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MINES OF HOPE: COPPER GIANT CHILE
Chile is the world’s leading producer of copper, but its rugged
country means that mining there demands outstanding risk
management.
By Frank Stern
❯
It’s a forbidding place, dry as dust, bleak, desolate,
tive country in the shade. “It’s so dry that there aren’t
and on top of that, vulnerable to earthquakes too. It
even any insects,” says West, who normally examines in-
may be one of the most inhospitable regions in Chile but
dustrial risks in the Asian-Pacific region for AGCS from its
here lies one of the country’s greatest natural resources:
base in Singapore.
copper. A new deposit is being mined there right now at
Esperanza, the mine of hope.
ALCOHOL AND DRUG TESTING
This is where NASA tested its Mars probes, which
However, one of AGCS’s clients is the Japanese Group
says a lot about the region, believed to be the driest place
Marubeni, which is also doing well in South America.
on earth. The Atacama Desert in northern Chile receives
Marubeni holds a 30-percent stake in the Esperanza
only a fraction of the annual rainfall of Death Valley in the
mine, which lies at 2,500 meters above sea level. Allianz is
US – not exactly a wet place itself.
one of the underwriting companies.
Dean West knows a lot about dryness and drought.
World copper production continues to grow year
But the arid conditions that the Australian found in
after year (see charts, pp. 24 and 25), and Chile has over
northern Chile put everything he experienced in his na-
40 percent of the world’s copper resources, but most of
them are located in the country’s most hostile environments, namely the Atacama Desert and the Andes. The
ore is mined under extreme conditions. Water is a particularly rare commodity. And this is needed to transport
the crushed stone down to the processing stations,
which lie at a lower altitude. A 145-kilometer pipeline has
been built to carry pumped seawater to the mine for the
Esperanza project, whose costs total USD 1.25 billion.
Work on the 3.5-kilometer-long, 2.5-kilometer-wide
and 750-meter-deep opencast mine started over a year
ago. Supply facilities, transport pipelines and a huge ore
crusher (the one in the Esperanza mine is the biggest in
the world) should all be in place by December 2010. Then,
each day 95,000 metric tons of ore containing 0.5 percent
copper will be mined from the walls and taken away in
Photos: AGCS
Los Pelambres, 2.5 kilometers long and 2.2 kilometers wide, lies
in the Andes at 3,100 meters above sea level. It’s the fifth largest
copper mine in the world.
Dean West is almost 2 meters tall, so
not exactly short. He’s still dwarfed by
the monster truck ...
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... and the monster trucks are dwarfed by the the 750-meterdeep Esperanza mine
enormous trucks. It’s a tricky job: The terraced ramps
which takes its name from the port city, is the majority
Copper remains the driving force of Chile’s economic
the stuff of dreams for countries such as China, whose
aren’t particularly wide, and it wouldn’t take much for
shareholder in both mines, Los Pelambres and Esperan-
development, despite the world market price’s volatile
populations are increasingly striving for wealth: the
such a heavy carrier and its load to topple onto the
za. Los Pelambres is situated at 3,100 meters above
performance in recent months. China in particular is
metal is essential for the manufacture of refrigerators,
plateau below. The drivers are tested for alcohol and drug
sea level. The teams have to undergo a medical
stocking up on the metal and thereby fuelling demand.
air conditioners, cars and electronic equipment.
use twice a day, just to be safe.
check-up before they are taken up there. Altitude
This is good news for Chile. The country earns a third of
According to estimates by the state copper commis-
sickness is no joke.
its GDP from the sale of copper, which is mostly extracted
sion Cochilco, Chile’s copper output could reach 6.8
The Los Pelambres mine, in which Marubeni has a
40-percent stake, is possibly even more technically
The ore is extracted from an open-cast mine and
and processed into nearly one hundred percent copper
million metric tons in 2012 – an increase of almost 25
demanding. Allianz is the lead insurer for the Japanese
transported through a specially constructed mountain
sheets in Chile’s own smelting plants and refineries. It’s
percent over 2007.
firm there too. The Chilean consortium Antofagasta,
tunnel down to 1,600 meters above sea level – at first
❚
glance a rather unusual method. “We were initially surprised,” reports Dean West, who is familiar with similar
WORLD COPPER MINE PRODUCTION
COPPER PRODUCTION BY COUNTRY (2008)
open-cast mines in Australia. But the riddle was solved
Thousand
tons
16,500
16,000
15,850
15,500
15,463 15,388
15,000
Production (metric tons)
ter snowfalls don’t hold up transport of the crushed stone.
Chile
United States
Peru
China
Australia
Russia
Indonesia
Canada
Zambia
Kazakhstan
Poland
Mexico
Rest of world
5600
1310
1220
1000
850
750
650
590
560
460
430
270
2030
World total
(rounded)
15700
THE STUFF OF DREAMS
There are other reasons why the efforts are so extensive.
ruption can be dealt with swiftly. In addition, there are
14,594
stations to monitor avalanches, and procedures are in
14,000
place in the event of an earthquake, after a quake
13,757
measuring 7.7 on the Richter scale shook northern Chile
13,000
and cut off power to numerous mines two years ago. This
year's earthquake in Chile has left the mine unaffected.
12,500
2003 2004
2005
2006
2007
2008
2009
Source: International copper study group
Two dams have been built nearby to supply water, and
measures taken to deal with flash floods.
Photo: AGCS
13,500
Country
The entire site is monitored with cameras so that any dis-
14,924 14,990
14,500
soon: The conveyors are below ground so that heavy win-
Rest of world 13 %
Chile 35 %
Mexico 2 %
Poland 3 %
Kazakhstan 3 %
Zambia 4 %
Canada 4 %
Indonesia 4 %
Russia 5 %
United States 8 %
Australia 5 %
China 6 %
Peru 8 %
Source: US Geological Survey