Planning for closure
CLOSURE, AN INTEGRAL PART OF OPERATIONS
All mining operations eventually cease. An integral aspect of operating our mines is the on-going planning for closure planning, together with estimate of associated liability costs and the assurance of adequate financial provisions to cover these costs.
A group closure and rehabilitation management standard was completed in 2009 and all operations were required to comply with the standard by December 2011. The Continental Africa operations have been granted an extension to December 2012.
Closure planning is an activity that starts at exploration and mine design stage and continues throughout the life of mine:
- The evaluation of new projects takes into account closure and associated costs in a conceptual closure plan.
- Our standard requires that an interim closure plan be prepared within three years of commissioning an operation, or earlier if required by legislation.
- This plan is reviewed and updated every three years (annually in the final three years of a mine’s life) or whenever significant changes are made, and takes into account operational conditions, planning and legislative requirements, international protocols, technological developments and advances in practice.
For many of the older mines, closure planning and the evaluation of environmental liabilities is a complex process. This is particularly so in Brazil, Ghana and South Africa, where many of the long-life operations present environmental legacies that may have developed over a century or more.
A particular challenge is concurrent rehabilitation, which is carried out while a mine is still operational. This practice serves to decrease the current liability and reduces the final rehabilitation and closure work that must be undertaken, but has the potential to sterilise reserves, which the company might wish to exploit should conditions, such as the gold price, change.
Our closure standard stipulates that closure planning must be undertaken in consultation with the community. In the course of these consultations, different issues are raised which require site-specific solutions. Livelihood preservation and infrastructure are often key requirements. Local people, who were previously employed at the mine, may receive education and training so as to seek viable employment alternatives. Communities also require information on rehabilitation of the landscape and on any lasting environmental impacts.
Our long-term remediation obligations include decommissioning and restoration liabilities relating to past operations, and are based on our environmental management plans and comply with current environmental and regulatory requirements.
Provisions for remediation costs are made when there is a present obligation, it is probable that expenditure on remediation work will be required and the cost can be estimated within a reasonable range of possible outcomes. These costs are based on facts currently available, technology expected to be available at the time of the clean-up, laws and regulations presently or virtually certain to be enacted, and previous experience in the remediation of contaminated sites.
Provision for restoration and decommissioning costs are made at the present value of the expenditures expected to settle the obligation, using estimated cash flows based on current prices and discounted at a pre-tax rate that reflects current market assessments of the time value of money. An assessment of closure liabilities is undertaken annually.
In 2011, discounted closure liabilities (excluding joint ventures) increased from $551m to $747m. This change is largely attributable to change in mine plans resulting in accelerated cash flows, change in economic assumptions and discount rates, change in design of tailings storage facilities and change in methodology following requests from the Ghana Environmental Protection Agency.
|– Vaal River||0.3||9.1||9.4||8.7|
|– West Wits||0.1||1.0||1.1||0.7|
|Mpasatia (Bibiani pit)||8.6||–||8.6||7.7|
|AGA Brasil Mineração||63.0||18.9||81.9||57.3|
|United States of America|
|Cripple Creek & Victor||77.0||4.1||81.1||46.0|
|AGA Colombia SA||0.8||–||0.8||–|
|Less equity-accounted investments included above (1)||(24.9)||(19.7)||(44.6)||(37.6)|