The lecturer at the Universidad Católica points out that what is happening in the Chilean mining industry is far from happened in the Asian crisis.
What kind of outlook is the Chilean mining industry facing?
The situation in Chile has to with the fall in the price of copper, but there are added complexities due to some energy problems, in which the price is not going to improve within three or four years. It seems unlikely that something will happen to improve this situation, aside from rain.
Chile has to solve its energy problem. If it does not, there will not be any new projects with the exception of those already announced, and as a result production in mines will not be so good.
This could be a better situation. However, in no way is the Chilean mining industry in crisis. Companies will have to realize that they cannot restrain costs as they wish. They have to tighten their belts, but this is not like the Asian crisis, when prices plummeted. This is different, and it is important to make the difference. We are not at the same party we were three years ago, but this isn’t a funeral, either.
What can we expect from mining projects?
If the country had competitive energy, like Peru for instance, some projects would be viable. If Chile had a clear idea of which projects can be started and finished within a reasonable time frame, things would be different. It is not enough to approve the environmental impact study. Afterwards any interest group can come and file a court appeal and stop the project.
In (Michelle) Bachelet’s first term, there were no large issues with this. During (Sebastián) Piñera’s term the Barrancones issue happened and, after that, the system was so discredited that the Supreme Court decided to halt Castilla. Afterwards, nobody else wanted to do projects. Minister Sergio Muñoz (from the Supreme Court) never imagined that his decision was going to halt energy investments in Chile. It had a high cost for this country, because it is going to be six years without investments.
NGOs are, in part, very responsible for this result because they have halted all projects related to coal. They do not want hydropower plants or dams either. They want gas plants, but there is not enough gas. They also want solar plants and wind farms. It is absurd to believe that this country can grow solely on these sources.
Beyond the energy problem, is there anything that mining companies could do to avoid this context?
The mining industry can do a few things, for example, they can get a move on engineering projects in order to be more prepared to invest when prices start to climb. This is not a bad moment to do environmental impact studies on those extensions that are pending, even though there is no decision to carry out those projects.
