Counting the cost of tailings dam failures

Advocates for civil engineering reform on mine sites have a problem and it is, accounting. That comes from University of Queensland Professor David Williams. Professor Williams’ CV includes director of the industry-funded Geotechnical Engineering Centre at University of Queensland, and manager of the Large Open Pit Project, which is a consortium made up of international mining majors. Director of the Geotechnical Engineering Centre at University of Queensland, Professor David Williams. Professor Williams has seen it all in tailings dam design, construction and maintenance including massive failures like the 2019 Brumadinho Dam failure in Brazil which killed around 270 and the Cadia tailings dam failure in New South Wales which saw the release of 1.33 million cubic metres of tailings. In this first of a series of stories coming out of a recent interview granted to Industry Queensland, Professor Williams highlights the role that short-term decision-making plays in undermining good engineering and puts forward a solution. Mine planning including tailings dams, was designed to fit into a model that aligned to immediate priorities that usually included getting finance for a new site. Related: Audio file of Professor David Williams interview That planning failed to adequately take account of the mine life which included expansion, diversification and eventually, closure, Professor Williams said. As a result, tailings dams on many mines were a patchwork legacy of short-term decision-making and Professor Williams called on all parties, particularly financiers, to consider whole-of-mine-life accounting when planning mines. “Well, currently, what dominates is what's called ‘net present value’ or ‘net present cost’ accounting, which is associated with a discount factor,” he said. “So, the idea is you try to minimise your upfront capital costs, and you discount future expenditure back to today's dollars, but using a fairly high discount rate. “This is all in an effort to make the very large investments involved in new mines attractive to the financiers. So, you defer costs to the extent that you can.” Kicking the can As a result, the future capital costs including commitments to mine-site closure and planning for tailings dam remediation were kicked down the road, Professor Williams said. “Many mines will operate for at least 20 years or more. That's a long time to defer expenditure. And you end up with these unintended consequences that become almost cost-prohibitive to do something about at the end. “The difference between net present value and the alternative that might be whole-of-life is in whole-of-life you try to account for the costs as they occur. “And I'm pretty sure that if you did a whole-of-life approach, that you would get a crossover. Upfront, it would cost you more, but there would be a crossover during the operation, where it starts costing you less. “And by the end of the operation, you've got a properly rehabilitated and closed mine, which has actually cost you less than it would do if you did the conventional net present value and discounted that rehabilitation cost towards the end.” There were few examples of mines operated in a conventional ‘net present value’ type approach that had been successfully closed, Professor Williams said. “What they tend to do is go into some sort of care and maintenance-type operation where they get maintained, or they get sold on,” he said. “In the past, that was often the case, that a major mining company would sell it on to a junior, and they'd eke a bit more revenue out of it and still pass the buck of rehabilitation and closure into the future, into the never, never, if you like.” Practices were changing and Professor Williams pointed to the sale of Century Mine in Queensland’s Gulf country to operators New Century where the environmental legacy remained with the seller for 10 years. Abstracts are being called for the Australasian Institute of Mining and Metallurgy’s Mine Water and Tailings conference held in Brisbane July 14-16. Photo: Hydro-mining at New Century Resources' Century zinc operation. An example of reworking a legacy tailings dam.

Counting the cost of tailings dam failures

Industry Queensland

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