How to resolve the permitting problem in Chile’s mining industry

Although Chile is aiming to reduce permitting times, the environmental assessment system of authority SEA and obtaining sector specific permits still pose challenges.

Meanwhile, productivity and evaluation entity CNEP, whose members are appointed by the president and serve terms of up to five years, presented a report to the finance ministry with proposals to improve mining project reviews and investment attractiveness.

To learn more about the proposals and the current system, BNamericas talks to CNEP's legal director Cristián Romero.

BNamericas: How long does it take on average to process a mining project?

Romero: Mining is a heterogeneous industry and there are differences depending on variables such as location or access to resources, such as water. In a report we delivered in March to the finance ministry, we identified 11 categories of projects. Those that take the least amount of time are related to small-scale mining, which takes three or four years maximum. This is because they do not enter the SEA system and have a more simplified procedure.

Other projects are more complex, they must enter the SEA system and there the average is five years, although they may take up to 10 or 12 years, if they require permits for major hydraulic works or access to the coastal edge, which is essential for mining to access seawater, whether it's desalinated or not, which also increases deadlines.

In summary, a mining project generally takes seven to 12 years. The biggest projects are not necessarily the ones that take the longest. There are medium ones that take the same amount of time or longer.

BNamericas: And how high is the rejection percentage?

Romero: In mining, 300 types of permits are required that are developed throughout the life cycle of a project, from the initial idea to beginning operations. This is assuming that you have a mining concession for extraction and that the environmental evaluation or the sectoral permit process are beginning, which are premises for construction.

In general, mining permits have a high approval percentage, over 90%. The problem is the delay because several interactions begin to be approved, such as the permits for the mining sector granted by [geological service] Sernageomin, or those from the water authority [DGA] for hydraulic works, etc.

Th highest percentages of rejection are related to location and [forest protection agency] Conaf.

BNamericas: What do you think of the two bills presented by the government to reduce processing times by 30% and to accelerate permitting?

Romero: The smart permit project by the economy ministry opens the possibility that when there is a low-risk project, it is not necessary to require a permit, but rather an affidavit or a notice to the public service that must comply with the corresponding regulation. That is, it does not require a statement from a state body. That's very good, although it probably won't impact mining much, as these projects generally take longer because the permits are high risk. SMEs or medium and small projects, not large ones, will benefit most.

The other important thing is that it seeks to integrate technology and digitization to promote a unified permit processing system, and it solves some DGA issues.

The 300 permits are not the cause of delays, but rather the 12 years it takes for 20 permits. The most critical permits are those of the DGA, Sernageomin, Conaf, the monuments council, maritime concessions and the [environmental qualification resolution] RCA. Without [reforming] this, I find it difficult to reduce deadlines by 30%.

[The initiative] also contains good things like eliminating the committee of ministers, although the political criteria are not the main problem, but the contradictions between the technical, legal and political part. This creates little predictability and confusing signals to the investor.

On the other hand, public consultations on environmental impact statements are being expanded, which could affect medium-sized mining, whose operational projects are five to seven years, with higher costs and processing times.

In medium-sized mining, declarations take 12 to 24 months and have become more complex due to the variables of flora, fauna and other environmental issues, adding six to 18 months to processing. Those are dead periods for mining.

BNamericas: How can uniformity be achieved in the evaluation criteria to avoid different resolutions between public organizations?

Romero: The 300 types of mining permits arise from a large number of criteria, laws or regulations. Furthermore, regulation is dynamic and adds criteria over time. The first thing is to carry out permanent reviews of the regulations and the conditions under which permits are granted, evaluating what is requested and why. That exercise is essential to keep the set of regulations in shape. In English, it's called housekeeping to maintain good regulatory practices.

The permanent rationalization or clarification of the criteria is key, although sometimes the cure is worse than the disease. For example, SEA constantly generates guides, but in the end there are so many documents that it makes it difficult to understand the current criteria.

BNamericas: Will the implementation of the Escazú agreement, involving rights to clear environmental information and citizen participation in review processes, make the system even more complex?

Romero: This treaty at the Latin American level seeks to reduce spaces of mistrust and avoid unnecessary controversies with clarity of information and precision.

I believe that it will strengthen legal certainty and eliminate the pressure between mining, indigenous communities and third parties interested in mining projects, although I do not believe that it will solve all environmental conflicts related to mining.

BNamericas: Do system improvements require a new legal framework or just administrative changes?

Romero: The 300 mining permits have been generated over the last 100 years in Chile, and each stage of a project requires different permits. It is not an easy system because there is not a single integrated authorization that allows access to territory, carrying out preliminary works, building the tailings deposits and starting operations.

Progress is made amidst several interrelationships between permits. For example, there is the Lafkenche law, which is the authorization granted by an indigenous people that has access to the coastline in northern Chile and which did not exist before. This affects the processing of maritime concessions and the entry times of the RCA. That is why some permits require intervention.

Perhaps we do not need a framework law but some specific regulatory interventions by DGA or Sernageomin, and perhaps hire more people.

BNamericas: Is there any model abroad that could serve as reference?

Romero: Singapore developed a model based on digital twin technology that provides satellite information on land, water, biodiversity, construction, etc. That country has very restricted territory, so before making an investment decision, it is modeled and the conditions to approve the project are identified. If we want to change the paradigm, we have to look beyond laws.

BNamericas: How much has the evaluation process impacted mining investments?

Romero: Investment increased last year, but mainly due to Quebrada Blanca.

Costs in the industry have been rising, and SEA has mostly affected medium-sized mining since the regulatory burden is applied in the same way as for large-scale mining. In Canada it also takes time to approve projects because they have a very important relationship with communities.

To move forward and attract more mining investments to Chile, a political agreement and more participation from commissions such as CNEP are required to help implement a reformed system.