Authors: Leahy, K; Farrer, G

Open access courtesy of:


Cite As:
Leahy, K & Farrer, G 2023, 'Sustainable finance and the role of mine closure', in B Abbasi, J Parshley, A Fourie & M Tibbett (eds), Mine Closure 2023: Proceedings of the 16th International Conference on Mine Closure, Australian Centre for Geomechanics, Perth,

Download citation as:   ris   bibtex   endnote   text   Zotero

Undertaking a robust environmental, social, governance (ESG) due diligence assessment of a mine or portfolio of mines supports informed sustainable investment decisions. While ample international guidance has been developed by reputable international lenders, and these serve as a structure to undertake a thorough ESG assessment, guidelines are largely silent on inclusion of mine closure considerations. Mine closure should be considered a cross-cutting theme which influences the majority of Performance Standards and Principles and so must be considered at all stages of project development from Pre-Feasibility onwards, as well as in the context of transaction due diligence. In the case where closure liability estimates are not comprehensively estimated, transactions may significantly increase financial provisions and portfolio-wide closure liabilities of a corporation, diminishing shareholder value and increasing risk. Undertaking a detailed review of available information, developing or challenging an existing closure base case, appreciating closure risks and opportunities, and developing conceptual liability estimates can support more sustainable transactions within proposed assets, operational assets and/or assets in closure or post-closure. Over the last decade, ERM has contributed on transactional ESG projects for hundreds of operational or legacy mine sites, either individually, or as part of portfolios that can be very large. In this paper/presentation we provide a brief overview of the international guidance on mine ESG Due Diligence, with emphasis on the factors that can affect closure liability. We highlight the process by which environmental and social data, either publicly available or within a transaction data room, must be critically analysed to identify material issues that will impact the closure liability estimates. We then present examples of two of the most common issues that are uncovered - water and social performance - and how incorporating them into a revised conceptual closure base case provides a more realistic financial model to inform the valuation. Almost invariably, these revised closure cost estimates exceed the provisions made in corporate reporting, Feasibility Studies or NI43-101 documents, and we conclude with an analysis of why this is the case and why, therefore, a more comprehensive consideration of mine closure has a fundamental role in sustainable finance.

Keywords: sustainable finance, ESG, closure liability estimates, water stewardship, social performance

Azevedo, M, Baczynska, M, Bingoto, P, Callaway, G, Hoffman, K and Ramsbottom, O, 2022 ‘The Raw-Materials Challenge: How the Metals and Mining Sector will be at the Core of Enabling the Energy Transition’ McKinsey & Company, Metals and Mining Practice viewed 5 June 2023, the-raw-materials-challenge-vf.pdf (
Campbell, R, Lewis, D and Tivey, J 2023, ‘Mining M&A Just Saw its Strongest Run in a Decade’, White & Case, viewed 5 June 2023, Mining M&A just saw its strongest run in a decade | M&A Explorer (
Dolowy-Busch, M 2023, ‘M&A in Metals and Mining: Future Proofing Mine Portfolios’ Factset, viewed 5 June 2023, M&A in Metals & Mining: Future Proofing Mine Portfolios (
European Bank for Reconstruction and Development, ‘Mining Sector Strategy 2024-2028’ EBRD, viewed 5 June 2023, Have your say on EBRD policies and strategies
European Bank for Reconstruction and Development, 2019 ’Social and Environmental Policy’ EBRD, viewed 5 June 2023 ebrd-environmental-and-social-policy-2019-english.pdf
Gambetta, G, 2023 ‘Landmark Sustainability Due Diligence Directive Pass European Parliament Vote’ Responsible Investor, viewed 10 June 2023, Landmark sustainability due diligence directive passes European Parliament vote (
Global Tailings Review, 2020 ‘Global Industry Standards on Tailings Management’ viewed 5 June 2023 global-industry-standard_EN.pdf (
International Council for Mining and Metals (ICMM), 2019 ‘Human Rights Due Diligence Guidance’ viewed 5 June 2023 ICMM - Human Rights Due Diligence Guidance
International Council for Mining and Metals (ICMM), 2019 ‘Integrated Mine Closure: Good Practice Guide, 2nd Edition’, viewed 4 June 2023 ICMM - Integrated Mine Closure: Good Practice Guide (2nd edition)
International Finance Corporation, 2012, ‘Performance Standards’ viewed 8 June 2023, Performance Standards (
KPMG International, 2023, ‘2023 Global Mining and Metals Outlook, Executive Insights on Decarbonization’ viewed 5 June 2023, 2023 Global Mining and Metals Outlook (
Marjolin, A, 2023, ‘Mining M&A in 2022 – Copper Targets Favored Over Gold’, S&P Global Market Intelligence, viewed 5 June 2023, Mining M&A in 2022 – Copper Targets Favored Over Gold | S&P Global Market Intelligence (
Mining Technology, ‘2023 M&A Activity in the Mining Industry Increased in 2023’, viewed 5 June 2023, 2023 M&A Activity in the Mining Industry Increased in 2023 (
Standardized Reclamation Cost Estimator, SRCE Version 2.0 Beta, last updated 5 May 2022, version (accessed at
The Equator Principles, 2020, viewed 3 June 2023, The Equator Principles_EP4_July2020 (
Valckx, N, Stuermer, M, Seneviratne, D and Ananthakrishnan, P, 2021 ‘Metals Demand From Energy Transition May Top Current Global Supply’ International Monetary Fund, viewed 5 June 2023, Metals Demand From Energy Transition May Top Current Global Supply (

© Copyright 2024, Australian Centre for Geomechanics (ACG), The University of Western Australia. All rights reserved.
View copyright/legal information
Please direct any queries or error reports to