Worries over halt of $1.4bn thermoelectric plant

Chile mining association says suspension will hurt economy

NEWS, Projects, Chile

The head of Chile's Sonami mining association and the economy minister said has that they're deeply concerned that the recent suspension of a planned $1.4bn thermoelectric plant will hurt the country and its energy-intensive mining industry.

A Chilean appeals court annulled the construction permit for the 740-megawatt Punta Alcalde plant owned by energy company Endesa late on Thursday, citing environmental reasons. Endesa can appeal before the Supreme Court.

"We respect the judicial decision, but we have to point out that the ruling will negatively impact the future of the country, especially mining," Sonami President Alberto Salas said. "If we want to reach the threshold of development in the next 10 years, Chile needs to double its power generation. The recent news doesn't contribute towards this objective."

Chile imports 97% of its fossil fuels and depends largely on hydropower for electricity, creating a crisis when a drought drains reservoirs or a dispute affects fuel imports.

The head of the influential lobby added that two thirds of all planned investments are delayed or are being revised in the key mining region of Tarapaca, in northern Chile, mostly because of legal setbacks.

A Chilean ministerial group had lifted a suspension of the Punta Alcalde project in December after an environmental commission blocked construction over potential air and water pollution.

Economy Minister Felix de Vicente told El Mercurio newspaper that the decision is "bad news" for the economic development of the world's No.1 copper producing country.

The appeals court's decision is the latest blow against megaprojects in energy-strapped Chile.

Chile's environmental regulator blocked Barrick Gold Corp.'s $8.5 billion Pascua-Lama mine in May and imposed its maximum fine on the world's largest gold miner, citing "very serious" violations of its environmental permit.

Pascua Lama was also halted by an appeals court after members of the Diaguita indigenous community, who live downstream from the mine, complained that the project threatens their water supply and pollutes glaciers.

Last year, Chile's Supreme Court cited environmental questions in rejecting construction of Central Castilla, a $5 billion thermoelectric plant. The 2,100 megawatt plant is a joint venture of Germany's E.ON and Brazil's MPX Energia SA. Local communities and environmentalist groups have opposed the Punta Alcalde and Castilla projects.

A controversial project to power central Chile by damming Patagonian rivers also remains on standby. The 2,750-megawatt HidroAysen hydropower project co-owned by Endesa will be reviewed by a ministerial commission. But its future is uncertain. Former President Michelle Bachelet, the frontrunner in the Nov. 17 presidential elections, is against it.

Most Chileans are also against the project's plan to tame two of the world's wildest rivers and build more than 1,000 miles (1,600 kilometers) of power lines between them and the grid that powers the nation's capital. Some protests against HidroAysen have turned violent.

Environmentalists fighting against the coal-fired thermoelectric plants and the hydropower dams argue that Chile should invest in renewable energy. But some experts say alternative energy would not meet demand over the coming years.


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