Challenging times for mining

It has been good news for the mining sector, and for the country, the high prices that copper has registered in recent weeks. A situation that, according to the analysts, should be maintained in the medium term. It should also be noted that the industry has been very efficient in responding to the coronavirus emergency, maintaining production and high health and safety standards for its workers.

And although the evolution of the price of copper has benefited the sector, the social outbreak that the country experienced in October 2019, with all its social, economic, and political effects, including the drafting of a new constitution, it creates a strong challenge, which resolution can set the course for the future dynamism of mining.

Now, recognizing factors specific to the country, the macro challenges facing the activity are very similar throughout the world. The “mining” brand does not enjoy a good reputation for its image of a polluting, conservative, and reactive industry to change, especially among the younger population. Its impacts on the territory, especially open-pit mines, tailings dams, the impact on glaciers, the use of water in desert areas, global warming due to the intensive use of fossil fuels, the interaction with social and productive ecosystems, and the low valuation of native  identities and cultures. (no sé cómo traducer el concepto de pueblos originario

In short, the mining companies appeared as very closed to the community, conservative in technology  and with great difficulty to assume the changes that society at a global level is demanding. The historical assumption, still very present, that their actions alone gave them the legitimacy and license to operate, is no longer enough.

Fortunately, in recent times changes have been observed in the way of facing the business. It is not enough to say that mining is key to maintaining today’s civilization, which is true and recognized by many. The issue is that there are different ways to meet this objective, which certainly involves efforts, investments, and technological developments. Basically, mining must be part, and not a spectator, of the solution in the most global problems of the complete chain, from the mine to the consumer. In a nutshell, to understand that the business does not end where the exit of the mine is, and that increasingly empowered consumer companies demand reliable information about the quality and conditions in which the respective metal was produced.

In the Chilean case, there is undoubtedly the same gap between the self-perception of mining companies, “we do everything well and they don’t let us work”, with the perception of important sectors of the population that strongly oppose mining for its “negative impacts”. And what is clear is that, in the case of Chile, mining is essential not only for the products we consume but also for the copper we export.

We know that mining activity itself generates impacts on the territory, but we also know that many of them can be minimized, with a more environmentally friendly footprint, using new technologies, and with a more open and transparent territorial and social management.

The issue of glaciers is a good test in this regard. Beyond a natural process of global warming that causes its melting, it is evident that mining has accelerated this process, understanding that until very recently, there were no regulations or awareness in this issue. Nobody disputes that there must be a regulation in this regard, understanding the dynamic nature of these bodies. Undoubtedly, there are very clear situations in which legal protection is fully justified, and there will probably be situations that will require greater flexibility, associated with case-by-case negotiations between the environmental entity and the respective company.

One last issue that we see relevant has to do with the future of Codelco. Its nature as a public company means that it is not always very clear what its owner expects of it, affecting its ability to take timely and more structural measures to adapt to changes in its environment. The profound productive transition that Codelco is going through in all its fields, supposes a gigantic investment and management effort, in a context of financial restriction, and with the challenge of generating surpluses. In addition to these specific challenges, it faces all the demands of large mining companies in terms of sustainability, transparency, and contributions to social and productive ecosystems.

Beyond management efforts to lower costs and improve productivity, it is essential the owner lay down rules in a clearer and focused way that remains over timeto avoid lurching and that profitability is related to the mining assets available and comparable with their peers. In this context, today it is difficult to understand and compare results, assuming that it is the same administration that changes every four years, which sets the goals.

In short, mining in Chile must continue to contribute more and more to the country’s sustainable future. And to face the upcoming constitutional debate in a good way, it is essential to abandon the defensive attitude, and that the large mining companies continue to take on the new challenges, just like what is happening internationally, opening themselves creatively to the changes and to the new demands of the population, which guarantees recognition, reputation, stability, and growth.