What have been the biggest themes influencing Aprimin’s members in 2021 and 2022?

The biggest challenge was operating safely and maintaining operational continuity in a Covid environment. That meant mining professionals worked longer shifts with greater self-protection measures, which resulted in higher costs for the entire industry. Access to sites was more limited, so we had to get used to working remotely by whatever means necessary. However, despite all the challenges, I would say the system worked well. Chile has good connectivity and logistical support, and the high level of vaccination in the country helped things run relatively smoothly.

Logistics was another big challenge, at both a local and international level. Suppliers either had a lot of stock, or supply chain problems caused a lack of materials, from computer chips to screws and nails. Because of these factors, costs have risen significantly. As a country that produces raw materials, Chile does have an advantage compared to many other countries – having a pound of copper above US$4.50 is a tremendous opportunity – but managing inflationary pressure remains a challenge.

The third theme has to do with the environment and our stakeholders. We are advancing towards sustainable mining, while at the same time developing renewable energy, so that our products and inputs have a greener component. During this transition, Chile has undergone significant political changes. We are currently discussing and drafting a new Constitution, but the process has become complex to agree on the new text with high public expectations; The newly elected government, a leftist group outsiders of the coalitions of the last 30 years, has also been moderating its discourse, which gives us hope that we will have an administration that seeks consensus to achieve its objectives.

Which areas of the mining supply business do you see as having strong potential for growth?

Aprimin’s associates cover the entire supply spectrum, from mining equipment to technology companies, or services such as food, transport and energy. I would say that if one looks transversally, we have all faced the challenge of being more efficient, while at the same time being more sustainable. So the larger companies with deeper pockets have been able to advance further from an innovation perspective. One element that has gained significant traction is technology related to connectivity. Remote operations have been introduced to several sites, and this requires a lot of digital infrastructure.

Today, all the elements that operate in a mining operation produce data, and the big question is how to handle, manage, protect, and use that data effectively. The issues of cybersecurity, data protection, data management and analysis are all very big opportunities.

The evolution towards the use of renewable energy is another growth area. One of the elements that has a significant impact on the carbon footprint of mining companies is extraction trucks, and considerable progress is being made in the use of batteries or the introduction of green hydrogen as fuel.

To what extent do you think political changes, such as the proposed royalty bill, could impact Chile’s mining landscape?

Regarding mining royalties, if legislature suggests that companies should pay based on their sales and not based on the operating margin, then we have a problem. A site that has a cut-off grade of 0.3% or 0.4% Cu is not comparable with another that has a 1% cut-off grade. Each operation has its own intrinsic conditions and performance levels. To our surprise, every time we meet with deputies and senators, it is difficult for them to understand the concept of a sales tax vs an operating margin tax. We have to think that we live in a global village, and if Chile has a tax level that does not allow the mining sector to be relatively profitable, we will not receive investment.

In the last 15 years there has been a level of remittances in the order of US$120 billion from mining companies to their subsidiaries as profits, but nobody remembers that in the same period there was also US$120 billion in mining investment. Those investments remain in the mining ecosystem that not only benefit suppliers of all sizes, but also those who live from this chain.

In summary, this form of taxation that has been advanced is not well thought out, but we still do not know what the final bill will look like. Also, many current investments were made with tax invariability, therefore these new taxes are not going to be immediate – some companies have invariability until 2030.

However, we are confident that finally the mining royalty bill, as indicated by the latest debates in the Senate, will establish regulatory conditions that will keep Chile as one of the most competitive mining districts in the world.

What role can innovation play to help Chile maintain production levels?

This year, the Ministry of Mining and Energy delivered the national mining policy for 2050, which has several factors. One of the most important factors in this plan is sustainability, while many operations in Chile have declining ore grades and are struggling with profitability. To tackle both these issues, an opportunity exists to reprocess tailings or ore storage facilities that were once considered uneconomic. Technologies such as bulk-sorting that determines what comes in each truck load or what goes through the conveyor belt are important in this regard.

Water is another key issue when it comes to maintaining production. Antofagasta Minerals declared that this year its productivity will drop because they do not have sufficient water, so they are developing the INCO desalination project which is around 70% complete (as of March 2022). This should be ready in 2023, and is an important step for our industry. This is a clear example of how climate change is affecting operations, and combating this challenge will require large investments. For these investments to be viable, Chilean authorities must establish a framework that ensures long-term returns.

How does APRIMIN see the draft proposal for the new political constitution that is being proposed in Chile, specifically on mining regulations?

The wording and harmonization of the final text of the constitution is still being refined, and must be approved or rejected by the plebiscite on September 4th. However, the nationalization of copper, which was the main threat to the industry, was ruled out by a large majority. The expiration of current mining concessions was also rejected. Although there are other rules that cause concern, such as the absence of a way in which mining concessions will be constituted, which today is very precisely regulated at the Constitutional level. It is proposed that this will be left to the definition of simple majority laws, that uncertainty should only apply to future mining concessions, not for current ones, which must preserve the property right currently held by the mining concessionaires who own them. In addition, these proposals, like all the proposed norms of the new Constitution, will or will not be a reality for Chile according to the result of the plebiscite, in which the current polls give a clear advantage to their rejection.