Industry Trend Analysis - Progress Underlines Tunnel Opportunities - OCT 2017

BMI View: Boosted by progress on the binational Las Lenas and Agua Negra tunnel projects, Chile and Argentina will present substantial opportunities for international firms specialised in tunnel construction over the coming years.

Growing momentum behind the Agua Negra and Las Lenas tunnel projects linking Chile and Argentina bolsters our long-held view that the binational tunnel projects will likely move forward in the coming years given political support, expanding bilateral cooperation between the two countries and support from multilateral institutions ( see ' Cross-Border Tunnels Set To Move Forward' , 15 December). In turn, the rising likelihood that the two projects move forward is reflective of the opportunities the two countries will present for international firms specialised in tunnel construction.

On September 13, it was confirmed that the government of Chile's O'Higgins region would pay for the first studies needed for the Las Lenas tunnel project which will see the construction of a 13km road tunnel and 73km of roadway (13km on the Chilean side and 60km on the Argentine side) linking the region with the province of Mendoza in Argentina. This step, which increases the probability that the USD1.5bn project moves forward, is the latest in several signs of momentum for binational tunnel projects in Chile and Argentina. Earlier in 2017, the governments of Argentina and Chile launched the tender for the 1.5bn Agua Negra Tunnel project, receiving a strong response with a number of international firms applying for prequalification ( see 'Tunnel Project To Benefit From International Interest', 05 June). Also, the Agua Negra project, which will involve the construction of two parallel 14km tunnels connecting the Argentine province of San Juan with the Chilean region of Coquimbo, has received increasing support from the Inter-American Development Bank with recent reports suggesting that the bank could finance the entire project.

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