Chile’s parched miners feeling the heat

Santiago, Chile — Water has always been an issue for mining companies operating in the world’s driest desert, the Atacama, in northern Chile. But now the industry fears that a tougher stance from the country’s environmental authorities could put future projects at risk.

Over the last two decades, northern Chile has developed into one of the world’s most important mining centres, with production of copper tripling to close to 3 million tonnes per year or around one-fifth of the world’s annual supply. But it is also one of the planet’s driest zones, receiving an average of just 200-300 millimetres of rainfall each year.

Water is used in almost every stage of mining, from flotation and leaching to spraying roads to keep down dust levels, so securing stable supplies is as vital a task to mining companies as discovering new reserves and keeping machinery running smoothly. With demand for copper running red hot and prices through the roof, Chilean mining companies are racing to speed up extraction and open new reserves. That means more water in an already tight marketplace.

According to Osamu Suzuki of Santiago, Chile-based water consultant EDRA, most of the major mining companies are exploring the desert and the surrounding highlands for fresh water resources. EDRA is currently helping the El Abra mine, run by Phelps Dodge (PD-N) secure the extra water it needs to exploit sulphide reserves that lie beneath the existing oxides pit. And if fresh supplies are not freely available, companies can pay big bucks to get hold of them. In November 2000, Minera Escondida, operator of the world’s largest copper operation, paid neighbouring copper miner CM Zaldivar, then part of Placer Dome, US$135 million for the rights to the water it needed for its new Laguna Seca concentrator plant.

But public concern about the impact of this rapid increase in water consumption on the environment is growing in a region where resources are clearly limited. Water use by mining companies is widely blamed for damage to the oases and salt flats that dot the desert; these areas provide havens for bird life such as rare Andean flamingos, a source of livelihood in the form of horticulture and grazing for local communities, and a major attraction for a growing tourism industry. Against this background, local authorities are beginning to take a tougher line, not just in granting fresh water rights, but in a willingness to revise existing rights.

Local water at risk

On March 7, the regional environmental authority (COREMA) for Chile’s northernmost Tarapac region said that water extraction by Compaa Minera Doa Ins de Collahuasi, one of the world’s largest copper operations, threatened to dry up the nearby Coposa lagoon within 10 years, rather than 30 years, as stated in the mine’s environmental permitting application. The company, controlled by Anglo American (AAUK-Q), Falconbridge (FAL.LV-T, FAL-N) and Japan’s Mitsui Corp., has been ordered to slash its rate of extraction to 300 litres per second by 2010, down from its current usage of 750 litres per second. According to Collahuasi, the order will not affect current production levels, but does jeopardize expansion plans being studied by the company.

Collahuasi is not alone in coming under the spotlight. COREMA has also investigated water use by BHP Billiton’s (BHP-N) Cerro Colorado mine, while last year, Minera El Tesoro, controlled by London-listed Antofagasta (ANFGY-O) and Australia’s Equatorial Mining (EQM-A), was forced to delay a planned expansion after Chile’s general water directorate (DGA) questioned the impact of increasing extraction from the Calama aquifer — which supplies water to one of the region’s largest cities. Industry sources expect similar cases to crop up in the coming years.

Alternatives to using local water resources are few and far between. State copper company Codelco is currently studying a 75-km pipeline to bring water from the highlands near the Bolivian border to its new Mansa Mina project. But much of the land there is protected under a system of national parks, or as grazing pastures reserved for nearby indigenous communities.

The Pacific Ocean promises a much more plentiful supply and Minera Escondida has already built a 500-litre-per-second desalination plant to water its low-grade sulphide project, due to enter production later this year. But desalinated water is several times more expensive than water from nearby wells, especially the cost of pumping the water up to the high altitude where many of the mines exist. While viable for a mega-operation like Escondida, which produces more than 1 million tonnes copper per year and has several decades of production ahead of it, this may not be an option for many smaller mines or for operations like Collahuasi, sitting at over 4,000 metres above sea level.

But mining executives argue that the real problem lies not with a lack of water, but a lack of knowledge on all sides about exactly how much water is available and where.

A hydrologist’s nightmare

Understanding water resources in the region’s complex mix of desert, salt flats and volcanic rock is every hydrologist’s nightmare, admits EDRA’s Suzuki.

But without the necessary resources to carry out their own studies, the DGA, COREMA, and other bodies are feeling their way in the dark. No comprehensive studies have been carried out into the amount of underground and surface water available in the region, and almost all of the government’s understanding of the local water systems is based on investigations by private companies as part of their application for water rights. Now that cases like Collahuasi have shown up deficiencies in this data, the DGA and other bodies are hardening their stance.

Last year’s Celco case in southern Chile, in which hundreds of black-necked swans died or disappeared downstream from a new wood pulp plant highlighted not just a slipshod attitude towards the environment by big business but also serious mistakes committed in the permitting process by COREMA. Mining executives now say that state authorities are prepared to take more drastic measures to protect themselves from further gaffes, rather than look for reasonable outcomes based on the technical data available.

The solution is now likely to lie with some form of public-private initiative to establish just how much water can be extracted in a sustainable way from underground sources, an idea most companies support.

A committee made up of representatives from the mining ministry, environmental authorities and industry has been set up to discuss possible solutions. This should help overcome the mistrust between industry and the public sector caused by the unequal amounts of information available to each side. It is early days and progress has been delayed by the recent change in government, but the water issue has topped the agenda in meetings between industry leaders and incoming mining minister, Karen Poniachik.

But it is likely to be several years before the necessary studies are completed, and until then, mining companies in the region face uncertainty.

Water is not the only resource where Chilean mining companies face difficulties. The industry is facing significantly higher energy costs in the future as restrictions on flows of natural gas from neighbouring Argentina force local generators to switch to costlier alternative fuels. But while the energy shortfall can be solved by the mining companies stomaching higher prices, without access to secure water supplies, several new mining projects could evaporate under the Atacama’s scorching sun.

— The author is a freelance reporter based in Santiago, Chile.