In Mining, Mining Coffee Chats

On Tuesday, April 13, AMI’s Mining Coffee Chat addressed the mining investment climate in Chile ahead of a very busy and historic electoral year. In May, Chileans will elect the constitutional assembly that will attempt to rewrite the country’s constitution. In October, the first round of voting will to elect occur the next president, as well as half the Senate and the full Chamber of Deputies. Both turns at the polls could materially impact the mining industry. Mining regulations facing fierce public scrutiny at present include royalties, water rights, and proximity to glaciers. In coffee chat, two experts, Rony Zimerman of Lembeye Abogados and Norman Gridley of Satarla Risk Consulting joined our Mining Practice Director, John Price, in a fascinating discussion of Chile’s mining sector on the eve of a challenging electoral calendar.

Among the key highlights of the Chat:

  • Mining accounts for ~10% of GDP, ~3% direct employment, and ~10% indirect employment in Chile.
  • A key concern is climate change and water availability. Projects near the ocean, if not all projects, will likely be expected to use ocean water.
  • Projects in Chile are experiencing dropping yields, higher compliance costs, higher water costs, and longer licensing process, which favors larger mining companies.
  • The new constitution is bound to give a stronger voice to indigenous communities, who were not specifically addressed in the current constitution.
  • Chile has a stronger community awareness of the power of mobilization. When income disparity grows over a period of time, people question status quo of pro-busines politics and gravitate towards populist politics. The pandemic worsened income distribution across the region, even in Chile. Currently, some of the leading candidates are populist by nature.
  • Mining is directly addressed in — and thus regulated by — the Constitution. Chile’s greatest asset has been its political stability and structure, allowing it to become a leader in copper mining. Major changes are unlikely, requiring a two-thirds majority in Congress.

In addition to these main points, the Chat also focused on questions from the audience. Click below to see the full Mining Coffee Chat, including detailed, insightful answers from the panel to audience questions.

Mining Coffee Chats are monthly meetings in which AMI explores important topics affecting the mining industry. The Chats are held via Zoom during the first Tuesday of every month at 11 a.m. ET (New York) time, usually featuring expert speakers and always allowing for attendees to obtain answers to the challenges that face them during COVID-19 and beyond.

If you have not already registered for Mining Coffee Chats, please click here to do so.

To find out more about AMI’s consulting work in the area of risk management for mining in different areas, please explore our webinar on rebuilding sustainable operations post COVID-19, case studies, our whitepaper on 7 key risks, and our analysis articles, which cover topics such as industry outlooks, political risk, operational risk, reputational risk and more.

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