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Annual report suite 2012

Planning for closure

It is inevitable that all mines will eventually fully exploit their resources and operations will cease.

It is possible that, for various reasons, such as gold price, cost inflation, labour issues, political risk, safety or environmental issues, mining operations may be halted – temporarily or permanently – before these resources are fully depleted. Planning for closure begins at the outset of every project, and includes planning for premature closure. Such closure is an integral part of every operational life cycle, and includes optimising planning and operations to minimise closure costs as well as the assessment of associated liability costs and the assurance of adequate financial provisions to cover these costs.

We recognise that closure is not only related to the natural environment, but that it has significant and long-lasting impacts on communities. Livelihood preservation and infrastructure support are often important considerations in closure planning. Local people employed by the company may receive education and training so as to seek viable employment or livelihood alternatives. Communities also require information on rehabilitation of the landscape and on any lasting environmental impacts.

All AngloGold Ashanti’s managed operations have been brought into alignment with the group’s closure and rehabilitation management standard.

This standard prescribes that:

  • all new projects take into account closure and associated costs in a conceptual closure plan;
  • an interim closure plan is prepared within three years of commissioning an operation, or earlier if required by legislation;
  • closure plans are reviewed and updated every three years except for the final three years of the life of mine when the plan should be reviewed annually. Plans should also be reviewed whenever significant changes are made, and take into account operational conditions, planning and legislative requirements, international protocols, technological developments and advances in practice; and
  • closure planning must be undertaken in consultation with regulators, local stakeholders and site-specific issues and solutions need to be considered.

Even in those jurisdictions where specific closure legislation is not in place – such as Argentina, Brazil, Namibia – we ensure that all operations are aligned with our internal standard.

Two challenges associated with closure are:

  • legacy issues, which are considered as part of closure planning. This is particularly challenging in respect of older mines (such as in Brazil, Ghana and South Africa) where the evaluation of closure options and liabilities is a complex process and not necessarily an exact science; and
  • concurrent rehabilitation, which is carried out while a mine is still operational, and which serves to decrease the current liability and final rehabilitation and closure work that must be undertaken, but has the potential to sterilise the Ore Reserve, which the company might wish to exploit should conditions, such as the gold price, change.

In 2012 a focused mine closure team was assembled to integrate closure planning into mine planning. Led by a mining engineer and comprising engineering and environmental specialists its remit is to ensure that mines are operated with closure in mind in order to minimise both short-term and longterm operating costs.

Also in 2012, workshops were held in Brazil and Ghana, at which the closure plan of each operation in AngloGold Ashanti was reviewed at a high level. This focused on environmental issues and the interface between the technical and financial disciplines. Common themes and challenges were identified and prioritised with a view to tackling them in a co-ordinated manner at corporate, regional and operational levels. There was also discussion on how to improve the company’s planning, including the internal management standard, in the light of experience gained following more than three years of implementation. Significant progress has been made across the company in closure planning. The challenge now is to optimise the plans by finding opportunities for improving them and especially for integrating them into the mine planning process. Each operation is developing a plan to close identified gaps. As of the end of 2012, all operations were substantially in compliance with the standard.

Remediation obligations and provisions

Our long-term remediation obligations include decommissioning and restoration liabilities relating to past operations, and are based on our Environmental Management Plans (EMPs) in compliance with regulatory requirements. An assessment of closure liabilities is undertaken annually and is presented in the table below.

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.

Rehabilitation liabilities per operation ($m)
Operation 2012 2011
Restoration Decommissioning Total Total
South Africa 43.7 105.1 148.8 154.8
Great Noligwa 0.6 9.5 10.1 15.7
Kopanang 1.0 17.0 18.0 22.9
Moab Khotsong 1.7 23.9 25.6 31.2
TauTona 12.4 7.4 19.8 23.8
Savuka 4.3 3.8 8.1 8.6
Mponeng 2.2 3.3 5.5 10.2
Legacy projects        
– Vaal River 14.2 14.2 9.4
– West Wits 7.0 7.0 1.1
– Other 0.6 0.6 0.6
ERGO (1) 16.8 5.0 21.8 30.3
Mine Waste Solutions 4.1 13.1 17.2
Nufcor 0.9 0.9 1.0
Continental Africa 275.1 152.4 427.5 364.3
Ghana
Iduapriem 28.4 14.6 43.0 44.3
Obuasi 136.8 46.8 183.6 143.9
Mpasatia (Bibiani pit) 8.8 8.8 8.6
Guinea
Siguiri 33.2 37.5 70.7 53.1
Mali
Morila 2.7 2.3 5.0 5.6
Sadiola 12.9 11.1 24.0 24.6
Yatela 6.8 8.3 15.1 14.4
Namibia
Navachab 3.1 2.4 5.5 3.3
DRC
Mongbwalu 6.0 2.4 8.4 7.9
Kibali 2.1 2.1
Tanzania
Geita 36.4 25.0 61.4 58.6
Australasia 26.8 34.7 61.5 42.0
Australia
Sunrise Dam 26.8 13.2 40.0 40.6
Tropicana 21.5 21.5 1.4
Americas 211.9 37.6 249.5 230.3
Argentina
Cerro Vanguardia 35.8 10.4 46.2 38.9
Brazil
AngloGold Ashanti Mineração 68.6 18.1 86.7 81.9
Serra Grande 18.7 5.1 23.8 27.6
United States of America        
Cripple Creek & Victor 87.1 4.0 91.1 81.1
Colombia
La Colosa 1.7 1.7 0.8
Sub-total 557.5 329.8 887.3 791.4
Less equity accounted investments included above (1) (22.4) (23.8) (46.2) (44.6)
AngloGold Ashanti 535.1 306.0 841.1 746.8
  1. (1)Subsequent to year end, the ERGO licence was transferred to DRDGOLD Limited.