Chilean government rejects controversial $2.5 billion copper and iron project

SANTIAGO (Reuters) - The Chilean government rejected on Monday a controversial $2.5-billion copper and iron project proposed by privately-held Andes Iron after a prolonged evaluation period that conservatives alleged was tainted by political decision-making.

Chile’s Ministers’ Committee, a gathering of high-ranking political officials who decide on the fate of controversial projects, pointed to numerous flaws with the Dominga project, which would have produced 12 million tonnes of iron annually and 150,000 tonnes of copper.

Andes Iron, which can file an appeal, had no immediate comment.

“(There are) deficiencies in basic information and insufficiencies in mitigation, compensation, and reparation measures, meaning we believe that the eventual impacts have not been properly taken care of,” Chilean Environmental Minister Marcelo Mena told journalists.

The project would likely have a significant impact on a Humboldt penguin reserve, he added.

Some Chileans had raised flags as former president and now-candidate Sebastian Pinera once had business ties to the project. Others pointed out that current President Michelle Bachelet has scenic land nearby, which they say may have played a role in Dominga’s permitting difficulties.

More generally, Dominga has become a symbol of the difficulties some major projects have had with permitting in recent years in mining powerhouse Chile, where citizens and leaders have taken increasing interest in environmental matters.

Dominga would have been located about 40 miles north of the central city of La Serena. In March, an environmental commission rejected the project, sending it to the Ministers’ Committee for a final judgment.

Reporting by Fabian Cambero; Additional reporting and writing by Gram Slattery; Editing by Nick Zieminski