Equity devising new solutions to problems of mine closure

Equity Silver’s (TSE) 1992 projected mine closure has driven home the environmental cost of doing business as the long-term effects of acid rock drainage are hitting the northern British Columbia mine at the time its reserves are the weakest.

Brian Robertson, mine manager, said about 60 million tons of waste material are generating a weak acid runoff which is being captured and neutralized with lime. Under the province’s new mining act, Equity is responsible for the long-term care of the site until it is deemed restored to a natural state. Robertson said it could take up to a century.

For companies, it becomes a daunting and expensive future task. While Equity has posted a $30 million interest-generating bond (with the interest sustaining the ongoing site rehabilitation maintenance required annually), it has the advantage of being located close to Houston and as such, it is not isolated.

But, for companies caught up in the acid rock drainage syndrome and in isolated locations, constant monitoring can be expensive and raise the costs of the bond required for site monitoring over the long term. Such bonds posted by the mining community are looked upon as essentially dollars lost. Equity’s Robertson doubts the company will ever see the return of its $30 million. But, said Robertson, “the company is acknowledging its responsibility to deal with the closure.”

However, such responsibility has added a new dimension to the scope of B.C.’s mines which may have to deal with acid rock leaching. Robertson pointed out that if a mine costs $125 million to place into production, posting a $30 million bond in trust to pay for ongoing site rehabilitation sharply affects the operating returns.

“That’s about 25% that is taken out of the operating return,” he said. While a joint industry-mines committee is reviewing the process and no decisions have yet been made, Robertson said it is expected that the provincial mines ministry will suggest a bonding method which would see interval payments over a mine’s life. Equity is the first B.C. mine to post the bond and many within the industry are watching, Robertson said. For Equity, the bond posting came at “the worst possible time”, Robertson said, adding that the mine’s better grades of ore have been exhausted.