Peru’s Congress removes energy and mines minister amid sector protests
Romulo Mucho was removed from his post on Tuesday amid protests from small-scale miners in the Andean nation.
Michelle Bachelet, 62, the most likely political figure to be Chile’s new president after getting 47% of the votes in Sunday’s election, won’t be bringing major changes into the mining industry in the short-term, but some fear her suggested constitutional changes could pave the way for a greater state role in the sector.
Bachelet, who led Chile from 2006 to 2010 becoming the first —and so far only— woman to become President of the copper-rich country, obtained nearly double the votes of her nearest rival, but not enough for an outright win. She will have to wait until a second round runoff, on Dec. 15, to seal her victory.
But since most polls show she will be the next leader of the country, most analysts have already started to predict what it is in store for the mining industry under her government.
Bachelet based her campaign on three broad promises: reform of the constitution introduced by dictator Augusto Pinochet, an overhaul of the education system, including free university access for all, and tax increases equivalent to 3% of gross domestic product that would finance needed reforms in the educational system.
A former political prisoner, pediatrician, defense secretary and Socialist Party stalwart, she didn’t refer much about her plans for the resource sector in the months previous to Sunday’s election. However, she did emphasize the country needed to “recover” its competitive edge in mining, mainly by bringing power prices down and revising the concessions system to simplify the creation of new mines, as well as to boost exploration.
Interviewed by local paper La Tercera (in Spanish), Bachelet said the likely changes include altering mining royalties and funding programs for state-owned mining company Codelco, the world’s No. 1 copper producer.
Opponents fear Bachelet, who spent the past two years heading the U.N. agency for women, may be laying the foundations for some more extensive changes in the long-term. Under Chilean law, the state has the right to royalties for the exploitation of natural resources, especially mineral ones, so hey think an increase in mining royalties is highly likely.
On a phone conversation with MINING.com, a high-level mining industry executive speaking on condition of anonymity, said the main issue he sees for miners under the Bachelet administration would be the right to use water resources.
Under the current law, he explained, mining companies have the right to use any water they find while conducting activities. But as the resource becomes more and more scarce, especially in the north of Chile, where most mining takes place, he said many would expect centre-leftist Bachelet to interfere.
“Communities in Atacama, the world’s driest desert, often feel they have to compete with mining companies for their water supply (…) a president who vows to fight for the poorest, cannot sit back and do nothing about it,” he said.
Latin America’s example
Chile, the world’s top copper producer with a fast-growing economy, low unemployment and a stable democracy, is commonly cited as an example for the rest of Latin America.
Producing roughly 5.7 million tonnes of copper a year, the red metal accounts for 60% of the country’s exports and 15% of its gross domestic product. The nation is also home to 30% of the world’s known copper reserves.
Major mega-miners such as BHP Billiton, Anglo American and Glencore Xstrata have operations in Chile.
Photo by Oscar Ordenes, via Flickr
4 Comments
Jorge Daniel Taillant
Bachelet, we should recall, was firmly behind the promotion of glacier protection. The Chilean Congress is currently entertaining a bill to protect glaciers, similar to Argentina’s Glacier Protection Law. We can expect glaciers to be a central issue in Chile’s future water management and a Glacier Law with Bachelet in office, is probably just around the corner.
virginia pearson
with present wage rates Chile is becoming uncompetitive in the mining industries.
Matt
Chiles labour laws are going to kill the competitiveness of any mining in present form. And guess what, nobody is making more money, they are just working a lot less. But laws are and should be made by the government of each Nation and Chile is no exception. So we will see.
ed martinez
The newly elected president Michelle Bachelet will not make many changes that will affect this key industry. No mattter how you consider her political views from the recent past or todays.
Read my lips: No one, NO ONE, in Chile, in her government would certainly like to scare mega miners and foreign interests in Chile at the present state of affairs, as the Chilean mining industry is “la gallina de los huevos de oro”.