Anglo American to appeal El Soldado project rejection

Anglo American (LSE: AAL) is planning to appeal a Chilean environmental commission’s rejection of its $40-million operational continuity project for El Soldado copper mine, 125 km north of the capital Santiago.

Despite having the backing of the country’s top environmental evaluation authority, which recommended the project’s approval, local regulator Coeva scratched last month El Soldado Phase V project with 10 voting against and only two in favour.

The decision was based on a technicality, as Coeva argued Anglo American should have submitted an Environmental Impact Statement (EIS) and not an Environmental Impact Assessment (EIA).

An EIA is a process for anticipating the effects on the environment a project can cause before taken a decision on whether not to proceed with it. An EIS is the document produced as a result of that process that is presented to decision makers.

Aaron Puna, executive president of Anglo American Chile, said the decision sent a “confusing signal” and added uncertainty to the environmental assessment processes.

“As in any country in which we operate, we need a relatively stable environment, both fiscally and politically, to allocate capital to projects in the country,” Puna said in a public statement (in Spanish).

“The decisions we are seeing make investment difficult and have a direct impact, not only on how we are looking at the future of our operations, but on how the global mining industry sees Chile’s business climate,” he noted.

Anglo American is analyzing the resolution and plans to ask the authority to review project’s rejection.

Longer, greener operation

The El Soldado Phase V is part of an operational continuity plan to extend the useful life of the mine by ten years — from 2027 to 2037.

The mining giant says the project was designed following sustainability standards, and with the aim of adapting the operation to climate change by reducing the use of water and emissions.

It includes the construction of a bulk ore sorting pilot plant to classify minerals according to their copper grade, which reduces the use of energy and waste generation.

This is the sixth mining project vetoed by the government of President Gabriel Boric, who assumed in March this year, and the second for Anglo American.

In May, a Chilean environmental regulator formally rejected the company’s application for a $3-billion expansion of its flagship Los Bronces copper mine.

The asset, one of Anglo American’s two largest copper operations, has been mined for over 150 years and is running out of high-grade ore. The Los Bronces Integrated Project (LBIP) would have allowed the company to tap higher grade ores from a new underground section of the mine, extending its life through 2036. 

Anglo has been the majority owner of El Soldado since 2002. The mine started operations in 1980 and produced 42,300 tonnes of copper last year, making it relatively small by Chilean standards.

Copper deposits are among the hottest assets in mining right now, mainly due to the metal’s use in electric vehicles (EVs) and the global green energy revolution. Experts estimate the copper industry needs to spend more than US$100 billion to build mines able to close what could be an annual supply deficit of 4.7 million tonnes by 2030.