Bonding is when a mining company is required to set aside a sum of money before mining operations begin to ensure that when mining operations are completed the land is restore to an acceptable condition. Bonding can be thought of as a type of financial insurance; the mining company's bond must be large enough to cover the full projected cost of reclamation, to ensure that the public will not be left responsible for cleaning up the mine site if the mine fails to do so.
Three types of bonds:
- Corporate Surety Bond: Consists of a third party that has a contract with the company to ensure that whatever the company is contracted to do actually gets done.
- Collateral bond: A bond that is controlled by a financial asset such as cash, lines of credit with the company, and real estate equity.
- Self bonds: A self bond is a legally binding corporate promise. Companies can only qualify for this bond if they meet the financial requirements; for example the company must have an extremely high net worth.