extractive industries - life cycle


The life cycle of a mine/quarry can be considered in 5 stages:

STAGES 1 AND 2

The value of the mine/quarry will be different at each stage. At stages 1 and 2 the value is low despite the fact that the full amount or ore is available "in situ". This is because the mine's economic operation is not yet proven and the risk is high. Risk will be lower and the value higher if there are "proven" comparable mines nearby. That is, if the proposal is a "pioneer" mine, the value is very low (approximating the opportunity land use value) as the economics of such a mine in that area far from certain.

Stage 2 is particularly vulnerable because there has been a large amount of capital input at risk.

STAGE 3

This is the stage where the mine/quarry has maximum value. The operations have been "proved" and therefore, the risks are lower. The operation may even have a number of forward contracts to buyers thus guaranteeing income in the immediate future (however, this factor may be better treated as part of the goodwill of the company which owns the mine).

STAGE 4

The mine/quarry has low value near point of exhaustion. The value is low because of the low amount of ore or mineral reserves available and the immediate need to embark on a rehabilitation landscaping program for the "hole in the ground", tailings and surrounds. However, the low value may be tempered by the hole having a high value for waste dumping purposes or even water storage purposes. For example, exhausted brick pits at St Peter's in Sydney.

STAGE 5

The valuation after exhaustion of the mine/quarry will depend largely on the cost of renovation/landscaping and the expected value of the land on completion. If the mine is in or near an expanding urban centre it may have a high potential value after renovation. For example, the land can be used for industrial or residential purposes.

LEGAL REQUIREMENTS ON REHABILITATION

EXAMPLE - SOUTH AUSTRALIA

The Mines and Works Inspection Act 1920 controls mining operations which disturb the land surface, treatment and disposal of mine wastes and the rehabilitation of affected land. The act prohibits undue impairment of the amenity of an area through water pollution, excessive noise and dust and unnecessary vegetation clearance. The act provides for the regulation and inspection of mines and works to ensure that mining operations and associated activities do not cause unnecessary impact on the environment.

The Mining Act 1971 regulates all classes of mining and mineral exploration tenements. It requires amongst other matters, that the Minister have regard to environmental aspects when considering terms and conditions of a mining tenement which determine the way in which mining operations can occur over a particular parcel of land. The act provides for rehabilitation and restoration of land by way of:
EXAMPLE - NSW

Protection of the environment is expressly covered under part VII sections 117-120, Mining Act 1973. These include condition on the operation of the Mining Lease (s118), rehabilitation of the site (s119) and directions to comply and penalties for non compliance (s120).

COMPENSATION

The owner of any land upon which mining operations are carried out is entitled to receive compensation for any financial loss, hardship or inconvenience suffered as a consequence of mining operations. The amount of compensation can be either by way of agreement between the owner and the operator or if they cannot reach agreement, by an appropriate court. For example, under the Mining and Works Inspection Act 1920 (SA). 3