Extreme denial: The mining industry’s climate blind spot

The Australian mining industry is ill-prepared for the impacts of climate change such as more frequent and severe floods, heat waves and sea level rise, according to a new report on how the industry can adapt to new weather extremes.

The report said long-term trends for rainfall, sea levels, average maximum temperatures, and storm activity are showing that extreme weather events are likely to be even more severe than they have been in the past.

“The increasing frequency or severity of extreme weather events will require adjustments to assumptions about risks, risk management, and entail the redesign of existing infrastructure,” the report by the Institute of Sustainable Futures at the University of Technology, Sydney, said.

The floods in Queensland in 2010-11 gave an indication of what the mining industry could expect in coming decades, with losses of $2.5 billion due to damage to equipment and infrastructure as well as many months of lost production.

Some coal mines in Queensland have already been forced to raise levee banks, originally built for a one in a hundred year flood, to much larger events described as “one in a thousand year” floods, the report said.

Production at the open-cut Baralaba mine, in north east Queensland, stopped for 5 months due to the floods of December 2010, resulting in operating losses for the year of $21 million and no dividend for shareholders. Levee banks were raised to withstand a one-in-1,000 year flood – approximately 2.5 metres higher than the 2010 flood event.

The open-cut coal mine at Yallourn in Victoria is Australia’s largest and supplies the nearby Yallourn power station, which produces 22% of Victoria’s electricity. Heavy rainfall in early June 2012 caused the artificial banks on a diversion of the Morwell River across the Yallourn mine to collapse. Flooding damaged conveyor equipment and diverted water collected in the open cut mine.

Production at the mine was significantly reduced which forced the Yallourn power station to operate at 25 per cent capacity. Full power production was not restored for six months. The estimated financial impact of the Yallourn mine flooding was $109 million.

There were also broader environmental impacts with the Yallourn mine requiring an emergency approval from the Victorian Environmental Protection Authority to pump water from the mine site to the nearby Latrobe River.

The report said while extreme events may have been anticipated in planning by these mines, the extent and costs of damage was not accurately predicted.

Unlike the sudden and overwhelming impact of flooding and storm events, extreme dry weather in Australia is cyclical and many mining operations are able to manage water constraints.

However, the prospect of reduced water availability, and more extensive periods of dry weather in future, “has the potential to significantly impact water-dependent operations”.

Changes to the availability of water for use in production have been a rising challenge for Australian mining operations, while long periods of higher temperatures can affect the reliability of electricity supply, the productivity of workers and the functioning of equipment.

Overseas major mining companies are already including climate impacts in their planning processes, the report said. International mining giant Anglo American requires all operations and projects complete climate change vulnerability assessments to determine whether they are “high-risk sites”. The company also has plans to integrate a “climate test” into its capital-expenditure approval processes.

One of the world’s largest aluminium producers, Norwegian company, Norsk Hydro, already incorporates climate change risks into its standard social and environmental risk assessment processes.

By adapting to climate change, Australian mining companies “will help to manage and potentially reduce insurance premiums, workplace health and safety disputes, damage to company and neighbouring property, as well as legal damages claims,” the report said.

“Effectively anticipating and mitigating risks, will also contribute to maintaining a social license to operate at a time when environmental concerns around mining have become a critical issue for Australian mining.”

The report, “Adapting to climate risks and extreme weather: a guide for mining and minerals industry professionals”, was funded by the National Climate Change Adaption Research Facility (NCCARF), which is closing down at the end of this month due to government funding cutbacks.