Latin America Update - Avanza consulta popular en Ayabaca y Pacaipampa por mega proyecto Río

Published by MAC on 2007-04-20

Latin America Update - Avanza consulta popular en Ayabaca y Pacaipampa por mega proyecto Río Blanco

20th April 2007

CHILE

Environ regulation could threaten Cu production, Chile By Harvey Beltrán BNAmericas

19th April 2007

An environmental regulation prohibiting the passage of vehicles transporting hazardous substances through the city of Calama in Chile's region II could place Chilean copper production in danger, lawyer Juan P Bambach told BNamericas. "This measure would make mining impossible because sulfuric acid is required as a raw material in copper production," said the lawyer, a partner with Santiago law firm Philippi, Yrarrazaval, Pulido & Brunner. The measure aims to protect the community from contact with hazardous substances. It was submitted by environmental authorities and recently approved by the Calama city council and mayor.

The proposal was inspired by shipments that cross the city every week in trucks carrying close to 22,000t of sulfuric acid bound for mines like Chuquicamata and Radomiro Tomic - belonging to Chilean state miner Codelco - and others like Escondida and Spence, both of which are owned by BHP Billiton. The substance is used to extract copper during the leaching process. Minera El Abra also operates in the area. It is 51% owned by US company Freeport McMoRan Copper & Gold and 49% owned by Codelco.

The majority of sulfuric acid comes from Codelco's El Teniente copper mine in central Chile's region VI. From there, the substance is transported by sea to region II and then goes to Calama, which is strategically located between ports and mines. As such it is necessary to transport the substance through the streets.

However, during the International Mining and Oil & Gas Law, Development and Investment conference held this week in Buenos Aires, Bambach said, "this regulation could put Chilean safeguards to the test in the area of mining expropriation." The lawyer believes that approval of the regulation could effectively mean an indirect expropriation "because a law of this nature could affect the right to mine," he said.

Calama environmental and municipal regulations manager Cristian Arangua said that companies operating in the zone have expressed their disagreement with the regulation. "It is now under consideration to be sent to the official gazette and once it is published it will go into effect," he said, explaining that authorities are in talks with the companies and it is feasible that a new article will be included that limits the measure. Bambach was optimistic and believes the regulation will be revised.