Another stay for foreign miners in Chile

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by Glenn Dyer

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It is looking increasingly likely that big miners like Rio Tinto, BHP, Southern Copper and South 32 have escaped the worst of the resource nationalism of the new Chilean government and its attempts to rewrite the country’s constitution.

For the second time in two weeks, delegates at a Constitutional Convention had failed to approve changes to the way resources are owned and regulated.

Debates on the new constitution and how it applies to resources such as the huge copper mining industry, have been going on since February.

Slowly in the past month the proposed changes have taken shape and been submitted to a convention for discussion, change and then ratification with the 103-vote supermajority need to make significant changes to the way mining is treated.

That has seen some of the changes approved, but not by the supermajority of two thirds which meant they failed.

The proposal, known as Article 27, would have given the state exclusive mining rights over lithium, rare metals and hydrocarbons and a majority stake in copper mines.

The proposed changes now go to a referendum on September 4.

Saturday’s vote in the Constitutional Convention saw a plan to replace the nation’s investor-friendly concession model with a system of temporary and revocable permits fell short of the two-thirds threshold needed to be included in a a proposed change that will be put to the referendum.

Even though the proposed change had been watered down from previous versions that required the state to have majority ownership of projects, the mining industry warned it still failed to deliver the legal certainties needed for investments that are crucial for supplying the clean-energy transition.

While the failure of the change to the concession system is a win, Saturday’s vote means the draft constitution will lack a dedicated mining statute, leaving legislation more vulnerable to changes in the future from a country not to wedded to the old “develop at whatever cost” attitudes.

A separate proposed clause – Article 25, which states that miners must set aside “resources to repair damage” to the environment and harmful effects where mining takes place – did get a supermajority and will be in the draft constitution.

The convention also approved banning mining in glaciers, protected areas and regions essential to protecting the water system.

Articles guaranteeing farmers and Indigenous people the right to traditional seeds, the right to safe and accessible energy and protection of oceans and the atmosphere were also approved.

New commissions in charge of fine-tuning the text took over from yesterday (Monday).

The final draft is due in early July and citizens will vote to approve or reject it on September 4.

Mining industry executives have indicated in the past that they can live with these changes – indeed many face similar legislative calls elsewhere, such as in Australia.

While Saturday saw the convention approve a ban on all mining activity in glaciers, it rejected similar proposals for salt flats, wetlands.

Chile is the world’s second-largest producer of lithium thanks to huge brine flats in its northern desert which join with similar deposits in northern Argentina.

A state guarantee of “equitable and non-discriminatory” access to energy was also approved on Saturday.

Chile is the world’s biggest copper producer and the state-owned Codelco is the largest producer in the country (while BHP and Rio Tinto control the world’s largest mine at Escondida).

The big problem for Chile and its government is that Codelco’s ageing mines, smelter and refineries need billions of dollars of new investment to bring them up to date, to lower carbon emissions and produce more metal more efficiently at the lower costs they are capable of achieving.


Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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