The Rucalhue power plant is being built by Rucalhue Energia Spa, a unit of China International Water and Electric Corporation (CWE), and is projected to cost $350 million.

It is being built along the Biobio, one of Chile's main rivers, and is opposed by Indigenous people who say it will harm the environment.

Security guards at the job site said assailants with guns showed up and threatened them. They then "proceeded to burn all the equipment there was at the site," said police chief Renzo Miccono.

The attackers burned 45 trucks and five pieces of earth-moving equipment, he said. Two security guards were wounded in the attack on the site, which is 550 km (340 miles) south of Santiago.

Security Minister Luis Cordero told local media that given where and how the attack was carried out it was "of a terrorist nature."

Rucalhue Energia Spa said the cost of the damage was being evaluated.