WA Government Braces for Record Mine Cleanup Bill as Company Nears Default
The Western Australian Government is facing the prospect of a record environmental cleanup bill potentially exceeding $100 million as a small private company approaches a critical deadline for a derelict nickel mine operation near Kalgoorlie.
Imminent Deadline for $9.1 Million Security Bond
Wingstar Investments has less than three weeks to meet a Department of Mines, Petroleum and Exploration ultimatum demanding payment of a $9.1 million security bond for the mothballed Avalon nickel mine. The department issued the bond demand on November 14, giving the company until February 12 to pay in full, with no payment received as of this week.
Failure to comply would effectively orphan the site, transferring its substantial environmental rehabilitation liabilities to the State's Mining Rehabilitation Fund. This could trigger a domino effect that might also topple Wingstar's other long-dormant nickel operation, the Cawse mine.
Potential Domino Effect on Mining Rehabilitation Fund
The worst-case scenario would saddle the MRF with its largest rehabilitation liability since the fund's establishment in 2013. The pooled fund, sustained by levies on Western Australian miners and managed by the DMPE, exists specifically to shield taxpayers from footing cleanup bills for abandoned mines.
"DMPE can increase mining security when there is a high risk of the tenement holder failing their environmental obligations and the liability reverting to the State," a department spokesman explained.
The bond ultimatum followed a series of environmental compliance issues at the Avalon project, with particular concerns about "inadequate" rehabilitation of waste rock dumps.
Outdated Cost Estimates and Potential Blowouts
Wingstar's last official closure cost estimates, calculated nearly two decades ago in 2007, pegged Avalon at $32.9 million and Cawse at $57.4 million. However, the DMPE has dismissed these figures as "outdated" and ordered Wingstar to provide fresh estimates through revised mine closure plans last year, which the company has yet to submit.
The situation echoes previous rehabilitation challenges in Western Australia, where rigorous remediation of mined-out land represents a relatively new phenomenon. The MRF's largest undertaking to date, the Ellendale diamond mine, provides a cautionary example.
When Ellendale's owner collapsed in 2015, rehabilitation liability was estimated at approximately $40 million. The MRF has since been forced to sink more than $120 million into the site. If this pattern holds true for Avalon and Cawse, the combined burden could exceed $300 million.
Government Response and Financial Implications
Mines Minister David Michael acknowledged that cleanup costs for Avalon and Cawse would be "significant" but expressed confidence that they would not jeopardise the MRF's viability. The minister is banking on the fund gradually absorbing any Avalon-Cawse hit over "many years."
"Rehabilitation is typically implemented over many years, allowing costs to be managed progressively alongside the continued growth of the fund," Mr Michael stated. "DMPE has successfully managed legacy sites in this way, including the Ellendale diamond mine."
However, the minister was unable to provide current liability estimates for rehabilitating the two mines. The MRF received $62 million during the 2025 financial year, with its balance standing at $356 million by June 30.
Historical Context and Ownership Structure
The Avalon and Cawse mines last produced nickel in the 2000s and were originally owned by Russia's Norilsk Nickel before being offloaded to Wingstar in 2014. Wingstar once had ambitious plans to combine the two sites near Kalgoorlie into a "super project" leveraging the city's infrastructure.
Wingstar is ultimately held by Singapore-based Logistek Pacific, with both entities controlled by veteran Perth prospector Robert Gardner and Canadian resident Rick Sibo Lu. Mr Gardner, who also serves as chairman of ASX-listed Dragon Mountain Gold, did not respond to requests for comment regarding the impending bond deadline.
