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.
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 access is crucial to both communities and
These conflicting demands need to be managed in order to
human rights abuses and project delays (source:
"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
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
"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
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.
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
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
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
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
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.