South32 Limited (ASX: S32) shares are in hot water this week.
Though you'd be hard-pressed to tell from today's trading action.
At the time of writing, shares in the S&P/ASX 200 Index (ASX: XJO) diversified mining stock are up 1.22% to $3.735 apiece.
Atop yesterday's strong run, South32 shares are now up 5% since the closing bell rang on Monday.
Now, here's what's happening with the miner's water issues.
Why are South32 shares in hot water?
As you're likely aware, the mining industry uses a good bit of water.
Unfortunately, the New South Wales Dendrobium coal mine, owned by South32's subsidiary Illawarra Coal Holdings, opted to source that water from a Sydney catchment without a licence.
As ABC News reports, the Natural Resources Access Regulator (NRAR) found that South32 tapped into some five megalitres of water a day for five years.
The ASX 200 miner has admitted to the violations and reached an agreement with NRAR saying it would endeavour "to carry out the commitments and preventative measures which are set out in this enforceable undertaking".
Investors are providing support for South32 shares today, despite news the company will pay a record $2.9 million to improve local waterways.
The company will also pay an additional $70,000 to compensate for legal and monitoring costs.
NRAR chief regulatory officer Grant Barnes said:
The breaches are very serious and they do concern significant quantities of water…
We will be monitoring the company's compliance very closely, both with the enforceable undertaking and in terms of their general compliance they hold for their operations.
Addressing the $2.9 million payment for local waterways, a South32 spokesperson said, "Over the coming months we will work collaboratively with NRAR and other stakeholders to develop a suitable water-related community project."
If you own South32 shares, you'll likely be pleased to know that the ASX 200 miner has paid millions of dollars for its water use over the past decade.
"Since 2014, South32 Illawarra Metallurgical Coal has paid $5.6 million to account for the passive take of water resulting from underground activities at Dendrobium Mine," the spokesperson said.
