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Chile: Nearly no projects despite large number of concessions described as speculation

Manifestación termal - Pampa Lirima, Chile (source: Energía Andina)
Alexander Richter Alexander Richter 7 Dec 2015

There are over 330,000 hectares of geothermal concession areas and only one project being actively developed in Chile. This shows the amount of speculation in geothermal land in Chile and something that needs to be addressed so the Director of the Geothermal Center of Excellence in Chile.

Although there have until today been awarded 330,228 hectares of geothermal concessions in Chile, there is currently only one project on a 136 hectares concession being actively developed today. The main reason is now described as speculation.

In an interview with Portal Minero, Diego Morata, an academic at the University of Chile and Director of the Center of Excellence in Geothermal Los Andes (Blinds), said that the map of Chile shows almost 80 exploration concessions. So it is “striking” to see that despite all the concessions the number of companies that are really doing exploration in the country are few.

According to Diego Morata the main reason for this kind of speculative activity is rooted in the low investment required to hold such a permit. “An individual can apply for an exploration concession, with very low investment for the the cost of maintaining the exploration concession, and you can say that when things are going well, one can then sell it at a higher price and that – so he said in the interview – is the reality. Since the enactment of Law 20,657 on geothermal concessions in the year 2000, the state has handed down ten concessions to six companies, totalling 80,295 hectares.

There are another 24 applications pending for 229,933 hectares. This is an addition to the existing concessions held by Energia Andina/ Antofagasta Mining and Origin, who hold 25% of the land under concession followed by the geothermal joint venture of ENAP and Enel Green Power, which hold 22%.  The latter group is developing the first and, until now-only nationwide geothermal project. Cerro Pabellon, located in the Region of Antofagasta.

There are further 45 concessions in force or exclusive rights totalling 1,871,000 hectares, plus another 34 in the process, by 791,150 hectares.

This has raised eyebrows in the industry, since there are so few projects in the pipeline to justify so many concessions. Back in May 2014, the government of Chile announced plans to send in a draft piece of legislation aimed at “improving the system of geothermal concessions in order to ensure compliance with exploration programs committed by developers in accordance with the reality of national geothermal industry, to avoid speculation in geothermal development in Chile.” But it seems that this never materialised.

Source: Portal Minero