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How to close a mine and save money

Jul 26 2017 09:29
Lameez Omarjee

Johannesburg – The closure of a mine is complicated, but if done right it can bring sustainability for the communities in which it operates while not draining a mining company's bottom line, an expert believes.

During a seminar on mine closure held at Webber Wentzel on Tuesday, Aurecon’s Pieter Scholtz explained that the new closure legislation would require a shift in the way things are done to make a closure successful.

In the past, the primary driver affecting the closure of a mine was legislative compliance. But South Africa has more than 6 000 abandoned mines, none of which provide a blueprint of successful closure, Scholtz said.

He said the new amendments promote closure while bearing in mind the goal of improving the balance sheet and not making it worse, while still meeting compliance. “We will know what the financial provisioning needs to be a long time in advance.”

This is enabled through a “financial provision quantum” to calculate how much the financial provision needs to be to close a mine. 

Further, there will be financial accuracy requirements which will be strongly regulated. Mining houses will know exactly how much a closure will cost.

People usually just consider closure plans in terms of environmental rehabilitation, which is really only a small part of it, he explained. The amendments indicate that mine closures should consider the South African context, and the socio-economic structure around most mines.

“In future we will have to plan a closure with a sustainable mindset.” Along with meeting charter requirements by creating enterprises, closures need to help create sustainable solutions to bring down liabilities, Scholtz emphasised. Considering the sustainability function will lead to the right enterprise development and re-skilling of the workforce.

He added that this work cannot be done by a single mine alone and that there should be collaboration between mines in the same area.

Garyn Rapson of Webber Wentzel also agreed that the regulations require stakeholder engagement. The communities in which mines operate need to inform the closure plan and objectives.

The amendments also promote integrated closure planning. In the past mine closure has lacked integration, explained Scholtz. This led to skills shortages and financial shortages and eventually unsuccessful closures. Integration across mining departments such as environment and property as well as with municipalities, government and unions is needed.

Although these engagements may be difficult, they are necessary. “We got away with having nice words on paper which never really materialised. To get this right we will have to have buy-in from municipalities, government, the Department of Mineral Resources and unions.”

Scholtz reiterated that regulations would force a different way of thinking and could reduce liabilities and costs for mines.

Ben Burnand, of the MSA group, said the regulations are positive. He explained that organisational models have to change. A successful mine closure needs to be considered and planned for, and the departments that deal with it should not be pushed aside.

Appropriate financial planning could help reduce closure costs. After having spoken to mining houses which allocated investments toward concurrent rehabilitation, there was a differential between 20% to 40% in the financial quantum for the mine closure.

Burnard said that this shows money should not be locked up in trusts. Investments in rehabilitation could reduce the country’s liability and build the economy.

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rehabilitation  |  mining

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