The water issue is not as simple as being able to locate a captive source to start a development, it is much more complicated.
"From supply origin (surface, ground, sea or third-party water), management (recirculation and efficiency) to discharge (treatment and final discharge), there are political, environmental, economic and social repercussions," the analysts said.
All of these have led to investors asking mining companies how they plan to manage water resources when evaluating potential investment projects.
"This question is as important as a company's return [on investment] because without water simply there will be no return."
Water is expensive: it represents around 10% of infrastructure capital expenditure, according to Wood Mackenzie.
It is also a potential source of political, environmental and social conflict. This could be because the resource is in regions of drought or scarcity, has the potential to cause pollution by discharge, or its massive consumption could have an impact on the surrounding communities.
Just how companies plan to use and store this water is also facing increased scrutiny.
"The requirement for environmental regulations in different regions and countries also leads to the assumption that governments will apply stricter regulations due to scarcity or pollution of water resources," the analysts said.
With tailings dam disasters still fresh in the memory, these regulations are only going to get stricter.
As a result, more sustainable water resources are going to be required and the industry is going to have to improve upon its record when it comes to recycling water.
Wood Mackenzie said the industry is confronting the issue, and has in response turned to industrial and seawater use as opposed to resources from rivers, lakes and wetlands. The use of seawater and recirculated water increased 250% and 125% between 2012 and 2016, according to the research firm.
But as has been shown with desalination plants in Chile, the cost to use and process seawater is high.
BHP (AU:BHP) and its partners are having to invest US$3.4 billion for a 2,500 litre per second plant at its Escondida copper mine, according to Wood Mackenzie.
As a result, companies will have to get much better at recycling water in order to either avoid such capital expenditure or ensure the payback is more than the initial outlay.
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