11 May, 2017
Mine rehabilitation bonds leave taxpayers paying to clean up the industry’s messes
A new Auditor-General’s report has found environmental bonds have failed to keep pace with the environmental risks associated with the mining industry, which in NSW has risen by more than 400% in the past decade. [1]
“The NSW Auditor-General’s report confirms what we have been saying for years,” Nature Conservation Council CEO Kate Smolski said. “Taxpayers are facing massive financial and environmental risks because the government does not make companies stump up enough money to cover the full costs of mine rehabilitation.
“It is a damning indictment of the successive state governments who have mismanaged this issue by putting mining company profits ahead of the environment, communities and taxpayers.”
The report found:
- Environmental bonds have ballooned more than 400% between 2005 and 2016, from $500M to $2.2B, yet are unlikely “to cover the full costs of each mine’s rehabilitation in the event of a default”.
- Formulas for calculating bonds are least four years out of date.
- The bonds don’t cover long-term rehabilitation activities such as groundwater and mine void water management, rectification of rehabilitation failures, rectification of major vegetation/ecosystem failures, and management of tailings dams.
“This report puts a big question mark over the Warkworth Sands and Wilpinjong mine extensions which were both approved on the basis of big rehabilitation promises,” Ms Smolski said.
“In light of the Auditor-General’s report, there should be a full independent review of these projects to see whether the numbers put forward by the mining companies stack up.”
Ms Smolski said the system of environmental bonds needed a complete overhaul.
“Not only do they fail to cover all the immediate environmental risks, they also fail to address the biggest hazard of all time – global climate change,” she said.
“If coal companies had to pay to repair the environmental damage their industry causes, these projects would never get off the ground.
"Instead, taxpayers and future generations are being forced to pay to clean up the mess because successive governments have given these companies a free ride.
“The government should require coal companies to take out insurance at market rates before they can turn the first sod.
"Let the market decide how much it will cost to rehabilitate these toxic sites, not government’s that have cozy relationships with these big companies.”
[1] http://www.audit.nsw.gov.au/publications/latest-reports/mining-rehabilitation-security-deposits
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