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Miners face growing hurdles accessing water – Moody's

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Miners face growing hurdles accessing water – Moody’s

(Kitco News) The challenge for miners to secure a reliable water supply will continue to grow, according to a report published by Moody's Investors Service. 

It is becoming harder and more expensive for mining companies to find reliable and secure water supplies for their operations, the report published last week stated. 

“Water is a key resource in the mining process and scarcity costs associated with securing reliable sources is an elevated risk,” the report said. 

Part of the challenge are stricter environmental regulations that increase miners’ costs as well as scarce availability of water supplies in desert areas.

“Many countries, including Peru, Chile, Australia, South Africa and Mongolia, have large mining operations exposed to decreasing water availability,” Moody's Senior Vice President Carol Cowan said. “In the next 20 years, all of these countries will be in the high to extremely high ratio of water withdrawals to supply, which will make it difficult for companies to secure reliable sources.” 

Public protests against mining companies’ use of local water sources have led to stricter environmental regulations.

“Protests have occurred in Peru, Chile, Mexico, and the U.S. over the last few years, and can cause delays in the construction of new mines or expansion of existing ones as demonstrations against such projects will likely continue,” the report highlighted. 

For example, Chile’s water authority DGA announced earlier this year that it would more than double the number of areas where miners would not get permits to water — going from 30 to at least 70 prohibition locations. What this means is that no new license will be given to miners and existing licenses will require an approval of the local environmental authorities.  

The announcement came as a response to depleting levels of fresh water in Chile’s desert mining locations. 

Larger international firms will be better equipped to meet this new mining challenge, while smaller mining firms are likely to struggle with rising operating costs, Moody added.

“With water levels expected to continue depleting, smaller mining companies with limited financial flexibility may face increased costs related to water procurement over time.”

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