Assessing Water-Related Risks in the Mining Sector

As populations, economies and global per capita consumption continue to grow, so does the need for raw materials. Mining activity will need to increase to meet these growing demands. At the same time, water availability and poor water quality are increasingly emerging as global risks for many industries, especially in arid and densely populated regions, and the mining sector is no exception. Because of the long-term and potentially irreversible impacts of mineral extraction on land and water resources, the mining sector faces increasing scrutiny from citizens, local and national governments, and civil society organizations.

As part of a 3-year grant from Norges Bank Investment Management (NBIM), CCSI worked with the Columbia Water Center to develop and benchmark a modeling platform for quantitatively assessing the environmental risks associated with gold and copper mining projects and their resulting financial implications.

For this project, CCSI conducted a review of the legal and regulatory frameworks governing the use and discharge of water by the copper and gold mining sectors in a selected sample of resource rich jurisdictions. An overview of the findings was published in the Resources Policy Journal. Interviews of mining company representatives working on water management issues complement the legal review to highlight the perceived regulatory risk by investors of the analyzed jurisdictions. The countries assessed include Chile, China, Peru, Philippines, South Africa, Australia (Western Australia), United States (Federal, Alaska, Arizona,New Mexico,Nevada), and Canada (British Columbia). The comparative review and profiles are intended as a useful resource for policy makers, researchers and civil society groups seeking to understand and compare how water issues are regulated in the hard rock mining sector in their jurisdictions.

As part of this project, CCSI is also researching the relationship between water-related incidents and social conflicts. Furthermore, CCSI has organized an event for institutional investors to discuss water related risks from an investor perspective in September 2016 (see background brief here) and co-submitted a letter to the SEC to comment on the modernization of property disclosures for mining companies.

CCSI has also developed a framework to approach the shared use of water and water infrastructure, among other types of infrastructure, after conducting a worldwide survey of related case studies. Research papers on shared use in the context of other types of infrastructure are posted here.