Acid contamination could threaten mining giant BHP Billiton’s attempt to sell its old Mount Goldsworthy iron ore mine in the Pilbara to company Nimbus Mines.
BHP faces the prospect of $100 million in clean-up costs.
The plan was shown to WA Premier Colin Barnett last year.
BHP head of external affairs in WA Julius Matthys told Barnett in 2012 substance in the waste dumps that could produce acid needs to be sent under the water table.
This would “make up a substantial portion of the overall closure costs, which are estimated to be up to $100 million”.
According to documents, BHP was in discussions with Nimbus to sell the mine, which Nimbus plans to reopen as an underground mine.
While BHP would keep the magnetite resources at the mine, Nimbus would mine hermatite ore below the open-pit mine, The Australian reported.
BHP also requested Barnett to be “fully released” from its environmental obligation at Mount Goldsworthy.
The company added it would need to be covered by Nimbus against any obligation.
The acid contamination issue has halted discussions between BHP and Nimbus.
Nimbus said it does not think the cost to clean Mt Goldsworthy will be as much as $100 million, and added it is “at the low end of being an environmental hazard”.
Matthys also acknowledged BHP would undergo “significant reputational damage” if it did not fulfil its environmental obligation and if Nimbus also neglected to carry out mine remediation.
“As a result BHP Billiton Iron Ore has identified in its discussions with Mr Daws (Doug Daws, Nimbus chair) the requirement for Nimbus Mines to fully establish to BHP Billiton Iron Ore’s satisfaction its financial capacity and operational credentials as a precondition to any potential transaction,” he said.
But in a letter from October last year, BHP’s head of strategy and development Jonathan Price told Nimbus he did not think the state would let BHP go from its environmental obligations.
“Given the state’s likely position...BHP Billiton is of the view that it must continue to plan on the basis that it will maintain primary responsibility to manage rehabilitation at the Mt Goldsworthy mine.
Barnett concurred and refused to free BHP from its environmental responsibility.
“As a general position, the state government does not provide releases from the Contaminated Sites legislation or the indemnity provisions of state agreements as this is counter to their intent.
“The treatment of any liability issues would be a major consideration of the state of any proposed excision of a portion of the lease.”
A WA Department of State Development spokesman said it was happy with BHP’s rehabilitation plans and that the government had been kept in the loop on the acid contamination issue.
BHP stopped mining at Mt Goldsworthy in 1982 and carried out preliminary rehabilitation in the mid-1990s, according to a spokesman.
“During routine inspections following a wet cyclone season in 1999/2000, the presence of potentially acid-forming material was identified,” he said.
“Initial remediation activity was undertaken and a dedicated work program is being undertaken over the next three years to determine the final rehabilitation plan.
“BHP Billiton Iron Ore is continuing regular environmental monitoring at Mt Goldsworthy.”