Chile's GasAtacama clinches energy deal with miners

Reuters: [2008-04-30 03:57:00]

SANTIAGO, April 29 (Reuters) - GasAtacama, a major electricity supplier to Chile's northern mining region, said on Tuesday medium-size and big mining firms had agreed to pay $650 million to ensure power supplies amid an energy squeeze.

The deal was struck with the likes of state-owned Codelco and Collahuasi, owned by global miners Xstrata Copper <XTA.L>, Anglo American <AAL.L>, Meridian, Xstrata <XTA.L>, Barrick Gold <ABX.TO> and SQM <SQM_pb.SN>, GasAtacama said in a statement.

The mining companies who signed up to the deal account for 85 percent of the demand for electricity in the northern grid, or SING.

"The mining companies have agreed to provide support totaling $650 million," GasAtacama said in a statement.

GasAtacama is in the midst of a financial crisis because it has not been able to cover high generating costs at contracted prices after Argentina cut supplies of low-cost natural gas to Chile and it was forced to use more expensive fuels to generate power.

The deal represents an exit for the company other than the bankruptcy it was facing, and represents a major effort by many of the world's largest copper miners to guarantee energy supplies and output of the red metal.

Power generation costs rose in 2007 as lower reservoir levels hit hydroelectric output, compounding the impact of scarcer natural gas and high international oil prices.

(Reporting by Monica Vargas, Writing by Simon Gardner, editing by Todd Eastham)

((simon.gardner@reuters.com; +562 370 4250; Reuters Messaging: simon.gardner.reuters.com@reuters.net))

Food prices drag down Garcia's popularity in Peru

Reuters: [2008-04-20 21:22:00]

By Jean Luis Arce

LIMA, April 20 (Reuters) - Peruvian President Alan Garcia's approval rating sank to the lowest level of his second term, hammered by rising food prices that have stoked public discontent, according to an opinion poll published on Sunday.

Garcia's approval rating fell to 26 percent, despite strong growth in the Andean country's economy, according to an Ipsos Apoyo survey published in local daily El Comercio.

The president's disapproval rating was 70 percent. Some 57 percent of those polled said rising prices were the main reason behind their disapproval.

Early in his second term, which began in 2006, a poll by the same firm put Garcia's approval rating at 63 percent.

Peru has enjoyed a six-year economic boom with growth now running at about 9 percent a year, but the benefits are not trickling down to many poor who don't have enough to eat.

About 42 percent of Peruvians, or 12 million people, live in poverty.

"When people see these (growth) figures and a minister says ... that tomorrow we will be a richer country and on the way to joining the first world ..., what they see is what they have and their condition, and I imagine what they feel is anger," political analyst Alberto Adrianzen said.

The government this week sent troops banging on the doors of the poor in night-time operations to hand out groceries to counter the spectre of political instability.

Over the last few months, prices for basic staples like rice and oil have surged at double-digit rates, eroding the spending power of the poor.

Peru depends on food imports, so residents are feeling the pinch of rising global commodity prices.

The central bank has slashed tariffs, raised interest rates and increased deposit requirements for banks this year in a bid to ease inflationary pressures.

Garcia's first term in the 1980s was an economic disaster, when hyper-inflation battered living standards and made long lines for staples common. He has vowed not to repeat the same mistakes.

The poll, conducted Tuesday through Thursday, surveyed 1,000 people in 16 cities across Peru. It has a margin of error of plus or minus 3.1 percent. (Writing by Simon Gardner)

((simon.gardner@reuters.com; +56-9-9818-8538; Reuters Messaging: simon.gardner.reuters.com@reuters.net))

Chinese miner to move Peru town of 5,000 people

Reuters: [2008-02-22 18:36:00]

LIMA, Feb 22 (Reuters) - China's biggest aluminum company, Chinalco, plans to buy up all the houses in a Peruvian mountain town and relocate 5,000 people to make space for its giant Toromocho copper project in the Andes Mountains, officials said. Chinalco, or Aluminium Corp of China Ltd <601600.SS>, is promising to build a new house for each family it relocates and install water and sewage systems in the new town. The existing town of Morococha, situated near old mines, lacks clean water and is polluted, officials said.

"We are doing basic engineering for the project. We have a few years to move the town, but when we start producing it won't be there," Walter Diaz, head of environmental projects for Chinalco's Toromocho project, told reporters late Thursday.

Chinalco bought the project from junior miner Peru Copper last year for about $800 million, and the site could become one of Peru's biggest copper mines in 2011. It expects to spend $100 million on environment remediation and water treatment projects before the mine opens.

"We are in an area that has been intensely mined, where all the bad environment stuff was concentrated by old-fashioned mining that was not managed well," Diaz said.

Toromocho, in the mountainous region of Junin, is about 86 miles (140 km) east of Lima, Peru's capital. Parts of the project site were polluted in the 1970s by dozens of mine tailings from state-owned company Centromin which sit close to rivers, Diaz said.

Toromocho has reserves of 2 billion tonnes, with a copper grade of 0.08 percent and will require $2 billion in investments, company officials said.

Peru Copper said annual production would be 273,000 tonnes of copper from a pit mine at Toromocho, which would boost annual output in Peru by about 20 percent. Peru is the world's third-largest copper producer after Chile and the United States. (Reporting by Teresa Cespedes, Translating by Terry Wade, editing by Matthew Lewis)

((terry.wade@reuters.com; +511 221 8309))