Ontario Taxpayers Unprotected from Potential Costs of Cleaning Up $584 Million of Contaminated SitesPublished by MAC on 2006-04-14
Ontario Taxpayers Unprotected from Potential Costs of Cleaning Up $584 Million of Contaminated Sites at Inco and Falconbridge Operations
by MiningWatch Canada
14th April 2006
MiningWatch Canada learned today, through an application under the Freedom of Information and Privacy Act, that the two mining companies in Ontario with the largest environmental footprint have been allowed to "self-assure" their mining operations against closure and abandonment. The companies themselves estimate the cost of that clean-up as over $585 million.
The clean-up estimate costs have not been independently evaluated, and there is no requirement under Ontario law for this to be done. Until today, the public did not know which companies self-assured their properties, and for how much.
On December 5, 2005, the Auditor-General of Ontario released a report slamming the Ontario government for exposing taxpayers to this enormous risk:
"Companies whose bonds are rated Triple B or higher meet the financial test established in the Mining Act and don't have to provide financial assurance. We were informed by the Ministry that Ontario is the only province in Canada that accepts the corporate financial test for of assurance, which constitutes the major portion of total financial assurance provided. This form of financial assurance essentially amounts to self-assurance.
"A consultant hired by the Ministry in 1996 to review self-assurance found that the risks associated with granting such a privilege to a mining company are considerable because the Ministry is effectively assuming the status of an unsecured creditor. Any failure of these mining companies would mean a significant liability for the province. Also, it could be difficult to obtain another form of financial assurance once a company is experiencing financial difficulty and can no longer meet the financial test.
"Experience in other jurisdictions has shown that mining companies that have gone bankrupt continued to meet the financial test right up to the time they filed for bankruptcy protection. Because significant mine-rehabilitation costs are being borne by government after companies that offered self-assurance have gone bankrupt, some jurisdictions have eliminated the use of self-assurance. For example, the Bureau of Land Management in the United States has not accepted any new corporate self-assurance since 2001."
While the Ontario government continues to assume all the risks for cleaning up their mess, Inco and Falconbridge have declared net earnings for 2005 of $836 million (US); and $872 million (US) respectively.
"It's time the public and the communities that produce this enormous wealth were protected against the day when the boom is over and the price of metals plummet," commented MiningWatch Canada National Coordinator Joan Kuyek.
The public has not had the names and amounts of companies' self-assurance until today.
These are the figures released by the Ontario Ministry of Northern Development and Mines:
For more information, Joan Kuyek, National Co-ordinator, tel. (613) 569-3439