Copper’s next supply snag could involve water rights

The COVID-19 pandemic has caused disruptions to copper mining and production activity in Chile in 2020, but regulatory scrutiny of the industry’s water use could be poised to put a longer lasting strain on supply of the red metal from the South American nation.

Parts of Chile, particularly the Atacama desert, are among the driest places on the planet, which is prompting the nation’s environmental agencies to look more closely at the impact of copper mining and ore treatment.

An early August report by Bloomberg indicates Chile’s Superintendency of Environment (SMA) has informed the Australia-based BHP Group that it suspects the mining firm has been using more water than it is permitted to use for each of the last 15 years at its Escondida mine.

To the south, the Salvador mine run by the nation’s own Codelco firm has been unable to undertake an expansion project at the site because Chile’s State Defense Council has not approved of Codeclo’s use of water at the site, according to Bloomberg. 

“Mines that dot the parched Atacama desert are coming under increasing scrutiny for their use of water, with lithium giant Soc. Quimica & Minera de Chile SA facing a Supreme Court ruling after community complaints,” says the news report.

Chilean regulators say they have observed “a serious decline in the water table” near the Escondida mining site, according to Bloomberg. The article indicates “triple the acceptable threshold” in water use may have occurred at the mine site in 2019. BHP tells the newspaper it “has never exceeded the restriction” at Escondida.

Copper has been increasing in value even during the COVID-19 pandemic, in part because of the rebound of manufacturing in China occurring at the same time as pinched supply of copper ore in Chile, combined with China’s government restrictions on copper scrap imports.