Mining & Water Risk: Diagnosis, Benchmarking and Quantitative Analysis of Financial Impacts
Columbia Water Center recently completed a three-year project sponsored by Norges Bank Investment Management (NBIM) to develop a modeling platform to quantitatively assess mining-related water and environmental risks and their financial implications.
The modeling platform provides investors access to a targeted analysis of water-related mining risk, with a high level of specificity related to the type of mining operation, geophysical and socio-political setting, remediation and mitigation needs, financial implications of particular asset risks on the broader company portfolio, and causal connections between risk factors and financial performance.
The project uses modeling tools to address elements of specific risks as well, including: meeting water requirements for mineral processing, energy production, and community needs; treatment, disposal, and re-use of wastewater; flooding and mine de-watering operations; and addressing accidents and spills. Additionally, the team considered how rights, regulations, and related governance issues pose financial risks to mining operations.
OUTCOMES: The new modeling platform provides investors access to a targeted analysis of water-related mining risk that includes:
• Relevant climate and physical data
• Analysis of the gaps in governance, monitoring, reporting, and verification
• Remediation and mitigation options
• Financial implications of particular risks at the asset and portfolio levels, especially from a
• Causal connections between risk factors and financial performance
• Assessment of initiatives involving local communities to avoid conflict related to water resources
• Financial modeling tools for real option analysis to account for risks related to water, climate,
commodity prices, and other quantifiable factors.
BLOG: Hurricanes Harvey and Irma Show That It’s Time for Companies to Disclose Climate Risks to Investors
For more information: http://water.columbia.edu/research-themes/risk-and-financial-instruments/water-and-the-mining-industry/