Publication Name

MINING FOR CLOSURE

cial, environmental and social liabilities associated

with such sites also pose a barrier to development

in such jurisdictions. In contrast to countries that

have already implemented ‘good international min-

ing practices’, and despite significant progress since

that time, these EiTs have yet to develop sufficiently

sophisticated corporate governance, regulatory

frameworks, or financial and insurance markets to

adequately address mine closure rules or funding.

Among other things, Nazari (1999) indicates that

this leads to:

delays in developing projects and investments

in this sector,

potentially inequitable distribution and exter-

nalization of closure costs,

costly and time consuming tailor-made solu-

tions on a case-by-case basis, and

differentiating, and possibly creating the im-

pression of ‘penalising’ investors seeking fi-

nancing or political risk insurance through

International Financial Institutions.

Addressing the last point, it should be noted that

international financial institutions typically require

consideration of closure related issues. As a result,

investors seeking finance from such sources may

be disadvantaged in their endeavours when com-

pared to those potential miners accessing alter-

native capital markets with more limited require-

ments relating to closure funding.

The development of corporate governance, regula-

tory frameworks, financial and insurance markets

to address the funding of mine closure is further

complicated by involvement of some “junior inves-

tors”, who unlike many major mining companies,

have only limited resources to back up the mining

company’s obligations, and have significantly less-

er sensitivity to other factors driving responsible

behaviour such as reputational risks. Such actors

are more prevalent in EiTs than in more developed

mining nations.

Despite the relevance of these issues and the press-

ing nature of the challenges, the nature of discus-

sions surrounding the advancement of mining in

the region is presently somewhat compromised. As

such, it is expected that a key outcome of this docu-

ment should be a more open and informed debate

surrounding the need for mining and the ability of

mining to serve as a valuable economic driver for

development while still maintaining or even im-

proving the environment.

Bor smelter – Serbia

Photograph by EnvSec