Energy and mining projects encounter resistance

13 August 2013

Corporations and the government are squaring off against the courts over construction projects relating to major energy and mining developments in resource-rich Chile.

At issue are concerns over environmental damage to local communities during an election year in which a left-wing coalition is expected to win in November on a program that includes environmental protection.

The latest conflict concerns a $1.4bn coal-fired power plant in Chile’s Atcama region.

The Chilean branch of Spanish energy firm Endesa was given approval to build the plant, which would boost supply to Chile’s largest power grid by more than 10%.

Last June an environmental commission blocked its construction on the grounds that the plant would cause pollution.

Then in December a Chilean government ministerial group, comprising ministries of health, economy, agriculture, energy and mining, lifted that block and gave the 740-megawatt Punta Alcalde thermoelectric plant its go-ahead.

But the plant was blocked again in early August this year by an appeals court, which ruled that the plant endangered the rights of those nearby "to live in an environment free from contamination".

It ordered the ministerial group to consider arguments against the project before reaching a new decision.

But the ministerial group and Endesa have said they will fight the appeals court’s decision.

Head of the ministerial committee, environment undersecretary Ricardo Irarrazabal, said they would go straight to Chile’s Supreme Court because its decision on the plant "adheres to the law and was neither illegal nor arbitrary".

Not the first

This project is not the first to suffer from setbacks due to opposition by environmental groups and local communities.

The litmus-test case for other environment-versus-energy disputes was in 2012, when a court cited environmental reasons for blocking the construction of Castilla, a $5bn thermoelectric power plant.

Chilean courts have blocked construction of energy projects in the country citing environmental reasons (Brian Turner/Wikimedia Commons)

The Chilean constitution states that the individual has "the right to live in an environment free from contamination" and further that "it is the state’s duty to guard against infringement of this right and to oversee the conservation of nature."

In the case of the Castilla project the court said that the companies involved, MPX Energia SA and E.ON, did not provide enough information about the impact of the two parts of the project – a port and a thermoelectric power plant.

The court offered the companies the option to resubmit an environmental impact study that combined the two elements.

And it is not just permission for planned energy projects that have faced opposition.

Earlier this year, an appeals court froze operations of the Pascua-Lama open pit project by the Barrick Gold Corporation, construction of which had already begun. The court required Barrick Gold to build more infrastructure to prevent water pollution before continuing with its plans.

Since, a group of indigenous Chileans have asked the Supreme Court to revoke the environmental licence of the company because it seeks total re-evaluation of the project. It is estimated that the Supreme Court could issue a ruling at the end of the year.


Some of the power projects in Chile are aimed at supplying energy for mining. Chile is considered to be the world’s top copper producer, and it is thought that opposition to the projects stems from a feeling among Chileans that they have not benefited from the country’s copper boom.

Protests have rocked Chile in recent months while the country prepares for an election in November.

One-time Chilean president Michelle Bachelet, leader of Chile’s Socialist Party and head of a left-wing coalition widely tipped to win, is campaigning against the current conservative government on a program that includes social inclusion and environmental protection.

Story for GCR? Get in touch via email: [email protected]

Latest articles in Markets