Mining giants invest $3bn to secure water supply in Chile

Major mining companies BHP Billiton and Rio Tinto have agreed to invest $3bn (£1.95bn) in a desalination plant at their joint venture project, Escondida, in Chile.

The plant will provide a sustainable supply of water for the project’s new copper concentrator, approved in February 2012, while minimising Escondida’s reliance on the region’s aquifers.

BHP Billiton copper president, Peter Beaven, said: “Securing a sustainable water supply in the Atacama Desert is a major priority for all Chilean copper producers, so the approval of the Escondida Water Supply project is a significant milestone for our business.

“The new desalination facility will minimise our reliance on the region’s aquifers, which will help us to meet our environmental commitments and enable us to achieve our long-term business strategy,” he added.

Construction of the new 2,500 litre per second seawater desalination facility begins this month with commissioning scheduled in 2017. BHP will invest $1.97bn into the plant, while Rio Tinto invests the additional $1.03bn.

The announcement coincides with analysis from the Carbon Disclosure Project (CDP) which reveals that for the majority of metals and mining firms, there are very real concerns that water shortages could strike at the heart of their production systems.

The paper distilled findings from 36 companies that were happy to disclose water data – these 36 organisations have a combined market share of just over 600bn euros, covering core markets in aluminium, steel, gold, precious metals/minerals and diversified metals/mining.

Out of those 36 firms, all bar one identified substantive water-related risks that could reduce profits going forward. More than two-thirds (67%) identified water stress as a possible risk to operations, making it the most reported risk compared to other factors such as flooding, declining water quality and regulation of discharge.

Water stress was also identified as the most imminent risk, with nearly half (47%) of companies expecting water stress to hit their business within five years.

The research also found that the majority (64%) of businesses have already been badly hit by water-related issues in the past five years, with flooding the most commonly cited occurrence.

More than one-third (39%) are now experiencing increased costs as a result of negative water impacts. Corporations such as Anglo American, BHP Billiton and Rio Tinto have already had to change their practices in response to this.

Commenting on its water strategy, Rio Tinto stated in the CDP report: “We created a water standard which requires all operations and new projects to develop and implement criteria on water abstraction, dewatering, effluent/discharge or water quality when government regulations are absent, insufficiently protective or ambiguous to ensure protection of surface water and ground water resources”.

Leigh Stringer and Maxine Perella

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