G. Lagos Et Al 2020 Journal of Mineral Economics - Potential Copper Production Through 2035 in Chile
G. Lagos Et Al 2020 Journal of Mineral Economics - Potential Copper Production Through 2035 in Chile
in Chile
Mineral Economics
Raw Materials Report
ISSN 2191-2203
Miner Econ
DOI 10.1007/s13563-020-00227-2
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Mineral Economics
https://doi.org/10.1007/s13563-020-00227-2
ORIGINAL PAPER
Abstract
In the long term, primary and secondary supply of refined copper satisfies demand. Numerous models exist to explain and predict
demand and secondary supply; however, the projection of primary supply relies mostly on detailed knowledge of potential
mining projects and on existing ore reserves and resources. Much discussion has occurred historically regarding the availability
of resources and reserves for the future. Chile, being the largest copper producer, also has the largest reserves in the world;
therefore, it retains its potential to be a key player in future supply. This article explores some of the most relevant resource and
technological challenges that may emerge with an accelerated development of brownfield and greenfield copper mining projects
in Chile through 2035, without considering economic, regulatory, and environmental constraints. A “Full Scenario” was created
to accommodate these conditions and restrictions. It includes estimates of future ore reserves, copper production, plant capacity,
ore grades, energy and water consumption, greenhouse gas (GHG) emissions, and generation of tailings. Maximum production
would exceed 10 million tons of contained copper from 2027 to 2030, with a resulting decrease of ore grades and the growth of
energy and water consumption. The growth of indirect GHG emissions through 2035 is estimated at 18.4% less than copper
production growth, because all new electric energy for this scenario would be based on renewable energy. Also, all new water
used by 38 out of the 42 mining projects considered would be seawater, and some of the continental water used in 2019 would
cease to be used in mining.
announced publically by the mining companies. They also The variables included in this work to evaluate chal-
include potential projects which have been reported, even if lenges of the industry in this scenario are the following:
the companies have not yet defined the starting date. This ore grades, energy and water consumptions, GHG emis-
method is justified because mining companies usually overes- sions, and generation and disposal of tailings. All these
timate throughput rates and are optimistic about commission- elements have been considered key in studying the copper
ing dates. During the last decade, there was a systematic bias mining environmental footprint by Lagos et al. (2018),
towards over-predicting global mining production (UBS Ali et al. (2017), Aivazidou et al. (2016), European
Global Research 2017; Wood Mackenzie 2017c). A third Commission (2016), IISD (2016), Northey et al. (2013,
method consists in predicting the date of commissioning and 2016), Schoenberger (2016), Spuerk et al. (2017), Mahdi
the throughput using the price incentive method (Wood Badiozamania and Askari-Nasabb (2014), Jeswiet et al.
Mackenzie 2017a), which forces the more competitive pro- (2015), Nguyen et al. (2014), Harmsen et al. (2013),
jects to be commissioned first. It implies that demand and Mudd et al. (2012), Norgate and Jahanshahi (2007),
secondary supply are known previously and requires detailed Norgate and Haque (2010), Norgate and Jahanshahi
cost data of the greenfield projects. The method, nevertheless, (2011), Matthews et al. (2008), Kuckshinrichs et al.
does not consider the time required for commissioning and (2007), and Hondo (2005).
only considers a modest part of the available brownfield “Methods” of this paper discusses the framework used to
projects. estimate mining production and other variables. “Results” pre-
The motivation of this article was to explore the potential sents the results obtained. “Discussion” contains a discussion
production of the Chilean copper mining industry through and “Conclusions” closes the article with some conclusions.
2035, considering that the country is the world’s largest pro-
ducer and holds the biggest ore reserves and resources glob-
ally. It is of importance for the copper industry to understand Methods
such potential and also find its limitations. Therefore, the aim
of this article is to analyze the production potential and some This section is divided in two parts: the first one addresses the
of the main challenges of Chilean copper mining through framework for projecting production and the second presents
2035, assuming that metal price, the regulatory environment, the methods to estimate the remaining reserves, energy and
and other competitive aspects of the country should not limit water consumption, as well as tailing generation and GHG
project development and production growth. Therefore, the emissions.
article provides an unobstructed view on what is technically
possible, but does not provide all the real challenges that the Framework for a mining production projection
industry will face in the future, since it ignores three main
challenges in the future which would be economic, regulatory, The construction of a mining project should begin once
and environmental. the basic engineering is concluded, environmental permits
This scenario is referred to as the “Full Scenario.” As a exist, and no law suits are presented against it in the
result, this paper estimates the maximum total copper produc- justice system. Table S.1 (in Electronic Supplementary
tion of Chile that could be achieved from 2019 to 2035, given Material) contains an estimation of the minimum time
the assumptions indicated. required from 2019 onwards to commission the 15 green-
The article addresses the production of copper in con- field and 27 brownfield projects considered in this work.
centrates and cathodes. The earlier is employed for pro- These projects include extensions of the life of the mines,
cessing mainly primary sulfides ores and includes a con- expansions of capacity, and new projects.
centration process based on froth flotation, which must be According to the information available, many of the sec-
followed by smelting and electro refining in order to ob- ondary oxide deposits processed via leaching, solvent extrac-
tain refined metal. The latter starts from oxide ores or tion, and electrowinning (Leach/SX/EW) will come to an end
even secondary sulfides, resulting in copper cathodes via prior to 2030 (Table S.1). This means that there will be an
leaching, solvent extraction, and electrowinning processes economic incentive to develop the copper hypogene ore bod-
(Leach/SX/EW). In 2018, Chile produced 5.8 million tons ies that underlie the currently exploited oxide deposits, mak-
of contained copper, of which 47.8% were exported as ing it possible to avoid high closure costs and take advantage
concentrates, 25.2% were smelted in Chile, and 27% were of existing installations. Hypogene deposits contain primary
cathodes produced via Leach/SX/EW. sulfide copper minerals, which at present must be processed
This paper also addresses the availability of ore resources via a concentrator plant.
and reserves in the country. In particular, if they will represent A feature of almost all the Chilean sulfide deposits is that
a constraint if Chile increases its copper production through they have a greater amount of resources and reserves than the
2035 according to the full scenario. oxide deposits above them, so their useful life should extend
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Potential copper production through 2035 in Chile
The second step involves estimating the energy required to calculated considering the methodology used by Cochilco
transport and elevate the water (desalinized or not desalinized (2017c) using the following expression:
seawater):
W t; j ¼ ∑ Ψi; j Qi; j ð8Þ
i
E El; j ðT JÞ ¼ g m=s 2
V El; j m =h
3
where Wt,j refers to total new water for the year j. The subscript
h ðmÞ=ðηb ηm Þ 365 ðdaysÞ
i takes the values C, H, SR, and Ot for concentration, hydro-
24 ðhÞ=106 ð5Þ metallurgical process (Leach/SX/EW), smelting and refining,
and other processes, respectively. Smelters and refineries are
where g is the gravitational acceleration constant, VEl,j is the considered only for the current production since no expan-
water volume for the year j, h is the height (the average of all sions or closures are expected during the study period. The
operations), ηb is the efficiency of pumps, and ηm is the effi- term Ψ refers to the new water unit coefficient by process for
ciency of the motors. The average altitude above sea level of each year j expressed in m3/t of refined copper but for the mill
all projects considered was estimated to be 2750 m. plants (m3/t processed mineral); and Q is tons of refined cop-
The total electric energy needed for using desalinized sea- per produced per year except for the concentrators (tons of
water is equal to the sum of both components. mineral processed).
In the case of the traditional process via concentration, the It was assumed that Vizcachitas, Andina expansion, El
following equation was used to estimate the electric energy Teniente expansion, and a fraction of the Cerro Casale
consumed by mines, mill plants, and services in the produc- project would use new continental water. It also assumes
tion of copper concentrates, where QCon,j represents the pro- that all new seawater requirements would be desalinized
duction of copper contained in concentrates and QT,j is the unless particular mines currently using direct seawater.
Chile’s total copper contained production: Consumption for processed material at the mill remained
constant at 0.63 m3/t of mineral in concentrators. Specific
QConc; j unit coefficients for Leach/SX/EW processes, for
E Conc; j ¼ E O; j þ E Ser; j þ E Des; j þ EEl; j þ E U; j þ E C; j ð6Þ smelters, and for other uses, including mines, services,
QT; j
and human consumption, were considered constant in
For the estimation of mine and Leach/SX/EW energy con- terms of m3/t of copper contained. It also assumes that
sumption, the following equation was used: permits for the 2 cubic meters per second that would
cease to be used in hydrometallurgy by 2035 would not
QH; j be rescinded and therefore companies that exploit hypo-
E H; j ¼ EO; j þ ESer; j þ E Des; j þ E El; j þ E H; j ð7Þ
QT; j gene deposits underneath the oxide deposits would use
these rights.
where QH,j is the electrowon cathode production. Estimation of new water consumed in the traditional pro-
The methodology used to estimate the consumption of fuel cess via concentration by mines, mill plants, and services used
was the same used for electric energy, and hence was estimat- the same partitioning method as that expressed in equation 6,
ed separately for open pits, underground mines, concentrator whereas new water consumed in the mine for Leach/SX/EW
plants, leaching-SX-EW plants, smelters, electrorefining, and processes used the same method expressed in equation 7.
services. The corresponding unit coefficient by process for
each year was projected until 2035 using a logarithmic linear
regression of the unit coefficients for the 2001–2016 period Tailings
(Cochilco 2015, 2017a), except in the case of open pit mines
where a linear regression was used. The mass of tailings disposed per year was estimated with a
mass balance considering an average concentrate grade of
26.6% of copper content (equation 9). This value corresponds
Water consumption
to the global average grade of copper concentrates from 2013
to 2015 according to Wood Mackenzie (2015). Chile’s aver-
New water usage estimations were made considering average
age is similar to this value.
data reported by Cochilco for 2015 (Cochilco 2016a). Unit
consumption coefficients for 2015 were used for all years up QTail; j ¼ QC; j −QCp; j ð9Þ
to 2035, assuming that there would be no recirculation or
efficiency improvements in the future. These calculations where QTail,j is the tailing mass disposed on year j, QC,j is the
were compared to the estimates made by US Geological mineral processed in the concentrator, and QCp,j is the concen-
Survey (Bleiwas 2012). Then, new water consumed was trate produced on the same year, all expressed in tons.
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Potential copper production through 2035 in Chile
Remaining reserves
exploited is moderate, as observed in Fig. 6. This behavior can Figure 7 shows future (2019–2035) production and remaining
be expected to continue beyond 2035. Figure 6 also indicates reserves for Chile’s full scenario. It is observed that the de-
that ore grades fed to Chilean mills until 2025 would decline at crease in production is not due to reserve scarcity, even in the
a rate of 0.58% per year. The decrease from these levels to ore most conservative scenario. This is in agreement with the
grades below 0.5% should be very slow. These results agree findings in Mudd and Jowitt (2018) who showed strong evi-
with the conclusions of Northey et al. (2014) who found that dence of growth in known mineral resources rather than evi-
ore grade decline may abate in the future because mined ore dence of resource depletion. The fixed base scenario considers
are approaching average ore grades in reserves. A comple- that none of the existing resources will become reserves after
mentary view is provided by West (2011) who contends that 2015. The highest reserve growth rate of the 2000–2015 pe-
improved extractive technologies to exploit very low grade riod illustrates that a demand/price boom, as the one that oc-
deposits drove the decline in ore grades in the last two curred between 2003 and 2012, not only fosters exploration
decades. but also transforms mineral resources into reserves that would
Figure 10 shows that consumption of continental water continuation of use of diesel trucks and other vehicles occurs,
should decrease from 13.1 m3/s in 2015 to 10.8 m3/s in whereas indirect GHG emissions per ton of copper contained
2021 because of the projected construction of desalination has a maximum coefficient of 2.68 t CO2 eq/t of copper
plants and pumping systems of seawater announced until reached in 2016, decreasing to a minimum of 1.62 t CO2 eq/
2017. Growth of continental water consumption after 2021 t of copper in 2019, to increase again afterwards because the
would occur only in the central region of Chile. Values composition of the grid will incorporate liquified natural gas
shown in Table 1 for concentrate production are within the (LNG) and small sources of diesel and fuel oil. These values
values reported by Northey et al. (2013) of 33.8 to 350 m3/t of are within GHG emission ranges of scopes 1 to 3, as reported
copper contained, with an average of 70.4 m3/t. Northey et al. by Northey et al. (2013), which contain high variability from
(2013) also indicate that water consumption for processes in- mine to mine due to processing configurations, ore mineralo-
cluding mine and Leach/SX/EW varies between 22 and gy, sources of energy, hardness of the rock, and transport
47 m3/t of copper contained, which is similar to the value cited distances.
in Table 1. The tailing mass produced per year by 2035 would be 3.25
Direct GHG emissions in 2035 increase 55% more than times the 2015 value. Replacing the grinding/flotation process
copper production, while indirect GHG emissions increase by a technology that generates a more favorable waste to ore
18.3% less than copper contained production up to 2035. ratio remains as one of the greatest technological challenges
The latter is due to the interconnection of the two electric grids for the mining industry (Gutberlet 2015).
of the country and to the growth of non-conventional renew-
able energies (CDEC-SIC 2016). The direct GHG emissions
per ton of copper will change from 0.98 t CO2 eq/t of copper in
2015 to a maximum of 1.53 t CO2 eq/t of copper in 2035, if the Discussion
The full scenario predicts that from 2027 to 2030, Chile would
produce over 10 million tons of copper per year, decreasing
afterwards to reach 8.6 million in 2035 due to the closure of
oxide mines and a reduction in the ore grades of sulfide oper-
ations. It is estimated that copper exports in concentrates
would reach 8.1 million tons in 2029, compared with 2.5
million in 2015. This would accentuate the vulnerability of
Chile with respect to treatment and refining charges.
Three technological issues were identified as barriers to
swift production expansion rates. The first barrier stems from
a vertical morphology of several large deposits, including
Fig. 8 Indices of copper production (contained), electric and fuel energy
Escondida, Andina, and others. This may preclude very large
consumption, water usage, tailings generation and direct and indirect expansions such as the one designed for the Andina mine a
greenhouse gas emissions. (2015 = 1). In 2015, contained copper few years ago, with a 350 ktpd capacity of its concentrator.
produced was 5.76 million tons, electric energy consumption was Whatever the method chosen by Andina to exploit its deposit,
85,019 TJ, fuel energy consumption was 78,044 TJ, water consumption
was 15.3 m3/s, tailing generation was 528 million tons, direct and indirect
the full extent of reserves may not be recovered due to limi-
greenhouse gas emissions were 5.7 and 13.9 million tons of CO2 tations imposed by nearby glaciers and the design rules elab-
equivalent, respectively orated by Codelco to guarantee that glaciers would not be
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Potential copper production through 2035 in Chile
affected by copper extraction. Similar issues would be possi- approximately 1.7 million tons per day. The need for intro-
bly faced by Los Bronces and Pelambres minesites. duction of new equipment and transport methods to handle
The second technological barrier is the complexity of this load is a serious matter for the future.
expanding the throughput capacity of very large under- What emerges from the analysis is that mine reserves
ground mines, such as Chuquicamata and El Teniente, and resources are not equivalent to production potential
which are the largest in the world for these types of but in a prolonged period of time. Therefore, country pro-
operations. duction potential in the short to mid-term is not the same
The third technological barrier arises in Escondida where as the sum of all its mine reserves and resources. While
material moved reached close to 1.5 million tons per day in many very large mines in Chile have enough known re-
2017 (Wood Mackenzie 2017b). Adding the OGP2 concen- serves and resources to produce well beyond 2050 at the
trator (Table S.1) would increase this number to rates required by the full scenario, not all of them could
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Lagos G. et al.
Table 1 Parameters of relevance by total copper production, concentrate production from mine to concentrator and Leach/SX/EW Cathode production
from mine to Leach/SX/EW, 2015 and 2035, and percentage variation in the period
References: 1, Cochilco (2016a); 2, Cochilco (2016c); 3, Cochilco (2017a); 4, Lagos et al. (2018); 5, authors’ estimate
increase the rate of extraction beyond the full scenario elaborated by other authors such as Hernandez (2009) and
unless there are breakthroughs in technology. Wood Mackenzie (2017c).
Chile’s copper production projections up to 2035, shown in The summits shown by these production projections, nev-
Fig. 1, are limited by factors not associated with known re- ertheless, are very different from production peaks, as defined
serves, as is illustrated in Fig. 7. In fact, reserves and resources by the peak production theory, which assumes that these max-
for the mines considered in this work were 610 million tons of imums are caused by resource exhaustion (Northey et al.
copper in 2017 (detailed data is shown in Table S.3, in 2014; Ali et al. 2017). After peaks occur, primary production
Electronic Supplementary Material), more than enough to sus- should start to diminish, according to convention. The peak
tain production up to 2035 even in this full scenario. Namely, production theory was originated for oil production and dates
the identified limitations consist of the knowledge of the pro- back to the beginning of the XXth century (Radetzki and
jects that could be developed as well as the aforementioned Warrel 2017). It affirms that oil production will peak when
technology limitations. Both of these reasons caused produc- one half of recoverable resources have been exploited. This
tion peaks in Figs. 1, 2, 3, 5, and 7, and in projections theory is supported by the Association of the Study of Peak
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Potential copper production through 2035 in Chile
continental water by seawater was not considered for this part not provide all the real challenges that mining will face, since
of the country in the full scenario. it ignores three main challenges in the future, which would be
It is assumed that all new electric energy demand required economic, regulatory, and environmental.
by the full scenario would be met by renewable energies, The accelerated mining extraction of Chilean copper re-
especially, solar energy. serves and parts of its resources were studied in the upcoming
It was estimated that 14.6 TWh will be required for new 15-year period in a “Full Scenario,” identifying and quantify-
copper mining projects and expansions by 2035, including ing productive and resource impacts and challenges.
water desalination and pumping, in the full scenario. This In this scenario, Chile would produce 143.7 million tons of
could be achieved with renewable energy, especially solar copper from 2019 to 2035, short of the 210 million tons of
power. It is unlikely that it will be based on hydropower be- remaining reserves estimated by the USGS in 2017 (USGS
cause most mining in Chile is located in desert regions, and 2018). Reserves and resources for the mines considered in this
there are no new plans to construct important hydroelectric work were 610 million tons of copper in 2017.
power dams in central Chile. The land used by solar power The maximum production identified in this work for 2027
installations that could deliver the new energy required by the to 2030 and its subsequent decrease is associated with a lack
full scenario, was conservatively estimated to be 2% of the of present knowledge about the projects that could be devel-
surface of the Antofagasta region, whose population density is oped, and with the technologies to economically increase the
4.6 inhabitants per square kilometer. The investment to do so rate of extraction, rather than to the lack of ore reserves and
would be competitive with the investment required for resources. Therefore, the maximum production estimated is
installing gas powered stations. associated with a false summit rather than with peak produc-
The country would use 144 TWh in 2035, of which mining tion. Once a false summit is reached, the real summit or an-
will use 53.2 TWh in the full scenario. This total corresponds to other false summit appears in view, and climbing can contin-
the non conventional renewable energy scenario2 of the CDEC ue. On the contrary, after reaching the peak, the only alterna-
SIC 2016 study, plus the requirements of the full mining scenar- tive is to go down.
io. The total renewable energy of the country grid would be Exploitation of the highest-grade reserves first cannot be
61.7% in 2035. This paper assumed that the composition of the achieved optimally because these are mainly present in the
mining electric grid will be the same as that of the country’s grid, very large deposits where this work identified technological
in spite of the fact that some mining companies have already barriers to increase the rate of extraction. Therefore, low grade
subscribed contracts to fund total solar power for their operations. deposits would start to be exploited simultaneously with the
Northey et al. (2014) assert that the increase of energy and expansion of high-grade existing mines.
water usage, as well as GHG emissions resulting from increas- The construction of new tailings dams and the expansion of
ing production and declining ore grades, will present barriers existing deposits is possibly the greatest environmental chal-
to the continuing expansion of the global mining industry this lenge that the copper mining industry faces for its expansion
century. The scenario developed in this paper challenges this and even for its continuation in a large area of Chile located
view because all the new electric energy required for copper from the Atacama region towards the south of the country.
mining would be based on solar power, which is very abun- The existing tailing deposits in this part of the country have
dant in the country (especially in the mining regions of the the capacity to accommodate tailings estimated in the “full
north). Regarding the environmental footprint of seawater ex- scenario” up to 2035, and possibly beyond, without
traction, desalination, and transportation, the use of solar en- resourcing to the construction of new deposits. But the exploi-
ergy would not imply a significant increase in GHG emis- tation of the very large copper deposits could continue for
sions. The extraction of seawater and the return of salt brines many more decades, and new tailing deposits will be required.
to the ocean may imply, nevertheless, important environmen- It is likely, that environmental permits to construct such new
tal impacts if a proper facility design based on comprehensive tailings deposits in this part of Chile, would require the most
environmental information is not carried out (Roberts et al. advanced available technologies. In spite of the fact that
2010; Missimer and Maliva 2018). existing large tailings deposits in Chile have successfully
withstood all earthquakes occurred during the last 55 years,
new tailing dams using the most advanced technologies
Conclusions should reduce even more, the risk of catastrophic failure.
New water required for the expansion of copper mining
This article provides an unobstructed view on what is possi- does not represent a resource obstacle in the country, because
ble, from a technical and resource perspective, for the Chilean all of it would be extracted from the ocean, for 38, out of the
copper mining industry through 2035, but by design, it does 42 projects considered in this work. The remaining mining
projects could, if required, bring seawater for extraction and
2
This scenario includes conventional renewable energies. processing of the ores.
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Potential copper production through 2035 in Chile
A restrictive regulation prohibiting to operate in the vicinity Chilean Senate (2018) Bulletin N°11.876–12. Draft law on glacier pro-
tection. July 4, 2018
of glaciers could hinder the expansion of some of the largest
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Acknowledgements We thank the many people in industry and academia
del cobre 2017–2028. Comision Chilena del Cobre, Santiago
that commented on the potential mining projects that could be constructed
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in Chile in the period through 2035. We specially thank comments by
cobre 2017–2028. Comision Chilena del Cobre, Santiago
Diego Hernandez of the National Society for Mining (Sonami), Nelson
Cochilco (2019a) Proyeccion de la produccion esperada de cobre en Chile
Pizarro of Codelco (former CEO), Gerhard von Borries of Codelco,
2019–2030. Comision Chilena del Cobre, Santiago
Ricardo Alvarez of Mitsui, Juan Carlos Román of Anglo American,
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Rodrigo Moya of Antofagasta Minerals (AMSA) and Robert Mayne
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