The raging two-year drought that continues to affect Chile has made copper producers concerned as to how to source electricity to fire up their plants and sustain their operation.
"If La Niňa persists beyond June, it's foreseeable we'd have a very complex season in terms of energy generation in the second half of the year," Fernando Santibanez, an agronomy professor at the University of Chile in Santiago, told Bloomberg News.
The Gordon Dam in Tasmania is a large hydro facility, with an installed capacity of 430 MW.
Data from the country's Public Works Ministry said Chile's water reservoirs were already 40 per cent off from its supposed total holding capacity. In January, the basins held 5.2 billion cubic meters or 1.4 trillion gallons of water, less by 13 per cent and 1.6 per cent from December and from a year ago, respectively, according to Chile's El Mercurio newspaper.
Definitely a cause of concern for Chile's copper producers especially since the sector's power consumption, in central Chile alone, is projected to rise by 6 per cent average per year in the next decade, data from the website of AES Corp. showed. Chile's dams give off a third of electricity generation for the entire country. State-run Codelco, the world's largest copper producer, and Anglo American Plc operate their copper mines in central Chile.
Chile's Finance Minister Felipe Larrain said the continuing drought will "undoubtedly" create an effect on the prices of some goods in the short-term.
Chile, to counter the ill effects of La Niňa, has resorted to using coal, diesel and liquefied natural gas to preserve its hydroelectric dams. However the move, according to Diego Hernandez, chief executive officer of Codelco, in December, has increased costs of power generation and diminished the country's competitiveness.
Just last week, Public Works Minister Laurence Golborne said prices of produce and electricity will remain stable in spite of the continuing drought.
But Santibanez surmised a rationing might occur in the next months, affecting the agriculture sector and people living in the rural areas. "The economic impact of this drought is very high."
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