How is the mining in Chile?

For the 2022-2026 period, according to Chilean Copper Commission (COCHILCO), a total of $24.6 billion in investment projects are under execution.

Chile is the top copper producer in the world with 24 percent of global copper production and, according to United States Geological Survey (USGS), the world’s second largest producer of lithium with approximately 30 percent share of world production. The annual average copper price in 2022 was $4 per pound, whereas the average price of battery-grade lithium carbonate was estimated at $37,000 per metric ton.

In 2022, the sector produced 5.3 million tons of copper, a 5.6 percent drop from the previous year. The mining sector’s contribution to the country’s 2022 GDP was 13.6 percent and mining exports reached 58 percent of total country exports. The industry remains a key sector of Chile’s economy. The estimated price of copper for 2023 is $4.04 per pound.

According to USGS, Chile lithium production output increased from 28,300 MT of lithium content in 2021 to 39,000 MT in 2022. Chile’s lithium is found, for the most part, in lithium brine deposits.

Copper mining project pipeline remains on hold. A new constitution currently under draft could potentially modify the mining code. The result has been investment uncertainty for new or greenfield projects and increased operational efficiencies for continued operations or brownfield projects.

According to the Association of Industrial Mining Suppliers, there are over 3,000 official suppliers to the mining sector with combined sales of more than $13 billion. The United States supplies about 20 percent of parts and equipment to the sector and enjoys a reputation for quality and service. Export opportunities will remain for companies offering products and services that bring operational cost reductions, improved productivity, and more efficient use of energy, water, and cleaner and safer processes.

Chilean copper mines are 72 percent owned and operated by private mining companies. The remaining 28 percent are state owned and operated by Codelco. Freeport McMoran Copper & Gold Inc. of Phoenix, Arizona and Albemarle Corporation of Charlotte, North Carolina are two major U.S. investor companies operating in the market. Also, present are Canadian, Australian, European, and Asian companies.

Chile currently holds over one-third of the world’s lithium reserves, according to USGS. This, combined with the demand coming from the electric vehicle industry, will make this resource the focus of international investors and developers. However, the current administration, after announcing plans to nationalize its lithium industry, is reviewing the current concession regulatory framework thus leaving critical key questions unanswered regarding how the lithium concessions will be managed in the future.

Today, there are only two companies active in the lithium extraction industry: Soquimich S.A. (SQM) in association with Tianqui which owns 24 percent of SQM, and Albemarle Chile Ltda. a fully owned subsidiary of Albemarle Corp. Chile is also the number one producer of iodine, rhenium and sodium, and potassium nitrate.

The Chilean mining sector is investing in new technologies to become more sustainable and support the country’s climate change goals. Mining projects are incorporating desalination and renewable energy to reduce their carbon footprints. By 2023, the Chilean Consejo Minero estimates that 63 percent of electricity will come from clean energy sources. Water consumption in the mining sector is less than four percent of the total compared to 72 percent in the agricultural sector, and approximately three quarters of water is recirculated. Mining companies are also deploying automation and remote operations technologies to improve efficiency and safety.

In July 2022, the Chilean government released a tax reform bill that includes new mining royalties. The effective tax burden, defined as income tax and royalty payments divided by pre-tax income stands at 44.7 percent according to the Mining Council.

Leading Sub-Sectors

Off-road transportation parts & equipment, bulldozers, scrappers, and trucks, 360o revolving excavatorsCrushers; grinders and parts for rock cuttersCranes and screening machine partsUnderground mining technology equipment, services, and partsDesalination plants, equipment and parts, and monitoring technologyAir pollution abatement technology, services, and partsTailing pond monitoring technology, services, and partsCarbon footprint reduction services, technology, and partsPersonal safety equipment.

Opportunities

For the 2022-2026 period, according to Chilean Copper Commission (COCHILCO), a total of $24.6 billion in investment projects are under execution. Of these $ 23.6 billion are brownfield and $1.0 billion are greenfield. Over half of the investment will be spent by state-owned Codelco. The remaining investment is expected to be undertaken by private mining companies.

Trade Shows

• EXPONOR, June 3-6, 2024 Antofagasta, Chile. Exponor is Chile’s second largest mining trade show. The U.S. Pavilion features around 40 exhibitors. (https://exponor.cl/).

Source: Miningreporters.com