Water Issues of Rising Concern for Mining in Australia

Special to the Northern Miner

Water shortages caused in part by global climate change are increasingly affecting mining operations in Australia. As a result, water planning and management are becoming a key issue for mining companies, with growing emphasis being placed on water conservation and recycling measures. There are, in many cases, competing uses for each litre of water — including irrigation, domestic uses, protecting aquatic habitat, or industrial uses such as mining.

This water priority can be seen in the Bowen River basin of central Queensland, in the northeast part of the country. Three recent failed wet seasons have resulted in low water levels at the Eungella dam, the region’s main water source for agricultural, domestic and mining purposes.

Having a good supply of water is critical to the continued operation of Peabody Energy’s (BTU-N) Millennium coal lease and to the development of Bowen Basin Coal’s planned Vermont coal mine. The story of how this need was met points to some issues that miners operating in Australia may need to consider regarding water.

Much of Australia’s water demand is met through government-owned corporations operated as independent utilities by individual states and territories. One such is Queensland-owned SunWater, which provides water infrastructure and supply solutions to users in the Bowen River basin.

At the end of 2004, SunWater contacted the environmental science and geotechnical engineering firm Golder Associates regarding extensions to its existing Eungella pipeline and associated terminal storage facility north of the coal-mining town of Moranbah.

Two extensions were proposed, originating from the terminal storage facility: an eastern extension, supplying 4,115 megalitres per year across to the Millennium coal project, and a southern extension supplying 1,500 megalitres per year along an existing power line easement towards the proposed Vermont coal mine.

In decades past, governments in Australia were more willing to fund such pipeline projects in hopes that they would stimulate development. Now, it is much more common for potential users of the water, such as mines, to be asked in the planning stages to commit to supporting the project financially. Only if there are enough users willing to “pay to play” will the project proceed.

This means that mining companies may need longer lead-times in their projects than they are accustomed to. This can also mean projects must meet a higher expected rate of return, as water supply spending may need to be factored into their financial projections for a new mine or expansion of an existing one. In this, Australia is like much of the world where the cost is rising for water itself and for the infrastructure needed to carry it.

Another factor to be considered is the construction of the water pipeline.

In some ways, the geography of Australia makes it easy for pipeline builders — the continent’s ancient, heavily eroded topography generally features flat or gently rolling terrain. There is no freeze-thaw cycle as in colder latitudes. Generally, soil is deep enough to bury the line at an appropriate depth.

In other ways, new considerations need to be made.

Aboriginal people have significant influence over land use in much of Australia, and any pipeline has the potential to require their approval. In this area, the Australian legal environment differs significantly from that in North America. North American governments have carried out the groundwork in determining where native title exists, so that a company looking to develop a mine or pipeline in Canada, for example, would be able to access the rights that apply to a specific tenure.

In Australia, a company developing resources has to go it alone, without government assistance. The burden of companies is not to determine native title rights — the courts do that. But until that determination, those rights are not considered extinguished unless by an extinguishing tenure or event. Similarly, in Canada and Alaska, negotiating settlements with traditional owners and paying the associated costs rests firmly on the company’s shoulders. Native title has to be addressed on a project-by-project basis. While having expert counsel is not essential in dealing with these matters, it can help make the process smoother, faster, and increase the odds of a more favourable outcome.

Cultural heritage is also an issue. Dealing with Aboriginal cultural heritage again requires, in most states, consultation with the traditional owners.

Like other jurisdictions around the world, Australia puts a high value on undisturbed habitat, called “remnant vegetation.” In the Moranbah pipeline work, route solutions were found that minimized the amount of remnant vegetation to be crossed.

As well, the routes avoided crossing sensitive habitats — which could have triggered national government permitting requirements — and certain large rivers.

In low-lying areas along the coastline, which have been covered by rises in sea level over the last 8,000 years, there is another hidden issue — acidic soils, which have to be identified and managed, if disturbed.

These factors mean that pipeline planning calls for a strong base of local knowledge. This includes a good understanding of both national and state/territorial legislation regarding environmental protection.

Because of the importance of avoiding areas that are sensitive from an environmental, social or historic resources perspective, it is often easier to plan pipeline routes along existing utility easements and roadways. Doing so means obtaining permission from users of these corridors, and local knowledge helps determine who these stakeholders are.

Because of the challenges facing water supply, many mining companies active in Australia are taking a closer look at measures to conserve and recycle water used in processing. This can mean higher capital spending for equipment to thicken tailings to paste consistency, or for other ways to capture process water.

Governments in Australia want to encourage environmentally responsible mining, and therefore, do take measures to help with water supply. But in general, mining companies accustomed to working in more water-rich parts of the world may need to make water issues a bigger consideration in their plans.

— Marshall Lee is an associate in the Brisbane, Australia, office of Golder Associates, where as environment manager, he oversees a team working in environmental impact assessment, native title claims, cultural heritage, acid soils and other areas. He can be contacted at mlee@golder.com.au.

Lisa Lombardi is a legal practitioner in the U.S. and in Queensland, Australia, and currently serves as legal counsel, Asia-Pacific for Golder Associates, in Brisbane. She can be contacted at llombardi@golder.com.au.