Codelco cancels $1bn desalination plant contract with Japan’s Marubeni
Chile’s Codelco, the world’s No. 1 copper producer, has cancelled a $1 billion contract awarded in November to a consortium led by Japan’s Marubeni to construct and operate a desalination plant that would supply water to the miner’s Chuquicamata, Radomiro Tomic and Ministro Hales divisions in the country’s arid north.
“Between awarding the tender and signing the contract, we identified adjustments to be made to the project, prompting a decision to redefine the tender, which will take place within the next 24 months,” it said in the statement.
Construction of the plant, with an initial capacity of 840 litres per second (l/s), was due to start in the first quarter of 2020. The much-needed facility was expected to be fully operational in 2022.
Data from the national mining association, Sonami, shows that about 20% of the water currently used by major copper miners comes from the sea. The figure, however, is expected to more than double by 2029.
Chile’s copper commission, Cochilco, in turn, forecasts that ocean water consumption will represent around 43% of the total used by the local mining industry in the next 10 years.
MTT, the consortium that had won the tender, is made up of Marubeni, Transelec and Techint.
Codelco gave no further details about the potential impact of the retendering process of the plant, which was expected to educe water consumption costs by 35% and become the country’s second-largest, behind the $3.4 billion facility at the Escondida mine.
The copper giant, which hands over all of its profits to the state, holds vast deposits of the industrial metal, accounting for 10% of the world’s known proven and probable reserves and about 11% of the global annual copper output with 1.8 million metric tonnes of production.
Production decline, together with lower copper prices and higher costs, saw the company’s annual profits drop by a third last year to $2 billion, not counting paper losses worth almost $400 million, as it wrote down the value of its assets, including its Ventanas smelter and the open pit at its Salvador division.
The company has been struggling this year to keep up its annual output of about 1.7 million tonnes mainly as a consequence of unusual floods in the Atacama Desert, lengthy maintenance shutdowns at two smelters and a two-week strike at Chuquicamata, among other issues.
There are three plants, besides Codelco’s, scheduled to begin operations in the next decade.
Anglo American-Glencore’s $3.2 billion Collahuasi mine life extension, includes a desalination facility.
Antofagasta’s Los Pelambres so-called Complementary Infrastructure project (INCO) will have a 400 l/s plant, while Teck Resources has also announced plans to build a 1,000 l/s plant for its Quebrada Blanca Phase II project.