Mine closure planning and independent technical support forCommunity Liaison Committee

Dear Community members

The Cortona mining proposal is a significant opportunity for progress in Majors Creek. There appears to be a welcome view that Corona wishes to secure good social outcomes for the district and leave the environment in a better state than it now is. To achieve such an outcome, a mining proposal needs to address all probable impacts and possible risks. Notwithstanding the need for any mining proposal to be comprehensive in addressing environmental and social impacts, I wish to draw the communityÔÇÖs attention to two issues that need to be thoroughly addressed: mine closure planning; and the need for community access to expertise in best environmental practice in gold mining.

Planning for mine closure:

Recent history in Australia and overseas indicates that early mine closure can be unexpected and messy. Gold mining is a marginal business. Like grazing and agriculture, a gold mining company can manage a tight operation but it has little control over external factors which will determine its financially sustainability. When a gold mine ceases to be profitable and medium term forecasts indicate little good news, the mine can either close or change its operational parameters, sometimes with minimal community consultation. The main factor which affects profitability is the volatile gold price, which fluctuates in response to global markets, global security, industry demand, global availability (both through mining and government held reserves) and regulatory compliance costs. Many other factors affect profitability and these can also be unpredictable (for example, the ongoing adequacy or potential failure of local infrastructure).

An example of an overhead which is beyond an operationÔÇÖs control and may force closure is the national introduction of carbon emissions reduction measures, irrespective of whether these measures are in the form of emissions trading schemes, more direct carbon taxes or agreed global initiatives. The costs of any mineÔÇÖs operations are destined to increase unpredictably over the next decade.

The many early mine closure scenarios, most of which have actually happened to gold operations over the last few decades in Australia or overseas, often involve regulatory compliance events (most famously in Romania and Papua-New Guinea). These often relate to sites which perform cyanide treatment on-site. Therefore off-site treatment may be desirable for a Majors Creek operation. However, this cuts both ways because the small profit margins of a gold mining operation may be trimmed even further due to the additional costs of treatment at another location within Australia or overseas. Perversely, this means that a mine that minimises environmental impact and risk can be more exposed to closure risk than an operation where cyanide treatment occurs on-site. The distance of the mine to a rail head or shipping terminal may also result in a carbon emissions reduction scheme elevating these costs further.

These are all pressures which may cause early mine closure. As a mining operation goes through exploration, viability assessment and consultation, extraction and closure phases, expertise demands will change and mine ownership may change. Similarly, company positioning in Australia and globally will result in corporate takeovers. The Majors Creek community will inevitably be speaking to different owners at future phases of a mineÔÇÖs operation. These owners will have different prerogatives to those of the current proponent in respect of obligations to the community. As closure is the final stage in a mineÔÇÖs life, the closure plan can be affected more than any other phase by any corporate policy changes.

Most aspects of a mining operation can be regulated by state and Commonwealth governments. The community can lobby authorities and political representatives if environmental regulatory problems or oversights occur. However, for the reasons highlighted above, the complex circumstances that can cause mine closure are very difficult for proponents, communities or governments to forecast.

These risks associated with mine closure can be largely addressed by a fully costed and contingency driven mine closure plan which is funded through a secure trust deposit by the proponent. This should be an absolutely minimum for the current proposal. For over a decade and based on bitter national experience, State chambers for mines, the Minerals Council of Australia and all Australian governments have supported this kind of comprehensive closure plan which allows for site rehabilitation, revegetation, infrastructure maintenance and other impact amelioration.

Cortona funding of independent expert advice and support to the community:

The convening of a community body to facilitate consultation and seek views is a credit to the Majors Creek community. An unbiased committee which listens to and promulgates all views is essential and it is evident this is working.

The next phase is to collate and analyse community comment and provide a cogent and reasonable response to the proponent. This requires an appropriate level of expertise in the areas of gold mining, environmental management and social impacts. Communication and advocacy skills are also important, as is independence from the process. It is often difficult for a community to have internal access to this level of expertise. When the expertise does exist, issues of conflict of interest and continued availability often arise. Mining project proponents are far better placed to make informed and cogent arguments in favour of their proposal, potentially resulting in an unbalanced consultative process. This has been a common problem for communities responding to mining proposals in Australia over recent decades. This is unfortunate and unnecessary as considerable independent expertise exists in best environmental practice in gold mining. Nevertheless, smaller communities often cannot afford expert advice, especially in response to an ad hoc mining proposal.

In recognition of this reality, it is very reasonable for the community to request financial assistance from the proponent in order to engage expert assistance:
ÔÇó to collate community views;
ÔÇó to offer assurance by researching available literature and identifying any key issues that the consultation process has missed; and
ÔÇó to support the committee by offering unbiased expertise and advocacy, as appropriate, through the mine approval process.

There is often a reluctance to make a direct request to the proponent when a perception may exist that the resultant advice might sometimes conflict with the proponentÔÇÖs apparent interests. This reluctance is misplaced as a sound and fully informed pre-approval process is very much in the interest of all parties. The funding assistance request should be at a level that allows full and continuous support for the complete approval process and, subject to community and committee views, in the order of $50,000 to $100,000.

It could be argued that this kind of assistance from the proponent is a higher priority than community projects which should in fact be dividends to flow to the community anyway as part of the growth that the proposal offers.