Brokering Law Firm

Law concerning the closure of mining facilities

On November 11th, Statute 20.551 was published in the Chilean Official Gazette, which regulates the closure of mining facilities. The Statute aims to repeal the regulations that exist in the Code of Mining Safety (Reglamento de Seguridad Minera).
 
A system was implemented which demands mining companies to have an approved plan by Sernageomin (a governmental agency that ensures mining and environmental safety), for the closure of mines prior to the implementation of a mining operation. This plan has to be planned and implemented progressively throughout the duration of the mining operation.
 
Furthermore, the mining companies must issue guarantees to the State in order to assure the fulfillment of the plan of closure. In order for the company to be refunded of said guarantees, it is necessary for the mining company to obtain a certificate issued by Sernageomin stating that it has fully complied with the plan. Nevertheless, part of the guarantees will be returned to its owners upon the fulfillment of these requirements.
 
Two types of procedure exist for the plan of closure to be approved. One is the procedure of general application, which shall apply to mineral deposits whose extraction capacity is superior to 10,000 tons per month. The simplified procedure shall apply to mining operations whose capacity is less than the above-mentioned amount and mining explorations that enter the environmental impact assessment system.
 
The general procedure requires, among other requirements, that the plan of closure is accompanied by a technical report issued by a person competent in Recursos y Reservas Mineras (mining resources and reserves) in accordance with statute 20.235. The technical report shall incorporate information about national monuments and archaeological sites, a financial assessment of the closure and the post-closure costs, a number of guarantees and which instruments shall be used as collateral and a plan to inform the local community. Among others, deposits, bank guarantee ballots, letter of credit stand-by, and even the assignment of contract of sale of minerals with Enami, may be handed in as collateral.
 
Once the plan for closure has been approved by Sernageomin, it will have to be audited by external auditors. Regular audits will take place every five years and extraordinary ones will take place when serious situations arise which warrant one. The audits are intended to verify that mining companies are in compliance with the plan of closure and update it if necessary.
 
The audit reports shall indicate the technical standards that are applied upon: the parameters of certification, the control and verification procedure, and ways of verifying and guaranteeing the impartiality of the auditor. For this purpose, a Public Register of External Auditors shall exist.
 
The simplified system only requires that the company is identified, along with the mining project and the set of activities that the company proposes in order to maintain the physical and chemical stability of the surroundings, as well as the protection of the well-being of both the local population and environment.
 
These plans will be prepared in accordance with methodological guidelines issued by the authorities.
 
The plan of closure will not be static, but rather be updated throughout the mining operation.
 
It is possible to request a temporary suspension of operations, for a period up to 2 years, with the possibility of it being increased after 3 years. However, should a temporary suspension be falsely requested with the intention of a permanent standstill, a fine of 1.000 to 10.000 UTM (in June 2012 1 UTM equaled USD $79) shall be issued.
 
It should be noted that not only is the company responsible for the fulfillment of the closure plan but also that its legal representative can be subject to a fine ranging from 100 to 1.000 UTM.
 
This law also regulates the closure of oil and natural gas operations.
 
FFollowing the closure, a fund shall be established for the maintenance of closed mines. Before the company is issued its certificate of final closure, it shall make a non-refundable payment which will cover the costs of the post closure activities. During the closing stage, a monitoring and verification process will be developed that will ensure the physical and chemical stability is kept, as well as not harming the local population and environment.
 
This law will come into effect a year following its publication in the Official Gazette. While the legislation enters into force, the mining companies currently in operation shall make an evaluation of their closure plans, incorporating the health and environmental issues, and obtain an environmental impact assessment of it issued by the appropriate authority, if pertinent.