Falling grades and increased costs are often cited as reasons why there is not enough copper coming through the project pipeline, but water – or a lack of it – is another constraint holding back the industry’s growth, according to analysts from Wood Mackenzie.
The water issue is not as simple as being able to locate a captive source to start a development, it is much more complicated.
“From supply origin (surface, ground, sea or third-party water), management (recirculation and efficiency) to discharge (treatment and final discharge), there are political, environmental, economic and social repercussions,” the analysts said.
All of these have led to investors asking mining companies how they plan to manage water resources when evaluating potential investment projects.
“This question is as important as a company’s return [on investment] because without water simply there will be no return.” Water is expensive: it represents around 10% of infrastructure capital expenditure, according to Wood Mackenzie.
It is also a potential source of political, environmental and social conflict. This could be because the resource is in regions of drought or scarcity, has the potential to cause pollution by discharge, or its massive consumption could have an impact on the surrounding communities.
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