Understanding the environmental liabilities of a mining operation is critical for the eventual cost estimates of restoring, replacing or providing the equivalent of the damaged environment and natural resources.
Before a mining company is allowed to mine, regulations stipulate that the miner must conduct a thorough assessment of the proposed project’s environmental and social impacts.
The results of the assessment become integral to both the decision-making around whether to approve the mine and how best to protect local communities and the environment from harm.
Rigorous environmental and social impact assessments ensure that the potential impacts of mining development are identified before work begins, enabling authorities to impose conditions that manage these impacts by requiring miners to develop and implement effective mitigation plans.
However, the impacts of mining’s environmental liabilities on local communities are often left unaddressed, according to a paper published last December in The Extractive Industries and Society journal, resulting in ongoing ecological costs to the communities and broader society.
The authors explained that conventional market approaches had been applied to protect and improve the environment from environmental impacts at the lowest cost, using economic instruments such as pollution charges, tradable permits, market friction reductions, and government subsidy reductions.
While market approaches encourage practices that minimise environmental harm, primarily through the ‘polluter pays principle’, people will try to reduce pollution by using better technology or making less harmful products. The authors noted this does not necessarily apply to the mining sector, where impacts are diverse and can span years.
They said: “This rule assumes that everything can be measured by money; however, pollution is not just a matter of money.
“The impacts of air, land, and water pollution on human wellbeing exhibit a lagging effect, taking time to manifest and lasting for a long time.
“It is also a matter of human dignity, meaning everyone deserves the right to live in a healthy and safe environment.”
In particular, EIAs often lack precise and inclusive methodologies that fully capture the spectrum of environmental impacts and their effects on local communities, especially from the perspective of Indigenous communities and long-term ecological impacts.
Currently, there is no legal assessment framework which explicitly addresses the impacts of mining on people’s wellbeing.
Another study published last year in the Australasian Journal of Environmental Management explored the extent to which current project EIA practice could achieve enhancement, no net loss, or a net gain of biodiversity and Nature Positive goals.
They concluded that to overcome the “controlled loss” paradigm that typified EIA practice, a major mindset change was needed, and recommended placing “enhance” in addition to the mitigation hierarchy, ensuring policies upheld “true offsets” and legislative provisions were developed for Nature Positive and how EIAs should address it.
Nature Positive is a global goal to halt and reverse the loss of ecosystems, so that the global state of nature improves for the benefit of people and the planet.
The first paper found that two distinct categories emerged from the economic instruments for quantifying mining-related liabilities: market and non-market valuation techniques, with significantly more focus on the former than the latter due to the availability of market tools.
In the Australian context, a few non-market valuations were found to be undertaken to measure the environmental liabilities of the mining proposals. For example, contingent valuation was applied to estimate the willingness to pay to protect the Kakadu Conservation Zone from mining.
The authors concluded that incorporating non-market valuations, such as discrete choice experiments for environmental protection, into cost-benefit analyses could provide a more comprehensive understanding of the true economic impacts of mining projects.
They put their findings to the test in a case study of the McArthur River zinc-lead-silver surface mine in the Northern Territory, assessing costs using replacement cost, welfare cost savings, and basic value transfer methods.
These methods were applied to assess the loss of local Indigenous communities’ wellbeing; the loss of ecosystem services from native vegetation and freshwater; and the opportunity cost of the mine, none of which are fully accounted for in the operator’s environmental assessments and approved mitigation measures.
This valuation analysis showed that the market value of McArthur River’s environmental and social impacts amounted to $1.1 billion every year, while the non-market value was $20 million per year.
Market values were evaluated through the lens of tangible losses, focusing on the depletion of freshwater resources and the cost of managing waste rock.
Non-marketable values, on the other hand, focused on the ecological and societal consequences involving the loss of wellbeing benefits, native vegetation, and the opportunity cost of forgone benefits from vegetation and access to cultural sites.
These types of more thorough approaches to assessing mining’s impacts can be extended to the effects after mining has finished by integrating EIAs into mine closure planning.
A report published by the Australian Centre for Geomechanics explored how the integration of EIAs with mine closure planning facilitated effective mine closure plans at the project approval stage.
Developing mine closure plans early has several benefits, such as facilitating early discussion, broadening knowledge and cultural acceptance between different parts of the organisation, aiding identification of key risks and fatal flaws, aiding decision making for mine planning, and enabling early investigations and trials to maximise rehabilitation success.
The authors said: “Strong areas of integration that currently exist between EIA and mine closure planning are the evaluation, prediction and mitigation of risk; collection of sound scientific knowledge; and in some cases, the start of early and ongoing consultation to develop sustainable mining goals.
“The effectiveness of integration between EIA and mine closure planning is strongly dependent on the driver and enthusiasm of key facilitators and requires a collaborative approach.”
They added that the key constraints on effective integration of EIA for mine closure planning were a lack of regulatory guidance and enforcement, compounded by a lack of process transparency and no financial disclosure requirements, which hinders wider learning.