Here’s Another Warning Sign From The World’s #1 Copper Nation

0
Here’s Another Warning Sign From The World’s #1 Copper Nation

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.

Gates Capital Returns 32.7% Tries To Do “Fewer Things Better”

Gates Capital Management's Excess Cash Flow (ECF) Value Funds have returned 14.5% net over the past 25 years, and in 2021, the fund manager continued to outperform. Due to an "absence of large mistakes" during the year, coupled with an "attractive environment for corporate events," the group's flagship ECF Value Fund, L.P returned 32.7% last Read More

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.

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.

Updated on

Dave Forest writes Pierce Points Free Daily E-Letter, an advisory on mining and energy read every day by BP, Rio Tinto, JPMorgan, BNP Paribas, Repsol, GDF Suez, GE, Platts, Warburg Pincus, and the UN. Sign up for free at www.piercepoints.com. Mr. Forest has funded and managed over $80 million in global exploration and development in natural resources, and continues to design and develop projects globally. He is a professional geologist.
Previous article Self-Driving Car Crash In Singapore Puts Autonomous Bus Safety First
Next article Is This New Law Another Big Reason To Be Bullish On Natgas?

No posts to display