MAC: Mines and Communities

Patagonian Hydroelectric Project Approval Spurs Protests in Chile

Published by MAC on 2011-05-17
Source: Bloomberg, Associated Press, BBC (2011-05-21)

Miners involved in the project

Xstrata is directly involved in this project because they could jointly develop a section of the transmission line. See: Xstrata inks deal with Transelec for power line

HidroAysen's five dams would flood nearly 6,000 hectares (14,800 acres) of land and require a 1,900 kilometer (1,180 mile) transmission line to feed the central grid that supplies Santiago and surrounding cities as well as copper mines owned by Codelco, Anglo American and others.

Transelec Chile SA - an electricity transmission company controlled by Canada's Brookfield Asset Management, the Canada Pension Plan Investment Board, and the British Columbia Investment Management Corp. - stands to profit handsomely in the name of Canadian pensioners by building the 2,200 kilometre transmission corridor through wildlife reserves and national parks that is required to complete the project.

To read the report, "Conflicts Over Water in Chile: Between Human Rights and Market Rules" (2010), co-edited by Sara Larraín and published in English by the Council of Canadians: http://www.blueplanetproject.net/resources/reports/ChileWaterReport-0411.pdf

** Updated on 23 May 2011

ESPAÑOL

Patagonian Hydroelectric Project Approval Spurs Violent Protests in Chile

By Matt Craze and Randy Woods

Bloomberg

10 May 2011

Chile approved a hydroelectric project that would flood Patagonian valleys and become the country's biggest power generator, sparking violent protests and more than a hundred arrests.

Police fired water cannons and tear gas at demonstrators outside the building in the city of Coyhaique where 11 of the 12 members of an environment commission voted in favor of the HidroAysen project that Santiago-based Empresa Nacional de Electricidad SA and Colbun SA (COLBUN) want to build.

HidroAysen's five dams would flood nearly 6,000 hectares (14,800 acres) of land and require a 1,900 kilometer (1,180 mile) transmission line to feed the central grid that supplies Santiago and surrounding cities as well as copper mines owned by Codelco and Anglo American Plc. The government of President Sebastian Pinera says Chile needs more hydroelectric and coal- fired plants to meet demand that will double in the next decade and reduce power costs that are the highest in the region.

"We have to get that energy somewhere, independent of what the project is, because energy today is twice as expensive as in other Latin American countries," Ena Von Baer, the government's spokeswoman, told reporters yesterday in Santiago. "We want to be a developed country and to do that we need energy, especially cheap energy for the poor."

Street March

Hundreds of protesters blocked the entrance to the room where the government's regional representative Pilar Cuevas and other officials sat after yesterday's meeting in Coyhaique. A police officer and at least one other person were injured by stones thrown by demonstrators, while more than 20 people were arrested during clashes with police involving tear gas and water cannons, regional governor Nestor Mera told reporters yesterday.

More than 120 were arrested last night in protests around the country, newspaper La Tercera reported. About 1,500 people gathered in a plaza in central Santiago before marching to the presidential palace, the newspaper reported. Police dispersed protesters who tried to block traffic in the downtown area.

With capacity to produce 2,750 megawatts, about 35 percent of the country's current power consumption, the project would dwarf Ralco, Chile's biggest hydro-generator at about 760 megawatts, on the Bio Bio River. HidroAysen would require a total investment of about $7 billion.

Shares Rise

Shares of Colbun and Endesa Chile, as Empresa Nacional de Electricidad is known, rose 1 percent and 1.4 percent, respectively, in Santiago trading yesterday before the vote, as investors speculated on a favorable outcome.

Yesterday's approval was for the dams. The project plans to seek approval for the transmission line later this year.

HidroAysen is in "advanced" talks with Zug, Switzerland- based mining company Xstrata Plc (XTA) to jointly develop a section of the transmission line, HidroAysen Chief Executive Officer Daniel Fernandez said in an interview yesterday.

Non-profit group Patagonia Without Dams has erected billboards showing electricity pylons blotting a landscape of rugged snow-topped mountains and green fields sandwiched between Argentina and Pacific fjords.

"Here we don't need all this energy that they are going to generate," said Gloria Hernandez, an adviser to the Catholic Church in Aysen. "They are going to deliver it to the mining companies in the north."

Local Jobs

HidroAysen runs television adverts emphasizing the need for new energy sources by showing a floodlit stadium plunged into darkness during a soccer match. The project is clean, renewable and will bring jobs to the region, Michel Moure, HidroAysen's head of operations, said. At least a fifth of the workforce will be sourced locally, Moure told the commission yesterday.

Pinera, the billionaire entrepreneur-turned-politician who assumed the presidency in March 2010, is targeting average annual growth of 6 percent over his four-year term, double the average under the previous administration.

So far this year, authorities have granted Santiago-based Empresas Copec SA (COPEC) a permit to build a $500 million coal mine on a Patagonian island and approved Brazilian billionaire Eike Batista's plans for a $4.4 billion thermoelectric plant. HidroAysen "would be good" for Chile, Interior Minister Rodrigo Hinzpeter told Duna radio station before the vote.
Injunction Filed

Gabriel Silber, an opposition lower-house member, filed an injunction against the vote in a local appeals court on the grounds that some regulators have vested interests in the project. While the court allowed yesterday's vote to proceed, it may overturn the result, Silber told reporters from Coyhaique.

The government put undue pressure on regulators to approve HidroAysen, Senator Patricio Walker of the opposition Christian Democrat party told the commission.

The environmental application process has been transparent and in compliance with regulations, Von Baer said. The commission wasn't influenced by Hinzpeter's earlier endorsement, Cuevas told reporters.

Opponents of the project will now focus on blocking a separate study into the transmission line to the central grid.

"Obviously this fight continues," Senator Walker said from Coyhaique. "The transmission lines must not affect virgin land and that's a fight to be fought further ahead."

HidroAysen has held talks with companies including Spain's Abengoa SA (ABG) and Colombia's Interconexion Electrica SA to jointly develop the transmission line and may invite bids for partners next year once a further study is complete, Fernandez said.

The company may also study operating the transmission as a concession with operators paying for its usage on a daily basis, he said.

To contact the reporter on this story: Randall Woods in Santiago at rwoods13@bloomberg.net or Matthew Craze at mcraze@bloomberg.net


Chile approves huge dam project in wild Patagonia

Associated Press (AP)

10 May 2011

SANTIAGO, Chile - A $7 billion project to dam two of the world's wildest rivers for electricity has won environmental approval Monday from a Chilean government commission despite a groundswell of opposition.

The commissioners - all political appointees in President Sebastian Pinera's government - concluded a three-year environmental review by approving five dams on the Baker and Pascua rivers in Aysen, a mostly roadless region of remote southern Patagonia where rainfall is nearly constant and rivers plunge from Andean glaciers to the Pacific Ocean through green valleys and fjords.

Monday's vote - 11 in favor and one abstention - could prove to be pivotal for the future of Chile, which has a booming economy, vast mineral wealth and a determination to join the elite group of first-world nations.

With its energy-intensive mining industry clamoring for more power and living standards improving, some analysts say Chile must triple its capacity in just 15 years, despite having no domestic oil or natural gas. Chile imports 97 percent of its fossil fuels and depends largely on hydropower for electricity, creating a crisis when droughts drain reservoirs or faraway disputes affect energy imports.

Supporters say the economic benefits of the dam project justify carving roads through the heart of Chile's remaining wilderness and running a thousand miles (1,600 kilometers) of transmission lines to power the capital, Santiago.

The dams together could generate 2.75 gigawatts, nearly a third of central Chile's current capacity, within 12 years. The Aysen region will receive less expensive energy, jobs, scholarships and $350 million in infrastructure, including seaports and airports, said HidroAysen's executive vice president, Daniel Fernandez.

But people in the sparsely populated area are divided. Only three dozen families would be relocated, but the dams would drown 14,000 acres (5,700 hectares), require carving clear-cuts through forests, and eliminate whitewater rapids and waterfalls that attract ecotourism. They also would destroy habitat for the endangered Southern Huemul deer: Fewer than 1,000 of the diminutive animals, a national symbol, are believed to exist.

"They are all sell-outs," rancher Elisabeth "Lilli" Schindele said of the commissioners.

She lives with her husband and two young children in the Nadis, a sector that would be inundated. Their neighbors have agreed to relocation, but she doesn't want to leave the 1,235 acres (500 hectares) where they raise cattle and sheep.

"There is no land like ours," she told told The Associated Press by phone.

Robert F. Kennedy Jr., a lawyer for the U.S.-based National Resources Defense Council, appealed to Pinera to call off the project.

"It's the most beautiful place, I believe, on the planet," said Kennedy, who kayaks there every year. "I don't know any place like Patagonia."

Investors have spent $220 million on the project so far, but opposition has grown to 61 percent of Chileans according to the latest Ipsos Public Affairs poll, and the government is concerned about a backlash.

More than 1,000 people gathered outside the hearing in the regional hub of Coyhaique, chanting and carrying signs. Some threw rocks at the cars of commissioners, and clashed afterward with hundreds of police, who responded with a water cannon and tear gas. Several protesters were bloodied in the melee, and the commissioners were kept inside for their safety.

In downtown Santiago, several thousand people blocking a main avenue in protest also encountered tear gas and police water cannons.

Mining and Energy Minister Laurence Golborne had urged opponents to turn to the courts, and they did vow to appeal.

"We're going to keep fighting until this project is unviable," said Patricio Rodrigo, a spokesman for the Patagonia Without Dams coalition. "This project robs us of our sovereignty."

But Interior Minister Rodrigo Hinzpeter, who sent police to contain the protests, said that "the most important thing is that our country needs to grow, to progress, and for this we need energy."

Chile's decision has lessons for a world confronting a future without inexpensive fossil fuels and questioning nuclear safety. The country has abundant renewable-energy potential, from dams on its many rivers to year-round sun in its northern deserts, wind along its long Pacific coast, numerous geothermal sites and biomass from its large agricultural industry.

But Chile gets less than 5 percent of its electricity from renewable sources other than hydroelectricity, has done little to encourage efficiency, and lacks a strategy for securing future supplies, although a government commission will make such recommendations by September.

While a growing number of countries are modernizing networks to enable countless individuals with rooftop solar panels to contribute electricity, Chile's grids aren't even linked.

It's another legacy of dictator Augusto Pinochet: To encourage development and undo his socialist predecessor's attempts at land reform, he made waterways the property of the state energy company and eliminated regulations to protect competing interests. The rules remained even after the company was privatized and sold to foreigners.

As a result, Chile's rivers are the tax-free, private property of the Spanish-Italian Endesa energy company, which now has huge influence and few incentives to modernize the system in ways that would encourage competition. Colbun SA, a Chilean electricity generator, also is participating in the HidroAysen project.

"It makes no economic sense. The big energy demand is coming from the northern part of the country and the metals industry, and in those regions you already have available resources," Kennedy said. "The Atacama desert is ideally suited to solar thermal production. It's got the altitude, 365 days of sunlight a year and power lines that already exist, and in most cases you're only a few miles from the industries you're powering. The only reason these dams are being built is because of the political clout that Endesa has over the Pinera government."

Fernandez said HidroAysen will help Chile to receive the cheapest, cleanest electricity possible. Several Chilean energy experts also dismissed solar as uncompetitive and years away from relevancy, and warned that the only alternative is dirty and imported coal. Chile recently approved Latin America's largest coal-fired plant, to power a mine near the northern deserts. Two other coal plants received the OK on Friday.

Kennedy's counterpoint is a huge $2.2 billion, 2.6-gigawatt solar project being built in the Mojave desert with private money and U.S. government guarantees. It already has 20-year contracts to supply California's utilities starting in two years, much quicker than HidroAysen. "This is proven technology that is being used all over the world," he said.

Monday's dam decision may only intensify the debate. Environmentalists predict more damage from the transmission lines, which face a separate environmental review in December. Their construction could open remote Patagonia to much more development, and the area's abundant water could attract even more dams once the lines are built.

But last month's poll, which also showed 84 percent opposition to nuclear energy, suggests Chileans care more now about the environment, said Douglas Tompkins. The poll had a sampling margin of error of plus or minus 3.1 percentage points.

Tompkins, a clothing entrepreneur, and his wife, Kris, have used much of their fortunes from the Esprit, North Face and Patagonia companies to create Parque Pumalin, where 10,000 tourists a summer visit a nature reserve running all the way from the Argentine border to the sea. The couple have objected to letting the lines cut through the park; Fernandez cited technical reasons, not political ones, for a 100-mile (160-kilometer) undersea detour.

The battle shows Chileans can no longer trust the free market alone, Tompkins said: "The electric law in Chile is so skewed to the power companies, virtually guaranteeing inefficiencies and monopolies, that it is counterproductive to the interests of citizens and certainly counterproductive to the health of nature."

But HidroAysen's "benefits outweigh the drawbacks, from the development perspective," said Maria Isabel Gonzalez, who used to run Chile's National Energy Commission.

"This project is necessary for the country. It's not ideal that they're the same ones who already have an important percentage of the generation of the central grid - this isn't acceptable, but it's what there is," the lobbyist said.

"Chile is still a poor country, with 2.5 million poor people, and to overcome poverty we need energy, and for that reason we need to develop our own resources, the most competitive ones. ... It would be very selfish on the part of the rich countries to say, 'Look how they're destroying these uninhabited pristine areas.'"

Associated Press writers Eva Vergara reported from Santiago and Michael Warren from Buenos Aires, Argentina.


Canadian pension funds quietly profit from destruction and oppression in Chile

Council of Canadians Media Release

12 May 2011

(Ottawa) Protests and violent police reaction erupted across Chile on Monday following the approval of two unpopular and potentially devastating dams by a presidentially appointed commission. Police fired water cannons and tear gas at the largely peaceful protests and arrested as many as 100 protesters, including Sara Larraín, the internationally renowned director of environmental group Chile Sustentable.

While the project - which threatens to drown thousands of acres of farmland, destroy endangered ecosystems, and open up the remote Patagonia region to further development by heavy industry - is opposed by 61% of Chileans, it could spell big profits for some Canadian pension plans.

Transelec Chile SA - an electricity transmission company controlled by Canada's Brookfield Asset Management, the Canada Pension Plan Investment Board, and the British Columbia Investment Management Corp. - stands to profit handsomely in the name of Canadian pensioners by building the 2,200 kilometre transmission corridor through wildlife reserves and national parks that is required to complete the project.

The Council of Canadians has for several years opposed these dams and the transmission lines and has worked with groups in Chile to oppose the destructive influence of Canadian mining companies that seek the power that would be generated from this project, as well as calling for public ownership of the now private water utilities that are controlled by Canadians pension plans.

"Canadians support democracy, freedom of expression, and responsible environmental stewardship at home and around the world," says Maude Barlow, National Chairperson of the Council of Canadians. "But most Canadians have no idea that their pension plans are fuelling the kind of environmental destruction planned in Chile. In a global world, what can seem far away may be very close to home. Canadians must stand with the people of Chile in opposing this terrible project and condemning the undemocratic and violent actions of the state."

Maude Barlow is available for comment. For information contact: Matthew Ramsden, Communications Officer, Council of Canadians, 613.233.4487 ext 245.


Chile's HidroAysen dam project provokes mounting anger

Annie Murphy Aysen

BBC News

21 May 2011

For the past few weeks, Chile has seen repeated and increasingly angry protests after regulators approved plans to build dams in the south of the country.

The project would see two rivers in the Aysen region of Patagonia dammed to provide hydroelectricity.

HidroAysen, the company in charge of the project, says the dams are an environmentally friendly, low-impact solution to the nation's growing hunger for energy.

Opponents, from conservationists to local farmers and scientists, argue that the dams will have dramatically negative effects on an important wilderness, as well as a vanishing way of life.

"HidroAysen didn't even consult with us; they showed up and gave us a relocation plan, as if they could kick us off our land before a decision was even made," says Lily Schindele, 39, who lives near one of the proposed dam sites with her husband and two children.

"Who has the right to decide the future of this region? A business that's located 2,000km (1,250 miles) away, or the people who live here?"

Getting to Mrs Schindele's isolated farm takes nearly two days of driving, bumping over dirt roads in a 4X4, cutting through dense cypress groves, over grassy plains and alongside dozens of waterfalls.

Once the dams are constructed, Mrs Schindele's farm, along with much of the surrounding rugged landscape, will be fully submerged at the bottom of a large artificial reservoir.

But Mrs Schindele is not just concerned about the loss of her property and home.

"These people don't understand these rivers or this region. This is one of the last wild places in Chile, and this project will change it forever," she says.

But Daniel Fernandez, the CEO of HidroAysen, says that the project is sustainable - and virtually unavoidable if Chile wants to meet its growing energy needs.

"The people who oppose the dams are people who don't share in the vision of development that Chile has adopted," says Mr Fernandez.

"They want conservation, but they don't take into account other citizens."

According to Mr Fernandez, by 2030 Chile will require three times as much energy as it does today.

He says the bulk of that new demand is due to home use, and public works projects, such as street lighting.

'Pristine places'

But Lily Schindele and others in the anti-dams movement say that the bulk of Chile's energy consumption is due to the country's vast copper mines in the northern Atacama Desert.

Environmentalist Juan Pablo Orrego has calculated that new mining projects will require approximately 12,000 additional megawatts of energy.

"Mining is the energy tension in Chile; without mining, there is no energy crisis," says Mr Orrego.

Scientists are concerned that dams will drastically alter the ecosystems of Patagonia, which oceanographer Giovanni Daneri says are unlike anything else on Earth.

"These are pristine places; some of them, no-one has ever even set foot there," he says.

The organisation Mr Daneri works for, Center for Research on Ecosystems of Patagonia, has calculated that Patagonia's fjords alone absorb the same amount of carbon dioxide that the entire country emits.

And those fjords are dependent on the health of the rivers that are now set to be dammed.

"What a dam does is it acts like a trap for sediment and nutrients," says Mr Daneri. "And the fundamental role of a river in an aquatic system is to move nutrients.

"The turbidity of the river is going to change, and we don't know how this is going to impact the ecosystem of the fjords."

Industry v conservation

Kris Tompkins, one of the founders of the Patagonia clothing line, now dedicates her time to conservation projects across the region, along with her husband, Douglas.

The Tompkins' vision of conservation rests on recognising the value of large protected areas, and supporting countries like Chile and Argentina as they build a culture of national parks and conservation.

"We're trying to elevate the importance and value of wild lands, and intact landscapes," says Mrs Tompkins, sitting in front of a large window looking out over the rolling grasslands and big open sky of what will be the future Patagonia National Park.

This is a 650,000-acre conservation project just a few hours from one of the proposed dam sites.

Yet Mrs Tompkins believes that conservation can only go so far, and that the Chilean government must better regulate industries like mining if the country is serious about protecting the environment.

"If 60% or 70% of energy is going to industry, then my mother can turn her lights out every time she leaves a room, but the fact is they need to keep building dams," says Mrs Tompkins.

"That's not because of my mother, but because of industrial growth, and because industry isn't being forced to be more efficient."

The government has insisted the country's energy sector needs to be expand to aid economic growth and lift thousands out of poverty.

Construction worker Carlos Hernandez, who lives in Aysen, believes the dams are necessary.

"Right now we generate power by burning petroleum and coal, which pollute the environment. We need these dams, and the electricity they'll generate. I just hope the project will give jobs to local people," Mr Hernandez said.

But Mrs Tompkins argues that the biggest problem with the HidroAysen project is not the construction but the drastic changes it will usher in.

"It's the discovery, effectively, of this region in terms of its natural resources. That's what will be the really cruel effects of the dams."

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