Chile Rejects Dominga Project Once Again, Taps Debt Market To Help Its Copper Growth

Chile has rejected the proposed $2.5 billion Dominga iron and copper mining project. Andes Iron, a domestic exploration and mining company, aimed to establish two open-pit mines and a seaport near the Humboldt Penguin National Reserve.

However, the regulators rejected the project again, citing environmental concerns for an area home to a unique mix of species, including Humboldt penguins, dolphins, and endangered parrots.

The mines were expected to extract 12 million tons of iron and 150,000 tons of copper annually for 22 years, generating 1,400 jobs in a country that is the world's top copper producer.

In 2017, socialist President Michelle Bachelet's administration first rejected the project, leading to the resignation of two top ministers. In 2019, the Chilean Supreme Court ordered a reevaluation, and under the current government of President Gabriel Boric, the project was rejected again in January 2023.

This latest decision by Chile's Committee of Ministers follows an environmental court's mandate to revisit that ruling.

The project's potential impact on biodiversity influenced their decision. The committee noted a lack of a credible mitigation plan, particularly for the burrowing parrot, whose habitat and food sources were inadequately assessed.

"It was not possible to determine or evaluate the real impact on these species," the committee stated.

As per the Reuters report, Andes Iron criticized the ruling, accusing the government of bias since the nearby Cruz Grande port received environmental approval.

"The action of the Committee of Ministers sets an unfortunate precedent never seen before in the history of Chile in terms of environmental permits," the company said in a statement.

Despite continuously rejecting this prospective project, Chile remains committed to growing its copper output. State-owned miner Codelco recently showed signs of a production turnaround and is raising $1.5 billion in bonds to fund its capital expenditure plans.

After spending between $4 and $5 billion last year, these expenditures could reach nearly $6 billion in 2025, aiming to push the copper output toward the goal of 1.7 million tons per year by the decade's end. The financing deal, sourced by Bank of America, Citigroup, JPMorgan Chase & Co., and Banco Santander, is expected to close by January 13.

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