As the closure landscape changes, regulations relating to mine closure are increasingly stringent, with governments becoming more risk averse. Stakeholder expectations, as well as scrutiny from regulators and NGOs, are also increasing. This is particularly relevant for the industry's closure performance and how companies disclose costs associated with mine closure.
The ability of mining companies to responsibly close their operations is critical to their social licence to operate, both individually and collectively. To this end, Gold Fields has strengthened its approach to closure liabilities over time by requiring operations to:
- Regularly review and update their closure plans in accordance with ICMM-aligned Group closure guidance
- Develop rigorous closure cost estimates, which are then internally and externally reviewed annually
- Set annual performance targets for their progressive rehabilitation plans
During 2020, the Group maintained its focus on progressive rehabilitation – the implementation of closure activities during the construction and operation of a mine – although some activities were materially disrupted by Covid-19-related restrictions. Progressive rehabilitation includes remediation of contaminated areas, decommissioning and removal of redundant infrastructure, landform reshaping, rehabilitation, revegetation and in-pit tailings disposal. The Group achieved an average of 93% of the measures set in the rehabilitation plans for 2020, ahead of target.
Substantive rehabilitation projects undertaken during 2020 included the rehabilitation of the Damang TSF, backfilling the St Ives Diana pit and rehabilitation trials at Gruyere.
Gold Fields' total gross mine closure liability increased by 7% to US$467m in 2020, largely due to the impact of currency fluctuations (US$19m) and additional closure requirements at Cerro Corona (US$10m). The regional breakdown is provided in the table below:
|Group closure estimates (US$m)||2020||2019|
|Australia1, 2, 3||219||198|
|1||Due to legislative changes introduced in Western Australia, there is no longer a legal obligation to have unconditional performance bonds in place for mine closure liabilities. Such liabilities for continuing operations are now self-funding. In addition, companies are now required to pay a levy to the state based on the total mine closure liability. This levy is 1% of the total liability per mine, paid annually. This levy goes into a state administered fund known as the Mine Rehabilitation Fund. Capital and interest from the fund will be used to rehabilitate legacy sites or sites that have prematurely closed or been abandoned|
|2||Includes 50% of the total Gruyere closure cost estimate|
|3||Exchange rate fluctuations between 2019 and 2020 resulted in a material change in the Australia closure cost estimate. In Australian Dollar terms, the actual year-on-year increase was marginal (A$282m to A$284m)|
|4||Includes US$2m Salares Norte footprint disturbance cost estimate|
The funding methods used in each region to make provision for the mine closure cost estimates are:
- Peru – bank guarantees
- Australia – existing cash and resources1
- Ghana – reclamation security agreements and bonds underwritten by banks, along with restricted cash
- South Africa – contributions into environmental trust funds and guarantees