Water stewardship: a shared responsibilityAccess to safe, clean water is a basic human right, central to livelihoods and essential to maintaining healthy natural environments. BHP’s vision is for a water secure world by 2030. This would be a world where water resources are conserved and resilient so they can continue to support healthy ecosystems, maintain cultural and spiritual values and sustain economic growth; where the human right to safe and accessible water and the traditional rights of Indigenous peoples are realised and upheld; and where water governance is effective and beneficial, ensuring communities and ecosystems thrive for future generations.
Water is integral to our business and vital to the sustainability of BHP. We cannot operate without it. We interact with water in a number of ways, including:
- extracting it for activities including ore processing, cooling, dust suppression, ecosystem irrigation and processing mine tailings
- managing it to access ore through dewatering (extraction of water from below the water table to allow access to ore), as part of the oil recovery process and at our legacy assets (legacy assets refers to those BHP-operated assets, or part thereof, located in the Americas that are in the closure phase)
- providing drinking water and sanitation facilities
- discharging it back to the receiving environment
- interacting with marine water resources through our offshore Petroleum business and port facilities
- utilising marine water for desalination
For a more detailed example of how we use water in our operated assets, refer to our Olympic Dam Case Study.
We have a responsibility to effectively manage our water interactions and minimise impacts on water resources. We also recognise the importance of working with others to enable more effective water governance and stewardship across the communities, regions and countries where we operate.
Effective water stewardship must begin within our operated assets. From there, we can more credibly collaborate with others toward solutions to shared water challenges.
Responsible water management will ultimately make BHP more resilient in the long term and positively contribute to an enduring environment and social value.
On this webpage, we disclose how we manage our water interactions and water-related risks – through our water interactions, from extraction to use and discharge. The term ‘water-related risk’ refers to risks where water is either part of the risk event description, or as a cause, impact or treatment for other risks. BHP’s Risk Framework is described in the BHP Annual Report and this webpage provides specific information in relation to water-related risks. In the BHP Annual Report, we also share our performance and how we are tracking against targets.
Water Report 2018
We produced our inaugural Water Report in FY2018 to highlight our efforts to improve stewardship of water resources and reflect water’s importance to society and to BHP.
OverviewWe produced our inaugural Water Report in FY2018 to highlight our efforts to improve stewardship of water resources and reflect water’s importance to society and to BHP.
Our focus on disclosure of our water activities remains strong, but we have chosen to integrate our water reporting within the disclosure of the broader aspects of our sustainability (e.g. health, safety, climate change).
Our water disclosures here and in the BHP Annual Report have been prepared predominately pursuant to the International Council on Mining and Metals (ICMM) ‘A Practical Guide to Consistent Water Reporting’ 2017 (ICMM Guidelines) minimum disclosure standard, which is an international water accounting framework to allow for comparable water data across the mining and minerals sector. During FY2021 the ICMM undertook a review of these Guidelines and an updated version was released in August 2021. BHP has reported against the ICMM Guidelines that were active in FY2021 (that is the 2017 ICMM Guidelines). We have commenced consideration of any changes to the minimum reporting requirements introduced by the updated ICMM Guidelines and will seek to fully align our FY2022 reporting with the updated ICMM Guidelines.
Our water disclosures also consider other disclosure frameworks. BHP is a signatory to the United Nations (UN) Global Compact’s CEO Water Mandate (CEO Water Mandate) and our disclosures here and in our Annual Report serve as BHP’s Communication of Progress against the core elements of the CEO Water Mandate. Our reporting is also consistent with the Global Reporting Initiative (GRI); for more information on how this webpage meets the GRI standard, refer to our FY2021 ESG Standards and Databook.
We have reported our water withdrawals and discharges and had water-specific public targets in place for more than 15 years. While water stewardship is not new for us, we believe we can do more to support enhanced water management practices at our operated assets and in collaborating with others for more effective water governance and stewardship across the communities, regions and countries where we operate.
BHP’s approach to water stewardship is visually represented in the figure below. Each element of our approach is discussed on this webpage.
In FY2019, we developed our Water Stewardship Position Statement that expresses BHP’s commitment to and advocacy for water stewardship. Implementation of the Position Statement commenced in FY2020. It outlines our vision for a water secure world by 2030. The Position Statement was developed following broad internal and external engagement and is aligned to the UN Sustainable Development Goals and other initiatives such as the CEO Water Mandate and the ICMM Water Position Statement. Our Position Statement describes the challenges facing fresh and marine waters across the globe and seeks to reinforce that it is everyone’s responsibility to take action together. Our approach to realising this vision includes taking action to improve water management within BHP and catalyse actions to strengthen water governance beyond our operated assets.
Our Water Stewardship Strategy was adopted in FY2017 to improve our management of water, increase transparency and contribute to the resolution of shared water challenges. The strategy’s pillars are outlined in the table below.
The five pillars of our Water Stewardship Strategy
Water challenges faced by BHP may include water scarcity or high variability in water supply due to climatic conditions or collective use or impacts within a catchment. These challenges need to be managed appropriately to minimise impacts to the environment, communities and BHP’s ongoing viability. We seek to identify and assess opportunities to reduce stress on high-risk water resources and implement actions where appropriate. For example:
- Our BMA and BMC operated assets are located in a region with highly variable rainfall. In any given year, we may need to manage an excess of water or an insufficient water supply for operational needs, which may influence our projected production or costs. For example, in FY2020, a number of intense rainfall events in the location of BMA and BMC resulted in capture of water volumes above that which is needed for operations. We seek to manage any excess water to minimise impacts to the environment and community while maintaining operational continuity, with a number of options available including: storage for future use; transfer to other sites that require water; or discharge in line with legal requirements.
- Previously, Escondida mine extracted groundwater from the Salar Punta Negra and the Monturaqui aquifers in Chile, where freshwater resources are scarce. In December 2019, we ceased extraction of groundwater for Escondida mine for operational water consumption purposes1 10 years earlier than originally scheduled. Our operational water requirements are now supplied via a seawater desalination facility. For more information refer to our Escondida case study.
-  Small quantities of groundwater are extracted from the Hamburgo aquifer for pit dewatering to allow safe mining. This groundwater is used for operational water consumption
- Western Australia Iron Ore (WAIO) operations commonly mine ore that is below the natural water table and must extract water (an activity known as ‘dewatering’) to mine safely. The extracted water is used to meet the mine’s water use requirements, but at most sites the dewatering volumes exceed use requirements. This surplus water is generally fresh to brackish in quality and is a recognised environmental, social and economic resource. In recent years, WAIO has developed large water infrastructure schemes to return much of this surplus water to groundwater systems. In line with increasing surplus water, WAIO has updated its long-term water strategy seeking to optimise operational considerations as well as social value and environmental outcomes.
Our Water Stewardship Strategy is complemented by our public target and longer-term goal, established in FY2017.
Setting targets on critical metrics helps us focus our efforts, monitor progress and hold ourselves accountable. We have included water-specific public targets for more than 15 years. These have evolved from targets that were set from the top down, based on intensity metrics (water used per tonne of product), to a combination of risk-based targets and absolute volume reduction targets. Our water targets are set through a bottom-up assessment of operated asset-level information and consider the context, risks and opportunities of the relevant asset.
Through this experience, we have recognised that global-level intensity targets are challenging to define. Intensity targets are usually only appropriate at the individual operated asset level due to the regional nature of water resources and water-related risks as well as the individual variations in ore grade and production processes. We encourage our operated assets to identify intensity targets to improve performance above their contributions to our Group-wide target and longer-term goal outlined below.
Our five-year water target and longer-term goal
In FY2017, we announced a new five-year Group-wide water target of reducing FY2022 freshwater withdrawal by 15 per cent from FY2017 levels across our operated assets. For the purposes of this target:
- Withdrawal is defined as water withdrawn and intended for use (in accordance with the ICMM Guidelines) and ‘fresh water’ is defined as waters other than seawater, wastewater from third parties and hypersaline groundwater. Freshwater withdrawal also excludes entrained water that would not be available for other uses. These exclusions have been made to align with the target’s intent to reduce the use of freshwater sources which are subject to competition from other users or the environment.
- The FY2017 baseline data has been adjusted to account for the materiality of the worker strike affecting water withdrawals at Escondida in FY2017 and improvements to water balance methodologies at WAIO, BMA and BMC in FY2019, which included alignment of water balances to ICMM guidance. Discontinued operations (Onshore US-operated assets) and non-operated joint ventures have been excluded.
The target was developed taking into account each of our operated assets’ circumstances, the potential to reduce fresh water use and the operated asset’s potential level of contribution to a BHP water target. The target focuses on the use of fresh water because it is usually the most critical water resource for the communities where we operate and the environment, and is limited globally. Fresh water has significant direct use by society as it provides drinking water and water for amenities and recreation and it is important in enabling terrestrial environment to sustain ecosystem functionality. Therefore, elimination or reduction of risk and stress to freshwater resources has benefits to all. The majority of our operated assets are in terrestrial environments, where the majority of the world’s freshwater resource is located, and therefore we can have greater influence towards and directly conserve the freshwater resource. Protection of the marine environment is also important and our Water Stewardship Position Statement acknowledges the importance of protecting this resource as well as fresh water. Performance against our target is one of the sustainability related measures in management scorecards across BHP.
Our longer-term goal is to collaborate to enable integrated water resource management in all catchments where we operate by FY2030. It is aligned to the United Nations Sustainable Development Goal 6 that seeks to ‘ensure availability and sustainable management of water and sanitation for all’. Our priorities are around transparency, collaboration, knowledge and innovation. Beyond our operational activities, we have committed to working with communities, government, business and civil society with the aim of gaining a shared approach and catalysing actions to improve water governance, increase recognition of water’s diverse values and advance sustainable solutions. We continue to collaborate with the CEO Water Mandate to support harmonisation of water accounting standards. We see this as a critical step to strengthening transparency and collaboration across all sectors for improved water governance, in line with our Water Stewardship Position Statement.
As we seek to further strengthen our data quality and our understanding of the influencing factors on water-related risk within the catchment and marine regions where we operate, we will continue our efforts to refine our approach to goal and target setting. Our Water Stewardship Position Statement commits BHP to set public, context-based, operated asset-level targets that seek to improve our water management and support shared approaches to address water challenges within the regions where we operate. These targets are intended to more closely align performance to key regional challenges and priorities. During FY2020, we commenced planning for a water resource situational analysis (WRSA) process (defined in section 4.11.4 of the BHP Annual Report) which aims to establish a collective view on the shared water challenges within the regions or catchments in which we operate. The WRSA process commenced in FY2021 and is expected to inform our post-FY2022 water targets, which will vary across our operated assets depending on the nature of our interactions with water and the shared water challenges within each region. These targets are expected to commence in FY2023.
The Board and Executive Leadership Team have endorsed BHP’s Water Stewardship Position Statement and Strategy and oversee progress on the implementation of our Strategy. Each of our operated assets has assigned accountability and responsibility for their key water management activities and this is a requirement of our Water Management Standard.
Progress against our Water Stewardship Strategy, target and goal is reported in the water section in sections 1.13.13 and 4.8.6 of the BHP Annual Report.
Water and risk at BHP
BHP’s portfolio of long-life operated assets means that we must think about the long term, plan in terms of decades and consider the needs and circumstances of future generations. We need to consider both our operated assets’ needs and the potential for regional changes to water resources due to climate change, pollution, population growth and changing expectations.
The shared nature of water resources means we also need to think ‘beyond the fence’, which includes the interactions within catchments (a term used interchangeably with ‘basins’ on this webpage) when managing risk. As part of our Risk Framework, our operated assets are required to identify, assess, treat, monitor and control the potential water-related risks from their activities and make strategic business decisions in line with our Risk Appetite Statement. Our Water Stewardship Strategy has been progressing a range of improvements to further identify and assess water-related risk for our operated assets, including those at basin level. In FY2020, we completed risk assessments for the catchments where we operate to develop a more comprehensive understanding of the water-related risks in our operational regions.
The management of water-related risks needs to reflect the different physical environments, hydrological systems and socio-political and regulatory contexts in which we work. BHP must take into account the interactions that we, and external parties, have with water resources within catchments, shared marine regions and groundwater systems. In our disclosure of water-related risk, we present two facets of risk:
- threats or opportunities related to BHP activities at our operated assets
- basin risks (threats or opportunities associated with inherent basin characteristics in areas where BHP operates, such as drought or flooding etc.)
These two facets of risk seek to consider shared water challenges within the catchment and how catchment risk may influence company risks.
BHP and Basin Risk
We have used the World Wildlife Fund’s (WWF’s) Water Risk Filter in FY2021 to assess the level of basin risk of each of the locations where we have operated assets. This is different to the risk that BHP’s activities may present to the water resource, which is termed operational water-related risk and is further described below. We use the level of basin risk as an input to assessments of our operational water-related risks; usually as a causal factor and when determining the severity of potential impacts and likelihood of the risk event occurring.
The WWF Water Risk Filter is widely used and in FY2021 BHP adopted it in place of our own assessment method, seeking to provide greater transparency and clarity to external parties about how the evaluation of inherent basin risk is undertaken for areas where we operate.
The WWF Water Risk Filter assesses the level of risk in the basin based on the location of the basin from physical, regulatory and reputational perspectives using global (or local where available) datasets of 32 basin risk indicators. For example, the physical perspective is assessed using a variety of information such as water scarcity, flooding and drought potential among other physical attributes. For some of our operated assets, there are multiple individual sites within the asset that are geographically spread, such as our BMA, WAIO and US legacy assets. For these operated assets, multiple locations across the geographical spread were assessed in the WWF Water Risk Filter and the average overall basin risk of the locations reported for the operated asset.
The WWF Water Risk Filter classifies risk into three categories as follows:
- Physical: Whether available water is too little, too much, unfit for use or inaccessible and/or whether the surrounding ecosystems are degraded, so may negatively impact water ecosystem services.
- Regulatory: The changing, ineffective, or poorly implemented public water policy and/or regulations. Regulatory water risk is heavily tied to the concept of good governance.
- Reputational: Stakeholders’ and local communities' perceptions of whether companies conduct business in a sustainable and responsible fashion with respect to water. While a considerable proportion of reputational water risk is operational (i.e. not basin-related), there are some basin pre-conditions that make reputational water risk more likely to manifest.
Other external water guidances (e.g. the CEO Water Mandate) also classify risk using the above three categories.
The methodology that is used by the WWF Water Risk Filter allows for the use of local knowledge to verify the basin risk outcomes. This approach is also supported by other external water disclosure frameworks, such as the CEO Water Mandate and the Carbon Disclosure Project (CDP)*. The basin risk indicators used in the WWF Water Risk Filter are generally aligned with those previously used by BHP in basin risk (previously termed water sensitivity) evaluations.
* Carbon Disclosure Project (CDP) is an international not-for-profit organisation that operates the only global system for the measurement, disclosure and management of corporate environmental information.
Although we have presented the level of basin risk in accordance with the outcomes from the WWF Water Risk Filter in our tables and figures, the discussion below indicates where, based on our local knowledge, we consider that the outputs of the WWF Water Risk Filter may be under- or over-estimating basin risk.
In the majority of locations where we operate, BHP has previously assessed regulatory risk for the basin as higher than the WWF Water Risk Filter. Regulatory risk indicators within the WWF Water Risk Filter consider policy and laws, management instruments, governance and infrastructure and finance. In addition to these considerations, BHP’s previous assessment also considered the specific regulatory requirements applicable to each operated asset and other operators in the region, regional policy, plans and constraints and current discussions with local and national regulators regarding water permitting and performance for the operated asset and the region. As a result, we believe that the exposure from regulatory basin risk may be higher in the majority of the basins where we operate than is assessed by the WWF Water Risk Filter. We have incorporated our local knowledge of regulatory risk within our assessment of severity and likelihood in our water-related operational risk assessments.
BHP previously assessed basin physical risk for Olympic Dam as higher than under the WWF Water Risk Filter. This is because the Great Artesian Basin water resource supports important springs, and increasingly, there are requests by others to access this shared water resource (between Indigenous peoples, communities and other industries). This higher level of physical risk determined for Olympic Dam remains valid for FY2021 and has been incorporated into the relevant operational water-related risk assessment (e.g. catchment risk assessment for Olympic Dam).
BHP previously assessed basin reputational risk at our Chilean operated assets (Escondida and Pampa Norte) as high (versus the WWF Water Risk Filter’s assessment as medium) because there is widespread community interest in the use of groundwater and legacy impacts from the use of high Andean aquifers and increasing interaction with seawater resources in this region, which remains current for FY2021. For our legacy assets in the United States and Canada and for WAIO and our Jansen Potash Project we are aligned to WWF Water Risk Filter’s rating of high (versus from low to medium previously assessed by BHP). Our previous assessment was based on a lower level of media scrutiny and conflicts at the time of reporting, however the WWF Water Risk Filter appropriately reflects increased stakeholder focus on the importance of cultural factors and biodiversity and includes events since we previously reported.
Refer to the graphics below for a summary of our basin risk level due to location for each operated asset and the catchment or marine region where they are located. We estimate that 75 per cent of our operated assets are in areas of moderate-to-high basin risk as assessed by the WWF Water Risk Filter.
Overall Basin Risk (WWF Water Risk Filter)
The graphic below shows the proportion of the overall risk that is contributed by physical, reputational and regulatory risk for each basin.
The following table provides further characteristics of the basins, reflecting the outcomes from the WWF Water Risk Filter, where BHP operates. This includes the river basin names, basin physical risk, and projected potential for change in overall basin risk as a result of climate change (based on the Change in Overall Risk by 2050 WWF Water Risk Filter’s Pessimistic Scenario as described on the WWF Risk Filter). In addition, it provides information regarding the key water source, water activities and water consumptive uses of the water resources for each of our operated assets. Note that due to the nature of our operations, our activities do not necessarily impact the basin named in the table below. For example, the WWF Water Risk Filter shows Olympic Dam as being in the Lake Gardiner river basin but our operations do not interact with or access surface water resource, as our key water source for Olympic Dam is groundwater sourced from the Great Artesian Basin. Similarly, our legacy assets are not in operation and therefore only actively source relatively minor volumes of water resources from some of the basins shown for the purpose of maintaining a water cover over potentially acid-generating tailings.
The basin physical risk level from the WWF Water Risk Filter is presented in this table to indicate whether BHP’s operated assets are in a ‘water stress area’. The rationale for BHP’s use of this measure to determine water stress is outlined below.
Water stress is defined by the CEO Water Mandate in the Corporate Water Disclosure Guidelines (2014) as ‘the ability, or lack thereof, to meet human and ecological demand for fresh water’. The Guidelines also state that ‘compared to scarcity, water stress is a more inclusive and broader concept. It considers several physical aspects related to water resources, including water availability, water quality, and the accessibility of water (i.e., whether people are able to make use of physically available water supplies), which is often a function of the sufficiency of infrastructure and the affordability of water, among other things. Both water consumption and water withdrawals provide useful information that offers insight into relative water stress. There are a variety of physical pressures related to water, such as flooding and drought, which are not included in the notion of water stress. Water stress has subjective elements and is assessed differently depending on societal values. For example, societies may have different thresholds for what constitutes sufficiently clean drinking water or the appropriate level of environmental water requirements to be afforded to freshwater ecosystems, and thus assess stress differently.’
The WWF Water Risk Filter uses the World Resources Institute (WRI) Aqueduct dataset to assess some of the indicators within the physical risk category, including baseline water stress. The WRI database determines baseline water stress based on an assessment of water scarcity and does not explicitly consider environmental flow requirements, water quality or access to water. The WWF Water Risk Filter in its assessment of physical risk includes indicators for the potential for drought, flooding and the risk to water quality and ecosystems services, and it therefore takes a holistic view of water stress as recommended by the CEO Water Mandate. For this reason we have elected to use the physical risk ratings from the WWF Water Risk Filter to define ‘water stress areas’. Operated assets with a physical risk rating of high or above, as assessed for the FY2021 period, are deemed to be in areas of water stress.
Table: Characteristics of basins where BHP’s operated assets are located
Basin risk across BHP operated assets
Using the approach for defining water stress discussed above (based on the WWF Water Risk Filter basin physical risk level), two of our operated assets (Escondida and Pampa Norte) (approximately 18 per cent) are classified as being under high or very high water stress due to location. In line with the draft updated ICMM Guidelines (released in August 2021) and other frameworks (e.g. GRI/SASB) we have disclosed the proportion of our water withdrawal, discharge and consumption that occurs in water stressed areas in our Annual Report.
Our operational water-related risksOur operational water-related risk refers to the ways in which water-related challenges can potentially impact our business viability. Our operational water-related risks are influenced by both the basin risk as described above in the regions where we operate and the nature of our activities. We prioritise the allocation of water-related risk management resources based on the level of basin risk or to those risk events where we believe there is an increased likelihood of negative water-related impacts due to the nature of activities (e.g. tailings and marine risk).
BHP’s Risk Framework seeks to inform the identification and management of operational water-related risks and further information is contained in the detailed table below. The basin risk discussed above also seeks to inform the assessment of operational water-related risks, usually as a cause of a risk event. For example, high water scarcity within the basin may be a cause for the risk of inadequate water supply, or high flooding potential may be a cause for an extreme weather incident. Basin risk levels may also influence the severity of potential impacts and likelihood of the operational risk event occurring. For example, a high basin risk for ecosystem services may increase severity of potential impacts to environmental receptors, such as groundwater-dependent vegetation, if the water resource is not managed appropriately. For more information on our approach to operational risk management, refer to the Risk Management section of the BHP Annual Report.
Unmanaged or uncontrolled operational water-related risks have the potential to impact:
- the health and safety of our employees, contractors and community members
- spiritual and cultural values
- communities, including social and economic viability
- environmental resources, including water, land and biodiversity
- legal rights and regulatory compliance
- reputation, investment attractiveness or social value proposition
- production, growth and development (including exploration)
- financial performance
The table below summarises the operational water-related risks that we have identified across our operated assets. This assessment does not consider the effectiveness of controls to manage identified operational water-related risks, and therefore this table should be read as a hypothetical representation of the potential impact of the risk in the absence of controls. We have classified the significance of BHP’s operational water-related risks as follows:
- Tier 1: Operational water-related risks that may have significant consequences, in the absence of controls (shown in the table below as ‘1’).
- Tier 2: Operational water-related risks that are still important, but may have lower consequences, in the absence of controls (shown in the table below as ‘2’).
- n/a: Operational water-related risks that are not applicable at that operated asset.
The basin and the operational risk ratings table are reviewed each year at the operated asset level.
The following table provides further details about BHP’s significant operational water-related risks that we have identified, potential impacts and how we seek to manage such risks. All of the risk areas have potential physical, reputational and regulatory impacts. The management of operational risks requires a mixture of management types/maturity that are described by the CEO Water Mandate, CDP and ICMM Guidelines.
Catchment Scope Risk associated with the physical, environmental, socio-political, water resource and regulatory settings of our operated assets, the activities of other water users, present and past impacts from our operated assets and cumulative and indirect impacts to shared water resources.
BHP acknowledges and seeks to include the cultural and spiritual values associated with water resources, especially to Indigenous communities, in consideration of this risk.
Potential impacts Potential impacts to the community from BHP’s access to and use of water resources within the catchment include reduced water supply to communities, aesthetic impacts to recreational use for water or contamination of water sources, with potential reduction in availability for community water use. Ineffective catchment governance and regulation can make them more complex to manage.
The impacts to the environment may include changes to natural groundwater levels, changes to stream flows, water quality issues in ground, surface or marine environments and reduced pressure in groundwater aquifers that in turn, may affect the biodiversity, habitats and species that rely on the water sources.
Environmental impacts can contribute to community conflict and reputational impacts. They can also alter the spiritual value of water/water features to Indigenous peoples affect the value of the water resource for future generations.
Unsustainable use of the water resource may affect production and a lack of understanding of the water resource may fail to provide transparency to the operated assets on the long-term water management limitations and opportunities. Impacts to the water resource may have longer-term financial implications and threaten our business model, including our ability to expand or develop new resources and inhibit the delivery of our social value proposition.
The cumulative impacts resulting from multiple users of the water resource within a catchment may exacerbate the community, environmental and business impacts discussed above.
We seek to manage potential impacts to the water resource, including the environmental, community and business impacts, through:
- ongoing and regular stakeholder engagement to ensure effective collaboration
- compliance with water allocation permits
- targets for reduced fresh water use
- participation in catchment-level reviews and regulator assessments to understand and improve technical knowledge, challenges and interactions at a catchment level
- ongoing monitoring and measurement of water (quality, quantity)
- understanding baseline and reference characteristics of water resource and movements
- water recovery or source substitution
- integration of water management practices into operated asset business planning
- identification and where feasible implementation of opportunities for reduced water use
- where practical, ongoing monitoring of flora and fauna and other indicators of environmental health
- human rights impact assessments
- undertaking WRSA involving stakeholder engagement
See more information on how BHP engages with communities.
BHP undertakes ongoing assessment of baseline conditions at a catchment level and the potential direct, indirect and cumulative impacts of our operated assets on the baseline condition. Climate change science must be factored into this assessment. For more information, see Our Requirements for Environment and Climate Change standard.
Our Water Stewardship Strategy includes a collective action and a disclosure pillar, both of which focus on water governance and collaborating with host communities, government, industry peers and other stakeholders.
While BHP does not have the ability to directly manage all catchment risks, we need to maintain a focus on management of our contribution to the risk and commit to participate in collective approaches to ongoing catchment governance. For example, we have worked with the CSIRO to assist with Ningaloo Reef public data collection, and we actively participate with the Fitzroy Basin Association and Queensland Reefs group which both do public education.
Closure Scope Risk associated with water management and post-closure obligations for operated assets that are closing, have closed, or are under ‘care and maintenance’, which can cause water quality (within the BHP footprint and beyond) or water accumulation issues. Potential impacts Ineffectively managed operational water-related closure risks may adversely affect the environment (for example, contaminants in surface and groundwater, changes to landforms), communities, public safety and our costs associated with managing water now and over the long term. Management
Effective closure planning is an important control across BHP’s operated assets. Closure plans are required to consider issues such as pit void lake formations, acidic and metalliferous drainage and saline water accumulation, and potential impacts to both surface water and groundwater. For legacy assets, (legacy assets refers to those BHP-operated assets, or part thereof, located in the Americas that are in the closure phase), controls may also be similar to those for the dewatering, extreme weather and water quality risk areas.
See more information on our approach to closure.
For more information on the financial provisions relating to closure liabilities, refer to the BHP Annual Report.
Compliance Scope Risk associated with changes in the regulatory settings, including the nature and extent of regulation related to water allocation, permits, tariffs and reporting obligations.
Our operated assets function in mature regulatory environments for water and regulation compliance requires constant vigilance.
The regions in which we operate have reasonably mature regulatory systems for water extraction, use and discharge, although their approach and requirements vary by operated asset and jurisdiction. Typically, we are granted a licence to extract a prescribed quantity of water for a defined period and to discharge water at certain quantity limits and quality standards.
Potential impacts Non-compliances could result in lower-order infringements through to financial penalties, enforcement orders or proceedings, social activism or increased cost to BHP.
Environmental impacts may cause regulatory breaches or legal liability.
Monitoring and reporting requirements are usually defined by permits and licences. In addition to local regulation, we apply a range of internal standards. Please refer to Water Governance for a detailed overview of these. There are a few instances where water use and discharge may not be regulated via licences or permits. Our internal standards require that, in these instances, BHP follows relevant local guidance e.g. Australian and New Zealand Environment and Conservation Council (ANZECC) Water Quality Guidelines or the International Convention for the Prevention of Pollution from Ships. Application of these guidelines typically requires consideration of the water quality in receiving waterbodies.
Water regulatory requirements must be continually monitored and, where required, our compliance improved.
Ongoing engagement with regulators helps to understand their priorities, how regulatory requirements apply to our operated assets and at a catchment level, and address existing non-compliances regarding surface water and groundwater.
Dewatering Scope Risk associated with management of dewatering activities and surplus mine groundwater and surface water (such as levels, volumes and pressures).
Many of BHP’s ore bodies are below the natural groundwater level and to access the ore we need to pump water.
Dewatering is an important activity that supports mine production, by enabling access to ore located below the water table or enabling access to ore by supporting pit stability.
Potential impacts Dewatering can potentially impact geotechnical stability and safety, water supply, excess water management, the environment, communities and production. Management
Management controls for dewatering include:
- mine planning
- maintaining an operational and predictive water balance
- defining dewatering and depressurisation targets
- monitoring and reviewing performance metrics
- environmental impact assessments
- managing excess/surplus water (such as the re-injection of excess water to local aquifers, where possible)
- ongoing hydrology assessments to inform planning
Extreme weather Scope Extreme weather can cause drought, snow or flood events and may arise from acute (event-driven, including increased severity of extreme weather events) or chronic (longer-term changes) to climate cycles. Potential impacts Extreme weather events may contribute to production, environmental, community and reputational impacts. For example, ineffective management during drought conditions may constrain production due to limitations on water availability. Ineffective management of excess water also has the potential to affect geotechnical stability and safety, prevent site access, cause injuries due to flooding and affect the environment, communities and production. Management
Forecasting and monitoring of extreme weather events is important in assisting timely and appropriate management. Other preventative controls include design criteria for surface water infrastructure (including extreme weather events analysis) and building integrity within the infrastructure. Mitigating controls include emergency preparedness, communications systems and adequately trained staff. For example, operated assets test the effectiveness of emergency preparedness for extreme weather events by undertaking emergency drills that include external agencies, such as regional fire and police as well as internal BHP resources.
Marine Scope Risk associated with the alteration in marine water quality (sea or coastal areas), water or seabed levels or biophysical changes to marine environments.
Marine ecosystems are susceptible to impacts resulting from changes to the physical (e.g. temperature and pH) and chemical (metal, hydrocarbon concentrations) parameters of the water body.
This risk can arise from significant or catastrophic loss of containment of hydrocarbons within Petroleum operated assets, discharges from desalination facilities or from port facilities located in proximity to communities and/or key marine areas.
Potential impacts Due to regional differences in marine ecosystems and potential cumulative impacts, the type and extent of the impacts to the marine environment for each of our operated assets may be different and could include increased costs for mitigation, offsets or financial compensatory actions or obligations.
Potential impacts include water quality impacts due to loss of hydrocarbon or chemical containment. Impacts to water quality have the potential to affect both the environment and communities.
Brine discharges at desalination facilities may result in the alteration of marine ecosystems.
Loss of containment or other major incidents may affect BHP’s licence to operate and/or production.
Controls for hydrocarbon containment include:
- pressure relief systems
- engineering design specifications
- operational procedures (e.g. job risk assessments, management of change, equipment performance standards, inspections and audits)
- passive protection
- oil plume modelling to inform potential impacts, and controls to minimise impacts
- continuous monitoring during operations
Mitigating controls include:
- communication and emergency drills
- preparedness plans and emergency systems.
To help minimise impacts associated with smaller discharges in marine environments, treatment, sediment, erosion and other collection and/or treatment systems are utilised.
Controls for desalination and port facilities include:
- ongoing maintenance of critical equipment
- monitoring and technical studies
- stakeholder engagement.
Tailings Scope Risk associated with the water infrastructure design, operation and reliability of tailings storage facilities could pose catastrophic failure, seepage and inefficient water management. Potential impacts Impacts arising from the ineffective management of tailings facilities can range from interrupted production to catastrophic incidents with multiple injuries and fatalities, widespread environmental damage and extensive community disruption, with flow-on financial and reputational impacts. Management
Following the Fundão tailings dam failure, BHP has sought to enhance our tailings management, governance and risk assessment processes, and contribute to raising industry-wide standards. BHP has formed an internal Tailings Taskforce.
Water access, sanitation and hygiene (WASH) and water-related human rights Scope Risk associated with providing access to safe and reliable drinking water (potable water) and appropriate sanitation and hygiene facilities, including availability of appropriate water infrastructure to supply WASH facilities.
The remote nature of many of our operated assets means BHP is often the supplier of water to our workforce for drinking and sanitation, and the manager of effluent. This role sometimes extends to neighbouring communities.
Potential impacts Ineffective WASH practices and infrastructure may result in the inability to provide the required quantity and quality of drinking water or sanitation. This may result in illness and potential fatalities, which could disrupt our operated assets, impact communities and the environment, have financial and reputational impacts and inhibit the delivery of our social value proposition. Our operated assets also have the potential to affect the cultural and spiritual values associated with water resources, including potential human rights breaches. Management
Understanding the baseline quality of the water we receive, the performance of our treatment plants and monitoring the water produced are our WASH priorities.
We have global drinking water standards that our operated assets are required to meet (see BHP Annual Report - Water Performance section). Other controls include appropriate infrastructure that is constructed, designed and operated to meet external standards by suitably qualified persons and is regularly maintained, inspected, monitored, with exception reports and responses, emergency response and business continuity planning.
Regular maintenance of water infrastructure, such as treatment plants, pipelines and tanks, is critical to ensure that water is adequate for our operated assets, both in quantity and quality.
Human rights impact assessments (HRIAs) are a control that assesses both direct impacts to the workforce and communities, as well as potential impacts to other human rights, such as Indigenous, spiritual and cultural rights. All operated assets are required to undertake and review HRIAs regularly.
Water quality Scope Risk associated with changes in the chemical attribute of water, which may occur from runoff or seepage (from exposed ground, pit slopes, waste rock), infiltration from water, tailings and process facilities, infrastructure, and increases in salinity due to long-term storage of water. Potential impacts Changes to the quality of water that runs through or under an operated asset can affect the surrounding groundwater resources and streams. This can affect other water users and the environment. Changes in water quality can also constrain production or result in water accumulation over time (due to discharge restrictions), which makes management during extreme rainfall events more challenging. This risk can persist for years after mining activity has ceased. Management
Management of water quality risks requires an understanding of what contributes to changes in water quality, how this may affect sensitive receptors within the environment and/or communities, and the appropriate management measures required. Controls include:
- avoiding contact with substances that may affect water quality
- appropriate design, construction and monitoring of facilities to prevent and detect contamination
- minimising impacts through treatment and monitoring of water quality outcomes, so that the effectiveness of controls is understood and can be reviewed as appropriate
Water security Scope Risk associated with current and future balance between water supply, including the capacity and reliability of water supply infrastructure, and demand for all relevant users and related to the ecosystem function. A continuous and sustainable water supply is critical to our operated assets, including provision of sufficient and well-maintained water infrastructure.
The level of risk is dependent on location and climate impact water availability and supply. For example, availability has been a risk at New South Wales Energy Coal in the Hunter region of eastern Australia due to extended periods of below-average rainfall.
Potential impacts The inability to secure water access can constrain production, affect the environment, create community concerns about water availability and have regulatory, legal and financial implications.
Insufficient or poorly maintained water infrastructure can result in the inability of water infrastructure to supply the required quantity or quality of water necessary for our operated assets. This can result in losses in production and impacts to the long-term viability of our operated assets.
An adequate understanding of technical aspects of the water resource, hydrological conditions and/or long-term changes in water availability and management is critical to ensure ongoing supply. In addition, understanding demand through water balances, predictive modelling and monitoring is central to effective water security.
Many of the controls in place for the management of catchment risk are applied for management of water security risks. Please refer to controls listed above for the Catchment risk area of this table.
We seek to use lower-quality water where feasible and recover and recycle water to reduce fresh water requirements.
Water infrastructure needs to be:
- designed and constructed to meet internal and external standards
- regularly inspected and maintained
- operated within set parameters
- regularly monitored with processes to respond to monitoring
Regular maintenance of water infrastructure, such as treatment plants, pipelines and tanks is critical to ensure that water is adequate for our operated assets, both in quantity and quality.
Climate-related risks are discussed in a number of the risk factors in the risk section of the BHP Annual Report. From a water-related risk perspective, climate change can be considered as a potential amplifier of existing risks as it may increase the likelihood and/or severity of other water-related risks or could result in new risks. Potential direct water-related impacts resulting from climate change may include changes in precipitation patterns, sea levels, storm intensities, temperatures and frequency and/or severity of natural disasters (such as floods or droughts).
Indirect potential impacts of these changes may include coastal erosion, storm tide inundation, and production of toxic microorganisms and, over the longer term, reduced rainfall could create water security issues while increasing the need to manage excess water. Assessments of the potential impact of future climate change policy and regulatory, legal, technological, market and societal changes on water-related risks are uncertain given the wide scope of influencing factors and the countries where we do business.
Our operated assets are required to apply the BHP Risk Framework to consider physical climate change risks and options to build climate resilience into their activities, for example, by designing new facilities to withstand projected sea level rise or changing climate patterns, or factoring forecast increases in extreme weather events into operated asset-level plans. We are progressively implementing full physical risk assessments under our Adaptation Strategy and aim to be in a position to report on specific material physical risks and potential financial impacts by FY2025. We also require new investments to assess and manage physical climate change risks in line with the BHP Risk Framework. For more detail, see the BHP Climate Change Report 2020.
Examples of significant operational water-related risks
Catchment-level risks are classified as Tier 1 across all of our mining operated assets as the nature of these assets coupled with their physical context has the potential to significantly impact water resources and related environmental and/or social values. This may arise because of direct impacts either from BHP’s operated assets or from the cumulative impacts from our activities combined with those of others within a region.
For example, WAIO in the Pilbara region of Western Australia is located alongside other mining companies’ facilities. The cumulative effect of combined activities has the potential to impact groundwater that supports local ecosystems and has important spiritual and cultural significance for Indigenous communities.
To better understand potential impacts, WAIO conducted a strategic environmental assessment that took a regional approach. A key element of the assessment was to understand the potential cumulative impacts and management strategies associated with surface water and groundwater. An analysis was also undertaken to identify key, water-dependent environmental features within the upper Fortescue River catchment.
This innovative approach allowed WAIO to develop proactive, outcome-based management actions to cumulative-impact risks. These actions now inform short- and long-term operational planning to avoid and minimise impacts to water-dependent environments.
- Reducing reliance on groundwater at Escondida
- River Health Partnerships in Queensland, Australia
- Martulu-Palyalu Project
Please refer to our ‘Managing excess water in the Pilbara’ case study for an example of how BHP manages dewatering risks.
Extreme weather risk
Extreme weather risks are required to be managed at the operated asset level. These risks have been identified as Tier 1 at WAIO (cyclones), Escondida (extreme precipitation events), Pampa Norte (extreme precipitation events), BMA and BMC and New South Wales Energy Coal (variable rainfall including extreme rainfall and cyclones and periods of drought) and Petroleum (cyclones).
The climate at our BMA and BMC operated assets is characterised by wet season rainfall, which includes tropical cyclone events that produce most of the annual rainfall and a dry season during which little rainfall occurs.
Mine-affected water (MAW) is one of the key operational water-related risks for BMA and BMC. MAW is rainfall runoff from active mining areas and other water that has been used in the mining process. MAW is typically stored in mine pits and dams. Over time, this water may become more saline due to evaporation or it may have increased suspended solids due to wash-down or erosion from surrounding mining activity. MAW is used for dust suppression and coal washing. Too little MAW may limit production and excess water may obstruct access and limit production in operational pits.
Water management activities aim for the balance between too much and too little water on each site. This allows sufficient storage for runoff from rainfall events, while not affecting production and not allowing unauthorised site discharge of MAW. Discharge of MAW needs to be managed in accordance with licence conditions, which in some cases may require management of MAW prior to discharge. Appropriate management should minimise out-of-season flow in ephemeral creeks and rivers, which has the potential (if not controlled) to increase sediment and salt loads.
Due to a series of extreme rainfall events, excess water management is central to BMA and BMC’s operating strategy. Some BMA sites still hold excess water after the 2011 and 2013 floods and tropical cyclone Debbie in 2017. One way we seek to manage this is to move MAW from sites with water excess to sites that have too little water. A further control is to avoid the accumulation of additional water from excess rainfall events. BHP undertakes detailed studies on an ongoing basis that assess the benefit and cost of various options to manage excess water.
Ongoing modelling and simulations are used to inform appropriate flood risk mitigation activities, which include construction of flood levees and preparation of emergency evacuation plans.
Climate change has the potential to heighten these extreme weather risks and introduce new ones.
Water access, sanitation and hygiene risk
Water access, sanitation and hygiene (WASH) is a Tier 1 risk at all operated assets where drinking water and sanitation facilities are provided for the workforce and/or communities.
The remote nature of many of our operated assets means that BHP is often the supplier of water for the purposes of drinking and sanitation, and the manager of effluent with respect to our workforce. In some instances, this role extends beyond our operated assets to our neighbouring communities.
In such circumstances, we are committed to providing access to safe and reliable drinking water (potable water) and appropriate sanitation and hygiene facilities.
For example, WAIO provides drinking water to the community of Newman, five operational mining areas and one closed mine, and supplements supply to our operations at port and rail. Therefore, management of this water is critical to our activities and surrounding communities. To manage this risk, WAIO adopted a management system approach based on ISO 9001, which integrates World Health Organisation (WHO) and the Australian Drinking Water Guidelines requirements, as well as a number of additional standards to enable a holistic approach to drinking water safety and infrastructure management.
Our operated assets also have the potential to affect the cultural and spiritual values associated with water resources. Where relevant, BHP engages with local and Indigenous communities to understand and seek to minimise effects to the cultural and spiritual value.
Water quality risk
Please refer to our Island Copper case study for an example of how BHP manages water quality risks.
Please refer to our Beenup Titanium Minerals Project Closure case study for an example of how BHP manages water risks in relation to closure.
Water-related risk in the value chainWater-related risks can indirectly affect operations via our value chain, from supply to operated assets to customers. For example, floods in one part of the world may affect supplies of a critical input or item of equipment necessary to sustain our operated assets. Additionally, tightening regulation around water discharges in a particular country or region may constrain our customers’ manufacturing operations. This may have flow on effects to our ability to sell certain commodities.
BHP has potential exposure to water-related risks across its value chain and climate change may increase our future exposure. Customers and suppliers may be exposed to areas of high to extremely high water stress. Many are also located in areas with a higher likelihood of flooding. We need to understand these factors and respond to the challenges, working with our customers and suppliers.
BHP undertook an evaluation of our value chain in FY2018 to identify customers and suppliers with potential water-related risks. This highlighted a concentration of suppliers and customers in China that may be exposed to water-related risks. Commencing in FY2019, we began a more detailed evaluation, informed by the BHP Risk Assessment Framework, of value chain water-related risks in this region. During FY2020, this evaluation identified suppliers in China operating within areas of water stress and potential partners for water collective action projects.
In FY2021, we extended the scope of intelligence gathering to other regions where our suppliers operate. This is furthering our understanding of opportunities to work with suppliers and customers to better manage water-related risks within our value chain.
For further information on value chain initiatives please refer to Value Chain.
Non-operated assetsFor information on BHP’s interests in companies and joint ventures that we do not operate and how we engage with them, refer to the non-operated joint ventures (NOJVs) information in the BHP Annual Report.
Water stewardship is as vital for our Minerals NOJVs and Petroleum non-operated assets as it is for our operated assets.
Petroleum non-operated joint venturesFor our current Petroleum non-operated assets, processes are in place to identify and manage water-related risks pursuant to the respective joint operating agreements. An example is in Bass Strait, offshore Victoria, Australia, where the operator is monitoring a number of water-related risks. These include risks associated with per-fluoroalkyl and poly-fluoroalkyl substances, non-aqueous phase contamination and oil-in-water metering.
Minerals non-operated joint venturesWe engage with our NOJVs to better understand their management of water-related risks.
We have worked with Antamina and its shareholders to secure Antamina’s commitment to align with ICMM Mining Principles.
For more information regarding the Samarco NOJV, refer to the Samarco section.
Water management can create opportunities
BHP recognises that our positive environmental performance (including water stewardship) contributes to social value and the resilience of nature.
Effective water-related risk management can contribute to long-term business, social and environmental benefits, such as:
- increased productivity
- improved community benefits and resilience
- improved water disclosure and governance
- becoming a partner-of-choice to governments and communities in new and existing jurisdictions
- access to resources by obtaining and retaining rights to operate and expand our current operated asset base
- reduced liabilities and long-term legacy issues
- increased long-term business resilience
An example of an opportunity from effective risk management is how WAIO manages dewatering. Dewatering at WAIO produces more water than is required for mining activities. This surplus water is a valuable resource and WAIO’s preference is to implement a controlled return of this water to aquifers through a managed aquifer recharge process. This approach has a number of benefits. It seeks to preserve the water resource for future use by BHP or other parties, minimise our environmental footprint, promote resilience of water resources and the environment and place less impact on the cultural heritage values of the surrounding landscape, which has been an important consideration for Traditional Owners.
BHP’s Water Stewardship Strategy seeks to leverage technology solutions to significantly reduce water-related impacts, increase water efficiency and deliver benefits beyond our operated assets.
We have developed a roadmap of potential water technologies. This roadmap identifies emerging and long-term challenges and strategic opportunities to resolve these through technology and innovation. The roadmap was developed by overlaying operated asset-level water risk with the water stewardship vision and objectives to leverage technology solutions that drive a step-change reduction in water risk and realise value creation opportunities. Some examples of technologies and initiatives that are included in the roadmap include:
- Olympic Dam tailings decant water treatment for reuse and to partially offset Great Artesian Basin supply
- Escondida tailings dam water recovery/treatment for reuse
- BMA and BMC mine-affected water treatment for reuse or discharge
We have a range of core business processes, requirements and guidance materials that apply to our management of water at Group and operated asset-levels. These include:
- our corporate planning, scenario, strategy and investment evaluation processes
- standards such as Our Requirements and other Group-wide standards, including those on risk management, environment and climate change, closure, human rights, community and stakeholder engagement
- target setting
- water accounting
- audit and assurance
- technical water management standards.
The Our Requirements for Environment and Climate Change standard requires that our operated assets establish baseline water conditions, identify water-dependent receptors and water uses and stressors and seek to predict changes to these conditions, including the potential impacts of climate change, for the ‘life of asset’.
Our operated assets are also required to determine their contribution to the current and future cumulative impacts and define thresholds and controls (e.g. environmental effects monitoring) to manage catchment-scale impacts, develop and review water forecasts over the life of asset, undertake a WRSA and develop operated asset-specific, context-based water targets. A situational analysis is an analysis of the water resources and catchments that the operated asset interacts with, including consideration of:
- the sustainability of the volume and quality of the water resources, and related environmental, social or cultural values considering interactions of all parties and climate change forecasts
- the state of water infrastructure and WASH of local communities
- the environmental health of the water catchments that feed the water resources, considering the extent of vegetation, runoff, and any conservation of the area
- external water governance arrangements and their effectiveness.
BHP has developed technical standards that set minimum standards for water management across its operated assets. These standards include the requirements for all operated assets, including legacy assets (legacy assets refers to those BHP-operated assets, or part thereof, located in the Americas that are in the closure phase), to implement measures to minimise impacts to water resources and impacts to water-dependent ecosystems, communities and cultural values. The standards require development of:
- plans that incorporate initiatives that substitute, reuse and reduce our reliance on and impacts to fresh water
- water balances that consider all primary water inflows, uses, treatment, storage, losses, diversions and discharges
- plans for management of excess water (storm water, dewater and runoff) to ensure that a minimum tolerable level of impact to the receiving environment is achieved
- documentation of potential and known sources of groundwater and surface water contamination across the exploration, project, operating and closed sites
- a risk-based management program where there is potential for groundwater or surface water contamination or water quality impacts. The program must characterise the type, distribution and fate of contamination and establish water quality performance criteria in operational management activities (e.g. for excess water release or treatment)
BHP has established cross-functional teams to implement our approach to water stewardship at Group and regional levels. These teams include representatives from Planning; Engineering; Strategy; Health, Safety & Environment; Community; Corporate Affairs; Operations; Risk; and Legal.
More detail on the Group-level processes and requirements and how they apply to water-related risks is set out below.
Existing process Application to water
BHP has a corporate alignment planning (CAP) in place designed to implement long-term Group strategy. The CAP process guides the development of plans, targets and budgets to deploy capital and resources.
The planning process seeks to deliver an understanding of our projected production levels and water requirements over decades. Risks and opportunities are required to be identified and assessed against social, environmental and economic considerations. For example, for some operated assets, access to ore is dependent on effective water management, therefore water is integral to short-term and five-year plans as well as production targets and effective environmental management.
BHP assesses how divergent policy, technology, market and societal outcomes could impact our current portfolio. We undertake ongoing monitoring of the macro environment that seeks to re-assess the resiliency of our portfolio because we recognise the world could respond in a number of different ways.
We undertake ongoing assessments of changes to legislation that identifies water as a national security interest; changes in valuation and cost of water; water-related legal or regulatory action against companies; changes in ocean health; and the nature and extent of water stress as water availability and populations change.
BHP has a Capital Allocation Framework (CAF) that is designed to maximise shareholder value.
While our current investment evaluation process includes a qualitative assessment of sustainability risks and opportunities, we recognise there is room for greater understanding of water in future assessments. Our Water Stewardship Strategy includes an assessment of the adequacy of the current process (see Progress against Water Stewardship Strategy in Section 4.8.6 of the BHP Annual Report).
Dam safety reviews are mandatory as part of BHP global standards. The reviews are based on the Canadian Dam Association’s recommendations and include an evaluation of hydrogeological conditions that may influence dam stability.
For more information on tailings dam management, refer to the Tailings section of the BHP Annual Report.
Our Requirements standards
BHP has a number of Our Requirements standards that outline Group-wide mandatory minimum performance requirements. They are supported by technical standard and guidance documents.
The Our Requirements for Environment and Climate Change standard and the Water Management Standard are key documents that set mandatory minimum performance standards for water management and outline both Group-wide and operational-level requirements.
At BHP, management of risk is central to creating long-term value. Our mandatory minimum performance requirements for risk management outline BHP’s risk process that includes steps for risk identification, analysis, treatment, monitoring and review, including specific requirement for material risk. Risks are subject to internal and, in some cases, external evaluation of effectiveness of controls.
Water-related risks are required to be identified, assessed and managed in line with the broader risk process as outlined in our water-related risk content on this webpage and in the BHP Annual Report. The understanding of water-related risk is increasing over time as discussed in our water performance and our water-related risk content on this webpage. BHP’s risk processes assist in monitoring and assessment of the implementation of our Water Stewardship Strategy, and support the observation of global trends for water availability.
The Our Requirements for Environment and Climate Change standard takes a risk-based approach to managing water-related risks.
All our operated assets must understand baseline conditions at a catchment level and the potential direct, indirect and cumulative impacts of their operations on these conditions. Climate change science must also be factored into this assessment.
The Our Requirements for Closure standard requires closure considerations to be built into management and decision-making throughout the life cycle of our operated assets to minimise longer-term risk and liabilities and identify and harness opportunities.
Each operated asset is required to develop a Closure Management Plan that covers the life of asset to minimise closure-related risk, including those that are water-related, and include long-term monitoring to verify the effectiveness of controls and maintain performance standards.
We aim to identify and manage human rights risk in BHP activities and processes via human rights impact assessment and integration with our risk management system.
Our Water Stewardship Position Statement recognises water access and sanitation as basic human rights. We require our operated assets to assess direct impacts on people, the interrelationship with other human rights, such as Indigenous, spiritual and culture rights, and specific implications for vulnerable and or marginalised groups. The right to water and sanitation entitles everyone to sufficient, safe, acceptable, physically accessible and affordable water for personal and domestic use and the provision of sanitation facilities that offer privacy and dignity. Our operated assets are required to identify and document potential human rights risk by undertaking human rights impact assessments. For further information, see Human rights.
Community and stakeholder engagement
Understanding the needs and concerns of communities and other stakeholders is fundamental to water stewardship. The long-term nature of our operated assets means it is critical we make effective and genuine connection with people that can be sustained over time.
Climate change adaptation planning
Our long-life operated assets require a robust, risk-based approach to adapting to the potential physical impacts of climate change. Effective analysis of regional climate science is critical to inform our resilience planning at an operated asset level and improve our understanding of the climate vulnerabilities our operated assets may face.
We have set minimum requirements in BHP's Our Requirements for Environment and Climate Change standard that our operated assets need to address to understand and plan for climate mitigation and adaptation. Many of these relate to water security and water scarcity.
Audit and assurance
Our Internal Audit and Advisory (IAA) team evaluates the design and effectiveness of our processes and management of material risk, including water-related risks. These results are considered in the development of plans to address improvements where required.
IAA periodically undertakes a review of material water-related risk and performance data to improve our understanding and consistency of approach to water management.
External third-party assurance providers routinely evaluate our water data and processes to assist us in accurately representing our commitments and action. Refer to the assurance statement in the BHP Annual Report.
We have publicly reported our water withdrawals and discharges for more than 15 years, since the establishment of the Minerals Council of Australia’s Water Accounting Framework (WAF) Input-Output Model.
We transitioned our reporting in FY2019 to align with the ICMM ‘A Practical Guide to Consistent Water Reporting’ (ICMM Guidelines), an international accounting framework to allow for comparable water data across the mining and metals industry. Although the ICMM Guidelines are in general alignment with the WAF and the basic reporting requirements of the Global Reporting Initiative, alignment to the ICMM Guidelines has resulted in some changes to the way we now report water data. A key change relates to the terminology we use. We now describe our water inputs as water withdrawals and what we previously referred to as water outputs is now referred to as water consumption or water discharges.
Our reporting metrics are in line with the ICMM guidance, such that we report:
- our water withdrawals (water intended for use by an operated asset) by source, by quality and by operated asset
- water consumption (water used by the operated asset) via the type of consumption (e.g. evaporated, entrained)
- water discharge (water returned to the environment ) by destination, operated asset and quality
- water diversions (water actively managed by an operated asset but not used for any operational purposes) by quantity
- water recycled/reused (water that is used more than once at the operated asset) by quantity and efficiency.
BHP has a commitment to contribute to improved mining sector water reporting through strengthened ICMM guidance, aligned with GRI requirements. In FY2021, we collated information on change in water storage as described in the revised ICMM Water Reporting Guidance and used it to support further assessment of the validity of assumptions underpinning asset water models and water balances. Water modelling contains a degree of uncertainty due to inclusion of estimates and assumptions. The collation of information to inform reporting of change in water storage has identified areas for improvement in the estimated and simulated data within the water models as currently used at our Coal assets. We intend to undertake work during FY2022 to assess underlying assumptions in an effort to improve the water modelling at those assets, as well as further maturing the measurement of changes in water storage across the Group. For this reason, we have not included change in water storage data in our reporting for FY2021.
In FY2021, we also introduced the disclosure of the proportion of withdrawals, discharges and consumption that occurred in areas of high or very high physical risk areas. We have used the WWF Water Risk Filter physical risk ratings to determine which of our operated assets are classed as being in water-stressed areas. (See ‘BHP and basin risk’ in the ‘Water and risk at BHP’ section above for a full overview of this change).
The reported metrics are either measured directly, estimated or simulated. The WAF accuracy statement process is used to determine level of accuracy for each metric. During FY2021, we continued to focus on improving the robustness of water data in line with the ICMM Guidelines. We endeavour to directly measure water withdrawals, water consumption, water discharges, water diversion and water recycled/reused. This is intended to allow us to regularly track and monitor data quality and performance. Note that the WAF accuracy statement is not necessarily a statement about water data quality and BHP has identified opportunities for improvement of water data quality throughout FY2021. Using the WAF accuracy statement approach as outlined in the ICMM guidance (see section 3.3 of the WAF), we assessed that approximately 85 per cent of withdrawal volumes are measured for a majority of sources for the majority of the year, therefore this data is considered to be at a high accuracy level.
Our evaluation indicated that there was only a moderate level of accuracy in the measurement of reported discharge volumes. Previously we had a high level of accuracy for measurement of discharge volumes. The reduction in accuracy is due to issues with measurement equipment for our brine discharge at our Escondida desalination facility, whose discharges represent approximately 60 per cent of our global discharge volumes. The measurement equipment was repaired during FY2021 and we expect the accuracy of discharge volumes to return to high in FY2022.
We simulate or estimate elements, such as evaporation and entrainment volumes, at all our mineral resources operated assets as these are challenging to measure and vary over time due to seasonal climatic changes and product variability, which results from the changing characteristics of ore bodies (for example, moisture content and whether the ores are located below or above the water table). Estimation is used in some instances, such as for runoff at BMA and BMC, for quality categorisation. This focus on improvements in data quality and understanding, particularly at WAIO, BMA and BMC, has resulted in restatement of the FY2017 data that formed part of the FY2017 baseline for the freshwater withdrawal target.
We seek to minimise our withdrawal of high-quality fresh water, which is water with low levels of salinity, metals, pesticides and bacteria and is relatively neutral (pH 6-8.5) and use lower quality or saline water instead. In FY2021, approximately 80 per cent of our water withdrawals consisted of water classified as low quality. The definitions for water quality types are provided in section 4.11.4 of the BHP Annual Report and a detailed description is available in section 2.4 of the WAF.
BHP has continued to group water quality into three categories in line with the WAF, as this provides more granularity. Type 1 and Type 2 equate to high-quality water, while Type 3 equates to low-quality water under the ICMM Guidelines.
Water performance summary
During FY2021, we continued to progress our Water Stewardship Strategy. Significant milestones included the implementation of the global technical standards, an assessment of operational water-related catchment and marine region risks and alignment of operational water-related risk to the BHP Risk Framework.
In FY2022, we intend to complete the development of our context-based, operated asset-level water targets and release our initial set of context-based, operated asset-level water targets as part of our annual reporting suite for FY2022.
The nature of these targets will vary across our operated assets, as we consider both the nature of our interactions with water and the shared water challenges within each region. The water resource situation analysis commenced in FY2021 and is intended to be completed in FY2022, which we expect to involve collaboration with interested parties within the regions to address our shared water challenges.