Water-the Big Mining Problem

Whether you live in parts of the world experiencing drought conditions, or are in a water-intensive industry such as mining, water availability is a key issue. Emerson’s Juan Carlos Bravo, a member of the mining industry team, explores mining’s water challenges.

Emerson's Juan Carlos BravoHere in Austin, Texas, summer is in full swing with temperatures soaring above 100F or 38 C. And by listening to the local news about how low our water source levels are this year, it brings to my mind one common problem Austin has with the mining industry—water.

According to the United Nations estimates, 80% of the fresh water used is for human consumption (domestic use and irrigation) and only 20% is used for industrial applications, including mining. The problem is that the world’s population is growing by about 80 million people a year, which implies increased freshwater demand of approximately 64 billion cubic meters per year. This puts more pressure on industrial use to be diverted for human consumption.

Source: United Nations, Water Use, http://www.unwater.org /statistics_use.html

We have seen in recent years this reality for the mining industry. One example is Newmont Mining, which had to put on hold the Minas Congas project in Peru due the water issues with the local population.

Also, the Wall Street Journal’s Market Watch blog reported that environmental factors such as water scarcity could hurt ratings of global miners, unless they are able to manage the operational and political risks associated with their projects. Capital expenditures and operating costs could increase as miners are required to comply with more stringent environmental regulations involving their projects. And, on the other hand, competition with local communities for limited water resources in various mineral-rich areas is likely to raise political risks.

In my opinion, the relationship between mining industry and the global water supply is really complex; therefore, it will need several solutions to have a meaningful impact. We have seen that large mining companies are already taking this holistic approach by implementing water programs to create awareness among their employees, and also by implement technology to monitor and reduce its water consumption.

I think that the biggest approach mining companies are taking is in building desalination plants. One example is the one reported by the Santiago Times announcing that BHP Billiton is set to build a US$3.4 billion desalination plant in northern Chile. The plant, scheduled for completion in 2017, will pump 2,500 liters of seawater per second from Chile’s Pacific coast across the arid Atacama Desert.

Source: The Santiago Times, Chilean mining giant plans billion dollar desalination plant, http://jimc.me/13pulXX

I think that on the positive side, desalination will allow companies not just to meet their water needs but also to minimize their political risks, since by using seawater they are avoid to taping into local fresh water supplies, something that will allow them to have less pressure from local communities that are competing for such valuable resource.

The big challenge for desalination technology is that it still needs to be determined how economically viable this solution will be for every company, since this process uses a lot of energy and the cost of generating electricity may be really high depending of the availability of fossil fuels. Even though some companies are testing the use of solar power and other alternative energy sources to minimize the need for fossil fuels, the cost still may be high depending of where the mines are operating.

As we can see, there’s not an easy answer and I think this is a great opportunities for suppliers that can provide technologies to mining companies to overcome this problem. We know miners will have to do a lot in order to quench their thirst, but what is true is that water is definitely changing the competitive landscape.

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