Chile’s environmental regulator SMA filed on Tuesday six charges against Lundin Mining’s (TSX: LUN) Candelaria copper mine for breaches in its operational permits, including violations related to its blasting operations.
The watchdog said three of the infractions were “minor” and the other three “grave”. They range from exceeding the limit of emissions related to liquid industrial waste to infringing provisions outlined in the mine’s environmental qualification, or RCA for its initials in Spanish.
Among the gravest violations, SMA found the mine used more explosives than allowed between August 2019 and April 2020. This, the regulator said, caused an increase in the total emissions generated by the company, which could have risked the health of locals.
Another serious charge is linked to the miner’s failure to comply with its commitment to reducing the consumption of freshwater, leading to a loss of underground water at Copiapó river’s aquifer — an area known for its water scarcity.
The SMA said the company could be subject to a fine of up to about $23 million, the revocation of its environmental credentials (RCA), or the project’s closure.
The watchdog also said it had received a number of complaints from local residents, which expected to be addressed by the company along with its own demands in a compliance plan.
Lundin now has 10 business to present a compliance plan and 15 business days to dispute the charges.
“Minera Candelaria always complies with current legislation, with the applicable environmental and sector authorizations, and reiterates its unbridled commitment to the development of responsible mining,” the miner said, adding it was studying the charges to determine its next steps.
Last month, Lundin announced a 14% drop in copper output at the mine, where it’s advancing a $600 million expansion that would allow to extend the operation’s life by 10 years, starting in 2030.
The review of the environmental study for the expansion has been postponed to the end of August at the company’s request.
Full-year guidance has been reduced to between 155,000 and 150,000 tonnes copper and 90,000 to 85,000 ounces of gold from between 172,000 to 182,000 tonnes copper and 95,000 to 100,000 ounces of gold expected previously.
Candelaria produced 34,203 tonnes of copper and about 21,000 ounces of gold in concentrate on a 100% basis in the March quarter. While mill throughput was higher than the prior-year quarter, copper output was lower due to planned lower grades in the most recent quarter.
The mining complex is indirectly owned by Lundin Mining (80%) and Sumitomo (20%), with the Toronto-based miner acquiring its ownership from Freeport-McMoRan in 2014.