Building confidence in mine closure cost estimates: a practical approach to risk and uncertainty management

Authors: Guerra, M; Pedlar, R; Hesketh, P Download Paper Open access courtesy of:

DOI https://doi.org/10.36487/ACG_repo/2515_30

Cite As:
Guerra, M, Pedlar, R & Hesketh, P 2025, 'Building confidence in mine closure cost estimates: a practical approach to risk and uncertainty management', in S Knutsson, AB Fourie & M Tibbett (eds), Mine Closure 2025: Proceedings of the 18th International Conference on Mine Closure, Australian Centre for Geomechanics, Perth, pp. 1-8, https://doi.org/10.36487/ACG_repo/2515_30



Abstract:
Understanding the associated closure costs of mine sites is crucial for effective business planning, particularly in the final decade of operations when production typically declines. Traditionally, closure cost estimates have relied on deterministic methods, which often overlook the inherent risks and uncertainties involved. This oversight can lead to significant underestimations of closure costs, leaving companies to grapple with unexpected expenses during the execution of closure or from legacy sites. Furthermore, many closure strategies remain in conceptual stages, lacking clear objectives and critical studies. By employing probabilistic models, the approach translates risks into a range of probable closure costs, enhancing the understanding of potential financial outcomes. Moreover, this methodology facilitates the identification of key risk factors that can impact closure costs, allowing companies to develop targeted strategies for risk mitigation. By refining their closure plans based on comprehensive data analysis, organisations can better allocate resources and prioritise investments that align with their closure objectives. This proactive approach not only improves the confidence of closure cost estimates and supports a reflection on the risk identification process supporting the incorporation of potential omissions, but also supports sustainable business practices by ensuring that companies are prepared for the financial implications of mine site closure. In doing so, it fosters a culture of responsibility and foresight in the mining industry, paving the way for more resilient operations in the face of inevitable transitions. This paper advocates for a paradigm shift in closure cost estimation practices by emphasising a structured, process-oriented approach that integrates existing life of mine cost data with a comprehensive assessment of closure assumptions, risks and uncertainties. The paper outlines key steps – such as internal stakeholder engagement and scenario development – that support the creation of a tailored risk assessment framework. Through the adoption of probabilistic thinking within this guided process, the goal is to improve the transparency, defensibility and reliability of closure cost estimates, ultimately contributing to more sustainable and responsible mining planning.

Keywords: closure cost, cost estimation, risk mitigation, closure strategies, legacy sites, financial outcomes, resource allocation, life of mine, probabilistic cost, business planning

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