East Ayrshire Council has failed in a bid to get the insurance company, Zurich, to pay out £3.34 million for environmental remediation at Dalfad mine. Instead the company is now only liable for £1.67 million or less.
The Court of Session in Edinburgh rejected the council’s claim because it had not given the required 60 days notice. But the council argued that such notice had been impossible because of when the mine’s former operator, Scottish Coal, had gone bust.
Even if the council had won the full amount under the insurance bond, it would probably have fallen far short of the money needed. An independent mining engineer put the full cost of restoring Dalfad at £8.56 million.
East Ayrshire, which has by far the highest concentration of opencast coal mining in Scotland, has a massive £132 million hole in the budget it needs to restore the landscapes scarred by 22 mines. It says it expects to retrieve £14 million in bond money by the end of this month, with negotiations continuing.
“The council's failure to secure the expected bonds for restoration of Dalfad is a major blow to plans for this and other sites,” said Malcolm Spaven, chair of the Scottish Opencast Communities Alliance.
“It underlines that the discredited bond system cannot fund restoration of abandoned sites. And communities should not be expected to put up with the reduced restoration schemes now being proposed for remaining operational mines.”
The Royal Society for the Protection of Birds (RSPB), which has been monitoring the fate of opencast mines, expressed disappointment that the council had missed out on “desperately needed” funds. “This highlights the risks of using complex commercial bonds, which place too much trust in the developers and in the bond issuers,” said RSPB Scotland’s senior conservation officer for Ayrshire, Zoe Clelland.
“We know East Ayrshire Council is working hard to recover bonds at other sites, but this will still fall far short of the tens of millions needed to properly restore these sites. A simpler system is urgently needed to ensure that it is always the polluters that pay for clean-up when they harm our environment and it doesn't fall to hard pressed local councils and taxpayers.”
David Mitchell, head of legal services at East Ayrshire Council, described the court’s decision on Dalfad as regrettable. “Whilst it is not the normal practice of this council to engage in tilting at windmills, particularly in the context of legal proceedings, it is to be hoped that we will not be judged too harshly for at least trying to secure the maximum recovery possible in this instance,” he said.
“The council is considering the various alternative options which might now be available and have sought further counsel’s opinion on a number of related issues.” Because of the particular circumstances of the case, he thought that it would not have an adverse impact on the other restoration bonds that the council was pursuing.
He added: “The council continues to make good progress in its negotiations with various other bond providers and anticipates achieving over £14 million in recovered bond monies by the end of this month, with negotiations continuing on the remainder thereafter.”
A spokesman for Zurich said on Friday that the company was unable to comment.