Mine closure in Canada: Giving back a healthy ecosystem to future generations

Mining operations have long been a key contributor to Canada’s wealth and economic vitality. Canadian-based companies have experienced significant growth through mining and exploration, and account for the largest share of global mining equity financing.

Authored by Gonzalo Rosa, Director and Troy Dunow, Director

The mining sector is crucial to Canada’s economic well-being, contributing approximately $97.7 billion to the GDP in 2018 while providing direct and indirect employment to over half a million Canadians.

With this abundant capacity and commitment within the mining industry, Canada also rightfully stands on the forefront of environmental initiatives and shares in the responsibility of improving global perspectives and best practices as it relates to mine decommissioning, closure, and reclamation.

In an ideal scenario, global companies would apply purposeful, consistent standards and a refined approach to decommissioning and closure. Towards this end, there is a collaborative drive and sense of a common purpose in defining approaches amongst some global and regional players. The primary concern is for Canadian mining companies to be able to apply a more consistent approach to meet their sustainability goals.

Defining and applying standard procedures will ensure local commitments are fulfilled and governmental regulations are followed, thus strengthening relationships between all parties.

Industry challenges of mining in Canada

Simply put, maintaining the status quo in regards to attitudes and processes around mine closures is not good enough. Though the lasting environmental effects of a closed mine will be experienced by countless future generations, the process of decommissioning is often less rigorous than the process of building a new operation, which leads to inefficiency and increased costs.

However, as attitudes towards sustainability and corporate social responsibility evolve, the scope surrounding mine decommissioning has also shifted.

What constituted a satisfactory closure plan a decade ago is now no longer acceptable.

In past years, mine decommissioning consisted of little more than demolishing the process buildings and securing unsafe areas, such as underground portals. Now the focus is on rehabilitating the land and supporting local communities through the transition. Often these efforts include providing infrastructure or assistance that may not be directly related to the mining efforts, such as building new roads, renovating electrical systems, or facilitating job training.

Despite this shift, perceptions within the industry may still be focused on compliance, rather than seeing it as fulfilment of commitments made when the operation was started. Accepting and meeting those commitments will lead to stronger license to operate when the time comes to open new mines.

Further complicating matters, mine decommissioning is rarely seen as a high-profile, career-enhancing opportunity for Canadian mining project teams. When given a choice between building a new mine and facilitating the closure of an old mine, the former option is often more likely to attract high-end, innovative industry talent.

We must work to change this perception and show that decommissioning projects can be as innovative and advanced in their project development as new mine construction.

The final challenge relates to a disconnect in the process. Canadian mining companies commonly use different teams and standards between mine closures and other projects, which can negatively impact the quality of scope definition and lead to additional costs.

Lack of foresight of Canada’s mining project management

The importance of proper project planning and management cannot be underestimated. Lack of foresight around tightening regulations or challenges around costing models can unexpectedly propel closure costs far beyond initial estimates.

A recent example of this can be seen with Energy Resources of Australia (ERA) “Ranger Mine” closure and plan for progressive rehabilitation. A uranium mine in Australia’s Northern Territory, the Ranger Mine is required to cease mining operations by January 2021 and to complete rehabilitation efforts within five years.

Upon final review, estimates for closure costs were $200 million over what had been anticipated (approximately 58% more), mostly due to additional costs relating to water treatment, revegetation and tailings transfer. Proximity to local indigenous communities and a World Heritage listed National Park further compound the responsibilities (and costs) around rehabilitation.

A growing issue of mine closures in Canada

Historically mine closures have not been seen as significant projects, which has contributed to a lack of rigour in the project development process.

However, as the number of worldwide mine closures is expected to increase considerably over the next decade, now is the ideal time for Canadian mining companies to implement change and to strengthen decommissioning processes into the cycle of business operations, rather than solely as a compliance requirement.

For example, a client of ours was dissatisfied with cost and schedule challenges that had arisen during multiple closure projects. Our solution involved setting up a Program Management Office and treating their projects as a program of work, with the goal of instilling consistency and efficiency in their approach. This has given the client greater confidence as they work towards upcoming closure projects across multiple continents.

Steps taken now by global mining companies to increase their commitment to improving mine decommissioning practices will have far-reaching environmental, social, and financial implications.

A paradigm shift of mining in Canada

Because of the complexity and diversity involved in mine closure and decommissioning work, a program-level mindset is required. This approach ensures a unified effort relating to site reclamation, revegetation, water management, and underground rehabilitation.

Applying a collaborative mindset is also a key component in enacting change. In this case, a strong and collaborative relationship between Canadian mining companies and regulators helps to ensure all parties stay on the same page and to avoid any potential costly missteps.

Collaboration and knowledge-sharing between global mining entities will help improve best practices industry-wide and support global sustainability goals.

As an example of this, we recently evaluated the impact of change in waste dump slopes. What appeared to be a minor issue at first glance was identified as a factor that would add hundreds of millions of dollars to the mine’s remediation budget. Examples such as these provide context for the importance of mining companies and regulators to closely collaborate to ensure required standards are met, while also reducing cost impacts.

Successful progressive reclamation of the land can provide significant benefits to local communities and improve relations between communities and mining companies.

A prominent example of a successful mine closure can be seen with Teck’s work on the Sullivan mine in Kimberley, British Columbia, a zinc and lead mine that had been in operation since the beginning of the 1900s. Detailed closure planning began in 1990 when it became apparent that reserves would soon be depleted. As the mine played a central role in the local economy, the decommissioning plan included training and transition planning for mine employees. From a sustainability perspective, water collection and treatment was carefully managed to ensure continued downstream water quality. Proactive planning allowed the town to rebrand itself as a destination for recreation, making the transition from a mining-centric economy to a tourism-centric economy as smooth as possible. Teck continues to work with the community on sustainable projects, such as the opening of a 1.05-megawatt community solar power plant.

This successful demonstration by a Canadian mining company represents an opportunity to define new frameworks that can be replicated in other jurisdictions.

The opportunity for Canadian mining companies

Mine closure and decommissioning projects provide a unique opportunity for Canadian mining companies to show their commitment to sustainability by closing down operations with the same degree of rigour as daily mining operations.

We are confident that by applying best in class practices to these projects and programs, mining companies can provide additional value to their businesses, while at the same time enhancing the final product from their closure and decommissioning efforts.

Learn more about Canadian construction build costs in our Canada market intelligence report for 2020.

For further information contact:

Gonzalo Rosa
Director

t: +1 (587) 332 0204
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