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Ministry of Energy, Mines and Pertoleum Resources

Performance Bonds Policy

RECLAMATION SECURITY POLICY PERFORMANCE BONDS


About Performance Bonds   

Section 10 of the Mines Act requires an owner, agent or manager to apply for and receive a permit approving a mine plan and a program for protection and reclamation of the land and watercourses. Section 10(5) allows the Chief Inspector of Mines (Chief Inspector) to determine the amount and form of security to be provided as a condition of a permit issued under the same section. This policy sets out the normal requirements and limitations to the provision of performance bonds for mine reclamation in the Province of British Columbia but can not fetter the Chief Inspector's authority to require security in an amount, form, and subject to conditions specified by him. Security may be applied to satisfy the requirements of other provincial ministries for protection and reclamation of land and watercourses affected by the mine. This provision however does not limit the authority of other provincial ministries to set other conditions, or act independently, under their respective permits and legislation.

I. Criteria for acceptance of a performance bond

1. Subject to Section II, a performance bond is acceptable to cover:

  • 1.1. all conditions of a Mines Act Permit, including, but not limited to,

  • 1.2. physical reclamation of lands disturbed by mining activities, and

  • 1.3. reclamation of lump sum costing items not related directly to an area of disturbance such as hauling of surface materials and decommissioning of buildings, mills, silos, power lines, and conveyors.
     

II. Limitations to the use of a performance bond for mine reclamation

  1. A performance bond may not be provided where the total security required is less than $100,000.00 (One Hundred Thousand dollars).
     

  2. "Hard" security as defined in Section III must be posted so that at any point in time the amount will fully cover the next five-year period of:

  • 2.1. expected post closure costs and periodic capital replacement costs related to the operation of a water collection and treatment facility and for the management and disposal of associated secondary wastes, and/or

  • 2.2. expected post closure site monitoring and maintenance costs including, but not limited to, dam inspections, maintenance of water diversion structures, waste material monitoring, water quality monitoring, and vegetation sampling.

  1. The amount of hard security will be determined using a net present value calculation with a discount rate of 3.5 percent (the discount rate is subject to change).
     

  2. The residual amount of the outstanding liability may be covered by a performance bond provided by an approved bonding company as described in Section IV.
     

  3. Until the Chief Inspector has approved criteria for a formalized financial risk assessment for establishing reclamation security, the performance bond together with other forms of security must fully secure all outstanding liabilities related to protection and reclamation of lands and watercourses affected by the mine.

III. Acceptable forms of "Hard" security

"Hard" security must be in one of the following forms:

  • cash

  • irrevocable letter of credit, or

  • fully registered marketable bonds issued and/or guaranteed by the Government of Canada or the provincial government (Canada Savings Bonds are not acceptable), treasury bills, guaranteed investment certificates, and term deposits with up to three-year terms.
     

IV. Performance Bonding Companies

A performance bond must be provided by an insurance company licensed to write surety insurance in Canada or the Province of British Columbia. Such an insurance company must be approved by the Ministry of Finance (Risk Management Branch) and maintain an A.M. Best rating of A (Excellent) or better.

V. Existing Performance Bonds

The provisions of this policy are not retroactive to existing performance bonds unless otherwise determined by the Chief Inspector.
 

VI. Performance Bond Form

Download as an Adobe Acrobat PDF (21kb)

NOTE: PDF versions allow publications to be viewed and printed exactly as created, but you must have Adobe Acrobat Reader. Visually impaired users accessing this site with a screen reading application should use the HTML versions, although Adobe Access.com does provide an internet service at http://access.adobe.com that converts PDF files to text format.


VII. Policy Review

The Ministry of Energy, Mines and Petroleum Resources will coordinate a review of this policy in three years to determine if any modifications are necessary.

Original signed by
F.W. Hermann, P.Eng.
Chief Inspector of Mines