Water, Water, Everywhere and Not a Drop to Drink
Miners have been vocal on the proposed changes to open-pit mining rules in Mexico, but somewhat less noisy on the tightening rules on water usage.
AMLO’s proposed changes also relate to water usage and would significantly limit water exploitation in areas facing water scarcity, if approved. The changes would prioritize personal and domestic water use, prohibit concessions in water-scarce areas, and recognize water as a fundamental right, not a commodity. This approach sets a usage hierarchy for water in the following order: domestic use, then agriculture, and lastly, other industrial sectors.
In the past many mining companies in water-challenged regions constructed dams and other water storage facilities. In the general lazy intellectual climate and lax government oversight this practice has gone by the wayside, leading us to where we are now.
There is no reason why reservoir building should not be as much on the agenda as tailings storage facilities. It is time for miners to relearn the art of dam-building and wean themselves off utilizing natural water sources as it is a right.
We seemingly fell foul of Alphamin when we criticized its reticence to construct a hydroelectric facility for a few million dollars at its Bisie Mine in the DRC (with a shortage of water being the least of their problems). This would have partially weaned them off diesel dependence, allowed them to regrind tailings currently going to a TSF (thus increasing production and cashflow) and insulate them from transit issues for their massive (and expensive) diesel habit. The rest is history with, in early 2025, their supply lines being cut off by M23 rebels and control of the company being sold for a bargain price. Short-termism anyone?
We recall several projects of significant vintage (and no great size) in the uplands of Peru having small hydroelectric facilities, so this is scarcely reinventing the wheel.
We wonder if the less noisy response from miners in Mexico on tightening water usage rules is due to the solution to the issue being within their own grasp (i.e. building small or medium dams). Miners will race to embrace $100mn TSF budgets and yet baulk at building a $20mn dam to store water. Farmers build themselves dams, why shouldn’t miners return to this once common practice? And imagine when the mine closes down, whether the water storage could remain as a benefit to the local community… perchance to dream.
Christopher Ecclestone
Christopher Ecclestone is a Principal and mining strategist at Hallgarten & Company and is based in London.Prior to founding Hallgarten & Company in 2003 he was the head of research at an economic thinktank in New Jersey which he had joined in 2001. Before moving to the U.S., he was the founder and head of research at the esteemed Argentine equity research firm, Buenos Aires Trust Company, from 1991 until 2001.
Prior to his arrival in Argentina, he worked in London beginning in 1985 as a corporate finance and equities analyst and as a freelance consultant on the restructuring of the securities industry. Earlier, he worked for the Federal and State governments in Australia. He is a native of Melbourne, Australia. He graduated in 1981 from the Royal Melbourne Institute of Technology.
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