South Africa’s mining industry may struggle to secure reliable water sources over the next two decades, according to Moody’s.
Mining companies need millions of litres of water for processing ore, smelting and refining, dust suppression, as well as for their equipment and employees.
This is what the ratings agency said in a recent research report.
While miners are getting more efficient at managing water use, they still face the risk of when it comes to securing reliable water sources, “particularly for mines in arid regions or close to populated communities,” said Moody’s .
Moody’s says SA’s mining industry is particularly at risk from water stress.
Other countries falling into the same bracket are Peru, Chile, Mongolia, Australia and Chile.
According to the World Resources Institute, a Washington-based research non-profit group, South Africa will face high water stress by 2040. This means that between 40% and 80% of water available to agricultural, domestic, and industrial users is withdrawn annually.
Moody’s says mining companies have been putting measures in place to decrease water use, such as desalinating seawater, recycling water or using closed circuit systems. But this, in turn, raises the costs for projects.
Higher water stress will to lead to increased capital spending and operating costs, as companies look to “lock down sustainable water sources”.
Moody’s says that small mining companies may be particularly at risk seeing as they may not be able to afford increased costs associated with securing enough water.