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Posted On: Jul. 19, 1998 12:00 AM CST

Multinational mining company Boliden Ltd. and the government of Andalusia, Spain, are proceeding with cleanup plans, even though they have yet to determine the cause of an April accident that resulted in Europe's biggest ecological disaster in the past decade.

Although the public has been critical of the company and local government, a Boliden executive said an investigation into the accident points to a geological cause rather than any degree of negligence. Even so, the company is undertaking a review of all of its safety procedures.

A tailings dam at the Los Frailes mine, nearly 30 miles west of Seville and near wetlands, national parks and historic sites, collapsed April 25. Approximately 5,100 acres of land was flooded by 175 million cubic feet of acidic water and solid materials from a tailings pond between the mine site and the town of Sanlucar la Mayor, which is 9 miles away. Heavy metals in the waste discharge included lead, cadmium and thallium.

Local experts believe the thallium had been carried by the wind from an oil refining and industrial complex near the city of Huelva, west of the mine in southern Spain, and had accumulated in the tailings pond.

Work at the Los Frailes open pit mine, which produces zinc, lead, copper and silver, began in February 1997 after ore from the adjacent Aznalcollar open pit mine was depleted in late 1996. Mining at this location has been conducted since Roman times.

Estimates of the initial cleanup and remediation cost following the failure of the Los Frailes dam are 25 billion pesetas ($162.5 million), said Javier Serrano Aguilar, director of a cleanup action group created by the environmental agency of the Junta de Andalusia, the autonomous Andalusian government.

"We are now cleaning up all of the mud from the area and reclaiming the Guadiamar River basin," Mr. Serrano said.

The area affected is mainly an agricultural zone of both wetlands, where the chief activity is fishing, and a dry area predominantly dedicated to peach orchards. Debris from the tailings pond penetrated the soil by some 8 to 20 inches. The local government and Boliden decided the best remedy was to excavate the polluted soil. As the topsoil in this area is so thin and the excavation could remove all of the productive soil, the local government and Boliden decided to compensate the farmers for the loss of their land and upcoming harvest.

The Junta de Andalusia is paying the farmers the pre-accident market value plus 25% for their land, and the farmers are receiving compensation for the loss of their harvest from Boliden, Mr. Serrano said.

So far, Boliden has paid about $6.5 million in compensation to the farmers, said Bill Fisher, exploration manager for Boliden in Toronto, where the company is based. Boliden has not accepted liability for the damage, he said, noting that this ultimately will be decided by the Spanish courts.

Boliden Vp James Borland said that, in addition to the payments to farmers, the company expects to pay $13 million to clean up an area within an 8-mile radius of the mine.

Mr. Serrano said it is important that the cleanup work be completed before the rainy season in the fall to avoid the danger of heavy metals being transported via the Guadiamar River to the Guadalquivir River, one of the largest rivers in Spain and a tributary that flows into the Gulf of Cadiz.

"We cannot wait for the judges to make up their minds," Mr. Serrano said of the court's role in apportioning liability for the disaster.

Once cleaned up, the excavated land will be converted into a "green corridor" that will connect nearby mountains with the Donana wetlands. "This will allow animals in the mountains an access route to the Donana and the coast," Mr. Serrano said.

The decision to create a "green corridor" is part of a larger reclamation program of the Junta de Andalusia to remediate pollution to the west and southwest of Seville, the region's largest city. This includes tackling the effects of pesticides used by farmers in the area as well as industrial pollution.

In addition to Boliden's expected contributions of $13 million, the Junta de Andalusia is paying 8 billion pesetas ($52 million) toward the cleanup, and the Spanish federal government in Madrid is paying 4 billion pesetas ($26 million). Mr. Serrano said the Andalusian government also will apply to the European Commission for financial assistance for the work.

An official in the Environmental Affairs Directorate at the European Commission in Brussels, Belgium, said his office is collecting all technical data relating to the accident before it makes a determination on assistance.

"The Spanish courts will decide on the matter of liability. We have to investigate whether any (European Community) legislation was breached. We are concerned with a special protection area some 60 kilometers (37 miles) away and a river course which will take the debris to the sea," the official said.

Boliden CEO Anders Bullow said in a statement that the company has sufficient liability and business interruption insurance to cover its costs from the accident. He did not give any coverage details.

The Los Frailes mine is owned by Boliden Apirsa, a Seville-based wholly owned unit of Boliden Ltd. Boliden acquired Apirsa in 1987 from Madrid-based Banco Central.

Boliden Ltd.'s property/casualty insurance is underwritten by Trygg Hansa Insurance Co. of Stockholm, Sweden, and Storebrand Insurance Co. Ltd. of Oslo, Norway, said Mr. Borland, who could not detail their participation on individual policies. The company's limits are $65 million for property damage and business interruption risks and $13 million for third-party liability.

Boliden previously was owned by Swedish manufacturing conglomerate Trelleborg A.B. Boliden was the dominant base metal mining company in Sweden until 1993, when the Swedish government permitted foreign mining companies to enter the country.

In 1997, Trelleborg A.B. floated 55% of Boliden on the Toronto Stock Exchange and established the company's head office there.

Last month, a preliminary report from Madrid-based engineering group EPIRSA Servicios de Ingeneria S.A. stated that the tailings dam failure at the Los Frailes mine probably was caused by slippage in a share zone within a marl formation 50 to 66 feet below the surface.

Mr. Fisher, the Boliden exploration manager, said he believes the depth of the slippage was probably between 26 and 33 feet below the surface.

"Basically the dam shifted on its footing. The water (in the tailings pond) found a gap in the wall, and the tailing. . .got out," he said.

"The company's position is that this was an accident. The dam was tested just a few days before. This was due to geology and not to negligence," Mr. Fisher added.

The EPIRSA study was carried out on behalf of Boliden. The preliminary report was issued in June, and a final report is due at the end of summer. The study is being scrutinized by a team of independent engineering consultants from Sweden, Canada and Spain.

The Junta de Andalusia is carrying out its own independent study of the dam failure, Mr. Serrano said.

It is not clear yet what caused the underground slippage, but Mr. Fisher said he thinks it could have been caused by stresses created by a small earthquake, though none was recorded at the time of the failure.

Mr. Fisher said the dam had been designed to withstand the equivalent of an earthquake of force 7 on the Richter scale. "Most of Seville would be destroyed in an earthquake like that. The dam was overdesigned," he added.

However, the general public reaction to the disaster in Spain has been fiercely critical of the company and the local government in Andalusia.

"We do think there is a problem with the attitude of various professionals in the mining field in the management of their risks. Also the local government does not seem to have exerted the control necessary," said an insurance broker in Madrid.

Immediately after the accident there was much confusion about who was in charge of addressing the disaster: the central government, the ministry of environment or the local government.

"There are a number of autonomous regions in Spain, and you must know what is in an autonomous community's competence," said Maria Jose Menendez, a specialist in environmental law at the Madrid office of London-based law firm Clifford Chance. Ms. Menendez added that the initial cleanup was within the purview of the local government.

But as some of the spillage was heading for a river, that was also within the responsibility of federal environmental authorities, he said. In addition, there is a special "heritage site," or historic landmark, nearby, which means the European Commission in Brussels also has an interest.

Because of the initial confusion over which agency should take the lead in containing and cleaning up the disaster, both Boliden and the Junta de Andalusia came under severe criticism in the Spanish media.

Mr. Fisher rebutted criticism of Boliden, however, saying the company maintains high standards of environmental protection in all its operations.

"Sweden has environmental standards second to none, and that's where Boliden is coming from. We have to have the same standards everywhere in the group, otherwise we cannot get finance for a project," he said.

As a result of the accident, the company is reviewing every single step of its operating procedures. This includes an examination of past work at the mine when it was owned solely by Apirsa, the Spanish company.

Mr. Serrano also rejected criticism that the local authorities did not carry out a thorough inspection of the mine and the dam that could have identified the risk.

"That is not right. Everything was controlled. It was not possible to foresee what happened," he said.

Clifford Chance's Ms. Menendez said it is difficult to predict what the effect of the accident will be on Spanish environmental legislation. The Spanish courts have been making ever-tougher rulings on pollution cases, she said.

"There is no legislation in Spain that applies a strict liability (to polluters) except in specific cases, such as a nuclear accident. But the courts are becoming tougher in the way they apply the civil code. Unless you take every possible procedure to avoid damage, you are liable. You have to prove that you were very, very diligent to avoid liability," Ms. Menendez said.

An amendment to existing environmental legislation in Spain is being studied by the Spanish Parliament. Currently, it exists only in draft form and has not yet been introduced for approval by lawmakers. Among other things, it proposes a statute of limitation on environmental liability of three years and a cap on liability to 15 billion pesetas ($97.5 million), Ms. Menendez said.

"This would be third-party liability after any accident. But we do not know to what extent this experience at the mine will affect the new law," she added.