WA's Mining Rehabilitation Fund Braces for Record $300 Million Clean-Up Bill After Bond Default
The worst fears of Western Australia's mining regulator have been realised as the owner of two long-dormant nickel mines missed a critical payment deadline, potentially leaving the state's Mining Rehabilitation Fund (MRF) with a staggering $300 million-plus environmental clean-up bill.
Bond Payment Missed, Triggering Domino Effect
Late last week, time expired for Wingstar Investments to pay a $9.1 million bond for the Avalon nickel mine near Kalgoorlie. The Department of Mines, Petroleum and Exploration (DMPE) had given Wingstar 90 days to cover what it deemed "inadequate" rehabilitation efforts at the site. Missing this payment sets off a chain reaction that could ultimately force the MRF—a pooled fund sustained by levies on WA miners—to shoulder the massive financial burden.
A DMPE spokesman confirmed the non-compliance, stating, "Wingstar has not lodged the required unconditional performance bonds, which constitutes non-compliance with the conditions of the tenements under the Mining Act. As a result, the tenements are at risk of forfeiture, and proceedings may be initiated in accordance with sections 96 and 97 of the Mining Act."
High Stakes for Mining Rehabilitation Policy
Failing to pursue forfeiture of the tenements would establish a dangerous precedent, contradicting the State Government's mining rehabilitation policy. However, seizing the site from Wingstar places the MRF in a precarious position, as it would assume its largest rehabilitation liability since the fund's inception in 2013. Compounding the issue, Wingstar also owns the nearby Cawse nickel mine, which has an even greater rehabilitation burden than Avalon and would likely be next in line if its sister mine is taken over.
Wingstar's last official closure cost estimates, calculated in 2007, pegged Avalon at $32.9 million and Cawse at $57.4 million. The DMPE has dismissed these figures as "outdated" and ordered Wingstar to provide revised estimates last year, which have not been submitted.
Cost Blowouts and Historical Precedents
Rigorous remediation of mined-out land is a relatively new practice in WA, and cost overruns have plagued pioneering projects. The MRF's current largest undertaking, the Ellendale diamond mine, serves as a stark example. Initially estimated at $40 million when its owner collapsed in 2015, the rehabilitation costs have ballooned to over $120 million. If Ellendale is any indication, cleaning up Avalon and Cawse could cost approximately $300 million.
At the start of this financial year, the MRF's balance stood at $356 million. Mines Minister David Michael recently asserted that the fund could absorb an Avalon-Cawse hit over "many years," but the scale of the potential liability raises significant concerns.
Background and Ownership Details
Both mines last produced nickel in the 2000s and were previously owned by Russia's Norilsk Nickel before being sold to Wingstar in 2014. 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. Gardner, who also chairs ASX-listed Dragon Mountain Gold, has not responded to requests for comment.
This situation underscores the ongoing challenges in managing environmental liabilities in the mining sector, particularly as older sites require extensive and costly rehabilitation efforts to mitigate long-term impacts.
