Anglo American Plc, which has faced in Chile a drought of years that does not let up, is considering developing a desalination project in association with the state Codelcothe Japanese Mitsui & Co. and a local water company.
The proposal involves building a plant on the coast of the Valparaíso region that would produce drinking water for residents in exchange for access to wastewater that could be used in the mines, Anglo Chile manager Aaron Puna said.
“All roads lead to desalinationPuna said in an interview from London on Monday. “We would expect to have something firm on that in the next 12 months.”
This project offers a longer-term solution for Anglo’s Los Bronces mine, neighboring Codelco’s Andina in the mountains above Santiago. Giant copper mines in the northern desert have turned to seawater amid depleting freshwater supplies that has prompted an overhaul of the country’s water rights system and increased protections for glaciers.
With a cost of between US$500 million and US$1,000 million, the desalination project would probably not be ready for another four or five years. For now, Los Bronces is moving away from fresh water by recycling tailings dams and using local industrial water.
That solution will allow Los Bronces to exceed the first quarter production projection by 3-5%, although production would have been higher without the water restrictions, Puna said. At Anglo’s Collahuasi partnership with Glencore Plc, rains generated by the so-called altiplanic winter have had a greater-than-normal impact on production, he said.
In addition to a possible desalination plantAnglo plans to invest around US$3 billion this decade to keep annual production at Los Bronces at around 350,000 metric tons. In Collahuasi another US$3,500 million are being spent.
© HERNAN CONTRERAS BOLVARAN
Drought
Anglo has not stopped any investment and is “committed to Chile”, although it is closely following the process of drafting a new constitution along with the government’s plans to increase taxes, Puna said. The drafters of the new Magna Carta are weighing radical proposals, including the redesign of private property rights and even the nationalization of the mines.
While the company has “a lot of confidence in the political institutions and processes,” the challenge will be striking the right balance between what is best for Chile and maintaining investment incentives, he said.