Mining: A Platform for Chile’s Future Report to the President of the Republic of Chile Michelle Bachelet

[Seleccionar fecha] The Commission for and Development of Chile National Council of Innovation and Competitiveness December of 2014

Index

Introduction 3

1. Vision 5 2. Agenda of strategic priorities 7 3. Institutional framework for a virtuous, sustainable and inclusive mining industry 15 4. Members of the group who participated in the elaboration and agreements arising from this document 17

Mining: A Platform for Chile’s Future

Introduction

The mining future of Chile is a task of the present. Two domains that need to be addressed are creating the conditions for attracting greater investment and strengthening public confidence in mining activities. Chile also needs to make advances in environmental sustainability, to achieve a harmonious encounter with the people and communities where mining carries out its activities, to increase productivity and to develop an effective platform for the growth of new industries and knowledge-intensive services.

Making this progression possible is a challenge of proportions. It requires the concourse of multiple efforts in social innovation, institutional development, and advances in science and technology. Building these capabilities is at the heart of this proposal.

The Commission for Mining and Development of Chile and its members, who sign this agenda, agreed to elaborate a vision and to identify the strategic priorities required for Chilean mining to consolidate its aspirations and reaffirm its global leadership. The Commission presents this vision and sets forth the targets that the industry needs to achieve in the next 20 years.

We are convinced that in its stride towards a virtuous, sustainable, inclusive and multicultural industry endowed with regional solidarity, mining will be a source of inspiration for the nation. This will open cultural and scientific paths at the forefront of global knowledge.

Chile is a global mining power. It is the largest producer, supplying 32% of worldwide production and the third largest producer of molybdenum. It also occupies leading positions in the processing of other minerals. Mining has been a pillar of national progress for a long time. A recent study concluded that, if mining exports had not increased as it did from 1990 on, and if it had continued in the same institutional and productive trajectory it had during the period spanning 1960-1990, the current national income would be 45% lower than its present level. Mining has been a leading force to power development and attract investment; it is a crucial contributor to the progress made in the quality of life the country has enjoyed in recent decades.

The Commission agrees that there is a great opportunity for mining to further its contribution to the improvement of the welfare of Chileans. To materialize this opportunity, urgent action is required in order to reap the benefits of this historical moment that stems from the high demand for minerals from emerging economies in Asia.

To begin with, all stakeholders must strive to overcome the problems that discourage investment in mining today. In this regard, it is worrisome to note that far from increasing, investment in has fallen. According to the last survey of investment projects, there are over US $ 44 billion being held pending a decision. If this projection holds true, mining production would decrease by about a third from its current level by 2030. It is obvious that if this scenario prevails, no part of this proposal would be viable.

Seizing the opportunity requires also bridging the gaps that exist in terms of productivity, environmental protection, effective citizen participation and fair compensation to the localities where mining takes place. To show the magnitude of the effort involved in closing these gaps, it should be noted that labor productivity in Chilean mining is one third that of Canada or the United States. As a country, Chile needs to increase its productivity, and this is urgent for the mining industry.

The challenges we face begin with the need to strengthen citizen confidence in the sector. The mining industry of the future requires forging and strengthening a relationship of worth and collaboration among all stakeholders: mining companies, their workers and their suppliers; the State that directs, regulates and supervises; and the citizens who see their interests positively or negatively influenced by this activity. We believe that dialogue that leads to mutually beneficial agreements -where each party meets its agreed commitments- is the best way to avoid or overcome conflict and move towards a mining of the future.

For this reason, many of the proposals made here address the need to bolster trust. Prominent among them is the strengthening of national capacities for more effective environmental protection, and the institutional development agreed upon concerning the process of consultation with native communities. The reinforcement of overall citizen participation is paramount.

In parallel, the proposal emphasizes actions seeking to increase the productivity and the competitiveness of mining in order for the sector to radiate progress to the country. This includes tackling the profound challenges related to labor productivity, availability of water and energy, as well as the development of knowledge, organizational capabilities and human resources that are crucial for the success of this process; the crafting of a strategic platform for R + D + I; and the unfolding of an industry of high productivity providers that can undertake a solid exporting role.

The second consideration of the Commission is that it is essential to have a roadmap to guide the country through the efforts included in this proposal and to measure their progress. This task requires urgent and continuous long-term dedication. A jump-start in the established direction is essential. Therefore, the document herein not only defines a set of strategic priorities to be adopted immediately, it also includes initiatives that are already supported by the firm commitment of public and private stakeholders who are engaged in their promotion.

A third consideration is the identification of the institutions that should be tempered or created to support the development of this agenda. This proposal suggests giving the country a public-private institutional framework to ensure greater coordination and joint actions between the different participants in this activity. The idea is to speed things up and move from a transactional approach to a transformational one, which will generate collaborative and integrated relationships at all levels. We need an institutional setting that generates, guides and supervises the blossoming of a virtuous, sustainable and inclusive mining industry and thus help create greater trust and value for all parties involved in its development.

Finally, we emphasize the importance of addressing these hurdles with the conviction that we do not hold the answers to all the puzzles and challenges that will arise. Therefore, we must assume this task as a learning process. The objectives are demanding and must be sustained over a long time, so we must exercise extreme coordination between stakeholders. We therefore invite the nation -in the context of a broad political and social calling- to define and implement a new vision for the development of a new virtuous, sustainable and inclusive mining industry that is also respectful of human rights. We therefore begin by presenting our vision. It is a proposal to contribute to the sustainable development of mining and continue its role as a driving motor behind an improved quality of life and national welfare for many years to come.

1. Vision: A virtuous, sustainable and inclusive mining industry to improve the quality of life of current and future generations.

By 2035 the mining industry in Chile will have achieved:

The export of 130-150 billion tons of copper and other minerals during the 20 years between 2015 and 2035, having completed the huge investment required. Eighty percent of this production will be positioned in the first two cost quartiles of the global industry. Furthermore, 250 suppliers exporting world-class technology and knowledge intensive services have come on stream. Business at the end of the period reaches a total of US $ 10,000 million per year. The establishment of a worldwide leadership in sustainable mining founded on the implementation of benchmarks and environmental management standards based on best industrial practices. This clears the way for rationalizing the processes of environmental requirements and permits, as well as facilitating their monitoring by the State. In this way, the demand for fresh water and energy, and also greenhouse gas (GHG) emissions, will have been reduced compared to the base year projected (BAU 2010). These actions will mitigate net losses in biodiversity, thereby contributing to the conservation of our natural heritage. The establishment of relationships based on trust and collaboration between all parties involved in the mining activity. This is made possible through an ongoing open and transparent dialogue between parties on an equal standing, leading to agreements with shared benefits that allow for the advancement of the common good. Likewise, the existence and compliance of relationship standards by each stakeholder has become a standard practice that points to the full respect of agreements in a long-term relationship of mutual benefit.

This vision unfolds from the concepts of a “virtuous, sustainable and inclusive mining industry”. We define each one of these qualifiers below: Virtuous Mining is the one that, by strengthening its competitiveness and productivity, tends to create conditions for the emergence of a robust ecosystem of innovation. Virtuous Mining is driven by individual action and collective effort. The latter is based on an agenda of shared actions between the mining industry, mining industry suppliers, the scientific community, native people, local communities, and the State. Beginning with this agenda, investments increase to expand productive capacity and complete the transition from an industry based on the country’s natural advantages to an enterprise of higher complexity. The benefits of this development are many because they counteract the impact of deteriorating ore grades in our deposits and act as a springboard for Chile to become a player in the global value chains and the knowledge society, exhibiting the highest standards of respect for the rights of the individual.

Virtuous mining assumes its economic, technological, social and environmental tasks as a driving force for the creation of new capabilities and productive activities. In this way, it stands as a mining power that invests in knowledge and ensures excellence in research, innovation, engineering, production and marketing, managing to stay sustainable, competitive and profitable in the long term. Thus, converted into a state of the art technological development pole and empowered to solve technological, environmental and social problems, virtuous mining multiplies its benefits over other industries and sectors. It not only fortifies its role, but it becomes an agent of change at the service of society.

Inclusive mining is one that encourages the participation of communities living or working in areas affected by mining facilities in the benefits generated by their operations. Inclusive mining seeks to create shared value in its social environment and maintains a fluid and permanent dialogue with its workers; within a framework of full respect for the rights of all parties. A present and active State must generate the institutional conditions of coexistence for the common good and promote a dialogue between parties as well as a free, ex-ante, informed, responsible and in good faith participation of native and other communities near the mining activities. It should also manage efficiently and fairly that portion of the income it acquires which corresponds to a non-renewable natural resource whose healthy development benefits the whole country.

Sustainable mining is one that, in the design of its operations, integrates all variables affecting the socio-environmental system in which it operates. In this way it prevents, avoids, minimizes, mitigates and compensates its environmental impacts -including effects on the ecology and biodiversity, water and soil quality, and also the social and cultural impact throughout the life cycle of the facilities until their closure and abandonment. The industry operates with practices, technologies and verifiable world-class environmental standards. It favors the interests and rights of present and future generations. In this context, the State assumes a more effective role in the protection of the environment, through means such as territorial planning, norms and regulations, and monitoring of industrial externalities.

The three concepts that structure this vision of the future of mining -virtuous, sustainable and inclusive- are grounded on practices currently under way, although many of these must be improved, extended and institutionalized. These concepts are closely related, therefore the deployment of all three is required to give form and substance to the necessary relationship of trust and dialogue between the parties concerned. Mining development and its success can then meet the expectations of a better quality of life and a greater well-being of all the people in Chile.

2. Agenda of strategic priorities for a virtuous, sustainable and inclusive mining industry.

To build the mining industry motivated by the vision we have agreed upon requires launching a comprehensive set of initiatives. These involve public and private responsibilities, a significant mobilization of resources and, above all, persistence over time. The commission shaped its proposals around strategic priorities, putting forth a set of concrete initiatives for each of them. These are detailed in the annexes accompanying this report, as well as others that serve as a complement.

To achieve the goals set by the commission we must begin to act now. Therefore, the commission along with public authorities and the corresponding parties in the private sector, agreed to launch the implementation of a series of initiatives in 2015 that are central to move in the desired direction. The decision to go-ahead with these actions bears witness to the commitment of business and government with the proposed agenda.

2.1- Immediate agenda: ten commitments that start in 2015.

a. To complete the institutional development proposed in Section 3. These institutions are required as drivers for the emergence of a virtuous, sustainable and inclusive mining industry. The public and private sectors provide the resources required to promote this immediate agenda.

b. To promote a dialogue aimed at building a shared vision of mining’s future based on the stated proposal of a virtuous, sustainable and inclusive mining industry. This task should be the responsibility of a public-private council and can begin with the search for agreements on crucial issues between the mining industry and the community of citizens at large, as is the case of water resources. Dialogue is essential to build trust and develop a narrative that demonstrates the contribution of mining to Chile’s social and economic development, one that is supported and understood by the public. The resulting definitions will lay the foundations for a broad and firm commitment of the entire nation with its mining industry. Particularly relevant will be to feed this dialogue with an analysis of the challenges and obstacles faced by the next generation of mining projects. Among these is the development of large-scale mining in Central Chile (IV to VI Region). Mining resources available in these regions represent 16% of world copper reserves and 50% of the national mining potential. However, this territory is inhabited by nearly 60% of the population engaged in multiple and significant activities. Therefore, there are varied uses of soil and other resources that must be considered to make viable the future of mining in this region.

A public-private consortium has already started work to identify risks and opportunities for mining in these regions and to specify the actions required to address them. It is essential to maintain and strengthen this effort under the aegis of the suggested public-private institutional framework and, above all, to incorporate the viewpoint of citizens in this process. c. To build and finance collaborative R & D + i initiatives by mining companies and their suppliers. These initiatives will incorporate a set of relevant projects focusing on technological challenges and innovation. All these projects are aligned with the proposed vision and they cover issues related to exploration, processing, sustainability (including energy and water) and inclusive association (relationships with communities and generation of shared value). In order to give maximum legitimacy to this R & D + i agenda, its contents are to be discussed with the Public- Private Council that will be created as part of the agreements promoted by the Commission. The founders of this concerted effort may invite other firms, producers or suppliers, to participate in the board of the Council, in specific projects or in related consortia. During 2015 at least two R + D + i collaborative projects will be launched.

Carrying out these objectives implies a definition of the principles that will materialize in the respective contracts in order to facilitate the development of collaborative relationships between mining companies and suppliers as well as the scaling of their joint initiatives. Furthermore, the initiative must structure and make public a transparent map of supply and demand for research, services and technologies to guide the development of the capacities needed to put them on stream. d. To expand and enhance the ongoing program for the development of world-class mining providers and other similar initiatives. During 2015, at least two additional mining companies will develop programs of this type. The idea is to scale the effort which aims to achieve the targets set in the vision of this document, and at the same time obtain an adequate return for the projects. As part of the program, producers and providers should tailor specific contractual arrangements applicable to incremental innovation projects and technological breakthroughs by the exchange of information concerning the risks and benefits of the projected ventures. A second action is to grant greater visibility to mining sector suppliers through a characterization process validated by third parties. Finally, the program considers setting up a scheme to attract major global suppliers. The purpose is to bring their technical capabilities to Chile in collaboration with local counterparts, in the expectation that they help integrate these local providers into the global value chains. The funding of this program corresponds to the mining companies, suppliers and the State, in proportions to be agreed upon. e. To enhance the productivity of mining, through a technical institution in charge of monitoring and analyzing the factors affecting productivity and proposing measures to increase it. This could be a priority for the Productivity Commission promoted by the Ministry of Economy. f. To improve the regulatory framework of the free, ex-ante and informed consultation process of the native people and initiate a dialogue on matters questioned by them concerning Regulation 66. It is necessary to encourage the construction of specific frameworks for ex-ante consultation that fits the context and needs of each indigenous group in line with the requirements of Convention No. 169 of the International Labour Organization. We also observe the existence of unclear concepts in these regulations that can be clarified within a dialogue in good faith.

Academic meetings for reflection, debate and dialogue between interested parties and native and non-native experts in relations between communities and mining are also advisable. The aim is to create a shared vision of the opportunities and mutual benefits that mining can offer all stakeholders, and also to clarify and agree upon standards and regulations applicable to the industry and the State, in its role as consultant and guarantor of the rights of indigenous peoples. g. To strengthen the availability of geological information and improve the access to mining property. In line with the recently announced pro-investment agenda of the Bachelet administration, we suggest moving towards the creation of a database on mineral exploration and geological resources following the standards of the most advanced mining economies. In addition to this, we should study mechanisms to provide greater liquidity to the mining property market to stimulate its effective exploitation. One example is to establish a progressive toll when the owner shows no advances in the exploitation of the resource. h. To fortify the capacities of environmental institutions. This will be financed by the Strategic Investment Fund for an amount of approximately US $ 35 million annually. These revenues will seek: i. The design and implementation of a program for the accreditation of laboratories and environmental services endowed with high standards for monitoring and assuring quality. This will be a key contribution to improving environmental monitoring capabilities. A top priority will be the socialization of the new environmental management system by developing a demonstrative example based on the strict overseeing of one specific area of compliance, such as the current regulations over emissions by thermo-electrical plants. ii. The development of environmental norms, regulations and recommendations for the mining sector based on best industrial practices. iii. The establishment of funding alternatives for world class R & D centers which put into practice specific capacities for characterizing the state of the environment. The objective is to systematically produce information about the state of resources such as water, soil, air, biodiversity and the eco-systemic services of the territory. This information will support the process of strategic environmental assessment. It will also allow for the definition of criteria for integrated protection and optimal compensation of biodiversity. iv. The launching of a plan for strategic environmental assessments in locations declared national priority due to the existing environmental risk. This plan will generate environmental baselines –freely available to the public– in prioritized territories based on their potential for mining and energy development. i. The new institutional framework will put together a proposal for conduct standards for all the actors of the mining industry in relation to the labor, productive, social and environmental setting. The idea is to agree on standards in areas such as occupational safety, integrity and transparency, energy efficiency, use of water and water sources, recycling, emissions and community relations. These standards will stem from the best national and international practices and lead to the sustainable and inclusive evolution of the extractive activity. To this end companies will set verifiable annual targets of compliance to standards. j. To continue strengthening the national research capacity and expand the number of researchers working in areas relevant to the development of the virtuous, sustainable and inclusive mining industry. According to the analysis conducted by the Commission, Chile currently has roughly 350 researchers of excellence in these areas. This number is clearly insufficient and much less than in countries with a mining development lower than ours. The public sector will promote actions to bring the number of active researchers in these areas to 600 within three years, beginning with an increase of 100 researchers during 2016. The diagnosis of priority areas for research, as well as the preparation of the documents needed to invite applicants, will conclude in 2015. The Commission proposes that by 2025 there will be at least 1,000 researchers of excellence in areas directly linked to the development of mining. k. To conduct studies co-financed by mining and electricity (generation and transmission) companies to determine the energy requirements of the mining industry. These studies will focus on the new generation and transmission capacities associated with mining development and will include a technological mix to improve the competitiveness of Chile in relation to other exporting countries in terms of costs, carbon footprint and freshwater use.

2.2 Five strategic development priorities for a virtuous, sustainable and inclusive mining industry.

The proposal laid out up to this point is the result of the work of subcommittees from the Commission for Mining and Development of Chile. Its conclusions are presented in the annexes to this report that provide details on the suggested ideas. We recognize that in many cases it is necessary to continue working to define more accurately the specific policies.

Before setting out the strategic priorities it is important to note that many of them are not only applicable to mining. They are priorities with a national scope and have a strong impact on mining activity, but they must be assumed as a whole. However, in several instances this proposal suggests to begin confronting the mining challenges immediately. The size of the mining sector and the willingness of several actors to collaborate could help bring forth lessons for the definition of a general policy. It could also help speed up pressing decisions for the crystallization of the new conception of mining contained in this proposal. We present the strategic guidelines designed for the advent of a virtuous, sustainable and inclusive mining industry in the following.

1. To strengthen productivity and innovation in mining: make Chile part of global value chains. The huge buying power of mining offers the possibility of boosting a local industry of world-class mining suppliers. This, however, requires multiple actions from the public and private sectors and, above all, bolstering cooperation between them both. Some of the required tasks have been expressed as priorities for 2015. This is the case of joint initiatives and the coordinated action of the public sector. However, additional actions are required. Paramount among them is risk-sharing facilities for piloting and testing the technologies that are being developed.

We also need to continue invigorating our research capacity. To the proposed increase in the number of top researchers, it is necessary to add the investment in infrastructure and equipment required to bring this agenda to fruition. The sector’s human resources base should also be reinforced. We therefore suggest the implementation of a system of qualification of mining skills in every educational institution offering technical and professional training in mining and the creation of three training centers for them. Another idea is to implement an international program to attract mining talents from abroad.

Additionally, it is necessary to continue building up the ecosystem of entrepreneurship and innovation. Greater access to financing is also needed so that mining providers succeed in developing their activities, especially knowledge- intensive suppliers in services, technology and equipment. The result will be to induce both local and foreign investors to scale up their undertaking.

We should also implement a policy to position Chile internationally as the mining center of the future, coupled with a program to attract large multinational suppliers to conduct productive and innovative activities from Chile. We can leverage the Pacific Alliance to the same purpose, enhancing our industry in partnership with countries in the region.

Finally, we should emphasize the importance of the energy, logistics and transport sectors (and of a potential water supply industry) to provide for the mining industry. Therefore we must fortify the links between the representatives of these sectors and the local communities with the people dedicated to elaborating these policies. 2. To establish a Fund for Promoting Citizen Participation. It is necessary to increase citizen participation and improve the quality management of its processes with exacting standards for procedures and outcomes. We propose the creation of a Fund for Promoting Citizen Participation for encouraging and facilitating public participation under equal conditions of representation for the diverse stakeholders. The Fund will back the training of players, facilitate dialogue and launch advocacy and education campaigns on the substance and procedures of dialogue. It would then be possible to lay down the conditions for all participants to represent their interests and honor the commitments arising from the negotiations. Additionally, we suggest devising and implementing a register of specialized consultants.

The strengthening of participation requires considering the municipality as a relevant space for social dialogue, because the municipality articulates the social involvement of the community, should ensure the representation and legitimacy of participating organizations. It is therefore necessary for the local councils of civic organizations and the municipality to keep an updated registry of the priorities of the inhabitants of these localities. In this way, these priorities can be considered when companies and communities negotiate undertakings of mutual benefit.

We propose the execution of pilot participation initiatives to support the definition of standards for carrying out the processes of consultation and participation in mining projects.

3. To step up the intercultural dialogue. The country needs to create conditions for a harmonious coexistence between different cultures and people. We propose two parallel actions in an effort to create a convergence. The first aims to resolve historical problems, the second to implement representative, timely and effective mechanisms validated by the communities concerning the free, ex-ante and informed consultation. Both tasks must be assumed within a public policy that includes process and outcome standards, and the resources required for their implementation. Among other things, this policy requires training public officials responsible for executing and defining standards and methodologies for social participation (including how to evaluate them). The policy also needs an information system to feed the intercultural dialogue.

Solving historical problems must consider a clear-cut delimitation by the State of the territories which belong to native people. For the mining industry, it is of utmost importance what happens in the northern part of the country. It is also highly desirable to begin a dialogue with each indigenous group about the ways in which they benefit from national and regional development, with full respect for their rights. Likewise, it is necessary to define a representation system for intercultural dialogue.

This enterprise calls for the creation of a public agency specializing in the design, implementation and evaluation of intercultural dialogue. This agency would also be responsible for conducting consultations in coordination with the administrative and legislative bodies whose main obligation is to perform these processes.

At the same time, we must consider that no institutional modification can stop, undermine or slow down the environmental assessment or the consultation processes. Therefore, the parties must recognize and reinforce the current responsibility of the Environmental Assessment Service (SEA) as a temporary solution until the new institutions are put into place. Both the new agency and the SEA must maintain close coordination so that the single-window system applied to relevant investment projects is respected. This mandates that only one institution will define the eventual involvement of communities that, if indigenous, require a formal consultation process.

Again it appears appropriate that this new institutional framework is grounded on a concrete experience of intercultural dialogue. Therefore, we suggest a pilot experience with the Atacama people to shed light on the challenges triggered by a genuine intercultural dialogue. The experience can then be replicated with other native peoples facing a similar situation. 4. To enhance the capacity and legitimacy of environmental Institutions for mining. The environmental institutions of the country need to accelerate their improvement and strengthening processes. A significant progress is necessary in order to avoid discretional measures and increase efficiency, supported by real overseeing and control capacities. It is also essential to ensure coherence between the different laws and regulations that govern the relationship of mining with the environment. Currently, many regulatory norms overlap, dampening the efficacy of the system. The weaknesses of the current scheme generate public distrust and judicial uncertainty among investors from diverse types of industries. Given its size and importance for the country, mining provides a good opportunity to test new mechanisms to increase the capacity for effective action by the environmental authority and, as a result, to validate the new institutions.

A first challenge is the evolution of the current regulatory framework, which is very general, towards a system based on standards and references for each productive sector. This system and its full compliance should gradually replace the huge number of RCAs (administrative document that certifies the environmental approval or rejection of a project) that, because of their quantity, complicate or make their control impossible. We aspire to a model where the processes to grant environmental permits are based on verifying that the projects being evaluated incorporate the best available control techniques (BAT). Greater environmental protection will result in further reducing discretion in the evaluation process. The best control techniques will be determined in a transparent process involving the industry, government agencies, research centers and NGOs. The idea is to ensure robust, simple, efficient and transparent studies by the institution in charge (Environmental Impact Studies Service SEIA).

This effort to strengthen environmental institutions should also be applied in other industries, based on the evolution process of environmental management led by the mining sector. An increase in the capacity to monitor the rules and resolutions for environmental qualification is also necessary. Generating knowledge and capabilities for the control and monitoring of the industry’s discharges and impacts in order to verify the compliance with rules and regulations is a requirement to accomplish this task.

Recognizing the inadequacy of the State concerning its capacities in this area and the need to count on the necessary human resources and infrastructure required for the task, we suggest charging companies an “entry fee” for each project they send to the SEIA. If approved, the collected sums could finance the increase in analysis and control capacity of environmental compliance in investment projects. This would allow the State to commit to shorter deadlines for environmental assessments and improve levels of analysis in monitoring tasks. The result would generate greater public confidence in the institutional framework, and greater security to citizens and investors. In parallel, it is appropriate to fortify the private system of environmental audits certified by the State as a complement to the public activity in the field.

An essential add-on to carry out the above tasks is to temper and bring forward the processes of citizen participation within the SEIA as stated in the corresponding section of this document. It is important to note that improvement in the environmental institutions and in public participation processes require simultaneity since they complement one another.

Along with the enhancement of the public environmental framework, it is advisable that each and every company shows its commitments to sustainability in a transparent manner, defining verifiable and transparent goals (five-year and annual reports) in matters such as energy efficiency, water use and sources, recycling, air emissions, biodiversity management and emission of greenhouse gases. The idea is to lay out criteria and standards for the coexistence of companies and mining cities, using mining as a driving force for the development and the improvement of the quality of life in these places. There are several successful examples in Chile and other countries. The same applies to specific communities. There are a growing number of mutually beneficial agreements between the mining industry and native and other types of communities. It is also advisable to grant them the right to participate in the closure and abandonment plans.

Finally, another priority is to advance in the renewal of the full register of environmental passives in agreement with current environmental standards and the enactment of a law on environmental passives applicable to all the industries.

5. To buttress social inclusion in the public and private use of mining revenues. One main aspect of the effort to build public confidence in mining and in the institutional regulating framework is that the public perceives a fair the distribution of mining income. This could be accomplished either by tax decentralization, by targeting objectives of mutual benefit and/or the emergence of new development opportunities. Particularly significant is distributing a larger share of mining profits to the communities surrounding its operations.

This requires a better understanding of the collection and disbursement of the mining rent by all parties involved. In the same vein, we suggest a comparative study on the effective taxation of mining in Chile in relation to other nations exporting mining products, to make citizens more knowledgeable on the subject.

Likewise, it is essential that the population living around mining centers receive a verifiable part (to be established) of the specific mining taxes and patents paid by the industry. To achieve this objective we propose a larger decentralization of current taxes. This can happen once the monies collected from mining patents or from the Investment Fund for Competitiveness (that is financed by a specific tax on mining, assuring it will be used exclusively for innovation) is left in the hands of local authorities. Other ideas can be explored. One possibility, for example, is that a percentage of the investment by mining companies in local development or community projects is accounted as a credit for future income taxes. These funds would be allocated to the community through respective local or regional authorities. The increase in the money available for local development projects must be accompanied by a corresponding increase in efficiency, transparency and participation in the use of these resources.

Furthermore, considering the projected law of associativity discussed in the context of energy policy, we propose developing a common criteria and not separate formulas for specific economic sectors. The existence of a single instrument is highly recommended to avoid confusion and overlapping rules.

We endorse the creation of an institutional framework, to manage resources and to select the social projects that encourage dialogue and the building of confidence between company and community, as well as to promote fiscal decentralization. It is also necessary to avoid politicking and the intermediation of external agents that have their own agendas.

Another necessary condition to bolster public trust and fairness is that the State and the industry invest in regional sustainable projects beyond mining. In this context, the creation of shared value through a dialogue resulting in a commitment between stakeholders to reach agreements on mutual benefits is very important. It is therefore useful to agree on impact/benefit standards that include mechanisms for dispute resolution, transparency of information on potential impact and the establishment of a system to monitor and evaluate commitments.

The aforementioned standards should stem from the new institutional framework and refer to the process (social and intercultural dialogue) and the result (agreements of mutual benefit). The companies will then make public their verifiable goals and report their progress.

Finally, it is suggested to reinforce dialogue within the mining company, between the different organizational levels of the enterprise and between the company and unions. The objective is that all players can commit themselves to the changes required by the industry and maintain sustainable labor relationships. In this regard, a special effort should be made to increase the recruitment of women and members of the local communities where the company operates as well as to take into consideration small and medium enterprises in the vicinity. In these matters companies could adopt verifiable standards.

3. Institutional framework for a virtuous, inclusive and sustainable mining industry.

The mining sector of the future requires an institutional framework that ensures coordination of actions between the public sector and the private sector and within each of them. We therefore propose creating three instances of coordination: i) A Public-Private Council that would be responsible for guiding and coordinating the process to define and implement this proposal; ii) An Office for Collaborative Initiatives that articulates the actions co-financed by companies to support and forward the agenda; and iii) A Coordination Bureau of Public Initiatives, in charge of coordinating the different government organisms involved in this proposal and reporting their progress. The annex presents more details about the composition and tasks of these institutions.

a. The Public-Private Council will be responsible for following up on the initiatives for 2015 outlined earlier as well as guiding the implementation of the Agenda for a virtuous, sustainable and inclusive mining. This involves directing, supervising and evaluating the progress of the agenda as well as informing all stakeholders. The Council will also convoke meetings and dialogues between the different parties interested in enriching and updating the agenda and reinforcing its efficacy. At least every three years, the Council will update the agenda based on lessons from national and international experience. Finally, the Council will review and facilitate the discussion of the effect of regulatory and legislative changes in mining.

We recommend that the Council defines a shared national vision to promote the development of a virtuous, sustainable and inclusive mining industry during 2015.

b. The Office of Collaborative Initiatives is driven by the companies that outline and articulate the actions they co-finance to promote the agenda. Therefore the office informs and seeks agreement with the Council concerning these actions. The participating companies will create their system of governance and manage the use of the resources they invest or spend. It has been estimated that the investment or spending could reach the level of $ 25 million annually and will be complemented by resources or actions on the part of the State.

c. The Coordination Bureau of Public Initiatives is in charge of an existing government body (to be defined) which points out what department bears the institutional responsibilities for specific initiatives and what public resources are available to implement the agenda, informing the Council on the public objectives of the various executors.

Participants in the elaboration and agreements included in this document.

Alberto Salas, National Society for Medium and Small-Sized Mines, President. Álvaro García, Commission for Mining and Development of Chile, Coordinator Bárbara Saavedra, Wildlife Conservation Society – Chile, Director. Bernardo Larraín Matte, Colbún Electric Company, President Diego Hernández, Antofagasta Minerals, CEO Edgar Basto, BHP Billiton Copper, President Felipe Purcell, Angloamerican Chile, Vicepresident of Corporate Affairs. Gerardo Rojas, Municipality of Salamanca, Mayor. Gianni López, Centro Mario Molina Chile, Director. Gonzalo Rivas, CNIC - Commission for Mining and Development of Chile, President. Hennie Faul, Anglo American, CEO. Ignacio Irarrázaval, Center for Public Policies, Catholic University, Director. Javier Ruiz del Solar, Advanced Mining Technology Center, Universidad de Chile. Jean Paul Luksic, Antofagasta Minerals, President. Joaquín Villarino, Mining Council, CEO Jorge Bande, Center for copper and Mining Studies (CESCO), Director. Juan Andrés Fontaine, Fontaine Consultores. Juan Asenjo, Chilean Academy of Sciences, President. Leopoldo Reyes, Sudmetal, Director. María Eliana Arntz, Intercultural Program, United Nations. Mauro Valdés, Mining Program, CORFO-Fundación Chile, President. Óscar Landerretche, Corporación Nacional del Cobre- , President. Pamela Chávez, General manager, Aguamarina S.A. Patricio Meller, Fundación Chile, President. Raimundo Espinoza, Federación de Trabajadores del Cobre, President. Ricardo Lagos Escobar, Fundación Democracia y Desarrollo, President. Rolando Carmona, Drillco Tools, President. Rolando Humire, National Society San Pedro de Atacama, President Servet Martínez, Center for Mathematical Modelling, University of Chile, Professor