Extreme Weather Becoming Major Threat to Mining Companies

Mining operations around the world are severely affected by extreme weather, especially heavy rains, droughts and fires. According to experts, climate change is becoming a bigger issue, so mining companies are experiencing a much more unusual situation in 2022.

So far this year, the mining industry has had to address more climate change-related issues and incidents than in previous years. According to mining executives around the world, these issues will impact the production and earnings guidance of most companies. "We are looking at a few different scenarios to adjust for the likelihood of more bizarre weather patterns," said Peter Rockandel, CEO, Lundin Mining.

Moreover, experts argue that climate change further jeopardize human lives involved in mining operations. For instance, heavy rains killed eight workers at a Trevali Mining zinc mine. Sibanye-Stillwater had to stop operations in Montana after snow melted, causing surface runoff that washed away roads and bridges.

In Mexico, the situation is critical, especially regarding droughts. NASA reported that 85 percent of Mexico is facing droughts, which has serious implications for citizens and threatens to undercut economic activity. In 2021, Mexico’s National Water Commission (CONAGUA) reported that the country experienced 20 percent less rainfall than usual, whilst some regions have experienced temperatures above 35°C (95°F). Combined, these factors have resulted in a 25 percent decrease in volume capacity at 78 out of the 210 dams that account for 92 percent of the country’s water reserves.

Isabelle Ramdoo, Deputy Director, Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF) told MBN that extreme weather conditions and climate change are putting water supplies, a key input of mining operations, at risk. Ramdoo highlighted that between 30 and 50 percent of copper, gold, iron ore and zinc is produced in areas with water scarcity, a figure that may even double by 2030. “Mexico is particularly at risk. Tensions with local communities over competition for access to water and rising costs of operations are likely to jeopardize mining activities.”

Moody's Investor Services announced that as water issues are likely to continue to grow worse in Mexico in the coming years, the mining industry will have to continually increase capital expenditures to gain access to water.