Requirements for Mining Exploration in Chile

Mining has been part of Chile’s history since pre-Columbian times. Fast forward to today and Chile is one of the largest producers of copper in the world and a leader in many other minerals.

Exploration is the first stage of the mining cycle. This stage consists of searching for minerals then evaluating mineral resources. Exploration extends until the moment when, based on a series of studies, it is decided that a particular project has enough resources to sustain a profitable producing mine.

Basic exploration activities comprise of a series of activities. It begins with desktop evaluations of potential properties, followed by preliminary reconnaissance in the field, campaigns or programs for taking surface samples for geochemical analysis, and then drilling to verify what minerals are present below the surface.

Drilling is an advanced stage of exploration where environmental regulations must be followed. For this, the presentation of an Environmental Impact Statement (EIS) or an Environmental Impact Study (EIA) will be required in cases where the project or activity:

• generates a risk to the health of the population in relation to the quantity and quality of the effluents, emissions or waste produced.
• generates significant adverse effects on the quantity and quality of renewable natural resources, including soil, water, and air.
• generates resettlement of human communities or a significant alteration of the life systems and customs of said human groups.
• It is located close to a population, other resources and/or protected areas that are likely to be affected,
• generates a significant alteration to the landscape and/or tourist value of the area.
• disturbs monuments, sites with archaeological, anthropological, or historical value.

The main considerations required for mineral exploration are:

Testing and Digging: Anyone can carry out tasks to examine and open the earth to look for mineral substances. Therefore, exploration can take place on open land, except in the case of areas subject to a mining concession owned by a third party. Regardless, any disturbance of the land that is subject to concession, authorizations of the owner of the surface land will be required, when appropriate.

Exploration Concession: To carry out exploration activities, it is necessary to have a mining exploration concession, which is a right granted by the State that confers on its holder the exclusive powers to investigate the existence of concessional mineral substances in their entirety.

The constitution of an exploration concession begins with the presentation of an application called a “motion” before the corresponding civil judge, which will be reviewed by the SERNAGEOMIN (National Geology and Mining Service). Once the concession is granted, this body includes it in the registry of mining concessions and ends with the issuance of the constitution sentence, which must be registered in the respective Conservator of Mines and then included in the Mining Registry.

The exploration concession is granted for two years and can be extended for only another two, if complying with certain requirements. This concession can change owners many times, and a mining company may decide not to continue with exploration by either renouncing the concessions or selling them to other companies that are interested in continuing to explore them.

From the moment the motion is registered in the Discovery Register, its holder may carry out all the necessary work to establish the exploration concession. The holder will lose his exploration concession if he carries out mining on it.

The exploration mining concession is protected through the payment of an annual patent.

The Work Plan: Before starting the exploration activities, the company must present to SERNAGEOMIN a “work plan”, briefly explaining where, when and what activities it intends to carry out. To receive a “work plan”, SERNAGEOMIN requires that the company have the exploration concession at least in the status of “application”, not necessarily constituted. If applicable, the owner will present his project to the Environmental Assessment Service (SEA).

The SEA will review the DIA or EIA if applicable and may impose some conditions or requirements as determined by the environmental assessment, considering, among other matters, for example, those related to species classified in some category of conservation or the presence of archaeological remains.

Access Permit: The mining concessionaire must obtain an access permit from the landowner to enter the site, since the mining concession does not grant ownership of the surface land. The usual thing is that an easement is constituted in favor of the exploration company, by virtue of which it must compensate the owner for the damages caused based on the previously agreed conditions. With the exploration concession, the petitioner is authorized to explore the mineral resources found in the subsoil of the area included in the concession. It is important to note that the public lands are administered by the Ministry of National Assets. If an agreement is not reached with the superficial owner, a judge can be appealed to, who grants the right of way and defines the corresponding compensation payments.

Citizen Participation: As mentioned above, if exploration involves prospecting activities where an EIA or an EIS must be submitted then citizen participation will always be required. Many companies are reaching out to communities at an early stage to reduce conflicts by building trust and giving the communities time get to know the project. This also allows the company to consider the communities observations or concerns when preparing the project.

Conclusion 

It is good for foreign Investors and companies to have a basic understanding of what is required to start exploration activities, but this will not replace the need to have qualified professionals who can provide guidance based on the specific circumstances of each project.  

Ax Legal works with competent professionals from a variety of backgrounds to help junior mining companies and investors streamline their exploration and back-office activities in Chile under a monthly fixed fee contract. The benefit is that you instantly have an expert team of business experts, lawyers, and specialized service providers, including administration and accounting. 

Our clients appreciate that they can budget their expenses for 12-monthperiods giving them more credibility with their investors and allowing them to focus on making a new discovery.

Ax Legal helps foreign companies to enter and operate in the Latin America. Our team of legal and commercial advisors have a distinguished track record of helping foreign technology and services companies at each stage of their growth. Over the years, we have worked with starts up, mid-size businesses, and publicly listed companies. The one common factor that connects are clients is that they are leaders in their field, providing innovative technologies and services to the industrial sectors.

To better understand how we can support you in the Region, please contact Cody Mcfarlane at cmm@ax.legal