Miner Freeport Pressured by Water Costs as Copper Prices Slide

its not alone. As mining companies probe remote areas for increasingly scarce minerals, they are investing billions of dollars for water. Moody's Investors Service estimates that mining companies spent $12 billion in 2013, three times as much as 2009, on water management, including treatment facilities and pipelines. The issue is especially crucial for copper. Around half the world's copper comes from a belt running from Utah to Chile under mountainous, dry areas, and costs for water are expanding. The Chilean parliament is considering forcing mining companies to build desalinization plants, which remove salt from ocean water, rather than use fresh ground and surface water for their operations. BHP Billiton Ltd. BLT -1.60 % , another top copper producer, and its partners agreed to build a $3.43 billion desalinization plant for its massive copper mine in Chile's Atacama desert. Freeport in Chile recently completed a $315 million desalinization plant and pipeline. And in Peru, it is building a $340 million sewage treatment plant. "Water is a critical issue in places like Northern Chile and Southern Peru, and here in New Mexico and Arizona," Freeport Chief Executive Officer Richard Adkerson said in an interview. Water management costs are adding to pressure on copper miners amid a slide in prices—down 32% since highs reached in 2011—deflated by weaker demand, especially in China. But at about $3 a pound, prices are still higher than Freeport's extraction costs in North America of $1.87 a pound, and up from prices that hovered around $1.50 a pound in the 1990s. Analysts say copper prices are relatively resilient, because quality deposits are limited and the metal is essential to a wide variety of goods, from water pipes to iPhones. Analysts say Freeport isn't at risk of having to close mines for lack of water, but having to increase spending on water could drive up miners' costs.