MercoPress. South Atlantic News Agency

Huge mining project will turn Magallanes into Chile’s “coal region”

A huge project involving 300 million US dollars for the exploitation of coal deposits in the extreme south Chilean Magallanes Region was officially presented in Punta Arenas this week by Energy Minister Marcelo Tokman and top officials from the two companies involved in the project.

The project, 70 kilometres to the north of Punta Arenas in the Riesco Island consists of four main proven coal deposits, plus the building of a sea port, fully mechanized to ship the mineral which once in full production could cut Chile’s imports of coal by 30%.

The first stage or the project to be completed by 2011 should see coal production reach four million tons annually, which will shipped north to the power plants in Chile’s main urban areas. Full production is estimated in six million tons per annum, a couple of years later.

Minister Tokman said that coal production has the full support of the Chilean government which has authorized the building of several power plants which can use coal as an alternative input and pointed out that “coal consumption in the country would double in the next five years”.

Chile currently imports 96% of its coal, mainly from Australia and Colombia, but “the Riesco Islands project will help cut our foreign dependency hopefully to 70%. Coal is also anticipated will represent between 10 to 15% of Chile’s main energy source in the next two decades”, said Minister Tokman.

The project is a joint long term undertaking by Copec and Ultramar, two companies long established and with much experience in Magallanes region where they have been involved in mining.

The coal mining project was begun years ago by Chile’s Development Corporation, having ended in 2007 when a bidding process was opened and finally awarded to Minera Isla Riesco which took over the assets last February.