Financial assurance for mine closure in Chile
Paper from the Proceedings of Mine Closure Solutions 2014 conference held in Ouro Preto, Brazil, April 26-30, 2014. (downloadable PDF).
Author: Alfonso Olivari, National Geological and Mining Survey, Chile p>
Published by InfoMine Inc. 2014.
In November of 2012, Chilean Law 20.551, which regulates mine closure and mining facilities, took effect, requiring some mining companies to establish financial assurance or guaranties to the state, to ensure complete and timely compliance with closure obligations, as described in this law.
The main objective of this regulation is to avoid and mitigate environmental liabilities once the mine site is closed, ensuring the physical and chemical stability of the mine site, mining facilities, and the disturbed area, and to protect the life, health, and safety of people and the environment.
This law obligates all mining companies with an extraction level or ore benefit that exceeds 10,000 tons per month to present a closure plan for approval to the mining authority. The plan should address all closure work, requirements, and activities made to prevent, minimize, or take control of environmental hazards, risks, and possible negative effects associated with the chemical and physical stability of the mine site. The mining company has to elaborate a cost estimate for all closure work, requirements, and activities of the mine to establish financial guarantees to the mining authority according to the terms of this law. All mining companies with an extraction level or capacity lower than 10,000 tons per month are exempt from establishing financial assurance or guarantees to the mining authority.
This law defines the requirements for the financial assurance or guarantee, including calculation of the financial guarantee amount, acceptable financial instruments for the guarantee, terms and patterns used to establish the guarantee during the life of mine, conditions governing guarantee releases, regulations regarding guarantee adjustment and review periods, and requirements for a post-closure fund or pool.
Closure regulations also require financial guarantees to ensure that all activities involved in the post-closure or post-mining period are completed; these activities include ensuring the physical and chemical stability of the mine site, monitoring, and control measures. Finally, once the mine site is closed, the mining company must contribute cash resources to the mining authority; these funds will be used in the post-closure period to cover the costs of post-closure work.
This paper outlines the legal framework of closure legislation in Chile, focusing on financial assurance.
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