With its impressive mountains and proximity to a continental subduction zone, Chile has some of the most amazing geological features on the planet, geological features that have blessed the country with ample mineral deposits. These mineral deposits had long been mined by the inhabitants of the region long before the arrival of Spanish explorers. The Inca exploited gold in the norther part of the country and they also mined copper and copper minerals to produce jewelry and various weapons. With the arrival of the Spanish, mining became an important economic activity in the region and gold was soon being mined from easily accessible placer deposits.
Mineral exploration and exploitation have helped to shape the economy, geography, culture, and history of Chile. Today the economy of Chile is one of South America’s most stable and prosperous, due in no small part to its mineral riches. The mining sector accounted for 9% of Chile’s GDP in 2019, generated over 200,000 direct jobs, and added more than 36 billion U.S. dollars that year in mining exports (Alves, 2020). Internationally, Chile’s production ranks amongst the highest in the world for metals and minerals such as molybdenum, lithium, silver, gold, and most important of all, copper (Alves, 2020).
With this richness of mineral deposits and strong support for the mining sector by the Chilean government, it is no wonder that Chile ranks 5th in the world when it comes to mineral-exploration spending (Preston, 2014). The world’s biggest mining companies are well established in Chile and a plethora of junior companies are also actively trying to lay claim to the next big find in the region. Companies such as BHP Billiton, Codelco, Anglo America, and Glencore, amongst others, spend millions of U.S. dollars annually in exploration projects. It is important to mention that expenditure on exploration projects by junior companies had been deteriorating significantly before the COVID-19 pandemic due to low commodity prices. From the budget for exploration in the country for 2018, 89% corresponded to Major companies and 4.4% to Junior companies (CESCO, 2019). With the effects of COVID-19, the mining output and exploration budgets in Chile were further reduced. Chile lost 200,000 tonnes of copper production in 2019 according to Chile’s Ministry of Mining (Harris, 2020).
The COVID-19 crisis was an unprecedented event that threw a wrench in the world’s economy, every country in the world was affected by it and Chile was no exception. As vaccinations rate increase around the world and COVID cases start to decrease, there is a growing hope that things will go back to normal in the world. This is something that is starting to be reflected through an increase in commodity prices around the world. Metal prices have increased by 72% relative to their pre-pandemic levels (Stuermer, 2021). As commodity prices increase, we will start to see an increase of exploration activity in mining jurisdictions. Chile is not without its challenges, both politically and environmentally, but it is well positioned to take good advantage of the upcoming boom in commodity prices. With its rich mining history, government support for the industry, respect for the rule of law, and well-educated work force, Chile’s mining exploration sector will be back on its feet in no time.
Alves, B. (2020, 07 15). Mining in Chile – Statistics & Facts. Retrieved from Statista.com: https://www.statista.com/topics/6550/mining-in-chile/
CESCO. (2019, 06 03). CESCO- The future of mining exploration in Chile. Retrieved from CESCO – Centro de Estudios del Cobre y la Mineria: https://www.cesco.cl/en/2019/06/03/the-future-of-mining-exploration-in-chile/
Harris, P. (2020, May 28). Chile Loses 200,00t copper output to COVID-19. Retrieved from Mining-journal.com: https://www.mining-journal.com/covid-19/news/1387871/chile-loses-200-000t-copper-output-to-covid-19
Preston, G. (2014, June 05). Chile’s Mining Challenges . Retrieved from The Northern Miner: https://www.northernminer.com/regulatory-issues/chiles-mining-challenges/1002362476/#:~:text=Chile%20ranks%20fifth%20in%20the,apace%20over%20the%20coming%20years.
Stuermer, M. (2021, 06 09). 4 Factors Behind the Metals Price Rally. Retrieved from Seekingalpha.com: https://seekingalpha.com/article/4433821-4-factors-behind-metals-price-rally