The role of national government is to provide a well-designed legislative framework for the mining industry that includes all aspects of the environment, both physical and social. From the regulator’s perspective, a clear-cut and enforceable framework is essential to effectively control the activities of the industry. From the industry viewpoint, it is important to have a regulatory system that is stable, transparent and appropriate to the
conditions of the country in terms of priorities, infrastructure and skills.
There are a wide variety of physical and environmental issues that need to be addressed by legislation if they are to be acceptably managed. The socio-economic issues that need to be covered are discussed in Chapter 6, Section 4. The range of legislative systems to be found in different countries has resulted in a diversity of methods for allocating the responsibilities of these issues among mining, environmental and other laws. No two countries possess exactly the same framework and only a general overview of the possibilities can be outlined in this document. Some regulatory models are given in the Appendices.
Each country will need to adapt these Guidelines to suit its own circumstances. The number of issues now included under the “sustainable development” rubric means that a wide range of laws and regulations may apply to the physical, social, environmental and economic management of a project. Each country needs to assess the level of regulatory legislation generic to all industries, and how much should be specific to the mining industry. In addition, the administrative arrangements for enforcement tend to be complex because the division of responsibilities among different government departments and among national, provincial (or state) and local levels of government is seldom straightforward. There is unfortunately no ideal system and a country has to establish its own procedures, based on individual priorities and circumstances.
3.1 Legislation
3.1.1 Mining Legislation
The politically sensitive nature of the mining industry, due to issues such as state sovereignty, ownership and control, environment, community impact, sustainability, depletion and site dependency, has led most countries to develop regulatory and fiscal systems distinctly different from those that regulate most other industrial activities. A “mining law” is the principal regulatory instrument governing mineral exploitation activities and it defines both the rights and obligations of the mining title-holder and the power of government officers. The government’s first role is to regulate the industry at all levels, including domestic exploration and exploitation or extraction, as well as primary mineral processing.
However, many mining laws, or the associated implementing rules and regulations, either state that the holder of an exploration or mining licence must comply with all other relevant laws or include a number of environmental provisions. While mining laws are rarely specific enough to allow for broad environmental programmes, many now incorporate the requirement for one or all of the following:
• an environmental impact assessment or environmental impact statement;
• an environmental management plan;
• a rehabilitation programme;
• a rehabilitation or restoration fund.
Some also include the stipulation that a decommissioning plan and/or a closure programme must be outlined early on in project planning. Many of the environmental clauses contained in the mining law overlap with the environmental legislation, though the latter are usually generic to all activities and contain a more precise description of the requirements.
There is a growing trend for countries to draft specific environmental regulations for the mining industry. However, this often creates conflict between the mining and environment ministries or departments regarding which one should be responsible for their implementation. Appendix 5 provides a reference to the environmental guidelines for mining projects in Western Australia where the responsibilities are shared between the two departments.
3.1.2 Environmental Legislation
Environmental legislation has moved from comparative obscurity to prominence in a relatively short time. Many of the issues that are now collectively referred to as “environment” were originally dealt with in separate laws, with the emphasis on human health and pollution prevention. The shift in thinking towards “environmental management” has resulted in the majority of countries adopting some form of general environmental law. In most cases these new laws were added to the existing legislation, though some countries are now starting the process of amalgamation. For example, Papua, New Guinea, is in the process of drafting a new Environment Act, which will replace the existing Environmental Planning Act, Environmental Contaminants Act and the Water Resources Act.
The most common model is for a country to establish an environmental planning or environmental management law, which acts as a framework for the environmental management of the country and is administered by a specially created ministry or department. The individual instruments of environmental management, such as prescribed activities and environmental impact assessment, are then specified in associated regulations and guidelines. However, most of the environmental laws are generic in nature and do not specifically outline the unique environmental requirements of the mining industry.
In order to integrate the requirements of the mining law and the environmental law, a number of countries have drafted specific environmental regulations for the mining industry. These are usually established under the environment law and designed to include all the aspects of environmental management that come under the jurisdiction of that act such as:
• environmental impact assessment/statement;
• socio-economic impact assessment;
• environmental management plan;
• environmental monitoring programme;
• environmental audits;
• environmental reporting;
• rehabilitation programme;
• mine closure;
• compensation;
• fees and charges; and
• financial surety.
Other issues such as water usage, waste disposal, air emissions and the control of hazardous substances are commonly regulated by separate legislation and are discussed in more detail in the next section. Where the mining law also covers the same issues, the environmental or associated legislation usually takes precedence.
3.1.3 Other Legislation
A number of issues pertaining to the environment and relevant to the management of a mining project are frequently contained in separate legislation. The following examples give an idea of the range and scope of this legislation but it is by no means an exhaustive list. Land law: deals with the acquisition, disposal, use, protection and management of stateowned land.
Conservation law: was often the first “environmental protection” legislation and includes the preservation of fauna and flora and areas of specific scientific interest. Forest law: looks at the protection and use of forested areas and often includes a provision for establishing national parks and reserves.
Water resources law: usually covers both surface and ground water but does not include the sea or ocean. This law is aimed at regulating the uptake or usage of water and discharge of effluent to natural watercourses.Water quality criteria or standards are often established under this law.
Air quality law: regulates the discharge of atmospheric emissions. Air quality criteria or standards are often established under this law. Hazardous substances law: controls the transport, storage and disposal of any hazardous substances from hydrocarbons through to cyanide. Radioactive substances law: regulates the transport, storage and control of radioactive substances and often includes the disposal of radioactive waste.
3.1.4 International Conventions
In recent years, the number of international conventions aimed at protecting the environment has increased significantly. They deal with an ever-widening range of issues on which global action has been deemed necessary. Conventions now cover not only issues of biodiversity, world heritage and biosphere reserves, migratory species and wetland conservation, but also pollution and waste issues such as hazardous chemicals and the dumping of waste at sea. These conventions are notable for the use of trade restrictions as well as outright bans on certain substances, and many have implications for the mining industry. For example, the growing use of deep-sea tailings disposal should take into consideration the Convention on the Prevention of Marine Pollution by Dumping ofWastes and Other Matters.
In addition to international environmental conventions, there are also the International Labour Organization and other conventions that provide for the protection of workers, women and children. Although conventions are meant to be “legally binding”, they often have no mechanism for ensuring compliance. Conventions are intended to oblige governments to pass national legislation to implement their commitments.
3.2 Instruments for Implementation
The nature of the relationship between the regulator and the operator can vary significantly, from collaborative to confrontational. Where a regulatory body exerts greater control, it also accepts a greater level of responsibility. This may inhibit continuous improvement on the part of the operator, thereby undermining one of the principles behind sustainable development. In order to provide a more balanced approach to both physical and social environmental management, the concept of cooperation and co-regulation is now being applied in some countries. This may also involve the community and NGOs as well as the relevant government agencies and the company.
In the past, governments tended to use command-and-control or prescriptive systems that limited the options for the industry. However, prescriptive legislation can be costly to implement. It also requires an appropriately trained enforcement team, extensive and regular monitoring of operations, analytical and data evaluation support and an effective judicial system to administer fines and penalties. Government authorities are now using a variety of other regulatory approaches to overcome these limitations. However, none of these alternatives used alone is able to address all situations. In practice, a mixture of regulatory instruments is now advocated in order to provide the most suitable response to national needs.
Among the co-regulatory alternatives are:
• performance targets (Section 3.2.3);
• economic instruments (Section 3.2.4);
• negotiated or voluntary agreements (Section 3.2.5); and
• environmental management systems (Section 4.1).
3.2.1 Prescriptive vs. Non-Prescriptive
Prescriptive legislation provides absolute values or standards, which are set by the relevant government department or agency, which must be met at all times. They are relatively simple to put in place and provide a measured response to the question of compliance. They are typically “media” specific and usually are not related to the industrial process being controlled or to the existing environmental conditions of the particular area. Prescriptive legislation can be highly successful in reducing pollution from certain industries but in the mining sector there are both advantages and disadvantages in the use of such an approach.
Large mining operations lack the degree of standardization present in other sectors such as manufacturing. Therefore, the standardized requirements, which are an integral part of the prescriptive system, may result in reduced efficiency resulting in under-protection at some sites and unnecessary over-protection at others. This can mean that the operator concentrates all efforts on meeting those standards, and proving compliance, rather than being forced to think about the process itself. This promotes standardized technological solutions that do not necessarily deliver the optimum environmental or economic performance.
In contrast, non-prescriptive legislation relies on the operator identifying the issues and making the management commitments to deal with them. The operator needs to be aware of the environmental issues and to develop a knowledge and understanding of what is expected from the outset. The methods of achieving these requirements can then be built into the overall management of the project. This provides the opportunity to develop the process and procedures and to identify suitable standards on a site-by-site or case-bycase basis. The flexibility of this approach is advantageous because environmental issues tend to fit no one model and are often full of contradictions.
On the other hand, this method of regulation can provide the operator with the opportunity to understate or hide issues that may be environmentally critical. Ill-defined standards and issues are difficult to measure and open to individual interpretation and persuasive argument. In addition, standards can vary considerably among sites for no apparent reason, which could lead to confusion on the part of project personnel. It also means that compliance or non-compliance often is unclear, leaving the regulating agency unsure of its role.
The prescriptive vs. non-prescriptive debate is more often than not linked to the decision of which government department or agency is responsible for the environmental management of the mining industry. If the Department of the Environment or Environmental Protection Agency has the responsibility, it will, as a general rule though there are exceptions, impose a highly prescriptive regime with standards, criteria and penalties for every eventuality. In contrast, if the Department of Minerals and Energy is in control the tendency is usually to take a more non-prescriptive approach, preferring to negotiate with the operator and taking economic as well as environmental aspects into consideration. For these reasons a mixture of regulatory agencies is likely to be the optimal option.
3.2.2 Standards and Criteria
A standard is a reference norm against which performance can be measured. In environmental matters, standards or criteria are developed to regulate the discharge of pollutants to the natural environment. They provide the numerical limits to which industrial operations must be designed and managed. Unfortunately, many standards are established using little science and much guesswork. It is common practice for a country to base its standards on those of another country with little or no reference to the existing conditions. This can result in the natural environment exceeding the standards without any contributing industrial emissions.
However, standards are an essential tool for a regulator that wishes to employ (at least in part) a command-and-control or prescriptive approach to environmental management, but they should be used with caution (see the previous section). Environmental standards (or criteria) are normally established in regulations or guidelines subordinate to environmental legislation. The most common environmental standards are water quality standards, air quality standards and noise quality standards.
There are no environmental standards that apply around the world, although the World Bank has established recommended target guidelines for water and air quality for the mining industry and the World Health Organization (WHO) produces guidelines for drinking water quality (see Appendix 6 (a)). These guidelines are often copied into national laws even though each country has its own needs and circumstances and should set its own standards accordingly. Indeed, in many cases it is necessary or desirable to have standards specific to a particular site.
3.2.3 Environmental Performance Targets
Environmental performance targets are one of the instruments available to regulators using a non-prescriptive approach. They are based on the receiving environment and the most appropriate technology, and are expected to show a gradual but continuous improvement in overall environmental quality. The choice is left to the operator, who is assumed to have sufficient expertise to make sound, well-informed decisions. Performance targets are also seen as locally responsive because they can take into consideration site-specific
conditions (the assimilative capacity of the environment, background concentrations of contaminants, etc.).
Performance targets differ from quality objectives in that they try to define the behaviour of industrial operations rather than the characteristics of the natural media. Such an approach assumes that there is an effective regulatory and enforcement framework already in place and that legal recourse, in cases of non-compliance, is feasible. Where sufficient resources are not available, independent monitors trusted both by the government and the operator (and preferably the community, as well) could be employed to monitor compliance.
3.2.4 Economic Instruments
Economic instruments can be used in both prescriptive and non-prescriptive regulatory regimes, as a method of providing funds for the regulatory agency and/or as an incentive to improve environmental management. In a prescriptive situation, fees or charges can be levied for a number of stages in the regulatory process, such as the submission of an environmental impact statement or the issuing of an environmental permit. These fees are
usually set at a fixed rate regardless of the environmental implications of the project and provide no incentive for a company to improve its performance.
The setting of fees and charges in a non-prescriptive situation essentially reflects the polluter-pays principle, where a company may be charged for the abstraction of water or the discharge of effluent. These charges are based on the quantity and/or quality of the specified substance and, as such, encourage a reduction in usage or discharge.While some critics claim that this method of environmental management is in reality a licence to pollute, under the right circumstances, economic instruments have been very successful in developing as well as developed countries.
A third alternative is to establish an optimal level of pollution, which is defined as the point where the cost of waste removal is equal to the external cost, based on the assimilative capacity of the environment. Charges would be set at this optimal level which would give the company the maximum freedom of choice under conditions of economic efficiency while minimizing the net social cost. If the optimal level is exceeded, then a fine could be charged to ensure compliance.
3.2.5 Voluntary Agreements
Voluntary agreements, covenants and other instruments sometimes described as self- or co-regulatory, are finding an increasing role in the regulatory system. The advantage of voluntary mechanisms is their high degree of flexibility, allowing companies to find the most cost-effective solutions for each individual case. Their disadvantage is their inability to ensure that all companies comply (enforcement mechanisms are rarely built into voluntary agreements), and the fact that non-signatory parties are not bound by the agreements.
Nevertheless, programmes such as the ARET (Accelerated Reduction/Elimination of Toxics) and MEND (Mine Environment Neutral Drainage) programmes in Canada, and the Greenhouse Challenge Programme in Australia, demonstrate that sector-wide voluntary programmes can produce impressive results in some areas. Voluntary agreements and control are discussed in more detail in Section 4.
3.3 Financial Surety
The regulatory authority is usually ultimately responsible for the cost of treating the environmental problems created by the abandonment of a mine site. As a result, it is becoming common practice for some form of financial surety or rehabilitation bond to be established prior to project approval. This provision is designed to guarantee environmental performance and to cover both the technical and/or financial failure of mine operators to meet their full obligations at the time of closure or in the event of an unplanned closure.
Governments establish financial sureties in order to protect the environment and avoid the costs of cleaning up orphaned sites. However, the cost of a surety can be significant and could deter a potential mining investor. It is therefore necessary for the government to have a good understanding of the issues involved in the design and application of a financial surety policy. The following issues should be considered:
Required standard of rehabilitation: the standard of rehabilitation will affect the cost and therefore the amount of financial surety. A requirement that land be returned to its pre-mining condition is not always realistic although rehabilitation for future economic use should be an option. Required standard of certainty: forecasting rehabilitation costs is an inexact science. Safety factors should take into consideration reasonable foreseeable risks rather than extremely unlikely events.
One-off rehabilitation vs. long-term care: some sites can be successfully rehabilitated at the end of mine life while others may require long-term care. The long-term care costs can be substantial, and it may be advantageous to implement a graduated or incremental system of commitment.
The choice of financial surety instrument: there are a number of options available for establishing a financial surety, as follows:
• Irrevocable Letter of Credit: an agreement between the company and the bank whereby the bank will provide cash funds to the authorities if the company defaults.
• Performance Bond: a surety bond issued by an insurance company in which the insurer is responsible for all claims up to an agreed limit.
• Trust Fund: a fund that operates in a similar fashion to a pension fund with regular contributions being invested by a fund manager.
• Insurance Policy: a special form of performance bond.
• Parent-Company Guarantee: the parent company guarantees to indemnify the government in the event of a company default.
• Pledging of Assets: The company assets are pledged to the government.
• The Timing of a Requirement for Financial Surety: a financial surety should be established early in the life cycle of the mining project and should be reviewed on a regular basis.
For some mine operators, the amount of financial surety is established during project negotiations and is based on the information contained in the environmental impact statement and is an estimate of the closure and rehabilitation costs. Another method is for the mine operator to be charged a levy on every tonne of rock/ore mined/processed or every tonne of concentrate/metal produced.
The financial surety should be available to either the mine operator or the relevant regulatory authority, to pay for rehabilitation. If the mine operator defaults, the money remains in the hands of the regulatory authority. Once all stages of rehabilitation have been completed, including the passive care programme, the remaining funds may be returned to the mine operator.
Whichever method is used to establish a financial surety, it is essential that it be regularly assessed, as part of the environmental management of the project, and increased or decreased as necessary. Contributions to a financial surety are, in some countries, tax-deductible.
3.4 Enforcement
While all instruments promoting behavioural change need some monitoring, those based on specified requirements necessitate an effective and regular enforcement mechanism if they are to be successful. Traditionally, an environmental or mining inspectorate has been charged with monitoring and enforcement. However, the resources needed for the increasingly complex legislative requirements that are now required for the environmental management of a project are not always available. Accordingly, new approaches to enforcement are being tried out at the same time as training and institutional strengthening is being sought to support the more conventional functions of the enforcement agency.
A particularly significant question concerns the responsibility for enforcement of the environmental regulation of mining. The environmental agency does not necessarily possess the expertise in mining while the mining department does not always have a background in environmental issues and can suffer from a conflict of interest. Practical resource allocation increasingly favours a division of functions; the environmental agency is responsible, in consultation, for establishing policies, law and standards while the mining department undertakes the management and enforcement. This arrangement is also compatible with the concept of “cleaner production”, where the mine inspectors can directly oversee the company approach to pollution avoidance. However, the environmental inspection function is not abandoned and there remains an important monitoring role for environmental agencies to collect information and confirm that enforcement is consistent with overall policy and standards. Close liaison among the various government departments is essential.
In countries with a federal government structure it is common for environmental enforcement roles to be delegated to the provincial (or state) and/or local government. The central government still maintains the overall control and management of the project while the regional government, which is often more in touch with the local situation, is responsible for the day-to-day monitoring and direct liaison with the company and the local community. Some countries have elected to place a full-time enforcement officer at each major project who, if given the proper training, can work closely with the company to ensure compliance and improvement in environmental performance at the same time as improving cooperation and consultation with all levels of government and the local community.
Whatever arrangement is adopted, compliance with environmental standards and legislation may be ensured by mechanisms such as:
• imposing civil liability on mining operators;
• compulsory insurance or payment into an environmental guarantee fund to pay for damages and compensation;
• financial surety (see Section 3.3); and
• incentive measures to maintain environmental standards in the absence of specific regulations.
These measures all require some degree of inspection and enforcement by the competent authorities and fines or sanctions of sufficient importance to dissuade non-compliance. There is relatively less experience with enforcement of the newer environmental management instruments such as environmental management systems. Much depends on the monitoring and auditing arrangements since these instruments impose an information system, rather than a fixed standard that can be easily checked in the field for compliance or non-compliance.
The skills required by inspectorates under such regulatory regimes are quite different from the traditional field skills. On-line data transmission, regular monitoring of operational rather than environmental parameters, and strict incident reporting are among the new measures being applied.
The growth in the use of voluntary agreements is also putting pressure on industry associations to monitor and report on the activities of their members; a role with which many are unfamiliar. In the future, sector-wide reporting can be expected to become more common to supplement the corporate environmental reports now being published by major companies.
Government agencies are also starting to use consulting services in enforcement. For example, in Western Australia, not only are project EIAs prepared by consultants, the evaluation of the assessment reports is now being handled by accredited assessors rather than by the government agencies directly (see Appendix 5). A key new role for the agencies is now checking the credentials of assessors. All enforcement mechanisms rely on adequate monitoring and data collection. This aspect is discussed in Section 6.6