A Reclamation bond is a type of performance surety bond. This type of bond is required by the Bureau of Land Management (BLM) and also by some state government agencies that issue permits for mining type operations. Reclamation bonds are typically a requirement for a business that is seeking a permit to start mining or other related operations at a specific site. The reclamation bond provides a financial guarantee that the land being disturbed for the operation of the mine, or related activity, will be returned back to either its approximate original state or an acceptable condition agreed upon by the operator and the government agency.
Reclamation bond amounts are not standard. The amount required is usually based on a form of cost analysis used to determine the approximate cost to reclaim the land after the mining operations have ceased. Reclamation costs vary greatly depending on what type of mining operation is being conducted and the degree of impact on the land. Some land reclamation cost considerations include tasks such as (but not limited to):
Reclamation bonds are not restricted to mining type activity. Generally speaking, a reclamation bond may be required of any operation that alters the land to a degree that the land may not recover on its own post operation. A couple examples of operations that may be required to obtain a reclamation bond are waste recycling plants and waste water disposal facilities.
A Reclamation bond is put in place to guarantee that the land affected by mining or similar permitted operations, is returned back to its approximate pre-mining condition or an agreed acceptable condition. In the instance where a mine operator does not perform the land reclamation, the Surety, the company providing the guarantee behind the bond, may be called upon to uphold it’s financial responsibility to the reclamation bond. Typically, the Surety would either be able to pay out on the bond or manage the land reclamation operation themselves. In either instance, the mine operator is responsible for the financial expense incurred by the Surety. A Reclamation bond is not insurance and does not work like insurance. The mine operator is ultimately financially responsible for the land reclamation.
Reclamation bond rates vary greatly depending on the qualification of the bond applicant/s. The rates are determined based on many factors which include the credit and financial strength of the company and its owners.
The only way to get an accurate quote for a reclamation bond is to apply and let the underwriter review the request and put a quote together.
To apply for a Reclamation bond there are few items that are needed in addition to the bond application and a credit check:
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