For years, being the main copper export country has been a synonym of leadership in Chile. New paradigms question such status nowadays.

First, there is a supply issue. Chile can’t increase throughput significantly and there are no more mega deposits and profitability is decreasing. We cannot pretend that “business” depends only on natural advantages.

A second collapse are the threats and opportunities of new technologies and their disruption in business. In order to add value to current companies, it is imperative to be linked to the global value chain, with more complex products and more sophisticated processes.

The problem here is that mining, a strategic sector for our country, is also very conservative in innovation and research, and it’s in the rear guard when it comes to new values and concepts promoted by the leading companies. This is worrying in Chile, especially if we export concentrates basically. According to official estimates, around 43% of copper produced are concentrates, a percentage that may reach almost 70% in the next decade. This means to export more than 12.5 million tons anually without processing.

Furthermore, environmental and traceability topics have generated profound changes: the consumer wants to know the product footprint. In the case of copper, non-compliance of standards will be sanctioned through price. For Chile, it’s key to have a leadership role in sustainability and value addition. However, it’s difficult to seek for the green copper seal, if we export increasing quantities of black concentrates.

All this implies the analysis of the dogma stating that processing concentrates in Chile is a bad business. Although smallest than the mining business, it can’t be discarded. In Chile there are profitable foundries, despite having old and small-scale technologies.

When reviewing costs for foundries worldwide, what affects competitiveness more is if management responds to a custom smelter model or is added to mining business. Savings in freight, the recovery of by-products and non-payment of penalties in the case of complex concentrates form a solid basis to think about concentrate processing as a competitive and profitable activity.  

Chile can and must add value to a metallurgy industry that has a history, upgrading and opening it to new market requirements, with more sophisticated materials and alloys more sophisticated, which demands professionals more and more qualified on different disciplines. This enables to generate sustainable value, knowledge and technology for the mining business and other sectors.

Ivan Valenzuela R.

Director for Cesco