Anglo American (LON: AAL) said on Tuesday a Chilean environmental regulator had formally rejected the company’s application for a $3 billion expansion of its flagship Los Bronces copper mine.
The 377-page decision follows last week’s recommendation by the same office, the Environmental Assessment Service of Chile (SEA), to deny the permit due to lack of information on the potential risk to public health.
“Anglo American is examining the details of the [decision] and expects to continue following the regulated permitting process in Chile, which includes the potential to request a review by a minister’s committee to evaluate the full breadth of merits of the project,” it said in a statement.
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.
Anglo American also estimates it will reduce production costs from $1.50 per pound of copper to about $1.3 a pound.
The miner noted LBIP has been designed after 10 years of scientific studies and a comprehensive and transparent consultation process with local communities as well as the relevant authorities.
It further stated that mitigation steps will compensate for 120% of the emissions produced by the project and the mine’s current operations, during construction as well as in operations to improve local air quality.
The company and the co-owners of the mine — Chile’s copper miner Codelco, Mitsui and Mitsubishi — now have 30 days to appeal the resolution.
It noted it would continue to work with SEA and other appropriate regulatory authorities to make available any additional information and provide clarity on the project.
The area around Los Bronces hosts 30% of Chile’s copper resources and 10% of world 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 revolution.
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
Shares in the company fell slightly over 2% on the news after the announcement to $3,512 pence in early morning.