Cap SA (CAP), Chile’s biggest steel and iron-ore producer, said plans to expand its mines in the country may be delayed by electricity shortages.
Energy supply in Chile is a problem, Cap Chairman Roberto De Andraca told shareholders in Santiago today. Cap, which plans to invest more than $500 million this year, will be able to fund expansions with its own cash, he said.
The government of President Sebastian Pinera, who last week swore in his fifth energy minister in two years, aims to double power supply in the next decade to match demand growth as mining companies plan investments totaling $91 billion. BHP Billiton Ltd. (BHP), the world’s largest mining company, urged Chilean authorizes yesterday to find ways to increase power supply.
While BHP has enough power for its Chilean operations until 2015 and can supply the initial expansion of its Escondida copper mine, the company is looking to secure more supplies after that, the company’s Base Metals President Peter Beaven told reporters in Santiago yesterday.
Cap expects global iron-ore prices to remain steady at about $148 a ton this year before slumping to about $100 in the long term, De Andraca said. Steel prices will remain low as long as there is an excess of global production capacity, he said.
The company, based in Santiago, expects sales to grow about 5 percent this year and doesn’t expect to lose money from its steel division, De Andraca said. Cap is in negotiations to enter Colombia, he said, without elaborating.
Cap shares gained 0.5 percent to 20,350 pesos at 1:14 p.m. in Santiago.
To contact the reporter on this story: Eduardo Thomson in Santiago at firstname.lastname@example.org
To contact the editor responsible for this story: Dale Crofts at email@example.com