Chile's Great Big Cash Machine

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April 15th 2012
Published: April 15th 2012EDIT THIS ENTRY

An hour or so northwest of San Pedro de Atacama lies Calama - a god-forsaken place in the middle of the desert which tends to attract singularly unflattering descriptions. "Calama is an absolute hole", warns one guidebook. And we're looking forward to spending our afternoon there.

Calama certainly is a hole. A great big hole. Perhaps one of the biggest holes on Earth. And although few would ever dream of going there, every Chilean owes an awful lot to dusty, tatty Calama.

Just north of town is the Chuquicamata copper mine, the most massive open-pit mine in the world. Over 4 kilometres long and a kilometre deep, this hole - along with a few others strung along Chile's northern regions - keeps the nation's coffers full. Red gold, as they sometimes call it, generates a lot of money: Chilean copper exports reached a high of 33 billion US dollars in 2006. Copper is, by and large, what keeps Chile the richest country in South America.

Mining doesn't generally enjoy the best of reputations anywhere, and Chile certainly isn't any different, dependent though it is on digging stuff (not just copper, as we'll discover) out of the ground. The pit on Calama's doorstep causes its fair share of problems: it generates so much dust and pollution that the mining town of Chuquicamata, sitting almost on top of it, had to be abandoned less than a decade ago and all its inhabitants - thousands of them - moved lock, stock and barrel to Calama. Expansion of the mine to exploit further deposits is likely to require abandonment and relocation of parts of Calama itself in coming years. The mine and its associated furnaces, smelters and refining plants consume vast quantities of energy (in a country that is really rather short of it) and water (slap bang in the middle of the planet's driest desert). Chuquicamata is a monster, but copper sells at US$8,000 a tonne and the world wants it. Lots of it.

Copper had been mined here by indigenous populations long before the arrival of of Europeans in South America, but industrial-scale mining at Chuquicamata began around 1910, funded by the Guggenheim family. The mine was privately-owned and operated by the US Anaconda Copper Company until the late 1960s when the Chilean government - under Marxist president Salvador Allende - assumed control of it; first by buying, then by taking. Allende's expropriation of Chile's US-owned copper mines didn't go down too well with the US government: indeed the 1973 coup by Pinochet has some of its roots in the nationalisation of Chuquicamata and other mines. The mine is now run by Codelco (Corporación Nacional del Cobre), the state-run mining company. Codelco runs daily tours of the mine - and that's why we're in Calama, of all unlikely places to be.

Calama looks exactly what you'd expect a town in the middle of a desert and right next to a gargantuan mine to look like: hot, dusty and very, very dodgy. Fried chicken restaurants and iffy nightclubs line its uninviting streets. Even the cheapest eateries serve Bolivian and Peruvian dishes, evidently to cater for migrant mine workers. Flashy car dealerships and spanking new highways are signs there's serious money about. A few miles to the north, a large plume of dust extends off towards the snow-capped Andes in the distance.

The visit starts with a short stop in Chuquicamata town, which until last decade was home to the mine's workers. Concerns about the effects of the mine's proximity to the town - residents apparently had high levels of arsenic in their blood - led to it being closed down completely. Today it lies utterly abandoned and fenced off. Its shops, homes, social clubs, cinemas, schools, playgrounds deserted - almost as if Chuquicamata's residents had left only yesterday. It feels a little like those photos you see of Pripyat, the ghost town outside Chernobyl - minus the DNA-zapping radiation, one hopes. Needless to say we didn't linger very long.

Looming over the ghost town are the gargantuan hills of tailings discarded by the mine. The rocks being excavated here contain less than 5% copper, leaving an awful lot of leftovers. Occasionally, right up on the rim of the mine, a truck can be seen tipping its load of tailings over the side - as the hole gets deeper, the hills just get larger. But it's not just any truck: as we approach the centrepiece of the visit, the pit itself, the sheer scale of this operation becomes clear. The numbers simply boggle the mind.

The trucks which lumber a kilometre down into the Earth are seven metres high and eight metres wide, and carry up to 400 tonnes of rock in a single load. There are 114 of these US$5,000,000 monsters operation in Chuquicamata. Each one of their six tyres will set you back US$40,000, and each one guzzles its way through five thousand litres of diesel per day, putting Chuquicamata's daily fuel bill for the trucks alone at well over half a million dollars. Given the trucks' lifespan of eight years, Alex - ever the accountant, even this far away from the woes of work - estimates that the mine's truck fleet depreciates to the tune of US$200,000 every day. Buying a new car doesn't seem such a bad thing now...

The copper production process ends with an enormously power-hungry electrolysis step: a huge power station on the coast in the town of Tocopilla provides the 1,500,000,000,000 watt-hours of electrical power Chuquicamata consumes in a year, at a cost of over a hundred million dollars. That's some leccy bill! With the price of fuel, electricity and copper constantly fluctuating, the economics of this place are truly flabbergasting.

It's just as well, then, that the thick slabs of pure copper the mine churns out daily bring in such a lot of hard cash: at current prices, Chuquicamata produces over US$12,000,000 worth of copper a day, taken by train to a dedicated port near Antofagasta, to be shipped around the world and turned into pipes, iPods and a thousand things in between.

In a tidy display of chemical and economic efficiency to delight any teacher or accountant, the mine uses the vast quantities of highly-polluting sulphur dioxide produces by its furnaces to manufacture sulphuric acid, which is used in the copper production process itself, or sold. Further by-products of the mine's activities are molybdenum and rhenium, exotic metals produced in relatively tiny quantities but whose market prices make the sideline a juicy one. Molybdenum - used in steel alloys - commands a tidy US$30,000 a tonne while rhenium, an exceedingly rare but key component of modern jet engines, changes hands for an incredible US$5,000,000 per tonne. On top of this, countless tonnes of "anodic mud", a by-product of the electrolytic refining of copper, are sold to the Far East which extracts gold, silver and all sorts of other goodies from it. Pollution, ugliness, noise aside - you can't help but marvel at sheer human ingenuity in a place like this...

Chuquicamata and mining in general elicit strong feelings in Chile. While mining has long been referred to as "el sueldo de Chile" (Chile's salary), the industry's environmental effects continue to be a major problem. And it certainly isn't limited to the northern regions - far from it. All the way down in Aysén, thousands of kilometres from here, plans are well advanced to construct hydro-electric dams on the Baker and Pascua rivers just outside Cochrane and Villa O'Higgins, as well as many thousands of pylons to carry the electricity they produce northwards. Supporters of the plans refer to Chile's acute energy crisis (power and fuel are much, much more costly in Chile than in Argentina, for example), while opponents (largely Patagonians, unsurprisingly) argue that Aysén's unspoilt southern wilderness is being sacrificed on the altars of mining and big-business for the benefit of the power-hungry north. Why should the region's wild rivers - magnets for visitors, including ourselves - be dammed when locals feel they barely benefit from Chile's copper-dollars? Ironically, even up in the far north, there is feeling that the region's vast earnings get sucked down to Santiago - Calama certainly doesn't project the image of a wealthy boom-town, to be sure. Such, it seems, is the reality of Chile: a disproportionately long country, with a capital bang in the middle, an enormously centralised government, a stupendously mineral-rich north and an isolated, inaccessible, beautiful south. Chile abounds with gorgeous but fragile environments - from glacier to altiplano - too valuable for their own good. It's hard to decide if Chuquicamata is a blessing or a curse.

Interestingly, Chuquicamata - and indeed much of the entire region - has not always been Chilean territory at all. This used to be Bolivia until the War of the Pacific, which pitted Chile against allies Peru and Bolivia between 1879 and 1883. Chile emerged victorious and expanded northwards, depriving Bolivia of its access to the ocean and taking control of a vastly mineral-rich region. These remain very sore points in Chilean-Bolivian relations to this day. Today, Chile is South America's wealthiest nation. Bolivia is its poorest. One can only wonder: "what if?".

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