Fabian Cambero

SANTIAGO (Reuters – Chile’s drought record is threatening mining operations. This has forced companies to increase their searches for water sources, including water treatment and costly desalination plant.

The Andean nation is the No. 1 producer in the world. Number 1 lithium producer, and no. 1 producer and the no. 2 lithium producer, are currently enduring a drought which is entering its 13th anniversary. Santiago, capital of Chile has launched unprecedented plans to reduce water consumption for its residents.

The effects are even felt in the mines.

Anglo American (LON) The flagship Los Bronces Mine in central Chile suffered a 17% drop in production in the first quarter 2022. This was partly because of water scarcity. Antofagasta Minerals reported that Los Pelambres’ production dropped 24% in the first quarter due to drought.

For Chile’s miners who use water for mining minerals, such as lithium, copper smelting and concentrators, tensions about water consumption have developed over the years.

They have always relied upon continental waters, which are land-based water that comes from rivers, lakes, and reservoirs.

Maximo Pacheco of Codelco, a state-owned miner, said that the main problem is to locate other resources beyond continental waters.

Pacheco indicated that Codelco planned to reduce its water usage and recycle more water through efficiency savings. However, he did not provide any details about specific steps.

Antofagasta, Anglo American, and Antofagasta are mining companies that have targeted mine tailings to boost recirculation, reduce water loss and recycle greywater.

“EVERY Drop COUNTS”

Los Pelambres is a northern Coquimbo region mine worker who are reminded by the screens in their dining room to cut down on water usage. It’s part of the mine’s “Every Drop Counts” program to conserve water.

Antofagasta has also a desalination facility that is expected to be operational in the second quarter of this year. This plant will provide water for 90% of Antofagasta’s mine from the ocean, recirculation or other sources by 2025.

Jorge Cantallopts is the head of research for the government copper commission Cochilco. He told Reuters that the greatest challenge was facing mines higher up in central Chile’s Andes. The drought could persist, and problems creating desalination facilities far away from the ocean.

Cantallopts cited Los Bronces for the best example but warned that other Codelcos like El Teniente and Andina could face similar problems.

He stated, “They will be facing the same problems within a few years. We have to do some thing.”

Willy Kracht, the mining undersecretary, told Reuters that government had been pushing miners to use water infrastructure. He also said there were plans for a forum to improve coordination.

Anglo American stated in response to Reuters questions that Los Bronces was seeking to increase production efficiency and to find water resources that are “not competitive with human consumption.”

However, the company has seen an improvement in water efficiency and decreased freshwater extraction. It has also warned that its copper production estimates of 660,000 to 750,000 tons this year may be affected by changes in water availability or COVID-19. 

POLICIES OF WATER

Water usage is becoming more political with President Gabriel Boric, a leftist politician, keen to tighten environmental regulations.

Some mining companies have been fined or sued by regulators for water abuse in excess, in particular in Atacama desert, where lithium is abundant and in high demand.

According to Cochilco’s report, fresh water consumption will drop by approximately 45% due to desalination by 2032. However, the process is costly, requires lots of electricity and may not be feasible in high-altitude Andean inland regions.

BHP Group (NYSE;), an early movers, now meets water demands at Escondida’s huge mine. The technology also powers a desalination station at Spence, which is still dependent on the continental waters for Cerro Colorado, which is smaller.

Antofagasta stated that Zaldivar’s continuity is dependent on the extension continental water rights, as its large size does not justify the expense of desalination plants.

Kracht stated that it was difficult to balance the needs of the country, which is heavily dependent on mining resources, and those of the environment.

We must take care of the drought. We are being asked to expand mining. “So there’s a sort of contradiction that we must learn to balance,” he stated.