In a statement, Xstrata Copper said it will retain a 49% stake in the company, whilst introducing a partner with a demonstrated track record, expertise and experience in hydropower and renewable energy to support Energía Austral’s development.
Under the terms of the agreement, Origin has gained majority ownership of Energía Austral and will progressively invest over the next several years project development costs of US$75M for the completion of a detailed project feasibility study, and, if the project is deemed feasible, an additional US$75M towards a final investment decision. Xstrata Copper will be entitled to deferred payments by Origin Energy when the project is operational and if certain revenue threshold targets are met.
Energía Austral’s hydroelectric projects in the Aysén Region of southern Chile have been designed under Xstrata’s sustainable development standards. They comprise up to three hydroelectric plants – Cuervo, Blanco and Condor - with capacity of approximately 1000MW that will deliver clean energy through a new transmission system to the nation’s Central Interconnected Grid (SIC).
Xstrata Copper Chief Executive Officer Charlie Sartain said of the transaction: “We are delighted to secure Australia’s leading integrated energy company as a partner in Energía Austral. Origin has impressive international energy industry credentials and a demonstrated commitment to the highest levels of sustainability.
“I am proud of the fact that our Energía Austral team has developed strong, respectful relationships with our stakeholders in the project over the past five years. I am confident that with Origin’s contribution and our continuing support, Energía Austral’s projects will now be successfully advanced to the next stage of development to provide an economic and social stimulus for the Aysén Region and a long-term, clean source of energy for Chile.”
Origin Managing Director Grant King added: “Energía Austral will play an important role in providing the nation with an efficient, flexible and reliable supply of electricity from a renewable source.
“Origin’s investment in Energía Austral is consistent with our company’s pursuit of a portfolio of renewable energy opportunities in markets with attractive growth options. It also complements Origin’s existing footprint in Chile through its 40 per cent interest in the nation’s leading geothermal exploration company, Energía Andina.”
Energía Austral’s projects are situated in an area of reliable rainfall and stable water flows, making it ideal for hydroelectric power generation. The projects are in the feasibility study stage and a final investment decision to proceed to construction is expected in 2015/2016.
Energía Austral has the potential to contribute substantially to the social and economic development of the Aysén Region. During construction, a workforce of approximately 4,000 people will be required, providing significant local opportunities for employment and suppliers. The projects also include initiatives to promote tourism in the region.
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