Does Imperial Metals have environmental insurance?
By Peter Ewart
It is a statement that may come back to haunt them depending upon whether it is still valid. In 2002, in a “Plan of Arrangement” document regarding restructuring the company, Imperial Metals announced it would purchase insurance in amounts “to be adequate to protect itself against certain business and mining risks”. The document went on to say that, nonetheless, the company “may become subject to liability which it cannot insure against or which it may elect not to insure against due to premium costs or other reasons. In particular, [the company] will not [emphasis added] be specifically insured for environmental liability.”
A strange statement for a company that had a huge tailing pond at its Mount Polley mine situated by pristine lakes and world famous salmon spawning waters that are connected in myriad ways to First Nations and other local communities.
Environmental liability insurance in North America developed in the 1970s after some big environmental disasters hit the headlines. It can be quite comprehensive, covering a wide range of first and third party losses arising from an environmental accident of one kind or another, ranging from bodily injury, property damage, onsite and offsite cleanup costs, legal costs, board and officer indemnity, and so on.
Flash forward to today in the wake of the disastrous tailing pond spill at the Mount Polley mine. Company president, Brian Kynoch has indicated that the company’s insurance costs may not be enough to cover the spill costs (CBC News, 08/14). Other news reports claim that Imperial Metals has only $15 million in property and business interruption insurance coverage and $10 million in third-party liability insurance (Hoekstra, Gord, Vancouver Sun, 10/14). There is no mention of environmental liability insurance.
So, does the company have environmental liability insurance today in 2014? It is not clear. One would hope it does, given that the company tailing pond appears to have been pushed to its limits over the last few years. However, according to the company’s 2013 Annual Report, “the Company’s property, business interruption and liability insurance may not provide sufficient coverage for losses related to these or other hazards” and the Company “may elect not to insure against certain hazards where insurance coverage may not continue to be available at economically feasible premiums.”
In any case, for the sake of everyone affected, the company should clarify whether or not it has environmental liability insurance.
Furthermore, the provincial and federal governments should clarify why they do not make it mandatory for mining companies to have this kind of insurance (along with adequate security deposits for reclamation which are currently at the discretion of the government’s chief inspector). Without it, the danger increases that huge costs could end up falling on the shoulders of the public. As Calvin Sandborn of the University of Victoria’s Environmental Law Centre notes, there have been a number of times in the past when this has happened in British Columbia, including the Mount Washington, Union and Brittania mines.
Peter Ewart is a columnist and writer based in Prince George, British Columbia. He can be reached at: peter.ewart@shaw.ca
Comments
The cost of the Tailings Pond breach in Tennessee in 2008 cost $600 to $800 million dollars. Experts are comparing that environmental devastation to this one, so draw your own conclusions.
http://globalnews.ca/news/1498222/mount-polley-mine-tailings-pond-breach-is-one-of-the-worst-in-the-world-experts/
It may be impossible to insure against these types of risks. Your not going to walk into Hub and buy it. Underwriters have become much more selective in risks they are willing to ensure. Lloyds of London was a noted insurer of non standard risks until several events almost sank the company. Many companies choose to self insure due to limited underwriters and prohibitive costs. Perhaps a mandated unencumbered side fund for companies with these risks and no insurance would be appropriate.
No insurance company would touch this. Industry has an option, but they need it forced upon them. The equipment and technology exists (it has for some time) to operate mines, pulpmills, refineries etc. without conventional tailing/settling ponds. It IS possible to clean the wastewater and remove biproducts in a manner that can better protect the environment. YES, it costs money. If it were made mandatory, the technology would be refined to become cheaper and more efficient. Unfortunately, because it is not mandatory for industry to do all that is possible to protect the environment, it does not happen. Governments around the planet have to get on board and make it a requirement, otherwise we will be looking back in another 50 years as our planet has become a wasteland and say “we had the means to make it better, but we didn’t because it cost too much!” A $200 million waste processing facility at Mt Polley mine will seem like a drop in the bucket when the costs for clean-up, lost production and long term enviro hazards are tallied up.
I am not against mining or industry, we all need to make a living. BUT when the environment that we all depend on is being destroyed because it costs too much to do it properly, and it cuts into profit margins, then I must ask… Is it worth it?
dow7500: “It may be impossible to insure against these types of risks.”
Begs the question: If no insurance company will insure this sort of risk, why is it being permitted?
Simple case of right wing ideology at play here – Privatize Profits and Socialize Losses.
Read the ‘Exclusions Clauses’ on any standard business public liability and property damage insurance policy and see just how LITTLE any insurance company is now willing to insure against.
There used to be quite a number of insurance companies who offered fire insurance to sawmills, including some that were organised by lumbermen themselves way back when.
They were set up as ‘mutual’ insurance companies, where those insured were also the co-owners of the insurer to allow a greater pooling and sharing of risk without any regular insurance company’s drive for profits jacking up the cost of the premium. How many are left now? Very few, and their number continues to decline, and like every other insurer the list of risk ‘exclusions’ continues to grow.
socred: “Read the ‘Exclusions Clauses’ on any standard business public liability and property damage insurance policy and see just how LITTLE any insurance company is now willing to insure against.”
Bingo, socred.
@Heisenberg If companies did not make some profit which ends up in the hands of shareholders what would you live on when it is time to draw a pension? All pension plans including CPP and union plans depend on their investments in stocks to leverage the money in the pot. If you had to depend on deposit interest to grow your contributions you would have a steady diet of cat food in your golden years.
@Krusty When you insure your car do you take the maximum allowed for liability and property damage regardless of the cost or do you think that you have a good driving record and an accident is unlikely so 2 million plpd should be sufficient if the unexpected happens. Why are you allowed on the road without full coverage?
Posted by: Heisenberg on August 12 2014 11:55 AM
Simple case of right wing ideology at play here – Privatize Profits and Socialize Losses.
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Nailed it!
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