Kennecott: One of the Biggest Mining Claims Globally in Recent History


The Bingham Canyon Mine (also referred to as Kennecott Copper Mine), is an open-pit mining operation extracting a large copper deposit in Utah, in the United States. The mine has been in production since 1906, and has resulted in the creation of a pit over 0.6 miles (970 m) deep, 2.5 miles (4 km) wide, and covering 1,900 acres (770 ha).

The mine is considered to be the largest man-made excavation in the world and is owned by Rio Tinto Group, headquartered in the United Kingdom. The copper operations at the site are managed through Kennecott Utah Copper Corporation (KUC) which operates the mine, a concentrator plant, a smelter, and a refinery.

The mine experienced a massive landslide in April 2013.


In April 2013 the north east wall of the mining pit collapsed, resulting in approximately 150 million tonnes of rock and soil sliding in to the pit and covering the pit floor.

As a result, the main access road to the pit floor was cut over a length of some 800 metres, mining equipment (in particular three of the four shovels being used for production in the pit) with a replacement value of many hundreds of millions was destroyed and the production faces were buried under approximately 100 metres of rubble.

The mining authority immediately issued a notice prohibiting access to the pit for safety reasons. Within a few weeks this restriction was relaxed to permit limited production activities in an area of the pit unaffected by the debris by using the one remaining shovel which was “captive” in that area. The ore that was mined was transferred out of the pit via a conveyor tunnel through one of the walls of the pit not affected by the slide.


Reinstatement of the main access road into the pit was completed by 31 October 2013, which also coincided with the time it took KUC to replace the destroyed mining equipment. During this 6 month period only limited production from the pit was possible.


KUC made a claim under the material damage and business interruption policy issued by the Rio Tinto captive insurer in relation to various heads of loss totalling approximately USD1.5 billion. The captive in turn claimed under its facultative reinsurance program, which had been placed in various layers and percentages with close to 50 reinsurers in various parts of the world. Both the underlying policy and all reinsurance contracts were expressly subject to Australian law.

In terms of business interruption losses, KUC elected to claim under the Gross Earnings Endorsement of the policy, rather than under the Gross Profit Endorsement.

A unique point of difference for this matter was the necessity to draw on legal precedent from the United States given the absence of relevant case law in Australia and the United Kingdom in relation to the interpretation and application of the Gross Earnings Endorsement.


Wotton + Kearney were appointed to undertake the lead role in representing the interests of the entire reinsurance market in relation to the claim. Due to the disparate nature of the reinsurance program, another insurance law firm based in London was also appointed by the reinsurers to work in collaboration with Wotton + Kearney.

A reinsurer steering group was established to oversee the management of the claim. As effective and timely communication was imperative to achieving an outcome that would satisfy the reinsurance market Wotton + Kearney and the other appointed insurance law firm consulted regularly with the steering group, both in writing and, more importantly, by means of conference calls.


There were multiple issues in dispute in relation to both the material damage and business interruption elements of the claim, including:

  • whether the pit walls were insured property;
  • whether cover was triggered under the civil authority clause;
  • the extent of cover available under the “Permanent Access ways” clause;
  • the extent of cover available under the “Accumulated Stocks” clause;
  • whether the costs of remediating the various elements of the collapsed wall were covered:
    o under the clause in relation to protection and preservation of property;
    o as an expense to reduce loss under the Expenses Clause of the Gross Earnings   Endorsement;
    o under the Reinstatement Endorsement;
    o under the Debris Removal clause;
    o under the Extra Expense Endorsement;
  • what was the likely cause of KUC’s production losses and the need to purchase additional concentrate for use in the production process, in particular, whether they were due to:
    o the damage to the insured shovels; or
    o the fact that the uninsured rubble prevented access to the production faces;
  • under the Gross Earnings Endorsement:
    o what was the “Period of Interruption”;
    o was 31 October 2013 (the end of the “Period of Interruption”) a “hard stop” for indemnifiable loss of gross earnings, bearing in mind that it took some weeks for finished product to emerge from the production process and Rio Tinto had not purchased an extended period of cover under the Gross Earnings Endorsement;
    o at what point in the production process should the production losses be measured;
    o should KUC give the reinsurers credit for any “make up” of lost production “…within a reasonable period of time…” following the end of the “Period of Interruption” and, if so, what was “…a reasonable period of time…”;
  • whether the “strip ratio” clause in the policies entitled KUC to claim for an alleged loss of gross earnings, calculated by reference to the metal content in the overburden which KUC was unable to remove during the “Period of Interruption”;
  • whether, and if so to what extent, KUC could claim under the Debris Removal Clause for the costs of removing the rubble in the pit.


The matter settled at mediation in late 2016 for a substantial compromise. Reinsurers reported that they were reassured by the outcome and acknowledged Wotton + Kearney as having taken the lead in attaining a result for the benefit of the entire reinsurance market.

Reinsurers also positively acknowledged the ability of Wotton + Kearney and the other appointed insurance law firm to work together in a uniquely collegiate manner for the benefit of all reinsurers.

Insurers and reinsurers generally regard this claim as a landmark case in assisting with the interpretation of complex policy provisions which often appear in material damage and business interruption policies issued to the mining sector in Australia.