Mining in Chile

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1947 map of mines in Chile Chile Principle Producing Mines - DPLA - 6e7888f5d8ec26604ddd9e7d2928a0dd.jpg
1947 map of mines in Chile

The mining sector in Chile is one of the pillars of Chilean economy and copper exports alone stands for more than one third of government income. Most mining in Chile is concentrated to the 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]

Contents

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

El Teniente, an underground copper mine in the commune of Machali in the Cachapoal Province (205). Caletones.jpg
El Teniente, an 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 Chilean Miners.jpg
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 copper's importance, Chile continued to be affected by the vagaries of the international copper market. The fund received 0.2-0.5% of GDP, depending on the size of the budget surplus each year. In 2006, a one-off sum of $600 million United States dollars was added to the fund. The fund was replaced with the Economic and Social 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 Andacollo Gold mine.jpg
Gold mine in Andacollo

Since the late 1970s, the production of gold and silver has increased greatly. The lead, iron and petroleum industries have shrunk since the mid-1970s, the result of both adverse international market conditions and declines in the availability of some of these resources. With a combined total value of about US$4 billion, two of the largest investments planned in Chile in the early 1990s were designated for aluminium-smelter projects in the 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

Related Research Articles

<span class="mw-page-title-main">Economy of Chile</span>

The economy of Chile is a market economy and high-income economy as ranked by the World Bank. The country is considered one of South America's most prosperous nations, leading the region in competitiveness, income per capita, globalization, economic freedom, and low perception of corruption. Although Chile has high economic inequality, as measured by the Gini index, it is close to the regional mean. Among OECD nations, Chile has a highly efficient and strong social security system; social welfare expenditure stood at roughly 19.6% of GDP.

<span class="mw-page-title-main">Economy of Bolivia</span>

The economy of Bolivia is the 95th-largest in the world in nominal terms and the 87th-largest in purchasing power parity. Bolivia is classified by the World Bank to be a lower middle income country. With a Human Development Index of 0.703, it is ranked 114th. Driven largely by its natural resources, Bolivia has become a region leader in measures of economic growth, fiscal stability and foreign reserves, although it remains a historically poor country. The Bolivian economy has had a historic single-commodity focus. From silver to tin to coca, Bolivia has enjoyed only occasional periods of economic diversification. Political instability and difficult topography have constrained efforts to modernize the agricultural sector. Similarly, relatively low population growth coupled with low life expectancy has kept the labor supply in flux and prevented industries from flourishing. Rampant inflation and corruption previously created development challenges, but in the early twenty-first century the fundamentals of its economy showed unexpected improvement, leading Moody's Investors Service to upgrade Bolivia's economic rating in 2010 from B2 to B1. The mining industry, especially the extraction of natural gas and zinc, currently dominates Bolivia's export economy.

<span class="mw-page-title-main">Antofagasta Region</span> Region of Chile

The Antofagasta Region is one of Chile's sixteen first-order administrative divisions. The second-largest region of Chile in area, it comprises three provinces, Antofagasta, El Loa and Tocopilla. It is bordered to the north by Tarapacá, by Atacama to the south, and to the east by Bolivia and Argentina. The region's capital is the port city of Antofagasta; another one of its important cities is Calama. The region's main economic activity is copper mining in its giant inland porphyry copper systems.

<span class="mw-page-title-main">Chuquicamata</span> Largest open pit mine in the world by volume

Chuquicamata is the largest open pit copper mine in terms of excavated volume in the world. It is located in the north of Chile, just outside Calama, at 2,850 m (9,350 ft) above sea level. It is 215 km (134 mi) northeast of Antofagasta and 1,240 km (770 mi) north of the capital, Santiago. Flotation and smelting facilities were installed in 1952, and expansion of the refining facilities in 1968 made 500,000 tons annual copper production possible in the late 1970s. Previously part of Anaconda Copper, the mine is now owned and operated by Codelco, a Chilean state enterprise, since the Chilean nationalization of copper in the late 1960s and early 1970s. Its depth of 850 metres (2,790 ft) makes it the second deepest open-pit mine in the world, after Bingham Canyon Mine in Utah, United States.

<span class="mw-page-title-main">Codelco</span> Chilean copper company

The National Copper Corporation of Chile, abbreviated as Codelco, is a Chilean state-owned copper mining company. It was formed in 1976 from foreign-owned copper companies that were nationalised in 1971.

<span class="mw-page-title-main">Economy of South America</span>

The economy of South America comprises approximately 434 million people living in the 12 sovereign states and three dependent territories of South America, which encompasses 6 percent of the world's population. South America ranks fifth in terms of nominal GDP by continent, behind North America and after Oceania.

<span class="mw-page-title-main">Mining in Western Australia</span>

Mining in Western Australia, together with the petroleum industry in the state, accounted for 94% of the State's and 46% of Australia's income from total merchandise exports in 2019–20. The state of Western Australia hosted 123 predominantly higher-value and export-oriented mining projects and hundreds of smaller quarries and mines. The principal projects produced more than 99 per cent of the industry's total sales value.

<span class="mw-page-title-main">Sociedad Química y Minera</span> Chilean chemical company and lithium producer

Sociedad Química y Minera de Chile (SQM) is a Chilean chemical company and a supplier of plant nutrients, iodine, lithium and industrial chemicals. It is the world's biggest lithium producer.

<span class="mw-page-title-main">Mining in Iran</span>

Mining in Iran is still under development, yet the country is one of the most important mineral producers in the world, ranked among 15 major mineral-rich countries, holding some 68 types of minerals, 37 billion tonnes of proven reserves and more than 57 billion tonnes of potential reserves worth $770 billion in 2014. Mineral production contributes only 0.6 percent to the country's GDP. Add other mining-related industries and this figure increases to just four percent (2005). Many factors have contributed to this, namely lack of suitable infrastructure, legal barriers, exploration difficulties, and government control.

<span class="mw-page-title-main">Salar de Atacama</span> Salt flat in Chile

Salar de Atacama, located 55 km (34 mi) south of San Pedro de Atacama, is the largest salt flat in Chile. It is surrounded by mountains and lacks drainage outlets. To the east, it is enclosed by the main chain of the Andes, while to the west lies a secondary mountain range called Cordillera de Domeyko. The landscape is dominated by imposing volcanoes such as Licancabur, Acamarachi, Aguas Calientes, and Láscar, the latter being one of Chile's most active volcanoes. These volcanoes are situated along the eastern side of the Salar de Atacama, forming a north–south trending line that separates it from smaller endorheic basins.

<span class="mw-page-title-main">El Salvador, Chile</span> Place in Atacama Region, Chile

El Salvador is a mining town in the commune of Diego de Almagro, Chañaral Province, Atacama Region, Chile. Located at an elevation of more than 2,400 meters in the foothills of the Andes and in the middle of the Atacama Desert, it has a population of approximately 7,000 inhabitants. At its peak, El Salvador once had a population of 34,000 inhabitants.

<span class="mw-page-title-main">El Teniente</span>

El Teniente is an underground copper mine located in the Chilean Andes, 2,300 m (7,500 ft) above mean sea level. It is in the commune of Machalí in Cachapoal Province, Libertador General Bernardo O'Higgins Region, near the company town of Sewell. This was established for the workers and their families.

<span class="mw-page-title-main">Mineral industry of Peru</span>

The mineral industry of Peru has played an important role in the nation's history and been integral to the country's economic growth for several decades. The industry has also contributed to environmental degradation and environmental injustice; and is a source of environmental conflicts that shape public debate on good governance and development.

<span class="mw-page-title-main">El Salvador mine</span>

El Salvador mine is a combined open pit and underground copper mine located in Chile and owned by the state owned copper mining company Codelco. The mine is located in the company town of El Salvador.

<span class="mw-page-title-main">Mining in Bolivia</span>

Mining in Bolivia has been a dominant feature of the Bolivian economy as well as Bolivian politics since 1557. Colonial era silver mining in Bolivia, particularly in Potosí, played a critical role in the Spanish Empire and the global economy. Tin mining supplanted silver by the twentieth century and the central element of Bolivian mining, and wealthy tin barons played an important role in national politics until they were marginalized by the industry's nationalization into the Bolivian Mining Corporation that followed the 1952 revolution. Bolivian miners played a critical part to the country's organized labor movement from the 1940s to the 1980s.

Mining in the United States has been active since the beginning of colonial times, but became a major industry in the 19th century with a number of new mineral discoveries causing a series of mining rushes. In 2015, the value of coal, metals, and industrial minerals mined in the United States was US$109.6 billion. 158,000 workers were directly employed by the mining industry.

Mining in Argentina includes primary aluminum, lead, copper, zinc, silver, and gold. In 2019, Argentina was the 4th largest world producer of lithium, the 9th largest world producer of silver, the 17th largest world producer of gold and the 7th largest world producer of boron.

During most of Chile's history, from 1500 to the present, mining has been an important economic activity. 16th century mining was oriented towards the exploitation of gold placer deposits using encomienda labour. After a period of decline in the 17th century mining resurged in the 18th and early 19th century this time revolving chiefly around silver. In the 1870s silver mining declined sharply. Chile took over the highly lucrative saltpetre mining districts of Peru and Bolivia in the War of the Pacific (1879–83). In the first half of the 20th century copper mining overshadowed the declining saltpetre mining.

<span class="mw-page-title-main">Lithium Triangle</span> Region of the Andes rich in lithium

The Lithium Triangle is a region of the Andes that is rich in lithium reserves, encompassed by the borders of Argentina, Bolivia, and Chile. The lithium in the triangle is concentrated in various salt pans that exist along the Atacama Desert and neighboring arid areas. The largest areas three main salt pans that define its vertices are the Salar de Uyuni in Bolivia, Salar de Atacama in Chile, and Salar del Hombre Muerto in Argentina. Of these, the Salar de Atacama in Chile has the highest concentration of lithium among all world's brine sources. The shape of the area of interest for lithium resources in salt pans is however not a triangle but more of a crescent starting with Salar de Surire in the north and ending with Salar de Maricunga in the south. Because of this it has been proposed to rename the area Lithium Crescent.

<span class="mw-page-title-main">Mining in Canada</span> Overview of the mining industry in Canada

Mining has been conducted on an industrial scale in present-day Canada since the late 18th century. The industry remains an important aspect of the economy of Canada to this day, particularly in the North, and Canadian-domiciled mining companies have increasingly expanded their operations globally.

References

  1. Copper production in 2019 by USGS
  2. USGS Iodine Production Statistics
  3. USGS Rhenium Production Statistics
  4. USGS Lithium Production Statistics
  5. USGS Molybdenum Production Statistics
  6. USGS Silver Production Statistics
  7. USGS Salt Production Statistics
  8. USGS Potash Product ion Statistics
  9. USGS Sulfur Production Statistics
  10. USGS Iron Ore Production Statistics
  11. Gold production in Chile
  12. Saggu, A. & Anukoonwattaka, W. (2015). "Commodity Price Crash: Risks to Exports and Economic Growth in Asia-Pacific LDCs and LLDCs". United Nations ESCAP. SSRN   2617542.{{cite web}}: Missing or empty |url= (help)
  13. 1 2 Cabello, J. (2022). Reserves, resources and lithium exploration in the salt flats of northern Chile. Andean Geology . 49 (2): 297–306. doi: 10.5027/andgeoV49n2-3444. Retrieved July 2, 2022.
  14. 1 2 "Argentina could help the world by becoming a big lithium exporter". The Economist . 2022-11-15. Retrieved 2023-04-21.
  15. 1 2 Munita C., Ignacia (2023-04-21). "Control estatal de los salares, negociar con SQM y empresa nacional: Las claves de la estrategia del Gobierno por litio". Emol (in Spanish). Retrieved 2023-04-21.
  16. 1 2 Browne R., Vicente (2023-04-21). "Las razones del desplome bursátil de SQM tras el anuncio presidencial del litio". Ex-Ante (in Spanish). Retrieved 2023-04-21.
  17. Villegas, Alexander; Scheyder, Ernest (2023-04-21). "Chile plans to nationalize its vast lithium industry". Reuters. Retrieved 2023-04-21.
  18. Jara, J. Joaquín; Moreno, Francisco; Jara, Raúl; Dubournais, Francisco; Mata, Rodrigo; Peters, David; Marquardt, Carlos; Lagos, Gustavo (2019). "Ranking of Placer Gold Prospects in Chile Through Analytic Hierarchy Process". Natural Resources Research . 28 (3): 813–832. doi:10.1007/s11053-018-9420-5. S2CID   169899273.