How synergies can boost mining in Chile and diversify global supply

 

A public-private delegation from Chile is participating in Australia's largest mining fair, IMARC, meeting with leaders of multinational companies and outlining investment opportunities in copper and lithium.

Government officials, industry associations and businessmen traveled to Sydney with the goal of strengthening ties with the Oceania market and attracting investments in Chile's mineral potential amid high demand and global progress toward green economies.

Jorge Riesco, president of Chile’s mining association Sonami, spoke to BNamericas from the Australian city about the trends emerging at the convention, the outlook for the local mining sector and the importance of strengthening collaboration with other producing countries to boost supply.

BNamericas: Why was it important to be present at IMARC?

Riesco: I would like to highlight the similarities between mining in Australia and Chile, the desire to grow in a coordinated manner and to carry out joint work. There is a desire to create a shared hub for the development of mining.

BNamericas: What technological trends are on display at the IMARC mining fair?

Riesco: There are a large number of technologies for the automation of operations, the control of operations and the optimization of metallurgical processes, mineral extraction and water management.

We also see many technological solutions for the control of emissions and safety. For each area, there is an infinite number of equipment, software and programs. This type of fair is an opportunity to bring together all the existing offerings in the market and for companies to be able to discern what their priorities will be in the incorporation of technologies.

BNamericas: What is Sonami's presentation on risk management at the convention about?

Riesco: This refers mainly to the need to reduce the productivity gaps that we have in South America in the mining sector. In recent years, productivity has decreased by approximately 28%, while remuneration associated with the activity has increased by the same percentage.

We have the opportunity to intervene to reduce this gap through innovation and the generation of labor skills. This requires teamwork and the formation of alliances to generate common space in the region. The idea is to take advantage of synergies and make the industry more productive.

BNamericas: How do investors view the process launched by the Chilean government to allow the private sector to apply for lithium operating contracts?

Riesco: The concern is that the process needs to remain open and ready to receive all applications of interest to develop the projects, just as there is now the possibility of discussing private participation in the prioritized salt flats. Hopefully, the strategy can delve deeper into how investors can really take advantage of the lithium reserves in Chile.

BNamericas: Given the investment incentive mechanisms that Argentina has implemented, such as Rigi, do you think there will continue to be a diversion of capital towards Argentine lithium to the detriment of Chile?

Riesco: Apparently yes. There is a greater interest in this type of incentive. Argentina is an example in terms of investment incentives and I hope we can follow a similar path in Chile. Chile has opted, through its government, for a lithium strategy centered on the State with much control over the projects that are to be carried out, without any liberalization, a position that contrasts with Argentine policy.

Furthermore, if we take into account what is expected in terms of electromobility and power stations, there will be enough space to carry out all production projects, not only in Argentina. Therefore, these facts are a wake-up call for Chile, and I hope that we will have a second wave of announcements soon and that they will generate a slightly larger pool of projects than we offer now.

BNamericas: The low price of lithium this year has impacted several companies, including some in Australia, the largest producer of the metal. What perspectives were discussed at the fair on this subject?

Riesco: Yes, operations have closed in Australia, especially the higher-cost ones, while others are still operating.

This market needs to be watched carefully as demand for lithium could remain relatively high in the near and medium term, and that could push prices up. There is no doubt that several technologies that use lithium will continue to be required in the market. Supply and innovation for the lithium industry remain very strong, something we were able to see at the fair.

BNamericas: Is there still interest in investing in copper in Chile, despite the complexities in obtaining permits for projects?

Riesco: It is imperative to develop the full potential of copper to meet the high demand in the world and there is a consensus that this mining challenge must be addressed through synergies and collaboration, and not so much with a competitive dimension.

There is a responsibility among countries with large mineral reserves to respond to demand, and to do so, collaboration between countries, companies, trade associations and suppliers must be prioritized. This is no longer the time to generate competition between countries, but rather we have the opportunity to coordinate well to create the conditions for all investments to be made.

BNamericas: However, countries like the United States and its policies to reduce Chinese dominance in the global market for critical minerals are putting global geopolitics under strain.

Riesco: The policy to generate this counterbalance is precisely through alliances between Pacific countries, mainly South America and Australia. A strong alliance can generate a business environment that allows for investments in mining in other countries.

BNamericas: Sonami has criticized Enami's sale of its stake in the Quebrada Blanca copper mine to Codelco due its lack of transparency and for not being advantageous for the selling party. It has also alleged that Enami lacks government support. How will you continue to manage these cases?

Riesco: What worries me most is that there is a need for a mining policy that maintains state support for producers who need support, as has been traditional in Chilean mining.

The development and formalization of small-scale mining in Chile has gone hand in hand with a clear system of public-private participation in the value chain of this segment, but it has become blurred.

The sale is worrying because Enami is losing an important asset and also does not have the support to permanently stabilize its financial situation, which could affect the maintenance of the small-scale mining value chain.

We will continue to insist, because we believe that there is still room for this aspect to be rectified and we can once again have the peace of mind that there is a policy of promotion and development of small and medium-sized mining in the long term, an obligation that corresponds to the State.