Guidelines developed for MOPS

The Department has processes to obtain an understanding of rehabilitation requirements for each site. It has issued guidelines which require mining companies to include planning consent conditions, mining lease conditions and other rehabilitation obligations in MOPs.

The guidelines require mining companies to document activities that will occur over the MOP term (up to seven years) including progressive rehabilitation, investigations and research, monitoring and any decommissioning work. The guidelines also require an environmental risk assessment to be undertaken, in accordance with the requirements of AS/NZS ISO31000:2009, 'Risk Management - Principles and Guidelines', although there is no specific requirement to focus on rehabilitation and closure risks. The guidelines also identify a range of risks to rehabilitation that may need to be addressed including the potential for acid and metalliferous mine drainage, erosion, slope stability, subsidence, and flora and fauna management.

Mining companies must submit a MOP

The MOP guidelines and mining lease require an approved MOP to be in place prior to commencing any significant surface-disturbing activities. MOPs are required to:

• be consistent with any development consent requirements
• be based on objectives and outcomes developed with stakeholder involvement
• provide sufficient detail, supported by scientific and engineering assessment and/or peer review where appropriate, to clearly demonstrate that the objectives and outcomes defined in the MOP will be met.

The Department had a current MOP in place for each operational mine site we examined. It has recently prepared a checklist for reviewing MOPs. It also has processes to approve MOPs or ‘refuse’ them and seek further information from mining companies.

MOPs aim to cover rehabilitation and closure

The MOP guidelines state that the MOP is intended to fulfil the function of both a rehabilitation plan and a mine closure plan, and it also forms the basis for the estimation of the security deposit. The guidelines also require MOPs to document the long-term mine closure principles and outcomes while outlining the proposed rehabilitation activities during the MOP term.  

The guidelines provide limited information on detailed closure planning including the steps required to meet closure criteria and the level of detail required in closure plans at each stage of a mine’s operation. Some other jurisdictions, such as Western Australia, have guidelines encouraging detailed closure planning early in the life of a mine to ensure adequate forward planning to minimise the risk of long term legacy issues.

Further, the International Council on Mining and Metals toolkit on Planning for Integrated Mine Closure states that an active and detailed closure plan that is in effect during the early stages of operations represents good practice. In addition to allowing the mine plenty of time to fine tune and optimise closure outcomes, a fully detailed closure plan increases the ability of an operating mine to deal with issues such as unplanned closure.

The MOP guidelines provide limited information on how any offsite impacts from a mine will be managed under an environment protection licence issued by the Environment Protection Authority and the steps required to relinquish the licence post-closure. The guidelines also lack information on how heritage sites will be managed during and after closure. This presents a risk that these requirements will not be adequately managed and costed in rehabilitation calculations.

High level of uncertainty in closure planning

As previously indicated, MOPs are intended to fulfil the function of a mine closure plan. MOPs we reviewed included broad, high-level information on mine closure including final landforms and land use as well as closure criteria. Mining companies will need to prepare detailed closure plans prior to a planned closure but there is no clear policy on when this should occur and, historically, most mine closures have not been planned.  

Typical uncertainties around mine closure include final void management, containment of tailings, repairs required to address subsidence, stability of slopes and erosion control. There may also be the potential for saline or acid and metalliferous mine drainage, surface and groundwater interaction following cessation of dewatering and the need for ongoing management or treatment, as well as uncertainties associated with vegetation establishment.

Uncertainty can also exist around whether materials required to rehabilitate a mine are readily available on site or will need to be imported at additional cost.

The estimated time between cessation of mining and successful rehabilitation and closure is another uncertainty, being difficult to estimate as it depends on many variables. However, it is a cost-critical aspect of closure planning and expert advice indicates it has been underestimated in most mine closures. A review of 73 mine closure plans dating from 2007 to 2013 showed that, on average, relinquishment of the mining lease is proposed to be achieved in 11 years. A separate review of 57 mines in actual closure shows that only five have so far achieved relinquishment with an average closure period of 14 years after production ceased. The remaining 91 per cent of sites in closure had an average closure duration of over 21 years and counting.

There can be no detailed plan for unexpected early mine closure

The Department will not have a clear picture of what each site will look like if it closes prematurely, and the specific tasks required for successful rehabilitation and closure. Practical planning for sudden closure cannot be done in detail, as the circumstances surrounding the closure may dictate possible closure scenarios. Being prepared for sudden closure relies instead on regular updates of the detailed closure plan, which gives the closure planner the ability to rapidly evaluate the remaining unknowns and risks associated with closure and to develop a plan.  

If an open-cut mine site closes prematurely, the agreed final land use may not be achievable and the approved final landform will probably not be achieved. A 2006 review of 800 mines in Australia over 25 years from 1981–2005 found that unexpected early closures accounted for around 75 per cent of mine closures. That is, only around 25 per cent of mines closed due to the anticipated resources being depleted.

The Department’s policy is for security deposits to cover the full cost of rehabilitation. No discounts are provided to mining companies for past good behaviour or low likelihood of default, unlike in some other States. 

The security deposits the Department holds are not likely to be sufficient to cover the full costs of each mine’s rehabilitation in the event of a default. The Department provides a Rehabilitation Cost Calculation tool to help mining companies calculate the cost of rehabilitation and the required deposit amount, but:

• several activities required to effect closure are not included and others are under-costed
• it does not make provision for industry cost changes over time, even though the period between one cost calculation for a mine site and the next can be up to seven years
• the rates used in the tool have not been updated since 2013
• the basis for the rates and allowances set in the tool is not documented.

The Department recently released a new calculation tool for industry consultation. If implemented, the new tool should improve the rehabilitation estimates. It updates rates and allowances, and includes additional items to better cover required rehabilitation tasks. The Department was also able to provide a basis for how the rates and allowances in the new tool were derived. While a substantial improvement, the new tool could be further improved by providing additional coverage for stakeholder engagement, additional planning approvals, insurance costs, and any additional design, research and verification work required for successful closure.

Security deposits may not be adequate to cover uncertainties associated with planned and unplanned mine closure as discussed in the previous chapter. The deposits are also not designed to cover the risk of environmental degradation after a mine is closed and the deposit returned to the mining company. This needs to be costed and covered as part of a separate mechanism such as a sinking fund.  

The Department reviews cost estimates provided by mining companies, but verification of the required rehabilitation work on which these estimates are based is limited.

Recommendations

The Department should:

• increase certainty that security deposits are sufficient by:
  • ensuring its new cost calculation tool adequately covers all works needed for rehabilitation and closure
  • increasing the contingency for uncertainties associated with mine rehabilitation and closure, at least until the mining company provides a detailed closure plan
  • verifying the cost estimates for a sample of high risk sites annually
• collaborate with relevant agencies to establish a financial assurance mechanism, such as a sinking fund, to cover the risk of long-term environmental degradation after mines are closed and security deposits returned.

Deposits should cover 100 per cent of rehabilitation costs

The Department has issued a clear policy statement which says that deposits must cover the government’s full costs in undertaking rehabilitation in the event of a default. The Department has increased the total amount of security deposits held from nearly $500 million in 2005 to around $2.2 billion in 2016. The Department advises that this increase coincides with gradual improvements in the way deposits are calculated and collected.

Mining companies must calculate rehabilitation costs

Mining companies must submit a new rehabilitation cost estimate whenever a security deposit review is required. A review can be triggered by a mining lease renewal or transfer, a new or amended MOP, as part of an annual environmental management report, a request from the Department or a request from the mining company.  

The Department has produced procedures and a form for mining companies to submit these cost estimates. Companies can choose to use the Department's calculation tool to estimate the costs or they can use another approved method.  

All operational mine sites we examined, apart from one, had provided rehabilitation cost estimates calculated using the tool. The remaining site employs its own tool that was approved by the Department.  

Companies must ensure that the cost estimate is based on the rehabilitation and closure details in the MOP. The MOP is required to provide information such as areas of disturbance and infrastructure assets requiring eventual removal. It also needs to identify aspects of the site that need to be managed to achieve closure, including final landforms and land use.  

Department developed tool for calculating rehabilitation costs

The Department’s rehabilitation cost calculation tool is in the form of a series of spreadsheets by domains, or mine site areas, with a schedule of rates and unit costs for each activity. The Department has produced guidelines to support the tool and the security deposit review process.  

We identified anomalies with the way the calculation tool was being used by some mining companies. There were errors in some calculations, although these were not material, and some rates were changed without explanation. Rates are not locked in the spreadsheet and can be altered without explanation.

The Department reviews rehabilitation cost estimates

The Department reviews the cost estimates submitted by mining companies, determines the required deposit amount and then requests the deposit. It has established a checklist for high level reviews of cost estimates. The completed checklists contained limited information on the level of detail and rigour applied to the assessment. Independent verification of mining company claims about the size of the outstanding rehabilitation task is also limited.

Our site visits highlighted some opportunities for improvement in the way the Department reviews cost calculations. For example, some Department inspectors request site maps containing the areas relevant to the cost estimates to better understand the cost calculations, and these were evident in one of the completed cost calculations we examined. We also note that the Department does not ask mining companies for the actual cost of rehabilitation conducted to date, or for their internal estimates of the cost of rehabilitation and closure, to further inform cost estimates and the rates used in the tool.  

If a mining company disagrees with a rehabilitation cost estimate determination it can request a Ministerial Review. These reviews are undertaken by another Departmental team from a different region to the team that made the original determination. The Department recently evaluated the Ministerial Review process and recommended that such reviews be conducted by parties independent of the Department’s resources division.

No allowance for cost increases over time

The unit rates and allowance used in the calculation tool have not been updated since August 2013, with no allowance for inflation or other changes in industry rates. MOPs may be valid for up to seven years, meaning a review of the cost estimates may not occur during that period and the rates will not be adjusted. Because of the scale of mining operations and the large quantities of material that need to be moved around a site, even small changes in unit rates can result in major changes to cost estimates.

No justification for the rates in the rehabilitation cost calculation tool

The Department was unable to provide information on how the rates and allowances used in the current tool were derived and provided limited information on what costs they are designed to cover. For example, it is unclear how the rates for sourcing, carting and spreading topsoil or for removing railway lines or the maintenance of rehabilitated areas were derived. Because the Department is not able to provide a basis for the rates and allowances, we do not know what is included in them and why they think they are appropriate. Without a basis for the rates, we cannot provide assurance as to the sufficiency of rehabilitation cost estimates.

Rehabilitation cost calculation tool may not cover all management costs

The calculation tool allocates ten per cent of the total rehabilitation estimate to project management and surveying costs. For state significant development sites this means anywhere from $500,000 to more than $10 million can be allocated to these tasks. Departmental staff advised that, in their experience of mine closures, the allowance of ten per cent for project management is appropriate to cover costs for most mine sites. However, the Department was not able to provide a basis for this allowance or say exactly what activities it is meant to cover.  

There is a risk that the ten per cent allowance may not be sufficient to cover standard project management and surveying costs, as well as management activities specific to unplanned closure and rehabilitation including:

• stakeholder engagement associated with rehabilitation and closure, including seeking agreement on final landforms and land use from a range of government agencies and community groups throughout the closure planning and implementation process
• insurance costs, especially as they relate to liability for any downstream harm caused during rehabilitation works
• developing and verifying detailed design plans for site rehabilitation and final closure, including associated investigations to gather new knowledge before implementing the works
• a range of third-party contractor costs such as office space and equipment, workshops and tools, demolition and rehabilitation equipment, maintenance and overheads.

Insufficient allowance for long-term site management

The calculation tool allocates five per cent of the total rehabilitation estimate for post-closure environmental monitoring. For state significant development sites this means anywhere from $250,000 to more than $5 million can be allocated to this task. There are also allowances in the tool for maintenance of established rehabilitation areas for up to five years. The Department advises that issues around slope stability and erosion, and management of vegetation and fauna would be adequately covered by the allowances in the tool.  

It also advises that the five per cent allowance would be sufficient to cover ongoing environmental monitoring programs for most sites. For example, in relation to an $80 million cost estimate associated with rehabilitating a large scale open cut mine, this contingency would allow up to 80 years for a biennial ecological rehabilitation monitoring program. However, the Department was not able to provide a basis for this allowance, including the list of monitoring measures it is meant to cover.  

There is a risk that the five per cent allowance may not be sufficient to cover long-term environmental management and site issues including:

• requirements for surface water and groundwater management, including managing Environment Protection Authority licence requirements
• site security including patrols and maintenance of fencing around dangerous parts of the site, such as steep sections of mine voids, during the period of post-mining site management and in perpetuity
• management of mine void water which may be saline, and in some cases acidic and/or contaminated with metals, over many years to ensure it does not negatively impact surface water and groundwater, and does not harm water resources, native ecosystems and land uses
• managing the ingress of groundwater to voids so that it does not create unstable void walls
• rectification of any rehabilitation failures identified during monitoring such as erosion of waste rock landforms or major vegetation/ecosystem failures
• management of tailings dams which, depending on composition and stability of contents and surface treatment, may need to be monitored and managed in perpetuity

The Department indicated that a higher percentage for environmental monitoring can be entered into the tool for higher risk sites. However, all operational mine sites we examined used the five per cent default contingency in the current tool.

Heritage assets not adequately covered in rehabilitation cost estimates

The calculation tool does not adequately cover the cost of long term management of heritage items at each site, including the cost of coordinating the handover to a third party. Further, some rehabilitation cost estimate cover sheets mentioned heritage assets but no costings for these items were included in the estimates.  

The MOP guidelines, while allowing for preservation of heritage assets as a post mining land use, do not adequately address these assets. For example, there is no requirement to provide details in MOPs on how heritage assets are to be managed during closure and no explanation of how the Office of Environment and Heritage (where responsibility for heritage resides) is involved in the process of approving MOPs. There is also no requirement to apply the Burra Charter 2013, which defines the basic principles and procedures to be followed in the conservation of Australian heritage places

Insufficient contingency to cover uncertainty with unplanned closure

In the event of an unplanned closure and default by a mining company, the Department will not have a clear picture of what the rehabilitated site should look like, and the tasks required for successful rehabilitation and closure. It will have limited knowledge of the amount of material to be moved, and the site-specific risks and uncertainties it will need to manage.  

As previously mentioned, practical planning for sudden closure cannot be done in detail, as the circumstances surrounding the closure may dictate possible closure scenarios. The inevitable lack of such a detailed plan makes it difficult to verify the adequacy of cost calculations.  

The tool adopts a standard default ten per cent contingency to cover uncertainty, regardless of the complexity and risks associated with the site. Further, if an open-cut mine site closes prematurely, the agreed final land use may not be achievable and the final landform will probably not be achieved. Guidance we obtained from a range of sources indicates contingencies should range from 25 per cent to as much as 50 per cent in the worst cases, especially in the absence of a detailed plan to achieve closure.  

The Victorian Hazelwood Mine Fire Inquiry identified many of the same issues around uncertainty for the Latrobe Valley brown coal mines. In that inquiry, a costing model was developed based on the type of approach used in costing major infrastructure projects.  

In summary, a probabilistic costing method (as the Inquiry included for the Latrobe Valley mines) recognises that certainty has a cost. Where there is high uncertainty of costs, but government wants a high level of certainty that costs will be covered fully, the contingency needs to be very high.

The tool is not designed to cover long-term environmental risks

The tool is not designed to cover the risks of unexpected environmental degradation in the long-term after a mine closes. Even if a mine is deemed to be fully rehabilitated, based on best available information and contemporary science, there may still be a risk that sometime later the site will start to display or cause significant environmental harm. This includes the risk of saline discharge or acid and metalliferous drainage at some sites. There is also the risk of further subsidence from underground mining cracking creeks, rivers or swamps, which can be difficult or impossible to repair. There is also the possibility of failure of pit walls, waste rock dump landforms and tailings dams depending on their design life.

New calculation tool developed but not yet implemented

The Department has developed a new rehabilitation cost calculation tool with an updated schedule of rates and allowances. This is currently with the industry for consultation. The improvements in the new calculation tool allow for more detailed costings of management, rehabilitation and demolition activities. These improvements include:

• more line items to allow for greater specificity in calculations
• allowances for site security during closure, pest management in buffer areas and management of undisturbed areas
• increased allowance for long term monitoring, from five to ten per cent of total rehabilitation costs
• increased allowances for the development of an 'unplanned' closure plan and for tender preparation and assessment
• increased allowances for the mobilisation and demobilisation of third-party plant and equipment.

The Department provided a justification showing how the rates and allowances used in the new tool were derived.  The new calculation tool could be further improved by better addressing other deficiencies we noted in the current tool. These include:

• inadequate costing for the preservation of heritage assets
• no indication that these rates will be updated over time
• inadequate costing of stakeholder engagement and additional planning approvals required for early unplanned closure
• no coverage of insurance costs, especially as they relate to liability for any downstream harm caused during rehabilitation works
• no allowance for any additional design, research, trials and verification work required to undertake successful closure
• control measures not adequately costed because of any deficiencies in the risk assessment process for rehabilitation and closure risks.

Guidance developed for new tool

The Department has developed revised guidelines for rehabilitation cost estimates which include an updated flowchart better explaining the rehabilitation cost estimate process. It also includes additional information on the Department's Ministerial review process, as well as information on how and when security deposits will be released following partial or full site rehabilitation.

The Department has also drafted a new Rehabilitation Cost Calculation Tool Handbook to guide the use of the new tool. The handbook:

• lists the changes from the existing cost calculation tool
• takes the reader through the process of developing a cost estimate using the tool
• discusses formulae and functions, and displays calculation methods for key aspects such site areas, volumes, and haulage distances
• provides details regarding the use of alternatives rates, including the justification required for their approval.

Department provides guidance on annual reporting requirements

The Department requires mining companies to submit annual environmental management reports for each mine site. It has produced guidelines for mining companies explaining the content requirements of the annual reports, including the need to provide information on:

• issues arising from the annual report and the previous annual inspection, and any other directions given by the Department and the response to those issues
• control strategies implemented to manage a range of specific environmental risks
• complaints and community liaison
• rehabilitation of disturbed land and renovation or removal of buildings
• research and trials conducted during the period
• activities proposed in the next annual reporting period.

We identified a number of deficiencies in the annual environmental annual report guidelines. These include no requirement to report directly against any annual targets for rehabilitation work identified in the MOP and therefore no necessity to report on corrective action if targets are not met. There is no obligation to monitor groundwater and surface water, and record and discuss trends in volumes, levels, flow and quality. There is also no requirement to provide an updated rehabilitation and closure risk assessment and information on how these risks are being managed. The Department is developing new annual reporting guidelines which may address these issues

Progress reports on rehabilitation provided by mining companies

The Department held a current annual report for each operational mine site we examined. The annual reports we reviewed contained a range of information on rehabilitation including areas of disturbance, management of exposed areas, success of rehabilitated areas, pest and fire control, and management of topsoil and seed stock.  

Around half the annual reports we reviewed discussed progress against MOP targets and the success of rehabilitation. Around half discussed rehabilitation risks and their mitigation. Although 11 out of 13 case-study sites reported cultural or natural heritage items, only five of the annual reports reviewed provided a detailed discussion of the management of heritage items.  

Most annual reports we reviewed did not explain environmental changes over time, nor the risks to mine closure and the measures required to mitigate them. For example, analysis of changes to surface water and groundwater quality was limited despite its relevance for assessing future contamination risks.

The Department monitors rehabilitation progress

The Department monitors rehabilitation progress at mine sites by undertaking reviews of annual reports and MOPs, and conducting site inspections. Most of the annual environmental management reports we reviewed discussed issues identified during the last inspection and any remedial action taken.  

The Department has the ability to direct mining companies to undertake rehabilitation work under section 240 of the Mining Act 1992. We obtained a list of recent section 240 directions issued by the Department indicating it had undertaken inspections on a range of sites and enforced remedial action for deficiencies identified. On one site we reviewed, the Department directed a mining company to manage offsite discharges through a section 240 direction even though the mining lease had expired.

Risk-based prioritisation for reviews of mine sites

The Department has recently developed procedures which prioritise assessments of MOPs and annual environmental management reports based on a risk ranking. The procedures require more detailed annual assessments of sites ranked critical and high, including a review of mining and rehabilitation progress and the current security bond held to determine whether it is still adequate.  

In late 2015, the Department ranked 312 mine sites from critical to low risk based on their environmental and rehabilitation performance and any issues of public concern. Of these, 45 were ranked as critical and 73 were ranked as high. A risk matrix was developed to support the ranking process. However, no documentation was available for each site supporting the assessment and specifying the risks that led to it being ranked critical, high, medium or low.  

Procedures in place for reviewing annual environmental management reports

The Department has recently established procedures for reviewing annual environmental management reports including a checklist. Completion of the checklist involves a review of the mining company’s progress against MOP targets and completion criteria. It also requires a review of available data to determine if there are any emerging issues that may be a threat to rehabilitation success.

The Department also has processes in place for approving annual reports or ‘refusing’ them, meaning it generally requires more information from the mining company. It provided approval letters for two of the sites we examined and a letter for another site requiring a few items to be completed prior to the report’s approval.

Limited evidence of site inspections and what they cover

The Department was able to provide limited evidence on the frequency and detail of mine inspections conducted by its staff. For example, for the sites we reviewed, it was unable to provide the dates of the last two site inspections and what those inspections covered. Although the Department’s risk prioritisation process requires high risk sites be assessed more frequently and thoroughly, it does not specify how often site inspections should occur.

There was also no evidence of a formal protocol in place to guide Department staff during site inspections. Such inspections should focus on key rehabilitation and closure risks and uncertainties and how they are being mitigated.

Levels of progress with rehabilitation not sufficiently verified

Most of the annual reports we reviewed describe rehabilitation progress but around half do not compare it directly to rehabilitation targets in MOPs. This makes it difficult for agency staff to gauge the level of progress towards rehabilitation goals and determine whether remedial action, or even a new MOP and rehabilitation cost estimate, is required.  

The Department was not able to demonstrate a robust process for assessing rehabilitated areas so they can be removed from the rehabilitation cost estimate. It lacks detailed procedures for assessing and verifying the quality of rehabilitation occurring on mine sites. The Department is developing a rehabilitation reform package, including new rehabilitation guidelines and a site rehabilitation assessment procedure, which may provide consistency in the assessment of the progress and quality of mine rehabilitation.

Security deposits in bank guarantees or cash

Mining companies must provide the Department with the required security deposit prior to commencing operations. The security deposit is added to or reduced during the life of the project depending upon variations in the level of disturbance. The Department should hold a security deposit until the mine site is successfully rehabilitated in line with consent conditions.

Security deposits can be in the form of cash or bank guarantees. Almost all the deposits the Department holds are bank guarantees. Bank guarantees are an agreement between the financial institution and the Department that if a mining company is unable to fulfil their rehabilitation obligations, the bank will cover the liability up to the agreed amount.  

The Department only accepts bank guarantees provided by an institution supervised by the Australian Prudential Regulation Authority (APRA). These institutions are well-established and therefore unlikely to not honour a guarantee. Ten of the 13 case study mines had bank guarantees provided by approved deposit taking institutions supervised by APRA. Two other sites had bank guarantees provided by insurance companies supervised by APRA. The deposit and mining lease had been relinquished on the other site, which had ceased operations and been closed.

The Department has developed a template to standardise the wording of bank guarantees. This standardisation ensures that the bank guarantees contain the necessary conditions to enable the Department to access the funds if required. All bank guarantees being held for the case study mines were in line with the Department's template.

Level of securities has increased

The Department has increased the total amount of security deposits held from nearly $500 million in 2005 to around $2.2 billion in 2016, covering around 450 mine sites. The Department advises that the increase in the value of security deposits held coincides with improvements it has made in the way deposits are calculated and collected.

Department can access deposits when needed

The Department has obtained legal advice indicating that it should be able to claim on the bank guarantees if the need arises. As the bank guarantee must be from an APRA approved financial institution, and not from the mining company, the Department should still be able to access the funds if a mining company goes into liquidation.  
To date the Department has not accessed a large security deposit to rehabilitate a state significant development site, consistent with its position as an option of last resort in ensuring rehabilitation is completed. It advises it has claimed security deposits in the form of bank guarantees on some smaller sites.

One financial institution recently arranged for a bank guarantee of around $40 million, held by the Department, to be exchanged for a security deposit in the form of cash. This example provides a further indication that the Department should be able to call-in bank guarantees to cover the cost of rehabilitating land disturbed by mining operations, if the need arises.

The Department has a process in place for exchanges of security deposits 

The Department ensures it always holds a security deposit for each mine site. It advised that if a mining company wishes to exchange a security deposit, it must provide a new security deposit before the Department will release the existing security deposit. Mining companies exchange deposits due to:

• a change in ownership of the mine
• significant changes in the level of security required
• change in financial institutions.

No procedures for using deposits to fund rehabilitation

Although the Department has experience claiming deposits for some derelict mine sites, it has never had to assume responsibility for overseeing the complete rehabilitation and closure of a large mine. It is yet to establish a set of procedures to guide the process of using claimed securities to undertake such rehabilitation work.

We assessed the financial delegations of the Department, and despite the lack of clear procedures, believe they are sufficient to direct funds towards rehabilitation activities should the need arise.

The Department encourages progressive rehabilitation

Consistent with best practice, the Department encourages ongoing rehabilitation through security deposits and targets in MOPs. Clearly there is a financial incentive for companies to undertake rehabilitation to reduce the required security deposit. We saw evidence during our site visits and in annual reports that ongoing rehabilitation is occurring at most of the sites we reviewed.  

The progressive rehabilitation included landform shaping, spreading of topsoil and vegetation establishment. One of the sites we reviewed had backfilled areas of the void once the coal had been mined. The Department advised that, through progressive rehabilitation, the mining company had shaped the final landform within only one year of completing mining. We were also advised that recent observations on the site reported similar flora and fauna levels to that which existed prior to mining. The Department continues to hold over $3 million security until the long-term monitoring of the site indicates that rehabilitation has been successful

Lack of clarity around when deposits should be returned

The Department will continue to hold a portion of a security deposit until that site reaches successful rehabilitation. Successful rehabilitation occurs when the mining company's rehabilitation efforts fulfil the criteria set out in the consent conditions. The length of monitoring required between a mine ceasing operations and successful rehabilitation varies between mine sites. It generally depends on the level of disturbance, the extent of ongoing rehabilitation and how well closure risks have been managed.  

The Department has recently revised its reporting form for mining companies to provide information on the rehabilitation work they have completed and its impact on their rehabilitation cost estimate. The form requires evidence and other information, including plans and photographs, as well as written statement outlining the rehabilitation activities undertaken and a description of how rehabilitation objectives and completion criteria have been met.

The Department advises it conducts inspections on rehabilitated areas against the site-specific consent and closure conditions. Once rehabilitated areas have been proven to meet the closure criteria, the Department will sign off the area. However, as previously noted, the Department lacks detailed procedures for verifying the extent and quality of rehabilitation work reported by mining companies. Further, consent conditions and closure criteria are often not specific, making the task of judging the fulfilment of these conditions even more problematic. The Department is currently developing a new rehabilitation assessment procedure to improve its assessment of rehabilitation performance.