June 2018

Water sustainability in the resources sector

  • By Terence Jeyaretnam Partner, Climate Change and Sustainability, EY

Water is a critical input for the mining industry. Measuring, managing and reporting water use in the sector has always presented complex challenges. This issue is becoming more important than ever before.

The world is surrounded by water, but did you know that only 2.5 per cent of that is freshwater, two-thirds of which is frozen? Furthermore, two-thirds of the water we do use goes towards growing food. And a staggering 46 per cent of people around the world do not have water piped to their homes.

As stated by CSIRO, ‘mining, manufacturing, and other industries use about 20 per cent of all water consumed in Australia. They use water in cities and in some water-stretched rural systems, placing pressure on them to use water more efficiently’ (CSIRO, 2018). Mining needs water. Water is necessary to mill and extract minerals and suppress dust, and is typically obtained from surface or ground water systems. Water is then used to process ore and slurry tailings. Therefore, managing water quality of both used water, as well as mine site run-off, becomes crucial.

Management of and impact on aquifers from coal seam gas extraction is a complex area that has communities, industry and regulators concerned and trying to demystify and understand the potential future impacts from operations. This will continue to be an area of debate and disagreement.

Water management and investor disclosure

The value of water can be measured in economic, environmental or cultural contexts. Regulatory approvals, community concerns, native titles and cultural values, investor disclosures and costs tend to be among the drivers for water management and reporting in mining. Sustainability reporting on water has increased in quality over the past two decades. This reporting typically uses the Global Reporting Initiative and focuses on water use and volumes withdrawn, the impact on the sources of water, and recycling and reuse of this water. Some mining processes use very large volumes of water. For example, gold mining uses over 750 000 litres of water to produce a kilogram of gold (Mudd, 2007).

Recently, the International Council on Mining and Metals (ICMM) released its new water stewardship position statement that aims to improve water security. The position statement is a binding document for ICMM members, which requires them to publicly disclose the company’s approach to water stewardship; allocate clear responsibilities and accountabilities for water; integrate water considerations in business planning from company strategies, life of assets to investment planning; and publicly report company water performance, material risks, opportunities and management. ICMM has also published a practical guide to consistent water reporting, which includes a new minimum disclosure standard for external water reporting using consistent and standardised metrics.

The Carbon Disclosure Project requires some large listed companies to report against the Water Disclosure Project on the risks presented by lack of water availability.

The Alliance for Water Stewardship (AWS) is the global umbrella organisation for water stewardship, with a network of regional partners assisting implementation at a local level. Water Stewardship Australia (WSA) is the regional partner for AWS in the Asia-Pacific. The AWS Standard is built around six steps, in which proponents undertake the following:

  • commit to water stewardship
  • gather and understand water-related data
  • create a water stewardship plan
  • implement their plan
  • evaluate performance
  • communicate progress with stakeholders.

It is early days for the AWS Standard in Australia, with only agriculture, farming and textile industries having utilised it. A mining case study is yet to be published.

Investors are increasingly focused on environmental impacts. According to investor rating agency Moody’s, environmental factors, such as water scarcity, could adversely affect the ratings of global mining companies if they fail to proactively manage the accompanying operational and political risks to their businesses. Moody’s has downgraded the rating of some South African mines on the basis of water availability, as it is seen as increasing the threat of climate risk and related financial losses.

Environmental change – too much and too little water

Notwithstanding the increased stresses on our water resources from a community and industrial point of view, climate change is introducing new risks and threats to water availability and water management.

Climate change in Australia is projected to lead to more frequent and severe floods and droughts, with radically changing intensities. For example, rain over land is projected to become less frequent but more intense. Droughts cause competition between water users in rural areas such as farmers, miners and community. Flooding can cause property damage and inundation leading to production losses.

Intense rainfall events, such as those experienced in the Bowen Basin coal mining region of Queensland in 2011 and again in 2017, have led to extensive flooding of mine pits, damage to transportation routes, on-going disruption to production and export of coal, reduced state royalties and community anger over the effects on downstream water quality caused when pit water was released into streams.

Guidance has been published by the National Climate Change Adaptation Research Facility, including Climate change adaptation for Australian minerals industry professionals. The CSIRO has also developed and trialled a tool known as CRATER (Climate Related Adaptation from Terrain Evaluation Results), which can identify flooding vulnerabilities using detailed geographic information system data to support decision making. Tools and guidance will continue to become more sophisticated as well as focus on financial costs, losses and insurance.

In light of the importance of water to mining operations, and the complexity of meeting the high standards set by stakeholders, continued focus on management of water use and quality will be essential to the sustainability of the industry.

The views expressed in this article are the views of the author, not Ernst & Young. This article provides general information, does not constitute advice and should not be relied on as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Liability limited by a scheme approved under Professional Standards Legislation.

References

CSIRO, 2018. ‘Chapter 10: Water in mining and industry’ [online]. Available from: www.csiro.au/en/Research/Environment/Water/Water-Book/Water-in-mining-and-industry.

Mudd G, 2007. Resource Consumption Intensity and the Sustainability of Gold Mining. Second International Conference on Sustainability Engineering and Science, Auckland, New Zealand.

Image: Vladimir Lapshin/Shutterstock.com.

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