Chile's goal of attracting $100 billion in mining investment by 2020 is unlikely to be achieved because of setbacks to several planned mining and energy projects, Thomas Keller, chief executive of state copper giant Codelco, said on Thursday.
Many analysts had already called the target unfeasible, citing Chile's ballooning energy problems, dwindling ore grades and volatile world copper prices -- all of which may cause companies to reconsider projects.
On Tuesday, Chile's top court rejected the planned $5 billion Central Castilla thermoelectric power plant, citing environmental reasons and potentially jeopardizing a string of new mines planned in the mineral-rich Atacama region.
"The portfolio of $100 billion appears very ambitious. Clearly it's a little optimistic to make it materialize within the time frame initially forecast," Codelco's CODEL.UL CEO said during a news conference.
"Indeed some projects have already been delayed and likely won't be achieved in line with what was originally programmed," he added.
Chile, once Latin America's investor darling, is also experiencing an increase in environmental and social opposition to mega projects that is gaining traction in courtrooms.
While mining helped Chile's economy grow 5.4 percent in the first half of this year, the country has the highest level of income inequality among the 34 OECD countries, according to a report by the body last year, and many Chileans feel they have been left out of the country's copper boom.
Chile's government will on Thursday send a bill to Congress intended to connect its two main energy grids to soothe criticism, soften high energy prices and bolster the country's shaky transmission system.
Lumina Copper's Caserones mine and Barrick's Pascua Lama mine are among the mines gearing up to operate in the area near where Castilla was planned.
But the rejection of Castilla may lead to delays in Codelco's small Salvador project as energy prices will be hard to stomach, Keller said in an interview with Chile's Diario Financiero on Wednesday.
Keller is overseeing the state miner's own challenging investment plans to boost copper output to more than 2 million tonnes from around 1.7 million tonnes. Chile, which produces about one-third of the world's red metal, mined 5.24 million tonnes of copper last year, down 3.2 percent from 2010 levels.
July's copper output sank 8.5 percent from June due to maintenance of conveyer belts and grinding equipment, the INE statistics agency also said on Thursday.
More than $22 billion and over 8,000 megawatts in energy investment in Chile have been suspended, according to Libertad y Desarrollo, a conservative Chilean think-tank.
Brazilian billionaire Eike Batista, whose MPX Energia SA was spearheading the Castilla project, reportedly said via Twitter that investing in Chile "was becoming impossible," according to local media, which added that the tweet was later deleted.
Source: Reuters
