Chile: Anglo American Plc evaluates desalination plant project for copper mines

RIO DE JANEIRO, BRAZIL – Anglo American Plc, which has faced years of relentless drought in Chile, is considering developing a desalination project in partnership with state-owned Codelco, Japan’s Mitsui & Co., and a local water company.

The proposal involves building a plant on the coast of the Valparaiso Region that would produce drinking water for residents in exchange for access to wastewater that could be used in the mines, said Anglo Chile manager Aaron Puna.

“All roads lead to desalination,” Puna said in an interview Monday from London. “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. The giant copper mines in the northern desert have turned to seawater amid depleting freshwater reserves, prompting an overhaul of the country’s water rights system and greater protections for glaciers.

At the cost of between US$500 million and US$1 billion, the desalination project would probably not be ready for another four to five years. For now, Los Bronces is moving away from freshwater by recycling tailings dams and using local industrial water.

That solution will allow Los Bronces to exceed its first-quarter production projection by 3% to 5%, although production would have been higher without the water restrictions, said Puna. “At Anglo’s Collahuasi partnership with Glencore Plc, the rains generated by the so-called altiplano winter have had a greater than average impact on production,” he said.

In addition to a possible desalination plant, Anglo plans to invest around US$3 billion this decade to maintain annual production at Los Bronces at around 350,000 metric tons. Another US$3.5 billion is being spent at Collahuasi.

Anglo has not halted any investments and is “committed to Chile.” However, it closely follows the process of drafting a new constitution and the government’s plans to raise taxes, said Puna. The drafters of the new Magna Carta are weighing radical proposals, including the redesign of private property rights and even the nationalization of mines.

While the company has “a lot of confidence in the institutions and political processes,” the challenge will be to strike the right balance between what is best for Chile and maintaining incentives for investment, he said.

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