Rehabilitation of mining and resources projects as it relates to Commonwealth responsibilities

Submission 70
1

Obstacles and opportunities for

effective life-of-mine implementation

aBsTracT
red dome mine was a highly complex gold copper operation developed over a number of phases between mid-1986 and october 1997. it operated with only
three years of production ahead at one time and therefore required a proactive practical approach to mine closure. in 1989 the domains concept approach
to life-of-mine planning and mine closure was created as a proactive response to the proposed changes to Queensland legislation. The domains concept
aimed to integrate mine closure during production at red dome. The concept provides a straightforward approach to mine closure, simplifying the usual
complexities and optimising cost-effective, whole-of-mine, life cycle planning. in the subsequent 20-year period the concept has been misunderstood and
poorly implemented to a large extent. as a consequence, opportunities in using the domains concept have been missed.
The process produces a meaningful and operationally practical document, with clear objectives, and a rationale for achieving measurable rehabilitation
and closure outcomes. With proposed activities clearly defined within a landscape context and within landscape units, there is a much better understanding
of why a particular final landform/use has been nominated. This information provides a construction roadmap for personnel and better transparency of
intentions for the community. By using this approach, there is potential to significantly mitigate legacy issues as well as maintain compliance.
This paper, originally presented at life-of-mine 2014 in Brisbane, re-examines the many advantages and applications of the domains concept as a
management tool. it uses focused landscape investigation techniques to underpin life-of-mine planning decisions and maximise closure outcomes. The
paper also examines the role of current financial modelling and project viability assessment in creating post-closure liabilities and long-term mining
legacies. The use of net present value and deferred costs in financial models are considered an inadequate method of assessing true project viability as the
available analytical tools do not include sufficiently detailed life-of-mine development and closure costs.
The engineering and financial processes used at feasibility have overlooked the scientific appraisal of landscape constraints, and limited the placement of basic
and progressively required infrastructure to maximise closure outcomes. Furthermore, because financial models never include detailed provision for progressive
and well-managed rehabilitation and closure, there is rarely sufficient finance to undertake such works. Therefore, this paper proposes a new approach, including
the concept ‘starting with the end in mind’, which could be used to address the challenge of assessing the true value of a rehabilitated site.

hisTorical conTeXT
Twenty-five years ago the original Domains mine closure concept
(the Domains Concept) was developed at Red Dome Gold Mine in
north Queensland (Figure 1).
Red Dome was a complex gold and copper operation developed
over a number of phases during its 11-year operation. The deposit
was characterised as a porphyry gold copper type and contained
significant polymetallic base-metal mineralisation, notably lead
and zinc. Fully operational from 1986 to 1997, it processed gold
and copper ores using a combination of heap leach, flotation and
carbon-in-leach production techniques, singly and in various
combinations. At the time, its open pit was the deepest and steepest
excavated in Australia (320 m deep) and abutted the Piano Caves
National Park. At any point in time the mine had a life expectancy
of only three years or less, which created a degree of urgency with
respect to rehabilitation planning and implementation.
The technical basis of the early versions of decommissioning
plans were usually written from a particular technical
specialist’s perspective – for example, a water engineer using a
water management template. The Domains Concept came about
as a common-sense multidisciplinary approach to developing
a decommissioning plan based on the specific activities
located or proposed to be located within the landscape. In
its most simple form, the concept divides the mine into a
suite of interlocking mutually exclusive but spatially related
subcatchment components, each with its own rationale,
objectives, detailed execution plan and cost estimates. From
1989 the Red Dome mine implemented a detailed life-of-mine
(LOM) decommissioning plan, the Red Dome LOM plan, using
this spatially explicit approach.
This operationally focused rather than approvals-focused plan
became the primary reference document for all progressive
rehabilitation activities and was accepted by the site management
team. The plan provided the main vehicle through which to
understand, agree on, implement and manage objectives and
costs of mine closure as part of everyday production activities. As
time progressed, the clear and systematic focus on post-mining
outcomes built transparency, credibility and trust with regulators
and the community.
The domains concepT
Domains are defined as ‘contiguous spatial units within a
landscape (subcatchment) with similar challenges to eventual
closure’. These units segregate the mine site into operational,
physical and related components, enabling a suite of individual
plans to be developed. Applying the Domains Concept is
fundamentally different from engineering approaches because
it assesses the inherent opportunities, threats, flaws and
weaknesses of the landscape prior to making decisions on where
to place infrastructure within subcatchments.
In its first application at Red Dome, each domain unit had its
own individual plan with a clear site description of the landform,
topography, underlying stratigraphy and structure, material
characteristics, drainage, soils, operational and closure objectives,
discussion of likely operational constraints and a rationale, as well
as the basic assumptions for undertaking the work. This enabled a
detailed suite of defined tasks to be developed for which realistic
 Rehabilitation of mining and resources projects as it relates to Commonwealth responsibilities
Submission 70
2 From start to finish: a life-of-mine perspective
FIG 1 – Red Dome project location.
costs and resources could be assigned and scheduled for the
implementation of works as necessary.
The process provided a corporate vision of closure for the
management team within the business plan. The format of
the document was modular and easily adapted to changing
production scenarios – one domain, one subplan – reducing
the mine closure ‘elephant’ to a series of manageable pieces.
In  this way, progressive rehabilitation was incorporated within
the operational and capital budget expenditure procedures
and reforecast every three months as a unit cost of production.
The format of the plan was sufficiently flexible to accommodate
ongoing design, research and development studies and could be
updated in response to changing production scenarios without
having to redo the complete document or myriad of costed tasks.
The Domains Concept approach is easily adapted to current
project management practices and software systems, enabling
scheduled implementation of works and tight cost control, and
providing real cost/value-based evaluation of environmental
impacts and controls within each spatial unit. The comprehensive
list of costed tasks meant that the overall cost estimates for the
site were very robust and over time provided documentary proof
that original closure cost estimates were sound.
The cumulative track record of final landform objectives and
rehabilitation was able to demonstrate that most closure success
criteria were achieved within seven wet seasons following mine
closure. Most of all, this way of planning and project management
provided a vehicle to build transparency, credibility and mutual
trust with government agencies, landholders and the community.
All parties could support the vision and see measurable success
towards the outcome.
The real strength of this mine closure approach is in detailed
landscape investigation during the exploration or development
phase to properly understand the underlying features and
landscape characteristics that could increase the risk of failure
of mine closure. Once the structure of the receiving landscape
is understood, proposed mining landforms and infrastructure
can be placed and designed in such a manner to eliminate
potential issues concerning geological structure and stratigraphy,
contaminant exposure pathways and/or geotechnical failure
risks. Furthermore, when landscape investigation is coupled
with geochemical assessment and risk reduction controls of
overburden, useful specifications can be built into constructed
landform design. In turn, these can guide production activities to
maximise eventual closure success. Thus the very act of mining
becomes the key component of the mine closure outcome.
Indeed, the components of mine closure need to be recognised
and managed in the operational phase as a unit cost attributed to
each tonne of commodity produced, and boards should expect to
report such information in annual reports.
THE LAST 20 YEARS
Towards the end of the 20th century, mines in Queensland
focused most of their environmental energy on closure outcomes,
understanding environmental challenges and putting plans
together to attempt to control the longer-term liabilities by
effective operational management. This was in part due to a degree
of kudos afforded to performance, and also to the knowledge base
that had been accrued by industry and the regulator. A change in
the administration of mining rehabilitation in Queensland in the
early 2000s, coupled with a rapid expansion in the sector during
2000–2010 arguably contributed to a shift in the knowledge and
experience base and subsequent rehabilitation outcomes. On-
the-ground LOM performance has been replaced by increased
monitoring and reporting. Operational staff numbers have been
reduced, regulator documentation has grown exponentially and
the main thrust of environmental management is now primarily
the production of approvals documentation.
A form of the Domains Concept was broadly adopted by
a significant number of mining companies and government
agencies. The Queensland Government introduced Technical
Guideline 18 (Department of Environment and Heritage
Protection, 2012) and the NSW ESG3: Mining Operations Plan
(MOP) guidelines (Department of Trade and Investment, 2013).
Both use the term ‘domain’, but the concept now defines a spatial
 Rehabilitation of mining and resources projects as it relates to Commonwealth responsibilities
Submission 70
polygon of a land disturbance type and allow the grouping of
landform and infrastructure types for ease of closure-report
production. These polygons appear to be an administrative tool to
calculate financial assurance, rather than a technical and scientific
tool to optimise closure outcomes.
Today, under various jurisdictions, governments and mining
companies seem to agree on a way of issuing approvals for mining
projects; however, it appears to be more about following a process
ahead of achieving a satisfactory final outcome.
Assessing mine approvals for licensing or overall project
viability without a detailed life cycle assessment, including mine
closure costings, will never hold any mining company accountable
for long-term liability and legacy risks.
The regulatory processes across Australia are based on
compliance, and with such administrative complexity it is almost
impossible to hold a mining company and/or its directors
responsible for ineffective mine closure. While taxpayers may
take comfort from governments securing billions of dollars of
rehabilitation bonds, these are greatly understated in the main.
Furthermore, regulatory personnel often lack the necessary
experience and skills required when working with these bonds.
When mining companies approach mine closure, the industry
standard (International Council on Mining and Metals (ICMM),
2008) is initiated after the project has been constructed and
operations have commenced. As a consequence, the placement
of significant infrastructure within the landscape is usually done
without any reference to optimising mine closure.
Applying an arbitrary unit cost per hectare of a domain
disturbance type may have administrative advantages, but it
won’t optimise an outcome for the receiving landscape and the
community because there is no technical or scientific assessment
based on the domain’s underlying characteristics.
If environmental domains are identified from environmental
impact assessment (EIA) information prior to or during
feasibility studies, the real impact of specific infrastructure on the
receiving landscape would be better assessed, understood and
controlled. McLeary (2009), ‘Brukunga Mine forward program’
South Australia, captures the essence of the Domains Concept.
Here, a technical advisory group of national and international
expertise was brought together to develop a potential walkaway
remediation solution by functioning under a self-guided model.
The model incorporated shared information, shared decision-
making and application of selected expertise across numerous
mining companies and agencies to generate creative and holistic
solutions to complex problems.
Domains actually define themselves from the underlying
landscape and geology, rather than being a two-dimensional
polygon created around a particular piece of infrastructure. As
such, landscape domains should be defined as a critical output
of an EIA, and then the considerations and challenges presented
within each domain applied directly to LOM planning for
feasibility and viability assessment.
Without this basic step, the most fundamental element of
impact assessment is not addressed: the suitability of a proposed
placement of infrastructure in the landscape with respect to
closure. As a consequence the whole EIA and feasibility process
cannot satisfactorily assess, quantify or address the legacy issues
that could accrue over the life of each project.
The author believes that this administrative and management
disconnect between the EIA and feasibility is fundamental to the
failure of mine closure outcomes. Additionally, the associated
lack of transparency on an understood measurable outcome
may also cause uncertainty in the community, contributing to
individuals or groups holding up projects for years on largely
ideological grounds.
The domains concept 3
In the author’s opinion, the real benefits of using the Domains
Concept has been misunderstood, inadequately applied and in
some cases misrepresented. As a direct result of the apparent
simplicity of the original concept, its true possibilities and
opportunities have been overlooked.
The Domains Concept approach, if applied properly, allows for:
•• The effective use of EIA and geoscientific data to manage
infrastructure location and controls. It makes the best
use of the landscape to tailor rehabilitation and closure
outcomes, minimising the overall LOM cost of progressive
rehabilitation and closure. It thereby increases shareholder
value and renders compliance a by-product of the final
outcome, rather than being the outcome.
•• Robust financial liability assessment to be quantified for
the life of the project, from prefeasibility to closure and
lease relinquishment, because the spatial units capture
sufficiently detailed information.
•• Increased confidence in a more transparent and self-
evident process by the regulators and community, as well
as providing the potential to explore options, other than
financial bonds, insuring against the cost of reclamation
failure.
•• The full consideration of all spatial environmental factors
relating to closure in the planning stage of a project,
providing for a LOM perspective to be adopted. When this
is understood, documented and adopted it provides the
operational vision, specifications, direction and continuity
of purpose for earthmoving contract negotiations and the
operation of the mine. It also negates the impact of inevitable
changes to personnel.
•• Progressive implementation of the plan with a holistic
monitoring data management system to demonstrate
a measureable track record of rehabilitation success,
such that ultimate lease relinquishment timelines can be
easily understood by financial institutions, regulators and
community stakeholders.
•• Effective project management and cost accountability
during the complete life cycle of the project from feasibility
to final reclamation, by capturing costs by domain in a
similar manner to an item of equipment. This approach
makes possible the accrual of an appropriate provision
for closure within the financial ledger, in a similar manner
to capital, and documentation for the shareholder and
community in corporate fiscal reports.
•• Community–mine transparency and credibility, allowing
stakeholders to become involved in post-closure planning,
confirmation of the rehabilitation approach and the
establishment of an achievable and agreed end land use.
An inconvenient truth
Tinsley (2007) made the observation that due-diligence
processes are consistently undermined by consultant capture,
poor professional standards, idealistic industry belief/
commitments, omissions from scopes of works, inconsistency
and fragmentation. He also showed that the casual relationship
between project viability and mine closure means that
non-corporate stakeholders are exposed to significant and
undervalued risk. Over the years the author has witnessed the
Domain Concept being utilised, yet missing the mark through a
lack of understanding.
In reporting on mine activities, capable practitioners can
generate a conceptual mine closure plan using a template of
previously captured high-level strategies and tasks. Most attempt
to cover all the bases with a set of generic environmental risks
from previous projects.
Design engineers tend to lack the operational experience
required to plan the practical development of the mine through
 Rehabilitation of mining and resources projects as it relates to Commonwealth responsibilities
Submission 70
4 From start to finish: a life-of-mine perspective
to closure, and typically there is no continuity of personnel
with the necessary experience or overarching vision for the
full life cycle of the project. During design and construction,
environmental controls are usually seen as secondary to building
the necessary infrastructure on time and under budget. Data
captured in the EIA process appears to have little influence on
the development of a feasibility document, nor the optimisation
of closure outcomes and, ultimately, almost no impact on the
mitigation of long-term LOM risk.
The author asserts that operators can only truly effect
management control when they embrace the reality of a situation.
The industry needs to acknowledge that the subject of the real
costs of mine closure has been avoided, and this has happened
primarily because mine closure and its associated costs do not
conveniently fit within engineering project management tools or
financial modelling parameters of feasibility studies. As a result,
the currently available modelling tools are flawed, producing an
incomplete financial assessment for project viability.
As a consequence, real LOM environmental costs are omitted
from the financial landscape. It is little wonder then that good
closure outcomes are absent from the actual landscape and are
not sufficiently reflected in the regulatory landscape.
A time of more discerning investors is coming and they will
require mining companies to be more transparent regarding mine
closure costs when considering a project’s viability. It will not be
sufficient to produce conceptual plans that are mere checklists
within a mining control plan that includes quality assurance /
quality control (QA/QC) for things not publicly available.
Industry needs to start to recognise another elephant in the
room, one that is a major obstacle to attaining satisfactory mine
closure outcomes – the negative impact of a compliance culture.
Workplace health and safety legislation has driven a much
valued increase in safety awareness in recent years; however,
compliance systems, including environmental ones, focus on
process and are big on historical documentation, but poor on
environmental objectives and explicit outcomes. They are often
focused in the present, are reactive and require significant
personnel and resources to maintain the status quo.
This situation leads to ad hoc reactive and costly retrofit
of management controls rather than sound proactive
environmental planning. Most compliance cultures tend to
create an operational arena that is shy of innovation and is
heavily controlled and inflexible, without the necessary latitude
to implement appropriate environmental infrastructure and
planning to optimise closure outcomes. The author believes
that operational environmental and safety compliance should
be a product of a job well done, founded on appropriate
and considered long-term LOM planning that is inclusive of
rehabilitation, closure and relinquishment, rather than focusing
on being compliant now as the only outcome.
STARTING WITH THE END IN MIND
The crux of the problem causing the avoidance of adequate LOM
planning is the focus on permitting/approvals as the key driver of
project commencement. The commitment to a project EIA process
(provision of scientific data) is largely formatted to fulfil regulatory
requirements. This means that it is somewhat disconnected from
the parallel prefeasibility and feasibility processes (provision of
best, least-cost option financials), which are conducted pursuant
to Project Management Institute (2013). Unfortunately for
LOM operational and closure planning purposes, the granting
of approvals is the signal for the engineering group to focus on
detailed design and the bankable feasibility study (BFS), with the
requirements of the EIA barely applied.
The mining life cycle (Figure 2) describes the different phases
of a project from scoping through feasibility, construction,
operations and eventual closure, with a typical approvals and
progressive rehabilitation process embedded. Typically mine
closure planning isn’t even initiated until two or three years
into operations. The author believes that to gain most return for
investors, detailed mine closure planning needs to occur at the
feasibility stage, as has been stated.
If the most notable input to the viability of the project from
the EIA process is merely whether approval has been given,
adequate provision for staged mine development and closure is
not accommodated in the feasibility capital funding. Therefore,
there may be no funds to achieve successful rehabilitation and
closure, including the installation of appropriate impoundments
and drainage features.
The prevailing perspective from clients and engineering
groups appears to be that anything to do with environmental
management during future operations equates to unnecessary
cost in their net present value (NPV) financial model. Therefore
LOM issues generated by the EIA are not adequately considered
or are avoided. This is unfortunate because the potential LOM
cost-saving opportunities in the construction and operation of a
project using the landscape’s best attributes are missed.
Nethery (2003) recognised this:
The feasibility process includes a tension between the
Owner’s desire to have a viable project with low capital
and operating costs, and the engineer’s desire to design
conservatively to maximise the likelihood of a technically
successful project.
However, Nethery did not include the other part of the tension
triangle, which is the appropriate placement of infrastructure in
the landscape from the perspective of sustainable closure.
The principal purpose of a BFS is to demonstrate the technical
and economic viability of the proposed project to expert third
parties for the purpose of obtaining financing for the project.
Unfortunately, civil engineering groups focused on project
construction commonly do not have the technical expertise to
deal with closure planning and costing. As a result the engineering
group tends to focus on making the numbers work for the client
and overlooks the engineering of potentially significant LOM
environmental risks, instead deferring them to operations.
The author believes that the mining industry needs to properly
incorporate mine closure considerations from the EIA within the
overall feasibility and mine development plan to maximise the
overall LOM economic return for shareholders.
In the concluding remarks of their paper ‘Use and abuse of
feasibility studies’, Mackenzie and Cusworth (2007) note that
feasibility studies:
•• are regularly portrayed as being much more comprehensive
and accurate than they are
•• are often not fit for their intended purpose
•• tend to focus on technical issues at the expense of critical
business and project delivery issues.
They conclude that:
The poor track record of the industry – which indicates only
half of projects meet their feasibility study expectations –
demands a better approach to the feasibility study process.
Good environmental management of mine sites should
include the best available engineered solution to mitigate
and control identified environmental risks within the actual
landscape. It should not be about attempting to finesse approvals
documentation to fit a chosen engineering solution, nor meeting
the required administrative format just to gain an approval.
Nethery (2003) observes that:
The level of risk assumed by the parties to a project is related
to quality of the feasibility study, the quality of the concepts,
the depth of analysis and the team of people doing the work.
 Rehabilitation of mining and resources projects as it relates to Commonwealth responsibilities
Submission 70
The domains concepT 5

FIGURE 1 - The mining life cycle

Scoping Study Prefeasibility Study Feasibility Study & Implementation & Operations Closure & Lease Relinquishment
Funding Start up Decommissioning

Determine Determine Determine Extract the Closure & Post Closure

Deliver Project
what it could what it what it will construction Value Decommis- Management
sioning Plan and Lease
be should be be Capital works Relinquishment

Final Rehab Report

EIS Process - Permitting and Approvals Plan of Operations
and Financial Closure
Assurance implementation plan

Develop
Investor
Concepts
Review
Assess Progressive
& Rank Development Agreed
Does Instigate
it Alterna Capital Works
Progressive Acceptable
make tives Demonstrated
Rehabilitation Final land use Rehabilitation
sense
and Closure
Effectiveness
Plan
Is it
viable

Construct Operate Complete final

Project Project landform
Is it construction
Detailed
the
Costings and
best
financial anaylsis Progressive Progressive rehabilitation and
Rehabilitation and monitoring to demonstrate
monitoring to success
demonstrate success

Identify
management From projected
domains and final land form
instigate detailed
assess
closure planning
infrastructure

After : Why Feasibilities fail McCarthy, 2013 (Presentation to AusIMM Melbourne Branch June 2013)

FiG 2 – The mining life cycle (mccarthy, 2013).

Current engineering practice neglects to properly engage the There are currently detailed guidelines for incorporating
science of the underlying landscape and optimise the placement of significant material costs with the resource and reserve
progressive infrastructure development within it. Consequently, statements to develop a project viability statement.
detailed LOM cost estimates are not addressed in feasibility The author argues that feasibility studies need to include the
studies so the outcomes are ill-conceived and the viability of the expected real life cycle cost of a project, including closure, to
project can be questionable. properly assess its true viability. This will lead to:
The general approvals-based excuse offered by most mining • corporate decisions about the viability of a sustainable
companies when challenged by regulator or community project being made on assumptions
interests is that these are operational matters that will be • significant impairment of the investors’ ability to make
worked through when the operation starts generating revenue informed business decisions about the project’s actual
– essentially, ‘Don’t worry about that, we’ll get around to it later’. shareholder value, the real rate of return and their potential
Of course, mining companies almost never do, because over time exposure to long-term liabilities
most knowledge is lost when representatives of the proponent • the project possibly becoming unviable at a reasonably
and the regulator involved at approval are no longer involved early stage during operations because the actual cost of
approaching closure. doing business, including rehabilitation, will outstrip the
Unfortunately, significant financial resources are not economic value estimates suggested in the BFS
allocated to these LOM matters, once the project gets its • potential missed opportunities for smarter, more innovative
approval and initial capital reserves become depleted and and less environmentally damaging ways of developing the
there are no resources to expedite necessary controls. The resource to be considered
operational phase of the mine has to then exist on a nominal • the considered development of appropriate rehabilitation
annualised compliance/staffing budget just for necessary or closure success criteria not being possible, or confused,
compliance monitoring, because, the author would argue, the because planning is not sufficiently thought through or
bigger picture was not accommodated in the overall project detailed, increasing the uncertainty of outcome
viability during feasibility. • an almost inevitability that most sites are at risk of becoming
The latest version of the JORC Code 2012 attempts to deal with a long-term liability for governments and communities
all the inherent project risks at project viability assessment: because no resources have been allocated.
The feasibility study is supposed to define all the likely risks It is surprising that the current system of project viability
and propose a coherent and effective plan for mitigation. assessment could retain these oversights, because planning
system and feasibility guidelines for major projects are clear
VALMIN 2015 9.3(c) now states: about what the financial model should consider, such as all
Depending upon the scope of the Public Report, the aspects of the project’s cash flow, including financing costs,
Practitioner should report upon liabilities, commitments interest during construction, royalties, taxes, sustaining
and financial exposures … (c) the cost of environmental capital, reclamation and closure and risk assessment and
regulatory requirements, rehabilitation and mine closure. mitigation. It is instructive to reflect on why there are rarely
 Rehabilitation of mining and resources projects as it relates to Commonwealth responsibilities
Submission 70
6 From start to finish: a life-of-mine perspective

sufficient resources or funds available to undertake adequate all stages of the mining cycle, but entrenches the detailed closure
closure work. design at a late stage in proceedings. This defers costs to a point
Nethery (2003) notes that: when revenue is almost non-existent and nothing can be done.
Financial analysis is usually the penultimate stage of the Rather than detailed closure planning occurring late in the
project evaluation and feasibility, where the project cash development of the productive use of a mine, much more detailed
flows are modelled and the NPV and Internal Rate of Return planning needs to occur at the feasibility stage to determine
(IRR) of the project are determined. The models used are whether the project is truly viable and all the major issues can be
often complex and always sensitive, in order of importance, satisfactorily addressed during the life of the operation.
to commodity prices, capital and operating costs. The mining industry is necessarily concerned about red tape,
When financiers are asked to provide debt finance for the project delays and land access difficulties; however, by not
project on the basis of a feasibility review they are basically incorporating detailed costings for the projected life of the project
interested in loan coverage and the project’s ability to support the at the viability stage, it falls short of addressing important whole-
of-project responsibilities for the environment by which the
required level of debt; NPV and IRR is inconsequential from their
perspective. If closure costs don’t fit into current models because
there is no way of handling them in terms of NPV, and NPV is not
Section 3.
mining industry is judged. For many issues, not least landform
drainage and geochemical challenges, leaving the development of
necessarily important to the financiers, the question has to be
asked ‘why should there not be some other financial model and
Framework of a detailed
a LOM plan to such a late stage in proceedings cannot undo the
consequences of ill-advised or simplistic landform construction.
instrument used to determine the true value of the project?’
Nethery (2003) suggests that:
closure
will planthe application and description
The JORC 2012 Code considers that the Feasibility Study
be expected to contain
32 of all Modifying Factors (as outlined in JORC 2012 Table  1
A bankable document is one that satisfactorily provides all Social, environmental and governmental approvals) in a
of the information and auditing necessary for the bank and detailed form and may address implementation issues such as
its engineer to determine that the risks are acceptable and detailed mining information
Contextual schedules, construction ramp-up and project 33
the project is viable, on a standalone project finance basis. execution plans. Table 1 should be further developed to include
Target closure
consideration of theoutcome andcost
detailed goalsof closure and reclamation 34
Financiers tend to use independent reviewers to review the
project, the feasibility study, and to critically examine all aspects with respect to the material impact on the Ore Reserve
Action plans 35
of the project and uncover serious or fatal flaws. These external viability. Without such consideration, Ore Reserve statements
reviewers have a primary function to protect the financial are seriously
Closure inadequate.
costs 36
institution from lending to poor projects, but, without detailed Mine design, construction and mine development must consider
Updating the detailed closure plan 37
closure planning costs, it is difficult to see how they can adequately the inherent costs of a full life cycle scenario contained within a final
fulfil these obligations. closureFacilities
plan intimately
with long linked to lives
and short findings and recommendations 37
In the light of current industry discussions with respect to in the EIA, otherwise there is a material hole in the financial data
sustainability principles, two relevant questions to be asked: and theSudden closure
feasibility is flawed. The straightforward answer is always 38
to start with the end in mind and use the technical capabilities we
•• Why do banks and other financial lending institutions find Application to existing operations 38
currently have to plan the project properly with closure in mind
the omission of significant cost exposures that are likely
(Figure 3).
to accrue over the project’s life acceptable when making
assessments?
Exploration –
•• Does the current approach to resourcing LOM development
and closure at feasibility represent good stewardship?
The NPV mindset used in feasibility business planning CONCEPTUAL
encourages short-term least-cost option judgements to be CLOSURE
made at the expense of considered LOM planning and fit-for-use
PLANNING
Pre-feasibility –
environmental controls and ensures there is no money available
for closure expenditure at the end of the project. Feasibility –

The industry prides itself on representative sampling and

analyses, repeatability, adequate QA/QC and having experienced
and appropriate personnel to sign off reserve statements; Construction –
however, applying the same rigour to mine closure and Operations –
Stakeholder input

progressive rehabilitation planning and costings at feasibility

Mine life cycle

is somewhat lacking. This suggests it is time to align closure

work with The six tenets of sustainability for mining planning
INCREASING
statement (Robertson, 2013): DETAIL
… planning for the sustainable mining of resources is a
global necessity; determination of the potential impacts DETAILED
and the optimisation of mine development, operation and CLOSURE
reclamation, to minimise these impacts, is a requirement PLANNING
of responsible stewardship; and planning and provision Decommissioning –
for post-mining sustainable land use management and Transition to closure
custodial succession are necessary. Closure –
The current approach – pursuant to the JORC Code,
incorporating environmental matters in JORC’s Table  1 – Post closure –
omits or understates detailed LOM closure costs from reserve
statements and project viability, and needs to be completely and
Relinquishment–
appropriately revised.
Likewise, the Planning for Integrated Mine Closure: Toolkit FIG 3 – International Council on Mining and Metals mine closure
(ICMM, 2008; see also Figure 3) clearly identifies closure issues at planning toolkit (image courtesy ICMM, 2008, pPlanning
32). for Integrated Mine Closure: Toolkit
 Rehabilitation of mining and resources projects as it relates to Commonwealth responsibilities
Submission 70
The process the industry needs to adopt should include:
•• The appointment of a senior environmental technical
manager with 15+ years’ closure planning experience as the
competent person to oversee the process.
•• Extracting a closure context from the EIA study process,
identifying underlying 3D landscape domains with respect
to potential exposure pathway considerations.
•• Each domain nominally being a subunit of an existing
catchment and appropriately sized to accommodate
expected LOM infrastructure.
•• Optimising the proposed project landforms and infra­
structure by spatial unit within the identified landscape
domains for a beneficial closure implementation.
•• The inclusion and implementation of key findings from
the EIA to directly mitigate legacy risk. From these control
measures produce a LOM business plan, developing it
with closure in mind as an integral component of the JORC
Reserve statement, assuming a 5–10 year rolling average
commodity price and mine life, with costs and scheduled
±15–20 per cent with all uncertainties identified and
projected timelines to close them out.
•• Making robust LOM cost estimates and financial provision
to achieve a practical closure outcome.
•• Incorporating LOM cost estimates as a significant material
factor to be addressed by JORC Reserve statements, to more
realistically represent the likely extent of the project for
one-off placement of infrastructure required for the mine
life cycle within the landscape.
•• Determining a project’s real viability by involving an
independent reviewer from financial institutions in the
sign-off process for LOM closure provisions.
•• Permitting and final approvals only being given after a holistic
cradle-to-grave project business plan has been completed
parallel to, and demonstrating intimate connectedness with,
the EIA and identified landscape domains.
•• Developing an explicit operational closure document.
•• Adopting an internal provision for closure approach
based on an assessment of the predicted cost of closure to
demonstrate a measurable track record of success as work
progresses. This would require the operator of the mine
to sets aside funds each year to cover the eventual cost of
closure proportional to the amount disturbed on a 3–5 year
rolling average ahead of disturbance. On completion
of progressive rehabilitation there would be an annual
drawdown of the provision for closure to profit and loss
accounts or control budget.
•• Reporting progress annually to shareholders and
community as part of Australian Securities Exchange
financial requirements.
CONCLUSION
The Domains Concept approach, applied early in the project’s
existence at the exploration phase to adequately investigate
and understand the landscape, is a tried systematic approach to
manage and implement mine closure from pre-evaluation to lease
relinquishment. Using the domain concept process and identified
spatial units mine closure can be modelled and scheduled using
current project management software, treating each spatial unit
as a defined cost centre with a suite of defined tasks, specifications
and assigned resources. It is straightforward, reasonably simple
and need not be assigned to the too-hard basket.
This approach laid the foundation for Red Dome to demonstrate
compliance and build a bottom-up environmental management
system. The resultant spatially explicit data allowed the site to
meet its desired final land use objectives and effectively meet the
nominated rehabilitation success criteria and commitments seven
The domains concept 7
years post-closure, in support of eventual lease relinquishment.
A site contamination assessment was also conducted by domain.
The operational phase is where mining companies should
extract the value of resources, but the current deferred-cost
approach to closure either costs the company more than it should,
increasing the risk of non-compliance, or eventually costs the
State and the local community in legacy issues. This highlights
that the current practice of analysing financial viability using NPV
is fundamentally flawed.
The NPV mindset used in feasibility business planning
encourages short-term least-cost option judgements to be
made at the expense of considered LOM planning and fit-for-
use environmental controls, thus ensuring there are limited
to no funds available for closure expenditure at the end of the
project. It also means that commercial decisions to proceed with
projects are taken without directors, investors or the community
understanding the real life cycle cost of the project. Consequently,
environmental matters that need to be addressed within the
eventual operational control budget framework do not exist or
are at best underestimated and under-resourced.
The mining industry has the expertise, so why not estimate
project closure planning at feasibility? Complying with
environmental licensing in order to get projects up and running so
as to generate revenue streams early in the mining life cycle, with
little regard for how to achieve a safe, sustainable and beneficial
end use, is a poor reflection of current practice. The industry has
been able to avoid the subject of the real costs of mine closure; it
is now time to adapt and get smart about how it goes about its
business in the future.
More robust LOM planning and cost estimates over the actual
life of the operation would provide all stakeholders with a
better understanding and transparency of what the post-mining
landform could look like. The plan would be built on effective
smart design within the parameters of the most likely long-
term scenario with realistic costs, milestones and measurable
outcomes. This would significantly reduce project uncertainty
and would provide a good starting point for communities to
be involved in a decision-making vehicle towards a common
closure vision.
Given that industry tends to react to regulation through
compliance it is strongly recommended that legislation needs to
be amended, such that the grant of an Environmental Authority
would be conditional on an independent audit of LOM financial
estimates within the project feasibility by a competent person
with responsibility for the reserve statement. Then, as with
other financial data, closure costs should be audited by an
independent reviewer for the financial institution to ensure
finance for a project would be contingent on a viable whole-
of-life project cost. This would require that corporations
law and regulations, such as Australian Securities Exchange
listing rules Guidance note 31 (2013); JORC Appendix 5A
(2012) subsection 40 and Table 1 Sub-sections environmental,
infrastructure and other, be revised to ensure that detailed LOM
development for environmental purposes and closure costs
are adequately addressed in feasibility documents, pursuant to
Australian Securities and Investments Commission (ASIC, 2011)
Regulatory Guideline 111.114. Due consideration of disclosure
of all LOM costs should reflect the intention and consideration
of Section 729 of the Corporations Act 2001.
The administrative process for mining tenure also needs urgent
review as mining leases tend to represent arbitrary rectangular
polygons superimposed over a landscape. To deal with mine
development and closure appropriately, planning needs to be
undertaken within the context of local and regional catchments.
If necessary, mining lease boundaries should allow for the best
placement of landforms and infrastructure within the landscape
 Rehabilitation of mining and resources projects as it relates to Commonwealth responsibilities
Submission 70
8 From start to finish: a life-of-mine perspective
to fully take into account the Domain Concept and optimise
closure effectiveness.
Clearly, the possibilities and real opportunities of using the
Domains Concept to produce robust LOM plans and value to the
shareholder have not been fully grasped, or have been overlooked
in the past 20 years.
Through the proper use of the Domains Concept approach at
project inception and use of straightforward landscape assessment
to define domains, there is potential to usher in an era of optimised
cost-effective whole-of-mine life cycle planning. The resultant
project framework would provide robust and detailed cost estimate
data, which could be used as input into more robust financial
models than are currently common. There is an opportunity to
deliver real project transparency for both investors and community,
and potential to significantly mitigate legacy issues.
The NPV concept pays dividends for shareholders and mining
companies, but frequently at the expense of governments,
taxpayers and communities. This is why it is time for the mining
industry to adjust how it approaches financial modelling:
encompass all LOM costs including relinquishment, and create
a way of assessing project value that replaces NPV and the
deferment of costs. The industry needs to modify its closure
approach and associated valuation in the 21st century to more
readily reflect the transparency required by the public, and take
advantage of smarter ways to operate mines more cost-effectively
with an outcome for greater sustainability.
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