All mining operations disturb the natural environment.  Companies that operate mines are obliged, to varying extents, to undertake work associated with the closure and decommissioning of their mines and rehabilitation of the impacted area.  Closure provisions recognised in financial statements account for the future expense of undertaking this work.

Closure provisions are becoming an increasingly important factor in the value of mining companies, representing approximately 7% of tangible fixed asset value across the sector in 2005.  With various drivers impacting the quantum of these provisions, it is important that the information provided is sufficient to allow investors to understand fully a particular company’s position with respect to these liabilities.  The quality and consistency of disclosure of such information in the sector is currently variable resulting in the opportunity for the sector to enhance the transparency of reporting.

A deeper level of detail explores the numerous issues relating to closure provisions and puts forward suggestions for improving the transparency of reporting these liabilities in annual financial statements to assist shareholders and wider stakeholders in their analysis and decision making.

For further information, download our publication Improving the reporting of mine closure liabilities (PDF, 712 KB).