BHP, Rio Tinto and other Australian and foreign companies with an interest in Chile’s huge mining sector have received something of a reprieve for the time being over proposals that could have seen them lose control of their mines and the minerals they contain in a change to the country’s constitution.
The proposal wanted to give the state exclusive mining rights over lithium, hydrocarbons and rare earth metals and majority ownership of copper mines.
It needed a supermajority of 103 votes to be included into the draft constitution, but only got 66, which would indicate it has little chance in another vote.
The article now returns to Chile’s environmental commission, where it will be renegotiated before facing a second vote ahead of a vote on a new constitution later in the year.
Media reports say that while Chile’s constitutional assembly passed articles expanding environmental rights on Saturday, the approval was short of the level needed for them to change the constitution.
Chile is the world’s top copper producer as well as a major producer of lithium from brine, the changes proposed were strongly opposed by the country’s mining industry. Molybdenum, gold, and silver are by-products of the copper mining and earn valuable revenue for companies and state taxes.
Another proposed article stating that mining regulations will consider environmental protections and the finite, non-renewable nature of mining resources, was approved and will be in the draft constitution voters will decide to approve or reject on September 4.
BHP controls the world’s biggest copper mine, Escondida, with Rio Tinto a shareholder, along with Mitsubishi of Japan. BHP has two other smaller mines in the country.
South 32 would have been relieved for the time being that the proposal has been rejected. It spent $US1.55 billion buying a 45% stake in the Sierra Gorda copper mine in 2021 that was finally wrapped up in the first quarter.
Around 72% of Chile’s copper mines are privately owned while the other 28% is state owned, making Codelco – the country’s state-controlled miner – the largest copper producer in the world.
Besides BHP and Rio, Barrick, Anglo American, Antofagasta Minerals, Lumina Copper, Freeport-McMoRan, Teck Resources, Lundin Mining, KGHM and SQM (lithium), operate in the country.
Australian miners like BHP and Rio Tinto have been vocal in opposition the proposed changes.
The constitutional assembly had earlier passed articles reshaping water governance to focus on water availability and expand protection for water in indigenous territories. The assembly approved expanding protections for wetlands, native forests and land essential to the water cycle.
Available water is the key to future expansion of mining and the tighter state controls gives it a greater say in expansion of existing mines and new proposals. It will become a major source of tension with mining companies, some of whom have been fined for using too much water in the past couple of years.
Reuters said constitutional assembly previously voted down the environmental commission’s set of proposals, but approved them on Saturday and began voting on them individually.
Proposed new articles for the constitution that have received less than a two-thirds supermajority, but more than a quarter of votes, will go back to the commission and get a second vote in the assembly.
More lobbying and pressure can be expected from leftwing political and social groups in the country to give greater control of mining to the state.
