With the groundwork laid, the company is aiming to have seawater flowing through its network by the end of the decade, setting the stage for a full-scale rollout in one of the driest regions on Earth.
The project’s economics are just as impressive as the engineering, with the study tipping a 4.5-year payback and a post-tax net present value of US$122M (A$187M) over its initial 20-year life, using an 8 per cent discount rate.
Notably, the plan is already backed by a signed memorandum of understanding and positions Costa Fuego as the foundation off-taker for the project’s first phase.
Stage two is set to turn the taps on even wider. By spending a further US$1.4 billion (A$2.15B), the expanded project will introduce a modular reverse osmosis desalination plant into the picture, capable of supplying 1300L/s.
According to the pre-feasibility study, the full build-out could deliver more than US$4B (A$6.15B) in post-tax free cash flow across stages one and two, eclipsing the earning potential of the company’s copper project.
A raft of potential clients – including Teck and Newmont’s Nueva Union copper project and CMP’s Los Colorados iron ore mine – have already signed MOUs for a combined 665L/s. Total demand estimates exceed 4000L/s.
The kicker is a third stage, which aims to push desalinated supply to 2300L/s by 2050 and beyond, extending the pipeline network deep into the Andes to feed the massive Valeriano and Vicuña copper mines, together with other world-class deposits.
Hot Chili Limited managing director Christian Easterday said: “The outcome of the water supply preliminary feasibility study provides an opportunity for Hot Chili to fully consider the strategic value of its 80 per cent owned subsidiary company Huasco Water, which controls all our critical water assets.”
Environmental approvals are well advanced, with marine impact studies, leak detection technology and community engagement programs already baked into the design. The pipeline route avoids sensitive ecosystems and the system is compatible with renewable energy inputs.
In a market where water equals production – and production equals billions in copper – Hot Chili’s Huasco Water project is more than infrastructure. It’s the missing piece of the puzzle that could ignite a mining boom in one of the most resource-rich, water-starved regions on the planet.
And in the race to supply the world’s clean energy transition with copper, whoever controls the water just might control the future.
Is your ASX-listed company doing something interesting? Contact: mattbirney@bullsnbears.com.au
