public disclosure authorized e-345 - world bank · e-345 ukraine coal mine closure opportunities...

E-345

Ukraine Coal Mine ClosureOpportunities for a More CostEffective Process

File I-14 February 2000

Clifton Associates Ltd. engineering science technology

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Clifton Associates Ltd.engineering science technology

22 February 2000File No. 1-14

The World Bank1818H Street, N.W.Washington, DC 20433U.S.A.

Attention: Mr. Heinz HendriksMission Leader

Dear Heinz:

SUBJECT: Ukraine Coal Mining Restructuring Project

Please find enclosed two copies of a report entitled "Ukraine Coal Mine ClosureOpportunities for a More Cost Effective Process", dated February 2000. This reportwas prepared in keeping with the specified Terms of Reference for the Coal SectorMission dated 12 January 2000.

I trust this report will assist the World Bank in assessing future action with respect tothe coal mine closures. I look forward to our next mnission together.

In closing, I would like to thank the World Bank for the opportunity to work on thisvery interesting project. I would especially like to thank you for yourprofessionalism and advice during the work term. I very much appreciated yourwisdom.

Yours truly,

Clifton Associates Ltd.

Ron G. Barsi P.Geo.RGB/RB

Enclosures

101, 116 Research DriveSaskatoon, Saskatchewan

Canada S7N 3R3

Tel: 306 975-0401Fox: 306 975-1076

File 1-14Page i

Executive Summary

From 24 January to 8 February 2000 the World Bank conducted a mission in the Ukraine

to evaluate the status and intermediate results of the Coal Sector Adjustment Loan,

similar for the Coal Pilot Project and to develop improved mine closure procedures for

the forthcoming Coal Mining Restructuring Project. This World Bank project would

partially finance the costs of closing 70 additional uneconomic mines.

Experience gained to date, strongly demonstrates the need for improved mine closure

procedures, particularly with respect to environmental considerations. Extensive delays

in the completion of mine closure and the transfer of rehabilitated mine locations to the

local administration have been a major cause for large cost overruns. There are

insufficient funds available to meet the demands being registered by the regulatory

authorities, the local administration and the public.

An alternative approach that is timely, cost effective and involves the appropriate

participants needs to be developed for the future project.

From an environmental perspective, there are many opportunities for improving the cost

effectiveness of the closure program. The main areas where improvements would be

beneficial indude:

* Prioritization of environmental concerns based on risk

* Streamlining the closure process

• Enhanced implementation planning

• Minimizing the number of participants

* Rationalization of the regulatory requirements

* Focused sustainable development


File 1-14Page ii

The population within the immediate impact area of the coal mine closures has a

reasonable level of environmental awareness. They are experiencing a severe social

situation attributable to the mine closures. Consequently, unless they are directly

impacted, the public do not place a high priority on environmental matters.

The advantages of institutional change and enhanced planning mechanisms are discussed

in some detail. Emphasis is placed on the use of "Risk Based" decision making.

Models are suggested for:

• Integrated Closure Planning

* Risk Analysis

* Information Management

Following the completion of site closure, liquidation and transfer of the mine sites to the

local administration, it is emphasized that "Institutional Control" be put in place to

protect the public and the environment over the long term.


File I-14Page iii

Table of Contents Page No.

Transmittal Letter

Executive Summary i

Table of Contents ii & iiiAbbreviations 1

1.0 Introduction 2

2.0 Issue 2

3.0 Environmental Context 33.1 Definition of Environment 33.2 Public Opinion 3

4.0 Opportunities for Improvement 44.1 Environmental Considerations 5

4.1.1 Items of Concern 54.1.2 Hydrogeology (underflooding) 64.1.3 Water Pollution 94.1.4 Terra Cones 94.1.5 Surface Subsidence 114.1.6 Mine Gas 114.1.7 Land (mine site) Rehabilitation 124.1.8 Hazardous Materials 124.1.9 Monitoring 13

4.2 Closure Process 134.2.1 Institutional Importance of UDKR 144.2.2 Participants 154.2.3 Implementation Planning 154.2.4 Regulatory Requirements 164.2.5 Liquidation and Transfer Blockages 18

4.3 Social and Public Aspects 184.3.1 Loss of Social Assets 184.3.2 Sustainable Development 20

* 4.3.3 Public Involvement 214.3.4 Future Liability 22

5.0 Optimization of the Closure Process 235.1 Institutional Change 23

5.1.1 Strategic Closure Sequence 235.1.2 Revised Management Concept 245.1.3 Critical Components 245.1.4 Preconditions Required 27

5.2 Integrated Closure Planning 285.2.1 Integrated Planning Worksheet 285.2.2 Risk Analysis Matrix 29


File 1-14Page iv

Table of Contents Page No.

5.3 Institutional Control 315.3.1 Mechanism and Funding 325.3.2 Information Management 33

6.0 Closure 33

7.0 Acknowledgements 33

Appendix AList of Mission Participants

Appendix BEnvironmental Management Assessment, Itinerary and Consultation Meetings

Appendix CDesign on Closure of Mine Belonging to Coal-mining Association (State HoldingCompany) - Explanatory Notes (Translation)

Appendix DChapter 13 - Assessment of Impact on Environment (Translation)

Appendix ECabinet of Ministers of Ukraine - Regulations #31, January 12,1999 (Translation)

Appendix FTargeted Comprehensive Sectoral Program No. 9 (Translation)

Appendix GReference Paper on Enviromnental Information Management System

Appendix HAide Memoire

List of FiguresFigure 5.1.2.1 Suggested Site Closure Process

List of TablesTable 4.2 Closure Process IssuesTable 4.2.2 Primary StakeholdersTable 5.3.1.1 Mine Site Closure - Integrated Planning WorksheetTable 5.3.2.1 Risk Analysis Matrix - Recontouring of Terra ConesTable 5.3.2.2 Risk Analysis Matrix - Flooding of the MineTable 5.3.2.3 Example Table - Summary of Remedial Action Alternatives

List of DrawingDrawing No. 114-1 Coal Mines in the Donbass Region


File 1-14Page 1

Abbreviations

CMRP World Bank Coal Mining Restructuring Projectm meterm

3 cubic meter

SECAL World Bank Coal Sector Adjustment LoanSJRG Senior Joint Review GroupUDKR "Ukruglerestrukturizatsiya" Company

Clifton Associates Ud. engineering science technology

File 1-14Page 2

1.0 Introduction

From 24 January to 8 February 2000 the World Bank conducted a mission in the Ukraine

to prepare the Coal Mining Restructuring Project (CMRP). The mission was lead by Mr.

Heinz Hendriks of the Bank's Industry & Mining Unit.

The primary objective of the mission was to evaluate the status and intermediate results

of the Coal Sector Adjustment Loan (SECAL), similar for the Coal Pilot Project and-to

develop improved mnine closure procedures for the forthcoming CMRP. The mission

undertook field visits in the Donbass region, conducted discussions with the government

in Kiev and participated in a workshop organized by the Kiev International Institute of

Sociology with respect to the social implications of the mine closures.

Appendix A provides a listing of the mnission participants. Appendix B outlines the

itinerary and the consultation meetings conducted by the mission's environmental

management consultant.

This report presents the environmental management component of the mission.

Drawing No. 114-1, shows the coal mines in the Donbass region.

2.0 Issue

The World Bank is developing the CMRP, which would partially finance the costs of

dosing 70 additional unecononic mines. Experience gained with the Coal SECAL and

Pilot project strongly demonstrates the need for the development of improved mine

closure procedures and institutional changes, particularly with respect to enviromnental

considerations. It is evident that extensive delays in the completion of mine dosure and

the transfer of rehabilitated mine locations to the local administration have been a major

cause for large cost overruns. Consequently there is a marked conflict between the very

limited funds available for mine dosure and the high demands being registered by the

regulatory authorities, the local administration and the public.

An alternative approach that is timely, cost effective and involves the appropriate

participants needs to be developed for the implementation of the CMRP.


File 1-14Page 3

3.0 Environmental Context

A key component of the CMRP will relate to the environmental implications of the mine

closures. Consequently the focus of this report is on the environmental considerations

related to mnine closure and site rehabilitation, as well as evaluating the site closure and

transfer process. No effort was expended on incorporating the environmental matters

associated with operating mines or coal washing plants.

During meetings or interviews with those consulted in Appendix B, the line of

questioning typically related to the following:

* What are the environmental problems and concerns related to closure;

* What is the closure process, particularly with respect to environmental matters;

and

e What opportunities are there to speed up the closure process, avoid expensive

delays and to expedite transfer of rehabilitated mining lands to the local

administration.

3.1 Definition of Environment

For the purposes of this assessment, the definition of the "environrment" is not limiting

and includes not only the natural environrment, but also the local human community.

Therefore, the potential zone of environmental impact indudes the local human

population that typically resides adjacent to the mine sites. Consequently, this assessment

also considers public health and safety aspects.

It also must be recognized that the environmental and closure conditions vary from site to

site. Therefore, it is important to keep in mind site specific circumstances that may apply

as one considers this generic discussion with respect to the environmental implications of

closure.

3.2 Public Opinion

The impact upon society within the Donbass region has been studied in 1997 and 1999 by

the Kyiv International Institute of Sociology and the Donetsk Informational Analytical

Center. Although the study did not focus on environmental matters directly, their


File 1-14Page 4

investigations did identify a couple of underlying trends with respect to the

environmental aspects of coal mine closure.

The study found that the population within the immediate impact area of the coal mine

closures:

* Have severe social issues, like unemployment and poverty, to contend with and

are essentially in a survival mode. Consequently, unless directly impacted, they

do not place a high priority on environmental matters; and

* Have increased their environmental awareness over the last few years and

possess a reasonable understanding of the issues.

Information obtained through consultations with the local administrations in the

Enakievo and Stakhanov areas confirm these findings. It was also noted that as

community leaders, they are receiving complaints from the public with respect to the

legitimacy of spending large sums of money on various environmental rehabilitation

matters, when the money could be better spent on rectifying some of the more pressing

social issues. In both discussions, leveling of the terra cones was raised as an example of

this waste of money. The public questioned the need for this action and in fact was more

prone to complaints with respect to the dusting that was resulting from the work related

to leveling the piles.

The environmental issues of concern to the public with respect to mine dosure were

incorporated into the priority listing provided in section 4.1.1.

4.0 Opportunities for Improvement

Due to the long term importance of the coal industry to the Ukraine economy, and the

significance of the mine dosures, particularly from a social perspective, there is a very

wide range of interested parties active in the discussions and decision making

surrounding mine dosure. In addition, the formal regulatory approval process requires

the participation of a large number of government organizations in the closure and

liquidation process. Consequently, there are very many opportunities for beurocratic

delays in decision making and administration, largely due to conflicting demands on the

process.


File 1-14Page 5

However, from an environmental perspective, the following shortlist of stakeholders

play a key role in the expeditious management of dosure:

* Ministry of Fuels and Energy; identifies the mines that will be closed.

* State Research, Construction and Project Institutes of Coal Industry of Ukraine;

known as "the Design Institutes'; prepares the mine site closure plans.

* "Ukruglerestrukturizatsiya" Company (UDKR); responsible for the mine site(s)

during dosure, conducts the physical work, manages the social and

environmental programs.

* The local administration who will eventually receive the site following

liquidation.

* Ex- mine workers.

* Public; residents adjacent to the mine site(s), essentially the human population in

the primary impact zone. Their views on closure concerns have been studied by

social research organizations such as the Kyiv International Institute of Sociology

and the Donetsk Informational Analytical Center.

* Entrepreneurs; those looking for local business opportunities from a dosed mine

site, induding ex-mniners.

Discussions were held with representatives from all of the above noted stakeholder

groups, with a view to understanding their environmental and process issues related to

mnine site dosure and liquidation. Their prevailing views are reflected in the following

sections.

4.1 Environmental Considerations

4.1.1 Items of Concern

During discussions with stakeholders, the following items of concern with respect to the

environment were recorded in the following order of priority:

a Hydrogeology (underflooding)

a Water Pollution


File 1-14Page 6

* Terra Cones

* Surface Subsidence

* Land (Mine Site) Rehabilitation

Although not identified during any of the consultations, experience has shown that old

mine sites are often used as a waste depository for:

* Hazardous Wastes

The specifics of each of these items will be discussed in the following sections.

4.1.2 Hydrogeology (underflooding)

In order to develop and operate the coal mines, it was necessary to remove the

groundwater by pumping. This created a cone of depression within the groundwater

regime, or "dry zone", within which the mine was operated. The "dry zone" was adjusted

to accommodate the underground development of the mine. Upon dosure, the pumping

is stopped and the natural ground water levels are allowed to re-establish. In some cases

this may take several months to years, while in some circumstances, recovery of the

ground water table to pre-mining levels is rapid.

In some mining areas, various environmental concerns arise with regard to the recovery

of the ground water table following closure of the mine(s). This circumstance is

commonly referred to as "underflooding". The level and severity of the resultant impact

of underflooding is often more pronounced in areas of significant surface subsidence,

whidh is due to the collapse of underground mine workings. These concerns can be

further complicated by the elevated levels of residual dissolved mineralization in some of

the mine water.

Typically, the concerns are related to the flooding of:

* Public buildings, homes and outbuildings, causing structural damage and the

potential for an elevated health and safety risk, as well as a deterioration in value

or loss of use and investment;

* Public infrastructure such as sewer, storm water and domestic waste

management systems. The resultant unsanitary condition not only raises the


File I-14Page 7

potential for disease but also degrades the quality of life due to deterioration in

local aesthetics. The local administration do not have the funds available for the

remediation or replacement of these systems;

* Surface and underground domestic water supply. May increase the level of

mineralization and other contaminants in potable water. Contaminant levels

vary, but they may rise to levels that make the waters unsafe for human or

livestock use; and,

* Surface hydrology system. Flooding of low-lying areas, creating new marshes

and swamps. Flooding of agricultural land, removes the land from production

and can lead to salinization of the soil. Destruction of surface vegetation and

woodlands.

According to UJDKR the worst area suffering the results of underflooding in the Donbass

region is in the Stakhanov and Bryanka areas, as shown in Drawing No. I14-1. A field

visit was conducted to this area to review the documentation and investigate the

situation. In this area there were 12 coal mines that were approximately 1000 m deep.

They are hydrogeologically interconnected. Mine operations were discontinued and

pumping of the mine water stopped in 1996/97. All estimates as to the rate of ground

water recovery and areas of impact made by institutes forecasting the situation were in

error. Flooding occurred more quickly than expected with much more impact to the local

community than anticipated. In response, UDKR has compiled credible geological and

hydrogeological schematics that have been prepared from mine records and a network of

hydrogeological test wells that have been installed throughout the area. The water levels

in these wells are moritored approximately every ten days and recorded on the

schematics. The last measurements were made on 13 January 2000.

The worst underflooding is in low-lying areas adjacent to local rivers. According to the

regulations an area is flooded if the groundwater table is within 2 m of the surface. Based

on a more recent evaluation by UDKR it is forecast that 178 hectares will be subject to

flooding with 300 houses and 240 summer cottages impacted. The domestic wells for

these residences range in depth from 20 to 50 m. 5 industrial wells are also present to a

depth of 200 m. All of these wells are contaminated with mine water. The most elevated

contaminant is sulphate, which is expected to exceed the local drinking water standard of

500mg/l by four times.


File 1-14Page 8

A mine water spring in a Bryanka residential area was observed. The spring is situated

approximately 10 m upslope of a road and the adjacent housing. It was estimated to be

flowing at 0.6m3 /minute. UDKR has a monitoring well approximately 3 m away and has

conducted water quality analysis of the spring, with a total mineralization of 3.8 g/l and

sulphates of 2.5g/1 with a pH of 7.0. No other contaminants of concern were noted. The

waters flow down slope, across the road and through a row of houses enroute to a small

river approximately 100 m below the houses. The root cellar of house closest to the flow

was inspected and standing water/ice was observed. The home owner reported the

problem of water in his residence to be getting worse as was the amount of damage to his

house due to subsidence.

It should be understood that due to the underground mining in the area, the

groundwater regime has been permanently altered. Preferential groundwater flow paths

have been established that may result in significant public safety and environmental

hazards in the future, as the ground water table is re-established. Examples of the

geotechnical, social infrastructure and environmental impacts that can occur have been

referenced earlier in this section. The severity of these impacts will of course depend,

upon the site-specific situation. It is very important that this potential hazard be closely

monitored and pragmatic cost effective solutions be considered as necessary. UDKR

already has some hydrogeological expertise within their ranks, however serious

consideration should be given to enhancing this capability. The addition of

hydrogeological computer modeling support would be a cost effective risk analysis tool

in these circumstances.

As a general observation, the recovery of the groundwater table to natural levels may not

always lead to negative environmental circumstances. It is expected that with the

recovery of groundwater levels, the hydrology of surface water bodies that have

experienced low to no flow or low water levels during the long history of mining in the

Donbass region, will also experience a recovery to premining levels. This is expected to

enhance the hydrology of the local enviromnent by increasing the number and size of

water bodies and increase the availability of habitat for various fish and wildlife. The

value of this aspect will be dependant on the location and quality of the flood back waters

and can only be assessed following the ground water table reaching equilibrium and the

water quality stabilizes.


File 1-14Page 9

4.1.3 Water Pollution

There is a general concern with respect to water pollution as it may relate to

underflooding. The chemistry of the mine water appears to vary considerably. Some mine

waters meet drinking water standards, while others have elevated levels of total

dissolved solids in the range of 2-5 grams/litre, primarily made up of sulphates and

chlorides. Elevated levels of iron are also prevalent. Heavy metals are available in trace

amounts and do not appear to be of concem. Given the elevated level of sulphur in the

coal there is a potential for elevated acidity, however UDKR information suggests that

occurrences of acid generation is infrequent and localized. Dependant on the chemistry of

a particular site, mine waters may range in pH from 5-8. Surface waters typically have a

pH 7+. The surface waters are highly buffered due to the predomninance of carbonate

country rock, which tends to neutralize mine water that makes its way to the surface

environment.

Generally, it would appear that environmental contamination due to the surface

discharge of mnine waters or by underflooding is not a prevalent concern. This important

item needs to be considered on a site by site basis.

4.1.4 Terra Cones

During operation the waste materials from underground mines are transported to the

surface and discarded in large waste dump piles commonly referred to as "terra cones".

These piles vary in size, are conical in shape and can exceed 80+ m in height. The majority

of the material in the pile is typically mudstones, shales, limestone, sandstone and

sometimes up to 12 to 15% of coal in localized areas of the pile. The material in the piles

varies in size, from dust to small mine run boulders, with the majority of the fines at the

top of the pile and the large material lower in the pile profile. Pile volumes vary from 1 to

8 million m3 and typically have a footprint ranging from 1 to 30 hectares. Surface runoff

from the piles is collected by drainage ditches and routed through settling ponds enroute

to the receiving environment.

UDKR have 205 terra cones under closure control. 37 are burning. Given the existing

budget, they are planning to conduct remediation at 152 of the piles.

Clifton Assoeiates Ltd. engineering science technology

File -144Page 10

The terra cones are of concern due to:

* The accumulation of methane gas within the pile and the potential for self

ignition and explosion. This "self blasting" is viewed as the primary threat. In

1962, a terra cone exploded at the "Ilycha" mine, causing loss of life and pile

slope failure;

* The potential for them to self ignite and burn. This generates air pollution from

noxious smoke and fumes;

* The threat of geotechnical instability and consequent slope failure. The level of

risk can be elevated dependant on the piles susceptibility to erosion;

* The possibility of acid generation. The coal in Ukraine can contain elevated levels

of sulphur. Through the processes of biological and chemical oxidation acid

drainage can occur. The acidic waters in turn, can greatly increase the mobility of

chemical contaminants, such as heavy metals and radionuclides, from the pile.

Significant environmental impact is possible, depending on the severity of the

site specific situation. UDKR has measured the acidity of some pile drainage at

pH 24, with local impacts to domestic wells and the environment. It was

reported that hids phenomenon is not prevalent at the sites under dosure; and

e The spreading of dust throughout the local area. Complaints from the public are

most prevalent during pile recontouring.

It was noted that regulatory requirements are such that all terra cones have to be leveled

and recontoured to a maximum height of 40 m. Apparently this is to prevent self blasting,

internal combustion and enhance slope stability. The cost to do this leveling is very

expensive, causes dusting and increases the footprint of the pile. One of the piles at the

Pravda mine had been recently recontoured, however smoke and surface heating was still

obvious at the time of inspection. Those familiar with the piles indicate that a pile seldom

catches fire or is subject to geotechnical failure if it has been stable for five years.

Placement of 0.5 to 1 m of topsoil on the recontoured piles has been required, however

UDKR are having trouble obtaining sufficient topsoil. The environmental impact or

advisability of stripping this soil from it's original location was not factored into closure

planning. It was also observed that the piles naturally revegetate, with some supporting a

solid growth of trees and shrubs.

Clifton Associaltes Ltd. engineering science technology

File 1-14Page 11

4.1.5 Surface Subsidence

Coal mining in the Donbass region has occurred for decades. The mines are in alternating

beds of sandstones and limestones with narrow seams of coal at depths of around 1000 m.

The dip of the strata varies. As the mined out spaces collapse at depth and are infilled

with material from above, the void space eventually works its way up through the

stratigraphy and expresses itself on surface as a topographic low. This shift in surface

conditions will impact the foundations of buildings or infrastructure present in these

newly created low areas. This movement will cause cracking, movement of the facilities

or in severe circumstances make theses assets structurally unstable and unusable.

The negative impacts of subsidence can be significantly exacerbated if underflooding

conditions are also present. Unfortunately this is the case in the Stakhanov area, where

these two forces are severely impacting public infrastructure, private residences and

agricultural lands.

Due to the long time line involved, rehabilitation costs are usually very expensive.

Reoccurrence of the damage, even after repair, is common until such time that the

stratigraphy is fully settled. Relocation and resettlement are often the most economical

solution.

4.1.6 Mine Gas

The coal mines in this region are considered dangerous "gassy" mines in that they

produce methane. Methane represents the majority of the gas by volume and is

hazardous due to explosive characteristics. Methane is also a "green house" gas. Methane

was particularly hazardous for the miners during operations. Upon dosure of the mine,

the gas is driven to the surface as the ground water level recovers. Although not

emphasized as a significant envirorunental concern, there is a risk that methane will

accumulate in the basement of a building, making it susceptible to an explosion or fire.

UDKR is conducting monitoring of buildings in the impact area to prevent this

occurrence. They are also installing, at great cost, ventilation systems at the dosure sites,

to try and direct the escaping methane away from sensitive areas.

The value of installing this expensive gas ventilation system is questioned. It is expected

that once the mine is fully flooded, gas production will be inhibited, if not stopped, and

escape to the surface will be virtually discontinued. It can be assumed that during

flooding, the methane will naturally make its way to the surface through fissures and


File I-14Page 12

dissemninate to the atmosphere. Rather than installing a gas ventilation system, it may be

more cost effective in the interest of public safety, to enhance the level of monitoring

during mine flooding and the subsequent transition period.

It has been suggested that the level of gas escaping from the mines can be collected for

economic benefit. Apparently this option is not viable, given the volume of gas

production is to slow and disseminated to warrant serious consideration.

4.1.7 Land (mine site) Rehabilitation

During dosure, the majority of UDKR's activity relates to physical demolition and

removal of the mine works. This includes surface facilities and support infrastructure.

Common practice is to salvage where feasible and bury the residual scrap material on

site. The primary focus is to make the site safe and enviromnentally secure in accordance

with extensive regulatory requirements.

Typically the shafts and raises are backfilled to surface with terra cone material. Fencing

may be installed in locations where there is gas ventilation works, shaft and raise covers

to surface, or any potentially hazardous area.

Some areas have been recontoured and revegetated however this practice has been

rrninimized due to the lack of funds.

4.1.8 Hazardous Materials

This topic was not raised by any of those interviewed. However, experience has shown

that mine sites, particularly old ones, are notorious for serving as disposal sites for

industrial hazardous wastes. Often these materials have been buried and no records or

personnel are available to assist in determining their identification or finding their

location. In order to protect the workers, public and the environment, diligence is

recommended during site dosure assessment, planning and demolition. It is important to

ensure that all toxic materials at the dosure site are properly identified and dealt with in

order to prevent any immediate concerns during dosure and to remove the potential for

future liability.

It was reported that one of the coal mines in the Donbass region served as the host for a

mining and coal gas experiment using a nudear explosion. It is understood that this site

will be subject to very stringent measures at the time of permanent closure.


File 1-14Page 13

4.1.9 Monitoring

It was evident from the discussions that some environmental monitoring was being

conducted during closure, however limited funds make a comprehensive program

impossible. Monitoring appears to focus on gas and underflooding issues and does not

appear to include more conventional environmental components. It was also not

apparent if a long-term monitoring program was intended for the sites following closure

or who would be responsible for this activity.

It was also noted that there is no modem environmental data management system in

place to assist with dosure planning, monitoring or assessment activities. A suggested

tool that would remedy this situation is discussed in further detail in section 5.3.2.

4.2 Closure Process

The process for the closure of a coal mine in the Donbass appears to be very complicated,

fragmented and costly, particularly from a regulatory perspective. There is a distinct lack

of focus. A sunmmary of the process as presently understood, is as follows:

- The Coal Mining Association reviews a technical feasibility dosure study that

has been done by the Design Institute to evaluate whether or not to dose a

mine. If dosure appears warranted, a recommendation is made to the Ministry

of Fuels and Energy for consideration;

* Once the Ministry of Fuels and Energy decides to dose a particular mine, they

request the mining company to contract with their Design Institute for the

preparation of a Closure Plan. This plan follows the regulatory requirements

and table of contents as outlined in Appendix C of this report. Appendix D

provides a detailed description of the information contained in a typical

section 13, "Assessment of Impact on Environrment". To this point, UJDKR or

any other participants are not officially involved. There is no evaluation or

identification of final land use or sustainable development opportunities;

* UDKR is given a mine dosure project along with a dosure plan. It was

suggested that UDKR have the right to approve or reject the plan, however this

occurrence is not a practical or likely alternative. There are always insufficient

resources to achieve the closure plan. Closure work, social payments and


File 1-14Page 14

maintenance costs are managed by UDKR. All site closure work is done by

contractors through a tender process and not ex-miners;

* When the physical site work has been completed, the site must be inspected

and the work certified as satisfactory, by a large number of regulatory

agencies, before liquidation and transfer of the land can occur. All agencies

must sign off or the site closure is not deemed complete. Several "Final

Certificates" with multiple signatures are required in the following areas:

* Physical works

* Environmental protection

* Overcoming consequences of mine closure

i Social mitigation program

* Once all of the certificates have been obtained, the site can be liquidated and

transfer to the local administration can occur. It should be noted that to date,

no transfers have occurred, even though some sites have completed closure.

It can be seen from this process, that a number of issues that impair a cost effective and

timely dosure process are evident. Table 4.2 summarizes the primary closure issues. If

these opportunities for process improvement are remedied, it is expected that significant

cost savings will be realized and the credibility of the closure program will be enhanced.

Table 4.2Closure Process Issues

* No Focus

* Poor Coordination

* Large Number of Stakeholders

* Poor Planning

* Inappropriate Regulatory Requirements

4.2.1 Institutional Importance of UDKR

During operations, the coal mines were the focal point for their surrounding

communities. Now with the closure of these sites, UDKR has necessarily assumed the

identity as being the most important senior institution to these communities. How UDKR


File 1-14Page 15

manages the site closures is integral to the community well being, whether it is from a

social, environmental or public safety perspective. Consequently, any modifications to

the closure process must be done in such a way as to enhance the performance and

effectiveness of UDKR. If done properly, this will allow UDKR to better assist the local

communities in their efforts to meet the closure challenges facing them.

4.2.2 Participants

At the present time the closure process appears to involve a "cast of thousands". It seems

that each group holds the view that they must have decision-making authority over the

final outcome of the site. This in turn has created a very beurocratic situation that leads to

major delays in site dosure and the resultant large cost overruns. Also, this is one of the

primary reasons that no site has been liquidated and transferred to a future owner.

It is of paramount importance, that the number of participants in a decision making

capacity with the site closure process be kept to an absolute minimum. It is suggested

that the primary stakeholders be limited to those identified in Table 4.2.2. and that the

number of representatives from each stakeholder group also be rminimized. In this way

the "web" of decision making can be streamlined and the necessary commnunications

linkages can be simplified.

Table 4.22Primary Stakeholders

* CabMin

* Ministry of Fuels and Energy

* UDKR

* Regulatory Agencies

* Local Administration Authority

* Ex-Mine Workers

* Public

* Entrepreneurs

4.2.3 Implementation Planning

It was noted in several circumstances that the primary planning work lies with the

"Design Institute" with minimum input from other sources. This practice does not allow

the participation of key stakeholders and results in the lack of support for the closure


File 1-14Page 16

plan. This in turn results in delayed closure certification, site liquidation and transfer.

These delays directly convert into additional closure costs.

Similarly there are missed opportunities to save costs during closure due to the lack of

involvement of experienced organizations. For example, as it now stands UDKR is not

directly involved at the outset in closure planning. Consequently they do not have the

opportunity to utilize their experience in site closure to build operational efficiencies into

the closure plan.

There is no evidence that the local impact community has formal input into a closure plan

that predetermines the:

* Regulatory requirements for closure of the site

* Future development options for the site

* Specific schedule and circumstances of final liquidation and transfer

Having identified the above consultation needs it must be understood that effective

closure planning will only occur if there is solid management and coordination of the

various components. A clear focus on the priority objectives must be adhered to at all

times.

4.2.4 Regulatory Requirements

The environmental regulations in the Ukraine were recently overhauled following the

collapse of the Former Soviet Union. The regulations, for the most part, are representative

of those in Europe. Although not the subject of a detailed analysis, they appear to be

credible and reasonably modern. However, it is also understood that the regulations and

associated regulatory process are not flexible enough to allow for the present economic

and environmental situation in the area of coal mine dosures. Neither is there a "risk

based" philosophy in their application. This breadth and rigidity of regulation, greatly

limits the opportunities for cost effective decision making and a focus on the priority

"risk" items during closure planning.

It was also reported, that on occasion, there has been "misuse" of the regulatory process

in order to postpone the closure of a site with a view to extending the time during whidch

fees and fines could be collected.


File 1-14Page 17

It is assumed that this situation is the same for all of the regulations applicable to the coal

sites. There exists an almost insurmountable situation for UDKR in that they literally may

not be able to close out a mine site and transfer the property for future use. Consequently

there is a distinct need to rationalize the regulations and the regulatory process to allow

for more effective management of the coal mine closures.

Examples where flexibility would be beneficial within the regulatory process and

applicable regulations are readily found when considering the environmental closure

aspects of terra cones, mine water pumping and methane gas management at flooding

mines. Given the high cost of remedial action, the public often questions why:

• The terra cones, as discussed in section 4.1.4, are forced to be recontoured to a

height of 40 m if they are no threat to the local population or a sensitive

enviromnent;

* At mnines to be dosed, alternate-pumping capacity must be installed at the

neighboring mine, even though this site may in turn be closed in the near future.

This is a major source of closure delay. Pumping rates at the closure mines vary,

with a high of 800m 3 /hr at Krasny Oktyabr site. At present UDKR is pumping an

estimated average of 9000m3 /hr from 30 mines while awaiting alternate mine

water management at the remaining operational sites. In order for the pumping

modifications to meet regulatory requirements, they must meet standards that

are equivalent for those systems that are in a mnine that will be working in a full-

scale operation for a long time. There is no flexibility within the regulations for

the installation of more economical interim pumping works that will allow the

mine to operate on a short term basis until it also is dosed.

* Expensive bore holes for ventilation are installed at a dosed mine as it is

flooding, to try and relocate the escaping methane gas to a less hazardous area.

The intent is credible, however this costly solution does not likely provide the

protection sought.

The level of funding is not the main issue in this circumstance. Some small incremental

benefit may be realized if the level of funding for closure programming is increased.

However, significant savings are anticipated if there is a shift in focus to the areas of high

risk along with a rigorous cost benefit analysis as to the wisdom of implementing

marginal value or short term work that is specifically required by onerous regulations.


File 1-14Page 18

These savings can be used to better manage priority environmental, public safety and

future development considerations.

4.2.5 Liquidation and Transfer Blockages

As noted in section 4.2.3 there is no formal opportunity for the local impact community to

directly influence the closure planning. This results in a local administration and public

who are expected to "receive" the mine site following closure, when they have in fact

minimum knowledge as to what "goods" they are getting. They are unsure as to how

they can use the site and most importantly, how will they pay for the maintenance,

development and potential liability costs associated with the property about to be

transferred to them. Consequently the present situation has developed where the local

administrations do not want the rehabilitated mine sites and are refusing transfer of the

property.

Section 4.2 and 4.2.4 both reference the decision-making problems, inappropriate

requirements and delays associated with the large regulatory bureaucracy.

As mentioned in section 4.2.1, UDKR is now the only source of economic activity in the

impact area. This organization is seen to have the money and therefore there are those

who would like to see this dosure program go on forever. It was reported that many

opportunities for the charging of fees, fines or direct corruption has materialized. Similar

complaints are heard from the small business sector that is trying to develop at the mine

sites. Their efforts are being hampered by the lack of financial support or mechanisms to

obtain such funding, inappropriate taxation of new business ventures or corruption.

Circumstances of this type should be sought out and stopped as soon as possible, if only

to conserve the financial resources and credibility of the program.

4.3 Social and Public Aspects

4.3.1 Loss of Social Assets

It is common at well established mining operations through out the world, especially

those in a predominant mining "area" like the Donbass, that the mine is the reason for the

existence of the community. In most circumstances, particularly in remote regions, the

mnine serves as the "Social Infrastructure Provider" for the local community.

Consequently a number of social assets are often an integral part of the mines

infrastructure.


File 1-14Page 19

Examples of such social assets are:

* Housing

* Domestic water supply

* Sewage management

* Central heating

* Electricity

* Telephone service

* Schools

* Hospitals

- Recreational facilities

- Many site specific examples exist.

Often the mine provided these facilities for use by the community at no cost.

With the closure of the mine, these social assets may be demolished, severely damaged or

removed from service, along with the rest of the surface facilities. The net result is that the

community not only loses a service that they rely upon, but in some cases they end up

with "new" infrastructure use and maintenance costs.

Consequently, it is extremely important that the integrated planning process discussed in

section 5.2, ensure that the public has adequate representation through the local

administration, and an opportunity to identify those social assets valuable to them.

Subsequently, these assets would be retained and rehabilitated for the continued use of

the community. It is envisioned that funding for this purpose could be put in place for the

direct use of the local administrations and that ex-mine workers could conduct this work.

It also appears that the public are concerned that there is an abuse of the dosure process.

Complaints have been made to local officials, that those organizations involved in the

closures, are pilfering valuable surface assets, such as buildings, for their own future use

and leaving the remaining "junk" behind for transfer to the local administration. It was


File 1-14Page 20

not confirmed if this practice is in fact occurring or rather an example of

miscommunication.

However, it is very important for the well being of the community, that they have every

opportunity for future development. An integral component of this need is the retention

and development of valuable assets from the infrastructure of the mine. If the planning

process discussed in section 5.2 is used wisely with respect to social assets, it is

anticipated that these assets can be salvaged in a cost effective manner with the result that

the community will be better equipped to meet the future.

4.3.2 Sustainable Development

It was not apparent if there is a cost effective or pragmatic sustainable development

function in progress, what the results are, or how this important consideration is being

implemented into the closure of a mine site.

Appendix F provides a translation of a "Targeted Comprehensive Sectoral Program

No.9". The purpose of this document is to provide a description of the "Development of

methods and means of environmental protection, economic utilization of mine workings

and surface facilities of the mines scheduled for closure". In essence, the program is a

research and development program with respect to the sustainable development of a

mine dosure. It was reported that the program was compiled in early 1999, however no

work was conducted due to the lack of funding.

Appendix F, as written, has some credible components that warrant future consideration,

particularly those with respect to hydrological and hydrogeological concerns. However,

from a pragmatic perspective, and given the severity of the existing problem, this

"research and development" program lacks focus, is very expensive and likely cannot

yield applicable solutions that wiU assist existing or forthcoming mine dosures in a

timely manner. If the work described were performed, over a large period of time at great

cost, it would only serve to benefit future mines. It is of concern, that should this program

be funded in it's entirety, the divergence of funds from immediate application to high

priority dosure problems that exist today, wiUl only serve to aggravate the existing

situation.

However, this sentiment should not detract from the importance of immediate

sustainable development planning and implementation. It was clearly evident that the

closed mine sites are viewed as a liability and not as an asset. There is evidence and


File 1-14Page 21

complaints of lost opportunities. For the most part it appears that this has been due to the

lack of an effective planning process. Section 5.0 incorporates the need for sustainable

development into the closure planning.

As noted in the preceding section, there are valuable assets that can be retained for future

use. Many of these assets can be "altered" for a different use than that for which they

were originally built. For example, one ex-miner has converted an old mine cafeteria

building into a sausage plant. He employs approximately 25 ex-mine workers. Another

building was converted into a factory for assembling mining technical equipment. There

was hope by some ex-miners to convert mine buildings from their initial use into a

"marketplace" for the community, livestock barns, grain and feed storage etc. It was also

reported that the buildings best suited for these uses have been demolished. It is

recommended that it will be far more cost effective to take the time to plan now and

retain some of these assets rather than have to construct additonal works in the future.

4.3.3 Public Involvement

All the authorities consulted were of the view that members of the public have ample

opportunity to register their comments with respect to mine closure. It was also evident

that the preferred mechanism for public consultation is through the local administration,

which in turn can incorporate the concerns of the public into their dealings with more

senior government agencies or areas of responsibility, such as l)DKR.

There was no opportunity to solicit comment from the public as to their acceptance of the

present system.

Discussions with the Mayor and deputy Mayor of two separate local administrations that

are in the direct impact area of the mnine closures, revealed that the following mechanisms

are used to solicit input from the public:

* Executives of the local administration have specified times, usually twice per

month, where they have meeting times set aside for public contact;

* Usually twice per year they have "Days of Open Letters" which are public

meetings where public requests are discussed;

* Dedicated telephone line where the public calls in with information requests.

These calls are then responded to later the same week;


File [-14Page 22

* Members of the public can make appointments to see which ever official

they please;

* Once per week they convene a "Complaint Day"; and

* Dissemination of information through the mass media.

It does not appear that there is a formal system to educate the public on mine closures. If

this was done effectively, the public would be in a better position to make informed

decisions and more valuable comments. This lack of a formal program for the preparation

and distribution of educational materials was noted by local official, as something they

would like to do, but they do not have the funding to do so.

4.3.4 Future Liability

During closure planning it is important that:

* Potential future liabilities be identified;

- Monitoring programs to detect the onset of anticipated negative impacts of these

liabilities, be designed for implementation;

* Those organizations responsible for monitoring and possible remedial action be

identified; and

* Clear commitments and accountability for those organizations responsible for future

liabilities must be put in place to ensure timely action should it be required.


File 1-14Page 23

5.0 Optimization of the Closure Process

A prevailing sense of doom is obvious in the Donbass coal mining region. The mine

closures have had a major impact on the social fabric of the area. The main rehabilitation

programs related to the coal region emphasizes closure of the mines and not alternate

economic development. Consequently, an optimnized closure process will only succeed if

there is a shift in attitude and an immediate opportunity for the involvement,

participation and employment of the ex-rnine workers.

5.1 Institutional Change

The present system for conducting the closure and liquidation of a mine site provides

many opportunities for extensive delay and major cost overruns. To date the physical

closure of some sites has been completed, however no lands have been transferred.

In addition the government beurocratic process associated with mnine closure is

unmanageable. For example, Appendix E provides a copy of the Cabinet

Ministers(CabMin) of Ukraine, Regulation #31, dated 12 January 1999. This document is

entitled "On Measures for Solving Ecological and Hydrogeological Problems, Resulting

from the Closure of Coal Mining Enterprises, Mines and Strip Mines. This document

details 12 decrees of the CabMin that instructs 13 state agencies to collaborate on

resolving this issue. They are also to work with the Oblast administrations. No mention is

made of the local administration or public involvement. No coordination mechanism or

method to ensure accountability is detailed in the document. Several sources reported

that no tangible results have been forthcoming since the issuance of this decree.

This is one example of several similar situations. This emphasizes that pragmatic

institutional change is required in order to break this impasse and promote the need for

future development of the dosed sites.

5.1.1 Strategic Closure Sequence

It was not apparent how the closure decision is made as to which mine(s) to dose and

when. Decision making criteria in this regard were not available. However, the

opportunities for cost savings are evident with respect to the sequencing of closures.

For example, when some mnines are dosed down they represent a flooding hazard to the

adjacent operating mine. This requires the installation of expensive additional pumping


File 1-14Page 24

capacity at the operational mine. Instances were reported where shortly after the

rehabilitation of the pumping works, the recently renovated operational mine was also

closed. In this circumstance there would be a two-fold loss of the value of the newly

installed pumping works. Firstly in the delay incurred by the mine site under closure,

where pumping, ventilation and maintenance work must continue and secondly the cost

of design and installation of the additional pumping works.

This one example, of many, simply demonstrates the need for the grouping of closures. It

is expected that this "bundling" of sites for closure wifl have multiple benefits and cost

savings. Not only will this approach maximize operational cost savings due to the

economies of scale and more focussed planning, but it will also provide a wider scale in

which to plan future sustainable development opportunities. Therefore it is

recommended that the Ministry of Fuels and Energy create a specific strategic planning

function to explore the merits of this approach and plan implementation.

5.1.2 Revised Management Concept

Figure 5.1.2.1 provides a suggested site dosure process. The primary objective of the

concept put forward in this figure is to protect the public and the enviromnent. It will

also:

* Streamline the dosure and liquidation process

* Integrate the decision making

* Provide better coordination

* Minimize the number of decision makers

* Focus on pragmatic dosure criteria

* Provide a model that can be replicated at all closure sites, and

* Save costs

5.1.3 Critical Components

At the outset it will be necessary for the Strategic Planning Unit within the Ministry of

Fuels and Energy to define the "bundle" of mines, or mnine, that will be dosed. This

recommendation will be forwarded to the CabMin for authorization to proceed.


Figure 5.1.2.1Suggested Site Closure Process

CABMIN/ Appoint and Empower

SENIOR JOINT * DKRCOAL MINISTRY REVIEW GROUP * Local AuthoritySTRATEGIC . Regulatory Authority

PLANNING FUNCTION * Ex-Mine WorkersSite Closure Decision Identify Priority Items for Environmental, Social, and

Sustainable Development

Conduct Integrated Planning

Seek Detailed Design

INTEGRATED CLOSURE AND FUTURE DEVELOPMENT PLAN

Implementation

UDKRz Parallel Closure Development Programming

0

PHYSICAL CLOSURE FUTURE oo UNIT DEVELOPMENT UNIT0

Physical Closure Social Programsz

Site Certification Sustainable Development. .4, Initiatives in partnership

with the Oblast

*|FINAL OUALITY CHEjC~K

SITE LIQUIDATION_-_ AND TRANSFER *- ___

_ Disband Senior Joint Review Group

INSTITUTIONAL CONTROL Municipal Authority* Long Term Monitoring Entrepreneurs* Remedial Action As Necessary

File 1-14Page 25

The CabMin will need to appoint and empower a "Senior Joint Review Group" (SJRG) to

coordinate and integrate the social and physical aspects of the site closure process.

Although not confirmed, it is understood that CabMin can authorize the work of such a

group, and in turn hold them accountable, through the declaration of a cabinet decision

item. This document would identify the participants in the SJRG, define their authority,

and confirm their funding mechanism. The selection of this group will be very important,

as the SJRG will be responsible for the integrated decisions that will control the closure of

the site and set the stage for it's future development.

In order for the SJRG to be effective, it must be small in size and have the necessary

authority, technical support and funding to perform it's responsibilities. It is envisioned

that this SJRG will have one senior representative from each of the following:

* UDKR

* The local administration authority

* The government's regulatory authorities

e The ex-mine workers

It will be necessary for the individuals selected to be a senior representative of their host

organization(s). They must possess excellent management, decision making and

communication skills, given that they will be relied upon to compile and coordinate all of

the applicable needs from their parent agency. For example, there are a great number of

regulatory requirements applicable from the state goverunent. It will be necessary for

one individual from the State govermment, to represent all of the regulatory agencies on

this senior planuing and coordination team. A prinary task will be to identify the

regulations that absolutely are required for application in a particular site specific

situation and which ones can be relaxed in a particular circumstance. This is not going to

be an easy task, however it is essential if there is to be a true streamlining of the closure

process.

It is expected that the individuals who serve as the senior representatives from the UDKR

and the government's regulatory authorities on the SJRG will stay the same. However

given the intent of this strategy, representatives local to the site will be selected to serve

on the SJRG.


File I-14Page 26

Once the SJRG is in place and functioning, they will be responsible for the coordination

and preparation of an "Integrated Mine Closure and Future Development Plan". This

document will essentially serve as the terms of reference for the site closure. The plan

must have two integrated paths that run in parallel. These are:

* Physical closure; public safety and environmental aspects, site demolition and

stabilization; retention and rehabilitation of social assets; site certification.

* Future development; management of applicable social programs; public

involvement; positioning of site for sustainable development and most

importantly, identify the site liquidation and transfer parameters and timing in

advance. It is intended that this function will be done in partnership with the

applicable Oblast, with a view to enhanced economnic development capacity

building within the Oblast local administration.

It is expected that to assist their deliberations the SJRG will be able to solicit assistance

and documentation from any of the many qualified agencies in the Ukraine, in addition

to the support they would receive from their parent organizations. The costs of these

services will have to be reflected in the budget of the SJRG.

Once the "Integrated Mine Closure and Future Development Plan" for a group of mine

closures or a specific mine, has been approved by the SJRG they will forward the plan to

the UDKR for implementation. This organization will insert operational specifics as

necessary and implement the work through a "Physical Closure Unit" and a "Future

Development Unit". These two units will essentially deliver the parallel program noted

above. This approach will demonstrate the importance and equal needs of site closure

and future development to all stakeholders.

Upon completion of the physical closure the site should receive regulatory certification

confirming that the site closure work has been completed in a manner consistent with the

approved plan. Similar confirmation should be made for the social conmmitments and

positioning of the site for future sustainable development. These steps feed into a final

Quality Check that will be coordinated by the SJRG. A small team made up of individual

representatives from the Regulatory agencies, the Oblast and the local administration

will be assigned by the SJRG to conduct this final check. The intent of this exercise is to

confirm that the site has been closed out and positioned for future development in

accordance with the approved closure plan.


File 1-14Page 27

Once it has been demonstrated that the closure plan was implemented as expected, the

site is now ready for immediate liquidation and transfer to the local administration and

applicable business ventures.

Once the final responsibility of ensuring site transfer has been completed, the SJRG can be

disbanded.

As the site now moves into the future, it will be subject to institutional control by a unit

within UDKR. The details of this reconmmendation are discussed in section 5.3.

5.1.4 Preconditions Required

In order for the closure process noted above to function, a few preconditions are required.

They are:

Minimize the number of participants in the process. As discussed in section 5.1.3

this can be done through the creation of the SJRG.

* Rationalization of regulations. For example the existing environmental

regulations are credible, however as they exist, local administration and

compliance is too expensive to for the present economic situation in the country

and the coal region in particular. Similarly the regulations are particularly

onerous with respect to the dosure of coal mines, which in turn leads to

additional expense with minimum environmental value. It may be advisable for

the CabMin to establish the coal closure areas as "Transition and Economic

Developmnent" zones for a period of twenty years. Within these zones, the

regulations could be adjusted to better match the environmental situation and

better match public demand, until such time that the economics of the area allow

them to return to normal local administration. The practical application and size

of the zones are undefined at this time.

* Adequate funding. In addition to the normal operating funds needed for the

Strategic Planning Unit of the Ministry of Fuels and Energy, the SJRG and

UDKR, the above noted process will require sufficient budget for 2 separate

applications. UDKR would be responsible for the local administration of the:

Physical Closure, which will pay for the:

* Physical mine closure work


File I-14Page 28

* Payout of social programs

Sustainable Development, which will provide monies for:

* Rehabilitation of social assets

* Rehabilitation of commercial business infrastructure

* Microcredit and grants for small business development

As previously mentioned in section 5.1.3, it is important that the sustainable development

efforts be conducted in partnership between the Oblast, the local administrations and the

UDKR An emphasis must be placed on building an economic development capacity in

the local area.

i Ensure transparency and the lack of corruption in the new streamlined closure

process so that this new approach builds and retains much needed credibility

with all stakeholders.

5.2 Integrated Closure Planning

It is of critical importance to the success of the coal mine closure program that integrated

closure planning occur. This section will suggest a couple of tools that have been of great

value in the planning and implementation of mine site decommissioning and closure at

other locations in the world.

5.2.1 Integrated Planning Worksheet

As noted previously in this report, there are many opportunities to streanline the dosure

and liquidation process thereby realizing major cost savings. From an environrmental

perspective it is recommended that one of the most important needs is to focus and

integrate design and dosure planning.

Table 5.3.1.1 provides a suggested worksheet that will assist the SJRG in coordinating the

main tasks that must be explored during planning. This table links the environmental

items of concern with planning information needs related to:

* Identification:

* Threat to environment and public safety


O 0 m 0 I m K =0 0 0. -o o-o~x0 C

0 ~~ ~ ~ C) ~Co -o0 a a D o O 0s oo 0 .z 0 0 C( 0 (D(DN0.

0 0 0 q C (' CD

o-0 ~~~ 0CD

C1

Treat to Environment _nd Public Safety

to :3~~~~~~~~~~~~~~~~~~~~a0)~~~~~~~~~~~~~~~

Threat to Social Assets ~

Opportunities foro _Sustainable C

-…- - 0~~~~~

Description of _ tRecommended Remedial cMeasures t v 0 m

Priority and Timing of

Executing Agency

(D

Rnwestment Required S_ CD

X _ _ _ A~~~~~pplicable Assumptions _

Monitoring andEvaluation Indicators

0

Future Liability '

Sensitivity to Delays androst Overruns

Relationship to OtherMeasures

File 1-14Page 29

* Threat to social assets

* Opportunities for sustainable development

Implementation:

* Description of recommended remedial measures

* Priority and timing of works

* Executing agency

* Investment required

Monitoring:

* Applicable assumptions

a Monitoring and evaluation indicators

- Future liability

- Sensitivity to delays and cost overruns

* Relationship to other measures

It is expected that once the components of the table are selected and the information

completed, this worksheet will not only be a valuable planning coordination tool, but also

serve as a secure platform for communications with all interested parties induding the

public.

5.2.2 Risk Analysis Matrix

It is recommended that a risk analysis matrix be developed and utilized to help discipline

the expenditure of meager funds on the priority items of concern during site closure.

Various jurisdictions have adopted the utilization of a "Geotechnical, Hydrological,

Environmental and Economic Rating Matrix" to help focus the complex assessments of

technical and economic considerations required when considering the closure and

decommissioning of a mnine site. This approach has merit for the Ukraine coal mine

closure situation, in that it is an excellent communications tool that promotes transparent

decision-making.


File 1-14Page 30

A risk analysis matrix would be developed for each of the environmental items of

concern noted in section 4.1. Examples of a matrix for the evaluation of the remedial

action options available for the recontouring of terra cones and an evaluation of

continued pumping of mine water at a mine site are provided in Tables 5.3.2.1 and 5.3.2.2.

For ease of discussion, the terra cone example will be elaborated.

The example risk analysis matrix shown in Table 5.3.2.1 depicts the numerical rating

system that would assist assessment of the remedial options available for the long term

closure of terra cones, in this case, the recontouring of the piles. The anticipated

performance of each remedial option is "scored" against a standardized set of important

technical/economic factors. An assessment of the long-term performance of the factors is

important for the ultimate selection of a preferred remedial option. Examples of some

site specific factors that may be utilized in the matrix include:

- Location: How close are the piles to the adjacent to population, or a sensitive

environment. What level of risk does the physical condition of the pile with respect to

geotechnical stability, burning, acid generation, erosion or dusting present to the

public.

* Impact on Social Assets: What risk does the pile and or its recontouring have with

respect to the use of social assets. How important are these assets to the local

population and how much their rehabilitation cost if they are impacted by remedial

action to the pile?

* Worker Health and Safety: What is the risk to workers during the completion of the

remedial action on the pile?

* Implementation: Should recontouring be conducted what is the time to completion

of the work; what is the cost to do the recontouring; is the effectiveness of the

recontouring easy to monitor; if problems are encountered how easily can the plan be

altered; and what is the potential for delay of site closure if this option is pursued?

* Future Liability: What is the risk and anticipated costs associated with future liability

of this remedial action option?

* Regulatory Criteria: What is the ease of compliance; is it extremely costly or cost

effective to do this particular remedial option? Will it be necessary to seek relaxation

of regulatory requirements to achieve the most practical and cost effective solution?


File 114Table 5.3.2.1Risk Analysis MatrixSite (Name) ClosureRemedial Action Option Recontouring of Terra ConesBalance of Risks

Risk Factor Ranking of Consequence FactorScore

0 1 2 3 4Terra Cones (Individual PileAssessment)

> Location People/ Pile within Pile in Pile in sparsely Pile remotebuildings major moderately populated area from

immediately population populated area populationadjacent to pile centre

* Adjacent to Population

Sensitive Sensitive Sensitive- Sensitive Sensitiveenvironment environment enviromnent environment enviromnentimmediately moderately

adjacent to pile adjacent to pile _

* Adjacent to SensitiveEnvironment

Severe Major Moderate Minor Stable* Geotechnical Stability .* Burning* Acid Generation* Erosion* Dusting> Impact on Social Assets Loss of Use Major Moderate Low No Impact* Importance of asset* Cost to rehabilitate _

> Worker Health and Safety Very high Hgh Moderate Minor Insignificant* Threat to Workers> Implementation Very high High Moderate Minor Insignificant

constraints constraints* Time to completion* Cost X .* Ability to monitor* Ability to change or modify

plan .* Potential for delay> Future liability Anticipated High Moderate Minor Insignificant

verv high costs . future demand* Item by Item Review> Regulatory criteria Absolute High Moderate some Minor No requirement

requirement flexibilityvery difficult

* Ease of compliance . .> Public Involvement Very High High Moderate Minor None* Level of Concern> Risk of failure Very high LHgh Moderate Minor Insignificant* Likelihood of Failure* Anticipated cost of delay

Perfect score: XXX points Individual option score equals a total of benefit XXX


File 114

Table 5.3.2.2Risk Analysis MatrixSite (Name) ClosureRemedial Action Option Flooding of the MineBalance of Risks

Risk Factor Ranking of Consequence FactorScore

0 1 2 3 4Hydrogeology> Underflooding Loss of Use Major Moderate Low No Impact

Modifications Modifications ModificationsRequired Required Required

. Flood Neighboring MinesBuildings and Homes ..

* Public Infrastructure. Water Supply* Surface Hydrology> Sensitive Environment Loss of Use Major Moderate Low Positive Impact. Level of Impact> Impact of Social Assets Loss of Use Major Moderate Low No Impact

Contamination Contamination Contamnination* Type of asset* Cost to rehabilitate> Worker Health and Safety Very High High Moderate Minor Insignificant* Threat to Workers> Implementation Very high High Moderate Minor Insignificant

constraints I constraints* Time to completion l_l_l* Cost I_I__T=_-* Ability to monitor | l_l__* Ability to change or modify

plan l l* Potential for delay > Future liability Anticipated H-ligh Moderate Minor Insignificant

very high costs future demand* Itemize _ _ _

> Regulatory criteria Absolute High Moderate some Minor No requiremenrequirement flexibilityvery difficult

* Ease of compliance> Public Involvement Very High High Moderate Minor None .-* Level of Concern> Risk of failure Very high High Moderate Minor Insignificant* Likelihood of Failure- Anticipated cost of delay

Perfect score: XXX points Individual option score equals a total of benefit XXX

Clifton Associates LUd. engineering science technology

File 1-14Page 31

* Public Involvement: What is the level of public concem with respect to the selected

remedial option. Is there public support or major resistance?

* Risk of Failure: What is the likelihood of failure of the remedial option under

consideration and what is the anticipated cost of delay?

The "score' for each factor is generated by applying professional judgment regarding the

"Rank" or level of risk associated with each factor. The total score represents a "Balance

of Risks" for each of the remedial options under consideration. Consequently this simple

quantifiable assessment provides not only a generic comparison of each of the remedial

options by way of their total scores, but it also allows a comparison of the individual

factor scores. This is helpful when comparing the sensitivity of the various options to

their particular factors and circumstances.

Each of the selected remedial action options for each scenario will be individually

evaluated on separate tables in keeping with the above noted rating system. For example

with respect to the terra cone analysis, possible remedial action options that could be

evaluated are:

* Do nothing, let the piles naturally revegetate and stand uncared for;

* No physical reshaping, reforest the surface to stabilize in place;

e Extinguish burning, no major reshaping, reforest as above;

* Recontour the pile to 40m; or

* Relocate the pile if it is a major hazard.

This method of transparent decision making clearly presents the rationale of each

individual assessment. The evaluation process and resultant scores will be summarized

as shown in Table 5.3.2.3. A preferred option can be easily identified for each scenario

and compared by the reader, such as regulatory agencies, management comrnittee

members, local administrations or the public.

5.3 Institutional Control

A number of the environmental issues that will be the subject of remedial action at the

closure sites will not reach final stability or equilibrium for several years. Therefore it is


Table 5.3.2.3Example TableSummary of Remedial Action Alternatives

Remedial "Item of Concern" ScenarioAction Option

Risk Matrix Factor Score Preferred Option

Alternative #1

Alternative #2 ?

Alternative #3

Etcetera.......

Note: The highest factor score yields the highest level of benefit and is therefore the preferred option

File 1-14Page 32

recommended that an "Institutional Control" capability be put in place to conduct long-

term monitoring and remedial action in the future, as necessary. The primary focus of this

endeavor would be those items of concern that have demonstrated a significant risk of

future liability through the risk assessment, planning and implementation stages of

closure. For example, an obvious item that will warrant future attention is the issue of

hydrogeology (underflooding)in select areas.

5.3.1 Mechanism and Funding

The responsibility of "institutional control" requires the long-term commitment of a well

established senior government organization that is:

* Technically sound

* Has operational and remedial action expertise, and

* Can reliably manage long term financial requirements.

Given these parameters, it is reasonable to assume that a small core group of

professionals within UDKR that have experience and technical knowledge from closure

of the mines could be retained and organized to conduct this responsibility, once UDKR's

dosure work has been completed and this organization disbanded. The expertise

required can be guided by the nature of those items identified as a likely future liability

during the risk assessment It is expected that a senior engineer, hydrogeologist and

ecologist would provide the necessary technical skills.

It will also be necessary to establish a budget for this group. There will be two main

components:

* a routine operating budget that covers staffing, operations and routine

monitoring activities; and

* a firm commitment on behalf of the government is made to cover the costs of

future unanticipated work. The work envisioned will be that necessary to

stabilize or secure an environmental or public safety concerns that has

materialized at a closed mine site.

The primary activity of this group will be routine inspection and monitoring of the site

closures to ensure that they are responding as expected at the time of closure planning.


File 1-14Page 33

Professional staff would prepare and supervise the monitoring program as well as

manage any future remedial action. It would be cost effective to have ex-miners, who

reside local to the site(s) and who have been trained to perform these duties, could do the

inspection and monitoring activities.

5.3.2 Information Management

As noted in section 4.1.9 UDKR does not have in place a comprehensive information

management capability to assist closure planning, implementation and transfer.

Consequently, the long term nature of the "Institutional Control" monitoring program

will only further complicate the situation. In order to better utilize the technical data

collected and further define program cost savings it -will be essential to establish and

maintain a dedicated information and data management system that will allow trend

analysis and future planning. The Environmental Information Management System

provided by Envista Technologies, as discussed in a reference paper provided in

Appendix G, warrants consideration for implementation.

6.0 Closure

This report contains the results of a reconnaissance level inspection and qualitative

technical evaluation of select coal mines in the Donbass region including discussions

with the associated institutions in the Ukraine. The recommendations with respect to

envirornmental protection, prioritization of hazards, remedial actions, potential costs,

planning processes and organizational strengthening are based on site inspections

and discussions with officials of the UDKR, relevant governrment agencies and

certain local administrations. The recommendations provided are for planning

purposes only. Additional investigations and analysis are required before specific

comment can be made with regard to the remediation designs.

7.0 Acknowledgements

The author would like to acknowledge the co-operation and assistance of the

professionals within the UDKR. Informative discussions were also held with

representatives of the local administrations of Enakievo and Bryanka, Ministry of

Fuels and Energy, Ministry of Environment and Nuclear Safety, Coal Research and

Development Institute, Kyiv International Institute of Sociology and the Donetsk


File 1-14Page 34

Informational Analytical Center. Ms. Yelena Kanivets served as interpreter in the

Donbass region while Mr. Sergei Kalinichenko provided interpreter services in Kyiv.

This report would not have been possible without the initiative, support and

guidance of the World Bank professionals and staff, including fellow mission

participants, particularly the mission leader Mr. Heinz Hendriks.

As always, I very much appreciate the "process" wisdom, experience and advice of

my valued colleague, Dr. Graham Parsons.

Clifton Associates Ltd.

Ron Barsi, P.Geo.Senior Project Manager - Mining

Environmental Management Services

Association of ProfessionalEngineers and Geoscientists of SaskatchewanCertificate of Authorization No. 9833


aK\ Clifton Associates Ltd.engineering science technology Appendix A

I I Il

File I-14Appendix A

Page 1

Appendix A - List of Mission Participants

World Bank, Ukraine Coal Sector Mission, January/February 2000, list of mission participants:

* Heinz Hendriks - mission leader

* Miroslav Ruzicka - social impact assessment of mine closures, assess effectiveness of employment

creation measures

* Konstantin Skorik - Coordinator with government agencies and resident international donors

* Andrei Astrakhan - legal assessment for implementation of regulatory and procedural changes

required for improved mine closure procedures and the upgrading of UDKR

X David Merrick - institutional arrangements for implementation of CMRP and review of development

progress of the coal industry

* Ron Barsi - review of environmental issues of mine closures and establishment of guidelines for fast

and low cost mine closures

While in the Donbass region the mission worked out of the UDKR office in Donetsk. Activities in Kyiv

were coordinated out of the World Bank's resident mission.


a Clifton Associates Ltd.engineering science technology Appendix B

File I-14Appendix B

Page 1

Appendix B - Environmental Management Assessment, Itinerary andConsultation Meetings

Mr. Ron G. Barsi P.Geo. of Clifton Associates Ltd. was retained by the World Bank to provide

environmental management expertise to the mission. The following assessment itinerary and

consultation meetings were conducted:

* 24 January 2000 - Donbass Region - Donetsk - "Ukruglerestrukturizatsiya" Company (UDKR), Mr.

Semyonov, Managing Director and Mr. Babushkin, Head of Tender Department, introduction and

planning meeting.

Mr. Egorov, Deputy Director of Production, discussed coal mine site closure procedures and

generic environmental issues related to closure.

* 25 January 2000- Donbass Region - Donetsk Oblast- UDKR Department of Industrial Sites and

Ecology. Mr. Spozhakin, Head of Enviromnent Department. Discussed environmental

management organization within UDKR and reviewed primary environmental issues of concern.

* Field visit with Mr. Spozhakin to Pravda area (three mines), part of pilot mines closure

project.

* Mr. Egorov, field visits and meetings planning session. Continued discussion on

environmental and regulatory process issues.

* 26 January 2000 - Donbass Region - Donetsk Oblast- UDKR - field visit to Krasny Oktyabr (Red

October) mine area. Participants were Mr. Babushkin, Head of Tender Department; Mr. Doroshenko,

Mine Manager; Mr. Kyazantsev, Chief Engineer; Mr. Kosak, Director of Enakievo Regional

Directorate for closing mines; and Mr. Ilichenko, Deputy Head of Employment Department.

* Krasny Oktyabr (Red October) mine, Local entrepreneur (unemployed miner) Mr. Sigunava,

Director of Small Business, Enakievo. Discussed closure process as related to his sausage

making initiative, future plans, needs and "road blocks".

* Krasny Oktyabr (Red October) mine, Mr. Litovchenko, Mayor of Enakievo. Discussed level of

concern related to environmental considerations, and problem areas related to closure

process, transfer of responsibilities from UDKR, opportunities for municipal and public

participation in the planning process.


File 1-14Appendix B

Page 2

* 27 January 2000 - Donbass Region - Donetsk - UDKR - Mr. Ulitskiy, Main Hydrogeologist. Evaluated

environmental concerns at closure primarily from a hydrogeological and geochemical perspective.

Ministry of Environment and Nuclear Safety, Donetsk Oblast. Mr. Kaliushenko, Head of

Department of Resources and Entrails Protection; and Mr. Michailenko, Head of State

Environmental Expertise. Accompanied by Mr. Spozhakin, UDKR. Discussed environmental

protection issues at coal mine closure from the regulatory perspective, reviewed the

regulatory approval process and opportunities for an expedited approval and transfer

process.

* 28 January 2000 - Donbass Region - Lugansk Oblast - UDKR --Field trip to Stakhanov mine area and

Bryanka mine area. Accompanied by Mr. Ulitskiy.

* Technical consultations were held with Mr. Timchemko, Chief Engineer Lugansk Branch; Mr.

Belousov, Chief Engineer of Geological Surveying; Mr. Chirka, Leading Hydrogeologist; Mr.

Melezhik, Chief Geologist Lugansk Branch. Focus of discussions were on the environmental

and infrastructure issues in the area.

= Discussion with Mr. Korneichuk, Deputy Mayor Town of Bryanka regarding municipalities

concern regarding mine closures. Suggestions for enhanced transfer process.

* Visited terra cone, underflooding and subsidence sites in Bryanka town and area. Invited into

one homeowners root cellar to observe flooding and impact of subsidence.

Note: It should be understood that due to the winter conditions, and the effects of active winter storms,

the surface inspection while in the field was hampered due to the deep snow cover and lack of access to

several locations at the mine sites.

* 29 January 2000 - Travel to Kyiv

* Planning meeting with- Mission leader

* 30 January 2000 - Kyiv - Mission planning, document review and preparation

* 31 January 2000 - Kyiv - Mr. Poshtuk, Head of Restructuring Department, Ministry of Fuels and

Energy

* 1 February 2000 - Kyiv - Assessed environmental component and participated in conference on the

"Mitigation of Social Consequences of Ukrainian Coal Industry Restructuring" conducted by the


File 1-14Appendix B

Page 3

Kyiv International Institute of Sociology and the Donetsk Informational Analytical Center.

* 2 February 2000 - Kyiv - Document review and preparation

* 3 February 2000 - Kyiv - Mr. Surgay, Director of the Coal Research and Development Institute; Mr.

Vulish, First Deputy Director; Mr. Tolstoy, Science Secretary; and Mr. Mogilko, Head of Department

of Ecology and Mining

* Mr. Poshtuk,, Head of Restructuring Department, Ministry of Fuels and Energy

* 4 February 2000 - Return to headquarters


aX) Clifton Associates Ltd.engineering science technology Appendix C

Appendix C

Design on Closure of Mine Belonging toCoal-Mining Association (State Holding Company)

Explanatory Notes


File 1-14Appendix C

Page 1

Table of Contents

PageEXECUTIVE SUMMARY

INTRODUCTION 111.0 BRIEF INFORMATION ABOUT FACTUAL (REAL) STATE OF THE MINE 13

1.1 Brief Characteristics of the Region of Activity and General Information about the 13Mine

1.2 Geological Characteristics of Mine Field (mine take) 131.3 Boundaries and Reserves of Mine Field 161.4 Development of Mine Field (for mining) 171.5 Ventilation and Degassing 181.6 Hoisting Underground Transport 191.7 Electric Supply 201.8 System of Drainage and Water Pumping for Mine Field 201.9 Safety and Industrial Sanitation 211.10 Surface Technological Complex 211.11 Pneumatic System (facilities) 221.12 Industrial and Common Sanitary Buildings and Constructions on Surface 231.13 Signaling System and Means of Comununication 261.14 Facilities for Barren Rock (waste) 261.15 Settling Ponds for Mine Water and Silt-Detention Tanks 281.16 General Plan and Transport 301.17 Nature Protection (envirorunental pr) 301.18 Analysis of Bottlenecks in Mine Work 30

2.0 ANALYSIS OF FINANCIAL AND ECONOMIC ACTIVITY OF MINE 31

3.0 REASONS FOR MINE CLOSURE 34

4.0 TECHNICAL DECISIONS FOR MINE IN PERIOD OF WAITING 354.1 General Statements 354.2 Underground Workings Ventilation 364.3 Hoisting Underground Transport 364.4 System of Drainage and Water Pumping for Mine Field in Period of Waiting 364.5 Energy Supply and Electric Equipment 374.6 Surface Technological Complex 384.7 Protection Against Fire 404.8 Cost of Maintaining Mine in Period of Waiting 40

5.0 DECISIONS ON OBJECTS (INSTALLATIONS) OF CLOSING MINE 465.1 Lists of Objects 46

(a) Subject to Liquidation 46(b) Remaining After It 46

5.2 Liquidation of Mine Workings 485.3 Technical Decisions Concerning Liquidation of Shafts, Adits and Wells 495.4 Ventilation of Mine in Period of Closure 555.5 Hoisting and Transport in Period of Closure 565.6 System of Drainage and Water Pumping for Mine Field in Period of Closure 575.7 Pulling Out of Equipment Metal Supports, Rails and Pipes from Mine Workings 575.8 Technical Decision for Surface Complex of Mine 58


File 1-14Appendix C

Page 2

Page5.9 Proposals Concerning Usage of Objects Which are not Subject to Liquidation 615.10 Transport System 635.11 Objects of Mine Which are not Used in Production Cycle and are not Subject to 63

Breaking Down

6.0 ELECTRICAL ENGINEERING 656.1 Power Supply and Electrical Equipment in Process of Closure 656.2 Pneumatic Facilities in Process of Mine Closure 666.3 Technical Decision on Power Supply and Electrical Equipment of Objects not Subject 66

to Liquidation6.4 Technical Decisions on Liquidation of Power Supplying Units and Power 67

Transmission Lines

7.0 SIGNALING SYSTEM AND MEANS OF COMMUNICATION 687.1 Technical Decisions on Signalling and Communication in Period of Mine Closure 687.2 Technical Decisions on Liquidation of Objects of Communication and Signaling 68

8.0 FACILITIES FOR WASTE ROCK 69

9.0 SETTLING PONDS FOR MINE WATER, SILT PITS 719.1 Usage of Settling Ponds for the Purpose of Technical Water Supplying and for 71

Irrigation Systemns9.2 Technical Decisions on Liquidation of Settling Ponds and Silt Pits 71

10.0 RECULTIVATION AND USAGE OF LAND 7210.1 General Evaluation and Amount of Land Which are Subject to Recultivation 7210.2 Proposals Concerning Further Usage of Land after Mine Closure 72

11.0 PROTECTION AGAINST FIRE 7411.1 Protection Against Fire for Liquidated Objects 7411.2 Protection Against Fire for Buildings and Structures Which are not Subject to 74

Liquidation

12.0 LABOUR PROTECTION AND INDUSTRIAL SANITATION 7512.1 General Statements 7512.2 Safety Measures During Mine Closure Period 7512.3 Industrial Sanitation 77

13.0 ASSESSMENT OF IMPACT ON ENVIRONMENT 7813.1 Protection of Entrails 7813.2 Measures Against Spontaneous Outlet of Gas to Surface 7913.3 Measures for Preventing Harmful Impact of Mine Water on Landscape and Water 80

Basin13.4 Waste of Production 8213.5 Assessment of Impact on Environment 8313.6 Lab Monitoring of Environmental Pollution 86


File 1-14Appendix C

Page 3

14.0 ORGANIZATION OF WORK ON MINE CLOSURE 8714.1 General Statements and Volumes of Work on Closure 8714.2 General Plan (construction) 8814.3 Calendar Plan for Mine Closure, Duration of Closure 8814.4 Organizational and Technical Measures 9314.5 Methods of Fulfilling Work 94

15.0 SOCIAL AND ECONOMIC CONSEQUENCES OF MINE CLOSURE 9815.1 Social Protection of Workers of Closing Mine 9815.2 Profile of Staff 9815.3 Employment of Mine Workers 10015.4 Expenses on Social Protection of Workers at Closing Mine 10115.5 Objects of Social Sphere (social assets) 110

16.0 TECHNICAL AND ECONOMIC PART 11216.1 Quantity of Workers for Period of Mine Closure 11216.2 Cost of Maintaining Mine During Mine Closure Period 11216.3 Cost of Mine Closure 11316.4 Sums of Returns 11516.5 Permanent Annual Expenses Caused by Consequences of Mine Closure 11616.6 Main Technical and Economic Indicators 116

17.0 INSURANCE FUND OF DOCUMENTATION 12117.1 General Guidelines 12117.2 List of Documents to be Included into Insurance Fund 12117.3 Requirements for Preparing and Sending Documentation to Insurance Fund 12517.4 Expenses for Preparing Documentation to be Included into Insurance Fund 126

ATTACHMENT AList of Initial Data Necessary for Elaborating Design on Mine Closure 127

ATTACHMENT BMethods of Defining Sums of Returns After Selling of Equipment and Materials Pulled out of 133Mine and Gained After Dismantling of Buildings and Structures on the Surface (during mineclosure)

ATTACHMENT CList of Now Being Used Regulative and Methodical Documents on the Basis of Which Design 141on Mine Closure is Elaborated

Cost Estimate Documentation 147

1 General Guidelines 1472 Total Cost Estimation of Mine Closure 1473 Total Calculation of Mine Closure Cost 151

Documentation 162

Minutes of Considering Technical Feasibility Study Concerning Expediency of Further Work 162(activity) of Mine

Minutes of Considering of Design on Mine Closure 163


File I-14Appendix C

Page 4

Resolution 167

Passport of Design on Mine Closure 169

List of Compliance Copies for Design 177

Letter of Ukr 178

COMPOSITION OF DESIGNVolume 1 Explanatory NotesVolume 2 Explanatory NotesVolume 3 Explanatory Notes


File I-14Appendix C

Page 5

ATrACHMENT CRecommended List of Existing Regulative and Methodic Documents Used for DesignElaboration (for Mine Closure)1 Procedure of Elaborating and Approval of Main Regulative Documents. Instruction

of Coal Mining M2 Safety Rules for Coal Mines3 Collection of Instructions to Safety Rules - VI4 Collection of Instructions to Safety Rules - V25 Rules of Technical Exploitation for Coal and Slate Mines6 Instruction on Procedure of Closure and Conservation of Enterprises (mining

enterprises) - Safety, Rational Use and Protection of Entrails / /Collection of MainDocuments on Protection of Entrails for Mining Enterprises

7 Unified Rules of Protection of Entrails While Developing Solid Mineral / / Collectionof Documents on Protection of Entrails for Mining Enterprises

8 Guidelines for Writing Off Mineral Resources Reserves for Mining Enterprises / /Collection of Governmental Resolutions

9 Methodical Instructions for Elaborating Technical Feasibility Study in Cases ofWriting Off From the Mine Cost Accounting Some Mineral Resources Which LostT1heir Industrial Importance / / Collection of Documents on Protection of Entrails

10 Instruction on Survey Prospecting1 1 Provisions About Procedure of Giving Mine Fields / / Collection of Governmental

Regulations12 Instruction on Mining Safety Near Flooded Workings13 Collection of Principal Documents on Protection of Entrails While Working Out the

Mineral Deposits14 Hydrogeology of the USSR15 Regulation on Designing Ventilation at Coal Mines16 Guidance on Dust Suppression and Preventing Dust Blasting at Coal and Shale

Mines17 Manual on Degassing Coal Mines18 Instruction on Safe Mining in Seams Prove to Sudden Outbursts of Coal Waste, Rock

or Gas19 Sanitary Rules for Coal Mining Enterprises20 Calculation and Construction of Power Supply Systems for Coal Mines21 All Union (the USSR) Standards of Technological Designing of Storages, Repairing

Shops, Mines and Washeries (coal preparation plants)22 All Union Standards of Technological Designing of Particular Storage for Long

Cargoes (freight)23 Standards of Technological Designing of Surface for Coal Shale Mines, Open Cuts

and Washeries24 Rules of Five Safety While Constructing and Assemblying25 Unified Rules of Safety in Cases of Blasting26 Safety Rules for Washeries and Briquetting Plants (coal, shale)27 Instruction on Designing Buildings and Structures of Mines, Open Casts, Washeries

and Briquetting Plants Which are Prone to Spontaneous Combustion28 Instruction on Designing Five Suppressing System for Buildings and Constructions

on Surface of Mines, Open Cuts and Washeries29 Ukrainian Legislation on Labour Protection. Collection of Regulative Documents (in

4 volumes)30 Ukrainian Code "About Entrails" / / Documents of Supreme Raga31 Water Code of Ukraine


File 1-14Appendix C

Page 632 Land Code of Ukraine. Land Reform in Ukraine // Collection of Regulative and

Governmental Acts33 Law of Ukraine about Environmental Protection34 Law of Ukraine about Environmental Expertise35 Law of Ukraine about Provision of Favorable Sanitary Conditions for Population36 Law of Ukraine about Handling Radioactive Waste37 Legislation of Ukraine for Regulating of Closure of Enterprises38 Composition Procedure of Elaboration, Compliance and Approval of Designing

Documentation for Construction39 State Sanitary Rules for Planning and Constructing Settlements40 Composition and Content of Documents for Assessment of Impact on Environment

While Designing and Constructing Different Buildings and Structures41 Safety Rules for Construction. Gosstroy of the USSR42 Climatology and Geophysics in Construction43 Underground Mine Workings. Gosstroy of the USSR44 Organization of Construction45 Sewage Nets and Structures. Gosstroy of the USSR46 Water Supply. Nets and Structures Gosstroy of the USSR47 Inner Water Supplying and Sewage of Buildings. Gosstroy of the USSR48 Typical Plan of Environmental Management on Closing Mines (requirements to

designing and organizing of works abating negative influence of mine closure onenvironment)

49 Explanation for Drawing of Section on Environment50 Methods of Assessment of Impact on Environment of Being Designed Coal

Enterprises51 Methods of Calculation in Atmospheric Air Some Harmful Substances Which are

Contained in Emissions of Enterprises52 Methodical Recommendation on Biological Recultivation of Flat Waste Piles of Mines

and Washeries for the USSR (Ukrainian SSR) Donetsk Botanical Garden53 Technical Schemes for Preventing Self-Combustion and for Extinguishing of Waste

Piles54 Butoretsky V.G. Environmental Protection in Coal Preparation55 Technological Schemes for Reclamation of Waste Dumps and Flat Waste Piles of

Mines and Washeries56 Instruction on Drawing Technical and Economic Part of Design at Coal and Shale

Mines (temporary)57 Elaborating Fire Suppression System for Coal Mines (methods of elaborating)58 Temporary Methods of Defining Economic Efficiency of Environmental Measures

and Economic Damage Caused by Coal Enterprises Because of EnvironmentalPollution

59 Rules of Drawing Cost Estimate and Defining Basic and Calculated Cost Estimate ofConstruction

60 Procedure of Defining Cost of Construction and Repair of Housing, Social Assets,Objects of Community Usage and Cost of Restoration of Architectural Monuments

61 Addition of .... Part II. Procedure of Defining Cost of Mining and Assembly WorksFulfilled by Enterprises and Ministry of Coal

62 Collection of Cost Estimate Standards -r 35 "Mining Works"63 Regulation on Employing Cost Estimate Standards for Construction Works64 Collection of Cost Estimate Standards of Ukraine65 Instruction on Employing Cost Estimate Standards for Equipment Assembly66 Collection of Cost Estimate Standards for Equipment Assembly67 Collection of Norms (standards) for Defining Cost Estimate of Usage for

Construction Machines and Mechanisms


File 1-14Appendix C

Page 7

68 Standards Norms for Drawing Design of Construction (for organizing construction)69 Collection of Cost Rates for Repairing and Maintaining of Workings in Period of

Construction70 Rules for Assembling Power Devices71 Methods of Defining Technical and Economic Feasibility of Pulling Out Materials

and Equipment from Closing (put on conservation) Coal Mines


a 43 Clifton Associates Ltd.engineering science technology Appendix D

File 1-14Appendix D

Page 1

13.0 Assessment of Impact on Environment

13.1 Protection of Entrails (Mineral Resources)

The hydrogeological settings of the coal seams of the neighbouring mines, coming near to the worked out

and flooded searms of the closing mine are analysed, the dangerous places where water seepage and gas

emissions are possible are determined.

All possible ways for groundwater movement to the neighbouring mines are determined: the size of

pillars, the quality of plugging for wells and mine workings, disjoint faults and folds common for some

mines are taken into account.

The preventive measures against water and gas break-throughs (bursts) to the day surface are elaborated:

these measures can include installing coffer dams, constructing boundaries for dangerous zones, etc.

(constructing boundaries for dangerous zones near wells, workings, disjoint faults and folds in the mine

fields of the neighbouring mines is performed by the closing mine). In the design on closure all objects

for constructing these zones are pointed out.

The data about job spaces and workings lying at the depth, which could cause sibsidence and fall-

throughs, are given; the protective measure are selected: e.g. fencing places of potential fall throughs,

filling some workings, etc.

The successor is to fulfill constant monitoring (at least annually) of liquidated (filled) mine workings,

including determining any excess of bench mark stock over zero level. In cases of the fall-throughs on the

surface he marks measures against caving in on the basis of a special design and puts reliable fencing not

less than 2.5 metres of height and water drainage ditch.

For buildings areas the state of mine workings and presence of gob spaces up to 80 metres depth are

analysed and the results of analysis lead to working out (elaborating) protective measures: filling,

plugging, etc.

The data about prospective time of displacement and maximum, factual and expected deformations of

land surface under the mine closure are given. It is pointed out that the successor should carry out

measures connected with consequences of underworking including drainage and irrigation work (land

reclamation, amelioration) on the affected areas.


File 1-14Appendix D

Page 2

The full list of all liquidated (now and earlier) mine workings coming out to the surface (shafts, adits,

pits) within the limits of this mine field, is given, their state is analysed and necessity of constant

monitoring from the side of the successor is stated.

In case when getting out of coal is being done simultaneous by with works on mine closure, the specific

areas of getting coal, balance and industrial reserves, measures for complete extracted of reserves and

reduction of coal losses, coefficient of coal extraction are listed. The information about extraction in these

cases and temporary used mineral resources, waste of production is given as well. The data about

balance and clearing of reserves (e.g. writing off, transfer to the neighbouring mines) are pointed out.

While extracting the remaining coal reserves, if necessity appears, the design for protection of existing

objects against harmful influence of mine work is elaborated and is presented in a separate volume.

The proposals concerning coal reserves writing off are given in a separate volume or in a separate section

of "Technical Feasibility Study of Coal Reserves Writing off from Balance of Mine if these Reserves Lost

Already Their Industrial Importance".

13.2 Measures for Preventing Spontaneous Outlet of Gas to the Day Surface

Mining geological and technical conditions of gas penetration to the day surface through mine workings

and tectonic irregularities reaching the surface, are analysed. The places of potential gas emissions and

their degree of danger are determined.

These places of potential gas emnissions are determined in accordance with "Instruction on Protection of

Buildings and Structures Against Methane Emissions" 1986.

Measures for presenting of potential spontaneous gas enmissions to the surface are given. Possible

schemes for offsetting gas from the closing mines are shown on Fig 4.

It is pointed that for successor it is necessary to organize monitoring of gas emissions in accordance with

"Instruction...."

In cases which are not considered by "Instruction....., the designing institute "Mak NII" (Makeevka

Scientific and Research Institute) is invited for defining boundaries of potential gas emissions, estimating

gas reserves and elaborating measures of protection.


File 1-14Appendix D

Page 3

13.3 Measures for Preventing Harmful Impact of Mine Water on Landscape and Water

Basin

The level of underground water under mine closure process and places of water infiltration to the surface

through mine workings reaching the surface are determined. Monitoring over possible land surface

underflooding and salinization are envisaged; measures for preventing underflooding and controlled

discharge of water are given. In steep seams it is necessary to pay attention to the potential displacement

of rocks with forming benches on the land surface.

The volume of gob spaces flooding and time period for restoring the ground water level are calculated.

The volume of empty spaces is determined on the basis of co-efficient of flooding given in i.2.20 of

"Instruction on Safe Mining Work near Flooded Mine Workings".

Because of the absence of normative and methodical documents concerning this issue and sometimes

even necessary initial data, it is expedient to attract the specialized organizations (production association

"Ukruglegeologia", Doubassgeologia", etc) if there are really difficult mining geological conditions.

For the mines of central part of Doubass the project (the design) should additionally contain decisions

concerning protection of entrails and water basin against harmful chemical contamination with

monitoring of pollution.

In case of surface under flooding, while flooding mine workings, it is necessary to give in a design on

closure the zone of under flooding and envisage preventive measures against under flooding.

In case of flooding gob space before the physical closure of a mine, the contractor design of flooding mine

workings is performed.

The contractor design should include explanatory notes and graphics.

The explanatory notes attached to the contractor design should contain the characteristics of

hydrogeological ties between coal seams, neighbouring mnines, forecasted level of each seam flooding,

expected water influxes, time of flooding,monitoring of flooding level,ways and volumes of water

overflow to neighbouring mines, chemical composition and water borne radioactivity.


File 1-14Appendix D

Page 4

The graphics (graphical materials):

* copies of mine workings schemes for all seams (levels);

* geological cuts (development schemes - schemes of driving of openings to and in deposit) with

water level indication in mine workings;

* drawings for dangerous zones boundaries (barrier and preventive pillars).

The contractor design of mine workings flooding is carried out by design organization and is agreed with

"Mak NII" (Makeevka Scientific and Research Institute), state technical control of labour safety and state

environmental expertise.

If necessary, the places of control well drilling are indicated.

13.4 Waste of Production

Waste of production for closing coal mine are: technological accumulations for the process of mine

exploitation and production waste formed in the process of mine closure.

Technical wastes are:

- barren rock

- slurry, sludge (silt)

Production wastes are:

* ferrous and non-ferrous metal scrap;

* timber;

* rubber conveyor belts;

* accumulator batteries;

* electrolyte, emulsol;

* used fuels;

* ash dumps;


File 1-14Appendix D

Page 5

* reinforced concrete;

* used concrete and timber sleepers;

* mercury containing devices, luminescence and mercury lamps;

* construction garbage left after demolition of surface structures.

According to each type of waste it is necessary to indicate volume and characteristics of their safe

environmental storage, plus adopted design solutions concerning:

* reuse (recycle) of waste;

* places and conditions of storage, utilization and disposal;

* measures for preventing or eliminating harmful impact on environment for already accumulated

A 6 t1 technological waste.

13.5 Assessment of Impact on Environment

The aim of this assessment is to define ways and methods for environmental normalizing and provision

of environmental safety requirements during mine closure period.

The materials of this assessment in a draft design on mine closure are prepared in accordance with the

requirements of A i H A.2.2-?-95 "Composition and Content of Documents for Assessment of Impact on

Environment while Designing and Constructing Different Buildings and Structures. Main Guidelines for

Designing" and Attachment 9 "Assessment of Impact on Environment A 6 n A2.2-3-97 "Composition,

Procedure of Elaboration, Compliance and Approval of Design Documentation for Construction".

Specific features concerned mine closure are taken into account.

Mine closure completely eliminates or minimizes harmful impact on separate components of

environment. That's why in accordance to i.2.9A 6 tl A2.2-I-95 in this impact assessment it is envisaged to

consider only those environmental components which are affected by the design activity and those which

do not meet the standards.

After mine closure to those components are referred:

1. Air basin. This section is prepared in accordance with the requirements of A 6 tl A2.2.2-I-95, KA

12.12.20T-97 and explanation for drawing section of design (contractor design) which is entitled

"Environmental Protection".


File 1-14Appendix D

Page 6

2. Water basin. This section is prepared in accordance with the requirements of 1 A2.2-T-95, KA

12.12.20T-97 and explanation for drawing section of design (contractor design) which is entitled

"Environmental Protection".

For closing mine (conserving mine) and for the cases of increasing water influx to the neighbouring

mines because of the stoppage of water pumping at closing mine (or mine put on conservation), the

data are given about volume and types of waste water with indication of physical and chemical

composition, characteristics of purification works, methods and efficiency of water treatment,level of

residual contamination after treatment, places of treated waste water discharges, usage of treated

waste water for water supply system of mine or other enterprises (consumers).

For each discharge (output) of water it is necessary to indicate a receiver of waste water, to give water

body characteristics combining its qualitative and quantitative sides concerning types of water usage.

It is necessary to give qualitative and quantitative characteristics of surface water bodies (their

contamination) before output (discharge) of waste water.

While offsetting water water to water bodies it is required to calculate all changes of physical and

chemical indexes of water body, on the basis of equation of water balance taking into account

background concentrations of contaminants, hydro-geological and hydro-chemical peculiarities of

water body.

The system of control transits (sample points in river), list and maximum concentrations of controlled

substances, ways of and frequency of lab control, controlling body or agency are determined.

The list of organizational and technical measures for preventing accident emergency discharges of

waste water to water bodies are given.

On the basis of comparative analysis of all factors of impact, the conclusions about impact and

potential changes in surface water bodies after mine closure are listed.

3. Lands. Reclamation of land is performed, further land usage is determined. On the basis of

calculations of impact on environment, sizes of sanitary and protective zones near remaining

buildings, structures and waste piles are specified. hi case of recontouring and reclamation of waste

piles it is possible to consider question about shrinkage of sanitary and protective zones.

4. State of radioactivity. The data about ionizing rays and their qualitative and quantitative parametres

and degree of danger for environment are stated.


File 1-14Appendix D

Page 7

According to data presented by regional inspectorates for controlling radioactive and dangerous

technologies, possible sources of radioactive contamination could be:

* settling ponds for mine water;

* slurry and silt detention tanks;

* some places on the surface within the boundaries of mine field.

Measures for preventing or decreasing radioactive impact on environment are given. If there is a

necessity for focal sites of radioactivity to be lessen, a separate design made by specialized design

organization is needed.

Above mentioned materials are prepared by subdivisions of sanitary and epidemiologic agencies

(regulation about state monitoring of environment vias approval by Cabinet of Ministers of Ukraine on

23.09.93 (,J7I85).

The initial data for performing the impact assessment are the materials presented by customer and the

technical decisions on mine closure.

The final document of this assessment of impact on environment is the statement about environmental

c.onsequences of mine closure. This statement is drawn in accordance with requirements of A r tlA2.2-I-

95 and is signed by customer and general designer. The copy of this statement is submitted for local

authorities control.

13.6 Lab Monitoring of Environmental Pollution

The requirements for conducting lab control during and after mine closure are given. The frequency of

lab control for different contaminants, schedules of control, means of measuring and approval of these

schedules by appropriate agencies are required.

A E nI state standards for construction.


a Clifton Associates Ltd.engineering science technology Appendix E

i

I i I I

File 1-14Appendix E

Page 1

CABINET OF MINISTERS OF UKRAINERegulations #31January 12, 1999

Kyiv

On Measures for Solving Ecological and HydrogeologicalProblems, Resulting from the Closure of Coal Mining Enterprises,

Mines and Strip Mines

The Cabinet of Ministers of Ukraine decrees:

1. To determine that the ecological state at the majority of coal mining regions is critical, and the

closure of unprofitable coal mining enterprises, mines and strip mines creates ecological problems, connected

with considerable changes in the geological and hydrogeological environment.

In the course of the elaboration and implementation of projects for the closure of enterprises,

mines and strip mines, the Ministry of Coal Industry is violating the demands of nature protection laws and

normative documents on ensuring ecological safety. A number of issues, requiring legal regulation, remain

unsolved, in particular on specifying organizations, responsible for the maintenance of territories of coal

mining facilities, subject to liquidation, preservation of mining surveying and geological documentation,

monitoring of environment elements in the post-liquidation period.

2. To recognize as unsatisfactory the work of the Ministry of Coal Industry, directed at the solution

of ecological and hydrogeological problems, resulting from the closure of coal mining enterprises, mines and

strip mines during the structural adjustment of the coal industry.

3. Ministry of Coal Industry, Ministry of Industrial Policy, State Committee for Oil, Gas and Oil

Refining Industry, jointly with the Ministry of Environment and Nuclear Safety, State Committee for Geology

and Utilization of Mineral Resources and National Academy of Sciences to carry out a comprehensive

ecological and hydrogeological study of territories where the closure of coal mining enterprises and facilities

is underway or planned in the future. To work out, on the results of the study, an assessment of the impact of

respective regional projects on the environment and plans for the engineering protection of territories, and

submit these projects to the Ministry of Environment and Nuclear Safety for state ecological examination.

4. Ministry of Industrial Policy, Ministry of Coal Industry, and the State Committee for Oil, Gas and

Oil Refining Ilidustry with the participation of the State Committee for Geology and Utilization of Mineral

Resources, and Ministry of Labor and Social Policy to ensure the unconditional adherence of ecological safety

demands during the preparation and implementation of projects and programs, related to the closure of

mining industry facilities, as well as the procedure for state examination in compliance with the law.


File 1-14Appendix E

Page 2

5. Ministry of Coal Industry, Ministry of Industrial Policy, Ministry of Economics, Ministry of

Finance, State Committee for Construction, Architecture and Housing Policy, State Committee for Geology

and Utilization of Mineral resources jointly with the Ministry of Environment and Nuclear Safety, Ministry

for Emergency Situations and Protection of the Population from the Consequences of the Chornobyl

Accident, and other bodies of executive power to work out a complex of measures within the framework of

coal mining industry restructuring programs and projects for protecting populated areas and aquifers in

regions, where coal mining enterprises, mines and strip mines are being closed down, from the harmful

imnpact, connected with the recovery of the hydrogeological regime.

6. Ministry of Industrial Policy, Ministry of Coal Industry, Ministry of Environment and Nuclear

Safety, Ministry for Emergency Situations and Protection of the Population from the Consequences of the

Chomobyl Accident, State Committee for Geology and Utilization of Mineral Resources jointly with the

Ministry of Justice, Ministry of Economics, Ministry of Labor and Social Policy, and the National Academy of

Sciences to work out and submit to the Cabinet of Ministers of Ukraine a draft of normative and legislative

acts on regulating ecological safety in the coal mining sector.

7. Ministry of Environment and Nuclear Safety, Ministry of Economics, Ministry of Coal Industry,

Ministry of Industrial Policy, Ministry of Finance, State Committee for Geology and Utilization of Mineral

Resources jointly with the National Academy of Sciences and other interested bodies of executive power to

work out and submit a draft Concept for improving the ecological situation in coal mining regions to the

Cabinet of Ministers of Ukraine by May 1,1999. Ministry of Finance and Ministry of Economics to determine

sources for financing the drafting of this Concept.

8. Ministry of Coal Industry, Ministry of Industrial Policy, State Committee for Geology and

Utilization of Mineral Resources, State Committee for Oil, gas and Oil Refining Industry, jointly with the

Ministry of Environment and Nuclear Safety, Ministry of Science and Technology, Ministry of Labor and

Social Policy, National Academy of Sciences and other interested bodies of executive power to set up a

permanent interdepartmental work group for working out and realizing measures connected with the

prospecting, development, extraction and utilization of coal-bed methane.

9. Ministry of Industrial Policy, Ministry of Coal Industry, Ministry of Science and Technology with

the participation of the Ministry of Environment and Nuclear Safety and the National Academy of Sciences to

submit proposals to the Cabinet of Ministers of Ukraine in the first semester of 1999 on the development and

introduction of effective technologies and technical means for the demineralization of mine waters.


File 1-14Appendix E

Page 3

10. State Property Fund jointly with the Ministry of Coal Industry, Ministry of Industrial Policy,

Ministry of Envirment and Nuclear Safety, Ministry for Emergency Situations and Protection of the

Population from the Consequences of the Chomobyl Accident, Ministry of Labor and Social Policy, State

Committee for Geology and Utilization of Mineral Resources and respective Oblast State Administrations to

work out the procedure for the transfer to organizations of responsibility for the maintenance of coal mining

facilities that are being liquidated, stipulating in it, in particular, a legal entity responsible for conducting

post-liquidation monitoring of the environment and removing negative consequences.

11. Ministry of Finance, Ministry of Economics, Ministry of Industrial Policy, Ministry of Coal

Industry, State Committee for Oil, Gas and Oil Refining Industry and Oblast State Administrations to

stipulate funds, during the specification of indices of the State Budget-of Ukraine for 1999 and formation of

state budgets for the coming years, for targeted financing measures, directed toward the solution of ecological

and hydrogeological problems resulting from the closure of coal mining enterprises, mines and strip mines.

12. The National Agency for Development and European Integration, Ministry of Industrial Policy,

Ministry of Coal Industry, State Committee for Oil, Gas and Oil Refining Industry, and other bodies of

executive power to consider as priority issues for ensuring ecological safety and rehabilitation of territories

during the structural adjustment of the branches of the coal mining complex during the attraction of

investments and international technical aid.

13. Miristry of Environment and Nuclear Safety, Ministry of Labor and Social Policy, Ministry of

Science and Technology, State Committee for Geology and Utilization of Mineral Resources and the National

Academy of Sciences to provide practical assistance to the Ministry of Coal Industry, Ministry of Industrial

Policy and State Committee of Oil, Gas and Oil Refining Industry in solving ecological and hydrogeological

problems, resulting in the coal mining regions due to the closure of unprofitable enterprises, mines and strip

mines.

14. Oblast State Administration jointly with the Ministry of Emergency Situations and Protection of

the Population from Consequences of the Chomobyl Accident, Ministry of Labor and Social Policy and other

interested bodies of executive power to work out a plan for the evacuation of the population from territories,

located within the limits of impact from coal mining facilities, which are being liquidated, in case emergency

situations arise.

V. PUSTOVOITENKO

Prime Minister of Ukraine


If I IClifton Associates Ltd.@J engineering science technology Appendix F

I __ _~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

MINISTRY OF COAL INDUSTRY OF UKRAINECity of Kyiv

TARGETED COMPREHENSIVE SECTORAL PROGRAM No 9

Development of methods and means of environmental protection, economic utilization ofmine workings and surface facilities of the mines scheduled for closure

File 1-14Appendix F

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Explanatory Note

The Targeted Comprehensive Sectoral Program No9 (TCSP 9) "Development of methods and meansof environmental protection, economic utilization of mine workings and surface facilities of the minesscheduled for closure " was worked out according to the Order of the Minister as of 19.02.99 No 65and the protocol No 1 of the MCI Working Group meeting as of March 11-12,1999.

The TCSP draws on proposals of 14 sectoral scientific research and design institutes and the previousTCSP version effective from 1996.

The goal of the TCSP sectoral work program is to resolve in a comprehensive way the problems ofdecreasing the negative environmental impact of the coal industry enterprises (both operating andclosed mines and strippings), as well as technical and environmental issues of closure of theuneconomic mines and strippings.

The works under the Program are aimed at resolving the following key tasks:

* analysis of changes of the hydrogeological conditions in the regions of mine closure;

X development of recommendations on rehabilitation of land damaged by mining works;

* development of technology and technical means of mine waste water demineralization;

* development of practical recommendations on prevention of surface water contamination bymine water discharges, by water from water accumulation ponds and slime tanks of centralwashing plants, as well as prevention of surface water contamination resulting from impact ofmeteoric water on waste rock piles and plane dumps and from underflooded mine fields formedas a result of coal seam rnining and further land subsidence;

* prevention of the impact of mines and strippings on the effective shore water intakes and thesurface runoff in general;

* development of the comprehensive environment-oriented hydromeliorative measures using asystem of water lowering sumps and injection wells to be carried out at the mines that are closedand being closed;

* development of designs for ensuring stability of slopes of waste rock dumps and reducing theirimpact on the adjacent areas;

* development of the technical means of temperature measurement of the places of dump fires;

* development of an automated system for record-keeping and analysis of environment-orientedworks carried out at the sectoral enterprises;

* development of proposals on utilization of mine workings and surface buildings of the closedmines, etc.

The Program envisages 28 work items, including 5 works that were performed earlier but weresuspended due to cessation of funding.

The R&D works under the TCSP 9 include 15 water conservation works, 9 land and air conservationworks, 1 equipment development work, 1 work on development of software (for PC) for theenvironmental works, 2 works on utilization of mine workings and surface buildings of the minesbeing closed. The Program does not include development of the sectoral normative and technicaldocuments (regulatory documents, instructions, procedures, etc.), insofar as these works areenvisaged by the TCSP 17 "Standardization, metrology and certification in the coal industry".


File 1-14Appendix F

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The total cost of R&D works for 1999-2005 amounts to 13399.5 thousands UAH (including 1500thousands UAH for 1999). The cost of scientific research works under the Program is 7539.5thousands UAH, development works - 650 thousands UAH, capital investment - 5210 thousandsUAH.

The costs are distributed by years as follows: 1998 - 25 thousands UAH, 1999 - 1500 thousands UAH,2000 - 3054.5 thousands UAH, 2001 - 2245 thousands UAH, 2002 - 3460 thousands UAH, 2003 - 2725thousands UAH, 2004 - 290 thousands UAH, 2005 - 100 thousands UAH.

The TCSP 9 implementation in 2001- 2005 will ensure the following results:* reduction of the volume of waste water discharge to the hydrographic 7.4

network, million m3

* increase of the economic use of mine water, million m3 2.1* increase of capacity of shore water intakes, million m3 90* prevention of water logging and underflooding of land and residential areas, 79.5

post-rehabilitated land use, hectare* land reclamation and recovery of agricultural land fertility, hectare 149.1* saving of land due to increased dump stability, hectare 10.2. reduction of saline water discharges from dumps to underground and 1560

surface waters

* production of power-generating fuel as a result of cleaning the settlers and 815slime tanks of the central washing factories scheduled for closure, thousandtons

* income from sale of additional coal, thousand UAH 3000* volume of rock used, thousand mn3 50* saving in cement, thousand tons 12.0* saving in sand, thousand m3 29.9* saving in crushed stone, thousand rn3 56.5Total economic benefit for 2001-2005, thousand UAH 22850

It is worth mentioning that the works envisaged in the TCSP 9 are primarily of a social nature. Theirmain objective is to solve the problems of rehabilitation and conservation of natural resources and toensure the favorable enviromnental conditions for people and plant and animal kingdoms. In view ofthis, the effectiveness of these measures, as a rule, does not show specific economic indicators and ischaracterized by the reduction of negative environmental impact of the industries and, as a result,reduction of the negative impact on humane health. Thus the economic benefit given above for somework items is a pure estimation with a certain probability and requires further elaboration in thecourse of implementation of developments and accumulation of statistical data.


File 1-14Appendix F

Page 4

1. TCSP 9STRUCTURE AND ECONOMIC INDICATORS

TCSPR&DEconomic effectiveness indicators

TCSP 9 " Development of methods and means of environmental protection, economic use of the mineworkings and surface facilities of the mines scheduled for closure"

Costs of TCSP 9

Outcome:

Reduction of the volume of waste water discharges to the hydrographic network

Increase of the economic use of mine water

Increase of the capacity of shore water intakes

Prevention of the water logging and underflooding of land and residential areas, post-rehabilitationland use

Rehabilitated land used for agricultural production

Saving in land due to increased dump stability

Reduction of emissions of hazardous coal dust gas in the air (average per mine)

Reduction of discharges of saline water from dumps to underground and surface waters

Production of power-generating fuel when cleaning settlers and sludge tanks

Saving in fuel for boilers

Income from sale of production

Volume of rock used

Saving in cement

Saving in sand

Saving in crashed stone

Annual economic benefit

1 LEVEL WORKS

1. III9863000M-Ts9

"To study the process of change of the chemical (saline) composition of underground waters duringoperation and after closure of mines and develop recommendations on reduction of its negativeimpact on water-bearing horizons, including those used for potable water supply"


File 1-14Appendix F

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R&D costs

2. To analyze environmental and hydrogeological situation in the regions, where mines are beingclosed or planned to be closed, and to estimate their environmental impact.

R&D costs

3. To develop a MCI master program of measures on resolving the environmental andhydrogeological problems resulting from coal mines closure for MCI, including measures onprotection of residential areas and water-bearing horizons.

R&D costs

4. To develop a package of measures on improvement of hydrological and hydrogeologicalsituation and environmental rehabilitation of land negatively affected by mining inChervonograd geological and industrial region of the Lviv-Volyn basin.

R&D costs

5. To design and put into operation an automated subsystem for record-keeping and analysis ofenvironment-oriented works, carried out at the sectoral enterprises, and make an annualperformance analysis of these works.

R&D costs

6. To develop the comprehensive proposals on controlling the process of formation ofhydrogeological and engineering-geological conditions of the representative operating and closedmines and strippings of Ukraine*.

R&D costs

Note: * works carried out during the previous years and suspended due to cessation of financing.

Outcome:Reduction of the volume of mine sewage discharged to hydrogeographic networkPrevention of land underflooding and post-rehabilitation land useIndustrial use of mine water

7. To carry out engineering-geological and hydrogeological survey at the representative facilitiesand determine the qualitative and quantitative indicators of the impact of mining on surfacewaters*

R&D costs

Outcome:

Reduction of the volume of waste water discharges to the hydrographic network

Increase of the river-shore water intake capacity

8. To develop recommendations on determination of rock filtration parameters and use ofgeophysical survey data for monitoring of the geological environment on the fields of operatingand closed mines.


File I-14Appendix F

Page 6

R&D costs

9. Development of waste generation standards for coal enterprises (mines, washing plants andstrippings)

R&D costs

10. To develop recommendations on stability of plane rock dumps and minimizing the damage tosurface waters in the area exposed to dumps *.

R&D costs

Outcome:

Saving of land due to increase of dump stability

Reduction of saline contamination ofunderground waters,surface waters

Saving of land due to stoppage of underflooding and salinization of adjacent land

11. To develop technical proposals on elimination of the negative environmental impact of wastedumps of the mines of:

11.1. Central Donbas region

11.2. Donetsk oblast

11.3. Lugansk oblast

R&D costs

Outcome:

Reduction of discharges to the air (average per mine) of:harmful gasescoal dust

Return of rehabilitated land:to the forest fundto the agricultural turnover

12. Environmental analysis of the areas of Donetsk oblast mines (with exception of the centralDonbas region), scheduled for closure, assessment of their environmental impact (on air, flora,fauna, soil, etc.)

R&D costs

13. Research and development of technological schemes for mine water demineralization, design andconstruction of a pilot plant, elaboration of technological rules.

R&D costs

14. To develop a package of technical measures and environmental solutions for washing plantsremoved from service


File 1-14Appendix F

Page 7

R&D costs

Outcome:

Production of energy-bearing fuel when cleaning settlers and slime tanks

Land rehabilitation


15. To create a module for production of granulated fuel and additions for brick-manufacturing,which would use the slime products from the settlers scheduled for removal from service.

R&D costs

Outcome:

Income from sale of production

Saving in fuel for boilers


16. To develop a package of measures on environmental rehabilitation of land and water forliquidation of coal strippings.

R&D costs

Outcome:


17. To develop a diagnostics system of deternination of the rock dump temperature and points ofspontaneous combustion.

R&D costs

18. To develop recommendations on application of a package of geophysical methods for exploringthe negative engineering-geological processes on the underworking sites and fields of minesscheduled for liquidation.

R&D costs

19. To develop a method of degassing of the worked-out areas of mines scheduled for liquidation,which would prevent gas leakage to the surface.

R&D costs

20. To develop technical proposals on application of systems of artificial recovery of undergroundwaters, reverse pumping of highly mineralized mine water into the deep water-bearing horizons.


File 1-14Appendix F

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R&D costs

21. To assess peculiarities of formation of the hydrogeological and engineering-geological conditionsin the area of the representative mine water accumulation ponds at the Donbas enterprises anddevelop recommendations on preventing water filtration from these ponds to the rock-beddingand contamination of geological environment.

R&D costs

Outcome:

Prevention of salinization and contamination of underground waters.

Prevention of undertlooding, water logging and salinization of land.

22. To research the impact of mines of the State Holding Company "Ukrzapadugol", both operatingand scheduled for liquidation, on the wells and private potable water intakes in the villages ofGorodische, Mezhduzechie, Volytsa and Selets of Chervonograd geological-industrial region anddevelop proposals on water quality improvement.

R&D costs

23. To study the engrineering-geological and hydrogeological conditions of the area of SHC"Pavlogradugol" mines, which mine the Samara flood-plain, and develop the technical-scientificmeasures on reduction of the negative impact of the above mines on the geological environment.

R&D costs

24. To develop technical proposals on the economic use of mine workings of mines scheduled fordosure (creation of gas storage facilities, large section chambers for installation of highlyhazardous producticm. disposal of industrial waste, etc.) and to justify the environmental safetyof mine workings used for these purposes.

R&D costs

25. To develop recotinmedaticns on rationalized and effective economic use of the surface buildingsand constructions of mmies scheduled for closure.

R&D costs

Outcome:

Annual economic benefit from use of existing buildings and constructions.

26. To develop, put into production and introduce in industry a fast-hardening solution, prepared onbasis of the dump and bumt rock, for conservation of junctions of vertical shafts with the pit-bottom workings

R&D costs

Outcome:

Volume of rock used

Saving in cementAnnual economic benefit

Clifton Associxtes Ltd. engineering science technology

File 1-14Appendix F

Page 9

27. To develop a technology for waste rock processing and the waste rock-based composite materialsfor lining constructions of modular and other types for the mine workings.

R&D costs

Outcome:

Volume of rock used

Saving in cement

Saving in sand

Saving in crashed stone


28. To develop recommendations on the geophysical structural scrutiny of dikes (dams) of the waterslime tailing storages and filtration paths of contaminated water on underworking sites.

R&D costs


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2. TCSP 9 OBGECTIVES AND STAGESI LEVEL WORKS

1. 1119863000-Ts9

"To study the process of change of the chemical (saline) composition of underground waters in theprocess of mine operation and on closure and develop the recommendations on reduction of thenegative impact of these changes on the water-bearing horizons, including those used for potablewater supply".

1.1. To develop theoretical statements and identify hydrogeomechanical specifics offormation of the chemical composition of underground waters in the area exposed tomnines.

1.2. To determine the law of changes and make a forecast of formation of the chemicalcomposition of underground water, drained from mine workings, using therepresentative Donbas mines, both operating and scheduled for closure, as an example.

1.3. To develop recommendations on controlling the hydrochemical process in the areaaffected by the operating and closed mines and reduction of their negative impact on thewater-bearing horizons, including those used for potable water supply.

2. To analyze environmental and hydrogeological situation in the areas, where mines are beingclosed or planned to be closed and assess their environmental impact in:

* Donetsk oblast (with exception of the central Donbas region)

* Lugansk oblast

Western Donbas and the central Donbas region

* Lviv-Volyn and Dniper basins.

3. To develop a MCI master program of measures on resolving the environmental andhydrogeological problems resulting from coal mines closure, including measures on protection ofresidential areas and water-bearing horizons.

4. To develop a package of measures on improving the hydrological and hydrogeological situationand environmental rehabilitation of land negatively affected by mining in Chervonogradgeological and industrial region of the Lviv-Volyn basin.

4.1. To assess initial conditions and possibilities of recovery of hydrological situation,reformation of the surface of damaged land of mine fields.

4.2. To develop a package of measures on improving hydrological and hydrogeologicalcondition and rehabilitation of the damaged land.

5. To develop and put into operation an automated subsystem for record-keeping and analysis ofenvironment-oriented works carried out at the sectoral enterprises, and to perform annualperformance analysis of these works.

5.1. To define the list of enterprises subjected to monitoring. To work out the structure ofcertificates of the enterprises and environmentally hazardous facilities. To determine thelist and formats of documents reflecting environmental safety works carried out byenterprises. To determine the reporting schedule of the works execution.


File 1-14Appendix F

Page I 1

5.2. To define the list and structure of the forms of input documents. To develop the technicalspecifications for software and the structural scheme of the program package. To developsoftware and set up a data base in order to keep record of the environment-orientedworks. To analyze performance of these works.

5.3. To update the data base, develop the forms of output documents and softwaredebugging. To input real information into the data base. To develop software forprocessing of inquiries to the data base. To analyze environment-oriented worksperformance.

5.4. To update software for all program package. To train users in operation of software anddata processing. To analyze environment-oriented works performance.

6. To work out the comprehensive proposals on controlling the process of formation ofhydrogeological and engineering conditions of the representative operating and closed mines andstrippings of Ukraine.

6.1. To develop the comprehensive proposals on controlling the process of fornation ofhydrogeological conditions of operating and closed mines and strippings of Ukraine, toassess the environmental effect of the proposed measures.

7. To carry out engineering-geological and hydrogeological research at the representative facilitiesof Ukraine and determine the qualitative and quantitative indicators of the impact of mining onsurface waters.

7.1. To work out recommendations on the safe depth of underworking of the surface waterobjects by Donbas mines and the execution of protection measures for the developmentof regulatory documents.

7.2. To develop and define the key indicators of the impact of mining works on surfacewaters in the area of the representative mines.

8. To work out recommendations on determination of the rock filtration parameters and use ofgeophysical survey data for monitoring the geological enviromnent on the fields of operating andclosed mines of Ukraine.

8.1. To work out the procedure of determination of the rock filtration parameters on the basisof geophysical survey data.

8.2. To develop recommendations on setting up the geophysical survey data basedmonitoring system of the geological condition of operating and closed mines of Ukraine.

9. To develop standards for wastes generation by coal enterprises (mines, washing plants andstrippings).

9.1. To develop the classification of wastes for the key and auxiliary production processes.

9.2. To determine the standard indicators of wastes generation.

10. To work out recommendations on plane rock dumps stability and minimization of the damage tounderground and surface waters in the exposed areas *.

10.1. To assess the actual stability of slopes of the plane rock dumps and contamination levelof the exposed area at the representative objects.

10.2. To develop recommendations on plane rock dumps stability and minimization of thedamage to underground and surface waters.

11. To develop technical proposals on elimination of the negative environmental impact of minewaste rock dumps of:


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11.1. Central Donbas region

11.2. Donetsk oblast

11.3. Lugansk oblast

113.1. To work out a unified system and tabular forms for the comprehensivesurvey of the rock dumps of mines scheduled for closure. To survey dumps andcollect data on hydraulic-mechanical condition, rock properties, thermal condition,etc.

11.3.2. To systematize and summarize the survey data, to classify data by directionsof the impact of dumps of closed mines on air, surface and underground waters,adjacent areas.

1133. To assess the environmental condition and justify the key directions ofeliminating the negative environmental impact of dumps (extinguishing,reclamation, demolition, prevention of the contamination of underground andsurface waters, etc.).

11.3A. To develop technical proposals on elimination of the negative environmentalimpact of dumps of the mines scheduled for closure in Donetsk oblast (withexception of the central Donbas region), assessment of their environmental impact(on air, flora, fauna, soil, etc.).

12. Research and development of technological schemes for mine water demineralization, design andconstruction of a pilot plant, elaboration of technological rules.

12.1 Research and development of technological rules for designing the pilot productionplant.

12.2 Elaboration of design and engineering documentation on equipment and constructionof the pilot production plant.

12.3 Equipment manufacturing, completing unit and construction of the pilot productionplant.

12.4 Commissioning and adjustmnent works and putting the plant into pilot productionoperation.

12.5 djustment and mastering of the mine water cleaning and comprehensive processingtechnology.

13. To develop a package of technical measures and environmental decisions for washing plantsbeing taken out of service.

13.1. To carry out analysis of water and slime facilities and settlers of the plants scheduledfor closure.

13.2. To make a survey of slime settlers and sludge tanks of the washing factories scheduledfor closure, determine quantitative and qualitative indicators of products contained andwork out a feasibility study on their utilization:

13.2.1. 1 phase closure factories



13.3. To develop technical decisions on ensuring environmental safety of the closed settlers/sludge tanks and rehabilitated land.


File 1-14Appendix F

Page 13

14. To set up a module for production of granulated fuel and additions for brick production using theslime products from settlers of the washing factories scheduled for closure.

14.1. To research the fuel and raw material properties of the slime products and develop afeasibility study on creation of the slime product processing module.

14.2. To develop a module design for production of granulated fuel and the fuel addition.

14.3. To set up a pilot production module for slime product processing at the washingfactory "Cherkasskaya".

14.4. To carry out testing, elaborate technological regimes and develop the rules onindustrial application.

15. To develop a package of measures on environmental rehabilitation of land and waters whenliquidating coal strippings.

15.1. To make a forecast of changes in the level regime and chemical composition ofunderground waters after liquidation of coal. strippings, develop measures onprevention of potable water supply contamination in the residential areas surroundingthe coal mining enterprises scheduled for closure.

15.2. To make a forecast of deformations of land adjacent to working trenches and developmeasures on its conservation.

15.3. To work out a package of measures on prevention of the negative impact of theliquidated strippings on adjacent land and water sources.

16. To develop a system of diagnostics of the rock dump temperature and determination of the placesof spontaneous combustion.

16.1. To perform survey and analysis of the existing methods and means of dumptemperature measurement. To work out the terms of reference for the experimentalprototype of the temperature measurement equipment. To develop the workingdrawings of the experimental prototype and carry out it's testing.

16.2. To elaborate the TOR for the production prototype.

16.3. To work out the package of documents, to manufacture and test the developmentalprototype of diagnostics system.

16.4. To correct the design documentation on basis of results of the acceptance testing of theproduction prototype, to conclude the license agreement.

16.5. To organize serial production and apply in industry the system of diagnostics of therock dump temperature and determination of the places of spontaneous combustion.

17. To develop recommendations on applying a package of geophysical methods for exploration ofthe negative engineering-geological processes on the underworking sites and fields of minesbeing liquidated.

17.1. Assessment and summarization of engineering-geological parameters of underworkingsites using mining-geological and geophysical data; analysis of the impact of operationand liquidation on these parameters, execution of experimental geological-geophysicalinvestigations.

17.2. Forecasting of qualitative and quantitative changes of engineering-geologicalconditions of the underworking sites and fields of liquidated mines, correction of thepackage of measures; elaboration of recommendations.

18. To develop a method of degassing of the worked-out areas of closed mines allowing preventinggas leakage to the surface.


File 1-14Appendix F

Page 14

18.1. To study the dependency of the gas production on the speed and level of flooding ofthe worked-out areas.

18.2. To explore the influence of the degassing regime on gas generation.

18.3. To elaborate technical requirements to the mobile vacuum pump.

18.4. To work out an instruction on controlling the mine gas ingress in buildings andconstructions.


File 1-14Appendix F

Page 15

II LEVEL WORKS

19. To develop technical proposals on use of the systems of artificial recovery of undergroundwaters, reverse pumping of highly mineralized mine water into the deep water-bearing horizons.

19.1. To study technical opportunities of the use of systems of artificial recovery ofunderground waters at the coal enterprises.

19.2. To elaborate recommendations on accumulation of water used for recovery of reservesand possible technical schemes of resources recovery.

19.3. To carry out engineering-geological, hydrogeological and environmental study ofcapacity for reverse pumping of mineralized water into the deep water-bearinghorizons.

19.4. To work out technical proposals on use of the systems of artificial recovery ofunderground waters and reverse pumping of mineralized water into deep water-bearing horizons.

20. To assess specifics of formation of hydrogeological and engineering-geological conditions in thearea of the representative mine water accumulation ponds at the Donbas enterprises and developrecommendations on prevention of water filtration from the ponds into the bedding rock andcontamination of the geological environment.

20.1. To survey the mine water accumulation ponds at the representative enterprises, studythe international experience of operation of the mine water accumulation ponds.

20.2. To assess geological and hydrogeological conditions in the area of representative minewater accumulation ponds, to make a forecast of changes of these conditions.

20.3. To elaborate recommendations on prevention of filtration leakage from mine wateraccumulation ponds for the representative operating and closed Donbas mines.

21. To study the impact of the operating and closed mines of the State Holding Company"Ukrzapadugol" on wells and private potable water intakes in the villages of Gorodische,Mezhdurechie, Volytsa, Selets of the Chervonograd geological industrial region and developproposals on water quality improvement.

22. To explore the engineering-geological and hydrogeological conditions of the area of the SHC"Pavlogradugol" mines and develop technical-scientific measures on reduction of the negativeimpact of these mines on the geological environment.

22.1. To study the engineering-geological and hydrogeological conditions of the area of theSHC "Pavlogradugol" mines, which underworked the Samara flood-plain by the end of2000.

22.2. To make a forecast of changes of the regional engineering-geological andhydrogeological conditions in the process of continued operation of the Blagodatnaya,Pavlogradskaya, Ternovskaya, Samarskaya and Stashkova mines.

22.3. To develop technical-scientific measures on reduction of the negative impact of theSHC "Pavlogradugol" mines, which underworked the Samara flood-plain, on thegeological environment.

23. To develop technical proposals on economic use of mine workings of the closed mines (creationof gas storages, using large section chambers for housing highly hazardous production, industrialwaste disposal, etc.) and justify environmental safety of the mine workings used.


File 1-14Appendix F

Page 16

24. To work out recommendations on rationalized and effective economic use of surface buildingsand constructions of the mines scheduled for closure.

24.1. To work out recommendations on use of surface buildings and constructions of therepresentative Donetsk oblast mines scheduled for closure in 2000-2005.

24.2. To develop recommendations on use of surface buildings and constructions of therepresentative mines of Lugansk and other oblasts scheduled for closure in 2000-2005.To elaborate technical documentation on installation of power plants on the headframes.

24.3. To summarize the developed recommendations on use of surface buildings andconstructions of the MCI mines scheduled for closure in 2000-2005.

25. To design, put into production and introduce in industry a fast hardening solution using dumpand burnt rock for conservation of junctions of vertical shafts with pit-bottom workings.

25.1. To develop a fast hardening solution using dump and burnt rock.

25.2. To develop technology of production and application of the fast hardening solutionusing dump and burnt rock.

25.3. To develop TOR for composition and technology and carry out acceptance testing.

25.4. To put into production and introduce in industry a fast hardening solution forconservation of junctions of vertical shafts with pit-bottom workings.

26. To develop dump rock processing technology and dump rock based composite materials forconstructions of the modular and other linings of mine workings.

26.1. To elaborate technical proposals on processing of dump rock with its further use incomposite materials.

26.2. To develop composite mnaterials for modular and other linings of mine workings.

26.3. To work out TOR and carry out acceptance testing of the composite materials.

27. To develop recommendations on geophysical control over technical condition of dikes (dams) ofthe water tailing storages and filtration paths of contaminated water on underworking sites.

27.1. To study the present situation, carry out experimental research, define the factualparameters for assessment of dikes (dams) condition, development of the controlprocedure.

27.2. Development and testing of a streamlined package of measures, analysis andgeneralization of research data, working out of "Recommendations ... "


l

C Clifton Associates Ltd.@ s > engineering science technology Appendix G

Environmental information systems for tailings management

D.V.B. McClarty, P.Eng.Clifton Associates Ltd.

D. Berthelot, M.Sc.,Elliot Lake Research Field Station

A. CogganRio Algom Limited, Elliot Lake, Canada

I. LudgateDenison Mines Limited, Elliot Lake, Canada

ABSTRACT: Two mining companies and a university affiliate undertook the implementation of aRegional Environmental Information Management System to manage the environmental programsfor the decommissioned Uranium mine sites and tailings management facilities near Elliot Lake,Canada. The region's 8 tailings management facilities contain 150 million tonnes of potentiallyacid-generating tailings. Regulatory licensing and permitting requirements for the environmentalmonitoring programs are captured by the system and used to drive data collection and to promoteconsistency in environmental protocols and procedures. Environmental managers use the systemto manage regulatory compliance issues. Production of regular reports for regulators andmanagement has been streamlined. The system is based on a commercially availableenvironmental information management system that has been configured to meet the specificrequirements of the environmental programs in the Elliot Lake region.

I INTRODUCTION

Elliot Lake is located approximately 35 kilometres north of Lake Huron in the Canadian Shieldbetween Sudbury and Sault Ste. Marie, Ontario (Figure 1). The region's geology and geographyis dominated by the underlying Precambrian shield and features low relief, softwood andhardwood forests with an abundance of lakes, rivers, swamps, and extensive rock outcrops withglacial deposits in the valleys and lakes. The discovery of uranium in the Elliot Lake regionduring the post World War II era led to the development of 12 mines and 11 associated millsbetween the years 1955 and 1958. In the late 1980s, the declining world demand for uraniumcombined with the discovery of high grade uranium ore in other areas of the world made thecontinued operation of the Elliot Lake mines economically impractical. As a result all area minesceased operations by the end of 1996.

Over thirty years of uranium mining in the region of Elliot Lake (1956-1996) has resulted inthe production of over 300 rmillion pounds of uranium. The uranium mines are locatedpredominantly in the upper and mid reaches of the Serpent River Watershed which covers an areaof 1,376 square kilometres and eventually discharges into Lake Huron. The region's 8 facilities, 3tailings management areas operated by Denison Mines and 5 mining waste management areasoperated by Rio Algom, which contain 150 million tonnes of potentially acid-generating tailingscover 1,321 hectares and receive drainage from an additional 1,300 hectares. Effluents from themining waste management areas (WMA) are discharged into 5 of the watershed's 60 major lakes.

Rio Algom Limited and Denison Mines Limited have been utilizing progressive environmentaltechnologies and management systems to reduce and manage the environmental risks associatedwith the WMAs. In 1996 Rio Algom and Denison Mines together with the Elliot Lake ResearchField Station (ELRFS), an affiliate of Laurentian University in Sudbury Ontario, formed aconsortium to undertake the implementation of a Regional Environmental Information

Management System (REIMS) for management of the environmental programs in the Elliot Lakearea.

This paper presents the implementation of REIMS which is based on a commercially availablepersonal computer-based environmental information management system.

Ontario

.AS ~~~~~~~~~Elliiot Lake

Figure I Location of Elliot Lake, Ontario

2 SYSTEM REQUIREMENTS

The prinary objective of the joint initiative was to imnplement a personal computer-basedenvironmental information management system for managing the historical data and ongoingenvironmental programs in the Elliot Lake region. Some of the key requirements identified forREIMS were:

* Scheduling. A scheduling capability for tracking regulatory and effluent treatment plantmonitoring activities was required. This included capabilities for scheduling sampling, fieldmonitoring results, laboratory test results, and inspections.

* Reporting. Rapid and efficient preparation of compliance and management reports in paperand electronic formats.

* Data conversion. Historical groundwater, surface water, and air quality data for the regionstored on a mainframe computer system and in paper format would be converted into theREIMS system. This data consisted of approximately 600,000 records of data obtainedover 10 years from nearly 1,800 active and historical monitoring locations. In addition, itwas desirable to incorporate data from several research databases. The acquisition rate fornew data into REIMS was estimated to be between 200 to 250 records/day.

* Data Validation. The system had to allow data validation by senior staff and distinguishbetween validated and unvalidated data when reporting.

* Security and Audit. The system had to prevent unauthorized access, controlled by datatype, data owner (i.e. Rio Algom or Denison Mines) and business function. The system hadto also provide an audit trail for all data in the system.

* Reliability and robustness. The system would contain environmental data critical toregulatory reporting and therefore the data had to be accurate, always available, and

protected against possible hardware failure or software error. It was also important that thesystem be based on broadly supported information technology.

* Remote access. The system should allow for access to the data by remote users.* External Application Support. Access to environmental data from other software packages,

including spreadsheets, word processors, data analysis applications, engineering andscientific software, graphics and presentation software, and telecommunications softwarewas required.

* Extensibility and modularity. The system had to be flexible to easily accommodateevolving data collection, management, and reporting requirements over a target ten year life-span.

The consortium conducted a study of environmental information management systems currentlyused by the mnining industry. Following a review of system proposals which included custom-builtsystems and commercially available solutions, it was decided that REIMS would be based on the"Envista" product, a commercially available environmental information management systemmarketed by Envista Technologies of Saskatoon, Canada. The Envista product would beconfigured and customized to meet the requirements for REIMS.

3 SYSTEM WORK FLOW

The REIMS system needed to support an integrated approach to environmental management.User needs ranged from those of senior management in the mining companies to the needs oftechnical staff in the ELRFS laboratory. The system would need to support multiple informationthemes and many types of user interactions. The major user interactions are illustrated inFigure 2.

|Adiministration

Senior EnvironrnentalManagement 4 Managers

-Administrative * Compliance ReportsReporting .Technical Reports

* Schedules- Review /

Management / ReviewReports * Management Review

* Compliance Parameters

-Lab Results *Monitoring Data

* Regulatory -Technical.Schedules, Reporting

* Schedules Review * Sche* Review

Lab F FieldTechnicians Technicians

SeniorTechnicalReview

Figure 2 REIMS user interactionThe work flow within the Elliot Lake environmental programs is illustrated in Figure 3. Most

of the information captured within the system stems from regular environmental monitoring

activities for either regulatory compliance or operating requirements. These requirements are alsoresponsible for the environmental protocols and procedures practiced during the acquisition of thedata. After reviewing the data flow requirements it was apparent that an information system withan integrated, process oriented and requirements-driven approach to the collection andmanagement of environmental information would be best suited to the needs of the Elliot Lakeconsortium. With a planning or scheduling layer in the system, managers could coordinate andtrack monitoring schedules. In addition, the scheduling layer could also support qualitymanagement initiatives by enforcing appropriate and consistent environrmental protocols andprocedures in the field and laboratory.

Regulatory & flow i n nmS

Data Collonection o Entry l

seirTechnical stf.Tedt aiainlyri hesse ol eue opeetdt

gonMosno anagement o euaos

Malownagmn cofectontrol lmthedt exurins wuasiyn anf majior eurmn,t frRhe system wudasedtwudnetoprovidea capabilitie for repord at aldtin fcnrllmtecrionsadmnaaavldto for reangultry orsnopratehional pupsesf. InThe cate ofalitonto layriminxurin the system would haue t rvento infor

the user of the excursion, and present a message indicating appropriate actions. For examnple, themessaging could include instructions for users to provide notification to regulators or managers,or to performn an equipment shutdown.

The reporting layer in the system would be used to streamline production of regular reports forregulators and management, and provide capabilities to perform sophisticated queries for analysisof specific situations.

4 SYSTEM ARCHITECTURE AND FUNCTIONALITY

REIMS is built on client/server architecture that is specifically designed to manage large volumesof spatially and temporally referenced information. It supports the data themes relevant toenvironmental management in the Elliot Lake region. Details of the system architecture andfunctionality are outlined in the following sections.

4.1 Information Themes

REIMS supports geographically referenced data generated from the environmental andgeotechnical monitoring programs and production operations. The data themes that are supportedinclude:

* Air, water, and soil sampling information;* Chemical and physical properties data for air quality, water quality or soil quality obtained

through sampling or direct measurement;- Environmental, operations, and geotechnical inspection reports; and* Effluent treatment plant monitoring data.All data within the system is assigned to a location defined within the system. Locations are

then assigned to an additional hierarchy consisting of projects and organizations. The datahierarchy enables the three groups using the system to organize their information in separate anddistinct data structures (Figure 4). System security controls unauthorized access to data at anorganization and project level.

*)Z Envista Explorer__ _ ' ' _ ~,, ' ' ' ' ' : _ ' ..... ._ . _: . ' . . .. _ . '. .... ' ... ., ....... .... .. :

'W!5E' ~ ' .' JW

fiT EXIAloefDenimMimsLkirred.EloLake 5HIST -143637 1990.04.2412(0000 11W

DerisonMines ritied ElotLake Region 5HIST -143651 1990.07.31 12:0000 UW.Des--on TMAs&Mie S-e HIST -143664 1990.10.30 12000 1W

Etss Location GroupsHST139 1910.10-0 WE3 B DenisonrlleasLirrited+EfiLak S E31HIST -143637 1991.04.2912Z00.00 UWs 1t}t BH211Aeast s~~~~~HIST -143703 1991.07.29 120000 UW

. E3 3; D-12A SHIST -143716 1991.10.281200-00 UWi i; D138 EHIST -143754 199207.271120000 UW

.HIST 143805 1993.07.271200-00 UW

i ii IwD SdSarnples ~~~~HIST -143905 1995.07.2412:W.00 UWi i E l O g~~~~~~~~~~HIST -143919 1995.10.3112 00:00 UW

C 2 e ChSResuks (Field) 5HIST .143924 1995.11.30 12-00:00 UWii ii; iFfisical Resukts Field) BHIST .143935 1996.01.3112:00:.00 UW

Figure 4 Screen shot showing the hierarchical data structure.Through it's modular data structure, REIMS is designed to be able to support additional data

themes or monitoring activities. Future plans include expansion of the system to include

ecological data themes that will enable incorporation of biomonitoring and vegetation surveysdata.

4.2 Scheduling and Planning

REIMS incorporates scheduling and planning capabilities for managing the environmentalmonitoring programs, regulatory compliance, and operations monitoring for Rio Algom andDenison Mines. Sampling, monitoring, and inspection events are scheduled according toregulatory and operational requirements and tracked for compliance purposes . Major features ofthe scheduling component of the system include:

* A Master Schedule module for defining reoccurring events which define event type,location, environment protocols, responsibility, frequency, and purpose;

* Master Schedule Templates for assigning scheduled events to multiple locations;* Workplan Activity screens which report schedules to production personnel;* Comprehensive reporting capabilities for compiling schedules, determining resource

requirements, and resolving scheduling conflicts; and,* Compliance reporting that provides details of incomplete or non-compliant workplan

activities.Figure 5 illustrates a screen shot of the master schedule components of the system.

Figur 5master swhedule cen

4.3 ata Ent f an AaimpEvo metrt

M= Mi_re Si e=

3 treM Masks SdkeX

of reua mb taonitorin d4ata, Eor asn unschedule data, Eas ntecseo iechrceiato aaBatc impor capabilitines alowuest imor larg gEroup fsape r eutsfo trcue

Som of Eth majoirA eaulres f it t inclu

_ t apWiA& kiwMneA&e_

-areighWMA &MineSite

Location Glxups___

isBCL-06

l ESl DiWeBlcAc6viies _

t | ~~~~El evaion _E3-Q1 Mon*ActiyXies

'-1 g bwater Sampsle

Figure S Master schedule screen.

4.3 Data Entry and Import

Data entry into the REIMS system can be done in response to a scheduled activity, as in the caseof regular monitoring data, or as unscheduled data, as in the case of site charactefization data.Batch import capabilities allow users to import large groups of samples or results from structuredASCII files created by the user, or produced by other applications or data acquisition systerns.Some of the major features of the data entry include:

* A data explorer module can be used for entering, reviewing, and modifying data through afamniliar Windows interface.

* Batch entry screens designed for rapid entry of data for scheduled field and lab activities.* User defined "data-calculators" can be used for automated calculation of results from

intermediate measurements.* A data import engine utilizes user-defined templates for importing structured ASCII files

containing sampling and result information.* Automated data validation is performed at all data entry points.

4.4 Control Limits

REIMS provides management of control limit excursions for regulatory or operational purposes.The control limits architecture helps to prevent data entry errors by notifying users of excursionsat the time of data entry and provides managers with details of compliance excursions. Some ofthe major features of the control limits module include:

* Upper and lower control limit values that can be specified for any physical or chemicalparameter, on a location by location basis. -

* Control Limit Templates are used to assign control limits to multiple locations.* A messaging system informs users of excursions and required actions at all data entry

points to the system.* Capability to have control limits based on historical trends of an analyte.

E Excursion reporting provides up-to-date status of control limit excursions.

4.5 Reporting and Presentation

The reporting capabilities of the REIMS system are used to produce reports for regulatorycompliance, senior management review, or analysis purposes. Users can define intricate reportsinvolving multiple locations, analytes, various levels of aggregation, formatting, and layout.Graphs illustrating trends can be used to review new data in the system or for presentation inreports. Third party reporting applications can also be used to access the REIMS repository toprovide additional presentation or analysis functionality. Some of the major reporting featuresinclude:

* A results and inspections query tool provides rapid retrieval of results for screen display,printing, or for copying to the clipboard for analysis or presentation in other applications.

* The summary report module features user-defined report templates that define locations,analytes, aggregation type, formatting, result statistics, and layout.

* A graphing engine can be used to produce 2D and 3D graphs of analytical data with controllimits that can be displayed on screen, printed, or copied to the Windows clipboard.

* A specialized reporting module configured by the system administrator is used to producecomplex reports that involve complex queries, computed values, or elaborate layouts.

* A custom module was developed to produce electronic reports that meet the OntarioMinistry of Environment MIDES specification.

4.6 Data Validation/lIntegrity and Security

Data integrity, validation and security were key requirements for REIMS. Some of the features ofthe system which address these requirements include:

* Analytes can be specified as requiring up to two levels of review by senior technical staff ormanagement. Reporting modules can be restricted to reporting only reviewed results.

* Over 400 data validation and integrity checking routines were implemented on the system toensure data consistency and integrity for all applications that access the REIMS repository;

* A robust row-level security system controls access to data by data owner (i.e. Rio Algom,Denison Mines or ELRFS) and system functionality. Security privileges are enforced in allapplications accessing the system.

* An audit system tracks the user and date for creation and modification of all data in thesystem.

4.7 Database Management System

REIMS was implemented using the Sybase SQL AnywhereT m database engine. This workgrouplevel product was selected for REIMS because of it's modest resource requirements, lowadministration requirements, and scalability. The system features full transaction processingcapabilities, triggers and stored procedures, cascading updates and deletes, dynamic multipledatabases, built-in referential and entity integrity, and database replication. The SQL Anywhereproduct is also compatible with the enterprise Sybase SQL Server product. The REIMS systemcan also be upgraded to the ORACLETm database server product through Envista's support ofalternate database platforms. With REIMS based on either the Sybase or ORACLE databaseengines, it is scaleable to even more powerful UNIX based hardware.

4.8 Database Replication

Database replication addresses the problem experienced in many large organizations where usersare located in geographically disperse sites for which high-speed data communication to a centralserver is unavailable or cost-prohibitive. Database replication solves this problem byautomatically replicating data between a central server and one or more remote servers. Users atremote sites enjoy the high-performance of accessing the server at their site while databasereplication works in the background to automatically synchronize information between remoteservers and the central server using low-speed data communications links.

From a user's perspective, replication is transparent. A user at a remote site has access toexactly the same information that they would if connected to the central server. A user has thesame security authorization everywhere, allowing traveling users to connect to the system at anysite and review the same information, without them requiring separate logon names and passwordsfor each site.

Database replication was used for REIMS to provide system access for Denison Mines userslocated remotely from the central server located in the building shared by Rio Algom and ELRFSusers. Replication was implemented by installing a standalone server in the Denison Mines office.Communications between the central sever and the Denison Mines server are done through adedicated telephone line using 33.6 kbps modems. A schematic of the database replication ispresented in Figure 6.

ELRFS Tmnsaction

F-I

Low Speed connectionover public phone lines

REIMS R EMSRPOIC-tOfY Rep-havoy

ELRFS DenisonServer Server

Denison Tmnsaction

Figure 6 Schematic of database replication.

4.9 GIS and Third Party Software Integration

ELRFS has developed a watershed management system inside the ArcView GIS software. Thereare plans to integrate the data contained within REIMS with the GIS in the near future. Thisintegration will provide a unique means of illustrating the spatial aspects of the water qualityinformation and will enable spatial analysis on the data.

To provide additional reporting, analysis, and visualization capabilities users can to access datawithin the REIMS repository through other third party software applications which supportMicrosoft's ODBC database communication protocol. These applications could include reportingtools such as Microsoft Query, Crystal Reports Pro, InfoMaker, or general purpose officeproductivity applications such as Microsoft Word and Excel.

4.10 Hardware and Operating Systems

The REIMS system is based on personal computer hardware for both the desktop and databaseserver functions. The REIMS server hardware consists of multiprocessor capable CompaqTMProliant 5000 server operating under the Windows NT 4.0 operating system. The server featuresa single Pentium Pro 200MHz processor. For future scalability, the system is capable ofsupporting up to four processors in a symmetric multiprocessing environment. Disk storage isprovided through an external disk tower configured with an integrated 32-Bit Fast-Wide SCSI-2controller connected to three 2GB disk drives and configured for RAID 5 fault tolerance. A 8-GBDAT Drive is used for server backup. The server also features two remote dial-in portsconfigured with 33.6 kbps modems.

Desktop hardware used to access REIMS consists of Pentium class workstations configuredwith processors ranging in speed from 133 MHz to 166 MHz, and configured with between 16MB and 32 MB of RAM. Desktop hardware is operating under either Windows 95 or WindowsNT operating systems.

5 SUNMARY

The consortium of Rio Algom, Denison Mines and the Elliot Lake Research Field Station hassuccessfully implemented a personal computer-based regional environmental informationmanagement system for management of the environmental programs in the Elliot Lake region.Some of the major benefits provided by the system include:

* Efficient information management that lets users spend less time managing environmentaldata and spend more time understandig the data.

* Reduced costs for reporting to regulators and management.* Consistency in environmental protocols and procedures.* Optimizing resourcing for environmental programs.* Reduced data redundancy and potential environmental liabilities.The REIMS system, together with other innovative technologies and management tools, help

Rio Algom and Denison Mines to facilitate the delivery of cost-effective care and maintenanceprograms for the tailings management facilities in the Elliot Lake region. Moreover, REIMS willhelp environmental managers reduce environmental liabilities and risk by providing tools whichpromote more proactive management of environmental issues.

Clifton Associates Ltd. Appendix H@ engineering science technology

File 1-14Appendix H

Page I

UKRAINE - COAL SECTOR

World Bank Mission, January 19 - February 4,2000Aide-Memoire

1. A mission consisting of Andrey Astrakhan, Ron Barsi, Heinz Hendriks (head of mission), DavidMerrick, Miroslav Ruzica and Konstantin Skorik visited Ukraine from January 19 to February 4, 2000, toprepare the Coal Mining Restructuring Project (CMRP), as well as to supervise implementation of theCoal SECAL and the Coal Pilot Project. The mission would like to thank the Ministry of Fuels and Energy(MFE), Ministry of Finance (MoF), UDKR and the Donetsk and Lugansk Oblast Administrations for theexcellent cooperation and hospitality. This aide-memoire is subject to approval by the Bank'smanagement.

Proposed Coal Mining Restructuring Project (CMRP)

2. Project Objectives. The project's overall objectives are to increase the efficiency of Ukrainian coalmining and to reduce the burden of coal mining on the national budget. Specifically, the project aims atreducing the cost and time of the closure of depleted and uneconomic mines by UDKR, mitigating thesocial impact and facilitating the transfer of ex-mine sites to municipalities.

3. Project Scope. The proposed loan of up to $ 200 million would finance over a timeframe of about 3years (2001-2003) social costs and works (including their design) related to mines closed by UDKR. Thesocial costs would cover principally the immediate and full payment of compensation for severance tominers of new mines being transferred to UDKR. The payments would include the statutory severancepay, settlement of wage arrears and other related legal obligations by the previous employer. The workswould principally cover: (a) essential underground works for physical closure of new mines beingtransferred to UDKR'; (b) socially and environmentally useful surface works on ex-mine sites as well ason related social objects transferred to municipalities2. Other components which would assure fair socialm-itigation, improve the efficiency of the closure process or facilitate the future use of ex-mine sites couldbe considered for financing under the proposed Bank loan if proper use of funds, under disbursementand control mechanisms acceptable to the Bank, could be assured (Annex 1 .

4. Implementation Arrangements. The main executing agencies would be UDKR andDonetsk/Lugansk Oblast Administrations (DOA/LOA)3. A Project Implementation Unit (PIU) in theMinistry of Fuels and Energy (MFE) would coordinate and monitor the activities of the implementingagencies (Ann 2). The mnission will seek possible donor support for the PIU. Action required: before thenext mnission (tentatively scheduled for mid-March): (a) MFE should designate the future head of the PIU,with qualifications acceptable to the mission, and elaborate a proposal for the structure and staffing of thefuture PIU; and (b) DOA and LOA should designate a counterpart person to discuss project preparationwith the Bank.

5. Improved mine closure procedures. The successful implementation of the proposed project dependscritically on the adoption of improved mine closure procedures. The main improvements needed are inthe areas of closure planning, payment of compensation to laid-off miners, designing of the closure andtransfer of social assets and ex-mine sites to municipalities (Annex 3). Early and full involvement ofUDKR, with participation of municipalities, in planning and designing the mine closures is required.

1 Such works would normally be based on designs financed under the proposed loan on the basis of competingoffers from qualified local design institutes.2 Such works would be limited in scope and carried out by eligible municipalities, with oblast involvement, inaccordance with guidelines acceptable to the Bank.3Because of the concentration of mines in the Donbass and the need to limit the number of executing agencies foradministrative efficiency, the mission proposes to focus on Donetsk and Lugansk Oblasts.


File 1-14Appendix H

Page 2

While ultimately the improvements can and must be achieved through a change in attitudes andpractices, the mission thinks it is indispensable that a legal base for improved procedures be provided inthe form of a new CabMin Regulation (Annex 4). Rational application of environmental regulations willbe crucial for cost-effective mine closure designs and faster transfer of assets. The mission'srecommendation is to apply an environmental risk analysis as a basis for rational closure designs andtransfers which are agreed between the key stakeholders (UDKR and municipalities) and are acceptableto the regional environmental authority. A report of the mission's environmental consultant with furtherdetails on this recommendation will be distributed separately to this aide-memoire. Finally, Ukraine's on-going administrative reform merits a review of UDKR's charter (Annex 5). Action required: MFE should:(a) elaborate a new draft of the proposed CabMin Regulation, consult with the Bank on this draft and thensubmit it to CabMin for approval; and (b) review existing closure procedures with a view to identify newguidelines for efficient mine closures.

Coal SECAL

6. Implementation Completion Report (ICR). The mission received an early draft of the Borrower's partof the ICR and proposes that it be reviewed as soon as the Bank's draft of its own part of the ICR has beenmade available. The mission has not yet received all data requested on the coal sector development.Action required: MFE should supply the remaining (mainly financial) data.

7. Disbursement offourth andfifth tranches. The mission emphasized that the conditions for release ofthe fourth and fifth tranches must remain fulfilled at the time when disbursement becomes possible and adisbursement request is forwarded. The critical condition is that all disbursements from the MSME andMunicipal Credit Lines must be replenished. Action required: MoF must replenish the MSME andMunicipal Credit Lines to the original deposit amount and document the replenishments at the time ofthe disbursement request.

8. Assessment of the social impact of mine closures. A workshop to discuss the draft report of the KievInternational Institute of Sociology was held on February 1. Minutes of the discussions, a list ofparticipants and a copy of the final report will be distributed separately. The mission recommends thatthe report's conclusions be considered for the on-going operations (Municipal and MSME Credit Lineunder the SECAL; micro-credits and employment subsidies under the Pilot Project) as well as for thepreparation of the CMRP.

Coal Pilot Project

9. Micro-credits. As an input to the design of the CMRP, the mission discussed terms of reference forfollow-up work by KIIS on the usefulness of the micro-credits granted previously by Donuglkombank. Inthe meantime, to allow a meaningful use of ample funds available before loan closing, the mission urgesthe rapid conclusion of agreements for the new and significantly imnproved scheme with Donetsk OblastAdministration, as previously discussed. Action required: MoF should reconfirm DOA's willingness tosupport the discussed scheme and then proceed quickly to finalize the draft agreements and submit themto the Bank for approval.

10. Employment Subsidy. The mission noted the weak demand for this scheme and urges UDKR toreinforce the scheme's publicity, in cooperation with local donor offices. If by mid-2000 a significantincrease in demand cannot be achieved, neither for the employment subsidy, nor for the micro-creditscheme, the mission recommends to cancel a portion of the loan.


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Next Steps

11. The most important next steps are summarized below:

Para. Action Target date Responsibility

Proposed Coal Mining Restructuring Project

4 Implementation Arrangements: Designation of the future head of 03/10/00 MFE/DOA &the PIU, elaboration of a proposal for structure and staffing of LOAthe PIU, and designation of a Bank counterpart person inDonetsk and Lugansk Oblast Administrations.

5 Improved mine closure procedures. MFE should: (a) draft a CabMin 03/10/00 MFERegulation and submit it for approval; and (b) review mineclosure procedures.

Coal SECAL

6 Implementation Completion Report (ICR).MFE should supply the 02/15/00 MFEremaining data.

7 Release of thefourth andfifth tranches: MoF must replenish the n/a MoF/MFEMSME and Municipal Credit Lines.

Coal Pilot Project

9 Micro-credits: MoF should reconfirm DOA's willingness to 03/10/00 MoFsupport the discussed scheme and then proceed quickly tosubmit draft agreements.

Kiev, February 5, 2000

Annexes:1 Possible project components2 Proposed Project Implementation Unit3 Proposed Improvements to Mine Closure Procedures4 Proposed CabMin Regulation5 Proposed Review of UDKR Charter


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Annex 1Page 1 of 2

PROPOSED COAL MINING RESTRUCTURING PROJECT

Possible Project Components

A. Components Proposed for Bank Financing

Objective Component Description Responsible Proposed Application ofAgency Bank Funds

To mitigate social tension Payment of severance UDKR All new minescaused by closing mines. compensation, including wage transferred to UDKR

arrears, immediately after after loan effectiveness.redundancy.

To achieve a cost effective Preparation of mine closure designs UDKR Selected minesmine closure design. on a competitive basis in scheduled for transfer

accordance with guidelines agreed to UDKR in late 2000between MFE and the Bank. and thereafter.

To advance physical mine Contracting of key works to UDKR Selected minesclosure rapidly to a point qualified contractors on a scheduled for transferwhere costly water competitive basis4. to UDKR in late 2000pumping and ventilation and thereafter.can be stopped.

To facilitate the transfer Letting of works to municipalities Municipalit Mine sites accepted byof ex-mine sites to eligible for improvement of the mine site5. y/Oblast and transferred tomunicipalities and make municipalities.the sites available for newuse.

To rationalize and Letting of works to municipalities Municipalit Social objects related tofacilitate the transfer of for demolition of redundant objects y/Oblast closed mine sites andsocial objects to and improvement of selected social accepted by andmunicipalities. objects. transferred to

municipalities.

B. Component Proposed for International Donors' Financing6

Objective Component Description Responsible Agency

To assist MFE/UDKR and Technical assistance to MFEmunicipalities/oblasts in the execution of implementation units7.the project.

4 The works typically would include sealing-off underground workings, filling of shafts, installation of submersiblepumps and expansion of water pumping schemes in neighboring mines where justified. A significant portion of thecontracts would be awarded on the basis of Intemational Competitive Bidding.5 These works typically would include socially and environmentally useful improvements to environment, buildingsand infrastructure on ex-mine sites. The projects would have to be compatible with criteria established by the Bank.6 At this stage it is unknown whether donor funding would be available.


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Annex 1Page 2 of 2

C. Potential Other Components'

Objective Component Description Responsible Agency

To assure effective transfer of UDKR's Temporary financial assistance to National Socialresponsibility for disability payments to cover monthly disability payments to Insurance Fundthe National Social Insurance Fund. entitled ex-employees of all mines

under UDKR.

To assure continued disability payments Temporary financial assistance to National Socialto entitled persons after liquidation of the cover monthly disability payments to Insurance Fundmine as a legal entity. entitled ex-employees of liquidated

mines.

To assure continued provision of free coal Temporary financial assistance to Municipality/Oblastto entitled persons after liquidation of the assure supply of free coal to entitledmine as a legal entity. ex-employees of liquidated mines.

7The assistance could pertain to closure design, contracting, project management, financial management,identification/evaluation of municipal projects, retraining and micro-credit schemes.8At this stage it is uncertain whether these components could be financed by the Bank.


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Annex 2PROPOSED COAL MINNG RESTRUCTURING PROJECT

Proposed Project Implementation Unit

Status of the Unit: . within MFE

* not subordinated to UDKR

Tasks: * monitoring of project implementation activities by UDKR and oblasts

* liaison with Government (CabMin, MoF, MinEcon, MFE), oblasts andmunicipalities

h liaison with World Bank and International Donors

* processing of required documentation for World Bank loan and Donors'grants.

management of technical assistance contracts with local and internationalconsultants

* provision of public information on the project and coal/energy sector policies

c collecting information and reporting on project progress for World Bank, otherDonors and Government

* arranging meetings for foreign visitors

Technical Assistance: . mine closure design

* contracting

* project management

* financial auditing

* social impact monitoring

- public information

Staffing: . Head of Unit

Expert in mnine closure works

Expert in financial management

Expert in social impact and its mnitigation

* Translator/support staff (Russian/Ukrainian/English)

Qualifications of the * familiarity with effective management and documentation systemsHead of the Unit: experience of working with international organizations

* experience in the coal industry

* working knowledge of English


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Annex 3PROPOSED COAL MINING RESTRUCTURING PROJECT

Proposed Improvements to Mine Closure Procedures

Planning and preparation of mine closures: . earlier feasibility study of the most uneconomic mineswith considerable coal reserves

a earlier planning of closing a regional group ofuneconomic mines in case these mines areinterconnected and continued water pumping andventilation would be overly expensive

* earlier stop of mine development work* earlier involvement of UDKR and municipalities* earlier transfer of social assets to municipality

Payment of compensation to laid-off miners: . compensation payment immediately after redundancyto the maximum number of people

* elimination of payment arrears to laid-off people

Mine closure design: * immediately after the decision to close, contracting ofmine closure design by UDKR on a competitive basis

* application of more rational and modem guidelines forthe design

* full involvement of UDKR and participation of themunicipality in the design process

* using a risk analysis for designing measures to mitigatethe environmental impact of closure

: buying existing housing on the market rather thanconstructing new housing

Transfer of ex-mine sites to municipalities: * offering grants to municipalities for works on ex-minesites as an incentive to take over the sites

- strict application of well thought-out guidelines forawarding and using the grants

Transfer of social objects to municipalities: * offering grants to municipalities for works on socialobjects as an incentive to take over the objects

* strict application of well thought-out guidelines forawarding and using the grants

Legal liquidation of the mine: . assuring the continuation of disability payments throughthe National Social Insurance Fund

. assuring the continued supply of free coal throughproper budgets for municipalities

Residual environmental and health liabilities: . confirmation that these liabilities will be theresponsibility of UDKR


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Proposed CabMin Regulation

Three main documents connected to mine closure procedures were adopted in 1999 (Mining Law,CabMin Resolution #1164, CabMin Resolution #31). These documents do not provide a regulativemechanism for transfer of social assets and ex-mine sites of closing mines to communal ownership underMunicipal Administrations and have only partially clarified the procedure for the succession of disabilitypayments and free coal delivery by Municipal Administrations. The insufficient regulation of these issuesimpedes the legal liquidation of mines which physically have already been closed and liquidated. It is notacceptable that the on-going physical mine closures simultaneously increase the number of mines whichare not legally closed.

Following the recommendations of previous mnissions, MCI drafted a new CabMin Resolution9. This draftwas supported by the majority of ministries and governmental agencies involved. However, it was onlysupported by two'° out of eight oblasts and the CabMin apparatus therefore rejected the draft withoutfurther action.

It is proposed to introduce the following changes to the draft:

1. The Resolution should cover both: (a) the responsibility of Oblast State Administrations andcorresponding Municipal Administrations for transfer of social objects (assets) of closing mines tocommunal ownership; and (b) the responsibility of eligible Oblast State Administrations for transferof ex-mine sites to municipal possession.

2. The division of concrete (financially guaranteed) responsibilities between MFE and Oblast StateAdministrations in the transfer of the objects of social infrastructure of closing mines to communalownership could be defined in their joint agreement.

3. A simnilar type of agreement for transfer of ex-mine sites of closing mines to municipal possessioncould be concluded between UDKR or coal enterprises of MFE and Oblast State Administrations withparticipation of regional environmental bodies. This agreement could help to ensure division ofspecific financially guaranteed environmental mitigation commitments (including a post-liquidationmonitoring of the environmnent and removal of negative consequences) between the parties involved.

4. The Resolution should oblige the MFE, UDKR and Oblast State Administrations to conclude abovementioned agreements by including distinct sanctions for nonperformance.

5. The Resolution should provide for responsibility of the Ministry of Finance to stipulate funds fortargeted financing of measures directed toward the fulfillment of the participants' environmental andsocial mitigation commitnents for completion of physical and legal liquidation of mines. One of themost critical points is to provide payment of backwages for the workers and specialists of the objectsof social infrastructure which are to be transferred to communal ownership.

9 'On division of Responsibilities and Functions at Closure of Coal Mining and Coal Processing Enterprises'' Volyn and Tcherkassy Oblast State Administrations


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Proposed Review of UDKR Charter

1. It is necessary to determine subordination of UDKR to the Ministry of Fuel and Energy (Clause 1.1)and indicate the new name of the Ministry in all chapters (Clauses 2.2, 3.3, 4.4, 4.6, 4.7, 4.11, 5.2, 6.4,8, 9.2, 9.4, 10.2, 10.3, 10.4).

2. It is proposed to unify Clauses 2.1 and 2.2 because of their similarity and emphasize the main task ofUDKR's activity, i.e., closure and liquidation of the coal enterprises in the Coal Industry (closure andliquidation of enterprises in other industrial sectors could be carried out in compliance with the lawon bankruptcy).

3. It is proposed to define more precisely and delineate the scope of competence of UDKR (Chapter 3) inseveral separate clauses as follows:

Mine closure and liquidation 'Feasibility Studies" and "Projects". The terms "Feasibility Studies" and"Projects" should be defined. A clear distinction should be made between feasibility studies as a basisfor closure decision and closure designs which are prepared after the decision to close. The existingclauses should then be organized accordingly. A reference should be made to the proposed award ofclosure designs through tendering and UDKR's key role in the tendering process. Clauses 3.1-3.8should be reviewed for consolidation and clarifications.Physical liquidation of coal mines. All obligations of UDKR connected to this issues and reflected inarticle 3.9, 3.12, 3.13 and 3.25, as well as other commitments of UDKR related to physical liquidationof coal mines, could be consolidated.

Environmental mitigation measures. All obligations concerning environmental mitigation could beunified, including Clause 3.9. The comrnmitment of UDKR to conclude agreements with municipalauthorities on the transfer of ex-mine sites to municipal possession after completion of necessaryenvironmental mitigation measures could also be included.

Social mitigation measures. This clause could specify all Liabilities of UDKR to provide social benefitpayments to laid-off personnel and refer to the role of the Social Insurance Fund and municipalities assuccessors for payment of disability allowances and for the supply of free coal.

Regional activity (local branches). This clause could determine the competence and functions of UDKR'sregional branches as well as define more precisely their relationship with UDKR's headquarter,taking into account the necessity to ensure rigorous central financial and budgetary control.

4. UDKR should concentrate its activity on the main goal, closure and liquidation of the coal enterprises.Direct job creation should not be among UDKR's activities. Therefore it seems reasonable to eliminateseveral clauses, such as 3.14, 3.17, 3.16, 3.19 and 3.9.

5. It is advisable to indicate that some functions, such as described in Clause 3.16 should be carried outstrictly in compliance with actual legislation of Ukraine (in order to prevent 're-inventing the wheel').

6. One of the most important goals is to provide transparency and accountability in the managerial andfinancial activity of UDKR as a state-owned and budget-funded enterprise. All definitions related tofinancial activity of the company should be absolutely clear and must have restrictive rather thanbroad interpretation. Several clauses contain ambiguities and should be clarified (e.g., 3.27, 5.2, 5.1,2.2, 3.20, 4.11, 3.26). It should also be clearly stated that UDKR is not a profit making company.

7. Often, a reference is made to other legislation without any gain in clarity or specificity (e.g., 3.11, 3.29,4.7, 4.9, 4.10, 4.11, 5.2, 5.3, 6.5, 6.6, 7.2, 8, 9.1, 9.4, 9.5, 10.2, 10.5). Such references should be avoided.


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