BHP Billiton approves $2 million water project in Chile

BHP Billiton (ASX: BHP) is thirsty. The mining company announced this week that it has approved a $2 million water supply project to keep its Escondida operations up and running in Chile.

Coinciding with a water-hungry 152,000 tonne per day copper concentrator, the new facility is capable of converting 2,500 litres of sea water every second. Construction will begin this month, and should be completed by 2017.

$2 million is a drop in the bucket for BHP, but the implications behind increasingly scarce water resources could mean a slow leak for mining companies’ profits. BHP’s own Copper president, Peter Beaven, understands his company’s reliance on the liquid blue gold:

“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.  The new desalination facility will minimise our reliance on the region’s aquifers, which will help us to meet our environmental commitments and enable us to achieve our long-term business strategy.”

While BHP’s desalination fix today is a smart move for the company, investors will need to continue to watch mining companies’ water reliance closely for signs of sloppy efficiency and squeezed margins.

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Motley Fool contributor Justin Loiseau has no position in any stocks mentioned in this article. You can follow him on Twitter @TMFJLo.

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