Bonding Overview

Bonds are monies collected through a third party to cover the cost of planned reclamation and environmental mitigation after a mine's life is over. Because hardrock mining at Donlin Gold could result in problems such as those examined in the case studies page and in the mercury page, mining companies are forced to put money into a dedicated fund, or bond, before beginning operations. In the event of a bankruptcy, the government can then, theoretically, use this money for cleanup although in many cases the amount of the bond has been insufficient. Presumably, bonds also also provide an incentive for the company to limit pollution at a mine, and thereby recoup more of the bond later.  You can read a comprehensive report on hardrock reclamation bonding practices in the western united states by clicking here.

At Donlin, closure and reclamation are estimated by NovaGold to cost about $96.1 million.    For comparison, as of 2010, the Red Dog Mine's bond account had over $300 million. Red Dog processed 6-8 million tons a year in its best years. Donlin will process about 21.5 million tons a year.  We hope to understand soon why a mine that will have a much larger footprint will be bonded for so much less.  We should be asking if this is enough, and we should carefully consider the obligations for perpetual water treatment when comparing Donlin to other mines.  Red Dog, for example, is expected to require $10 million per year in perpetuity to treat its acidic water after the mine closes.