Brazilian power company MPX is negotiating long-term PPAs with mining companies and financing from a number of banks for its US$2.7bn, 1.4GW coal-fired project in Chile’s central SIC grid, CEO Eduardo Karrer told BNamericas.
MPX expects preliminary agreements on both fronts within the next few months.
SUPERPORT
The Castilla project at Punta Cachos, 80km from region III capital Copiapó, would be key part of a superport similar to the Açu port MPX is developing in Brazil’s Rio de Janeiro state.
The Chilean port would import coal - probably from Australia and/or Indonesia - for power generation and export minerals such as iron ore and copper concentrates from mines in the area, which MPX estimates to have a combined 1.6GW power demand.
“This port is very competitive because you can use Capesize vessels some 150m from the coast so there will be very low capex figures, and you will have scalability because we will be using Capesize vessels to export metals and import coal,” Karrer said.
According to project documents, the port would have three berths capable of handling the 25m draft of 170,000t Capesize vessels.
GROWING DEMAND
To keep up with growing demand, SIC needs some 500MW new capacity a year.
“You have a lot of mining projects coming online and they all need new energy so all the big mining companies are looking for long-term power supplies to sustain these new investments,” Karrer said.
MPX’s aim is to sign long-term PPAs with the mining companies.
“So for these 1.4GW, what we envision is to sign four or five or six long-term PPAs that will be bilateral contracts to support this new investment in the mining arena in the Chilean market,” Karrer said adding MPX wants to sell 100% of the project’s output to mines.
PROJECT DETAILS
The plant will consist of 350MW units, with 700MW expected to come online in 2012 and 700MW more in 2013.
Production costs are estimated at US$75-85/MWh, Karrer said. The estimates depend on the evolution of the price of coal, which will settle down in 3-4 years, although it at present “is completely out of any normal curve.”
The project’s capacity factor is estimated at 90%.
Castilla is part of a US$19bn portfolio of nine projects, which was fourth in the list of priorities behind three projects in Brazil - MPX, Termomaranhao and Açu - according to the prospectus for MPX’s IPO in December 2007.
The prospectus states the company will foot 25% of the project investment with its own resources and seek 75% financing.
“We are right now negotiating with some banks a similar firm financing to that which we have in the Açu project, where we announced US$1bn coming from [Spanish bank] Santander.”
MPX is in talks with “a couple of” well-established banks in Chile.
“We expect within the next month to announce a similar firm commitment that we have to the Açu project for Castilla,” Karrer said.
“Imported coal has a very important role in the Chilean market… and will be one of the fundamental factors guaranteeing competitive prices in the Chilean market,” Karrer said. “For sure, coal has a very important role in Chile in the next 10 years to guarantee a reliable and optimized hydro-thermo combination for the country.”
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Bnamericas
Via By Karl Royce
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