SANTIAGO -(Dow Jones)- Several Chilean miners, including state-owned Corporacion Nacional del Cobre, or Codelco, inked the final agreement for a $600 million bailout of troubled power generator and natural gas pipeline company GasAtacama SA, Energy Minister Marcelo Tokman said late Tuesday.
GasAtacama is the biggest electricity generator on the northern SING grid, contributing about a quarter of the total grid-installed capacity.
BHP Billiton Ltd. (NYSE:BHP) (BHP); miner Dona Ines de Collahuasi, which is controlled by Anglo American PLC (NASDAQ-SMALL:AAUK) (AAUK) and Xstrata PLC (LSE:XTA) (XTA.LN); Codelco, iodine and lithium producer SQM SA (SQM), and several other large mining companies sealed the final deal, according to the minister.
With the bailout, GasAtacama will continue to supply the northern SING grid, dispelling fears of power rationing on that grid, which feeds most of the country's mining outfits.
The mining companies that signed the agreement "have given the country a great example, since their decision will avoid problems on the SING (grid), which translates into benefits for the northern grid and all its clients," Tokman said in a statement.
According to a preliminary agreement reached in earlier this month, the $650 million bailout will be active until the end of 2011 and GasAtacama will pay for 26% of the amount, while the other miners foot the remaining 74%, according to their energy consumption.
For about a year, GasAtacama, a joint venture between Empresa Nacional de Electricidad SA (NYSE:EOC) (EOC) and private equity firm Southern Cross, has been going through a financial crisis as a result of Argentina's decision to reduce its natural gas exports to Chile. Its daily losses have totaled some $300,000-$500, 000 as a result of substituting more expensive diesel fuel for the unavailable gas, and its owners had threatened to declare bankruptcy.
Codelco and BHP already funded a 2007 bailout plan that ran out at the end of March.
BHP controls and operates Chile's Escondida copper mine, the world's largest. It also wholly owns the Cerro Colorado and Spence mines.
-By Carolina Pica, Dow Jones Newswires; 56-2-460-8544; carolina.pica@ dowjones.com
(END) Dow Jones Newswires 04-30-08 0905 Copyright (c) 2008 Dow Jones & Company, Inc.
