Opportunity Assessment

  • This section explores three scenarios for leveraging mining-related investments in water infrastructure for development:
  • Where a mining company expands the capacity of its infrastructure either at the design phase or during an expansion of its operations, to supply treated water to surrounding communities.
  • Where a mining company acts as an anchor for investments in off-site water infrastructure which will then supply and/or treat both the water requirements of the mining company(ies) and other users.
  • Where a mining company sources its own water but agrees to collaborate with other stakeholders to rehabilitate, extend, or construct required water infrastructure for surrounding communities.
View footnotes

[1]UNDP and IFC and IPIECA, Mapping the Oil and Gas Industry to the Sustainable Development Goals: An Atlas. (n.p, 2017), 35

[2] Water Technology, “Kwinana Water Reclamation Plant”, accessed https://www.water-technology.net/projects/kwinana/ on 14 September 2018

[3] UNDP, IFC and IPIECA, Mapping the Oil and Gas Industry to the Sustainable Development Goals: An Atlas. (n.p, 2017), 35

[4] Toledano et al., A Framework to Approach Shared Use of Mining-Related Infrastructure, (New York: Columbia Center on Sustainable Investment, 2014), 63-65

Key Resources

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Topic Briefing

This section explores three scenarios for leveraging primarily mining-related investments in water infrastructure for development:

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  1. Where a mining company expands the capacity of its infrastructure – either at the design phase or during an expansion of its operations, to supply treated water to surrounding communities.
  2. Where a mining company acts as an anchor for investments in off-site water infrastructure which will then supply and/or treat both the water requirements of the mining company(ies) and other users.
  3. Where a mining company sources its own water but agrees to collaborate with other stakeholders to rehabilitate, extend, or construct required water infrastructure for surrounding communities.

 Relevant oil and gas-related investments examples are included below:

  1. Mining company expands the capacity of its infrastructure. As mining companies excavate deeper below groundwater levels to extract ore and mineral deposits, water ingress poses an increasing challenge. For active mines, water that collects in the mine pits – whether it be from rainfall, mining activities, or groundwater– needs to be drained (“dewatered”) and carefully stored to continue mining activities and to ensure that mine waste in this water does not contaminate ground and surface waters. There is the opportunity to mitigate the costs of dewatering and treat dewatered water through collaboration with other mining companies, local authorities, or other water offtakers, while at the same time supplying water to local communities (with government oversight to ensure water quality).

A scenario where a mining company is required to construct a desalination plant also presents the opportunity for it to provide potable, desalinated water to surrounding communities in partnership with a local water authority. The incremental marginal cost of expanding the capacity of a desalination plant to provide additional water to communities may be relatively small to the mining company compared with the capital investment of financing the construction of a desalination plant. In some cases, such as with Areva’s former operations in Namibia, the government may require the mining company to provide water.

Mining companies may be able to meet water needs by recycling their own wastewater for re-use, or, more innovatively, the organic waste/sewerage water of neighboring communities after some primary treatment. They could then provide excess treated potable water back to communities.

Recycling of waste water produced by hydraulic fracturing for the extraction of unconventional shale oil and gas is increasingly done for re-use in the fracturing process.

  1. Mining company acts as an anchor for investments in off-site water infrastructure, which will then supply and/or treat both the water requirements of the mining company(ies) and other users. Local governments or water authorities can use mining companies as anchor customers to attract investment in water infrastructure given the generally large water requirements of mining operations. From a government perspective, a long offtake agreement with a credible and credit-worthy mining company may help to secure financing where (1) the local government is institutionally weak, (2) subsidized water tariffs mean that cost recovery is negative, and (3) it is difficult to obtain reliable data to project consumer demand. An anchor customer strategy may also be relevant in the context of onshore petroleum projects that require water infrastructure for their operations.

Case study: The Kwinana Water Reclamation Plant in Western Australia is an example of a partnership between a petroleum company – BP – local government, and other partners, to develop shared-use water infrastructure.[1] A water reclamation plant was built at BP’s refinery to reduce the volumes of potable water being used by industry by replacing it with high quality industrial grade water treated at the reclamation plant. BP is one of the large industrial partners to use the reclaimed water, and the water reclamation plant is connected to the local water distribution system.[2]

  1. Mining company sources its own water but agrees to collaborate with other stakeholders to rehabilitate, extend, or construct required water infrastructure for surrounding communities. In a situation where mines are sourcing their own water and/or have no need for an on-site water treatment facility, but where surrounding communities have limited access to safe drinking water, opportunities exist for rehabilitating, expanding, or replicating the self-supply options to surrounding peri-urban or rural locations. Such water infrastructure investment could also be mandated in the mining concession itself or be negotiated as part of a CSR program. This may also be relevant in the context of onshore petroleum projects.

Case studies:

1) The Wayuu indigenous people of La Guajira province in Colombia live in a desert region and have limited access to potable water. Repsol and the UNDP signed an agreement to carry out the Communities Benefit Plan (PBC) in the Guajira Peninsula in the north of the country. The agreement focuses on measures to improve access to drinking water for the Wayuu people, including through construction of two micro-aqueducts and maintenance of four water reservoirs that benefit more than 1,600 people from 18 communities. Capacity was also built in local indigenous communities to enable maintenance of 1,200 water wells and windmills. This agreement is especially relevant because it was the first time that UNDP signed a partnership agreement with the oil industry in Colombia related to UNDP’s agreement with the National Hydrocarbons Agency to ensure that companies develop Community Benefit Plans.[3]

For more information refer to page 35 in “Mapping the Oil and Gas Industry to the Sustainable Development Goals: An Atlas” found in the key resources below.

2) Fort Dauphin in Madagascar has a population of around 50,000 people, but its water infrastructure is in disrepair and around 90% of the population does not have ready access to potable water. The water requirements for the Rio Tinto-owned QIT Madagascar Minerals (QMM) project and the expected growth of the town due to the project development cannot be supported by the existing infrastructure. While QMM is able to contribute funds and engineering expertise to the upgrade and improvement of Fort Dauphin’s water infrastructure, it is not a sustainable solution for the region for it to perform the role of a water service provider to the town. QMM, therefore, initiated a consultative process resulting in a collaborative partnership with the World Bank and JIRAMA, the local service provider, to upgrade and extend the town supply and reticulation. Under the agreement the town supply line is being replaced, with a new treatment plant being constructed by QMM. The World Bank will assist with both financing and engineering to upgrade the town’s reticulation and distribution network, and operation by JIRAMA has been formally agreed. QMM will also assist with the training and management of the treatment facilities [4]