Buried treasure and toxins at Beaconsfield

by | Aug 3, 2012 | Business, Resources

The Beaconsfield mine and (from top), Larry Knight, Todd Russell and Brant Webb.

As if befitting its tumultuous history of corporate conflict and human tragedy, the life of the Tasmania Mine at Beaconsfield seems destined to end in controversy.

It was first mined during the Gold Rush years of the 19th century, was closed at the outset of the First World War in 1914 and did not reopen again until 1999.

The Beaconsfield mine has produced 1.95 million ounces of gold over the years, worth more than $3 billion at today’s gold prices, and its resources remain “open at depth”.

The deepest drill intersection grades 32.4 grams of gold, over 1.0 ounce of gold, per tonne.

Yet now, with no resistance from government or regulators, management is preparing to dump 300,000 tonnes of tailings – mining leftovers thick with arsenic, cyanide and other toxins – straight back into the underground mine itself, risking ultimately poisonous seepage into the water table.

This action might seem an acceptable risk if the mine were way out in the desert. Rather, the historic Tasmania Mine, with its famous red and yellow headframe and museum, is situated smack-bang in the middle of the township of Beaconsfield in northern Tasmania.

This site, of course, is the very mine whose fateful collapse on Anzac Day in 2006 killed miner Larry Knight and trapped Todd Russell and Brant Webb 925 metres underground, until the euphoria of their rescue 15 days later.

‘Quick fix’ accusations

Now accusations swirl that the company which runs the mine, BCD Resources, is pursuing a “quick fix” to satisfy its environment bond requirements with the state government and keep its clean-up costs to a bare minimum – at the expense of future generations.

There are two main allegations: one of “resource vandalism” as there is significant existing gold, even apart from the potential for further discovery, and the second, of environmental folly.

“They (the company and the regulators) are deliberately burying a valuable long-term gold resource,” says dissident BCD shareholder, Will Matthews.

“BCD’s proposal to dump the toxic contents of TSF2 (one of the mine’s tailings dams) into the Tasmania Mine would create serious long-term environmental risks in the very heart of the pristine Beaconsfield township.” And it is all being carried out, says Matthews, without a proper independent environmental report being required by the Tasmanian Environmental Protection Agency (EPA).

Claims rejected

Both the company and the EPA reject Matthews’ claims. Chief executive Peter Thompson said the plan had been endorsed by the EPA and Mineral Resources Tasmania (MRT).

Piping tailings back into an underground mine, indeed the whole mine Closure and Rehabilitation Plan they claim is “world’s best practice”.

Yet Matthews responds, and his views are supported by others au fait with the Tasmania Mine, that significant underground resources, open at depth, have never before been sterilised this way in Australia.

Privately scathing

It should be said that the mining fraternity in Tasmania is tight-knit and few critics of the BCD proposal were prepared to speak against the industry and government on the record.

On background however, sources were scathing, calling into doubt the claim that the toxic sediment would stay, effectively capped, down underground without effecting groundwater.

“Unless it is rapidly halted, this may go down in history as Australia’s worst case of environmental and resource vandalism,” says one mining industry veteran. Once the mine flooded again, the toxins would ultimately mix with the water system.

Cost focus

Over the past two weeks, BusinessDay has put detailed questions to the EPA and MRT.

A picture has emerged of a mine closure plan devised by the mine’s management to be less environmentally cautious than cost effective. “It’s all about the money,” is the way Matthews frames it.

He says BCD has sought the cheapest way to get its $2 million to $3 million back from the government – the two parties are even in a legal dispute – and this is their effective settlement.

Further, present mine management is risk averse on mining deeper at Beaconsfield, even if there is gold there, so putting the operation on “care and maintenance” was discarded as an option.

It is the regulators however who ultimately preside over the fate of the mine. And critically, no formal EPA Environmental Effects Report (EER) has been requested or produced which assesses the risk of dumping the tailings down the mine. It barely rates a mention in the EPA’s public materials.

The EPA and MRT have merely signed off on the company’s mine closure proposal rather than insisting on a rigorous, independently prepared and publicly available EER.


On May 30 this year, in a presentation to the local Beaconsfield community, BCD chief Peter Thompson presented the Tasmania mine as a “Depleted Resource”.

A Closure and Rehabilitation Plan was laid out. It was to recover the sulphide tailings in the surface TSF2 dam, and pipe them into the mine, three kilometres away, rather than cap the dam which is usual practice. Further, old tailings from Lefroy, across the Tamar River, would be trucked to Beaconsfield, treated with cyanide to recover residual gold and, finally, also piped into the mine.

Matthews calls it madness.

As he says, why not leave the sulphide tailings where they are and simply pipe the retreated Lefroy tailings into TSF2 to cap the sulphide tailings. When the TSF2 dam was constructed, the EPA required it to be lined with plastic, the industry standard, and so all the sulphide tailings and Lefroy tailings would never affect local groundwater.

But back to the claims of a “depleted resource”, even the company’s own statements to the Australian Stock Exchange (ASX) from months earlier show BCD had begun downplaying the potential for further gold mining.


Changes in technology and a higher gold price would surely make this resource a viable mine again, says Matthews, just as they did after the last hiatus. “What is the point of burying the resource under tailings?” Others with a close knowledge of the project agree.

How much gold remains at Beaconsfield is a matter for conjecture, but the label “depleted resource” does appear misleading.

BCD’s half-year financial report to December 31, 2011 included reported “Identified Gold Resources”, as at June 30, 2011, totalling 334,000 ounces (1,011,000 tonnes at an average grade of 10.3 g/t gold). That is a lot of gold.

Since then, BCD reported total gold production for the 2011/2012 year of 44,829 ounces of gold.

Allowing for likely mining and treatment losses, gold resources would have been depleted by up to 56,000 ounces, say sources close to the project. “Remaining Identified Gold Resources in the Tasmania Mine would currently exceed 275,000 ounces of gold,” one told BusinessDay.

By comparison, Henty, Tasmania’s only current operating gold mine, on February 23, 2012 reported total mineral resources, as at December 2011, of 326,000 ounces of gold (2,081,000 tonnes at 4.9 g/t gold).

Therefore the Tasmania Mine at Beaconsfield contains the largest and highest grade gold resource in the State. The grade (10.3 g/t gold) of the Tasmania Mine is 5.4 g/t gold higher (110 per cent higher) than the grade (4.9 g/t gold) of the Henty Mine.

Disputed data

It is a comparison which the department said was “incorrect” for a “myriad of engineering and geological reasons”.

“Mineral Resources Tasmania (MRT) stands behind its previous response that the proposed actions will ensure the best environmental, economic and community outcome during and after mine closure,” it responded in a statement.

It also added that while it was “physically possible to deepen the mine, this was economically unviable at any reasonable projected gold price. This is due to the Tasmania Reef declining in gold grade and width with increasing depth.”

Whatever the case, MRT was also mindful to point out that the EPA was responsible for assessing whether the closure was carried out effectively.

Buried treasure

Still, at the current gold price of around $1,530 per ounce, the Tasmania Mine resources of over 275,000 ounces are worth more than $420 million in the ground.

The reality is that both technology and gold prices do, inevitably, change. They will change. As will the value of paper currency, namely the Australian dollar.

The $A gold price has risen consistently and inexorably in recent times, trebling over the last seven years alone.

Some commentators, including the chief executive of the world’s biggest gold miner Newmont Mining Corp, would say that gold is the only real form of money (it can’t be printed) and a further trebling in price over the next seven years to $4,500 per ounce is a very possible outcome – particularly if the world’s central banks keep revving up the printing presses.

There is of course an element of “he would say that, wouldn’t he” but a much higher gold price is more than just plausible, it is likely at some stage as easily extractable gold resources around the world become depleted.

At $4,500 per ounce, the current Tasmania Mine resources of over 275,000 ounces would be worth over $1.2 billion in the ground.

Does MRT consider that Tasmania is so well off as a state that it can afford to condone the sterilisation of such a significant, high grade resource just so the company concerned, BCD, can obtain a short term financial benefit of several million dollars?


The MRT again parrots the company line on this issue. That is, dumping the tailings down the mine would not necessarily prevent future generations from accessing the resource.

“The gold intersects referred to are not “sterilised” and, as has happened in many mines (including this one) in the past, should the economics change, these mineral resources could still be accessed appropriately,” said the MRT.

BCD chief executive Peter Thompson said it would be possible to simply drill through the tailings.

One gold miner told BusinessDay, however, that the cost would be prohibitive.

“Sinking a decline and new ventilation shafts from surface to 1,250 metres shouldn’t cost much more than $200 million,” was the sarcastic response.

“Historically, around 1 million ounces of gold was mined from the Tasmania Mine between 1877 and 1914. Between 1999 and 2012, around 1 million ounces of additional gold has been mined,” said Matthews. “There is no geological reason why there is not at least another 1 million ounces left in the Tasmania Mine for the future benefit of Tasmania, the Tamar Valley and Beaconsfield.

“The Tasmania Mine belongs to the people of Tasmania. It should not be buried under treatment plant tailings (sulphides from TSF2, cyanided Lefroy tailings, and presumably cyanided, mercury-containing Beaconsfield Estuary tailings) because the most recent BCD management says it has no future.”

No future again

When the mine closed in 1914, the engineers and geologists at that time also said that the Tasmania Mine had no future. And of course the world knows that they were very wrong.

There is no doubting BCD’s contention that further mining at the mine would be technically challenging and expensive. But there is also little doubt that there is a significant environmental risk to dumping the tailings down the mine, and that the regulators have done little to assess this risk.

They have, however, tried to offset the blame for any recriminations down the track.

In their responses to BusinessDay questions, the EPA say that, once MRT concluded that the mine was unviable, the EPA was free to approve using the mine as an underground tailings dam – BCD can fill it up with whatever they like, provided it is heavier than water and will never float to the surface (arsenic, cyanide and mercury for example.

For its part, MRT say that the mine must be unviable, otherwise BCD would have kept mining – besides “The EPA is the responsible body for assessing whether the closure is carried out effectively and efficiently in relation to both underground and above ground legacies”.

The mine may take decades to flood to the surface again, as it did after the last cessation of mining.

In the meantime, that 300,000 tonnes of tailings may just become one million tonnes of tailings as there are other tailings dumps in the area such as the Golconda tailings.

And the latest miner to get approval in the area, a nickel hopeful called Proto Resources, will need a place to abandon its waste – even if it is in the centre of a town.


Michael West

Michael West

Michael West established michaelwest.com.au to focus on journalism of high public interest, particularly the rising power of corporations over democracy. Formerly a journalist and editor at Fairfax newspapers and a columnist at News Corp, West was appointed Adjunct Associate Professor at the University of Sydney’s School of Social and Political Sciences. You can follow Michael on Twitter @MichaelWestBiz.

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