Abandoned Mines – Attempts to face the unwanted legacy in · Abandoned Mines – Attempts to face the unwanted legacy in Chile1 Sven Renner2, Mike Rankin3, Roberto Ponce4, Brian

1

Abandoned Mines – Attempts to face the unwanted legacy in Chile1

Sven Renner2, Mike Rankin3, Roberto Ponce4, Brian Griffin5, Rosana Moraes6, Manfred Dalheimer7, Maria Eugenia Parot8

2Chile bureau of the German Federal Institute for Geosciences and Natural Resources, Santiago, Chile, [email protected]; 3Golder Associates Ltd., Vancouver, Canada; [email protected]; 4Servicio Nacional de Geología y Minería, Santiago, Chile, [email protected]; 5Golder As-sociates Ltd., Houston Texas; [email protected]; 6Golder Associates S.A.R.L., Lyon, France; [email protected]; 7Federal Institute for Geosciences and Natural Resources, Hannover, Ger-many, [email protected]; 8Maria Eugenia Parot, Golder Associates S.A., Santiago Chile; [email protected]

ABSTRACT This paper discusses conceptual, regulatory and technical components for the management of abandoned mine sites developed by the Chilean Government with the aid of the Federal Institute for Geosciences and Natural Resources. Chile, as most Andean countries, has inherited orphaned mines, ranging from co-lonial times to 20th-century mid-scale mines. Mine decommissioning and closure activities are still not obligatory neither in Chile nor most countries of the region. Centuries of inadequate or non-existent mine closure practice have left a legacy of many hundreds of derelict mine sites that bear risks for the local communities and the environment.

The abandoned mines challenge requires a common understanding of the term mining liability, a political decision based on consensus between stakeholders on how to deal with the problem, especially regarding key issues like liability, fi-nance and funding. Finally a regulatory structure to put these components together and make them work is needed. Liability and funding normally turn out to be the main obstacles to a systematic clean-up when trying to assign responsibilities for acts of the past based on present day standards. The high costs involved make a solution even more difficult.

The paper further includes a short discussion of the basic issues – what to clean up, how to manage the abandoned sites and who should pay for the clean up. It includes a description of the technical procedures for mining legacy management: Site inventory, risk assessment and remediation standards,

Additional Key Words: Orphaned mines, Mining Legacy, Mining Liabilitie

1 Paper presented at Securing the Future and 8th ICARD, June 23-26, 2009, Skellefteå, Swe-

den

INTRODUCTION Chile’s economy depends on mining. The country is the number 1 copper producer in the world. It stood for 5,5 million tons or 36% of the world copper production during 2007 and ranks number one also for Lithium (64% of the world production) and Iodine (59%). Other important mining products are molybdenum (21% / rank 3), silver (10% / rank 4), boron (8% / rank 4) und gold (2% / rank 16) (Sernageomin, 2008).

The most important mining product, however, is copper by far. In 2007, copper or cop-per concentrate yielded 56,1% of all export revenues. The rest of the minerals produced another 7,8% (Cochilco, 2008). Copper base reserves in Chile reach 171 Mio t or one third of all known copper reserves worldwide (Brook Hunt, 2007).

Since the 70´s, the mining sector has attracted the greatest part of direct foreign invest-ment. From the total amount of 65 billion US$ direct investments, 21 billion, i.e. 33% went into mining. (Cochilco, 2008). The growing share of mining within the Chilean GDP dur-ing the last years, that rose from 5% (1998) to 20% in 2008, however, was not only caused by the increasing production, but mainly by the high raw material prices since 2004. (Fig. 1).

Figure 1: Mining in the Chilean economy: Development of the share of mining in the gen-eral economy as % of the GDP and fluctuation of the Copper price between 1995 and 2007 (Dipres (2008), LME (2008)).

The high portion of mining activities within the GDP leads to a very close correlation between copper prices on the metal market and the budget balance. Low copper prices generally produce a negative balance, high prices lead to a budget surplus. Tax income in 2007 from (state-owned and private) mining accounted for 15 billion US$, raising the tax contribution from mining to almost 50% of a total amount of 32 billion US$ (DIPRES, 2008).

In the midst of the country’s strong economic dependence on mining, the country expe-riences an increasingly critical position amongst local communities towards new mining projects.

3

Therefore, Chile’s economic dependence on minerals makes it vulnerable not only to price fluctuations on the raw materials market. It also increasingly depends on a social li-cense, which seems to be more and more difficult to obtain. How did an industry that sup-plies the basis for the country’s economic prosperity and growth get to the point, where it is no longer perceived by the local population as a benefit but as a menace?

Mining communities are often impoverished communities. The local population may suffer human health risks due to exposure to contamination. It may be exposed to safety risks caused by open holes – pits and shafts- collapsing tailings impoundments. Many times, when mines were abandoned, degraded landscapes, contaminated land and a deci-mated biodiversity were left behind. Further, when mines are abandoned, communities are often left without a livelihood. In many cases, mining did not leave riches but a legacy of social misery and economic desolation. It seems understandable that these communities should make a condition of these sites being cleaned up before new projects are approved.

The mining legacy of the past is one of the great challenges for today’s mining industry and governments of mining countries. While modern mining has reduced its environmental impact, improved on human safety issues and adopted improved practices regarding its re-lationship with neighboring communities, most of the mining legacies of the past remain and continue being a reminder of the little good mining has done to those communities in the past. The local population will accept new mining projects only after the remnants of the past have been cleaned up. But high remediation costs and unclear responsibilities have obstructed efficient remediation. Little has been done so far.

In order to face this unwanted legacy, in 2003 the Chilean government commissioned its National Geological and Mining Service (SERNAGEOMIN) to create the legal, techni-cal and institutional framework to address and remediate the impacts caused by historical mining. At the same time it requested technical assistance at the German government. Dur-ing a 5-year-long cooperation project with Germany’s Federal Institute for Geosciences and Natural Resources (BGR), a bill of law for Mining Liabilities was drafted, technical capacities at SERNAGEOMIN were improved, several mining legacy sites were investi-gated and some prepared for remediation and a method was developed, that allows system-atic grouping and ranking of mining liabilities based on risk assessment. This method is a central tool of the proposed mining legacy management system.

A mining legacy management system requires that some main issues be settled:

What to clean up: Should every remnant be removed, until landscapes have become what they were before mining or only those that pose a risk? For the latter case, what risks should be considered – risks to health? Human safety? Environment? Economic activities? etc.?

How to manage abandoned mines: What are the practical things to take into account when dealing with mining legacies?

Who has to pay: The polluter? The state? Both? These are the main issues this paper will focus on. The concepts presented are part of

the mining legacy management system proposed to the Chilean government. Some of them may be applied in other developing countries with similar economic constraints.

4

WHAT TO CLEAN UP Depending on remediation standards and the mine-site characteristics, costs for remedia-tion can be very high and often exceed funding capacities in developing countries. An effi-cient remediation program in developing countries should therefore not aim to clean up all mining remnants of the past and restore pre-mining conditions everywhere simultaneously. It should rather try to establish priorities for those sites that need urgent remediation. This makes it necessary to define what kind of abandoned mine site should be considered ur-gent, less urgent or even not worth remediating.

The question of what to clean up and to what point, depends essentially on what society is willing to tolerate. It depends on society’s tolerance of human health and safety risks, of environmental risk and destruction and its tolerance of destroyed landscapes. It also de-pends on society’s tolerance of associated risks such as country competitiveness on the world market which would eventually be exposed to green dumping or agriculture being exposed to the consequences of mining remnants.

The great improvements in hygiene, human health, safety and environmental standards in modern societies shows how living standards are culture-driven and change with time. What used to be a perfectly normal living condition is probably no longer considered an acceptable condition today. With today’s massive information exchange, these standards tend to be worldwide. The standards will not necessarily be established by law every-where, but eventually through other mechanisms like NGOs, market pressure (against child labor, grave robbery, etc.) and so on.

But a country’s regulatory system will give good hints as to what the society considers an acceptable situation and what it doesn’t. In Chile, as in many modern constitutions, the state guarantees every person its physical integrity and a life in an uncontaminated envi-ronment. This, of course, cannot be understood as a guarantee for a life without health or safety risks. There are a large number of risks that a society considers perfectly acceptable. Driving is allowed, though traffic fatalities in the US are three times as high as crime fa-talities. It is however accepted in benefit of mobility. A state health and safety guarantee is therefore to be understood as a guarantee of health and safety risks within reasonable or acceptable limits.

This state guarantee evidently also applies to abandoned mine sites and becomes one of the cornerstones of the Chilean approach: Wherever an abandoned mine site produces risk to health, safety and environment that goes beyond reasonable or acceptable limits, the state is compelled to step in and remediate until these risks have dropped far enough to be considered acceptable.

There are many risks and damages other than those to health and safety produced by abandoned mining sites. Degraded and destroyed landscapes lead to emigration, loss of qualified workforce, increasing poverty and finally provide economic decline of entire former mining districts.

Abandoned mine sites may also be a risk for today’s agricultural products, grown in the valleys where in former times hundreds of small processing plants happened to make use of the river waters for their processes and spilled tailings into valley areas. These tailings will eventually be a threat to agriculture, even if no contaminant is found within the pro-

5

duce. The information alone about fruit grown in the vicinity of abandoned tailings can make global demand for this product drop.

Abandoned sites are also a concern for the mining industry and the economy of the min-ing countries themselves. As long as the costs of the past mining activities are not as-sumed, countries may expose themselves to accusations of green dumping and thus lose competitiveness on the global metal market.

There are a large variety of risks associated with abandoned mines. And a sustained remediation of a mining site will be complete only if the conditions for economic growth in the surrounding communities are restored and other associated risks are eliminated. But clearly the most urgent actions are required when human health and safety are at stake. Even if poverty of communities in former mining districts cannot be changed quickly and easily, the state has the obligation of immediately acting when life is threatened by open shafts, unstable tailing ponds or other remnants of abandoned mines.

In Chile, therefore, based on constitutional guarantees given by the state, the condition for qualifying as a site to be remediated, is its significant risk to health and safety. An abandoned mine or parts of it, that produces a significant risk to health and safety is con-sidered a mining liability (pasivo minero).

With this definition, the difference between abandoned mines and mining liabilities becomes clear. Abandoned mines may not present any risk or harm to human health or safety. If so, there would be no necessity to do anything about them. But if there is risk to health and safety is beyond an acceptable limit, they become a mining liability and have to be remediated.

But what is beyond an

acceptable risk for health and safety? The Chilean approach defined that abandoned mine sites shall not threaten human life nor produce serious or

irreversible health damage according to a range of risk criteria which considered (i) the type of health effect, (ii) the magnitude of the health risk (in the form of the well known “hazard quotient for non-carcinogens, or the lifetime cancer risk, for carcinogens), and (iii) the number of potentially exposed people. In the Chilean approach, these different pa-

Figure 2: In Andacollo, 400 km north of Santiago, mine tail-ings are scatterd between the housing, exposing the local population to inhalation of the tailings material and eventu-ally collapsing tailing ponds.

6

rameters can combine in different permutations to define yield definitions of significant or not significant risk (Golder 2008).

In order to analyze risk of the numerous abandoned mine sites in Chile, a transparent and efficient technical procedure for risk assessment is needed. It has to yield exact and re-producible indications regarding which sites to clean up and ranking them according to their risk to health and safety. This procedure is the main tool of the abandoned mines management system.

HOW TO MANAGE ABANDONED MINES The definition of a “Mining Environmental Liability (MEL)” is based on its risk for human health and safety and the risk for the environment. According to the Draft of the Law, if there is significant risk, a site is to be considered a MEL and has to be remediated. Before going into health and safety issues, there should be clarity about the term risk. Risk is to be understood as a product of probability and consequence for health and safety. High risk therefore can be produced by high probability, high severity of consequences or both. Thus, risk assessment needs to be a crucial part in the management of abandoned mine sites. It has to yield reliable and reproducible results for a large variety of sites.

Risk Assessment The approach dictating how and which sites to clean up required that the sites be priori-tized by ranking them according to risk to human health, safety and the environment. This assessment and prioritization of MELs was influenced by several desired attributes:

1. The approach needed to use risk-based principles (i.e., quantify likelihoods of haz-ardous events and severity of the consequences);

2. The methods within the process needed to be repeatable and objective; limited sub-jectivity (professional judgment) was allowed respecting input parameters for as-sessment of risk, but not directly in the site ranking process;

3. The methods needed to be flexible to broadly embrace human health, safety and the environment;

4. The methods and process needed to be based as much as possible on existing data with little or no supplemental field data other than site reconnaissance and perhaps 2-4 soil/water samples of site contamination;

5. The methods and overall process needed to relatively easily implemented and communicated, while being defensible.

6. The process output would need to differentiate between sites with significant risk (i.e., MELs) that warrant mitigative action as soon as practical, versus those with risk levels that do not warrant immediate or perhaps any mitigation.

The resultant process is described in detail in a report to SERNAGEOMIN (Golder 2008; Manual De Evaluación De Riesgos De Faenas Mineras Abandonadas O Parali-zadas (Fma/P). Figure 3 presents the overall Chilean management process for orphaned mines. It consists of several components.

7

Figure 3: Overall assessment and classification process of an orphaned Site. Description of the process is given in the text.

(i) Pre-Screen on Orphaned Site Inventory: The Chilean inventory of abandoned sites has been prescreened to identify sites classified as Class III, which are considered to be of neg-ligible risk and not warranting further consideration as MELs. The pre-screen was a col-laborative undertaking within a Japanese-Chilean program and is predicated on considera-tion of limited site chemistry, site reconnaissance and photographs. (ii) Identification of Hazard Scenarios: A site reconnaissance and review of existing site information considering possible receptors associated with each identified risk scenario re-lated to security or contamination (e.g. people, aquatic life, terrestrial life, protected areas or economical activities such as agriculture, aquaculture and fishing). (iii) Simplified Risk Assessment (SRA): The simplified risk assessment targets people, the environment and related economic activities as the entities at risk, and employs risk matrix principles (see description below). This step evaluates the likelihood of risk scenarios (e.g. high, moderate, low, negligible); and evaluates the severity of the consequences (e.g., cata-strophic, high, moderate, low or negligible), both according to defined criteria. The output distinguishes three categories: (a) clearly significant risk to qualify the site as an urgent priority MEL needing remediation (Class I); (b) clearly insignificant risk qualifying the site as not an MEL for potential remediation (Class II); and (c) uncertain risks which war-rant more detailed risk assessment (DRA) of human health, safety and ecological health to resolve MEL classification status.

8

(vi) Detailed Risk Assessment (DRA): This step of the process involves the application of conventional contaminant-related human and/or ecological health risk assessment to pro-vide a more refined understanding of these risks, and to accordingly resolve the uncertainty preventing classification of the site as either Class I or II. These Stage 2 (DRA) sites would be addressed by third party specialists. If refinement of safety risk is warranted it is pursued through refined insight from site reconnaissance and updated risk matrix scores.

(v) Prioritization of Class I MELs for Remediation: After completing both SRA and DRA steps, those sites identified as Class I MELs are then assembled into a prioritized list based on rank for urgency of remediation. The ranking is accomplished using the matrix risk es-timates (SRA), human health and ecological risk estimates (DRA) and spatial impact con-siderations. Sequential ranking of MELs is not essential; it is conceivable that several sites may rank equally in urgency for remediation, based on different combinations of risk re-sults. The numbers of sites receiving remedial actions will be a function of the financial resources available for remediation in any fiscal year.

Simplified Risk Assessment Framework The SRA framework embraces the Systems Failure Modes and Effects Criticality Analysis (FMECA), a process originally developed to assess the detailed risk associated with parts and components of equipment at an operational site. The adaptation includes the study of large systems rather than small components, the identification of existing risk mitigation measures and the estimation and ranking of risk. A Systems FMECA is a comprehensive process designed to identify potential significant “failure modes” associated with the sys-tem being assessed (e.g. in this case an orphaned mine site with abandoned workings, in-frastructure and potential site contamination).

The “failure mode” describes a system failure event and includes all possible causes ranging from natural events such as earthquakes to equipment failures, operator errors and management system deficiencies. Potential safety, environmental or financial “effects” (consequences) as defined in the study objectives are also identified for each failure mode. For example, environmental “effects” may be measured in terms of environmental clean up costs following a release from a facility. A series of events usually needs to occur be-fore a “failure mode” results in an “effect” and therefore the complete series of events is assessed. Following the identification of this series of events, the risk or “criticality” is es-timated using a Risk Matrix approach described below.

For each of the relevant orphaned mine components, related significant failure modes and corresponding consequences (hazard scenarios) identified in the Systems FMECA, a measure of the associated risk is estimated using risk matrix methodology. A risk matrix is comprised of one index representing the measure of frequency and another index repre-senting the measure of consequence severity. Each of these parameters (frequency and consequence severity) is scored according to well-defined criteria. When a failure mode and consequence scenario is identified, the associated risk is estimated using the defined criteria and this yields a relative risk estimate within the risk matrix. A number of attrib-utes of the risk matrix are illustrated in the generic format presented in Figure 4. The ma-trix locations and related criteria for classifying a risk as “significant,” (Class I MEL), Low Significance (Class II MEL), are defined in Figure 4, red shading infers significant risk, and green insignificant risk. Matrix shadings were used consistently for assessing human

9

health, public safety and ecological health risks; however separate criteria distinguishing between the magnitude levels were defined for each the three categories of risk. The full set of criteria and severity definitions are beyond the scope of the present discussion, but described in detail in Golder 2008: Manual De Evaluación De Riesgos De Faenas Min-eras Abandonadas O Paralizadas (Fma/P).

Figure 4. Risk Matrix - Different severity criteria are defined for each receptor category, and then combined with event likelihood to yield location in matrix.

10

Detailed Risk Assessment Framework The detailed risk assessment uses conventional human health and ecological risk assess-ment frameworks for contaminated sites (Figure 5). It does not focus on the probability of a failure event, but rather specifically targets health effects as the risk outcome. Effec-tively it provides a refined assessment of the severity of the “health consequence” that an FMECA approach may identify during screening analysis of a potential contaminant-related event (e.g., failure to contain mine contamination from release to environment). The core concept is that the inherent toxicity of a chemical combined with the amount of receptor exposure allows an estimate of the potential for adverse impacts (e.g. reduced re-production in fish, or toxic effects to the liver or nervous system, etc.). For human health this process addresses both non-cancer and cancer health effects according to the type of contaminants that may be present. For ecological risk assessment the focus is on effects to growth and reproduction which may impair sustainability of ecological populations or rare/endangered species.

The DRA framework involves four steps:

• Problem Formulation: This step focuses the risk assessment on the chemicals, recep-tors and exposure pathways of greatest concern.

• Exposure Assessment: This quantitative step estimates the amount or dose of a chemical that a receptor may be exposed to through all applicable exposure path-ways.

• Toxicity Assessment: This step determines the acceptable dose or concentration that specific human and/ or ecological receptors can be exposed to on a daily basis without risk of adverse health effects.

• Risk Characterization: This step compares the results of the exposure assessment and toxicity assessment and determines whether there is a potential for chemicals from the site to pose a health and/ or ecological risk,.

Criteria for interpreting and refining risk estimates considered the magnitude of hazard quotients, lifetime cancer risks, the relative number of exposed (“at risk”) people, the rela-tive spatial context of ecological receptors and sensitivity of the environmental setting (See Golder 2008 for details). In essence, the greater the magnitude of health hazard and the greater the number of potentially exposed human or ecological receptors, the greater the risk level and propensity to be classified as a Class I MEL.

11

Figure 5: Human Health Risk Assessment Framework used for the Detailed Risk Assess-ment

12

WHO HAS TO PAY An efficient clean-up program however needs a clear regulation of responsibilities and fi-nancing mechanisms. In general terms, a number of basic mechanisms are available: (a) state-funded remediation, (b) polluter pays (leaving those sites, where no responsible party can be identified for a different funding mechanism), (c) a mixed funding mechanism, based on state and private contributions.

Polluter pays As in environmental legislations, the regulations for environmental liabilities or mining li-abilities tend to tie the finance and funding issue to responsibility (CERCLA / USA, Bun-desbodenschutzgesetz / Germany) and thus force former mine owners or operators to pro-vide the funding for the clean up.

But there is no logical support for assigning responsibilities (e.g. along the line of pol-luter pays or former owner pays) for acts in the past according to our standards of today. Today’s mining liabilities were generally produced according to the reigning rule of the time. The regulatory framework was established by the state governments of the time. If the state governments of the time did not demand a mine closure according to our today’s standards, it is because health and safety standards in the societies have changed. There is no party to be held guilty for this, or whose responsibility can be deduced by logic.

But if the state decides to hold former owners or polluters responsible for acts in the past, it has to be prepared for exhaustive investigations and costly lawsuits, especially when the mines closed decades or even centuries ago.

State funded remediations State funded clean-up normally applies when the sites were part of the state-owned mining company, as is often is the case in South America. In Peru, the governmental institute Ac-tivos Mineros has been created with the sole task of managing the clean up of the sites formerly operated by the state-owned mining holding Centromin. In Bolivia, the govern-ment has to face responsibility for the remnants of the formerly state owned mining hold-ing Comibol. In Chile, mining liabilities is no issue for the state owned Codelco, because no mine has closed so far.

Similar situations can be found in the eastern European countries, where communist governments have operated large mines until their breakdown around 1990. In this context, Germany also had to face an extremely costly inheritance of the east German Uranium and Lithium mines. Remediation of the uranium contaminated mining area of Wismut in east-ern Germany consumed the huge sum of 6,2 billion €. Lignite site clean up in eastern Ger-many is expected to cost 10 billion €.

Mixed funding and finance The mining industry is by no means the only one responsible for today’s mining liabilities. As shown before, it operated within a regulatory framework provided by the government and generally paid their taxes based on their revenues, which would have been less, if mine closure according to today’s standards had been mandatory. From a logical point of view, funding and finance should therefore be provided by both sides, the state and the mining companies.

13

A practical way to put shared funding into practice is using the funds generated by a specific tax on mining activities, as it is being done since 1977 in the USA with the SMCRA, the act that regulates coal mine control and remediation in the US. A specific tax reduces revenues for the mining companies and reduces the income tax paid by the mining companies to the state.

The Chilean government introduced a specific tax on mining activities in 2006, which amounts to 0,5 to 5% of revenue before tax. This new regulation together with the price boom since 2004 made an extra income for the government which in 2007 rose up to 800 million US$. A similar situation is to be found in Peru.

Additional funding mechanisms As an addition, not as a main funding mechanism, a series of instruments can be applied, such as establishing the clean up of abandoned sites as offset for the environmental impact of new mining projects: In order to get the approval of the environmental impact, mining companies should get the option of cleaning up an old site as compensatory measure.

Further, voluntary engagement should be encouraged. The Good Samaritan amend-ments to Ontario’s Mining Act provide a good model to allow mining and exploration companies to voluntarily rehabilitate specific abandoned mine hazards without incurring any additional liability caused by existing conditions. Any type of system that involves in-dustry should ensure that funds and contributions provided by industry are tax deductible.

REFERENCES Cochilco. 2008. Anuario de Estadísticas del Cobre y otros Minerales, ISSN 0716-8462 DIPRES. 2008. Estadísticas de las Finanzas Públicas 1998 - 2007, Estado de operaciones

de gobierno, ISBN 978-956-8123-28-4 Golder Associates (Chile). 2008: Manual De Evaluación De Riesgos De Faenas Mineras

Abandonadas O Paralizadas (Fma/P.) Final report to Chilean Governement - Ser-nageomin, conducted under contract and in collaboration with BGR.

LME. 2008. Copper prices at the London Metal Exchange at www.lme.com Sernageomin. 2008. Servicio Nacional de Geología y Minería; Anuario de la Minería de

Chile 2007, ISSN 0066-5096