A growing demand for more sustainable mining, the technological changes that the sector is facing, and the Covid-19 pandemic, are some of the factors that today are strongly influencing the development of mining in Chile and Peru.

We spoke with Jorge Cantallopts from Cochilco, Francisca Castro from Antofagasta Minerals, Hermann González from Clapes UC, and Luis Rivera from Gold Fields, who will participate as panelists in the presentation of the study “Mining signals” during Cesco Week Stgo 2021 on April 14 – to find out their views on the scenario in which the industry is developing today, and the factors that will influence it in the future.

Jorge Cantallopts, director of Studies and Public Policies at Cochilco:

“The consolidation of a sustainable and responsible demand for raw materials will become increasingly decisive in the mining industry”

“Mining is usually affected by global and local factors that in many cases are difficult to dissociate.

For example, the sustainable trends driving demand for metals like copper, lithium, cobalt, nickel are global currents that have a huge impact on how we mine, making sustainable development a local goal.

On the other hand, the trend to increase recycling, recovery from landfills, and the development of circular economy models pose a significant challenge to the mining industry, in addition to local regulations and demands that make the industry increasingly complex.

In this context, mining in Chile is at a time of expectation in the face of a growing trend of sustainable demand for minerals, but with a certain degree of additional uncertainty triggered by purely local factors. However, being a long-term industry, these changes are part of the business risks, but we must take care that these risks do not end up affecting the competitiveness of our production or the ability to attract new investments.

In the future, the consolidation of sustainable and responsible demand for raw materials will become increasingly decisive in the mining industry, so some processes must be modified, measurements, traceability, and transparency in their environmental and social management must be improved.

These sustainability factors, associated with carbon and water footprints, incorporation of women, care for human rights, local inclusion, respect for native peoples, among others, will force the development of a new mining that requires different technological solutions, hopefully of a strengthened innovation ecosystem.

The opportunity that opens up in this challenging context is that this new mining is being created and Chile can be a leader as it has been in the last 30 years”.

Francisca Castro, director at Antofagasta Minerals:

“The factors that will influence the future of the industry in Chile will be the capacity of mining to transmit the social impact it has, far beyond the taxes it pays”

“In my view, the most influential factors in current mining development are the technological changes necessary to make the industry carbon neutral, the impacts of climate change, the situation of the pandemic that is already spreading for the second year. And in front of that, it seems to me that mining has been fine and has been slightly affected compared to other industries, therefore, it plays a role in terms of economic recovery that is very relevant. And in addition to that role, it must contribute with its labor discipline and management capacity in health and safety issues. No less important is the relationship with the communities that has to do with the capacity of mining operations to demonstrate and transmit that they are a relevant contribution to local well-being and development, well-being that is also related to avoiding or mitigating the impacts of the mining activity on the environment.

The factors that will influence the future of the industry in Chile will be the capacity of mining to transmit the social impact it has, far beyond the taxes it pays. And I mean his contribution in knowledge, to the environment, in the development of communities”.

Hermann González, Macroeconomic Coordinator at Clapes UC

“Although Chile continues to be a very important actor in the global context, it has been losing participation to the detriment of other producing countries”

Chile has enormous natural advantages to continue being a relevant player in the mining industry, especially copper, but in the short term, it faces important challenges. For Chile, mining is fundamental, due to its impact on the activity, on the direct and indirect employment it generates, and the contribution to fiscal resources. Local mining production has remained stable in recent years due to the fall in the copper ore grade and the lack of investment. Thus, although Chile continues to be a very important actor in the global context, it has been losing participation to the detriment of other producing countries, it has lost competitiveness and also attractiveness for investments. Additionally, the mining industry faces greater uncertainty than usual, given the upcoming constitutional discussion and the debate that is taking place in Congress on a parliamentary motion that creates a mining royalty.

Going forward, the sector’s prospects are very favorable, especially given the growth projections in demand, due to the change in the global energy matrix, the decarbonization goals, the green growth strategies that are being promoted by various countries, and the spaces for progress in the urbanization of emerging countries. Chile has great potential to take advantage of these opportunities, but locally the environment for business and investment must be taken care of and the conditions of certainty and security must be created so that the industry can compete globally and continue contributing to the development of Chile.

Luis Rivera, Executive Vice President of the Americas Regions at Gold Fields:

“Mining has learned to live with Covid-19 and continues to operate under strict sanitary protocols” 

The first factor that is influencing the industry is Covid-19, and with it, the acceleration of technologies that would otherwise have taken years to arrive, and that at the same time have increased the pressure of nations and investors for a greener world.

For this, mining has learned to live with Covid-19 and continues to operate under strict sanitary protocols. The industry is aware that it cannot stop because these metals are required as vital resources for a better world, and that pressure has been transformed into better metal prices, which will greatly help Peru to improve its tax revenues.

In the future, the main influential factor will be the search for the reduction of carbon emissions, a mandate that already exists in several countries, states, and mega-companies. The majority agree that by 2050 these emissions should be zero. This will force full electromobility, including mining transport, and the replacement of combustion engines by green hydrogen engines, this will affect processes upstream and downstream of the industry.

Parallel to this, scrutiny on the activity will be increased, either by more regulated governance of companies, especially those listed on exchanges, with specific mandates on environmental, social, and corporate governance reportability as well as human metrics linked to ethics and the search for a more transparent mining activity.