Exploration Forum: the keys to promoting new projects

Exploration Forum:

Support to junior companies and data bank on mining property among the keys to promoting new projects

-With a frank conversation about the opportunities and difficulties presented by mining exploration in Chile, the 18th CRU World Copper Conference was started in the framework of Cesco Week Santiago 2019. New forms of financing, greater access to mining property and an updated geological map in the case of Chile, are among the main demands of the sector, with a view to a deficit in the global copper supply in 2035.

CRU analysts referred to the pipeline of projects and the long-term prospects of the price of copper and its derivatives and analyzed the opportunities and threats to the market. Asia, beyond China, is emerging as the territory that will boost copper in the coming years.

In her welcoming remarks, the Executive Director of Cesco, Alejandra Wood, assured that Chile continues to be a very attractive place for explorations, but it is necessary to address the barriers and difficulties for this activity. “There is consensus around the shortage of free territories and we must see how to give greater liquidity to the mining property. The forums of honest conversation and not just public relations are more necessary than ever”, said Alejandra Wood on the relevance of the Exploration Forum.

Then, it was the turn of the Undersecretary of Mining, Pablo Terrazas, who presented the plan of Promotion to the Mining Exploration of the Government. Terrazas explained that although there are currently 300 exploration projects in the country, only 22 are active, which shows the problems the activity is facing. Likewise, the majority of the property is in the hands of major companies, generating an imbalance with respect to the junior companies that needs to be reduced. “We are in the sixth place of investment in exploration in the world; being a mining country we are far below than where we should be”, he appointed.

To deal with this deficit, the Undersecretary announced that the steps to follow are to look for financing mechanisms for the exploration companies in Chile; to define which exploration concessions are of interest to junior companies and thus create new business opportunities for these companies with the major companies, and finally socialize this policy among internationally interested companies. “In the near future there will be a deficit in the supply, we know that the new structural projects of the major companies are to maintain production, not to increase it. We need new projects, new deposits, new discoveries, to take advantage of the opportunities”, the authority said.

Subsequently, the discussion panel “The environment for copper exploration” came and there were presentations from different companies and their prospects. They presented the challenges and the context for the activity

Regarding the risks and opportunities for the development of exploration projects, the panel referred to the need to have access to information on mining property, given that a good percentage is in the hands of private entities with whom it is difficult to contact. In this regard, they praised the Government’s initiative to have a data bank open to junior companies and the foreign community. The need to create new financing models for junior companies was also highlighted. “It is difficult to count on investment when there is a risk that they give you permission one day and the other it will be taken away. It would be different if there was an ecosystem working for this purpose”, said Ignacio del Río, Partner, Director and General Manager of Active Mining.

The day continued with the panel Examining the factors that determine the long-term perspective of copper and its derivatives. What are the opportunities and threats to the price of copper?, moderated by the CEO of Corporación Alta Ley, Mauro Valdés, in which the CRU analysts Hamish Sampson and Robert Edwards made a presentation. The latter referred to the demand for copper, the costs of supplies and prices of production, and the marginal costs of mining projects. According to the expert, “until last year, we all believed that the boom in electric cars was going to impact the demand for copper. Today there is a consensus that it will not be pushed until the middle of 2020. The growth of the increase in demand this year will be driven by infrastructure and by the industrial sector, rather than by the electromobility and the increase in renewable energies”. He also referred to the important growth that the Asian market will have, in particular countries like Vietnam because of the growing Chinese investment that has been made in that country.

The Forum continued with the discussion panel “What should Chile do to promote exploration?“, where the need to improve access to mining property by juniors was agreed, along with updating the geological map and to improve the regulatory environment, for instance, in the standard of temporary mining camps for drilling. “We have been discussing the problem of captive mining property by large corporations for years since Chilean legislation allows an irrational concentration of mining property and impedes its circulation. But we must be practical and concentrate on what we are looking for: greater circulation and how to encourage exploration with the existing regulatory system”, said Cesco director Marcelo Olivares.