Antofagasta’s Zaldívar Mine Extension: A 26-Year Play on Copper’s Green Future

The mining sector is no stranger to regulatory hurdles and environmental scrutiny, but Antofagasta’s recent environmental approval for its Zaldívar copper mine marks a paradigm shift. By securing a 26-year extension to 2051, the Chilean miner has transformed what could have been a looming closure risk into a strategic advantage. This move not only de-risks its operations but positions it to capitalize on the surging demand for copper—a cornerstone of the green energy transition.

Regulatory Risk Mitigation: A Watershed Moment

The May 2025 approval by Chile’s Environmental Evaluation Commission (COEVA) resolves years of legal battles over water rights and environmental compliance. The mine had faced threats of closure due to concerns over groundwater depletion and its impact on the Salar de Atacama ecosystem. By agreeing to transition to non-desalinated seawater post-2028—a first for a major copper producer—Antofagasta has neutralized two critical risks:

1. Legal Uncertainty: A 2024 lawsuit by Chile’s Consejo de Defensa del Estado (CDE) alleged over-extraction of groundwater. The settlement tied to the EIA approval ensures regulatory alignment and avoids costly litigation.
2. Community Opposition: The shift to seawater addresses local concerns over water scarcity, aligning with ESG principles and securing social license to operate.

The result? A mine life extension from 2028 to 2051, creating operational continuity through a period of unprecedented copper demand.

Operational Scalability: Fueling the Green Energy Boom

Copper is the unsung hero of the energy transition. Solar panels, EV batteries, and wind turbines all rely on its conductivity. The International Energy Agency projects a 25% rise in global copper demand by 2040, driven by renewables. Antofagasta’s Zaldívar mine—now secured until 2051—is perfectly positioned to supply this surge.

Key advantages of the life extension:
- Cost Efficiency: Transitioning to seawater eliminates the need for costly desalination, reducing long-term production costs.
- Reserves Growth: The approval unlocks access to primary sulfide ore reserves, boosting output potential and extending the mine’s economic lifespan.
- Production Stability: With 2028 as a clear inflection point for the seawater transition, Antofagasta can now plan multi-year capital expenditures without operational uncertainty.

ESG as a Competitive Weapon

The Zaldívar project is a masterclass in turning ESG challenges into opportunities. By adopting seawater—a first in the industry—Antofagasta is:
1. Lowering Water Scarcity Risks: Chile’s Atacama Desert is one of the driest regions globally. Shifting to seawater removes reliance on local aquifers, addressing biodiversity concerns.
2. Enhancing ESG Ratings: The move aligns with global standards for sustainable mining, attracting ESG-focused investors.
3. Reducing Regulatory Drag: Proactive compliance minimizes the risk of future permits being withheld, a critical factor in Chile’s evolving regulatory environment.

Why This Approval Justifies a Buy Rating

Antofagasta’s stock has underperformed peers over the past year, trading at a 25% discount to its net asset value. The Zaldívar extension changes the calculus:

• De-Risked Portfolio: With Zaldívar’s longevity secured, the company’s earnings stability improves.
• Valuation Catalyst: A mine life extension to 2051 adds ~$2 billion in NPV (net present value) to Zaldívar’s valuation, per industry estimates.
• Dividend Stability: Antofagasta’s payout ratio, currently 40%, can be maintained without capital constraints.

Investors should act now: the stock trades at 8.5x EV/EBITDA, below its five-year average of 9.2x. With copper prices hovering near $4/lb and the green transition accelerating, Zaldívar’s scalability is a rare growth lever in a sector dominated by maturing assets.

Conclusion: A Decade of Dominance, Secured

Antofagasta’s Zaldívar mine extension is not just a regulatory win—it’s a blueprint for future-proofing operations in the era of climate action. By addressing water risks, securing ESG credibility, and unlocking decades of production, the company has transformed a potential liability into a growth engine. With copper demand set to explode, this is a stock primed to outperform as the energy transition takes hold.

Rating: Buy
Price Target: £55/share (20% upside from current levels)

Antofagasta’s Zaldívar approval isn’t just a mine-life extension—it’s a stake in the future of energy. Act now before the market catches up.