Chile’s Mining Sector Seeks Solutions to Water, Energy Problems in 2013

CHILE, SANTIAGO

Water and energy shortages “paralyzed” Chile’s mining industry in the second half of 2012, but mining companies expect solutions to these issues to take shape in the new year.

In 2012, 45 large-scale mining projects were launched with a total of $104.3 billion USD in investment, mining industry portal Portal Minero reported on December 31. However, by mid-year the investment numbers fell as energy uncertainty and water availability stalled the projects.

According to Portal Minero, 12 projects were frozen, decreasing investment in the country by an estimated $40.6 billion USD, and Chile Terra reported that another 15 projects, worth $22.6 billion USD, were subsequently paralyzed. Among the projects that failed to move forward were Barrick Gold’s $6 billion USD Casale project, Goldcorp’s $3.9 billion USD El Morro project, Teck’s Relincho project, also worth $3.9 million USD, and Minera Escondido’s $3.5 billion USD desalination plant project.

The $10 billion USD Hydro Aysen project and the Castilla thermoelectric facility were also abandoned in 2012.

Alberto Salas, president of the National Mining Society, said that in 2013 the sector will grow by “6 percent, with copper production of 5.8 million tons and exports of $55 billion USD.”

But he recognized the necessity of finding solutions to the greatest challenges in the sector -- “energy, water supply and human capital.”

According to Portal Minero, the solutions proposed for this year include new hydroelectric and thermal energy projects and water projects such as the Aquatacama pipeline and new desalination plants.

Sebastian Fernandez, regional manager of Energy Planning for Chile’s largest utility company, Endesa, told Portal Minero that project investment is “advancing at an adequate pace, as expected.” He outlined 17 projects that would add 6.127 to 6.347 Megawatts the country’s power capacity, including the $781 million USD, 490-megawatt Central Neltime project, the 150-megawatt Los Condores project in the Maule region and the 490-megawatt Punta Alcade central project.

Portal Minero predicted that 2013 will also see new participation and increased investment in the mining sector. The new participants include “international heavyweights” that currently have little or no presence in Chile.

For example, the $3 billion USD Sierra Gorda project, which is set to begin operations in 2014, is now 55 percent owned by Polish group KGHM Polska Miedtz after it purchased Canada’s Quadra FNX Mining for $2.9 billion USD, and Japan’s Sumitomo holds the remaining 45 percent share.

Southern Copper is exploring new areas in the northern Chilean zone of Catanave and Diego de Almagro, and Chinalco Yunnan Copper and Rio Tinto now own 30 percent of the Minera Escondida project.

Atacama Pacific Gold, Hochschild, Pacific Copper, Mitsui and Nippon Mining & Metals are among the other companies looking at opportunities in Chile.

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