Sunday, October 14, 2007

Chile plans to invest 17 billion US dollars in mining industry

Chile’s Mining Minister Karen Poniachik disclosed Monday that Chile is anticipating 17 billion US dollars on new gold and copper mining investment in the next five years. Poniachik said the new cash infusion is needed to replace existing mines whose reserves are running out and to bolster output.

Poniachik made her remarks while participating in the London Metal Exchange Week. During her visit to London she also gave a keynote address to the more than 3,000 mining executives, consumers, and investors gathered at the event. Her address marked the first time in more than 130 years that a woman has spoken at the gathering.

The new investments will be spread out over a period of five years, Ponichek said. During that time, she expects Chile's copper output to rise to 6.4 million metric tons, up from the current figure of 5.6 million tons.

Copper is a key sector in the Chilean economy, with exports last year reaching 33.3 billion US dollars. According to a 2007 report from the Council on Hemispheric Affairs, the daily average copper price for the first half of 2007 was about US$3.06 per pound on the London Metal Exchange. That figure was 11.5% higher than in 2006. Copper mining accounts for roughly 7% of Chile’s total GDP, and in 2006 copper represented 57% of the country’s total exports and 32 percent of its total fiscal revenues.

Poniachik’s announcements come as copper prices are heading for their sixth consecutive annual gain.

Poniachik also confirmed that Chile’s government is not interested in selling the state-owned copper agency. Chilean President Michelle Bachelet revealed in January that a group of investors had approached the government with an offer to buy the company. “CODELCO is not for sale,” said Poniachik.

While Poniachik’s announcement will have important ramifications for Chile’s business and mining communities, it has also raised strong concerns among energy and environmental experts, who link the mining industry’s expansion to several potentially destructive energy projects currently in the works in Southern Chile.

“In Chile, 65% of the country’s electricity is currently being consumed by the mining industry,” ecologist Juan Pablo Orrego, director of the environmental NGO Ecosistemas, told the Santiago Times Monday.

The Hydroaysén project directors have stated that, with the creation of new mining projects, the country’s demand for energy will rise 6.8% annually (…) in other words, the directors themselves have linked hydroelectric projects in Southern Chile with mining initiatives to the North of Chile (…) but, I must be clear that the Central Interconnected Grid only extends to Region III. Still, it does include mines such as CODELCO’s Andina and El Teniente and Los Pelambres. Additionally, there are new projects which are specifically sprouting up within the Central Interconnected Grid’s range”.

Aaron Sanger, a U.S. environmentalist formerly with NGO ForestEthics and now helping lead an international effort to stop dam construction in Chile’s Patagonia region, also linked the mining industry’s needs to the destruction of Chile’s southern Patagonia region.

Here is the full article.