During the heavy rainfall incidents in Queensland in early 2010, a farm dam immediately upstream of a mine site water supply dam failed. The water from this dam then flowed into the mine site water supply dam and in turn resulted in failure of that dam. As a consequence, the associated large open pit coal mine was flooded with associated substantial coal production losses for several months.
SCE was then requested by the insurer for the mine site to investigate the failure of both dams, and advise on the other relevant civil engineering issues to enable the insurer to make a decision in relation to the indemnity and the policy response.
An important feature of the SCE investigations was the determination of the adequacy of the mine site water supply dam itself and the chain of events leading up to the dam failure event itself. These investigations revealed that rather than the mine site constructing the dam and the spillway in accordance with the agreed engineering design, the spillway had in fact been built 10 times smaller than the design had stated.
In view of the foregoing, the physical damage aspects of the mine site water supply dam failure were then not counted as part of the ensuing insurance claim.