UPDATE 1-Huge desalination plant set for Chile's Escondida mine

Thu Jul 25, 2013 2:19pm EDT

July 25 (Reuters) - Construction of a $3.43 billion sea-water desalination plant at the world's largest copper mine, Chile's Escondida, has been approved in order to secure a steady water supply, majority owner BHP Billiton said on Thursday.

BHP Billiton , which holds a 57.5 percent stake in the copper mine located high in the Andes mountains, will put up $1.97 billion of the total investment.

Construction of the 2,500 liter-per-second desalination plant will begin this month, with the plant scheduled for commissioning in 2017.

"Securing a sustainable water supply in the Atacama Desert is a major priority for all Chilean copper producers, so the approval of the Escondida water supply project is a significant milestone for our business," said BHP Billiton Copper President Peter Beaven.

The mine produced about 1.1 million tonnes of copper last year, contributing to Chile's 5.5 million tonnes. Chile is the world's No. 1 copper producer.

The Andean nation is seeking to improve results at its huge, aging mines, but declining grades, soaring costs, labor unrest and energy woes could curb its ambitious plans.

Water availability is also an issue. Traditional sources of water, such as rivers and aquifers, are running dry, creating headaches for mines around the world and forcing them to turn to more expensive options, such as desalination plants and sewage treatment works.