Mining Mirror January 2018 | Page 29

Mining in focus
Watson . Blyvooruitzicht gold mine is a good example where a once hugely productive mine was passed on from one big company to the next and , in the end , no one is taking responsibility for the environmental rehabilitation .
“ Even when in care and maintenance , the company still carries full environmental responsibility for that mine ,” says Beech . So , if a junior acquires an old shaft and decides to shelve it for a while , the company exposes itself to massive environmental liability and financial risk .
“ The basic costs don ’ t go away ,” says Beech . That means all fixed costs , excluding employment costs , will remain in place . A mine will still have to , for example , keep all the excavations in good order , continue checking the support , carry on with concurrent rehabilitation , water the roads and monitor the dust fall-out ; all this doesn ’ t change . “ What does change is that the mine reduces its production costs , but overall the costs don ’ t just disappear ,” says Beech .
“ Any company that intends obtaining and re-opening a mothballed mine , needs to understand that they are taking over a liability and they have to ensure that there are sufficient funds available for rehabilitation and closure when they take over this liability ,” says Watson . “ Research shows that while there might be sufficient funds for mine closure , it is almost like a double tax .
“ Companies make financial provision , but they cannot access those funds ( held by the DMR ) until they have completed the rehabilitation programme . So , these junior miners must spend money to rehabilitate , while their funds are sitting with DMR , and only once rehabilitation is complete , will the DMR authorise the rehabilitation and the company can have its money back ,” explains Watson . For small junior mining companies this is a big burden , and a concern for the DMR , the government department ultimately responsible for the environmental closure and rehabilitation of derelict mines . The DMR clearly lacks the resources and capacity to deal with this problem .
Watson says that in an ideal world the major mining companies would mine out the resource and then close it , instead of passing it on to smaller companies to carry the burden . “ However , I realise that this is not realistic . The company that re-opens the mine must make the financial provision , operate the mine , and close it . I also recognise that big companies with massive overheads can ’ t continue to operate a mine and make it financially viable past a certain stage , whereas smaller companies will be able to do that ,” says Watson .
In the end , the buck stops with government , it needs to make sure that companies that acquire the mothballed operations , have sufficient resources not only to operate the mine effectively , but to close the mine effectively as well .
Challenges
Scott says the main challenge of revitalising a mothballed operation is to bring the mine back into operation with minimal unplanned expenses . “ All machinery that has been placed under care-and-maintenance will need to be tested , recommissioned and certified as safe for use . It may also require some repairs or replacing of expensive parts ,” says Scott .
The associated risk is that some of the parts may have been cannibalised by previous operations to reduce operating costs . If the facility was not guarded properly during the shutdown period , material and equipment may also have been stolen and / or sold as scrap material .
Re-using existing infrastructure and processing plant equipment reduces the potential of introducing new technology . Tying in new technology requires careful engineering and redesign , which often comes at a cost and with time delays . A detailed cost-benefit analysis is imperative .
On the staffing side , there may be a challenge to recruit lost skilled workers . Retrenchments are usually part and parcel of an operation being mothballed . The skilled workers that were not redeployed to other operations within the company are usually lost . Recruiting a new workforce usually comes at a higher cost and requires a period of time for the new workforce to be trained so they are familiar with the modified operations .
Scott also notes that there may be legacy issues with a mothballed operation . In other words , what was the previous relationship with local communities , authorities and other stakeholders ? What will it take to rebuild relationships and improve perceptions of the benefits of restarting the operation ?
“ As with any new business venture , one needs to evaluate the opportunity properly , truly understand the original reasons for an operation being mothballed ; and as long as the gains outweigh the pains , there is no reason to not forge ahead ,” concludes Scott .
JANUARY 2018 MINING MIRROR [ 27 ]