UK select committee highlights importance of reliable water supply to mining industry

By Laura Syrett, James Sean Dickson
Published: Tuesday, 21 October 2014

Access to water is a basic human right. It is also a basic requirement for mining. The conflict between these competing demands was discussed by the UK’s House of Commons Extractive Industries Select Committee, which considered how the situation could be managed through sound regulation and procedure, particularly in dry regions of the world like Chile and in areas where fracking is causing concern to communities.

The UK’s House of Commons Extractive Industries Sector Select Committee panel spoke on Monday of the importance of water security to mining, saying that the extractive industry’s use of this limited resource needs to be balanced with direct human needs.

Water access is crucial to both communities and mining companies.
These conflicting demands need to be managed in order to avoid
human rights abuses and project delays (source: Julien Harnels).
Members of the panel, which convened in London yesterday, noted how water access was more than a technical issue, and that how a mining company approaches the potential challenges of water supply can significantly alter its social licence to operate, as well as its economic viability.

"Water security is a growing risk for mining companies as environmental regulations become more stringent," Elizabeth Adey, principal community and environmental specialist at mining consultancy, Wardell Armstrong, said.

She also pointed out the ratings agency Moody’s, last year named water scarcity as one of the key factors that could negatively affect a mining company’s credit rating.

Access to water was acknowledged by all panel members to be a human right, and speakers highlighted the importance of appropriate usage in countries with arid climates. The panel said how, ultimately, the lack of a social licence to operate through poor community engagement can result in delays, or in the some cases, project cancellations.

"Problems often occur with junior miners moving into mining from exploration," James McNally, technical director at Wardell Armstrong told IM. "They get locked into wrangles with local communities as the demands of different groups increase," he added.

The production of shale gas via hydraulic fracturing (fracking) is one extractive industry at the heart of water usage concerns, given the large input required. Many countries such as Algeria, despite their large theoretical resources, are unlikely to be able to develop their shale gas potential without significant changes to water use policy.

Managing the issue

An iterative management approach was encouraged by Ken Haddow, a former 28-year Rio Tinto employee, now working as an independent consultant on corporate social responsibility (CSR), who said that compliance with guidance on human rights cannot just be procedural, and noted the delaying effect on projects that fall short of the required level of community engagement.

"Almost all mining companies will have a CSR section on their website – the problem lies in delivery," he said. "CSR is not integral enough to the execution of mine development plans."

He further noted that this approach requires active consideration and criticism of each development and new piece of information.

A 2013 amendment to the 2006 UK Companies Act requires that quoted companies report on their social, community and human rights issues "to the extent necessary for an understanding of the development, performance or position of the company’s business".

The obligation applies throughout a company’s supply chain – a step regarded by all of the panel to be a positive move.

Harrison Mitchell, director of consultancy and auditing firm, RCS Global, considered that this legislative push is encouraging companies to consider their supply chains outside of the four main conflict minerals – gold, tantalum, tin and tungsten – outlined by the US Dodd Frank Law.

"I think we will see ripple effects spreading out to affect other minerals," Mitchell said, especially given the developing trend towards greater public scrutiny and consumer engagement with the ethics of raw material sourcing.

Chile’s Minister of Mines, Aurora Williams Baussa, noted how water use in mining/unit of ore processed had fallen in her country, a direct result of investment in metallurgical processing research.

According to calculations by Baussa’s office, Chile has the world’s largest lithium reserves and is the second largest producer of this mineral, as well as hosting the world’s second largest boron deposits, of which it is the third largest producer and the sixth largest potash reserves, of which it is the eight largest miner.

Water is a significant concern for Chilean miners, given that the Atacama Desert, in which many of the country’s lithium, iodine and other mines operate, is the driest place on earth. Water must therefore be supplied by pipe from the sea, following purification, and this involves pumping it up to heights often over 2,000 metres above sea level.

In Chile, 74% of water used in mining projects is now recycled, Baussa explained. Given that this is technically possible elsewhere, its usage was encouraged by the panel.

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