Page 55 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.71, # 1, 2014, pp. 53-79

 A requirement to report ongoing reclamation activities during but not after a production period.

This paper focuses on the economics of instruments used in the Oil Sands mining operations.

The Mine Financial Security Program takes an asset-to-liability approach in securing total

expected reclamation liabilities. Companies must remit a base amount of security and, if needed,

an additional financial security to meet their liabilities for reclamation purposes.

A general rule says that if an approval holder has:

1) MFSP assets at least three times larger than its MFSP liability, is

2) within 15 years from the end of its bitumen or coal reserves and is

3) keeping up-to-date with its reclamation schedule

Then, additional security above the base security is not required. If at least one of the three

requirements above is not met, then additional financial security is required to satisfy total

reclamation liability.

1.2. Types of Financial Security Deposits

Four types of financial security deposits have been adopted under MFSP.

Base Security Deposit (BSD)

BSD is paid to the government. The applicant becomes immediately liable whenever it is

granted with the Approval to mine in the field. The base security deposit is $30 million for a new

oil sands mine with no upgrader and $60 million with an upgrader:

Table 1. Base Security Deposit requirement with/without an upgrader

A new oil sands mine with no upgrader $ 30,000,000

A new oil sands mine with an upgrader $ 60,000,000
Source: imputed calculation by author and approved by Alberta Environment 2013

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