11.   ENVIRONMENTAL MANAGEMENT

11.15.1  

Compliance

An EMPR for Hillendale and Fairbreeze Project mining operations was approved by the DME on 10 March 1998. This approval includes an addendum to the EMPR dated 9 March 1998. An EMP performance assessment undertaken in 2004 indicated that the Hillendale component of the EMPR needed to be updated but that the Mine was generally compliant with its EMPR commitments. A revised EMP was submitted to the DME before the end of 2005. In addition to the revised EMP, a social and labour plan and mine works programme was prepared. The MPRDA conversion application was submitted to the DME before the end of 2005.

No registrations for existing water uses have been submitted to DWAF, as the water uses generally commenced in 2001 so do not fall under the NWA definition of existing uses. The Water Act, 1956, permit for the use of industrial water was obtained for Hillendale in 1998. An application for a water uses licence was submitted to DWAF in December 2004. To date no water use licence has been received from DWAF so the Mine is theoretically operating illegally in terms of the NWA. As it is recognised that few water use licences have been issued by DWAF for mining operations and an application has been submitted, the lack of licence is not considered a major risk.

Due to the radioactivity associated with some of the mineral sands being extracted, the NNR has issued COR 43 to cover radiation protection and monitoring at the CPC and Hillendale sites. The relevant reporting requirements are being met.

There is an exemption from Section 20 of the ECA issued by DWAF, dated 8 June 2001, that allows for the disposal of CPC wastes at Hillendale. This includes the gypsum deposited with slimes on the residue deposit and the MSP and wet scrubber dust deposited in the mining void. Other disposal at Hillendale is covered by the COR and the legal compliance audit (see below) indicates that clarity on the waste disposal controls is required (this is currently being addressed by Ticor).

A legal compliance audit was undertaken in December 2004 for the Hillendale and CPC sites. It identified a number of potential legal non-compliances. Kumba applied its risk rating criteria to the results of this audit in June 2005 to identify the most serious legal risks, which included the water/EMP issues discussed above and non-compliance with GN 704 (discussed further below). Ticor has set actions, responsibilities and budget to address all the high level risks identified by Kumba. No additional risks or liabilities of a material nature were identified during this review.

11.15.2  

Environmental and Social Management

Environmental management at Ticor’s South African assets is handled by the Technical Services Department. The Environmental and Radiation teams, reporting to the Technical Services Manager, comprise five people. These teams handle environmental and radiation issues at both the Hillendale Mine and the CPC at Empangeni. In addition, there is a rehabilitation officer who reports to the Hillendale Mine Manager. Ticor SA has established an integrated quality control, environmental and occupational, health and safety management system in accordance with the requirements of ISO 14001, ISO 9001 and OSHAS 18001. Certification was obtained in December 2004. Ticor SA has a series of codes of practice relating to various environmental and OSH issues. These are supported by standard technical procedures for specific activities. All documents are electronically controlled using a document management system.

Community liaison and labour relations are generally managed by the Human Resources Department, though some aspects may fall under the External Relations Manager. Ticor SA participates in a number of community and environmental forums that are held either quarterly or six-monthly.

The operational environmental budget for Hillendale, CPC and some aspects of Fairbreeze Project is ZAR1.0mpa, which covers environmental monitoring, consultancy fees, consumables and donations/subscriptions to various organisations. The radiation department has a budget covering the same aspects of ZAR0.5mpa. The five year plan sees the budgets extending to ZAR1.7mpa and ZAR0.8mpa, respectively. These are considered appropriate for the work being done. Remediation budgets are covered elsewhere.

11.15.3  

Environmental issues

Water management: The legal compliance audit expressed concern over compliance with GN 704 and the water use licence application has not motivated for exemption from the requirements of these regulations. To verify compliance and identify necessary actions, Ticor has appointed an external consultant to undertake a detailed GN 704 audit (during September 2005). As ongoing water quality/biological monitoring does not appear to indicate any significant impacts, it is expected that motivation can be made for exemption from compliance with some of the regulations.

Rehabilitation: Ticor has committed to returning the land back to its previous status of sugar cane and some subsistence farming. Currently, relatively large areas are disturbed (135Ha) though temporary vegetation has been established to help in dust control (see below). A research project to determine how best to re-establish the soil structure has recently been completed and the results are about to be field tested. The test work is being done in consultation with stakeholders (e.g. South African Sugar Research Institute) and will be externally monitored (a steering committee is being set up and will meet quarterly to assess results). Once the optimal method has been determined, rehabilitation of the currently disturbed areas will take place. Currently Ticor is setting aside ZAR100kpm for rehabilitation purposes, but this may need to be increased once the test work is complete.

Dust: A number of complaints have been received from the surrounding communities regarding dust arising from the exposed areas of the mine workings. A number of measures have been recently (2004/2005) implemented to minimise the dust impacts, including planting of sugarcane or grass on the kidney storage area, dune coating areas of the pit that are not actively being mined and use of sprinklers/dust suppression chemicals in topsoil stripped areas. Ticor has indicated that dune coating can result in 90% control efficiency of dust. Ongoing monitoring will indicate the effectiveness of these measures, with daily monitoring taking place adjacent to the closest residential areas.

Radiation: Radiation management at the Mine falls under the requirements of COR 43, which is shared with the CPC site (discussed further below). The level of radioactive material being deposited as a waste material into the mine void is reportedly less than that being removed, resulting in an overall reduction in radiation levels so no significant risk is envisaged. However, ongoing monitoring is taking place to confirm this and it is recognised that radiation is an emotive issue to interested and affected parties.

Closure planning and costing: The EMPR includes some basic closure objectives and actions and closure cost estimates have been prepared in the past. The most recent estimate (October 2004) used the DME Financial Provision Guidelines as the basis for costing to give a closure cost of ZAR31.3m (includes owner costs, contractors costs and 10% contingency). However, this assumes that only the final 40Ha footprint will need to be rehabilitated as the rest will have been done as part of operational costs (see above). It therefore does not necessarily reflect the cost to close the Mine with immediate effect. SRK has concern that the DME Financial Provision Guidelines are generic in nature and do not reflect the specific nature of individual operations. It is understood that Ticor SA will prepare a detailed closure plan and cost estimate by the end of 2005. It is expected that the final closure cost will increase slightly but not make a material difference to the operation.

11.16.1  

Compliance

Although not considered a mine, an EMPR process was undertaken for the operation in 1996/7, however, as the relevant provisions of the ECA had not yet come into force, no environmental authorisation was obtained from the Provincial Department of Environment. Ticor SA applied for condonation in July 2005 of the process followed in terms of Section 24G of NEMA. Confirmation that the process was acceptable in terms of current legislation has not yet been received.

An application for a water use licence was submitted to DWAF in August 2004 but no licence has been issued to date. Water uses associated with disturbing watercourses have not been included in the application and may need to be applied for. Current water abstraction is covered by the Water Act, 1956, permit 1509N (this will be replaced once the licence is issued).

COR 43 has been issued for the CPC site and Hillendale Mine (see above). The only controlled area is the MSP.

The CPC operates a number of scheduled processes in terms of APPA and has received a provisional certificate A2205/1 for the ilmenite processing plant dated 14 October 2003 that is valid for 24 months.

Ticor SA is currently negotiating with DEAT for a full registration certificate to cover all scheduled processes. Emission monitoring of the stacks has indicated occasional non-compliances of emission limits during start up. Remedial measures have reportedly been successful in most cases but the roaster has had to cease operations until upgrades to the bag house are complete.

11.16.2  

Environmental and Social Management

Refer to Section 11.15.2 for proposed operational management.

11.16.3  

Environmental issues

Air quality: Dust from roads and stockpiles and emissions from the stacks have given rise to complaints from the community. Dust bucket monitoring is taking place but does not allow for directional assessment, and emission monitoring is looking at total dust rather than respirable dust. Upgrades to the monitoring systems are included in the 2006 capital budget and should minimise the risk posed by third party claims by providing a better understanding of the sources and health implications of dust from the site. Most emission complaints arise from the flare stacks, which are not being monitored and are highly visible. The registration certificate stipulates time limits for flaring on raw gas but these have been exceeded on occasion as reported to CAPCO annually (report indicates measures to remedy problem or provides justification for the exceedences).

Water management: ‘Dirty’ storm water drains via a series of channels and sumps to Dam 2. At present some process water is entering the dam. As the dam is being used for supply to the plant, the operating philosophy is to keep it at least 25% full. In addition, the CPC is not yet at full capacity so the water demand is not as high as originally predicted. This has resulted in excess poor quality water, which discharges to Logan’s Dam in response to rainfall (a clean water dam located on a tributary of the Nseleni River). Monitoring indicates increased sulfate levels in the dam but no apparent impact on the downstream river. Although the discharge has been included in the IWULA, ongoing and historical discharges pose a risk to the company should significant contamination build up. There is a risk that DWAF will require additional ‘dirty’ water containment facilities to ensure no process water enters the natural environment and possible remediation of any residual contamination in the dam.

Waste management: The legal compliance audit indicated concerns over the management of waste at the CPC site. Ticor SA has recognised this as a critical risk area and is currently preparing a waste management plan. Risks relate to inappropriate storage and handling of waste. The ad hoc disposal around the site without proper containment facilities may have resulted in soil or ground water contamination. Ongoing monitoring will confirm if there is an ongoing liability.

Material transport/handling: There have been complaints and incidents relating to dust from improperly covered vehicles, spills along the roads and inappropriate disposal of waste material. In one instance potentially radioactive MSP waste was sold by the transport contractor as a building material. Ticor SA has undertaken a survey of the area to identify where the material was used and has removed/demolished structures with appropriate compensation, where necessary. A close out report for this incident, including an assessment of residual radioactive risk, is currently being prepared. Although some residual risk remains, it is considered that Ticor SA has done all that is reasonable in the circumstances to minimise this risk.

Radiation: In terms of COR 43, Ticor SA submits worker dose and public dose assessments to the NNR. Radiation associated with dust and emissions is monitored regularly and there are a number of radiation management procedures that form part of the document management system. During the life of the operation, indications are that all potentially radioactive waste can be decontaminated sufficiently for disposal off-site (e.g. baghouse dust bags, high tension brushes). It is expected that there will be some residual radiation contamination associated with the stockpiles and plant at the end of life of operation but that remediation is possible to ensure NNR acceptable radiation levels after closure. Radiation issues are therefore not considered a major risk.

Closure planning and costing: Although the CPC is considered an industrial site and does not have to have a closure plan/cost in terms of South African legislation, Ticor SA has prepared a preliminary closure cost estimate using the DME’s Financial Provision Guidelines. This gives an immediate closure cost of ZAR20.8m and an end of life of mine closure cost of ZAR13.7m. As the CPC is unlikely to close in the immediate future, this is considered adequate however a detailed estimate based on accurate bills of quantity will need to be prepared at least five years before predicted closure.

11.17.1  

Compliance

EMPR amendments for Fairbreeze Project C Extension and the alternative residue disposal site have been prepared but not yet submitted. The latter was submitted in September 2005 but the Fairbreeze Project C Extension cannot be submitted until the conversion to new order rights is completed.

A water use licence application for Fairbreeze Project C and Fairbreeze Project C Extension was submitted to DWAF in July 2005 (this included both residue disposal options).

It is expected that the licence will take at least six months to be approved. The water supply required for the site is covered by the Water Act, 1956, Permit issued in May 1998 (this will be replaced by the licence once issued). A new COR application in terms of the National Nuclear Regulator Act is being prepared. The radiation baseline assessment is currently underway.

11.17.2  

Environmental and Social Management

Although not yet operational, the Technical Services Department are looking after most of the environmental aspects at the site, including attendance of the community environmental meetings. Baseline environmental monitoring is currently underway and, where relevant, existing Hillendale procedures are being used.

11.17.3  

Environmental Issues

Community sensitivity: Mtunzini is a small coastal village, popular as a retirement/holiday place but becoming increasingly popular with younger professionals who commute to Richards Bay/Empangeni. The Nature Reserve and scenic beauty of the area are major attractions. The residents are concerned about the overall impact of the Mine on the sense of place with particular concerns discussed further below. Many residents are actively involved as stakeholders and a Mtunzini Ticor Communication Forum meets quarterly to discuss issues relating to the proposed mine.

Proximity of mining to residential areas: The proposed Fairbreeze Project C Extension will extend to 100m of the edge of town. This has resulted in concerns over dust, noise, visual disturbance, etc. Ticor has planted an indigenous tree screen and developed the mine plan to minimise disturbance. However, this issue is still contentious and residents are using whatever opportunities arise to pressurise Ticor to move the border back. Although the specialist studies indicate that the expected impacts can be managed, the high level of community resentment remains an ongoing risk to the project.

Hydrological changes: The ground and surface water systems have been significantly depressed in the past due to agricultural and silvicultural practices, which in turn has affected the ecology of the wetland/estuarine systems dependent on these water resources. Detailed hydrogeological and hydrological investigations were undertaken to look at the cumulative impact of mining, backfilling and residue disposal on the water resources of the area. The studies predict that the temporary loss of plantations combined with backfilling will increase the groundwater level in the vicinity of mining, resulting in an increased baseflow contribution to the surface systems. This increase is expected despite the loss of runoff due to rainfall capture within the mining void and residue disposal sites. The implications of this are discussed under wetland/ecological systems.

Changes to wetland/ecological systems: Although the expected increase in flow is only temporary in nature, it is considered a potential benefit to the wetland/ecological systems in the area. There are concerns that excessive flows could result in increased frequency of estuarine breaching and that uncontrolled erosion from mining areas could result in sediment build up in the ecologically sensitive areas. There is a risk that if not actively and effectively managed, the Mine could result in significant negative impacts on a sensitive ecological system within a designated nature conservation area.

Closure planning and costing: Closure objectives and measures are included in the EMPR and EMPR amendments. A closure cost estimate of ZAR37.2m was determined in February 2005 (assumes the mine is operational). The cost is based on the DME’s Financial Provision Guidelines and on the feasibility study design information (includes owner costs, contractors costs and 10% contingency). This is considered adequate but it will require revision once the site is operational and once the ongoing rehabilitation work is further refined.

11.18.1  

Environmental Management Systems

Each of the three Tiwest JV sites has an environmental management system certified to ISO 14001. The environmental management systems of each site have been developed to meet the individual requirements of the particular site to which it applies, though all seek to achieve continual environmental improvement through similar processes.

Furthermore, the Kwinana site has its quality management system accredited to ISO 9001 standard. Environmental targets are agreed to by the site management teams in order to meet policy commitments, mitigate assessed risks, fulfil legal requirements, meet community expectations and improve performance within the bounds of available resources. Targets are achieved through the implementation of improvement projects in combination with an ongoing programme to improve operational procedures, workforce awareness and commitment, accountability and emergency preparedness.

Furthermore, the Kwinana site has its quality management system accredited to ISO 9001 standard. Environmental targets are agreed to by the site management teams in order to meet policy commitments, mitigate assessed risks, fulfil legal requirements, meet community expectations and improve performance within the bounds of available resources. Targets are achieved through the implementation of improvement projects in combination with an ongoing programme to improve operational procedures, workforce awareness and commitment, accountability and emergency preparedness.

11.18.2  

Legislative Environment and Compliance

Commonwealth Approvals: Commonwealth approval is required if matters of national significance, as defined in the Environmental Protection and Biodiversity Conservation Act, 1999, are triggered. The Commonwealth Department of Environment and Heritage (“DEH”) is responsible for administering the Act. Matters of national significance include presence of migratory birds, federally listed flora or fauna of conservation significance, Commonwealth land, nuclear actions and marine areas. If matters of national environmental significance are considered likely to be impacted, the project may be designated to be a “Controlled Action” and Federal authorities will require formal environmental impact assessment to be undertaken. The Commonwealth has entered into a Bilateral Agreement with the State of Western Australia whereby State formal impact assessment procedures under the Western Australia Environmental Protection Act, 1986, are accredited by DEH and the Commonwealth will not conduct a separate impact assessment.

Western Australian Approvals: Within Western Australia, the Environmental Protection Act, 1986, and the Mining Act, 1978, are the principal statutes defining the environmental management approval processes and operating strategies of extractive activities and environmental protection within the State. The Environmental Protection Act, 1986, makes provision for the establishment of the Environmental Protection Authority (“EPA”), for the prevention, control and abatement of pollution and for the conservation, preservation, protection, enhancement and management of the environment. The Act also provides for the control and licensing of potentially polluting activities, land clearing, and is the Act under which the State environmental approvals process operates.

Projects located on tenure granted under the Mining Act, 1978, are regulated by the Department of Industry and Resources (“DoIR”). With regards to environmental management, the Act allows DoIR to play an important role in the assessment of exploration and mining proposals, consultation with stakeholders on environmental issues, and environmental compliance monitoring.

Environmental Approvals: Before commencement of any mining operation, a proponent is required, under provisions of the Mining Act, 1978, to submit a Notice of Intent (“NOI”) to the DoIR. The NOI describes the project, surrounding environment, potential environmental impacts and proposed prevention and mitigation measures. Commitments made within the NOI are binding for any future operations on these tenements unless a request for an amendment to the relevant government authorities is accepted.

Commitments typically relate to:

• Rehabilitation practices (topsoil removal and spreading);
• Closure criteria (waste dump slope angles, vegetation establishment success);
• Environmental management practices (dust control, chemical storage and handling);
• Environmental monitoring.

The DoIR, as the decision making authority for mining projects, is required under Part IV of the Environment Protection Act, 1986, to refer mining projects to the EPA if they consider them likely to have a significant effect on the environment. A Memorandum of Understanding exists between DoIR and the EPA whereby projects are considered automatically to have significant effects on the environment if they satisfy the criteria listed in Part IV (Environmental Impact Assessment) of the Environmental Protection Act, 1986.

EPA Approval: All projects referred to the EPA under Part IV of the Environmental Protection Act, 1986, are assessed on a case-by-case basis. Once the EPA has received a referral, they assume responsibility for determining the appropriate level of assessment for the project. The Department of Environment (“DoE”) provides technical assistance to the EPA to assist with this process. The level of assessment set by the EPA will depend on environmental effects and the level of public interest associated with the operation. Levels of assessment available to the EPA include nonassessment, informal review or formal assessment. Differences between these levels of assessment relate to the public review period and the detail of documentation required. The EPA may determine that no assessment is necessary if the referred proposal is considered to have environmentally insignificant effects. Proposals considered not to warrant assessment under the Environment Protection Act, 1986, are referred back to DoIR, who assess and assign environmental conditions to the proposal’s tenement conditions upon approval of the environmental documentation. The Water and Rivers Commission (“WRC”) (a department within DoE) administers statutory processes of the Western Australia Rights in Water Irrigation Act, 1914. Groundwater Licences and Licences to construct or alter wells are issued by the WRC.

DoIR Approval: If DoE makes no formal assessment, DoIR will issue approval on assessment of NOI documentation. If DoE has made a formal assessment, DoIR will accept the assessment document without the need for NOI documentation, although tenement conditions are likely to reference the document and unconditional performance bond levels increased.

11.18.3  

Existing approvals

Approval for all three sites for the Tiwest JV Joint Venture were granted through the Mineral Sands (Cooljarloo) Mining and Processing Agreement Act, 1988. This Act essentially required prior owners of the operations to submit a development proposal that included commitments and plans to safeguard the environment (environmental management plan).

Amendments to each site have been made since the original approval. These have been gained by submitting development proposals to the Minister for State Development. The Office of Major Projects (“OMP”) has facilitated such proposals through the necessary regulatory authorities. Copies of these development proposals have generally been submitted to authorities in the form of Notices of Intent (“DoIR”), formal assessments (“DoE”) and Work Approvals (“DoE”).

Since July 2004, land clearing approvals are required to be obtained under the Environmental Protection Act 1986 prior to any land clearing occurring. This change to legislation is likely to have significant impacts on the ability to develop future mining operations in the Cooljarloo area as the area is characterised by high biodiversity values. Key regulatory requirements for the mining and processing operations include:

• The Mineral Sands (Cooljarloo) Mining and Processing Agreement Act, 1988.
• Ministerial Statements of Environmental Approval issued under Part IV of the Environmental Protection Act, 1986, including:

• Statement 37: Mine and Dry Separation plant (3/10/1988).
  • Statement 50: Dry Separation Plant (12/12/1988).
  • Statement 59: Synthetic Rutile Plant (28/2/1989).
  • Statement 67: Dry Separation Plant – amendment to statement 50 (4/4/1989).
  • Statement 412: Synthetic Rutile Plant – increased production to 200,000 tpa (4/4/1996).
  • Statement 452: Pigment Plant (6/1997).
• Environmental Licences 5519/8 (Cooljarloo), 5939/8 (Chandala) and 5320/8 (Kwinana).
• Works approvals for significant process upgrades or modifications issued under Part V of the Environmental Protection Act, 1986.
• Lease conditions on mining tenements ML268SA (Cooljarloo), M70/1010 (Cooljarloo).
• G70/165 – 168 (Chandala) and G70/88 – 90 (Chandala) issued under the Mining Act, 1978.
• Groundwater well licences issued under the Rights in Water and Irrigation Act, 1914.

11.18.4  

Environmental compliance

Compliance with regulatory requirements is closely monitored by all sites. A programme whereby environmental personnel from each site audit compliance of other sites has been implemented. Regulatory inspections are undertaken by DoE and DoIR personnel. No serious non-compliances have been reported as a result of these inspections. No non-compliances have occurred at the Cooljarloo mine site in recent years. The volume of process wastes disposed of in onsite landfills if measured as wet weight tonnes did exceed the licenced volume, however this was reported to regulatory authorities and an increase in the licenced disposal volume was granted. Clarification is being sought by Tiwest JV to determine if the licenced volume refers to wet or dry weight tonnes. The larger volume of waste resulted from excavation of historically deposited materials in ponds at Chandala and Kwinana.

No non-compliances have occurred at the Chandala or Kwinana sites in recent years. One reportable incident occurred at Kwinana during 2004 where loss of containment of sulphuric acid occurred from a storage bund. The incident was investigated by DoE however no regulatory action was taken. Four level 2 air emissions incidents occurred during 2004 with each reported in compliance with regulatory requirements.

11.18.5  

Environment, Closure and Rehabilitation Budgets

Cooljarloo: The operating budget for environmental management at the Cooljarloo site was AUD1.1m for 2005. A breakdown of this budget was reviewed and it appears suitable for requirements under the site environmental licence.

In addition to this operating budget, allowance has been made within the life of mine physical and financial plan for costs associated with vegetation clearing, topsoil clearing, land forming and rehabilitation on an annual basis. Costs have been allocated until 2026 and vary in accordance with annual development and rehabilitation rates. Forecast vegetation and topsoil stripping costs total AUD1.7m and AUD10.2m for the period 2005 to 2026. Forecast land forming and rehabilitation costs total AUD17.1m and AUD26.1m, respectively, for the period 2005 to 2026.

A rehabilitation provision account has been established for the operations with the provision currently totalling AUD20m. The provision is increased by a predetermined rate per hectare of disturbance on a monthly basis as areas are disturbed. Similarly the account is drawn down as areas are rehabilitated. A separate closure provision of AUD3m has been established to address historic legacies. The financial model includes allowances for rehabilitation and closure.

No rehabilitation bonds have been lodged for the Cooljarloo site. This is a direct result of the operations being governed under a State Agreement Act. Discussions with regulatory authorities indicate that placement of bonds on operations governed by State Agreement Acts is under review. Bonds may be required to be lodged in line with DoIR guidelines in the medium to long term. Bonds are typically lodged in the form of bank guarantees.

Kwinana: The operating budget for environmental management at the Kwinana site was AUD437,000 for 2005, and has been raised to AUD463k for 2006 (excluding salaries). A breakdown of this budget was reviewed and it appears suitable for requirements under the site environmental licence. In addition to the operating environmental budget, a waste management budget is set at between AUD1.7mpa to AUD1.8mpa. This budget is for tipping fees for filter cake solid waste disposal at the Cooljarloo mine site under licence. A provisional site closure and decommissioning plan has been completed and is estimated at AUD12m. This figure is likely to rise as the budget has not been broken down to any level of detail as yet. Financial provision for closure costs are the responsibility of the Joint Venture partners and Ticor has provided for this in their financial statements in accordance with AIFRS.

Chandala: The operating budget for environmental management at the Chandala site in 2005 was AUD86,000, including salaries. A breakdown of this budget was reviewed and it appears suitable for requirements under the site environmental licence. In addition to the operating budget, Chandala had a budget of AUD2.5m for solid waste disposal from the dry separator to the mine site, and AUD4.7m for waste disposal from the synthetic rutile plant to the mine site. Waste volumes allowed for disposal are limited by the mine site environmental licence, and determined by product throughput and grade. At present, Chandala is operating at close to capacity and has no significant expansion plans, other than debottlenecking improvements. The mine site recently had its landfill licence increased to accommodate an additional 150ktpa, which is unlikely to be met under normal operating conditions at Kwinana and Chandala. Chandala has recently developed a conceptual site closure and decommissioning plan, which apparently includes a detailed cost estimate. This plan is presently being audited by a third party and SRK were not granted exposure to it. As a result, SRK is unable to comment on the closure plan and associated costs. As with the Cooljarloo Mine, Ticor has provided for this in its financial statements.

11.18.6  

Environmental Issues and Risks

Cooljarloo: Rehabilitation progress has been severely constrained in years prior to 1999 resulting in the operations having a larger amount of unrehabilitated land than would be desirable compared to industry standards and regulatory expectations. One of the reasons for the large area disturbed is a result of slimes management which requires large drying areas to be exposed. Rehabilitation is primarily required to return land to native vegetation, however small areas located on Mullering farm are required to be rehabilitated back to pasture. Discussions with site personnel indicate this has been recognised and additional funding has been provided in recent years to reduce the historic legacy. This has included decommissioning five of the six process waste cells present on site.

The amount of land disturbed, but not rehabilitated is expected to peak during 2005/2006 at about 1,700Ha and then decline thereafter. Required native vegetation closure criteria are presently being established in consultation with regulatory agencies. Tiwest JV have recognised the challenge in being able to establish criteria that are practical, achievable, measurable and acceptable to regulatory agencies.

Development in three new areas is being considered, namely Dongara, Jurien and Falcon.

Environmental approvals will need to be obtained prior to development commencing in these areas. Review of information available for each of these areas indicates that approvals for mining in the Falcon and Dongara areas are likely to be difficult due to high biodiversity values and presence of conservation reserves. Formal assessment under the Environmental Protection Act, 1986, at a high level (Public Environmental Review or Environmental Review and Management Plan) is considered the most likely approval path. Difficulties have already been experienced in gaining land clearing approvals necessary to allow further exploration. Extensive baseline studies will be required prior to development of environmental impact assessment documentation.

Tiwest JV personnel are aware of the degree of difficulty likely to be experienced, the financial and technical resources required and lengthy timelines likely to obtain approvals. Significant volumes of water are required for dredging and ore processing operations. Difficulties have been experienced in sourcing adequate water without causing adverse environmental impacts. Abstraction in the north mine borefield caused unanticipated drawdown of the superficial aquifer and this in turn caused death of vegetation in 2000. Since dewatering of this aquifer ceased, water levels have returned to almost pre-abstraction levels and vegetation has reportedly recovered.

To ensure similar incidents do not reoccur, Tiwest JV has commissioned extensive groundwater modelling studies and installed two 600 metre deep bores in late 2004 to supply water for the north mine area. As operations progress, the importance of reliable groundwater modelling will increase to ensure sufficient water can be safely abstracted. Ongoing abstraction costs for the operation are likely to be high as a result of the need to develop very deep bores.

A number of environmental monitoring programs have been developed and implemented for the operations. These appear to address all potential environmental issues, are consistent with industry best practice monitoring techniques and satisfy regulatory requirements. Results of monitoring are reported annually in a publicly available report.

Chandala: The Chandala site undertakes a range of environmental monitoring programmes under its Ministerial environmental licence (5939/8). The site is audited annually by DoE staff, and to date, has not received any licence breaches. The site was next due for audit by DoE officials in November 2005. Notwithstanding the DoE inspections, SRK believe that several issues should be brought to attention. The dry mill stack on site is not licenced with the EPA. Tiwest JV are aware of this issue and are in the process of addressing it. It is unlikely Tiwest JV will be held in breach of conditions and it appears the issue is a simple oversight that both parties are presently rectifying.

There are two main environmental issues on site that pertain to potential and definite ongoing risk and therefore liability. The first is the existence of several groundwater plumes beneath the site. There are currently three distinct plumes from three separate sources. Two plumes are presently being managed while the third is still being defined. A brief description of each groundwater plume is presented.

Plume 1 is located beneath the process liquor storage ponds adjacent to the waste water treatment plant to the north of the plant. The plume was discovered in 1994, with the contaminants being ammonium and sulphate. The plume source has largely been removed with decommissioning of one pond and double lining of two others. Small leaks have since been detected on the relined ponds, though these are being managed. The plume is being pumped and treated through extraction wells and sulphate and ammonium levels have decreased from approximately 650 mg/L in 1994 to approximately 100 mg/L in 2004. It is therefore reasonable to conclude that the plume has been captured and is presently under control, though a leak remains and contamination remains in the groundwater.

Plume 2, which was discovered in 1996, is located below the synthetic rutile plant and is the result of poor bunding and housekeeping methods. Tiwest JV are aware of the cause of the plume and are actively managing it. The plume contains ammonium, sulphate (reduced from 4,000 to 1,000 mg/L since 1996) and also has a low pH value of approximately 2.4 due to sulphuric acid leakage from the plant. Capital works have been implemented to reduce point source contamination, in addition to remediating the groundwater by pumping and treating through recovery bores and the waste water treatment plant. As with plume 1, it is fair to say this plume has been contained and poses no immediate threats to off site waterways, however, it remains in place and will therefore require remediating. In this sense the plume must be considered a financial liability and risk. SRK believe that Tiwest JV are managing plumes 1 and 2 adequately, though current management methods must essentially be considered an operating cost. Once plant is removed from site, the plumes should be relatively simple to remediate.

Plume 3 is located adjacent to, and down hydraulic gradient from the Brambles sub-contractor compound near the site entry. It consists of low level hydrocarbon contamination from an unknown source. Tiwest JV have received specialist advice suggesting they monitor, rather than treat the plume at present. Contaminant levels are relatively low (<3.6 mg/L), though aquifer transmissivity is high, due to the sandy nature of the soil and Chandala Brook is located relatively close to the plume. Tiwest JV are continuing to receive advice in this regard and may commission an interception trench in due course.

Kwinana: The Tiwest JV Kwinana Pigment Plant is a designated major hazard facility due to the use of chlorine on site. The plant is an aggregate of six smaller plants that each provides a stage in the transformation of the synthetic rutile feedstock to the final product. The major environmental challenge at Kwinana is arguably managing the chemical feedstock on site, which include chlorine, sodium hydroxide, and natural, oxygen and nitrogen gases. Other environmental issues include managing waste products from the various process stages. Hazardous gases produced on site are managed via flue gas incineration and scrubbing, while waste water is treated and released under licence.

The plant operates under DoE environmental licence number 5320/8 and various legal Acts and regulations. Licence 5320/8 allows the plant to expand to produce 180ktpa, up from the current 110ktpa, if deemed viable. SRK identified the following as potential environmental issues and risks on site:

Managing operational incidents resulting in fugitive emissions of titanium tetrachloride (“TiCl₄”) and chlorine gas has been an historic issue on site. When exposed to water vapour present in the air, the TiCl₄ hydrolyses releasing hydrochloric acid, titanium dioxide (TiO₂) and heat. Tiwest JV have an incident management plan in action for chlorine gas and TiCl₄ release, with a level 3 incident being when a release violates the site perimeter. Tiwest JV had no level 3 releases at Kwinana in 2003 or 2004, though it remains a risk management issue should the plant expansion occur, simply as a function of increased throughput and the proximity of industrial and residential premises.

An historic groundwater plume containing phenols is located immediately below the site footprint in a relatively shallow aquifer (<20m). While Tiwest JV were not the source of this plume, rather, it originated from a source offsite, a potential environmental liability may exist should draft Western Australian Contaminated Lands legislation become law. It would be prudent for Tiwest JV to establish their legal position in this regard. A second groundwater plume is located below the waste water treatment ponds on site and is migrating towards Cockburn Sound. Tiwest JV are aware of this plume and believe that due to the nature of the contaminants (sodium, sulphate and chloride), it is not an issue, as concentrations are below those found in seawater.

Atmospheric emissions in the Kwinana industrial zone are managed under the Environmental Protection (Kwinana) (Atmospheric Waste) Policy and Regulations (1999), whereby release volumes of individual gases are established for each industrial facility. Relative latecomers to the Kwinana area have traditionally found themselves with lower emission quotas than older, more established sites. In this regard, Tiwest JV remain beneath their sulphur dioxide (SO₂) limits, and are therefore not in breach of their environmental licence. Tiwest JV have identified however, that the availability of their low sulphur (<1.5%) feedstock petroleum coke is tightening, and therefore the price is likely to rise. Depending on management decisions regarding the price sensitivity of low sulphur feedstock to their operations, a substitute option may include higher sulphur (up to 5%) coke, at lower cost. This in turn, may at best result in increased caustic consumption in post-emission incineration scrubbing units, and at worst, potentially increase SO₂ emissions; depending on the efficiency of the vent stacks over time. These effects would be greater should Tiwest JV choose to expand production at Kwinana.

These issues remain hypothetical at present, though ones that require consideration through appropriate stoichiometric calculations. A solid waste product presently on site which is returned to the Cooljarloo mine site for licenced, encapsulated disposal, contains low (<600 parts per billion) concentrations of uranium and thorium. Presently, these concentrations are below threshold values in Western Australian legislation that would otherwise deem the waste ‘radioactive’. As such, Tiwest JV are suitably licenced to handle this product. If however, international standards that contain lower trigger values for both elements are introduced into Australia, there is a risk that the products would become ‘radioactive’.

Implications should this occur include licensing, transport, and disposal. Furthermore, radioactive material (albeit the same material presently located on site) is traditionally a sensitive community issue and there may be community relations issues also involved. Again, this issue remains a hypothetical, however, Tiwest JV would be best prepared by establishing contingencies and manage the risk accordingly.

As noted in the budgetary section of this environmental review, Kwinana has recently completed a provisional site closure and decommissioning plan, with a budget estimated at AUD12m. Tiwest JV recognise that this figure is likely to rise as more levels of detail are added to the plan. Financial provision for the Kwinana site closure is provided for in Ticor’s accounts in accordance with AIFRS. Overall the environmental staff at the Tiwest JV Kwinana site are pro-active and aware at managing their environmental responsibilities suitably so that not only do they maintain an environmental licence, but continually improve environmental management on site in accordance with ISO 14001 principles.