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A Serious Warning From The World’s No.1 Copper Nation

Chile copper mine

Rough week for the South American copper mining sector. With reports from Peru suggesting that at least one person was killed by police in violent protests against the massive Las Bambas mine.

And just to the south, there was another major development for copper miners — in the world’s top producing nation for the red metal, Chile.

Chilean regulators announced last Thursday they are levelling charges against the Los Pelambres mine, run by leading copper producer Antofagasta. Accusing the operation of serious environmental violations — which could jeopardize the future of the entire project here.

State regulatory body SMA said in a statement that it is charging Los Pelambres with a total of nine infractions. With regulators noting that five of these charges are considered “serious”, while four charges are of a more minor nature.

The specific violations include extraction of water from unauthorized locations, construction of unauthorized wells, and failure to reforest some zones affected by mining activity.

These accusations against the company are not trivial. In fact, regulators suggested the violations could result in a shutdown of the mine — with SMA saying that a temporary or “indefinite” closure could be amongst the penalties against the operation.

At the very least, it looks like the case will result in a serious financial hit. With SMA saying that, alternative to closure, Antofagasta will pay a fine of $23.8 million. Related: Russia Says Six-Month Oil Output Freeze Most Efficient

All of which is a serious blow to one of Chile’s biggest mining operations. Los Pelambres produced over 375,000 tonnes of copper last year — meaning that a shutdown here would have major implications for Chile’s overall output.

In a broader sense, this case also confirms what numerous miners have been saying of late — that Chile is greatly tightening its environmental standards for mining across the country. With this week’s developments coming only months after Kinross Gold announced it is shutting down its Maricunga gold mine, pending the outcome of a government review into water use here.

Those moves suggest things are getting much more challenging for miners in this critical copper nation. Regulators are now giving Antofagasta 10 days to present a plan for remedying the offences — or 15 days to challenge SMA’s findings. Watch for a response from the company, and for final penalties to be handed down against the mine.

Here’s to seeing it coming.

By Dave Forest

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