Water shortage begins to affect copper production in Chile

In a country that accounts for more than 1/4 of the global supply of copper, water shortages are beginning to threaten copper production.

In Chile this week, a BHP Billiton mine was ordered to stop pumping groundwater for three months, while Antofagasta warned that production this year would be lower than expected due to tight water supplies.

While BHP's Cerro Colorado is a small operation nearing the end of its life cycle, and Antofagasta's guided cuts are modest, the outages highlight the challenge of operating mines in one of the world's driest deserts. For decades, copper mines have been pumping water from underground aquifers, often causing damage to local communities.

The problem has recently become prominent as deserts expand southward during a decade-long drought, and global warming is likely to exacerbate the problem. The industry responded by stepping up efforts to switch to seawater, which is expected to account for nearly half of its total water consumption by 2031.

Following mass protests against social injustice, Chile is now drafting a new constitution and legislators are pushing for reform of the water supply system, which relies heavily on private enterprises and market forces to allocate rights and provide services.

In this context, the Environmental Court took the surprising step of temporarily preventing Cerro Colorado from using water in the Lagunillas aquifer when hearing a lawsuit alleging environmental damage.

The company said it would "evaluate the action plan in accordance with the tools provided by the legal framework and will take operational action to comply with available measures."

The smallest of BHP's three copper mines in Chile has been opposed by the local community for the use of groundwater. Last year, it announced plans to scale back operations, effectively proposing planned cuts before its license expires in 2023. At the time, the company said it would continue to explore options for using seawater to extend mining beyond 2023.

Antofagasta now expects to produce 710000 to 740000 tons of copper this year, down from the previous forecast of 730000 to 760000 tons. The San Diego-based company is building a desalination plant, but it will not be operational until the second half of 2022, putting an additional 50000 tonnes of copper production at risk next year.

"this year is the driest of Chile's 12 years of drought," Antofagasta said in a statement on Thursday. "given that the traditional rainy season lasts from June to September, it seems increasingly likely that low precipitation will last at least until winter in the southern hemisphere next year."