Water and the Environment
Desalination plant development takes off
Chile is currently reaching a crisis point: wracked with drought and water shortages, it is burdened by continuously increasing water demand and less water to meet that demand. In that context, the government is rejecting new freshwater concessions for mining. All water usage going forward is expected to be desalinated.
However, despite continuous innovation to reduce water usage, there is still a dramatic need for water from the mining industry. “Demand will increase for water because of the operations situation today, in that some oxide operations are going down as minerals are reducing in grade,” explained Daniel Caro, CEO of Bermad Fluid Solutions. “They will be replaced by traditional flotation and concentrate processes. These processes are more demanding in terms of water because more water is required to process concentrates.
“In ten years time, the need for desalinated water in mining operations will double or triple compared to current capacity. On the Opex side, high pumping elevations in Chilean operations mean higher power requirements, then more investments in generation capacity and higher operating costs.” Patricio Maguire, Metals Director for Chile & Digital Transformation Lead LatAm, Turner & Townsend
According to ACADES, there are 24 desalination plants currently in operation in Chile, and 75% of the production of desalinated water is used by the mining industry. According to the state copper commission, Cochilco, demand from the copper sector for desalinized water will increase by 167% in 2023 compared to 2021 demand. There are multiple desalination projects currently in development in the mining sector, among them Codelco’s US$1 billion Distrito Norte plant, Antofagasta Minerals’ US$2.2 billion INCO plant, and Teck’s plant for the Quebrada Blanca 2 expansion.
Engineering and constructing desalination plants is extremely complex. “The supply of desalinated water depends on several factors such as flow capacity, site conditions, technology selection, location of the water delivery which, in the case of mining operations, are usually at high altitudes and longer pipelines, therefore leading to higher energy costs and higher Capex that significantly influence the water cost,” said Rubén Muñoz, lead practitioner desalination at CDM Smith.
Desalination is a major portion of a mining project’s Capex; as much as US$1 billion out of a US$3 or US$4 billion copper project. Today’s desalination industry in Chile has two typical contract structures. In the first, the mining companies themselves fund the construction of a desalination plant, thus owning the plant and the water production. The second option is a BOOT (build-operate-own-transfer) mechanism, in which a private sector group finances, designs, constructs, owns, and operates the plant; it then sells the water to the mining company. At a certain designated point years down the line, the mining company gains ownership of the project.
“Recently, we have seen a trend towards developments of multi-purpose desalination projects that aim to provide a water supply solution to the mining operations, to the local communities, and in some cases, to agriculture.” Gonzalo Vergara, Project Manager, CDM Smith
According to Muñoz, BOOT contracts are a useful route: “In this model, the client outsources the risk of project execution and just pays a fee during the operation. This is helpful for greenfield projects to reduce the initial Capex.”
Desalinated water production is an area of opportunity for mining companies to improve relationships with the local communities, utilizing their own water assets to support the community water needs. Pablo Peñaranda, Latin America business development director at Black & Veatch, explained: “The plant owners can decide whether to sell additional water production to a city or community, which is often encouraged by the mining company as part of their ESG efforts.”
A study by the environmental sciences center (EULA) at the Universidad de Concepción and the Mileno Socio-ecological Coastal Institute (SECOS) determined that as little as 4.5% of the coastline between the Santiago metropolitan region and the Arica y Parinaco region are “highly appropriate” locations for desalination plants, while 60% of that area was “little” or “not” appropriate. However, 17 plants are either in operation or planned in areas considered inappropriate.
The challenges do not stop with the plant itself. David Alaluf, general manager at Endress + Hauser Chile, explained: “We have had water desalination plants for 20 years or more, but these plants are technologically challenging, requiring corrosion-resistant systems. We must process the water and bring it up to an altitude of 3,500 m over distances of 250-300 km. That requires massive amounts of piping and complex pumps, valves, and instrumentation to monitor the process.”
“Various projects are on pause due to government choices, and they must be restarted to ensure that Chile has a secure future water supply.” Pascual Perazzo, Regional Commercial Director, Carpi Tech
Desalination provides a point of collaboration between mining companies and the local populations, enabling dialogue and demonstrating the value-add mines can bring to their surrounding areas. However, water projects for private industry cannot compensate for greater government investment in improving water access. Pascual Perazzo, regional commercial director of Carpi Tech, a company that offers both a proprietary waterproofing solution for tailing dams and solutions for the public water sector, noted the chilling impact of government policy on investment in the water sector. Of their concessionary projects in the public water sector, he said: “Many of these projects have been stopped because investors are waiting to see what happens with the new constitution. Many of these have been frozen for the last seven years, leading to a water supply deficit that is over a decade old.”
As the country continues to require more water, while available continental water continuously decreases, the mining industry has an opportunity to demonstrate its utility and societal contributions by taking a leadership role in the construction of desalination plants. By bringing water to remote or particularly dry regions, mines can reduce their groundwater consumption while simultaneously supporting local water access, filling an essential and concerning government and public sector gap.
Article header image courtesy of BPH