Leveraging Renewable Energy to Boost Chile’s - And the World’s - Copper Supply
Copper demand is on the rise, driven in large part by the global energy transition and the sustainable urbanization of emerging economies.
Specifically, copper consumption is integral to the generation of renewable energy systems, such as hydro, solar, and wind, needed to power developing urban environments. It also plays a key role in the production of electric vehicles, which experienced a 46% sales increase in 2023 in the US and are expected to grow significantly in 2024 and through the end of the decade.
Demand for copper, however, has quickly outpaced copper production, largely due to supply chain disruptions at prominent copper mines in recent years and because of increasingly long permitting processes in the key global copper mining jurisdictions. This lag in supply poses a significant hurdle to the advancement of renewable energy sources, global decarbonization targets and the environmentally sustainable development of emerging economies around the world.
Increase production while protecting scarce underground water resources
To contend with the supply challenges, Antofagasta plc and Marubeni Corporation are working to expand sustainable copper mining production in Chile’s Centinela Copper Mine via a $2.5 billion debt financing agreement as part of a $4.4 billion total capital project. The deal aims to increase Centinela’s copper production by approximately 140 thousand tons per year, placing it among the leading copper mines in the world by output. Notably, the Centinela expansion project is committed to using 100% renewable energy and raw seawater to fuel operations, rather than tapping into and further depleting scarce underground continental water resources in the dry Atacama desert of northern Chile.
Copper has become a critical metal for the energy transition, and Chile is the world's largest copper producer and an attractive jurisdiction for investors, so it will play a strategic role globally,” said Paul Miquel, Chile Country Head for Societe Generale. “Supporting our customers in the country in increasing production capacity, under strict sustainability criteria, is a clear example of our strategy in the sector.
Societe Generale acted as a Mandated Lead Arranger and Technical Agent for the financing package, the largest project finance in the mining sector in the Americas in the last five years. The deal enables Societe Generale to play an integral role in addressing supply-demand challenges in the copper industry.
The Centinela expansion project builds upon Societe Generale’s experience in Chile’s copper industry – last year, the Group acted as Joint Mandated Lead Arranger and Hedge Provider for a desalination and expansion project for Codelco, Chile’s national mining company. The project enables Codelco to significantly reduce its consumption of fresh groundwater, a particularly limited resource in northern Chile.
Societe Generale holds a strong commitment to advancing sustainable business practices across industries and to supporting the global energy transition,” said Alvaro Belevan, Senior Banker in the Natural Resources team at Societe Generale Americas. The Centinela expansion project embodies both of these values. It is a prime example of how renewable energy sources can and should be used to improve the sustainability of mining practices.