VANCOUVER (miningweekly.com) – New analysis by the research arm of the Fitch Group, BMI, forecasts water scarcity and contamination in Latin America will drive increasingly stringent environmental regulations in the region over the coming years.
While increasing the costs for miners and delaying certain projects, the focus on water usage in the mining industry will exert social pressure on firms to increase investment in reducing water usage and protecting community water sources.
The usage and treatment of water in the mining industry will come under increasing scrutiny in Latin America, as droughts or arid environments in key regions heighten tension between miners and local communities and previous incidents lead to more regulations.
In Chile, the environmental regulatory body has been more aggressively pursuing and fining water mismanagement in the mining sector, levelling charges against Antofagasta Minerals' Los Pelambres copper mine and effectively suspending Kinross Gold's Maricunga gold mine, in 2016.
In Argentina, Barrick Gold paid a $9.8-million fine for a cyanide spill at the Veladero gold mine in 2016, agreeing to increase water monitoring at the operation in response. Last month, a provincial government suspended operations at the mine owing to a pipeline issue and in April Barrick announced the sale of a 50% stake in the Veladero mine, to Chinese firm Shangdong Gold Group for $960-million.
In Brazil, following the 2015 tailings dam burst at the Samarco iron-ore mine, which killed nearly 20 people and polluted hundreds of kilometres of rivers, parent firms Vale and BHP Billiton face a $50-billion lawsuit for damages. In March, a Brazilian judge suspended the lawsuit as the firms negotiate with prosecutors.
BMI highlighted Chile, Argentina and countries in Central America as particularly likely to enforce stricter water regulations on the back of scarcity, contamination or a combination of both issues.
While Chile boasts above-average water resources per capita, according to the latest United Nations (UN) water data from 2012, the country's mining industry is concentrated in the Atacama desert, where freshwater scarcity is much more acute.
Argentina, meanwhile, registers only 21 325 m3 of yearly renewable water resource per capita, compared to a regional average of 53 004 m3 per capita, according to the UN.
Meanwhile, improving gold prices will incentivise informal gold miners, who generally do not abide by environmental regulations, to ramp up output.
BMI suggests that depending on the nature of the mining industry in each country, governments will respond differently to the task of regulating mining and protecting water resources.
For instance, in Chile, desalination plants will be increasingly popular, if not mandated, as freshwater scarcity in the Atacama desert pushes miners to invest in alternative water sources.
Chile's copper commission, Cochilco, estimates that sea water will account for half of the water used in copper mining by 2026, compared with about 16% in 2016. In Peru, President Pedro Pablo Kuczynski’s administration will take an inclusive approach to help small-scale gold miners comply with regulations through reducing red tape and offering incentives such as banking services.
In April, Argentina's government announced plans to invest $44-billion in water infrastructure, including a sewerage system and treatment plant.
Further, BMI reports that some large mining companies will take the initiative to self-regulate and increase water monitoring, as evidenced by the growing industry norm of providing yearly sustainability reports.
For instance, Vale emphasises its transition to dry-processing in iron-ore operations, from traditional wet processing, which will reduce waste and reliance on tailings dams. The firm's S11D mine, which came on line in in the fourth quarter last year, will use dry-processing, contributing to a 93% reduction in water consumption.
In December 2016, BHP Billiton and Rio Tinto completed mechanical work on the $3.4-billion water desalination facility at the Escondida copper mine. Further, in January, major State-owned miner Codelco announced plans to seek partners to develop a desalination plant in Antofagasta.