This is a tale that is still unfolding. The truth is well hidden by all concerned, for there are billions at stake. For the miners this is a story of trying to keep the mine going throughout 2047 – find a place to put the tailings the mine will generate. For the locals it means work on the mine; unless you are a farmer for whom it means pollution of water resources. For the lawyers it means fees and a fight for their perception of justice.

The drama part is well told by this (edited) news item from a year or two ago.

A dispute over the expansion of one of Chile's largest copper mines has all the drama of a Hollywood movie, pitting a big mining company against small farmers who say their water will be poisoned. Antofagasta is building a dam to contain processed waste rock near the small town of Caimanes, some 60 kilometers (37 miles) from Pelambres, one of the country's biggest copper mines.

The El Mauro dam, located at the top of an arid valley, has polarized the remote community, with each side accusing the other of everything from bribery to greed and excess ambition. Farmers say the tailings dam has cut off existing water supplies and could poison what's left as residues from the waste rock, treated to extract copper, filter into ground water. Others, who have benefited from new jobs and investment, accuse the farmers of standing in the way of development.

The dam was approved in 2004 but its future was cast into doubt when farmers from the valley below won a court appeal over water rights, which Antofagasta needs for the project to proceed. Antofagasta says it acquired water rights in the area when it bought the land El Mauro sits on, and that its project will supply more water to the valley than existed before. But farmers say any additional water brought from the El Mauro region will be contaminated by toxic tailings dust.

"What is happening in Chile is lamentable, where (local) rights must clash with big companies who are favored by the state," said Fernando Dougnac, an award-winning environmental lawyer who is handling a lawsuit against the dam. "This is not a matter for interpretation, it is a fact that those lands don't have water rights," he said. Victor Ugarte, a 70-year-old cattle farmer who owns a large tract of land at the top of the valley, says the dam has cut off natural wells and that some of his cattle have died from drinking water that flows down-valley from the dam. "When it does not rain, the only water that is left to us is the water from those wells," said Ugarte, whose group has as many as seven law suits against the El Mauro dam. Antofagasta says the water that feeds the valley comes from rainwater run-off that enters the valley at several points.

The debate has drawn debate from across the nation, with the National Mining Society warning that shutting the project down at this stage could hurt investor confidence in Chile. Many residents in Caimanes, and some local politicians, also support the miner, and some say farmers like Ugarte are just holding out for a large cash pay-off. Meanwhile, opponents of El Mauro whisper that Antofagasta is paying people in Caimanes -- many of whom are the miner's employees -- for their support.

Most residents in Caimanes could not say if El Mauro will hurt water supplies to the farms or the town, but several questioned the motives of the landowners. "Ha! They say they are farmers, but that's a lie. There is no farming out there," scoffed Natalia Tapia, a 28-year-old divorced mother whose job with the miner lets her raise her two children on her own. Tapia got a five-fold raise when she left her job as a town street sweeper and went to work as a landscaper for the miner.

On a recent afternoon on the road leading into Caimanes from Chile's Pacific coast, graffiti in red paint demanded that Antofagasta abandon the dam. The next day it was gone, replaced by banners in support for the project.

Here follows more sober (edited) news briefs culled from the financial press.

June 23, 2005: Rural residents concerned about water contamination and the destruction of ancient cultural sites will challenge the construction of a tailings dam project proposed by the Los Pelambres copper mine that has already been approved by regional environmental authorities. The El Mauro tailings site would hold 1.7 billion tons of mining wastes coming from the Los Pelambres mine, owned by the Luksic group, one of the three most influential economic powerhouses in Chile. The Caimanes Community Group in Region IV claims that the tailings dam project was approved in “an irregular way” by environmental authorities in April, 2004, before the National Monuments Council and the General Water Authority had completed their studies of the project. “We are certain the El Mauro project has already been approved, but that irregularities have occurred, giving us cause to seek justice before the courts,” said the group’s spokesman Nair Huerta Carvajal. “We want the country to know the harm the project will cause the people of Caimanes. We don’t want the same thing to happen here as happened at Celulosa Arauco and with Pascua-Lama.” He added that the project would put at risk hundreds of ancient archeological sites related to different indigenous groups.

November 14, 2006: The Luksic Group, the parent company of Antofagasta Minerals, will appeal a Court of Appeals decision to Chile’s Supreme Court, revoking water permits related to construction of a tailings dam at the world’s fifth largest copper mine. The original planning process for the US$530-million El Mauro tailings dam at Minera Los Pelambres in northern Chile began in 2003. The regional environmental authority of Coquimbo (COREMA) approved the project’s environmental impact assessment in April 2004, a decision ratified by Chile’s national environmental agency (CONOMA) at the end of 2004. The court’s decision specifically addresses the validity of permits granted by the Chilean water authority (Dirrecion General de Aguas) for the El Mauro project. In a statement issued earlier this month, Los Pelambres management said they believed they have received all technical and legal permits necessary to construct the dam, which is now 58% complete. Start up of the dam, which would hold 1.7 million tons of tailings was planned for the end of 2007.

In 2004, community organizations in the Pupio Valley, which is a part of the municipality of Los Vilos, filed a claim objecting to the tailings dam. Local farmers and residents have protested against the project, claiming it would turn the Pupio River basin into a garbage dump, threatening local drinking water supplies. Los Vilos is a beach resort and port. In a statement to the Chilean newspaper El Mecurio Nair Huerta, President of the Caimanes Committee for Drinkable Water claimed that both business and political interests have been stacked against local residents. “We’ve requested that the government prioritize technical criteria and disregard” commits from Mineras Los Pelambres concerning how far the project has advanced, she said.

May 25, 2007: As previously announced, there a number of claims currently at first instance or on appeal in the Chilean courts against third parties (either governmental authorities or former owners of land in the El Mauro area) which relate to the Mauro tailings dam project. None of these cases are directly against Los Pelambres, but in some cases the company has participated in proceedings in case an eventual judgment affects the tailings dam project. In one of these cases, a first instance court in Santiago rejected a sixth petition by the plaintiff in that case on 18 May 2007 that work on the Mauro tailings dam should cease immediately, confirming Los Pelambres' right to complete its construction. The court nevertheless has held that operation of the dam by depositing tailings cannot for the moment commence, and Los Pelambres intends to appeal against this part of the decision. This resolution was issued following a first instance judgment issued on 19 April, in which the validity of a purchase and sale agreement in 1992 between two former owners of land in the area of the Mauro tailings dam was successfully challenged by the plaintiff seller. Los Pelambres, who acquired the land in 2001, had participated in this trial to protect its interest and has appealed against this decision to the Court of Appeals. The appeal has the effect of suspending the effect of the first instance resolution. Current operations are unaffected as the Quillayes dam remains in use. The Group is confident that Los Pelambres' legal title to the land in question will be upheld on appeal and it believes that this as well as any other outstanding claims will not have any material impact on the Mauro tailings dam project. Construction of the tailings dam, which is now 86% complete, is continuing in accordance with the original schedule and the project is expected to be completed as planned by the end of 2007.

August 27, 2007: The management company at Los Pelambres, one of Chile's biggest copper mines, says it plans to appeal a court order which will force it to stop work on part of its El Mauro tailings dam project. The company, Los Pelambres, was notified of the court order on Friday. The document, issued by a local court in the town of Los Vilos, central Chile, ordered the company to halt construction of a canal through an estuary after a local farmer complained that the project would have a negative impact on the environment. The company's management says the farmer's complaint is unfounded. The El Mauro dam project has been plagued by legal problems since it was approved in 2004. Antofagasta Plc, which owns the Los Pelambres mine, is building the dam to contain processed waste rock. Some local farmers say the dam, which is nearly completed, has reduced water supply to their fields and could poison the water that remains. In a statement released on Friday and posted on its Web site, Los Pelambres said it would appeal the court decision and was confident it would be overturned. It said that of the 4,000 people working on the El Mauro project, only 270 would have to stop work and most of the construction would continue as normal. The dispute over El Mauro is one of many which has pitted Chile's environmental lobby against the mining industry.

As background, here is information from the Company’s 2006 Annual Report.

Los Pelambres (60 per cent owned) Los Pelambres achieved its best ever results in 2006 due to record copper prices, historically strong molybdenum prices and good production figures. Operating profits increased to US$2,223.7 million from US$1,350.4 million in 2005 as LME copper prices averaged US 305.3 cents per pound and molybdenum prices averaged US$24.8 per pound. The company was able to pay US$1,450.0 million in dividends to its shareholders. Production of payable copper was 324,200 tonnes in 2006 compared to 322,800 tonnes in 2005with an improved copper grade of 0.81 per cent compared to 0.80 per cent last year. Molybdenum production increased by 13 per cent to 9,800 tonnes from 8,700 tonnes due to higher grades of 0.028 per cent compared to 0.022 per cent and better recovery rates. The average price of molybdenum for 2006 was US$24.8 per pound against US$32.0 per pound in 2005.

Los Pelambres still ranks among the ten lowest cost copper producers in the world although cash costs increased sharply to US 16.4 cents per pound compared to a negative US 17.1 cents per pound in 2005 – due mainly to lower molybdenum by-product credits. The US$180 million concentrator plant expansion project initiated in mid 2005 to boost ore throughput from 125,000 tonnes per day to 140,000 tonnes per day was substantially completed on schedule and under budget. The repowering of the two SAG mills, the installation of a fifth ball mill and additional flotation cells contributed to higher production earlier than expected for 2006.

The feasibility study for a further expansion to 175,000 tonnes per day throughput within the existing environmental approval will be completed by mid-2007. The first stage of a two year exploration programme to identify additional resources beyond the present 2.9 billion tonnes has been encouraging. Preliminary indications show the existence of a potential copper-gold porphyry adjacent and south-east of the Los Pelambres orebody and a molybdenum zone may be discovered.

No major accidents occurred at Los Pelambres in 2006 and the mine was awarded for the third time in six years the highest Certificate for Safety by the Servicio Nacional de Geología y Minería. Los Pelambres will enter wage negotiations with its mine and port union in September 2007 and with its plant union in July 2008. Labour agreements in Chile are for a minimum period of two years and a maximum period of four years. Copper production in 2007 is expected to be 321,000 tonnes with a grade of 0.74 per cent copper, slightly down on 2006 because of a larger percentage of harder rock.

The Mauro dam, which will provide storage capacity for the tailings from the 2 billion tones of ore reserves at Los Pelambres, is 80 per cent complete with cumulative costs of US$323 million incurred by the end of 2006. This will support the mine life to 2047 at current production levels. Project costs have risen substantially, mainly in the areas of steel, energy and mining equipment whilelabour costs in US dollars have risen due to the continued strengthening of the Chilean peso. Final costs for the Mauro dam are expected to be in the region of US$534 million (before any further appreciation of the Chilean peso), a substantial increase over the original budget due to the factors mentioned above but also because of permitting delays and inferior rock quality encountered in two of the three tunnels totalling 8.4 kms.

Los Pelambres has been mindful of its responsibilities in the region spending over US$25 million on improvements to infrastructure for the local communities and on providing aid and assistance to local farmers and small businesses affected by this project. In November 2006, the Court of Appeals of Santiago upheld a challenge by claimants in the Pupio Valley against the Chilean Water Authority (Direccion General de Aguas) in relation to the granting of one of the sectoral permits relating to the El Mauro tailings dam. In December, however, the Court of Appeals rejected a second request by the claimants that work on the dam should be suspended and confirmed that Los Pelambres was entitled to continue construction pending a final resolution by the Chilean Supreme Court, to whom Los Pelambres had appealed, as an affected party, together with the Direccion General de Aguas.

Management of Los Pelambres continues to believe that all the technical and legal permits it has received have been correctly applied for and granted and is confident that this view will be upheld by the Chilean Supreme Court. Construction is continuing on schedule. There are other claims at first instance currently in the Chilean courts against third parties (either governmental authorities or former owners of land in the El Mauro area). These claims are not against Los Pelambres but in some instances the company has participated in these legal procedures in case an eventual judgment affects the project.