Chile's Energy Problems, Part 1: A Mining Sector Starved For Electricity

The head of Chilean state copper giant Codelco said Aug. 30 that recent setbacks on energy and mining projects would make it very difficult for Chile to reach its goal of attracting $100 billion in mining investment by 2020. The announcement came two days after Chile's Supreme Court struck down a proposal that would have allowed German and Brazilian energy companies to construct a large coal-fired power plant and its associated coal import port in northern Chile.

The project has become the latest in a string of failed attempts by private enterprises to meet Chile's demand for additional electricity generation. Chile needs to provide enough cheap energy to maintain the growth of its mining industry, the backbone of the country's economic prosperity over the past decade. However, massive protests over the potential environmental consequences of the proposed projects and political deadlock in Santiago make it unlikely that any significant new energy projects will be approved until after Chile's unpopular outgoing president is replaced in the December 2013 presidential election.