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A sinkhole is exposed at a mining zone close to Tierra Amarilla town, in Copiapo, Chile, on Aug. 1.STRINGER/Reuters

A giant sinkhole has opened up near a Lundin Mining Corp. LUN-T copper mine in Chile, forcing the Canadian company to suspend some development work at the site.

Authorities are investigating the cause of the sinkhole that appeared on the weekend in the vicinity of Lundin’s underground Alcaparrosa mine in northern Chile.

Chile’s geology and mining regulator, Sernageomin, posted a picture of the 32-metre-wide and 64-metre-deep sinkhole on Twitter on Monday. Sernageomin is analyzing the technical nature of the formation and plans to issue recommendations in due course.

Alcaparrosa is part of Lundin’s Candelaria copper, gold and silver complex, which is 80 per cent owned by Toronto-based Lundin and 20 per cent by Japan’s Sumitomo Metal Mining Co. Ltd. Candeleria is Lundin’s biggest copper operation by far with projected annual production of about 160,000 tonnes this year. The Alcaparrosa mine accounts for about 5 per cent of Candeleria’s output.

Lundin said the sinkhole hasn’t had any impact on personnel, equipment or mine infrastructure and likely won’t affect the production forecast at Candelaria either. Sam Crittenden, an analyst with RBC Dominion Securities Inc., wrote in a note that the suspension of development work at Alcaparrosa could, however, reduce production over the medium-term.

Sinkholes form when land underground can’t support the weight coming from the surface and collapses. Sinkholes can occur naturally in “karst” areas, which is a type of subterranean rock that can be naturally dissolved by groundwater, such as limestone. Sandy Archibald, a geologist and technical director with Canadian mining consultancy Aurum Global Exploration, thinks this may have been the cause of the sinkhole at Alcaparrosa.

“The geology of the Alcaparrosa includes stratigraphical younger carbonate [limestone] rocks, so it is likely that the sinkhole is natural and is not directly related to mining,” Mr. Archibald said on Tuesday.

Sinkholes can also be caused by industrial activity, such as construction or mining.

“Some sinkholes form when the land surface is changed, such as when industrial and runoff-storage ponds are created,” the United States Geological Survey states on its website. “The substantial weight of the new material can trigger an underground collapse of supporting material, thus causing a sinkhole.”

Lundin purchased its stake in Candelaria in 2014 for US$1.8-billion from United States copper major Freeport-McMoRan Inc. Over the years, the mining complex has suffered from several operational problems that have hampered production. In 2017, a rockslide forced Lundin to cut its annual production forecast by about 20 per cent at the site. Last year, the company once again reduced its production forecast after setbacks with the mill, and after the grade of metal mined failed to live up to expectations. Subsequently, Lundin cut ties with its chief executive officer, Marie Inkster, of only a few years.

Shares in Lundin fell by almost 7 per cent on the Toronto Stock Exchange on Tuesday to close at $6.72.

Outside of Chile, Lundin produces copper, zinc, gold and nickel from operations in Argentina, Brazil, Chile, Portugal, Sweden and the United States.

In late July, the company’s founder and former chairman, Lukas Lundin, died from cancer at the age of 64. Mr. Lundin had been active in the mining and energy sector since the 1980s and was instrumental in the founding of 11 Lundin Group companies.

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