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INTERVIEW: 'Rehabilitation,' biodiversity restoration pose cost challenges for miners: Thiess CEO


Rehabilitation costs typically included in C1 cash costs

Government interest in mining growing on energy transition

Many governments now buying mine closure bonds

  • Author
  • Diana Kinch
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  • Richard Rubin
  • Commodity
  • Coal Electric Power Energy Transition Metals

Growing emphasis on the "rehabilitation" of shuttered mine sites, including the restoration of biodiversity, over the past five years is starting to weigh down miners' balance sheets so much that governments increasingly need to play a supportive role, including with the purchase of closure bonds, a leading mining contractor told S&P Global Commodity Insights.

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Sites must be brought back insofar as is possible to their pristine biodiverse state and sustainably support human activities if appropriate: sites shouldn't be viewed as merely disused or abandoned mines and the land is no longer to be "closed," Michael Wright, CEO of Australia-based mining services company Thiess said in an interview.

"Rehabilitation in the past was about landform redesign – restoring the land to its previous shape, but now it's much more," Wright said. "Now there's a real focus on biodiversity and the reintroduction of species into mined areas. "It's not only about restoring areas for cattle grazing, for example, but about monitoring of native species such as the quoll that we have in Australia, a marsupial rodent."

Mining companies in Australia are striking partnerships with universities to help carry out research into species integration, and drones now play an important part in monitoring land erosion and vegetation health. But this is also about local community health.

"When jobs are lost, what happens to that community?" Wright asked.


Answers to questions such as these now need to be given at the same time as a mining company presents its prospective mine plan for licensing or permitting, maybe 10 years or more before production startup.

Thiess, with expected $4 billion revenues this year, operates more than 40 mines in seven countries worldwide, including in copper, coal, lithium, iron ore and gold in Australia, nickel and coal in Indonesia, and at the Oyu Tolgoi copper and gold mine in Mongolia. It also provides technical services to Tata Steel in India.

In March 2022, Thiess opened a stand-alone Rehabilitation unit to meet demand for closure services, and has already secured two contracts in this area, including with Australia's Ensham Coal Mine, with more than 600 hectares rehabilitated over the last 12 months. This follows more than 20 years of offering similar services to clients including the Burton Coal Mine and Mt Owen Mine in Australia, where research has been undertaken with the University of Newcastle; and the Sangatta Coal Mine and Melak Mine in Indonesia. Various of the projects have included managing tailings dams. The company has rehabilitated more than 10,215 hectares of land at 16 coal and hard rock projects since 2007.

Government roles

Governments typically own the land on which mining concessions are granted to operators, often from the private sector, for a number of years, before this is handed back to government. Environmental legacy or long-term environment impacts must now be contained or dealt with, biodiversity reintroduced and a future use ensured for the area, before the land is returned, Wright said.

"Unfortunately there's a long history of companies walking away from their environmental obligations in days gone past," he said. "So governments now, certainly in more progressive countries, are taking a very strong approach to ensure, as part of licensing and regulations, that mine rehabilitation and closure are factored into the very start of the licensing [process] and are handled progressively."

"Progressive" rehabilitation allows preparation for closure to occur throughout a mine's planning phase and its entire productive life and is widely favored, Wright said.

"Where progressive rehabilitation hasn't occurred there are more engineering challenges," he said. "Now when we plan mines we have rehabilitation in mind and this works out cheaper." The cost of this type of rehabilitation is typically reported as part of a mining company's C1 cash, or basic production, costs.

Permitting is often handled on a state or regional government level, but approvals may also be required from federal governments.

Balance sheets

"One of the key issues now is that companies' balance sheets can be weighed down by closure liabilities," Wright said.

This can happen even before a miner starts gaining revenue from production and is where government support for closure costs is coming increasingly into play.

Various governments now use mine closure bonds as a financial guarantee to ensure that rehabilitation will take place, according to Wright. This involves governments purchasing bonds in mining companies that will be surrendered to the company at the time of rehabilitation to help finance that rehabilitation and ease companies' financial burdens.

Governments worldwide are becoming more interested in the mining sector. As the energy transition advances, many are seeking to build up critical minerals stockpiles for electric vehicle battery and wind turbine supply chains, to achieve net-zero targets.

"Mining can and will play a significant part in decarbonization with the right focus," Wright said.

While ore grades are "certainly depleting" throughout mining as easy pickings have already been taken, this doesn't mean there will be a rush of mine closures in the near future, he added.

"Grades may be falling but technological advances in drilling, mining, processing and rehabilitation are making the mining of marginal resources feasible and some cut-off grades levels are being revisited both in open cut mines and as underground mines go deeper," Wright said. "This may even extend mine lives as demand for minerals and metals grows."