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Codelco update of machinery is also boost to environment
The Miami Herald / January 3, 1998

By Larry Luxner

RANCAGUA, Chile -- In the remote, barren hills of Chile's Region V, the world's largest copper-exporting company is discovering that joining in the fight against global warming -- even in a small way -- also makes good business sense.

Compania del Cobre de Chile (Codelco) has embarked on an innovative program to replace relatively inefficient motors with high-efficiency ones at its huge El Teniente copper refinery near Rancagua, some 65 miles south of Santiago. By so doing, the state-owned entity hopes to slash its electricity bill, cut production costs and indirectly reduce the amount of carbon dioxide it spews into the Chilean atmosphere every year.

The project is known in Spanish as "Proyecto Reduccion de Gases Productores del Efecto Invernadero en Chile." Budgeted at $1.7 million, it's sponsored by the Chilean government through its National Energy Commission (CNE) and the National Environmental Commission (CONAMA), with assistance from the United Nations Development Program and financing from the UN's Global Environmental Facility.

Carlos del Castillo, the UNDP's resident representative in Santiago, said the agreement between his agency and Codelco's El Teniente division "will serve as an example for the rest of Chilean industry" while resulting in economic benefits for Codelco, which employs 19,000 people and reported 1996 sales of $2.94 billion.

"To promote the incorporation of high-efficiency motors in the mining industry, it is necessary to focus our attention on how to mobilize the public and private interests to formulate and put into practice legal, institutional and fiscal structures that encourage sus-tainable energy," he said. "This requires the support of the public sector, as well as an im-portant economic contribution on the part of the private sector and civil society in general."

In 1994, nearly 75% of the electricity consumed in Chile went to the mining and industrial sectors; Codelco alone used $200 million worth, or 24% of the total. More efficient motors at Codelco would slash copper production costs by 2% to 6%, say experts. In addition, international experience has demonstrated that improvements in energy efficiency can knock up to 25% off utility bills, since the cost of saving one kilowatt-hour is far less than the cost of generating one kilowatt-hour.

All told, Latin American and Caribbean nations together generate under 6% of the world's carbon dioxide, says a study presented at the recent climate conference in Kyoto, Japan. The report, published by the UN's Economic Commission for Latin America (CEPAL), concludes that Latin America "reduced the specific emissions of carbon dioxide within the whole energy system by more than 20% between 1970 and 1990," with Brazil alone cutting harmful emissions by a third.

Yet Chile has a long way to go -- and this is obvious to anyone whose eyes have ever teared from the smog that perenially plagues Santiago, a traffic-choked metropolis of four million. Indeed, while copper exports have helped give Chile one of Latin America's most prosperous economies, they've also contributed to pollution and the production of greenhouse gases believed to cause global warming.

According to government statistics, Chile consumed 25,007 megawatt-hours of power in 1995, of which the copper industry accounted for 37%; manufacturing and other mining activities also used 37% of Chile's electric production, followed by paper and cellulose (14%); petrochemicals (3%), steel (2%); iron (2%), cement (2%); salt (1%) and fishing (1%).

That's why the UNDP has made it a priority to help Codelco replace its inefficient motors with ones that cost up to 20% more apiece but which burn less fuel.

"It's the only project of its type in Chile. Nobody has a project like this in the mining industry," says UNDP executive Thomas Reich, interviewed at his Santiago office. "The copper industry the biggest consumer of electricity in the country. This project helps do energy audits to replace the old motors and also finances the incremental costs for companies like Codelco, but not exclusively Codelco, to adopt these new technologies."

Reich says Chile's biggest mines are located in the north -- mostly an arid zone -- where desert-like conditions preclude the possibility of hydroelectric power. Instead, the mines use thermal electricity produced from coal.

"Only in the south do we have hydroelectricity," he says. "That's why it's so important to reduce consumption. By doing so we also reduce greenhouse-gas emissions."

In a smaller but related development, UNDP is financing a pilot project to generate electricity by gasifying timber. The $150,000 project uses a biomass generator from India, and is located on Buta Chauques, a small island off Chiloé in extreme southern Chile.

"In this region, there are lots of forests, and people in small villages use leña (wood from native trees), since normal electricity will never come there," said Reich. "But this contributes to a reduction in biodiversity. So we are trying to change these habits by producing electricity -- by burning not the wood but the foliage of the trees."

Reich adds that "if this proves feasible, the Chilean government will adopt this technology for other isolated areas of the country, especially in the south."

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