CHILE

CHILE

Tempers flare over water at Chile mine

By Pav Jordan

21st March 2007

CAIMANES, Chile, March 21 (Reuters) - A dispute over the expansion of one of Chile's largest copper mines has all the drama of a Hollywood movie, pitting a big mining company against small farmers who say their water will be poisoned.

Antofagasta is building a dam to contain processed waste rock near the small town of Caimanes, some 60 kilometers (37 miles) from Pelambres, one of the country's biggest copper mines.

The El Mauro dam, located at the top of an arid valley, has polarized the remote community, with each side accusing the other of everything from bribery to greed and excess ambition.

Farmers say the tailings dam has cut off existing water supplies and could poison what's left as residues from the waste rock, treated to extract copper, filter into ground water.

Others, who have benefited from new jobs and investment, accuse the farmers of standing in the way of development. The dispute has injected new vigor into a national debate about how to attract mining investment -- the economy's top driver -- while at the same time protecting dwindling resources like water.

"Water is becoming increasingly scarce, especially in Chile's north, and cost and availability are a growing issue for existing and developing mine projects," said David Maarse, an expert in water issues at Golder Associates, a global group providing engineering and environmental services.

"The bottom line is that there is increased environmental vigilance that comes on top of the decreased availability of water in general."

WATER RIGHTS

The dam was approved in 2004 but its future was cast into doubt when farmers from the valley below won a court appeal over water rights, which Antofagasta needs for the project to proceed.

That case is now before the Supreme Court. Most expect a verdict this year, but it could take longer.

Antofagasta says it acquired water rights in the area when it bought the land El Mauro sits on, and that its project will supply more water to the valley than existed before.

But farmers say any additional water brought from the El Mauro region will be contaminated by toxic tailings dust.

"What is happening in Chile is lamentable, where (local) rights must clash with big companies who are favored by the state," said Fernando Dougnac, an award-winning environmental lawyer who is handling a lawsuit against the dam.

"This is not a matter for interpretation, it is a fact that those lands don't have water rights," he said.

Victor Ugarte, a 70-year-old cattle farmer who owns a large tract of land at the top of the valley, says the dam has cut off natural wells and that some of his cattle have died from drinking water that flows down-valley from the dam.

"When it does not rain, the only water that is left to us is the water from those wells," said Ugarte, whose group has as many as seven law suits against the El Mauro dam.

Antofagasta says the water that feeds the valley comes from rainwater run-off that enters the valley at several points.

PAY-OFF

The debate has drawn debate from across the nation, with the National Mining Society warning that shutting the project down at this stage could hurt investor confidence in Chile.

Many residents in Caimanes, and some local politicians, also support the miner, and some say farmers like Ugarte are just holding out for a large cash pay-off.

Meanwhile, opponents of El Mauro whisper that Antofagasta is paying people in Caimanes -- many of whom are the miner's employees -- for their support.

The El Mauro case is one of several that have tweaked Chile's environmental conscience in recent years, resonating at home and abroad.

After often negative media coverage, Canada's Barrick Gold., the world's top gold producer, recently emerged bruised but triumphant from a years-long struggle to have its giant Pascua Lama gold project approved.

South America's largest gold mine, Yanacocha in Peru, owned by Denver-based Newmont Mining Corp. and Peru's Buenaventura, has been unable to develop new sites amid protests about the impact on local water quality.

Antofagasta has done its homework in Caimanes, creating jobs for a town that for years was losing its sons and daughters to nearby big cities.

"I had to leave Caimanes when I was 15 to look for work," said Alejandro Escobar, 28. "Now, thanks to El Mauro, I'm working as an electrician here and I am doing well."

Most residents in Caimanes could not say if El Mauro will hurt water supplies to the farms or the town, but several questioned the motives of the landowners.

"Ha! They say they are farmers, but that's a lie. There is no farming out there," scoffed Natalia Tapia, a 28-year-old divorced mother whose job with the miner lets her raise her two children on her own.

Tapia got a five-fold raise when she left her job as a town streetsweeper and went to work as a landscaper for the miner.

"Now I have life insurance and health insurance and after five years I'll be getting 21 days of vacation a year," she said.

On a recent afternoon on the road leading into Caimanes from Chile's Pacific coast, graffiti in red paint demanded that Antofagasta abandon the dam. The next day it was gone, replaced by banners in support for the project.