UPDATE 2-Chile rejects HidroAysen, hydro power project can appeal
* Businesses, miners lament government decision amid power woes
* Legal appeal on the cards for hydropower project
* Environmentalists cheer, Bachelet likely to benefit (Adds context on energy in Chile, details on project, politics)
By Felipe Iturrieta and Alexandra Ulmer
SANTIAGO, June 10 (Reuters) - A special Chilean ministerial committee on Tuesday canceled the massive HidroAysen hydro-power project's permit, after environmentalists protested it would wreck pristine valleys in Chile's wild south.
While the decision is a big blow to the controversial project, it is not deadly. HidroAysen can still tweak the project or take its case to courts, suggesting more bitter legal wrangling over the fate of the 2,750 megawatt project may still be ahead.
Still, the $8 billion-plus project faces a steep uphill battle if it decides to fight on in court.
"Although the project isn't formally dead the litigation strategy has become a lot harder for the company now," said Luis Cordero, law professor at the Universidad de Chile, who estimated a fresh legal battle would yield a final decision in about a year.
The HidroAysen joint venture, made up of leading generators Endesa Chile and partner Colbun, was not immediately available for comment. Continuación...