The impact of climate change facing Chile's copper mining industry

As the global temperature rises and climate events become ever more recurrent, copper mining in Chile is adopting measures to confront the risks and impacts. However, ensuring competitiveness requires a solid institutional framework and a collaborative adaptation process.

The El Niño climate phenomenon is exacerbating the problem in countries like Chile, generating floods and landslides this year that caused damage to infrastructure such as roads and slurry pipelines. Chile is the world's largest copper producer.

“The cost of repairs increased by 11 cents per pound [of copper], and in production a loss of 3.6% annually,” said Juan Ignacio Guzmán, CEO of mining consulting firm GEM in a seminar hosted by copper studies group Cesco on Thursday.

“In the copper mining area, an increase in temperature is expected, which will raise the zero-degree isotherm and the intensity of precipitation. This translates into a greater loss of NPV of an operation due to lost days and repair costs. The recommendation is to build barriers to prevent landslides in the future, which is less expensive than the cost of exposure,” Guzmán said.

To cope with the impact of storm surge on copper mining port facilities, the consultant recommends evaluating possible failures in copper concentrate shiploaders.

“With dynamic structural analysis, taking into account extreme weather phenomena [sic] such as earthquakes and tsunamis, potentially exposed structures must be identified and possible damage assessed, in order to make the necessary reinforcements or auxiliary structures to reduce the risks,” said Guzmán, underscoring the importance of maintaining safety standards and improving the use of materials to minimize the likelihood of fires on concentrate conveyor belts.

While a landslide can cut off traffic on roads, a storm surge make it difficult to export concentrate. The mining industry should "carry out an adequate productive transformation to avoid the risk of losing competitiveness in an international market that will increasingly be financed with low-emission copper," former mining undersecretary Willy Kracht told the event.

Kracht stressed the importance of efficient management of dams and tailings, and recommended more collaboration between companies to collect information on the effect that mining has on the environment and biodiversity and which corresponds to climate change.

“We have to build an institutional framework for risk management, in a transversal way with a focus on production, that learns from experience, modifies norms if necessary, and incorporates learning. Collaboration in institutional transformations is as necessary as productive transformation,” he said.

Several copper mining companies in Chile have strategies to challenge drought, tidal waves, tsunamis, landslides, extreme snowfall and the greater frequency of forest fires. One is Anglo American Chile, which has been monitoring the risks around its Los Bronces copper mine for years. The mine is 3,500m above sea level in the Santiago metropolitan region.

The increase in temperature and drought affect the surrounding communities of Colina, Til Til and Los Andes, while Anglo wants to develop its US$3.3bn Los Bronces Integrated project to add three new phases of extraction to the current pit, comprising areas in both the metropolitan and Valparaíso regions.

“We are going to reduce freshwater consumption by 50% by 2025-26 until we stop using it in 2030,” said Marcela Bocchetto, climate change and biodiversity manager at Anglo American, in the seminar.

Los Bronces will be supplied with 500l/s of desalinated seawater starting in 2025 through an agreement with Aguas Pacífico that includes the supply of drinking water to neighboring areas.

Regarding biodiversity, Anglo has conservation measures, compensation, reforestation and other initiatives. The mine is located close to two nature reserves.

"The evaluation of the risks associated with climate change not only affects capex, but also the insurance that must be contracted," added the executive.

For its part, Antofagasta Minerals has a mining plan focused on reinforcing continuity and operational competitiveness in the face of high temperatures, extreme or low rainfall, storm surges, strong winds, emissions of particulate matter and from the logistics chain, said corporate environment manager Alejandra Vial.

Its Los Pelambres copper mine is located in Coquimbo region where a severe drought has meant costs of “over US$200mn,” said Vial. At its Antucoya, Zaldívar and Centinela copper operations, meanwhile, the company faces the risks of storm surges and the consequences for the supply of critical inputs in Antofagasta region.

In terms of water, the Luksic group company hopes to double the capacity of its desalination plant to 800l/s to supply Los Pelambres, its largest mine, from 2026.