Title: Mine reclamation bonding and environmental insurance

Authors: Richard Poulin, Michel Jacques

Addresses: Departement de Genie des Mines, de la Metallurgie et des Materiaux, Universite Laval, Quebec (QC), G1K 7P4, Canada. ' Ecole d'Actuariat, Universite Laval, Quebec (QC), G1K 7P4, Canada

Abstract: Mineral extraction is normally followed by rehabilitation of the mined area. A growing number of jurisdictions are using environmental bonding to provide financial assurance that rehabilitation will be carried out as agreed at the permitting stage. The current practice in environmental bonding for mining is critically reviewed. In theory, it is an efficient economic enforcement mechanism but has shown shortcomings in its application. Elements of a solution are identified through the emergence of environmental insurance. The use of insurance as a complement to bonding could prove beneficial by creating a useful framework and by reducing the risk for the public and the environment. We propose a simple model showing how risk could be quantified.

Keywords: rehabilitation bonding; environmental bonding; mining; assurance; financial bonding; environmental insurance; mineral policy; Monte Carlo simulation; mine reclamation bond; risk assessment; minerals industry.

DOI: 10.1504/IJRAM.2007.014098

International Journal of Risk Assessment and Management, 2007 Vol.7 No.5, pp.589 - 606

Published online: 18 Jun 2007 *

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