After 60 years of
operation, coal extraction at Solid Energy New Zealand's (SENZ) Strongman Mine, near Rapahoe is scheduled
to end in early 2005. Up until 2003 the closure bond for Strongman Mine was only
$930, and both SENZ and the West Coast Regional Council (WCRC) agreed that a
more realistic level of bonding was required.

A
conceptual closure plan has been developed by Golder Associates, and the cost of
the work estimated. Closure includes decommissioning of equipment and
facilities, rehabilitation and replanting of all disturbed areas and a period of
maintenance and monitoring to verify that closure objectives have been met.
Significant maintenance allowances are included to cover management of
underground fire, subsidence and slope instability. These make up much of the
potential ongoing environmental liability at the Strongman. All costs incurred
beyond year 1 of closure are discounted to present value. Uncertainty in costs
is addressed by Monte Carlo simulation, with an
80 % confidence level adopted.

A
bond quantum of $3.0 million has been calculated for the first year of closure
at Strongman. A three-year rolling' bond is proposed. Progress will be reviewed
annually, with the bond adjusted up or down accordingly. It is then renewed for
a further three years. This allows for progressive return of the bond as
rehabilitation objectives are met and verified. Similarly, if there are delays
in meeting objectives, a proportion of the bond may need to be kept in place for
a longer period than assumed. The level of bonding in place for the Strongman
operation at any time in the future will therefore reflect the cost to complete
the closure work programme.