BHP’s Cerro Colorado copper mine in Chile hit by further water measures

Fitch expects relatively persistently high metals prices should help cushion the credit effects of cost inflation and generally lower production amongst senior miners. (Image courtesy of Consejo Minero.)

BHP (ASX, LON, NYSE: BHP) said on Wednesday it will modify operations at its Cerro Colorado copper mine in northern Chile to lessen the impact of a fresh ruling that prevents the company from drawing water from a nearby aquifer for 90 days, while it appeals the environmental court’s decision.

The world’s largest miner said on Friday that Chile’s First Environmental Court had issued a new precautionary measure related to the extraction of water from the Lagunillas aquifer, which would affect the mine’s $467 million operational continuity project.  

“Cerro Colorado recognizes that the new measure will have an impact on operations and on its entire value chain,” BHP said in a statement on Tuesday, adding it would adapt its operations.

At first, BHP will halt one of Cerro Colorado’s plants and operate the remaining facilities with some limitations. It will also offer vacation for a “significant” group of workers, while others will work from home.

“The adopted measures make it possible to face the contingency in a responsible manner. The final decisions are expected to be evaluated in the coming days in light of new information available,” it said.

The case relates to a resolution by the country’s Supreme Court in January last year, upholding local indigenous communities’ complaints about the miner’s water use and impacts on wetlands. Such ruling was followed in July by the top environmental court’s order to BHP to start again from scratch on seeking permits to operate Cerro Colorado.

Since then, the same First Environmental Court has ordered two 90-day long groundwater extraction halts, which BHP has consistently appealed.

BHP’s environmental licence for Cerro Colorado, which produced 68,900 tonnes of copper, or about 1.2% of Chile’s total copper output in 2020, runs until the end of next year.

Copper companies across Chile, the world’s top producer of the red metal, have been forced in recent years to find alternative means to feed water to their mines as drought and receding aquifers have hampered operations. Many have sharply reduced use of continental freshwater or turned to desalination plants.

(With files from Reuters)