Mining Sector in Chile

MINING SECTOR IN CHILE

Metals

Chile is a country with large reserves of minerals. Metal mining emphasizes the production of copper, iron, molybdenum, manganese, lead, zinc, gold and silver. Of these products, the most interesting are copper and molybdenum, the latter being a byproduct of copper production. As a result of this wealth, mining has always been the main activity of the country.

COPPER In Chile, copper mining is shared between private and state enterprises. Codelco, Chile`s Copper Corporation is an independent administration, the country’s largest copper mine and the main copper producer in the world.

The main products sold by Chile are the cathodes and copper concentrates, which are exported for processing and to produce manufactured goods. High concentration of exports is to industrialized countries and now also the industrializing countries like China.

Non metallic

Nonmetallic mining includes the extraction of mineral resources. After adequate treatment the minerals are transformed into products applicable in various industrial and agricultural use due to its physical and / or chemical properties. Hence, the public and private interest in its development is geared to both its production phase and the end- use products.

Given the diversity of non-metallic products only for purposes of analyzing their behavior, they are classified into 4 groups by virtue of their economic importance and characteristics of market:

Group I: Products originating from resources characterized by very good geological prospects, giving comparative advantages in the global market. Includes resources from salt deposits and brines, existing in the North of Chile, with reserves of quality and favorable location for a prolonged operation. Its current market and export potential is preferred.

The list of products group, in order of importance, are: saltpeter (potassium nitrate, sodium nitrate and potassium nitrate) Iodine (Iodine and its salts and derivatives Iodides Iodates) lithium salts (carbonate and chloride) Borat (Ulexite and derivatives boric acid, borax refining) SODIUM CHLORIDE potassium salts (chloride and sulphate)

Group II: Products are characterized by low unit value and high production volumes, preferably integrated into a consumer industry (self-supply). For example, industries related to construction and ceramics. It is considered that there is only a marginal market, but a growing market for these products.

Included in this group in order of importance: CALCIUM CARBONATE (Limestone for cement and lime) cast (for plaster and concrete objects) POZZOLAN (for cement) Clays (common clay and plastic IRON OXIDE (for cement and pigments) pyrophyllite (For Ceramic) CEMENT (Included as industrial product) CAL (Included as industrial product)

Group III: Diverse products of relatively abundant resources in the country, from reasonable geological prospects that are exploited in production volumes of medium and low scale. They have a wide range of industrial applications in the country and are diversified by type of product and quality. They are designed mainly for the domestic market, where they must compete with similar imported products. Some of them reach grades allowing them to be exported.

The list of products in this group, in order of importance, are: PHOSPHATES (Superphosphate, ammonium phosphate, rock phosphate, guano) CLAYS CAOLINIFERAS (Kaolin, refractory clay) RESOURCES Silicea (silica, quartz, silica sand) DIATOMITE SODIUM SULFATE SULFUR (Crude, Sublimation) Calcium carbonate (Crete, DC Granules and rainfall) TALC FELDSPAR ROCKS (Marble, Granite) Bentonite (calcium and sodium) ABRASIVES (Pumice, Garnet) WOLLASTONITE PERLITA BARITINA CIMIT ALUMINUM SULFATE

Group IV: Products, by being based on fewer prospects geological resources, according to current geological knowledge, show no significant domestic production. Consequently, the national supply are of imported origin but are included in this analysis because of their importance in domestic consumption and as background to any future mining developments. The products of greatest interest are the following: SODIUM CARBONATE MAGNESIUM (Dolomite, Magnesium, Magnesite) ASBESTOS Aluminum Oxide (Alumina, Bauxite) Chromite Andalusite FLUORITE NATURAL GRAPHITE MICA.

This segmentation into four groups reflects only the purpose of focusing the analysis of the behavior of the products according to their characteristics and their development prospects.

MINISTRY OF Mining, (www.minmineria.cl) Mission, Approach, Objectives

The mission of the Ministry of Mining of Chile is to generate, encourage, spread, and assess regulations and policies that optimize Chile’s sustainability on mining development, maximize its contribution toward social economic development, and consolidate international leadership.

The strategic objectives of the Ministry of Mining are described as follows:

1. Encourage sustainability on domestic mining development 2. Generate joint participation between public and private sectors in order to stimulate growth on the sector and for the country 3. Give assistance to small mining 4. Modernize regulations toward mining sector 5. Modernize the public sector institution 6. Consolidate Chile’s international mining leadership. 7. Manage effectively and efficiently the resources of the Ministry of Mining in order to comply with its specific objectives

These objectives are reached progressively through creation of public policies on mining development according to the Government’s principles through research and round tables. The important is the creation of Public Policy encouraging small and medium sized mining sector, carried out by the Empresa Nacional de Minería, ENAMI (National Enterprise of Mining.)

There exist statutory regulations that control domestic mining activity through legal, tax, environmental, security and other clear and stable laws generated by research and round tables, especially with regard to Patent Law, Tax Evasion and Avoidance Law and to Mining Security Regulations.

Important is by creating links between public and private sectors in order to encourage sector growth, initiating an “Acuerdo de Producción Limpia (APL)” (Fair Trade Agreement) with the large scale mining sector.

A great receptor is promotion of small mining self-sustainability through Programa de Asistencia y Modernización de la Minería Artesanal (PAMMA) (Cooperation and Modernization of Small Mining Program) focusing on those sectors that show more economic and social vulnerability.

In sector of small mining, resources are focused towards the development through search of interest and assembly lines that allow to reach higher levels of efficiency and equity generating a productive activity able enough to face changes on the structure that occur in the global market.

In sector of medium sized and large scale mining, actions are taken towards increasing the value of public sector enterprises promoting technological innovation that bring major competitive advantage and export the know-how to the world, as well.