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Author: Jack Caldwell


This review looks at the things most mines insure, the companies that sell insurance policies, and the consultants who can advise you on what to insure and how to maximize your chances of getting paid. Other topics covered include risk management, political risk insurance, and climate change and insurance.


In our daily lives we are familiar with insurance: pay a regular premium to a selected company and if the covered event occurs, put in a claim and hope you get paid. It works pretty much the same way in mining. Accordingly, in this review, we take a look at the things most mines insure, the companies that will sell you mining insurance policies, and the consultants who will advise you on what to insure and how to maximize your chances of getting paid. We focus on one particular type of insurance, namely political risk insurance, as this is probably the biggest risk the average mining company faces, and it is possibly the least understood of the insurance policies available.


If you insurance company tries to dodge paying you, you may have to retain a policy-holder insurance recovery expert. How they work and what they do is well describe on the Heller Ehrman website.

Also you may consider consulting ErMC2 who note that they provide these services to the coal mining industry:

ErMC˛ provides highly customized claims management services to the insurance and financial industries. We are especially experienced in developing customized runoff plans. Claims management services, like all our others, are focused on quality and based on individual needs and objectives.


Here are some of the insurance policies that should be in place at a typical mine:

  • Directors and officers liability insurance
    • publicly and privately held corporations
  • General liability for all stages of mining including
    • Vacant land for exploration
    • Surface mining operations
    • Underground mining operations
    • Third party issues related to subcontractors hired by you
  • Excess Liability & Umbrella
    • Greater limits in excess of the standard million offered in the Auto and General liability policies
  • Workers Compensation
  • Reclamation bonds are a very expensive and challenge for the insurance industry.
  • Property & Equipment
    • Insurance for all of the buildings and contents for processing sites and equipment, offices, temporary buildings, etc.
    • Mobile equipment used for getting ore out of the ground to processing including, earth moving, drilling, transporting, etc
    • Rail cars and other modes of transport
  • Business Income
    • Insuring potential lost revenue against the normal perils we are used to related to buildings and equipment
      • Fire
      • Theft
      • Vandalism
    • But also to include
      • Equipment breakdown
      • Cave ins
      • Other factors that could relate to diminished production
  • Boiler & Machinery
    • Compressed containments for heating and processing
    • Boiler inspections
    • Equipment breakdown for processing & mobile equipment
    • Sprinkler inspections & testing
  • Auto Liability
    • Insuring everything from the pickup to the crew bus to the tractor -trailer
  • Cargo
    • Insuring the ore and equipment in transport whether shipped by common carrier or owned trucks & rail
  • Employment Practices Liability
    • As the workforce grows issues arise along the lines of alleged and actual - wrongful termination, sexual harassment, failure to promote, failure to hire, gender, age, religious, and race discrimination
  • Foreign & Multinational Liability
    • Covering risks and operations outside of the country
  • Political Risk
  • Kidnap, Ransom & Extortion
  • Pollution & Environment Liability
    • Fuel & Chemical Storage Tanks
    • Sediment ponds
    • And filtration facilities
    • Reclamation projects
    • Hazmat cleanup
    • Brownfield sites
  • Loss Control & Risk Management services


Here are some companies in the InfoMine Buyer's Guide that sell insurance to the mining industry:


ErMC2 can help you in the coal fields of the eastern United States. Here is how they describe their services:

Our staff of professional engineers, insurance executives, forensic analysts and attorneys can correctly assess your risks and then plan and implement a tailor-made loss avoidance or mitigation program that will reduce client exposure to risks - and the steep costs associated with them - in a wide variety of industrial, environmental and credit-related fields.

Reynolds Porter Chamberlain LLP have provided these services to the mining industry:

  • Advising in relation to the collapse of a toxic waste reservoir owned by Canadian mining company Boliden International in Spain in 1998. The Spanish authorities seek €100m in compensation for clean up costs
  • Advising in relation to arbitration proceedings in Chile following a mining accident involving Canada's largest copper mining company
  • Advising in relation to proceedings in Argentina following accidents involving mining operatives


ControlRisks provides consulting services in these relevant areas:

  • Political and security risk analysis - we are able to provide an understanding of the strategic and tactical success factors of mining projects including political and regulatory risks, security concerns, and social and reputational issues.
  • Business intelligence and investigation - we can produce detailed local research that can increase access to project finance.
  • Due diligence - we can examine the backgrounds of joint venture partners and acquisition targets and provide briefings on project stakeholders.
  • Security audits -our independent assessment of security conditions can help to reduce insurance premiums.
  • Asset tracing - we can help recover shareholder value in case of a corporate crisis.
  • Security management - we are able to provide sophisticated site and personal security that allows our clients to protect their assets while not fuelling local tensions.
  • Crisis management


As always the best definition of Political Risk Insurance (PRI) is at Wikipedia. AON will sell your mining company a PRI policy. Their services include:

  • Construction insurance programs for lenders, investors and sponsors in new mining projects
  • Bespoke risk management programs covering mining and related industries
  • Risk assessments
  • Due diligence for mergers and acquisitions
  • Insurance advisor for financial institutions
  • Alternative risk financing for environmental risks and mine/site remediation
  • Political risk insurance for new projects and existing operations to cover both lenders' and borrowers' interests

To see how PRI works in the mining industry, see this document that records the story of PRI in Columbia at the Las Animas mine. More documents from OPIC on PRI in mining are at this link.

I am no fan of PowerPoint presentations. However I am impressed by the one at this link that gave me an introduction to and some details of PRI. To whet your appetite, here are the bullets that trace the development of PRI:

  • Began by governments following World War II to encourage investors to rebuild war-torn Europe
  • Private insurers became active in the mid 19702
  • Today, there is a thriving global private political risk market
  • Most major governments continue to be active through their export credit agencies

Another PowerPoint presentation from the late 1990s that gives considerable detail about PRI to the mining industry in Africa is at this link. Even easier, and always up-to-data, is the World Bank Group Multilateral Investment Guarantee Agency site for general information about PRI.


PRI providers are listed on the InfoMine Suppliers database. Above I mentioned Aon. Here are some others:

Heath Lambert explain their PRI policy and policies at this link. As so often is the case, they expect you to have fought back before they will pay out.

Africa Trade Insurance Agency may be able to help you-they helped First Quantum Minerals with PIR for mining equipment in Zambia (see slide 36). I particularly liked their Environmental Operations Manual. It would be interesting to see how it is applied.


See the InfoMine library for publications on mining-related insurance. Links to more publications on PRI and many other aspects of international mining and insurance are at this site.

A detailed, academic study of PRI is in the paper Measuring Risk: Political Risk Insurance Premiums and Domestic Political Institutions.

The International Risk Management Institute has a $76 book Political Risk Insurance Guide if you seek in-depth information.

The Risks We Run: Mining, Communities and Political Risk Insurance is a book that is as critical of PRI and the mining industry as any you will find. The book is "reviewed/supported" in a posting from the Society for the Study of Peace and Conflict. Relative to PRI in India, the reviewer states: "The Risks We Run is a must read for campaigners, human right activists as well as researchers and academicians in India. The history of extractive industries has a bad reputation in India by flouting environmental and social responsibilities. In the present context, while State governments of Orissa, Jharkhand and Chhattisgarh are wooing investors for the exploration of rich minerals at the heart of tribal lands and private risk-consultant groups are hell bent on advising the investors, this book will give an opportunity to the common man to evaluate the structure, process and outcome of those mining industries."

If you choose not to buy the book, you will find a description of some of the mines dealt with in the book at The Whirled Bank Group.


The Scientific American names Swiss Re Business Leader of the Year. I suspect this is based primarily on their e-publications on the implications of climate change and hence insurance costs. An example is the report The effects of climate change: Storm damage in Europe on the rise.

Regardless of your opinion of the reality and/or causes of climate change, I suspect these are the relevant questions for the mining industry:

  • What will climate change mean to the mining industry?
  • How can the mining industry avoid negative impacts of climate change?
  • How can the mining industry benefit from climate change?

Swiss Re has a fascinating report Opportunities and risk of climate change. The report does not address mining, but the broader principles it sets out may be worth considering in trying to answer my three questions.

Another report in a similar vein is from Marsh & McLennan Climate Change Risk. This report reminds us of the opportunities inherent in green industries, the need for appropriate insurance, and adoption of risk management programs.

I can only speculate that the first issue arising from climate change that may affect the mining industry is a growing shortage of water, or at least an increasing cost to getting the water needed to operate a mine. There may be greater social conflict involved in securing access to water between the mine and the surrounding inhabitants. Do we need increased research on minimizing water consumption in mining and processing?

Opportunities for the mining industry associated with climate change must surely lie in provision of the materials that will be needed to build the facilities needed to cope with climate change. The supply of soil and aggregate to build the dikes and berms to limit flood damage is an obvious example.

Another well-worn path on the trail of climate change issues that will affect the mining industry is greenhouse gas emissions. Are there research opportunities in mining industry minimization of green house gas emissions and CO2 sequestration in old mines?

I cannot possibly purport to fully answer these questions myself. If you have ideas or comments, please pass them on to me.

Incidentally, one other report I found from Swiss Re that may be of interest to the mining industry is Maintenance-a strategic management tool.

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