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FIJI Post-Disaster Needs Assessment While other mining prospecting sites exist around the country, the VGM operates within three special mining leases that cover a total area of 1,255 ha. VGM also has the right to explore areas outside the current mining leases via a special lease that covers over 19,000 ha of the surrounding Tavua volcano. Total damage to the sector following TC Winston is estimated at F$11.5 million, and economic losses are estimated at F$20.0 million. Hence, the total effects of TC Winston on the mining and quarry sector are estimated at F$31.5 million. Total recovery needs for the sector total F$11 million, which includes F$5 million in reconstruction needs that can, however, be met by insurance coverage for VGM. About F$6 million is needed to recover lost revenues by VGM. The industry must focus on an immediate response to urgent needs and must also take steps to achieve and maintain production at a sustainable level. The BBB approach will be incorporated into the medium- and long-term recovery and reconstruction activities to ensure robust industry growth. Mining Sector Background Eight mining leases are currently monitored in <strong>Fiji</strong>, and 78 exploratory licenses have been issued. Mining activities are expected to increase in the near future. Measured in terms of revenue generated through the export of gold and other minerals, VGM dominates the mining and quarry sector. Gold shipped for the month of February 2016 (2,114 oz) was 46 percent lower than for January 2016 (3,913 oz). With the price of gold at US$1,097.40 per ounce, this equals a production loss of F$3.7 million. Assessment of Disaster Effects on the Mining Sector (F$32 million) Damage and production losses in the mining sector were predominantly sustained by VGM, both at the underground and surface mining facilities. Table 33 shows the total value of damage and production losses in the mining sector. Figures for total estimated damage were provided by the Inspectorate Unit and the Environmental Unit of the Mining Division within the Department of Mineral Resources based on their onsite assessment following TC Winston. Table 33: Quantification of Damage and Losses in the Mining Sector (F$ million) Damage Losses Total Private Public Mining Industry (Vatukoula Gold Mines, Ltd.) 11.5 20.0 31.5 100 0 Source: Estimation by Assessment Team. Note: Total estimated loss was based on the assumption that the average gold shipped per week is 1,100 oz at the price of US$1,097.40. Damage to the Mining Sector (F$12 million) TC Winston caused significant damage to buildings, infrastructure and other assets at VGM. Most of the damage to the mining and quarry sector involved structural damage to buildings (factory, office and staff quarters), furniture (in offices and staff quarters), communication and technology infrastructure, and machinery. Underground mining areas also suffered extensive damage due to flooding. Overall, the surface facilities were more affected than the underground facilities. Table 34 shows the damage to key assets within the mining industry. Table 34: Damage to Key Assets in the Mining Sector Damage (F$ million) Underground Assets Surface Assets Total Damage Buildings 0 4.8 4.8 Mining area 2.6 0 2.6 Infrastructure 0.3 0.5 0.8 Assets 2.4 1.0 3.4 Total 5.3 6.3 11.6 Source: Estimations by Assessment Team. 62 Tropical Cyclone Winston, February 20, 2016
FIJI Post-Disaster Needs Assessment Losses to the Mining Sector (F$20 million) Losses are primarily attributable to loss of earnings, higher operational costs, cleanup costs and lower productivity, which resulted from flooding at the underground mine and led to a decline in gold shipped. Total gold shipped in February 2016, the month of the cyclone, was 2,114 oz, which was 1,799 oz less than the January shipment. Table 35 shows the mining industry’s total loss (including gold shipped and earnings) due to low production. Table 35: Losses in the Mining Sector February–March April–June Total Effects Loss in Gold Shipped (oz) 1,522 6,874 8,396 Loss in Earnings (F$ million) 3.7 16.3 20.0 Source: Estimations by Assessment Team. Note: Some of the costs (losses) to the sector could not be determined at this early stage of assessment. The average gold shipped per week is 1,100 oz. Calculations assume that by July 2016, VGM will be back at full capacity and that the average gold shipped per week is 1,100 oz at the price of US$1,097.40. Social Impact of Damage and Losses Despite normal operations at VGM after the cyclone, sector operations were affected by the poor attendance of workers, the majority of whom were affected by the devastating cyclone in some way (such as damage to their homes). Much of the damage done to buildings posed a risk to the environment. For example, live electrical wires were exposed to rain and sun, and the chemical storage facility was damaged, potentially exposing staff to hazardous chemicals. However, the staff acted quickly to address and mitigate the risks. Structural engineers working within the sector were deployed to the site to undertake the assessment, and the findings formed the basis for the rehabilitation and maintenance works to be undertaken. Recovery and Reconstruction Needs for the Mining Sector (F$11 million) Total recovery and reconstruction needs for the mining sector (that is, for VGM) are estimated at F$11 million. Approximately F$6 million is needed to cover costs of operating the mine from February to July 2016, when the industry is expected to be back at full capacity, and includes costs for repairing minor damage, paying wages, etc., without full revenue while there are no gold sales. The remaining F$5 million is required for VGM’s first insurance deductible of F$5 million. The assumption is that the insurance company will agree to pay 100 percent of the claim for F$11.5 million (total damage on physical assets). Table 36 provides the breakdown of recovery needs that must be met to return the industry to full capacity. Table 36: Total Recovery and Reconstruction Needs for the Mining Sector (F$ million) Recovery of lost revenue by increasing gold production (VGM) Maintenance/repair of buildings and infrastructure (Insurance excess) Recovery Reconstruction Resilience Total 6.0 6.0 5.0 5.0 Total 6.0 5.0 11.0 Source: Estimations by Assessment Team. Note: A detailed breakdown of recovery needs by sector is included in Annex 2. VGM is expected to fund the majority of reconstruction requirements. However, more funding may be required for additional risk management mechanisms and insurance arrangements, which will take into account cyclone risks and support the industry in BBB. Maintaining well-skilled employees for construction activities is also important. Tropical Cyclone Winston, February 20, 2016 63
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Damage to Ovalau Resort Source: Min
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