B.C. mines minister Bill Bennett says he was caught off guard when he learned that the province's mining companies are on the hook for less than half the amount that should be set aside to pay for potential cleanup costs.
More than 50 mining operations – the majority of them either permanently shut down or temporarily shuttered – have been allowed by Mr. Bennett's ministry to provide security for only a portion of the anticipated liability for site reclamation, with a total funding gap of $1.2-billion.
The gap was highlighted by Auditor-General Carol Bellringer in a report early in May, but the ministry took several weeks to provide details on the individual companies that have not provided bonds large enough to cover environmental restoration. The breakdown shows one resource company – Teck Resources Ltd. – was responsible for $743-million of the deficit. Barrick Gold Corp. had the second-largest unpaid amount, at $212-million.
Mr. Bennett said in an interview he was not aware of the details until the Auditor-General raised the matter because he had left such decisions to the chief mines inspector.
"I was surprised by the magnitude of the numbers. I know everyone assumes that ministers make all the decisions and know absolutely everything, but this issue was dealt with by the statutory decision-makers," he said. "I have accepted the responsibility to come up with a plan to change how we calculate financial security and get it up to a point where the public can have more confidence in it."
However, Mr. Bennett said he doesn't expect to come up with a new funding formula until early next year – a timeline that allows the industry to prepare for unwelcome news. Due to a sustained downturn in commodity prices, there are only 13 metal and coal mines operating in British Columbia, and almost half have claimed a deferral of their electricity bills.
Karina Brino, president of the Mining Association of B.C., said she hopes Mr. Bennett will consult with the industry before any changes that could undermine its already precarious state. "Things have been difficult, all of our operators are doing cost containment," she said. "Nobody wants to put jobs at risk. We're hoping there is going to be a practical approach to addressing what the issue might be."
Grand Chief Stewart Phillip of the Union of B.C. Indian Chiefs, whose organization recently released its own study on the underfunding of mining liabilities, questioned whether Mr. Bennett will hold the industry to account.
"The government [of Premier Christy Clark] just doesn't have a sense of their obligations to the citizens of British Columbia in terms of safeguarding the environment, they are so hell bent on natural resource development at all costs."
He said First Nations are working with environmental organizations to push for stronger protection of B.C.'s land and waters following the 2014 disaster at Mount Polley, where the tailings pond dam collapsed, spilling approximately 25 million cubic metres of waste water and tailings into nearby water systems and lakes in central British Columbia.
The Auditor-General, in addition to raising concerns about the shortfall in liability funds, blasted the province for a regulatory regime defined by not enough funding, infrequent inspections and a lack of enforcement.
Since 1969, the province has made mining companies responsible for reclamation and remediation costs for their operations, but ministry officials have used discretion to allow companies that are on solid financial footing to pay less than the full security amount.
Mr. Bennett said he isn't convinced that the entire $1.2-billion needs to be collected, but he is not satisfied that all the companies that have been allowed to pay a reduced security bond are capable of meeting their obligations.
"I'm not comfortable right now with the current status of the mine reclamation securities … I'm not comfortable with each and every company there," he said. "The issue is, if you get a bad actor that defaults, do we have enough insurance to pay for what the company should pay for."
Taxpayers have picked up the cost when a company defaults; "orphan" mines have cost taxpayers $5-million. But the most significant taxpayer-funded clean up was for the Britannia copper mine, which closed in 1974 after 70 years of operations. Cleanup of the contaminated site on Howe Sound began 15 years ago and so far, the province has spent more than $61-million.