Two case studies of ways companies have avoided paying to rehabilitate mine sites.
Case study #1: Banks transferring liabilities
In 2015, ANZ bank threatened to pull its financing facility from Cockatoo Coal.
Cockatoo operated the Baralaba mine in Queensland, which was seeking to expand.
ANZ’s facility included $34.5 million in bank guarantees for rehabilitation.
The guarantees were not secured by cash but presumably by other assets, possibly the mine itself.
Cockatoo acknowledged ANZ’s review of its financing facility could impact its solvency.
ANZ appears to have successfully withdrawn from its responsibilities under the bank guarantee, and in the end, Cockatoo’s 41% shareholder took over responsibility for financing the company.
Unfortunately for the shareholder, Cockatoo entered into administration and the shareholder, whose shares are essentially worthless, is ultimately responsible for any draw downs on the bank guarantee.
The 22 February 2016 report by Cockatoo’s administrators confirmed provisions of $7,256,373 and $4,547,401 were raised for the Baralaba mine, now in care and maintenance.
Case study #2: Minnows avoiding scrutiny
Batchfire resources Pty Ltd, a company registered on 29 July 2015, entered into a ‘share sale agreement’ with Anglo American coal to purchase the Callide mine in
Queensland in early 2016.
Batchfire is associated with failed coal ventures abroad and raised only $750,000 to proceed with the transaction.
The ‘share sale agreement’ is where the shares in the operating company,
Anglo Coal’s subsidiary, are sold to Batchfire.
This means the ABN of the company operating the Callide mine does not change, and Batchfire was able to avoid scrutiny by the minister of the company’s ‘financial and technical capabilities’ required to run a coal mine in Queensland.
This appears to be a loophole as any transfer of mining licences to a different company, or an application for a new licence, would be subject to governmental
scrutiny. Furthermore, since the corporate identity of the environmental authority did not change, there was no requirement for DeHP in Queensland to review whether Batchfire had an appropriate environmental history for it to be an eligible ‘suitable operator’ that could run the mine.
For more information and references, check out the full report: Dodging clean up costs: Six tricks coal mining companies play