.org/10.36487/ACG_rep/1152_74_Lwin

Cite As:
Lwin, TA 2011, 'Mine closure risks – from a financial institution's perspective', in AB Fourie, M Tibbett & A Beersing (eds), Mine Closure 2011: Proceedings of the Sixth International Conference on Mine Closure, Australian Centre for Geomechanics, Perth, pp. 69-77, https://doi.org/10.36487/ACG_rep/1152_74_Lwin



Abstract:
Mining companies post financial securities that are mandatory in many jurisdictions to cover reclamation and closure obligations. For a financial institution that underwrites such financial securities, financial liability constitutes a fundamental risk. Nevertheless, the nature of reclamation and closure obligations assumed by mining operations is such that appropriate understanding of underlying performance attributes is required. These non-financial attributes cover the spectrum from technical and environmental to regulations and stakeholders. Long duration of the obligations also means that the scope, methodology and cost of reclamation and closure activities are necessarily revised and refined with the passage of time, and ultimately determine the success or failure of the undertakings. The paper offers insight into how a financial institution views and assesses mine closure risks and liability, and concludes that although tangible parameters and characteristics are critical for sound assessment, it is somewhat inevitable to encounter subjective and uncertain aspects of reclamation and closure obligations that render the assessment more challenging whilst making it difficult to fully mitigate the risks.