New hope for Dominga

Environmental tribunal reverses decision on copper project in Chile.

On 16 April 2021, the Antofagasta Environmental Tribunal reversed an earlier ban from Chile’s mining regulator on the USD 2.5 billion Dominga copper and iron mining project, which had been marred by environmental licensing issues.

The was surprising for a mining executive in Chile, “The ruling opens up a possibility that was unexpected by the industry. Before the ruling, the Dominga project was considered unviable and there was even rumours that the land in the area would be put up for sale.”

“The ruling opens up a possibility that was unexpected by the industry. Before the ruling, the Dominga project was considered unviable.”

Mining executive, Chile

Dominga is expected to produce 12 million tonnes of iron ore and 150,000 tonnes of copper per year through two open pit mines. Andes Iron, the company that will operate the mine, has already invested USD 300 million in Dominga. Additionally, iron and steel producer CAP will invest USD 459 million before the end of the year. The project also anticipates the construction of a port with capacity to receive 56 ships per year.

Andes Iron said that it plans to start construction in the second half of the year and that the new site would significantly modernise the ageing copper mines in the country. Andes Iron’s victory is seen as a rare success of the business community over regulators, often criticised for playing an oversized role in mining developments.

The proximity of the mine, 500km north of Santiago, to environmentally protected areas will likely generate further protests from environmental groups and NGOs. The court ruling has severely limited the legal options for environmentalists, the main drivers of the legal action that halted the project in 2017.

The General Counsel of a mining company in Chile commented, “The environmental lobby have celebrated every judicial ruling adverse to the project but social leaders have lamented the potential loss of approximately 1,000 jobs. As unemployment rises in the country, the rejection of mining projects declines.”

“The environmental lobby have celebrated every judicial ruling adverse to the project but social leaders have lamented the potential loss of approximately 1,000 jobs.”

General Counsel, mining company, Chile

Nevertheless, appeals to the court ruling still pose the main risk for the future development of the mining site. Environmental groups and some regional administrations have focused their appeals on eight claims ranging from the impact of the mine on sea life to the pollution of land ecosystems. In this context, the progress of each appeal could still either halt or limit the development of Dominga.

A senior mining executive in Chile agreed that the future of Dominga was far from certain, “Unfortunately, the project will continue to face difficulties both at the judicial level and in its relationship with communities and the local authorities. Even if it is finally approved in court it could still be unfeasible if impossible demands are imposed on it – a frequent strategy to stop projects without appearing openly as disapproving.”

An adviser to the Minister of Mines in Chile shared the executive’s concerns, “The project is attractive from a geological and engineering point of view but there are environmental, political and regulatory risks which are increasingly common in Chile.”

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