10/04/08

SANTIAGO (Reuters) – Tougher legislation and increasingly scarce supplies are making water a growing cost component for miners who are now seeking new technologies to improve efficiency and seek new water sources.
Water supply has become a problem in many important mining regions around the world, but in Chile it is a critical one since copper operations are mainly located in the northern Atacama desert.
Professor Jacques Wiertz, a specialist on water use at Universidad de Chile, says research efforts by mining companies have focused on engineering and technical solutions to reduce water consumption and increase water reuse.
“Efficient use of water and responsible water management are the center of attention for many mining companies,” Wiertz told Reuters in an interview.
“And this is mainly a problem of cost. The increasing costs related to water supply — pumping and transport, desalination, etc. — and with effluent treatments to reach the increasing water quality standards required are the main drivers.”
Chile`s state-owned miner, Codelco, the world`s biggest copper producer, is also concerned.
“It is a growing challenge for the industry,” Jose Pablo Arellano, chief executive of Chilean copper giant Codelco, said.
“Our efforts focus on efficiency and treatment. Codelco has secured water supply for its operations, but that does not mean we don`t need to focus our full attention on the issue,” added Arellano.
Even in countries with relatively good availability of water, like Brazil, regulations increased the cost of using the resource and companies are investing in better management.
“Everyday you see new projects that include a more rational use of water,” Rinaldo Mancin, director of Environmental Affairs for the Brazilian Association of Mining Industries (Ibram), told Reuters.
Mancin says Brazil has relatively new legislation with local councils deciding on the use of water available in the region. Once free, companies today need to pay a type of royalty to use the resource.
“Increased costs for the industry in general can damage the financial balance of a project, inhibiting its execution,” he added.
The payment makes companies improve projects to reuse the water. Mancin says 90 percent of companies operated by Brazilian mining giant Vale reuse water. “Since it is already paid for, you better reuse as much as you can,” he says.
But that does not spare the company from criticism. Last month, the Brazilian NGO Defesa da Vida included Vale in a ranking of the 10 most water-polluting companies in Brazil, along with steel, paper, oil and agricultural companies. Vale said the report was biased.
DRY MINING A DREAM
Wiertz says the main alternative for supply so far is the use of water from the Pacific Ocean, as Antofagasta Minerals is doing at its Esperanza mine in Chile.
Esperanza is going to use 100 percent sea water brought to the mine by a 90 mile pipeline. The mine is expected to start operation in 2010.
“But for operations located far away from the sea and at very high altitude, this would not be a solution unless desalination for domestic use in towns located on the Pacific coast could be the basis of an exchange for existing water supply presently extracted in the Andes,” said Wiertz.
The specialist is coordinating a conference on water management in the mining industry (Wim2008), to take place next June in Chile. Cerro Lindo, the newest big mine in neighboring Peru, runs exclusively on desalinated sea water.
(Additional reporting by Antonio de la Jara; Editing by Terry Wade and Jim Marshall)

Reuters