Economics of quarry after-use

The after-use can yield greater profits than the mineral operation. An Australian mining textbook contains the observation that: 'The obvious place to start a mine, if one was allowed to, is right in the centre of a large city so that one has housing, transport, water, power and market all on the doorstep' (Thomas 1978: 62). Location also has a great influence on the economics of quarry afterï¾­use. The subject has not been researched systematically but it is apparent that, while reclamation is certain to impose a financial burden in remote areas, there is a good prospect of it yielding a profit if the site is close to a town. Urban quarries, like urban reservoirs, have exceptional development potential. Thorpe Park, near London, is an old gravel pit which has become a theme park. It is well planned and poorly designed. At Dayton, in Ohio, a very large 'water supplyï¾­parkï¾­recreational complex' has been created by mining sand and gravel in the flood plain of a river, near the town. The provisions of the 1977 Surface Mining Control and Reclamation Act would prevent such developments (Committee on Surface Mining and Reclamation 1979: 34). The relative order of costs in Table 1 is representative of the economic situation which a mineral operator is likely to face in remote areas. The figures are likely to change but not the ratios. Table 1: The economics of mineral working in a remote area: Value of land in existing use: 1,000/ha Value of land with permission to work minerals: 60,000/ha Cost of backï¾­toï¾­contour restoration: 6,000/ha (using overburden) Cost of reclamation as a 'nature reserve' 2,000/ha (with seeding and planting only) Value of land after restoration: 300/ha The figures do not derive from a single place or project and in many cases the disparity between reclamation costs and afterï¾­use land values will be greater than in the above example. Thus some Australian mineral sand companies spend up to $2500/ha on restoring land which will have a value of $12.5/ha (Thomas 1978: 66). In such circumstances there is no financial incentive whatsoever for reclamation. It is done solely because governments and operators now accept the Scott Report's argument 'that in principle it is wrong that any body or person should be allowed to work land and leave it in a derelict condition'. In prosperous agricultural areas, which are free from urban pressures, the economic position for reclamation work will be very different from that in remote areas. Land will have a higher existing use value and a higher afterï¾­use value. If sufficient overburden is available to restore the land to an agricultural use then the financial position may be as shown in Table 4.2. Once again there is no financial incentive for the company to restore the land. Yet reclamation is economically desirable for society because the agricultural output from the land will produce benefits over a very long period of time. Table 2 The economics of mineral working in agricultural areas. Value of land in existing use: 6,000/ha Value of land with permission to work minerals: 60,000/ha Cost of restoration to agricultural use: 10,000/ha Value of land in agricultural afterï¾­use: 5,000/ha If a mineral operation is close to an urban area, as often happens for pits and quarries which yield building materials, then the economics of reclamation and afterï¾­use are entirely different. The figures in Table 4.3 indicate the economic prospects, but land development companies are as secretive as mineral companies about their costs and profits. It will be assumed that the hectare of land in question could be used for agriculture, mineral extraction, or industrial/residential use, and that it will be partly below the water table after the mineral has been removed. Table 4.3 The economics of mineral working near towns. Preï¾­quarrying land values Agricultural land 6,000/ha Mineral land 60,000/ha Industrial/Residential land 600,000/ha Reclamation costs Seeding and planting of banks 3,000/ha Backï¾­toï¾­contour restoration 45,000/ha (with purchased rubble) Reclamation profits Hygienic landfill (with domestic refuse) 3,000/ha Value of land in afterï¾­use Passive recreation (on unfilled land) 100/ha Forestry or rough grazing (on landfill) 500/ha Agricultural land (on rubble) 5,000/ha Private watersports and angling 10,000/ha (on water areas) Industrial/Residential land 600,000/ha The figures show that different afterï¾­uses can have very different financial consequences for the mineral companies. In the above example an industrial or residential afterï¾­use is much the most profitable option for the company. This is followed by the watersports option. In the London area it has been the case for many years that the rental for sailing and waterï¾­skiing is 'considerably more than the normal rental for agricultural land' (Jones 1975: x). Hygienic landfill can also yield a profit for the company, though filled land has little afterï¾­use value because of problems with subsidence, methane generation (unless this can be sold) and leachate disposal. Passive recreation and nature conservation will not produce a profit for the company, though the costs of preparing the land may be attractively low. Agriculture is normally the least desirable afterï¾­use from a shortï¾­term financial viewpoint. It requires a high level of expenditure which cannot normally be recouped from the afterï¾­use value of the land. A 1976 British report on Planning control over mineral working took the view that it was entirely reasonable to insist that a company should 'restore' the land to its former use but that it would be unreasonable to require expenditure on preparing the land for any other afterï¾­use (Stevens Report 1976: 104). This latter expenditure was described as 'special treatment for redevelopment'. The restoration alternative provides a useful benchmark for the level of expenditure which might be required ï¾­ but there is no reason why the company should avoid the expenditure when permission is given for a less costly, or more profitable, after use. If, for example, a quarry is to have a lowï¾­cost recreational afterï¾­use, it is fair that the company should pay for footpaths, planting and car parking. If, on the other hand, it is developed as a highï¾­profit industrial estate then the money which would otherwise have been spent or restoration work could be spent on screening, recreation or wildï¾­life conservation. There is, in principle, no doubt that the proper source of reclamation funds is the mineral operation which created the dereliction, not the afterï¾­use, so that external costs are internalised, on the economic principle that 'the polluter pays' (Samuelson 1973: 810). This is an equitable way of apportioning costs, and an efficient way of getting the work done. Excavating plant is often idle during a mineral operation and can be used to prepare for an after use as part of the mining cycle. Reclamation designs can be tailored to the capabilities of the machines which will be used. In the case of abandoned mines and orphan quarries, which were worked before the age of mineral planning, then finance must come from elsewhere: from charity, from public funds, as happens with Britain's derelict coal mines, or from a levy on future workings, as with America's derelict strip mines. The latter policy can be justified if the consumers who gained from the artificially low price of coal in earlier years approximate to the groups who consume the output from current mines. But what should happen to the land itself? Public acquisition should be a 'planning gain' which provides compensation for any adverse sideï¾­effects which the public has endured during the operational life of the quarry (Ratcliffe 1976: 86). This happens in Holland: Despite the fact that the gravel companies have to hand over the exhausted quarries to the provincial government without payment, the eagerness of several parties to buy and develop this 'derelict' or 'idle land' clearly demonstrates its intrinsic economic value (Moolen 1996).