CHAPTER 2 SETTING UP AND CARRYING OUT A NEW FACILITY PERMIT PROGRAM
| Jurisdiction | United States |
(Mar 1981)
SETTING UP AND CARRYING OUT A NEW FACILITY PERMIT PROGRAM
ASARCO Incorporated
Tucson, Arizona
Introduction
The development of attempts to expedite the environmental permitting of new mines is the result of efforts now being made by mining companies to perform the tasks of proving up potential ore bodies, designing mine-mill facilities and obtaining necessary environmental and construction permits in a parallel sequence with each other, rather than performing the jobs one after the other as has been done in the past. Ideally, from a technical standpoint, the work should proceed in the order of the exploration department locating the mineral deposit and doing adequate drilling to determine the outlines, continuity and average grade of the deposit. The responsibility then, ideally, would shift to the engineering department to perform the definition drilling of the ore body to enable the development of the mining plan and the design of the mine, mill, tailings disposal and other structures. After the complete facility design was developed, the project would then be given to the construction supervisor who would obtain necessary permits prior to beginning work.
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The need for compressing these activities arises from management's awareness that present-day environmental legislation and regulations have had the effect of introducing a new and potentially very time-consuming function in the overall process of new mine development. The delays that can be caused by this new environmental permitting function are a concern to management because they introduce a new and substantial element of uncertainty into the business operations of mineral companies and because the delays represent increased costs to them. A conservative measure of the costs to a company of delay in a mine development project is the sunk capital costs of the company in the project. It is not uncommon for a company to have two to five million dollars invested in land payments and drilling costs in a favorable exploration target. Additionally, there often will be substantial carrying costs to the company for maintaining the property. The loss of the use of these funds, or the cost of paying interest on them, can amount to a substantial incentive to reduce any delays in beginning commercial production.
From the perspective of lost profits to a company resulting from delay in mine development, the need to expedite the permitting process is even more impressive. If an exploration property has the potential to support a $100,000,000 mine-mill complex which is expected to earn a
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20% return on investment, every six-month delay in beginning production from the property means a loss to the company of $10,000,000 in income. Since many mining projects presently being considered by mining companies involve the potential investment of multiples of the hypothetical $100,000,000 basis, the lost profits to the companies from delays in permitting make it clear that expediting the permitting process should have a very high priority.
At the same time that management of mining companies has become aware, through its own experiences and those of others in the industry, of the potential for substantial delay of mine development projects due to environmental permitting requirements, management has also become aware of the complexity of the permitting process itself, including the necessity of developing base-line environmental data for the project, selecting lead governmental agencies to coordinate the permitting process, making the permit applications and responding to agency information requests and appeals processes.
This awareness has resulted in the development by different companies of various types of environmental permitting departments, teams and task forces which are charged with the responsibility of reducing the time added to the mine discovery-design, construction sequence by the environmental permitting function.1
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One way for the permitting team to reduce the net time added to the mine development sequence is to begin the permitting process as early as possible in the mine discovery phase and then continue to work in parallel with the development drilling and the mine and mill design phases. This "fast track" permitting effort can, if properly managed and coordinated, be successful in reducing the time required, but its management must continually deal with the difficulty of trying to gather and apply environmental data for mining and milling facilities whose size and location may not be clearly defined.
Early Steps in Permitting
The involvement of the permitting team often begins as early as the stage where the exploration department has developed data about a mineral project which indicates the potential of an economic ore body. The first step for the permitting team is usually an initial reconnaisance study of the environmental, socio-economic and cultural aspects of the area to determine potential problems and sensitive situations.
In order to make this study, the permitting team needs a general description from the engineering department indicating the type and size of facility that is planned and the location of the facility. Providing such a description
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can be difficult for the engineering department because of the limitations of the available data, since the prospect will often not yet be completely drilled out, and because of the limitations of time, since the permitting team is often involved before the engineering department has completed a feasibility study. As a result, the permitting team often must...
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