A new Western Australian (WA) govern- ment fund will help release hundreds of millions of dollars tied up in environmental bonds.

The Mining Rehabilitation Fund (MRF), which has been introduced by the Western Australian Department of Mines and Petroleum (DMP), will largely replace the state’s environmental bonds system.

Under the previous environmental bonds system, companies were required to provide a bond that covered 20% of total rehabilitation liabilities for a site.

This model, however, had a number of disadvantages, including tying up significant funds for operators during the initial exploration stages and restricting the use of the bond money to the particular mine for which the security was held, rather than addressing the legacy problem of abandoned mines.

It is estimated that bonds in WA cover only 25% of the total outstanding rehabilitation liability, which means that if a mine operator is unable to meet its environmental obligations, the State must pay the rehabilitation costs.

The MRF will, thus, overcome these issues by providing a pooled fund, levied according to the environmental disturbance existing on any given tenement at the yearly reporting date.

DMP environment division executive director Dr Phil Gorey says the fund was developed over many years and chosen after extensive consultation with industry, government, conservation and community stakeholders and will provide industry with a significant cost saving.

Money in the MRF will be used for rehabilitation where the operator fails to meet rehabilitation obligations and every other effort has been used to recover funds from the operator.

Interest generated from this account will be used to fund the administration of the MRF and will also be used to carry out rehab- ilitation work on legacy abandoned mine sites throughout the state, which will be carried out by suitably qualified professional contractors with expertise in rehabilitation.

The fund will enhance the State’s capacity to manage and rehabilitate abandoned mines, leading to better environmental and community safety outcomes.
The voluntary opt-in period for the MRF started on July 1 and allows registered companies to join the fund.

The MRF has been broadly supported by industry and has seen nearly 400 companies preregistering to enter the fund during the voluntary period.

The period will continue for the first year of the fund, which will become mandatory for industry to join after July 2014.

“The new system encourages early rehabilitation and will provide a mechanism for the state to rehabilitate abandoned mine sites in the event that a company defaults on its obligations, which is a win-win for the sector and the environment as it frees up valuable funds at the start of projects and encourages ongoing rehabilitation,” says Gorey.

He also says the new fund requires tenement holders to submit data to the department using an online system, declaring the size of the area disturbed and the type of disturbance.

“The information technology systems we have put in place ensure that it is easy for companies to submit the information needed by the department,” explains Gorey.

The levy is calculated on a per tenement basis according to the type of disturbance, as clearly defined in the regulations.

The contributions start at 1% of the estimated rehabilitation cost a year and the fund will build up over time. These funds will then be available to use in the event a company does not fulfil its rehabilitation obligations.

Gorey says that, as the liabilities for those who join the fund are calculated yearly, it is expected that the new fund will encourage progressive rehabilitation throughout the life of the mine.

“The new fund provides a more flexible and cost effective system for industry,” he adds.