TORONTO (miningweekly.com) – Despite more than 25 000 people losing their jobs in Chile as a result of the lower copper price, national unemployment levels have dropped by more than half a per cent, as government support and efforts to redeploy the country’s skilled work force pay off.

As measured at the end of 2015, the unemployment rate had dropped to 5.8%, down from 6.4% in the comparable period, said Chilean Mining Minister Aurora Williams in an interview with Mining Weekly Online on the fringes of the yearly Prospectors and Developers Association of Canada (PDAC) convention.

The national miner Empresa Nacional de Mineria (Enami) had been supporting small and medium-sized copper producers in the difficult economic climate by buying output at times when prices dipped below sustainable levels. It had in recent months been buying production at between $2.08/lb and $2.48/lb. The Minister explained that the industry support was similar to loans that companies would start repaying, at least in part, once prices improved.

The mining industry was forced to rationalise costs as a result of a 20% drop in copper prices the last several quarters, resulting in significant job losses. The copper industry was mainly focused on northern Chile and provided significant employment for skilled trades, which often comprised migrants from the country’s lower latitudes.

The downturn hit the economy hard, prompting president Michelle Bachelet to set up the ‘production commission’ that, among other tasks, looked at options to transfer skilled workers to other parts of the services-oriented economy.

LEGISLATIVE FRAMEWORK
Williams highlighted the new Foreign Investment legislative framework that came into force on January 1 – Law No 20 848 – and how this created a new institution for foreign investment in the country, modernising the investment regime. Foreign investment in mining projects accounted for about 35% of total investment in the country, and the Minister stressed its importance to the economy.

Chile also completed significant tax reforms in 2015, which did away with specific taxes in several industries, which was helping to improve the country’s attractiveness on the global stage.

The Enami delegation held presentations at the PDAC, promoting six project opportunities – one in the prefeasibility stage, one in the feasibility stage and four grassroots exploration opportunities.

The country held about 30% of the world’s copper resource, and also contained significant amounts of lithium, a hot metal at the moment, used to make lithium-ion batteries for mobile electronic devices, electric vehicles and, potentially, also larger grid-level applications. Other minerals included rhenium, iodine, gold and silver.

Williams said government had formulated a five-point action plan for the lithium industry in January and created a non-metals mining committee charged with promoting the country’s lithium potential. State-owned copper miner Codelco was ordered to study the lithium market through its subsidiary Codelco Labs, which was also looking at ways to improve the element’s use in photovoltaic applications.

FUTURE PERFECT
“We are convinced that the future of mining is very important for Chile’s economy. With the input of the mining industry, we can build a knowledge-based economy. Technology overcomes the mining challenges we have dealt with,” said Williams.

She added that technological advancements had helped the mining industry to reduce costs at a time when prices were low, while allowing them to reduce their physical and carbon emissions footprints.

For example, desalination was playing an ever-increasing role in the country’s dry mining areas, as well as where mining competed with agriculture. Large miners operating in the country were looking to seawater to satisfy their mine processing needs.

Canadian miners Goldcorp and Teck Resources were building their El Morro and Relincho projects, for which they were developing mutual infrastructure. Located about 40 km apart in the Huasco province, in the remote Atacama region of Chile, the combined Project Corridor was expected to reduce the environmental footprint of these two mines by using a single desalination plant, a single port, a single transmission line, a single concentrator and a common tailings facility.

Williams pointed out that, while about 20% of water for mining currently came from desalinated sources, plans were in place to have that percentage grow to 50% in the next decade.

BHP Billiton’s $4.5-billion Escondida mine became the largest user of desalinated water in the country, producing about 2 500 ℓ/s.

“Our message is that we are preparing the economy for long-term growth. Chile is an investment destination not because of its mineral wealth but because of its macroeconomic stability, advanced logistics chain, human resources and a well-established legal system that upholds due process,” concluded Williams.