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’ – that includes the interactions within water catchment areas or basins – when managing risk. As part of our Risk Framework, our operated assets and functions 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 in relation to water-related risk management to further identify and assess operated asset water-related risks, including catchment-level risks. In FY2020, we completed risk assessments for the catchments and basins where we operate to develop a more comprehensive understanding of the water-related risks in our operational regions.
BHP and water sensitivity
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.
To better understand and manage the water-related risks for BHP at a portfolio level, we have assessed the water sensitivity of the locations in which we operate. The World Resources Institute’s (WRI) Aqueduct global water risk mapping tool is a widely used approach for assessing baseline water stress. We use the Aqueduct analyses within one of our factors (‘Competition for water resources’) in BHP’s water sensitivity assessment table below, while recognising that, in isolation, it has limitations for BHP due to its current exclusion of groundwater resources and the limited detail of data sets for some of our operating regions.
We define water sensitivity as the degree (high, moderate or low) to which a region is sensitive to a range of water-influencing factors that are identified below. This assessment is primarily qualitative.
The factors we assess are:
Climate: Different climatic conditions influence the availability of water and the way water interacts with the physical environment. We operate in a range of climate zones, including arid; hot desert; warm temperate; humid; and cool as noted in the table below.
BHP water source interactions: The water resources we extract from and discharge to vary across each operated asset and influence the exposure we have to particular water resources (i.e. surface, ground or marine water resources).
Competition for water resources: Most of our operated assets share water resources with other parties, including communities, agriculture, other industries and the natural environment. As a result, we consider factors such as stakeholder concerns and expectations, cumulative impacts and the extent to which a resource is shared with communities and the natural environment. We apply baseline water stress (using WRI categories) to inform the sensitivity of the water resource to competition by evaluating the total withdrawal with the total water resource available. A higher ratio indicates more potential for competition and thus the risk of higher stress.
Sustainability of water resource: Water resources are sustainable when their quantity and quality continue to support environmental and social requirements and values, for example maintaining vegetation populations or community water supplies. Understanding water resource sustainability and the tolerance to climatic and other changes is essential to effectively manage the potential impacts from BHP to water resources, the environment and communities. It also allows us to understand the potential impacts to our operated assets from both environmental variations (e.g. in climate) and from activities of other parties that use or interact with the water resource.
Regulation: 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. Monitoring and reporting requirements apply to support compliance with these conditions. 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.
For a summary of our water sensitivity assessments for each operated asset and the catchment or marine region in which they are located, refer to the table below. We estimate that 75 per cent of our operated assets are in areas of moderate-to-high water sensitivity.
Our Escondida and Pampa Norte operations in Chile rate as having high overall water sensitivity due to their extremely dry and remote locations, coupled with historic use and interactions with the limited groundwater resources and an increasing interaction with seawater resources in these regions, which are highly significant to both the environment and local communities, including Indigenous peoples and coastal communities. The water sensitivity at Queensland, New South Wales Energy Coal and Olympic Dam, in South Australia, is elevated due to the level of focus by stakeholders and regulators in relation to water interactions within the regions of these operated assets; for example, our Olympic Dam operation manages its extraction from the Great Artesian Basin (GAB) closely because the GAB supports important springs and is a resource shared with Indigenous peoples, communities and other industries.
The following table summarises our water sensitivity assessment and the degree (high, moderate or low) to which an operated asset is sensitive to a range of water-influencing factors. This assessment is primarily qualitative.
How we assess water sensitivity at BHP
(L = Low influence on water sensitivity; M = Medium influence on water sensitivity; H = High influence on water sensitivity; NA = Not applicable)
(1)In accordance with Köppen-Geiger climate classification terminology.
(2) Derived from the World Resources Institute’s Aqueduct global water risk mapping tool and the associated descriptors for baseline water stress: Low (<10%); Low to medium (10–20%); Medium to high (20–40%); High (40–80%); Extremely high (>80%); Arid and low water use; and no data. Gassert, F., M. Luck, M. Landis, P. Reig, and T. Shiao. 2014. Aqueduct Global Maps 2.1: Constructing Decision-Relevant Global Water Risk Indicators. Working Paper. Washington, DC: World Resources Institute. Available online at wri.org/publication/aqueduct-global-maps-21-indicators.
(3) BMA = BHP Mitsubishi Alliance BMC = BHP Mitsui Alliance. Further description of all operated and non-operated assets can be found in Section 1.9 of the BHP Annual Report.
Water sensitivity across BHP operated assets