Worst drought in years pushes Anglo to sign water deal with Codelco

Los Bronces copper mine. (Image courtesy of Anglo American).

Global miner Anglo American (LON: AAL) recognized that the severe drought affecting Chile’s central region has impacted its Los Bronces copper mine.

In its Q4 2019 production report, Anglo said Los Bronces’ production dropped by 28% due to water scarcity, a situation that also caused a 44% decline in the plant’s processing capacity.

“Production from Los Bronces decreased by 28%, to 71,700 tonnes with a 44% reduction in plant throughput (7 million tonnes vs 13 million tonnes) resulting from lower water availability,” the quarterly document states. “Chile’s central zone continues to face unprecedented climate conditions, with 2019 being one of the driest years on record and the driest since the start of the current decade-long drought.”

According to Anglo, the negative results at Los Bronces were partly offset by strong mine performance, in particular a step-up in shovel productivity and planned higher grades (0.99% vs. 0.81%)

Los Bronces closed 2019 with an overall production drop of 9%, as it was only able to generate 335,000 tonnes of fine copper. Guidance for the year had been set on 359,000 tonnes. 

Given these results, Anglo decided to go ahead with a water deal with Codelco’s Andina division, a massive mine adjacent to Los Bronces. 

The agreement between the two miners entails that clean water from Andina’s Ovejería tailings pond is to be transported seven kilometres by truck to Los Bronces’ tailings facility, known as Las Tórtolas.

According to local media, Codelco has said that this is a good use for the resource because its industrial water either accumulates in the pond or evaporates as is not apt for agricultural use or human consumption.

Los Bronces is operated by Anglo American together with Codelco and it is among the world’s largest copper mines. It sits at 3,500 metres and just 65 kilometres from Santiago.