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With no letup in Chile’s years-long drought, Anglo American Plc is looking at developing a desalination project in partnership with state-owned Codelco, Japan’s Mitsui & Co. and a local water utility.

The proposal is to build a plant on the coast of the Valparaiso region that would produce drinking water for residents in exchange for access to waste water that could be used at mines, said Anglo’s Chile manager Aaron Puna.

“All roads lead to desalination,” Puna said in an interview Monday from London. “We would expect to have something firm on that in the next 12 months.”

Such a project offers a longer-term solution to Anglo’s Los Bronces mine that neighbors Codelco’s Andina in the mountains above Santiago. Giant copper mines in the desert to the north have turned to seawater amid depleting freshwater reserves that have triggered an overhaul of the country’s water-rights system and greater protections for glaciers.

At a cost of $500 million to $1 billion, the desalination project probably wouldn’t be ready for another four or five years. For now, Los Bronces is shifting away from freshwater by recycling from tailings dams and using local industrial water. 

Related: Antofagasta says Chile water shortage to hit 2022 production

That solution will allow Los Bronces to come in 3%-5% ahead of first-quarter production guidance, although output would have been higher without water restrictions, Puna said. At Anglo’s Collahuasi partnership with Glencore Plc, rains generated by the so-called Altiplanic winter have had a bigger-than-normal impact on output, he said.

Besides a possible desalination plant, Anglo plans to invest about $3 billion this decade to maintain annual output at Los Bronces at about 350,000 metric tons. Another $3.5 billion is being spent at Collahuasi.

Anglo hasn’t halted any investments and is “committed to Chile,” though it’s keeping close tabs on a process to write a new constitution along with government plans to raise taxes, Puna said. The writers of the new charter are weighing radical proposals including redesigning private property rights and even nationalizing mines.

While the company has “a lot of confidence in the political institutions and processes,” the challenge will be to strike the right balance between what’s best for Chile while maintaining incentives for investments, he said. 

(By James Attwood)