Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Taxpayers could be on the hook for up to $1 billion in unfunded liabilities for mine remediation and neither the Ministry of Energy and Mines nor Ministry of Environment are up to the task of protecting British Columbians from the environmental risks from mining.
Those are two of the more blistering criticisms in a damning report on B.C.’s mining sector by Auditor General Carol Bellringer.
“Compliance and enforcement activities of the mining sector are inadequate to protect the province from significant environmental risk,” Bellringer said at a May 3 press conference.
She said her audit found that “monitoring and inspections of mines were inadequate to ensure mine operators complied with requirements.”
While the two-year audit was still underway, the Mount Polley tailings pond failure occurred, underscoring some of the failures of key ministries when it comes to monitoring and enforcement.
Bellringer’s report concludes that the Ministry of Environment failed to conduct geotechnical inspections on the tailings pond for several years, despite the fact policy requires annual inspections.
At a press conference following Bellringer’s, Energy and Mines Minister Bill Bennett said a special technical panel struck to study the Mount Polley mine disaster concluded that no amount of inspections could have foreseen the tailings pond’s collapse.
He conceded that better enforcement and inspection might have mitigated the disaster, however, since it was an over abundance of water that exacerbated the spill.
One of the more troubling findings in Bellringer’s report was the way the Line Creek coalmine expansion was approved in the Elk Valley.
The mine is one of five owned and operated by Teck Resources Ltd. (TSX:TCK.B). Coal mining in the Elk Valley over a century has resulted in high selenium levels, which poses a risk to fish and humans.
Because of water quality concerns, a permit for the expansion was denied by ministerial staff. But it was approved anyway by Cabinet. Bellringer said it was the first time such an expansion was approved by Cabinet.
“The rationale for the decision was not publicly disclosed,” the AG’s report states.
Despite the health and environmental risks that high selenium levels pose, Bellringer’s report concludes: “The ministry has not disclosed these risks to legislators and the public.”
Bennett defended the decision to approve the Line Creek expansion. He said a century of coal mining in the Elk Valley has led to a legacy of high selenium levels that need to be brought down.
But denying Teck access to more coal would simply mean coalmines will have to shut down.
He said the government decided it was in the best interest of the public to have Teck pay for the treatment and remediation needed to bring selenium levels down than to put those costs onto taxpayers. But to do that, Teck needs to keep operating.
“Somebody’s going to have to clean it up,” Bennett said. “We came to the conclusion that it would be better for the company to pay than for the taxpayer to pay.
But Bellringer says the taxpayer could be on the hook for remediation anyway, because the financial securities mine companies put up for closures and ongoing remediation and water treatment is not nearly enough.
B.C. taxpayers are already on the hook for cleaning up the contamination from the Britannia mine near Squamish.
Bellringer said the current liability is estimated at more than $2 billion, but government has only collected $900 million.
“This means that, for some mines, there is a risk that taxpayers may bear the cost for long-term monitoring, perpetual water treatment and land reclamation after mining activities cease,” she said.
She also said the two key ministries have done a poor job, overall, of communicating to the public the environmental risks associated with mine projects.
Bellringer said the environmental risks from mining in B.C are increasing at the same time when enforcement and compliance are going down. She cites a “culture” on non-enforcement within the two key ministries, Environment and Energy and Mines. Both are understaffed and work with “cumbersome and incomplete data systems.”
The ministries are failing so badly on compliance and enforcement that Bellringer recommends the government create a new independent compliance and enforcement unit to take over the task. It’s a suggestion the provincial government has already rejected, the AG’s report states.
Bennett disputes that, saying he hasn’t ruled out the idea of an independent compliance and enforcement unit, although he seemed reluctant to have such a unit operating independent of his ministry.
While Bennett took issue with some of Bellringer’s criticisms on the Mount Polley disaster, he said overall he accepts that his government needs to do a better job on enforcement.
Bellringer has made 16 recommendations for improving the governance of mines in B.C. Bennett said he agrees with most of them.
“Government agrees that business as usual is not good enough,” Bennett said. “Improvements are necessary and significant improvements are underway.”
@nbennet_biv
Read article at Business in Vancouver
