At its core, the Los Pelambres desalination financing was not about building pipes and pumps. It was about redesigning how a mining company could be financed.
Antofagasta Minerals’ $2 billion transaction transformed a critical operational input — water — into a standalone, investment-grade infrastructure credit. In doing so, it opened a new channel of long-term capital for the mining sector and delivered one of the most structurally innovative financings ever executed in Latin America.
The deal, which previously won the award for Infrastructure Financing of the Year: Latin America, now earns Structured Financing of the Year for its reconfiguration of risk, cash flow and investor exposure.
Los Pelambres is one of Chile’s most productive copper mines and a cornerstone of Antofagasta’s earnings. Operating in the arid Coquimbo region, its long-term viability depends on securing water independently from scarce continental sources. Meeting that challenge required not only engineering solutions but a financing structure capable of supporting decades-long investment.
Instead of borrowing conventionally at the mine level, Antofagasta isolated its water infrastructure into a new special purpose vehicle, DSWS SpA. That entity owns the desalination plant and pumping systems and raises debt backed by a long-term Water Services Agreement with the mine.
Under the agreement, Los Pelambres commits to pay a fixed tariff on a “hell-or-high-water” basis. This contractual mechanism converted operational necessity into predictable revenue — the foundation of an infrastructure-style credit profile.
The result was a two-tranche senior financing totaling two billion dollars. The anchor was a $1.55billion US private placement of fully amortizing senior notes with a tenor of roughly nineteen years. Rated BBB+ by Fitch, it became the largest private placement ever executed by a Latin American issuer and drew more than seventy institutional investors, including Allianz, MetLife, Apollo and New York Life.
A $455 million syndicated bank facility completed the structure, providing flexibility for construction and refinancing while balancing tenor and pricing. Together, the dual-track format diversified Antofagasta’s funding sources and aligned debt maturity with the economic life of the water assets.
Investor confidence rested on a comprehensive risk framework. The financing incorporated debt service reserve accounts, distribution and leverage tests linked to target debt service coverage ratios, tariff step-up mechanisms and make-whole provisions. An operations and maintenance agreement ensured continuity of service while preserving the option to introduce third-party operators or equity partners.
“The most innovative element is that a mining company was able to finance its water supply with infrastructure-oriented capital,” says Eduardo Tagle, CFO of Antofagasta. “That gave us longer maturities and more competitive terms than we could have achieved in the mining market.”
What distinguished the transaction was the investor proposition it created. Rather than underwriting a cyclical commodity producer, lenders gained exposure to long-dated, contracted cash flows tied to an essential service. The private placement was oversubscribed, confirming appetite for structured assets that combine industrial fundamentals with infrastructure-style predictability.
Beyond financial innovation, the structure reinforced Antofagasta’s environmental strategy. Once Phase II is completed, more than 90% of Los Pelambres’ water will come from seawater or recirculation, sharply reducing dependence on freshwater sources.
But the defining legacy lies in its architecture. By ring-fencing water assets and monetizing them through long-term contracts, Antofagasta created a template for resource companies seeking to fund adaptation projects without burdening corporate balance sheets or relying solely on short-tenor bank debt.
Known as “Project Mallupai,” the transaction has become a reference point for hybrid financings that sit between project finance and corporate funding. It secured operational certainty for one of Chile’s most strategic mines and expanded the country’s institutional investor base. For Latin American markets, it marked a shift from financing what is built to financing how risk is structured.
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