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Marcos Lima
Director of Pares&Alvarez

November 18, 2021
Drought, climate change and water stress are three concepts that, frankly, I have not heard much during this month of presidential campaigns. It is strange that the candidates do not express, with sufficient force, solutions to a problem that can have serious consequences on the functioning of most of the country’s economic sectors and become devastating for society.

Not everyone pretends to ignore this reality. The water crisis affecting our country is nothing new for the mining industry, which is concentrated in areas of high water stress. This is reflected in the fact that Antofagasta, Chile’s mining capital, has been supplied by the largest desalination plant for drinking water in Latin America since 2003; that of the 18 desalination plants operating for productive activities, 13 correspond to mining companies and also that, of the 22 plants in the pipeline, there are others driven by the main mines in operation that do not yet have this infrastructure.

An activity such as mining, which requires high levels of investment, long start-up processes and a careful process of cost control, cannot but plan its operations for the long term, considering critical inputs such as water in the planning process. If we review the latest Cochilco yearbook, we see that seawater consumption by mining companies in 2020 will already exceed 23% of total consumption, reaching more than 5,200 lts/sec, doubling the volume of five years ago, which is a tangible sign of their achievements.

Once again, mining is ahead of its time and leads the way in the use of new technologies to address a situation that should be of concern to the country as a whole, but which does not seem to be of interest to the political priorities, despite the fact that the years of drought have brought this problem closer to the regions surrounding Santiago, endangering the water supply in the near future.

As a resource-intensive process, the development of desalination plants will require economic activity capable of absorbing the cost and attracting operators with the experience, technical and financial backing to pull it off.

It is also important to consider that the major cost of desalination is not the investment in the plants but their energy-intensive operation. The use of clean energy and its boom in the north of Chile was possible because mining provided the demand that allows the growing installation of solar and wind farms that substantially reduce their cost, the same advantage that can be used in desalination.

A pending issue – where mining can make an additional contribution – is to promote integration between several projects that need desalinated water, accumulating the demands and inviting an operator to take charge of their development, taking advantage of economies of scale and avoiding the proliferation of medium-sized plants and their consequent environmental impact.

Given the reluctance of mining companies to develop joint projects, which is even reflected in the scarce cooperation between companies and/or divisions that share the same owner, an initiative of this nature can be a great example against the individualistic and distrustful culture that we see today in business and politics. This is what the former chairman of the board of Codelco, Oscar Landerretche, was referring to a few years ago when he mentioned that, in sixty kilometres of coastline, four mining operations (FE and Cu) ended up installing three desalination plants. This issue should be stimulated by the State, with appropriate incentives for cooperation, in order to have a few large-scale desalination plants to meet the industrial requirements of mining and the needs of our population.

Mining has been a fundamental pillar of Chile’s development throughout its independent history and especially in the last thirty years. We are sure that it can continue to show the country that it not only represents foreign exchange, taxes and good jobs, but that it can also contribute to successfully face one of the most urgent problems of the coming years: water.