SRK Consulting highlights why operations need to be stress-tested against a range of environmental scenarios.
In biology, adaptation refers to an organism changing its behaviour, physiology or structure to better suit its environment. In mining, adaptation is about resource companies responding to the great challenge of our time: climate change.
Brian Luinstra, principal consultant (hydrogeology) at SRK Consulting, is passionate about mining adaptation. He believes Australian resource companies are more focused on climate-change risk-mitigation strategies than adapting to a changing climate.
“Mitigation is important,” Luinstra says. “Everything miners can do to reduce carbon emissions and preserve the environment makes a difference. But a faster rate of climate change is already affecting mining companies. We need to think a lot more about adapting to this change.”
Luinstra uses a clothing analogy to describe the process. “The weather influences what you wear today. But it’s the climate that influences what you keep in your wardrobe, so you can deal with a range of weather scenarios,” he says.
Boards and management should ensure their operations have been stress-tested against a range of climate scenarios, using latest tools and data.
“They should ask: what happens if there’s a lot less water than we modelled for a project due to drought? Or if there’s a lot more water due to floods? Or hotter temperatures and extreme weather events?” Luinstra says.
Luinstra says adaptation-planning is not a theoretical exercise. “There’s been some major failures in tailing dams in recent years due to water management issues. Not all the problems were related to climate change, but it can be extremely costly if a tailings dam, for example, gets a lot more rainfall than it was designed for,” he says.
Surface-water management is another issue. Excess rainfall can create flooding at open-mine pits and cause environmental problems if larger-than-expected quantities of water are discharged.
“Climate change is likely to increase the incidence of flooding,” Luinstra says. “Mines will need to plan for that in their water-management strategies.”
The other extreme is drought. “What happens if a mine gets 20 per cent less rainfall than engineers modelled in a plant design, due to climate change?” says Luinstra. “How would that affect the site’s day-to-day operations and long-term viability?”
Mining companies should be aware of the potential impact of rising temperatures across various aspects of their operations.
Greater weather variability is another consideration. “Two years ago, Australia had severe drought and bushfires,” Luinstra says. “This year, we could have record rainfall and flooding. Mining companies will need to adapt to more extreme swings in weather.”
Climate change is affecting mine-closure planning. “There are mine-closure experts who are acutely focused on climate change. They recognise that faster climate change has ramifications for mine remediation and closure strategies that need to last thousands of years,” Luinstra says.
As a geologist by profession, Luinstra knows the climate is always changing. The issue is the increasing speed of climate change. He says companies need a measured, structured approach to adaptation, as part of their risk-management activities.
“Essentially, companies need to treat mining adaptation like any other risk. That is, they need to stress-test, measure and monitor the impact of climate change on their assets under various scenarios. Then, report and communicate the results, and have a process to manage this risk,” Luinstra says.
Luinstra says Australia’s mining industry is well placed to develop a stronger culture of adaptation that complements work in climate risk-mitigation.
“Many mining companies are used to working in arid conditions and dealing with long droughts. Others, particularly in Northern Australia, are used to cyclones and flooding,” Luinstra says.
He says Australian miners rank favourably on climate- adaptation. “We are probably a bit behind European and Canada on risk mitigation. On adaption, we’re up there with the world’s best. That doesn’t mean our industry is doing enough on adaptation or can’t do more. It’s an issue for all global mining companies,” Luinstra says.
Australia has another advantage in adaptation – data and tools – says Luinstra. “Our Bureau of Meteorology has developed exceptional tools to help mining companies stress-test assets against climate change. The tools are extremely insightful, yet not enough miners use them,” he says.
Luinstra says several factors are inhibiting mining adaptation. The first is perceived complexity. “Some miners think stress-testing assets against climate-change scenarios is a highly technical, scientific process. Or a ‘dark art’ that requires a lot of investment for uncertain outcomes. There are tools available that are simple and quick to use,” he says.
Data is another factor, says Luinstra. “Many miners already model the effect of climate change on their assets. But too often, they use data from the 1980s or 1990s, which is becoming dated due to the speed of climate change. They don’t understand the full significance of climate change on their operations because they’re using out of date data. Or they have not incorporated climate change into project modelling.”
Luinstra says adaptation is an organisation-wide issue, not only something for mining engineering teams.
“Mining companies need to ‘mainstream’ this issue by getting employees across departments talking about the potential impact of climate changes on the assets and workforce,” he says.
Lack of awareness also weighs on mining adaptation. “Frankly, climate-risk mitigation is an easier topic to communicate and promote. Companies often want to show stakeholders what they are doing to address climate change. Some are less interested in grappling with the harder question of how all their operations will fare with climate change in years to come,” Luinstra says.
Another issue, says Luinstra, is company size. “There’s a risk that smaller miners believe adaptation is something only for large companies. All miners need to plan for climate change. Adaptation strategies are especially important for companies with older operations,” he says.
Luinstra says mining-adaptation laggards face significant risk in their operations, and from stakeholders. “Increasingly, investors want to understand board oversight of climate-change risk and how management teams are addressing this issue,” he says. “Mining companies that aren’t adapting sufficiently to climate change will inevitably pay a higher cost of capital.”
Boards, says Lunistra, should encourage adaptation-planning in mining. “They should ensure there is an organisation-wide culture of adaptation for climate change, not just mitigation. Mining companies need both strategies in tandem, but they have to start adapting now,” he says.
SRK Consulting is a leading, independent international consultancy that advises on clients mainly in the earth and water resource industries. Its mining services range from exploration to mine closure. To learn more about SRK Consulting, visit www.srk.com
This article appears in the August issue of Australian Resources & Investment