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Lack Of Water Isn't Mining's Biggest Threat, It's The Regulation

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When future government's act to protect scarce water resources, miners may suffer the most.

The World Resource Institute released announced a study today on the impacts of water stress worldwide and how industry will be impacted.

Miners, textiles and oil and gas have the most to worry regarding environmental, social, and governance (ESG) matters related to water. The World Resource Institute ranked the risk as "very high". Comparatively, the same threat to agriculture, energy and chemicals was ranked as low.

"The materiality of ESG issues and responsible business conduct is driven by an increasing global awareness from a broad range of stakeholders – including investors, civil society, and regulators," writes World Resource Institute explaining the classification. "The index provides insights into potential financial, reputational, and compliance risks, such as human rights violations and environmental destruction."

Miners may also suffer the most when communities are impacted by lack of access to sanitation and drinking water. Coastal and river flooding were also ranked as out-sized threats to miners compared to other industries. Vale was hit with huge fines and arrests after its tailings dam collapsed killing scores of downstream residents. Unstable weather caused by climate change may increase the risks going forward.

The WRI said once-unthinkable water crises are becoming commonplace.

"Reservoirs in Chennai, India’s sixth-largest city, are nearly dry right now. Last year, residents of Cape Town, South Africa narrowly avoided their own 'Day Zero' water shut-off. And the year before that, Rome rationed water to conserve scarce resources," wrote the WRI.

The author's study found that water withdrawals globally have more than doubled since the 1960s due to growing demand – and they show no signs of slowing down.

"New data from WRI’s Aqueduct tools reveal that 17 countries – home to one-quarter of the world’s population—face 'extremely high' levels of baseline water stress, where irrigated agriculture, industries and municipalities withdraw more than 80% of their available supply on average every year."

The WRI said 12 out of the 17 most water-stressed countries are in the Middle East and North Africa.

"The region is hot and dry, so water supply is low to begin with, but growing demands have pushed countries further into extreme stress. Climate change is set to complicate matters further: The World Bank found that this region has the greatest expected economic losses from climate-related water scarcity, estimated at 6-14% of GDP by 2050."

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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