Chilean energy companies Copec, E-CL join for biodiesel venture

Two of the most important players in Chile's fuel and energy market, fuel and forestry conglomerate Empresas Copec SA (COPEC.SN) and power generator E-CL SA (ECL.SN), will team up to create biofuels from micro-algae.

The government wants 20% of Chile's power coming from non-conventional energy sources such as geothermal, solar, wind energy and biofuels, by 2020. The Andean nation needs to incorporate more than 10,000 megawatts of new capacity over the next 10 years to keep up with demand.

The joint-venture project, which includes the construction of a pilot plant in Chile's northern Atacama desert and an investment of 6.84 billion Chilean pesos ($14.3 million), aims to produce second generation biodiesel over the next five years.

Chile's government will provide technical support and financing for the project.

"In Chile we have comparative advantages for the production of biofuels using algae," said Jimena Bronfman, undersecretary to the energy ministry.

Copec and E-CL are developing the project through a consortium called Algae Fuels SA.

"Algae Fuels' partners expect to help develop the nation's biotechnology industry, produce biofuel in a sustainable manner and to eventually export this pioneer technology to other countries with similar characteristics to our Atacama desert," the companies said in a joint statement.

At the end of 2009, the SIC power grid, which is the nation's largest and runs from the northern city of Tal Tal to the southern island of Chiloe, supplied energy to more than 90% of the nation's population and had 11,147 megawatts of installed capacity. The second-largest grid, the SING, totaled 3,572 megawatts of installed capacity and covered the far northern reaches of Chile, home to the bulk of the country's mining industry.

Chile produces nearly a third of the globe's copper.

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