Expert Insights:
Chile’s Evolving Sociopolitical Landscape
A new government has been elected, a new constitution is being formed, and ESG scrutiny has increased
“While the social agenda that animated Boric’s campaign may entail changes, the economic realities will ultimately sustain the close working relationship between the government and the private sector. The President understands the imperative necessity to continue to attract foreign investment and the indispensability of mining operations to the lifeblood of the Chilean economy. Moreover, there is a growing cognizance of the private sector’s role, from generating tax royalties to funding local community programs, to effectuating any reformist policy.”
Cristóbal García-Huidobro, CEO & Managing Director, Lithium Power International
“During the election campaign there was a perception, which was encouraged by Boric’s opposition, that his coming to power would be a Chávez type moment for Chile. That was erroneous for a number of reasons, including the strength of Chile’s institutions and the fact that the rhetoric used to energize Boric’s left-wing base is very different to the reality of governing a country. The government’s ministerial appointments, most notably finance minister Mario Marcel who very successfully ran the Chilean central bank from a fiscal management point of view, went a long way to alleviate market fears.”
Michael Cullen, Managing Director – Latin America, FTI Consulting
“ESG is currently the biggest theme influencing the industry. This was demonstrated at CESCO week 2022, where 90% of the talks were related to ESG, with companies presenting plans on how to comply with zero carbon emissions as quickly as possible. Aligned with this, there has been great investment in environmentally friendly technologies and desalination facilities to mitigate challenges brought on by the drought in Chile, which has become structural. Successful management of community relations remains key to execute projects. Cost control is always a priority for mining companies to remain competitive at the low part of the cycle, given depletion of ore grades, financial requirements from stringent environmental standards, supply chain disruptions and inflation. Finally, uncertainties remain around constitutional reform that may negatively affect new investments, although the final constitution draft looks reasonable without proposing material changes to the industry.”
Alejandra Fernández Campbell, Director of Mining, Fitch Ratings
“Until this current constitutional process, Chile's legal framework has faced very few changes in the past 40 years. What has changed is environmental legislation – the threshold is significantly stricter today. Communities have become much more involved, and their perception and reception of mining projects has changed a lot. Authorities, NGOs and communities are much more critical and are constantly monitoring projects and the behavior of mining companies and contractors. Mining has a reputation of being the ‘big bad wolf’ and therefore building confidence today is more complex. The care and respect of the environment as well as the development of close and trusting relationships with stakeholders have become fundamental for mining projects.”
María Paz Pulgar, Counsel – Natural Resources, Philippi Prietocarrizosa Ferrero DU & Uría (PPU Legal)
“There was a period in which all the universities and schools of mining and metallurgy were full. Today, that is not the case, and the challenge is to get young people interested in studying careers in mining. Chilean society thinks that mining is a predator of nature; that companies are stealing, because that is the message that reaches them. Because of this stigma, mining ends up hiring a lot of foreigners. To attract young people we must improve the different curricula with state-of-the-art technologies and create research centers so that professionals also have a niche in which to investigate.”
Manuel Viera, Former-President (until June 2022), Chilean Mining Chamber (Cámara Minera de Chile)
