China Water Risk (CWR) talks to Anne-Marie Fleury of the International Commission of Mining and Metal’s (ICMM) about whether the mining industry is dealing with the impending water crisis, and whether it could be blindsided. Anne-Marie is Director of the Commission’s Environment and Climate Change work programme.
ICMM was founded in 2001 to improve sustainable development in the mining and metals industry. It brings together 22 mining and metals companies as well as 35 national and regional mining associations and global commodity associations to address core sustainable development challenges.
CWR: Tom Burke special advisor to Rio Tinto said in an interview with Ethical Corporation that “I see water security as being a major issue … I think people are going to be blindsided by it.” Would you agree with his assessment?
Anne-Marie:Yes, to a certain extent I would. However, a lot of mining operations that take place in areas of water scarcity are fully aware of the risks around water security. The real crunch comes from how those risks are managed. The point about being blind-sided is something that comes up when the scarcity of water isn’t necessarily the result of a mines own water use, but from the cumulative effects of all the water users within a catchment, which includes communities, other industries etc. It is what we would typically describe as “what occurs outside the fence”. This is where there is the potential to being blindsided.
CWR: Are there things that the mining sector is doing or could be doing to manage this wider watershed risk?
Anne-Marie: We see a lot of examples of operations looking to manage the risk that occurs outside of the fence, but I wouldn’t necessarily say its standard practice across the industry though. It’s challenging, as it touches on community relations, on relationships with local and national government, and is something that requires a lot of time and effort to build trust.
CWR: How high does ICMM rank water as an issue for the future of the mining industry?
“Water is one of the top ranking issues that comes up in our regular issues analysis which assesses issues from media coverage and NGO campaigns related to mining.”
Anne-Marie: Quite highly. Water is one of the top ranking issues that comes up in our regular issues analysis which assesses issues from media coverage and NGO campaigns related to mining. In this analysis water comes up consistently quite highly, though it usually incorporates a basket of other issues.
There are many aspects that get lumped together with water. The one that we see coming up most often relates to pollution, water quality and discharges. However, there is also significant concern around water scarcity, competition for limited resources and the resulting community conflict related to either of these two issues.
There is also the question of how regulation and licensing requirements are changing and the fact that in many jurisdictions water prices are quite low. If the response to these water risks is the development of regulation that is poorly coordinated and complex, then this can be a big risk to business. This underscores the importance of companies engaging with governments on the question of regulation so there is sufficient regulation to prevent bad practices and drive improvements, but also to provide a framework that is coherent and works.
Another concern that comes up quite regularly is climate change and the impacts from extreme weather. Many companies have already felt the impact of these risks and have them on their radar.
Another source of information is the ICMM members’ annual sustainability reports. Members commit to a sustainable development framework with three elements: 1) a set of principles; 2) a reporting framework, and 3) third party, independent assurance of the report. Within the annual reports that our members submit, a materiality assessment is included of what the top material issues are to their business, and water consistently comes out on top there as well.
CWR: Within that “basket” of water issues, does the social licence to operate component of water risk come out more highly than physical operational risks associated with water scarcity?
Anne-Marie: Yes, the social licence to operate aspect of water is a big part of the risk. Water will often be the focal point for communities when there are grievances on many different issues.
The question of whether companies will have access to water in order to operate is a big issue in some places, but not across the board. When it is an issue, technical solutions to securing more access are not necessarily the answer. The challenges arise around the political and community buy-in and the question of a company’s “social licence” to access and continue accessing water.
CWR: Within the Life-cycle of the mine, where do you see water risk being most prevalent?
Anne-Marie: There are water risks throughout the lifecycle of a mine. Typically water needs are very high during construction. Although this is a comparatively short phase it can set the tone for community related water risks. Risks will often materialise during the much longer operational phase of the mine, which can range from 20-50 years in length.
The post closure phase is also significant, as it is only after closure that the long-term impacts of mining on water can be assessed. Risks around acid rock drainage, for example, have the potential to leave behind a long lasting legacy for companies, communities, and governments. There are many examples of acid rock drainage legacies from previous operations, some going back as far as Roman times.
CWR: What is ICMM doing to help its members address these risks?
“ICMM brings together its members in a water working group. Over the last few years, we have focused on sharing best practice.”
Anne-Marie: ICMM brings together its members in a water working group. Over the last few years, we have focused on sharing best practice. In 2012 we published a set of case studies that illustrate some of the innovative work that our members are doing on water. Much of the work we have carried out in the recent past has been internal and focused on water reporting. This year the water working group is undertaking an extensive strategic analysis of water issues for the sector, which includes stakeholder consultation. We will be developing a new work-plan accordingly.
CWR: On the subject of reporting consistency, in 2010 the World Resources Institute (WRI) came out with the Mining the Gap report. This report, whilst highlighting that as a sector you were ahead of the curve when it came to water disclosure, also made the point that there was considerable regional variability in the sector especially when it came to the developing market, with the level of disclosure from Indian and Chinese companies being very low. Considering their equity share of the market is this a bit of a concern? What has ICMM been doing to close that gap between the developed and emerging market companies?
Anne-Marie: ICMM is a members association with 22 company members and 35 association members. This includes many of the biggest national and commodity associations. Although association membership to ICMM does not entail commitments, it helps get alignment on sustainability issues across the sector and also means that ICMM’s influence and reach can be quite broad.
ICMM has one Chinese corporate member, MMG, who adhere to ICMM reporting requirements including water indicators. The Federation of Indian Mineral Industries is an association member, but we do not have any Chinese association members at present.
However, ICMM undertakes a fair bit of outreach and engagement in China. In the last few years we have presented at both the China and Asia Mining Conferences, so we do have some presence in the region. Also a number of our documents are freely available in Simplified Chinese.
CWR: The Mining the Gap report also highlighted a few shortcomings when it comes to water disclosure. One of the main ones being that there is no requirement for a local context when it comes to water usage data. Is this something that is currently addressed within your reporting guidelines or something that you plan to address in the future?
“One of the aspects of water reporting that needs to be appreciated is that global volumetric data can lack meaning it is the local context provides that meaning.”
Anne-Marie: This is a very important point. I think this is something that traditionally hasn’t been covered thoroughly in any of the water specific reporting frameworks, but this is something that needs to be developed further, as it is fundamentally important to look at local context. One of the aspects of water reporting that needs to be appreciated is that global volumetric data can lack meaning it is the local context provides that meaning. The water footprint cannot be treated in the same way as the carbon footprint.
A developed framework that exists around water accounting and reporting for the mining sector is the one developed by the Minerals Council of Australia (MCA). There are several requirements within that tool to look at the local context, I see that as something that will develop further, both within the MCA framework, as well as other frameworks such as the CDP Water Reporting.
The MCA tool also touches on the aspect of water quality data, which is important to the mining sector, not just in terms of output but also in terms of water intake. Mining operations can often use degraded water for water intake which needs to be taken into account for a fuller picture of water impacts. The MCA framework includes a simple categorization of water quality ranging from ‘fit for human consumption’ to ‘unsuitable for most purposes’.
CWR: The Mining the Gap report also highlighted inconsistencies in reporting from company to company, making it difficult for investors to compare performance and risk exposure across the sector. Is there anything that ICMM has been doing to try and standardize reporting across the sector?
Anne-Marie: The MCA framework was created in response to this inconsistency in reporting. It focuses on water footprint, which is obviously a large component of your risk exposure, and therefore of interest to investors.
However, there is another side to water disclosure and management of risks. This includes the influence of policies, management structures, targets, etc. These elements help give an indication of the level of maturity around risk management. The sector specific indicators we developed in partnership with the Global Reporting Initiative (GRI) focus on these aspects of water management.
Overall, there has been some advancement in increasing consistency in reporting. Australia is a good example. However, a big challenge in getting more consistency relates to local regulatory drivers for company reporting. Regulation can create incentives or disincentives for reporting in certain ways. The CDP water disclosure questionnaire is helping in that regard, and as it develops, will help push that consistency forward.
CWR: IIRC have just launched their first consultation document on their Integrated Reporting template. Is this a method of reporting that ICMM will be promoting to their members, and will it help address these reporting inconsistencies?
Anne-Marie: We have been tracking this closely and it is an interesting development in reporting. However, it is very much in its infancy, so it is difficult to comment on how long it may take before it becomes mainstream, and it is also hard to say whether ICMM would be one of the early adopters of it. As to the question of whether it will drive better consistency on water reporting, I am not sure it will. There is a heavy focus on materiality and it doesn’t seem that it will have a series of standardized indicators. So without these standard indicators, it is not immediately apparent how it will help address the consistency question.
CWR: Do you see any opportunities around water for the mining sector going forward?
“Water issues can be used to drive partnerships with local communities, NGO’s, municipalities, water authorities, and governments that can be beneficial on many fronts.”
Anne-Marie: Absolutely. Water issues can be used to drive partnerships with local communities, NGO’s, municipalities, water authorities, and governments that can be beneficial on many fronts. There are more and more examples where companies have looked at the water needs of the wider community in an area, and have been able to address them in conjunction with meeting their own water needs. As water is a shared resource, you need to look at how you can address your own water security at the same time as maintaining or improving water security for others. It’s about how you plan at a catchment level in a way that brings benefits to others and not just yourself. A good case study in South Africa is the eMalahleni water treatment plant where Anglo American, over the course of several years built up partnerships with water authorities and municipalities to treat acid rock drainage legacies from around the region for local water needs.
There are opportunities to create partnerships, strengthen your own water security, leave behind positive legacies for local communities, and to use this process to help build trust and transparency.
CWR: Have you started to see a trend in your members looking at the opportunities that payment for watershed services schemes or eco-compensation schemes offer them for covering their costs, or providing an alternative revenue source from the remediation of their old operations?
Anne-Marie: We are starting to see some examples of this coming through, however they are still limited. These kinds of opportunities are not always possible for mining operations, but the industry is increasingly seeking them out. I think we will see more of this happening in the future.
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