(Reuters) - Chilean mining company Antofagasta (ANTO.L) is renegotiating its long-term energy contracts in a shift toward renewables as prices for wind and solar plummet in the world’s top copper producer, the company’s chief executive told Reuters.
In an interview marking the start of the London Metal Exchange Week, an annual event for the mining and metals industry, Ivan Arriagada said some of Antofagasta’s energy contracts will not expire for another three to five years but allow for renegotiation if market conditions change.
Until 2014, mines in Chile had been largely reliant on coal and gas. But a flurry of new renewable energy projects that have taken advantage of the country’s abundant wind and sunshine have brought down prices and could mean major cost savings for the copper industry.
Arriagada said the company is seeking to duplicate its success at Antofagasta’s top-producing Los Pelambres mine in northern Chile, which relies on non-conventional renewable sources for nearly 45 percent of its energy.
The company’s remaining mines in northern Chile - Centinela, Antucoya and Zaldivar - use energy from coal-fired plants, but Arriagada said they were negotiating a move towards renewables.
“Going forward, we will prefer non-conventional renewable sources, and it wouldn’t surprise me if we surpassed 50 percent, though we don’t have a specific goal,” he said.
Arriagada said rising copper prices would likely smooth labour contract negotiations in Chile in 2018, despite fears that reforms that strengthened the hand of labour under center-left President Michelle Bachelet would lead to more strikes.
“The legislation adds complexity, but with market conditions a bit more favourable, I don’t see a systematic risk in the next year, and I think it will depend more on labour relations at each individual company,” he said.
Chile’s National Mining Society (Sonami) last week warned that some 30 pending negotiations over expiring workers’ contracts could hurt output if strikes hit the sector.
Outside Chile, Arriagada said its Twin Metals unit in the United States was preparing an environmental impact assessment for a proposed underground copper-nickel mine in Minnesota.
But the project hinges on resolution of a legal dispute with the government, which under former U.S. President Barack Obama refused to renew the company’s mineral leases in 2016 to protect a wilderness area from possible pollution.
Arriagada said U.S. President Donald Trump’s election has created a “more favourable climate for the development of the project.”
But the dispute would still need to be settled in court, he said, adding: “We’ll keep defending our right to develop the mine.”
Reporting by Dave Sherwood and Fabian Cambero; Editing by Chizu Nomiyama