Water News

Water scarcity could increase ratings pressure on mining companies

Written by  Thursday, 14 February 2013 07:47
Rate this item
(0 votes)

Ratings agency Moody’s Investor Service on Thursday warned that environmental factors, such as water scarcity, could adversely impact on the ratings of global mining companies if they failed to proactively manage the accompanying operational and political risks to their businesses.

In its ‘Global Mining Industry: Water Scarcity to Raise Capex and Operating Costs, Heighten Operational Risks’, it highlighted that mining projects were already competing with local communities for limited water resources, while having to comply with stringent environmental rules could add to the capital expenditure (capex) budgets for new mines.
In addition, tighter environmental permitting requirements could add to project timelines and require mining companies to seek more complex water procurement systems.
The report added that this would, in turn, push up the companies’ operating costs, owing to the higher associated maintenance and energy costs.
Further, political risk was likely to also increase as competition for water resources between mining companies and local populations intensified, Moody’s stated.
“Water scarcity is already changing the mining landscape as environmental legislation becomes more stringent, and operating in some countries increases political risk as mining companies’ water supplies can be restricted if the needs of communities increase, said Moody’s Corporate Finance Group analyst and author of the report, Andrew Metcalf.
“If, as a result, projects take longer to complete, and become costlier and riskier to execute, we would expect these factors to exert downward pressure on the ratings of the mining companies.”
Moody’s pointed out that smaller, less diversified mining companies, particularly those with single-mine operations, in water-scarce regions, such as South America, were most vulnerable.
These companies were likely to have the greatest exposure to event risks, but had more limited financial and technical resources at their disposal to handle them.
Large, globally diversified mining companies, such as Rio Tinto, Anglo American and BHP Billiton, would continue to be adversely affected, given their global footprints and willingness to operate in the most remote and arid regions.
These companies had the expertise and financial strength to build complex water procurement systems for large-scale projects, evidence suggested that they had, to date, needed to absorb increasingly significant costs related to environmental risks.
 

MINING

Tours of West Rand gold fields

The FSE conducts regular tours with interested and affected parties, of the West Rand gold fields and Sibanye Gold’s operations. 

Mine Shafts: Accidents waiting to happen

  Eighty-two shafts without warning signs.  Twenty-two open shafts.  Three wate...

Residents left in the dark over AMD treatment

The Department of Water and Sanitation (DWS) has been accused of “authorising po...

SA NEWS

Lauded for research on SA acid mine drainage

The launch of Acid mine drainage in South Africa: Development actors, policy impacts and broader implications, by Suvania Naidoo, took place on 10 February 2017. The book has proven to be a timely publication because of the incipient water crisis in South Africa. The event was hosted by Unisa’s Department of Development Studies in the College of Human Sciences. The guests were welcomed by the chair of the department, Prof Gretchen du Plessis, who expressed that “development studies is an ever-changing discipline and is a space where different issues converge”. She further stated that the book fills a void in our knowledge about acid mine drainage (AMD) and that the publication is “an example of hard work which results in big achievements”.

Truth of the dust that brings death

  A new hard-hitting report from Harvard Law School details how South Africa has failed to meet its human rights obligations concerning gold mining in and around Joburg. Bonnie Docherty, who led the research, spoke to Sheree Bega

Harvard Report: The Cost of Gold

A report has been published by the Harvard Law School International Human Rights Clinic titled "The Cost of Gold: Environmental, Health, and Human Rights Consequences of Gold Mining in South Africa’s West and Central Rand.   The reports states, "The complex web of responsible government agencies and repeated legislative changes to that organizational structure have impeded the development of a coordinated plan to deal with the negative effects of mining. The limited scope of action, inadequate attention to at-risk communities, and insufficient consideration of environmental concerns have undermined the completeness of any response."

SA hasn't protected residents from gold mine pollution: Harvard report

JOHANNESBURG South Africa has failed to protect residents affected by pollution from contaminated water and mine dumps over more than 130 years of gold mining near Johannesburg, an independent investigation by the Harvard Law School said.

WATER

Eastern Basin acid water plant is "sledgehammer"

The Department of Water and Sanitation (DWS) has used a "sledgehammer" for its R1bn treatment plant for acid mine drainage (AMD) on the Eastern mining basin that could ultimately create more toxic water.  This is the view of water strategy and consulting mining hydrologist Kym Morton, who believes government is "wasting money" by pumping large volumes of water and adding lime that makes it alkaline but still toxic and hazardous. 

SABC Health Talk, Environmental Health: 25 February 2017

Focus on preventing illness rather than incurring the expense of treatment....

Rand Water tightens the taps in Gauteng

In the Midvaal suburb where Sipho Mosai lives, the gardens are lush and green be...