Chilean report raises doubts about water availability for copper

Published by MAC on 2009-11-23
Source: BN Americas, EFE, Santiago Times

Cochilco report raises doubts about water availability for copper mining

By Pablo Gaete

Business News Americas

18 November 2009

Based on the findings of a study released Wednesday on water usage in domestic mining by Chile's state copper commission Cochilco, mining minister Santiago González said that if companies do not start searching for alternative water sources now, it is highly likely there will not be enough resources for all the red metal projects slated to begin between now and 2020.

"There is no doubt that this is a serious problem," González said during a Santiago press conference Wednesday. "There's no point carrying out projects if we don't have the necessary water resources in order to development them in the years to come."

González added that desalination, like that being carried out by copper miner Escondida, 57.5%-owned by BHP Billiton, or direct use of seawater, such as the case of Antofagasta Minerals' Esperanza copper project, are the two best alternatives today to relying on natural aquifers that are becoming scarce.

Cochilco expects Chile's copper production to grow from its forecast of 5.38Mt this year to 7.38Mt in 2020, of which concentrate output will rise from 3.27Mt this year to 5.74Mt and cathode production will drop from 2.11Mt to 1.64Mt.

The expectation that concentrates will take on a larger share of copper output in the coming years compounds the water shortage, since concentrate production demands more water than SX-EW processing, said Ana Isabel Zúñiga, director of research and public policy for Cochilco.

However, all copper output processes require water. "Without water, there is no mining," Zúñiga said, adding that another contributing factor is the gradual decline of ore grades, because the lower the grade the more water is required.

As for fresh water usage, Cochilco estimated that in 2009 Chile's copper miners will consume slightly less than 400Mm3 or 11.9m3/s. In 2020 that amount is expected to increase to more than 600Mm3 or 20.2m3/s.

But taking into account the growing impact of alternative water sources such as desalination, in 2020 copper miners could consume about 550Mm3 or 17.1m3/s, according to the commission.

The most sensitive areas of the country are northern regions I-IV that lie within the Atacama desert, one of the driest places on earth and also the world's most abundant source of copper.

For this year Cochilco predicts region II, the most active mining area in Chile, will consume 57% of the total water used in regions I-IV by the copper industry. Region I will consume 18%, region III some 17% and region IV about 8%.

In 2020 region II will drop to 33%, regions I and III will both consume 27% and region IV some 13%.

However, Zúñiga noted that the mining industry only consumes about 5% of water used in northern Chile, while the agricultural sector uses 77%.

This means the agricultural sector might be urged in the future to reduce its water intake also, González said.The minister added that Chile's public works ministry (MOP) is expected to announce a plan on water conservation before year-end.

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Chile to Need 45% More Water for Mining in 2020

EFE

19 November 2009    

SANTIAGO – Chile will need 540 million cubic meters (19 billion cubic feet) of water for mining in 2020, 45 percent more than it currently requires, to keep pace with plans that call for boosting annual copper production to 7.3 million tons by that year, according to a study released Wednesday by the Chilean Copper Commission, or Cochilco.

More water will be needed because of an expected increase in output by the mining companies, including greater production of copper concentrate, which is more water intensive.

Mining Minister Santiago Gonzalez Larrain said companies need to invest in alternative sources of water to meet their production targets, saying they are “indispensable at this time for mining development.”

“We have a $38 billion investment plan for the next 10 years” but that will depend on the availability of water, Gonzalez said.

He said the ministry’s policy is that mining projects without available water from current sources must have some alternative source of water – “whether that be (resources obtained from a) desalination plant or sea water” – before they can be approved.

The study also said that the use of desalination plants at the massive Escondida copper mine and the Xstrata firm’s El Morro project and the use of sea water at Antofagasta Minerals’ Esperanza project will reduce pressure on aquifers in the northern part of the country by 15 percent.

Chilean President Michelle Bachelet this year formed a ministerial committee to address the water supply issue, including studying alternatives such as granting concessions for operating seawater desalination plants. “We hope before year’s end to have a concrete proposal from the committee led by the public works minister (Sergio Bitar)” and that a public policy is in place to solve the problem, Gonzalez Larrain said.

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Chilean Mining Giant To Construct Northern Desalination Plant

By James Fowler, EL MERCURIO, LA TERCERA

18 November 2009

CAP, one of Chile's largest mining companies, announced plans this week to construct a US$250 million desalinization plant to provide water for its iron mining operations in Chile’s Atacama area (Region III).

Over 750 workers will construct the plant, an underwater emission pipe and a sea-water collection facility near the town of Puerto Totoralillo. A 120 km aqueduct will then transfer the water to Cerro Negro Norte mine in the Copiapo Valley.

On completion the plant will employ over 60 people in three shift patterns. Over 50 per cent of the mine's water needs will be supplied by the project, which CAP hopes to be operational by 2012.

The desalination plant forms part of a bigger project by CAP's mining subsidiary CMP to increase annual iron production in the Copiapo valley to four million tons within the next four years.

Water scarcity is a growing issue in Chile's north. Recent studies suggest water resources in the region have halved, causing local politicians to urge the government to nationalize water supplies (ST. Sept 24).

Water resources in the Copiapo Valley, home to Chile’s early table grape deal and other fresh fruit exports, are considered critically low. Fruit growers and municipal authorities insist that huge water consumption by local mining facilities are responsible.

“Mining firms need to invest in water resources for the future of their business,” said the director of the Universidad de Chile's mining department Gustavo Lagos. “Desalinization is certainly an option they can investigate.”

Another desalinization project is being considered for Chile's biggest mine, Escondida, in Region II, owned by BHP Billiton.

CAP operates as a holding company within the mine and steel sectors. Mining subsidiary CMP exports raw mineral material primarily to Asian markets, while other holdings produce and export steel globally.

CMP recently reported profits of US$62 million for the first nine months of this year, almost half the figure reported for the same period in 2008. Total income over the January- September period was down US$80 million from last year.

Parent company CAP reported losses of US$52 million up to September this year, mainly due to a decline in steel prices.