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Ecosystem valuation

Ecosystem valuation. informing decision-making in Rio Tinto’s Iron Ore mining in Western Australia. Where we operate. at April 2012. Key Mines and mining projects Smelters, refineries, power facilities and processing plants remote from mine. Aluminium Copper Diamonds & Minerals Energy

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Ecosystem valuation

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  1. Ecosystem valuation informing decision-making in Rio Tinto’s Iron Ore mining in Western Australia

  2. Where we operate at April 2012 Key Mines and mining projects Smelters, refineries, power facilities and processing plants remote from mine AluminiumCopper Diamonds & Minerals Energy Iron Ore NorthAmerica Europe Asia Africa SouthAmerica Australasia

  3. Rio Tinto Iron Ore: Owns 14 Mines, 3 ports and large network of railways; and currently produces 220 MT/yr

  4. Our Challenges in a Rapidly Expanding World • Iron ore production will increase from 220 to 353 million tons per year over next 40 years: • requires accessing the ore located below water table • involves dewatering and discharging large volumes of groundwater • will increase the footprint by ‘an order of magnitude’ • Understanding and addressing the Traditional Owners concerns linked to spiritual and other connection with land and water • Lowering of water table could be more than 140 metres • Dewatering creates a large drawdown and managing large volumes of water could be a challenge

  5. Quantifying dewatering volumes and potential biodiversity and ecosystem impacts • Requires prediction of: • the volume of groundwater to be extracted • duration of dewatering • total area impacted by dewatering (cone of depression) and discharge • changes in water quality • downstream impacts • time that will take for water table and the ecosystem recover • The challenge that we face with respect below watertable mining is globally unique

  6. Rio Tinto-IUCN-CSIRO project: case study • Expansion of operations at Marandoo Mine – surplus water management • Four major options for managing surplus water: • Supply near by town (Tom Price) and support mining operations • Recharging depleted aquifers • Discharge into nearby ephemeral streams • Introduce irrigated hay at pastoral station • All options come with financial and environmental costs and benefits, including the impact of aquifer drawdown • Rio Tinto committed to Net Positive Impact on biodiversity

  7. Innovations in Managing Biodiversity and Achieving a Net Positive Impact (NPI) • Rio Tinto leases & manages 1.5 million hectares of pastoral land, much of it disturbed by pastoral activities in years of drought • Innovative approach is the use of surplus water for the irrigated hay production: • Marginal pasture to be destocked • Redeployment of cattle allows the natural re-generation of the ecosystem and improved ecosystem services (ES) • potential for an opportunity to develop an ‘offset package’ based on the concept of ‘ecological restoration’

  8. Ecosystem services affected have values to society – what can we measure? • Source: de Groot et al (2010), Challenges in integrating the concept of ecosystem services and values in landscape planning, management and decision making. Ecological Complexity 7, 260-272

  9. The Analysis for Marandoo project • Quantify the net benefits of dewatering: • Baseline: no mine expansion and dewatering • Scenario 1: mine expansion and options 1, 2 and 3 • Scenario 2: Scenario 1 + option 4 • Use an ecosystem service framework. Major services: • Habitat and biodiversity • Food and fibre production • Carbon sequestration • Soil erosion • Tourism and recreation • Cultural and spiritual values

  10. Step 1: Quantifying Marginal Change in Ecosystem Service Provision Projected ecosystem service changes associated with: • hay production and associated partial destocking • ephemeral streams that receive more water • lowering of the water table focusing on Groundwater Dependent Ecosystems • Determine indigenous values potentially affected by creek discharge

  11. Step 2: Valuing Marginal Change in ES • Major valuation methods: • Stated preference survey (choice modelling) to value biodiversity benefits • Benefit transfer recreational and avoided soil erosion benefits • Market values for carbon sequestration • Indigenous cultural values 2. Plus collation of financial costs and benefits

  12. Integrating ecosystem valuation into Cost Benefit Analysis Dewatering of ____ ML/day Below Water Table mines Supply to towns and mines Creek discharge Re-injection Hay production and partial de-stocking ___ML/day ML/day ___ML/day ML/day ___ML/day Financial Financial Financial + Financial Financial + Biodiversity + or - Biodiversity + or - Biodiversity + or - Carbon + or - Carbon + or - Carbon + or - Economic Water + or - Water + or - Water + or -

  13. How will the information be used? • Develop a set of recommendations for water resources and ecosystem management at Marandoo, and more broadly in the Pilbara • Develop a replicable analytical framework, including ecosystem valuation, which can be incorporated into current and future company processes for: • Environmental & Social Impact Assessments • Biodiversity offsetting (to achieve NPI) • Financial assessments connected with stakeholder engagements and consultations, and corporate reporting

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