Chile is an energy deficient country. Chile’s economic development is driving strong growth in energy demand. However, domestic energy production has stagnated resulting in Chile currently importing approximately three quarters of its energy needs. Similarly, thermal coal imports are also three quarters of domestic consumption (See Graph 1). Demand for thermal coal has grown significantly since the curtailment of gas exports from Argentina in 2007. Coal fired power generation (coal consumption) doubled from 2005 to 2012.
Graph 1. Chile’s Thermal Coal Consumption & Production
From 2007 to 2012 an additional 2,155 MW of coal fired power capacity was introduced to Chile’s power grid, almost as much as the 2,549 MW added over the previous 70 years. The Chilean government forecasts that 8,000 MW of new power generation capacity (from all fuel sources) is needed by 2020 to meet demand growth. Thermal coal consumption can be expected to grow from 12 million tonnes per annum in 2013 to around 30 million tonnes per annum over the next 10 years based on government annual power consumption growth figures (6% – 7%) and coal remaining at just 27% of the current power generation fuel mix compared to a world average of 43%.
The potential for import replacement together with forecast strong growth in thermal coal demand by domestic power producers provides an excellent opportunity for new coal project developments in Chile. Equus is strategically positioned to take advantage of Chile’s growing energy needs. Currently there is just one operating open-cut coal mine and one dormant open-cut coal in Chile. Both utilise direct ship loading facilities on the Otway Sound (see Photo 1) supplying just 18% – 25% of demand from five power companies operating 12 coal fire power stations (See Photo 2). Transportation of coal from the Magallanes coal basin to markets is via bulk carrier ships.
Photo 1. Coal loader at the recently commissioned 5mtpa Mina Invierno – Chile’s only large coal mine.
Photo 2. Guacolda coal fired power station in Region III (600MW) is one of Chiles 12 existing coal fired power stations.