June 2017

Water and Mining: engaging with long-term management arrangements

  • By Charles Edlington, Director, National Water Policy Section, Australian Government Department of Agriculture and Water Resources

Ensuring sustainable and fair water management policies for all stakeholders, including the mining industry

The mining industry is of critical importance to Australia’s economy; so too are water management practices that will provide long-term certainty for users, including industry.

The Australian and state and territory governments have been working closely with the mining industry to better align water management with enhanced investor certainty and community expectations.

The Minerals Council of Australia (MCA, 2012) states that the minerals industry strongly supports the principles contained within the Council of Australian Governments’ (COAG) 2004 Intergovernmental Agreement on a National Water Initiative (NWI) and implementation of the national water reform agenda. The MCA further recognise that:

  • water is a key business asset with social, cultural, environmental and economic values at a local, regional and national level
  • industrial users should be included in water resource planning to provide opportunities for maximising economic, social and environmental outcomes (MCA, 2012).

The NWI is COAG’s blueprint for water reform, with governments across Australia agreeing on actions to achieve a cohesive approach for managing, planning, pricing and trading Australia’s water resources.

Australia is seen as a world leader in water planning, and the mining industry continues to play its part in that success. Water licences have been key in underpinning secure access to water and they enhance the industry’s asset base.

The Australian Government encourages the mining industry to continue to work with all jurisdictions to implement contemporary arrangements that underpin investor confidence, including enhancing social licence. This article seeks to highlight some key issues and resources to help in this regard.

The Australian Government Productivity Commission’s water reform inquiry

The Australian Government Productivity Commission are required by law to conduct an inquiry into the implementation of the NWI every three years. The 2017 inquiry has commenced, and an Issues Paper released. The Issues Paper highlights that concern exists about the risks of alternative water rights arrangements for extractive industries (Australian Government Productivity Commission, 2017). The Commission will examine this area and report to government by 31 December 2017.

The National Groundwater Strategic Framework

To assist parties with implementation of the NWI, Australian and state and territory governments have recently published the National Groundwater Strategic Framework (Australian and state and territory governments, 2017). Increasing demands and impacts on groundwater require a nationally coordinated approach to better understand, manage and secure Australia’s groundwater systems.

The framework provides a strategic ten-year vision focusing on three priority objectives where action is required to sustain our groundwater resources and enable ongoing access to this increasingly valuable water resource. One of the three priority objectives is providing investment confidence through a risk-based, consistent and efficient regulation of groundwater resources to provide confidence for investors and ensure long-term sustainability.

The framework sets out risk based approaches to groundwater management and use

Good governance is essential for the long-term sustainability of Australia’s groundwater and confidence in investment. Cost-effective water planning takes a risk-based approach and also involves a balance between competing economic, social and environmental interests.

One aspect of this is to ensure that those who use the resource have clarity in respect to the legal nature of water entitlements. The processes by which access to groundwater is enabled, the legal status of that access, and the rules and costs that apply to its extraction need to be transparent and accountable.

COAG and NWI water reforms (COAG, 2010) have resulted in jurisdictions moving towards agreed principles for water management, including processes and practices to achieve sustainability through legally enforceable water management plans.

However, inconsistencies in practices still persist. Further work is needed to better understand the nature of the differences in state and territories’ approaches to groundwater management, and to gain agreement on harmonised approaches to groundwater policy and practices where appropriate.

Key areas where harmonisation and the use of risk-based approaches would deliver the greatest benefit to investment confidence include:

  • understanding the public benefits and environmental, social and economic values and comparisons of these in decision-making
  • the role of offsets in resolving resource management decisions
  • trade-off of short-term and long-term values (eg mining versus agriculture)
  • the approach to using groundwater that is not currently replenished (non-renewable resources), considering the needs of future generations.

The NWI Policy Guidelines for Water Planning and Management (COAG, 2010) stated that stakeholders should be able to identify and understand how environmental and other public benefits and social and economic objectives are identified. This should involve actively and transparently considering and settling the trade-offs between competing outcomes for water systems, using best available science, social and economic analysis and community input, and addressing impacts on affected water entitlement holders and communities.

The NWI Policy Guidelines for Water Planning and Management

Mining and other extractive industries provide for a high economic value from water use and provide regional economies with a diversified income base. Clause 34 of the NWI allows for special water management arrangements to be put in place for mining and other extractive industry activities where needed. However, the NWI does not preclude parties from including these industries in their water planning regimes. Mining activities should benefit from clearly specified water access entitlements, as this would provide a greater level of water security and therefore investment certainty.

Mining and other extractive industries can have a large, localised, incidental water use or impact associated with ore production or hydrocarbon extraction. Consequently, it is important that consideration is given to current and future water resource requirements of such operations to ensure that water (and natural resource) allocation problems are handled in an integrated and strategic way to minimise any potential (or perceived) third party impacts.

Principles

  • Integrating mining into water planning processes. Water resource impacts of mining and other extractive industries should be brought into the water planning process to ensure an integrated approach. However, in doing this there will be a need to recognise relevant legislative requirements.
  • The cumulative effect of all water use by mining and other extractive industries, including energy generation, should be authorised and accounted for in water budgets and managed under regulatory arrangements that are part of, or consistent with, water plans. Much of this information is provided under existing legislative arrangements and should be utilised in the water planning framework.
  • Minimising the impact on aquifers. Regulation of mining and other extractive industries should ensure that the impacts of activities outside the water entitlement system that could interfere with the integrity (and quality) of an aquifer (eg drilling or excavation) are understood prior to approval.
  • Protection of existing rights. Regulation of mining and other extractive industries should ensure that the legitimate water access rights of existing water users are protected.
  • The water resource impacts of mining and other extractive industries need to be managed. Consideration needs to be given to:
    • the cumulative effect of all operations
    • the protection of water quantity and quality (including beyond the life of the activity)
    • what type of monitoring and evaluation is required
    • whether, and what form of, offsets are required to minimise the impact of the operations, for example in areas where there is no water market
    • obtaining the future use requirements of these industries through engagement with state mineral resource departments and companies.
  • The ability of mining operations to intercept overland flows should be similar to that of other landholders. Mining operations also need to ensure that
    any water leaving the operation is of suitable quality.
  • All water sources need to be considered. Mining companies often recycle and reuse water within their operations and whenever possible, all water sources should be considered. Reuse and recycling practices should be promoted and fostered as leading practice, with a focus on maintaining operational supply and external water resource outcomes. High-quality water should be used only where it is essential or where no other suitable source is available. This should also include the use of surplus ‘onsite’ water where possible noting that in some areas (eg tropical regions) this may be impracticable.

Considerations

  • Water planning and management processes have been designed for other uses. Current water planning and management processes have been established primarily to manage irrigation and urban use, including industrial uses. In light of this, the current entitlement system in some jurisdictions may not be appropriate for the mining industry. The mining industry is a consumptive user of water, and also takes water that enters a mine as a result of dewatering the incidental aquifers. In either case, this water should be accounted for and licenced either through an existing licence category of an appropriate volume and appropriate security or through development of a special type of entitlement, as provided for under Clause 34 of the NWI. This entitlement would allow the mining operation to transfer the incidental water entering its operation to other users by a private contractual arrangement. This water can either be issued to the mining operation upon application or, in high competition water sources, sourced from the water market. The mining industry should become part of the wider planning process. Where geographically feasible the industry may become part of the water market and could aid in the supply of water for urban or agricultural use.
  • Changes to the water regime. Where mining results in changes to the water regime that impact on environmental water needs, arrangements to maintain environmental assets over an appropriate time frame are needed. In some cases, springs impacted by dewatering may need to be supplemented; in other cases, release of excess water needs to be managed to limit inundation or water quality impacts to riparian zones or receiving wetlands. Where appropriate, a mining operation could be granted an ‘offset entitlement’. In areas where it is impractical to supply water to other users or where the water quality is unsuitable, the mining operation could purchase, eg high security water entitlement(s) that would be held for use as environmental flows.
  • Application of future water entitlements to mining and other extractive industries. Mining operations are usually long-term ventures, and the water impacts of mining operations are often unaccounted forunder legislative arrangements in regards to water, eg state water legislation. Applying a requirement for entitlements due to ongoing mine expansion may be appropriate in some circumstances to ensure all water extracted from a water source is fully accounted for. In some instances, exemptions may apply. For example, these may be based on the size of the operation, the purpose of the operation, or the period of the operation (with potential differences occurring between short- and long-term operations). Nevertheless, a baseline of water extraction should be established. Entitlements should then be required for any additional extraction, subject to reasonable exemptions. Finally, exemptions could be phased out over the life of a water resource plan, in a way that gives industry time to fully account for and acquire their water without inadvertently affecting the water market over a shorter term.Note that the application of these issues to coal seam gas extraction may require further, more specific guidance.
  • Measuring water use. Mining operations are currently able to measure most of the water used or extracted as part of their activities. These measurements need to be extended so that water use or extraction in all parts of the operation is accounted for. Management plans need to be regularly reviewed as information of water use from mining and other extractive industries operations becomes available.
  • Reporting on water use. Extractive industries are usually required to report water use to the appropriate agencies as per legislative requirements. Integration with other planning and approval frameworks is required to ensure that measured (or estimated) water use information is incorporated in the planning and management process. Where insufficient information is being supplied, compliance and enforcement provisions may be required in water legislation to give powers to officers to verify mining water use reporting. Management plans need to be regularly reviewed as the production from the mine increases to help ensure that there are no unintended consequences for other users or the environment.

Case Study: Managing intercepted groundwater by mining as a product in the Pilbara

Background and geographic area

There are multiple localised pockets of fresh water that have accumulated in the fractured rocks of the Pilbara region in Western Australia. The region is mineral rich: it has immense reserves of iron ore, many of which lie below the groundwater table. To enable access to the ore deposits, large volumes of water, often of excellent quality, must be moved. As the majority of mine sites have significant excess water there is a limited market, and as the sites are generally remote, the cost of transporting it to areas of demand is prohibitive at present.

Objective

Management aims to minimise risks to the environment and other users and to support a culture of effective water management within the industry, regardless of location. Management is effected through a water licence, which is the regulatory instrument that entitles the holder to take the water subject to conditions.

Application of a risk–based approach

Excess water at remote locations is managed against a hierarchy of objectives. The priority is to maintain groundwater dependent ecosystems that are affected by the drawdown or release of groundwater. For example, water is piped to mimic natural springs, and excess water is released downstream of the groundwater dependent system to prevent inundation.

Excess water is used onsite as far as possible, though consumptive use is generally only a small proportion of the total volume. Water is used to manage dust, and importantly, to limit dust from ore transport. This also includes conditioning of the ore to prevent dust during delivery to port operations. Often water efficiency isn’t a key goal at these sites, as onsite use of water can
offset the potential impacts of disposing of excess water.

Where feasible, once onsite needs are met, water is transported to nearby mining camps, towns or neighbouring water-short mines and used to supplement supplies.

Should there be no consumptive use options, then the possibility of injection back into the aquifer at designated sites must be assessed. If this is not an option, then controlled release to the environment is assessed.

In an environment of long, hot, dry periods punctuated by extreme floods, sustained inundation caused by release of excess water does cause localised changes. Initially, riparian vegetation flourishes along the drainage line from the point of release to where water dissipates into alluvial deposits along the creek bed. After several years of inundation, tree deaths can occur in this zone of inundation. Where there are no other viable options and long-term harm is localised and not greater than the natural variation, managed surface discharge is considered acceptable.

This water management approach seeks to align with other government project approvals to ensure a consistent approach to managing excess water from mining operations that operate below the groundwater table. In less remote sites, initiatives to enhance the economic potential of this water are currently
being explored.

References

Australian and state and territory governments, 2017. National Groundwater Strategic Framework [online]. Available from: http://agriculture.gov.au/water/policy/nwi/national-groundwater.

Council of Australian Governments, 2010. National Water Initiative Policy Guidelines for Water Planning and Management 2010 [online]. Available from: http://webarchive.nla.gov.au/gov/20160105002803/http://www.coag.gov.au/node/461.

Minerals Council of Australia (MCA), 2012. Water Policy [online]. Available from: www.minerals.org.au/file_upload/files/resources/MCA_Water_Policy_2012c.pdf.

Australian Government Productivity Commission, 2017. National Water Reform: Productivity Commission Issues Paper [online]. Available from: www.pc.gov.au/inquiries/current/water-reform/issues/water-reform-issues.pdf.

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