The company responsible for operating the Ffos-y-Fran opencast coal mine in Merthyr, South Wales, has raised concerns as it has, to date, provided only a fraction of the required funds for site remediation. The impending closure of the mine, slated for November, has brought the issue of environmental restoration and financial responsibility to the forefront.
Closure Announcement and Local Impact
In June, Merthyr (South Wales Ltd.) confirmed its intention to cease coal mining operations in November, resulting in the loss of 150 jobs. This decision followed the rejection of the mine operator’s request in April to extend the mine’s operational life until March of the next year by the Merthyr Tydfil County Borough Council. Notably, Ffos-y-Fran accounts for approximately two-thirds of the UK’s coal production.
Remediation Costs and Liability
As part of the planning agreement with the Merthyr Council, the mining company is legally liable for the remediation of the expansive mining site. While the precise cost of remediation remains undetermined, it could potentially exceed £100 million.
To date, the council has identified £15 million in an escrow account earmarked for remediation efforts. In response to inquiries, the council emphasised, “The costs for the restoration of the site remain the responsibility of the mine operator as a requirement of the planning conditions. There are no settled final costs of restoration, but £15 million has been secured in an Escrow account, which is available to assist with the costs of restoration works.”
Mitigating Shortfalls and Future Planning
Concerns linger about potential shortfalls in funding for remediation. In response to inquiries about addressing such a shortfall, the council asserted that “Merthyr (South Wales) has recently appointed consultants to review and prepare a future planning application that seeks permission for a revised restoration strategy. Whenever and when appropriate, all legal possibilities to make up for any deficiency will be taken into account.”
The mining company declined to comment on its current estimate for remediation costs or its plans for financing the required work.
Financial Provisions and Ownership
The latest audited account for Merthyr (South Wales Ltd.) for 2021 revealed an increase in the provision for remediation by £5.8 million, reaching a total of £71.4 million. The increase was attributed to rising operating costs, particularly the soaring price of diesel. This increase followed both an internal revaluation and an assessment by independent consultants.
Additionally, under the terms of the lease with the landowner, Geraint Morgan Legacy Ltd., the company has provided an unlimited guarantee and indemnity against all damage, loss, cost claims, and expenses arising from mining operations or site restoration and aftercare.
Political Concerns and Potential Environmental Risks
The issue of remediation costs has garnered political attention, with Plaid Cymru’s Delyth Jewell highlighting estimates of £100 million to potentially £120 million for mine site remediation. She expressed concerns over the consequences of the company failing to fulfil its obligations, stating, “If the company doesn’t keep to its promises or abandons the site, there will be a shortfall of more than £100 million.”
First Minister Mark Drakeford acknowledged the complex situation, emphasising the need to ensure the proper restoration of the site and mitigate risks. He voiced concerns about the potential for abandonment and the associated risks, including flooding, ground stability, and unsecured access to the site.
Coal Authority Involvement
The Coal Authority recently took enforcement action against Merthyr (South Wales) for mining activities outside its licenced area. A statement from the authority noted, “A recent inspection of the Ffos-y-Fran site by the Coal Authority has highlighted that the operator is coaling outside of their licence boundary. We have contacted the operator and begun enforcement action to end coaling in this wider area in line with our legislative powers.”
The situation surrounding the Ffos-y-Fran opencast mine continues to evolve, with multiple stakeholders working to address the environmental and financial challenges posed by its closure.