Moody’s report predicts escalating costs

South African mining companies face escalating operating costs and capital expenditure in the next 20 years as climate change will cause water scarcity, according to a Moody’s Investor Services report last week. File Photo: IOL
JOHANNESBURG – South African mining companies face escalating operating costs and capital expenditure in the next 20 years as climate change will cause water scarcity, according to a Moody’s Investor Services report last week.

Moody’s senior vice-president and the report’s author, Carol Cowan, said mining companies faced substantial headwinds when it comes to securing reliable sources of water.

“Many countries, including Peru, Chile, Australia, South Africa and Mongolia, have large mining operations exposed to decreasing water availability,” Cowan said.

“In the next 20 years, all of these countries will be in the high to extremely high ratio of water withdrawals to supply, which will make it difficult for companies to secure reliable sources.”

This exposed these mining companies to elevated environmental risks that would result in higher costs from both an operating and capital development perspective, it said. The effect will force the government to implement stricter environmental regulations, affecting mining firms.

Source: iol.co.za