Chile would strengthen mining ties with Canada

Chile’s mines minister recently told a Canadian audience that vast areas of his country, especially in the south, have received little exploration despite many indications of deposits. He predicted that exploration will increase and will include non-metallic resources and base metals other than the traditional copper, gold and silver.

Alejandro Hales was speaking to a symposium of the Mining Association of British Columbia during this city’s Mining Week 1993.

“Close links have been achieved between Chile and Canada in the mining sector and we are keen to safeguard and strengthen these links because they are mutually beneficial,” Hales said.

He noted that Canada accounts for most of the foreign investment in Chilean mining, on the basis of money invested and the number of companies operating there.

“It is evident that this significant presence of Canadian business in Chile offers great related opportunities to companies that supply equipment and services, which allows our country to take advantage of advanced Canadian mining technology,” Hales said.

“An example of these new options is the association between Inco (TSE) and Codelco-Chile with the purpose of producing machinery and plans to export. This new company will be near El Teniente, the world’s largest underground copper mine and Codelco’s second-largest producing entity division.” He said recent legal changes allow Codelco-Chile to negotiate joint ventures for exploring several projects (the company holds a significant percentage of Chile’s established properties). Codelco also transferred 24 less-advanced prospects to the national mining company (ENAMI).

“As a state company with a mandate for the promotion of small and medium-scale mining, ENAMI will be able to negotiate the transfer of these properties for their operation by private companies,” Hales explained. The Chilean government is encouraging companies to work toward enhancing the value of mining products. An example would be converting possible surpluses of copper concentrates into refined copper.

Earlier in the day, a number of Canadian mining companies discussed their projects in Chile, as well as working conditions in the country. Fred Hewett, vice-president of Arauco Resources (VSE), described his company’s recent venture into southern Chile. The junior is applying “Canadian-style” techniques to find deposits in a vegetated setting more typical of the Canadian Cordillera than the deserts of northern Chile. Two projects are at the drilling stage.

William Robertson of Cominco (TSE) said the Quebrada Blanca copper project in northern Chile’s arid desert is being developed to North American standards in anticipation of environmental legislation. Key concerns for this project will be water and dust management. Associated companies Teck (TSE) and Cominco Resources International (TSE) also have interests in this project, which will produce cathode copper by solvent extraction-electrowinning. A plant should be constructed by the first half of 1994.

John Hannah of BHP Minerals provided insight into the Escondida copper mine in Chile’s Atacama Desert. The company broke ground for international companies by moving back into Chile after the turbulent years when Salvadore Allende was in power (1970-1973).

“We had immense difficulties trying to finance this project in the mid-1980s because of the Latin American debt crunch,” Hannah said of the joint venture, which includes BHP, RTZ and two minority partners.

Escondida was completed in late 1990, seven months ahead of schedule and $149 million under budget. In 1992, BHP’s share of copper concentrate production (57.5%) contained 401 million lb. (production of cathode copper is being investigated). Hannah said BHP is “evangelical” about providing a positive environment for workers. He added that, at Escondida, little distinction is made between management and workers.

Princeton Mining (TSE) provided details of its Rio Lluta project where a porphyry copper target and several associated tourmaline breccias are being explored.

Jay Taylor of Placer Dome (TSE) and Michael Knuckey of Falconbridge both noted that their respective companies have re-allocated considerable capital to Chile from North American projects.

Taylor cautioned that mining in Chile does have disadvantages. These include: a complex bureaucracy, problems with overstaking of claims, tough competition for resources, a shortage of skilled workers, water scarcity in the north, an appreciating local currency, and scarce local financing.

On the other hand, many companies active in Chile cited a loss of confidence in British Columbia. Reasons include a complex regulatory process, uncertainty of mineral tenure and land access, and high taxes. B.C. Mines Minister Anne Edwards released a paper outlining plans to strengthen exploration and improve competitiveness in B.C. mining. “Mining is a key part of our economy which we want to keep healthy and viable,” said Edwards. “If we don’t work together to address its problems, we could see it shrink or virtually disappear in the 21st century.” Edwards said another priority is to increase the value of B.C.’s mineral products. She added that the government would work to rationalize environmental and regulatory requirements, while maintaining high standards of environmental protection.