Politics, Business & Culture in the Americas

Energy Concerns After Chile’s Castilla Ruling

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Chilean Minister of Energy Jorge Bunster addressed concerns on Wednesday afternoon over the threat of rising energy prices and the risk of a power shortage in Chile after its Supreme Court ruled on Tuesday to halt the planned Central Castilla thermoelectric power plant and port project.  While the $5 billion, 2,100-megawatt planned power plant would provide much needed energy for the growth of the mining industry, Minister Bunster made clear that there were alternative projects that will supply electricity in the medium and long term.

The Supreme Court ruling, coupled with setbacks on other power projects, has caused concern that copper production will slow or become too expensive.  Increased costs of electricity also poses the threat of a reduction in mining investments—a major source of national revenue with roughly $20 billion inmining project investments planned over the next 10 years.  According to some analysts, the concern is not about a shortage of electricity, but the risk of anincrease in price.  Chile’s mining minister, Hernan de Solminihac, has called for a national development solution, so that the mining industry continues to be an engine of growth. Mining represents roughly 15 percent of its gross domestic product.

The Castilla project is a joint venture between Brazilian billionaire Eike Batista’s, MPX Energia SA and Germany’s E.ON.  They will now have to go back to the drawing board to reevaluate their strategy in Chile.  It remains to be seen whether they will resubmit their proposal with an environmental impact study. The ruling on the project brought cheers from local fisherman and artisan groups who expressed concern over potential environmental effects such asair and water quality. 


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