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Chile’s Mining Permit Delays: A Growing Challenge for Copper, Lithium Projects
Chile’s Mining Permit Delays: A Growing Challenge for Copper, Lithium Projects

Chile’s Mining Permit Delays: A Growing Challenge for Copper, Lithium Projects

  • 07-Nov-2024 7:30 PM
  • Journalist: Xiang Hong

An extended delay in enacting reforms to expedite mining permit approvals in Chile is becoming a significant challenge for the country’s mining industry, according to Mario Larenas, the head of U.S. mining company Freeport-McMoRan’s Chilean operations. Chile, the world's top copper producer and the second-largest lithium producer, is grappling with the regulatory hurdles that many in the mining sector argue are slowing project development.

President Gabriel Boric’s government has been working on a set of reforms designed to streamline the mining permit process and amend the environmental assessment procedures. These reforms aim to simplify regulatory approvals for new mining projects, which would help increase investment and maintain the country’s competitiveness in the global mining market. However, the legislation is still under discussion in Chile’s Congress and is unlikely to be finalized by the end of 2023, as originally anticipated.

Speaking at a seminar in Santiago hosted by EY and Cesco, Larenas described the delay in passing the reforms as a "serious" issue for the mining industry, which is crucial to the Chile's economy. While he acknowledged that the proposed reforms are on the right track and could be improved, Larenas expressed the disappointment that the legislation has not progressed as quickly as it was actually expected. “Initially, when they were presented, the idea was to have them ready by the end of the year, and that won’t happen,” he said.

The delay is putting the critical projects at risk. Freeport-McMoRan is planning a $7.5 billion investment to expand its El Abra copper mine in northern Chile by 2025, but this expansion is contingent on obtaining an environmental permit. The delays in the approval process are raising the main concerns about whether the project can proceed according to the schedule.

For Chile, which depends heavily on mining revenues, these delays are especially concerning. The country faces increased competition from other global mining destinations, which are streamlining their own regulatory processes to attract investment. Chile’s mining industry has long been a cornerstone of its economy, but regulatory bottlenecks could threaten its ability to maintain its leadership in copper and lithium production.

The delays come at a time of growing demand for copper and lithium, which are crucial to the global shift towards clean energy technologies. Without faster permitting, Chile risks losing out on investment, potentially delaying the development of new projects that are essential for meeting both domestic and global demand for these critical minerals.

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