BHP, Codelco to Help Pay Costs at Chilean Utility

By Anonymous

In an effort to keep their respective copper operations in Chile moving. BHP Bullion, the world’s biggest mining company, and cupper producer Codelco agreed to help pay costs at a Chilean energy generator to maintain power supplies at their mines. The companies agreed to provide financing to GasAtacama SA for W days. BHP’s Hscondida Mine, the world’s biggest copper mine, buys power from GasAtacama.

A shortage of natural gas in northern Chile has increased costs at GasAtacama, pushing the company toward bankruptcy, Bear Stearns & Co. said in a May 15 report. The mining companies are seeking to prevent energy shortages.

GasAtacama has been losing as much as $15 million per month after it switched from natural gas to more expensive diesel fuel to run its generators, chief executive officer Rudolf Araneda said. The company is selling energy under current contracts for less than its production costs, he said.

BHP, Codelco and other miners will pay about $7 million a month to help GasAtacama tinanee fuel purchases, Chilean newspaper El Diario reported, citing an unidentified person involved in the talks.

Collahuasi, Chile’s third-largest copper mine, and El Tesoro, a mine owned by London-based Antofagasta PIc, also buy power from GasAtacama, the generator said on its Web site.

Copyright Society for Mining, Metallurgy, and Exploration, Inc. Jul 2007

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