BHP to terminate coal-fired energy supply deals for Chilean mines

BHP is set to pay a total of US$840 million for an early end to energy contracts at its Escondida and Spence copper mines in Northern Chile, which are currently supplied by a coal-fired thermoelectric plant.

Local power company AES Gener — a unit of AES Corp — said on Monday that the agreement BHP signed with its Angamos coal plant will end in August 2021. The contracts originally expired in 2026 at Spence and in 2029 at Escondida.

“As a result, AES Gener is accelerating all future payments from two of its long-term coal generation contracts, for a total of $720 million,” the company said.

AES noted that Escondida will have to disburse $730 million in nine instalments from August 2021 and Spence $109.6 million at the end of August this year.

The early termination follows BHP’s announcement last year of its plans to run Spence and Escondida (the world’s biggest copper mine) entirely on renewable power.

The world’s largest miner recently committed to invest $400 million over five years to reduce greenhouse gas emissions from its operations and commodities.

BHP is also aiming to eliminate the use of water from aquifers in drought-affected Chile by 2030. Instead the company plans to upgrade its desalination plants at Escondida and Spence.