Business unions highlight the importance of the constitutional process maintaining the foundations that have allowed the development of mining in Chile.
Various reactions were generated by the latest version of the Fraser Report, which placed Chile in 30th place in the ranking, dropping 13 places in relation to the tabulation obtained in 2019, where it was located in 17th place.
It should be remembered that in 2018, Chile managed to position itself in the Top 10 of the ranking, ranking eighth in the general measurement. We would have to go back to 2013 to find our country among the top 10 places again.
For Diego Hernández, president of the National Mining Society (Sonami), “the significant drop that Chile has had in this prestigious ranking is unfortunate, but it was undoubtedly expected due, mainly, to the serious social situation that our country experienced in from October 2019. The extreme violence generated by the social outbreak had an international repercussion that undoubtedly affected our reputation as a stable and dialoguing country ”.
The union leader considers that “not only the social outbreak has played against Chile, but also the legal certainty that constitutes a fundamental factor to consider when making investment decisions and that has been reflected in situations such as the Winter Mine on the Island Riesco, the Dominga project, the excessive processing of environmental permits and the populist attitude of some parliamentarians, who have promoted initiatives that generate even more uncertainty, such as the glacier project, an initiative that in the terms in which it is drafted it would end up costing thousands of jobs, putting at risk the development of numerous initiatives in our sector ”.
For his part, Manuel Viera, president of the Chilean Mining Chamber, considers that one of the main reasons behind the fall in the ranking “is the lack of a clear policy of national geological exploration to attract new investors”, emphasizing that Since the creation of the organization he leads, “it has been suggested to the various national authorities that the existing geological information is not enough to maintain the interest of mining investors in our country.”
The authority also addresses the effect of social outbreak, “an issue that also produces political instability and is one of the negative factors. What the respondents consistently indicated that when defining an investment is determined by 40% by political factors ”.
New Constitution and Mining
The implications of the drop in the report are also addressed by Juan Carlos Guajardo, executive director of the consulting firm Plusmining, who points out that “if we consider that the ranking is constructed from two indices, one of political perception and the other of best practices in mineral potential, Chile’s fall from 17th place (2019) to 30th place (2020) is to be expected ”.
“On the one hand, the downward adjustment of the country’s political perception index in the 2020 version arises as a result of a structural process of stagnation in the competitiveness of the industry, exacerbated by the recent socio-political crisis. Similarly, the index of best practices in mineral potential is also affected, as a result of greater instability and uncertainty in the development of mining investments “, comments the specialist, who emphasizes that” even with the decline in this ranking, Chile it is a country with a great installed capacity and great potential for growth, so the decisions taken in these times will be relevant for the industry of the future ”.
For his part, Sergio Hernández, executive director of the Association of Industrial Mining Suppliers (Aprimin), considers that “what most influences the fall in the ranking is the perception of a certain political sustainability problem. Therefore, we believe that as the discussion of the constitutional convention progresses normally, this perception will be positively modified ”.
In this context, he mentions that the report was prepared in 2020 before the plebiscite was held in which it was approved to create a new Constitution. “The high approval of a new Constitution channels the political conflict and the social agenda through democratic means. Therefore, it is going to be a later factor that is going to influence the next report, ”he says.
The executive mentions that “as a country we have a history, a very established culture that does not change from one year to the next, which overcomes the crisis with stability, so we have confidence so much in the history of Chile, in its culture, in the process constitutional, which we hope will be as orderly as possible ”.
His vision is complemented by Diego Hernández, who affirms that “the beginning of the constituent process is another element that generates uncertainty, but we are confident that it will allow maintaining the basic elements that have allowed the development of this powerful productive activity. We believe that it is essential that the process of drafting a new Constitution be conducted in an environment of public order and through the institutional channels already defined ”.
In the same way, the president of Sonami considers “of vital importance to maintain the regulatory bases that have allowed the development of the three productive pillars of Chilean mining, this is the state pillar made up of Codelco; the pillar of private large mining companies, made up of national and foreign investors; and national private investors of small and medium mining ”.
Investments for Chile
After reviewing this year’s ranking, Sergio Hernández said that “there are some elements that are very prominent in the report, such as the infrastructure in the country, which improves its value substantially, and the specialized workforce; as well as the history and country condition for mining development, which are substantially improved in the Fraser Report ”.
In addition to asserting that “notwithstanding this report, current copper prices, and the projection of supply and demand, which is favorable to a demand higher than supply; moreover, the imbalance that will actually exist for this reason, such as the price; and the absence of large projects worldwide in mining, (…) necessarily mean that investment in Chile will materialize, because there are not enough alternatives to respond to future demand ”.
In this context, Manuel Viera makes a “call to the authorities to once again believe in mining and apply an urgent action plan so as not to continue losing competitiveness. Let us remember that in 2019 Chile ranked 6th and we have fallen to 30th place. , we must not stand idly by ”.