Exclusive: Freeport LNG retracts force majeure, widening losses for gas buyers - sources

By Julia Payne and Marwa Rashad - Yesterday

 An LNG tanker is tugged towards a thermal power station in Futtsu

LONDON (Reuters) - Top U.S. gas exporter, Freeport LNG, has retracted the force majeure it initially declared after an explosion in June, a development that could cost its buyers billions of dollars in losses, a document showed and three trading sources said.

Force majeure is a notice used to describe events outside a company's control, such as a natural disaster, which usually releases it from contractual obligation without penalty.

The force majeure would also have allowed Freeport’s LNG buyers to exit their own agreements to deliver gas to end users. Instead, they are facing a collective loss of up to $8 billion as they source alternative supplies at elevated spot market prices, according to the trading sources, who have knowledge of the matter, and calculations by a consultancy.

Those buyers include BP, TotalEnergies, Osaka Gas, Japan’s top power generator JERA and South Korea’s SK Gas Trading and trading house Trafigura that holds a small contract.

Freeport and the buyers declined to comment on the force majeure, its retraction and potential losses.

Freeport accounts for 20% of U.S. LNG exports but stopped shipments after the explosion on June 8, causing a spike in global gas prices which had already soared on falling Russian supplies to Europe and other outages.

Freeport declared force majeure on June 9, before retracting the notice around the end of June, two of the three sources with knowledge of the matter said, adding that Freeport blamed human error.

"No facts have been revealed that would indicate that the incident was a result of Force Majeure," Freeport told market participants on Aug. 3 in a notice seen by Reuters.

Neither the retraction nor the notice has been previously reported.

Related video: OPEC and its allies agree to raise output by 100,000 barrels per day from September (CNBC)   View on Watch

Freeport does not expect full operations to resume until the end of the year, although a partial restart is scheduled for October. Without the force majeure, the company needs to pay compensation to its gas buyers and the buyers still need to supply end users.

The outage leaves a hole of about 80 cargoes based on an October restart date, according to Reuters calculations and an LNG consultancy, although Freeport's buyers may not need to replace them all depending on how they negotiate their onward contracts.

The buyers had paid Freeport around $30-$50 million per LNG cargo, according to two of the sources, with the fuel then sold to end users at a premium usually amounting to a few millions of dollars per cargo.

Freeport's buyers would have to pay $100 million per cargo based on Wednesday's spot market prices to replace the lost volumes as LNG prices have doubled since the explosion, which happened when markets were already tight.

However, Freeport is offering buyers compensation of around 10% of the value of the purchased and undelivered cargoes or lump sums of between $3 million-$5 million per cargo, according to the two sources.

"There are ongoing discussions taking place right now with Freeport as the compensation they are offering will not cover taking a spot cargo at today's rates," one of the sources said.

Freeport declined to comment on its compensation policy.

"The potential losses Freeport's offtakers may face... will probably be within the range of about $6-$8 billion, on a collective basis," said Tamir Druz, managing director at Capra Energy, an LNG consultancy.

“While some of these cargoes may not need to be replaced, on a mark-to-market basis, it remains a significant loss.”

Oil major BP has the largest contract at 4.4 million tonnes per annum (mtpa) through 2040. JERA and Osaka Gas have contracts at 2.3 mtpa each through 2039, while SK and TotalEnergies each have 2.2 mtpa contracts running through 2040, according to the International Group of Liquefied Natural Gas Importers.

Based on Freeport paying 10% compensation per lost cargo, losses may amount to about $2.3 billion for BP and $1.1 billion for TotalEnergies on a mark-to-market basis, Capra Energy's Druz said.

BP and TotalEnergies declined to comment on any losses.

Mark-to-market is a way of measuring the fair value of accounts based on current market prices, which is likely different to the price paid to acquire them.

Osaka Gas sharply cut its annual net profit forecast this month citing a nearly 80 billion yen ($611 million) hit from the Freeport outage for the second quarter alone.

(Reporting by Julia Payne and Marwa Rashad; Editing by Kirsten Donovan)

Trans Mountain names Dawn Farrell new CEO and president

CALGARY — Trans Mountain Corp. says Dawn Farrell will become its new president and chief executive next week.

© Provided by The Canadian PressTrans Mountain names Dawn Farrell new CEO and president

The pipeline operator says Farrell has more than 35 years of experience in the energy business, where she has held senior level positions.

She was most recently the president and CEO of TransAlta Corp. and helped the company transition away from coal-fired electrical generation.

Farrell's appointment comes after Ian Anderson announced in February that he would retire from the position in April.

Farrell will be tasked with guiding the company as it oversees a pipeline expansion she called "one of Canada’s most important infrastructure projects."

Farrell says the Trans Mountain expansion project is passing the 60 per cent completion mark and she is looking forward to leading the organization to the end of it while steering the next phase of the company’s future.

This report by The Canadian Press was first published Aug. 10, 2022.

The Canadian Press

Dead salmon found at Trans Mountain construction site spark outcry from environmental group

Yesterday 

Environmentalists are calling on Fisheries and Oceans Canada (DFO) to halt pipeline construction in Hope, B.C., after dead salmon were found at Trans Mountain’s worksite on the Coquihalla River last weekend.

Longtime Hope resident Kate Tairyan and other members of Protect the Planet have been documenting the situation for more than a week. Right now, salmon can’t bypass the construction of the pipeline expansion project and many are dying without laying their eggs, Tairyan told Canada’s National Observer in an interview. Cutting open five dead salmon revealed four were full of eggs, she noted.

“There are hundreds of (salmon) trapped in your construction site,” said Tairyan, who is also a health sciences senior lecturer at SFU. “What are you going to do about them? Are you just going to let them die here or spawn near those excavators? That's not the right thing to do.”

Tairyan said a Trans Mountain biologist told her the dead salmon had already spawned. But she was skeptical: it is so early in the season and the fish seemed energetic and well-muscled — unlike those near the end of their lifecycle.

Trans Mountain has a DFO permit allowing it to divert the river and remove 800 square metres of instream spawning habitat in order to replace part of the existing pipeline and install the new pipeline for the expansion project. The permit is only valid for August 2022.

“Normally, we start seeing the first salmon mid-August and then their quantities increase, and the peak is mid-September,” said Tairyan, who has watched every salmon run in her 15 years of living on the river.

This year, the run — which is set to be larger than average for sockeye salmon — coincides directly with the pipeline replacement and installation.

More than a dozen large pumps and black hoses transport water downstream of the site to lower the water level, enabling heavy equipment to dig in the river. Protect the Planet released drone footage of the worksite showing turbulent and muddied water, which makes it difficult for salmon to navigate upstream.

In an emailed statement to Canada’s National Observer, Trans Mountain said the work complies with Canada Energy Regulator-approved environmental protection plans and permits issued by DFO and the BC Oil and Gas Commission.

“Great care is taken to preserve the environmental features around the river, such as the wildlife and aquatic habitat provided within the riparian zone,” the statement reads, adding that water monitoring takes place throughout the construction process.

“After the pipes are installed, the stream will be returned to the natural flow path and the site will be reclaimed to its original condition with additional bed and bank flood protection.”

The DFO permit requires Trans Mountain to have a qualified environmental professional onsite for all instream work. Tairyan said on Aug. 7, Trans Mountain employees refused to disclose whether the environmental professional was present, which suggests a permit violation.

The company did not directly address Canada’s National Observer’s questions about whether a qualified environmental professional was present onsite that day.

For many days, Protect the Planet and concerned citizens contacted DFO with their concerns.

The DFO told Canada’s National Observer it “is aware of the criticism related to the impact of the TMX construction site at the Coquihalla River,” in an emailed statement yesterday evening.

It said a regulatory inspection team was on-site yesterday to ensure TMX is following the conditions imposed by their Fisheries Act authorization.

“Corrective action will be taken if required,” the statement said.

Last night, B.C. Environment Minister George Heyman tweeted acknowledging concerns about the worksite and urged the federal government to fully investigate the complaints and “take appropriate action to protect wild salmon and BC waterways if any wrongdoing is found.”

“I am not very hopeful,” said Tairyan. “This is like government policing government… like the fox taking care of the hen coop.”

Five species of salmon and steelhead trout migrate through or spawn on the Coquihalla River. Video taken by Tairyan shows two salmon being swept towards heavy machinery at the worksite.

The DFO permit requires fish to be “salvaged,” meaning caught and transported away from the construction site. However, it says salvaged fish must be relocated downstream, so they will still be unable to bypass the construction.

Tairyan and other Protect the Planet members have set up a citizen observation camp near the site to document Trans Mountain’s work and answer questions from locals.

“We don't have any intention to disrupt this work ourselves. It's not safe for us to do that. But we're going to be here watching, documenting,” said Tairyan, who spends hours observing the river every day.

“When I started asking more questions, they started adding more fence and then the next day we see they put black tarp so it's not transparent anymore,” she said. Tairyan also said there has been a recent uptick in security presence, including a worker that “follows me everywhere with his camera,” she said.

“I'm very respectful to everyone, I don't enter their construction site. I don't bother anyone. I just want to see what is happening. Sometimes I feel that I'm the only person witnessing this. And I have a duty to document it.”

Natasha Bulowski, Local Journalism Initiative Reporter, Canada's National Observer

Omar ekes out win in surprisingly close Minnesota primary

Caroline Vakil - Yesterday 

Rep. Ilhan Omar (D-Minn.) was projected to win her primary in Minnesota’s 5th Congressional District, setting up a likely third term in the House for a progressive member who has proven to be a GOP lightning rod since entering Congress.

© Provided by The HillOmar ekes out win in surprisingly close Minnesota primary

NBC and CNN both called the race shortly before 11:30 p.m. EDT.

The race proved unexpectedly close, however, with her Democratic opponent Don Samuels trailing her by only a few percentage points.

A member of the “Squad,” a progressive group of Democrats in the House, Omar became the first Somali-American to be elected to Congress in 2018, in addition to the one of the first Muslim-American women.

She became a vocal proponent on issues like dismantling the Minneapolis police in the wake of the death of George Floyd, a Black man who died after a white Minnesotan police officer knelt on him for more than nine minutes; student loan forgiveness; and expanding the Supreme Court.

Former Minneapolis City Council member Don Samuels was considered her most competitive challenger, notching endorsements from the Star Tribune’s editorial board, Minneapolis Mayor Jacob Frey (D) and former Minnesota Secretary of State Joan Growe.

Samuels touted his background as a self-taught musician, his prior toy designing career, city council experience and position as an executive of a nonprofit that offers microgrants to low-income individuals for areas in education, small business and transportation.

Omar is likely to win a third term given the data website FiveThirtyEight notes her seat has a partisan lean of plus 57 points.

37,000-year-old mammoth butchering site may be oldest evidence of humans in North America

Harry Baker - Yesterday 



A 37,000-year-old mammoth butchering site, uncovered in New Mexico, might be the earliest evidence of humans in North America, controversial research finds. Some of the bones at the site show signs of being handled by humans or even being used as tools, which is "some of the most conclusive evidence" yet that humans settled in North America much earlier than experts previously thought, according to the new study.


The excavation site in new Mexico, known as the Hartley mammoth locality, with a partial mammoth's skull lying on top of a pile of bones.

If the team is correct about human activity at the site, it would almost double the amount of time humans have occupied North America. However, determining the exact date that people first appeared in North America has been a controversial subject over the past few decades, and similar studies have been dismissed as inconclusive. Some experts are similarly skeptical of the conclusions the team has drawn from the mammoths' remains.

The new site was discovered on the Colorado Plateau in northern New Mexico, after hiker Gary Hartley spotted a chunk of tusk protruding from the surface. Researchers named the site the "Hartley mammoth locality" in his honor.

An excavation of the Hartley site revealed the incomplete remains of two mammoths, believed to be an adult female and a juvenile. Most of the bones were grouped in a large pile, with the adult female's skull lying on top. By carbon-dating collagen in the bones, researchers estimated the remains could date to between 36,250 and 38,900 years ago.

Related: 'Ghost footprints' left by ancient hunter-gatherers discovered in Utah desert

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Some of the bones appeared to have been crafted into makeshift knives, possibly used to butcher the mammoths, the researchers said. Other bones showed signs of being broken by blunt-force trauma, possibly from using rocks, which were also found in the pile of bones. There were also puncture marks in some of the mammoths' ribs, possibly resulting from humans' attempts to glean at the valuable nutrients inside.

Tiny particles found in the sediment surrounding the bones also included crystallized ash from what researchers suspect was a fire, possibly used to cook the mammoth meat as well as other small animals.

"What we've got is amazing," lead study author Timothy Rowe, a paleontologist at The University of Texas at Austin, said in a statement.
When did the first Americans arrive?

Until the early 2000s, archaeological evidence had suggested that the Clovis people — a group of early humans who can be identified through distinctively shaped weapons — were the first humans in North America, arriving around 13,000 years ago. But more recent finds have revealed that there was likely a genetically separate group of humans, known as pre-Clovis people, living in North America before the Clovis people arrived.

It is now firmly established that the pre-Clovis people were the first humans to live in North America, and they can be reliably traced back to around 16,000 years ago, Justin Tackney, an anthropologist at the University of Kansas who specializes in the human settlement of the Americas and was not involved in the study, told Live Science in an email.

This time frame suggests that the pre-Clovis people arrived in North America after the end of the Last Glacial Maximum (LGM) — the most recent period when ice sheet coverage across Earth was at its greatest extent, between 26,500 and 20,000 years ago. The melting ice sheets likely provided the pre-Clovis people with an opportunity to cross the Bering Land Bridge, a piece of land that once connected North America and Asia.

However, a number of recent contentious studies have claimed that the pre-Clovis people may have dated even further back, potentially to before the LGM. But this idea has been "a much bigger pill to swallow" for most experts because the evidence from these studies is inconclusive, Tackney said.

A 2017 study investigating a similar pile of mammoth bones at a site near San Diego revealed that the bones may have been handled by humans and could date back to around 130,000 years ago, suggesting humans may have been around more than 10 times longer than previously believed. However, critics argued that the bones' unusual orientation and "wear and tear" could also be explained by natural processes and were not definitively human-caused.

Related: Woolly mammoths survived on mainland North America until 5,000 years ago, DNA reveals

In 2020, another group of researchers claimed to have found unusually shaped rocks in a Mexican cave that may have been used as stone tools and date to around 30,000 years ago. But another study, published in 2021, cast serious doubt over whether the shape of the rocks indicated they were human-made.

These types of studies can be problematic because the evidence does not definitively point to humans. Instead, humans are just one possible explanation. This means researchers are often creating a narrative to fit the evidence, rather than the evidence clearly pointing to what really happened.

"People in our field usually err on the side of caution, and the simplest explanations are preferred," Tackney said. "In that sense, I am always extremely skeptical of reports from sites like these."

Until now, the most conclusive evidence of a pre-LGM settlement for pre-Clovis people comes from a 2021 study, which revealed a set of 60 bare human footprints uncovered at White Sands National Park in New Mexico. The fossilized tracks date to between 21,000 and 23,000 years ago based on organic material trapped inside the footprints, which suggests pre-Clovis people may have moved into North America before or during the LGM. But this discovery has not been enough to settle the debate.
New evidence

In the new study, researchers analyzed the bones found at the Hartley site using a number of techniques, including high-resolution CT scans and scanning electron microscopy.

These analyses revealed that a handful of the bones displayed signs of being fractured by blunt-force trauma, including, most notably, the adult's skull. Most of the ribs showed signs of being snapped off the vertebrae and some had puncture marks that the researchers think could have been made by humans to extract fatty marrow from inside the bone, according to the study. At least one rib bone also shows signs of cut-like marks that could have been left by humans.

"There really are only a couple efficient ways to skin a cat, so to speak," Rowe said. "The butchering patterns are quite characteristic."

The team also identified around a dozen bone flakes, smaller bone fragments with sharp edges, that the researchers think could have been used as knives to cut through the mammoths' meat. There were also many more microflakes, measuring less than 1.2 inches (3 centimeters) long, that could have been created as a byproduct when the bones were turned into makeshift knives. Not all of these flakes and microflakes can be attributed to individual bones, but there is evidence they were carved either perpendicular or parallel to some of the bones, suggesting they were not randomly created by natural processes, according to the study.

A large boulder and several fist-size rocks were also found among the mammoth bones, which the researchers think could have been used to help fracture and break the bones.

The team also found potential evidence of a controlled fire at the site. In the sediment, there were tiny particles of crystallized ash, similar to those found within ancient fireplaces from past studies. Chemical analysis of the particles suggests that they were formed in a controlled fire and not from a much more powerful wildfire or ancient lightning strike. There were also bone fragments from smaller animals and possibly even fish scales, suggesting that humans may have cooked more than just mammoths at the site.

However, some experts remain skeptical.

"The researchers certainly have a solid date for the death of the mammoths, but they lack definitive evidence of human activity," Lauriane Bourgeon, an archaeologist at the University of Kansas who specializes in ancient animal bones, including mammoths, and was not involved in the study, told Live Science in an email. "The role of natural factors also cannot be definitively ruled out."

It can be very hard to attribute human activity to ancient bones because natural processes — like weathering, trampling and sediment layering — can cause similar types of damage to the bones, Bourgeon said.

Without clear and unambiguous tool use or human remains, it is almost impossible to conclusively prove the damage was caused by human activity, Bourgeon said. The stones found inside the mammoth pile and the bone flakes are not sufficient to confirm tool use, she added.

"I think this is going to remain another controversial site," Bourgeon said.

The researchers acknowledged that some experts might be skeptical of their findings, especially when analyzed individually, but they believe that combining all of the evidence found at the Hartley site paints a clear picture of human activity.

"It's not a charismatic site with a beautiful skeleton laid out on its side," Rowe said. "It's all busted up, but that's what the story is."

The study was published online July 7 in the journal Frontiers in Ecology and Evolution.

Originally published on Live Science.

Canada largest private sector union elects first woman president


By Shreya Jain


© Reuters/COLE BURSTONU

nifor, Canada's largest private sector union, announce their new president in Toronto

TORONTO (Reuters) - Canada's largest private sector labour union, Unifor, elected Lana Payne as president on Wednesday, making her the first woman to lead an organization representing more than 315,000 workers, including in the auto sector.

Payne was previously National Secretary-Treasurer of Unifor, and was the first woman to hold that position as well.

Payne replaces Jerry Dias, who retired after eight-and-a-half years as president in March.

Unifor was formed in 2013 from the merger of the Canadian Auto Workers union and the Communications, Energy and Paperworkers Union of Canada.

(Reporting by Shreya Jain,; Additional reporting by Allison Lampert and John Stonestreet)

Sumitomo hikes Chile copper project cost estimate by 60%

Reuters | August 8, 2022 | 

QB2 is Teck’s most important growth project, which will extend the existing mine’s life by 28 years. (Image courtesy of Teck Resources.)

Japan’s Sumitomo Metal Mining Co Ltd and Sumitomo Corp said on Monday they had raised their estimate of the construction cost for the Quebrada Blanca phase 2 (QB2) copper project in Chile to about $7.5 billion from $4.7 billion.


The 60% increase comes as the covid-19 pandemic has delayed construction which started in 2019 and boosted expenses to deal with the outbreak, they said in a statement.


The move also follows a revision of the estimated project cost by Canadian miner Teck Resources Ltd, which holds a 66.67% stake in the project, to $6.9 billion-$7.0 billion from $4.7 billion last month, based on updated assumption of forex rate and other factors, the Japanese companies said.

Teck has said previously it expects the QB2, considered one of the world’s largest undeveloped copper resources, to begin production in 2021, but it now targets to start the initial production in late 2022.

The higher cost estimate by the Japanese partners compared with Teck’s is due to their assumption of the forex rate going forward at 775 Chilean pesos a dollar, against Tech’s assumption of 850 pesos a dollar, a spokesperson at Sumitomo Metal said. Currently, $1 is equal to around 916 pesos.

Sumitomo Metal, a Japanese miner and smelter, owns a 27.77% stake in the QB2 while Sumitomo Corp, a Japanese trading house, holds 5.56%.

The higher project cost will start affecting their earnings starting in 2023 as the depreciation of construction costs will be booked after next year when a commercial operation is expected to begin, the Sumitomo Metal spokesperson said.

(By Yuka Obayashi; Editing by Bernadette Baum)

Signal Gold obtains environmental approval for Goldboro project in Nova Scotia

Staff Writer | August 8, 2022 | 

Signal Gold’s Goldboro gold property in Nova Scotia. Credit: Signal Gold

Signal Gold (TSX: SGNL) has reached a major milestone in the regulatory approval process of its Goldboro gold project in Guysborough county, Nova Scotia, that would see the company a step closer towards bringing the proposed 1-million-ounce operation to life. The Goldboro mine project consists of two open pits, a processing facility, a tailings management facility, waste rock storage areas, as well as water management infrastructure.


Last week, the company was advised by the Nova Scotia Minister of Environment and Climate Change that the Goldboro project has been approved, subject to the terms and conditions outlined in the environmental assessment (EA) approval. With the minister’s approval, Signal Gold is now allowed to commence site-specific permitting processes including the industrial approval and the Crown land and mining lease applications.

In a statement, the minister stated he was “satisfied that any adverse effects or significant environmental effects of the undertaking can be adequately mitigated” through the terms and conditions outlined in the EA approval, as well as “through compliance to the other licenses, certificates, permits and approvals that will be required for operation.”

“Signal Gold is extremely pleased to have received the environmental approval for its Goldboro gold project, an important milestone that reflects the culmination of five years of environmental baseline monitoring and analysis. This approval marks an important milestone towards the development of Goldboro, which will have a significant socio-economic impact on the region and the province,” Kevin Bullock, Signal Gold CEO said in a media release.

“We recognize that a mining project is a temporary use of land, and we are committed to sustainably developing a project that mitigates environmental impact at every phase, including construction, operations, reclamation and closure,” he added.

The company is currently reviewing the terms and conditions and is also reviewing all comments provided by rightsholders and community stakeholders through the EA process. Future updates will be provided as it progresses Goldboro towards development, it said.

According to a feasibility study released in December 2021, the Goldboro Phase 1 open pit is expected to produce 100,000 oz. of gold per year at an average grade of 2.26 g/t over an 11-year mine life. Its after-tax net present value (5% discount) is estimated at C$328 million, with an internal rate of return of 25.5%. The projected after-tax payback is 2.9 years.

St Barbara wants to raise tailings dam at Touquoy gold mine in Nova Scotia

Staff Writer | August 8, 2022 | 11:23 am News Canada Gold

Touquoy gold mine, Nova Scotia: Credit: St Barbara

St Barbara (ASX: SBM) could be forced to suspend operations at the Touquoy gold mine in Nova Scotia soon, should it fail to receive provincial government approval for a proposed tailings capacity expansion by early August. The mine’s current tailings capacity is expected to be exhausted in mid-September 2022.


The Touquoy open pit mine is part of St Barbara’s Atlantic operations that includes three other projects nearby at Beaver Dam, Fifteen Mile Stream and Cochrane Hill. The combined mineral reserves for the Atlantic operations are estimated at 1.6 million oz. at a grade of 1.0 g/t gold. Together they have an estimated mine life to 2030.

The Australian miner first began mining at Touquoy in 2017, reaching commercial production a year after. The processing plant at Touquoy is a conventional carbon-in-leach (CIL) circuit with a nominal capacity of 2 million tonnes per year.

In 2020, St Barbara began the provincial permitting process to convert the Touquoy open pit into a tailings management facility (TMF) upon completion of open pit mining. This longer-term strategy for tailing deposition was implemented to extend the life of the Touquoy mine, following similar paths to Beaver Dam and Fifteen Mile Stream.

However, late in the process, the Nova Scotia Department of Environment and Climate Change (NSECC) sought further clarification on aspects of the in-pit tailings deposition application, which impacted the timeframes for the company’s in-pit tailings solution. At the current rate, construction work on the in-pit tailings infrastructure will not be completed by the time the current TMF capacity is exhausted.

The company therefore elected to make an application to raise the existing tailings dam as an interim solution while the in-pit deposition matter is settled. The capital cost for the tailings lift is approximately $4.2 million and will extend the life of the Touquoy operation until the end of fiscal 2023.

A permit application to lift the dam was then submitted, but the timeframe for a decision was set at early August 2022. Should approval of the permit not arrive by then, there would be insufficient time to allow for the construction of the raise, leading to the Touquoy operation being placed into care and maintenance.

The potential tailings dam raise has alarmed environmentalists, according to reports by CBC, as the industrial permit is considered separate from the normal environmental assessment process. “Raising a tailings dam puts it more at risk of breaking and this decision is going to be made behind closed doors and you’ve really got to question it,” said Karen McKendry, wilderness outreach co-ordinator for the Halifax-based Ecology Action Centre, in a CBC interview.

At of this moment, the Nova Scotia environmental department is still reviewing St Barbara’s proposed interim tailings solution.

Chile to ‘sanction’ those responsible for sinkhole near copper mine
Reuters | August 8, 2022 | 

Sinkhole at the Alcaparrosa mine. (Image by Sernageomin, Twitter).

Chile will seek to apply harsh sanctions on those responsible for a huge sinkhole near a copper mine in the country’s north, the mining minister said on Monday.


The mysterious hole of 36.5 meters in diameter that emerged in late July has provoked the mobilization of local authorities and led the mining regulator Sernageomin to suspend operations of a nearby mine owned by Canada’s Lundin in the northern district of Candelaria.

“We are going to go all the way with consequences, to sanction, not just fine,” Mining Minister Marcela Hernando said in a press release, adding that fines tend to be insignificant and the ruling must be “exemplary” to mining companies.

Chilean authorities have not provided details of the investigation into causes of the sinkhole.

Local and foreign media showed various aerial images of the huge hole in a field near the Lundin Mining operation, about 665 kilometers north of the Chilean capital. Initially, the hole, near the town of Tierra Amarilla, measured about 25 meters (82 feet) across, with water visible at the bottom.

The Canadian firm owns 80% of the property, while the remaining 20% is in the hands of Japan’s Sumitomo Metal Mining Co Ltd and Sumitomo Corp.

The minister added that although the country’s mining regulator had carried out an inspection in the area in July, it was not able to detect the “over-exploitation.”

“That also makes us think that we have to reformulate what our inspection processes are,” she said.

In a statement, Lundin said the over-exploitation referred to by the minister had been duly reported.

“We want to be emphatic that, to date, this hypothesis as reported by Sernageomin has not been determined as the direct cause of the sinkhole. The hydrogeological and mining studies will provide the answers we are looking for today,” Lundin said.

“Different events that could have caused the sinkhole are being investigated, including the abnormal rainfall recorded during the month of July, which is relevant,” added Lundin.

(By Fabian Andres Cambero and Carolina Pulice; Editing by Leslie Adler and Kenneth Maxwell)