Toward Better Measures of Financial Feasibility : Finacial Risk=Environmental Risk

Our current work  at Bowker Associates has been a study of the relationship between mining economics and environmental risk.  We have been looking at this through the only century long compilation of adverse environmental consequence, Tailings Impoundment Failures, 1910-2010. It is well known and undisputed that environmental damages arise mostly from non revenue generating aspects of a mine: its tailings, waste rock and wastewater management.  When there are cash flow crunches, in the absence of regulatory controls which insure continuing adequate levels of mine waste management stewardship, mines that are less adequately capitalized avoid or are unable to attain “best practices”.  To my mind this is the Mt. Polley story.  The record is clear that they have been skating on a thin and vunerable balance sheet since their near bankruptcy following forced closure of the mine due to falling prices in 2001.   The record is clear that their engineer Knight Piesold had encouraged a redesign of the TSF and a reassessment of its Dam Hazard Classification Rating which would obligate the company to a set of specific practices appropriate to a its higher rating as well as requiring more frequent independent dam inspections.  ( Mt. Polley was grandfathered under new requirements because its permit was already active when new statutes were passed)The record is clear that Imperial/Mt Polley Mine Corporation, Mt. Polley resisted and avoided these recommendations and that the issue was cash flow.  In 2013, before the failure, Imperial Metals announced that it could no longer even fund production at its operating mines ( Sterling in Nevada, Huckleberry and Mt. Polley in B.C.) out of cash flow and would have to go to market keep its operations going and meet the outflow necessary to get Red Chris permitted and on line. 


In the course of our research we happened to stumble on an NI 43 101 technical report  filing by Avanti for its  Kisault Mine, a previously mined B.C. site with  a permit pending before the B.C. Ministry of Mines.  We were  shocked  at the very poor caliber of work in this report on “financial feasibility” and on further inquiry found what looks like, in effect, a hostile takeover by its unscrupulous only source of funding a TSX V listed venture capital company.  In effect the entity that applied for a permit no longer exists and has no capital at all.  The Board and key leadership positions were suddenly replaced on December 1, presumably all appointed by the venture capitalist .  There is nothing in the present B.C. mine permitting structure that will brinf this under review even though this mine will become, by 2080 a perpetual treatment mine.  A company that doesn’t even exist now surely can’t be relied on to eiher open and manage this mine responsibly or provide for perpetual treatment from 2080 into perpetuity.

 Few regulatory structures globally have clear or well defined financial capacity standards on entry ( issuance of a permit) and none we have seen include any recognition or understanding of how a disruption in financial viability at the company or mine level can manifest in catastophic environmental loss if left unattended.


British Columbia has no criteria at all which address financial viability with a view to environmental security. It apparently assumes the efficiency and quality of bank and securities markets will ensure that all operators are financially qualified to operate a mine.  They are apparently going to allow Kitsault to continue to operations.  They are apparently not concerned that Imperial Metals doesn’t have cash flow or access to capital still, by its own declarations, to even keep the mines in production.

 The following  is correspondence with a long term member of the B.C. Securities  Commission and a long distinguished engineer ( An FEC)with whom I bat ideas concerns and good papers back and forth.  This correspondence is about a superb paper that I think offeres some real touchstones for building appropriate financial capacity standards into the mine statutes and regulations.  I copied the folk at Info Mine on this, asked them to include this paper in their online library and asked them to please read the Kisault NI 43-101 in light of this brilliant paper.

 Dear Roy,

Thank you for sharing this wonderfully rich and insightful paper:

Samis, M., Martinez, L., Davis, G. A., and Whyte, J. B. “Using Dynamic Discounted Cash Flow and Real Option Methods for Economic Analysis in NI43-101 Technical Reports.” In The Valmin Seminar Series 2011-12 Proceedings, The Australian Institute of Mining and Metallurgy, Publication Series No 3/2012, 149-160 accessed December 2014 at

And  thank you for your ongoing exchange with me on financial capacity and environmental security.  As an expert  and as a co-creator of NI 43 101 in the course of your long term tenure on the B.C. Securities Commission you have a profound understanding of the degree of reliance mine regulation places on the workings of exchanges to pre select viable mine projects and viable miners.  B.C. as you know has no financial capacity requirements in its mine permitting and oversight process relying entirely  on the posted reclamation security as satisfaction of “financial capacity” concerns.

This brilliant paper( Samis, Whyte, Davis, Martinez), which I hope has been or will be widely read and deeply considered by environmental advocates, mine regulators and most especially by those engineering firms who prepare the NI 43 101 technical reports, really crystalized and clarified my own thought on this critical “orphan issue” of environmental risk management of metallic mines, especially their TSF’s.

My notes & quotes and commentary.

“​A further requirement under NI43-101 guidelines is that the technical report must inform the investor about the economic viability of the resource given a suitable project design and using reasonable assumptions about the current and future economic environment. This is an important requirement as it underlies the actual definition of a mineral resource: a mineral occurrence can only be declared a resource if it can be demonstrated that there is a reasonable prospect of economic extraction.”

“It is notable that the analysis supporting conclusions about the possibility of economic extraction is often not performed to the same level of sophistication as the technical analysis supporting conclusions about the quantity and quality of mineral resources.. ”

This point applies in general to mining analysis ..enumerating the volumes of mineralized ore with thousands of beautifully done 3 d graphs and drill core projections and colored  block  models is not the same as “identifying a resource”  It’s not a resource if it cannot be recovered profitably and with adequate levels of environmental security.   That’s just the starting point of “viability” not the proof of viability.

The level of sophistication point is certainly true of the qualifications and caliber of analysis offered in the Kisault NI 43 101.  The “qualified person” standard” has to reach for something more like the caliber of the authors of this excellent paper or you yourself who understand mining thoroughly who are real mining economists. In addition to indepednedent  dam review committees over a mine’s life there needs to be an independent team of qualified mine economists   over the life of a mine.  A “Financial Review Committee” with the mix of skills and expertise of these three authors would seem to be ideal.  I rarely see any interdisciplinary  cross fertilization in any part of “mine vetting”  There is a sort of insular cacooned  “do it ourselves” mentality among a small group of engineering firms .  It needs and NI 43 101 should require expertise from “first source” QPs like this team, like you, like Richard Schodde and others who are “mining economists”.

Their observations on the simplest flattest least insightful tool used in what analysis is done  also has the seeds of what I hope might begin to  evolve into a set of “financial capacity” criteria for use in mine permitting and life of mine oversight..

“Static DCF ignores randomness in cash flow variables: The reliance on only the expectations of uncertain cash flow variables such as metal price excludes a more detailed description of their randomness in the cash flow analysis”

“Static DCF ignores the effects of contingent cash flows and flexibility: Projects incorporate contingencies that cause the structure of cash flow to change with variations in the project environment”

( to me as a risk manager after my deep immersion with Dr. C. on 100 years of TSF failures this is the key issue in evolving financial capacity standards for entry ( issuance of a permit)  and for ongoing risk management viz environmental security)

​”​Static DCF risk adjustments do not recognize the dynamic variation of cash flow risk through time: The use of a single discount rate implies that project cash flow uncertainty increases through time in a regular manner. However, most mine valuation professionals would agree that the cash flow uncertainty changes in a dynamic and erratic manner due to changes in metal grades and prices, operating costs, mining method, exhaustion of tax shields, and tax and royalty rates among other things. A risk adjustment method that responds to changes in cash flow uncertainty would be preferred”.

This is exactly what Dr. C. & I have mapped as the main effect of the modern mining metric on environmental security ( as indicated in manifest loss from TSF failures 1910-2010..if you start with a financially marginal permit holder and or a marginally feasible mine project the environmental risk life of mine is that much higher..”proven reserves” are not “cash in the hole”.  Cash is what is needed to weather these contingencies and continue a high level of stewardship when the crunch is on.

The author’s observations on need for a more dynamic approach to understanding the ‘sensitivities” of a particular project are also foundation seeds for  regulatory “financial capacity standards”


“ single-variable sensitivity analyses superimposed on Static DCF calculations are a useful, but limited, way of describing the uncertainties surrounding a mineral project. “Other analyses” could include Dynamic DCF or RO NPV calculations that incorporate uncertainty analysis techniques such as Monte Carlo simulation or risk adjustments tuned to unique project uncertainty characteristics”


MCE standards are part of the norm in mine planning and TSF design standards but as these authors affirm the range of random events that in turn affect cash flow ( and therefore “environmental security” ) is not now part of the process of entry decisions on “overall viability” ( financial+environmental security) or ongoing “contingency monitoring”( risk management)

I could not do justice to the full value of the approach these authors advocate and hope it will be widely read and deeply considered especially by mine regulators who assume  that financial markets work properly to decide which miners are going concerns and which are not.  A few highlights with greatest bearing on  adequate risk management and the maintenance of adequate financial and environmental security ( you may have gathered my premise is that without  financial security there is no environmental security.)

“Traditionally, quantitative risk assessment within a Static DCF model has been limited to scenario and sensitivity analyses.However, they do not provide any guidance on project risk since they do not define nor provide a summary measure of project risk. ”


Additional Resources On Valuation of Mining Companies & Mineralized Assets

This is a really excellent primer focused on valuation of the mining company ( or from the regulators perspective, “the applicant” The financial risk at a mine which equates to and can manifest in environmental loss  resides partly in the company itself  and partly in the mineralized asset under consideration for permitting.    Both have to be considered ( and neither is now in B.C. nor adequately considered in most regulatory structures.

Who owns and is proposing to develop a given mineralized assets can have as much bearing on “environmental risk” as the geochemistry of the assets and its proposed mine plan and plan of operation.

His paper looks at “valuation” life of mine from the investors perspective  ( or the perspective of an exchange seeking to have quality and transparency in its operations).

“Environmental Security” requires  life of mine ability of the miner to weather the swings  uncertainties and contingencies that affect all miners ( the mega factors over which no individual company has control) and an asset that is only viable in some of the market  conditions that are likely to be encountered over the mine life. ( eg mines that have had or are likely to have  a pattern of price related active and inactive periods involve higher financial risk and therefore higher environmental risk


West Australia Requirements For Availability of Adequate Financial Resources

Above is one of many cases interpreting and applying Warden decisions under the  178 Mines Act to deny or take back approvals for exploration & mining based on financial  capacity..available resources. .  In this as  a permit holder had not been able to raise exploration capital through the exchanges and another entity petitioned for repeal of the permit holders rights for failure to evidence capacity to explore the resource I accordance with its promised programme of exploration.

IN others I have read and may soo abstract in a directror of decisions on “adeaquate financial capacity” there are seeds of  better standards for “financial capacity” more thna a letter from some accountant saying that resources are adequate, current resources ( ie not just the most recent annual report)..iei driving toward where is the capital for this specifc project.

Other implied standards in these is the limit of the wardens authority..iei not to certify the over all capacity of the company  just the allocation and availability of resources for the project  which is the subject of the application.

Glad of any examples of useful and appropriate standards you might share via post here

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Finding & Fixing At Risk TSF’s Still Permitted & Still in Operation

TSF Things Aren't Always What They Seem to be

..sometimes when the storm passes and the dust settles you find the path you have been following has left you standing at the edge of a precipice instead of in the middle of the clearing you imagined the path would lead you to. So it is with our work on TSF’s. We have arrived at a precipice of inconvenient truths and almost incomprehensibly difficult and chaotic barriers to acceptable is not even clear that there are acceptable solutions only choices among very unacceptable but still essential inerventions …. and then what happens…?

The only way to  understand the whole of a problem, and therefore be able to pose meaningful solutions, is to conduct an inquiry that is truly open. Such an inquiry is guided by questions every step of the way that don’t contain some idea of what we think the answer is. That is the process we have applied to our inquiry about the magnitude of public/environmental liabilities in tailings storage facility (TSF) failures and whether that can be pre funded in some way. That was the work we began the day of the Mt. Polley failure.
My 30 year career is in Risk Management/Environmental Risk Management, Finance and Public Policy with a strong theme of multivariate analysis and other forms of systematic thinking applied to “social problems” and to the formation of sound workable solutions. From that framework, I started looking at Mt. Polley as a case study. My aim was to encourage leaders in policy and advocacy here in Maine to take a fresh look at our 2012 statute and the poorly informed rules that thankfully were not accepted by the Maine legislature (1). Sort of saying look at our statute and regs through the prism of Mt. Polley: here’s an example in history; here’s how it happened; here is what has happened; here is what they have in place to respond to it. What about us here in Maine? What does our statute say about TSF’s? Would our statute have prevented this? Would we have been better prepared to deal with the consequences?

In conversation with a leader in the responsible mining movement for whom I have immeasurable respect and admiration,  that evolved to looking at the issue of “polluter pays” and to exploring the possibility of funding the enormous unfunded and presently unfundable costs . Specifically we were exploring the feasibility of some sort of risk pool since historically “polluter” never pays and except for a few very large miners like Grupo, “polluter” can’t afford to pay without going bankrupt.
I knew from the outset that the established frequency rates of failure, popularly cited by “the industry” as 1.2%/TSF over the past 100 years, and 0.5%/TSF for” the modern era” were way outside the rules and conditions that would normally apply to risk pools. ( Risk pools normally have to follow the same rules as apply to insurance (events of chance, high consequence but not catastrophic  among a very large pool of “insureds/members”). By definition frequencies this high speak to a century of human error as the cause of failure and notables like Mike Davies have said as much. Every dam review committee concludes that. TSF’s fail because of human error not “Acts of God”. TSF’s fail because miners fail to apply known best knowledge and best practice in the design, construction and management of TSF’s.

I knew that the “universe”, claimed by the mining industry to be 3500 TSF’s was too small for efficient pooling even if one liberally applied the same procedures used to price insurance policies to estimating loss from TSF’s and figuring out the per participant costs. I knew that no single state or province was large enough for an efficient risk pool but forged ahead to see how many individual TSF’s it would take to achieve some tolerable level of efficiency.
To evaluate the feasibility of polling costs first requires  estimating how much loss had to be pooled.  We put that that very conservatively at  $2.5 billion for this decade.. That’s assuming a a conservative average loss of $300 million for a large failure.  In the past two deades among 12 large failures we found economic cost data on 6 that totaled $2.4 billion.  That’s an average of $400 million per large TSF failure.

Quite apart from the fact that there is no accurate updated profile of TSF’s , it makes no sense to think of loss “per TSF” with such diversity in total TSF capacity among standing TSF’s. Mt Polley was only about 59.6 million cubic meters at failure and obviously would not have the same fair share as a 1 billion cubic meter Freeport McMoran TSF. The failure rate is more appropriately expressed on a failures per million tons of mine production (5) ..

For a miner as small as Imperial, already skating on a thin balance sheet to think about financing such a large loss out of cash flow is virtually impossible.  Pre failure they had announced that they could no longer meet their production goals out of cash flow  and would be seeking $100 million in credit markets.  Their one principal investor took that debt.  There was no sign of market confidence.  Their stock plummeted and remains on watch. They announced this week that they have spent $47 million already on the Mt. Polley clean up and have budgeted for up to a $100 million total cost.  They are expecting to open Red Chris ,a much higher risk mine with only $10 million cash on hand and no access to capital markets while Mt Polley remain closed.  Even if clean up costs are $100 million as they hope it is a questionable proposition financially.

Only the very largest miners in the world can absorb the costs of large TSF failure losses. All choices are equally unacceptable. If held to full account at the original estimates of costs ( which are more in line with actual loss history and documented costs in the past two decades) Imperial would obviously have to declare its little subsidiary bankrupt.  If a miner is not held to account for natural resources damages cased by negligence then the only atlernative is that tax payers pay..either by just accepting the damage of absorbing essential remediation and clean up costs.

That production cost, $20/ton, is beginning to undermine the “the mining metric” of “growing the resource through large scale production at ever lower ore grade standards. That 30% rise in production costs mainly attributable to higher energy costs  is squeezing Chile and driving their huge capital investment in mining infrastructure and their current effort to justify deep ocean dumping of tailings ( instead of refurbishing and making safe their existing TSF’s or building new one,and squeezing even big miners like U.S. steel who just sought credtor protection on all their Canada holdings.

The margins ae thin for all primary metals.  Small miners just don’t have the cushion or access to capital  for the levels of stewardship required for TSF’s and certainly no capacity to self fund any large loss.

We know that the average spill is about 1/3 of total contents ( Rico/Benito/Diez (2011). All significant spills for which we have costs data from court documents have been over $150 million in total public costs and the average has been $400 million. So there’s no question it makes no sense as a matter of public policy to even think about financing losses. The only feasible strategy is to lower the frequency and severity of losses though application by force of law to best knowledge best practice in every phase of a TSF, construction, active life, stand by life, pre closure and closure.
The risk is in standing operating already permitted TSF’s which like Mt. Polley, maybe weren’t “at risk” when they reopened in 2005 but only became at risk accommodating the greatly increased production volumes per year and exponentially greater expansion of its old TSF designed in 1992. Looking at Mt. Polley as a “case study”, looking at their pancake thin 2013 balance sheet now pushed even more by the costs of repairing the TSF alone  beginning clean up and even assuming the facility might need only minor structural improvements to be made safe for continued operations, where does Imperial get the money to do that? To make the fundamental structural corrections needed to make it safe for operations and safe for closure.?(4)


The one thing that seems very very clear is that we need to start by screening and identifying possibly at risk TSF’s, try to get a sense of costs to prevent failure and work it out from there. With a push from EPA  Bingham Canyon addressed its at risk south impoundment that had served since inception of the mine almost 100 years ago  The same was done at Red Dog in Alaska ( also ith a push from EPA).  But  how does a little company like Imperial do that?   Are their mineralized assets  of a quality that would attract a white knight willing to take on those liabilities?


Risk identification and loss prevention is clearly the best strategy but how does that get done without huge market disruptions and some public cost? .


The other thing that is clear is that to identify and repair at risk currently operating TSF’s will be messy, painful and complicated


.——– Footnotes & End Notes ——-
and we looked only at the frequency of large failures which we defined as more than 1 million cubic meters in outflow.
(4) working per ton of ore produced allows for a more reasonable portrayal of costs among all TSF’s of various sizes and dimensions and to look at costs across a more reasonable base not of “all TS’s) but all TSF’s likely to have a consequential loss..iei those larger than ( we included in our analysis only TSF’s greater than 1 million cubic meters in capacity. We estimate that at 38% of all standing TSF;s. In other words a more likely per TSF denominator would be 1330 and the per tsf more like $2.19 million. And that still leaves the problem that a little facility like imperial at 59.6 million cubic meters shouldn’t bear the same amount as a 1 billion million cubic meter facility. Per ton of ore produced solves that problem .
(5) we are not making any judgment here on the structural soundness of the facility, only using Mt. Polley’s spread sheet as perhaps typical of small mines and trying to make the point that at risk facilities are going to cash strapped to take on any additional costs especially for work that may require a temporary interruption in use and therefore a further impairment in revenue.

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Tailings Impoundment Failure Rates: A New Look At The WISE & ICOLD Data

In the wake of the Mt. Polley tailings Impoundment failure on August 4, 2014, we have been working with the ICOLD/WISE data (see link at end for machine readable compilation) . Our aim initially was  to assess the feasibility of risk pooling to fund the huge unfunded and presently unfundable public and environmental liability in every TSF failure. This requires reasonable predictions of the number and average cost of TSF failures for a given  large group of TSF’s.  Most within industry researchers working with this data and publishing technical reports with reference to it have looked at frequency and at causes of failure, i.e. descriptions of what has already happened. Few have worked specifically with the cost consequence of public and environmental liabilities or with predicting future failures.

Only two presentations we found in the literature spoke to prospective consequence and consequence trends. Rico/Benito/Diego (2008)  used actual ICOLD/WISE data supplemented with additional research to create a complete uniform data base. They developed regressions to predict volume of spill for a TSF of a given height and capacity and for calculation of run out in distance (size of the area potentially impacted)

“simple estimations can be performed based on generic empirical relationships. In these equations, key hydrological parameters associated with dam failures (e.g. outflow volume, peak discharge, mine waste run-out distance) can be estimated from pre-failure  physical characteristics of the dam (dam height, reservoir volume, etc.), based on reported historic dam failures. This approach has been successfully applied to estimate  peak discharge (V)and outflow(DMax) resulting from water-dam failures [8,9,10].” .

V f=0.354*Vt1.008       r2=0.86 where Vf= spilled volume  vt=Total volume

Dmax=1.612*(H*Vf).0655     R2=.057  where h=height;Dmax-= run out flow in Km”

The above equation shows, that on average, one third of the tailings and water at the decant pond is released during dam failures”

Using an estimate of total volume at time of failure based on verified dimensions and stated freeboard( (59.6 million cubic meters) we did the failure volume (V) calculation for Mt. Polley)   It came out very close to actual: predicted failure volume  21.9  v  24.5 actual).  As more precise data on more failures becomes available the Rico/Benito/Diego can be reclaibrated, if necessary.

Doing the D max ( run out) using 45m ht ( from Piesold 2011..we know it was actually higher at failure as three raises occurred after that but wanted to use an authoritative figure) calculated failure outflow (Dmax) is 2.5 km..  By examination of the equation it is clear that for a given total capacity of a TSF, greater height  will result in greater runout ( and a large area of damage).  This suggests that TSF’s lie Mt. Polley’s rising at unplanned rates to meet determined production scheudlues may potentially create more envionmental damage in the even of failure than a newer facility with a much larger footprint and much lower height.
Rico began with a subset  from the ICOLD/WISE with the most complete profile of key variables and then did research on those dams to fill out what was missing.  They ended up with complete enough information for only 28 failed TSF’s.  If the actual standing inventory is 3500 as Morgenstrern(1998) has estimated and other researchers have widely used , that in itself is an important statistic.  That we have a complete data set for only .8% of he worlds TSF’s when they are historically one of the most consequential sources of massive non remediable environmental impacts, and the single largest source of presently unfundable public liability gives pause. 
That we don’t even have an accurate global inventory of TSF’s with basic descriptors like construction type, year built, original design height and volume, present design height and volume number says that producing mines and keeping them in production has a higher “public value” than the responsible risk management of these facilities. The issuers of permits globally have had this information always and it is long recognized that growing waste volumes from mines sites are a key issue in assessing environmental risk  and yet we have no government agency, other than  West Australia, that is systematically compiling  this critical environmental risk management information.
The second work we found looking at consequence in a resposble way ( or at all)  was A. Mac G Robertson (2011) who  transcended the limitations of the ICOLD/WISE data presenting a theoretical model on “potential risk” using maximum achieved height and maximum achieved total volume of TSF’s which we will describe further below.


Our search for what is needed to evaluate the feasibility of risk pools for public and environmental liabilities, which are now largely both unfunded and unfundable, lead us to some insights that also have a bearing on descriptive interpretations of the failure data.  Our findings mainly affect the interpretation of the failures per decade and the popular claim that the data show improved performance in the last two decades attributable to better knowledge and better practice.  These claims have been based on frequency data alone which is not a complete or even best indicator of potential liability   Further both the numerator and denominator of those numbers are fuzzy and frail.  The denominator “3500” is really just  an informed best guess by Morgenstern in 1998 that has been used by virtually all other users of the ICOLD/WISE data as “gospel”  even though China had more tha 12,000 TSF’s by 2008 . The numerator, # of failures per decade is not a complete inventory even post 60’s but again  its the best number available so  it too is treated as “gospel”.  In the world of the statistics that we need to rely on to give some realistic shape to public liability exposure these are very “soft and fuzzy” numbers.  Coupled with the irresponsibility of citing only frequency it’s  not much to “stake a claim” of improved industry performance on.  

Also a close examination of the ICOLD ISE Itself  refutes the industry claim of improved modern performance attributable to better practices and better regulatory system of permitting and oversight.  As our restatement below shows the trend in fact is to an increasing number of major and large failures.


TSF Failures Increasingly Major  and large

Of those 39 incidents cited as proof of improved environmental performance by the mining industry, 1990-2010 , 25 (64%) were major failures, 12 of those , (31%) of all  the incidents last two decades were at the scale of catastrophic. The total costs for just 6 of the 12  large failures 1990-2010 totaled $2.4 billion , an average cost of $400 million per failure.  These losses, according to dam committee reports and government accounts are almost all the result of miner failure to follow known best practice


Taking Dr. Robertsons lead and going beyond the limitations of the ICOLD/ WISE data to the actual numbers the industry and its investors and analysts rely on it is very clear that public liability loss exposure is  shaped by two numbers:  ore grade and production volume  which have been spreading from each other in opposite directions since about 1950.  These two numbers in turn are what is driving the characteristics of risk in the TSF’s themselves:  Height and more importantly TSF total capacity.  As dropping ore grades force more and more volume of ore production for essentially a flat line production of refined product , more waste is generated and larger TSF’s are created mostly we assume, as at Mt. Polley  through expansion of existing TSF’s..

Correlation Matrix of Key TSF Failure DescrIptors/indicators

Variables tfail lrgfail Mxpri decpro oregrd pricyc
tfail 1 0.651 -0.137 0.503 -0.675 -0.14
lrgfail 0.651 1 -0.239 0.835 -0.789 -0.496
Mxpri -0.137 -0.239 1 0.020 0.130 0.666
decpro 0.503 0.835 0.020 1 -0.907 -0.222
oregrd -0.675 -0.789 0.130 -0.907 1 0.288
pricyc -0.149 -0.496 0.666 -0.222 0.288 1

Bowker Associates Science & Research In The Public Interest  October 2014

The two variables MXPRIC and PRICYC were an exploration of price as a predictor and    our data element PRICYC does have a strong correlation, -0.496, with the number of large failures. We coded PRICYC to try and capture the character of the price climate over the decade L 0=no change, 1= 1 decade of upward price, 2 =2 decades f upward price,3 = 3 decades of upward price and -1, -2,-3 for downward trends.  MAXPRIC was the highest price per ton for ore attained in the decade. MAXPRIC had very low correlations with the non price variables explained by a line almost parallel   with downward grade of downward cost per ton for production(3) essentially nullifying  price as a factor in predicting decade trends for all TSFS’s. ( Although of course on an individual mine basis price often makes a particular mine infeasible and results in either going on standby as at Mt Polley or not going forward with a mine application.)

We were interested to see how this “maps” for the whole of failures as the price of copper ( in constant$2010) maps exactly to the failure histogram. We believe on further analysis it will prove a useful indicator of operating stage of TSF life.  Specifically, we hypothesize that the combination of price/price trend and production will define periods of intense active use of TSF’s where a higher failure rate with  higher consequence are most likely to occur. and for identifying “at risk ” TSF’s.  The 0.496 correlation of PRICYC with consequence ( LRGFAIL=# of failures gt 1 million cubic meters)suggests that as well.

The bottom line is that when both frequency & consequence are taken into account the modern era performance is lower than at any other time in history and continuing in that direction.

Data on mine production is more solid and established over the entire 100 year period whereas exact data on inventory of TSF’s is not and probably never will be historically.  More importantly there is no comparison between a typically small  pre 1950 TSF and a modern TSF like Mt. Polley. On a per TSF basis adjusted for the smaller number of TSF’s pre 1950 the frequency is actually greater in the two most recent decades.005 as compared with .001 pre-1940. Consequence has been constantly escalating since 1960 therefore overall performance either way is significantly lower.



By definition, by the way, failure rates over this entire history as at least one other researcher  has recognized, are well above what is considered reasonably attributable to chance.  Rates this high over the entire history of mining by definition indicate human error at work ( ie an established pattern of  failure to take reasonable precautions to control off site damages with increasingly grave consequences).  Even the overall failure rate for water dams, .0001 ,is just barely in the range of what could be considered attributable to chance.

Azam/Li (2010) arrayed the ICOLD/WISE data into this histogram  of incidents per decade from 1900 to 2000 for a total of  218 failure incidents .


The stat most frequently cited is that the overall failure rate for the century is 1.2% expressed with reference to the total number of mine sites, 18401.( What that is and who chose that number 18401 is a mystery we have not yet unraveled)

By  custom the pre 1960 decades are not usually included in analysis. rates. According to TailSafe 1136 TSF’s were built before 1950 and had failure rate of .0220.  That number is probably every bit as “solid” as the “3500 and any comparisons on a per TSF basis should use 1136 as the basis. We think it is important to understand TSF failures in the context of the entire century. 1960  in fact is key.It marks the beginning of the “modern mining metric” where demand  for metals is met with ever increasing production volumes relative to final output of  refined metals. It also marks the beginning of the ever increasing spread between ore grade and total production. and a dramatic change in the profile of mines generating production from a very few large mines pre 1960 to many more mine sites of widely varying size.  We are looking to use as much reliable data over the longest term possible.

The rates (2) cited as evidence of improved performace by the industry(failures/3500) are .01467/decade for the 60’s 70’s and 80’s and .0052/decade for the two most recent decades shown on the chart  This interpretation seemed  to warrant a closer examination  First, because frequency alone does not measure outcome.  Frequency and severity together measure outcome.   ICOLD/WISE have no data on  cost of failures  and only spotty data  on the size of the failure which most agree is a good surrogate for severity of TSF failures. There is general consensus within  the industry  that pursuit of profit at ever decreasing average ore grades results in larger and larger volumes of waste and therefore larger and larger TSF’s with a greater consequence in the event of failure. It is universally recognized that impoundment size is a principal  driver/ indicator of potential consequence..

In a keynote address at a 2011 Tailings & Waste conference, A.MacG. Robertson ( 2011 )   looked at the entire century beyond the failure incident data just in terms of changes in “potential risk” over time  as indicated in the upper limits of height and volume achieved  per decade He estimated that the volume of “potential waste” per 1/3 century had increased  10 fold accomodated by a 2 fold increase in achieved maximum  height and a 5 fold increase in achieved maximum volume of TSFs per 1/3 century.   While pointing in the right direction and framing an excellent theoretical model for looking at “consequence of failure”over the entire century, it is not useable as an actual measure of consequence over the century nor did he intend that it be used that way.

This is the formula for “expected loss” (size of group,* frequency of loss* average loss for group). So with more data on both the standing inventory of TSF’s and on failed dams  this is exactly the formula for estimating total liability in any group of dams.  We hope to be able to explore development of a Risk score for TSF’s based on that and other data not yet compiled by any known source.  We are hoping to “round out” information on at least 28 more of already failed dams and develop a data base of at least 50 dams representative of the standing inventory.

Reading  the dam committee reports at WISE / ICOLDand surveying all the literature on TSF failures available online it was apparent  that the  greatest magnitude of loss for any given TSF failure  was in periods of active production of ore as at Mt. Polley.  Errors in the deposition of tailings and in the rate and size of raises were of  concern throughout the literature indentifying active operations as the most critical period in a TSF  where “best practices/best knowledge is most important in preventing TSF failures.  So we set about looking for some published and reliable data that might provide a more complete framing of these 218 TSF failure incidents against the periods in which TSF potential consequence is highest, in periods of actual production and in periods of price upswings.


The first issue we considered is what basis to use for frequency. The table below compares three ways of looking at frequency.  Per TSF is customary in all literature we  have located via on line search and of course the most “normal” if we actually had “census” on TSF’s which we don’t.. So we wanted to explore other approaches. The table below, compares frequencees per TSF ( with a correction for the smaller number of mines pre 60’s) with frequency per mine site and frequencies based on production volume.     Per mine site is often used to cite century performance, 1.2% is the most frequently cited number.  However this is not as sensitive to the likely inventory of TSF’s over time so shouldn’t be used as a basis for stating overall performance either.  Overall performance should be stated on the same basis as per decade analysis.With the pre 1960 adjustment the failure rate per TSF is .015 pre-1960 v..055 60-s through 2010.  Much higher post 60.  Most researchers though only cite as “modern performance as  the 90’s and 2000’s and the failure rate 0.0057.

On an  ore production basis the failure rate over the century is an atsronomical .0449 mainly determined by the extremely high rates in the 60’s 70’s and 80’s.

Comparison Of TSF Failure  Frequencies Per TSF V.Per Mine siteV.Per Unit Production
 Decade TSFincidents Per/TSF*N1=1136   N2=3500 Per/SiteN=18401  Per/10 6 tons/10a CU mine production a to create closer    nominal scale
10’s 2* .0011 .0001 .0200.
20’s 2* .0011 .0001 .0200
30’s 4* .0030 .0002 .0220
40’s 8* .0070 .0004 .0381
50s 9* .0080 .0005 .0429
60’s 48 .0143 .0026 .1122
70’s 56 .0160 .0030 .0933
80’s 50 .0143 .0027 .0641
90’s 19 .0054 .0010 .0211
2000’s 20 .0057 .0011 .0153

Bowker Associates Science & Research In The Public Interest

October 2014



Knowing that the production at mines in operation is frequently interrupted by falling prices which can affect  most of a decade we first looked to data on copper prices over the entire century 1900 to 2000 and found that it mapped exactly into the shape of the historgram suggesting that  peaks in failure incidents  in the histogram in the 60s 70s 80s were in a period of price increase and that the two decades of the 90’s and 2000’s were in a period of general price decline  where it would be expected there would be a higher proportion of mines and TSFs in standby mode, ie not actively extracting.  This was the case at Mt. Polley which was reopened in 2005 after a 4 year period of no extraction due to falling market prices.

Copper Prices In $2010 dollars 1900 -2000

These periods of long upswings and long downswings in copper prices also presumably affect inventory of standing mines and inventory of standing TSF’s with the possibility of additions to both on long periods of upswing and the possibility of permanent shifts from “active” life phase to “closed” during long downward trends in price Here in Maine a long expensive history of exploring Bald Mountain, a small, low grade, high risk VMS deposit had reached a point in 1990 where Boliden was looking at the possibility of active extraction.  As the possible operation was too small and too uncertain they passed it off to a Denison subsidiary whose application was withdrawn in 1997 again citing falling metal prices. If that deposit had been a higher grade( and not had such extreme risk characteristics) it might have shifted into the “active life” phase with a small new “TSF” adding one new mine and one new TSF to inventory. On a down swing if a deposit is close to mined out it might just go into earlier than planned permanent closure of the mine site and of the TSF.

We are now in  a period of continued sustained upswing in copper prices and as a result of that we would expect both a higher frequency of failure, exceeding those of the middle three decades (60’s,70s, 80s) and significantly greater magnitude as grade has continued to decline over the past 1/3 century and the size of the standing inventory of TSF’s has pushed to greater heights and greater volume as compared to the size of these same facilities in the middle decade.(3)

This is very much the case at Mt. Polley and in the exit letter the designer of the original TSF who had continuously served as  consulting engineer to  the mine owner expressed concern about the size of the facility.   Further specific details about their concerns were found in the recently released 2009 annual inspection report submitted by the consulting engineer to the mine owner/operator.

What this all means is that degree of risk in any given standing TSF has a tendency to increase over time if it remains in active use because as production continues,  the TSF grows in both height and total volume.



Looking at TSF failures against global copper production 1900-2010 yields perhaps better data and more insight on actual trends in TSF failures and consequence implications especially when taken in conjunction with the world bank graph of copper production, ore grade and ore production over this same period.  All Failures has very weak correlations with everything except major failures because it includes mostly small incidents ( rather than failures) or very minor actual spills.  Both major failures and large failures have extremely high correlations with ore grade, mine production ( whether of copper only or of all metals), dam height at failure

Variables allmetals millions copper millions tons Mxpri pricyc $us2009 mxht oregrd tfail majfail lrgfail
allmetals millions 1.000 0.586 0.064 0.029 -0.212 0.524 -0.741 0.501 0.518 0.492
copper millions tons 0.586 1.000 0.092 -0.226 -0.769 0.967 -0.956 0.447 0.900 0.969
Mxpri 0.064 0.092 1.000 0.642 0.194 0.033 -0.023 -0.061 -0.014 0.018
pricyc 0.029 -0.226 0.642 1.000 0.517 -0.396 0.234 -0.149 -0.393 -0.325
$us2009 -0.212 -0.769 0.194 0.517 1.000 -0.795 0.694 -0.164 -0.736 -0.797
mxht 0.524 0.967 0.033 -0.396 -0.795 1.000 -0.922 0.346 0.860 0.950
oregrd -0.741 -0.956 -0.023 0.234 0.694 -0.922 1.000 -0.551 -0.889 -0.904
tfail 0.501 0.447 -0.061 -0.149 -0.164 0.346 -0.551 1.000 0.725 0.382
majfail 0.518 0.900 -0.014 -0.393 -0.736 0.860 -0.889 0.725 1.000 0.882
lrgfail 0.492 0.969 0.018 -0.325 -0.797 0.950 -0.904 0.382 0.882 1.000

Looking  at the world bank graph below we see that the spread between the blue line ( ore extracted (=waste volume)) compared with the flat refined ​copper line (red line) continually increases after 1960. The blue line ( total production of ore to produce the same level of ​refined copper), in effect is the same as the magnitude of consequence and more or less graphs what Dr. Robertson was conveying in his 2011 key note tailings conference address.


​Mapping the histogram of 218 TSF failure events ​(Azam/Li (2010) onto this graph​, ex​press​ing it on an incident per ​million tonnes of production basis​, shows that the two decades pre 1960 had a failure rate of .002 per ​million tonnes produced  ( adjusted for​ China which is not reflected in the TSF failure incident data) . and almost the same for the two most recent decades.( see table above)

Given the difference in magnitude of co​nsequence over the post ’60 period ( larger and higher im​poundments to handle more and more waste ​per unit ​of final metal) this is obviously a considerably worse​ risk management performance by the industry as a whole as compared with the pre- 1960 era ( looking only at TSF’s).

The middle period​ (60s, 70s, 80s) , of maximum TSF failure incidents was at a time of frenzy chasing an almost continuous upward trend in copper prices ( in constant $2010) and as ex​pected during such a big push on production the pressure on safety of TSF’s shows in much higher failures rate of .00878 per​ million tonnes(scaled by 100).

​The big price push over this period was driven mainly by demand from China who were both stockpiling and using at very high levels and by electrical infrastructure demands in developing/modernizing nations.. By 2010 China was a significant producer  of refined  metal in its own right with 25% of the global refining production and 10% of global production through mining.(after a very bad record of TSF failures not reflected in the ICOLD/WISE data)

This preliminary analysis  does not factor in the growing trade in copper concentrate solutions(secondary refining) at about 16% of total mine production in 2009  or the increasing role .and the increasing role of SW/Ex which was almost 20% of all production in 2009. Both of these changes in the profile of “mine production” have implications for TSF utilization and expansion


End Notes & Links

(1)Here is a link to Tailing.Info’s excellent codification of the ICOLD/WSE data.  It is not current with that data. ICOLD/WISE  is immediately updated and revised as each new failure occurs so does not include Mt. Polley.Its consistent codification though does significantly improve the possibilities of using the ICOLD/WISE for systematic analysis.

Thank you Eric A. Tuttle for volunteering to transfer the Tailings.Info codification into useable spread sheet form.

(2) Number of Standing TSF’s .The industry seems to have  adopted “3500” as the “semi official” inventory of TSF’s and it seems, as far as we can see to originate form this paper by Davies et. al. citing a 1998 paper by Morgenstern.

We have not yet checked the Morgenstern to see what he intended/believed the number represents.  It is not clear whether they intend their created number  of “3500 TSF’s globally” to mean all TSF’s between “Put in service” and ” closure” or also closed TSF’s. .  Everyone cites Azam/LI (2010) as the source who in turn cite this paper.

(3)Schodde, Richard “100 Years of Resource Growth For Copper Impacts Of Cost. Grade and Technology” ( has some fascinating insights on  HOW miners continued production as grades fell and prices varied.  His main point is that costs of production went steadily down making it possible to profitably mine lower and lower grades.and that a 6 fold lowering ore grades  allowed a 3 fold output  in refined copper.  He says “price is input” . We don’t believe this is a relevant predictor of TSF failures but his analysis is compelling. His slide presentation also has fascinating  bar graph showing that pre 1960 almost all copper production was out of  a few very large mines where as post1960 there is a greater number of mines and more diversity in the size of the mines.

(4)  technically it is not correct to say copper is “post peak” as reserves have not approached 50% reduction . Nor have they reached a point where continued extraction is not economically viable,  Extraction at current low grades of about .3 are still economically viable and we have reached nowhere need 50% .  Environmentally though it is post peak.  Because as that spread increase, the public side of the risk equation grows exponentially large and we hope soon to name that.  We know it is far greater than the 3% ( the rate of production increase in copper.)  We know that is what brings us mine proposals like Pebble & Northmet and Freeport McMorans plans for 2 billion cubic meter TSF.

Posted in Analysis TSF Failures, Bowker Associates Science & Research In The Public Interest, Copper Mine Production 1900-1999, Copper Prices 1900-2000, Frequency of TSF Failures BY Decade, ICOLD, Measuring Magnitude of Consequence TSF Failures, Tailings Failure Rates, Tailings.Info, TailSafe, TSF Failure Incidets 1900-2000, TSF Risk Management, Universe of Mine Sites, Universe of Standing TSF, WISE | Leave a comment


The following is the introduction to the summary and conclusions section of a major paper we have been collaborating on with another and far more distinguished co-author who speaks mining truths always and only with humility and quietness. So chances are if we proceed to publish our work jointly this would never pass muster. But its the language that poured out of my heart and my intellect this morning as the only moral and political compass on what the Mt. Polley TSF failure tells us about the current global management of TSF’s and the as yet unmanifested unfunded public and environmental loss exposures of current industry wide business practices. We estimate that at $2.8 billion that will be passed off to tax payers globally from the presently standing inventory of TSF’s by 2020.

The mining industry is already beginning to throw up a dust cloud of talk about dry stack as “THE SOLUTION” and resurrecting the myth of “safe” deep water disposal..that is ocean dumping and dumping in deep pristine lakes a practice that even has blessing and sanction in GARD Guide and MEND despite solid and irrefutable scientific evidence of irreversible harm( Vogt(2013 ) and warnings by distinguished scientists in 2009 ( Moran et. al. 2009 ).

The industry will agree to other fixes on which there is widespread consensus including transparency ( public access to all raw data with a bearing on public and environmental liabilities) but they will continue to call for and rely on self regulation and will continue to divert attention away from the enormous unfunded public and environmental liabilities in the world’s standing and operating TSF’s.

After two months of careful and open inquiry into the “present state” on the magnitude of public and environmental liabilities and the current available funding for that the phrase that summed it all up was from Dr. Chris Seeley via R. Buckminster Fuller.

“By “business as usual,” I mean the kind of business that is bewitched by what Dr Chris Seeley calls, in The Fool and the Great Turning, “the three impossible fantasies”: the fantasy of limitless growth; the fantasy that actions can be taken that don’t have consequences; and the fantasy that human beings are separate from, and above, the natural world”(R. Buckminster Fuller)”

In the preceding discussion we have shown that except for very large companies with big balance sheets, lots of liquidity and diversified earnings (like Grupo) few companies operating TSF’s today ( or proposing them) have the financial capacity to absorb the total public cost of environmental damage caused by “human error” and resulting in failure of a TSF. We have shown that insurance is and can be only a very tiny and insignificant part of the total cost of such a loss and that publicly ordered clean up ( eg via a compliance order, is non insurable). We have shown that no prefunding is provided via spill response programs in Canada or in most regulatory regimes and that pre funding at the level of any state or province is not actuarially possible for a TSF failure of $300 million.. In short we have shown that there presently is no funding possible for large losses despite the public expectation/demand that “polluter pays”.

All prudent and reasonable persons ( the non bewitched) would agree, we are sure. that the current situation is not acceptable and cannot continue as is.

Business as usual is not an option.

It is not in the public interest to allow the development and accrual of large unfunded public liabilities that result from human error ( ie that are as most authors have said straight forwardly, preventable). The public expectation/demand that “polluter pays“ is a fair and reasonable one, a foundational one in any democratic nation founded on common law principles. It is ordinary that individuals and corporations accept not only legal but financial responsibility for the consequences of their actions. There is nothing out of order or unreasonable in the public/expectation demand that the “polluter pays”.

The present structure in B.C. and in most political jurisdictions is that the legal structure not only tolerates but facilitates shielding of the mine operator from financial liability for the consequences of preventable losses. Otherwise, bankruptcy would be inevitable. To reduce that to its plainest truth, the present structure of mining law and regulation places a higher social value on preventing bankruptcy of mining companies than it does on environmental protection and socially and economically productive uses of tax payer dollars. The present structure of B.C. law and law in most places is that there is a de facto public subsidy for the public consequences of mining failures. The public either accepts the loss or pays for the clean up that is essential to satisfy the electorate. The present structure is not “in the public interest”.

Businsess as usual is not an option.


Posted in bannaism of maine, corporatocracy, craig Vogt, Dr.Chris Seeley, mining truth, Mt. Polley, plutonomy, politics of mining, polluter pays, Robert E. Moran, TSF Risk Manageent | Tagged , , , , , , , , | Leave a comment


OOSKA NEWS, a water quality focused global news service has reported that the public/environmental liabilities for the August 6 failure of a feeder dam 25 miles from the U.S. border are now estimated at $137 million.
Bowker Associates has been following this failure  and the catastrophic tailings storage facility failure at Mt. Polley in British Columbia since each first occurred.  The original part of the post focused on the implications with reference to Maine’s appalling new mining statute, its legislatively rejected rules and the antiquated uninformed old 1991 rules now continuing in effect. As is the format for all of our posts on specific ongoing  events,  there is an  annotated running file of later developments. For that post Buena Vista Del Cobre has its own tracking with commentary and background on the facility and mine itself.
The key issues at Buena Vista, beyond the dam failure are of continuing interest to us and we will be doing more work on “unpacking” this . Old mine sites around the world are being “reworked” to reprocess old waste piles and extract from pits that were deemed non profitable including unexamined  reuses of old  TSF’s for electrowinning  process slimes. Freeport McMorans portfolio of mineralized assets is dominated by such “reworking” of old infrastructure for electrowinning and the foreign sites of U.S. and Canadian mines are increasingly about reworking and retrofitting old sites and facilities for electro winning.
Electrowinning has made it possible to profitably extract very high  grade copper ( and a few other metals) from very low grade ore using a recirculating sulphuric acid solution holding leached suspensions of metal.  It is a vast vat leaching process with Outotec, designer constructor of the retro fit of the Buena Vista Del Cobre facility,  the industry leader in these electrowinning refits of old mining infrastructure.
As part of a paper  explaining the legal and financial reality of why only extremely large companies can actually pay for the public and environmental liabilities of a TSF failure we had already prepared a comparison between Imperial and Grupo.  Here is an excerpt from that paper.

Debt rating agency Moody’s warned .. it was concerned the miner may not have the liquidity to absorb the financial impact of the spill. Imperial had $1.5-million in cash versus $464-million in debt, and a working capital deficit of $21.7-million as of the end of March, according to its financial statements.

The shutdown of Mount Polley will stretch thin an already tight balance sheet,” Raymond James analyst Adam Low said in a note to clients.”

 Important to note that working capital deficit of $21.7 million is pre TSF failure.  With Mt. Polley out of  the picture for income and costing enormous outlays  for  cleanup and recovery and no significant recourse to bonds and insurance for any part of  failure costs the  working capital deficit is most likely now many times that.

In its 2013 annual report Imperial announced that it could no longer fund operations and development out of cash flow as it had done to that date and would have to go to credit markets.  Post failure It did obtain $100 million in unsecured 5 year debt but at a fairly high rate, 6%, and principally funded by the two existing investors with most at stake. We do not need world class accoutants and rating agency’s to wonder how this $100 million can contribute in any way to funding failure costs.  The working capital deficit alone required all of that.

Imperials stock plummeted immediately after the massive TSF failure which further impairs access to  and cost of capital even on the risk robust mining centered TSX .  Mt Polley has $900 million in assets but $500 million in liabilities so its net worth ( unencumbered assets) is only $400 million.  With $100 million already drawn down just to meet working capital deficit and the price per share still impaired that doesn’t leave much possibility of access to the TSX to fund the Mt. Polley failure and meet Imperials public and environmental liabilities.

By comparison, Grupo Mexico who have expended $150 million so far on clean up of their Buena Vista Del Cobre feeder dam breach which occurred 2 days after the Mt. Polley failure had $2.44 billion cash on hand and only  $5.78 billion in debt ( a ratio (debt to cash) of 2.36 as compared with Imperial/MPMC’s of 309.3.  To meet an uninsured, unfunded  loss of $100 million and not risk impairment of all other operations a company  needs to  have sufficient liquidity and revenues from other operations to be able to absorb the unplanned costs of the failure.  Only the  largest  miners, like Grupo have that.”

Posted in Buenavista Del Cobre, dam failue envronmental costs, electrowinning, Electrowinning dam faiures, Grupo Mexico, Imperial Metals, Mt. Polley, polluter pays advocacy | Tagged , , , , , , , , , , , | Leave a comment


Jack Caldwell, ( who I respect and admire very much not just for his expertise on TSF’s but for his fidelity to advocating for best knowledge, best management in their design, construction, management and closure..for donkeys years.) posted this morning from his blog ( I Think Mining.Com) that Steven G. Vick  publicly acknowledged at a Tailings Conference yesterday that 100% of all TSF’s will fail. If Vick is right ( and I would never dispute anything about TSF’s with Vick or Jack) then a very rough first cut calculation is that the total unfunded and perhaps unfundable public liability just from TSF’s alone is $(us)1.05 trillion.  That is $(us)150  per person for every person alive on earth today ( see my post at I think Mining for details..I will post here as footnote later today) I didn’t hear the actual full context myself and I am sure he was in part simply saying “no man made structure can last forever” but having read many of his papers and many of the dam committee reports on failed TSF’s that he investigated, in particular OMAi (Guyana 1994) I think he means more than that.  He has seen the deep flaws in permitted TSF’s not just in reviewing failed ones but in his other work as well as perhaps one of the top three experts in the world on TSF’s.  He knows what skeletons are in the closet and I have seen that too in my deep dive into what has shaped that global inventory of currently operating TSF’s.

In my business (..Risk Assessment, Risk Management, Risk Finance), an event that is certain is not within the definition of a “risk”. If the probability of failure of a TSF is 100% as  Vick is reported to have said (probability of failure=1) ( ie it is not a question of whether but when) then we are not talking about “risk” we are talking about 100’s of standing TSF’s globally every single one of which could  eventually fail, not because human structures can’t last 100’s of years but because most were built without regard to known and widely accepted best practices.  He knows that.  That is what he is most likely pointing to.. That formula from “my industry”used by Vick & Robertson is not proper if in fact there is 100% certainty that all TSF’s will fail eventually. In my world of expertise that formula is used to evaluate the consequence of random events not the consequence of a certain event where accepted practice is to build structures that will fail.

In fact , by coincidence, the paper we will soon release arrives at exactly what Vick has said and I have been working the past two days on the best numbers to describe both the geographic scale and economic consequence of that reality.Ie the total unfunded and presently unfundable economic public and environmental consequence of the entire TSF profile globally. ( By the way every chapter in this work in progess is headed by a quote from a mining industry leaders..just this second I have switched out the lead to that chapter for Vick’s authoritative quote.(.thank you Jack) frames our point so beautifully and sets up the numbers that will follow that quote in our paper.)

I am sure Vick’s point is the same as my conclusion..that therefore we have to focus on reducing consequence to the fullest extent possible..I have been writing to Jack and others for weeks now that the policy goal has to be to move TSF’s from their historic and unsustainable loss rate down to something closer to the failure rate for water dams.   In other words we have to take chronic chosen deviation from best knowledge and best practice out of the process.

The level of chosen deviation from known best practice, best science , best knowledge  is not a tolerable  reality for  something with such massive economic consequence geographically, environmentally. It’s not acceptable that Imperials LLC and the structure of Canadian and Provincial law will effectively completely insulate Imperial from the consequence of this loss as happened with Omai( Guyana 1994) and with Bolden at Los Frailles. The creation of shells which shield a company against consequence is not an acceptable condition of the social license to operate especially where the public demand is “polluter pays”.

Business as usual is not an option. That is really what Dr. Vick is saying.

We set out just to map why it is the polluter never pays for the massive public and environmental consequences of a TSF failure, to show that it is always tax payer pays or just accept the loss. When we laid out everything it took to explain the entire context of that we almost immediately saw in the numbers what Vick has now publicly pronounced. ( we are assuming Jack has  correctly reported Vicks remarks, of course because we trust and respect him)

I previously outlined in Jacks post mocking me what the strategy has to be to lower consequence. to conditions that will continue the “social license to operate” Let me preface my list by saying I have been a policy wonk for 43 years and have all my life fought against, denounced and tried to fix or eradicate command and control approaches to law and regulation. Law & regulation  have to be workable and doable and understand the actual operations and constraints on an industry.  It has to “map into” the actual flow of an industry. I believe the West Autralian structure, just accomplished, actually does that. It can be done. It just hasn’t been tried yet in the U.S, and Canada.

I have written extensively about flaws in U.S laws like Superfund, Lead In Construction , Asbestos Statutes &Regs etc.c. for Lloyds Environmental Risk Management, Managing Risk For Loss Control & Prevention, the CPCU Journal, Business Insurance and the Risk Management Journal. (A lovely professional photo of me & my bunny rabbit,”Bugs” actually were the full top page cover of business insurance once) So when I speak of controls via regulation I am not talking about the usual, I am talking about something more like what West Australia has done, something that can actually work, something that doesn’t add ridiculous levels of costs with out any justifiable corresponding public benefit.

(1) it is too late for incremental fixes permit by permit new TSF by new TSF.The “infestation” is too severe from too many years of building a TSF inventory that rejects best practices ( not as our paper will show out of will but out of cash flow pressures and economic realities of developing and operating a mine) Companies do what they do to survive or perish or Sam Jones put it .

(2) New entry has to be more tightly controlled not just on strict adherence to best pactices but also on the financial capacity of the operator and existence of a responsibly managed risk finance plan for all public and environmental liabilities.

(3) new entry new permits) have to be conditioned on each applicant accounting for and having an aggressive program for looking at all its standing TSF’s ( not just in the political jurisdiction issuing the permit..ALL of them and making fixes or building new TSF’s as necessary to address those at highest risk of major consequence.

As is clear in our paper when its all laid out this is a co-ventured reality of  too many  standing  currently permitted and operating TSF’s. It is the product of a longstanding partnership and mutual consent between government and the industry. We the people were looking in the wrong places or advocating for the wrong things as all this shaped the profile of the thousands of standing TSF’s globally.

The final reality ad toughest sell where the public expects “polluter pays” is a tough sell. The consequence of loss and the costs to fix it has to be shared. Government just can’t turn back to the industry and say fix this by 2020. Every tax payer in every jurisdiction that issues permits for mines and has standing mines will have to also be part of this investment. Thank You Jack. Thank you Steven G. Vick Now Lets’ get to work working on a workable strategy together for tackling that unacceptably high consequence of unfunded public and environmental loss.

The Dam Review Committee report on Mt. Polley isn’t on the critical path to that.

We know that already.

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Mt Polley & The Global Capital Squeeze: The Other Side Of Dr. Robertsons Declaration That TSF Risk Profile Has Increased 20 Fold Every 1/3 century in the Modern Era


“Whether a start-up business looking to list; a hapless explorer completing its final drill programme; a company that has been fortunate enough to strike it lucky and turning towards development; or a producer with a depleting ore body, it is critical for a company to move forward or face certain extinction.

To do so, a company needs to be adequately financed,particularly in an industry as capital-intensive as mining – few “people would argue otherwise.”( Sam Jordan Jones, The Global Mining Finance Guide 2014

Globally the credit and equity markets that have traditionally financed mining explorations development and operation have changed dramatically in recent years. Expectations that have kept miners afloat and moving forward for decades all of a sudden are not supported by equity and credit markets Capital just isn’t there the way it always was. According to The Global Mining & Finance Guide (op cit link above) a major contraction clicked in in 2012 after a steady and significant decline  from 2009. which of course would affect all mining companies globally whose development plans and operations relied on continued access to these markets at the same terms and conditions and in accordance with need. As noted in the introductory quote  above, a sudden and apparently long term change  in finance availability and access is especially challenging in an industry that is as capital intensive as mining.

And that of course puts additional pressure on the chronic and inevitable conflict between TSF safety in design and management and the allocation of scare available resources to production.

Imperial/MPMC was clearly caught in this unexpected crunch in global capital markets when it realized in 2013 that it was now completely dependent on those capital  markets to meet its development and production goals promised to investors.

With that capital crunch, of course generating as much revenue as possible through aggressive production goals moves front and center and doing whatever it takes to achieve those goals takes priority. Surely the profile of the capital crunch since 2010 is a principal driver pushing the  20 fold increase in risk profile Dr. Robertson mapped at his key note 2011 Tailngs Conference even higher. ( .

Miners have to work what they have invested in    and committed to developing. They have to make lower grade ores that once seemed financially viable, produce more and more and they have to push existing infrastructure, including TSF’s as far as possible. What other choices are there?     Where else can a company find the revenue it needs to survive.

That is where Imperia/MPMC is hanging.

They are desperately counting on the permit at Red Chris to plug the holes in its leaking financial vessel and trying to convince the public that will spare them the cost of the Mt. Polley TSF failure cleanup.  But how can that be a good deal in terms of public liabilities and  environmental risks when we know the TSF at Red Chris has been designed to keep costs at a bare minimum.  The capital crunch is driving completely against the public interest.  Can we make that bargain when the public risk hasn’t been measured  and Imperial MPMC’s financial capacity to fund its public liabilities and environmental loss exposures has not been fully examined.

As Sam Jones says in the opening quote  it is move forward or perish.

Of course a business that has accumulated almost $1 billion in mineralized   assets, survived for half a century and invested so much for so long will go for survival and of course the other end of that is inevitably  a higher risk and loss profile overall and a greater probability of higher unfundable unmanageable public liabilities and environmental liabilities.

This is the tailspin Imperial /MPMC was caught in at the time of this enormous record breaking TSF failure.

Here are just a few quotes from the Global Mining Finance Guide that flesh out the severity of the current global capital crunch.

“.. in the current environment, where investors are concerned about the level of new supply coming to market and have a smaller appetite for risk, there is less capital available to finance such programmes.Geological expertise is key and those with a successful track record will find iteasier to gain investor confidence. However, even those promising to repeat past performance and offer the highest returns are struggling to raise capital and consequently, we have witnessed a contraction of early stage investors.(emphasis added “

“Historically, exploration activities have been financed by the public equity markets. However, over the past 18 months, capital in its traditional form has all but dried up.Only 17 initial public offerings (IPOs) occurred in the sector globally during the

nine months to September 30, 2013, raising just US$626 million”

“The sell off over the past two years has been severe as shown by EY’s Mining Eye and Canadian Mining Eye indices, which track the performance of junior mining stocks on London’s secondary stock exchange, AIM and Canada’s Toronto Stock

Exchange (TSX) and TSX Venture Exchange (TSX-V), respectively. With share prices depressed, and investors looking to protect investment positions, it is little surprise that new equity is not being attracted into the sector.”

“It has been a difficult year for miners. Metals prices are down significantly, equity values remain under pressure and shareholders have grown increasingly vocal in their demands for fiscal restraint.”

“Growth at the expense of shareholder returns has led to lower investor confidence and areduced appetite for mining equities,” BMOCapital Markets’ Co-Head of Mining Research,Tony Robson, said”

Posted in A. Macg. Robertson, Bowker Associates, Global Capital Squeeze In Mining, Ian Coles, Sam Jones, TSF Failures, TSF Risk Profile | Leave a comment

It Is Time To Commission a Panel of Risk Finance and Underwriti​ng Experts To Review Financial Capacity of British Columbias 10 existing Mine Operators


I only just stumbled across this article rightly questioning the wisdom of allowing Imperials other two mines , Huckleberry and Red Chris, both in B.C. to continue until a through  reexamination and “audit” is conducted.
I was just about to post what is now so obvious on a statistical actuarial basis that it requires some immediate speaking from the “Responsible Mining” movement.  I will frame it into a more usable “FAQ” form and seek expert peer review from my industries ( banking, insurance, underwriting & risk management)  but the picture on a financial responsibility basis is grim and the B.C. governments existing structure is without pathways and procedures for responding  adequately to that.
At this point Imperial (operator of two of B.C’s 10 currently operating mines and seeking a permit on a third) is caught in its own self constructed trap and is really helpless as a corporation to do anything about it.  It  has reached the edge of the cliff( in my opinion and in the public opinion of market experts).
The call that needs to be made right now from the “responsible mining community is on Imperials financial capacity to meet its obligations and fund its environmental loss exposures and present legal liabilities not just at Mt. Polley but at Huckleberry and at Red Chris which is in permit processing.  That financial capacity “audit” has to also take account of its JV in Nevada.  .
Bowker Associates is constantly combing through potential sources of data looking for documented or at least widely accepted data  to replace assumptions we have had to derive from what is available for our work on “moving the global risk curve” for mines.
Last night I discovered that B.C. has only 10 operating mines…
It is a major red flag  on risk that Imperial in its challenged financial condition hold permits on two of these mines and is seeking a third. regardless of what actually caused the TSF failure ( not that there is much question about what Vick, Zyl an Morgenstern(???) will say).
 It is simply not sound policy to issue permits to companies for anything let alone an endeavor like mining with a documented high public liability  risk profile if the company cannot fund  or otherwise meet its environmental and other public liabilities.
Full stop ( as they say in the U.K.). Period (in the U.S.)
 The call can and should be made by the entire “Responsble Mining ” network in the Canada & The U.S. for an  independent qualified actuarial and accounting team of experts  to audit and assess the capacity not just of Imperial but of the owners of all 10 operating mines in B.C. to meet these financial public liabilities and to evaluate the adequacy of The B.C. governments present criteria and standards for making determinations on “financial capacity”. The panel of financial & risk finance experts should  provide specific recommendations to B.C. on improving their “financial capacity ” criteria and specific guidance on how to restructure its requirements for current permit holders..
Failing their taking that up, or perhaps preferably, we responsible mining advocates should hire our own expert panel   and get that out in public view immediately.( It will be tricky to pull this panel together as no expert who understands mining and is currently serving the industry will want to be publicly involved. My work with this information so far suggests the numbers speak loud and clear and about such basic and funadmental risk management and risk finance issuse that they require no mining expertise to assess)
Those audits should take a close look at what the B.C. government allows and what practices these 10 companies have on the creation of shielded LLC’s which funnel revenue up to the parent but protect  the parent against liabilities.(1) The original permit at Mt. Polley was issued in 1992 to Imperial Metals.  Mt. Polley Mining Corporation, the current permit holder was formed in 1996 as a co-venture with Sumitomo and other investors.. A further corporate restructuring in 1998 ( following merger with Princeton) created “Imperials Metal Corporation  “which operates the mine”   “The mine is owned 52.5 per cent by Imperial and 47.5 per cent by SC Minerals Canada Limited, a wholly owned subsidiary of Sumitomo Corporation of Japan.”(1) ,.There is no reference in the BOE inventory on Mt. Polley of any additional B.C. approvals or reviews of these corporate changes.  There is no reference to how the current permit came ot be in the name of “Mt. Polley Mine Corporation”. Further documentation is needed to assess what financial resources are presently available via “Mt. Polley Mine Corporation”, the current permit holder. Are the liabilties shared with the SC Minerals?  What recourse does B.C. MOM have directly to SC Minerals or to “Imperials Metal Corporationl”?  Sumimoto still references “SC Minerals of Amrica” ( no mention of “SC Minerals Canada Ltd.”
A search at InfoMine for “SCMinerals Canada Ltd.” yieilds no results. Imperial Metal Corporation’s 2012 Annual report  shows 100% ownership of Mt. Polley via its wholly owned subsidiary “Mount Polley Mining Corporation”   Does Sc Minerals of Canada Ltd still own 47.5% of Mt. Polley?  Does it have any assets other than the Mt.Polley share.  How ere the liabilities apportioned? Does anyone at BC MOM track or evaluate these corporate changes and their effect of adequate financial capacity?
This is an important and fundamental call on business practices that have so far not been a focus of the main  themes and work of  responsible mining and environmental justice but are so obviously  key now that we look at the reality of Mt. Polley
The implied “thought” behind what B.C. and other political jurisdictions interpret as “financial capacity” is that a company can always sell off its other assets, go to credit markets or fund out of cash flow from other operations.  This is flawed thinking and flawed policy as Mt. Polley makes very very clear.  
The present course of the public private partnership between the mining industry and its regulators, not just in B.C. but across the board, is reckless and irresponsible and on “financial capacity” gaps alone ( a company’s own assessment of its capacity and the assessment required by regulators) is tantamount to an undeclared and unagreed, unacknowledged unlimited  public subsidy to the mining industry via unfunded and unfundable public liabilities.
The markets have already made the call on Imperial so there is no political risk or liability exposure and no vulnerability to a charge of unqualified” criticism ( who is mining watch and wman or Bowker Associates  to question  or assess a company’s financial capacity):
(1) Imperial announced in its 2002 annual   it was essentially going bare ( unfunded) for its environmental and other operations liabilties.  ( did B.C. make a response to that, notice that, consider that?) There is no evidence or reference in their annual reports since then of any effort to pre fund or even quantify what those liabilites are.  They have merely asserted that they can fund them out of cash flow without any supportive analysis for that claim(  anyone who manages a check book can see such a claim  is a stretch to say the least.  Almost no one can mange catastrophic losses out of cash flow).
(2) a key rating agency publicly challenged that whether Imperial can survive this:“Debt rating agency Moody’s warned on Friday it was concerned the miner may not have the liquidity to absorb the financial impact of the spill. Imperial had $1.5-million in cash versus $464-million in debt, and a working capital deficit of C$21.7-million as of the end of March, according to its financial statements.

“The shutdown of Mount Polley will stretch thin an already tight balance sheet,” Raymond James analyst Adam Low said in a note to clients.”

(3)The markets have made their call. Imperials stock plummeted. The “market” didn’t offer them that $100 million in unsecured debt, the two major investors with the most to lose funded that whole debt and their level of confidence is shown in the very high rate charged ( 6%)
(4) in their pre spill 2013 financial statement Imperial acknowledged that even to meet their production and development goals ( especially at Red Chrs) they had no cash flow and would have to rely on credit markets.
Just pointing to these four established indisputable facts, any citizen with a thinking cap on can legitimately say “hey wait a minute” this sounds like not a good deal for we taxpayers and quite reasonably make the call I am suggesting you make now.
As this article points to indirectly “financial capacity” must involve a full consideration of liabilities.  It is obvious that even without the spill. Imperial does not have the financial capacity to meets its environmental and other liabilities at 4 mines ( Huckleberry & Mt. Polley  in production, Red Chris coming on line in B.C. and ar JV operation in Nevada)
The  B.C. Spill response program is not funded ( nor is it mining specific..same program governs a tiny little oil delivery truck spill to a homeowner and a spill the size of Mt. Polley). The B.C.policy merely asserts, that it is reasonable for the government to seek reimbursement should the responsible party be unwilling or unable to respond..the maximum fines for non compliance are a joke in the context of a major or even average TSF spill
Also what this article is saying about the fundamental relationship between cash flow pressures and safety is really the entire issue in mining.
It is endemic and well documented.
Imperial is the refection if a global cash flow crunch affecting and forcing changes within the entire mining sector
This is endemic but not so much publicized though obvious on examination of any company,  It underscores the urgency if regulatory reform to address financial capacity and other controls on entry.
It turns up again and again in dam review committee reports and it was the main point well made in this excellent piece presented at the 2011 tailings conference. 
This excellent paper is making the right call.  The industry itself is paying no attention to the operating phase of a TSF and their is no focus on oversight, not just in B.C. but again on an endemic basis.  Have to look up the exact number( AZAM 2010??) but something like 44% of all TSF failures occur during active mining operations.  It is the single largest threat of non remediable, non recoverable permanent environmental loss and yet regulations, not just in B.C. but everywhere fail to focus on the well known well established  causes of TSF failures in their requirements and provisions for oversight

At this same conference Dr. A. MacG. Robertson who has all his career called for voluntary self regulation on best practice principles called the May Day industry wide

 Dr Robertson is the wise man in the industry..I have immense respect for what he tries to do through info Mine and what he has done all his career as a consultant to mining companies.).  He said to his fellow miners as the key note speaker there the risk profile of modern era TSF is rising at the alarming rate of 20 fold per 1/3 century.
His reasoning and even his numbers look fine to me. and what it points to is exactly what the article that prompted this post is pointing to except the author doesn’t understand as Dr. Roberson obviously does that it is endemic to the whole industry.  
Mt Polley is just the mirror in which we see the face of most of the mining industry today and in which we see the details of a failed co-ventured historic public private partnership between the industry and its regulators..
(1)In 1992, Imperial Metals Corp. received a mine development certificate from the B.C. Ministry of Energy, Mines and Petroleum Resources for a 13,700 tonne-per-day open pit mining operation and covers all elements of the mining plan including the open pit, processing plant, water supply, tailings pond and a power transmission line. The mine development recommended by Fluor Daniel Wright Engineers in its feasibility study calls for 13,700 tonnes-per-day based on an initial 10-year mining reserve of 48,983,400 tonnes grading 0.38 per cent copper and 0.54 gram per tonne gold to produce 13,608,000 kilograms of copper per year. Gold production will exceed 3,428,000 grams per year initially and gradually decline to 1,714,000 grams per year in year 10 (George Cross News Letter #199, October 15, 1992).

In 1994, Gibraltar Mines Ltd., under an option agreement with Imperial Metals drilled seven core holes for 1,216 metres. Upon evaluation of the project Gibraltar declined further participation. Following a merger with Bethlehem Resources Corporation in 1995, Imperial completed an in-house feasibility study. Financing was arranged with Sumitomo Corporation through a joint venture with SC Minerals Canada that culminated in the formation of Mount Polley Mining Corporation (MPMC) in April 1996.

“In June 2001, Imperial Metals Corporation announced that mining and milling operations at Mount Polley mine would be suspended in September 2001 due to continued depressed copper and gold prices.”
Posted in Bowker Associates, Canada Dominance in Mining, CSP2, Financial Capacity Standrds Mines, global cash flow crunch, Imperial Metals, Mining Risk Management, Mining Watch Canada, Mining Watch Maine, Mt. Polley, SC Metals, Sumitomo Corporation, TSF Failures, WMAN | Tagged , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Canada & Canadian Owned Mines In Foreign Countries Determine The Unacceptably High Risk & Loss Profile of Mines Globally

I am sure Mining Watch Canada and WMAN have long been aware of the stats and facts on Canadas global mining dominance which have appeared in the wake of the Mt. Polley TSF failure.

Looking at these stats in the context of my current work in analyzing  whether and how it is possible to move the unacceptably high global risk and loss profile of mines to levels that might shield against unlimited unfunded public liabilities  these numbers and facts are stunning.

They have implications for how U.S. and perhaps pronvicial law in Canada  needs to shield against public interest gaps in Canada’s legal structure for mining. .

They have implications for public interest advocacy and advocacy coalitions (mining watch groups and major voices like Sierra Club)

For those of  us numbers crunchers  and researchers  who sit in the dark drear bowels of government buildings pouring through records that may contain long hidden data   and who pour through compilations like ICOLD’s and WISE’s on TSF’s it puts a completely new light on interpretation and analysis.

“Over 75 per cent of the world’s exploration and mining companies are headquartered in Canada, and mining and energy investment is the third largest component of Canadian direct investment abroad. A leaked report by the Prospectors and Developers Association of Canada, the biggest industry lobby group, confirms that Canadian mining corporations are responsible for almost half of all the documented mining-related rights violations around the world, and in the global South are implicated in four times as many violations as companies from other countries.”

“A recent Globe and Mail article reveals startling facts about Canadian International Development Agency (CIDA) poverty-reduction aid funds being prioritized to countries that have deposits of mineral resources and are of “strategic” and “commercial” interest to Canada’s resource-extractive sector. According to Maude Barlow, CIDA has approved $50 million in projects linked to the mining industry since the Harper government took power (Common Dreams Op.Cit Mt. Polley Mining Disaster”

( I vetted this back to its source)

Canada has no equivalent to the U.S. Alien Torts Acts which allows injured and aggrieved persons in foreign operation to of U.S. Companies to seek remedy under U.S. Law. to the International Business Times, that leaked industry report found that of the 171 high-profile incidents of pollution, human rights violations, and unethical behavior, 34 percent were committed by Canadian companies.

The companies’ actions and the government’s inability to regulate them have gained Canada a reputation as “worst offenders in environmental, human rights and other abuses around the world.”

This is presumably how it came to be that the Canadian Government refused to hear the $2 billion in damages claimed  by the OMAI (Guyana)TSF failure victims and actually ended up being directed by the Guyana government to reimburse the Canadian mining company, its insurer ( Home) and all named parties for their legal defense costs even though the dam committee report  found gross and fundamental errors in design, management and construction of the TSF.  ( By the way Steven Vick, who is one of the three member Committee appointed to review Mt. Polley, was chair of the OMAI dam review committee. And Knights Piesold, original designer and long term consulting engineer on the failed Mt. Polley TSF also designed the OMAI dam and has a major footprint on TSF’s globally having designed over 400 TSF’s according to their website)

Rushing through volumes of studies & stats in my quest for numbers that may add more rigor to calculations on  what it would take (and whether it is possible) to shift the entire risk profile for TSF’s from its present global rate of 1.2% to something more like the fallure  rate of water dams (0.01%) I recall seeing that Canada has previously absorbed costs of $400 million and $69 million in two other  failures.

In his 2011 key note address at a conference on TASF’s Dr. A. Mac G. Robertson, owner of INFO Mine , the original “R” in SRK, the Principal consultant on the Bald Mountain analysis here in Maine,  and someone I respect immensely, presented his calculation that contrary to industry claims that new technology  has made mining safer, the risk profile of modern TSF’s was actually elevating 20 fold ever 30 years.

Mike Davies, AMEC, has framed that for the industry but also for we who are  legislators, regulators and advocates:

“{I}f one becomes a student of tailings impoundment case histories, an interesting conclusion arises. Tailings dam failures, each and every one, are entirely explainable in hindsight. These failures cannot be described as unpredictable accidents. There are no unknown loading causes, no mysterious soil mechanics, no “substantially different material behaviour” and definitely no acceptable failures. There is lack of design ability, poor stewardship (construction, operating or closure) or a combination of the two, in each and every case history. Tailings impoundment operational “upsets” or more catastrophic failures are a result of design and/or construction/operational management flaws – not “acts of god”.(Davies et ,al 2002)

ICOLD ( International Committeee on Large Dams is saying the same thing.

“The ICOLD Tailings Dams Committee has concluded that effective reduction of the cost of risk and failure can only be achieved by a commitment from Owners to the adequate and enforced application of available engineering technology to the design, construction and closure of tailings dams and impoundments over the entire period of  their operating life. “

Canada, Canadian Mines, Canadian Statutes and Regs are the key to preventing unfunded unlimited public liabilities world wide ( and from a risk finance point of view any real possibility of “polluter pays”.  If Canadian mining companies don’t change voluntarily or through force of law, the global risk and loss profile of  mines in general and TSF’s in particular will play out as Dr. Robertson has warned.

The unnamed dragon in Dr. Robertsons 2011 slide presentation in addition to standing for the threat of losing the social license to operate completely and/.or  the  treat  of onerous and poorly informed reactive legislation  is also, in light of these stats and facts, Canada itself and the policies of most of its provincial governments.

 beyond here be dragons

UPDATE 09/20/14

I just posted this end note addressed to Dr.Roberston and Jack Cassidy at the I Think MIning piece reprinting my email to  Mining Watch Canada and Western mines Alliance Network. (WMAN)


May I just add the end note here and address it to you Jack and to Dr. Robertson?

On the charts of ancient mariners where it once said at the edge of the known charted traveled seas “BEYOND HERE BE DRAGONS” we modern blue water mariners now travel routinely and with confidence..small crews and single handed sailors on small boats traversing once unknown oceans with giant freighters and huge pods of all kinds of whales and dolphins. All of us crossing together..

It was the mariners who ventured into that unknown who have made that possible.

You are the wise man in mining, Dr. Robertson. This moment in mining history needs you to lead the way into those uncharted and dreaded waters.

If you don’t chart the course for the essential legislative andlindustry partnership needed to fix that risk profile for TSF’s you yourself have called the MAY DAY on,.the folk who will do it will make it a tough voyage for all concerned.

It won’t be pretty.

It will be very disruptive unless you lead the way.

Your ebook with Shannon Is the blue print. West Australia has already put that work in law and regulation..

It is too late to still hope for a fix through a self regulated industry.

You can’t just leave it at marking the chart “beyond here be dragons”

Here I might add looking at Jacks chosen illustrations for his report of my email, a child learning braille

,which of us is having trouble seeing?

action not angst is the answer.

UPDATE  0/19/2014

This has now been reported at Info Mine’s blog “Ithink”

I apologize for offending Jacks sensibilities by including in the cites I used  human rights violations Canadas overseas mines have been implicated in.It was not central to my key point in my email to Mining Watch Canada and the Western Mining Alliance ( though it is a very large part of my larger “ministry” on mining).

Jacks reaction to that apparently overshadowed his thoughtful consideration of my main point. ( my fault I’m sure)

Please join the blog at Jack’s site.

We have a saying in Maine “You can’t get theyah from heeyah”

As I look at the risk and loss profile of mining globally I don’t really see how we change that overall profile one new permit, one new mine at a tme. Somehow correction of serious flawed mines already in operations has to go alongside that.  And as painful as it is for Jack who has in fact always called for best practice, best knowledge, best science..he & Dr. Roberston have “waited to ong at the fair” on their call for respomsble self regulation.  Dr Robertsons own 2011 key note address makes that perfectly ckear.  Some sort f well thought out collaborative public private partnership is needed to make this shift. It’s time to begin that collaborative work on what government has to do to force that shift.I hope jack & Dr. Robertson will make that call and lead that effort.

Here is the link to Mining Watch Canadascommentray on the leaked Industry report

(Ths is the report hyperlinked in the quote above)

Additional Studies Reports on Canadas Foreign Mines Profile

My focus in exploring Canadas dominance globally in mining is about whether its possible to shift the high risk profile of mining as a whole to more acceptable numbers,  My searches for numbers and stats keep mumping into reports I was not previously aware of that document the Canadians Governments direct implication in human rights abuses and other conduct in foreign nations.   With the spotlight here on Canadas global presence therefore We will be posting what we bump into on human rights abuses and conduct.

Canadas Presence in Latin America

Canadas Presence in Africa

“Some readers might be surprised therefore to learn that Canada – with a population less than one-tenth that of China’s and geographically about as far from Africa as one can get – has quietly grown to become one of the largest stakeholders in Africa’s mining sector – possibly the largest, depending on how you quantify it”

“According to these documents, in 2011 – the most recent year for which statistics are available – 155 Canadian companies were operating in 39 African countries. Their combined assets* totalled more than $30.8 billion, up from $26.5 billion in 2010.

“According to a December 2012 report drafted by the TSX, during the first nine months of 2012, 89% of all global mining equity financings were done on the TSX and TSX Venture (up one point from 2011). ”

“There are approximately 315-20 listed [mining] companies that are not African but are doing business in Africa”, says Bruce Shapiro, president of Mine Africa, a Canada-based business and marketing company. “Of those, over 50% are Canadian. So in terms of the companies that we would normally look at, we certainly dominate that market.”

Posted in Bowker Associates, Canadian Mining Dominance Globally, Huncleberry Mine, Metallic Mining Risk Management, Mining Watch Canada, Mt. Polley, Red Chris Mine, Tailings Storage Facility Risk Management, WMAN | Tagged , , , , , , , , , , , , , , , , , , , , | Leave a comment


Background & Analysis: Total Volume Of Mt Polley TSF Failure Significantly Higher

RevIsed Estimate Puts Toxic Sediments at 60% of Total Spill Volume

(10/2/2014This table presumably now shows corrected  table.  B.C. MOM issued this errata on 9/27  W have not had an opportunity yet to see whether any of the analysis below is affected.  The errata is sonly for mercury 2010-2014)

Mt Polley was already the largest TSF failure in recorded history. (   Canadian press now reports that the release was not 14.8 million M3 but 24.8 million M3. The difference, significantly, is in the revised estimate of highly toxic sediments from an initial estimate of 4.6 million M3 to 14.8 million M3 (and the addition of  0.6 million M3  of construction waste). This represents a 300% initial under reporting/underestimating of sediment release. 

Whether it is significant or just a number remains to be seen but that also means that sediments were 60% of the total release not 29%.   Just intuitively that  seems to suggest the possibility that the pressures on the face of the  112’ man made wall and resulting breach originated in/ or through the sediment layer.

Likely Resuident Lawna Bourassa-Kuester With Sediment Cloudedaden Water From Quesnel Lake24hrs Vancouver

Resident Of Likely With Sediment Clouded Water From Quesnel Lake

Sediments were the major issue raised by Brian Olding Associates in its 2009 review for Imperial and First Nations of the permit application for annual discharge 1.4 million cubic meters of waste water per year. .  The TSF had been doing double duty as a temporary holding pond for mine and drainage waters, a common practice. The Olding Associates report concluded that the risk of contamination of receiving waters was too high without a “polishing pond” for sediments prior to discharge. “Sediment or associated contaminants could enter Hazeltine Creek unless there is an effective sedimentation pond between the Tailings Storage Facility (TSF) and Hazeltine Creek. (T)he sedimentation/polishing pond that is mentioned in the TA Report should be a condition of the discharge permit. “

Olding Associates  also found that the data presented in the discharge permit application tended to under assess and/or not accurately measure the risk to receiving waters and habitats of the requested 1.4 million M3 annual discharge.“Throughout the TA Report, predicted chemical concentrations in Hazeltine Creek are based on annual or monthly mean values of effluent discharge to Hazeltine Creek. This approach can mask the potential for short-lived high concentrations of potentially harmful chemicals to exceed water-quality guidelines and potentially be harmful to the aquatic life of Hazeltine Creek. To correct this in a precautionary way, maximum concentrations of chemical parameters such as Sulphate, Selenium, Copper and Cadmium need to be calculated for minimum ( emphasis added) flow rates in Hazeltine Creek”

The B.C. Government was slow to release raw data on sediments. Recently released, the  raw data , a combination of post failure grab  samples and averages from a sampling program of TSF sediments 2010-2014 shows that sediments which are presently laying in the immediate vicinity of the spill have a contaminant profile consistent with the  pre breach average profile of sediments within the TSF. Post failure grab samples reported in this raw data do not show those characteristics at other sample sites but do show some exceedances which could be pre-failure or could have resulted from operations and not be related to the failure.

Before the raw data was released, the provincial government had released this August 15th analysis of sediments and visual inspections.

“Quesnel Lake near mouth of Hazeltine Creek in water 1 and 2.5 m deep. The lake bottom appeared to be covered in tailings and no aquatic plants were visible”.

It is not clear whether the two grab sample columns labled “Outside Tailings Dam Breach” are this observed “dead zone” at Quesnel Lake. These two columns show exceedances  as follows as compared with the “Impoundment Average 2010-2014” and “Outside At the Breach” ( all measurements in ug/g dw)

Sample Sites   Inside AVG   At Breach.

Arsenic     12        12.4         12.32              11.7

Copper   646      723            931                 918

Manganese   757       705           652                 525

Selenium   1.2          1.1           1.04                 1.4

Sulfur  3410     3320        ——–             2750

Vanadium    161        162         180.54            145

No further studies or results on sediment impacts are listed at the provincial government website as completed or in progress.  No footnotes or commentary are offered on the consistent pattern of lower measurements  “At the breach” as compared with the two sample sites.

Unfortunately no geographic coordinates were provided with the raw data which would have facilitated spatial analysis. This Mount Polley Mine Corporation (MPMC) map of sample sites appears at the Ministry of Environment  (MOE) website but does not clearly correlate with the raw data on grab samples  released a few weeks ago  It does,however show the location of these MOPC sediment sampling results reported to MOE ,

“Environment Canada’s data on Imperial Metal’s mine tailings show mercury compounds, a neurotoxin that can cause degenerative disease, ramped up from 435 kilograms in 2012 to 3,114 kg last year – a seven-fold increase in one year.” (No exceedances of mercury are shown in the raw data either in the area immediately next to the breach or in any grab sample sites.)

Vanadium is not regarded as a serious (human) health hazard, is found in most soils and common in foods including olive oil, eggs, apples and soya beans . It does strongly bio accumulate in mussels and crabs causing inhibitions to certain enzymes.( )

Large metallic mineral deposits have natural releases of toxic metals which are established in background water quality studies pre-mining.  Different parts of a deposit can have a very different profile of metals and very varying levels of environmental risk. Mining operations and advanced explorations can create new pathways. Exceedances shown in the raw data need further explanation and analysis to assess what is attributable to the failure beyond what is immediately at the breach.

The day after the failure, Brian Olding, the consultant to Imperial & First Nations on the 2009 re analysis of Imperials permit application to discharge 1.4 million M3 per year said “More water was coming in over the year than they could deal with…They just kept building the walls up higher and higher every year and it got to the point where that was untenable.”

Olding & Associates had also urged a structural reassessment which Imperial did not agree to. “I requested a structural engineering company be involved, and that was nixed. They did not want to deal with that problem at that time.”( op.cit

Today (September9) a non compliance directive on continued unauthorized discharges was issued to Imperial/Mt.Polley

At an inspection on Sep 4 it was discovered that Mont Polley Mining Corporation (MPMC) was discharging effluent into Hazeltine Creek.Order 107461 directed the installation of passive and or active sediment control systems designed to a 1 in 10 year 24 hr rainfall event.

Interflow & Salmon Spawning Impacts

Scientist Carl Walters is keeping a close eye on the “interflow” which has suspended the sediments released in TSF failure in a layer under the top warm layer of water and above the deeper cold waters.

This situation, Walters said, can worsen for the coming sockeye run given three possible conditions:

  1. It is common for a strong west wind to blow through the area for a day or two every few weeks this time of year, and if this happens the warm surface water will be pushed east away from the lake outlet where it can be carried out of the system, and the polluted water may surface and run downstream past Likely.
  2. Samples of the polluted water have shown that it has copper levels that are “close” to levels that can impair the salmon’s directional sense of smell, which the sockeye may need to move up Quesnel Lake and find their primary spawning areas in the Horsefly and Mitchell Rivers. As they move into the lake, they may seek deeper, cooler water and so will encounter the polluted, colder, dense water of the interflow layer cake. “This is especially worrisome for the Mitchell River fish that need to make a left turn about 20 km up the lake into the lake’s north arm and travel 60 km up that arm,” he said.
  3. About 20 km up the lake from the outlet, there is a shallow area called a sill, across which the lake water usually flows westward. That flow concentrates small plankton that feeds young salmon, but the polluted water has spread eastward enough to reach the sill, which could affect both the young fish and its food supply.

“I still don’t think it will be a serious problem, but I just can’t say for sure,” said Walters. “But at this point all we can do is to keep our fingers crossed that the polluted layer will be diluted enough by the time the main body of fish arrives so as not to be a major problem for them.”

October 10,2014 Sediment Plume deep in Quesnel Lake

Posted in Adjacency Impacts, Mt. Polley Sediments, Tailings Storage Facility Failures | Tagged , , , , , | Leave a comment