Water Insecurity a Key Threat to the Development of Global Mining – by Lauren Power (Future Directions International – October 9, 2013)

http://www.futuredirections.org.au/

Pressure for platinum miners in South Africa to halve their water consumption is symptomatic of a growing global risk to resource development posed by water shortages and conflict over water supplies available for mines.

Background

The South African Government recently requested that platinum miners in the country’s North West province cut their water use by half, in response to a drought that is threatening water supplies in the region. Throughout the world, mining activities are being challenged by water issues involving the availability of supplies for operational use, community conflict over available resources and the environmental consequences of water contamination.

Water issues are creating threefold operational, regulatory and reputational risk for miners, who are increasingly identifying water shortages as a top ranking issue in risk analysis. The availability of water is a considerable factor, affecting both growth and productivity; shortages in supply could prove a threat to new developments in some areas.

Comment

Access to a secure and stable water supply is essential for most mining operations, as they require significant volumes for every step in production, especially in the extraction and processing stages. While the mining industry is a relatively small water user in most countries, individual operations can be major users within a particular watershed.

Water shortages for mines can be caused by poor supply infrastructure, drought, existing overuse or pollution by the mine, or the cumulative effects of other users in a catchment, including consumption for agriculture, industry and urban use. Water pressures from mining are likely to become greater in the future, as long-term demand expectations for metals and minerals from the developing world are strong, causing mining to expand rapidly across the globe. Furthermore, new mining activities are increasingly taking place in countries that already face water shortages and anticipate intensified competition in the future, as a result of demographic and economic trends.

It is not only in South Africa that tension is emerging over water use in the mining industry. Water shortages for mining facilities in Chile have led to growing social pressures and the introduction of water rights concessions. The purchase of concessions is driving up the price of water and leading to the construction of costly desalination facilities to mitigate the risk of shortages.

Water shortages are also causing issues for miners throughout Asia. India and China, in particular, face serious threats to the future of their mining industries because of water availability issues. In China, water shortages will severely limit additions to thermal power capacity. Eighty per cent of China’s coal comes from areas where water supplies are either “stressed” or in a state of “absolute scarcity”. In many areas, coal production and water-use targets are irreconcilable.

Mining operations are also implicated in water security issues because of the environmental impacts of mining practices. Water contamination remains the most common environmental impact associated with mining. Acid mine drainage is a major issue affecting South Africa’s water supply and the impacts of fracking on groundwater quality are a growing concern.

As mining operations expand and global water insecurity increases, water scarcity is likely to cause conflict between miners, local communities and host nation governments. As concerns about meeting urban and agricultural water needs for food and human security grow, governments will change their regulations and licensing requirements, which could increase the cost of operation for miners. This has been seen in both Chile and Mongolia, where mining companies face increased costs as the national governments have moved to protect their water supplies.

Growing social pressures pose another threat. Mining companies require a social license to operate and a big part of water-related risk devolves from the threat of community conflict. Water insecurity often becomes a focal point for communities with grievances on a number of different issues. In many cases, mining’s demands for water can rob local communities of their entitlement and disrupt food security by competing with agriculture for available supplies. This heightens operational risk for companies operating in areas where water issues may spur conflict with local communities or governments. The Mineral Council of Australia has developed a framework for water accounting and reporting that is considered a world best practice. Australia’s transparent regulatory framework means it is provides a relatively low water-risk for mining operations.

For the original version of this column, click here: http://www.futuredirections.org.au/publications/food-and-water-crises/28-global-food-and-water-crises-swa/1368-water-insecurity-a-key-threat-to-the-development-of-global-mining.html

 

 

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