West Australian water authorities say they will slash mining giant Alcoa's water licence by a third in response to unsustainable pressure on the local area's water supply. 

WA Water Minister Simone McGurk used a 23 per cent drop in rainfall to justify sweeping changes to licensed water in the Murray region, in the state's south-west.

The updated allocations for the Murray groundwater area, located an hour south of Perth, also cut the region's access to future available water by 40 per cent, with ongoing reviews to look at further reductions. 

It means areas such as Pinjarra and Nambeelup have no groundwater and shallow aquifer water left to allocate.

Peel-Harvey Catchment Council chief executive Jane O'Malley supported the cuts and said it was unsustainable to view water as an infinite resource.

"Water trading, transfers, savings and alternative sources is not a new concept and it should be no surprise to water users, particularly industry ... that groundwater allocation must be managed for the future – no question," she said. 

Alcoa water use hurting aquifers

The staged reduction of Alcoa's water licence for the Cattamarra Coal Measures aquifer in Pinjarra, where their water-intensive bauxite refinery is based, will begin in 2026 and equates to a cut of 2.5 billion litres. 

A Department of Water and Environmental Regulation (DWER) spokesperson said the current level of licensed water was unsustainable. 

"We are working with Alcoa to reduce the impacts of their abstraction, which is contributing to declining trends not only in the Pinjarra but also the Nambeelup sub-area," they said.

"These risks and impacts can be appropriately managed through reducing groundwater abstraction.

"The department will provide assistance to Alcoa for the investigation of water use efficiency."

An Alcoa spokesperson said the company was aware of the decision but did not shed light on any success in securing different water sources for their biggest refinery.

"We are investigating alternative water sources for our operational needs at Pinjarra Alumina Refinery," the spokesperson said.

Alcoa had previously set a goal to reduce water use by 5 per cent in "scarce" areas — which includes the Pinjarra facility — by 2025. 

So far its efforts have only reduced water use by 0.8 per cent.

Ecosystems drying up

DWER said the impacts of declining water levels on environmentally sensitive waterways meant something had to change.

"Allowing more abstraction in sub-areas where groundwater levels are declining would threaten the resource’s capacity to supply the required quantity and quality of groundwater into the future," a department statement said.

The region is characterised by a large estuary and 17 fresh and saline lakes, and features internationally recognised wetlands. 

Ms O'Malley said there was an international obligation to protect the region's waterways.  

"Groundwater flowing into the system has decreased significantly, our lakes are becoming more salty and changing the structure of these magnificent ecosystems," she said. 

Water cuts amid planned expansion 

The extensive changes to water allocations come as Alcoa plans to expand the Pinjarra refinery to process five per cent more bauxite, along with opening up new mining areas. 

The extension proposal is currently with the Environmental Protection Authority (EPA) with a spokesperson confirming the impact on water resources would be assessed. 

"Alcoa is also already required to provide a cumulative environmental impact assessment of the proposal, which includes consideration of water resource allocation, and climate change impacts on inland waters," the EPA spokesperson said.

If approved, the company would need to clear 6,700 hectares of native vegetation.

On a January 18 call with international investors, Alcoa chief executive Roy Harvey was asked to explain delays to the regulatory approvals.

He said expectations around environmental protection had increased.

"I have a lot of confidence that we're going to be able to work collaboratively and get to … a timely conclusion, so that we can operate these facilities for another few decades," he said. 

"I think we have the support of our host government, but that doesn't mean that we can't look at other ways in order to bring in bauxite or to look at other solutions."