The need to dynamize Chile’s mining permitting system

Chile's 2025-30 mining project portfolio totals US$60bn, according to the BNamericas database, but the realization of these investments depends on a cumbersome permitting system.

Two bills presented by the executive branch seek to resolve this issue. One promises to reduce processing time for sectoral permits by up to 70%. It was approved in the lower house in October and is currently subject to a second constitutional procedure in the senate.

The other bill, known as environmental assessment 2.0, seeks to reform law 19,300 and modernize the environmental assessment mechanisms of regulator SEA.

Nicole Porcile, who was vice president of corporate affairs and sustainability at companies such as Codelco, Antofagasta Minerals and Andes Iron, is among those who deem this bill insufficient to boost mining investments.

In this interview, Porcile, who is now director of consultancy Anagea, which specializes in investment projects and socio-environmental responsibility, talks about reform, competitiveness and the need to attract talent.

BNamericas: How are investments in Chile's mining sector going?

Porcile: Over the past decade, mining investments have averaged around US$10bn annually and in 2023 they will reach US$14bn, the highest figure in the period. This year, investment is seen to be on the rise, driven by major projects and a favorable global environment for critical minerals in the energy transition.

However, this must be analyzed by how much investment has obtained environmental approval and permits moving forward. There the trend is downward. In the last decade, the annual average was US$6.5bn and in the last five years, that fell to US$3.5bn. It was worrying in 2023, since environmentally approved investments only reached US$2.2bn and that trend has been accentuated this year to less than US$200mn in the first half.

BNamericas: Could the bill amending law No. 19,300 on general environmental bases help improve the permitting system?

Porcile: Processing times for environmental permits have increased over the last decade, with environmental impact studies taking an average of 650 to 1,200 days and environmental impact statements taking 300 to 400 days.

The bill would accentuate these problems, as it proposes changes such as citizen participation open to people beyond those directly affected, which extends to the entire process. This would increase the timeframes and investment uncertainty.

In addition, it establishes the ability of anyone to file a claim, which could increase litigation. It also extends the deadline for early termination [of the evaluation process due to lack of information] by extending it until after the first addendum [a document in which the project owner responds to queries from SEA or citizens].

It also modifies administrative silence. Currently, if the authority does not resolve a claim within the deadline, the application is deemed accepted. With the new regulations, a resolution can be requested from the executive director [of the regulatory agency] and if the director doesn't make a decision within the deadline, it will be considered rejected, allowing the applicant to appeal to the environmental court.

Regarding the debate on whether decisions should be political or technical, it is proposed that the regional SEA director approve investments, but this would be excessive for one person. In my opinion, it would be more appropriate to create an initial political body to assess the territorial viability of the project and another technical body to ensure quality and environmental compliance.

BNamericas: What about transparency and citizen participation in project evaluation?

Porcile: Balancing transparency and participation with efficient processing times and clear definitions in the decision-making process is crucial to ensure fair and efficient environmental assessments and to provide investment certainty. This can increase companies' credibility and reduce investment risks.

BNamericas: What other mechanisms could reduce uncertainty?

Porcile: Chile should have a strategic plan aimed at maintaining the competitiveness of mining in the global market, and it's essential to control and reduce operating costs, which have doubled in the last 15 years, through operational efficiency and adoption of technologies.

Regarding copper mining, we see other countries increasing production. Peru has the potential to double its production to 5Mt/y in the next 10 years, based on existing projects. And the Democratic Republic of Congo has increased its production from 300,000t/y to 2.2Mt/y in the last decade.

In contrast, Chile faces declining ore grades and ageing deposits. For every tonne of processed rock, 6kg of copper is extracted, compared to 10kg 15 years ago. It's crucial to invest in exploration and new projects to counter this trend.

BNamericas: How should the evaluation system be configured under this plan?

Porcile: It should aim to streamline the procedures for environmental and sectoral permits by simplifying and making them more flexible. Investment projects that enter the SEA are usually in the feasibility engineering phase. However, when moving towards the basic or detailed engineering stages, it's common to make optimizations that involve modifications to the projects.

It's therefore essential to have flexible evaluation tools that allow projects to be updated and adjusted as they evolve. Currently, the SEA is static, while project engineering is dynamic. In other countries, updating and modifying projects is allowed. By addressing these issues [with a plan], Chile could reduce uncertainty in mining investment and encourage the arrival of new capital into the sector.

BNamericas: What other factors could hinder the development of mining projects?

Porcile: The need for human capital. There is a shortage of qualified personnel and it's projected that in the next 10 years, around 35,000 new jobs will be required, which shows the importance of attracting and training new talent.

At the same time, the incorporation of women, at 18%, and young people, at 30%, in the mining workforce is limited, so it's necessary to promote inclusion to take advantage of the potential of available talent. It's also essential to adjust technical training to the real needs of the industry, which increasingly needs to operate advanced technologies.

BNamericas: What legislative challenges exist?

Porcile: The main challenge is to simplify and make environmental and sectoral procedures more flexible, since the current processes delay the start of mining projects. The processing of sectoral permits involves 38 public services dependent on 16 ministries to manage more than 380 permits. This overloaded regulatory structure hinders economic growth and national productivity.

BNamericas: What opportunities will continue to motivate investors to choose Chilean copper?

Porcile: The main opportunity to decarbonize the world lies in the lack of copper. By 2030, copper demand will increase by more than 50% and is expected to double by 2040. Chile has the possibility of being a key enabler in the global energy transition, but this requires a strategic plan, as various actors seek to capitalize on this opportunity.

We see new end customers, such as recyclers and re-processors, which will challenge traditional players in domestic mining, such as transnational mining companies. Secondary copper production, coming from recycling, currently accounts for 17% [of production] and is expected to reach 40% by 2040.

There are also opportunities in tailings and dumps that have higher grades than some operating mines, and in the extraction of metals from the seabed that has recently generated geopolitical debates. It's also essential to analyze the evolution of the market. From 2025, the London Metal Exchange will require that traded metals and minerals comply with sustainable production standards such as The Copper Mark.

BNamericas: And how is Chilean mining progressing towards decarbonization?

Porcile: The local mining industry is committed to carbon neutrality by 2050 and in this context has developed a roadmap to address scope 1, 2 and 3 emissions.

Renewable energy to supply mining operations has increased, and today mining represents a third of the national total, representing consumption of 27,000GWh and it's projected that by 2030, 90% of the mining electricity supply will come from clean sources.

Regarding water consumption, only 4% used in mining is freshwater, which is due in part to the high efficiency of the process, since three quarters comes from recirculation. Seawater currently reaches 30% and is expected to reach 70% in 10 years. There are currently 11 operational desalination plants with a capacity of 3-4m³/s, and there are 15 additional projects under development for local mining.