Sonami reports hindrances to enter power generation business
06-Nov-2012 Diario Financiero – News
National Mining Society of Chile (SONAMI) forecasts mining industry outlook for 2013
Sonami reports hindrances to enter power generation business
Alberto Salas is not absolutely convinced of the Chinese deceleration and relies on a satisfactory 2013
Alberto Salas, President of SONAMI, said to Diario Financiero he was concerned about energy issues and also, with a hopeful feeling, he expressed “shale gas is a great opportunity”. However, he warned, “shale gas must be negotiated in large amounts and at long terms if not, it will reach a price similar to LNG”.
When referring to the core of energy issue, Salas said, “we lack competitiveness in electric power industry”, and then he explained, “we have four main actors in power generation area versus about 450 generators in Germany or 160 in Italy, That is what I call competitiveness!”. Salas also said that responsibility for this lack of competitiveness is beyond the reach of generation companies, he considers this is a problem arising from regulating entities. “Hindrances to enter are hard to leap over and they must be analyzed at the light of competitiveness”, he pondered. SONAMI’s President referred to nuclear energy as an alternative, “nuclear energy emits zero CO2, it is the cleanest of all”.
Projections for 2013
Salas defines himself as “moderately optimistic” regarding dynamism and macroeconomic indexes for copper mining industry in 2013. “A 6% growth is expected for mining industry and 4.5% for country growth. We expect to reach 5,800,000 tons while this year we will be attaining 5,450,000”. The head of the mining association added that they will be contributing with exports in the amount of “US$55,000 versus US$50,000 we had forecasted for this year. Besides, we expect copper price to be in the range of US$3.6-3.8 per pound”.
Salas said that now in mining “everything hinges on China. If it continues growing – even at lower rates – then we will still have business to trade for a long time”. The SONAMI’s President explained that this is due to the fact that the Asian country growth basis is much higher today than before, consequently much more copper is required now than ten years ago when the country was growing at two-digit rates. “I do not see China slowing down in 2013, quite to the contrary, I see it in a steadily growing condition”.
More exacting demands
Salas admitted that current investment projects have “more variables to analyze which need response and to be taken into consideration”. Likewise, he also asserted “the European crisis also has an impact over markets and cash-flow which means investments will not be always available like it was two or three years go”. He also added that when a crisis exists “investor shortens terms and that is exactly the point where mining industry that is mainly a long-term activity may become particularly affected”.
