A life cycle approach: exploration and closure
Podcast
Caroline Digby
Director, Post-Mining Alliance, Eden Project“Successful mine closure ensures that local people are in a position to adapt to new circumstances, as well as establishing new uses for the mine site, its surrounding infrastructure and landscape.”
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Our context
The commitments made in our values imply that, even at the exploration phase of a project, we need to take into account the fact that our mines will eventually close. Rehabilitation costs must be provided for over the lifetime of the operation, and rehabilitation work must be undertaken in line with our commitment to respect the environment. Communities which have hosted our operations must be consulted on what we leave behind in terms of infrastructure and impacts.
AngloGold Ashanti has a large portfolio of greenfield and brownfield exploration projects. Active community engagement is underway at many sites and issues such as health, safety and environmental management are addressed in the exploration phase of our projects.
On closure planning, significant efforts have been made to improve the quality of closure plans at all of our operations. As a means to achieving this end, a company closure standard was approved in 2009. Operations have been given until the end of 2011 to comply with this standard.
This section provides more detail in respect of two critical aspects of our business – exploration and closure planning – both of which are essential to mine in a sustainable manner and leave communities with a sustainable future.
Our exploration pipeline
Exploration is the life blood of any mining company. The long-term and sustained commitment to making new discoveries, evaluating them and transitioning them into viable mining operations ensures sustainability of the organisation.
AngloGold Ashanti’s greenfield exploration business unit is mandated to deliver a pipeline of new projects of material value for more detailed resource definition and pre-feasibility studies as a precursor to mining activities. This mandate is achieved through building a global portfolio of projects that balances risk (including geo-political, commercial, technical and non-technical risks), project flow and the optimisation of overall value creation.
The AngloGold Ashanti commitment to building a global exploration project pipeline has been substantial. The company has developed a presence in prospective geological environments on each of the major continents. The company’s Proved and Probable Ore Reserves amounted to 71.2Moz of gold in 2010 compared to 70.6Moz in 2009 and 74.9Moz in 2008. Following the sale of the Tau Lekoa mine in August 2010, the figure for Proved and Probable Ore Reserves in 2009 reduced to 70.6Moz from the 71.4Moz previously stated.
AngloGold Ashanti’s greenfield exploration business unit identifies and evaluates new opportunities according to a well-developed mining industry process of exploration. Exploration is undertaken in a staged manner with a progressively greater level of commitment and prioritisation of resources as projects move through the stages in the exploration process (project generation, target generation, drill target definition, drill testing and resource definition and conceptual studies) and levels of business risks are identified, quantified and managed.
AngloGold Ashanti differentiates itself from its competitors by ensuring that its exploration business unit works in partnership with the various operational management teams to capture regionally based commercial, safety, community and environmental expertise relevant to each stage of exploration. It is this commitment to sustainable development through “operating globally and acting locally” that defines the company’s value proposition in terms of developing a brand and reputation at the exploration phase of a project, and establishing trust within the communities in which we operate.
From 2011, this process will be developed further, through Project ONE, which, as a comprehensive business model, enables us to improve processes for recognising and managing business risk. The company is in the process of developing guidelines and policies to be incorporated into sustainability practices.
Our portfolio of exploration projects
Stakeholder engagement in the exploration stage of a project
The frequency and type of communication and stakeholder engagement differs between sites and jurisdictions, and is dependent on the maturity of stakeholder relationships as well as the stage of development of the project. Stakeholder engagement has taken place at all advanced exploration sites during 2010 and particularly at the Tropicana Gold Project in Australia which has now been approved by the AngloGold Ashanti board to proceed through construction to mining.
We are currently undertaking a feasibility study for the Mongbwalu Project in the north east of the Democratic Republic of the Congo (DRC). As part of the required environmental impact study, we are working with independent consultants to undertake further specialist studies such as a human rights assessment. We are also working on a stakeholder engagement process to ensure that stakeholders have access to information on the project and can raise concerns and questions that are important to them, locally, regionally and nationally. Stakeholders are given feedback on issues they have raised, and participate in the planning of project impacts and benefits.
Elsewhere, in Gabon, Northern Canada, Brazil, Colombia and the Solomon Islands extensive and ongoing early stage engagement is taking place in partnership with joint venture partners at national and regional government level with the relevant government and regional development bodies, community groups and NGOs.
In the Western Province of the Solomon Islands, where AngloGold Ashanti is exploring jointly with Canada-based XDM Resources, regular engagements with the community took place during 2010 on land access agreements and compensation for disturbance to land by ongoing exploration activity. The joint venture management team provides work opportunities, small-scale business activities, and health and community programmes to encourage participation by locals and customary landowners.
Case study
Tropicana Gold Project – Stakeholder engagement in Western Australia
In November 2010, the company approved the development of the 70%-owned Tropicana project, which expects to pour its first gold in 2013. In advance of production, an AngloGold Ashanti project team was actively engaging key stakeholders to obtain buy-in and to co-design the project.
Read case studyClosure planning and provision
All mining operations eventually cease. Closure planning is a critical operational activity, potentially with significant reputational implications. The associated liabilities must be provided for and publicly disclosed. Closure planning is an activity that starts at exploration and mine design and continues throughout the life of mine.
Planning for closure implies creating a 'closure mentality', whereby closure is considered at each stage in design and operation of the project. It is often possible to plan and design operations to reduce rehabilitation costs. In waste rock dump construction, for example, cost considerations often dictate steep slopes, which may lead to expensive earth moving after closure. Establishing flatter slopes during construction could reduce such costs in the long term.
The company’s Environment and Community Policy commits the company to ensuring that financial resources are available to meet its closure obligations. Good closure planning is a value-adding exercise that optimises post-mining land use, and can help to reduce life-of-mine operating and closure costs.
Poor or inadequate closure planning can lead to dysfunctional relationships with host governments and communities. Furthermore, without proper planning the company is likely to be exposed to higher costs, missed opportunities, compensation claims and reputational damage.
In order to ensure that operating staff and the company’s stakeholders clearly understand our closure commitments and to set a common benchmark across the company, a closure and rehabilitation management standard was finalised during 2009. Operations were given two years, until the end of 2011, to achieve full compliance with the standard, which requires, amongst others, that an interim closure plan be prepared within three years of commissioning an operation, or earlier if required by legislation. This plan is reviewed and updated every three years (annually in the final three years of a mine’s life) or whenever significant changes are made. It takes into account operational conditions, planning and legislative requirements, international protocols, technological developments and advances in practice. The interim plan becomes a final plan at least three years before closure is planned.
Our long-term remediation obligations include decommissioning and restoration liabilities relating to past operations which are based on our environmental management plans and comply with current environmental and regulatory requirements. Provisions for remediation costs are made when there is a present obligation, it is probable that expenditure on remediation work will be required and the cost can be estimated within a reasonable range of possible outcomes. The costs are based on currently available facts, technology expected to be available at the time of the clean up, laws and regulations presently or virtually certain to be enacted and prior experience in remediation of contaminated sites. Provisions for restoration and decommissioning costs are made at the present value of the expenditures expected to settle the obligation, using estimated cash flows based on current prices and discounted at a pre-tax rate that reflects current market assessments of the time value of money.
In 2010, discounted closure liabilities increased from $418 million to $551 million. This increase is largely attributable to changes to life of mine plans, changes in estimates of closure liabilities and increased cost escalations.
Community imperatives
Among concerns associated with closure is the need to ensure that commitments to communities have been recorded and are acted upon. After the mine has closed the local community must live with its legacy. Our closure standard stipulates that closure planning must be undertaken in consultation with the community. In the course of these consultations, different issues are raised which require site-specific solutions. Livelihood preservation and infrastructure are often key requirements. Local people who were previously employed at the mine and may have received education and training seek viable employment alternatives. Communities also require information on rehabilitation of the landscape and on any lasting environmental impacts.
Performance on closure planning in 2010
Guidelines to assist operations to implement the closure and rehabilitation management standard were developed during 2010. A workshop was held in December 2010 to ensure alignment amongst environmental, social and accounting professionals within the company and to share best practices across the group.
Throughout 2010, closure planning was conducted at an operational level, with assistance from corporate and regional experts where necessary, to meet the standard. A multi-disciplinary closure working group, established in 2008, oversaw progress and updated executive management. It assessed gaps between existing closure plans and the standard.
Self-assessments conducted in 2010 highlighted that areas requiring greater attention at some operations include:
- risk and opportunity assessment;
- decommissioning and rehabilitation plans;
- completion criteria and monitoring;
- contingency planning;
- care and maintenance plans;
- premature closure; and
- planning of final exit from site.
Commitments and delivery
Work to achieve compliance with the company standard for closure and rehabilitation will continue in 2011. Over 2011 and 2012, compliance with the standard will be assessed through a corporate-led assurance and operations review. Closure planning is an iterative process and we are aiming for continuous improvement in our performance.
Mali
The women of Kourouketo Village near Yatela mine collect indigenous Peniculatum grass seeds from the area surrounding their village and sell them to the mine for use in its rehabilitation programme.