Chilean National Mining Policy 2050 – The Economic Goals for Growing the Chilean Mining Industry
As the second of our two-part series, we are going to talk about the economic role of the new 2050 Mining Policy. Our first part covered the environmental and sustianbility aspects. It can be found here.
Mining is an important engine for the Chilean economy now and going into the future. It is a fundamental and strategic sector in the economy, during 2020 it represented: 12% of GDP, 56% of exports, 90% of mining revenues are distributed among workers, taxes, and suppliers, 9.3% of tax revenue (2010-2020), and 840,000 direct and indirect jobs
It has also been losing momentum and competitiveness, productivity has shown signs of deterioration, and climate change and other stresses have threatened mining production. Given the situation, the mining industry is expected to improve productivity by incorporating technology. Human capital capable of absorbing, using, improving, and taking advantage of the new technologies is an important part of the plan. Technological change will bring gains in productivity and performance in multiple areas.
One of the most important pillars of this policy is the economic one, which aims for Chile to be a world leader in responsible, sustainable, competitive, and innovative production with world-class standards in mining. This economic pillar seeks to strengthen the productive, organizational, technological, and innovation capacities so that the national and local economy can participate in solving the challenges of sustainable production. Specifically, this means improvements in productivity and competitiveness by improving the human capital and to be at the forefront of new technologies.
Below we will break down the objectives and goals of the economic pillar outlined in the 2050 Mining Policy:
First Objective: To be a world leader in the sustainable production of minerals, promoting the world’s low-carbon economy, and safeguarding the health of people and the environment
- Achieve a production level of 7 Mtons by 2030, where small and medium-sized mining doubles its production, and by 2050 it reaches 28% of world copper production, corresponding to 9 Mtons.
- 70% of the investments included in the Cochilco 2020 Investment Registry, valued at US$74 million proceed.
- The industry has traceability and reportability systems for 100% for large and medium-sized mining companies, which ensure responsible production in environmental, social, and governance issues.
- Doubles the annual investment in greenfield exploration with respect to the average of the last 5 years, maintaining it until 2050.
- Deliver basic geological, geophysical, and geochemical information from decree 104 of May 2017.
- Generates a mineral diversification strategy with the aim of increasing the production of products other than copper, such as rare earths and cobalt, among others.
- Lithium production increases by 2030, achieving 380 Ktons of lithium carbonate per year.
Second objective: Increase sustainable productivity and competitiveness of the mining industry
- Increases the productivity of large-scale copper mining by 20% by 2030, measured as total factor productivity (TFP) and by 50% by 2050, compared to the 2021 measurement.
- Places 70% of the production from the national copper industry in the first two quartiles of C1 costs worldwide.
- Reduces the time for the entry of workers into operations to a maximum of 30 days by 2030, and from 15 days after that through the homologation in the accreditation of all its direct and indirect workers.
- The investment for average training (in real terms) per worker increases by 50% by 2030 compared to 2019.
- Achieves that 30% of all patents requested in Chile, in the area of materials and metallurgy, are national by 2030.
- Ensures a refined copper capacity that allows Chile to continue capturing the majority level of the value generated by the industry and that facilitates compliance with carbon-neutrality.
Third objective: Generate a value chain industry at the forefront of innovation and development
- Increases by 20%, the contribution to GDP of goods and services related to mining by 2050.
- Improve investment in Research and Development to 0.5% in relation to the sector’s GDP in 2030, keeping the intensity of investment on par with the leading mining countries by 2050.
- To have 250 world-class supplier companies and improve exports of goods and services linked to mining to US$1.5 billion by 2030 and US$4 billion by 2050.
- Improve and increase collaboration between universities and the mining industry by 2030.
- Reach a leadership position in world rankings that measure academic excellence, with 25% of careers in the area of geo/mining/metallurgy by 2030.
The 2050 Mining Policy is an important vision that will lead the Chilean mining industry into the future. This strategic document will help the private industry and government navigate the future economic, social, environmental, and governance aspects of the industry in Chile. For mining suppliers, it offers some insight into the opportunities that exist in the Chilean mining industry where their products or services can be utilized to help the industry achieve its goals.
From an ESG perspective and as covered in part one of our series, Suppliers will be needed to help reduce water usage in production processes, improve the economics for dewatering tailings, create cheaper and more efficient desalination plants, introduce less intrusive mining techniques to minimize disturbances on ecosystems, improve environmental monitoring, and to deliver products that can be recycled and reused in the circular economy.
From part two which we covered above; it is easy to see that suppliers will be needed to help mining companies become more efficient across all aspects of their operations to achieve their goals. Technology will be required at every step of the way. Everything from only running the best material through the plant, improving the transportation costs of moving material to the plant, improving the plants and crushing systems, improving the equipment utilization and downtime, and ensuring that the human capital is as productive as possible through every area of the mine.
A large part of this technology drive means suppliers will need to have people on the ground. Mining companies will need to have suppliers who can trouble shoot problems and train their local teams in the use of these technologies. Some can be done from offshore, but suppliers will need invest in having local operations even if they are only small to demonstrate their commitment to supporting the local operations.
Mining suppliers will play a large role helping mining companies to bridge the gap between where they are now and where they need to be. The 2050 Mining Policy is a good way for suppliers to see where the industry is and where it is going.
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