Chile's Water Shortage Threatens Copper Mine Cerro Colorado

BHP Billiton has taken another step towards reducing the size of its smallest copper mine in Chile, as it nears the end of its licence and struggles to regain groundwater supplies.

Owner BHP Billiton said in a statement on Thursday that 35 jobs were being cut at the Cerro Colorado mine. The cuts are part of a so-called downgrading plan launched in 2020 as production and ore quality decline, and the mine's environmental permit is scheduled to expire at the end of next year.

Meanwhile, Cerro Colorado is taking operational measures in response to a court order to stop taking water from the Lagunillas aquifer because of allegations of environmental damage. The mine plans to close one of its plants and limit other operations as it tries to show the extent of the recovery of the aquifer and there is no immediate risk.

While BHP has not linked the aquifer stoppage to job cuts, legal action could accelerate plans to cut jobs, affecting suppliers and dragging down the local economy.

Cerro Colorado presents a dilemma for the world's largest mining company, which is focused on its main business but sees copper as a strategic asset in its transition away from fossil fuels. While the mine pales in comparison to BHP's other mines, and the company has tried and failed to find a buyer, there are options that could extend its life by decades. The company evaluated a desalination plant that was estimated to cost $190 million in 2019.

The legal dilemma over aquifers comes as a decade-long drought and booming agricultural exports have put pressure on Chile's dwindling freshwater reserves. There are growing calls to guarantee human water supplies under a new constitution currently being drafted.