Govt approves mine rehab review

The State Government has approved a new assessment system to encourage mine owners to fulfil their tenement obligations for mine closure and rehabilitation, which has been welcomed by the Chamber of Minerals and Energy and the Conservation Council of WA.

Resources Minister Francis Logan said the new system would help reduce the government's risk when these obligations were not met.

The new system was the key recommendation of a review of mining securities, conducted by the Department of Industry and Resources.

Mr Logan said the review had identified an increased financial risk rising from higher mining operational costs, changed community expectations and mine rehabilitation standards.

"The review recommends industry provide government with a more accurate measure of rehabilitation and mine closure costs in accordance with accepted accounting standards," Mr Logan said.

"This would bring Western Australia into line with other Australian jurisdictions."

Under the new scheme, which will begin in July 2009, mine owners will be required to provide a self-calculated estimate of the rehabilitation and closure costs of proposed mining operations.

Mr Logan said this estimate would need to be verified by a third party.

"A new bond estimation tool will be developed to help companies produce a more consistent and accurate estimation of these costs, which must be paid before a project begins," he said.

"Unlike the current bond calculation system, the tool will take into account cost factors such as increases in the consumer price index, the cost of mobilising equipment over long distances and post-closure monitoring.

"The review also recommends providing more clarity to industry on mine closure requirements through amendments to regulations and the creation of new supporting guidelines.

"Bonds for exploration will only apply to proposed higher risk mineral exploration activity, which will streamline approvals and reduce administration costs for industry and government."

CME chief executive Reg Howard-Smith today welcomed the government's announcement and said it was committed to working with the government to develop a new and alternative system for future consideration.

"Although CME had given in-principle support for the development of an alternative bond calculation methodology, final support for the new methodology would depend on it addressing the needs of industry and providing a clear environmental benefit," Mr Howard-Smith said.

Below is the full CME announcement:

The Chamber of Minerals and Energy of Western Australia has welcomed the review of mining securities by the Department of Industry and Resources that underpinned the recommendations announced by Resources Minister the Hon Francis Logan MLA today.

Chief Executive, Reg Howard-Smith says the CME is committed to working collaboratively on developing a new and alternative assessment system for future consideration.

Mr Howard-Smith said, "Although CME had given in-principle support for the development of an alternative bond calculation methodology, final support for the new methodology would depend on it addressing the needs of industry and providing a clear environmental benefit".

Mr Howard-Smith further explained CME's final decision to support a new methodology would be conditioned on it delivering the following:

- The ability to reduce the bond based on a company's risk profile and past performance. CME does not favour the imposition of a blanket full cost recovery policy on environmental bonds.

- Avoiding duplication of reporting obligations. - The ability to fully retire bonds with clear guidelines detailing completion criteria.

- The capacity to assess bonds on a project basis as opposed to tenement by tenement.

Mr Howard-Smith said CME believes the current bond system is working effectively and should be retained alongside the new methodology.

"More broadly, the resources sector remains committed to sustainable development practices and continues to take its environmental management obligations seriously and I look forward to reviewing the final report and recommendations".