Taxpayer Concerns

The Mining Game JPG
The history of sulfide mining is filled with companies going bankrupt or lacking the financial resources to respond to pollution from their mines.

The result has either been ongoing environmental contamination, or a shift of financial burden from the companies to the public to clean up mining pollution.

Costs left to taxpayers

The U.S. Environmental Protection Agency estimates that the cost of mine cleanup for sites listed as national priorities is $20 billion. The most significant cost associated with this cleanup is long-term water treatment and management.

  • Summitville Gold Mine, Colorado – The company filed for bankruptcy, leaving cleanup costs to the public. Costs expected to be about $235 million and take at least 100 years.
  • Zortman Landusky Mine, Montana – In 1998, the company abandoned the site and filed for bankruptcy. After several lawsuits against the mining company and its creditors following the company’s bankruptcy, Montana’s taxpayers are still liable for anywhere from $8 million to $90 million.
  • Gilt Edge Mine, South Dakota – The parent company, Dakota Mining, went bankrupt and abandoned the mine in 1999 with only a $6 million bond in place, an amount insufficient to cover water treatment for even a single year. In 2000, South Dakota requested the site be designated a Superfund site for long-term cleanup, leaving the burden of reclamation costs on taxpayers.

How taxpayers are left liable

It is quite common for mining companies to go out of business when a mine closes.  Corporations created for specific mining projects with backing of international investors have little incentive to stay in business if mining operations are completed or if mineral prices fall significantly.

When companies are unwilling or unable to pay for the cost of cleaning up a mine site, the cost of treating sulfide mining pollution becomes a liability for taxpayers and affected communities.

Long-term water treatment, long-term costs

Closure costs for a mine fall into two separate categories:

  1. Reclamation of the site - This involves filling in pits, planting vegetation, and attempting to restore the land to its pre-mining state as much as possible.
  2. Long-term water monitoring and treatment - This cost is larger and more difficult to calculate. Some researchers who study mines across the country warn against permitting projects that will require long-term water treatment because of the many unpredictable variables.

Figuring out how much financial assurance is needed for water treatment that lasts forever can be challenging and inaccurate. If the bond is too little, taxpayers will eventually pay the costs. If the bond is too high, mine companies may lose the profitability of the operation.

Responses in other states

Because of the high costs of cleaning up and treating sulfide mines, and the history of mining companies abandoning mines and leaving taxpayers to deal with them, several states have strengthened their laws.

  • New Mexico – After experiencing significant pollution problems from two of its sulfide mines, increased financial assurance for the two mines to roughly $400 million each.
  • Montana – After disastrous mining pollution experiences and enormous financial liabilities, increased financial assurance amounts that ranged from 50 percent to more than 10,000 percent of previous levels.

Beyond financial assurance measures, states are using other means to protect themselves from long-lasting sulfide mining pollution:

  • Grand Canyon, Arizona – In early 2012, the U.S. Department of the Interior signed a 20-year moratorium for new hardrock mines on one million acres of federal land around Grand Canyon National Park.
  • Prove-it-First law, Wisconsin – In 1998, Wisconsin passed a moratorium for opening new sulfide mines until a similar mine could be demonstrated elsewhere that had been operating for ten years and closed for ten years without having created acid mine drainage. No sulfide mines have been proposed in the state since the law was passed.