Closure of Mines: Guarantees

One of the main criticisms involving Argentine mining regulation nowadays is the lack of mandatory guarantees to ensure the remediation of sites once mining activities conclude. Only the Province of San Luis has enacted specific regulation related to this matter: Law No IX-0634-2008 created an "Environmental Guaranty Fund" to repair the environmental damage in the Province. The Environmental Ministry of the Province of San Luis is the enforcement agency. Article 4 of the Law establishes that all mining activities capable of degrading the environment must make a one-time payment to the Environmental Guaranty Fund of an equivalent 7% of the total investments made. In comparative law, to guarantee the obligation to remediate sites, the regulation on mine closure has several aspects to consider, such as: (a) the adoption of voluntary guides on behalf of mining companies (by means of internal corporative politics, guidelines elaborated by mining organizations, or requirements made by the entity financing the project); (b) requirements set by certifying institutions; (c) legal regulation of the Government where the exploitation takes place; or (d) ad-hoc agreements between the mining company and the Government. In any case, it is necessary: (i) for regulations regarding the closure of the mines to be clear, with no ambiguity; (ii) for Governments to provide guidelines on the way to proceed in the closure of mines, besides the existing regulation; (iii) an applicable legal framework which is stable in time; (iv) for the closure plan of the mine to be a part of the company's exploitation plan; (v) to clearly identify competent authorities; (vi) for the adopted plan to be useful, without exceeding the Government's control capacity; and (vii) for the financial guarantees required to be useful, varied, possible for most of the companies, for them to have been able to choose the most suitable type of guaranty, according to their possibilities. The variety of financial guarantees is wide and Governments generally accept cash deposits, fixed-term deposits, letters of credit, bonds, evaluations on the company's financial statements, special funds for the closure of the mines, third parties guarantees, among others. With the purpose of contributing with the knowledge of the existing systems in comparative law, we reproduce a paper prepared by Dr. Gianmarco Tagliarino, regarding the forest trust as one of the possible guarantees to ensure the compliance with the closure plan of the mines in the Republic of Peru, as follows. Dr. Gianmarco Tagliarino is a member of the legal department of Hochschild Mining Plc' in the City of Lima, Perú.