I spent some time this morning doing some Google searches for copper mine financial assurance. Lots of links referring to yesterday's legislative hearing showed up. Personally, I think Ron Meador's piece in today's MinnPost is about the best of the bunch. However, I found some even more interesting information a page or three into the search listing. An organization called EARTHWORKS has a link to a paper published by the Mineral Policy Center titled Putting A Price On Pollution, Financial Assurance for Mine Reclamation and Closure. It was authored by Jim Kuipers, Center for Science in Public Participation. Here's a quote from the Executive Summary:
"However, these estimates—and the resulting financial assurance—usually fall short of actual reclamation and closure costs. As illustrated by the chart on page 2, taxpayers throughout the western U.S. face huge clean-up costs as a result."Here's the chart (use the link above to read the fine print):
We can see that there's a wide range of Assurance and Liability per acre. (These figures are several years old.) However, as an additional incentive to get you to read the report yourself, here's another quotation:
Since 2001, some mining companies have reported difficulty securing financial assurance in the form of surety bonds for their operations. It is true that financial assurance is increasingly expensive—and cash equivalents are even more expensive than bonds. However, the reasons offered by mining companies for this trend do not correctly explain the problem.Now, I would find all of this less worrisome were it not for the fact that our Minnesota politicians, when faced with regulatory roadblocks (literally) to a new bridge across the Wild and Scenic St. Croix River, got Congress to create an exemption for the bridge. The Vikings are now in the process of siphoning another $100 million or so out of the pockets of Minnesotans. I just hope that these projects haven't set an unfortunate precedent for a philosophy of jobs über alles? Go read Meador's piece. Wouldn't sustainable development on the Iron Range be a better long term risk management strategy than relying on our regulators and politicians to get it right this time?
Surety companies that provide legitimate financial guarantees are responding—as expected in a market economy—to greater risk. In the past few years, mining companies have demonstrated in case after case that the cost, time frame and extent of clean-up have been substantially underestimated by regulators who set bond amounts. [emphasis added]
Due to a spate of mining company bankruptcies, surety providers have made significant payouts in recent years. In response, the surety industry has increased its rates. In fact, testimony by repre- sentatives of surety companies demonstrates that mine reclamation bonds are more risky than their other investments. [emphasis added]
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