Drought: No respite for Chile amid yet another winter of discontent

In the winter months of July and August the mountains that stand guard over Chilean capital Santiago should be snowcapped. 

But this year – like many previously – peaks have sported little more than a miserly gray-white smear most of the time.

The scene is testament to Chile’s decade-long drought, which has continued in 2021, amid unusually warm temperatures.

Critically, weak precipitation means less accumulated snowfall in the Andes, particularly vital to feed rivers and reservoirs in the water-stressed central and northern regions in the warmer months.

In July, Santiago registered just 0.6mm of precipitation, making it the driest in at least 72 years. The precipitation deficit for the month was 99%, Chile’s national meteorological service said. The situation eased slightly in August after a weather front dumped some snow and rain over the capital and surrounding areas, but a heavy deficit remains.

Since 2010, precipitation in central Chile has been below normal each year by an average of 20-45%, according to NASA. In Santiago, around 10-20% of normal rainfall has been seen in recent years. Even Chile’s normally wet southern regions are experiencing far less rainfall than they usually do.

The million-dollar question is how long this will last – or if this is the new normal. A UN climate change report makes for sobering reading, warning that more is to come. 

Here and now, however, the situation has already impacted the farming, electric power and mining sectors, among others. It has also created opportunities, for example, for construction of non-conventional renewable energy plants in central zones to help mitigate lower hydropower generation in the warmer months. And that’s not to mention new reservoirs and desalination plants.

And it’s not just Chile. Large swathes of southern South America, including chunks of Brazil and Argentina are also experiencing crippling drought conditions. 

BNamericas takes a look at the drought through the lenses of Chile’s water/waste, mining and electricity sectors.

WATER

Drought fallout is guiding much public policy in the spheres of infrastructure and climate change mitigation.

The government has presented a bill that creates a water resources office under the jurisdiction of the public works ministry (MOP), which would then be renamed the public works and water resources ministry, or MOPRH.

Some key features of the bill, currently in the senate, include the creation of a ministry board that would draft a 10-year water plan and a new subdivision dedicated to rural waterworks. The proposal would allow the ministry to develop desalination projects, even under the concessions model. 

Aside from this, the government is advancing with its US$6.1bn plan to build 26 reservoirs across the country, although authorities warn that the fruits from these works will take decades to materialize. This is because, on average, it takes 30 years to fully develop these projects from inception to operation start, on account of long approval procedures and the amount of institutions involved.

Outside the state, utilities are also investing heavily to secure water provision. In the case of capital Santiago, Aguas Andinas is investing not only in water storage but also infrastructure resilience, as earlier this year it nearly had to impose a water cut in the capital because of increased turbidity levels caused by heavy rains. 

ELECTRIC POWER

Drought conditions have led to deteriorating hydroelectric output. Authorities have taken a series of measures to reduce the risk to power supply through a preventive decree published on August 18.

Measures include ordering grid coordinator CEN to accelerate the connection process of new power plants, making more prudent use of water stored in dams, optimizing plant maintenance processes to ensure they remain online when needed, and creating a capacity registry.

The decree also specifies natural gas power plant owners must make “their best efforts to have maximum availability of existing storage capacity, both in terms of regasification and LNG transport, with the goal of minimizing any capacity restrictions that may occur.”

CEN told BNamericas it does not “see a risk to the electricity supply of residents and industries,” provided “all market players comply with their obligations and make their best efforts to have all the fuel that’s necessary for the operation of their units.”

The entity added it had seen some hiccups with regards to diesel plant availability over the past few weeks, which had further jeopardized the power grid’s conditions, as those thermal units, which are the most expensive to dispatch, are supposed to function as a backup in the case of a system emergency. In response, it is tightening fuel availability monitoring.

The contribution of hydroelectric generators in July was 50% lower than that of the same month of 2020. Hydrologic conditions during the midyear have matched those of the two worst drought years in recent history in the country: those of 1968 and 1998, both of which saw power consumption rationing at a time the national grid was much more dependent on hydroelectric generation.

Hydro’s participation in the power matrix dropped from about 50% in the 1990-2010 period to 27% in 2020.

MINING

Drought fallout is hitting home in the mining sector, which is betting heavily on desalination to feed its water-intensive operations and, in turn, boost its ESG credentials by reducing use of scarce continental water. 

Antofagasta Minerals is a case in point. The company this month reduced its production guidance for 2021 and warned of losses in output for 2022, citing the drought. The miner cut guidance to 710,000-740,000t from 730,000-760,000t previously, assuming that for the rest of the year there will be minimal precipitation. 

“We have now had 12 years of drought, and the precipitation in 2021 has so far been less than in 2019, which itself was one of the driest years on record,” said CEO Iván Arriagada. 

The miner forecast that in 2022 up to about 50,000t of copper could be at risk at Los Pelambres mine in Coquimbo region. 

To mitigate drought impact, the company is advancing a US$1.7bn expansion of Los Pelambres that includes a US$500mn desalination plant with 400l/s capacity, among other projects in the pipeline. 

Chile’s copper commission Cochilco forecast that, by 2030, copper mines will use 156% more sea water and 6% less continental water compared to 2019 levels.

With additional reporting by Concetta Cacciatore, Javiera Gracia and Cristóbal Riego.

Picture: An aerial view of Farellones ski resort without snow on August 10 in Santiago