BHP today announced four new renewable power agreements, to meet power demand for its Escondida and Spence copper operations in Chile.
The new contracts will meet Escondida and Spence’s current energy needs and also contain flexibility to help manage future demand as well. BHP aims to supply Escondida and Spence’s energy requirements from 100 percent renewable energy sources from the mid-2020s.
“These new renewable energy contracts will increase flexibility for our power portfolio and will ensure security of supply for our operations, while also reducing costs and displacing CO2 emissions,” said Daniel Malchuk, President of BHP Minerals Americas.
“From a commercial perspective, these contracts will deliver an estimated 20 per cent reduction in energy prices at Escondida and Spence operations.”
“Good business considers the financial and social value in making decisions in the long term interests of shareholders.”
“This is an important step in our transition to sustainable energy use over the medium term in Chile.”
“Our path to 100 per cent clean energy in Chile began earlier this decade when the Kelar power plant environmental permit was switched from coal to gas, enabling power supply from lower emission sources.”
The separate contracts agreed by Escondida and Spence are 15-year contracts for 3Terawatt 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 3 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.
The new renewable energy contracts will be value accretive even including a provision of approximately US$780 million related to the cancellation of the existing coal contracts which will be recognised in BHP’s December 2019 half year financial results.
In Chile BHP has also been working for more than a decade on eliminating water draw down from aquifers for operational supply by 2030.
At Spence, a desalination water plant with a capacity of 1000 litres per second (l/s), will support the Spence Growth Option. Due on line 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 will further increase total capacity.
“Water is critical to our operations in Chile and to the communities where we operate in the Atacama Desert.”
“In addition to our new desalination plant at Spence, we have also invested over US$4 billion in Escondida’s desalination facilities to further our 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.”
“We aim to improve transparency and leadership in water stewardship across the industry in the coming years. Our vision for a water secure world by 2030 is outlined in the BHP water stewardship position statement, published last month.”