Through the rugged terrain of the Choapa Valley, desalinated water travels along 38 miles of pipelines from the Los Vilos port to the El Mauro dam, which supplies the Antofagasta-owned Los Pelambres mine with the water it needs to operate.
Establishing this system proved costly, requiring a $2 billion investment. However, it was essential for ensuring continued mining operations in a region where droughts are frequent and groundwater supplies are primarily designated to serve local civilians.
Desalination plants illustrate the Chilean mining industry's need to adapt to ensuing challenges as businesses try to meet the surging demand of copper.
Supply needs have risen exponentially due to the metal's critical role in the green revolution. It is used for powering electric vehicles, solar farms, and artificial intelligence data centers.
Copper demand is projected to double from 25 million metric tons per year to 50 million metric tons by 2035. This has raised concerns about a potential 5.5-million-ton supply deficit by 2034.
Much of this fear can be traced to Chile, which supplies approximately 23% of the world's copper, and faces numerous production challenges.
Simon M. Jowitt, Director and State Geologist at the Nevada Bureau of Mines and Geology, told The Latin Times that production fell to "5.3 million metric tons (Mt) in 2024, down from 5.6 Mt in 2019."
The obstacles
One key issue is declining ore quality. BHP, one of the world's largest mining companies, estimates that the average copper ore grade has dropped by around 40% since 1991. This decline increases costs, as more ore must be mined, processed, and transported to yield the same output.
At Antofagasta, for example, production increases at Los Pelambres in Q2 of 2024 were offset by low-grade ore extracted from other sites.
Another dilemma is water scarcity, which Jowitt describes as a "major challenge."
Most of Chile's copper comes from the Atacama region, where mountain ranges block ocean precipitation. As producing one ton of copper requires 90 cubic meters of water, mining demands exceed the available groundwater supply.
This has already caused problems for one of Chile's big four mining groups. Back in 2021, a year that saw a fall in copper production, BHP was ordered to spend $93 million to settle a state-backed lawsuit over water usage in the north of the country.
To navigate this shortage, mining companies are turning to desalination plants, such as the one in Choapa Valley, which proves to be an expensive but potentially effective solution.
However, obtaining approval for such projects is yet another challenge, as environmental concerns have led to increased regulatory scrutiny and permitting delays.
Although President Gabriel Boric's government supports the mining sector, which accounts for approximately 13.6% of Chile's GDP, critics argue that slow permit approvals deter investment in new projects.
In January, Chilean authorities denied a permit for the proposed Dominga iron and copper mine due to environmental concerns.
María José Vidal Olmedo, a lawyer specializing in mining and taxation at law firm Vidal Abogados, told The Latin Times that "Concerns have emerged in recent years regarding bureaucratic delays in permit processing. In some cases, long waiting times have created uncertainty and delays in key projects, potentially affecting the country's competitiveness compared to other mining jurisdictions."
Industry solutions
Despite these obstacles, major mining companies remain confident.
Antofagasta and Anglo-American, two of Chile's largest mining groups, have shared with us their plans for future expansion.
Marcelo Esquivel, a spokesman for Anglo American, affirmed the company's commitment to its goal of producing "1 million metric tons of copper globally by early 2030." A key part of this plan is a partnership with Chile's state-owned Codelco, which Esquivel believes will "increase production by 120,000 metric tons from 2030."
Addressing environmental concerns, James Wyatt-Tilby, Group Head of Corporate Affairs at Anglo American, emphasized the use of new technologies: "We are employing coarse particle recovery to separate metal from ore more efficiently. This reduces energy consumption and enables greater water recycling, lowering both production costs and our environmental footprint."
He acknowledged that "Water is, of course, a constraint for the industry, so desalination plants are becoming a necessary investment." He added, "We are building a desalination plant for Collahuasi in the north, and for Los Bronces, we will use industrial wastewater."
Similarly, Henry Don, an associate at Brunswick Group, an advisory firm that represents Antofagasta, expressed confidence that the company's initiatives will support continued growth, helping them achieve their "goal of increasing production from 664,000 to 900,000 metric tons of copper per year."
Vidal Olmedo, the lawyer, summarized the situation, stating that "companies have interpreted this change as a call to improve the productivity and sustainability of their operations."
She reassured that businesses "are making significant investments in process optimization, the development of new technologies, and the exploration of deposits to maintain the industry's competitiveness."
"From an investor perspective, this moment represents a unique opportunity to drive new technologies, strengthen efficiency, and diversify copper sources, ensuring that Chile remains a leader in producing this strategic metal for the global energy transition," said Vidal Olmedo.
These topics are set to be center stage at The CRU World Copper Summit taking place this April in Santiago. Soon after, Q1 reports will reveal if the industry innovations have increased production to meet the demands of a world that shows no signs of decreasing its need for supply.
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