What goes up

What goes up…

The Australian mining industry is booming again! Despite the global financial downturn of 2009, mining investment continues to rise, with strong export growth in the iron ore, gold and coal sectors in 2010 and 2011. So, is it prudence or terminal pessimism that has motivated the Western Australian Department of Mines and Petroleum (DMP) to revise the Mining Act 1978 to impose more stringent mine closure obligations on mining operators and proponents?

A new set of guidelines to be issued jointly by the DMP and the Environmental Protection Authority, describes the new standards that will apply to both existing and new mining operations in the future. Among the key changes is a requirement to include estimates of mine closure costs in the Mine Closure and Rehabilitation Plan that must be submitted to the government as part of the project approvals process, or for existing operations, in mandatory 3-year reviews. The closure cost predictions must be supported by information on the costing method, assumptions and financial processes used to estimate costs.

SRK Australasia has been using the Standardised Reclamation Cost Estimator (SRCE) model since 2006. The SRCE model was developed by SRK and the Nevada mining and regulatory community to improve accuracy, completeness and consistency in mine closure and reclamation cost estimates. It is essentially a specialised cost estimating tool that standardises user input requirements, productivity calculations, volume and area calculations, while allowing enough flexibility to incorporate site-specific conditions. This model is also a useful “what if” scenario tool, for instance, to answer questions such as “how do rehabilitation costs vary as a function of changing cover, growth media and revegetation equipment?” or “what are the cost implications associated with different regrade systems used on waste rock dumps”?

The demand for closure and reclamation estimates is increasing and SRK has established a solid client base, which continues to grow as mining companies understand the potential of the SRCE model and how it can be tailored to site-specific needs. SRK is currently working alongside several clients in Western Australia and Queensland, using the SRCE model to estimate mine closure and rehabilitation costs.

Luke Esprey: lesprey@srk.com.au
Danielle Kyan: dkyan@srk.com.au

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