Chile: World's Leading Cu Engine : No power for new mines or massive upgrades
INDUSTRY
Chile Coal Plant Ruling Threatens Cu Mine Development
· A Chilean court ruling blocking construction of a coal-fired power plant could stop development of Cu and Au mines in the country, national mining association SONAMI said Friday. In a unanimous ruling Wednesday, the Santiago Court of Appeals upheld three out of four rulings brought against Endesa Chile's plans to build a 740-MW coal-fired plant near the port of Huasco.
· "We respect the court's ruling, however we cannot avoid highlighting the negative impact which the decision will have the country's future development, particularly its mining industry," SONAMI President Alberto Salas said in a statement.
· The plant was seen a critical energy source to a number of mining projects being developed in northern Chile. It is not the first energy project in the region to run into permitting difficulties. Last year, MPX Energia dropped plans to build a 2,100-MW coalfired power plant in the region after the Supreme Court suspended its license.
· Punta Alcalde was rejected last year by environmental authorities in the northern region of Atacama over air quality concerns in the industrial port of Huasco. But ministers ruled in favor of the project last December after Endesa offered to install an electrolytic precipitator at an iron ore pellets plant operated by steelmaker CAP in the town
· SONAMI said Atacama had been expected to receive projects worth $35 B over the next decade, but almost two thirds of forecast investment has been suspended or delayed. They include major mine projects such as Barrick Au's Pascua-Lama and Au Corp's El Morro which have suspended by the courts over environmental challenges. Other mining companies, however, but cited their lack of competitive power supplies for their decision to halt investment
Comment: Unless the regulatory situation changes significantly in Chile, we see further delays in the development of Chilean mining projects due to the need for power and environmental approvals. Chile Forecasts Mining Investments of $112 B to 2021
· Chile's government forecast on Monday that the world's No. 1 Cu producer will attract mining investments of some $112 B in the next eight years. The estimate is higher than the previous forecast of $104 B, due to rising capital expenditures and new projects.
· Chile's annual production capacity will increase to 8.1 M t of Cu in 2021 considering the current investment portfolio, from 5.9 M t last year, Mining Minister Solminihac said. (In 2012, Chile produced 5.455 M t Cu.)
· In January, the Sonami mining association said it expected Chile to get $100 B in mining investment over the next 10 to 12 years, a slightly longer timeframe than previously forecast, as regulatory uncertainty and energy woes are key risks.
Comment: It appears that Sonami is more optimistic on the development profile for new mines in Chile than we are. Besides the regulatory and power environment, rising Capex and market uncertainty could also add to delays in new mine development.
source: Visage Report