Over a two-day period in March 2015, many years' worth of rain fell in the Atacama desert - one of Earth's driest regions - resulting in catastrophic flooding that deeply affected local communities and mining sites in the area, including some of the world's leading copper and lithium operations.

The flooding tragically caused deaths, loss of homes and infrastructure damage in the region. It also forced mining companies to stop production for several days.

Extreme climate events like these are starting to become more frequent and more intense.

Often located in remote and climate-vulnerable areas, mining operations are being exposed to greater physical risks than many other economic sectors. Droughts, floods, storms and other climatic phenomena are latent threats and their associated risks, such as water supply stress and transport disruption, must be identified early by companies in order to properly address them in a timely manner, minimising negative economic, environmental and social impacts.

In addition to increasing physical risks to mining assets, climate change poses other challenges to the mining industry. If left unmanaged, the impacts of climate change can weaken a company's balance sheet through, for example, the need to need to make unplanned investments to adapt.

Strong risk management strategies that are sensitive to climate change are viewed more favourably by investors, who are placing ever-increasing emphasis on disclosing the management of climate risks. This is illustrated by the Task Force on Climate-related Financial Disclosures (TCFD), one of the leading initiatives from the investment sector, who have identified the disclosure of climate-related risks and risk management strategies as core to their recommendations.

The mining and metals industry has always faced the challenges of working in varied physical environments, and has well established methodologies, tools, data, resources and people in place to identify and manage related risks and opportunities. This experience puts the sector in a good position to integrate climate change drivers within existing risk management and planning procedures, but it also needs to be acknowledged that climate-related risks are multifaceted. They cut across virtually all components of the mining system and business units; that requires a more thorough approach. Improved corporate governance on climate change, multi-disciplinary teams, capacity building and early engagement with host communities and key stakeholders are all essential components of developing a comprehensive approach to climate-related risks and opportunities across the mining system.

Corporate adaptation responses to climate change need to be flexible, given the natural uncertainties about future climate scenarios. Developing adaptation pathways with a modular and iterative approach can provide such flexibility to respond to changes in observed trends in climate and weather, changing risk profiles or external pressures. The pathways approach allows decision-makers to plan for, prioritise and stagger investment in adaptation options.

Steps to resilience

The International Council on Mining and Metals' (ICMM's) latest report, ‘Adapting to a Changing Climate: Building resilience in the mining and metals industry', proposes a step-wise process for identifying priority physical climate risks, with measures to address them. This is informed by the practical experiences of several of our member companies.

The process comprises seven steps:

1. Define the scope - objectives, boundaries and specify the timescales;
2. Understand the current situation - identify current vulnerability to weather and natural hazards, stakeholder positions and actions;
3. Explore future climate scenarios - identify and use climate information;
4. Assess climate risks and opportunities - identify critical climate-related thresholds and map risks;
5. Identify risk management/adaptation options - stress test current options and identify new ones;
6. Evaluate risk management/adaptation options - assess tools and methods and identify co-benefits; and
7. Develop adaptation pathways - map out timing and linkages between actions.

Ultimately, this process emphasises the need to use observed and predicted climate data and scenarios to understand both current and potential future risks.

Global goals

Climate change is one of the critical global challenges of our time, and the transition to a low-carbon economy will require joint efforts from all parts of society.

Minerals and metals, such as copper, nickel and cobalt, are a key resource to support the decarbonisation of our energy and transport systems, allowing millions of people and companies access to clean and affordable energy. Building business resilience in the mining sector is not only important for the industry, it is also critical to achieve global sustainable development goals.

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Verónica Martinez is senior programme officer at the International Council on Mining and Metals (ICMM)