A view of the desalination plant in Palma de Mallorca, Spain, April 4, 2014. JAIME REINA/AFP/Getty Images
On Wednesday, Chilean mining company Antofagasta Plc announced that it had reached a deal to end protesters’ blockage of its Los Pelambres copper mine. The protests, which began on February 28, centered on excessive water usage as Chile faces its eighth consecutive year of harsh drought. Protesters partially blocked access to the mine and damaged some facilities, prompting the Chilean government to intervene. It restored access and arranged negotiations between the company, the local community, and regional and national authorities to resolve the dispute.
The residents of the Choapa River Valley accused the mine’s tailings dam of diverting an unjustified quantity of water during a time of severe drought. A local tribunal found that the dam impeded the natural flow of a stream to the town of Caimanes, and on March 10 ordered the demolition of the dam. But a court battle that would have been lengthy, expensive, and bruising for Atofagasta’s P.R. has been avoided thanks to Wednesday’s comprehensive agreement.
Antofagasta made concessions fairly quickly to limit its production losses to an estimated 8,000 tons of copper this year (a significant but small amount compared to its production of 405,000 tons last year). The company agreed to help fund studies for the construction of a water dam for local use, which would be developed under a private-public alliance if built. Pledging that it “will use sea water for any further expansions of its mining operations,” Antofagasta agreed “to contribute funding for the study of a desalination plant project, which would be developed under a private-public alliance or public concession scheme.” Analysts at Nomura estimated that such a plant and linked pipeline could add around $1.5 billion to serve the mine’s expansion alone.
Antofagasta is not the only miner hurt by the drought. Water scarcity contributed to Anglo American’s loss of 30,000 tons of copper production from its Los Bronces mine, the world’s sixth-largest, Mining.com reported. Hydropower provides approximately one third of the country’s electricity, so the drought has driven up prices even further — mines in Chile now pay twice as much for energy as mines in Peru. And Chile’s copper commission Cochilco expects that as multibillion-dollar projects become operational between now and 2025, the country’s mining industry will increase its annual electricity consumption from just over 20 TWh to nearly 40 TWh.
All signs point to a coming boom for desalination plants in Chile, particularly in the arid northern half of the country where many mines are located. Chilean President Michelle Bachelet said on March 3 that the country will increase its own desalination effort to boost supply to town and cities in drought-stricken areas, and other mining companies are investing heavily on their own plants as well. Anglo American Plc inaugurated a $100 million desalination plant near its Mantoverde copper mine in November, while BHP Billiton Ltd. and Rio Tinto Plc are building a $3.4 billion plant to provide water to the Escondida copper mine, the world’s largest.
Desalination satisfies local communities, but if the Chilean government makes it mandatory for miners it would cost the industry over $13 billion, according to Bloomberg Industries. However, if the drought continues, Santiago may feel compelled to do just that.
