License to operate, environment and costs: Threats to Chilean mining in 2025

Licensing to operate, environmental management, and rising costs and productivity are set to be the primary risks facing Chile’s mining industry in 2025, in line with the sector’s current focus on environmental, social and governance (ESG) issues.

These three risks were highlighted by consulting firm EY and mining research center Cesco in a study that outlines 10 risks and opportunities for the industry, which includes geopolitics and supply chain, depletion of resources, new projects, climate change, capital, governance and social issues.

Although mining companies have made progress on ESG issues, "stakeholders have heightened their demands, and increased scrutiny is expected," Alicia Domínguez, EY's lead partner for industry and energy, said at an event held in Santiago to present the study, attended by BNamericas.

In the pursuit of shared values between economic benefit and community progress, Javier Silva, sustainability manager at Chilean lithium producer SQM, stated at the event that the company has reduced its use of continental water by 50% and plans to cut that figure to nil in response to community concerns over water availability.

Katherinne Pulgar, contracts and supply manager at mining company Collahuasi, meanwhile, emphasized the production chains that mining creates to support development of communities.

“We work with local suppliers, empowering them to offer their services and products to other players, but these productive chains have to be sustainable. That’s why we’re promoting tourism activity and collaborating to preserve the heritage sites of Humberstone and Santa Laura saltpeter mines,” Pulgar said during a panel discussion at Wednesday's event.

On the issue of capital – which is seen as the major global risk for the mining industry in 2025 – Theo Yameogo, EY’s mining and metals leader, said in a BNamericas interview earlier this year that this challenge is closely linked to the energy transition.

“The sector competes for investment and incentives to accelerate exploration and development of minerals and metals for the energy transition. We’re seeing a shift from a short-term focus on returns to a long-term view of value, encouraged by recognition that longer-term investment horizons are required to meet 2050 net-zero goals," the executive said at the time. 

Yameogo recommended prioritizing capital management for operational resilience by investing in technologies that promote sustainable practices and enhancing risk management strategies to address increasingly frequent climate events.

He also emphasized the importance of strengthening community relations and transparent communication to secure the social license to operate.

Another trend in capital and cost management will be an increase in joint ventures and partnerships across the industry, particularly to manage "mining projects that are more challenging or high-risk," Erik Heimlich, head of base metals supply at consulting firm CRU, told BNamericas.

Image: List of the top 10 risks and opportunities for mining in Chile. Prepared by EY and Cesco.