In 2016, Stockton Mine was offered for sale, complete with historic environmental liabilities. The government's sales agent referred potential bidders to the Project as a potential solution for management of AMD liabilities. In 2017, the mine was sold to BT Mining, but with the government retaining all environmental liabilities (AMD and land rehabilitation) incurred prior to the September 2017 settlement date. Treasury’s Annual Report records (page 109) reads:
In 2016, Stockton Mine was offered for sale, complete with historic environmental liabilities. The government's sales agent referred potential bidders to the Project as a potential solution for management of AMD liabilities. In 2017, the mine was sold to BT Mining, but with the government retaining all environmental liabilities (AMD and land rehabilitation) incurred prior to the September 2017 settlement date. Treasury’s Annual Report records (page 109) reads:
Stockton Acid Mine Drainage
The Crown agreed to assume liability for the acid mine drainage (AMD) remediation obligations arising frompast coal mining at Stockton Mine, through a Deed of Commitment with Solid Energy New Zealand Limited andrelevant councils in 2016/17. In 2017/18, a new mine owner became party to the Deed of Commitment througha Deed of Accession and Assumption. The new mine owner is responsible for carrying out AMD treatment onacid generated by both historic mining and their own mining activities. The Crown reimburses the mine owner inproportion to its share of the acid generating rock, which is recalculated each year to reflect new mining activity.
A current provision of $6.496 million (2023: $5.112 million) is calculated based on the expected value of claims bythe mine operator BT Mining over the next 12 months. The non-current provision is calculated using a projectionmodel that considers the key variables of projected acid volumes to be treated, the cost of the primarytreatment agent (lime), operating and capital expenditure, and inflation rates. The model utilises a forecast thatgoes out to 2034 and then calculates an annuity value into the future. The generation and treatment of acid fromthe mined rock is expected to continue indefinitely. There exists a long-term obligation to repeat treatment usingcurrent treatment methods.
The non-current provision of $83.403 million (2023: $82.727 million) represents the discounted present value ofthe forecast cost of meeting the Crown’s obligations for AMD remediation.
The provision will be sensitive to changes to experienced costs and revisions to economic estimates used inits preparation. The on-site operating costs for the treatment process are relatively stable. The biggest factorsimpacting the provision are the cost of lime and the inflation rate. The cost to treat a tonne of acid increased by2.8% for 2025 and then the inflation rate is applied for future years. In 2023 the future modelling includeda 22.2% cost increase. A 10% increase in acid treatment cost above the projection would increase the provisionby $7.2 million. A 1% increase from 2% to 3% for the long-term inflation rate would increase the provision by$38.8 million. A 1% increase in the discount rate used for the net present value calculation, from 4.3% to 5.3%would decrease the provision by $19.9 million.
Treasury advises that there will be no decision on a preferred option until there is more certainty around BT Mining’s “planned date of exit”, which will now be affected by Bathurst Resources promotion of the “Stockton Plateau Continuance Project”
HDL’s expectation is that lime-dosing will be continued by the miner on behalf of the Government until such time as the miner quits the site.