Australian uranium industry climate change vulnerability assessment☆
Introduction
The mining industry’s contribution to the Australian economy has historically been high: for example in 2015 it represented 46% of the total value of Australian exports (ABS, 2016). As a source of energy, uranium is a small part of this trade comprising just .8% of the total value of exports; however it represents 16.5% of the total energy exported from Australia in 2014–2015 (AG, 2016). Australia is the world’s third largest producer, behind Kazakhstan and Canada (World Nuclear Association, 2016a). Australia has 31% of the world's known uranium reserves, and supplies 12% of world uranium demand (MCA, 2016). At the present time, all of Australia’s uranium output is exported to Asia, Europe and North America. Australia’s volume of uranium exports is expected to increase by 9.9% during 2017–2018, in line with demand. This comes after a decrease of 6.8% in 2016–2017 (AG, 2017). The expected nuclear energy demand has been recently impacted by:
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The devastating earthquake and tsunami in 2011 that resulted in the Fukushima Daiichi incident. This incident contributed to reducing uranium demand worldwide and increased the costs of construction of power plants due to increased safety requirements and higher discount rates for investments in nuclear energy (Hayashi and Hughes, 2013)
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Higher costs of initial investment, technical/knowledge expertise in nuclear plant operations and more stringent market and regulatory requirements with local governments and worldwide agreements (IEA, 2011)
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A lack of worldwide agreement regarding the long term storage and treatment of nuclear waste (Bruckner et al., 2014)
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A trend of declining uranium spot prices in the last 6 years, with possible increases in future prices still dampened by the accumulation of inventories and abundant supply (AG, 2017).
Nevertheless, there are currently 66 reactors under construction, 160 planned and 300 in the proposal stages (WNA, 2016b). While Australia does not produce nuclear energy itself, the worldwide increase in nuclear power facilities offers a significant opportunity for the Australian uranium mining industry.
Uranium has been mined in Australia since 1954. During 2016, there were three Australian uranium mines operating: Energy Resources of Australia’s (ERA) Ranger mine located in the Northern Territory, BHP Billiton’s Olympic Dam and Four Mile mines, located in South Australia (WNA, 2016a). Their locations are presented in Fig. 1.
In 2015–2016, the majority of Australian uranium production (80.27%) was from the Ranger and Olympic Dam mines. Historically, these mining operations have been impacted differently by climatic conditions in both direct and indirect ways due to the nature of their operations (open pit and underground respectively).
At the Ranger mine, production and safety have been directly influenced by extreme rainfall. Olympic Dam has been indirectly affected through energy interruptions during heat waves and scarcity of water during prolonged periods of drought (BHP Billiton, 2009b, BHP Billiton, 2012, Torrisi and Trotta, 2013, Toledano and Roorda, 2014). For example, during 2016, an unusually heavy storm impacted operations at Olympic Dam mine that caused shutdown of the mine for 15 days due to energy supply issues (BHP Billiton, 2016).
Both mines have documented the financial impact of extreme weather events to their operations in recent years (BHP Billiton, 2009b, BHP Billiton, 2012, BHP Billiton, 2015, Rio Tinto, 2012, Energy Resources of Australia, 2013b) and they have considered climate change in their expansion plans (BHP Billiton, 2009a, Energy Resources of Australia, 2013b).
Climate change scientists suggest that extreme weather events (primarily heat waves) would increase in frequency in South Australia and cyclones will increase in intensity in the Northern Territory by 2030 (Watterson et al., 2015a, Watterson et al., 2015b, Moise et al., 2015, Reisinger et al., 2014). Loechel et al., 2013b, Loechel et al., 2013a have previously documented the disruption to the Australian mining industry caused by extreme weather events including drought, heat waves, and heavy rainfall. They also report that only a limited number of mining industry survey participants recorded that they were concerned about future climate change and the potential impact on their operations. At the time, mines were more concerned with developing mitigation measures to reduce their emissions (Loechel et al., 2013b).
Three years on, in 2016, some mining companies have accepted climate change as being a significant risk to their operations (Rio Tinto, 2015, BHP Billiton, 2015). This suggests that proactive adaptation measures may be necessary in order to ensure business continuity in the light of climate change (Hodgkinson et al., 2010, BSR industries series, 2011) within mine operations plans. Without climate change adaption strategies in place, production may be adversely affected, impacting on the world uranium supply chain. Therefore, there is a growing need to assess how climate conditions and climate risks have impacted the industry to date and how they may impact it in the future. For this purpose, a vulnerability assessment of the industry has been performed focusing on the current uranium operations at the Ranger and Olympic Dam mines.
Analysis of public domain company reports (full annual reports and sustainability reports) from both the Olympic Dam, and Ranger mine was conducted in order to identify how they have been affected by climate risks and if they have taken any approach to deal with future climate risks.
Vulnerability to climate change, as conceptualised by Ford and Smit (2004), Smit and Wandel (2006), Ford et al. (2009), Pearce et al. (2009), and Pearce et al. (2011) can be considered a function of exposure/sensitivity and adaptive capacity. Pearce et al. (2009) have defined components of vulnerability for the mining industry that have been applied in this study. They are provided below:
Exposure/sensitivity: the tendency of mining operations to be affected by climate conditions assessed by parameters including frequency, magnitude, location and impacts.
Adaptive capacity: the ability of the mining company to plan towards changing their operations to suit climate conditions. This involves the identification and characterisation of the current risk management plan’s ability to cope with climate risks.
Nelitz et al. (2013) have defined a vulnerability assessment as the process of measuring or characterising exposure, sensitivity and adaptive capacity of a system (natural or human) to any disturbance. Two approaches used to assess vulnerability include a top-down approach and a bottom-up approach (Nelitz et al., 2013). The top-down approach is focused on global climate models and their downscaling of projections that are used as inputs to project regional climate impacts and to evaluate the physical vulnerability (Nelitz et al., 2013). The bottom-up approach focuses on understanding the past and present vulnerability that is used to estimate future vulnerability and adaption options in order to reduce the future vulnerability (Nelitz et al., 2013). Both approaches have different emphasis or perspectives but are complementary (Dessai and Hulme, 2004).
In this study the bottom-up approach has been applied based on the input of stakeholders to evaluate both social and physical vulnerabilities (Nelitz et al., 2013). Predictive biophysical models have been replaced by stakeholder feedback that has been collected via survey methods.
Section snippets
Historical impacts of climate and extreme weather events
This section describes the climate characteristics and historical record of the main climate events that have affected the region where each mine is located. It also reviews expected future climate conditions, based on downscaled projection provided by the Intergovernmental Panel on Climate Change and Reisinger et al. (2014). These projections are based on the downscaling of Global Climate Model (GCM) simulations for each RCP scenario to the particular conditions of each area. A confidence
Vulnerability assessment
A vulnerability assessment of the industry has been undertaken based on stakeholder feedback collected via survey methods. The survey focused on sampling the opinions of uranium mining chain participants that include mining and service provider employees, consultants, contractors, government organisations, local communities and non-governmental (not-for-profit) organisations (NGOs). The survey was designed with questions based on historical climate impacts documented at the Ranger mine and at
Discussion of the results
This study provides a review and assessment of the past impacts related to climate conditions and climate risks for the Australian uranium industry (focused on the Ranger and Olympic Dam mines) and a future vulnerability assessment (based on past experience and future expected conditions) of the industry for climate change. The uranium industry was considered to be composed of a broad set of participants: not just the mining companies per se, but also contractors, consultants, mining services,
Conclusions
This study reveals the most influential climate risks for the uranium mining industry and how these have affected operations in the past, as well as the likely future impacts in South Australia and Northern Territory. Past-exposure was based on a review of company reports supplemented with the responses to the survey. Both factors were used to pose further questions to respondents regarding their estimate of future vulnerability. Furthermore, past direct and indirect climate-related impacts to
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This research has been funded by an Australian Postgraduate Award (APA) and the Commonwealth Scientific and Industrial Research Organisation (CSIRO).