Anglo American (LON: AAL) secured on Wednesday a supply agreement to meet almost half the water requirements of its Los Bronces copper mine in Chile with desalinated water from 2025.
The deal with Aguas Pacifico will allow the miner to bring ocean water to Los Bronces’ recirculation systems, with the goal of not drawing fresh water from the area where the mine is located.
Anglo American will also bring desalinated water to about 20,000 people in northern Santiago, an area that has been hit particularly hard by a decade-long drought.
In this first phase, the company will use 500 litres per second of desalinated water to cover 45% of its operations. In the second phase, Anglo plans to use treated wastewater in exchange for supplying desalinated water for human consumption.
“In a scenario of water scarcity like the one we are currently in, human consumption has priority,” Anglo American’s interim executive president in Chile, Patricio Hidalgo, said in the press release.
Lack of water supply prompted Anglo American in September to tighten its production guidance for Chile to between 560,000 and 580,000 tonnes of copper from between 560,000 and 600,000 tonnes.
Hidalgo added the project not only secures industrial water supply for Los Bronces, its flagship mine, but also benefits local communities, generating “social value” for the country.
Anglo American’s ultimate plan is to stop using fresh water altogether by 2030 through desalination and water recirculation.
The company and the co-owners of Los Bronces — Chile’s copper miner Codelco-Mitsui and Mitsubishi — are hoping to win an appeal to an environmental watchdog’s decision that blocked a needed a $3.3 billion expansion of the mine in May.
The decision is now in the hands of a government committee, led by the environment minister.
The asset, one of Anglo American’s two largest copper operations, has been mined for over 150 years and is running out of high-grade ore. The Los Bronces Integrated Project (LBIP) would allow the company to tap higher grade ores from a new underground section of the mine, extending its life through 2036.
The project uses the mine’s existing processing facilities, optimizes water efficiency, and requires no additional fresh water or tailings storage facilities, Anglo has said.
Critics worry about potential impacts on a local glacier as well as on water availability for the region.
Los Bronces has the capacity to produce over 300,000 tonnes of the red metal each year. The underground deposit is estimated to have a 1.7% copper grade, three times the mine’s open pit grade. In that sense, it would be a rare example of an expansion project that will process lower tonnage without requiring further milling and processing capacity.
The area around Los Bronces hosts 30% of Chile’s copper resources and 10% of the world’s resources.
Copper deposits are among the hottest assets in mining right now, mainly due to the metal’s use in electric vehicles and the global green energy transition.
Experts estimate the copper industry needs to spend more than $100 billion to build mines able to close what could be an annual supply deficit of 4.7 million tonnes by 2030.