Water rising to the top of the mining agenda
In an era of social licence, business is driven to think and care about other factors along the way to the creation of value. Mining has for years been increasingly focused on obtaining social licence through community development, impact benefits agreements, digging wells, and building clinics. While the industry has unquestionably improved with the essential communication of its successes, it needs to engage in water management with increasing vigor. Water is rising on the agenda of our opponents and in its importance to major projects.
A new agenda for engagement around water management is proposed by the International Council on Mining & Metals and the International Finance Corporation of the World Bank in a report published in March. The rising importance of water access and capital cost of water infrastructure is notable. Of the six largest mining companies, 70% of operations are in waterstressed jurisdictions. The cost of water infrastructure is rising to make up 10% of industry capital costs.
Water is also an increasing source of conflict over concerns real and perceived. Water was cited in 58% of mining-related complaints to the IFC ombudsman. Water also was cited by El Salvador in its recent decision to ban all mining. Importantly, on the subject of engagement, a closer look at El Salvador reveals that the ban is rooted, in fact, in the local perception that they lack the capacity to properly assess environmental impacts of development. Now that is something industry can help with!
IFC strongly, and in my mind correctly, proposes that industry meet the rising concern with engagement, disclosure, leadership and collaboration. Again, practices well learned in the era of social licence. Water presents unique opportunities to do this as:
- Mining collocates with other industries and with the community, existing or created, that grows to serve the mine. This provides a natural opportunity to create new infrastructure in collaboration with residents to serve the mine and community. In many jurisdictions this allows industry the chance to be part of reliable, convenient fresh water and water treatment for the first time. The sewage plant may be less sexy than the clinic, but is at least as important!
- Mining can build community trust and capacity at the same time. Those concerned about the quality of water can be educated by industry and engaged in monitoring and compliance. What better way to help build trust than to invite people in to assist with activities industry will, in any event, have to conduct.
- Confronting fake news with education. The internet is fun and, some argue, democratizing. It is also, however, a source for hysteria, fake news and junk science. Industry opponents abuse it. Mining companies need to use it, and fully leverage their unique advantages. When you are an anti-development activist at Berkeley you aren’t in South Gobi. In mining, industry and its employees are there, on the ground. The people who matter most in social licence are the residents, and our employees, living in the communities where industry operates and those who govern them. Industry must ensure it and its consultants are fully engaged to educate and involve those most directly interested in its success – those with something material and immediate to gain, and something to lose.
The IFC cited examples of project success in:
- Peru, where the community was brought into the water users committee;
- Australia’s Hunter Valley, where industry took the lead in engagement on environmental and social challenges facing the community;
- Canada’s Athabasca, which saw companies and the community work together to empower community water testing and monitoring;
- Mongolia’s South Gobi, where data is increasingly being shared and monitoring improved; and
- South Africa, where a holistic approach to water management is being adopted through the Strategic Water Partnership Network.
These examples of collaboration should be required reading for the industry, its leadership, its partners and consultants before boots hit the ground.
None of what is recommended is easy. It is hard work. It requires early and long-term engagement to be successful. However, as the mining industry has found in recent years, the route to the green isn’t just through quality exploration and disciplined development. It goes through the community and more and more will depend on proven shared interest in, and stewardship of, water resources.
SANDER GRIEVE is a partner, head of mining, and co-head of the coporate department at Bennet, Jones LLP.