Chile burnishes green credentials as copper, lithium demand booms

With the world's largest reserves of both copper and lithium, Chile sees itself playing a critical role in the global energy transition, attracting massive investment in mineral extraction and processing over the coming decades.

Mining companies are expected to invest billions of dollars in Chile over the next decade to bolster production of both minerals -- demand for which is expected to boom in line with the spread of clean energy technologies.

But as pressure grows on the mining industry to become more sustainable, Chile knows its contribution to the fight against climate change will only count if it can produce these minerals sustainably.

"Mining must be responsible, and we would like the market to value Chilean mining according to how we produce," Mining Minister Aurora Williams said at an event for members of the foreign press this month.

Like many mining companies, Chilean state copper company Codelco is advancing toward ambitious goals to reduce its environmental impact and improve the social impact of its operations.

By 2030, Codelco will receive all its power from renewable sources, thanks to new contracts with power companies AES Andes, Atlas Renewable Energy, Colbún, Engie and Innergex.

Construction has begun on a huge desalination plant, which will supply industrial water to its operations in northern Chile, reducing the pressure on local water sources in the Atacama Desert.

Larger aims

The efforts by the mining industry to improve their environmental profile are not just about improving relations with skeptical communities and authorities, which have blocked major investments in recent years.

Countries around the world increasingly looking to avoid contributing to climate change and degradation of the environment.

Codelco recently achieved the certification of all its mining operations under the Copper Mark, which recognizes responsible production practices in the global copper industry.

These recognitions are becoming more important as pressure grows on businesses to show that all aspects of their business model, from procurement to governance is carried out sustainability.

"These certifications are part of the assets that we can offer to the client," CEO Ruben Alvarado said.

Such qualifications will become increasingly important as consumer countries implement measures as such as the European Union's Carbon Border Adjustment Mechanism, which will tax imports according to the amount of carbon dioxide emitted during their production and transport.

Codelco is also set to become a major player in the lithium industry with a deal to take majority stake in the Chilean operations of SQM, one of the world's largest producers of the mineral. The deal is expected to facilitate major investment not only expand production of lithium but also reduce its environmental impact by incorporating desalinated water and new direct extraction technologies.

"To fight climate change, the world needs critical minerals, but these must be supplied with the same degree of responsibility that fighting climate change implies," Williams said at the event Aug. 4.

Local effects of sustainability efforts

But improving mining's sustainability will require innovation on multiple fronts.

Like many mining companies, Codelco is striving to make mining safer for its personnel by using automation and distance control systems to reduce the exposure of workers to risky situations.

Much of the process at its El Teniente mine, the world's largest underground copper operation, including vehicles, processing plants and railroad, are operated remotely from the company's offices in the nearby city of Rancagua.

El Teniente has incorporated more than 100 electric buses into its transport fleet and will soon deploy the world's first electric semiautonomous underground LHD vehicle.

These will not only reduce carbon emissions and air quality but support job creation in the region.

In line with its policy of supporting local economic development, the buses have been converted and produced by a local company, Reborn in Rancagua, creating a new source of employment and a new industry in Chile.

El Teniente has implemented recycling programs that now cover more than half of the nonhazardous waste produced at the mine, including tires, plastic and wood. Steel bolts used to stabilize mine roofs are now extracted during mineral processing and recycled by Chilean steelmaker AZA to produce new bolts that will be used to secure future tunnels.