Trading ice for gold in Chile – by Sarah Tory (Santiago Times – September 22, 2013) [Part 3 of 3] [Chile]

Part III of a three-part series on Chile’s water crisis: Melting glaciers in the Andes have dire implications and may prove a robust obstacle to future economic growth.

t the 1992 world fair in Seville, Spain, Chile’s pavilion featured a large iceberg. Some 100 tons of ice — the equivalent of 15 full-grown African elephants — were extracted from the Southern Patagonian Ice Cap and shipped across the Atlantic where they were conserved for six months during the European summer.

To the newly democratic government, the spectacle was meant to symbolize Chile’s emergence as Latin America’s success story, ready to take its place on the world stage. It was also a telling symbol of what drove Chile’s surging economy: a frenzy of digging, cutting and exporting from copper mines in the North to logging in the South.

More than two decades later, the symbol of Chile’s growth is more relevant than ever. With dwindling reserves and growing water shortages, the country’s copper mines — its economic backbone — are being squeezed by two opposing forces: financial pressure to expand and concern over environmental impacts. Now the model that was once hailed as the emblem of Chile’s success is beginning to look as unstable as a massive chunk of ice plunked down under the Mediterranean heat.

Shrinking glaciers

In August 2009, the 18,000-year-old Chacaltaya glacier in the Bolivian Andes disappeared. Experts had forecasted it would survive until 2015, but it melted sooner than predicted, and what used to be renowned as the world’s highest ski run — 17,000 feet above sea level — is now a boulder-strewn slope with a few patches of ice near the top.

The loss represents an alarming trend: Andean glaciers are retreating at a dramatic rate — up to 50 percent since the 1970s according to some reports. This puts the water supply of South America’s vast Cordillera region among the world’s most vulnerable to climate change.

In Chile, home to 80 percent of the continent’s glaciers, almost three quarters of the population relies on water supplied by ice. For the northern half of the country, glaciers are particularly vital — yet they are now retreating faster than ever. Due to a precarious combination of climate change, drought and an expanding mining industry, Chile’s northern ice flows, along with the water stored inside, are in danger of disappearing completely.

Local water supplies come from groundwater, rivers and lakes — all of which are replenished through rainfall as well as melting snow and ice that trickles down from the high Andes to the valleys each spring. During dry years, however, melting glacial ice becomes doubly important as a source of water, contributing more than 60 percent of the average volume of the area’s rivers.
In places throughout Chile’s north-central zone, where rising average temperatures have reduced rainfall by up to 30 percent, this means that without glaciers, many rivers would simply dry up completely.

Expansions in the face of shortages

Meanwhile, Chile’s copper industry, which accounts for 45 percent of the country’s exports and provides one-third of total government revenue, is scrambling.

Last year, Codelco contributed more than US$7 billion to state coffers — but the state-owned miner warns that without a major overhaul, dwindling reserves and declining ore grades could stall the country’s economic engine.

In response, the company has announced an ambitious plan: five expansions totaling US$26 billion.

Of all these megaprojects, the one that has garnered the most controversy is Codelco’s four-square mile, US$6.8 billion expansion of its Andina mine located 31 miles north of Santiago in the Valparaíso Region. Andina 244 will transform the current operation into the world’s most productive copper mine, extending its life by 49 years and tripling its output.

Codelco CEO Thomas Keller called the expansion “fundamental to the company’s future.”

That statement hints at a growing conflict within the company that pits economic interests against environmental concerns, many of which revolve around water, said Andrés Solimano, a former adviser to the U.N. Economic Commission for Latin America and the Caribbean (ECLAC).

Since the 1990’s, Codelco’s control of the copper industry has steadily eroded. The state giant went from producing 75 percent of the country’s copper output in 1990 to 32 percent in 2009, according to a report in The Economist.

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