Mine Closure: Financial Assurance Aspects Related to Chilean Closure Regulation and Proposals

摘要

Financial assurance for mine closure established in law 20,551, has been a controversial and difficult obligation to comply with for several mining companies. Practical aspects such as the lack of flexibility, the need to include the VAT1 (value added tax) and difficulties to establish a satisfactory financial assurance within the given timeframe, have transformed the financial aspects of mine closure into a critical aspect. Fundamental aspects are related to the lack of flexibility of the system, which has created compliance problems and legal risks to all regulated community. Therefore, there is a current need to amend the regulatory framework regarding financial aspects of closure.The obligation to constitute financial assurance of the closure plan at present value, compromises mining companies financial and operational stability, specially, from the medium scale mining. In addition, the opportunity to provide the assurance is restricted by the regulation, which establishes a limited timeframe to provide the financial assurance. The methodology to highlight these subjects comes from feedback provided by relevant mining industry actors such us medium scale mining companies, financial experts, technical and a regulatory analysis of foreign closure regulation. In this context, this paper provides an integral diagnosis regarding the financial aspects related to mine closure regulation, aiming to discuss its results and generate a proposal to improve the legal framework that provides proper flexibility and economic efficiency. Possible solutions are related to expand the range of available financial instruments to provide financial assurance and the extension of the timeframe to fulfill the financial obligations. These measures could also have a positive impact in the effective and timely implementation of closure measures.