Investor Presentaiton
(ii) Asset retirement obligations
The calculation of asset retirement obligations involves judgment about
certain assumptions. In environmental terms, they refer to the future obliga-
tion to restore the ecological conditions similar to those existing before the
beginning of the project or activity, or to carry out compensatory measures,
agreed upon with the applicable bodies, as a result of it being impossible
to return the areas to the pre-existing condition. These obligations arise
from the beginning of the environmental degradation of the area occupied
by the operation or from formal commitments made to the environmental
body, under which the degradation must be compensated. The dismantling
and removal of an asset from an operation occurs when it is permanently
retired, through the interruption of its activities, or by its sale or disposal.
Expenditures relating to mine retirement is recorded as asset retirement
obligations. The asset retirement cost, equivalent to the present value of
the obligation (liability), is capitalized as part of the carrying amount of the
asset, which is depreciated over its useful life. These liabilities are recorded
as provisions.
The Company and its subsidiaries recognize a liability based on the fair value
for the demobilization of assets in the period in which they occur, against
the corresponding intangible asset.
The Company and its subsidiaries consider the accounting estimates re-
lated to the recovery of degraded areas and the costs of closing a mine
as a critical accounting practice because it involves expressive amounts of
provisions and these are estimates that involve several assumptions such
as interest rates, inflation, useful life of the assets considering the current
stage of exhaustion, the costs involved and the projected depletion dates
of each mine. These estimates are reviewed annually by the Company and
its subsidiaries.
(iii) Obligation for environmental liabilities
The environmental liability must be recognized when there is an obligation
on the part of the Company and its subsidiaries through having incurred an
environmental cost which is not yet disbursed.
(a) Breakdown and changes
Additions
2021
2020
Legal claims
Asset
retirement
obligation
Tax
Labor
Civil Other
Total
Total
Opening balance for the
year
2,185
766
311
264
60
3,586 3,137
356
153
210
52
53
Reversals
(10)
(96)
(125)
(34)
(23)
824
(288) (319)
512
Judicial deposits, net of
write-offs
3
(1)
2
(3)
Settlement in cash
(183)
(65)
(62)
(34)
(3)
(347)
(146)
(11)
(11)
(34)
Settlements with
judicial deposits
Effect of subsidiaries
included in
consolidation (i)
Foreign exchange
variation
30
(17)
(15)
(14)
21
(16)
Present value
adjustment
107
107
117
Monetary restatement
(5)
41
28
21
(1)
84
(19)
88
(1)
(2)
(2)
83
265
Revision of estimated
cash flow
(273)
(273)
76
Closing balance for the
year
2,295
782
338
252
84
3,751
3,586
(i) Refers to the business combination operation of the indirect subsidiary St. Marys, as
described in Notes 1.1 (o) and 1.1 (v) and the sale of the investee APDR, as detailed
in Note 1.1 (jj).
170
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