Mining for Closure: Policies, practises and guidelines for sustainable mining and closure of mines

unable to, comply with the required environmental and social policies and processes (International Fi- nance Corporation, 2003). A large group of leading banks already support the initiative (33 institutions as of August, 2005). Fur- ther, and relevant to earlier discussion of financial surety, the signatory international banks undertake not to finance any project over US$ 50 million un- less it meets World Bank and International Finance Corporation environmental policies, standards and guidelines, 53 which include a requirement for clo- sure funding (Miller, 2005 p.6 & p.17). Indeed, the principles include a requirement for fully funding a mine’s closure plan by appropriate instruments so that the cost of closure can be covered at any stage in the mine life, including premature and un- foreseen cessation of activities. While the key focus of the principles are upon de- veloping countries, the guidelines may eventually also apply to mines in developed countries (Inter- national Finance Corporation, 2003; Miller, 2005). As a potentially negative aspect, Miller (2005) re- ports the guidelines may act against discretionary leeway currently utilised by many governments, including a number of those in developed coun- tries, when setting the amount and nature of the required financial assurance. 54 The Equator Principles are included as Appendix C to this document. 2.3.5 governance principles for foreign direct investment in hazardous activities While not of the scale and visibility of the Equator principles presented above, the Regional Environ- ment Center for Central and Eastern Europe has also worked on a set of principles. Again these seek to ensure that projects – particularly projects in ar- eas such as mining – financed in jurisdictions such as those in SEE, are developed in a manner that are socially responsible and reflect sound environmen- tal management practices. The REC submitted Draft Governance Principles on Foreign Direct Investment in Hazardous Activi- ties on the occasion of the fifth Ministerial Confer- ence “Environment for Europe” in Kiev, Ukraine which took place from the 21 – 23 May 2003. 55 A revised and updated version of these principles was also made available at the Cluj-Napoca confer-

also included in accordance with the United Nations Convention of 25 June 1998 on Access to Informa- tion, Public Participation in Decision-Making and Access to Justice in Environmental Matters (Aarhus Convention) to which the EU is a signatory. Importantly, all these measures will apply to those waste management facilities that present a high ac- cident risk but will not fall under the provisions of the revised Seveso II Directive. 2.3.4 the equator principles 52 A potentially important development at the supra- national level is encompassed within the Equator Principles, an initiative led by the International Finance Corporation and the World Bank. This initiative aims at the very financing mechanisms of the industry. Project financing plays an impor- tant role in financing development throughout the world. Further, the financing of projects, particu- larly in emerging markets, is central to the rise of environmental and social policy issues. In recogni- tion of the fact that financiers have significant op- portunities to promote responsible environmental stewardship and socially responsible development (International Finance Corporation, 2003), the Equator Principles seek to ensure that the projects financed by signatories are developed in a man- ner that are socially responsible and reflect sound environmental management practices. As part of adopting the principles, financiers undertake to carefully review proposals and to refuse loans di- rectly to projects where the borrower will not, or are 52. See http://www.equator-principles.com/principles.shtml . 53. Since 1998, the World Bank has included in its “Pollution Prevention and Abatement Handbook” (World Bank, 1999) provi- sions to ensure that any project financed by the Bank or the related IFC (International Finance Corporation) anywhere in the world includes appropriate standards of mine closure and reclamation, including the nature and amount of financial assurance. These requirements are currently stated in general terms. If a country does not have corresponding requirements, then the World Bank/ IFC measures govern the project. 54. He indicates that unforeseen side effect of these undertakings could be to frustrate the deliberate policies of governments. If a state demands less than full coverage of potential reclamation liabilities, as a calculated policy designed to attract mining, bank financing may not be available for projects there. As a result, the government’s con- scious policy may be nullified. The legislation of many jurisdictions gives the responsible minister some discretion in setting the nature and amount of required financial assurance (Miller, 2005, p24). 55. These activities are reported at http://www.rec.org/REC/Intro- duction/Kiev2003/. The draft document presented is also avail- able at http://www.unece.org/env/documents/2003/kievconfer- ence/inf.18.e.pdf

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MINING FOR CLOSURE