The Mackay Conservation Group has supported the Queensland State Government’s move to review the formula used for calculating financial assurances associated with mine rehabilitation.
Currently, mining companies must lodge a financial assurance (FA) with the State Government to cover rehabilitation costs when the mine closes.
The Queensland Government delivered an increase in FA in case companies failed to meet their environmental obligations or pay the rehabilitation costs, with Environment minister Steven Miles on Friday announcing a review of the state’s framework on the assurances.
He said the government was committed to having the financial assurance it holds reflect the amount needed to pay the rehabilitation costs when operations cease.
“We now hold more than $7 billion in financial assurance from mining, gas and oil companies, compared with $1.45 billion in 2008,” he said.
The current amount comprises $5.92 billion for mining activities and $1.15 billion for petroleum and gas activities.
“This is important progress, but we know there is more work to do to ensure that when the mining business cycle enters a downturn ordinary Queenslanders aren’t left with the rehabilitation bill.”
However, calculations of FA have fallen short in recent cases.
In five of the last six cases when these financial assurances sought, there were not enough funds to cover the rehabilitation costs, according to a report by the Daily Mercury.
Nonetheless, MCG’s Patricia Julien said the minister’s announcement was a positive step and that further auditing will be needed to ensure the amounts are enough.
Currently, the government requires FAs to be lodged by a resource company before activities under an environmental authority begins.
“For large resource operations, FA amounts are reviewed at least every five years, or sooner if a company changes its plan of operations or increases its level of disturbance,” Miles said.
“When a resource operation changes hands, the former owners’ FA is not discharged until the new owners lodge their FA – FA is not transferrable in this regard.”
Miles added that FA is lodged in the form of bank guarantees that are irreversible, and payable on demand.
The government has also passed the new Chain of Responsibility laws to allow them to pursue the individuals involved in resources companies to ensure they comply with environmental obligations, through the form of Environmental Protection Orders (EPOs).
An EPO was already given to Peter Bond, former chief executive of troubled UCG Company Linc Energy, to ensure they met environmental requirements.
Queensland Resources Council chief Michael Roche has also supported the review, outlining FA reform had been identified as a major priority for mining companies.
Miles said the government would assess a number of alternative FA models.
“Whatever course is chosen, the government will assess the capacity of the FA to achieve a high level of environmental performance, protect the taxpayers, continue to present an incentive to investment, and provide an outcome that satisfies community expectations.”