Tempers flare over water at Chile mine

By Pav Jordan

CAIMANES, Chile (Reuters) - A dispute over the expansion of one of Chile's largest copper mines has all the drama of a Hollywood movie, pitting a big mining company against small farmers who say their water will be poisoned.

Antofagasta is building a dam to contain processed waste rock near the small town of Caimanes, some 60 kilometers (37 miles) from Pelambres, one of the country's biggest copper mines.

The El Mauro dam, located at the top of an arid valley, has polarized the remote community, with each side accusing the other of everything from bribery to greed and excess ambition.

Farmers say the tailings dam has cut off existing water supplies and could poison what's left as residues from the waste rock, treated to extract copper, filter into ground water.

Others, who have benefited from new jobs and investment, accuse the farmers of standing in the way of development.

The dispute has injected new vigor into a national debate about how to attract mining investment -- the economy's top driver -- while at the same time protecting dwindling resources like water.

"Water is becoming increasingly scarce, especially in Chile's north, and cost and availability are a growing issue for existing and developing mine projects," said David Maarse, an expert in water issues at Golder Associates, a global group providing engineering and environmental services.

"The bottom line is that there is increased environmental vigilance that comes on top of the decreased availability of water in general."