Water, Mining & Communities Roundtable

Summary

February 2011

In January 2011, IFC convened mining companies, civil society organizations, industry organizations, sector specialists and international consultants to share experiences, challenges and opportunities related to community engagement and water resource management in the mining industry. The objective was to help companies, through a facilitated dialogue, brainstorm sustainable water management solutions that increase operational efficiency and ensure local communities’ access to clean and safe water. Mining industry practitioners shared their perspectives of the challenges surrounding good water stewardship, including supporting local stakeholder capacity for engagement and building organizational expertise related to water management.

Key take-aways:

  • Water resource management is a significant corporate risk issue. It is not just an environmental/technical issue, but also a social one. Sources of risks are: operational, reputational, investor and community. In fact, forty per cent of cases reviewed by IFC’s Compliance, Advisor Ombudsman (CAO), have a water dimension. The main issues are competition for water resources, quality of water, weak governance and managing risk in a dynamic environment.
  • One challenge is unpacking water risks. Water risks identified were: a) Access: defined as the supply of water (for operations) or threats to access; b) Cost: often related to the treatment of water; c) Social disruption: people not having access to safe drinking water.
  • Mining is a significant water user & producer of wastewater. As companies develop, build, operate and close systems, taking an ecosystem services approach is vital.
  • There is a significant lack of credible data and challenge around water accounting. Key questions asked were: Is there a common standard? How do we collect data, interpret and act upon in a meaningful way? What metrics should a company use to understand its’ water footprint? There was also a resounding need for a common language and benchmarks.
  • There is the view that water issues in mining present a ‘tragedy of open access,’ not a tragedy of commons. Water is a shared resource and an internationally recognized human right (United Nations General Assembly, 2010). It is a complex issue as there is often uncertainty around a) who is taking what out of/putting into the water supply, b) ownership rights, and c) a distinction between government/company roles and responsibilities.
  • Another challenge for companies is balancing institutional investors’ (short-term focus) interest with the long-term needs of communities and their own long-term strategies. Investors are increasingly aware of water issues, yet in many cases, the risk is long term, rather than immediate and stock-moving (relevant for publicly traded companies). The question arose of “What is the point of convergence that can serve as grounds for possible collaboration?” The institutional drivers for this evolving mindset include: climate change, scarcity of water in regions with rich mineral deposits, poor regulatory environment, no common standard on water footprinting, social disruption risk for companies, and increasing financial consequences related to water.
  • What can companies do? Disclose water use, increase water re-use, reduce groundwater dependence through efficient long-term planning starting in construction/engineering, engage early with affected water users/authorities (public private partnerships with utility companies), develop transparent and equitable distribution policies, independent/third-party monitoring of water quality and usage, invest in water infrastructure (e.g. boreholes), establish grievance mechanisms for impacted communities, ensure free, prior and informed community consent prior to project development, build trust and maintain trust with communities through dialogue.
  • Collaborative management is a potential solution to mitigate conflict around water. Institution building, facilitated communications, assisted negotiation, community-led monitoring, joint fact-finding and shared planning and decision-making are good ideas but rife with implementation challenges. Critical questions are how/who to engage, how to ensure independence, reconcile differing perspectives (compliance/standards, a regulatory environment and getting tangible results on the ground), act in a cultural sensitivity manner, and remain focused on outcomes.
  • Water risk/issues should be included as part of an ESIA, appropriate mitigation measures should be developed and incorporation of these measures into the design of project should be ensured.
  • It is necessary to build sustainability into systems (e.g. land use planning, shared water resource planning, plan for closure at beginning of mine life cycle).

Exploration phase - Strategic Planning around Shared Water Resources

Key issues:

  • Water issues: runoff, spills, supply disruption.
  • Globally, declining ore grades are likely to increase corporate water demands.
  • Mineral deposits increasingly located in water scarce regions.
  • IFC Performance Standards/Equator Principles: companies must ensure adequate baseline on water sources before construction (PS 1) and need to justify water use (e.g. non-recharging aquifers) in a regional context to prove that communities will not be impacted. (PS 3).
  • Engage stakeholders early and understand community perceptions: explain to communities what the water issues are vis-à-vis a company’s operations, listen to community concerns and develop joint action plans.
  • An ecosystem services approach is vital for decision-making.
  • Influx of people near a project’s site puts severe pressure on water infrastructure which leads to increased competition for resources and unsanitary conditions. This can be a source of local conflict.
  • Pitfalls to avoid - overlooking the value of community perceptions. Communities often do not differentiate exploration from mining.

Solutions/Mitigation Strategies:

  • Develop a water resource management plan.
  • Rio Tinto has developed a water standard and water targets (5 yr target to reduce water withdrawal by 10%). The standard is site-specific and includes: understanding water balance, conducting a water risk review, surface water management, valuating staff competences needed for water management and ensuring that infrastructure to control, manage, move and treat water is properly designed. Rio Tinto’s water strategy is supported by three pillars: a) improving water efficiency (e.g. recycling); b) assigning a monetary and non-monetary value to water for decision-making process; c) engaging with key stakeholders (government, NGOs, communities, international organizations and associations).

Development/Construction Phase - Sustainable Water Management Facilities

Key issues:

  • Water issues: runoff, spills, increased pressure on water infrastructure due to newcomers, water routes impacted by project engineering, water quality.
  • Continue engaging stakeholders as communities are most vulnerable (e.g. growing population, influx, foreigners) during construction. This presents challenges to companies due to project time constraints (budget, completion of construction on time, develop a producing mine and investor demands).
  • Emerging practice: Over the last several years, it has become more common to use treated wastewater for operations to improve water efficiency. As a result, the price of treated wastewater is increasing and some local municipalities see a business opportunity in this.

Solutions/Mitigation Strategies:

  • Water is a shared issue and requires shared solutions. These include joint fact-finding on water table levels, developing an early alert warning system to track changes in water routes, independent/participatory monitoring on a project’s impact on water, and working with local utility companies to provide, upgrade, maintain water infrastructure.

Other:

  • In Chile, water rights are private (bought and sold). Companies and people buy and sell water rights while the government intervenes to regulate usage/permitting. This is not a panacea to water scarcity and responsible use. Chile relies on coal fired plants/importing energy. Desalination of water is energy intensive and has its own environmental footprint.

Operation/Production Phase - Water Stress, Conflict and Monitoring

Key issues:

  • Water issues: water consumption for drilling (heat, dust), chemical contamination, runoff, dependence on hydro power, water consumption for mineral separation, wastewater discharges, high acid drainage, tailings dam, large mixing zone for discharges.
  • Examining the water impact from a broad watershed perspective.

Solutions/Mitigation Strategies:

  • Identify opportunities to include local communities in decision-making around water resource management and impacts, such as participatory monitoring, which can help build trust between companies/communities, participatory land use planning, use of open pits to collect rainwater for irrigation, and sustainable water infrastructure such as boreholes.
  • Debunk myths and rely on technical data. For example, it took two weeks to convince the process manager at a mine in Ghana that it was safe to use treated water from the sewage treatment plant and reinject it into operations.

Closure Phase - Sustainable Water Resource Management after the Mine

Key issues:

  • Water issues: long-term contamination problems (such as acid mine drainage), sustainability of water infrastructure (boreholes, foot pumps, water pipelines).
  • Need to plan for closure at beginning of mine as communities become dependent on improved infrastructure, jobs, access to services, etc.
  • Revisit baseline studies, examine population growth, water usage patterns, community perceptions to improve internal/external communications. Be prepared as communities can direct blame to companies in the absence of credible, historic data.
  • Trust built through dialogue. Stakeholder engagement, over life of mine, will facilitate closure.
  • It is important to remember issues relevant to the entire lifecycle of the mine are also present during closure.

Solutions/Mitigation Strategies:

  • Create synergies not dependency. For example, in Peru, a mining company lined an open pit with plastic to store treated water for irrigation during the dry season to extend agriculture time for local farmers. Other strategies involve using open pits for fishing.

Conclusion

Globally, water is one of the most critical sustainability issues facing the extractives industry. Extraction from surface and groundwater is critical to the industry at all stages of the project cycle. Ineffective management of water resources by the mining industry can result in interruption of natural water cycles, directly impacting ecosystems and biodiversity and increasing competition for access to water from nearby communities. Sustainable water management and access – by companies, communities and local governments – requires raising the awareness and building the capacity to design and implement development plans that protect this critical resource.

The four headings below capture the broad themes covered in the Roundtable discussion:

1) Trends: Mining is a water-intensive activity, particularly as ore grades are declining and mining activities are taking place in more remote, arid regions. As communities are becoming more informed and active, population growth patterns in water stressed areas where mining takes place, scarcity of water resources, competing interests, rising costs, investor demands, and water resource management are increasingly important globally.

2) Implications: Access to water is becoming threatened as costs increase, social disruption has financial consequences to a project and investors are demanding explanation from companies on how they approach water issues. Water has become a politicized issue as it is an internationally recognized human right, however, there is much uncertainty between the role and responsibility of a company vis-à-vis government. Water is also unique in that it is highly emotive in nature.

3) Complexities: The nature of water and related data is complex and there is no consistent standard. It is more than just a resource/commodity – it is a source of life, a human right. Competition for water use/ownership can lead to conflict as it is a non-renewable resource. Lack of data and weak governance where mining occurs is an ongoing challenge. Perceptions of communities are important as realities and trust takes time to build. Genuine community participation and shared decision making is key, but difficult. Pricing and markets can help put a value on water which may help us tackle the challenges ahead. What opportunities for water resource management are sustainable given the site-specific context of mining projects? What policies can be put in place to protect a depleting resource? It is critical to debunk myths with technical solutions.

4) Solutions: There is no single silver bullet but industry experience provides important insights. Awareness raising, long-term planning with governments and communities and recognition of issues must serve as the starting point. Pricing and markets are part of the solution but have limitations. Important questions must be asked: Where do ownership rights over water come from? Do politics/human rights trump ownership?

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