Climate change, ESG obligations will make water issues more challenging for miners

12th March 2021 By: Nadine James - Features Deputy Editor

“Water isn’t just a technical issue, it is very much a stakeholder issue”, ERM partner Caroline Vail stated during a panel hosted by international law firm Fasken on March 11.

The panel, ‘Water: A Critical Resource and Human Right – Mitigating Water Risk in Mining’, discussed the fact that reporting on water management within the extractive industries has to become more data-driven and transparent for mining companies to maintain both the legal and social licence to operate.

Vail explained that, while “water is and should be a fundamental and universal human right”, access is by no means equitable, but that if mining companies manage the resource  “properly”, it could result in a “win-win-win” scenario for the operators, the affected communities and society as a whole.

She noted that stakeholder concerns and expectations carry significantly more weight than in previous years. “About half of all capital projects are abandoned and about half of those are abandoned due solely to stakeholder issues,”  she commented, adding that investor expectations for mining companies are that they align with the global sustainable development goals, with initiative such as the International Council of Mining and Metallurgy’s (ICMM’s) Responsible Mining Initiative and that they behave in a socially responsible manner in terms of human rights and water.

“Water, as a challenge is only going to get harder. With Covid-19, climate change, and enhanced scrutiny on operators, if anything water management is becoming more significant.”

She stressed that companies should deal with issues pertaining to water in a participatory and transparent way, building trust within the mine-affected communities because “perceived impacts are as important as actual impacts, and where there is a lack of transparency and information, misinformation will fill that gap”.

Vail emphasised the importance of gathering and disseminating credible data as well as effective communication with communities. She also noted that companies should consider how mine activities and broader societal change may affect how socially acceptable the mine’s water consumption will be.

She cited population growth and other stakeholder requirements related to specific catchments as factors that may affect perception around a mine’s consumption. “Stakeholder requirements for a specific catchment will change owing to population growth and other factors, and companies must understand that upfront.”

Further, “just because it’s legal doesn’t mean that it’s going to be socially acceptable”, she said, noting that just because mining companies have water permits and rights enabling water withdrawal and/or diversion, societal and environmental changes within a region may result in instances where withdrawal of large quantities is legally permissible, but socially unacceptable.  As such, mines must “stay on top of changes” that occur within the catchment area so that they can adapt their consumption and/or processes to maintain community relations and the social licence to operate.

She also noted that mining companies must change their mindsets, incorporating considerations around water-related challenges from the off, rather than “shoehorning” a solution into the mine plan, as something of an afterthought.

Anglo American water sustainability principal Dr Henrietta Salter discussed the diversified major’s approach to mining, which focused on acting appropriately within the “catchment-specific context”.

She noted that the group had to work across seven different jurisdictions, each with their own social context. This is further complicated by the fact that 75% of its operations are in water scarce or stressed areas.

Salter commented that while climate change is a risk that is globally recognised, “water doesn’t quite have that voice”, despite the fact that access and availability of potable water sources are inextricably linked to climate. She suggested that a reason for the comparative lack of awareness around water-related risks was the fact that water is a “local” issue, first and foremost. “It’s catchment specific, community specific, household specific.”

She noted that Anglo, in light of self-interest and good practice, has prioritised the compilation and analysis of “very good data” to ensure that the operations at the 38 sites globally “understand the flow of the water from when we bring it into the operation, how it is used through to the quality and quantity of the operation’s discharge.”

Salter said that Anglo considers the standards developed by the ICMM and Global Reporting Initiative, as “basic’, in the sense that Anglo is looking at multidimensional target setting in terms of operational risks and catchment risk (as well as the associated political and environmental considerations).

She added that the company has developed comprehensive, data-driven, evidenced-based, stewardship plans to encourage and maintain its social licence to operate in each of the seven jurisdictions. She noted that Anglo is also incorporating implications for biodiversity into its data acquisition and reporting, as operation-based standards around efficiency and withdrawal do not account for “sensitivity to biodiversity or the social impacts to climate change and water availability”.

“Water is cheap compared to energy; it’s not about the cost, but about driving the right behaviours, determining the social and environmental value of water, and reflecting the complexity of the social, political and ecological context of the sites. We continue to develop our ambition to reduce the water footprint while creating value for our stakeholders.”

During the panel, Salter noted South Africa has a very mature mining industry, and that water is a national resource and so water licencing inherently takes into account equitable use, “the ecological reserve is enshrined in law” and while there are “hiccups with implementation”, there is a “solid ground rule” that ensures that,  “everyone knows exactly what they are required to do.”

Fasken partner Francois Joubert noted that despite the comparative ambition of the National Water Act, there had been discussion over the last ten years to replace or amend the Act to ensure greater alignment with and consideration for communities. Further he said that he had observed “a crackdown on enforcement, with more inspections  from government agencies. Companies are also published to report on actual water stewardship, and community engagement in that regard. He noted that mining companies that have “offsets” and initiatives directly linked to the affected communities are more likely to maintain their licence to operate, stressing that “we’ve seen a drive in environmental and water-related directives, with higher and higher fines” for companies that fail to comply with legislation.

Meanwhile, Fasken partner and corporate social responsibility leader Pierre-Olivier Charlebois noted that Quebec was one of the the latest regions to grant “legal personhood” to a river.

The Magpie River in Côte-Nord, was granted legal personhood by the local municipality of Minganie and the Innu Council of Ekuanitshit earlier this month. He noted that this was part of a long-term trend starting in 2008 when Ecuador became the first country to enshrine the legal rights of nature in its constitution. Bolivia passed a similar law in 2011, while New Zealand in 2017 became the first country to grant a specific river legal rights, followed by the Indian state of Uttarakhand. Bangladesh granted rights to all of its rivers in 2019.

Charlebois explained that the Quebec resolution provides that the river has its own rights, such as the right to flow, the right to maintain its integrity and possibly the right to sue. However he stressed that it is unclear how this decision could affect the mining industry, as legal personhood of the environment “doesn’t exist in law in Canada”,  and in many other jurisdictions besides.

He and Joubert expect that, in light of this trend, stipulations related to water rights or licences will become stricter, with harsher punishments for infringement as well as greater emphasis on enforcement.  Charlebois suggested that, in light of climate change and the potential affects on water sources,, many jurisdictions may limit the timeframes of water permits/rights, and impose harsher requirements when companies apply for renewals, based on independent analysis of the catchment in question.

He noted that the prospect of climate change “makes it difficult to forecast both future consumption and the future availability of water for existing users”, adding that the impact of climate change would likely fall “mostly on junior water users”, who would have to find ways to adapt, either by making arrangement to rent “more senior water rights” or by  ceasing or reducing their water using activities.