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BHP flags US$780M hit to switch Chilean copper mines to renewables from coal

BHP Group signed new power supply contracts for its Spence and Escondida copper mines in Chile, which the company expects will cut energy costs by up to 20% and displace up to 3 million tonnes of carbon dioxide emissions, it said Oct. 21.

In its results for the six months ending in December, the company will make a provision of about US$780 million due to canceling existing coal contracts for the mines, Reuters reported.

The company awarded a tender to ENEL Generación Chile to supply 3 terawatt-hours per year for 15 years starting in August 2021 and for Colbún to supply 3 terawatt-hours per year for 10 years beginning in January 2022. The two mines will fully source their power from renewable energy sources in 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 [carbon dioxide] emissions," BHP Minerals Americas President Daniel Malchuk said.

In July, BHP pledged a US$400 million investment over five years to develop technologies to cut greenhouse gas emissions from its operations and those generated from the use of its resources.

Meanwhile, a 1,000-liter-per-second water desalination plant at the Spence mine is targeted to go online in 2020, which will reduce its reliance on aquifer-drawn water for operations.