BHP Cuts More Jobs at Water-Stressed Chilean Copper Mine

(Bloomberg) -- BHP Group took another step in downsizing its smallest copper mine in Chile as it approaches the expiry of permits and grapples to regain access to underground water supplies.

The Cerro Colorado mine cut 35 direct jobs, owner BHP said in a statement Thursday. The cutbacks are part of a so-called de-escalation plan launched in 2020 as production and ore quality decline, with the mine's environmental license scheduled to expire at the end of next year. 

At the same time, Cerro Colorado is taking operational measures in response to a court order to halt extraction of water from the Lagunillas aquifer amid allegations of environmental damage. The mine plans to shut one of its plants and restrict other operations as it works on showing the aquifer's level of recovery and lack of imminent risk.

While BHP didn't tie the aquifer halt to the job cuts, the legal proceedings may accelerate the staff-reduction program, impacting suppliers and putting a drag on the local economy.

Cerro Colorado poses a dilemma for the world's biggest mining company, which is focusing on major operations but sees copper as a strategic asset in the transition away from fossil fuels. While the mine is dwarfed by BHP's other mines and the company has tried and failed to find a buyer, there are options that could potentially expand its lifespan for decades. The company has evaluated a desalination plant that in 2019 was estimated to cost $190 million.

The legal woes surrounding the aquifer come as a decade-long drought and booming agricultural exports put Chile's shrinking freshwater reserves under strain. Calls are mounting to safeguard supplies for human consumption under a new constitution currently being written up.

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