The World’s Largest Copper Producer Cancels $1 Billion Contract- Why?

In November, Codelco, the world’s largest copper producer, signed a $1 billion contract with a consortium led by Japan Marubeni Corporation to build and operate a desalination plant for the Chuquicamata, Mina Radomiro Tomic, and Mina Ministro Hales sites in northern Chile. On Friday, however, Codelco announced the cancellation of the contract.

In the statement, Codelco said: “Between the award of the tender and the signing of the contract, we decided to make adjustments to the project, which prompted us to redefine the bid, which will take place within the next 24 months.”

The plant has an initial capacity of 840 liters per second and was originally scheduled to begin construction in the first quarter of 2020. This much-needed facility was expected to be fully operational by 2022.

According to the Chilean National Mining Association, about 20% of the water currently used by major copper miners comes from the ocean. This number is expected to more than double by 2029.

Cochilco, The Chilean Copper Mining Commission, predicts that marine water will account for about 43% of the total local mining water consumption over the next ten years.

The winning consortium, MTT, consists of Marubeni Corporation, Transelec, and Techint.

Codelco did not further disclose the potential impact, or further details about the plant, which was expected to reduce water costs by 35% and become the second-largest plant in Chile after the Escodida mine’s $3.4 billion facilities.

Codelco has a large number of copper deposits, accounting for 10% of the world’s proven and possible reserves. The annual output is 1.8 million, accounting for about 11% of global copper production.