What recent developments in the Chilean mining sphere should investors be aware of?

2023 was a year of good news for the Chilean mining sector. The constitutional discussion was resolved, eliminating the prolonged uncertainty that had disrupted investment decisions. The passage of the royalty bill, previously a major source of uncertainty, has now made long-term investments more feasible. Finally, under the Ministry of Finance, a working group, collaborated to establish a roadmap to address inefficiencies in the permit system.

Today, Chile’s mining environment is much more positive than in 2021 and 2022. This has led to declarations from large mining companies; AMSA invested US$4 billion in a new concentrator at Centinela; there are expansion plans at Collahuasi; operations began at Quebrada Blanca II; Los Bronces expansion; Anglo-American’s project obtained its environmental approval resolution; and Codelco is also investing. For the next two years, there is an investment portfolio of approximately US$18 billion. In the long term, that portfolio increases to US$66 billion.

All of this contributes to a much more positive environment for investment nowadays. What efforts are being made to streamline the permitting process in Chile?

Upon approval of the new royalty, the government formed a working group under the Ministry of Finance, involving the Ministries of Economy, Mining, and Environment, with representatives from Sernageomin, Sonami, APRIMIN, and Consejo Minero. After six months of collaboration, the group produced two crucial documents: a baseline analysis identifying the permits with the longest processing times and the areas with delays in project permit acquisition, and a roadmap developed by the Ministry of Finance to address these inefficiencies and bottlenecks. What plans must the country finalize to spur investment in the lithium space?

The country is making decisions that abandon the idea that only the state will exploit lithium reserves. The Ministry of Mining has issued a call for short-term investment proposals and identified the strategic and protected lithium-bearing salt flats. Now that the government has defined the rules of the game and eliminated the elements of uncertainty, investors are starting to make decisions.

The government defined the 26 salt flats, but they have not defined the formula for incorporating private companies, the timeline for when they will grant the contracts, or how they will incorporate the private sector with ENAMI and Codelco. We know the two companies that will be involved, but not the measures the government is undertaking to grant Special Operation Contracts for Lithium (SEOLs). The industry needs a greater level of definition from the state, but lithium is acquiring velocity. What role does Chilean mining play in addressing climate change?

Just as the country committed to achieving carbon neutrality by 2050, many mining companies have committed to reaching this by 2040. The greatest promoter of clean energy in the country is the mining industry, consuming one-third of the electrical energy. The wind and solar parks in northern Chile were financed by the mining sector. Today, renewable energies represent 68% of the supply for large-scale mining operations. By the end of the decade, this percentage will be around 80%. Mining also promotes the construction of desalinization plants. By the end of the decade, nearly 50% of water consumption in the mining industry in Chile will be seawater.

Climate change not only requires the mining industry to reduce its effects on the planet but also to adapt to the effects of a changing climate. Chile has felt the effects of climate change for years and has started to adapt. Tailings tanks, for example, have been engineered to withstand intense rainfall. Visible change obliges the industry to rethink its infrastructure. How can the industry address the problem of the skilled labor shortage?

I would like to share two significant advancements on this topic. In March 2024, the total participation of women in mining companies reached 20.9%. Additionally, 1 out of every 2 individuals hired by mining companies in the last 12 months were women. This is a sector-wide commitment that has seen significant progress in recent years. Do you have a final message?

Chile is a country with a long mining tradition. Most of the uncertainties in the sector have been resolved. There is human capital to make mining possible, and stable institutions and transparency to give foreign investors peace of mind.