GDF Suez Unit Lining Up Chilean Miners for Powerline Project

E.CL SA, northern Chile’s largest power generator, said it’s in advanced negotiations to supply electricity from coal-fired plants to mining companies seeking to expand in Chile’s Atacama region.

The unit of GDF Suez has environment permits to build a $600 million transmission line connecting northern power stations to the region that currently pays higher energy costs because of a local supply shortage, Chief Executive Officer Lodewijk Verdeyen said in an interview in Santiago yesterday.

Barrick Gold Corp., Goldcorp Inc. and Teck Resources Ltd. plan to build copper and gold mines in central-north Chile’s Atacama region. E.CL says its transmission line can be completed in two years, solving the power crunch more quickly than a government initiative to improve transmission on the central grid and Empresa Nacional de Electricidad SA’s proposal to build the Punta Alcalde coal-fired station in the region.

“It takes half the time than to build a coal plant,” Verdeyen said of the powerline project. “When we get enough interest we will go ahead.”

Energy Minister Jorge Bunster wasn’t immediately available for comment, according to his press office. An official from Endesa Chile’s press office, who isn’t an authorized spokesperson, said the company was unavailable to comment on Punta Alcalde’s development.

E.CL, which generates more than half of the power on Chile’s northern grid, has 400 megawatts of spare capacity at coal power stations, Verdeyen said. Some of E.CL’s competitors in the north have even more spare capacity to plug the shortage further south, he said. Chile is the biggest exporter of copper.

Bidding Process

The company, based in Santiago, will publicly invite bids to contract power from proposed line in a six-month process starting July, Verdeyen said. E.CL may invite an distribution company to build and manage the line that would bridge the gap between Chile’s two power lines, he said.

The company is also seeking supply contracts with mining companies to go ahead with its $1.7 billion Infraestructura Energetica Mejillones project, which involves two coal-fired plants generating 375 megawatts each.

Mining projects in Chile are being delayed by falling commodity prices and concern over securing environmental permits, Verdeyen said. Power demand on the northern grid in the Atacama Desert, mostly met by coal imports, will rise by an average of 6.3 percent a year in the coming decade, according to the company’s first-quarter results presentation.

E.CL fell 0.8 percent to 969.89 pesos at 12:11 p.m. in Santiago. The shares are down 12 percent this year compared with a 0.3 percent decline by Chile’s benchmark index.

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