SMM: Chilean authorities are cracking down on mine water in the driest desert on earth, which could threaten the country's future copper supply, industry analysts said on Monday.
On Friday, Chile's environmental regulator SMA accused BHP Billiton's Escondida copper mine in Chile of pumping significantly more water than allowed in the past 15 years, a move that could result in the mine losing its mining license, being ordered to close or being fined.
BHP Billiton Escondida Copper Mine faces the risk of fining for excessive water use
In southern Chile, the state-owned Codelco company suspended plans for the expansion of the Salvador copper mine until the National Defense Commission's lawsuit over the proposed water use for the project could be resolved.
For miners operating in the country's Atacama desert, they are undergoing increasingly intense scrutiny.
Quimica&Minera faces a ruling from the country's Supreme Court after receiving complaints from the local community.
Even in central Chile, production is limited due to supply shortages at, Anglo American's Los Bronces mine and Codelco's El Teniente.
Escondida Copper Mine is the largest copper mine in the world.
Chilean regulators blamed the mine for falling water levels and accused it of failing to reduce water consumption in four controlled water sources since 2005 and that the mine's water recovery rate was three times the acceptable threshold in 2019.
According to local regulations, BHP has 10 days to come up with a compliance plan against the allegations.
BHP Billiton did not immediately respond to a request for comment on the allegations.
Andrew Cosgrove, an industry analyst, said that while the possibility of shutting down Escondida seemed slim, the mine might have to operate at lower capacity.
The lawsuit against Salvador's capacity expansion also threatens future supply, as Codelco needs the project to mitigate the impact of declining ore grades in operation.
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