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Chile court freezes Glencore hydroelectric project

SANTIAGO, Oct 25 (Reuters) - A Chilean appeals court has blocked a recently approved $733 million hydroelectric dam on environmental grounds, a surprise blow to owners Origin Energy and global miner Glencore Xstrata PLC.

Opponents of the 640-megawatt Rio Cuervo project planned in the remote southern Aysen region say it would be built above a geological fault line and could foment quakes in highly-seismic Chile.

The project had received the green light from the SEA environmental regulator just last month.

The fresh freeze on the complex is another blow for energy-strapped miners in copper powerhouse Chile, where unclear rules has allowed environmental and social groups to appeal against projects even after approval, putting in limbo billions of dollars of investment.

Lawyers from the environmental prosecutor's office lodged the appeal, claiming the plant's approval was not legal, and arguing that the project threatens a local river and poses geological risks.

Construction will be blocked until the court rules on the case.

"In Coyhaique the case will be dealt with in about two to three months," a court source told Reuters. "At this point...the case will probably arrive at the Supreme Court next year, if (one or more parties) seek to elevate it."

Australia's Origin Energy, which owns 51 percent of the project, and Glencore, which has a 49 percent stake, run the project through their joint venture Energia Austral.

Energia Austral could not immediately be reached for comment.