The historic mining city of Kalgoorlie-Boulder sits in a resource-rich part of Western Australia’s Goldfields, where water is seemingly as valuable as gold.
While drinking water has been piped through the 566-kilometre-long Golden Pipeline for more than a century, a lack of water for commercial use is stifling development amid the state’s latest mining boom.
Mining companies operating in WA’s Goldfields rely on water pumped from underground bores, which typically contain more than 200 grams of salt per litre – about six times saltier than seawater.
Curtin University researcher Laurence Dyer said the salinity of the water made desalination a cripplingly expensive option locally, meaning new water sources are required.
Professor Dyer described current shortages as a “key limitation on growth” at a time when demand for critical minerals is diversifying Kalgoorlie-Boulder’s economy beyond its traditional reliance on gold mining.
He pointed to the proposed development of the $3 billion Kalgoorlie Nickel Project, 70km north-west of Kalgoorlie-Boulder, as a prime example.
With a 40-year mine life, it was awarded major project status by the federal government in March 2022 and will require huge quantities of water for a planned processing plant.
“If you have a new project coming online, water, energy, that is the biggest consideration as to whether it’s going ahead, alongside obviously, whether it can make money,” Professor Dyer said.
“When we’re talking about critical metals, those processes require clean water, not just the hypersaline groundwater that’s sitting under the town.”
Professor Dyer has been researching new treatment techniques for “dirty water sources”, including tailings and mineral waste.
“You don’t necessarily need drinking water … we’re calling it industrial fit for purpose, making it good enough to go wherever it needs to go.
“The size of the prize is massive, because it could mean the next billion-dollar project either does or doesn’t go ahead.”
Waste not, want not
Water has also been embraced as a revenue stream by the City of Kalgoorlie-Boulder, which has used treated effluent to irrigate parks and gardens for decades.
During the 2021-22 financial year, the City of Kalgoorlie-Boulder received 2,306 megalitres of wastewater at its South Boulder treatment plant, and 1,380 megalitres of purified effluent was recycled.
Those are big numbers, but the plant has its limitations.
“You can only treat as much grey water as the town produces, so if the town doesn’t grow, then your supply into treatment is limited,” Professor Dyer said.
Figures for the 2022-23 financial year reveal the City of Kalgoorlie-Boulder sold $3.02 million worth of recycled water to industrial users.
The result was $349,992 less than what the council had budgeted, amid five months of city-wide water restrictions.
If those current rates are maintained, the City could achieve revenues of $60 million over the next 20 years.
Biggest customer by far
Most of the water from the council’s wastewater treatment plant was sold to rare earths miner Lynas for use at its new $730 million refinery in West Kalgoorlie.
Lynas managing director Amanda Lacaze said water was a key consideration in building the refinery, which is currently in the commissioning phase after blowing out from its original budget of $500 million.
“It is one of the reasons why we chose Kalgoorlie as the site, the availability of grey water,” Ms Lacaze told reporters in August.
“In a country like Australia, where water is at a premium, using grey water is excellent and we re-use it about six times through the process before it ends up in one of our tailings facilities.”
Long-term deal with council
The council previously supplied water to Kalgoorlie’s Super Pit gold mine, but a pipeline was ripped up several years ago.
Lynas is now its biggest customer.
In November 2021, the City of Kalgoorlie-Boulder awarded $1.3 million in contracts for the construction of a new pipeline to deliver about 1.7 gigalitres a year of recycled water to the Lynas plant.
The 5.5km pipeline runs from storage basins directly to Lynas’ West Kalgoorlie refinery.
The council had previously insisted the pipeline would pay for itself.
This past week, however, the City’s newly-elected council announced an independent review into its water supply contracts.
New Mayor Glenn Wilson said the review would provide clarity around the contract process and the City’s obligations.
“There’s an obvious amount of public confusion around this matter, with an assumption that the water shortages faced earlier this year were due to an oversupply to those on commercial recycled waste-water agreements,” Cr Wilson said.
“We understand that the larger agreements have been a fundamental component of business cases for companies such as Lynas to establish their new operations in the city and that without the provision of industry-suitable water, the plant would not have been developed in its current location.”
Profits out to 2040
The independent review follows an audit in February this year by WA’s Economic Regulation Authority, which shed some light on the importance of wastewater sales to the City’s bottom line over the next two decades.
While it did not reveal a dollar value, the audit quoted a long-term financial plan that said “recycled water sales make up approximately 20 per cent of City of Kalgoorlie-Boulder’s annual revenue forecasts” out to 2039-40.
“The January 2023 budget update shows City of Kalgoorlie-Boulder’s water services making a profit in every year out to 2039-40 with the exception of 2024-25,” the audit said.
“The forecast loss in 2024-25 is due to the proposed capital program and more than $10 million of expected capital expenditure on the recycled water scheme.”
For its part, Lynas has welcomed the council’s plans to expand its water treatment and storage capability.
“The council is well progressed on the investment in that,” Ms Lacaze told reporters in August.
“I am very confident that we will continue to have that grey water supply in a way that suits both business and the community.”
