Tailings dam failures have put the mining industry in the headlines for the wrong reasons in recent years. Dam failures can have disastrous consequences in terms of loss of life and environmental damage to surrounding areas.
In response to such failures, the mining industry, its stakeholders and regulators have been reviewing how mine tailings are processed and stored. A Global Tailings Review was co-convened by the United Nations Environment Programme (UNEP), Principles for Responsible Investment and the International Council on Mining and Metals, which this month culminated in the publication of the Global Industry Standard on Tailings Management (the "Standard").
Mining tailings are a waste product created when significant minerals and metals are extracted from mined ore. They ordinarily appear as a fluid slurry made of fine mineral particles, produced as mined ore is crushed, ground and prepared.
Since the 1960s, tailings have normally been stored behind dams, referred to as upstream, downstream or centreline, depending on the method of construction. Although upstream dams were recognised to be less stable and inappropriate for use in earthquake zones, tailings dams were considered to be relatively safe until a succession of recent failures in Canada and Brazil. These failures drew attention to dam design risks that were not previously recognised and demonstrated the potentially devasting consequences of dam failures.
The mining industry and expert engineering firms that had previously approved and certified these dams, have had to reassess appropriate methods for treating and storing tailings. Investors in the industry have also begun to scrutinise the industry more closely in this respect, led by groups such as the Church of England Pensions Board and the Swedish National Pension Funds' Council on Ethics, which visited Brazil earlier this year to raise concerns about the safety of tailings dams.
The Investor Mining & Tailings Safety Initiative was created in the second quarter of 2019 by groups in the extractive industries, including asset owners and asset managers. In January 2020, the Environmental organisation GRID-Arendal launched the world's first publicly accessible global database of mine tailings storage facilities. The database, the Global Tailings Portal, was built by this Norway-based centre as part of the Investor Mining and Tailings Safety Initiative with the backing of UNEP. The portal is a comprehensive database of the disclosures made by mining companies in relation to their tailings storage facilities. It gives unprecedented transparency to communities, investors and regulators regarding the status of mines and mine waste (including levels of risk).
As mentioned above, this month, UNEP published the Standard, which aims to provide a framework for safe tailings facility management.
As stated within the document, the Standard is to be "supported by implementation protocols, which will provide detailed guidance for certification, or assurance as applicable, and for equivalence with other standards". The Standard does not seek to displace existing legal and regulatory measures in place in relevant jurisdictions, but clearly it is intended to be seen as the standard bearer for mining industry best practices.
One immediate consequence of the introduction of the Standard is that mine operators are likely to be required to show their adherence to it as a condition for the provision of financing or investment. Similarly, listed mining operators are likely to have to make specific provisions in their annual disclosure documents about compliance to the Standard.
Investors are turning their attention to innovation and more sustainable forms of tailings treatment, including the concept of reprocessing. Reprocessing takes the tailings from an existing dam and applies mineral processing solutions to recover ore, which is usually of a lower grade than primary production, but still has value and is tradeable. The discarded tailings are then dewatered and dry stacked, and the water is recycled, usually at the mine. Companies with this reprocessing technology are offering mines an on-site solution to de-risk and extract value from the tailings, in some cases offering capital investment, as well as technical expertise.
As stated in the opening paragraphs of the document, the Standard "strives to achieve the ultimate goal of zero harm to people and the environment with zero tolerance for human fatality. It requires Operators to take responsibility and prioritise the safety of tailings facilities, through all phases of a facility's lifecycle, including closure and post-closure". Significant strides have been made over the past couple of years to address this issue and we expect, going forward, that greater attention will be given to more sustainable methods of tailings treatment such as reprocessing.
This article was written by CMS partner Ted Rhodes and consultants James Nwankwo and Marianna Rebello and first published on CMS Law-Now here on 27th August 2020.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.