Mine Site Rehabilitation Report

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ECOS3997
Assignment brief:
final report
The University of Sydney
Page 1
Photo by Sara Evrington: from an ABC News site: https://www.abc.net.au/news/2016-05-16/redbank-copper-mine-off-the-hook-as-nt-epa-drops-charges/7419566
Unit assessment
Final report: Policy brief 3000 words (excluding tables & references)
60% Fri 6 May 11.59 pm
Online submission
Media presentation: 1500 words
Online submission
The University of Sydney
40%
Fri 27 May 11.59 pm
Page 2
Final report
Due Date: Fri 6 May 11.59 pm
Word length: 3,000 words (excluding tables & references)
Any students experiencing difficulty with generating results please email
me shauna.phillips@sydney.edu.au for assistance.
Posted thread on Ed for questions you may have- will look at this
frequently- if I don’t respond in time for your please email me.
The University of Sydney
Page 3
Assignment: Final Report
For this assignment you will write a report for the NSW Department of Planning
and Industry. Given the recent Senate Inquiry into mining policy and the growing
social awareness of environmental problems associated with abandoned mines,
there is a need to review policies and make changes where appropriate. The
Department is seeking advice on the following 2 questions/issues:
The University of Sydney
Page 4
Assignment: Final Report
1.The Department has a pool of funds for abandoned mine rehabilitation (the current pool of
available funds in the NSW Legacy Mines Program (LMP)). Although there is a large list of sites
that need rehabilitation, the Department has narrowed the choice down that it is seeking advice
on to the following 5 mines: Muswellbrook, Vales Point, Munmorah, Liddell and Wallerawang.
The government programme prioritises the rehabilitation of abandoned mines based on the
following factors: public safety risk, environmental risk, end use of the land, and cost
effectiveness. It is in particular seeking advice on the least cost option from a consultant
economist (you).
Use the results you generated with your assigned parameters in Lab 4 from the spreadsheet
MineRehabilitationFund.XLS to advise the government. Conduct a basic sensitivity analysis of
the results for a range of discount rates ( 1%, 2% and 5%).
The University of Sydney
Page 5
Assignment: Final Report
2. Apart from rehabilitating abandoned mine sites, the Department would like to consider what
the best policy is to encourage mining companies to rehabilitate their sites to avoid have to
make more funds available for the NSW LMP. It also needs particular advice about a small
mineral ore mining operation, Wongalee Inc. in the Hunter Valley region of NSW that is mid-way
through the approval process for operation. Using the online bond calculator tool the company
has calculated an environmental bond value of $5m to be posted in full at the beginning of
operations. The local farming community is concerned about the poor environmental track
record of Wongalee Inc and claim that there is ample historical evidence that the mechanism of
a bond is inadequate. Further, they argue that the bond is undervalued in terms of the real
potential cost of the damage. This sentiment is echoed by local indigenous groups who argue
that in cultural terms the undisturbed land is in fact not possible to value.
The University of Sydney
Page 6
Assignment: Final Report
2. Continued
An alternative to bonds, a damaged land tax is also being discussed. This could be
levied on a per hectare basis with the aim of creating an incentive for total clean up
during mining operations. Wongalee Inc. claims if imposed the tax is unnecessary,
and local groups are calling for a DLT.
The government needs both specific and general advice. In order to respond to
claims about the bond amount, it needs to know how much environmental damage
might be caused by the mining operation and its value.
The University of Sydney
Page 7
Assignment: Final Report
2. Continued
The government also needs to respond about the policy mechanism – in particular,
should a tax be used instead of the bond. Also, it needs a recommendation about a
tax rate per ha and two tax rates have been suggested : $250/ha and $500/ha. The
government wants to use the case study for this particular mine, to put some figures
on things, and also wants an educated opinion from an economist on the relative
appropriateness of environmental bonds versus environmental taxes levied on
damaged land.
The University of Sydney
Page 8
Assignment: Final Report
2. Continued
In Lab 4 outcomes for the firm (NPV of profit) and society (discounted social
welfare), amount of damage in the final period (YT), and value of social damage in
perpetuity (?? ?? (?? ????
) were compared under no regulation, and a proposed
damaged land tax (DLT).
Use numerical estimates from Lab 4, and other information from lectures and
readings, to make some recommendations to The NSW Department of Planning
Industry and Environment.
The University of Sydney
Page 9
A consultant’s report
• You are writing as an applied economic consultant:
• this means the models you present are ones that you would have
constructed yourself
• Do not make reference to learning material in ECOS3997
• You are writing to government bureaucrats who will understand some
jargon (especially terms about mining) but will not understand terms
live social welfare or externalities. These bureaucrats understand why
they have requested the report, so you do not need to write a rehash of
the problem statement.
The University of Sydney
Page 10
Suggested structure (any other logical structure that uses subheadings will also be
appropriate):
1. Introduction and background.
2. Method: briefly present the models estimated
2.1 and 2.2 This section should include a description of the models employed.
3. Results: mining rehabilitation advice.
4. Results: advice relating to Wongalee Inc and taxes versus bonds policy.
5. Conclusions
6. References – not included in word count.
The University of Sydney
Page 11
1. Introduction and background (approx. 1000wds).
Suggested content:
Problem statement
Background info-stats (reference your claims)
Brief literature review on policy to encourage mining companies to
rehabilitate mining sites (references)
Objectives
The University of Sydney
Page 12
More detail
– Write a brief to a state mining minister on policy to promote mine rehabilitation and
allocation of pooled funds for rehabilitation
– Introduction and background section should include:
– 1. Some statistical information about the problem of pollution from mining
– 2. Be framed in terms of core economic principles (e.g externalities, damage costs,
social welfare – these should be explained clearly and in context).
– 3. Brief presentation of the policies that might be used to provide incentives for mining
companies to clean up pollution (include pros and cons, cite the literature).
– 4. A brief but clear aim of the report.
– Do not describe what the government is currently doing-you can refer to it if you want.
Do not use too much technical language.
The University of Sydney
Page 13
Brief presentation/literature review of policy (taxes
V bonds)
Policy makers will use this existing knowledge to inform what they do or don’t
do….your work draws on prior work.
Take elements of past research and build on or develop or change in some way.
Aim is to provide reader with understanding of a relevant body of literature
(empirical and theoretical).
In the literature review: summarise, analyse compare & contrast.
Don’t explain every detail- need to isolate what’s important- need to grasp main
aspects of past research as it relates to yours.
The University of Sydney
Page 14
2. Method (suggested approach) approx. 700 words
2.1 Mine rehabilitation Model
Minimise ?????=1 ????,0 ???? + ?? ????,0 , ????,0
+ ?????=1 ?? ?? ?????=1 (????,?? ?????,???1 )???? + 1 ? ????,???1 ???? (????,?? , ????,?? )
subject to
??
??
??
? ????,0 ???? + ? ?? ?? ? (????,?? ?????,???1 )????
??=1
??=1
???
??=1
plus verbal description – couple of paragraphs
2.1 Mine Policy Model
??
??
Maxmise ?? = ????1
??=0 ?? ???? ???? ? ?? ???? , ???? ? ??(???? ) ? ?? ???? – ?? (?? ???? )
subject to: ????+1 = ???? ? ????
for t = 0,1,…T-1
????+1 = ???? + ????? ? ????
for t = 0,1,…T-1
plus verbal description – couple of paragraphs
The University of Sydney
Page 15
NOTE: ethical obligations of scientists/researchers(Randall
(2011))
– Intellectual rigor: Scholars should be committed to the highest standards of logical and
empirical rigor.
–
Openness: Scholars should be open to new information, ideas.
–
Critical attitude: Scholars should be willing to criticize the work of others rigorously, without
fear or favor, and to submit their own work to such criticism.
–
Modesty of claims: Scholars should not claim too much for their ideas and research findings.
–
Giving credit: Scholars should give/share credit for ideas and research findings of others
(collaborators, but also precursors) that have contributed to their work.
The University of Sydney
Page 16
3. & 4. Results (about 1000 words)
Present results in 2 subsections – one for mine rehabilitation, the other for
policy.
Clearly label any tables or figures.
All figures and tables should have titles
All illustrations/graphs are classified as figures.
Cite figures and tables in consecutive order in the report.
Do not cut and paste Excel output
The University of Sydney
Page 17
Results Mining Rehabilitation fund
Discuss characteristics of mines (your data)
Present results- interpret, recommend
Sensitivity analysis over discount rate – table?
The University of Sydney
Page 18
Results Mine Policy Model
Comment on bond vs tax on general principles as well as in specific empirical
context.
Present results – interpret, recommend.
Potentially tabulate SWF and NPV, outcomes for ?? ?? (?? ???? , Y10 etc.
Any comments on extraction schedules, rehabilitation schedules etc.
The University of Sydney
Page 19
Conclusion
(about 300 words)
Brief concluding statements.
Make sure your conclusions follow logically from the empirical
estimates in the report, and any reasoning you have applied based
on theory and background evidence.
Don’t present background information in this section.
The University of Sydney
Page 20
References and referencing
Use the APA 6th referencing style.
Guide available at:
https://libguides.library.usyd.edu.au/c.php?g=508212&p=3476096
The University of Sydney
Page 21
Final Report
• You will be assessed on:
• your ability to articulate your quantitative analysis with reference to economic
theory and your use of empirical evidence in the applied context of the mining
industry in NSW.
• your written communication.
You will not be able to write this the night before submission – good writing is a skill takes time and practice.
Leave yourself time to re-edit the document a few times.
A rubric for this assignment has been posted on Canvas.
The University of Sydney
Page 22
Rubric: Final Report
Weighting
(/100)
Assessment Against Criteria
Clear and coherent exposition of
background and policy to focus
issues/management problem.
HD
D
C
P
F
20
Analysis and presentation of empirical
results
HD
D
C
P
F
40
Writing: appropriate style, free of
spelling and grammatical errors.
HD
D
C
P
F
30
Quality and relevance of references and
consistent referencing
Clear and appropriate formatting of
brief
excellent
no errors
satisfactory
a few minor
errors
unsatisfactory
major errors or omitted
altogether
5
5
HD=85+; D=75-84; CR= 65-74; P=50-64; F=0-49
The University of Sydney
Page 23
MRF Model(notation)
• ???? is pollution stock at site i, i = 1,2….I
• ????,0 : initial volume of contamination from Z at site i in period 0
•
????,??+1 =(1 + ???? ) ????,?? is the growth of volume (0 < ???? < 1) • ????,?? = ???? /????,?? : average contamination at site i in period t • ????,?? = ???? (????,?? , ????,?? ): damage during t is a function of volume contaminated and average concentration. • ???? : costs of cleaning up site i, K is the present value of total funds available for clean up. The University of Sydney Page 24 Diffusion and stock pollutants (assumptions) • ????,?? : binary choice variable • (????,?? = 1 if site has been cleaned up, 0 otherwise) • Assume once site is cleaned it stays cleaned: if ????,?? = 1 then ????,?? = 1 for all ??> t
Assume damage occurs while a site is being cleaned, but then all
future damage goes to zero:
????,?? = 1 ? ????,?? ???? ????,?? , ????,??
for t=1, 2,…T
• Funds not spend in t are available to earn interest (they increase by
factor (1 + ??).
The University of Sydney
Page 25
Binary dynamic optimisation problem
The optimal schedule of rehabilitation becomes a binary dynamic optimisation problem that
seeks to minimise total costs by choosing the ????,?? values. Minimise
??
??
??
+ ? ?? ?? ? (????,?? ?????,???1 )???? + 1 ? ????,???1 ???? (????,?? , ????,?? )
? ????,0 ???? + ?? ????,0 , ????,0
??=1
??=1
??=1
subject to
??
??
??
? ????,0 ???? + ? ?? ?? ? (????,?? ?????,???1 )????
??=1
??=1
???
??=1
The optimal clean up schedule seeks to minimise the discounted sum of rehabilitation costs
and damage costs.
The University of Sydney
Page 26
Binary dynamic optimisation problem
• In determining the optimal schedule, the first time that ????,?? = 1 , the
government pays ???? dollars in period t (or a present value payment of ?? ?? ????
today t=0)
• If and when a site is cleaned, i.e. ????,?? = 1, then ????,?? = 1 for all ??> t and the
future coefficients on ???? are zero. This ensures only a single payment of
rehabilitation at any site in this model.
The University of Sydney
Page 27
Numerical application
• 5 abandoned mine sites, 11 year horizon, t = 0, 1, 2…, T=10.
2
• Damage function with no rehabilitation: ????,?? = ???? ????,?? ????,??
• Nature of the damage function?
• Data sources/assumptions?
• Initial conditions and parameters are ???? , ???? , ??, ???? , ???? ?????? ??
The University of Sydney
Page 28
Data table.
K=$500, ?? = ??. ????
Parameters site i=1
site i=2
site i=3
site i=4
site i=5
5
50
20
10
30
10
500
100
10
50
0.01
0.1
0.02
0.02
0.04
Ki
50
500
200
100
300
??i
1
0.01
0.4
0.5
0.2
Zi
V I, 0
??
i
The University of Sydney
Page 29
Solver dialogue box
Sets Xit values to be
0 or 1 only
Present value sum of
remediation costs can’t
exceed total funds
available
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Constraints that ensure
once a site is cleaned up,
it stays so
Page 30
Solution: location and timing of rehabilitation
Solution fully utilises
available funds
Recommended
clean up
schedule:- clean
up only sites 3
and 5 immediately
The University of Sydney
Substantial damage
costs remain from
unrehabilitated sites
Page 31
Discounted clean up cost schedule
???? ????,??
?? ?? ????,?? ? ????,???1 ????
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Page 32
Discounted damage cost schedule
???? ???? ????,0
?? ?? ((1 ? ????,???1 )???? ???? ((1 + ???? )?? ????,0 )
The University of Sydney
Page 33
POLICY MODEL – dynamic optimisation model
Control variables: control variables Qt (extraction) and Et (rehabilitation)
Co-state variables: ???? = ?????1 +??????1 ? ?????1 ; ????+1 = ????+1 ? ????
Price takers p =$34 ($/t).
Extraction cost ?? ???? , ???? = ??1 + ??2 ????2 ??3 + ??4 ?????1
Rehabilitation cost w ????
damage cost (social) ?? ?? = ??????
The University of Sydney
Page 34
Maximise a social welfare function
??
??
– ?? = ????1
??=0 ?? ???? ???? ? ?? ???? , ???? ? ??(???? ) ? ?? ???? – ?? (?? ???? )
– subject to: ????+1 = ???? ? ????
????+1 = ???? + ????? ? ????
for t = 0,1,…T-1
for t = 0,1,…T-1
– Qt ? 0 and Et ? 0 for all t
– with ??0 = a, initial resource endowment and
–
??0 = b, initial damaged land endowment
The University of Sydney
Page 35
References
–
–
–
–
–
Conrad (2010 or 1999) Resource Economics, Ch 6. Section 6.4, 2nd edition, Cambridge University Press
Dept. of Mines & Petroleum-WA Government (2016) MRF The first two years. Available:
https://www.dmp.wa.gov.au/Documents/Environment/MRF_The_First_Two_Years.pdf
Gilbert & Tobin (2017)Mining Rehabilitation in Western Australia – Where to From Here? Available:
https://www.gtlaw.com.au/insights/mining-rehabilitation-western-australia-where-here
NSW Govt (2016) Derelict Mines Program Policy.
Available:https://www.resourcesandenergy.nsw.gov.au/__data/assets/pdf_file/0003/594084/POL16-6-Derelict-MinesProgram-Policy.pdf
NSW Govt (2020) Legacy Mines Program Available: https://www.resourcesandgeoscience.nsw.gov.au/landholders-andcommunity/minerals-and-coal/legacy-mines-program
–
NSW Govt. (2020) Mining Legacies. Available: https://www.mininglegacies.org/mines/nsw/
–
NSW Govt. (2020) Legacy Mines Program/ Funding Guidelines. Available:
https://www.resourcesandgeoscience.nsw.gov.au/__data/assets/pdf_file/0009/594198/POL16-7-Derelict-Mines-ProgramFunding-Priority-Guidelines.pdf
The University of Sydney
Page 36
ECOS3997
Written report
Ryosuke
???????????
TUTOR
Self-Introduction
????
#
1. ?????????? UNSW??
2. ????? ?????
3. ???????????? ??80+
4. ?????????????? ?????????
???
5. ??????????????????
6. ????????????????????
TUTOR:Ryosuke
???
???
????
1.??????
2.??????????????
3.??????????????
4.?????/?Chat??????????????
???
???
????
????
????
????
????
?????????
CONTENT
??????
1
Model??
2
Assignment??
3
???????
4
????
????
????
?????Written report
DDL?5.6
???Up to 3000 words ???????
??????Online- Turnitin?
????? 60%
??????
??????
????????????????????????????? ?????????????
???????????????????????????????????????????
??? ???????? 2 ???/???????
??????
??1?
???????????????????NSW Legacy Mines Program (LMP) ???????
??? ???????????????????????????? 5 ????Muswellbrook?
ValesPoint?Munmorah?Liddell ? Wallerawang???????????????? ????
??????????public safety risk???????environmental risk??????????
????end use of the land, and cost effectiveness?? ?????????????????
????????
??lab 4 ?????? MineRehabilitationFund.XLS ???????????????????
????????1%?2% ? 5%??????????????
??????
??2?
??????????????????????????????????????????
??????? LMP ?????????????????????????????????
?? Wongalee Inc. ??????????????????????? 500 ?????????
?????????????????????? Wongalee Inc ??????????????
???????????????????????????????????????????
??????????????????????????????????????????
?????
??????????????????? ???????????????????????
?????? Wongalee Inc. ??????????????????????????????
???????????? ??????????????????????????????
?????????
??????
??2?
??????????????——??????????????? ???????????
???????????????250 ??/??? 500 ??/??? ????????????
??????????????????????????????????????????
??????????
?lab 4 ???????? NPV?????????????????????????? ?
?????????
??????????????? ???????????DLT??
????lab 4 ????????????????????????????????????
?????????
??????
????????????????
1. ??excel??????????????????????????????????????
??????discounting factor?????????????????????
2. ????excel??????????no regulation?part???tax?bond??????????
????????????????????????????????????????????
??????
Introduction and background?
?????1000words
???????????Introduction?background????????????????????
?????Introduction?background???????????????????????????
?????
????????????????
Problem statement
Background info-stats (reference your claims)
Brief literature review on policy to encourage mining companies to
rehabilitate mining sites (references)
Objectives
??????
Problem statement
?????????????????????????????????????????
????????case????????????????????????????????
??????????????????????????????????????system
?????????????????????????????????????????
???????????????
????????????????????????????
?????????????????????????????????????
????assume????????????? ?????????????????????
?????????????????????????????????????????
???????????????
externalities?damage costssocial? welfare
??????
Brief literature review on policy to encourage mining companies to rehabilitate mining sites
???????????????????policy?????????????Policy???
policy???????????????????????????????????????
????????????policy???????????????????policy maker??
???????????????????????????????????
?????????????????????????????????????
?????????????????????????????????????
??????????
??????
Objectives
?????????????????????????????????????????
3-5????????????????????????????????????????
??????????????????????????????????????????
???assume???????????????????????????????????
????????????????????????
??????
2. Method
?????????????model
??????
??????
??model???????????????Excel????????????????model?
?????????????????????????????parameters????
?????????????Parameter???????????????????????
?????????????????????????????????????????
???????parameter????????????
?????700 words
??method?????????????????????????
????????????parameter????????????????????????
?????????????????????????????????????bullet
point????????????????????????????????????
??????
3. & 4. Results (about 1000 words)
????????????????????????????????????
???????100????
???
1. ?????????????
2. ?????????????
3.????/?????????
4.????????????
5.??????? Excel ??
??????
????????????
1. ??????????????
??????????????????????????????damage function????
??damage function?increasing or decreasing??????????????????fund
2. ????????????
?????excel??????????case??????????????????????
??????????????????????????????cost?????
3. ?????
?????discounting factor???????????factor???????
discounting factor????????
1%?5%?10%??factor????????????????????????????
??????
???????Policy???????????????????????????????policy?????
??????????????????tax??????????SWF??????tax?????????
?????????tax?bond?????????????????????????????????
policy??????????????????
????????regulation?????NPV??SWF????????????????????????
???????????????????????
???????????????????????????????????????????????
??????????????????????
??????
??????????????500????????????????????????????
??????????????????????
???????????????????????????????????????????
??????????????????????result???????????????????
??????????????????????????????????
??????
Conclusions?
?????300 words
??????????????????????????????????
?????????????????????????????????????????
??????
Reference?
APA 6th
????
??????
??????? & ??
????????????????????????????????????????????
?????????????????????????
Reference????????????????????????????reference ????????
????reference?????????????40???????????
???????????????????excel??????????
??????????????????????
?????????????3000???3000??????????????????????
?????????????????????????????????????

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Mine Site Rehabilitation

Mining Act

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