Chile Rejects $2.5 Billion Mine Project on Environmental Risks in Snub to Business

A victory for President Gabriel Boric’s green agenda has business groups fuming

(Bloomberg) — Chile’s government rejected a $2.5 billion iron-ore project near a nature reserve in the north of the country on concern it would endanger local species, a victory for President Gabriel Boric’s green agenda that has business groups fuming. 

A committee of government ministers on Wednesday voted unanimously against Andes Iron’s Dominga project, Environment Minister Maisa Rojas told a press conference, citing the “unique ecological value” of the area. Andes Iron, owned by the local Delano and Garces families, said it would appeal the decision in environmental tribunals. 

The Dominga project is a flash-point between business interests in Chile — a global investor darling and mining powerhouse — and activists that warn it would wreak havoc on the local environment. By halting the controversial project after a decade of legal wrangling, Boric’s left-wing government risks endangering the business climate in Chile’s main industry at a time the economy is expected to fall into recession this year.

“The Domingo project not only fulfills, but exceeds all standards, and is in line with the principles established by the government for sustainable development,” Andes Iron said in a press release. “We are confident that at the end of the process, truth and justice will prevail.”

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Wednesday’s decision was expected after Boric, who run on a green agenda, repeatedly slammed the initiative on the campaign trail in 2021, warning that it would destroy one of Latin America’s most important marine ecosystems. Still, the ruling irritated Chile’s business groups, which argue the decision was driven by politics more than technical reasons.

“It’s bad news,” said Ricardo Mewes, head of the CPC, one of the country’s main business organizations, in comments on Twitter. “The Committee of Ministers turned its back to the technical evidence.” 

The project aimed to produce 12 million tons of iron concentrate and 150,000 of copper concentrate. It envisaged the generation of 10,000 jobs during construction and 1,500 once up and running. Chile is the world’s largest copper producer.

Dominga first requested environmental approval more than a decade ago. The project hit the popularity of former President Sebastian Pinera after it was revealed he once held an indirect stake in the venture. 

In 2017, a ministerial committee under former President Michelle Bachelet blocked the project, citing insufficient environmental protection. After that vote, Bachelet’s Finance Minister Rodrigo Valdes and Economy Minister Luis Felipe Cespedes both resigned.

That move was later overturned by a local court, arguing that it didn’t follow legal process. Last year, the Supreme Court declined to rule on the matter and ordered the committee of ministers to make a second vote.

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(Updates with quote from business chamber VP on 5th paragraph.)

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