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Eike Batista, the Brazilian billionaire, has suffered another blow after the $5bn power plant he was planning to build in Chile with Germany’s Eon was blocked by the country’s supreme court for environmental reasons.
The 2,100 megawatt thermoelectric plant project was promoted as a needed boost for Chile’s copper industry, which has been hampered by soaring energy costs and power cuts since a devastating earthquake struck the country in February 2010.
The joint venture with Eon, Germany’s largest utility company, was also set to help restore confidence in Mr Batista after disappointing production figures at his oil start-up OGX in June prompted a 40 per cent share price fall in two days.
However, Chile’s highest court rejected the companies’ plan for the so-called Castilla plant in the northern Atacama Desert late on Tuesday, saying it could “harm the constitutional guarantee that one can live in an environment free of pollution”.
The court said the companies had only provided information about the two separate parts of the project – the power plant and a new nearby port – and had given little assessment of the environmental impact of other factors such as fuel transportation.
Environmental and indigenous groups have recently put pressure on the authorities to block a growing number of vast mining projects in Chile, the world’s top producer of copper, as miners rush to the region to meet rising demand from China.
Only three months ago Chile’s supreme court blocked the construction of a hydropower plant planned by Xstrata and Australia’s Origin Energy as part of a $3.6bn mining project in the country’s Patagonia region.
The court on Tuesday said Eon and MPX, Mr Batista’s power company, could still resubmit a more comprehensive study, assessing the environmental impact of the project as a whole.
However, MPX gave little indication of its next steps, saying in a note that it would “revaluate its business plan” in the country in light of the decision, without giving further details.
When previously asked about the possibility of the authorities blocking the Castilla plant, Mr Batista told the Chilean magazine Qué Pasa in 2010: “It would be a really bad sign for foreign investors.”
Mr Batista, who ranked as Brazil’s richest man until a few months ago, said the cancellation of the project would also worsen Chile’s electricity shortages.
“If the authorities decide we shouldn’t develop this project, I would advise every woman to stop drying their hair, to stop using their cell phones … [This project] is important for the Chilean people,” he said.