When the Gold is Gone: Reporting of Asset Retirement Obligations for the Ultimate Cleanup of Closed Mining Operations

ABSTRACT: Hardrock mining companies contribute positively to the U.S. economy. However, they also cause serious degradation to the surrounding environment. According to the Environmental Protection Agency, hardrock mining companies are among the greatest polluters in the United States. Mining companies are responsible for satisfying legal obligations arising under environmental laws that include cleanup and exit costs for all mines shut down. These environmental liabilities are called asset retirement obligations and under FAS No. 143, U.S. mining operators are required to recognize their asset retirement obligations upon acquisition or construction of their mines. In this paper, we examine the financial reporting for asset retirement obligations for gold mining companies. Based on a simple ratio analysis, it appears that top U.S. gold mining operators have sufficient financial resources to meet their future asset retirement obligations. However, when we conducted sensitivity analysis to exclude intangible assets and to adjust the value of the asset retirement obligations, we found that firms are not likely to have sufficient financial resources to meet their obligations. Current financial assurance mechanisms do not consistently and effectively result in firms meeting their asset retirement obligations. As a result, U.S. taxpayers can be left with the costs of cleanup and reclamation.

Skagway, Whitehorse and the White Pass and Yukon Route Railway

The White Pass and Yukon Route, a 177 km narrow gauge railway linking the Alaskan coastal port of Skagway with Whitehorse, capital of the Yukon Territory, ceased operations in October, 1982, a casualty of the economic recession of the early 1980s which brought about the collapse of the Territory's hardrock mining industry. The railway had been constructed by British interests between 1898 and 1900, that is, in the aftermath of the Klondike gold rush, and had been in continuous operation since that time. In this paper, the author traces the broad lines of the history of the railway and shows the various ways in which it influenced the development of Skagway and of Whitehorse, its ocean and inland termini respectively. The closing of the railway was a major blow to Skagway, where White Pass Transportation and its subsidiaries were the principal employers, and where over two-thirds of the railway's employees were located. The closing appears to have had a more limited impact on Whitehorse, a much larger community whose economy is now highly diversified.

Occupational Exposures and Chronic Airflow Limitation

The recent literature was reviewed to evaluate whether chronic airflow limitation is associated with occupational exposures to dusts. Only those studies that controlled for the effects of smoking were included. There is compelling evidence that exposure to inorganic dusts, such as from coal and hardrock mining or asbestos, are associated with the development of chronic airflow limitation, independently of pneumoconiosis. Nonsmoking gold miners are particularly at high risk of airflow obstruction and emphysema. Findings from studies of organic dusts, such as exposures to wood, cotton, grain or other agricultural dusts, or to mixed dust exposures, were less consistent but tended to show positive dose-response associations. In the majority of studies, no statistical interaction was shown between dust exposures and smoking; however, the effects of the dust exposures were often more pronounced. An occupational history should be considered, in addition to a smoking history, as an integral part of an investigation of chronic airflow limitation in a patient.