Beyond Extraction: Why Mine Closure and Decommissioning Risk is a Top Priority in Asia Pacific

Mining companies across APAC are under growing pressure from regulators, investors and communities to plan for mine closure and decommissioning with the same rigour they apply to site development and production. When closure is overlooked or underfunded, operators can face permit suspensions, rising remediation costs and long-tail environmental liabilities, alongside lasting reputational damage for individual companies and the wider industry.

Commodity price volatility, the energy transition and ageing asset portfolios across the region are all amplifying uncertainty for the mining sector, making these financial and reputational consequences even more critical. But it is regulatory penalties that are now forcing mining companies to act across their portfolio. In September 2025, the Indonesian government suspended 190 coal and mineral mining permits following a review by the Directorate General of Minerals. “Many operators had failed to maintain adequate financial guarantees or meet post-mining land reclamation obligations,” says Gareth Ho, Associate Director, Natural Resources for Aon in Singapore. “This signals that regulations on these matters are only going to become more stringent.”

“By failing to plan and act on decommissioning and mine closure obligations, companies’ risk having their licences revoked.”

– Gareth Ho, Associate Director, Natural Resources for Aon in Singapore

When Closure Liabilities Overtake Revenue: Protecting the Balance Sheet

As a mine approaches end of life, the financial burden of closure and rehabilitation obligations begins to outweigh its revenue-generating capacity. “As the value-to-liability ratio deteriorates, mining companies can be left with limited options to fund decommissioning,” says Ho. “Operators are required to deposit funds in escrow before commencing operations to cover rehabilitation costs, but inflation over decades of operation can result in a shortfall of provisions for actual end-of-life costs. This leaves a funding gap that can be harder to meet as revenue declines.”

This challenge becomes more complicated when mining assets change hands. “In a particular tier 1 Mining jurisdiction, mines commonly pass to progressively smaller operators as production and reserves declines,” says Ho. “If the owner at closure is unable to fund rehabilitation, responsibility defaults to the state. When this happens, the whole industry experiences the reputational impact.”

Designing Mines to Cut Closure Costs and Future Liabilities

Bringing closure considerations into mine design discussions can be an effective way to mitigate escalating closure costs and liability exposure. Looking at alternative tailings solutions, for example, can substantially reduce ongoing obligations associated with wet tailings facilities after closure. “These costs can be significant and create liabilities that last for decades,” says Ben Christensen, Principal Risk Engineer, for Aon. “The Berkeley Pit in Montana, United States was an open-cut mine closed in 1982. To this day it still requires active water treatment due to severely contaminated groundwater.”

“By contrast, the Karara iron ore mine demonstrates how a facility can be designed to reduce impact and avoid remediation liability at closure,” he adds. “Constructing dry-stacked tailings storage at this site in Western Australia allows the operator to exit without ongoing management costs.”

Rehabilitating mined areas during operation is becoming more popular as both good practice and effective risk management. Gippsland Critical Minerals is taking this progressive rehabilitation approach with the Fingerboards Project in Victoria, Australia by committing to backfilling and beginning rehabilitation of each area within twelve months of mining it. “More companies in the sector are looking at this type of solution,” says Ho. “It enables investment in site rehabilitation when cash flow is available, rather than storing up significant liability that is expensive and could take years to address.”

Planning and Engineering for Value Beyond Closure

With upfront planning informed by technical capability, former mining sites can generate lasting value and be transformed into a source of revenue for local communities and industries. In Far North Queensland, the Kidston Pumped Storage Hydro Project is converting a disused gold mine into a 250-megawatt pumped storage hydroelectric facility. “The Eden Project in Cornwall, United Kingdom is a flagship rehabilitation project for the mining sector,” says Christensen. “Opened in 2001 in a former clay pit, the site has now contributed more than GBP2.2 billion to the regional economy and attracts over one million visitors every year.”

These examples show how effective post-closure land use can be when engineering expertise is applied to properly assess the value each site could offer beyond its mining life. “Not every mine will become a pumped hydro facility,” says Ho. “Asking the question early opens up options that may not be possible when raised at closure.”

Matching Insurance Cover to the Asset Lifecycle

As a mine moves through the asset lifecycle, its risk profile changes and insurance programs need to adapt accordingly. During operation, Industrial Special Risks (ISR) policies cover the asset base. As production winds down and closure activities begin, the focus shifts to liability mitigation. Impacts such as groundwater contamination and tailings leakage can take decades to emerge and Environmental Impairment Liability (EIL) insurance can address these types of issues in the years following closure.

Where decommissioning involves new construction, Construction All Risks cover can be tailored to address the specific hazards associated with working on disturbed ground. In partnership with SCOR, Aon offers insurance solutions developed under SCOR’s NatReCo Initiative. Addressing both ecological restoration and rehabilitation, NatReCo solutions are standards-and-impact-assessment-based, scalable frameworks that transfer defined physical risks arising from insured events, within agreed policy limits, from project sponsors and capital providers to SCOR.

Support from Aon’s Global Risk Consulting (AGRC) practice enables mine operators to identify, quantify and prioritise closure risks. This provides mining executives with evidence to build their business case for best practice closure strategies and gives insurers the data they need to underwrite with confidence.

“Operators who invest in rigorous risk assessment can access better insurance terms across every stage of the lifecycle, not just during operations.”

– Ben Christensen, Principal Risk Engineer, Aon

Mine decommissioning is moving up the industry’s risk agenda. Regulators are taking action; investors are paying attention to closure provisions and communities expect positive outcomes that go beyond stabilising water sources and restoring landscapes. For risk and finance leaders, this creates an opportunity to enhance value and reduce long-term liability by bringing closure considerations into early project decisions. Working with experts who understand both engineering requirements and insurance options at each lifecycle stage can support a cost-effective strategy that meets investor and regulatory requirements throughout the life of the asset.

Learn more about Aon’s capability and expertise in managing mine closure risk across APAC. Or speak to one of our Aon specialists about closure and decommissioning risk across your mining portfolio.

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