The Mine Financial Security Program (MFSP) is used by the Government of Alberta and the AER to strike a responsible balance between protecting Albertans from oil sands and coal mine closure costs, and maximizing industry’s opportunities for responsible and sustainable resource development. The MFSP is one of many liability management programs that ensure that Alberta’s energy resources are developed responsibly.
The program helps
- manage coal and oil sands liabilities by collecting financial security from mine owners, and
- protect the public from paying for project closure costs, rather than the companies that own them.
How the MFSP Works
At the end of a mining project’s life, the company that owns the coal or oil sands mine must remove all infrastructure and return the land to how it looked, and how it was used (or similarly), before development took place. The MFSP is a series of financial deposits that secures funding to help ensure that this process happens and that the financial burden to abandon and reclaim these sites remains with the energy companies that own them.
Under the MFSP, mining companies must provide sufficient funds to abandon, remediate, and reclaim their sites. We are responsible for managing the security deposits submitted by mining companies. By ensuring that these costs are covered, companies can afford to remediate and reclaim their sites and maintain the land until they receive a reclamation certificate.
How Security Is Collected
A company’s security deposit is based on the estimated liabilities of its mine, which are the costs to abandon, remediate, and reclaim the site. Companies can elect to pay the full security deposit based on estimated liabilities at the start of the mining project, or they can pay four security deposits during the course of the project, which focus on potential risks throughout the life cycle of a mine.
The four deposit types, and when mining companies must pay them, are as follows. Note that these four deposits apply to the oil sands mining industry because the coal mining industry has chosen to pay full financial security at the start of its projects.
Base Security Deposit
All companies with new and existing mines must provide a base security deposit. This amount is primarily used to maintain the security and safety of the site until another operator assumes responsibility for the project or until all infrastructure is removed and the site is reclaimed.
Operating Life Deposit
This deposit covers project risks that coincide with the end of a mine’s operations. A company is required to start posting financial security when there are less than 15 years of reserves remaining. This ensures that all outstanding abandonment, remediation, and surface reclamation costs will be fully secured by the time there are less than 6 years of reserves remaining.
Asset Safety Factor Deposit
In the event that a company’s assets (net cash flow from remaining reserves) fall below an acceptable level, this deposit ensures that all MFSP liabilities are fully funded. When a project’s MFSP asset-to-liability ratio falls below 3.0, the company must pay us sufficient financial security to bring the ratio back up to 3.0.
Outstanding Reclamation Deposit
This deposit addresses the risks posed by a company that defers reclamation of its site until the end of operations. The company must post an outstanding reclamation deposit when it fails to meet its approved reclamation plan targets.
Where to Send MFSP Submissions
Companies must submit their MFSP annual submissions (using schedule 2 or 3, provided below) and supporting documentation to us by email to MFSPSubmissions@aer.ca.
Supporting MFSP Documents for Industry
Guides and Schedules
- Guide to the Mine Financial Security Program [PDF] (updated: February 2017)
- Mine Financial Security Program Standard [PDF]
- MFSP Schedule 1 [PDF]
- MFSP Schedule 2 [PDF]
- MFSP Schedule 3 [PDF]
- MFSP Schedule 4 [PDF]
- Annual Mine Financial Security Program Submissions [PDF]
- MFSP Security and Liability [PDF]
- Oil Sands Forward Price Factor [PDF]
Questions and submissions for MFSP must be directed to MFSPSubmissions@aer.ca.