Lundin Mining fined over Alcaparrosa mine sinkhole as Chilean regulator orders continued closure

Lundin Mining Corporation is under increasing regulatory scrutiny after Chile‘s Superintendencia del Medio Ambiente (SMA) imposed a $3.3 million fine and ordered the continued closure of the Alcaparrosa mine due to environmental permit violations linked to the 2022 Alcaparrosa mine sinkhole. The penalty underscores the Chilean government’s firm stance on environmental compliance, as regulators push for stricter oversight of mining operations.

Lundin Mining’s subsidiary, Minera Ojos del Salado, received the SMA’s legal notice following a detailed investigation into the sinkhole’s causes. The regulatory body found that Lundin Mining had breached four specific environmental regulations, leading to concerns over mining-induced land stability risks.

How Did the Alcaparrosa Mine Sinkhole Develop?

The Alcaparrosa mine sinkhole, first detected on July 30, 2022, appeared near Lundin Mining’s Minera Ojos del Salado operations in Chile. The company immediately cordoned off the affected area and alerted regulators, stating that no personnel, equipment, or infrastructure had been impacted.

Initial assessments indicated that the sinkhole remained stable, and the company deployed monitoring technology to track any underground activity linked to the collapse. However, the Chilean environmental authorities launched an independent investigation, citing concerns over potential long-term geological damage.

Following these findings, Lundin Mining suspended operations at the Alcaparrosa mine, removing its mineral reserves from future production estimates. The company has since focused production efforts on its Candelaria mining complex, which reported record-breaking copper output in late 2024 and is projected to produce 140,000 to 150,000 tonnes of copper in 2025.

What Are the Environmental and Financial Implications for Lundin Mining?

The SMA’s ruling, which mandates the Alcaparrosa mine closure, adds to the regulatory pressure on Lundin Mining in Chile. Beyond the $3.3 million fine, the company faces heightened scrutiny over environmental compliance, which could influence future mining permits and operational expansion plans in the region.

Mining analysts note that while the penalty is financially manageable for Lundin Mining, the damage to its reputation could have broader implications. Investor confidence and stakeholder relations are critical in the resource sector, and ongoing environmental disputes may affect long-term growth strategies.

How Is Lundin Mining Responding to the Environmental Investigation?

Lundin Mining has emphasized its full cooperation with Chilean regulators, providing monitoring data, technical studies, and environmental expertise to support the investigative process. The company has pledged to review the SMA’s legal notice and assess its next course of action regarding the alleged environmental violations.

A company spokesperson reaffirmed that Lundin Mining is committed to upholding international environmental standards, while also ensuring that all necessary remedial measures are implemented to address regulatory concerns. However, legal experts suggest that Lundin Mining may challenge aspects of the ruling, particularly regarding its long-term operational rights in Chile.

What Is the Future of the Alcaparrosa Mine?

While the Alcaparrosa mine closure remains in effect, it remains uncertain whether Lundin Mining will seek regulatory reapproval for future mining activity at the site. Given the SMA’s firm stance on environmental risks, the company may have to restructure its mining plans or implement stricter monitoring protocols before securing approval to resume operations.

Meanwhile, Lundin Mining’s Candelaria mine, which remains unaffected by the regulatory actions, continues to serve as the company’s primary copper production hub. The Candelaria operation is a critical revenue driver, and Lundin Mining is expected to prioritize investment in expanding its production capacity there while navigating regulatory challenges at Minera Ojos del Salado.

Lundin Mining’s Share Capital Update: How Does It Impact Investors?

In a separate announcement, Lundin Mining confirmed an increase in issued and outstanding shares, with the company’s total share count rising by 93,674,455 to 867,777,426 common shares as of January 31, 2025.

The increase primarily stems from Lundin Mining’s joint acquisition of Filo Corp. with BHP and the 50% sale of the Josemaria project, forming a new mining entity called Vicuña Corp. The share issuance also includes stock transactions related to employee stock options and share unit vesting.

Market analysts believe that while the share expansion dilutes existing ownership, the strategic acquisitions strengthen Lundin Mining’s long-term asset portfolio. However, with the ongoing regulatory pressures over the Alcaparrosa mine sinkhole, investors will likely remain cautious as the company navigates environmental compliance challenges in Chile.

What’s Next for Lundin Mining in Chile?

The legal and environmental fallout from the Alcaparrosa mine sinkhole signals an increasingly strict regulatory climate for Lundin Mining’s Chilean operations. The $3.3 million fine and ongoing compliance obligations mean that the company must carefully balance its operational ambitions with heightened environmental oversight.

As Chile strengthens its mining regulations, companies like Lundin Mining will need to adapt to stricter sustainability requirements. The outcome of Lundin Mining’s response to the SMA’s legal ruling could set a precedent for future mining disputes in the region, potentially influencing other industry players operating in Chile.

For now, Lundin Mining’s primary focus will likely remain on maximizing production at the Candelaria mine, mitigating legal risks, and rebuilding stakeholder trust amid growing concerns over environmental accountability in the global mining industry.