Mining in Chile

The engine that moves Chile forward

TABLE OF CONTENTS

Introduction...... p50 This report was researched and prepared by Interview with Minister Hernán de Solminihac..p51 Global Business Reports (www.gbreports.com) for Interview with Diego Hernández, CODELCO.....p53 Engineering & Mining Journal. Chile’s Array of Commodities...... p54 Editorial researched and written by Matilde Mereghetti, Sidonie Pichard and Yana Stankova. Evolution and Challenges...... p63 For more details, please contact [email protected]. Service Providers...... p70 Conclusion...... p82 Cover photo: View of Anglo American’s Los Bronces operation, courtesy of Anglo American.

A REPORT BY GBR FOR E&MJ

MARCH 2012 Mining IN CHILE Mining IN CHILE Mining activity will be the engine that “Our priority is to improve safety” moves Chile forward in the next decade Interview with Hernán de Solminihac, Minister of Mining, Chile Enjoying political stability, the world’s largest copper-producer has set an Which are the main bodies under ricula to adapt to the need of the mining example in the development of its mining sector and related industries. the umbrella of the Chilean Mining sector and, by being aware of the prospec- Ministry? tive salaries, we are able to show students There are various governmental institutions the prospects that this activity can offer. The economy of Chile is one of South ment environment, Chile has become the for approximately 110,000, and indirect subordinate to the Ministry of Mining. Co- We have also created programs to train America’s most stable and prosperous, copper-mining capital of the world, produc- more than 500,000 people.” chilco is the institute that advises the Chil- people from other industries, allowing them with the highest nominal GDP per capita in ing over a third of global output. “Mining is Chile’s engine,” said Hernán ean government and private players on mat- to transfer into mining. Companies are also Latin America. The Global Competitiveness In recent decades, mining activity has de Solminihac, Chilean Minister of Mining, ters concerning the production of copper, directly training people who are interested Report by the World Economic Forum for led Chile’s economic growth. Mining proj- when talking about the overall mining in- copper byproducts, metals and industrial in entering the sector. 2011-2012 ranks Chile 31st, topping all ects are not seen as isolated enclaves but vestment portfolio by 2020, which is esti- minerals, with the exception of coal and An important subject for our country Latin American countries, well above Brazil as active promoters of regional development mated to equate to US$66.8 billion. This fuels. Sernageomin provides specialized is the participation of females in the work (53rd), Mexico (58th), Peru (67th) and Ar- and generating new sources of employment. continual growth is based not just on the technical advice on geological and mining force; both government and private sector gentina (85th). The Ease of Doing Business Increased investment in exploration and industry expanding, but also on it becoming matters to the Ministry of Mining. ENAMI have made a significant effort in this regard. Index of the World Bank for 2012 lists Chile mining stocks, greater output and exports of more sophisticated and diverse. (Empresa Nacional de Minería) aims to en- Today there are examples such as Minera as being the 29th most competitive country mineral products and their derivatives have Traditionally, Chile’s mining strength has courage the development of small and me- Gaby, where the workforce is currently 20% in the world and the first in Latin America. been key factors that have contributed to been based on a single commodity: copper. dium mining companies, helping them to Another project, which has already been female, and Esperanza, where the work- The mining sector is one of the pillars of the development of communities. In the past two decades, Chile has consoli- access the market of refined metals, under approved by congress and is in its final stage force is currently 12% female. There has the Chilean economy. The Chilean govern- In the words of the President of Chile, dated its position as world leader in copper competitive conditions. of approval, is a law requiring mining compa- been a definite advance in this line of work. ment strongly supports foreign investment Sebastián Piñera, at the annual meeting of production, raising its global market share There is currently a law under discussion nies to prepare a closure plan for the mines in the sector and has modified its mining the Mining Council (Consejo Minero) held from 17.7% in 1990 to 34.2% in 2011. that reconsiders the structure of the Ministry before the start of operations to minimize the How can Chile attract more ju- industry laws and regulations to create a in November 2011, “The mining indus- Mine copper output in 2011 reached 5.69 of Mining. The proposition will give a new environmental impact of mines. nior companies? Is the regulatory favorable investing environment for for- try represents a little more than 20% of million metric tons (mt) of refined copper, a direction to the aforementioned institutions framework too favorable to major eigners. Thanks to large copper resources, Chile’s GDP, equal to more than US$40 267,000 mt or a 5.0% annual increase on and hopes to create additional institutions, The state mining company Codelco companies? progressive legislation and a healthy invest- billion and generates direct employment the previous year. (cont. on page 52) such as an Institute of Geology, which will was the subject of legislation last In Chile there are currently 8,000 mining be responsible for research, development, or- year. What are the main changes operations, out of which around 20 are held ganization of data and advice on geological that have been made to Codelco’s by large companies. The amount of com- features and another institution, “Superinten- corporate governance? panies is colossal. Considering production dencia de Minas”, will be dedicated to moni- In March 2010, a new legislation was ap- levels, big companies are majority, but if tor and ensure compliance with mine safety proved which makes Codelco’s corporate you look at the quantity of companies, there regulations. This law is yet to be approved. governance more independent from the gov- are considerably more small and medium ernment. The government designates three mining companies. You were recently nominated as directors directly, and the rest are nominated The government is working alongside Minister of Mining. What are the by the corporate president, with the proposi- with CORFO (Corporación de Fomento de main initiatives that you hope to see tion of high public direction, an organization la Producción), to create the Fénix fund, in approved during your Ministry? that selects the candidates for the positions. which the state has invested US$92 mil- Our priority is to improve mining safety. Af- Also, two directors are proposed and select- lion, and the private sector delivered around ter the Mina San José accident, the govern- ed by the workers. US$58 million, to support the participation ment has been working intensely to lower The question of private capital in Codelco of junior companies in the exploration of new accident rates. The San José mine accident has also been a long running discussion in mineral deposits. was, without a doubt, an accident with a Chile. The President Sebastián Piñera has positive outcome, and important lessons been clear about the fact that Codelco is, How will you ensure Chile’s global were learned from it by the whole industry and always should be, a state company. De- leadership for copper production in in Chile. Additionally, the ministry has im- spite this, there might be specific projects in the future? proved the taxation system and increased which Codelco can participate in cooperation The mining industry today has about assistance to small mining businesses, as with private capital. US$67 billion worth of investment to be put we are aware that most accidents occur in in place in the next eight years, of which this specific market sector. Thanks to this What are the initiatives in Chile to around US$20 billion belong to Codelco, effort and the raised awareness of safety counteract the lack of professionals and the rest to private companies, with the concerns, the fatalities rate in the first eight in the mining sector? objective of increasing the production on months of 2011 were reduced by more We are assessing the profile of the profes- current mines, generating new production, than 50% compared to the same period last sionals needed, the quantity and the salary making existing mines more efficient, and year. At the same time, we have proposed that each type of profile would get. When surpassing 5.4 million mt of fine copper. a regulation that puts increased emphasis demand is quantified, it is easier to solve We expect that the materialization of these on safety, improving working conditions and the problem. We have worked with univer- projects will maintain Chile’s leadership in safety at altitude. sities and technical institutes to adjust cur- world copper production.

50 E&MJ • MARCH 2012 www.e-mj.com www.e-mj.com E&MJ • MARCH 2012 51 Mining IN CHILE Mining IN CHILE Mining activity will be the engine that “Our priority is to improve safety” moves Chile forward in the next decade Interview with Hernán de Solminihac, Minister of Mining, Chile Enjoying political stability, the world’s largest copper-producer has set an Which are the main bodies under ricula to adapt to the need of the mining example in the development of its mining sector and related industries. the umbrella of the Chilean Mining sector and, by being aware of the prospec- Ministry? tive salaries, we are able to show students There are various governmental institutions the prospects that this activity can offer. The economy of Chile is one of South ment environment, Chile has become the for approximately 110,000, and indirect subordinate to the Ministry of Mining. Co- We have also created programs to train America’s most stable and prosperous, copper-mining capital of the world, produc- more than 500,000 people.” chilco is the institute that advises the Chil- people from other industries, allowing them with the highest nominal GDP per capita in ing over a third of global output. “Mining is Chile’s engine,” said Hernán ean government and private players on mat- to transfer into mining. Companies are also Latin America. The Global Competitiveness In recent decades, mining activity has de Solminihac, Chilean Minister of Mining, ters concerning the production of copper, directly training people who are interested Report by the World Economic Forum for led Chile’s economic growth. Mining proj- when talking about the overall mining in- copper byproducts, metals and industrial in entering the sector. 2011-2012 ranks Chile 31st, topping all ects are not seen as isolated enclaves but vestment portfolio by 2020, which is esti- minerals, with the exception of coal and An important subject for our country Latin American countries, well above Brazil as active promoters of regional development mated to equate to US$66.8 billion. This fuels. Sernageomin provides specialized is the participation of females in the work (53rd), Mexico (58th), Peru (67th) and Ar- and generating new sources of employment. continual growth is based not just on the technical advice on geological and mining force; both government and private sector gentina (85th). The Ease of Doing Business Increased investment in exploration and industry expanding, but also on it becoming matters to the Ministry of Mining. ENAMI have made a significant effort in this regard. Index of the World Bank for 2012 lists Chile mining stocks, greater output and exports of more sophisticated and diverse. (Empresa Nacional de Minería) aims to en- Today there are examples such as Minera as being the 29th most competitive country mineral products and their derivatives have Traditionally, Chile’s mining strength has courage the development of small and me- Gaby, where the workforce is currently 20% in the world and the first in Latin America. been key factors that have contributed to been based on a single commodity: copper. dium mining companies, helping them to Another project, which has already been female, and Esperanza, where the work- The mining sector is one of the pillars of the development of communities. In the past two decades, Chile has consoli- access the market of refined metals, under approved by congress and is in its final stage force is currently 12% female. There has the Chilean economy. The Chilean govern- In the words of the President of Chile, dated its position as world leader in copper competitive conditions. of approval, is a law requiring mining compa- been a definite advance in this line of work. ment strongly supports foreign investment Sebastián Piñera, at the annual meeting of production, raising its global market share There is currently a law under discussion nies to prepare a closure plan for the mines in the sector and has modified its mining the Mining Council (Consejo Minero) held from 17.7% in 1990 to 34.2% in 2011. that reconsiders the structure of the Ministry before the start of operations to minimize the How can Chile attract more ju- industry laws and regulations to create a in November 2011, “The mining indus- Mine copper output in 2011 reached 5.69 of Mining. The proposition will give a new environmental impact of mines. nior companies? Is the regulatory favorable investing environment for for- try represents a little more than 20% of million metric tons (mt) of refined copper, a direction to the aforementioned institutions framework too favorable to major eigners. Thanks to large copper resources, Chile’s GDP, equal to more than US$40 267,000 mt or a 5.0% annual increase on and hopes to create additional institutions, The state mining company Codelco companies? progressive legislation and a healthy invest- billion and generates direct employment the previous year. (cont. on page 52) such as an Institute of Geology, which will was the subject of legislation last In Chile there are currently 8,000 mining be responsible for research, development, or- year. What are the main changes operations, out of which around 20 are held ganization of data and advice on geological that have been made to Codelco’s by large companies. The amount of com- features and another institution, “Superinten- corporate governance? panies is colossal. Considering production dencia de Minas”, will be dedicated to moni- In March 2010, a new legislation was ap- levels, big companies are majority, but if tor and ensure compliance with mine safety proved which makes Codelco’s corporate you look at the quantity of companies, there regulations. This law is yet to be approved. governance more independent from the gov- are considerably more small and medium ernment. The government designates three mining companies. You were recently nominated as directors directly, and the rest are nominated The government is working alongside Minister of Mining. What are the by the corporate president, with the proposi- with CORFO (Corporación de Fomento de main initiatives that you hope to see tion of high public direction, an organization la Producción), to create the Fénix fund, in approved during your Ministry? that selects the candidates for the positions. which the state has invested US$92 mil- Our priority is to improve mining safety. Af- Also, two directors are proposed and select- lion, and the private sector delivered around ter the Mina San José accident, the govern- ed by the workers. US$58 million, to support the participation ment has been working intensely to lower The question of private capital in Codelco of junior companies in the exploration of new accident rates. The San José mine accident has also been a long running discussion in mineral deposits. was, without a doubt, an accident with a Chile. The President Sebastián Piñera has positive outcome, and important lessons been clear about the fact that Codelco is, How will you ensure Chile’s global were learned from it by the whole industry and always should be, a state company. De- leadership for copper production in in Chile. Additionally, the ministry has im- spite this, there might be specific projects in the future? proved the taxation system and increased which Codelco can participate in cooperation The mining industry today has about assistance to small mining businesses, as with private capital. US$67 billion worth of investment to be put we are aware that most accidents occur in in place in the next eight years, of which this specific market sector. Thanks to this What are the initiatives in Chile to around US$20 billion belong to Codelco, effort and the raised awareness of safety counteract the lack of professionals and the rest to private companies, with the concerns, the fatalities rate in the first eight in the mining sector? objective of increasing the production on months of 2011 were reduced by more We are assessing the profile of the profes- current mines, generating new production, than 50% compared to the same period last sionals needed, the quantity and the salary making existing mines more efficient, and year. At the same time, we have proposed that each type of profile would get. When surpassing 5.4 million mt of fine copper. a regulation that puts increased emphasis demand is quantified, it is easier to solve We expect that the materialization of these on safety, improving working conditions and the problem. We have worked with univer- projects will maintain Chile’s leadership in safety at altitude. sities and technical institutes to adjust cur- world copper production.

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Since then, the industry, followed by Corporate Bank Ltd (MIZC), prices will the state owned firm Codelco, has intro- climb to as high as US$9,500/mt from duced new management practices, new last year’s close of US$7,600/mt. Maintaining Global Leadership technologies and strong investment in Despite this traditional and continued training and skills development. focus on copper, which accounts for more Interview with Diego Hernández, President and CEO of Codelco As a result, the extraction of copper be- than 60% of the total mining Chilean ex- tween 1993 and 2005 was equal to the ports, other minerals are also receiving in- amount of ore mined in the previous 92 creased attention. In 2011, Chile ranked What is your vision for Codelco gov- expand and become global companies that years. Increasing productivity and reduc- first globally in copper, lithium and rhe- ernance? can be competitive abroad. We have influ- ing production costs have ensured Chile’s nium, third in molybdenum, fifth in silver Codelco is the number one copper producer ence to contract their services and there are mining competitiveness in international and 15th in gold. Chile was also one of worldwide, which is a position that we have many service companies who can provide markets. In 2002, Chile ranked first in the the world’s significant producers and ex- held for the last 40 years. We are in a pe- us with solutions using innovation and tech- Fraser Institute’s Annual Survey of Mining porters of potassium nitrate and sodium riod where we need to invest much more nology to solve our challenges. Companies as the most attractive country nitrate and ranked second after Japan in than what we have invested before; from We have selected companies that are in Andrés Mac-Lean, executive vice president of the world production of iodine. 2011 we had to invest the same amount of the program and our target is to help them Chilean Copper Commission (Cochilco) in the world for mining investment, both for its geological potential and its political Over the next four years, there will be a money that we have invested over the last improve their quality and potential by offer- (cont. from page 50) According to An- stability. substantial increase in silver, copper and, 35 years. ing them contracts. We encourage compa- drés Mac-Lean, executive vice president of Moreover, since the beginning of the especially, gold output. Moreover, Chile is In 2014 we will run out of oxide ore at nies to incorporate new innovations and the the Chilean Copper Commission (Cochil- last decade, prices of copper have in- one of the most significant producers of ar- Chuquicamata where we have a plant that common target is to increase the number of co), “The trend should stand over the short creased in response to the sharp rise in senic, boron, refined selenium, pumicite, produces 150,000 mt/y; we are mitigating companies in the cluster program to 250 term, with production in 2013 expected to demand from emerging Asian countries. sulfur, salt and diatomite. that risk by developing the Quetena and Ale- by 2020. reach a record 6.12 million mt”. The London Metal Exchange LME index of However, the Chilean mining industry jandro Hales projects. We will lose access Chile has been the leading global pro- six primary metals including copper and needs to face certain challenges including to the ore we are mining now in Chuqui- What is Codelco’s strategy regard- ducer of copper since the 1990s when aluminum fell 22% last year, the first drop access to water, energy and the lack of camata unless we transition from open-pit of 2012 and the investments will help us ing power supply? the process of liberalization opened the in three years. qualified personnel. Nevertheless, the sta- mining to underground mining. The location to become more competitive. The projects We have secured power contracts with Chilean market to the arrival of large in- However, copper prices may gain as ble political and economic situation and of the ore at El Teniente is 300m deeper will allow us to have bigger plants with less power companies, which is important as ternational mining companies, whose much as 25% in the second half of this the mining regulation framework support compared to the current level of the ore. people and will improve our productivity. we believe that in the future there will be investments led to a tripling of the coun- year on steady demand from China, the confidence and foresight for investments The new underground level of El Teniente a shortage of power. Therefore we need to try’s copper production so that in 1999 world’s top consumer, and amid tight in the country; the production potential will cost additional investment. How do you plan to improve effi- pressure power companies to increase their Chile produced roughly 35% of the copper supplies. According to Yuka Kageyama, of Chile is huge and long-term projections Moreover, to increase our production, ciency? capacity because there is enough interest in mined in the world. a commodity derivate analyst at Mizuho are positive. Codelco will require the construction of an Codelco will use the same tools that private the market. additional plant to process sulphides, which companies use. Codelco is a state company The cost of power has increased follow- should be completed by 2017. We are that had to comply with new rules intro- ing the growth in the demand. This has af- providing Ministro Hales, which produces duced by new governors when Chile joined fected our competitiveness so we are look- 150,000 mt/y, with an open-pit concentra- the Organization for Economic Co-operation ing for alternatives to decrease the cost. tor. We also have projects in Salvador, which and Development (OECD) in 2010. The Min- at present produce 70,000 mt/y, but we can ister of Finance and Minister of Mining rep- How do you face the shortage of increase this by constructing an open pit on resent the shareholders. This system gives skilled professionals working for top of underground workings and smaller more flexibility to the company and enables the industry? open pits. This would give us access to us to achieve better business results. We need to prepare the company for the the source of 1 billion mt of ore at grades Moreover, Codelco needs to take advan- next generation of employees as Codelco of 0.5% and we are currently collecting the tage of all of our investment programs to has a higher than average age of staff in the geological information for the project. update our current technology and include industry. We have started to employ people We are performing a feasibility study at the latest generation of equipment in a way through apprenticeships and through gradu- the San Antonio project to produce 60,000 that we can be more competitive. We run ate programs and we are focused on human mt/y, which will provide future access to our own programs in some fields through resources. 800 million mt of sulphide reserves that are different approaches in partnerships with All of these initiatives will work in con- below the oxides. The production at Salva- some service companies, universities and junction with health and safety programs, dor should increase from 70,000 mt/y to research and development entities. In some environmental and community initiatives 200,000 mt/y. fields we have internal research and devel- and we are making a special effort to im- Andina is a project in the feasibility opment in underground mining for blockad- prove our working practices. stage and we plan to build a concentrator ing, automation, working at distance, the to increase production from 250,000 mt/y pre-conditioning of rock, continuous mining What is your final message to Engi- to 600,000 mt/y. If we execute all of the and bio-leaching, although when we can neering & Mining Journal’s reader- projects, copper production will increase find available technology in the market we ship? from 1.75 million mt/y to 2.1 million mt/y, do not try and develop it ourselves. Chile will maintain its leadership and see a but if we do not execute any projects then portfolio of greenfield and brownfield projects our production will drop to 800,000 mt/y What is the mission of the mining that are lower-grade copper; the grades have by 2020. cluster in Chile that Codelco has decreased from 0.95% copper to 0.75% and Codelco intends to improve its position been organizing? could continue to decline, meaning that we in the industry in terms of cost. We want to The project is aimed at helping service need to enhance our technology to produce decrease costs by 25% by the second half companies that are in the mining cluster to the same amount of copper.

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Iron Creek Capital is another Canadian company focused on Chile, with copper forming as an important component of their Chile’s vast array of commodities poly-metallic portfolio. Timothy Beale, Iron Creek’s President said, “It is hard to beat Massive copper expansions take the spotlight, but there are other minerals. the potential of the geology in the country as we are located along some of the world’s most prospective mineral belts. Chile is a great place to be working in this business, and Iron Creek has properties with multiple targets in the existing portfolio, so we hope we have very good chances of discovery success. The potential is very good and the Maricunga district in Chile has a number of Patrick Cussen, chairman of the board, the large projects with very important precious Center for Copper and Mining Studies (CESCO) metals and copper resources, but generally majors, all seeking to find the next Chuqui- with rather low grades. Also, there are some camata or El Teniente.”The Chilean Mining difficulties in these areas because of the Code was last amended in the 1980s and is high altitudes and the weather conditions Sampling alteration zones in the Atacama desert. (Photo by Steve Andersson, courtesy of Inmet). useful in many ways defining clearly Mining in the winter.” Rights, which gives all private companies a Since communities in the north of the sense of security and has encouraged for- country are more accustomed to the mining Latin America attracted more exploration ploration Report from the Metals Economics “Chile is recognized worldwide as a eign companies to invest in Chile in the past industry, the relations with local communi- spending in 2010 than any other continent Group (MEG) Chile rose from seventh to sixth mining country since its territory is rich in three decades” said Patrick Cussen, chair- ties in Chile in many cases are less con- in the world, with a grand total of 27% of in 2010 (one place higher than in 2009) metalliferous deposits, mainly copper, gold, man of the board of The Center for Copper flicted than in other states of Latin America. global non-ferrous exploration budgets being with 5% of total expenditure. Moreover, silver, iron, lead, zinc and manganese. and Mining Studies (CESCO), the Chilean “In terms of community relations, exploring spent in the region. Five countries - Mexi- the Fraser Institute Annual Survey of Min- Most of these resources are located in the think-tank on mining. in Chile is much easier than in Argentina,” co, Peru, Chile, Brazil, and Argentina – ac- ing Companies for 2011-2012, based on north of our country, which is characterized The history of exploration success in said Marcelo Cortés, projects development counted for all but 17% of this expenditure. the perception of the main mining industry by the presence of vast types of deposits, the Chilean copper belts can be reinvigo- vice president of Coro Mining Corp., a Ca- Yet even within this elite group, Chile ranks executives, estimated that Chile is the best with major porphyry copper deposits,” said rated with new technologies and concepts. nadian company with an established explo- exceptionally well. In the 2011 World Ex- jurisdiction to do mining in Latin America. Enrique Valdivieso Valdés, former national Those who believe that the country’s dis- ration pipeline of copper and molybdenum director of Sernageomin, the governmen- covery potential for copper deposits could projects in Chile and copper-gold ones in tal body in charge of the geological study be exhausted, especially after a mining his- Argentina. of these deposits. Much of the country’s tory that dates back centuries and a cur- Friedrich Speidel from Inmet said, “The mineral wealth has accumulated from vol- rent crop of companies that have staked main challenge at the exploration stage is canic and magmatic activity, as well as the large land claims, are mistaken. “Chile has the mining code: it is very complex and I extreme aridity that has prevailed over the large copper deposits and potential for long- find it somewhat unpredictable and not Atacama Desert for millions of years. “Me- term exploitation. In general, Chile is a very very ‘user-friendly’. Mining exploration do tallic mineral resources are the backbone good place to work. People abroad have the not have real title security until they finally of large-scale mining in Chile, where there perception that in Chile there is not much constitute their properties. Industry people is an ongoing exploration for copper, mo- land available anymore. The big established over the years have commented that they lybdenum, gold, silver, iron, lead, zinc and companies have a lot of it and the mining would like to see the mining code updated, manganese,” said Valdivieso. industry has reached maturity and there are but this has not yet happened. For a relatively small country (its some areas that are fully staked, so you have Indeed the system of mining concessions 756,096 km2 are dwarfed by neighboring to be a bit more creative,” said Friedrich in Chile allows companies to keep the ar- Argentina or regional giant Brazil, and rank Speidel, regional manager, South America eas of exploration by just paying an annual as the seventh smallest on the continent), for Inmet Mining, a Canadian-based mining amount, and without committing to do any Chile boasts an impressive diversity of ex- company active in copper and zinc produc- work on them. “In Chile this can be a prob- ploration activity. New technology is being tion, development and exploration that also lem, especially for junior companies. Indeed applied to known deposits to seek unex- owns operations in Turkey, Spain, Finland the system of mining concessions in Chile ploited potential, and greenfield exploration and a development project in Panama. does not give as many opportunities to ex- is being undertaken for a diverse range of In Chile, Inmet Mining has two gen- ploration for junior companies, as it allows other minerals. erative projects, 16 projects at the target large companies to keep the concessions for generation stage or early drilling stage, and large, prospective areas of exploration by Copper one project in the advanced drilling stage. paying the annual fee and without need to As is to be expected, a large amount of ex- The broad geographic distribution of these show progress in exploration. That tends to ploration expenditure is focused on finding projects is a good indication of the extent of discourage exploration by juniors because the most famous of Chile’s minerals, cop- the country’s geological promise. The com- it can be difficult to negotiate with large per. The promise of massive finds in a coun- pany plans to have a broader portfolio of companies upfront from the early stage of try that boasts the highest concentration of projects in both Chile and Peru within the exploration,” said Felipe Malbran, executive large copper porphyry deposits in the world next five years, with a larger focus on more vice president exploration of South Ameri- has attracted a slew of both juniors and advanced projects. can Silver Corp. (SOAM), a Canadian junior

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54 E&MJ • MARCH 2012 www.e-mj.com www.e-mj.com E&MJ • MARCH 2012 55 Mining IN CHILE Mining IN CHILE company that is developing the copper-gold valued at US$66.8 billion. This amount in- third of the total investment portfolio that the possibility of expansion of its other proj- project Escalones in Chile, among other ex- cludes projects under construction and proj- we have in Chile,” said Diego Hernández, ects in Chile: Mantos Blancos, El Soldado ploration projects. ects slated to begin construction in 2011 President and CEO of Codelco. As explained and Mantoverde. In Mantoverde we are In Chile and Latin America, SOAM Silver to 2015, plus portions to be invested from by Diego Hernández, some of Codelco’s developing to allow sulfide minerals to be is focused on further development of silver 2015 to startup. mines have been in production for years extracted. Mantoverde has oxide ores that and copper projects. “We have developed Investments slated for 2011 to 2015 and therefore are running out of oxide ore or can produce 60,000 mt/y of fine copper a specific expertise through our our Malku stand at US$44.1 billion, 66% of the proj- have lower-grades. The same is happening until 2016. Anglo American intends to ex- Khota project in Bolivia in terms of silver and ect portfolio. Planned investment in cop- in the case of mines owned by other large tend Mantoverde’s life until 2032 through indium, as well as significant experience in per mining stands at US$54.3 billion, or players. Similar to Codelco, major private the sulfides. Moreover, Anglo American porphyry systems. The gold potential in Chile 81.2% of the total. The balance goes to mining companies need to plan massive in- invests on exploration for new deposits in is great, though it has generally been associ- gold and silver mining with US$9.82 billion vestments in mine expansions. Chile,” said Durán. ated with other minerals, generally with por- or 14.7% and to iron and industrial miner- The new projects of private mining com- Quadra FNX Mining will invest US$2.5 phyry copper systems,” said Malbran. als mining with US$2.71 billion or 4.1%. panies in Chile are not far behind Codelco’s billion in the development of the Sierra Future exploration projects in Chile could in magnitude. Esperanza, inaugurated last Gorda deposit, as exploration suggests the Marcelo Awad, President and CEO, Antofagasta Miguel Ángel Durán, executive president of Anglo see more cooperation between large com- Major copper producers year and owned by Antofagasta Minerals, presence of major copper, gold and molyb- Minerals. American Chile. panies that own property rights and junior COCHILCO’s projections for the period had a construction cost of US$2.6 billion, denum reserves. The Canadian-based com- players, as is the case of the copper-gold 2009 to 2025 indicate that copper pro- according to Marcelo Awad, Antofagasta Minnesota, United States called Nokomis, volume from the Escondida mine in Chile. pany decided to wind down its Carlota and project Inca de Oro, a joint venture between duction will see a dramatic jump, rising by Minerals’ (AMSA) President and CEO. which will take from three to 10 years to be BHP said output at Escondida is expected Podolsky operations to focus on more prom- Codelco and the Australia-based company about 45% as a result of construction proj- “Antofagasta Minerals’ production will built. The open pit mine project at Antucoya to be marginally lower in the year through to ising projects and also made changes to the Pan Aust. “Pan Aust can bring know-how ects worth US$20.8 billion. Furthermore, grow thanks to the Caracoles and Telégrafo is waiting for directory’s approval, and will June, with volumes weighted to the second mining plan for its Franke mine in Chile. to Codelco and vice-versa. We expect many the development of new deposits could fur- projects, which also produce gold, and by contribute a further 80,000 mt/y by 2014. half of the year, but should improve beyond Quadra FNX sold a 45% stake of its Sierra more joint-ventures like this one to happen ther enhance the productivity of the indus- expanding the Pelambres mine, which pro- Also, by the end of 2016, we will have two that as mining moves toward higher-grade Gorda copper project to Japanese company in the future,” said Francisco Tomic, execu- try, averaging 7 million mt/y by 2025. duces copper, gold and molybdenum. The other projects, Caracoles and Telégrafo, ore. BHP has a 57.5% stake in Chile’s Es- Sumitomo Corp. tive general manager of Pan Aust, a copper Codelco, the state-owned Chilean group, company plans to double its production by which will together contribute 350,000 condida mine, which is one of the largest Complementing the projects of players and gold producer with operations in South is the world’s single biggest copper pro- 2020 thanks to an ambitious investment mt/y of copper. For Los Pelambres we also producing copper mines in the world. that are already established on the Chil- East Asia. ducer, controlling about 20% of total global plan of US$15 billion,” said Awad. have projected to double production; we are Moreover, the original BHP Billiton’s La- ean market, such as Xstrata (expansion of reserves. The state-owned giant accounts “Antofagasta Minerals has a project port- now on the pre-feasibility stage, and it will guna Seca plant project was complement- Lomas Bayas), Teck (Quebrada Blanca Hi- Portfolio of investments 2011-2020 for 45% while major private miners account folio that will allow doubling our capacity by take around seven years to bring to opera- ed by a new mill and concentrating plant pogeno) and Freeport Mc Moran (El Abra According to the Chilean Copper Commis- for 53.5% of copper-mining investment. the end of this decade, considering only nation. Today, we also produce 250,000 oz/y replacing the Los Colorados facility, to be Sulfolix), there are also new operations sion (COCHILCO), Chile has a robust min- “Codelco plans to invest US$3.5 billion ev- tional operations. We have two internation- of gold per year and, when the new proj- relocated to clear the area for new mining. owned by new players, such as Pan Pacific ing investment project portfolio until 2020, ery year over the next six years, which is a al projects, one in Pakistan and another in ects come in, we should produce around These plans are designed to retain current Copper (PPC), a private Japanese company the 600,000 oz/y. Molybdenum production concentrate output in spite of declining held by JX Nippon Mining & Metals and should rise from 10,000 mt/y to 25,000 grades. A new phase to be defined may con- Mitsui Mining that invested in Chile to guar- mt/y before the end of the decade,” said sider the construction of a third concentrat- antee the copper supply to its two smelting Marcelo Awad. ing plant plus a desalination plant supplying plants in Japan. Collahuasi, owned by Xstrata (44%), water to the new operations. PPC and Mistui Co., Ltd jointly own Anglo American (44%) and Mitsui (12%), Anglo American has invested around Minera Lumina Copper Chile with a share is another giant mine in expansion. “The US$2.8 billion in the Los Bronces (Anglo balance of 75% and 25%. In Chile, JX Nip- expansion of Collahuasi, which is now at American Sur) development. “Los Bronces pon Mining & Metals has a share of 15% the level of feasibility study, will double is currently in the start-up curve. After 12 in Minera Los Pelambres, 3.6% in the Col- the mine’s production. Today Collahuasi months we will reach the total installed ca- lahuasi mine and 3% in Minera Escondida, produces about 500,000 mt/y of fine cop- pacity, which will be up to 400,000 mt/y the biggest copper mine in the world. per, and with the expansion it could pro- of copper. The expansion included the pur- “To increase our supply ratio, Minera duce more than 1 million mt/y,” said Miguel chase of a crusher and a new milling line Lumina Copper Chile is currently develop- Ángel Durán, executive president of Anglo with a capacity of 87,000 mt/d processing ing the Caserones copper and molybdenum American Chile. plus a 58-km long slurry pipeline for trans- project in the north of Chile, the first project Collahuasi’s total investment for expan- portation of ores to higher-capacity copper fully operated by Pan Pacific Copper. We sion phases I and II will reach US$3.2 bil- and molybdenum concentrating plants in plan to start producing copper cathode in lion. The project involves building two re- the valley. At peak production levels, Los January 2013 and copper and molybde- verse osmosis potable water plants and two Bronces is expected to be the fifth largest num concentrate by the end of 2013,” said wastewater treatment plants. The company copper mine in the world, with reserves Masashi Kikuchi, vice general manager of also plans to build an organic material land- and resources that support a mine life of Minera Lumina Copper Chile. fill, a modular water treatment plant and more than 30 years and with further ex- Despite the long history of copper ex- landfill for non-hazardous waste. pansion potential. We are driving volume traction, the future of Chilean copper pro- BHP Billiton Escondida’s expansion is growth across the most attractive com- duction and its leading global position is another huge project, which will probably modities with a continued focus on long guaranteed by the plans for increased pro- reach US$5 billion in investment. The en- life assets with low cash operating costs. duction of the major mining companies, largement will include a third concentra- Our long-term growth pipeline presents sig- both public and private, which will assure tor and increase production to 1.3 million nificant opportunities and optionality,” said the maintenance of the world’s first posi- mt/y, aimed to reverse an ageing operation Durán of Anglo American. Anglo American tion for at least 15 years. Copper is a key that has seen BHP Billiton’s copper produc- produced 599,000 mt of fine copper in wealth for Chile, and can finance almost tion decline 7% during 2011, due to lower 2011. “Anglo American is also studying 50% of the country’s budget.

56 E&MJ • MARCH 2012 www.e-mj.com www.e-mj.com E&MJ • MARCH 2012 57 Mining IN CHILE Mining IN CHILE company that is developing the copper-gold valued at US$66.8 billion. This amount in- third of the total investment portfolio that the possibility of expansion of its other proj- project Escalones in Chile, among other ex- cludes projects under construction and proj- we have in Chile,” said Diego Hernández, ects in Chile: Mantos Blancos, El Soldado ploration projects. ects slated to begin construction in 2011 President and CEO of Codelco. As explained and Mantoverde. In Mantoverde we are In Chile and Latin America, SOAM Silver to 2015, plus portions to be invested from by Diego Hernández, some of Codelco’s developing to allow sulfide minerals to be is focused on further development of silver 2015 to startup. mines have been in production for years extracted. Mantoverde has oxide ores that and copper projects. “We have developed Investments slated for 2011 to 2015 and therefore are running out of oxide ore or can produce 60,000 mt/y of fine copper a specific expertise through our our Malku stand at US$44.1 billion, 66% of the proj- have lower-grades. The same is happening until 2016. Anglo American intends to ex- Khota project in Bolivia in terms of silver and ect portfolio. Planned investment in cop- in the case of mines owned by other large tend Mantoverde’s life until 2032 through indium, as well as significant experience in per mining stands at US$54.3 billion, or players. Similar to Codelco, major private the sulfides. Moreover, Anglo American porphyry systems. The gold potential in Chile 81.2% of the total. The balance goes to mining companies need to plan massive in- invests on exploration for new deposits in is great, though it has generally been associ- gold and silver mining with US$9.82 billion vestments in mine expansions. Chile,” said Durán. ated with other minerals, generally with por- or 14.7% and to iron and industrial miner- The new projects of private mining com- Quadra FNX Mining will invest US$2.5 phyry copper systems,” said Malbran. als mining with US$2.71 billion or 4.1%. panies in Chile are not far behind Codelco’s billion in the development of the Sierra Future exploration projects in Chile could in magnitude. Esperanza, inaugurated last Gorda deposit, as exploration suggests the Marcelo Awad, President and CEO, Antofagasta Miguel Ángel Durán, executive president of Anglo see more cooperation between large com- Major copper producers year and owned by Antofagasta Minerals, presence of major copper, gold and molyb- Minerals. American Chile. panies that own property rights and junior COCHILCO’s projections for the period had a construction cost of US$2.6 billion, denum reserves. The Canadian-based com- players, as is the case of the copper-gold 2009 to 2025 indicate that copper pro- according to Marcelo Awad, Antofagasta Minnesota, United States called Nokomis, volume from the Escondida mine in Chile. pany decided to wind down its Carlota and project Inca de Oro, a joint venture between duction will see a dramatic jump, rising by Minerals’ (AMSA) President and CEO. which will take from three to 10 years to be BHP said output at Escondida is expected Podolsky operations to focus on more prom- Codelco and the Australia-based company about 45% as a result of construction proj- “Antofagasta Minerals’ production will built. The open pit mine project at Antucoya to be marginally lower in the year through to ising projects and also made changes to the Pan Aust. “Pan Aust can bring know-how ects worth US$20.8 billion. Furthermore, grow thanks to the Caracoles and Telégrafo is waiting for directory’s approval, and will June, with volumes weighted to the second mining plan for its Franke mine in Chile. to Codelco and vice-versa. We expect many the development of new deposits could fur- projects, which also produce gold, and by contribute a further 80,000 mt/y by 2014. half of the year, but should improve beyond Quadra FNX sold a 45% stake of its Sierra more joint-ventures like this one to happen ther enhance the productivity of the indus- expanding the Pelambres mine, which pro- Also, by the end of 2016, we will have two that as mining moves toward higher-grade Gorda copper project to Japanese company in the future,” said Francisco Tomic, execu- try, averaging 7 million mt/y by 2025. duces copper, gold and molybdenum. The other projects, Caracoles and Telégrafo, ore. BHP has a 57.5% stake in Chile’s Es- Sumitomo Corp. tive general manager of Pan Aust, a copper Codelco, the state-owned Chilean group, company plans to double its production by which will together contribute 350,000 condida mine, which is one of the largest Complementing the projects of players and gold producer with operations in South is the world’s single biggest copper pro- 2020 thanks to an ambitious investment mt/y of copper. For Los Pelambres we also producing copper mines in the world. that are already established on the Chil- East Asia. ducer, controlling about 20% of total global plan of US$15 billion,” said Awad. have projected to double production; we are Moreover, the original BHP Billiton’s La- ean market, such as Xstrata (expansion of reserves. The state-owned giant accounts “Antofagasta Minerals has a project port- now on the pre-feasibility stage, and it will guna Seca plant project was complement- Lomas Bayas), Teck (Quebrada Blanca Hi- Portfolio of investments 2011-2020 for 45% while major private miners account folio that will allow doubling our capacity by take around seven years to bring to opera- ed by a new mill and concentrating plant pogeno) and Freeport Mc Moran (El Abra According to the Chilean Copper Commis- for 53.5% of copper-mining investment. the end of this decade, considering only nation. Today, we also produce 250,000 oz/y replacing the Los Colorados facility, to be Sulfolix), there are also new operations sion (COCHILCO), Chile has a robust min- “Codelco plans to invest US$3.5 billion ev- tional operations. We have two internation- of gold per year and, when the new proj- relocated to clear the area for new mining. owned by new players, such as Pan Pacific ing investment project portfolio until 2020, ery year over the next six years, which is a al projects, one in Pakistan and another in ects come in, we should produce around These plans are designed to retain current Copper (PPC), a private Japanese company the 600,000 oz/y. Molybdenum production concentrate output in spite of declining held by JX Nippon Mining & Metals and should rise from 10,000 mt/y to 25,000 grades. A new phase to be defined may con- Mitsui Mining that invested in Chile to guar- mt/y before the end of the decade,” said sider the construction of a third concentrat- antee the copper supply to its two smelting Marcelo Awad. ing plant plus a desalination plant supplying plants in Japan. Collahuasi, owned by Xstrata (44%), water to the new operations. PPC and Mistui Co., Ltd jointly own Anglo American (44%) and Mitsui (12%), Anglo American has invested around Minera Lumina Copper Chile with a share is another giant mine in expansion. “The US$2.8 billion in the Los Bronces (Anglo balance of 75% and 25%. In Chile, JX Nip- expansion of Collahuasi, which is now at American Sur) development. “Los Bronces pon Mining & Metals has a share of 15% the level of feasibility study, will double is currently in the start-up curve. After 12 in Minera Los Pelambres, 3.6% in the Col- the mine’s production. Today Collahuasi months we will reach the total installed ca- lahuasi mine and 3% in Minera Escondida, produces about 500,000 mt/y of fine cop- pacity, which will be up to 400,000 mt/y the biggest copper mine in the world. per, and with the expansion it could pro- of copper. The expansion included the pur- “To increase our supply ratio, Minera duce more than 1 million mt/y,” said Miguel chase of a crusher and a new milling line Lumina Copper Chile is currently develop- Ángel Durán, executive president of Anglo with a capacity of 87,000 mt/d processing ing the Caserones copper and molybdenum American Chile. plus a 58-km long slurry pipeline for trans- project in the north of Chile, the first project Collahuasi’s total investment for expan- portation of ores to higher-capacity copper fully operated by Pan Pacific Copper. We sion phases I and II will reach US$3.2 bil- and molybdenum concentrating plants in plan to start producing copper cathode in lion. The project involves building two re- the valley. At peak production levels, Los January 2013 and copper and molybde- verse osmosis potable water plants and two Bronces is expected to be the fifth largest num concentrate by the end of 2013,” said wastewater treatment plants. The company copper mine in the world, with reserves Masashi Kikuchi, vice general manager of also plans to build an organic material land- and resources that support a mine life of Minera Lumina Copper Chile. fill, a modular water treatment plant and more than 30 years and with further ex- Despite the long history of copper ex- landfill for non-hazardous waste. pansion potential. We are driving volume traction, the future of Chilean copper pro- BHP Billiton Escondida’s expansion is growth across the most attractive com- duction and its leading global position is another huge project, which will probably modities with a continued focus on long guaranteed by the plans for increased pro- reach US$5 billion in investment. The en- life assets with low cash operating costs. duction of the major mining companies, largement will include a third concentra- Our long-term growth pipeline presents sig- both public and private, which will assure tor and increase production to 1.3 million nificant opportunities and optionality,” said the maintenance of the world’s first posi- mt/y, aimed to reverse an ageing operation Durán of Anglo American. Anglo American tion for at least 15 years. Copper is a key that has seen BHP Billiton’s copper produc- produced 599,000 mt of fine copper in wealth for Chile, and can finance almost tion decline 7% during 2011, due to lower 2011. “Anglo American is also studying 50% of the country’s budget.

56 E&MJ • MARCH 2012 www.e-mj.com www.e-mj.com E&MJ • MARCH 2012 57 Mining IN CHILE

Gold Gold production in Chile will grow 19% from 2011 to 2015, ce- menting the country’s position as a significant producer of the precious metal. The field for foreign gold explorers and producers is wide open, with no national champion dominating the gold mining industry to the same degree as Codelco does in copper mining. In Chile, gold is often associated with porphyry copper, so gold companies need to extract both minerals.

Exploration “The potential for gold exploration in Chile is great. If you look at the growth profile, the current projection is for 200% to 300% growth in the next five years. There are some very big projects that should be developed in the next five to 10 years, for example, in the Maricunga belt where Andina Minerals has discovered 17 million David Fowler, CEO, Orosur Mining. La Coipa mine, located in Copiapó, northern Chile. (Photo courtesy of Kinross). oz and is currently completing its feasibility study. The Maricunga gold belt is characterized by very large lower-grade deposits that ning a second phase of drilling and are looking to complete their NGOs, the UN Global Compact and government partners focused have become more attractive with the world’s depleted resources,” first engineering assessment later in 2012. “For me the gold poten- on economic and social conditions by addressing their root causes: said George Bee, CEO of Andina Minerals, a Canadian gold explora- tial in Chile is great, though it has generally been associated with lack of educational resources, poverty, and poor housing condi- tion company focused on Chile. other minerals, generally with porphyry copper systems, but not as tions,” said Rod Jiménez, Barrick’s vice president corporate affairs “Chile will likely go from being the 15th biggest gold producer in in Mexico, Peru and Bolivia where it’s the primary mineral,” said in South America. the world to the eighth biggest gold producer,” said David Fowler, Felipe Malbran, executive vice-president of exploration. It is not, however, only the majors who are producing in Chile. Orosur Mining’s CEO. The favourable business climate has allowed a number of compa- Orosur, which operates a producing gold mine in Uruguay (San Producers nies to become producers. Cerro Grande Mining Corp., for example, Gregorio), has assembled an exploration portfolio of high-quality as- Having bought gold deposits in Brazil, Chile and Ecuador, Kinross is a Canadian-based company that has achieved success as a gold, sets in Chile. The Canadian junior company started working in Chile has changed from being a minor joint venture partner into the opera- copper and industrial mineral developer and producer in northern three years ago after acquiring a Canadian company called Fortune tor of projects over the years. Lobo-Marte is a gold project in north- Chile. “The company’s Pimentón gold-copper mine is in production Valley, which had two projects, one with Codelco and another proj- ern Chile, which is the company’s flagship in the country. “With since 2004 and has an expected life of 50 years. The potential for ect with Anglo American. “For us, it was a good combination of the increasing price of gold, the ability to mine greater depths and the Pimenton mine is huge, although it will take time to increase new exploration projects and starting in Chile with an established improving technology, gold mines are staying in production for lon- the tonnage. Exploration is going deeper and our rig is capable of company. Having acquired those two assets, we recently acquired ger. The expected mine life of Lobo-Marte is 10 years, but there are drilling to 1,500 m. Depending on our results, we will have to go our third asset, Talca. Orosur’s goal is to maximize our market valu- significant other potential targets in the area. We have an explora- ation based on what we have at the moment, to grow the company, tion program looking at other targets within a 10- to 15-km range develop our assets, and increase the value of what we have. We of Lobo-Marte on the package of ground that we have. The property want to be seen as a production company. That is why we are doing was an acquisition from Teck Cominco and certain subsidiaries of exploration to try and grow the production. In five years, we expect Anglo American. Lobo-Marte used to operate in the early 1990s to have developed two of the new projects and we will be producing and the original Marte mine was built and shut down within a year 150,000 oz/y if not more,” said Fowler. of operations. The construction of Lobo-Marte should start in Sep- The aforementioned Iron Creek Capital has taken a very spe- tember 2012 and will take 18 months. The expected production of cific approach to gold and silver exploration, looking to bolster their the mine could be as much as 320,000 oz/y and this project is our copper resources with significant finds in these commodities. “Iron main focus,” said Alan Pangbourne, vice-president of projects South Creek geologists have particular expertise in the exploration for pre- America, Kinross. cious metal veins of the El Peñón type and we feel that these are Other major gold projects in Chile include the Cerro Casale proj- very valid targets in this part of the world,” said Beale. ect (Barrick), Caspiche (Exeter), El Morro (Goldcorp) and Pantanillo South American Silver Corp. (SOAM) provides a typical example (Orosur Mining). of the type of gold mineralization found in Chile. Their Escalones Barrick’s operation Pascua-Lama, which is located on the border project is a copper-gold porphyry project with a resource of 420 of Chile and Argentina, has proven and probable reserves of 17.8 million mt containing 3.8 billion lbs of copper; they are now begin- million oz of gold, with 671 million oz of silver contained within the gold reserves. Pascua-Lama is a high quality, world class resource and it is expected to have an average annual gold production of 800,000 to 850,000 ounces in the first full five years of operation. Pascua-Lama, located over 4,500 meters of altitude, will create more than 5,000 direct jobs in the region. Barrick Gold, the world’s largest gold producer, is committed to manage the project in a responsible manner. “Barrick is committed to making a positive difference in the communities in which we operate. These communities benefit from jobs, salaries, capital expenditures, local purchase of goods and services, and payment of taxes and royal- ties. In Chile we have been working over the last three years in the Atacama Commitment, an innovative partnership between the Orosur’s San Gregorio mine is located in northern Uruguay in the historic company and a group of Chilean NGOs and governmental agencies. Minas de Corrales mining district. (Photo courtesy of Orosur). The Atacama Commitment is a unique alliance with eight Chilean

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strategic mineral. This definition dates back from the time when lithium was thought to be used in the production of nuclear weap- ons, and is now considered to be outdated. Only two companies, the local SQM and the German firm Chemetall’s subsidiary Socie- dad Chilena de Litio, operate in the country,” said Daniela Desormeaux, founder of Signum Box, a consultancy that offers market intel- ligence specialized on the lithium market. However, companies such as Li3 En- ergy, Australian Talison Lithium and US- based Pan American Lithium are currently exploring for lithium in Chile. Barrick Gold’s Zaldívar copper operation in RC drilling at the Cerro Buenos Aires exploration target, Pampa Buenos Aires project. (Photo courtesy northern Chile. (Photo courtesy of Barrick). of Iron Creek). Li3 Energy, a US-listed and South Amer- ican based exploration and development to the market to find US$25 to US$30 mil- billion. More than half of this figure is rep- development at Pimenton will require lime- company in the lithium and minerals sector lion to drill, but we are currently funding our resented by the production of deposits such stone and it will be beneficial for us to have acquired their flagship asset, Maricunga, in own drilling,” said David Thomson, execu- as caliche, mainly iodine and its derivatives our own source,” said Houghton. 2009. “Li3 has a preliminary mine plan, in tive vice president and director of explora- (US$407 million) and salt (US$444 million which we expect to produce 15,000 mt/y tion of Cerro Grande Mining Corp. including potassium nitrate). The potassium Chile, the Saudi Arabia of of lithium carbonate during 20 years. So salts (chloride and sulfate) provide 22% of the lithium in total, we should have a resource of ap- Iron total value of Chilean non-metallic production. Alongside these commodities, lithium is an proximately 300,000 mt of lithium carbon- In 2011, Chile produced 0.38% of the The importance of non-metallic resources area in which Chile really makes a mark on ate. We are now working on a preliminary world’s iron production ranking far behind in Chile is based on their variety and qual- the world stage. According to the U.S. Geo- economic assessment, which will come out the world leaders. In 2010, the main iron ity and also the massive nature of some of logical Survey, the Atacama desert contains in early March 2012. We expect to be in player in Chile, CAP Minería, increased pro- the reserves. Chile possesses more than one 27% of the world’s lithium reserves. “Chile production in early 2014,” said Luis Sáenz, duction by 23%, reaching 10.5 million mt. third of the world’s iodine, as well as vast contributes more than 50% of lithium for Li3 Energy’s CEO. “We hope to double production in the next amounts of natural nitrates and gypsum/ chemicals production worldwide, and is Sáenz, who is planning to list the com- five years,” said Peter Venturini, manager anhydrite. The exceptionally large salt de- a leader in price. There is no permit yet in pany on the Toronto Stock Exchange before of mining projects in the CAP Group, which posit of Salar Grande has reserves that could Chile to exploit lithium, since it is legally a mid-2012, explained his ambitious plan: is constantly expanding its mining programs supply world demand for centuries. Chile is to ensure the continuity of operations for therefore today a world leader in the produc- many decades to come. tion and export of lithium, iodine and nitrate Among the iron producers, Minera Santa ore as well as the main producer of salt. Fe is a company dedicated to extraction, “Chile suffers from a lack of well located concentration, smelting and export of iron high-grade limestone deposits. In recogni- ore products. The company, a joint venture tion of this shortage and the fact that there with India’s JSW Group, produced 1 million exist substantial growth opportunities for mt in 2011. At present their main exploita- the consumption of burnt lime, CGM has re- tion comes from iron of their mines situated focused part of its exploration activities and in the Third Region in Chile. knowledge of the Chilean mining industry to identify potential burnt lime projects,” said Molybdenum Stephen Houghton, CEO of Cerro Grande In addition to its growing gold output, Mining Corp. Chile is also the third largest producer of Cerro Grande Mining’s primary industrial molybdenum in the world, behind China minerals deposit is the Catedral/Rino proj- and the United States with about 17% of ect, a limestone and cement rock deposit. the global production, according to Cochi- These kind of deposits “are hard to find in lco. In terms of exports, molybdenum is Chile in sufficient volumes. Currently there the second most important mineral in the are three major producers who have not country. In 2010, Chile exported 39,896 been interested in the cement rock deposit mt valued at US$1.322 billion. Of this but we think that the deposit will be a major amount, more than 50% has been pro- player in time.” duced by Codelco, while the rest of the This deposit, while useful in its own production comes from Collahuasi, Los right, is particularly beneficial when viewed Pelambres and Anglo American. in conjunction with Cerro Grande Mining’s other projects.”We are seeking to find a Non-metallic minerals source of capital or a partner who would put Chile has large investments in non-metallic the cement rock deposit into production. minerals. In 2010 Chilean exports of these However, we have been advised to keep products achieved a value of US$1.622 the limestone deposit because the porphyry

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Evolution and Challenges How Obstacles Breed Innovation

Operations at the Maricunga project, northern Chile. (Photo courtesy of Li3). 3M is a major supplier of safety, chemical and electrical equipment. (Photo courtesy of 3M).

“Li3 has the right access, the right people and the right partner. That differentiates us from many other players. In Argentina there To take full advantage of Chile’s mining of concentration by flotation, fusion, elec- because of their surface. Evaporation is a are many lithium projects ahead of us in their investigations. None- boom, which will see copper output rise to tro-refining, hydrometallurgical process big issue in Chile, since many mines are theless, because of the work we are doing here in Chile and our 7 million mt/y by 2015, the industry is go- leaching, solvent extraction and electro- located in the desert,” said Leticia Conca long-term strategic investors, we are catching up very quickly. In the ing to have to overcome energy, water and winning. “In mining, most water is spent in Benito, general manager of Alquimia Con- long-term, Bolivia, which owns about half of the world’s resources skilled labor deficit challenges that are al- the tailings. Fortunately, more wastewater ceptos, a consultancy focused on mining in lithium, will be the place to be for lithium mining. However, the ready hampering the speed at which new gets recovered nowadays: tailing thicken- and metallurgical processes. Bolivian government is very reluctant to let foreign investors in. To output can be brought on line. These chal- ers are better, recovering more water and Ricardo Nicolau, managing director of be able to invest in lithium in Bolivia you have to think long-term, lenges are motivating companies to develop preventing heavy metals from infiltrating Chilean engineering firm JRI Ingenieria, and a lot of time and potentially money will be spent in talking to new innovations and technologies. the soil. The tailing ponds are smaller, and agrees on the importance of new technolo- the Bolivian government to come to a solution that works for ev- therefore have a lower evaporation rate, gies to improve water management. “The eryone. We want to show the government that they can use their Water natural resources to change the dynamics of the country, which is With most mineable deposits in Chile be- one of the poorest of Latin America. POSCO, our partner, is one of ing located in the north of the country, one the companies that have signed a memorandum of understanding of the driest places on earth, some of the to develop projects in the Salar de Uyuni in Bolivia.” obstacles facing the mining industry are no “We know that the Chilean authorities are currently examining surprise. “One of main challenges is relat- the regulations to make future lithium exploitation possible,” said ed to the availability of water in Northern Sáenz. Salt lagoons, as the ones present in the Atacama Desert, Chile, where most of the mining operations have proven to be cheaper to exploit compared to a conventional take place,” said Miguel Ángel Durán, Anglo mining process and as such have given Chile a cost competitive American’s executive president, Chile. advantage in lithium production. With limited water availability, this re- In the lagoons, lithium is found in the form of lithium chloride, source has taken on a critical importance. which is transformed to lithium carbonate with solar evaporation. High cost and the potential impact of cli- The chloride is pumped, placed in evaporation wells, using solar mate change on water resources must be energy; the only energy costs come from pumping from from 5- to factored into a company’s strategy from the 50-m deep. It is then transported to the chemical plant and mixed start of any operation. “PWC is helping one with different chemicals and dried to obtain lithium carbonate. This of the biggest mines in Chile with water process is very cost efficient compared to the mining process; the management to ensure that it is economi- cost per mt is around US$1,300 to US$2,000/mt, although the cally optimal. The water usage is measured economical evaluation is complicated due to the fact that, when in each part of the process in small seg- producing lithium hydroxide, the carbonate is produced first and ments to help understand the economical then mixed with sodium hydroxide. Therefore, the production costs implications,” said Colin Becker, partner at of the lithium carbonate must be taken into account, unlike the PricewaterhouseCoopers, in an example of mining companies, who can produce from the concentrate both the amount of care that companies have to carbonate and hydroxide. pay to this issue. The lithium market is currently dominated by a handful of ma- According to Cochilco, the total amount jor producers, SQM and Chemetall, but investors naturally look to of water consumption for the production of smaller junior exploration and production (E&P) companies for the copper concentrates will increase to 540.6 real growth. As the demand for battery-powered devices increases, million m3 by 2020, 26% more than cur- global demand for lithium has risen, bringing the Chilean industry rent volumes. For copper production, water forward to international prominence. is used mainly in the traditional processes

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Evolution and Challenges How Obstacles Breed Innovation

Operations at the Maricunga project, northern Chile. (Photo courtesy of Li3). 3M is a major supplier of safety, chemical and electrical equipment. (Photo courtesy of 3M).

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“At Esperanza, Antofagasta Minerals in mining operations contaminates the soil. residential sector and manufacturing sector, has three important innovations which We use sophisticated software to monitor according to the National Energy Commis- have been applied for the first time on a these processes,” said María Eugenia Parot, sion (CNE). large scale. We are pumping seawater to general manager of Golder Associates Chile, At present, electricity prices in Chile an altitude of 2,400 m, with four pumping a global engineering firm with several areas amount to US$250 per MWh, which is stations in 120 km of tubing. Moreover, we of practice. US$50 per MWh higher than those in Ar- are not desalinizing water, as we use salt gentina, Colombia and Peru. These high water for all of our processes, becoming the Energy prices have an historical reason; during the first copper operation to do so completely. Water is not the only fundamental resource Argentine energy crisis in 2004, the Argen- The third innovation is thickened tailings, in short supply. Another major challenge for tinean government restricted natural gas which are the first in Chile, and second the development of the Chilean mining in- exports to Brazil, Chile and Uruguay to pre- worldwide after Australia. The thickened dustry is its ability to secure sufficient pow- serve the supply for internal consumption. tailings use less volume, and recover most er. Although energy infrastructure is grow- These export cuts seriously harmed Chile of the water. Unlike most tailing wells, the ing, the number of mining projects in the and since then the electricity sector in Chile Ricardo Nicolau, managing director, JRI Alan Pangbourne, vice-president of projects María Eugenia Parot, general manager, Golder relies predominantly on thermal and hydro- Ingeniería. solid percentage is 70% with 30% water, South America, Kinross. Associates Chile. pipeline makes their development a race and all recovered water is reused in our against time. power generation. mining industry is trying to recover as much processes,” said Marcelo Awad, CEO of An- doing tests with snow fences to increase havior of our minerals comparing sea water According to Chile’s President Piñera, In this context, the mining industry faces water as possible form the tailings. We have tofagasta Minerals, one of the main copper water capture,” said Alan Pangbourne, to fresh water and came to the conclusion at the rate the country is growing there is increases in its cost structure in direct re- a lab where we study how to thicken tail- producers in Chile. vice-president of projects South America, that we obtained better results of recovering the need to increase its installed capacity lation to electricity prices. “Higher energy ings,” said Nicolau. The desalinization process is costly, as Kinross, a major gold exploration and pro- copper and gold from the Esperanza mine by 8,000 MW to address the rise in con- prices in Chile reduce the country’s com- Mining companies have traditionally processes such as reverse osmosis require duction company. with pure sea water,” said Awad of Antofa- sumption that will accompany investments petitiveness in all the economic sectors and obtained water from aquifers. However, a significant amount of energy. Moreover, The competitive advantage of using salt gasta Minerals. planned until 2020. The country currently mining is no exception,” said Durán of An- the scarcity of fresh water from the main seawater is usually found far from the mine water is a significant lowering of costs and, Technological responses to the water has about 17,000 MW of installed capac- glo American. land and competition for it with other pro- sites. In the feasibility study, mining com- in addition, when water is desalted, it gen- scarcity issues are increasingly sophisticat- ity, of which more than half is consumed Faced with this situation, mining com- ductive sectors, such as agriculture and panies need to take this into account or erates large amounts of salt that need to be ed and national and international engineer- in the Central Interconnected System (SIC), panies are making efforts related to energy manufacturing, has led mining companies look at other technologies to save water. returned to sea or re-used. Using fresh un- ing companies work intensively to find new and about one third in the Northern Inter- efficiency and clean technologies, and are to look at alternatives. Mining companies “In some cases desalinization is an option derground water would risk exhausting the solutions. “We help our clients to work with connected System (SING). exploring initiatives to promote non-conven- are making innovative efforts in this sense, and in other cases it becomes financially desert’s natural resources, but salt water environmentally sustainable resources and In terms of energy consumption, the tional renewable energies. “The main back- such as the use of seawater via desalina- limiting as it requires huge amounts of en- gives long sustainability to the project. we are specialized in the issues of de-water- mining industry ranks first in consumption bone of the grid is reaching capacity and the tion, water recirculation and innovative ergy. We have been looking at new ways to “We do our own water management. ing and retrieving water from tailings: we fa- of electricity in the country, and in terms of entire grid is becoming stressed so we are waste disposal solutions. increase water capture and we have been We spent two years investigating the be- cilitate anything to prevent that water used total energy is the fourth after transport, the getting power cuts and brownouts. How-

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64 E&MJ • MARCH 2012 www.e-mj.com www.e-mj.com E&MJ • MARCH 2012 65 Mining IN CHILE ever, there is work being done and power contracts with the mining companies to stations have been approved and there are help provide some of their energy needs. new hydro-stations being built in the south. “We have been watching closely what has Development requires power and the op- been going on in Europe in terms of the in- tions for power development are limited,” creasing focus on the issue of renewable said Pangbourne of Kinross. energy. Now, we are looking at our own “Antofagasta Minerals is developing two systems to see where we can begin ap- power supply types. The first is geother- plying more alternative energy sources. A mal energy and we have several contracts new network can take five years to set up. in this area. Our most advanced project of Hopefully, within five years, we will already this type is located 300 km southeast of be relying more on renewable sources. We Santiago, where we have drilled 700 m are constantly considering new options in deep and managed to obtain water steam terms of alternative energy sources as well to the temperature that allows us to keep as advances in traditional technologies,” drilling and get to the 1,500 m needed to said Eric Ahumada Gómez, business devel- John Byrne, managing director, Boyden. place the turbine and generate electricity. opment vice president of transmission com- We will be done with the project at the end conventional sources of energy has been pany Transelec. of 2013. The second type of power supply emphasized by a number of the country’s In addition to these efforts, many of the project that Antofagasta Minerals is devel- leading figures and analysts. “With coal- engineering companies heavily involved in oping is underground coal gasification: we power energy becoming more expensive the mining industry are also seeing a gap take coal deposits and, instead of extract- and diesel power capacity still a number of in the energy market and are moving in ing the coal, we inject oxygen and ignite it; years away, we may see the industry shift- to meet this demand. Endress+Hauser, the flame burns the coal which generates a ing into alternative energy as both a com- known worldwide for their work in the methane gas that is captured at the surface plementary source and as a manner of com- energy sector, are increasingly looking to with tanks, and later distributed and used plying with social responsibility standards,” supplement their work in Chile’s mining in thermo electrical plants or for domestic said Alicia Domínguez, leading partner of industry. “For Endress+Hauser worldwide use in cities. This operation is run in Valdiv- Ernst & Young’s mining group in Chile. the energy sector is a large part of the busi- ia,” said Awad of Antofagasta Minerals, in Mining companies that are already con- ness. In Chile, we want to work alongside an example of the innovations companies nected to traditional power generators are engineering companies to cover the energy are exploring. now requesting to be connected to alterna- area; we want to develop the area of en- The importance of developing these tive renewable energy sources. These re- ergetic resources optimization. It begins by alternative sources to complement more newable energy providers are making sales knowing how much is consumed, monitor- ing the consumption, with certain software, and review afterwards,” said Susana Torres, managing director of Endress+Hauser. The mining sector uses 85% of the Northern Grid’s (SING) power capacity of which 58% is supplied by natural gas. To expand copper production by an order of a magnitude as discussed earlier, Chile will have to reconcile the construction of new large scale power plants and fuel sources (coal, natural gas, and uranium).

Skills shortage According to Ernst and Young, a skills shortage remains the second biggest risk for mining and metals this year in Australia, Latin America, South Africa and Canada. “In Chile, there is an incredible demand for knowledgeable people in terms of project control managers, project directors and plant managers. The demand is in the mining sector but also in infrastructure. Brazil hires anyone that they can find that is associated with engineering. Chile will receive US$67 billion of investment in mining alone and Peru will receive US$48 billion by 2020; each project needs available people,” said John Byrne, managing director of Boyden, one of the three main recruitment Lines of Transelec in the flowered desert in the north of Chile. (Photo courtesy of Transelec). companies present in the country.

66 E&MJ • MARCH 2012 www.e-mj.com www.e-mj.com E&MJ • MARCH 2012 19 Mining IN CHILE ever, there is work being done and power contracts with the mining companies to stations have been approved and there are help provide some of their energy needs. new hydro-stations being built in the south. “We have been watching closely what has Development requires power and the op- been going on in Europe in terms of the in- tions for power development are limited,” creasing focus on the issue of renewable said Pangbourne of Kinross. energy. Now, we are looking at our own “Antofagasta Minerals is developing two systems to see where we can begin ap- power supply types. The first is geother- plying more alternative energy sources. A mal energy and we have several contracts new network can take five years to set up. in this area. Our most advanced project of Hopefully, within five years, we will already this type is located 300 km southeast of be relying more on renewable sources. We Santiago, where we have drilled 700 m are constantly considering new options in deep and managed to obtain water steam terms of alternative energy sources as well to the temperature that allows us to keep as advances in traditional technologies,” drilling and get to the 1,500 m needed to said Eric Ahumada Gómez, business devel- John Byrne, managing director, Boyden. place the turbine and generate electricity. opment vice president of transmission com- We will be done with the project at the end conventional sources of energy has been pany Transelec. of 2013. The second type of power supply emphasized by a number of the country’s In addition to these efforts, many of the project that Antofagasta Minerals is devel- leading figures and analysts. “With coal- engineering companies heavily involved in oping is underground coal gasification: we power energy becoming more expensive the mining industry are also seeing a gap take coal deposits and, instead of extract- and diesel power capacity still a number of in the energy market and are moving in ing the coal, we inject oxygen and ignite it; years away, we may see the industry shift- to meet this demand. Endress+Hauser, the flame burns the coal which generates a ing into alternative energy as both a com- known worldwide for their work in the methane gas that is captured at the surface plementary source and as a manner of com- energy sector, are increasingly looking to with tanks, and later distributed and used plying with social responsibility standards,” supplement their work in Chile’s mining in thermo electrical plants or for domestic said Alicia Domínguez, leading partner of industry. “For Endress+Hauser worldwide use in cities. This operation is run in Valdiv- Ernst & Young’s mining group in Chile. the energy sector is a large part of the busi- ia,” said Awad of Antofagasta Minerals, in Mining companies that are already con- ness. In Chile, we want to work alongside an example of the innovations companies nected to traditional power generators are engineering companies to cover the energy are exploring. now requesting to be connected to alterna- area; we want to develop the area of en- The importance of developing these tive renewable energy sources. These re- ergetic resources optimization. It begins by alternative sources to complement more newable energy providers are making sales knowing how much is consumed, monitor- ing the consumption, with certain software, and review afterwards,” said Susana Torres, managing director of Endress+Hauser. The mining sector uses 85% of the Northern Grid’s (SING) power capacity of which 58% is supplied by natural gas. To expand copper production by an order of a magnitude as discussed earlier, Chile will have to reconcile the construction of new large scale power plants and fuel sources (coal, natural gas, and uranium).

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The selection process used by Boyden tries to define the specif- Recruitment from a pool of internation- A year after the accident, measures tak- ics of the required positions. “We visit the place of work to meet al talent is often the only solution. “We are en by the government of Sebastián Piñera and discuss with HR and line managers to gain a greater under- forced to bring in people from Europe and seem to have taken effect. The number of standing of what exactly they are looking for. We define a target Australia to fill the gap. The mining indus- fatal accidents has fallen; the fatalities rate market where we research on specific candidates. In the second try is global and people in the industry are in 2011 had been reduced by more than week we have initial meetings with the selected candidates. By the mobile and understand that being flexible 50% compared to 2010. third week we deliver our clients with a long list and meet with our is part of the job,” said Byrne of Boyden. “The San Jose mine rescue exposed a client and by week four we deliver candidates. We always try to be According to Cochilco, this situation lack of governmental control and now there within four weeks and we measure a lot of key performance indica- has had, and will continue to have, an im- has been much more focus on safety stan- tors in the company; our period to fill is 120 days, which is a good pact on the wages of experienced profes- dards in the industry. Some clients are turnover ratio,” said Byrne. sionals and will provide an incentive to the not prepared to pay extra for high stan- In Chile, the Institute of Mining Engineers (IIMCh) has estimated replacement of national professionals with dards, although global standards will be that the mining sector in the coming years will face a human capital international ones. implemented by multi-national companies, deficit that could reach 64,000, considering only the most feasible “We also recruit people to work in Chile which will increase industry costs, so we Ricardo Garib, South American regional director, projects that could materialize in the medium term. from Argentina, Peru and Mexico. Some- will be more financially competitive with Weir Minerals. “The deficit of miners can be explained by the combination of a times, there can be difficulties because local contractors,” said Graham Butten- considerable increase in demand for workers from geo-mining and To comply with this important issue, someone might miss the food or customs shaw, senior vice president for Redpath, a metals companies (attached to the copper boom of recent years) many companies are opening their own from their home country, but we can usually Canadian mining contractor specialized in and a constrained supply growth,” said Andrés Mac-Lean Vergara, training centers or sub-contracting training work through it. The great thing about Chile underground mines. executive vice president of COCHILCO. programs. “A lot of mining companies and is the people, but we are also seeing a lot For some, this increased emphasis on “One of our biggest challenges is probably finding the number of suppliers for the industry have to make of potential in workers coming out of these safety is providing them with a competitive workers we need to meet our expected growth. The education sys- our own arrangements. Komatsu Chile has other countries,” said Ricardo Garib, South advantage. “We were invited to come to tem in Chile just does not produce the necessary amount of people recruitment and development programs American regional director of Weir Minerals, Chile because of our extremely good safety with the skills required for the mining industry. It is surprising that internally so we can find people and train an equipment provider. record in such a dangerous industry. We a country as dependent on mining as Chile does not focus more them. We also have our own university. Those companies that overcome this have never had a fatality in the Americas. It on supplying the human resources for the industry. If you talk to We work with young people just out of challenge find themselves in a hugely ad- is a very dangerous business when you build young people in Chile today, almost none of them say ‘I want to be 3- or 4-year programs, people from other vantageous position; explaining the prior- shafts and tunnels and safety is absolutely a mining engineer’ or ‘I want to be a metallurgist or a geologist’,” industries, and even with our own people, ity that both mining companies and ser- paramount in everything we do. Our big- said Jeff Dawes, President of Komatsu, a mining and construction as the rate of development and evolution vice companies put on finding new talent. gest marketing tool is our safety record and equipment manufacturer. in products requires a lot of training and “Profitability is essential, but this is not the that is why we get big, complicated, and According to figures compiled by Codelco, very few students in re-training. The machines we use are very company’s baseline motive. A large part of high cost jobs,” said Mark Venning, general Chile choose a career in mining. Some reasons outlined include sophisticated. We have arrangements JRI centres on the training and empow- manager of Cementation, a South African the distance to the job sites, difficulties in working in the mines, with technical institutes and universities erment of our young engineers. We have contractor who is expanding in Chile. poor image of the sector and discontinuous financial support to throughout Chile. One of our main goals just hired a university professor of metal- Due to the increasing importance of students. “Right now the lack of specialized people due to the high now is to try to entice young people from lurgy to train our employees to be qualified safety aspects in mining operations, protec- market demand is a major challenge for the industry. Meeting dates the south of Chile to pursue careers in in more specific mining processes. While tion equipment for workers has become an and quality in a highly demanding market requires special skills mining. The vast majority of technical JRI gains from having educated engineers, attractive business for various companies. from our people and organizations,” said Martin Brenner, general workers are generated in the south and highly skilled in the mining sector, these 3M, a major supplier of safety equipment manager of ThyssenKrupp Ingeniería Chile, a diversified engineer- central part of the country. The problem young engineers gain by receiving further as well as chemical and electrical equip- ing group. is that a lot of people are not interested in education into the sector. This also obvi- ment, expects to double the size of their going to work in the north. We have to not ously puts JRI at the cutting edge of new mining business in Chile within two years. only find people to train, but also convince developments and gives an indication to “In terms of safety, we offer helmets, safety them that their career really should be in the vision we have for future growth within goggles - everything from respirators to re- mining,” said Dawes. the company,” said Ricardo Nicolau, man- flectors. We work closely with regulating PWC has found that their clients have aging director of JRI, a Chilean engineer- committees, the Mining Council and pro- taken a similar course of action. “We have ing company that has grown from two to viders,” said Guillermo Ochoa, 3M’s gener- been hired by a mining company to de- 400 employees in the past 30 years. al manager. On the top of a variety of tools velop a mining school for professionals The mining sector pays high wages; well and software to support miners’ personal and technicians in the north of the coun- above the national average in Chile. The protective equipment (PPE), 3M organizes try. One of the main challenges is to get supply of an adequate quantity and quality safety training for its clients’ employees. skilled resources and females to work in of workers will be a strategic factor for the “For ThyssenKrupp, the health and the industry as it is not perceived as fe- future competitiveness of the industry. safety of employees is a corporate objective male friendly. Young people do not want of equal standing with the quality of our to live in areas that are not popular, so Safety products and business success. A preven- we are working in collaboration with uni- The importance of having highly skilled tive health policy and improving safety at versities, to develop programs to attract professionals working in the mining in- work are therefore key management duties. young people to the mining industry and dustry is also related to safety standards. To achieve a further significant improve- show them the benefits that the industry Since the accident at the San José mine in ment in health and safety, the company can provide. Our aim is to convince young 2010, where 33 miners were trapped un- has combined all measures in achieving people that the mining sector offers a good derground for 70 days, the Chilean mining the ‘Zero Accidents’ initiative,” said Martin career choice,” said Colin Becker, partner industry has raised its awareness of min- Brenner, ThyssenKrupp Ingeniería Chile’s Tailing dam engineered by JRI Ingenieria. (Photo courtesy of JRI). at PWC. ing safety. general manager.

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Chilean service companies become world class Sophistication in Mining Services

Rema Tip Top is a manufacturer of products for conveyor belt maintenance, wear protection and corrosion prevention. (Photo courtesy of REMA Tip Top).

In the last two decades, Chile has developed novation programs that can be used in the R&D center dedicated to develop mining a cluster of service companies that are now mining sites and exported to other parts of projects with new technologies or solu- leaders in the region. The huge quantities the world: this is unique. The project is go- tions,” said Susana Torres, managing direc- of mining investment have significantly in- ing to take about two to three years and we tor of Endress+Hauser. creased demand for mining service and are helping companies to build a sustain- Micomo, which is a subsidiary of Codel- equipment suppliers in the country, and to- able mining practice. The first months that co, developed advanced technologies in day’s challenge is to meet this trend in order we spend in each company are to help un- collaboration with the Japanese firm NTT, for Chile to reach even greater levels of tech- derstand the key drivers in the company and the second largest telecommunications nological sophistication and development. how it addresses the needs of the mining in- company worldwide. “Today, due to the re- “Chile has some great mines, especially dustry. We want to identify where the com- moteness of the mining sites, long distance the ones operated by Codelco and the multi- pany can develop new solutions and how command, communication and information national mining companies. Miners from all they can package it on a global scale,” said is crucial. In El Teniente, thanks to photonic over the world routinely visit them. The op- Colin Becker, partner of PricewaterhouseC- fiber, we are able to do remote operations, erating standards for those mines are high oopers, a global consultancy that takes part as well as at the Andina division. We are and that allows Chile to remain competi- in the world-class suppliers project. also developing robotics and biotechnology tive,” said Ricardo Garib, general manager To date, BHP Billiton and Codelco have and without a doubt we will be able to have of Weir Minerals, who manufacture tools in- a total of more than 50 projects being ex- a more sustainable, competitive, and lower volved in extraction, from pumps and valves ecuted by a similar number of suppliers, cost mining through the incorporation of and siphons to tanks and other recipients which, by solving specific challenges in the all these new factors,” said Edgar Happke, for guarding and transporting the raw mate- Chilean mining industry, advance in their general manager at Micomo. rials that are extracted. path to world-class suppliers. Mine planning becomes increasingly The need for technical expertise in the more important in all aspects of work. “Min- service sector is such that mining companies Automation and IT systems: the ing is a very dynamic environment so com- themselves are playing a significant role in mines of the future panies need to be accurate to ensure that developing it. The project of the world-class As a result of lower-grades and the increas- they achieve the mine plans,” said Hans supplier development program started by ing age of the pits, mining operations in Schoch, general manager of Micromine, an Codelco and BHP Billiton aims to develop Chile have much more volume to process Australian company that produces software 250 world-class suppliers based in Chile by than they ever did in the past. Consequent- for the mining industry and is expanding its 2020. The program calls for providers with ly, the mines in Chile are bigger and bigger, operations in Latin America. development potential to solve those chal- and therefore require advanced technolo- Micromine has created software to man- lenging issues that have been prioritized by gies to coordinate operations. age operating mines and mine production. the operational areas of the involved mining Technology is key to the competitiveness “Our Pitram system records all mining ac- firms, which are currently lacking satisfac- of all service companies, whether they be tivities from development to production tory solutions. Thus, the program seeks to international or Chilean. “Our advantages and all the equipment that is being used. create development opportunities for local are a combination between state of the art Customers do not need a control room to businesses, encouraging them to compete technologies and specialized services; we monitor where all of the equipment is and globally. This agreement also represents a are focused on instrumentation and mea- where it is operating. In the long-term, data boost to the international projection of sup- suring equipment for companies. We do it is stored and customers can go back to an- pliers operating in the Chilean market. directly in Chile, where we have well ca- alyze how long a process has taken, how “The objective is that the companies pacitated personnel who we are constantly crews perform, how equipment performs have world-class internal processes and in- training. Endress+Hauser owns its own and they can evaluate the data to make

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Chilean service companies become world class Sophistication in Mining Services

Rema Tip Top is a manufacturer of products for conveyor belt maintenance, wear protection and corrosion prevention. (Photo courtesy of REMA Tip Top).

70 E&MJ • MARCH 2012 www.e-mj.com www.e-mj.com E&MJ • MARCH 2012 23 Mining IN CHILE more intelligent decisions. Safety is of par- develop solutions. “In 2007, we surveyed Endress+Hauser, an international Another important innovation is virtual- amount importance so we can see where mining directors in Chile and Peru to un- company with more than 50 years of ex- ization, which is the creation of a virtual people are at all times and what they are derstand problems they were encountering perience in process automation and instru- version of the mine’s hardware system, to doing so any incidents can be recorded.” at the production level. After the analysis, mentation, has also developed its digital centralize administrative tasks of the mine Also, the technology related to explora- we were able to select 36 main issues, for communication technology called Founda- and back-up the data. Andes IT is a young tion has improved to shorten the time for which we came up with 12 solutions. For tion Fieldbus, between teams that are cur- Chilean firm, which has focused its ser- analysis of geological data. For example, example, we have automated the truck rently on field and the centers that receive vices on this niche market. “Andes IT of- Australia-based FEI Natural Resources, system for fuel control. We are working the information. “The competitive advan- fers the service of strengthening business the world leader in electron optics and with a German firm that specializes in the tage of this technology is that it allows processes through virtualization, seeking focused ion beam technologies, provides use of radar for collision avoidance sys- better control of the plant thanks to the to consolidate the mines’ infrastructure. automated mineralogy solutions and SEM tems on haul trucks. Currently, there are available information, such as tempera- We provide mechanisms and technology based technology that can identify miner- many systems. Some use infrared technol- ture, pressure, and incoming flow, all this to make safer mining sites. Thus, if a site als and rocks. “With FEI Natural Resourc- ogy, but we use a more innovative tech- without the need of transporting people on crashes by earthquake or a contingency es’ technology it is possible to achieve nology that scans continuously operating field, and so improving maintenance of the issue, thanks to virtualization, there is in an eight hour shift – as in the case vehicle’s movements,” said Claudio Soto, plants. With Memosen digital sensors, the an immediately available alternative with of Codelco Andina - the same amount of general manager of C2 Mining. levels of savings rise up to 30%, and they minimum down time of service. We work work that 10 years ago would have taken Technology related to automation is are used in mines such as Escondida,” on contingency plans to lift the entire op- months using the traditional techniques. an important part of the development of said Susana Torres, managing director of eration off of the mine,” said Leonardo Our company provides the hardware, soft- new mines. “In the context of the shortage Endress+Hauser. Garrido, Andes IT’s CEO. ware, training and support - this includes of skills in the mining industry, the fact Codelco’s Andina mine is an example of Associated with the same concept, An- from the pre-installation evaluation of that a company can carry out its opera- innovation and experimental application of des IT also deals with the issue of logical the site to the start-up of the laboratory,” tions with a reduced number of workers is new technologies. C2 Mining has worked security, to protect company records. “It said Patricio Jaime, FEI’s business devel- a huge advantage. For example, ABB has on a pilot project in one of the plants: “We is increasingly more relevant for mining opment manager (natural resources) in worked with Antofogasta Minerals at Espe- installed an automatic system that scans companies to avoid and prevent attacks South America. ranza. It is one of the first mines in Chile miners, checking with a sensor if they are that might remove sensitive information Service companies need to be competi- to have its control centralized. In other wearing all their safety clothes at the en- from their databases. We are improving tive in improving efficiencies in the mining mines, every area normally has a sort of trance. Many companies work on new sepa- Codelco’s data management system, to process, from exploration, to evaluation, localized control with workers that moni- rated technological solutions for the mining strengthen their IT infrastructure. Andes IT production and remediation. The world- tor incoming information and this requires industry, but we think it is important also also installed equipment at El Teniente for class program promoted by Codelco and a higher amount of workers,” said José trying to integrate them, to add value to our its IP network management,” said Garrido. BHP Billiton encourages companies to Paiva, ABB’s country manager. clients’ operations,” said Soto of C2 Mining. Logistics companies are also becoming more sophisticated from a technological point of view, to comply with the mining industry’s needs. “We are investing a lot of time, money and resources into the constant innovation of our logistics systems. We have recently launched a global IT plat- form, which is one of the most important pillars of Bertling’s reputation and we believe that it will make a big difference. The system is constantly upgraded and allows easy communication between offices as they all use the same software, systems and reports. The amount of information that we can process, send and report to the client is incredible and we believe that we are one of the leaders in IT,” said Alberto Moran- te, regional managing director of Bertling, a growing shipping and logistics company in Latin America who will be, among other projects, responsible for 8,000 trucks at Barrick’s Pascua Lama. “In our proposals we provide a detailed and tailor made execution plan for every project. Our studies involve local knowledge of where the activities will be conducted and using our knowledge of the shipping market we are able to work out the end-cost of a project. We have strategic alliances with different carriers to enable us to provide a strategic shipping plan that is low-cost with a quality service. It is vital to secure conti-

72 E&MJ • MARCH 2012 www.e-mj.com www.e-mj.com E&MJ • MARCH 2012 73 Mining IN CHILE more intelligent decisions. Safety is of par- develop solutions. “In 2007, we surveyed Endress+Hauser, an international Another important innovation is virtual- amount importance so we can see where mining directors in Chile and Peru to un- company with more than 50 years of ex- ization, which is the creation of a virtual people are at all times and what they are derstand problems they were encountering perience in process automation and instru- version of the mine’s hardware system, to doing so any incidents can be recorded.” at the production level. After the analysis, mentation, has also developed its digital centralize administrative tasks of the mine Also, the technology related to explora- we were able to select 36 main issues, for communication technology called Founda- and back-up the data. Andes IT is a young tion has improved to shorten the time for which we came up with 12 solutions. For tion Fieldbus, between teams that are cur- Chilean firm, which has focused its ser- analysis of geological data. For example, example, we have automated the truck rently on field and the centers that receive vices on this niche market. “Andes IT of- Australia-based FEI Natural Resources, system for fuel control. We are working the information. “The competitive advan- fers the service of strengthening business the world leader in electron optics and with a German firm that specializes in the tage of this technology is that it allows processes through virtualization, seeking focused ion beam technologies, provides use of radar for collision avoidance sys- better control of the plant thanks to the to consolidate the mines’ infrastructure. automated mineralogy solutions and SEM tems on haul trucks. Currently, there are available information, such as tempera- We provide mechanisms and technology based technology that can identify miner- many systems. Some use infrared technol- ture, pressure, and incoming flow, all this to make safer mining sites. Thus, if a site als and rocks. “With FEI Natural Resourc- ogy, but we use a more innovative tech- without the need of transporting people on crashes by earthquake or a contingency es’ technology it is possible to achieve nology that scans continuously operating field, and so improving maintenance of the issue, thanks to virtualization, there is in an eight hour shift – as in the case vehicle’s movements,” said Claudio Soto, plants. With Memosen digital sensors, the an immediately available alternative with of Codelco Andina - the same amount of general manager of C2 Mining. levels of savings rise up to 30%, and they minimum down time of service. We work work that 10 years ago would have taken Technology related to automation is are used in mines such as Escondida,” on contingency plans to lift the entire op- months using the traditional techniques. an important part of the development of said Susana Torres, managing director of eration off of the mine,” said Leonardo Our company provides the hardware, soft- new mines. “In the context of the shortage Endress+Hauser. Garrido, Andes IT’s CEO. ware, training and support - this includes of skills in the mining industry, the fact Codelco’s Andina mine is an example of Associated with the same concept, An- from the pre-installation evaluation of that a company can carry out its opera- innovation and experimental application of des IT also deals with the issue of logical the site to the start-up of the laboratory,” tions with a reduced number of workers is new technologies. C2 Mining has worked security, to protect company records. “It said Patricio Jaime, FEI’s business devel- a huge advantage. For example, ABB has on a pilot project in one of the plants: “We is increasingly more relevant for mining opment manager (natural resources) in worked with Antofogasta Minerals at Espe- installed an automatic system that scans companies to avoid and prevent attacks South America. ranza. It is one of the first mines in Chile miners, checking with a sensor if they are that might remove sensitive information Service companies need to be competi- to have its control centralized. In other wearing all their safety clothes at the en- from their databases. We are improving tive in improving efficiencies in the mining mines, every area normally has a sort of trance. Many companies work on new sepa- Codelco’s data management system, to process, from exploration, to evaluation, localized control with workers that moni- rated technological solutions for the mining strengthen their IT infrastructure. Andes IT production and remediation. The world- tor incoming information and this requires industry, but we think it is important also also installed equipment at El Teniente for class program promoted by Codelco and a higher amount of workers,” said José trying to integrate them, to add value to our its IP network management,” said Garrido. BHP Billiton encourages companies to Paiva, ABB’s country manager. clients’ operations,” said Soto of C2 Mining. Logistics companies are also becoming more sophisticated from a technological point of view, to comply with the mining industry’s needs. “We are investing a lot of time, money and resources into the constant innovation of our logistics systems. We have recently launched a global IT plat- form, which is one of the most important pillars of Bertling’s reputation and we believe that it will make a big difference. The system is constantly upgraded and allows easy communication between offices as they all use the same software, systems and reports. The amount of information that we can process, send and report to the client is incredible and we believe that we are one of the leaders in IT,” said Alberto Moran- te, regional managing director of Bertling, a growing shipping and logistics company in Latin America who will be, among other projects, responsible for 8,000 trucks at Barrick’s Pascua Lama. “In our proposals we provide a detailed and tailor made execution plan for every project. Our studies involve local knowledge of where the activities will be conducted and using our knowledge of the shipping market we are able to work out the end-cost of a project. We have strategic alliances with different carriers to enable us to provide a strategic shipping plan that is low-cost with a quality service. It is vital to secure conti-

72 E&MJ • MARCH 2012 www.e-mj.com www.e-mj.com E&MJ • MARCH 2012 73 Mining IN CHILE Mining IN CHILE nuity for a project, so we need to pre-plan now,” said Raúl Dagnino, general manager bia, Guyana and Peru, where our branches vital to be competitive. “We have a ser- and understand the different control mecha- of Terra Service, a Chilean drilling contrac- are all running at 100% capacity”. vice unit to meet our clients’ needs on the nisms in a project like container planning. tor with bases in Santiago and Copiapó. The fast growing field of mineral explora- ground but with one caveat: being able to Bertling tries to put technical proposals in Dagnino considers the dynamics of tion in Chile by both big players and junior exchange components quickly is funda- place that are consistent, current and that medium-sized companies to be very impor- companies has created the need to rely on mental to maintenance. In maintenance, the client understands and is comfortable tant: “A company like Yamana drills more high quality drilling services and quicker de- to be successful, you have to standard- with. Our aim is to convey our experience holes than Codelco. Nonetheless, explora- livery times. ize your equipment. Mining Parts teams in specific proposals for each project and tion is not at its ideal levels yet and only “Against smaller competitors, our size al- always keep ready standardized compo- to provide our clients with a competitive today mining houses are starting to spend lows us to meet orders faster. Probably 90% nents to be able to give a quick response price. Loads that are abnormal or heavy are the money they should be spending. Com- of our accessories are available the day they in terms of spare parts. Any failure that managed by transport engineers to create or panies are stepping up their exploration are ordered. Other accessories may take two stops a drilling machine is very expensive design new tooling systems to optimize the investments. BHP has announced that it to three weeks, and drilling equipment takes and companies cannot afford to wait while logistics, which makes a big difference. The will spend US$400 million in the next four just two months. Against larger competitors, repairing a machine. In relation to this is- clients that we serve are confident that we years. In the early 2000s, the total budget our advantage is that if a client has a prob- sue, Mining Parts promotes a component Fernando Buttazzoni, vice president and general Luis Silva Arrieta, President and CEO, and Marilú lem with a product, I can call the person that exchange campaign with our customers, are able to deliver,” said Morante. for Chile was around US$100 million per manager, Christensen. Málaga, vice president, Ingetrol. Due to the growth and amount of invest- year. Now a single company will spend that made the part,” said Cyr. promising that one of their machines with ment in the mining industry, mining pro- amount, so exploration is picking up. Chile As in the case of engineering companies, ada, Finland and Croatia. We have agree- a failure will never be more than two hours transfer of information,” said Luis E. Silva ducers are outsourcing all the maintenance is awakening with regards to the explora- the main manufacturers of drilling tools are ments with large industrial groups, which without working,” said Fierro. Arrieta, President and CEO of Ingetrol. services and this represents a significant tion business. There are opportunities for present in Chile and the market is extremely label our products, keeping our brand.” Another competitive advantage is the Carlos Andrés, operation general man- business opportunity for the service sec- high quality drilling companies because the competitive, despite the country’s demand “One of our advantages is being local, constant innovation in new technologies. ager of Atlas Copco, an equipment provider tor. Service companies need to be able to market needs to develop to better serve its for drilling rigs being extremely high. Fer- our customers don’t need to place an inter- Both Chilean companies and international that covers many aspects of mining, said, integrate maintenance services and provide customers.” nando Buttazzoni, vice president and gener- national order and wait for it. Moreover, we ones develop new technologies to be more “We are not just focused on the present; we solutions, not just supplying equipment. Laurie Cyr, general manager of Fordia, a al manager of Christensen, the largest drill are very competitive at providing after sales competitive. Mining Parts developed intel- have special engineering teams constantly Canadian company that manufactures and company in Chile and the only one produc- services,” said Buttazzoni, whose company ligent machines that calculate geological working on the research and development Drilling services sells exploration drills and drilling equip- ing diamond bits in Chile, is a realist about participated in the rescue of the 33 miners data automatically and incorporate safety of new products. Over the last few years, The Chilean exploration market is very large ment said, “The drilling business has grown the competitive situation. “Our competitors trapped in the depth of the San José mine elements in its drilling machines to mini- there has been exponential growth in the and the country is relatively mature. This much quicker in Chile than in other Latin are the largest companies in the world, such in 2010. mize operational risks. Ingetrol, a manufac- mining industry; it is only logical that we try situation differs from emerging countries American countries: in only two years, the as Fordia and Atlas Copco. Therefore, we Eugenio Fierro Ahumada, general man- turer of drilling rigs, introduced computer- to keep up with this growth. We work with such as Peru and Colombia. “Some compa- number of core drills has gone from about must offer a first class product. Today we ager of Mining Parts, a company that pro- ized drilling equipment six years ago. “We the feedback we get from clients to improve nies did not do enough exploration in Chile 270 to 330. Fordia operates also in other are exporting and working at full capacity. duces its own line of drilling equipment, want to input more technology into our ma- our current products and make new ones in the past and are therefore catching up countries in Latin America, such as Colom- Our main destinations are Australia, Can- also believes that post-sales services are chines to enable a more accurate and faster to meet the needs of the market. We are

74 E&MJ • MARCH 2012 www.e-mj.com www.e-mj.com E&MJ • MARCH 2012 75 Mining IN CHILE Mining IN CHILE nuity for a project, so we need to pre-plan now,” said Raúl Dagnino, general manager bia, Guyana and Peru, where our branches vital to be competitive. “We have a ser- and understand the different control mecha- of Terra Service, a Chilean drilling contrac- are all running at 100% capacity”. vice unit to meet our clients’ needs on the nisms in a project like container planning. tor with bases in Santiago and Copiapó. The fast growing field of mineral explora- ground but with one caveat: being able to Bertling tries to put technical proposals in Dagnino considers the dynamics of tion in Chile by both big players and junior exchange components quickly is funda- place that are consistent, current and that medium-sized companies to be very impor- companies has created the need to rely on mental to maintenance. In maintenance, the client understands and is comfortable tant: “A company like Yamana drills more high quality drilling services and quicker de- to be successful, you have to standard- with. Our aim is to convey our experience holes than Codelco. Nonetheless, explora- livery times. ize your equipment. Mining Parts teams in specific proposals for each project and tion is not at its ideal levels yet and only “Against smaller competitors, our size al- always keep ready standardized compo- to provide our clients with a competitive today mining houses are starting to spend lows us to meet orders faster. Probably 90% nents to be able to give a quick response price. Loads that are abnormal or heavy are the money they should be spending. Com- of our accessories are available the day they in terms of spare parts. Any failure that managed by transport engineers to create or panies are stepping up their exploration are ordered. Other accessories may take two stops a drilling machine is very expensive design new tooling systems to optimize the investments. BHP has announced that it to three weeks, and drilling equipment takes and companies cannot afford to wait while logistics, which makes a big difference. The will spend US$400 million in the next four just two months. Against larger competitors, repairing a machine. In relation to this is- clients that we serve are confident that we years. In the early 2000s, the total budget our advantage is that if a client has a prob- sue, Mining Parts promotes a component Fernando Buttazzoni, vice president and general Luis Silva Arrieta, President and CEO, and Marilú lem with a product, I can call the person that exchange campaign with our customers, are able to deliver,” said Morante. for Chile was around US$100 million per manager, Christensen. Málaga, vice president, Ingetrol. Due to the growth and amount of invest- year. Now a single company will spend that made the part,” said Cyr. promising that one of their machines with ment in the mining industry, mining pro- amount, so exploration is picking up. Chile As in the case of engineering companies, ada, Finland and Croatia. We have agree- a failure will never be more than two hours transfer of information,” said Luis E. Silva ducers are outsourcing all the maintenance is awakening with regards to the explora- the main manufacturers of drilling tools are ments with large industrial groups, which without working,” said Fierro. Arrieta, President and CEO of Ingetrol. services and this represents a significant tion business. There are opportunities for present in Chile and the market is extremely label our products, keeping our brand.” Another competitive advantage is the Carlos Andrés, operation general man- business opportunity for the service sec- high quality drilling companies because the competitive, despite the country’s demand “One of our advantages is being local, constant innovation in new technologies. ager of Atlas Copco, an equipment provider tor. Service companies need to be able to market needs to develop to better serve its for drilling rigs being extremely high. Fer- our customers don’t need to place an inter- Both Chilean companies and international that covers many aspects of mining, said, integrate maintenance services and provide customers.” nando Buttazzoni, vice president and gener- national order and wait for it. Moreover, we ones develop new technologies to be more “We are not just focused on the present; we solutions, not just supplying equipment. Laurie Cyr, general manager of Fordia, a al manager of Christensen, the largest drill are very competitive at providing after sales competitive. Mining Parts developed intel- have special engineering teams constantly Canadian company that manufactures and company in Chile and the only one produc- services,” said Buttazzoni, whose company ligent machines that calculate geological working on the research and development Drilling services sells exploration drills and drilling equip- ing diamond bits in Chile, is a realist about participated in the rescue of the 33 miners data automatically and incorporate safety of new products. Over the last few years, The Chilean exploration market is very large ment said, “The drilling business has grown the competitive situation. “Our competitors trapped in the depth of the San José mine elements in its drilling machines to mini- there has been exponential growth in the and the country is relatively mature. This much quicker in Chile than in other Latin are the largest companies in the world, such in 2010. mize operational risks. Ingetrol, a manufac- mining industry; it is only logical that we try situation differs from emerging countries American countries: in only two years, the as Fordia and Atlas Copco. Therefore, we Eugenio Fierro Ahumada, general man- turer of drilling rigs, introduced computer- to keep up with this growth. We work with such as Peru and Colombia. “Some compa- number of core drills has gone from about must offer a first class product. Today we ager of Mining Parts, a company that pro- ized drilling equipment six years ago. “We the feedback we get from clients to improve nies did not do enough exploration in Chile 270 to 330. Fordia operates also in other are exporting and working at full capacity. duces its own line of drilling equipment, want to input more technology into our ma- our current products and make new ones in the past and are therefore catching up countries in Latin America, such as Colom- Our main destinations are Australia, Can- also believes that post-sales services are chines to enable a more accurate and faster to meet the needs of the market. We are

74 E&MJ • MARCH 2012 www.e-mj.com www.e-mj.com E&MJ • MARCH 2012 75 Mining IN CHILE Mining IN CHILE

Carlos Andres, operation general manager, Atlas Joaquín Cano, vice president and general Golder Associates is one of the main mining consultancy companies in Chile and other Latin Copco. Ingetrol team working with the Explorer Jr. 36D in Panama. (Photo courtesy of Ingetrol). manager, SNC-Lavalin. American countries. (Photo: Antamina East Waste Dump expansion, Peru; courtesy of Golder). always a step ahead. On the world level, those in China, Ingetrol has opened its “Here in Santiago you can find the larg- cal support and guidance from this office. opment division in Chile to support clients amount of investment represents an oppor- across the gamut of our product lines, we largest manufacturing facility in Mexico, to est companies in the world: international All copper projects need to report to our in both new and existing projects. As an tunity that will facilitate collaboration and are considered leaders in innovation.” produce high-quality products with lower- consulting and engineering firms such office,” said Joaquín Cano, SNC-Lavalin’s engineering company, we saw there was a networking among companies,” says Andrés If quick delivery times and strong post- costs, while using our engineering expertise as SNC-Lavalin, AMEC, WorleyParsons, vice president and general manager. service missing in the industry, so now we Poch, President of the Association of Con- sale services are essential to be competi- from Chile,” said Silva. Bechtel, Jacobs, AMEC, Fluor, Hatch, SNC-Lavalin’s Centre of Excellence for work together to find new ways to do things sulting Engineers of Chile. tive, a growing range of Chinese products ThyssenKrupp, who have important agree- Copper in Santiago has provided complete to improve technology and improve existing Chilean companies have proved their ca- available on the market has meant that Engineering companies ments with the large scale mining develop- lifecycle implementation services for a vari- processes and equipment,” said Cano of pacity to expand to other countries, as they price has also become an important factor. The Chilean engineering sector is strongly ers, such as Barrick, Kinross, Codelco, etc. ety of copper projects. Project teams have SNC Lavalin. already provide their services all through Ingetrol specializes in portable drilling ma- positioned within the Americas to take ad- Santiago is a center of operations, deliver- carried out basic and detailed engineering “The presence of international service Latin America. “There are even those who chines, with 400 machines in 40 countries vantage of new opportunities emerging in ing projects to Peru, Colombia, Africa, Aus- for many copper processing plants and have firms makes this market very attractive for are completely dedicated to exporting,” said around the world. “Ingetrol has strong com- the region. Chilean engineers are widely tralia, and other worldwide locations. In gained unique experience in designing for large-scale investments, as Chile can offer Poch, whose association briefs engineering petition from China, as their selling price is recognized by leading global firms for their 2010 SNC-Lavalin assigned the Centre of remote and harsh conditions ranging from the expensive infrastructure that this type of companies on strategies and know how to similar to our cost of production in Chile, so excellent technical skills and they are con- Copper Excellence to its office in Santiago, high altitude projects in the Andes to proj- operations needs and world-class services. export their expertise. we had to re-engineer the company strat- sidered to be world leaders in engineering so all copper projects around the world are ects in central Africa and tropical Australia. Around US$120 billion will be invested in “Golder Associates’ team is operating egy. Since Chilean wages are higher than for mining. reviewed in Chile. We will provide techni- “We have created an innovation and devel- Latin America over the next few years. This on a more regional level: we have offices in

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copper production. They needed a concentrator expansion of 25% to 30% in two of the plants: Laguna Seca and Los Colorados. We accomplished that,” said Ricardo Nicolau, managing director of JRI, a Chilean engineering company that has used its Chilean expertise to provide work in Peru, Bosnia and the Democratic Re- public of Congo, among others. Alquimia Conceptos, a Chilean consultancy, has also developed a specific expertise on mining and metallurgical processes working on the field. “We have worked with nearly all key mining companies in Chile. We have defined the processes of Esperanza and Mina Ministro Hales for Codelco. As a consulting company, Alquimia has very few competitors as we are very specialized. We work with engineering companies with many more employees than we have, but they do not have the expertise we offer in mining process con- Delkor designs and manufacturers mineral processing equipment, such as floatation cells. (Photo sultancy,” said Leticia Conca Benito, general manager of Alquimia courtesy of Delkor). Luis Garrido, general manager, AMEC Chile. Conceptos S.A. Peru, Argentina, Chile, Panama and Brazil. in the design, manufacture and supply of ent,” said Rodrigo Herrera, managing direc- With the current shortage of human resources in the industry, We work together with our offices in Aus- mineral processing and separation equip- tor for Delkor. having experienced engineers is a major competitive advantage for tralia, Canada and the United States. Since ment are also strengthening their presence The presence of huge copper mines is engineering firms. Golder Associates started in Latin America throughout the Americas, after five very suc- an opportunity for engineering companies “Our teams combine local professionals with foreign experts. As in 1996, people from all over South Amer- cessful years in Chile, Mexico, Argentina to design innovative solutions that stream- the size of the projects increases, there are fewer and fewer people ica have joined our team. Our operations in and Peru. Innovation is key to its strategy: line the process. “JRI has accumulated with the know-how to make the projects successful. The excellence South America are becoming the strength “Delkor is a company with a strong focus expertise in all specialties of the mining of our teams makes us stand out. We give a level of quality to cli- of our company in the mining industry on a on its clients, their needs on modern mining industry from its experience on the field. ents, so that they come to us early in the process of planning. We global level. The image that innovation and process solutions, through innovative design For example, in 2009 and 2010, when work with clients at all stages of projects, from the original ideas to industrial design comes from abroad is one and the development of an active customer the copper price decreased, BHP Billiton’s the implementation and completion of big projects,” said Luis Gar- we always wanted to change. We have much service. In our company, we work with spe- Escondida mine needed to increase its pro- rido, AMEC Chile’s general manager. to offer to the world, and people have started cialists, who know about processes and first duction, as the copper content of the ore “Good engineering is the way to avoid accidents and assures that noticing this,” said María Eugenia Parot, category engineering. Our goal is to satisfy was decreasing. So they needed to grind the environmental aspects are incorporated during the design phase Golder Associates’ general manager. our customers through the technological de- more, and increase the size of the flotation to prevent issues from both surface and subsurface that would be a Delkor, a global company specializing velopment, service, and closeness to the cli- plants just to maintain the same level of liability for the community for long time,” said Dave Lawson, global president minerals and metals of Ausenco, a large engineering and project management company. The economic crisis in 2008 forced engineering firms to diversify their activities. Leading engineering companies with operations in Chile are developing capacity in energy and infrastructure projects. Energy is a relatively new business line for Ausenco, yet has en- abled the company to enter a new and growing market in providing engineering solutions for the power industry. “We provide engineering solutions for power plants, whether it is for a gas plant, a diesel plant or a coal plant. Ausenco has been working on power plants in Canada, USA and other parts of the world, but not here in South America yet. We are looking for opportunities to develop Ausenco Energy in South America,” said Dave Lawson, Ausenco’s President. Twenty years ago, when global companies arrived in Chile they imported all the knowledge related to mining from developed countries. Today Chile is exporting mining engineering services all over the world. This represents a great opportunity to increase the country’s engineering expertise in other sectors. The goal is to import knowledge, develop local know-how and then export it to the rest of Latin America.

Equipment providers The implementation of advanced technology and integrated solutions has the potential to optimize overall mine productivity and further reduce equipment costs. These capabilities will be a key component for equipment providers to be competitive. “Weir is the leader in manufacturing all the tools that are involved in extraction. To provide integrated solutions to its clients, Weir invests a lot in technology,” said Ricardo Garib, South American regional director of Weir Miner- als, which has doubled its business between 2007 and 2010 and plans to double its size again within the next five years.

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The Siemens-manufactured ore crusher at Codelco-Norte’s Radomiro Tomic Michael Labbé, president of operations, Rema Claudio Dodds Figueroa, business development mine. (Photo courtesy of Siemens). Tip Top. Jeff Dawes, President, Komatsu. manager, Coprim.

In addition to providing a range of equipment as complete as pos- successful. “The growth strategy for Rema Herrera, managing director for Delkor, a first step. Later on we had the possibility of sible, international players have also understood the importance of Tip Top is to provide a fully integrated main- company that sells horizontal belt filter and accessing the North American market, and customizing their solutions to the clients’ needs. “For the increasing tenance service on the top of the material thickeners, among other products in both managed to establish an office in Vancou- complexity of current mining sites, an understanding of the processes handling and processing industry. Our clients South and North America. ver,” said Herrera. is required and this involves being a partner participating along with are focused on producing copper, and we Delkor, contrary to the more traditional Patricio Lagos, general manager of IDT the customer,” said Carlos Andrés, operations general manager of help them maintaining their systems,” said route of established mining companies Power Electronics, which is one of the few Atlas Copco. Michael Labbé, president of operations at moving from developed mining hubs such companies in South America that produces Finning, Caterpillar equipment’s distributor in Chile, is focused Rema Tip Top, a manufacturer of conveyor as Canada into the South American region, high voltage rectifiers to produce cathodes in on supporting the vast range of products they distribute. “Caterpil- belt maintenance, wears protection and cor- used the advantages of the Chilean market copper mining, agreed on the fact that de- lar makes the equipment; Finning delivers the equipment to clients rosion prevention. The German firm, which to establish their first footprint in the Ameri- sign is an important aspect to adapt to the and makes sure it keeps working for them. In South America, we has been supplying the Latin American mar- cas. “Delkor decided start its American op- local market needs. “We deepened the re- have more than 6500 employees, and about 80% of our employees kets for more than 40 years, expects to grow erations from Chile because of Chile’s min- lations with our clients to better understand are mechanics and technicians that work on equipment for clients,” about 25% to 50% per annum for the next ing tradition. The other advantage was that their requirements and design our rectifiers said Juan Antonio Winter, vice president of mining of Finning South three years, thanks to the growth of their the market in the region was very open to accordingly. Our design focuses on efficien- America, a company present in other South American countries maintenance services. development; this allowed us to take the cy and reliability. We have patented at least such as Argentina, Bolivia and Uruguay. The demand for services in Chile re- Maintenance services have become an important part of business quires scale. “With Collahuasi mine, we for service providers, accounting for 40% to 80% of their revenues. have 400 workers and we do all the main- “Maintenance of mining machines and systems is a sizable cost fac- tenance on the equipment they have. We tor for mining producers and therefore service companies such as take the risks, we are responsible for the Siemens need to tailor a maintenance strategy for each mining com- people and the tools, and they pay us by pany and for the individual mining processes. “ said Edwin Chávez, the hour. Other companies have in-com- CEO of Siemens Chile, which has four maintenance contracts with pany maintenance policies. We are flexible Minera los Pelambres, Minera Gaby, Radomiro Tomic Húmedo and enough to work with clients and do what- Radomiro Tomuc Súlfuros. ever makes them comfortable,” said Jeff “Of the 800 people working in Metso, 600 are earmarked for Dawes, Komatsu’s President. services that meet the requirements in different parts of Chile. More- over, Metso’s services aim to provide comprehensive support to our From Chile to the world customers’ business continuity by providing technical support and In Chile the demand for new technologies is spare parts. To do this, Metso ensures availability of spare parts on- covered by foreign companies importing and site to improve customer responsiveness before any accident occurs distributing their advanced products and so- and incorporates specialized technical support staff to improve the lutions. At the same time, the industry needs existing processes,” said Macarena Vallejo, marketing and communi- more products oriented to the special fea- cation manager at Metso Mining and Construction. tures of each phase of operation. Tailoring Finning confirms the increased importance of post sales services. products according to the clients’ needs is a “The way mining companies do sales in Chile is that they buy equip- way for Chilean companies to set themselves ment, and along with the equipment a contract for maintenance. apart from international competitors. We have pretty much perfected the maintenance aspect of these “There was a need for the design and sales and set a standard for the industry. We are contracting 1,000 manufacture of more equipments in Chile, technicians a year, training them and putting them to work on the to be able to satisfy the local requirements maintenance of Caterpillar equipment,” said Juan Antonio Winter of of the mining industry. Three years ago, Finning, which grew its Chilean business by 30% in 2011. Delkor developed a Center of Excellence The reason for the growing importance of maintenance services for Thickeners in Chile, so we can develop is that, because of staff shortages and the complexity of mining op- the design locally here in Chile and position erations in Chile, manufacturing companies outsource maintenance ourselves in the industry, being competi- systems. Services companies need to take this into account to be tive for large-scale projects,” said Rodrigo

80 E&MJ • MARCH 2012 www.e-mj.com www.e-mj.com E&MJ • MARCH 2012 81 Mining IN CHILE

80 E&MJ • MARCH 2012 www.e-mj.com www.e-mj.com E&MJ • MARCH 2012 81 Mining IN CHILE nine of our technologies and are ready to export them.” Chilean companies that have developed Conclusion a specific expertise or technology have started to expand abroad, providing ser- A Bright Mining Future vices and equipment to other countries, especially in Latin America but also all over the world. For example, Chilean com- Since the 1990s, Chile has been one of the pany Coprim, which provides engineering fastest growing economies in the world and and supplies smelting and refining equip- according to the World Bank it is the best ment in Latin America, is also present in country in Latin America to do business in. Europe, Africa and is expanding its services The Chilean government strongly supports in Eastern Europe. “Since Coprim began, it foreign investment in the mining sector and has participated in the development of all has modified its mining industry laws and Chilean casting plants. This has allowed us regulations to create a favorable investing en- Rodrigo Undurraga, general manager, Prodinsa. to evolve with our clients and continue to vironment for foreigners. This context has at- make technological advances, and in turn, are issues that have to be dealt with on a tracted, in addition to mining investment, the this has facilitated increased development case by case basis.” largest international suppliers of business ser- for our clients. Now, major companies have Küpfer, an industrial equipment pro- vices and equipment. The highly competitive come to depend on us. Since we are real vider, is another positive example. “Until market developed over the past 20 years has specialists in certain areas, Coprim has 2010, Küpfer was only in Chile. Last year, led to the sophistication of the service sector, managed to reach a very good level of pro- we opened our branch in Lima, Peru. For through new technologies, integrated suites ductivity; this means that the prices we of- the next 5 years, our plan is to develop our of equipment and more sophisticated assis- fer are very competitive in Chile and other mining business in the rest of Latin Amer- tance and maintenance services. Moreover, countries around the world,” said Claudio ica, as we see many opportunities. In the the world-class producer program promoted Dodds, Coprim’s general manager. near future we will move forward, perhaps by BHP Billiton and Codelco encourages Coprim is a prime example of how Chil- starting with projects in Colombia and Ec- Chilean companies to find innovative techni- ean companies are embracing the benefits uador,” said Pedro Bartolomé Cecchi, Küp- cal solutions to increase safety and efficiency of globalization, not merely in the markets fer’s general manager. throughout the production process. it opens but also in terms of the expertise Expertise developed on the field appears Overall, Chile has a positive combination and technology it gives them access to. to be a competitive advantage for Chilean of substantial mineral reserves and a favor- “Over the years, we have developed a lot companies. Prodinsa, which is the only ca- able business environment. However, the of techniques related to engineering; we ble manufacturer in Chile, was selected to sector will need to overcome the challenge have worked with specialists from all over participate to the world-class suppliers pro- on the water shortage in northern Chile, the world and made our own breakthroughs gram. “BHP Billiton, with whom we were where the greater part of mining operations here in Chile,” Dodds said. “More impor- already working since many years, has list- take place and the shortage of energy and tantly, we have learned a lot about issues ed the problems they have, including pro- infrastructure, as well as a deficit of skilled that are greater than problems of engineer- ducing cameras to see when a steel cable is professionals needed to support the indus- ing. We have worked with clients from all about to break, and Prodinsa is going to im- try’s development. Despite this, efforts to over the world, and we have learned that for plement this solution,” said Rodrigo Undur- both expand existing copper operations and all of our clients, be they Chilean, Peruvian, raga, general manager of Prodinsa, which is establish new ones bode well for the continu- Canadian or from any other country, there expanding its business internationally. al ranking of Chile as the world’s largest copper producer. Combined with the growing focus on other mineral extraction, especially in gold, silver and molybdenum, Chile’s domestic mining future looks assured. Yet Chile is also looking outside its bor- ders. The economy, with a growth rate of 6%, already relies on its export of goods, yet services are set to play an increasingly important role. The mining community, with its presence in Chile one of the most established in Latin America, has the necessary expertise, particularly in engineering, equipment and innovative technologies, to take advantage of booming industries in its neighbour- ing countries. With new regulations from the government ensuring that inward investment continues unabated, an increasing outward flow of Chilean expertise will further enhance the nation’s standing as South America’s Planetary strander for production of shovel rope strands. (Photo courtesy of Prodinsa). mining hub.

82 E&MJ • MARCH 2012 www.e-mj.com Mining IN CHILE nine of our technologies and are ready to export them.” Chilean companies that have developed Conclusion a specific expertise or technology have started to expand abroad, providing ser- A Bright Mining Future vices and equipment to other countries, especially in Latin America but also all over the world. For example, Chilean com- Since the 1990s, Chile has been one of the pany Coprim, which provides engineering fastest growing economies in the world and and supplies smelting and refining equip- according to the World Bank it is the best ment in Latin America, is also present in country in Latin America to do business in. Europe, Africa and is expanding its services The Chilean government strongly supports in Eastern Europe. “Since Coprim began, it foreign investment in the mining sector and has participated in the development of all has modified its mining industry laws and Chilean casting plants. This has allowed us regulations to create a favorable investing en- Rodrigo Undurraga, general manager, Prodinsa. to evolve with our clients and continue to vironment for foreigners. This context has at- make technological advances, and in turn, are issues that have to be dealt with on a tracted, in addition to mining investment, the this has facilitated increased development case by case basis.” largest international suppliers of business ser- for our clients. Now, major companies have Küpfer, an industrial equipment pro- vices and equipment. The highly competitive come to depend on us. Since we are real vider, is another positive example. “Until market developed over the past 20 years has specialists in certain areas, Coprim has 2010, Küpfer was only in Chile. Last year, led to the sophistication of the service sector, managed to reach a very good level of pro- we opened our branch in Lima, Peru. For through new technologies, integrated suites ductivity; this means that the prices we of- the next 5 years, our plan is to develop our of equipment and more sophisticated assis- fer are very competitive in Chile and other mining business in the rest of Latin Amer- tance and maintenance services. Moreover, countries around the world,” said Claudio ica, as we see many opportunities. In the the world-class producer program promoted Dodds, Coprim’s general manager. near future we will move forward, perhaps by BHP Billiton and Codelco encourages Coprim is a prime example of how Chil- starting with projects in Colombia and Ec- Chilean companies to find innovative techni- ean companies are embracing the benefits uador,” said Pedro Bartolomé Cecchi, Küp- cal solutions to increase safety and efficiency of globalization, not merely in the markets fer’s general manager. throughout the production process. it opens but also in terms of the expertise Expertise developed on the field appears Overall, Chile has a positive combination and technology it gives them access to. to be a competitive advantage for Chilean of substantial mineral reserves and a favor- “Over the years, we have developed a lot companies. Prodinsa, which is the only ca- able business environment. However, the of techniques related to engineering; we ble manufacturer in Chile, was selected to sector will need to overcome the challenge have worked with specialists from all over participate to the world-class suppliers pro- on the water shortage in northern Chile, the world and made our own breakthroughs gram. “BHP Billiton, with whom we were where the greater part of mining operations here in Chile,” Dodds said. “More impor- already working since many years, has list- take place and the shortage of energy and tantly, we have learned a lot about issues ed the problems they have, including pro- infrastructure, as well as a deficit of skilled that are greater than problems of engineer- ducing cameras to see when a steel cable is professionals needed to support the indus- ing. We have worked with clients from all about to break, and Prodinsa is going to im- try’s development. Despite this, efforts to over the world, and we have learned that for plement this solution,” said Rodrigo Undur- both expand existing copper operations and all of our clients, be they Chilean, Peruvian, raga, general manager of Prodinsa, which is establish new ones bode well for the continu- Canadian or from any other country, there expanding its business internationally. al ranking of Chile as the world’s largest copper producer. Combined with the growing focus on other mineral extraction, especially in gold, silver and molybdenum, Chile’s domestic mining future looks assured. Yet Chile is also looking outside its bor- ders. The economy, with a growth rate of 6%, already relies on its export of goods, yet services are set to play an increasingly important role. The mining community, with its presence in Chile one of the most established in Latin America, has the necessary expertise, particularly in engineering, equipment and innovative technologies, to take advantage of booming industries in its neighbour- ing countries. With new regulations from the government ensuring that inward investment continues unabated, an increasing outward flow of Chilean expertise will further enhance the nation’s standing as South America’s Planetary strander for production of shovel rope strands. (Photo courtesy of Prodinsa). mining hub.

82 E&MJ • MARCH 2012 www.e-mj.com