What does the IFC expect from Chilean mining companies that invest in desalination?

The International Finance Corporation (IFC), the private sector arm of the World Bank, is providing funds for seawater desalination projects, an area where the Chilean mining sector will play a key role in multipurpose initiatives.

By 2033, 71% of the water used by the Chilean mining industry will come from the sea, according to state copper commission Cochilco.

To learn about synergies and how to combat water stress, BNamericas speaks with Nayve Martínez, senior investment officer at the IFC.

BNamericas: What participation does mining have in IFC's project portfolio?

Martínez: Globally, between July 2023 and March of this year, our portfolio of mining-related projects amounted to around US$800mn, with 47% in copper, 27% in bauxite, 13% in lithium and 13% in other minerals. We're one of the few multilateral institutions that support mining because it’s a sector that has a lot of challenges at the community, social and environmental level.

Our teams ensure that mining industry projects are carried out under the highest standards and are sustainable. In particular, we're focusing on the mining of copper, lithium and rare earth elements, which are key to the global energy transition. For this reason, Chile, Argentina and South Africa are countries where we're very present.

In addition, we were the first to promote the Equator Principles that provide guidelines for the management of social and environmental aspects in investment projects, which are widely used by commercial banks.

BNamericas: What challenges do you see in Chile for mining to continue being a driver of more desalinated water initiatives?

Martínez: The development of desalination in Chile has occurred due to mining, because the cost of desalinating water is very high and this is a sector that has the capacity to face it. To expand desalination beyond mining, it’s essential that there is a broader legislative framework, which includes the streamlining of permits and comprehensive planning so that desalination reaches other industrial, agricultural and residential sectors. The role of Chilean mining has been a trigger to promote desalination and take the solution to a much more advanced level than in other countries.

BNamericas: What is the IFC doing to promote desalinated water and water recirculation in Latin American industries?

Martínez: As an institution with a multilateral profile, our role is to ensure that capital reaches desalination or reuse projects and that these are developed sustainably over time. Together with the World Bank, we coordinate issues like regulation and legislative frameworks, and we provide capital and advice so that initiatives are carried out correctly.

BNamericas: What challenges exist for Chilean mining to continue being a key player in the development of desalination plants and now move towards multipurpose plants to benefit communities?

Martínez: We see Chile as the first generation of desalination in terms of projects validated by the IFC. Now comes the second generation that will be more focused on multiuser and multipurpose plants. We have evaluated these types of plants, and we have advanced conversations to implement new projects.

As their purpose is to satisfy the needs of a wide variety of customers, multiuser plants are more complex. For this reason, financial analyses must be very refined to guarantee that all the cogs of the installation work correctly.

We see that the owners of the projects, not only miners, but also other investors and strategic funds, seek to provide water to multiple users, which makes construction and infrastructure more complex. In this sense, it’s important that there’s clarity from the regulatory point of view, and that a support network be put together so that the projects come to fruition.

BNamericas: What desalinated water and reuse initiatives with a multipurpose or multiuser approach are you monitoring in Chile?

Martínez: Projects such as Enapac, Cramsa [Aguas Marítimas], Desala and Econssa are part of the new generation of plants in Chile.

BNamericas: Has the IFC evaluated the impacts that underwater facilities and pipelines could have on the maritime ecosystem?

Martínez: These projects are viable from the point of view of biodiversity as long as all impact mitigation measures are adopted in the design and use of technologies. It’s important that the projects incorporate civil society from the beginning to ensure that there's social awareness about the impacts of the projects and, especially, to publicize the solutions that already exist at a global level to mitigate the impacts on the maritime environment, in the saline density and in the process of extracting and returning the brine to the sea.

From the beginning, all actors involved must be involved, including fishing coves, civil societies and communities, in a transparent process, with a comprehensive vision and mapping of the sectors that could be affected, either at the level of perception or at the real level.

BNamericas: What IFC programs seek to promote the optimization of water resources in the Latin American region?  

Martínez: We have the Scaling ReWater program that proposes a contract model to ensure that water reuse projects are carried out in an agile way and with a bank contribution. Reuse is a complementary tool to desalination and has become a new source of water for industries. This relieves the pressure of generating more desalinated water, which can be even more expensive.

Mining in Chile already uses water reuse and recycling. In Mexico we also see initiatives and in Peru the Cerro Verde mining company has an interesting project in collaboration with a local water company. There will be a much more noticeable trend in water reuse as a relief from the pressures that users suffer today.