Final Environmental Impact
Statement
USDI
Bureau of Land Management
Technical
Comments by
James
R. Kuipers, P.E.
Center for Science in Public Participation
On behalf of
1.0 Introduction
The
following comments on the Phoenix Project Final Environmental Impact Statement
(FEIS)[1]
have been prepared on behalf of Great Basin Mine Watch. The comments are based on review of the FEIS
and supporting documents as referenced, and extensive professional expertise in
the field of reclamation and closure planning and operations, and financial
assurance determination. The author is familiar
with the Phoenix Project site and in particular with their groundwater
contamination issues, having performed wastewater treatment engineering
evaluation services in the past to address groundwater contamination issues at
the site.
The
Phoenix Project is a proposed mining operation located approximately 12 miles
southwest of
These
comments are organized to address reclamation and closure planning, and also to
address the determination of financial assurance. The comments reference information from other
similar sites where the BLM and/or other state and federal agencies have addressed
similar circumstances and have established accepted means to address the issues
at the Phoenix Project. Specific
examples of reclamation and closure information and financial assurance
calculations that are referenced have been attached in an Appendix to these comments.
2.0 Reclamation and Closure
Experience
in successful treatment of reclamation and closure issues at other sites has
shown that several key issues must be addressed, including: the characterization
of waste rock materials; surface water and ground water impacts; and
revegetation. Other key issues such as
geotechnical stability may be important at some sites.
Review
of the Phoenix Project FEIS shows that in particular the related issues of
historic mining impacts to groundwater, waste rock and tailings
characterization, future impacts to surface water and ground water, and
revegetation, are key to determining an effective reclamation and closure
strategy at the site. As an example, the
following site-specific features are noted:
- According to the FEIS
(p. 3.2-33), overall, the highest
total dissolved solids concentrations occur in ground water samples from
areas near the Gold Tailings Facility and the Copper Leach Waste
Area. Specific ground water
monitoring and/or mitigation requirements are applicable to both of these
areas pursuant to the
- According to the FEIS
(p. 3.2-34,35), based on a cutoff
acid-neutralizing potential to acid-generating potential ratio of 3.0
recommended by the BLM, these results indicate that the majority of the
rocks in the pit wall surfaces and waste rock have the potential to
generate acid, and (p. 3.2-36) the
results of the kinetic tests indicate that most of the rocks in the
project area directly associated with mining operations (pits and waste
rock) have the potential to generate acid rock drainage. This finding is consistent with the
observation that surface water and some groundwater in the vicinity of the
existing pits are acidic and have elevated concentrations of sulfate and
metals.
- According to the FEIS
(p. 2-48), BMG has developed a
contingent long-term management plan to address potential ground water
impacts associated with the proposed
The
FEIS does not contain crucial information on tailings or heap leach material
characterization, or specific information as part of the plan on how the
existing ground water contamination from past mining operations will be
addressed.
As evidenced by nearly all
reclamation and closure plans where acid generation has been recognized and
dealt with, the following key features are common to those plans:
1.
Capture and
treatment of existing surface water and ground water contamination.
2.
Source reduction
by sloping, capping and revegetation of waste rock and tailings facilities
typically utilizing engineered water barrier or water balance covers augmented
by surface water controls.
3.
Provisions for
capture and treatment of future surface water and ground water contamination.
The impact of acid drainage
and appropriate mitigation measures has been established by BLM and other state
and federal agencies where this proven and all to common phenomena has been
recognized, such as throughout the states of Montana and New Mexico, as well as
some specific sites in other locations such as Summitville in Colorado, Iron
Mountain in California, and at the Brohm mining operations in South Dakota, to
name a few. Because of the particular
severity and expense of the reclamation and closure tasks associated with acid
drainage many of these sites have also fallen under Environmental Protection
Agency (EPA) Superfund regulation, including several existing mine sites with
characteristics similar to those of the Phoenix Project.
It is significant that up to
the present time acid drainage has literally not been recognized or accounted
for in reclamation and closure planning by the responsible state and federal
regulatory agencies in
The BLM in particular has
experience at two sites in
The following comments are
provided relevant to specific aspects of the reclamation and closure plan as
described in the FEIS.
2.1 Revegetation Guidelines
The FEIS (p. 2-37) states
that to complement and support
reclamation/revegetation efforts and to promote reclamation development, a
reclamation monitoring program including revegetation test plots would be
developed for the proposed
Although mining has been
ongoing at the site during the past 20+ years, including for over 10+ years
during which the Nevada Department of Environmental Protection (NDEP) and the
BLM have required reclamation and closure planning, it is disheartening to see
that little or no previous reclamation has been performed which can contribute
to determining reclamation needs. Basic
requirements such as revegetation test plots to determine how best to achieve
effective reclamation are only now being recognized and required. As has been repeatedly demonstrated at other
sites, a conceptual reclamation revegetation plan such as contained in the
Phoenix Project FEIS, without empirical field data to lend support to its
assumptions, is rarely if ever successful.
This is particularly true where the techniques relied upon must deal
with site-specific conditions such as unfavorable geochemistry, lack of
sufficient suitable growth media, and semi-arid climatic conditions. This is all the more critical because a successful
revegetation result is heavily depended upon to control infiltration and reduce
acid generation at the Phoenix Project.
The revegetation plan
associated with the proposed action in the FEIS represents a minimal
approach. The standard and accepted
approach to existing and future impacts associated with acid drainage from the
different mine areas requires that revegetation succeed in order to reduce
infiltration of meteoric water, as well as in order to prevent erosion and
maintain the cover characteristics, and to ensure suitable post-mining land
use.
The plan should be modified to recognize the following
requirements: At least 18 inches of
suitable growth medium (salvaged topsoil to the greatest extent possible),
including having the desired texture (density, coarse fragments and clay
contents), organic matter, moisture retention, fertility, and pH
characteristics adequate to propagate sustainable vegetation. Other re-vegetation factors that also must be
assessed include re-vegetation through time, slope and aspect, competition,
weedy species and undesirable invader plants, and plant cover. All these aspects should be included in the design
and monitoring plan for the revegetation test plots and additional variables
such as alternative cover designs and thickness, materials of construction, and
revegetation approaches should also be evaluated.
The underlying assumption of the cost estimate for
revegetation should consider the likelihood that successful revegetation will
require a sustained rather than one time effort as depicted in the reclamation
plan. Experience has shown that multiple
plantings of at least some areas is to be expected due to climatic, insect and
other factors, and that fertilization over an extended time period is typically
necessary, particularly where mined rock is to be substituted for a more
suitable growth medium.
2.2 Open Pits and Waste Rock Reclamation
According to the FEIS (p.
2-41, 42), a large portion of the waste
rock generated by the Phoenix Project would be used to backfill the Phoenix,
Midas, Iron Canyon, Reona, and Minnie pits.
Submerging waste rock in pit backfill facilities below the post mining
water table is intended to eliminate contact with atmospheric oxygen and limit
the potential for producing acidic solutions.
Capping material would be placed as a nominal 5-foot cap over the final
contoured surface areas…to promote revegetation and evapotranspiration of
precipitation of both the waste rock facilities and the pits backfilled
with waste rock.
The need to eliminate infiltration into the
acid-generating waste rock dumps, leach piles and tailing facilities, as well
as the backfilled open pit, along with the type of vegetative treatment planned
for reclamation, should dictate soil replacement depth. In order to reduce infiltration to the
greatest extent practical, a water balance cover (in
which plants transpire water and the soil prevents water infiltration to
underlying mine waste), or a water barrier cover (in which an impermeable water
barrier to prevent water infiltration) should be specified for all
potentially acid-generating areas. The engineered
cap should be designed so as to optimize desirable characteristics and achieve
minimize infiltration to underlying acid generating waste while maximizing
revegetation so as to increase evapotranspiration.
The FEIS did not adequately
evaluate the trade-offs of pit backfilling.
While in general backfilling is recommended in order to affect more
complete reclamation of the disturbed surface areas, where acid drainage
generation characteristics are present an examination of water quality and
other issues related to the backfill is typically considered necessary. In fact, this approach is typically taken at
sites comparable to the Phoenix Project to justify not backfilling, which is
contrary to the approach being advocated in the FEIS. Of particular concern is the inundation of
backfilled materials by rebounding groundwater.
While the proposal to amend backfilled materials below the water table
recognizes their acid drainage generating potential, it is illogical. The material being stored above the water
table has the greatest potential to be further oxidized and therefore should
similarly be amended while being placed (this would apply to waste rock dumps,
tailings and heap leach materials as well), whereas the submerged materials
would be stored in a reducing atmosphere and be less subject to oxidation
(therefore not requiring amendment). In
addition, the amendment of the backfilled waste with alkaline modifiers such as
lime will result in greater solubility of metalloids such as arsenic and
selenium, and could lead to additional ground water contamination concerns.
The proposal to backfill should be evaluated from the
standpoint of technical, environmental, cost and aesthetic trade-offs. A process like a multiple accounts analysis
or similar means of conducting a science based technical evaluation that ranks
and weights the various pros and cons of pit backfill is recommended to ensure
that the proposal is logical and will not result in undue degradation to ground
water and other resources.
2.3 Tailings Facilities Reclamation
According to the FEIS (p.
2-43), once tailings facilities have been
reshaped into the desired configurations, a minimum of 2-foot thickness of
capping material would be placed to promote revegetation and evapotranspiration
of precipitation and to minimize infiltration of meteoric water.
According to the FEIS (p.
2-43), a number of options are available
for managing fluid that may continue to drain from the tailings facilities
after reclamation is conducted. The
FEIS does not contain a geochemical characterization of the tailing materials;
however it should be assumed that if the waste rock is acid generating, the ore
bearing material, which is typically more mineralized, will have at least equal
or greater potential to generate acid drainage.
The FEIS also does not contain information adequate to assess tailings
closure requirements from a consolidation standpoint, as well as ultimate
transport and fate of fluid from the tailings facilities following closure. While the tailings facility liner will reduce
short-term potential for migration of tailings fluid into ground water, the
liner will degrade over time. Like the
existing tailings facilities at the Phoenix Project site, long-term water
management consisting of capture and treatment will most likely result from the
proposed tailings facilities.
The FEIS has not adequately addressed tailings facility
fluid management from the existing mine, proposed project, or post-reclamation
standpoint, and it has not been recognized in corresponding financial assurance
determinations. The proposed plan should
be modified to assume the most likely scenario of fluid management as being
active management including capture and treatment due to the acid drainage
generating nature of the tailings, the potential cost of which should also be
included in the financial assurance determination.
2.4 Heap Leach Facility Reclamation
According to the FEIS (p.
2-43), at present heap stabilization
consists of rinsing the leached ore with neutralized leach solution or fresh
water. The FEIS (p. 2-44) assumes a
relatively simple approach that would be
considered successful when the pad effluent exhibits the following
characteristics: pH between 6 and 9, WAD
cyanide concentrations below 0.2 mg/L, and the concentration for levels for
other constituents do not have the potential to degrade the waters of the
State. Also (p. 2-44), 6 inches of cover material would be placed,
and the entire heap revegetated.
Management of fluid that might continue to drain from the reclaimed heap
would be accomplished using the methodologies … from tailings facilities.
As has been shown by Miller
and others, heap leach neutralization is often times significantly more
difficult than anticipated, and simple approaches such as that suggested in the
proposed plan are rarely successful in achieving the desired approach. This is particularly common where acid
generation is likely to result from spent heap leach piles. Like the tailings material, the heap leach
ore is likely to be similarly mineralized as the waste rock, and also be acid generating. Once the protective alkalinity added during
the heap leach process is consumed, it is possible that the heaps themselves
will become acidic, resulting in a long-term need for fluid management. Numerous examples of similar phenomena exist
from operating mine sites, including such as is evident and has been
extensively evaluated at the Zortman and Landusky mine sites, which have highly
similar geochemical properties to the Phoenix Project site. [2]
The FEIS has not adequately addressed long-term heap
leach fluid management and it has not been recognized in corresponding
financial assurance determinations. The
proposed plan should be modified to assume the most likely scenario to fluid
management as being active management including capture and treatment due to
the acid drainage generating nature of the heap leach materials, the potential
cost of which should also be included in the financial assurance determination.
2.5 Contingent Long-term Ground Water Management
According to the FEIS (p.
2-48), BMG has developed a contingent
long-term management plan to address potential ground water impacts associated
with the proposed
Given the acid drainage
generating characteristics of the waste rock, it is nearly certain that the
requirement for water management is not properly termed “contingent,” but in
fact will be necessary. For that reason
it should be a fully identified and accounted for task in the reclamation and
closure planning of the proposed Phoenix Project.
The proposed plan does not address acid drainage that
will likely result from the tailings facility and heap leach areas, as well as
from the open pits and other areas. It
similarly does not address ground water contamination that is presently and in
the future will continue to emanate from the existing tailings facilities. These features make it obvious that there is
an immediately existing as well as future need to conduct water management
activities at the site that should be included in the reclamation and closure
planning. The requirements in this
regard are likely to result in significant financial assurance requirements.
3.0 Financial
Assurance
Information on financial
assurance is contained in the FEIS (p. 2-48) and in a reclamation cost estimate
submitted by the project proponent to the BLM.[3]
It is notable that the Bush
Administration supported retention of the proposed changes to the 3809 Surface
Mining Regulations addressing financial assurance, while rejecting all other
proposed changes to the rules. The issues
of environmental pollution caused by hardrock metals mining as well as the
recognition of the substantial economic burden that may be imposed on the
public have caused bipartisan recognition of the immediate need for a change
from past practices and to require adequate financial assurance. According to the BLM 3809 revised rules BLM has decided that to protect and restore
the environment and to limit taxpayer liability, financial guarantees for
reclamation should be required at 100 percent of the estimated cost for BLM to
have the reclamation work performed.
This includes any costs that may be necessary for long-term water
treatment or site care and maintenance.
In a previous report I have
identified the significance of acid drainage generation with respect to
reclamation and closure tasks and their resulting capital and operating costs
as they affect financial assurance.[4] As experience has shown at several mine sites
including at the Zortman and Landusky, and Golden Sunlight mines, both of which
are regulated by Montana BLM, the presence of acid generation can significantly
impact financial assurance requirements.
In many cases this has resulted in an increase of approximately an order
of magnitude to pay for surface reclamation and water treatment associated
mitigations, and has raised the typical cost of reclamation and closure from an
aggregated $5,000 - $15,000 per acre, to in excess of $50,000 to $100,000 or
more per acre.
The Golden Sunlight Mine in
The Zortman-Landusky Mine is
another significant case in point with respect to bonding. Despite the existence of significant bonding
of approximately $72 million when its owner Pegasus Gold went bankrupt, the BLM
and Montana DEQ have recently identified a need for an additional $33 million
to address a shortfall for surface reclamation and water treatment in
perpetuity for their preferred alternative.[6] The primary factors attributable to the
financial assurance shortfall were an underestimate of the acid drainage
generation at the site and a corresponding need for additional surface
reclamation and water treatment capacity and long-term financial assurance.
3.1 Reclamation and Closure
The FEIS (p. 2-48) provides
an estimate for reclamation and fluid management of approximately $32,073,000
for the first 3-year phase of the proposed operation. The maximum forecasted reclamation cost
estimate for the project during any phase is approximately $55,800,000 during
years 21-23 of operation.
According to the FEIS (p.
2-48), the bond amount would be adjusted,
as necessary, every 3 years to reflect disturbance proposed in the upcoming
3-year phase or if there is an amendment to the plan.
Our review of the Phoenix
Project financial assurance estimate shows that it has been appropriately
performed as a first order engineering cost estimate. Cost estimates for wages (Davis-Bacon),
equipment costs (hourly rental costs from vendors), and adjusted unit costs are
consistent with our experience and recommendations and the revised 3809 Surface
Mining Regulations (effective January 2001).
We noted the following inconsistencies with recommended practice in the
Phoenix Project cost estimate.
Direct Costs
The direct costs in the
reclamation cost estimate are for the proposed plan. The previous sections comments on reclamation
and closure identified deficiencies in the proposed plan with respect to cover
design and materials, revegetation, and water treatment for existing as well as
future ground water remediation.
Based on experience at other
sites where reclamation and closure of similar mine sites having acid drainage
has taken place, including those cited elsewhere in these comments, direct
capital costs for surface reclamation and water management will most likely be
higher than estimated for the proposed plan.
Engineered covers designed to minimize infiltration are likely to
require either modified or different material characteristics, and it is likely
that a more desirable growth medium for revegetation can be located in close
proximity to the site. Adequate revegetation
establishment to promote evapotranspiration will likely require more intensive
and longer-term effort than suggested by the proposed plan. Capital requirements for water management
including capture, conveyance, storage, treatment and discharge will most likely
significantly exceed the estimated requirements in the proposed plan, both in
terms of quantity of flow treated as well as load of acid and dissolved
contaminants.
It is not possible to make an
accurate estimate as to the actual required tasks and corresponding costs for
reclamation and closure at the Phoenix Project site given the inadequacy of the
information in the FEIS. The FEIS is
based upon a largely conceptual reclamation and closure plan that assumes a low
to moderate level of activity and cost associated with acid generation. However, cost estimates for comparable sites that
are based on adequate information and identify and address acid generation are
more complex in their treatment of the problem and have a significantly higher
unit and total cost than in the cost estimate for the proposed plan. Based on an average total unit cost of
$75,000 per acre for reclamation at similar projects (see projects cited
elsewhere in these comments and as provided in the Appendix) versus the $14,452
per acre in the cost estimate for the proposed plan, a shortfall of
approximately $60,000 per acre or more than $100 million total may exist for
the proposed bond amount.
The existence of this discrepancy in the financial
assurance amount, given the similarity of the Phoenix Project’s characteristics
to other mine sites where plans have been established that adequately deal with
acid drainage and associated issues, supports the recommendation that a more
extensive and immediate assessment of existing contamination and reclamation
and closure requirements and associated financial liability be conducted by the
responsible agencies, with assistance from the EPA and other knowledgeable
agencies. If any future mining takes
place, it should be assessed from the standpoint of potentially aggravating a
significant existing problem, and it similarly should be more adequately
addressed before approval is given in order to ensure an adequate reclamation
and closure plan and financial assurance.
Indirect Costs
·
Cost Escalation. The financial assurance estimate
provided by the project proponent is based on a lump sum of costs in 2001
dollars. Actual reclamation would take
at least three to five years or more in which event the bond, which would be
paid out as reclamation occurs unless otherwise specified, would not keep up
with inflation and other factors. It is
standard practice to establish a reclamation schedule (see Golden Sunlight Bond
Calculations in Appendix) and include cost escalation in order to determine the
NPV of the financial assurance instrument for the year of its
establishment. A correction should be made to account for both escalation since the
2001 cost estimate was performed as well as future cost escalation. The typical cost escalation factors used are
3.0% per year or as estimated by the Means Heavy Construction Costing Index
(approximately 3.3% average per year over last ten years).
·
Administrative Costs. The Office of
Surface Mining (OSM) has established long-standing costs associated with
administrative overheads of agency operated reclamation and closure
activities. The OSM guidelines identify
mobilization and demobilization, contingencies, engineering redesign,
contractor profit and overhead, and reclamation management fees as indirect cost
categories.[7] In addition individual states must include
applicable insurance, tax and contractor bonding requirements. The cost estimate for the proposed plan
includes mobilization and demobilization at 5%, contingencies at 6%, no
allowance for engineering redesign, contractor profit and overhead at 10%, and
BLM administration at 10%. In addition,
Insurance (1.5% of labor) and performance and payment bonds (3%) were
included. The contractor overhead and profit should be corrected to 20% to
reflect typical costs related to government contracting procedures, and an
allowance of at least 5% should be made for engineering redesign. This would result in an increase in indirect
costs of approximately 15% over that contained in the cost estimate for the
proposed plan.
The three-year financial assurance
review needs to do more than adjust for additional area and cost
escalation. It should also be reviewed
with respect to potential changes in site aspect or characterization and the
reclamation and closure plan modified as necessary to mitigate future
occurrences with corresponding changes made to the financial assurance
estimate.
3.2 Long-term Costs
According to the FEIS (p.
2-48), at project startup, BMG would be
required to establish a long-term trust fund and provide an interim surety to
cover potential costs to implement the Contingent Long-term Groundwater
Management Plan. Initially, the
long-term contingency fund would consist of a $1,000,000 interim surety (e.g.
performance bond) for up to 20 years following startup of
The assumptions used in the
proposed plan assumes short-term and long-term water management requirements
for up to and beyond 130 years and greater than 1000 years, but in all cases
requiring eventual groundwater capture and treatment at some point in the
future for an extended period of time.
However, it would be erroneous to base the actual long-term water management
costs on the estimates contained in the FEIS as it also states (p. 3.2-55) it is important to note that there is
considerable uncertainty associated with long-term predictions of potential
impacts to ground water quality resulting from infiltration through the waste
rock facilities.
This matter has been dealt
with in a consistent matter at other sites in other states, including those
where BLM was responsible, by requiring the financial assurance estimate to
assume that all existing and eventual water treatment facilities were available
either during or immediately post-mining and reclamation. This is reflected in the cost estimates for
the Golden Sunlight Mine and Molycorp Questa Mine reclamation and closure plans
(see Appendix).
Table 1 shows the potential
operating costs associated with water management based on the proposed plan and
information contained in the FEIS. That
estimate shows that the necessary amount in a trust fund based on a Net Present
Value (NPV) established in 2002 for future water management operations would be
$9.1M versus the proposed $1.0M financial assurance amount. The NPV is based on a 3% inflation rate
(approximately the average inflation rate over the past 100 years) and a 6%
interest rate (assumes trust fund is placed in a moderate to low risk annuity or
similar instrument consistent with typical state and federal investment
requirements) for a 3% per annum net positive rate.
Table 2 shows the likely
operating costs if actual site conditions are realized based on the assumption
that water treatment requirements will be a factor of four times more onerous (a
factor of 2.6 times rather than four times the costs estimated for treatment in
the proposed plan was used to reflect the efficiency of scale of a larger plant)
and adding in an additional $200,000 per year for site operation and
maintenance. The estimate shows that the
necessary amount in a trust fund based on a Net Present Value (NPV) established
in 2002 for future water management operations would be $47.3M versus the
proposed $1.0M financial assurance amount.
The NPV is based on a 3% inflation rate (approximately the average
inflation rate over the past 100 years) and a 6% interest rate (assumes trust
fund is placed in a moderate to low risk annuity or similar instrument
consistent with typical state and federal investments) for a 3% per annum net
positive rate.
This information demonstrates
the significant shortfall of the proposed long-term financial assurance based
on the assumptions of the proposed plan, as well as the even greater shortfall
which might occur due to acid drainage characteristics. These figures highlight the
gross inadequacy of the proposed financial assurance amount as well as the
factors which have been used to calculate the amount. It is recommended that the amount of financial
assurance in the form a trust fund for water treatment in perpetuity be
calculated to include existing and future water treatment needs in the present
and assumed to be necessary immediately following mining and reclamation, and
that those calculations be based on conservative rather than best case
scenarios.
3.0 Conclusions
Overall, it is concluded that the proposed plan for
the
The proposed plan significantly
underestimates the need for source control measures such as engineered covers
and adequate revegetation. Ground water
contamination that is likely to result from the open pits, waste rock
facilities and waste rock backfilled from the open pits, tailings facilities,
and heap leach facilities has been severely underestimated and in some cases
neglected from consideration.
As a result of these
shortfalls in the reclamation plan relevant to acid drainage characteristics at
the Phoenix Project site, the financial assurance provisions are significantly
less than the amount that will most likely eventually be necessary to address
reclamation and closure of the site.
Additional capital costs for improved cover designs and materials, and
enhanced revegetation techniques will likely be necessary to accomplish source
control. Because of the pervasive and
extensive nature of the acid drainage characteristics that the site
characterization data soundly demonstrate, ground water remediation in the form
of capture and treatment will likely be necessary for hundreds or even thousands
of years (in perpetuity), and will require significantly greater difficulty and
expense than has been suggested in the long-term contingent treatment plan.
As a rough estimate it would
appear that the proposed reclamation plan is approximately 50% of what it
correctly should be from a capital cost standpoint (or approximately $27M
short), and from a water treatment and long-term operation and maintenance
standpoint the proposed $1M surety amount is woefully inadequate compared to
the $9-$47M estimated cost of water management in perpetuity.