Codelco Update – One More Desalination Plant for Chile

Chile has faced a decade-long drought that has impacted local communities and whole industries alike. According to the environment ministry, 73% of the country’s water is used for agriculture, while industry consumes 12%, mining consumes 9%, and residents only 6%.

Although the mining industry only uses 9% of the countries water, most operations are located in Northern Chile where water is the scarcest. Water scarcity has already started impacting mining operations.

BHP’s Cerro Colorado copper mine was ordered in September of last year to stop pumping water from their aquifers for 90 days. Antofagasta Minerals in 2021 cut its copper production target for the year due to the water shortage as it waits for its desalination plant to start operating in 2022.

Over the years, the industry has been proactive with switching to sea or desalinated water in their operations. Currently, there are 8 desalination plants and 3 seawater impulsion systems operating which together represent 25% of the non-recirculated water used by the copper industry.

Now there will be one more desalination plant….

Codelco’s Board of Directors recently announced the approval to build the long awaited desalination plant in Calama.  The plant will provide water to the Chuquicamata, Radomiro Tomic ,and Minister Hales divisions.

The plant was originally tendered and awarded to the consortium which included Marubeni Corporation and Transelec. The tender was terminated in 2019 due to technical adjustments to the project. Mainly, Codelco wanted to incorporate the water distribution network from the reservoir in Radomiro Tomic to the other divisions near Calama and ensure compliance with Codelco’s changing standards.

The same companies (Marubeni Corporation and Transelec) will be responsible once again now that the project is ready to move forward.

Project Overview

• The project will be executed under a BOOT (Build, Own, Operate and Transfer) business model, which implies that the consortium will build, own, and operate the plant, and then transfer it to Codelco.
• The project involves an investment of more than US$1b and will employ of up to 2,700 people at the peak of the three-year construction period.  Local communities and citizens of Tocopilla and Calama will particularly benefit from the employment opportunities.
• The project will be a sustainable and cutting-edge technological solution based on the design of a desalination plant that will operate by reverse osmosis, with an initial capacity of 840 liters per second and with the potential to expand to 1,956 liters per second.
• The plant, which will be located south of Tocopilla, includes maritime works and a water pump system that will push the desalinated water through a 160 kilometers pipeline. 
• The electrical infrastructure will pump it at an altitude of more than 3,000 meters until it reaches the industrial water reservoir for the supply of desalinated water in the Northern District.
• This will be the country’s second largest desalination facility, behind the US$3.4bn Escondida plant. In comparison, Teck’s QB2 desal plant when operating at full capacity, the plant can purify about 1,300 litres per second. 

Codelco’s Sustainability Goals

Codelco has made some aggressive sustainable development targets for water usage in its operations. This deslanation plant will help the Northern Division reduce siginifcantly its reliance on inland water.

This goal of Codelco is to reduce the unit consumption of inland water by 60%, by making improvements to the efficiency of operational processes, the reuse of water from tailings, and the incorporation of the desalination plant for the Northern District.

Conclusion

It is good news to see Codelco taking a large step to reduce its inland water usage. This will make the companies Northern operations much more sustainable over time.

In December of 2021, our article  Water for Chile’s Copper Mines outlined our thoughts on the areas that Chilean mining operations will need to consider when looking at solutions to reducing inland water usage. From the latest announcement from Codelco, it seems that we were on the right track with our conclusions.

Shared Infrastructure – Codelco is able to share the cost of infrastructure between 3 operating mines, making the investment substantially more affordable. While other Chilean miners will not have the same opportunity to share infrastructure between their own operations, they can share these investments with other neighboring mines.

Water Recycling – Codelco has mentioned in its press releases that its goal is to reduce inland water by 60%. The company has publicly stated that desalination is only one part of the solution and the other areas they will focus is reusing water from tailing and improving efficiencies in its operations.

Energy Usage – It is not yet confirmed but it would not surprise me if Codelco signs power purchase agreements for local renewable energy to power some or the majority of its energy requirements for the desal and related pumping stations. Being located in an area of the country where renewables are cost effective will help make it that much more sustainable.

Environmental and Social License – Beyond engineering the proper specifications to reduce the likelihood of issues with brine discharge, I could see Codelco using companies such as the Chilean Start-up, BloomAlert, who is already receiving attention for its ability to predict coastal pollution events through its monitoring and intelligence service. I have no idea if they are speaking with Codelco but I like to see Chilean technology companies doing well so a little shout out for them. 

The biggest take away for service and technology providers, the new announcement demonstrates where the company is heading. Beyond desal, the company needs technology that will help it reuse water from its tailings and to make its operations more water efficient. It will be the same for many mining operations across Chile. Clearly, Codelco is putting its financial and political weight behind reducing its inland water usage so companies that can help them do this will surely have opportunities.

Ax Legal is an advisory firm that works with foreign companies in Latin America. Our team of legal and commercial advisors have a distinguished track record of helping foreign technology and services companies to grow and operate in Latin America. Over the years, we have worked with starts up, mid-size businesses, and publicly listed companies. The one common factor that connects are clients is that they are leaders in their field, providing innovative technologies and services to the industrial sectors.

To better understand how we can support you in the Region, please contact Cody Mcfarlane at cmm@ax.legal