Chile's GasAtacama clinches energy deal with miners
SANTIAGO, April 29 (Reuters) - GasAtacama, a major electricity supplier to Chile's northern mining region, said on Tuesday medium-size and big mining firms had agreed to pay $650 million to ensure power supplies amid an energy squeeze.
The deal was struck with the likes of state-owned Codelco and Collahuasi, owned by global miners Xstrata Copper (XTA.L), Anglo American (AAL.L), Meridian, Xstrata (XTA.L), Barrick Gold (ABX.TO) and SQM SQM_pb.SN, GasAtacama said in a statement.
The mining companies who signed up to the deal account for 85 percent of the demand for electricity in the northern grid, or SING.
"The mining companies have agreed to provide support totaling $650 million," GasAtacama said in a statement.
GasAtacama is in the midst of a financial crisis because it has not been able to cover high generating costs at contracted prices after Argentina cut supplies of low-cost natural gas to Chile and it was forced to use more expensive fuels to generate power.
The deal represents an exit for the company other than the bankruptcy it was facing, and represents a major effort by many of the world's largest copper miners to guarantee energy supplies and output of the red metal.
Power generation costs rose in 2007 as lower reservoir levels hit hydroelectric output, compounding the impact of scarcer natural gas and high international oil prices. (Reporting by Monica Vargas, Writing by Simon Gardner, editing by Todd Eastham)
