Chile Copper Mines Dodge Radical Changes as Convention Vote Ends
InvestorSarfari Comments:
Chile’s constitutional assembly has rejected plans to nationalize parts of the mining sector. The proposal from the “progressives” aimed to have exclusive mining rights over rare metals, lithium and a majority stake in ALL copper mines. The mining sector opposed this aggressively, for good reason.
It’s safe to conclude that most governments can’t be counted on for doing anything efficiently. Even less in second and third world countries where corruption is the norm and governments don’t have the same transparency requirements that companies do. State owned companies often operate with limited accountability and oversight.
For the time being this news can be considered a win for resource companies operating in Chile. Other article changes to the country’s constitution will be finalized this summer and voted on by citizens in early September. It will include more stringent requirements to avoid harmful effects to the environment and contingencies to repair any damages done. This is an acceptable compromise in our opinion.
Mining is one of the dominant economic sectors of Chile. It’s expected with today’s greater “green consciousness” that policy decisions surrounding resource extraction will draw conflicting reactions: from political parties, activists, businesses and citizens. Chile is the world’s largest producer of copper and places second for lithium – two critical components in our global move towards a cleaner consumption of energy.
Copper is, and will remain, a key source of clean energy. The reason being that battery production and electrical infrastructure is reliant on this metal, and all indicators point to exponential growth. (For further insight there’s a short TORQ video on copper here).
As with any decision, there’s an opportunity cost. Clearly a balance of long-term consequences needs to be considered here. But it must be done rationally, without radically-charged emotions. Companies are leaning towards efficient and cleaner technologies to minimize damage to the environment. Mining in Chile, with careful regard to the surrounding communities and the environment, IS currently a priority with several companies, including Torq Resources.
As we move towards a “green new world,” more countries will make environmental changes through regulations. $TORQ has been a good leader in this regard, and their current negotiations with communities in Chile reflects their stellar reputation in the area - one of the many reasons they were able to acquire the Santa Cecilia land.
Chile’s Constitutional Convention. (Image by the Constitutional Convention, Facebook).
Major copper producers from BHP Group to Freeport-McMoRan Inc. will likely avoid drastic changes in the way they do business in Chile as writers of a new constitution wrapped up deliberations on mining proposals.
In a vote on the Constitutional Convention floor on Saturday, 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 document that will be put to a referendum on Sept. 4.
While the article had been moderated from previous iterations 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. Chile boasts the biggest deposits of the wiring metal used to electrify economies. To be sure, Saturday’s vote means the draft constitution will lack a dedicated mining statute, leaving legislation more vulnerable to changes in the future.
“On the one hand, it excludes the risks that were initially foreseen, but on the other hand, it leaves everything subject to simple laws and, therefore, to circumstantial political majorities,” said Juan Carlos Guajardo, who heads consulting firm Plusmining. “But without a doubt, compared to how this story began, we are in a much better situation.”
In other measures that may affect resource projects, the draft charter will include an expansion of environmental governance, including a reshaping of water rules to focus on availability and greater protection of supplies on indigenous lands.
In Saturday’s vote, members approved a ban on all mining activity in glaciers, but rejected similar proposals for salt flats, wetlands, permafrost areas and the ocean floor. Chile is the second-largest producer of lithium thanks to mineral-laced brines in its northern desert.
A state guarantee of “equitable and non-discriminatory” access to energy was also approved on Saturday.
The proposals were presented by a committee stacked with young ecological activists and left-wingers, elected in the wake of protests that began in October 2019 over inequality. The full convention floor has a more diverse mix of members.
(By James Attwood)
https://www.mining.com/web/chile-copper-mines-dodge-radical-changes-as-convention-vote-ends/