BHP Billiton approves $2 million water project in Chile

This is a smart move for the company, but investors will need to continue to watch mining companies' water reliance closely.

Justin Loiseau

Justin Loiseau hails from the great united state of North Carolina, where he started his first business at the ripe age of five: melting crayons into candles. With the infamous Crayola Crash of 1994, Justin moved on to study economics and environmental studies as a Morehead-Cain Scholar at the University of North Carolina. He has worked in a variety of sectors across the globe, from management consulting to the United Nations, and once spent three months examining invasive snails in Vietnam. Justin discovered The Motley Fool in 2012 and it’s been love ever since. Creativity, contrarianism, kerfuffling… what more could one want? When he’s not playing the Fool, you can find Justin at the University of Auckland, where he is pursuing a Masters in Economics as a Rotary Ambassadorial Scholar. Justin finds biogas digesters fascinating and can unicycle a mile in seven minutes.

Published July 26, 2013 9:16 am AEST

BHP Billiton (ASX: BHP) is thirsty. The mining company announced this week that it has approved a $2 million water supply project to keep its Escondida operations up and running in Chile.

Coinciding with a water-hungry 152,000 tonne per day copper concentrator, the new facility is capable of converting 2,500 litres of sea water every second. Construction will begin this month, and should be completed by 2017.

$2 million is a drop in the bucket for BHP, but the implications behind increasingly scarce water resources could mean a slow leak for mining companies' profits. BHP's own Copper president, Peter Beaven, understands his company's reliance on the liquid blue gold:

"Securing a sustainable water supply in the Atacama Desert is a major priority for all Chilean copper producers, so the approval of the Escondida Water Supply project is a significant milestone for our business. The new desalination facility will minimise our reliance on the region's aquifers, which will help us to meet our environmental commitments and enable us to achieve our long-term business strategy."

While BHP's desalination fix today is a smart move for the company, investors will need to continue to watch mining companies' water reliance closely for signs of sloppy efficiency and squeezed margins.

Luckily for investors, there's no need to dig for copper in Chile to pull long-term profits. Interested in our #1 dividend-paying stock? Discover The Motley Fool's favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2013-2014."

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Motley Fool contributor Justin Loiseau has no position in any stocks mentioned in this article. You can follow him on Twitter @TMFJLo.

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