Audit of mining sector

8/17/2019 Audit of mining sector

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AN AUDIT OF COMPLIANCE AND

ENFORCEMENT OF THE MINING SECTOR

www.bcauditor.com

May 2016


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Te Honourable Linda Reid

Speaker o he Legislaive Assembly

Province o Briish Columbia

Parliamen Buildings

Vicoria, Briish Columbia

VV X

Dear Madame Speaker:

I have he honour o ransmi o he Legislaive Assembly

o Briish Columbia my repor, An Audi o Compliance and

Enorcemen o he Mining Secor .

We conduced his audi under he auhoriy o secion ()

o he Audior General Ac and in accordance wih he sandards

or assurance engagemens se ou by he Charered Proessiona

Accounans o Canada (CPA) in he CPA Canada Handbook –

Assurance, and in accordance wih Value-or-Money Audiing in

he Public Secor.

Carol Bellringer, FCPA, FCA

Audior General

Vicoria, B.C.

May

Cover Page - ailings pond o Huckleberry open pi copper mine in norhwesern BriishColumbia. Owned by Imperial Meals Corp. Source: Sock Phoo.

623 Fort StreeVictoria, British Columbia

Canada V8W 1G1P: 250.419.6100F: 250.387.1230

www.bcauditor.com

CONTENTS

Auditor General’s Comments 3

Summary 5

Summary of Recommendations 11

Response from Government 16

Background 29

Audit Objective and Conclusion 40

Part 1: Ministry of Energy and Mines 41

Part 2: Ministry of Environment 79

Appendix A: Audit Expectations and Scope 103

Appendix B: Glossary 106


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Auditor General of British Columbia | May 2016 | An Audit of Complicance and Enforcement of the Mining Sector

C B, FCPA, FCA Audior General

AUDITOR GENERAL’SCOMMENTS has a long hisory in Briish Columbiaand coninues o be an imporan source o employmen or housands

o people. Governmen has saed is plan o coninue o suppor and

develop his indusry by creaing opporuniies or new invesmen.

However, he recen decline in commodiy prices has lef many mining

companies sruggling o survive. Regardless o wheher he mining

indusry is experiencing growh or slow-down, proecion o he

environmen needs o be ensured. Tis is only possible hrough srong

regulaory oversigh. We conduced his audi o deermine wheher

he regulaory compliance and enorcemen aciviies o he Minisry o

Energy and Mines (MEM) and he Minisry o Environmen (MoE),

peraining o mining, are proecing he province rom significan

environmenal risks.

We ound almos every one o our expecaions or a robus compliance

and enorcemen program wihin he MEM and he MoE were no me.

We ound major gaps in resources, planning and ools. As a resul,

monioring and inspecions o mines were inadequae o ensure mine

operaors complied wih requiremens. Te minisries have no publiclydisclosed he limiaions wih heir compliance and enorcemen

programs, increasing environmenal risks, and governmen’s abiliy o

proec he environmen.

During he course o his audi, hese risks became a realiy and disaser

occurred when he ailings dam a Moun Polley ailed – releasing

approximaely million cubic meres o wasewaer and ailings ino

adjacen waer sysems and lakes. I may be many years beore he

financial, environmenal and social implicaions are ully known.


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Afer he ailure a Moun Polley and during our audi, we el i necessary

o review MEM’s perormance as regulaor or his sie. We noed he

same issues in he Moun Polley file as we did hroughou he audi – ha

is, oo ew resources, inrequen inspecions, and lack o enorcemen.

Our advice, o reduce he risk ha unorunae and prevenable incidens

like Moun Polley don’ happen again, is or governmen o remove is

compliance and enorcemen program or mining rom MEM. MEM’s role

o promoe mining developmen is diamerically opposed o compliance

and enorcemen. Tis ramework, o having boh aciviies wihin MEM,

creaes an irreconcilable conflic. Because compliance and enorcemen

is he las line o deence agains environmenal degradaion, business as

usual canno coninue.

I am hereore disappoined in he resisance o his overall

recommendaion as i is consisen wih many oher jurisdicions’

response o similar incidences. In addiion, i is disconcering ha

governmen will no be disclosing is raionale or decisions ha i makes

in he public’s ineres under secion o he Environmenal Managemen

Ac. Te nex opporuniy o discuss hese and oher areas o disagreemen

and he conens o his repor, will be a a meeing o he Selec Sanding

Commitee on Public Accouns.

Tis was a very large and involved audi. I appreciae he dedicaion and

commimen ha everyone, boh in he minisries and my Office, showed

o see i hrough o compleion.

Carol Bellringer, FCPA, FCA

Audior General

May

AUDITOR GENERAL’S COMMENTS


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mine reclamaion coss i a company deauls on is

environmenal obligaions.

MoE’s responsibiliies apply generally o regulainghe impac o mining aciviies ha exend beyond he

borders o he mine sie. MoE regulaes he quaniy and

qualiy o any wase discharges rom meal and coal

mines o ensure he proecion o he environmen.

OVERALL AUDIT

FINDINGS

MEM and MoE’s complianceand enforcement activities of themining sector are inadequateto protect the province fromsignificant environmental risks

Overall findings o MEM’s and MoE’s

regulaory program:

Planning

MEM’s mandae o promoe he mining

indusry con lics wih is role as a regulaor,

hus reducing is regulaory eeciveness.

MEM has a limied compliance and

enorcemen program and weak planning, and

hereore is regulaory oversigh aciviies are

inadequae.

Alhough MoE has adoped a compliance andenorcemen ramework, here are signiican

gaps in how he ramework is applied.

Neiher minisry coordinaes wih he oher on

heir compliance and enorcemen aciviies.

Boh minisries lack suicien resources and

ools o manage environmenal risks rom

mining aciviies.

o mee he provincial goals or new minesand mine expansions, MEM a nd MoE are

ocusing on permi applicaions. As a resul,

here are ew resources dedicaed o he

regulaory aciviies o monioring,

compliance and enorcemen.

Permitting

Neiher minisry ensures ha permis are

consisenly wrien wih enorceable language.

Neiher minisry uses a permiing approach

ha reduces he likelihood axpayers wil l have

o pay coss associaed wih he environmenal

impacs o mining aciviies (known as he

polluer-pays principle).

MEM is no holding an adequae amoun

o securiy o cover he esimaed

environmenal liabiliies a major

mines. he minisry has esimaed he

oal liabiliy or al l mines a more han

$. billion, ye has obained inancial

securiies or less han hal ha amoun

($. bill ion).

MoE has no reviewed or revised is ee

schedule or polluans issued under an

Environmenal Managemen Ac permi

since . And, in some cases, he

wase discharge ees do no relec heenvironmenal impacs.

SUMMARY


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Compliance promotion

Boh MEM and MoE have creaed guidance

documens and worked wih sakeholders

o promoe compliance. However, neiher

minisr y could demonsrae ha is aciviies

and guidance maerials were eecive

in achieving volunary compliance or

governmen’s environmenal oucomes.

Compliance verification

Neiher MEM nor MoE are conducing

adequae monioring and sie inspecionsand neiher have assessed how his is

impacing risks.

Enforcement

Boh MEM’s and MoE’s enorcemen

responses have signiican deiciencies and

MEM’s enorcemen ools are in some cases,

ineecual. his is resuling in delayed or

unsuccessul enorcemen by he minisriesand inacion by indusry in several insances.

Ensuring continuous improvement

Neiher MEM nor MoE have adequaely

evaluaed he eeciveness o heir regulaory

programs. Boh minisries are aware ha

deiciencies in heir regulaory aciviies are

resuling in risks o he environmen. In a

leas wo insanceshe ailings breach a

Moun Polley mine and he degradaion o

waer qualiy in he Elk Valleyhese risks

have maniesed ino real environmenal

impacs.

Reporting

We ound ha he wo minisries are no inorming

he public and legislaors abou he long-erm risks

rom mining, he effeciveness o he agencies’

regulaory oversigh, and he overall perormance

o he companies being regulaed.

SUMMARY


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OTHER COMPLIANCE

AND ENFORCEMENT

MATTERSTe impacs o an ineffecive regulaory regime are

increased risks o he environmen and he poenial

or deerioraion o he province’s waer sysems, loss

o wildlie habia, and damage o culurally significan

areas and values. In recen years, his risk has become

a realiy and resuled in acual environmenal damage,

such as a he Moun Polley mine sie and in he

Elk Valley.

Compliance and enforcement at theMount Polley Tailings Dam

On Augus , , a breach occurred wihin he

Perimeer Embankmen o he ailings sorage

faciliy (or ailings dam) a he Moun Polley copper

and gold mine in souh-cenral B.C. Te breach

resuled in he release o an esimaed million

cubic meres o wasewaer and ailings. Te miningcompany has since been working on he clean-up rom

his even, bu he ull exen o he environmenal

repercussions rom he breach are sill no known.

In response o his even, governmen convened an

independen, exper, engineering invesigaion and

review panel (panel) o deermine he mechanics o

how he dam ailed. Teir conclusion was ha he

primary cause o he breach was dislocaion o a par

o he Perimeer Embankmen due o oundaionailure. Te specifics o he ailure were riggered by

he consrucion o he downsream rockfill zone a

a seep slope. Tey noed ha had he downsream

embankmen slope been flatened in recen years as

proposed in he original design, ailure would have

been avoided.

Our assessmen differed rom he panel’s review in ha

we ocused on why he dam ailed and he Minisry o

Energy and Mines’ (MEM) overall compliance and

enorcemen aciviies. We ound ha he minisry

did no ensure ha he ailings dam was being buil or

operaed according o he approved design, nor did i

ensure ha he mining company recified design and

operaional deficiencies. MEM coninued o allow he

mine o operae and o approve permi amendmens o

raise he ailings dam.

In relaion o he Perimeer Embankmen where

he dam ailed, MEM’s weak regulaory oversigh

allowed inconsisencies wih he inended dam

design o persis over several years. Tis included: an

over-seepened Perimeer Embankmen slope and

inadequae managemen o he ailings beach. A he

Main Embankmen, in addiion o acceping a seep

embankmen slope and an inadequae ailings beach,

MEM also did no ensure ha butressing was buil o

he heigh and exen included in he dam design.

We concluded ha MEM did no enorce he design

due o he ollowing:

Over reliance onqualified professionals

I is no MEM’s pracice o carry ou is own echnical

review (or o oversee an independen echnical

review) o confirm ha ailings dams are buil in

accordance wih he design.

SUMMARY


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Inadequate standards to guide bothinspectors and industry

We expeced ha MEM would have ensured ha heir

design sandards were clear or boh indusry and

inspecors o enorce. However, MEM had adoped he

Canadian Dam Associaion’s Dam Saey Guidelines

or dam consrucion ha were no specific o he

condiions in B.C. or specific o ailings dams. Tese

guidelines were open o inerpreaion by he Engineer

o Record and MEM inspecors, and his resuled in

a ailings dam ha was buil below generally acceped

sandards or ailings dams.

Inspections did not meet policy

MEM perormed no geoechnical inspecions or a

number o years, even hough heir policy requires

a minimum o an annual inspecion. Alhough hese

inspecions would no have idenified he weak

oundaion layer, saff could have idenified ha he

operaor was no acually building or operaing he

ailings dam o he prescribed design and was raising

he dam wihou any long-erm planning. Also,addiional inspecions would have provided MEM he

opporuniy or increased onsie vigilance.

Lack of enforcement culture

MEM has adoped a collaboraive approach o

compliance and enorcemen ha emphasizes

cooperaion and negoiaion. In he case o Moun

Polley, his approach ailed o produce he desired

resuls. MEM has he abiliy o compel a miningcompany o ake correcive acion when necessary, and

has done so in he pas using enorcemen mechanisms

under he Ac, Code and permi. However, a Moun

Polley, MEM did no use mos o hese enorcemen

mechanisms o compel he mine operaor o build or

operae he dam as designed and inended.

MoE has not publicly disclosed therisks associated with permittingcoal mines in the Elk Valley

Lack o sufficien and effecive regulaory oversigh

and acion by MoE o address known environmenal

issues has allowed degradaion o waer qualiy in he

Elk Valley. Coal mining, which has been underway

in he area or over years, has resuled in high

concenraions o selenium in he waer sysem. As

selenium accumulaes up he ood chain, i can affec

he developmen and survival o birds and fish, and

may also pose healh risks o humans.

For years, MoE has been monioring selenium

levels in he Elk Valley and over ha ime has

noed dramaic annual increases o selenium in he

waershed’s ribuaries. MoE racked his worsening

rend, bu ook no subsanive acion o change i.Only recenly, has he minisry atemped o conrol

his polluion hrough permis graned under he

Environmenal Managemen Ac.

We examined he Line Creek Expansion Permi, he

Area-Based Managemen Plan and he Area-Based

Managemen Permi (Valley Permi)1 o undersand

how hey suppor MoE’s responsibiliy o minimize

risks o he environmen. We ound ha hese

documens do no address several risks, includinghe ollowing:

MoE sa, wih inpu rom exernal expers,

concluded ha he selenium levels in he

SUMMARY

Line Creek mine is one o five coal mines ha eck ResourcesLd. is operaing in he Elk Valley.


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proposed Line Creek Expansion Permi were

no likely proecive o he environmen. he

sauory decision-maker could no approve he

permi. Subsequenly, he permi was graned by Cabine. his was he irs ime ha Cabine

used his approval process. he raionale or

he decision was no publicly disclosed.

he Line Creek Expansion Permi allows

mining aciv iies o be exended ino an area

inhabied by Wesslope Cuhroa rou, a

species lised as being o “special concern”

under he ederal Species a Risk Ac . his

approved expansion o mining operaions

creaes a risk o urher decline o his species.

he A rea-Based Managemen Plan commis

indusry o developing six waer reamen

aciliies in he Elk Valley. his creaes a uure

economic liabiliy or governmen o monior

hese aciliies in perpeuiy and ensure ha

hey are mainained.

here is a risk ha i MoE is unable o enorce

he Area-Based Managemen Permi and he

mine exceeds is permi limi or selenium

a Lake Koocanusa, he oucome could be a

violaion o he reay relaing o boundary

Waers and Quesions arising along he Boundary

beween Canada and he Unied Saes (he

reay). he reay orbids he polluion o

waer bodies on eiher side o he border.

he levels or selenium in he Area-Based

Managemen Permi are inconsisen wih

he precauionary principle. he proposed

arges over he nex seven years show a

reducion in selenium, bu are sill signiicanly

higher han curren concenraions creaing a

high risk o urher environmenal impacs.

Te minisry has no disclosed hese risks o legislaors

and he public.

Ulimaely, despie he addiion o waer reamenaciliies, he curren permi levels o selenium are

above he waer qualiy guidelines se by B.C. o

proec aquaic lie, and or human healh and saey.

Selenium rom boh hisorical mining aciviies and

he ongoing expansion is likely o coninue o impac

he environmen ar ino he uure.

SUMMARY


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SUMMARY OFRECOMMENDATIONS

W a decade o neglec in compliance and enorcemen program aciviies wihin he Minisry o Energy and Mines, and significan deficiencies wihin he Minisry o

Environmen’s aciviies. Overall, we concluded ha compliance and enorcemen aciviies o he

wo minisries are inadequae o proec he province rom significan environmenal risks.

Te independen exper panel or Moun Polley saed clearly ha “business as usual canno

coninue.” We reached a similar conclusion a he end o his audi regarding compliance and

enorcemen, and we have one overall recommendaion.

Esablishmen o such a uni will:

show all sakeholders concerned abou

regulaory oversigh ha governmen

has pu a sound sysem in place

enable governmen o demonsrae ha

i will mee is public commimen o be

a sound environmenal seward

WE RECOMMEND THAT THE GOVERNMENT OF BRITISH COLUMBIA

creae an inegraed and independen compliance and enorcemen uni or mining aciviies,

wih a mandae o ensure he proecion o he environmen.

Given ha he Minisry o Energy and Mines (MEM) is a risk o regulaory capure ,

primarily because MEM’s mandae includes a responsibiliy o boh promoe and regulae

mining, our expecaion is ha his new uni would no reside wihin his minisry.

OVERALL RECOMMENDATION


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SUMMARY OF RECOMMENDATIONS

In addiion o his overall recommendaion, we have included recommendaions ha provide

urher guidance o governmen in he developmen o his new uni. Tese recommendaionsare hemed by aciviy: Planning, Permiting, Compliance Promoion, Compliance Verificaion,

Enorcemen, Evaluaion and Adjusmen, and Reporing.

Each recommendaion was in response o specific findings. In some cases, he recommendaion was

made due o specific issues as a resul o he Minisry o Environmen’s or he Minisry o Energy

and Mines’ perormance, and in oher cases, he recommendaion was applicable o boh minisries.

Planning

1.1 Strategic planning

We recommend ha governmen develop a sraegic plan ha would deail he aciviieso an inegraed and coordinaed regulaory approach, and he necessary capaciy, ools,

raining and experise required o achieve is goals and objecives.

Permitting

1.2 Permit language We recommend ha governmen ensure boh hisorical and curren permi

requiremens are writen wih enorceable language.

1.3 Security – adequate coverage We recommend ha governmen saeguard axpayers by ensuring he reclamaion

liabiliy esimae is accurae and ha he securiy held by governmen is sufficien o

cover poenial coss.

1.4 Security – catastrophic events We recommend ha governmen review is securiy mechanisms o ensure axpayers

are saeguarded rom he coss o an environmenal disaser.

1.5 Environmental Management Act waste discharge fees We recommend ha governmen review is ees under he Environmenal Managemen

Ac and ensure ha he ees are effecive in reducing polluion a mine sies.


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1.6 Cost recovery

We recommend ha governmen adop a cos recovery model or permiting andcompliance verificaion aciviies ha is consisen across all minisries in he naural

resources secor.

1.7 Decision-making – Use of section of the Environmental Management Act We recommend ha governmen publically disclose is raionale or graning a permi

under secion o he Environmenal Managemen Ac . Specifically, inormaion

should include how acors such as economic, environmenal, and social atribues were

considered in he deerminaion o public ineres.

Compliance Promotion

1.8 Reclamation guidance We recommend ha governmen develop clear and comprehensive reclamaion

guidance or indusry.

1.9 Incentives We recommend ha governmen creae effecive incenives o promoe environmenally

responsible behavior by indusry.



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Compliance Verification

1.10 Risk-based approach We recommend ha governmen develop a risk-based approach o compliance

verificaion aciviies, where requency o inspecions are based on risks, such as

indusry’s non-compliance record, indusry’s financial sae, and indusry’s aciviies

(e.g., expansion), as well as risks relaed o seasonal variaions.

1.11 Systematic compliance verification We recommend ha governmen sysemaically monior and record compliance wih

high-risk mine permi requiremens.

1.12 Qualified Professionals We recommend ha governmen esablish policies and procedures or he use and

oversigh o qualified proessionals (QP) across he naural resources secor. Tese

policies and procedures should have he ollowing:

guidance or sa ha oulines he speci ic naure and amoun o oversigh

expeced o a QP’s work

guidance or sa as o ex peced imerame or review and response o

QP repors

updaed guidance or sa or recognizing and responding o misconduc by a QP

conrols in place o ensure ha here is no undue inluence on he QPs

by indusry

conrols in place o ensure ha recommendaions by QPs are adhered o

1.13 Mine design We recommend ha governmen adop appropriae sandards, review mine designs o

ensure ha hey mee hese sandards, and ensure ha mines, as consruced,

reflec he approved design and sandards.



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Enforcement

1.14 Policies, procedures and tools We recommend ha governmen develop policies, procedures and enorcemen

ools or responding o non-compliances when indusry does no mee governmen’s

specified imeline.

Evaluation & Adjustment

1.15 Evaluation & adjustment We recommend ha governmen regularly evaluae he effeciveness o is compliance

promoion, compliance verificaion, and enorcemen aciviies and ools, and make

changes as needed o ensure coninuous improvemen.

Reporting

1.16 Public reporting We recommend ha governmen repor publicly he:

resuls and rends o all mining compliance and enorcemen aciviies

eeciveness o compliance and enorcemen aciviies in reducing risks and

proecing he environmen

esimaed liabiliy and he securi y held or each mine



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RESPONSE FROMGOVERNMENT

Te Minisry o Energy and Mines (MEM) and

Minisry o Environmen (ENV) acknowledge

receip o he Audior General’s Repor: An Audi o

Compliance and Enorcemen o he Mining Secor

(Audi Repor). Governmen wishes o hank he

Audior General or underaking he audi and her saff

or heir effors.

We noe here are areas o agreemen beween he

Audi Repor’s sub-recommendaions and he

combined recommendaions by he Moun Polley

Independen Exper Engineering Invesigaion and

Review Panel (Exper Panel) and he regulaory

invesigaion o he Chie Inspecor o Mines.

Governmen has acceped all o he recommendaions

pu orward by he Exper Panel and Chie Inspecor

o Mines and implemenaion is well underway.

We accep he majoriy o he recommendaions inhe Audi Repor; however, here are five poins

where we eel obliged o share our perspecive or

he public record.

APPROPRIATE

STANDARDS

Tere is a lack o clariy in he Audi Repor on wha

he operaional effeciveness o he compliance

and enorcemen programs should be measured

agains. Ofen he measure or sandard o expeced

perormance saed in he Audi Repor is unclear

and/or unsuppored by reerence o an idenified,

esablished auhoriy, such as he legislaion and

regulaion ha guides he acions o C&E saff in boh

minisries. Tis concern applies a various poins in

he Audi Repor, wih he Repor’s general reerence

o he Organisaion or Economic Co-operaion

and Developmen or he Inernaional Nework or

Environmenal Compliance and Enorcemen raher

han he laws o BC, he saed objecives o he

Minisries, or Canadian indusry sandards.

As a specific example in relaion o Moun Polley,

he Province is criicized or adoping he Canadian

Dam Associaion’s (CDA) Dam Saey Guidelines

which, he audi repor saes, “resuled in a ailings

dam ha was buil below generally acceped sandards

or ailings dams.” No only do we disagree wih

his asserion o opinion, he CDA guidelines arein ac proessionally recognized guidelines ha are

used hroughou Canada by geoechnical engineers.

Wheher he guidelines could be improved is a

separae quesion, one which he CDA is currenly

reviewing. Furher, he Miniser o Energy and Mines

has sruck a commitee ha is asked wih reviewing

he Healh, Saey and Reclamaion Code or Mines

in BC o deermine wheher and in wha ways

requiremens may appropriaely be improved

or clarified.


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PROFESSIONAL

PUBLIC SERVANTS

Te Audi Repor suggess ha proessional publicservans are unable o differeniae beween mandae

componens or ha hey are unwilling o enorce

exising regulaions. Te Audi Repor conains

no acual evidence ha he curren minisry

srucure resuls in any such risk, or in a mind-se

o acquiescence on he par o saff involved. Te

Repor liss a number o indicaors o poenial risk o

regulaory capure. Bu here is nohing whasoever

in he Repor o sugges any acual causal linkage.

Specifically, here is no evidence ha decisions were

made a Moun Polley, in relaion o he Elk Valley, or

anywhere else o ease or enhance he posiion o he

mining companies involved.

We do no accep ha mere appearances are sufficien

o warran he ac o removing compliance and

enorcemen rom MEM. No one is more aware o

he need o find he appropriae balance beween

promoion and regulaion o mining in minisrydecision-making han hose who are asked o do so on

a daily basis. I is he legislaive ramework in BC ha

drives compliance and enorcemen aciviies no he

organizaional srucure.

DISCLOSURE OF

INFORMATION

Te Audi Repor implies ha he Minisries ailed inheir duy o disclose inormaion regarding decisions

on mining operaions.

In he insance o Moun Polley, here was no breach

o any duy o disclose inormaion o he public

or o he Legislaure. Te Inormaion and Privacy

Commissioner recenly ruled ha here was no

ailure by MEM o mee he disclosure requiremens

o secion o he Freedom o Inormaion and

Proecion o Privacy Ac in relaion o environmenal

risk a Moun Polley.

Wih respec o he permiting o mining operaions

in he Elk Valley, here was also no breach o any

duy on he par o ENV and no ailure on he par

o Cabine o disclose inormaion o he public or o

he Legislaure. Beore addressing ha poin, i may

be o assisance or he governmen o se ou he

decision making process ha did occur, he exensiveconsulaions ha were underaken, and o clariy he

legal auhoriy under which decisions were made.

As he Audi Repor noes, mining in his area has

been going on or more han years and over he

pas years, ENV has been monioring he healh

o he waershed wih increasing concern. Emerging

science began o indicae he poenial effecs o

selenium and oher waer qualiy parameers in he Elk

Valley waershed, including Fording River, Elk Riverand Lake Koocanusa. Wih ENV saff bringing hese

issues o he atenion o he Miniser o Environmen,

RESPONSE FROM GOVERNMENT


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he Miniser used powers under he Environmenal

Managemen Ac o issue an Order requiring he

mining operaor o immediaely begin o sabilize and

reverse he waer qualiy rends.

Te Order required he developmen o an Area Based

Managemen Plan (ABMP) which mees specific

environmenal objecives and oucomes such as

proecion o aquaic ecosysems, proecion o human

healh and proecion o groundwaer. Te ABMP

also ses ou shor, medium and long-erm waer

qualiy arges. Te ABMP lays ou a schedule or he

insallaion o nine acive waer reamen plans over

he nex years. Te long-erm arges consider:) curren conaminan concenraions, ) curren

and emerging economically achievable reamen

echnologies, ) susained balance o environmenal,

economic and social coss and benefis, and ) curren

and emerging science regarding he ae and effecs o

conaminans.

Subsanial public and sakeholder consulaions were

underaken during he developmen o he ABMP and

afer permis were graned, various news releases and

media inerviews by minisers se ou or he general

public he naure o governmen decisions. Te ABMP

was developed by a echnical advisory commitee

wih represenaives rom he mining operaor,

he local environmenal group (Wildsigh), he

Province, Governmen o Canada, U.S. Governmen,

he Sae o Monana, he Kunaxa Naion, and an

independen scienis rom UBC. Parallel o he

echnical advisory commitee work, he Province wasengaged in a governmen-o-governmen process o

ensure he Kunaxa Naion’s ineress and concerns

were addressed. Te Kunaxa Naion Council’s public

suppor or he ABMP and he subsequen Elk Valley

permi is a reflecion o he commimen o he

Province, he Kunaxa Naion and he mining operaoro see waer qualiy levels sabilize and improve.

In November , he Miniser o Environmen

approved he ABMP which became policy or he

minisry sauory decision maker o consider when

making permiting decisions in he Elk Valley. Te

comprehensive Valley permi, subsequenly issued

by he minisry sauory decision maker, auhorizes

waer qualiy discharges and ses legal requiremens or

he mining company o insall nine reamen plansand o implemen widespread monioring o ensure

waer qualiy rends are sabilizing and reversing. A

angible resul o his unprecedened effor in problem

solving and public and Firs Naions consulaion is

he recen announcemen o he compleion o he

commissioning phase o he firs reamen plan. Te

recogniion o he minisry’s effors o effecively and

responsibly address a hisorically generaed waer

qualiy problem while balancing economic, social,

culural and environmenal ineress was no addressed

in he Audi Repor.

Te Audi Repor criicized Cabine or approving he

Line Creek Expansion Permi via an Order-in-Council

(OIC) in on he grounds ha he raionale or

he decision was no publicly disclosed. Decisions,

when hey are issued in he orm o OICs such as his

one, are always published on he BC Laws websie.

Furhermore, secion o he Environmenal Managemen Ac specifically oulines wha acors

Cabine may consider. Tese consideraions exend o



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acors such as social and economic needs and wheher

i is in he public ineres o ensure a uncioning

indusry so ha longer erm invesmens can coninue

o be made in areas such as research and developmenand waer reamen echnologies.

AUDIT SCOPE

Te ourh poin relaes o audi planning decisions as

o wha was properly wihin or ouside he audi scope.

For example, i is difficul or us o undersand why, in

a case sudy examining permiting in he Elk Valley indeail, he Audi Repor ailed o record he concered

effors ha ENV has underaken in order o ensure

hese permis are complied wih. Afer he Miniser

o Environmen approved he ABMP in , he

minisry sauory decision maker approved a valley-

wide permi or eck Coal Limied ha specified

he regulaory requiremens or reducing selenium

levels. Permi requiremens will bend down he curve

o growh in selenium levels in Lake Koocanusa by

requiring addiional invesmen in waer diversion

and reamen aciliies over he nex wo decades.

Te Audi Repor does no commen on he exensive

effors by he minisry o ensure ha eck Coal

Limied complies wih hese regulaory requiremens.

For insance, in , ENV creaed a dedicaed

managemen posiion suppored by wo echnical

officers o oversee eck Coal Limied. A compliance

plan has been developed ha specifies a schedule o

inspecion requency and waer sampling. Te amouno resources and effor ha has been ocused on

compliance o hese five paricular mines is significan

and he minisry has no inenion o reducing

ha atenion.

We also wonder why, in examining wheher

compliance and enorcemen aciviies o he mining

secor are proecing he Province rom significan

environmenal risk, he Audi Repor did no considerhe key role played by he Environmenal Assessmen

Office (EAO) in upholding he Environmenal

Assessmen Ac . Many o he mines in Briish Columbia

(new and expansions) have been subjec o he

Environmenal Assessmen process and received

environmenal assessmen cerificaes wih legally

binding requiremens. Permiting by MEM and ENV

happens subsequen o ha environmenal review

process. Addiionally, he EAO has is own compliance

and enorcemen program, which includes oversigh

o mines and uncions complemenarily o MEM

and ENV. Te Audior General recenly reviewed

EAO’s progress in addressing he recommendaions

rom he audi on he EAO’s oversigh o major

projecs. In ha ollow-up, he Audior General

acknowledged significan improvemens in oversigh

o environmenal assessmens projecs,

including mines.

MOUNT POLLEY

Te Audi Repor conains he inerence ha MEM

migh have been able o, hrough proper exercise o

heir regulaory powers, ac o preven he dam ailure

a Moun Polley. Te Audi opinion is conrary o he

Exper Panel finding o cause and is no reflecive o

he regulaory regime in place a he ime. Specifically:

Te Panel ound ha inspecions o he SF would no

have prevened ailure and ha he regulaory saff are

well qualified o perorm heir responsibiliies. Te Panel

ound ha he perormance o he Regulaor was

as expeced.


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I is imporan o undersand ha mine design, a

Moun Polley jus as a mines around he world, is no

saic and evolves hroughou he lie o operaion.

Tis is appropriae engineering pracice. Operaingmines evolve heir designs over ime regularly, all

wih he approval o licensed engineers. Saring in

, here were nine design sages over he lie o

he ailings Sorage Faciliy (SF) a Moun Polley.

All sages, including he design sage in place a he

ime o he breach had been approved by he design

engineer. Each sage o consrucion was cerified

by he Engineer o Record (EOR) in he as-buil

repors. MEM auhorized permi amendmens or

each sage o he SF. Te ailure o he SF was no a

compliance and enorcemen issue.

I is also imporan or he reader o undersand he

difference in design, acions and recommendaions

or each o he hree embankmens: Perimeer

Embankmen, Main Embankmen, and Souh

Embankmen. Specifically, he Audi Repor seems

o sugges ha iems idenified by boh he EOR

and minisry saff a he Main Embankmen can be

ranslaed, or are somehow relaed, o he ailure o

he Perimeer Embankmen. Such inerences are no

suppored by acs or engineering and do no offer

supporing evidence ha he breach o he Perimeer

Embankmen was somehow prevenable hrough

compliance and enorcemen acions.

Te Minisry appreciaes ha he purpose and process

o he audi may have been differen han hose o

he Exper Panel and he regulaory invesigaion ohe Chie Inspecor o Mines. We are noneheless

concerned abou he differen findings on undamenal

acs ha have come ou o hese processes. Te

Exper Panel, which was empowered in is erms o

Reerence o examine any maters i deemed necessary,

including he “regulaory oversigh by he Minisry oEnergy and Mines and he Minisry o Environmen”

and “o commen on wha acions could have been

aken o preven his ailure and o ideniy pracices

or successes in oher jurisdicions ha could be

considered or implemenaion in BC” concluded:

Te Panel finds ha he MEM Geoechnical Saff and

he Conrac Inspecors are well qualified o perorm

heir responsibiliies. Te eam is well organized and

has clear arges and schedules or annual inspecions.Te Panel considers he echnical qualificaions o he

MEM Geoechnical Saff as among he bes ha i has

encounered among agencies wih similar duies.

Te Panel urher concluded:

Addiional inspecions o he SF would no have

prevened he ailure.

Similarly, he exensive invesigaion by he ChieInspecor o Mines, which considered over ,

pages o documens and hundreds o hours o

inerviews, did no find ha he company breached is

obligaions under he Mines Ac , he Healh, Saey and

Reclamaion Code or Mines in Briish Columbia, is

permi condiions or any orders o prosecue. Tis is

he regulaory ramework ha governs he Minisry’s

compliance and enorcemen acions. We o course

awai he resuls o he Minisry o Environmen’sinvesigaion o poenial breaches o is legislaion.


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Te Audi Repor saes ha “governmen has adoped

an approach o reduce he regulaory burden on

indusry.” Te public relies on Qualified Proessionals

in many areas. Examples o qualified proessionalsinclude archiecs, accounans, lawyers, physicians,

pharmaciss and engineers. In each case, he qualified

proessionals are regulaed by heir respecive

governing body or associaion o ensure members

mee heir associaion’s sandards o conduc or code

o ehics. I qualified proessionals do no adhere o

hese sandards or codes, hen he associaions are

responsible or disciplinary acions. Tis is he sysem

ha holds proessional engineers accounable across

Canada. Te OAG concern abou over-reliance on

qualified proessionals is a criicism o proessional

bodies’ abiliy o regulae heir proessions.

Furhermore, he Audi Repor’s asserion ha

here is over-reliance on qualified proessionals is

no subsaniaed in he conex o mining. Reliance

on engineers and oher qualified proessionals in

he mining indusry has been a ac o lie in Briish

Columbia or decades. Te long sanding model

used in engineering hroughou he world relies on

proessional engineers o prepare and seal designs;

governmen hen reviews hese plans. Trough

legislaion like he Engineers and Geoscieniss Ac,

governmen has creaed echnical bodies o ormalize

accounabiliy and proec he public ineres.

Jus as he original design or he Moun Polley SF

was prepared and signed by a Proessional Engineer

in and hen reviewed by governmen saff, his was he same or subsequen lifs. In ac, he Exper

Panel ound:

MEM geoechnical engineers addressed significan issues

during he reviews and inspecions o he Moun Polley

SF. Tey had insighul quesions or he designers

a many insances during heir review o he design

documens, as noed above. Te EOR responded o hese

quesions based on heir observaions and undersandingo sie condiions. Te EOR is responsible or he overall

perormance o he srucure as well as he inerpreaion

o sie condiions. Te Regulaor has o rely on he

experise and he proessionalism o he EOR as he

Regulaor is no he designer.

Boh he Exper Panel and he CIM invesigaion

concluded ha he undamenal cause o he Moun

Polley ailure was he lack o appropriae subsurace

sie characerizaion when he dam was designedand buil. We respecully poin ou ha his was

no a quesion o he number o minisry saff on he

ground, he number o inspecions perormed, or an

increase in proessional reliance since.

In conducing he Moun Polley case sudy, he

audi eam – quie undersandably – augmened

heir own knowledge o environmenal principles,

geoechnical engineering and regulaory law. Tey

did so by consuling a panel o subjec mater

expers, comprising an environmenal academic,

environmenal lawyer, engineer and a ormer

employee. We undersand his o be consisen wih

normal audi pracice.

However, proceeding in ha manner did no give he

Minisries he opporuniy o know who was on he

panel, wha daa he panel may have considered on

specific poins, wha opinions hey migh have offered,or o challenge he hinking o panel members wih

addiional engineering evidence and/or compeing

legal or scholarly opinions.


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Governmen wishes o hank he Audior General or

underaking he audi and her saff or heir effors.

In paricular, we appreciae he exended processes

by which he Audi eam allowed he Minisries oraise and discuss acual and legal concerns arising in

connecion wih successive drafs o he Audi Repor.

Te Audi eam responded o many o our concerns,

bu poins o disagreemen remained which we

believed could no be lef unanswered. While we do

no accep ha he Minisries have been deficien in

proecing he environmen, or he recommendaion

o reorganize he compliance and enorcemenprograms wihin a separae agency, we do believe he

sub-recommendaions provide meaningul and

consrucive guidance ha will complemen curren

iniiaives already underway.

PART 1: RECOMMENDATIONS FOR GOVERNMENT

Recommendation by OAG Ministry Response

RECOMMENDATION 1.0

Overall: We recommend ha he

Governmen o Briish Columbia creae an

inegraed and independen compliance and

enorcemen uni or mining aciviies, wih

a mandae o ensure he proecion o

he environmen. Given ha he Minisry

o Energy and Mines is a high risk o

regulatory capture , primarily because MEM’s mandae includes a responsibiliy

o boh promoe and regulae mining, our

expecaion is ha his new uni would no

reside wihin his minisry.

I is he legislaive ramework in BC ha drives compliance andenorcemen aciviies no he organizaional srucure. Many provincialgovernmens across Canada have agencies and minisries wih he role opromoing and regulaing an indusry. In he absence o evidence by he Audior General ha his has compromised he inegriy o he minisryor is saff, Governmen does no suppor he need or a reorganizaiono he minisries, however we are prepared o urher discuss his wihhe OAG. Governmen will esablish a Mining C&E Board ha willaddress he need or greaer inegraion beween he minisries, as well as wih he Environmenal Assessmen Office.


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PART 2: RECOMMENDATIONS FOR MINISTRY OF ENERGY AND MINES AND MINISTRY OF ENVIRONMENT


RECOMMENDATION 1.1

Strategic PlanningWe recommend

ha governmen develop a sraegic plan

ha would deail he aciviies o an

inegraed and coordinaed regulaory

approach, and he necessary capaciy,

ools, raining and experise required o

achieve is goals and objecives.

A Mining C&E Board will be esablished o oversee an inegraed andcoordinaed regulaory approach o mining in he Province o B.C. TeBoard will be accounable o he Depuy Miniser o Energy and Mines,he Depuy Miniser o Environmen and he Associae Depuy Miniser ohe Environmenal Assessmen Office.

Te Board will develop compliance and enorcemen plans o map ouproacive annual aciviies based on a risk-based approach. Te board willalso be responsible or urhering longer erm sraegic improvemens inoher areas such as: enhancing raining; developing policies, proceduresand ools; conducing evaluaions; and expanding public reporing.

MEM will appoin a new Depuy Chie Inspecor o Mines or compliance

and enorcemen o oversee and implemen improved C&E.

RECOMMENDATION 1.2

Permit LanguageWe recommend ha

governmen ensure boh hisorical and

curren permi requiremens are writen

wih enorceable language.

Te minisries agree ha permis mus be writen wih measureable andenorceable requiremens. Boh minisries will develop policy o ensureenorceable and measurable requiremens are used in all new andamended permis.

RECOMMENDATION 1.9

IncentivesWe recommend ha

governmen creae effecive incenives

o promoe environmenally responsible

behavior by indusry.

Te minisries agree ha i is useul o consider incenives as par o hecompliance and enorcemen regime governing mines and will coninueo consider addiional opporuniies o recognize and reward good

environmenal perormers. Furhermore, i is expeced ha expandedpublic reporing o compliance and enorcemen aciviies will serveas a very effecive incenive or promoing environmenallyresponsible behaviour.

RECOMMENDATION 1.10

Risk-Based Approach

We recommend ha governmen develop

a risk-based approach o compliance

verificaion aciviies, where equency

o inspecions are based on risks such

as indusry’s non-compliance record,

indusry’s financial sae, and indusry’s

aciviies (e.g., expansion), as well as risks

relaed o seasonal variaions.

Compliance verificaion aciviies conduced by he minisries are oundedon a risk-based approach; however, he minisries commi o reviewpolicies in his regard.

Te annual compliance and enorcemen planning ha will ake place ahe Mining C&E Board, esablished under recommendaion 1.1, will also be risk-based o opimize he capaciy and effeciveness o he minisries’collecive compliance and enorcemen resources.



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RECOMMENDATION 1.12

Qualified Proessionals

We recommend ha governmen esablish

policies and procedures or he use and

oversigh o qualified proessionals (QP)

across he naural resources secor. Tese

policies and procedures should have he

ollowing:

guidance or sa ha oul ines

he speciic naure and amoun ooversigh expeced o a QP’s work

guidance or sa as o expecedimerame or review andresponse o QP repors

updaed guidance or sa orrecognizing and responding omisconduc by a QP

conrols in place o ensure hahere is no undue inluence on heQPs by indusry

conrols in place o ensure harecommendaions by QPs areadhered o

MEM’s effors are guided by he Mines Ac and he Healh, Saey andReclamaion Code or Mines in Briish Columbia. In paricular, he CodeReview currenly underway is considering specific maters such as heneed or a qualified individual designaed as a mine dam saey manager ooversee all work associaed wih a ailings sorage aciliy and will clariyhe roles and responsibiliies o he Engineer o Record a a mine.

Te Mining C&E Board, esablished under recommendaion 1.1, willconsider how MoE and MEM can srenghen he use and oversigh oqualified proessionals in he mining secor specifically.

Te Minisry o Foress, Lands and Naural Resource Operaionshas esablished a Qualified Persons in he Naural Resource Secor

Framework. Tis ramework guides he developmen and implemenaiono Qualified Persons policies and procedures specifically or he miningsecor. Te ramework is based on he hree essenial componens oguidance, compeency and accounabiliy and ensures he ineress ogovernmen, resource users, qualified persons and oher sakeholders arerecognized and addressed.

RECOMMENDATION 1.14

Policies, Procedures and ToolsWe

recommend ha governmen develop

policies, procedures and enorcemen ools

or responding o non-compliances when

indusry does no mee governmen’sspecified imeline.

Te minisries agree on he imporance o clear policies, procedures andools o aid in heir compliance and enorcemen aciviies. Te minisries will review hese in ligh o he recommendaions. Te esablishmen ohe Mining C&E Board, under recommendaion 1.1, will serve o urheriner-minisry collaboraion and sharing o bes pracices.

Governmen will also inroduce amendmens o he Mines Ac o provide

or Adminisraive Moneary Penalies in he spring 2016legislaive session.



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RECOMMENDATION 1.15

Evaluation and Adjustment

We recommend governmen regularly

evaluae he effeciveness o is compliance

promoion, compliance verificaion, and

enorcemen aciviies and ools, and

make changes as needed o ensure

coninuous improvemen.

Annual compliance and enorcemen planning and reporing willprovide a means o evaluae he effeciveness o he program, o ensureongoing improved argeing o areas o concern and recogniion o srongperormers. Te minisries will address his recommendaion hrough heesablishmen o a Mining C&E Board under recommendaion 1.1.

RECOMMENDATION 1.16

Public ReportingWe recommend ha

governmen repor publicly he:

resuls and rends o all miningcompliance and enorcemenaciviies

eeciveness o complianceand enorcemen aciviies inreducing risks and proecing heenvironmen

esimaed liabiliy and he

securiy held or each mine.

Te minisries suppor public reporing and have been making progress inhis area. Te Minisry o Environmen has been reporing is enorcemenacions or many years hrough published repors and an online searchabledaabase. I repors all o is enorcemen acions including orders,adminisraive sancions, adminisraive moneary penalies, violaionickes and cour prosecuions. Te minisry will work wih Minisry oEnergy and Mines o explore including heir enorcemen acions in hereporing.

In 2012, he Minisry o Environmen published all o is permisor indusrial and municipal aciliies ha discharge wase ino heenvironmen, including mines. Tis daase provides he opporuniyor ciizens o access province-wide daa on hose aciliies, includinginormaion on ees, locaions and discharges.

Te Minisry o Energy and Mines published all dam saey inspecions,emergency response plans and relaed documens online in 2015. Teminisry will coninue o publish urher documens or all major mines inBriish Columbia.

Te minisries will repor on rends and effeciveness o C&E in hemining secor.



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PART 3: RECOMMENDATIONS FOR MINISTRY OF ENERGY AND MINES


RECOMMENDATION 1.3 Security

Adequate CoverageWe recommend ha governmen

saeguard axpayers by ensuring he reclamaion liabiliy

esimae is accurae and ha he securiy held by governmen

is sufficien o cover poenial coss.

As seen in he 2014 Chie Inspecor’s Annual Repor,“In he pas ew years, he value o securiy deposishas increased o reflec more closely he rue coss oreclamaion. Te oal value o securiies held by heProvince has risen rom $10 million in 1984 o more han$773 million by he end o 2014.”

RECOMMENDATION 1.4 Security

Catastrophic EventsWe recommend ha governmen

review is securiy mechanisms o ensure axpayers are

saeguarded om he coss o an environmenal disaser.

Environmenal disasers, like he one seen as aresul o he Moun Polley ailing aciliy breach, canresul in damage boh on and off a mine sie. I is heresponsibiliy o he mine operaor o ensure sufficienenvironmenal liabiliy insurance is held o mee he risko such disasers.

Te Environmenal Managemen Ac conains auhoriyor spill response acions and cos recovery o requirepersons in possession or conrol o any polluingsubsance o prepare coningency plans and oimplemen hose plans a heir expense in he even oa spill. Te Ac also provides or he recovery o cossshould acion o respond o a spill be declared by heMiniser.

Tis Ac is being amended o proacively requirepoenial polluers o pay ino a spill preparedness andresponse organizaion. Tese amendmens are due orinroducion o he Legislaure his year.

RECOMMENDATION 1.8

Reclamation GuidanceWe recommend ha governmen

develop clear and comprehensive reclamaion guidance

or indusry.

Inernal work has begun on developing addiionalguidance maerials on a range o reclamaion aspecs,including erosion and sedimen conrol plans, closuremanagemen manuals, reclamaion securiy, ec.

RECOMMENDATION 1.11

Systematic Compliance VerificationWe recommend

ha governmen sysemaically monior and record

compliance wih high-risk mine permi requiremens.

As wih Recommendaion 1.10 above, a risk-basedapproach o compliance and enorcemen workorceplanning will uncover poor perormers or closerscruiny.



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PART 3: RECOMMENDATIONS FOR MINISTRY OF ENERGY AND MINES


RECOMMENDATION 1.13 Mine DesignWe

recommend ha governmen adop appropriae sandards,

review mine designs o ensure ha hey mee hese sandards,

and ensure ha mines, as consruced, reflec he approved

design and sandards.

Tis recommendaion is presened a he conclusiono he Audi Repor secion on he Moun Polley SF breach.

Tere had been nine design sages over he lie o he SFa Moun Polley Mine. All sages, including he designsage in place a he ime o he breach had been prepared by he design engineer; a qualified proessional. MEMreviewed and auhorized permi amendmens or eachsage o he SF. Each sage o consrucion was cerified by he Engineer o Record in he as-buil repors. Teailure o he SF was no an enorcemen issue.

Trough legislaion like he Engineers and Geoscieniss Ac, governmen has creaed echnical bodies oormalize accounabiliy and proec he public ineres. As appropriae in heir role, in response o he ExperPanel findings on Moun Polley he Associaiono Proessional Engineers and Geoscieniss BC isdeveloping proessional pracice guidelines or damsie characerizaion assessmens. Governmen is alsounderaking a review o he Mining Code wih labour,Firs Naions and indusry represenaives o deerminehow bes o implemen he exper panel findings.



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PART 4: RECOMMENDATIONS FOR MINISTRY OF ENVIRONMENT


RECOMMENDATION 1.5 Environmental

Management Act Waste Discharge FeesWe recommend

ha governmen review is ees under he Environmenal

Managemen Ac and ensure ha he ees are effecive in

reducing polluion a mine sies.

Te Minisry o Environmen is commited o reviewinghe ee srucure or wase discharges under he Environmenal Managemen Ac . Work has already beeniniiaed o assess curren ees, as well as conduc a cross- jurisdicional scan o ees imposed by oher provincesand erriories.

RECOMMENDATION 1.6

Cost RecoveryWe recommend ha governmen adop

a cos recovery model or permiting and compliance

verificaion aciviies ha is consisen across all minisries in

he naural resources secor.

Te Minisry o Environmen recognizes ha ohernaural resource secor minisries, including heEnvironmenal Assessmen Office, have begun imposingees on indusry or permiting and compliance verificaion aciviies. Te minisry will be examining heimposiion o ees or hese aciviies.

Effecive April 1, 2015 permi ees were inroducedunder he Mines Ac and he exising inspecion ees wereraised. Tis enabled a budge increase o approx. $9.3Mo he Minisry o Energy and Mines in Budge 2016.

RECOMMENDATION 1.7

Decision MakingUse o section o the

Environmental Management ActWe recommend ha

governmen publically disclose is raionale or graning a

permi under secion o he Environmenal Managemen

Ac. Specifically, inormaion should include how acors

such as economic, environmenal, and social atribues were

considered in he deerminaion o public ineres.

As provided or in Secion 137 o he Environmenal Managemen Ac , Cabine may consider acors haare in he public ineres and beyond hose ha aminisry direcor may consider. Discussions underlyinghe approval o an OIC are a mater o Cabineconfidenialiy. However, he resuls o Cabine decisions,

when hey are issued in he orm o OICs, are publishedon he BC Laws websie.



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BACKGROUND

MINING IN B.C.

M a par o B.C.’s economy since he mid-s. Saring wih coal mines on VancouverIsland and gold placer mining in he Cariboo, mining has expanded o all pars o he province.

oday, mining is a key driver o B.C.’s economy. Coal

and meal mines are he larges revenue-generaing

commodiies, and mining and relaed secors employ

more han , people. In , he oal value o

producion a B.C. mines was abou $ billion. Mineral

exploraion spending was $ million in and $

million in . Currenly in operaion, are six coal mines,

seven meal mines, more han indusrial mineral

mines, and hundreds o quarries and aggregae pis.

B.C. is Canada’s larges copper producer, larges

exporer o meallurgical coal, and he only producer

o molybdenum. Coal and meal mines are reerred o

as major mines and are he ocus o his repor

(see Exhibi ).

Mining is a emporary aciviy: i only lass as long

as he economically exracable resource (e.g. coal,

copper) is available. Tis could be up o years or

more. Mining is also a volaile indusry ha relies on

commodiy prices, resuling in cycles o “boom and

bus.” Currenly, B.C. mines are being affeced by a

sharp decline in commodiy prices.

In addiion o he operaing major mines, he

province has abou ohers ha are emporarily

closed or permanenly closed. Over one-hird o hese

closed mines are sill he responsibiliy o he mining

companies and coninue o have environmenal

obligaions under heir permis. Governmen’s role,

hrough coninued monioring and inspecions, is o

ensure ha mine operaors mee hese obligaions.

Te remaining sies are generally older, smaller mines

ha predae – he year ha governmen enaced

legislaion requiring mine operaors o mee more

sringen environmenal sandards. For hese older

mines, governmen could be lef wih he ull cos o

remediaion i waer qualiy issues were o develop ahese mine sies.

Te Governmen o B.C. suppors he coninued

growh o he mining indusry, as indicaed in he

BC Jobs Plan. Ta plan included a arge o having

eigh new major mines in operaion by he end o

and expanding nine exising mines. MEM repored in

June ha wo new mines had sared operaion

and seven had expanded. Te minisry cied ha low

commodiy prices during / impaced he rae omine expansions.

Click on he erms ha are bold and blue

o go o he definiion in he glossary

( Appendix B).


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0 75 150 300 Kilometers

Exhibit 1: Major mines in British Columbia as of August 2015

BACKGROUND

Source: Creaed by GeoBC or he Office o he Audior General o Briish Columbia


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A he same ime, governmen has a long-sanding

commimen o ensure ha mining aciviies proec

he province’s environmenal values. Tere is a ension

beween ulfilling his commimen and working ogrow he economy and creae jobs, bu governmen

has saed ha i embraces his dynamic. Mining

aciviies inherenly involve several environmenal

risks such as erosion, loss o habia, carbon

emissions, dus and sedimenaion. However,

he greaes environmenal risk rom mining is

waer conaminaion.

Given he ension and hese risks, a robus

compliance and enforcemen program is essenialo ensure ha he environmen is proeced.

BACKGROUND


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MINERAL RESOURCESDEVELOPMENT CYCLE

AVAILABLELANDRESOURCES

PLANNING ENVIRONMENTAL

ASSESSMENT PERMITTING

EXPLORATION8-10 years

CONSTRUCTION

1-3 years

OPERATION10-30 years

CLOSURE1-2 years

ENVIRONMENTAL MONITORING, AND IN SOME CASES,WATER TREATMENT, MAY BE REQUIRED IN PERPETUITY

P R O G R E S

S I V E R E

C L A M A T

I O N

P R O G R E S S I V E

R E C L A M A T I O N

BACKGROUND

Exhibit 2: The life cycle of a mineMEM supports the concept of progressive reclamation – that is, pro-active and ongoing reclamation that begins earlyin mine development and continues over the life of the mine. In many cases, reclamation continues after closure for adefined period (until closure obligations are met by the mine operator). However, a mine that is generating, or has the

potential to generate, contaminated water must be monitored indefinitely by the mine operator, and may require long-term or perpetual water treatment.

Source: Office o he Audior General o Briish Columbia, adaped rom Mineral Resources Educaion Program o BC


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ENVIRONMENTAL

CONCERNS WITH

MAJOR MINES

The mining process

Te lie cycle o a mine begins wih geoscience surveys

and exploraion o discover valuable coal or mineral

deposis. Discovery leads o consrucion, operaion

and evenual closure when he exracable resource is

depleed or no longer economically viable o exrac

(see Exhibi ).

BACKGROUND

How the mining process cangenerate pollution

Ore is mineralized rock conaining a valued meal

(such as gold or copper) or oher mineral subsances

(such as coal). In open pi mines, ore is exraced rom

an excavaed open pi. Acid and meals, i conained

in exposed pi walls, can leach ino he surrounding

environmen. Te exraced ore also includes large

quaniies o wase rock (maerial no conaining he

arge mineral) ha ges sored a he mine sie. Tese

wase rock piles, which may conain acid-generaingsulphides, heavy meals and oher conaminans, can

become a source o polluion.

Te ore ha conains he valued meal or mineral

is crushed and ground ino fine paricles he size o

sand or sil. Tis ore is hen processed using various

chemicals and separaing mehods o exrac he

final desired meal or mineral. Te by-producs o

his process are he ailings. Mine ailings ofen

conain he same poenially oxic heavy meals andacid-orming minerals as wase rock, and may also

conain he chemical agens used in processing, such

as cyanide or sulphuric acid. ailings are usually sored

above ground in conainmen areas or ponds.

Boh wase rock and ailings, i improperly secured,

can leach ou conaminans ino surace waer and

groundwaer, resuling in significan polluion and

adverse effecs (see Exhibi ).

Exhibit 3: Potential sources of water pollution in an open pit mine: pit walls, waste rock piles and tailings

Waste rock

piles

Processing

mill

Watertreatment

facility

Tailingsstoragefacility

Pit walls

Contaminated water

Treated water

Source: Office o he Audior General o Briish Columbia, adaped rom he Inernaional Nework or Acid Prevenion’s Global Acid Rock Drainage Guide and adaped rom he Elk Valley Waer Qualiy Plan.

http://www.teck.com/media/2015-Water-elk_valley_water_quality_plan_T3.2.3.2.pdfhttp://www.teck.com/media/2015-Water-elk_valley_water_quality_plan_T3.2.3.2.pdf


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Daily milling capacity from the early 1900's to present day

0.1

1

10

100

1,000

10,000

200019501900

100 tonnes in 19001,000 tonnes by 193010,000 tonnes by 1960100,000 tonnes by 2000

T o n n e s m i l l e d p e r

d a y ( t h o u s a n

d s )

Year

Advances in mechanizaion and echnology in he

mining indusry make i profiable or companies

o mine more maerials han ever beore. Te resul,

however, is ha mine wase in some o Canada’s largermines has muliplied enormously – rom s o

onnes per day in he early s o ,–,

onnes a day in some o Canada’s larger mines now.

Tis creaes a greaer poenial source o polluion

(see Exhibi ).

In B.C., meal mines are ypically low grade, meaninggreaer quaniies o wase maerial are now being

generaed in order o exrac arge minerals

(see Exhibi ).

BACKGROUND

Exhibit 4: Growth of production in Canada’s largest mines

Source: Office o he Audior General o Briish Columbia, adaped rom RobersonGeoConsulans Inc., Mine Waer Soluions in Exreme Environmens

Coal mining in he early ’sSource: www.brooklineconnecion.com

Presen-day haul rucks have he capaciy o movehundreds o onnes o maerial.Source: Sock image


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Water pollution and environmentalimpacts from mining

Te mos serious environmenal issues acing he

mining indusry, governmen and he public is waer

conaminaion resuling rom he chemical processes

associaed wih acid rock drainage (ARD) and heavy

meal and non-meal leaching (leaching).

ARD can occur when mineral deposis are excavaedrom an open pi or exposed in an underground mine

and hen reac wih air and waer o produce acid

(see Exhibi ). While ARD is a naural process, he

scale can be magnified as a resul o mining

aciviies. ARD has he poenial o severely degrade

waer qualiy, kill aquaic lie and make waer

virually unusable.

Leaching can occur when minerals conaining heavy

meals and non-meals (such as arsenic, copper,

cadmium, lead, zinc and selenium) in excavaed rock

or exposed mine walls come ino conac wih waer

and hen seep rom he rock ino he environmen.Meal and non-meal dissolving and ransporaion

may be acceleraed in he acidic condiions creaed

by ARD.

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Copper target materialOre waste material

135,500tonnes/day

500tonnes/day

BACKGROUND

Exhibit 5: Highland Valley copper mine’s production

Source: Phoograph, couresy o he Office o he Audior General o BriishColumbia. Daa adaped rom Wikipedia, InoMine and eck Resources Ld.’s Annual Repor


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Te conaminans ha resul rom ARD and leaching

can be carried rom a mine sie and deposied ino

sreams, rivers, lakes and groundwaer. Te resul can

be a slow, bu severe, degradaion o waer qualiy

and subsequen damage o fish populaions and

aquaic lie. In he case o a sudden ailings dam breach, he resul can be immediae and cause

caasrophic damage.

Wihin he U.S. and Canada, ARD and leaching

have conaminaed rivers, caused significan

ecological damage, loss o aquaic lie and resuled in

mulimillion-dollar clean-up coss or indusry andgovernmen (see Exhibi ).

Challenges in dealing with ARD and leaching

Planning and working o preven ARD and leaching

is an imporan par o avoiding environmenal

degradaion and declining qualiy o aquaic

habia and drinking waer. From a regulaory and

environmenal risk perspecive, considerable emphasis

in mine developmen is placed on prevening or

miigaing ARD and leaching. Tere are various

provincial and naional commitees ocused on

conducing research and sharing good pracices

beween governmen and indusry.

In recen years, echnological advances and

improvemens o mining pracices have helped in

his regard, hough significan environmenal risksremain. ARD and leaching are dynamic and complex

chemical processes ha are challenging o predic.

Te acual environmenal impac varies, depending on

acors such as he size and locaion o he mine and

he characerisics o he surrounding environmen.

Furhermore, he raes and iming o ARD and

leaching onse vary in response o a wide range o

sie-specific mining, geological and environmenal

acors. For example, a some mine sies, onse is

insananeous; a ohers, i has aken anywhere rom

o years.

BACKGROUND

Exhibit 6: Acid rock drainage on land and in water

Source: iSock (op) and Office o he Audior General o Bri ish Columbia(botom)


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Once iniiaed, hese processes can persis or

hundreds or even housands o years (see Exhibi ).

Mine companies can miigae he effecs o ARD and

leaching, bu here is no walk-away soluion. A mine

ha is generaing, or has he poenial o generae,

conaminaed waer mus be moniored indefiniely,

and may require long-erm or perpeual

waer reamen.

A common pracice in B.C. o preven ARD and

reduce leaching is o sore he acid-generaing

rock under waer in ailings ponds o minimize

he oxidaion process. Tese ponds mus remain

permanenly flooded. Tere are oher miigaion

opions, such as surace covers, bu MEM’s ARD

and leaching guidelines sae ha hese opions are

less reliable han underwaer sorage. Where oher

sraegies are unsuccessul, drainage collecion and

chemical reamen may be he only easible means

o prevening impacs. MEM also saes in hese

guidelines ha waer reamen should generally be he

miigaion sraegy o las resor.

In pracice, however, waer reamen is no unusual inB.C., and governmen does approve mines ha require

waer reamen rom he ouse major mines

currenly have waer reamen aciliies. MEM has

BACKGROUND

Te Faro Mine, locaed in souh cenral Yukon, is one o he larges and mos complex conaminaed

sies in Canada. I was an open-pi lead-zinc mine rom unil i wen ino receivership in and

ulimaely closed. Te sie covers approximaely , hecares and includes nearly million onnes

o ailings and wase rock. Tese maerials conain high levels o heavy meals ha could leach ino he

environmen in he absence o remediaion. Yukon axpayers will pay an esimaed $ million or he

clean up o his sie.

Source o phoograph: Aboriginal Affairs and Norhern Developmen Canada

Exhibit 7: The Faro Mine, Yukon


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ranked addiional mines as having moderae o

high poenial o ARD and/or leaching, and has

esimaed ha o hese mines will require perpeual

waer reamen.

While waer reamen is a common pracice in B.C.

and oher jurisdicions, some areas – he Norhwes

erriories, Manioba and Wisconsin – do no allow

mining operaions ha require long-erm waer

reamen. Tis is due o he increased risk ha

axpayers will ulimaely be lef wih he cos

o remediaion.

Tese waer reamen plans (see Exhibi ) mus bemoniored by indusry and governmen, mainained

and periodically replaced, in perpeuiy. Tis assumes

ha mining companies are willing and able o ake on

hese coss indefiniely – a risky assumpion given he

boom and bus naure o mining and he realiy ha

companies do no exis orever.

I indusry is unable o mainain and replace hese

aciliies or ulfill he environmenal obligaions in

heir permi, here is a risk ha he axpayer will have

o bear hese coss. In B.C., o reduce he possibiliy

o axpayers being lef wih he financial burden o

hese aciliies and environmenal reclamaion coss

o mine sies, mining companies mus provide a

financial securiy deposi. Tis deposi is designed

o ensure, wih “reasonable assurance” (as decided by

he Chie Inspecor o MEM), ha axpayers will no

have o conribue o reclamaion coss i a company

deauls on is reclamaion obligaions. Tis includesany ongoing requiremens or managemen and

monioring o achieve environmenal proecion.

BACKGROUND

Exhibit 8: Roman era mine in Spain dating back2,000 years, but still producing acidic wastewater.

Source: Te Inernaional Nework or Acid Prevenion’s Global Acid Rock Drainage Guide


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GOVERNMENT’S

ROLE AS AN

ENVIRONMENTALPROTECTION

REGULATOR

Under exising B.C. legislaion and policies, mining

companies are ully responsible or environmenal

proecion and reclamaion a heir mine sies. Te

companies mus demonsrae ha heir plans or

he developmen, operaion and closure phases o

he mines will be effecive. I is governmen’s roleo ensure ha he aciviies underaken by he mine

operaors are proecing he environmen.

Legislaion and regulaions under several agencies

apply o mining in B.C. For his audi, however, we

ocused on hose ha are he responsibiliy o MEM

and MoE because hese wo minisries:

are he primary permi ing agencies or major

mine operaions, and

have environmenal proecion mandaes

and associaed compliance and enorcemen

responsibiliies under provincial legislaion.

While heir mandaes overlap somewha, here are

also key differences.

MEM’s responsibiliies apply generally wihin he mine

sie. Te Chie Inspecor o Mines, appoined by he

Miniser o Energy and Mines, adminisers he Mines Ac and he Healh, Saey and Reclamaion Code or

Mines in Briish Columbia o ensure he proecion

and reclamaion o he land and waercourses

affeced by he mine. MEM grans a permi under

he Mines Ac o ensure mines are designed, buil,

operaed and reclaimed o an accepable sandard.

MEM collecs a financial securiy deposi rom mining

companies o help ensure ha reclamaion obligaions

are kep.

MoE’s responsibiliies are generally defined as

exending beyond he borders o he mine sie. MoEregulaes, hrough he graning o a permi under

he Environmenal Managemen Ac , he quaniy and

qualiy o any wase discharges rom meal and coal

mines o ensure he proecion o he environmen.

BACKGROUND

Tis mine operaed rom o , and did

no include a plan or waer reamen, as ARD

was no prediced o become an issue. However,

ARD did occur and he coss o rea i have

coninued o grow, even hough he mine is

closed. Coss include $ million o build he

new waer reamen aciliy shown above, and

increasing lime coss o neuralize he acid.

Te mining company has borne hese coss.

A securiy deposi is currenly held by MEM

o $ million which provides a saey neor axpayers.

Exhibit 9: The water treatment facility at Equity SilverMine in central B.C.

Source: Office o he Audior General o Briish Columbia


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AUDIT OBJECTIVE AND CONCLUSION

W audi o deermine wheher he regulaory compliance and enorcemenaciviies o he Minisry o Energy and Mines and he Minisry o Environmen peraining o he mining secor

are proecing he province rom significan environmenal risks.

We expeced he compliance and enorcemen

program o he wo minisries o have he seven key

elemens – defined by good pracice – ha would

make such a program effecive (shown below). We

also expeced ha MEM and MoE would be working

ogeher o achieve heir combined objecive o

proecing he environmen. (For more deails on he

audi expecaions and scope, see Appendix A ).

We concluded ha MEM and MoE’s compliance

and enorcemen aciviies o he mining secor are

inadequae o proec he province rom significan

environmenal risks.

Te ollowing wo secions o he repor address our

key audi findings or each minisry. Te firs secion

perains o MEM and he second secion o MoE.

PLANNING

REPORTING PERMITTING

COMPLIANCE

PROMOTION

COMPLIANCE

VERIFICATIONENFORCEMENT

EVALUATION &

ADJUSTMENT

1

2

3

4

5

6

7

COMPLIANCE &

ENFORCEMENT

Seven key elements of a comprehensive compliance and enforcement program

Source: Office o he Audior General o Briish Columbia, adaped rom he Organisaion or Economic Co-Operaion andDevelopmen’s Ensuring Environmenal Compliance: rends and Good Pracices and MOE’s Compliance Managemen Framework


41/109


PART 1: MINISTRY OF ENERGY AND MINES

MEM CONCLUSION

We concluded ha he Minisry o Energy and Mines’

compliance and enorcemen aciviies o he mining

secor are inadequae o proec he province rom

significan environmenal risks.

SUMMARY OF KEY

FINDINGSMEM’s compliance and enorcemen program

is limied. As a resul, he minisry is deficien in

carrying ou mos o he expeced regulaory aciviies,

such as creaing guidance documens, underaking

inspecions, monioring daa provided by indusry,

and enorcing non-compliance. Te minisry lacks he

resources, raining and ools necessary or compliance

and enorcemen. Furhermore, MEM does no

coordinae is compliance and enorcemen aciviies

wih hose o MoE. MEM has no publicly repored on

he effeciveness o is regulaory oversigh. MEM has

esimaed ha is financial securiy deposis or major

mines are under-secured by more han $. billion, ye

he minisry has no disclosed his o he public or o

legislaors, or communicaed he poenial risk

his poses.

MEM’S ROLES AND

RESPONSIBIL IT IES

MEM’s service plan has wo goals:

Goal : Globally compeiive energy and

mining secors ha creae jobs and grow

he economy

Goal : Sae, environmenally and socially

responsible energy and mineral resource

developmen and use

o achieve hese goals, MEM has wo main regulaory

ools: he Mines Ac , which governs all aciviies

ha occur on mine sies; and he Healh, Saey

and Reclamaion Code (Code) or Mines in Briish

Columbia, which regulaes all mining aciviies.

Te purpose o he Mines Ac and he Code is o:

Proec he healh and saey o workers and

public rom mining aciviies.

Proec and reclaim he land and waercourses

aeced by mining.

Suppor and monior he eicien developmen

o he Crown’s mineral and coal resources,

while managing environmenal impacs.

Faciliae successul reclamaion (see sidebar)

and closure o mine operaions.

Regulae environmenal and reclamaionliabiliies a mines hrough permiing and

bonding o ensure ha public unds will no be

required o pay he coss o mine clean up.


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Health, Safety andPermitting Branch

Wihin MEM’s Healh, Saey and Permiting

Branch is he permiting group. Unlike MoE, saff

responsibiliies wihin his group include boh

permiting and compliance and enorcemen. Tere

are wo secions wihin his group: geoechnical

and reclamaion.

Te geoechnical secion is responsible or many

aciviies, including:

echnical review o proposed mining projecs

geoechnical review o incidens and

responding o mine inquiries

geoechnical advice and policy developmen

inspecions ha ocus on a range o aciviies,

including he perormance o ailings dams,

wase rock dumps, open pi slopes and

underground openings

Te reclamaion secion is responsible or many

aciviies, including:

echnical review o proposed mining projecs

conducing AR D and leaching

(waer qualiy) assessmens

review o various environmenal plans

and repors

adminisering reclamaion securiy deposis on

behal o he province

inspecions o mine reclamaion aciviy

As o July , he permiting group consised o

nine saff, including wo geoechnical engineers,

wo reclamaion scieniss, our environmenal

geoscieniss specializing in geochemisry and waer

qualiy, plus he Depuy Chie Inspecor o Mines.

PART 1: MINISTRY OF ENERGY AND MINES

WHAT IS RECLAMATION?Mining companies are required o reclaim all

lands disurbed by mining. While MEM has no

defined wha i means o reclaim all lands , MEM

has esablished broad reclamaion sandards

wihin he Healh, Saey and Reclamaion Code

or revegeaion, growh media, meal upake,

landorms, waercourses, waer qualiy, dispos

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