Chile's Hy-Powered Future
Chile's Atacama Desert, known for its extreme landscape and copper mining, is becoming a key location for green hydrogen production. The region’s high solar radiation provides an ideal resource for this clean fuel, which is made by using renewable energy to split water. This development could help Chile reduce its dependence on fossil fuel imports and create a new economic sector.
One significant development is the technology used to address the region's dryness. While most green hydrogen projects use water-intensive electrolysis, some pilot projects are exploring different methods. For instance, the H2Atacama facility is testing a process that uses thermocatalytic solar reactors to extract atmospheric moisture and convert it into green hydrogen. This approach could reduce the need for large external water supplies or energy intensive desalination, which would be a practical advantage in an arid environment like the Atacama.
The economic potential of this industry is considerable. Government projections suggest that green hydrogen exports could reach a value of $30 billion by 2050, potentially becoming a major contributor to the national economy alongside the existing mining sector. Chile’s National Green Hydrogen Strategy aims to establish the country as a competitive producer and a top exporter within the next two decades. This vision is drawing international investment, with multiple projects already underway.
The growth of this sector will have broader benefits. It could create new jobs in technology and engineering, helping to diversify the economy. The use of green hydrogen in domestic industries, particularly in mining, could also contribute to lowering carbon emissions. By using hydrogen to power heavy equipment and processes, Chile will make its copper and other exports more sustainable. This is a critical step for a country that is a major global copper producer, and it is a direction the industry is already embracing.
The state-owned copper giant Codelco is a prime example of this transition. The company is not just a major player in Chile's economy, but a key driver of its green mining initiatives. Codelco has committed to a plan to become carbon-neutral by 2050 and is actively investing in new technologies to meet these goals. For instance, it has commissioned a prototype of a hydrogen-fuelled mining vehicle, a first for Chile, that operates with zero emissions and only emits water vapor. Codelco is also transitioning to a 100% clean energy matrix to power its operations, with an ambitious goal to reduce its overall carbon emissions by 70% by 2030.
These efforts to decarbonise and innovate make Codelco a strong candidate for investment. The company's strategic importance to the government, coupled with its strong market position and extensive mineral reserves, offers an attractive profile for investors. This is why Codelco is a long-standing name across the EPIC Fixed Income product range, with the longer-end bonds offering attractive risk-adjusted value and credit notch cushion. Moreover, a commitment to sustainability not only supports Chile’s national goals but also reinforces its long-term financial viability.
If you would like to receive The Daily Update to your inbox, please email markets@epicip.com or click the link below.