December 20, 2019 / 12:37 PM / in 3 months

Chile's Codelco tears up desalination project contract

FILE PHOTO: The logo of Codelco's El Teniente copper mine, the world's largest underground copper mine is shown on a vehicle near Machali, Chile, April 11, 2019. REUTERS/Ernest Scheyder/File Photo

SANTIAGO (Reuters) - Chile’s state copper miner Codelco said on Friday it would cancel a contract awarded in November to a consortium led by Japanese firm Marubeni to construct a desalination plant to feed its northern mines.

The previous project was put out to tender, with an estimated investment of around $1 billion, in 2017.

“Between awarding the tender and signing the contract we identified adjustments to be made to the project, prompting a decision to redefine the tender, which will take place within the next 24 months,” the company said in a statement.

Codelco said the adjustments involved the shipping of water supplies destined for Radomiro Tomic mine via the town of Calama, and to ensure the project complied with its new internal compliance and transparency requirements.

Codelco gave no further details about the potential impact of the retendering process. Construction on the plant, with an initial capacity of 840 liters per second, was due to kick off in the first quarter of 2020 for it to be operational in 2022.

MTT, the consortium that won the tender, is made up of Marubeni, Transelec and Techint.

A spokesman for Marubeni was not immediately available for comment.

Codelco, the world’s largest copper producer, reported on Friday a fall of 57% in its pre-tax earnings to September because of heavy rains, an extensive strike at its flagship Chuquicamata mine in northern Chile and lower metal prices.

The desalination plant is part of a $40 billion 10-year plan by Codelco to overhaul its ageing mines.

Reporting by Fabian Cambero; writing by Aislinn Laing and Cassandra Garrison; Editing by Chizu Nomiyama

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