SMI MCA
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BACKGROUND AND OVERVIEW
Introduction
- > 8% national GDP
- > 42% of goods and services exports; and
- > Tax and royalties in 2007/8 of $13.04 billion and in 2008/9 of $21.019 billion.
More Background on Industry's Water Use
Membership of the MCA requires companies to be signatories to Enduring Value - The Minerals Industry Framework for Sustainable Development. Enduring Value provides operational guidance on the implementation of the International Council on Mining and Metals’ 10 principles of sustainable development.
Companies that are signatories to Enduring Value, are required in their operations in Australia to [amongst others]:
- > Seek continual improvement [in] environmental performance; and
- > Implement effective and transparent engagement, communication and independently verified reporting arrangements with stakeholders.
In Australia, the policies and practices for sustainable access, use and stewardship of water resources, for the minerals industry, are documented in two key publications:
- > Strategic Water Management in the Minerals Industry – A Framework (MCMPR 2006); and
- > Leading Practice Sustainable Development Handbook (Commonwealth of Australia 2008).
As a high-value and responsible manager of water resources, the minerals industry strongly supports the development of water accounting frameworks, so that water use by all users in the landscape, can be compared in a quantified and transparent manner. Additionally, the minerals industry sees the development of water accounting as a key facilitating mechanism for the fruition of functional water markets.
The water accounting project has been undertaken as a research and development project in conjunction with the Sustainable Minerals Institute at the University of Queensland from 2007-9. The framework has been piloted in partnership with the NSW Minerals Council at a number of operations in Australia. The results have been used to develop the framework presented here for use by the minerals industry in Australia.
What is the Business Case for Minerals Industry Water Accounting?
Many minerals operations, and companies, already have in place frameworks for measuring, monitoring and reporting water use. However, these frameworks are often:
- > Not consistent across operations within companies;
- > Not consistent across companies within the minerals industry; and
- > Not consistent with the way other sectors report water use, making cross-sectoral comparisons difficult.
However, in almost all cases, minerals operations record the same type of data, and it simply requires repackaging to promote consistency. The business case for nationally consistent water accounting for the minerals industry is, therefore, founded in:
- > Improved capability for the industry to report sustainable use of water resources, in a consistent and contextual manner;
- > Regulatory reform to promote efficiencies in current reporting arrangements;
- > Benchmarking opportunities for operations within a region to support identification of potential efficiency measures;
- > Increased recognition of industry as a responsible steward of natural resources, through development, application and reporting of water accounts;
- > Application of a robust framework for identifying and quantifying water flows and their relationship with supply contracts, license conditions and climatic variables;
- > Increased capability of the markets and regulators to quantify water quality and therefore support water access pricing arrangements that reflect water quality and source; and
- > Supporting strategic land use planning processes, so that overallocation of water resources is avoided.
How has the Framework been Developed?
The Accounting Framework development began in 2005 as part of a strategic program led by the MCA to gain improved understanding of minerals industry water use and use requirements, amongst stakeholders involved in the water reform process, and regionally with operations. The MCA’s Sustainable Development Committee, which reports to the MCA Board, has overseen the strategic development of framework, with the Water Working Group (WWG), and the MCA Secretariat responsible for the ‘hands-on’ development.
Initially, the WWG engaged the Sustainable Minerals Institute (SMI) to ‘develop a suite of metrics’ to enable consistent reporting within industry. This work involved reviewing existing monitoring and reporting activities within industry, and identifying a ‘path of least resistance’ for adoption of industry-wide consistent water use reporting framework. This included understanding an operation’s water balance, its reporting obligations under annual environmental reports, and voluntary corporate reporting initiatives.
At the same time as the SMI work was unfolding, the National Water Initiative water policy reform program was investing in developing ‘water accounting’ frameworks, and potentially, regulatory instruments. Additionally, at a similar time, the Bureau of Meteorology received additional powers under the Water Act 2007 to collect ‘water information’ from anyone who held it.
In mid-2008 SMI delivered its ‘preliminary framework’ for consideration by the MCA’s WWG and SD Committee. In the second half of 2008, the MCA commissioned a third-party review of the work, and undertook targeted stakeholder engagement, with industry, government and non-government representatives, including an open workshop at the SD08 conference, and a joint industry-government workshop in Perth. During this time, there was also in-principle support from industry and government to run a pilot accounting exercise with the Commonwealth Government’s Water Accounting Development Committee.
The Minerals Industry Water Accounting Framework
What is Water Accounting?
Water accounting is the application of a consistent and structured approach to identifying, measuring, recording and reporting information about water.
Water accounting is a framework which provides measurement, monitoring and reporting protocols, to support public and investor confidence in the amount of water being traded, extracted for consumptive use, and recovered and managed for environmental and other public benefit outcomes (National Water Initiative, 2004 ).
It is important to distinguish between water accounting and water reporting. Accounting concerns the consolidation of water balance information, as discussed throughout the framework description. Reporting concerns the presentation of water balance information in formats tailored to the needs of various reporting uses and users.
Scope and Objectives
The current version of the MCA Water Accounting Framework is here: Current Framework (pdf). This is the version that was used to undertake the pilot project.
The current version of the framework provides:
- > A consistent approach for quantifying flows into, and out of, reporting entities, based on their sources and destinations
- > A consistent approach for reporting of ‘water use’ by minerals operations that enables comparison with other users, and relates to water sharing planning processes
- > A consistent approach in quantifying and reporting water ‘reuse’ and ‘recycling’ efficiencies such that the reliance on sourced water is reduced
- > A model for the more detailed operational water balance as guidance for those businesses which currently do not have an effective operational water model or see an opportunity to develop this new approach.
The framework is not a tool. Tools can be developed to support reporting in alignment with the framework, or existing tools can be modified. The Bureau of Meteorology is developing a tool to report ‘water information’, and this may be amenable to reporting water accounts for industry.
How Can the Framework be Applied?
The framework can be applied at two levels;
- the Input-Output Model provides a consistent approach for quantifying flows into, and out of, reporting entities, based on their sources and destinations, and
- the Operational Model provides guidance for companies for water processes within their operations. This is of more value to businesses which currently do not have an effective operational water model or see an opportunity in developing this new approach.
The framework typically requires a combination of existing data, and modelled estimates, depending on an operation’s existing data holdings. It is envisaged that with a standardised reporting platform across industry, government agencies may be amenable to reforming regulatory arrangements and enabling national consistency.
Further, it is likely that the process of generating water accounts, will lead in the medium-term, to the acquisition and communication of water data that helps manage an operation’s water supply risks. Accuracy or reliability statements associated with water accounts are provided in a consistent format, with data collections fit-for-purpose and related to an operations water supply risks and regulatory requirements.
We are proposing four reports arising from water accounting:
- The Input-Output Statement lists flows for all input and output categories for the reporting period, along with the change in storage.
- Statement of Operational Efficiencies lists the total flows into the tasks, volume of reused water, reuse efficiency, the volume of recycled water, recycling efficiency and the worked water cycle number.
- The Accuracy Statement list the percentage of flows that were measured, simulated and estimated.
- Contextual Information ensures that numbers in the report are not divorced from the context in which a facility is operating. It gives information about the water resources of the region and the catchment in which the sites are located.
Relationship with the Global Reporting Initiative (GRI) and the Preliminary Australian Water Accounting Standard (PAWAS)
The framework has been developed to be in alignment with requirements from the GRI (Global Reporting Initiative), PAWAS (Preliminary Australian Water Accounting Standards) as well as other Corporate reporting needs. Both GRI and PAWAS reports can be generated from reports under the framework. The aim of the framework is to support operations in simultaneously meeting their various reporting commitments efficiently and without duplication of effort.
A capacity building program will be delivered to support adoption of the framework, which will likely include a range of communication, training and guidance. The capacity building requirements will be determined based on ongoing stakeholder engagement and feedback, and opportunities to leverage other existing programs.
Central West NSW Pilot Project
In 2009 a pilot project in Central NSW was undertaken. This was a joint initiative of the MCA, SMI and the NSW Minerals Council.
Building on the feedback from industry and governments during the stakeholder engagement in 2008, the Minerals Industry Water Accounting Pilot Project, a partnership involving the MCA, the NSW Minerals Council, the National Water Accounting Development Committee and the SMI, was established in 2009. The objectives of this pilot project were to:
- > Map minerals industry water accounting definitions and concepts to the Standards and other documentation previously developed by NWI's Water Accounting Development Committee;
- > Explore the incorporation of water quality into the accounting framework;
- > To update and refining the presentation of accounts, based on industry and other stakeholder feedback, and where possible to align with water accounting approaches being developed by the Water Accounting Development Committee;
- > To provide feedback to government agencies developing water accounting methods on the utility, challenges and opportunities, in the accounting approaches being developed from an industrial water user perspective; and
- > To undertake an accounting exercise across either, a region of mines, to test the refined accounting framework and inform capacity building requirements.
The pilot project was completed in October 2009 and the MCA is now entering a phase of engaging with industry and other stakeholders. The framework is not final, and there will be further opportunities to support its development.
Feedback and Further Information
The content of the framework has been uploaded to the Wiki so that registered users may contribute to its development. Should you wish to become a registered user, please contact us.
This will then allow interested parties to provide feedback via the discussion pages and to lodge their own case studies should they wish. Over the next six months, the feedback will be collated and the framework will be finalised. In addition to this platform, there will be opportunities to undertake formal training sessions. All queries should be via the email address.
Should you wish to read further please contact us as the framework has been presented at the following AusIMM conferences:
- Sustainable Development Indicators in the Minerals Industry (SDIMI) 2009 conference. A Water Accounting Framework for the Australian Minerals Industry by CM Cote and CJ Moran
- Water in Mining 2009 Conference - Developing a Water Accounting Framework for the Australian Minerals Industry by CM Cote, CJ Moran, J Cummings and K Ringwood. Link to Presentation
Site Navigation
The Wiki does not have the same functionality as a web page so to easily navigate the site, the links to all pages associated with the framework are provided here and a link to Site Navigation is provided as the last line for each linked page.
SYSTEM DESCRIPTION defines the terms of the framework.
CONTEXTUAL INFORMATION which provides background information about the water resources of the operational facility.
ACCOUNT DEVELOPMENT provides an overview of the steps involved in generating the reports. The details are within:
Two case studies have been provided to show the application of the framework.
The Water Accounting Framework has been designed so that the reports contain sufficient information for the minerals industry to adopt them as an industry wide standard. Also, they can easily provide the requirements for reporting to external parties. We have provided guidance as to how the framework can be used for:
