Chile-based copper mining group, Antofagasta plc through its Minera Los Pelambres subsidiary, will transfer its share in the Alto Maipo Co. to AES Gener S.A. The transfer follows the announcement of a forecast 10 to 20% total cost overrun for the US$2.05 billion 531-MW Alto Maipo hydroelectric project and an improved price for energy.
Minera Los Pelambres holds a 40% equity investment valued at $350 million in Alto Maipo and AES Gener, which operates four run-of-river hydroelectric power plants on Chile’s SIC grid, holds the remaining 60%.
The transfer is subject to shareholder approval.
In the announcement, Antofagasta Chief Executive Offier, Ivan Arriagada, said, "Mining is our core business. We entered into this project when electricity supply in the central region of Chile was constrained to ensure that Los Pelambres would be able to access a reliable source of electricity at competitive prices. We are now close to fulfilling this objective at an improved price, and to ensure a clean, stable and long-term energy supply for Los Pelambres."
Arriagada did not specify what the savings would be in the improved price for electricity.
Alto Maipo is incorporated to develop, construct, own and operate the Alto Maipo hydroelectric project. The project includes two run-of river hydroelectric power stations located in the upper section of the Maipo River, about 50 km southeast of Santiago, Chile, according to Antofagasta.
Antofagasta said Minera Los Pelambres entered into a power purchase agreement with Alto Maipo for the provision of up to 110 MW over a 20-year period from the project’s completion date.
The project would have supplied power to Antafagasta’s flagship holding, Minera Los Pelembras, which is located in central Chile. The mine produces copper concentrates containing gold and silver and a separate molybdenum concentrate. The company said the mine generates more than 57% of overall production and about 65% of earnings before interest, tax, depreciation and amortization (EBITDA).
Antofagasta operates four copper mines in Chile and combined, their production represents more than 90% of its revenue and EBITDA, according to the group.