Copper Exploration
Reforms and collaborations set the course for the industry's future
With an exploration budget of US$832 million, Chile ranks fourth globally, trailing only behind the US, Canada and Australia. There are 226 exploration projects in Chile, and 53.1% of them are copper- focused, according to the Chilean Copper Commission (Cochilco). Addressing the copper shortage will require bringing new projects online, and exploration is a key part of this. Glencore Chile’s general manager Andrés Souper said: “I believe that there is a need to intensify exploration efforts to discover new reserves, which requires investing in advanced technologies and more efficient exploration methods.”
The burden of exploration has been placed on junior players, like Filo Corporation, said Jamie Beck, Filo’s CEO: “Major mining companies have reduced their exploration spend, leaving room for juniors to fill this void.”
A geological jackpot
Fortunately, before Chile was a country, it was a mining territory. Chile's copper deposits are primarily due to its position along the Pacific Ring of Fire, where the Nazca Plate subducts beneath the South American Plate. This subduction produced significant volcanic and magmatic activity, leading to the formation of large-scale porphyry copper systems and iron oxide copper gold (IOCG) deposits. Globally, only four major IOCG belts exist: the Central Andean IOCG belt in Chile, the Olympic Dam region in South Australia, the Carajás Mineral Province in Brazil, and the Bergslagen district in Sweden. “These deposits offer highly mineralized, steeply dipping deep rooted vein structures with mineable widths, providing favorable conditions for mining operations,” explained Alastair Mcintyre, CEO and president of Altiplano Metals.
The Andes' rapid uplift exposed deep-seated deposits near the surface, which makes mining operations more technically feasible and economically efficient compared to other countries. “In Australia companies will explore for IOCG deposits below up to 1,000 m of cover,” said Paul Gow, CEO of Tribeca Resources. “For projects like Tribeca’s La Higuera in the Coquimbo region of Northern Chile, the cover is typically much shallower, around 50-80 m of gravel,” he continued.
Porphyry deposits are associated with extensive hydrothermal systems that alter the surrounding rock and concentrate minerals into economically viable ore bodies. The porphyry systems in Chile often contain sulfide minerals, including chalcopyrite and bornite. Such processes dominated the formation of ATEX’s Valeriano deposit, explained Ben Pullinger, president and CEO: “We have granodioritic intrusions into a flat-lying Permian rhyolite volcanic sequence, resulting in chalcopyrite-dominated mineralization with bornite. The equigranular chalcopyrite is visually fine-grained but medium grade metallurgically. We simply grind the rock and float it to achieve high recoveries. Granodiorite intrusions dominate and mineralize the surrounding wall rock. A surprise was the late-stage epithermal system overprinting the porphyry, giving us 2% grades.”
Some projects marry different aspects of Chile unique geology. “Filo Del Sol features a unique oxide cap atop the deposit, which presents a distinct style of mineralization,” started Beck. “However, subsequent drilling revealed a larger sulphide deposit beneath the oxides. This exploration success has positioned Filo Del Sol as one of the world's largest undeveloped copper projects,” he continued.
Despite the geology, exploration is not happening quickly enough. Shawn Wallace, CEO and chairman at Torq Resources emphasized: “The key metric to monitor is whether we are finding enough to replace what we are mining, and currently, that balance seems precarious.”
New permitting to permit optimism
Global lead times from discovery to production continue to breach all-time highs. According to S&P Global, for the 127 new mines that began operations worldwide from 2002 to 2023, the average time from discovery to commercial production was 15.7 years. For copper mining, exploration averages two to eight years, according to the University of Arizona. Cristóbal Undurraga, CEO of Ceibo, explained: “Heightened regulatory awareness adds complexity to mining operations, extending project commissioning times from six years in the 1950s to around 15 years today—a consistent timeline worldwide.”
However, Chile is making strides at addressing this delay. After the royalty bill was passed, a working group under the Ministry of Finance involving the Ministries of Economy, Mining, and Environment, and representatives from Geomin, Sonami, APRIMIN, and Consejo Minero, produced two 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," explained Joaquín Villarino, executive president at Consejo Minero.
At the inauguration ceremony for Quebrada Blanca II, President Gabriel Boric committed to reducing lead times by 30%. This action will not only benefit the sector, but also the state. “If the approval period is reduced by a third, for every US$1 billion that is invested, the state collects US$240 million,” said Villarino.
Many juniors view Boric’s approach to mining favorably. “President Boric's statements at the CESCO dinner underscore his support for the mining industry and its importance to Chile's economic well-being. While some permitting processes have faced delays, particularly in initial stages, Chile's overall permitting environment remains robust. Numerous projects, including large-scale ones, have obtained permits or environmental approvals in under 12 months,” said Hayden Locke, president and CEO of Marimaca Copper.
“Having worked in over 50 countries on five continents, I can confidently say that Chile stands out as a premier destination for mining investment. Chile boasts a conducive operating environment characterized by robust mining laws, minimal corruption and stable governance which is a stark contrast to some jurisdictions.”
Antony Harwood, President and CEO, Montero Mining
Reforms ignite exploration
Starting January 1st, 2024, amendments to Law No. 21,420, refined by Law No. 21,649, came into effect, introducing the first modifications to Chile's mining regulatory framework since 1983. These changes alter the concession system, aiming to enhance mining activity and decrease concession hoarding. Of the current 90,000 concessions that cover 16 million ha of Chile, 40% are held by 10 companies. Of these concessions, only 10% are active. Wallace explained the implications: “Larger companies can secure extensive land holdings and maintain them with minimal activity, which may hinder opportunities for greenfield exploration. Implementing stricter regulations on mineral tenure could stimulate the exploration landscape by compelling companies to actively explore or relinquish their claims.”
Law 21,420 increases patent fees for exploration concessions from 1/50 to 3/50 Monthly Tax Units (UTM) per hectare for both metallic and non-metallic mining fees. For exploitation concessions, the mining fees will increase progressively from 4/10 UTM per hectare for the first five years, up to 12 UTM per hectare from the 31st year onwards. Concessions can qualify for reduced rates (1/10 UTM) by demonstrating initiation of mining operations, obtaining an Environmental Qualification Resolution (RCA), or processing within the SEIA system. “By raising fees, the government aims to deter companies from holding onto licenses without substantial progress or investment. This measure encourages companies to either commit more earnestly to exploration efforts or relinquish licenses, thereby creating opportunities for other groups to engage in exploration and mining activities,” explained Antony Harwood, CEO and president at Montero Mining.
Law 21,420 also increases exploration concessions from two years to four years. However, once the concession term has expired, the concession will be extinguished, unless an extension is requested and supported by a report of the geological information obtained from exploration work or proof of an Environmental Qualification Resolution or ongoing Environmental Impact Assessment to the National Geology and Mining Service.
“We will conduct further exploration at Fortuna, focusing on geochemistry, geophysics, mapping and sampling to understand the structures and source of mineralization. Our goal is to make another significant discovery at Fortuna, leveraging its potential as a large mineralized system.”
Geoff McNamara, Co-Founder, Culpeo Minerals
We are all in this together
Collaboration has surfaced in the copper exploration sector to overcome some of the industry’s challenges. One such collaborative move is taking place in Chile’s Huasco valley. Hot Chili is the only company in the Atacama region holding most necessary permits and licenses to provide itself with a desalinated water supply. The company chose to create a large-scale, multi-user desalinated water network serving the entire Huasco Valley. José Ignacio Silva, executive vice president at the firm, elaborated: “Hot Chili is launching a new water company to tackle water scarcity in the Atacama region. Leveraging an eight-year water concession, we will supply desalinated water to mining firms and communities, aiming to foster collaboration, lessen environmental impact, and cut costs.”
Other players in the Huasco Valley, like ATEX Resources, believe actions such as these will position the district at the top of the global scale. “Hot Chili’s desalinization project reduces capital requirements for NuevaUnion (Teck-Newmont), El Encierro (Barrick-AMSA), and ATEX by at least US$1 billion. With 10 more years of exploration, this area has the potential to become one of the largest copper producing districts in the world. Fast-tracking of new discoveries due to enhanced infrastructure will be a game changer for copper supply in Chile, with significant international benefits,” said Pullinger.
“Synergies with other developing deposits in the region are vital, as significant infrastructure will be needed. Along with Vicuña, El Encierro, Fortuna and Costa del Fuego, we have the chance to develop a major mining hub in north-central Chile,” Craig Nelsen, chairman at ATEX Resources, chimed in.
Chile's extensive exploration efforts and regulatory reforms signal a commitment to addressing the copper supply challenge and maintaining its leadership in the global copper market.
Article header image courtesy of Marimaca Copper