The top mining companies and the biggest electricity consumers in Peru, are considering entering the power generation business as they face uncertainties over supplies.
“While being a wild shot, the recent news from Peru about mining companies in the country considering to enter the power generation business, made me think. Mining companies in Chile are looking at geothermal as a potential source of electricity supply for their mining projects, so why shouldn´t this be an option for Peru?
Peru has – according to reports by Bob Lawrence & Associates – a geothermal potential of about 2,990 MW capacity. The country has seven volcanos, while “the geothermal resources are primarily located on the western slopes of the Andes Mountains and in the high plateau in the southern part of the country. Areas that were evaluated are: Chivay, Borateras, Calacoa, Calientes, and Callazas. The greatest short-term potential for development is seen for Colca-Chivay.
Two years ago the biggest Peruvian mining companies such as Minera Antamina and Southern Copper did not have any plans to build their own power plants but now those investments are being seriously considered, a mining company representative said on the sidelines of the BNamericas/IBC Energy Integration Congress in Lima, which kicked off Wednesday.
José Montes, an official from the energy procurement area at Antamina, said his company is looking at the “possibility” of investing together with a generator partner as much as US$150mn to have its own access to power. Company directors have yet to make a decision, he added.
Meanwhile at Southern Copper, which along with Antamina tops the list of the biggest companies in terms of sales revenue across all industries in Peru, officials have also reported similar plans but on a bigger scale.
Southern Copper officials did not immediately reply to a telephone and email request from BNamericas for comment on news reports that it may consider along with a partner as much as a US$700mn investment in new electricity production facilities The company needs to assure energy for copper mining projects being carried out, such as the Tía María operation that will require 80MW, the company has said.
Separately, a source from the energy purchasing area of Sociedad Minera Cerro Verde, the other “big three” mining company in Peru, said that its copper mine is not considering building any new plants and it will continue buying from electricity producers the estimated 170MW it requires.
Antamina is a zinc-copper mine controlled by Australia’s BHP Billiton (NYSE: BHP) and Anglo-Swiss miner Xstrata (LSE: XTA), while Southern Copper is part of Grupo México and Cerro Verde is owned by US company Freeport-McMoRan Copper & Gold (NYSE: FCX), Japan’s Sumitomo and Peru’s Buenaventura (NYSE: BVN).
Peruvian energy consumers are facing uncertainties over electricity supplies in the country after demand matched installed capacity in July.
In addition, there is greater uncertainty facing energy buyers related to the availability of natural gas.
Until a few months ago Argentina’s Pluspetrol, the company leading a consortium that holds rights to Peru’s largest natural gas reserves in the Camisea field, had reported that it had over 14Tf3 of reserves. But officials have since said the actual reserves that can be tapped at Camisea are significantly lower at under 9Tf3.
Those reserves may not be enough considering Peru has plans to export LNG and also has plans to construct new petrochemical plants.
Government officials encouraged miners in recent months to consider their own power generation assets.”
Source: BN Americas