National Water Reform: Concerns mining operators could be disadvantaged

The final report of the Productivity Commission’s National Water Reform 2024 is due to be handed to the Australian government this month.

Under the Productivity Commission Act 1998, the government is required to table the report in each House of the Parliament within 25 sitting days of receipt.

Final submissions from stakeholders closed on 24 April 2024 with the final report due to be submitted to the government within days.

The government called for the Productivity Commission to undertake an inquiry into the reform progress of Australian governments towards achieving the objectives and outcomes of the 2004 Intergovernmental Agreement on a National Water Initiative (NWI).

Where progress is lacking, the inquiry seeks to examine barriers to implementation, the opportunity costs of not implementing, and where practicable, key issues related to water security.

Water is a critical resource essential to mineral exploration and mining operations. It is primarily used in mineral exploration for drilling, predominately in remote areas that do not have fixed water sources and therefore must be carted to site.

In its interim report, the Productivity Commission notes climate change is making rainfall as a water source increasingly less reliable and that demand for water is growing and changing.

It highlights that many of the discrete actions under the National Water Initiative (NWI) are complete, with most jurisdictions continuing to make progress implementing their remaining and ongoing 2004 NWI commitments.

However, it states that gaps remain, particularly in some major mining regions.

“Western Australia and the Northern Territory have not implemented statutory perpetual water rights. Fully independent economic regulation of water utilities has not been adopted by all states and territories. In Western Australia, Queensland and Northern Territory, independent economic regulators do not have the power to set prices,” the interim report says.

“Although jurisdictions have developed various action plans and strategies to include First Nations people in water planning and decision-making processes, actual outcomes still need to be achieved.”

The Association of Mining and Exploration Companies (AMEC) – a national industry association representing more than 550 member companies – has provided feedback to the Department of Climate Change, Energy, the Environment and Water (DCCEEW)’s consultation on the discussion paper.

According to AMEC the source, access to, and use of water for mineral exploration is different to that of a developed mining operation.

The association notes that mines are fixed locations and often in remote areas, however a more permanent and ongoing access to water need to be secured for operations including ore preparation and processing. Carting water for drilling and securing water infrastructure is a significant cost of doing business.

“A new NWA (National Water Agreement) must factor this in and not increase costs for the mining industry,” AMEC says.

AMEC structured its submission to the Productivity Commission to reflect the feedback it is also providing to DCCEEW through on the proposed new National Water Agreement. Its feedback on the new NWA states that the need for development of a an entirely new NWA is not entirely clear when an update to the 2004 National Water Initiative may have been able to include these priorities.

Development of a new NWA should consider the criticality of affordable water for economic development, particularly downstream processing of minerals (including critical minerals), the association says.

“The discussion paper does not identify and provide clarity of those elements that are working well, neither does it clarify the specific failings that will be reformed for inclusion in the new NWA,” AMEC notes.

“The case for a new NWA should be strengthened and further evidence provided as to why it needs to be developed. It is important that DCCEEW identify and retain the elements of the NWI that are working well.

The Productivity Commission’s Interim Report on the NWI suggests there is still much to be done in certain jurisdictions under the current agreement. The new NWA should clarify how the Commonwealth government will support the states to find new ways to deliver.

There is an apparent lack of mapping between the proposed new NWA objectives and the elements of the existing NWI to be reformed and gaps to be addressed. DCCEEW would have garnered more informed feedback from stakeholders on the objectives and outcomes outlined in the discussion paper for the new NWA, had this information been available.”

According to AMEC, the Murray Darling Basin (MDB) remains the focus and driver for a new NWA, adding that the failures in this system need to be addressed.

The focus of a new NWA, it says, should be equally applied to consider more than just the MDB as all Australian water sources and the needs of all users must be considered equally.

“This was a criticism of the NWI, and it is disappointing that the NWA does not reflect the broader reality of Australian water. The discussion paper outlines objectives and outcomes but does not propose performance metrics and measures of success. Measuring success must be included in the new NWA.  

The discussion paper outlines high-level objectives and related outcomes, but little other information to indicate what the new National Water Agreement (NWA) would look like. Further information must be provided for more robust discussion and development of the new NWA.”

“Any delays to projects will cripple Australia’s supply of minerals as a source clean energy and decarbonisation infrastructure

In its submission AMEC says industry expects that any changes and new requirements under the new NWA will not economically disadvantage current mining industry operators or leave the future industry worse off. This includes those who have invested in developing projects given the status quo of current water policy frameworks.

AMEC seeks to ensure that the delivery of the new NWA does not delay mining industry approvals with additional red-tape, duplicative bureaucracy, or lengthy negotiations for water usage.

“Any delays to projects will cripple Australia’s supply of minerals as a source clean energy and decarbonisation infrastructure. This will impact Australia’s regional and urban communities and delay the delivery of environmental, social, and economic benefits that our clean minerals are providing to the world.

Final comments AMEC and industry welcome opportunities to collaborate with government as the new NWA is finalised, to find a way forward that achieves the objectives and outcomes without creating an unnecessary layer of restrictiveness that will have long term negative impacts on Industry and the availability of water as Australia continues to develop new projects.”

AMEC is a national industry association representing more than 550 member companies across Australia. Its members are mineral explorers, emerging miners, producers, and a wide range of businesses working in and for the industry.

Collectively, AMEC’s member companies account for more than $100 billion of the mineral exploration and mining sector’s capital value.

Mineral exploration and mining make a critical contribution to Australia’s economy, directly employing over 274,000 people. In 2022-23 Industry generated a record high $466 billion in resources exports, invested $4.27 billion (CY2023) in exploration expenditure to discover the mines of the future, and collectively paid over $63 billion in royalties and taxes.

Write to Adam Orlando at Mining.com.au

Images: PNX, Productivity Commission & DCCEEW
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Written By Adam Orlando
Mining.com.au Editor-in-Chief Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Orlando has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.