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Mine Rehabilitation and Closure Cost

Mine Rehabilitation and Closure Cost: A Hidden Business Risk

The accuracy of mine closure and rehabilitation liabilities can have a material impact on the valuation of a mining company. Closing the current generation of very large open pit operations across various commodities will certainly be in the order of hundreds of millions and in many cases be in excess of a billion dollars for a single asset.

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The cumulative impact of closure obligations on a corporate balance sheet should not be underestimated.

It is the view of the report authors that the accuracy of closure provisions are not adequately scrutinized in annual reports and neither are the risks associated with mine closure. Given the order of magnitude of the costs of closure and the associated technical, financial, reputational and regulatory risks, closure costs deserve far more scrutiny.

This report uses a series of contemporary case studies to illustrate that mining companies appear to consistently underestimate the cost of mine closure. Equally the whole issue of closure risk is not dealt with in any depth in any annual or sustainability reports.

 

   Image: Blair Athol Mine Qld

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