Mackay Conservation Group supports a Queensland mining project worth at least $7.3 billion that has been approved by the state government and the mining companies involved have already committed to. Sound a bit weird? It’s not really, the project is mine rehabilitation.
The Queensland government currently holds over $7 billion in Financial Assurance to fund the clean-up of mines if mining companies fail. We estimate that that level of funding would easily create 2,000 direct jobs for ten years and many could commence today if rehabilitation was undertaken progressively rather than waiting until mining is completed. The reality is however that mining companies have been delaying mine rehabilitation and, in some cases, have no plan to rehabilitate land at all.
Across Queensland there are 220,000 hectares disturbed by mining operations but only 556 hectares that have been fully rehabilitated. Today, only one twelfth of mined land has had some rehabilitation work done. In 2006 that figure was one third.
The Queensland Government has recently issued two discussion papers on mine rehabilitation. They are the first of six papers that will be released for public comment in coming months. Mackay Conservation Group and Lock the Gate have been working on reforming the mine rehabilitation sector since 2015. We have raised questions about the extent and quality of rehabilitation in public and in private discussions with government, academics and the mining industry. The papers look at the method of funding bonds paid by mining companies and the way that rehabilitation is planned.
Two of our big concerns about rehabilitation bonds have been the existence of discounts and in-house company calculations. A rehabilitation bond, or Financial Assurance, is only called upon when a company fails. According to the Queensland Government's financial assurance calculator the cost of cleaning up a mine site is a minimum of $108,000 per hectare. Using that figure the bonds held by the Queensland government should be at least $24 billion rather than the $7 billion currently held.
Until now mining companies have been able to calculate their own bonds. If a mining company obtains a quote from a contractor to undertake work at a lower rate than in the Queensland Government calculator then the lower quote is almost inevitably accepted. However the quote may not cover all the work needed or for the time required. Mining companies could also apply for discounts on their bonds of up to 30% based on their economic and environmental track record.
One example is the now defunct Linc Energy's underground coal gasification project at Chinchilla. The mine was found to be contaminating 320 square kilometres of farmland. Linc's bond was around $3 million but the clean-up cost has been estimated at up to $80 million. Either the taxpayer will bear that cost of the site will continue to cause environmental and economic harm. Of the past six calls on Financial Assurance it has been inadequate in five cases.
The Queensland Government has recognised that as many mines come to the end of their economic lives it is important to have in place a system of bonds that will cover the full cost of rehabilitation. The discussion paper proposes an end to discounting and in-house calculators, which MCG supports.
The other discussion paper is about reforming the process of planning and implementing mine rehabilitation. The proposal is to develop a mine life plan early in the planning process for a mine site. Mandatory rehabilitation milestones will have to be met along the way. Indefinite Care & Maintenance at the discretion of the mining company will be ruled out.
These reforms are a major step in ensuring that mine rehabilitation in Queensland is effective and that the taxpayer and the environment are not the ones who pay for the cost of unrehabilitated mine sites. In the next week or so MCG will issue a response to the discussion papers. We hope that you will take the opportunity to comment on the proposals. In the meantime you can look at the papers at:
Better Mine Rehabilitation for Queensland (PDF) and Financial assurance framework reform discussion paper (PDF)