Proposal to nationalize Chile’s mines clears 1st of many hurdles

A proposal to nationalize Chile's natural resources, including seizing mines and companies that explore and develop copper and lithium assets, cleared the first of many hurdles in the assembly that is writing the country's new constitution. 

The proposal, which would pave the way for the nationalization of some of the biggest copper mines and lithium deposits in the world, cleared its first vote in the assembly's environmental commission on Tuesday, with 11 in favor and eight against. The measure will undergo a second vote in the commission later this month and would then face the full assembly of 155 members, where it would need to be approved by two-thirds of the body in order to be included in the constitution's final draft, which will be subject to a national referendum later this year. 

Chile has the world's biggest copper and lithium reserves and nearly US$70bn in potential mining project investments expected during this decade. While the risk of the nationalization proposal being enshrined in the constitution remains low, the fact that it cleared the first hurdle sparked a strong response from the private sector.

“This decision is barbaric, with clear and evident legal mistakes," said Diego Hernández, president of Chile’s mining association Sonami, in a statement. "Copper nationalization has been approved, but the copper currently belongs to the Chilean State. Thus, this measure only means nationalizing the companies, not the natural resources, which is what they want to protect.”  

Hernández warned of dire consequences to Chile's economy if privately run mineral operations are seized and brought under the "full and exclusive domain of the state," according to the proposal published on the assembly's website. “The affected companies will resort to the treaties to defend their legitimate interests, generating lawsuits in international courts,” Hernández said. 

The document also establishes that part of the profits generated by mining activity will be used to protect and rehabilitate the environment in communities impacted by extractive operations. It adds that the nation's president would have up to one year to seize the mines and operations once the new constitution goes into effect. 

Center-left president-elect Gabriel Boric takes office on March 11. 

Photo credit: Chile's mining ministry