BHP has announced four new renewable power agreements to meet power demand for two of its copper operations in Chile.
BHP’s Escondida mine, located in Northern Chile, is the world’s largest copper producer, while Spence is BHP’s wholly-owned open-pit copper mine, located in the Atacama Desert, in the North of Chile.
BHP aims to supply Escondida and Spence’s energy requirements from 100 per cent renewable energy sources from the mid-2020s. The new contracts are expected to meet Escondida and Spence’s current energy needs and also contain the flexibility to help manage future demand as well.
President of BHP Minerals Americas, Daniel Malchuk, said these new renewable energy contracts will increase flexibility for BHP’s power portfolio and ensure the security of supply for operations, while also reducing costs and displacing carbon dioxide (Co2) emissions.
“From a commercial perspective, these contracts will deliver an estimated 20 per cent reduction in energy prices at Escondida and Spence operations,” he said. “This is an important step in our transition to sustainable energy use over the medium term in Chile.”
The separate contracts agreed by Escondida and Spence are 15-year contracts for 3 Terawatt hours per year (TWh/year) to ENEL Generación Chile and 10-year contracts for 3TWh/year to Colbún, following a competitive tender process. The ENEL contracts will begin in August 2021 and the Colbún contracts in January 2022.
The contracts will effectively displace three million tonnes of CO2 per year from 2022 compared to the fossil fuel-based contracts they are replacing – this is the equivalent to the annual emissions of around 700,000 combustion engine cars.
BHP states that the new renewable energy contracts will be value accretive despite a provision of approximately US$780 million related to the cancellation of the existing coal contracts.
The company is also taking further steps to reduce its impact on groundwater.
At Spence, a desalination water plant with a capacity of 1000 litres per second (l/s), will support the Spence Growth Option. Due online in 2020, the plant will enable the operations to use desalinated water as the main source of supply.
At Escondida, a second desalination plant began operating in 2017 with a maximum capacity of 2,500 l/s. Additional upgrades plus the connection of the original desalination plant to this conveyance system are planned to further increase total capacity.
Mr Malchuk said that in addition to the new desalination plant at Spence, BHP has also invested over US$4 billion in Escondida’s desalination facilities to further its progress to eliminate groundwater usage in Chile by 2030.
“This is consistent with our commitment to deliver social value as well as long term value for our shareholders,” he stated.