Recent Events in NWT and Quebec Reveal Big Holes in Mine Closure Safety Nets

[Update: As of November 6, 2014, the Government of the Northwest Territories accepted Dominion Diamonds' financial assurance for the Ekati mine. However, it came in the form of surety bonds - not, as is required in many jurisdictions, an irrevocable letter of credit - and therefore may not provide the same level of security.]

For several decades now, Canadian governments and the mining industry have assured us that abandoned mines requiring massive public spending on cleanups (like the billion dollar cleanup of the Giant Mine) are a thing of the past. We are told that mines are now planned for closure from before they start operating and that financial assurances will make money available to the responsible jurisdiction to do the clean up should the company go bankrupt or walk away from its responsibilities.

MiningWatch has remained sceptical about the government and industry statements given that there is little public disclosure of the financial assurances being held by governments and the amounts are typically negotiated with the ministries that have the double mandate of promoting and regulating mining.  Where information has been gathered, such as the University of Victoria Environmental Law Centre’s report on mine closure in BC, and when mines have been abandoned (eg. Jericho and Timminco), problems of adequate funding for closure are apparent.

Following recent news coming out of Quebec and the NWT, we have even more reason to be concerned that the public is still facing serious unfunded liabilities for mine closure and rehabilitation. (Major accidents like the August spill at Mount Polley are an even greater unfunded liability.)

RB Energy’s Quebec Lithium mine was just getting up and running when the company started to run short on cash and failed to raise additional capital needed to keep operating. Earlier this month the company laid off its workers and filed for bankruptcy protection. A report by CBC News indicates that the company has not filed any of the closure costs. An initial payment was due on September 23. The total closure costs are estimated at $25.6-million (this may be the estimated closure costs at the end of the mine life so current liabilities will be a lesser – but not insignificant – amount). Earlier today in the Quebec National Assembly, Quebec Solidaire made a motion to have the Minister responsible study and report back to the Assembly on how the company was allowed to skip out on its obligations.

Yesterday, CBC reported that documents filed in the NWT legislature indicate that Dominion Diamonds has not paid $171-millon in financial assurances for the Ekati Diamond Mine. The documents also showed that the Canada Zinc has $6-million in outstanding payments for the Prairie Creek mine, which is surrounded by Nahanni National Park. The NWT government is in the process for taking over responsibility for these matters from the federal government.

MiningWatch is a participant in the National Orphaned and Abandoned Mines Initiative. We have tried to get this multi-stakeholder group to tackle the issue of non-disclosure of financial assurances but our efforts have been blocked by industry and government members on the committee. If the amounts are generally sufficient and the aforementioned problems are exceptions rather than the rule, we wonder why both companies and governments aren’t prepared to make them public.