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Chile: Project Pipeline of Desalination Plants

Chile has been facing a drought for many years. Miners in the Northern Region over the last 6 years have increasingly sourced both salt and desalinated water from the coast for their operations. 

Now the miners in the central region of Chile are feeling the effects of the water scarcity – and they are less prepared. In October, Last month, Anglo American reported output at Los Bronces fell 16% to 80,400t, with a 15% drop in plant throughput due to lower water availability, but partly offset by higher grades. As a result of the drought, the company cut 2019 guidance to 630,000-650,000t from 630,000-660,000t. Anglo said 2019 has been “the driest year of the longest drought ever recorded in central Chile.”  

Mining association Sonami said 20.4% of the water major copper miners use currently comes from the sea, but by 2029 this figure could more than double. Copper commission Cochilco forecasts that seawater consumption will represent around 43% of the total water used in the local mining industry in the next 10 years.

Currently, 12 desalination plants are in operation in Chile’s mining industry, 15 more are planned and six of them could start operations over the next two to three years. These are:

CERRO COLORADO 

In December, 18 companies pre-qualified to participate in the US$190mn tender to build the desalination plant for BHP’s Cerro Colorado mine in Tarapacá region. Japan’s Marubeni and Mitsui, US-based Bechtel, Chilean Transelec and Italian Techint are participating.

Plant capacity will be 562l/s, with 162l/s in a first phase to provide water to the mine and 400l/s in a second phase to supply third parties. 

The environmental qualification is expected to receive approval in April.

SPENCE GROWTH OPTION

The desalination plant for BHP’s Spence Growth project in Antofagasta region will be in operation by the end of 2020.

Construction of the US$620mn facility has been awarded to a JV formed by Japan’s Mitsui and Spain’s Tedagua. Works started in 2018 and the plant would supply 1,600l/s to the Spence mine. 

LOS PELAMBRES INCO

The 400l/s desalination plant will be part of the US$1.3bn expansion plan for the Los Pelambres copper mine in Coquimbo region and is controlled by Chile’s Antofagasta Minerals. 

In 3Q19 the company said the expansion was 24% complete and the rate of expenditure was accelerating as expected. Works are set to finish in 2021.

COLLAHUASI

The desalination plant for Collahuasi will have an initial capacity of 525l/s which will increase to 1,050l/s to extend the mine life by 20 years and ramp up processing capacity to 210,000t/d from the current 170,000t/d. 

CODELCO

Last December, state copper miner Codelco scrapped the original US$1bn tender for an 840l/s desalination plant won by a consortium led by Japan’s Marubeni. 

The company will reformulate the project and the new tender process will start in March. The plant will have the potential to reach 1,956l/s and under the original tender operations were set to start in 2022.

Originally, the facility was planned to only supply Chuquicamata, Radomiro Tomic and Ministro Hales, but now will include all of Codelco’s facilities in Calama. It will be the second largest desalination facility, behind the US$3.4bn Escondida plant. 

QUEBRADA BLANCA

Canada’s Teck Resources’ plant for the US$5bn Quebrada Blanca Phase II will have a capacity to treat 1,300l/s and will start up in 2022. Works are executed by Isreal-headquartered IDE Technologies.

Conclusion:

According to the “Water Atlas Chile 2016”, mining is a minor user compared to other industries, using only 3% of consumptive waters. The big user is the agriculture industry, which uses on average 82% of the water consumed in the country. Although more modern agriculture is conservative in its use in irrigated areas, traditional agriculture with extensive and inefficient irrigation still persists.

There is no doubt that the mining industry in the North is doing its part. Chile’s drought crisis shows no signs of abating. The central region of Chile is now feeling the effects. Over the coming years, miners in this region will have more projects planned in order to secure their supply of water and reduce their need to take natural aquafers. 

Harris Gomez Group is a Common Law firm, with offices in Santiago, Bogotá, and Sydney. We also have legal teams in Peru, Bolivia, Ecuador, Brazil, and Argentina. Over the last 18 years, we have been supporting foreign companies with their growth in Australia and Latin America. Many of our clients are technology companies, service providers and engineering companies that focus on the mining, energy and infrastructure markets.

To better understand how we can support your management team in the Region, please contact Cody Mcfarlane at cmm@hgomezgroup.com