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Lundin Mining faces $13-million fine as Chile files charges linked to sinkhole

TOPSHOT-CHILE-MINING-SINKHOLE
TOPSHOT-CHILE-MINING-SINKHOLE

Chile’s environmental watchdog has filed four charges against Toronto-based Lundin Mining Corp. in relation to a 36.5-metre-wide sinkhole that first appeared near the company’s copper mine in July.

Of the four charges, two of them are related to allegedly excessive mining and the building of infrastructure that wasn’t allowed in the mine’s permit, which the nation’s Superintendency of the Environment (SMA) labelled as “serious” and “very serious,” respectively. Combined with two lesser charges, the company faces fines of up to US$13 million, the SMA said on Oct. 6.

Lundin’s Chilean company, Ojos Del Salado, said in a statement it has been informed of the charges and it is making a “corresponding analysis.” The SMA believes the company’s actions led to the creation of the 60-metre-deep sinkhole, and Ojos said there were “multiple factors” involved “with mining activity being a relevant one.”

In late July, Lundin suspended underground operations at its Alcaparrosa mine due to the sinkhole. The mine is part of the company’s Candelaria mining complex, which is responsible for about 44 per cent of Lundin’s revenue and is in Chile’s Atacama Region, 20 kilometres south of the city of Copiapo.

The South American nation, which is a popular mining location, has taken a stricter stance on the sector’s impact on the environment in recent times.

According to the SMA, Lundin extracted more minerals than authorized from the Gaby 4 cave, an area 200 metres below the sinkhole. In addition, the company constructed underground pools to manage surface water in the same area, which SMA said it didn’t have a permit for.

Emanuel Ibarra, SMA’s environmental superintendent, in a statement said “large amounts of water began to leak into the mine from places intervened beyond what was considered in the environmental assessment” when the sinkhole formed.

Lundin said it was trying to stop the “infiltration of water” at the mine and is working in co-ordination with authorities to “minimize the impact” on employers affected by the mine’s suspension.

The other two “minor” charges were related to how the company did not meet the required guidelines for transporting the mine’s ore.

Lundin has to respond to the SMA on how they plan to rectify the issues within three weeks.

Aside from Chile, the diversified miner produces copper, zinc, gold and nickel in Brazil, Portugal, Sweden and the United States. In the second quarter, Lundin’s revenue fell to US$590.2 million, compared to US$872.3 million in the same quarter last year, due to lower metal prices.

On Thursday, Lundin’s shares closed at $7, down 14 cents or 1.9 per cent, within a 52-week trading range of $6.24 and $14. The company has a market cap of about $5.4 billion.

• Email: nkarim@postmedia.com | Twitter: