Hot Chili has locked in the services of international engineering firm, ILF to complete a prefeasibility study on its proposed Huasco water business, a joint venture set up to address the severe water shortage in Chile’s Southern Atacama region.
The report, which is due in the first half of 2025, will explore infrastructure possibilities, potential client demand and deliver a financial model.
An initial engineering trade-off study has already been completed to identify the most viable solution based on cost and deliverability. The company has also applied for a secondary water concession which is progressing and expected to be awarded by the first quarter of 2026. Preliminary environmental studies and archaeological surveys are also underway at the seafront concession site.
According to management, there is significant interest from regional near-mine developers and non-mining customers for future desalinated water offtake. Engagement with the local community has also been positive according to the company, with a fresh water supply recognised as being fundamental to the region.
The JV is a collaboration between Hot Chili, which has 80 per cent of the project and Compañía Minera del Pacífico which holds the balance. It will target the region’s critical water needs through a multi-staged approach involving seawater intake and desalination.
The JV is aimed at servicing the growing demand for water resources from the community, mining companies and local farmers in the Huasco Valley region.
Importantly however, it is also seeking to service the future requirements of Hot Chili’s massive Costa Fuego copper project, which is in the same area.
Costa Fuego is a huge porphyry project, hosting 2.9 million tonnes of copper, 2.6 million ounces of gold, 12.8 million ounces of silver and 68,000 tonnes of molybdenum, however access to water has always proved elusive.
To meet the company’s ambitious targets, the initial stage one plan of the water business involves delivering 600 litres per second of seawater to its own processing plant. It will also present the opportunity to provide raw sea water to supply nearby communities for localised desalination plants.
Assuming the successful development of the Costa Fuego mine, Hot Chili envisages positive cashflows by year two from the water business which would allow the JV to move to the next stage.
Stage two then proposes a modular desalination facility with an extensive pipeline network to supply 1300 litres per second to nearby communities and farmers by the third year, assuming it can lock in advanced customer agreements. The region also contains six major undeveloped copper projects and two new, large-scale copper discoveries, all of whom require a desalinated water supply.
Stage three proposals involve upgrading and extending the network to carry up to 2300 litres per second to additional mining projects in the high Andean mountains.
Hot Chili’s decision to build a water supply network for itself and the local community could see it deliver a significantly valued asset to the region. It could also be a very savvy financial decision and may well find itself neck deep in proposals from potential users.
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