Mining in Chile

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Copper mining in Chile
)

The mining sector in Chile is one of the pillars of

Norte Grande region spanning most of the Atacama Desert. Mining products of Chile includes copper, gold, silver, molybdenum, iron and coal. Chile was, in 2019, the world's largest producer of copper,[1] iodine[2] and rhenium,[3] the second largest producer of lithium[4] and molybdenum,[5] the sixth largest producer of silver,[6] the seventh largest producer of salt,[7] the eighth largest producer of potash,[8] the thirteenth producer of sulfur[9] and the thirteenth producer of iron ore[10] in the world. In the production of gold, between 2006 and 2017, the country produced annual quantities ranging from 35.9 tons in 2017 to 51.3 tons in 2013.[11]

Nitrate

Mining nitrate in the North of Chile defined the country's history from the late 19th century to the mid 20th. Indeed, the period 1873-1914 is referred to as the Saltpetre Republic.

Copper

underground copper mine in the commune of Machalí in the Cachapoal Province
(205).

Although the relative importance of copper declined in the 1970s and 1980s, it was still the Chilean economy's most important product in 1992. The mining sector represented 6.7 percent of GDP in 1992, as compared with 8.9 percent in 1985. In 1991, copper exports represented 30 percent of the total value of exports, a substantial decline with respect to the 1960s, when it represented almost 80 percent of total exports. Mining exports in general accounted for about 48 percent of total exports in 1991.

Two developments in the copper sector were noteworthy. First, in the 1987-91 period, there was a substantial increase in the output of refined copper, as well as a relative decline in the production of

blister copper. Second, the state-owned Copper Corporation (Corporación del Cobre—Codelco
), the world's largest copper producer, still had an overwhelmingly dominant role (accounting for 60 percent of Chile's copper output in 1991).

The so-called Codelco Law of April 1992 authorized Codelco for the first time to form joint ventures with the private sector to work unexploited deposits. Thus, in a major step for Codelco, in 1995, it invited domestic and foreign mining firms to participate in four joint explorations in northern Chile. Foreign owned private firms were to become increasingly important as new investment projects got underway.

Chilean copper miners

The heightened importance of these foreign private firms in large-scale copper mining also resulted from the international business community's improved perception of Chile and from a mining law enacted during the

Pinochet regime
that clearly established compensation rules in the case of nationalization and otherwise encouraged investment in this sector.

Given this more favourable context, Phelps Dodge, a United States mining company and the Sumitomo Metal Mining Company, a Japanese firm, signed a US$1.5 billion contract in 1992 with the Chilean government to develop Candelaria, a copper and gold mine south of Copiapó. The mine's potential production of refined copper was equivalent to about 10 percent of Codelco's entire production.

Copper Stabilization Fund

Despite the decline in

Stabilization Fund in 2007. The new fund received fiscal surpluses in excess of 1% of GDP.[12]
The high variability of copper prices affected the Chilean economy, particularly the external accounts and the availability of foreign exchange, in several ways. In the 1987-91 period, the international copper market was very favorable; for example, copper prices in 1989 were 50 percent higher than in 1980. By May 1992, however, the price of copper had declined to about its 1980 level.

The government decided to counteract the effect of the variability of copper prices by creating the Copper Stabilization Fund, which worked as follows: whenever the price of copper increased, the government would direct a proportion of the increased revenues into the fund; these resources would then be used during those years when the price of copper fell below its "normal" level. This institutional development helped Chile at least partially free itself from the volatility of the copper market. The Copper Stabilization Fund is occasionally tapped into if there is a major need for more money. Part of the fund will be used to help pay for reconstruction after the devastating 2010 Chile earthquake.

Lithium

Northern Chile forms part of the Lithium Triangle with substantial reserves in the form of brine. The explosive growth in electric vehicles since 2015 has triggered increased demand.

Chile is the main producer of lithium from brine.[13] Until 2017, when it was surpassed by Australia, Chile was the over-all main producer of lithium.[14] By one estimate Chile will be surpassed also by Argentina and China in lithium production by 2030.[14]

Most of Chile's lithium reserves are in Salar de Atacama and Salar de Maricunga,[13] and all lithium extracted in Chile as of 2023 comes from Salar de Atacama.[15] The only two lithium-extracting companies currently operating in Chile, SQM and Albemarle, have licences to extract lithium until 2030 and 2043 respectively.[15][16] In April 2023 Chilean government announced plans for nationalizing its lithium industry.[17] The state-owned copper company Codelco was commissioned by the government to negotiate nationalization with SQM.[16]

Other minerals

Gold mine in Andacollo

Since the late 1970s, the production of

Puerto Aisén and Strait of Magellan
areas.

SQM is also a significant iodine producer.

Almost no mining of placer gold occurs today.[18]

See also

References

External links