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ASSET RETIREMENT OBLIGATION:
 12 Months Ended
Dec. 31, 2011
ASSET RETIREMENT OBLIGATION:  
ASSET RETIREMENT OBLIGATION:

NOTE 10-ASSET RETIREMENT OBLIGATION:

 

The Company maintains an estimated asset retirement obligation for its mining properties in Peru, as required by the Peruvian Mine Closure Law.  In accordance with the requirements of this law, the Company’s closure plans were approved by MINEM.  As part of the closure plans, commencing in January 2010 the Company is required to provide annual guarantees of $2.6 million over a 34 year period to furnish the funds for the asset retirement obligation.  In the near-term future the Company has pledged the value of its Lima office complex as support for this obligation.  The accepted value of the Lima office building, for this purpose, is $17 million.  The closure cost recognized for this liability includes the cost, as outlined in its closure plans, of dismantling the Toquepala and Cuajone concentrators, the smelter and refinery in Ilo, and the shops and auxiliary facilities at the three units.  In 2010, the closure plan for the new Ilo marine trestle was added to the asset retirement obligation.

 

The following table summarizes the asset retirement obligation activity for the two years ended December 31, 2011 and 2010 (in millions):

 

 

 

2011

 

2010

 

Balance as of January 1

 

$

59.1

 

$

48.9

 

Changes in estimates

 

—

 

5.3

 

Additions

 

—

 

1.6

 

Closure payments

 

(0.5

)

—

 

Accretion expense

 

3.4

 

3.3

 

Balance as of December 31,

 

$

62.0

 

$

59.1