SOURCE: The Narwhal

DATE: June 24, 2019

SNIP: Generous bonuses for mine managers, rewarding them for cutting costs or increasing production, are linked to tailings dam failures, a new research paper has found.

The new study, published in the journal Resources Policy, which documents four catastrophic collapses, including the failure of the Mount Polley tailings dam in B.C. in August 2014, found that all four companies had increased production or reduced operating costs prior to tailings dam failures.

Imperial Metals, which owns the Mount Polley copper and gold mine, increased production by 23 per cent in the second quarter of the year over the previous financial quarter.

Imperial Metals, in common with many mining companies, did not disclose incentives offered to middle managers, but two companies out of the four case studies showed hefty bonus schemes for managers and the practice is believed to be widespread in the mining industry.

We believe that the bonus system used to recompense middle management encourages managers to take more risks in order to generate short-term profits at the risk of serious long-term accidents,” said the paper, authored by Margaret Armstrong, Renato Petterd and Carlos Pettard.

The number of tailings dam failures worldwide has doubled in the past 20 years from eight between 1999 and 2003, to 16 between 2014 and 2018. In addition to the push to reduce costs and increase production, increased amounts of waste from mines is also factoring into the increase in accidents, the study says.

“Advances in mining technology have made it possible to exploit lower grade deposits, despite decreasing commodity prices, which means disposing of more rejects and putting more pressure on tailings facilities,” the report says.

“Pressure on mines to increase production and cut costs may be the underlying causes of many of the tailings dam failures, even if the immediate causes are excessive rainfall, poor management practices or poorly understood geotechnical characteristics.”

However, the paper notes that the company has not paid for the full cost of the clean up. Also, the three-year deadline to lay charges under B.C. law has passed and the five-year window to lay charges under federal laws is almost up.

“The industry’s image has been tarnished by the tragic dam failures in Brazil and by companies such as Boliden and Imperial Metals that have avoided paying for part or all of their tailings dam accidents by discharging the responsibility on to those who designed, built and maintained their tailings dam facility,” the paper concludes.