International credit ratings agency Fitch has warned that water scarcity is the greatest emerging risk in the mining and metals sector. A new report, issued 8 July, identifies that localised water shortages and competition for water resources are likely to increase in coming decades and this constraint will increase the challenges related to production of battery and low-carbon technologies that rely on exotic metals.
Of particular importance is the operational risk associated with water supply, according to the agency.. Drought and competition for water will likely increase operating costs in one of the most water-intensive industries.
Demand for some metals is predicted to rise about fivefold in the next 5 years, driven by demand for batteries, renewable energy and green technologies. At the same time there is growing social and environmental constraints on production that will likely cause many projects to become economically unviable.
Management of mine tailings and tailings storage dams are also an emerging concern given recent very high-profile failures. The report suggests that the sector will have to consider additional funding to address environmental and safety risks.
Investor scrutiny of wastewater and waste stewardship has increased across the sector, in line with a general trend of increased mitigation costs relating to water and wastewater management. These mitigation costs account for a growing portion of total operating costs.