BHP's Chilean mines to terminate coal PPAs with AES Gener

Author: Roland Peschetz. License: Creative Commons, Attribution 2.0 Generic

August 10 (Renewables Now) - Chilean copper mining companies Minera Escondida Limitada and Minera Spence SpA, controlled by multinational BHP Group Plc (LON:BHP), have agreed to pay USD 840.1 million (EUR 714.1m) for the early termination of their tolling power purchase agreements (PPAs) with the Angamos coal-fired plant in Chile.

Chilean power company AES Gener SA, which owns the plant through a subsidiary, said in a stock market filing that the parties had agreed to terminate the PPAs on August 8, 2021, and resolve all legal disputes in relation.

The PPAs to support the construction of a new coal-based thermal power plant were signed on March 17, 2008.

The Spence mine will part with USD 109.6 million on August 31, 2020, while Escondida will pay its USD-730.4-million share in nine annual instalments starting August 31, 2021, AES Gener said.

As a result, AES Gener expects the agreements with lift its net profit by USD 189.3 million in fiscal year 2020 and by USD 336.3 million in 2021. The power plant operator, Empresa Electrica Angamos SpA, will receive a USD-720-million payment in 2020.

AES Gener further said in a press release it will use the net proceeds to prepay debt and put USD 200 million in growth of wind, solar and battery storage capacity.

As of 2022, the Angamos plant will be fully merchant and sell its output on the spot market. Once the grid system is reliable enough as to no longer require the coal-fired plant, AES will move to close it, expecting that by then it will recover its investment, the company added.

In October 2019, BHP announced the signing of four renewable energy PPAs for its Escondida and Spence copper mines. The mining company awarded the contracts to Enel Generacion Chile SA (FRA:EPN) and Colbun SA following a tender process.

The PPA with Enel comes into force in August 2021.

(USD 1.0 = EUR 0.850)

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Sladjana has significant experience as a Spain-focused business news reporter and is now diving deeper into the global renewable energy industry. She is the person to seek if you need information about Latin American renewables and the Spanish market.

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