Troilus Gold brings potential funding from ECAs to $1.3 billion
The company has signed an additional LOI with Export Development Canada worth $300 million.
Sparks, Nevada — US miners and explorationists should not rely solely on President-Elect Donald Trump to halt the Environmental Protection Agency’s proposed federal financial guarantees to stiffen domestic mining project bonding requirements.
During a Wednesday afternoon session of the American Exploration and Mineral Association’s (AEMA) annual conference in Sparks, Nevada, experts representing the National Mining Association, the federal Small Business Administration, environmental consulting, and bonding surety blasted EPA’s proposed changes to the Comprehensive Environmental Response Compensation and Liability (CERCLA) Section 108 (b) dealing with financial guarantees for mining projects.
The panelists all questioned the need for the EPA to seek its own financial bonding guarantees for mining projects, when the U.S. Bureau of Land Management, the U.S. Forest Service, and state regulatory agencies already possess what miners contend are adequate financial guarantee programs.
Kevin Bromberg, assistant chief counsel, for the Small Business Administration, accused EPA of withholding “critical information” regarding the data and data sources utilized to create the regulatory agency’s proposed bonding formula model. He also believes that EPA data “has no technical basis”.
Bromberg and other panelists suggested EPA’s proposed formula for determining mining project costs far exceeds “real world” mine reclamation and closure costs.
Corporate consultant Jeff Parshley of SRK (U.S. Inc.) stated that EPA’s efforts to create an “one-size-fits-all formula” to mitigate risks from hazardous materials at mine sites, instead, resulted in “one-size-fits- none” formula.
Parshley suggested that applying EPA’s formula would send one Nevada gold mining operation’s bonding requirements soaring by a multiplier of 24 from the mine’s current $20.38 million cost estimate to $495.84 million.
Joe Poplawski, national underwriting officer for Argo Surety, asserted that EPA’s financial responsibility formula “is based on worst-case scenarios that are most likely not representative of today’s mining practices.” He also said the capacity of banks and surety groups to generate funds to meet EPA’s proposed bonding requirements “is questionable.”
In his talk Poplawski identified several risks for mining projects which may result from this EPA financial assurance program. For instance, the proposed size of these financial obligations will constrain a mining company’s existing financial resources forcing them to raise additional equity or increasing corporate debt. The manner in which this financial assurance program is set up will encourage lawsuits against mining projects, the costs of which will ultimately be borne by the mine owners and operators. For those exploration companies who are initially exempt from this program, the existence of this financial assurance program will have to be addressed in any preliminary economic assessment or feasibility study which may very well cause some projects to fall below the required rate of return necessary for development activity to take place.
Will Trump save mining’s CERCLA BACON?
Although the speakers believe the U.S. business environment will improve under Trump, it may be foolish for U.S. mining to simply rely on Trump’s “magic pen” to stop EPA’s proposed CERCLA 108(b) amendments.
The mining industry’s short-term strategy is to convince EPA to withdraw its proposed rule changes. The panelists advised that the D.C. Circuit Court decision requiring EPA to take final action regarding its proposed rule-making, actually allows the agency to choose to take no new action regarding current mining project financial requirements.
AMEA Executive Director Laura Skaer, a veteran natural resources attorney, assured association members that AMEA, the National Mining Association, mining companies and other groups have been in touch with Trump’s transition team, who realize the importance of halting EPA’s bonding proposal.
Meanwhile, the U.S. mining sector is pondering a longer-term strategy of utilizing “a surgical amendment of CERCLA” to prevent federal agencies from imposing duplicative and onerous bonding requirements on mining projects.
Skaer observed that CERCLA was originally enacted in the Love Canal environmental disaster era, originally addressing environmental pollution concerns that no longer exist in today’s modern mining industry.
Panelist Joe Baird, an attorney and former AEMA chairman, noted that no modern western hardrock mine has been named to the EPA’s “Superfund” list since 1990. Meanwhile, he believes that a cultural change may have occurred in the U.S., highlighted by last month’s U.S. presidential election; a change emphasizing U.S. manufacturing and jobs over the environmental protection favored by the Obama Administration.
