MAC: Mines and Communities

Despite widespread opposition, Chile's Isla Riesco coal project moves forward

Published by MAC on 2011-07-25
Source: Business News Americas, Santiago Times (2011-07-21)

The Chilean government looks about to sanction one of Latin America's biggest new coal mines, despite vocal opposition from a number of environmentalists and local community groups.

The Isla Riesco project is solidly backed by Chile's president, Sebastián Piñera, who has been accused of standing to profit personally from the enterprise as a major shareholder in one of the companies backing it.

Isla Riesco lies at the heart of Patagonia on an island recognised as being high in bio-diversity and forest cover.

According to the country's own National Energy Commission (CNE), “59 percent of all power plants currently under construction in Chile are coal burning" and "Chile is already the third-highest CO2 emissions polluter (per capita) in South America”.

During coming days, Chile's Council of Ministers for Sustainability is expected to make a final decision on whether mining will proceed.

However,  the prospect of the project being halted is slim: the Council is composed of ministers, all of which were appointed by Mr Pinera.

For earlier story on MAC: Chile: Despite major risks, Mina Invierno coal mine is approved

Controversial coal mine project in Chile moves forward

By Benjamin Schneider

Santiago Times

21 July 2011

Comptroller denies conflict of interest charges involving President Piñera.

Opposition to the Isla Riesco coal-mining project in Chilean Patagonia suffered a setback Thursday when Chile's Comptroller General rejected accusations of a conflict of interest at the highest level of government.

Critics have alleged that President Sebastián Piñera could profit if the project moves forward. The project's approval at this stage depends on the vote of a council of 11 ministers, all appointed by Piñera.

Despite suggestion of a conflict of interests, however, the Comptroller General ruled that the president's selection of ministers should not "affect their impartiality."

The council nevertheless delayed the vote that was schedules for Thursday for an informative meeting. Three of the 11 ministers on the council have held their positions for less than one week since Monday's cabinet shift.

The controversial mining project, located in the Magallanes Region, is expected to extract 240 tons of coal over the next 25 years. The project was approved by Chile's regional environmental authority in mid-February, despite vocal opposition from environmentalists. Opponents fear the project's mining of relatively low-quality coal will commit Chile to 25 years of "dirty energy" at a time of growing concern about climate change.

Opposition forces are rallying against the project in anticipation of the council's vote, arguing that the project is a step back for sustainable development and that conflicts of interest extend beyond Piñera's relationship with his cabinet.

For Chile Sustentable Director Sara Larraín, "Isla Riesco supports Chile's tendency towards coal, which would mean a 360 percent increase in carbon emissions."

According to figures from the National Energy Commission (CNE), 59 percent of all power plants currently under construction in Chile are coal burning power plants. Chile is already the third-highest CO2 emissions polluter (per capita) in South America.

Greenpeace has also joined the campaign against the Isla Riesco mines and plans to petition the ministers to reject the project. The organization participated in a press conference Tuesday together with Alerta Isla Riesco and other prominent environmental groups like Chile Sustentable and Patagonia sin Represas.

On the political front, members of the opposition alleged that the project is yet another example of a conflict of interest for Piñera, who was a billionaire businessman before running for president of Chile.

President Piñera holds almost 800,000 shares of stock in COPEC, making him one of the largest investors in one of the two companies behind the Minera Isla Riesco project.

Although the stock is held in a blind trust for the duration of his presidency, Dep. Enrique Accorsi said that after Mina Invierno was approved by the environmental authority in February, "the stock price of Copec rose, earning a US$5 million profit for the President."

The Comptroller General ruling does not preclude other investigations into possible conflicts of interest.

Critics also have alleged that Piñera helped the project advance in other ways, such as mentioning it within a government plan for the Magallanes Region released last November, while the project was still in the process of environmental assessment.

Carolina Tohá, president of the opposition party Partido por la Democracia (PPD) and a leading critic of the project, said the Comptroller General decision was "contrary to common sense" and that she will appeal the decision.


Ruling on Piñera's possible conflict of interest in Mina Invierno project due July 20 - Chile

By Victor Henriquez

Business News Americas

July 18, 2011

Chile's comptroller general Ramiro Mendoza will issue a ruling on Wednesday (Jul 20) regarding a potential conflict of interest involving President Sebastián Piñera and local company Minera Isla Riesco's US$180mn Mina Invierno coal project in southern region XII, lower house opposition member Enrique Accorsi told BNamericas.

Accorsi accused Piñera of a conflict of interest in April as the president is one of the largest single shareholders of local fuel distributor Copec, which owns a 50% interest in Minera Isla Riesco.

"The president publicly backed the project last November 5, when he included it in the Magallanes development plan," Accorsi said at the time.

"The comptroller general has promised to issue the ruling on the conflict of interest on Wednesday before a meeting of the council of ministers for sustainability the following day," Accorsi said.

On July 21, the council of ministers for sustainability will start reviewing the appeals to the approval granted to the Mina Invierno project.

The council is led by environment minister María Ignacia Benítez and also includes the agriculture, finance, health, economy, development and reconstruction, energy, mining, public works, housing, transport and communications, and planning ministers.

Region XII's evaluating committee unanimously approved the project on February 15.

Environmental and local community groups submitted four appeals before the council, highlighting the negative impact the project could have on wildlife, forestry and tourism on Isla Riesco, the country's fourth largest island.

Mina Invierno involves an open pit operation to produce 6Mt/y of sub-bituminous coal over a 12-year mine life, based on current reserves of 73Mt. The company's general manager Jorge Pedrals previously told BNamericas that construction was expected to start immediately after getting environmental approval.

The project is expected to substantially reduce the country's dependence on international markets by replacing close to 30% of current coal imports with local production. Chile currently imports 94% of coal used in power generation. Mina Invierno will replace imports from countries such as Colombia, Indonesia, Australia and the US.

The Invierno deposit is one of three coal concessions in the zone that were privatized in 2008. Together with Río Eduardo and Elena, the three deposits contain more than 1Bt of reserves.

Minera Isla Riesco is a JV between Copec and shipping company Ultramar.


Chile Council of ministers to review appeals to Isla Riesco coal project on July 21

By Victor Henriquez

Business News Americas

15 July 2011

Chile's council of ministers for sustainability will start reviewing on July 21 the appeals to the approval granted to local company Minera Isla Riesco's US$180mn Mina Invierno coal project, a source from the environment ministry (MMA) told BNamericas.

The council is led by environment minister María Ignacia Benítez and also includes the agriculture, finance, health, economy, development and reconstruction, energy and mining, public works, housing, transport and communications, and planning ministers.

The southern region XII evaluating committee unanimously approved the project on February 15.

Environmental and local community groups submitted four appeals before the council, highlighting the negative impact the project could have on wildlife, forestry and tourism on Isla Riesco, the country's fourth largest island.

Mina Invierno involves an open pit operation to produce 6Mt/y of sub-bituminous coal over a 12-year mine life, based on current reserves of 73Mt. The company's general manager Jorge Pedrals previously told BNamericas that construction was expected to start immediately after getting environmental approval.

Mina Invierno is expected to substantially reduce the country's dependence on international markets by replacing close to 30% of current coal imports with local production. Chile currently imports 94% of coal used in power generation. Mina Invierno will replace imports from countries such as Colombia, Indonesia, Australia and the US.

The Invierno deposit is one of three coal concessions in the zone that were privatized in 2008. Together with Río Eduardo and Elena, the three deposits contain more than 1Bt of reserves.

Minera Isla Riesco is a JV between local fuel distributor Copec and shipping company Ultramar.

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