A precious commodity: Water is a key concern for the mining sector

Looming on the long-term horizon is a major constraint for the mining sector: water. Though Mongolia’s mineral resources are scattered throughout the country, most of the ones now in development are in the Gobi Desert, the driest part of the country. That includes Oyu Tolgoi (OT) and Tavan Tolgoi (TT), the megaprojects that will in the near future be the biggest users of water at mine sites. The industry as a whole is likely to require large amounts of water in the future, and at a time when the trend is for the country itself to become more arid. Thus, desertification is increasingly an issue.

DECLINE IN WATER: According to the National Water Committee’s 2007 water census, surface water is in decline. The study found 5565 rivers in Mongolia in 2003 and 5121 in 2007. The number of streams fell from 9600 to 9340, and the number of lakes from 4193 to 3732. According to the committee, some 70% of surface water is found in the Altai, Khangai, Khenti, Khuvsgul and Great Khyangan mountain ranges. Precipitation for the country as a whole, according to the committee, is down 10% over the previous 60-year period, while the average temperature is up 1.9° C. That implies climate change could be factor. But it is not the only one. Desertification is also a problem, in large part because of the increase in livestock in the country since the Soviet period. In the liberalised market, herd size is unrestricted, which has led to significant growth (see Agriculture chapter).

DESERTIFICATION: Herders have increased their goat populations since then as the cashmere that comes from them is a key source of income. They also keep more livestock as a de facto insurance policy against winters so cold that animals cannot survive them. However, less is often more when it comes to husbandry.

Indeed, this has created a vicious cycle – more animals feeding on the same amount of vegetation means less food for each, and less ability to fatten up enough ahead of winter means more die before spring. Herders have responded by having even larger herds in order to avoid getting wiped out, and the land becomes more stressed as this cycle worsens. More animals eating roughly the same amount of plant matter causes desertification in arid areas as overgrazing leaves a lower amount of roots in the soil to help it hold water.

One potential solution is to offer herders livestock insurance, which could reduce the need for them to expand their herds so much. A pilot project from 2006-09 is being expanded to offer nationwide coverage, and is managed by a group including private sector insurers, the government and donor organisations.

In addition to water scarcity, purity is another issue, particularly in the crowded outskirts of Ulaanbaatar.

Here, decades of migration from herders giving up their rural lifestyles has produced “ger districts” unconnected to road, power, water or sewage services.

Government and health organisations fear that poor sanitation could contaminate the city’s water supplies, and are working to increase the percent of residents connected to city services from 50% to 80% by 2020.

INDUSTRIAL CONCERNS: Concerns for the mining sector, however, are more rural than urban in nature.

Fears about food supply for animals and people are a large part of the context in which water has emerged as an issue. While herders may not be aware of or concerned about desertification they are a demographic that lives off the land and wishes that it remain unpolluted. OT has been singled out as a populist concern even though its overseers say they plan to use water from an underground aquifer that is slightly briny, and therefore not potable. Furthermore, OT’s supporters say this aquifer is too far underground to mix with other aquifers, so there is no contamination risk.

However, concerns about the environmental impact assessment study on the project include that this source may not last the life of the mine. According to a report in the UB Post, 2.23 cu metres of water is needed to refine each tonne of ore. At the current rate of pumping, which the government has permitted at up to 810 litres per second, the water supply will last for 40 years, according to the newspaper’s calculation.

The environmental impact assessment for OT was published in August 2012, long after the project had been approved, according to the Bank Information Centre, a humanitarian watchdog group that monitors World Bank and International Finance Corporation (IFC) projects. Both organisations have considered participating in the development of the mining project.

According to IFC documents, during OT’s construction phase water was sourced from multiple aquifers within the mine’s licensed area, both shallow and deep. For the future, however, the deep aquifer to be used will come from the Gunii Hooloi basin, which the mine’s geologists determined was the only one with sufficient reserves for long-term operations that could be used without affecting surface water and vegetation. The government permit for the mine allows 810 litres of water to be extracted per second, slightly under the capacity of the mine’s equipment, which is 900 litres per second. According to the IFC just one herder keeping his flock at the north-eastern edge of the aquifer area where the deposit is closer to the surface than in other areas, would be affected by this water use. That herder is expected to be given an alternative supply should his well suffer, the IFC documents show.

A HOLISTIC ISSUE: While OT has attracted the most attention about its water-use plans, it is the southern Gobi Desert as a whole which may suffer from water shortages if mining activities go forward as planned. Tavan Tolgoi, for example, has attracted some opposition from locals upset at the mine’s plans to use water from Lake Balgas, the lone source of fresh water in an arid region. According to Erdenes Tavan Tolgoi (ETT), a division of the government-owned mining company that is developing the site, a long-term solution may require several water pipelines to be built.

A 2010 World Bank report estimated that demand across the whole region would increase from just over 80,000 cubic meters per day to as much as 550,000 cubic meters daily by 2020, with over 300,000 cubic meters going to mining. The existing groundwater potential, according to the report, would be enough to handle that level of demand for 25-40 years, but increasing beyond that could permanently lower the water table. The study also recommended further research on aquifer capacities and expected demand.

PIPELINE PLANS: According to ETT’s roadshow presentation, the government has approved a water-use permit for a groundwater source located about 65 km west of the East Tsankhi coalfield – one of the six major coal deposits that make up TT. Estimated water requirements for the coal handling and preparation plant are about 200 litres per second, with plans calling for an annual capacity of 20m tonnes per year. A power station on the site with a 300-MW capacity will require a further 20 litres per second. A pipeline is due be built from the water source starting in the first half of 2013, according to ETT’s plans, and be operational before the first phase of the coal processing facility is ready, which is envisioned for 2014.

Three rivers that could serve as alternative sources are the Tuul, the Orkhon and the Kherlen, and a pipeline would be needed in each scenario. A pipeline solution would be able to serve more than just TT, however. The proposal for the Kherlen River includes 540 km of pipelines that would deliver water to several other mines and to Sainshand, a city in the southeast that is envisioned as an industrial and logistics centre. A pipe from the Orkhon River would deliver to TT, OT and the cities of Dalanzadgad and Mandalgobi. For both projects, 50% of the water would be for mining and industrial use, 30% for agriculture and the rest of the supply allocated for livestock and human use.

A LONG-TERM SOLUTION: Water concerns also include addressing human needs on the mining site. As of 2012 drinking water on site was mostly bottled elsewhere and delivered by trucks. APU JSC, one of Mongolia’s largest publicly traded companies, has been the supplier of bottled water to the OT mine site. Demand as of late 2011 was estimated to be between 7 and 8 tonnes on a daily basis. The plan for OT also includes a waterbottling plant on site.

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The Report: Mongolia 2013

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