Changes Needed To Make B.C. Mining Companies Financially Accountable For Disasters

(VANCOUVER – July 30, 2019) Five years after the Mount Polley tailings dam breach that spilled 24 million cubic metres of waste into critical salmon habitat in Fraser River Watershed, communities and taxpayers face the prospect of having to foot the bill to clean-up the next mining disaster unless the BC government compels mining companies to provide funds for cleanup, according to a new reportreleased today.

The report, commissioned by the BC First Nations Energy and Mining Council(FNEMC) and written by economist Jason Dion, calls on the province to introduce a new legal framework to close a policy gap that allows mining companies to operate without providing financial assurance to cover the costs of a disaster.

Now is the time to make these changes. The expert panelmandated by BC First Nations Leadership Council and the provincial government to determine the cause of the disaster warned BC can expect two massive dam failures every 10 years unless mining laws are changed.

Financial assurance ensures that funds are available to pay for clean-up even if a company goes bankrupt and gives companies a direct economic incentive to reduce the risk of disaster.It also screens out companies that can’t afford the risk of their own projects. When companies are held fully liable, for instance, they are more likely to employ state of the art techniques – thereby lowering their insurance premiums and making smaller contributions to sector funds.  The temptation to cut corners is much greater when a company knows it might never have to pay for the mistakes and messes it makes.

Specifically, the report recommends a combination of funds for a disaster that would include a certain value provided by the mining company or a third-party insurance company, and if the costs exceed this coverage, a mining sector-level financial assurance or a public fund that pools funds from a range of sectors would kick in. The report also underscores the importance of First Nations representation in these solutions.

These changes would bring the mining sector into line with other heavy industrial sectors – pipelines, offshore oil and gas production, tanker traffic and nuclear power generation – which must provide financial security against the risk of disaster, in many cases up to $1-billion.

KEY FACTS: FINANCIAL ASSURANCE REQUIRED IN OTHER SECTORS

• Tanker traffic coverage of up to $1.4-billion.
• Offshore drilling and extraction – Company-level coverage up to $100-million or participation in a $250-million pooled fund with other firms.
• Nuclear energy – Pooled funds cover up to $1-billion.
• Rail transport –Coverage of at least $25-million, but up to $1-billion for some dangerous goods. Oil transporters pay into an industry fund to cover costs above operators’ coverage and ability to pay.
• Pipelines – Coverage based on a pipeline’s assessed “risk value”.  Operations with capacity above 250,000 barrels per day must provide $1-billion in coverage.
• British Columbia – no coverage required for mining disaster

Source: Reducing the Risk of Mining Disasters in BC – page 12

KEY FACTS: THE HUMAN AND FINANCIAL IMPACT OF DISASTERS

• The Lac-Megantic train derailment and explosion in July 2013 killed 47 and the oil polluted local waterways and soil. The disaster bankrupted the train’s operator, who had only $25-million in liability insurance. The disaster’s total costs have been estimated at over $1-billion. A settlement fund created by other companies implicated in the disaster helped cover some of the costs relating to personal injury and property damage, but most of the environmental costs are being borne by Quebec taxpayers. (Source: Mining Risk and Responsibility Report– p 17)
• In November 2015, a tailings dam collapsed at the Samarco iron mine in Brazil killing 19, and in January this year a tailings dam failure at Brazil’s Córrego do Feijão iron ore mine killed 240 in what has been called Brazil’s worst-ever environmental disaster. (Source: Reducing the Risk of Mining Disasters in BC p 1

QUOTES:

“B.C.’s First Nations are on the front line of mining’s environmental impacts and must have a say in how the financial assurance scheme is structured. Disasters like Mount Polley impact our way of life and the environment is devastated for years to come. This needs to change and it’s up to the BC government working with First Nations to change it.”

Robert Phillips, First Nations Summit and First Nations Energy and Mining Council

“B.C. has a polluter-pay policy under its Environmental Management Act, but that’s not the reality on the ground. By accepting our recommendations, the government would not only ensure that polluters pay when there are disasters, it would also reduce the risk of another Mount Polley by giving mining companies a financial incentive to reduce risk in their operations.”

Allen Edzerza, First Nations Energy and Mining Council

“The lack of financial assurance for mining disasters is a serious policy gap in British Columbia—one that increases the risk of another Mount Polley. By implementing smart financial assurance requirements, B.C. can better protect the public while still ensuring a thriving mining sector in the province.”

Jason Dion, Economist and report author

QUOTES: OUTSIDE EXPERTS:

“This is not just about what happened at Mount Polley five years ago. There are other mines being planned or already operating in B.C. that may never have been approved had financial assurance been in place when they applied for permits because they may not have been able to afford covering the risk. Financial assurance is long overdue to help protect communities and the environment currently threatened by mining disasters throughout B.C.”

Bev Sellars, former Chair of First Nations Women Advocating Responsible Mining

“Pooling disaster risks together under a publicly-managed risk pool can help better protect the public while keeping costs to industry low. Canadian governments should be exploring this idea.”

Glen Hodgson, economist, Fellow of the CD Howe Institute and former Commissioner of Canada’s Ecofiscal Commission

RESOURCES

Report 2| Reducing the Risk of Mining Disasters in BC – How Tools Like Financial Assurance Can Help

Report 1| Mining Risk and Responsibility

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Media contact

Jenn Wesanko
jenn@jennwesanko.com
604.347.5988

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