BROWN - Mining

Southeast Europe, as we have seen, has a long history of mining base and precious metals, reaching back to the fifth century BC at least. In Serbia, for example, archaeological exploration of the Bor site suggests that copper mining started in prehistoric times. The Balkans was the first place on the European continent where human society developed intensively. But in its long history, from prehistoric times to the present day, mining has experienced several ups and downs.

Balkan countries have struggled with the legacy of the break-up of former Yugoslavia and numerous armed conflicts. The region is highly fragmented and characterized by a complex economic and social situation that impacts in various ways on the management of mines and in some cases on the treatment of waste water.

The environmental legacy associated with extraction industries is all too familiar. Badly operated or abandoned mining sites have already caused severe pollution, some with impacts spilling across national boundaries: heavy metal spills from Baia Borsa tailings in Romania; the cyanide spill from Baia Mare in Romania; heavy metal spills from Sasa tailings in Macedonia; and various releases at Majdanpek and Veliki Majdan in Serbia, and Mojkovac in Montenegro. Watercourses are the main vector for transboundary pollution, whether it is ongoing and chronic, or infrequent, acute and accidental.

Smelters near borders such as in Bor, Serbia, also contribute to air pollution, with serious consequences for human health to this day, and continuing risks for the future. Environmental incidents related to the mining industry also fuel political tension at a time when peace and cooperation head the agenda.

The economic effects of irresponsible mining practices reach out to food exports and tourism, which suffer from the powerful media exposure of accidents and ongoing pollution activities. All these chronic problems – 

on top of their direct environmental impact – contribute to a negative atmosphere for economic investment essential to the region’s sustainable development.

However, southeast Europe is still rich in mineral resources and sustainable mining cannot be neglected as an option to progress economic development. Therefore, remediation of high hazard sites will be compulsory in order to attract foreign investement and to comply with environmental protection standards. A good example of how to achieve effective and fast risk reduction at relatively low level of investment is the repair measures of the mining dam in Baia Borsa – Novat carried out by the Austrian Development Agency (ADA).

Mining legacies: riches of the past, present day headaches

Between 1944 and 1991, the mining, processing, and downstream exploitation of base metals established the Balkans as a major European source of copper, lead, zinc and a global producer of chromite. Mining was one of the flagship industrial sectors, influencing the area more largely than in simply economic terms.

The upheaval that subsequently swept through southeast Europe resulted in economic, social and political instability. The disintegration of the Yugoslav common market aggravated economic conditions in the region and in the early 1990s the Balkan economy declined sharply. Industrial output dropped significantly, with a widespread shutdown of operations such as mining. In environmental terms this cuts both ways. With a dramatic drop in industrial output, pollution decreased. But at the same time plants were either abandoned or privatized under conditions that did not clearly establish environmental liability.

Today the legacy of mining is still a serious problem in southeast Europe. On abandoned sites, with no liable legal owner, the necessary measures to close the site were never taken – stabilization, water management, replanting of vegetation, etc. – to minimize the risk of accidents and prevent environmental pollution. Implementing them now is very expensive. Most modern mining operations consequently include a bonding system that ensures that sufficient financial resources are set aside during the active period of the mine. If appropriate such resources are released when mining stops and the measures mentioned above need to be taken.

Acid mine drainage and other mine water issues

Topics such as land disturbance, air pollution and labour issues are prominent in any discussion of the detrimental effects of mining. But in almost all cases, regardless of whether coal, ore or other materials are being mined, they are compounded by water-related problems. They may either be due to the fact that wherever mining occurs, the groundwater level must (almost always) first be lowered to permit mining. This may have far-reaching effects in the area. Limiting the water supply obviously impacts on plant life, and consequently the ecosystem and farming. But it may disturb wells too and cause land subsidence.

There may be a shortage of water, but on the other hand there may also be too much unwanted water. Water from mine voids or waste contains toxic elements at levels that are intolerable for discharge into the natural environment. The contaminants are mostly heavy metals, depending on the composition of the underground material. Micro-organisms which “eat” inorganic energy sources, notably iron, flourish on mining waste and in mines. They require oxygen and water to prosper, which is not available under natural conditions in places where mineral-rich material is found. Mining, however, creates a feast for them. It not only extracts minerals, bringing them into contact with air and water, as in the mine void, but also maximizes the contact surface by grinding rock into sand-like particles (overburden and tailings). Microbes, much as any living creature, produce waste, in the form of metals and acid. The resulting solution is known as acid mine drainage (AMD) or acid rock drainage (ARD). These discharges, with a low pH value and rich in heavy metals, affect downstream ecosystems and make water unsuitable for irrigation and other purposes.

In the Balkans, the effects on water are particularly severe. As explained in the Blue Chapter, many waterways cross borders and as the countries are relatively small, many sites are located close to a neighbouring state. The effect of changes in the water regime and water contamination are consequently likely to reach beyond political borders.

The situation in the Balkans falls far short of this ideal picture. Coping with the present situation is complicated, with a large number of sites with serious environmental impacts, high remediation costs and the liable owners missing. In most cases the government is held accountable. But the huge financial liability attached to any systematic rehabilitation programme represents a challenge that far exceeds the financial or organizational resources of any one regional actor. In comparison, the lack of expertise required to take practical responsibility for dealing with abandoned sites and the associated issues pales to insignificance.

The Balkan countries have certainly had many other concerns in the last two decades. But they will soon be reaching a point at which the question is no longer what they could do about problem sites, but what they must do. Joining the European Union is the top priority in Albania, Bosnia and Herzegovina, Macedonia, Montenegro and Serbia. But this means they must pass and enforce strict environmental legislation. The debate on ongoing pollution from piles of hazardous waste rock, tailings dams, mine voids, open pits, smelters and so on, will soon reach beyond the environment and enter the political arena.

The dark and the light side of the moon

The Bor region is one of the poorest parts of Serbia. In 2004, the average wage at Bor was only 43 per cent of the national average and 33 per cent at Majdanpek. Unemployment stands at about 50 per cent. But things were not always this difficult. The regional economy depended largely on mining, which started in 1903 with the discovery of copper ore. After the Second World War, the publicly owned mining and processing complex “Rudarsko-Topionicarski Basen Bor” (RTB Bor) became one of Europe’s top producers of copper and a flagship of former Yugoslav industry.

However, over the past 15 years, with political change and insufficient investment, the company has declined. Even with today’s high copper prices, operations are still not profitable due to massive overstaffing, outdated technology and low ore grades. The crisis in the mining industry had a disastrous impact on the regional economy. Moreover the combination of obsolete technology and poor maintenance has made RTB Bor’s operations, especially the smelter, extremely harmful to the environment and public health.

Foreign investors have expressed considerable interest as the area covered by the publicly-owned complex still has rich mineral resources. An initial tender for RTB Bor was announced in September 2006. It was awarded to the Romanian mining company Cuprom in early 2007. The offer amounted to US$400 million for the core operations of RTB Bor: the copper mines at Bor and Majdanpek, the smelter and the refinery. However the Romanian neighbours failed to provide financial guarantees by the set deadline, so the Serbian Privatization Agency terminated the contract in April 2007 citing the “obvious inability to meet the contract obligations”.

Whoever the future owner of the Bor mining complex may be, they will have to develop operations in an environmentally sound and socially sustainable manner. However, remedying the legacy of the past, such as two tailings ponds and several waste disposal sites, is still the responsibility of the Serbian Government which has separated environmental liabilities from privatization. This approach is designed to attract potential investors who would be deterred by the enormity of the environmental liabilities left over from the past.

In June 2007, the World Bank approved a US$43 million grant to the Government of Serbia “to reverse the decline of the Bor region”. Under this project, some US$31 million will be directed to the environmental management and remediation of mining sites, including civil works on critical facilities and the setting up of a monitoring system. Apart from these concrete measures on the ground, the project also has an influence over the privatization process. Among the conditions for granting financial support, the World Bank linked the project to the timely privatization and restructuring of RTB Bor and required the government to ensure that the new owner complied with environmental legislation and deployed sustainable operations. The new tender was issued in August 2007 with the expectation to see RTB Bor in the hands of the new owner by March 2008.

Mining the future?

Most of Kosovo’s wealth lies underground. According to the International Council on Mining & Metals, the “small territory (is) home to one of Europe’s most concentrated and potentially most lucrative mining sectors. With upwards of 14.7 million million tonnes of exploitable reserves, Kosovo is host to the fifth largest accumulation of lignite coal on the planet.” Hopes are high that exploiting these resources will help improve living standards in the territory. Lignite mining and combustion provide a way of overcoming the chronic power outages holding back growth and economic development. The export of energy to neighbouring countries promises to generate substantial income for Kosovo. While talk of statehood dominates diplomatic circles, many who live and work in Kosovo say their primary concern is much more basic. “Alleviate Kosovo’s economic hardships”, they say, “and we will be at least halfway to peace and stability.”

On the other hand, lignite mining and coal-fired power plants have severe impacts on the environment. Open-cast mines have large footprints, often requiring the resettlement of local people. The affected areas are subject to altered landscapes, disturbed water regimes, and airborne and waterborne pollution. Reducing carbon dioxide emissions is one of the world’s most important tasks. Yet each tonne of lignite burned produces more than a tonne of carbon dioxide. In combination with its low energy content per tonne and high proportion of impurities, lignite is a very undesirable energy source.

The potential adverse effects on people exposed to mining operations range from evacuation of villages (houses about to crash into the open pit mine) to respiratory diseases mainly caused by poorly maintained ash deposits.

The discrepancy between environmental protection and human development is commonplace in the modern world. Kosovo is one of the poorest territories in Europe and scarcely in a position to choose from a range of development options, so the international community is helping Kosovo concentrate on mining.

The World Bank awarded a US$10.5 million grant to the United Nations Interim Administration Mission in Kosovo (UNMIK) to attract private investors to develop lignite mines and build new capacity for lignite thermal power generation. The financial support should help set up proper regulations and laws enabling private investors to start bidding in early 2008, begin construction in 2009, and complete the power plant by 2014. The Ministry of Energy and Mining in Kosovo expects that the tender for the development of a new power plant using Kosovo’s lignite resources will become the biggest investment project in Kosovo’s history, with an estimated €3.5 million million in direct foreign investment.

The World Bank and UNMIK state that high standards of environmental and social sustainability will guide the development of these facilities. According to the World Bank, this will be achieved by complying with European Union regulations on lignite mining and coal-fired power plants. Whether these requirements will only apply to the new Kosovo C plant, or also to the old Kosovo A and B plants, has not yet been decided.  For the time being, no decision on their future has been taken. It remains to be seen whether they will be refurbished, perhaps with the help of private investors, or whether it would make better economic sense to close them.

However, it is misleading to suggest that by applying best practice and state-of-the-art technology, the environmental impacts are negligible. Lignite mining for electricity generation is a trade-off and the question is certainly still open as to whether, with the external costs entailed by the project, operations will be as profitable to Kosovo as expected.

Cost is already a big issue today, even before power plant construction has started. With the world’s current mining boom, prices for diggers, conveyor belts and so on, not to mention the salaries of skilled operators, are increasing almost monthly. It will cost about €240 million to equip the new South West Sibovc mine in part by using refurbished old equipment currently in use at the Mirash and Bardh mines. This saves money in the short term but not yield the most efficient mining operations. New funding sources must be found soon, as the two mines currently supplying fuel will run out of lignite by 2010 and will leave Kosovo powerless unless a replacement has been developed. Just as for mining supplies, the price of thermal power plants on the world market is also skyrocketing.

With these financial issues troubling the project, it is questionable how much room will ultimately be left to maintain the promised high environmental standards. Achieving the best possible result will demand determined negotiation of the tender, thorough project implementation and a responsible investor.

Kosovo’s hidden wealth

Martin Woker, Zagreb, Neue Zürcher Zeitung, February 2005

“The Kosovars could live like the sheikhs of the Gulf states,” said Rainer Hengstmann, then director of the Independent Commission of Metals and Mining (ICMM) in Pristina. Kosovo’s wealth is underground in the form of lignite and bauxite as well as a whole range of minerals such as lead, zinc, nickel, silver, chrome and potentially copper and gold too. Although the extent of deposits is still unknown, the ICMM has an accurate idea of the existing preliminary potential. This makes the growing euphoria understandable.

In Kosovo mining itself promises to create 35 000 jobs. A large part of this plan is associated with the exploitation of lignite, which is supposed to be used exclusively for electricity generation. On the basis of existing demand for electricity in Kosovo, the known deposits would produce sufficient energy for about 1 000 years. However, these tempting visions require a stable political framework. It would be unwise to wager on them, in particular because Serbia’s own lignite reserves will run out in the near future.

But Belgrade is not yet dependent on Pristina for its electricity, quite the reverse. Kosovo is unable to satisfy domestic demand and imports electricity from several neighbouring countries. In the eight years since the forced withdrawal of the Serbian administration, the United Nations Mission in Kosovo (UNMIK) interim government has not succeeded in providing the territory with an adequate electricity supply.

Various awkward circumstances explain this situation: outdated technology, mismanagement, confusion over ownership, corrupt national and international officials, a disastrous backlog of unpaid consumer bills and a lightning strike in one of the two power plants, to name but a few. Every day there are power cuts lasting several hours at alternating locations. Some Albanian and Serbian villages have been deprived of electricity for weeks on end. For many people in the territory, the idea of a luxurious life based on mineral resources must seem very exotic, real life being so different, not to mention the stench.

Near a village named after the Serbian hero Milos Obilic, just outside Pristina, two clusters of smoking chimneys rise into the sky. For years they have justified Kosovo’s dubious reputation as one of the worst sources of pollution in the Balkans. The chimneys belong to the two coal-fired power plants, Kosovo A and B. Because of their technical shortcomings, they do not even yield half their rated capacity of about 1.5 GWh. Two coal mines, Bardh and Mirash, are affiliated to the power plants. They extend over 10 square kilometres, with lignite mined round the clock, transported on a mile-long conveyor belt to the drying facility, then onto the power plant.

According to a mining expert, the two lignite mines were exploited in a very unsustainable manner during the 1990s until the withdrawal of the Serbian administration. Among others this is reflected in the unsystematic approach to exploiting deposits, with no proper preparation of the pit slopes. For this reason an Albanian village close to the mines had to be urgently evacuated. At the next thaw, the first houses were in danger of sliding down very steep pit walls. Similarly, the haze over Pristina is mainly due to the huge ash deposits exposed to the wind without any protective measures, and only to a lesser extent to the grime emitted from the power plant. If the mine was operated professionally all combustion by-products and mineral waste would have to be used to refill the exhausted pit, once its bottom had been properly sealed. In 2004, the Irish company, ESBI, took charge of improving the efficiency of the mining company.

There is a great deal of work still to be done, including removing about 10 000 tonnes of scrap metal in the form of diggers and other monstrous machines rusting on the site.

What ever happened to … Baia Mare?

At the time, the Baia Mare spill received worldwide attention and many sources referred to it as the “worst environmental catastrophe in east Europe ever since Chernobyl.” Today, the environmental effects of the accident have largely been overcome. Wildlife in the region recovered after about a year with species migrating into the affected area from upstream. According to the World Wide Fund For Nature, the situation in Baia Mare is better now than it was 10 years ago. There were no fatalities and in most localities the water supply was protected. The consequences of the accident could have been much worse under different circumstances, particularly without the emergency procedures, such as the early warning system that warned downstream communities of imminent contamination. However, the long term effects of the accident are still apparent at a different level.

To minimize the risk of future accidents, various security measures were introduced at Baia Mare, the last of which brought mining operations to an end in 2005. A Hungarian court forced the mining company to reduce production by 85 per cent. Investors consequently lost interest in the site, and spending on environmental protection declined too. When environmental inspectors discovered the company had failed to spend €750 000 on a water purification plant and a system for automatically dosing cyanide, the operation had to shut down.

The debate stirred up by the Baia Mare spill also triggered European legislation on industrial accidents and mining activities. In this respect, several legal measures were taken to improve the safety of mining facilities. The mining industry responded by developing better technology and attaching greater importance to safety performance.

For the people in Baia Mare and their downstream neighbours, what matters after all is whether the “lessons learned” will be remembered should the operations start again.

Facts of the accident

On 30 January 2000, a dam holding tailings (mining waste) from gold extraction overflowed in Baia Mare, in northwest Romania. The failure of the dam was probably due to a combination of factors: faulty design, unexpected operating conditions and extreme weather. The spill released some 100 000 cubic metres of waste containing about 70 tonnes of cyanide, as well as copper and other heavy metals. The contaminated water fed into the Sasar, Lapus, Somes, Tisza and Danube rivers, crossing seven countries, before reaching the Black Sea about four weeks later. The spill affected some 2 000 kilometres of the Danube’s catchment area.

Romanian sources reported that the spill interrupted the water supply of 24 localities and added to the costs of sanitation plants and industry, due to the break in production processes. Hungary estimated the amount of dead fish on its territory at 1 240 tonnes. The Federal Republic of Yugoslav authorities reported large amounts of dead fish in their branch of the Tisza river but no serious damage in the Danube.

Pros and cons of gold mining at Rosia Montana

The Rosia Montana gold and silver mining project in Romania’s Apuseni mountains has been in and out of the environmental headlines in recent years. It is a fascinating case of the new market economy trying to conduct a dirty old industrial activity in a completely new and much cleaner way – at least in Romania. Over roughly 20 years, the miners hope to extract 300 to 450 tonnes of gold and 1 500 to 2 000 tonnes of silver – for a total value of several million million US dollars. This is all supposed to bring new life to an attractive, historic area that has been mined for thousands of years. Purportedly the mines will bring new jobs and steady incomes, vocational training, new markets for local goods and services, spin-off local employment opportunities, schools full of children, better roads, improved public transport, renewed municipal services and plenty more besides.

Despite such promises, opposition to the project has been relentless, and highly vocal nationally and internationally. Sponsors of the project have argued that they will develop and profitably operate mining in a way that meets or exceeds all national and international social and environmental regulations, but to no avail. Opponents are not impressed by the range of expected benefits. There are bound to be disadvantages and the region’s unhappy past experience of mining has roused significant opposition. The appalling social and environmental consequences of past mining activities are still all too apparent in many areas of Romania.

As for the downside, the grand promises to reinvent the Romanian mining industry also involve reshaping mountains and burying whole valleys. To bring new life to the township, a large part of it will be destroyed. The risk of poisoned waterways goes hand in hand with the promise of a restored environment. All this coincides with a period of unprecedented institutional change and new rulemaking as Romania joins the European Union. Nor should it be forgotten that mining is also about making money and that the Romanian state owns a 20 per cent stake in the project, so vested interests no doubt explain some people’s wariness.

As of today, the key question is whether the Rosia Montana project will deliver all its promised benefits. But given the opposition to the project, it might be more to the point to ask whether it will even get a chance to try?

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