Critical elements in implementing fundamental change in public environmental policy: Western Australia’s mine closure and rehabilitation securities reform

Development of public policy is a key role of government. Following the framework for Australian governments to uphold when developing public policy alone will not guarantee good policy development. This research critically explores the policy development process of the Department of Mines and Petroleum in Western Australia for mine closure and rehabilitation securities reform, where significant costs for mining companies, and large environmental and community legacies were at stake. Fundamental change from use of individual bonds to a central Mining Rehabilitation Fund resulted; offering financial advantage for mining companies and government alike, and a mechanism for rehabilitation of historically abandoned mines. Critical elements in the policy development process were: (1) openness in clearly articulating the policy problem at the outset, (2) retaining focus on the policy scope relevant to the jurisdictional level, (3) use of trusted experts especially for contentious aspects of the reform agenda, (4) commitment to stakeholder engagement throughout, and (5) acknowledging and managing uncertainties through transparent and consultative data gathering processes. Attention to these matters enabled an innovative and effective mine closure and rehabilitation policy solution to be implemented by the Government of Western Australia that is unique in Australia, and perhaps the world

Puzzled: Navigating extractive policy information jigsaws for best practice and transparency

This viewpoint article was written in response to our attempt to explore mechanisms that promote financial 'transparency' in the minerals and energy extractive. We controversially forward our opinion that the trajectory of existing transparency mechanisms is likely to generate an obfuscating mass of disclosed information-not 'transparency'. Using a jigsaw analogy, we make a distinction between 'disclosure' and achieving the more challenging 'transparency': it is both being able to have the pieces (disclosure), and put them together to see the big picture. It is just as important to identify missing pieces of the puzzle to prevent selective disclosure. We critically analyze extractive financial policy, and provide an example where a 'best practice' mining securities policy has markedly advanced transparency in a major mining state. The policy substantially reduces government financial risk of a mining company default at no additional cost; reduces costs to industry around ten-fold; incentivises ongoing site rehabilitation; creates a fund for historical abandonments; and; sustains an impressive publically available information instrument of disturbed footprints and associated rehabilitation for every tenement at high precision on an annual basis. Yet it still remains deficient in terms of transparency in particular aspects, of which we clarify and discuss

Enhancements in mine closure planning in Western Australia and possible applications for Africa

It is now well established, for example by the International Council of Mining and Metals, that mine closure planning should be considered from the outset of mining planning and approval, and that this should involve relevant stakeholders to agree upon post-mining land-uses. This has been precipitated by situations where governments have been left with clean up obligations following mine closure. Recent innovations in legislation and regulations for mine closure planning in Western Australia are being evaluated for potential adaptation and application to five African countries. Western Australia has a sophisticated mining sector with respect to regulation and regulator capacity, and the purpose of this research is to showcase the Western Australian approach, and invite discussion on possible applications elsewhere. Whilst our Australian Government funded research specifically targets South Africa, Nigeria, Ghana, Mozambique, Kenya, Tanzania, and Zambia, we are keen to explore implications for other countries where mine closure remains an abiding issue. A key observation from the cooperative governance approach employed in Western Australia between various agencies responsible for mining and environmental regulation and operators is central to the effectiveness of mine closure planning. Early consideration forces both the regulators and operators alike to justify their respective closure requirements; the details of which are reflected in approval conditions for the mining operation. This brings the mine planning phase to a head regarding the likely feasibility of planned closure and post-mining land-use activities. In this manner, the likelihood of legacy problems associated with unexpected abandonment or premature mine closure is minimised, relative to former practices where the mine planning process was essentially left unresolved. In short, the closure requirements become more realistic with this early, consultative and progressing comprehensive mine-closure planning framework in place, with potential scope for adaptive management and numerous creative options for positive post-mining legacies woven into the local socio-economic fabric

Dealing with mining legacies: from bonds to a central mining rehabilitation fund in Western Australia

The responsible management of the rehabilitation and decommissioning of mine sites and the affected environs requires an effective regulatory, policy, and financial securities framework in place. While mining jurisdictions may have confidence in the adequacy of their policy and regulatory systems, financial security mechanisms (posted by mining companies in the form of unconditional performance bonds) are often also used to minimise negative mining-related outcomes. In theory, such mining securities ensure sufficient funds are available to a government to rehabilitate mine sites in the event operators fail to meet their mine rehabilitation and closure obligations. However, four major challenges are often encountered with these mechanisms: 1) They are commonly insufficient to cover appropriate mine closure activities and environmental remediation in the case of a default; 2) Bonds are tied to individual tenements and not damages outside of the designated zone; 3) Mining companies bear significant administrative costs associated with the creation and posting of bonds, and; 4) They do not solve the problem of historical abandoned mine sites. Conventional environmental bond mechanisms also create disincentives to mining company investment (particularly small companies) and little financial benefit for governments (benefits are largely captured by the banking sector). While Western Australia has long been considered as a sophisticated and advanced mining intensive jurisdiction, as of 2011 the state environmental bond system was estimated to cover less than 25% of the total obligation of mine site rehabilitation costs that may be required. These concerns led to the creation of an innovative policy approach: the Mining Rehabilitation Fund Act 2012. This paper discusses the background to the significant inefficiencies in the previous arrangements (which remain typical across the developed world), how they expose governments and mining companies to significant environmental obligations and financial challenges, and how they disincentivise mining activity. The paper also summarises how the Mining Rehabilitation Fund (MRF) anticipates and underwrites the full closure costs for mine rehabilitation, how it is a cost-neutral source of funds for governments to remediate existing abandoned mines, and how it ‘frees up’ mining company capital. It is estimated that after only ten years the MRF will cover the full clean-up cost of even the largest mine in Western Australia should any complete default occur as a worst case scenario. The interest earned by the government on the principal MRF funds will also be available for rehabilitation and remediation of previously abandoned mines, additional environmental monitoring, and impact assessment and remediation research and development. The paper concludes with how such a system may be adaptable to the African context

Is the Extractive Industry Transparency Initiative (EITI) sufficient to generate transparency in environmental impact and legacy risks? The Zambian minerals sector

Developing administrative and financial mechanisms to achieve transparency and compliance with legal frameworks related to mine operation and closure is a major challenge. Ensuring the appropriate level of disclosure, transparency, and accountability of all compliant and non-compliant parties, and accessibility of this information to external interested parties is a cornerstone of achieving a well-governed minerals sector. This research investigates mining company voluntary environmental disclosures in Zambia as an indicator of how the EITI (Extractive Industry Transparency Initiative) may or may not achieve transparency and accountability. Our research findings drew on three sources: literature review, qualitative primary data with EITI and government officials and content analysis to compare public environmental reporting via company websites of a total of 27 mining companies operating in Zambia. Our analysis found that non-EITI and EITI selected companies disclose similar provisions for environmental liabilities at country, subsidiary, or multinational level. While EITI compliance may improve the environmental financial disclosure by mining companies, the detail and specificity of the voluntarily disclosed information is insufficiently transparent to third parties investigating whether governments and companies are compliant with the law in terms of environmental and governance considerations. We propose solutions to achieve transparency in practice by linking aggregated international voluntary initiatives (akin to the EITI) with mandatory jurisdiction-level reforms in mining financial securities and mine closure legislation accounted at the tenement level that is publicly available. Such reforms enable both independent accounting of financial transactions and improved national capacity for minerals sector governance that attracts international investment and incentivises an innovative, environmentally sustainable, and an economically beneficial mining industry

The African Mining Vision

The Africa Mining Vision and Action Plan articulate a vision for the “transparent, equitable and optimal exploitation of mineral resources to underpin broad - based sustainable growth and socioeconomic development” across the African continent. The history of the development of these documents is best understood against the backdrop of significant disappointment with regard to the poor outcomes of exploitation of natural resources and sometimes crippling social and environmental legacies. At the same time these documents express a determination to build capacity and capability to ensure exploitation of mineral and energy assets can lead to positive structural transformation. This panel will discuss the AMV and Action Plan’s 9 programme clusters in the context of an African Renaissance to explore how Australia has and can further engage with pan - African institutions and other partners by examining three potential mechanisms in detail

Integrating mine closure planning with environmental impact assessment: challenges and opportunities drawn from African and Australian practice

Best practice mine closure planning and environmental impact assessment (EIA) principles share many common features. This research examined how mine closure planning relates to, and can be integrated with EIA by comparing practice in eight African and Australian jurisdictions. Emphasis was placed on key challenges and opportunities associated with: institutional arrangements for mine closure planning; financial mechanisms for mine site closure and rehabilitation including abandoned/legacy mine sites; transparency of mine closure planning and financing provisions; and regulation of artisanal and small-scale mining activity. Data were gathered through document analysis, interviews and interactions with practitioners from Western Australia, Ghana, Kenya, Nigeria, Mozambique, South Africa, Tanzania and Zambia. Issues associated with mine closure planning and rehabilitation under existing arrangements and opportunities for improvement through existing EIA processes already in place in each jurisdiction are explored. All eight jurisdictions have appropriate regulatory provisions in place already, but implementation capacity remains a challenge. Opportunities for effective practice lie in using mine closure planning and EIA measures in an integrated fashion, avoiding duplication and enabling synergies in management to be realised

Planning for artisanal and small-scale mining during EIA: Exploring the potential

This review considers the potential to better plan for artisanal and small-scale mining (ASM) during the Environmental Impact Assessment (EIA) phase of new major mine developments. We contrast and contextualise the parallel development of comprehensive mine closure regulation in South Africa with the resultant lack of progress in actual rehabilitation of its large and growing negative mining legacy. We discuss socio-economic conditions around the mine and the current tendency/flaw in governance that ignores the extensive ASM activities that exist. The ramifications of omitting the known large cumulative impact of ASM compromises efforts to undertake large-scale mine closure effectively both in theory and practice. This leaves some large-scale mine rehabilitation and closure plans unachievable due to cessation attracting ASM activity, consequently ‘re-opening’ the mine. We discuss the EIA process as an existing legal mechanism to generate wider consultation for post-mine ASM activity options, and to formally recognise and incorporate ASM as a known impact to plan for. Governance obligations for mining companies and policymakers should directly cater for ASM, with the focus directed towards mitigating negative consequences and maximising local socio-economic development benefits that the sector can create, managed through EIA processes

Complexities with extractive industries regulation on the African continent: What has ‘best practice’ legislation delivered in South Africa?

The legal framework for mine closure and rehabilitation of new and former mine sites in South Africa, including legacy abandoned sites, is comprehensive. This paper discusses legislative provisions for mine site rehabilitation and closure in South Africa with reference to established international expectations. Overall, while the South African legislative framework for mine closure and rehabilitation generally conforms with international expectations for best practice, the system is extremely complex and unwieldy. Many individual laws, regulations, and guidelines and their corresponding ministries applicable to mine closure planning and management in South Africa has created a complicated inter-connected raft of provisions and expectations. It is an open question whether the most recent amendments (December 2014), have untangled or rather added to the complexities. This historical complexity along with identified governance capacity constraints (financial, technical and experience based) likely explains why implementation of the legislative framework has fallen short of mine closure expectations and mandates. As South Africa is a jurisdiction on the African continent with much experience in mining, there are many lessons that are applicable to emerging countries in the region who wish to attract the benefits of the extractives industries and minimize their potential negative consequences

Raising the bar: Environmental disclosures in the extractives, transparency, and innovative legal frameworks

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