MAC: Mines and Communities

Controversial Chile Dam Project Inches Ahead

Published by MAC on 2007-01-05


Xstrata Submits Environmental Impact Study For Cuervo River Dam

By Benjamin Witte (

(January 5, 2007) Swiss mining company Xstrata, one of several large conglomerates eyeing Region XI as a potentially valuable source of hydroelectric power, nosed ahead of its competitors this week in what has been an ongoing race to dam the area's pristine rivers.

On Tuesday, Xstrata – working in collaboration with local affiliate Energía Austral – became the first of the competing firms to file an official Environmental Impact Study (EIS), a necessary prerequisite to any eventual construction.

Though the Swiss company would eventually like to build several power generators in the region, the EIS it submitted this week focuses specifically on plans to erect a dam along the Cuervo River. The proposed US$600 million project would be located approximately 21 kilometers northeast of Puerto Chacabuco and 26 kilometers north of Puerto Aysén.

There is, of course, no guarantee if or when the Region XI Environmental Commission (COREMA) will approve the project. Xstrata, nevertheless, is hoping to begin construction in 2008 and have the dam completed by 2012. Once in operation the Swiss mining company promises to produce some 600 MW of power from the Cuervo River generator.

The question remains, however, of what exactly Xstrata would do with all that power. Chile's electricity needs grow annually by approximately 6 percent. That electricity, though, is consumed primarily in the central part of the country, far north of the southern mountain rivers Xstrata and other interested companies are hoping to exploit. How then, does Xstrata plan to transport electricity from Region XI all the way to Santiago?

Spanish energy giant Endesa, working locally with Colbún (part of Chile's Grupo Matte conglomerate), also hopes to dam several of Region XI's rivers. Bigger and bolder still, Endesa-Colbún's plan calls for building four separate generators – along both the Baker and Pasqua rivers – that would together have a generating capacity of 2,400 MW.

Unlike Xstrata, Endesa-Colbún has yet to submit a single EIS for any part of its estimated US$4 billion dam projects. The Spanish-Chilean partner companies have, however, gone ahead and contracted the Canadian firm Transelec to conduct feasibility studies for the eventual construction of 2,000 kilometers worth of power lines. That relationship, in other words, is already in place, meaning Endesa-Colbún – assuming its mega-project is ultimately approved – is more or less guaranteed a means of transporting the electricity it produces.

Xstrata, on the other hand, has no such guarantees, something Energía Austral's general manager, Robert Biehl, openly admitted earlier this week. In comments to the press, Biehl also made no secret of his hope that Xstrata and Endesa-Colbún will eventually share Transelec power lines.

"We've had conversations with Transelec in the past and we're going to take them up again soon in order to reach a quick solution to the issue," said Biehl.

"There has to be just one line that would carry all the region's hydroelectric power," he went on to say. "There should be an agreement that the line doesn't just carry our energy, or energy produced by (Endesa-Colbún), but rather that it's open to other competitors as well."

Of course all of this would be a moot point if, as some people have speculated, Xstrata doesn't actually plan to build its Cuervo River dam, but is instead looking to eventually sell the project – possibly to Endesa-Colbún.

Biehl was adamant this week in denying the rumor. "We have a real interest in this project. It's not for sale," he said.

That opinion is not shared, however, by Cristián Ramírez, a senior analyst with LarrainVial. "I see the (EIS) announcement more as an intention to sell rather than a real plan to build the generator. It's easier to sit down and negotiate something with an approved EIS than it is to negotiate just the idea of a project," he told the daily La Tercera. "It's not beyond the realm of possibility that Endesa-Colbún will eventually acquire the project and partner with Xstrata."

All of this wheeling and dealing is of little concern to environmentalists, who are focusing instead on simply stopping Region XI dam construction all together. Together, they say, the proposed dams pose a major threat to the region, inarguably one of the world's most pristine wilderness areas.

The issue recently received substantial international attention from the U.S.-based Natural Resources Defense Council (NRDC), which last month designated Chilean Patagonia as a so-called "BioGem."

"Endesa-Spain, a European energy company, is pushing to build hydro-electric dams on at least half a dozen rivers in Patagonia. Its scheme would lay waste to this thriving region, flooding thousands of acres of irreplaceable wildlife habitat," said NRDC.

The plan, the environmental group's Web site goes on to explain, also calls for the clear-cutting a 1,200 km swath of forest, space that would then be used to build the world's largest transmission line. Five national parks would be affected by the massive clear-cutting, which would be done by a Canadian company called Brookfield Consortium.

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