Chile Mining Industry: Birds Eye View
Mining is a key driver of the Chilean economy and its contribution to GDP reached 9.9% in 2019.
Mining has been the only industry to post numbers during the pandemic. Chile’s GDP contracted 14.1% year-on-year in the second quarter, reflecting the impact of sanitary measures implemented to combat the spread of the coronavirus. In the most recent economic reports for Q2, mining grew 1.6%, down from 5.3% in Q1, as non-mining fell 15.7%.
The industry has a long and positive future but its importance to the Chilean economy is more important than ever.
According to information provided by Cochilco, investment in the industry reached US$10.1bn, the most since 2015 when the amount was US$10.2bn. In 2019, private large-scale mining investments in copper and gold reached US$5.93bn, while public investment by state copper miner Codelco and state minerals company Enami totaled US$4.15bn.
As a consequence of the pandemic, authorities and industry representatives have said 2020 will see a slowdown in investment. Since then though, copper prices have improved greatly over the last 30 days and the country has a significant project pipeline.
The Chilean government recently announced a US$34bn economic recovery plan in which 16 mining projects that are under construction or in late-stage preparations have been included
These 16 projects will contribute US$9bn to the economy in investments and will lead to the creation of 15,000 jobs over the next two years, according to recent comments made by mining minister Baldo Prokurica.
Adding these projects to the recovery plan means that the the government will provide support to help them advance, although authorities have not yet specified the plans for each project. However, they will boost job creation by generating partnerships between mining companies and local providers during construction works.
Meanwhile, the mining and finance ministry are working on a joint plan to speed up projects waiting for environmental approvals.
The number of workers in the mining industry rose in 2010-14 from 191,043 to 249,815, and then dropped by 2017 to 217,404.
During the last two years, the number of workers increased to 228,340 in 2018 and to 248,803 last year, according to Cochilco. The number of women employed in the industry has been increasing since 2010 and reached 8.62% of the total in 2019 at 21,455.
According to the copper commission, private and publicly owned mining companies contributed US$60.5bn to the treasury in 2019. Since 2010, the largest amount was in 2018 at US$65.6bn, when the country reported its highest ever copper production of 5.83Mt. Chile is the world’s largest copper producer but according to Cochilco, the pandemic could lead to a 200,000t drop in output this year from the originally forecast 5.72Mt.
New projects and expansions will be key to maintaining and growing these numbers.
Water and Energy
Chile’s drought and water scarcity has forced miners to find other sources to feed their operations and seawater is key.
According to Cochilco, the use of seawater in the copper industry increased rapidly in 2009-18 from 316l/s to 3,993l/s. Earlier this year, the agency predicted that Chilean mines would consume 156% more seawater by 2030. However, current delays in desalination projects due to the panedemic will lower the forecast for 2022-25.
Regarding energy consumption in copper operations, fuel and electricity use has been increasing since 2009. In 2018, fuel consumption reached 82,594TJ, which is equivalent to 22.9GWh. The figure for electricity was 94,153TJ, or 26.2GWh.
It has been reported that there are over 1,500 haul trucks operating in Chile and count among the biggest fossil fuel consumers in the industry. Every day, each truck needs around 3,500l of diesel, consuming the energy 700kg of hydrogen could provide.
Green hydrogen has a 70% chance of replacing fossil fuels in Chile’s mining industry, although costs, operational reliability, and demand are challenges that need to be overcome.
Government promotion agency Corfo is supporting three hydrogen-related projects involving transformation of diesel trucks, the use of hydrogen cells in underground mines, and the design and construction of a hybrid engine prototype with hydrogen-based batteries and cells to be used also in mining trucks.
In 2014-19, Chilean production of lithium carbonate, lithium chloride and lithium hydroxide increased to 112,607t from 56,375t, led by lithium carbonate.
SQM plans to expand its 70,000t lithium carbonate capacity to 120,000t next year and to 160,000t by 2023. The miner also aims to raise its lithium hydroxide production capacity to 21,500t from the current 13,500t. Albemarle, which currently has capacity to produce 44,000t/y of lithium carbonate, plans to reach capacity of over 80,000t next year.
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