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Mining In Chile - The Pros And Cons

By Gary Sargent

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Published: 14Dec2010
Word count: 543
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On 13th October 2010, the last of 33 miners trapped by an accident at the San Jose copper-gold mine near Copiapo, Chile was winched to safety. He had been at a depth of 2,300 feet below ground level. He had spent 69 days trapped underground with his companions after a shaft collapsed at the notoriously dangerous mine where the deaths of 8 miners had been reported over the last 12 years.

This high publicity incident was a catalyst for Chile's mining regulation agency to bring the hammer down, closing 18 mines within days and scheduling a further 300 for closure. It's easy to condemn Chilean mining as unsafe and exploitative, but what are the real pros and cons of the industry?

Pros
1) Mining is a great source of income for Chilean workers
Chilean copper mine workers are among the highest-paid miners in South America. However, inflated wages are used to entice workers to mines with poor safety records, as in the case of San Jose; mine workers were paid around 20% more for their troubles.

2) Generally Chilean mines have a good safety record
San Jose is an example of a smaller mine at which standards are known to slip. However, the larger mines generally owned by multi-nationals or the state copper mining company, Codelco, run a tighter ship.

3) Mining brings the benefits of a strong economy to Chileans
Currently enjoying a strong economic status, the population of Chile have good reason to be thankful for the mining industry. Over a third of government income due to exports come from copper alone. One notable benefit of the economic surplus from copper mining is the use of government funds to pay for reconstruction after the 2010 Chilean earthquake.

Cons
1) Inadequate government resources are available to monitor the industry
Between 2004 and 2010, the San Esteban Mining Company (owner of the San Jose mine) received 42 fines for breaching safety regulations. Why was the San Jose accident allowed to happen? Due to budget constraints, there were only three inspectors for the Atacama Region's 884 mines. Despite a very immediate public response to correct the problems that led to the San Jose disaster, the government still has much to do to bring the industry under control.

2) It isn't all wine and roses economically
Copper is a highly volatile commodity on the international markets, experiencing increases and decreases in value of up to 50% during the 1980's. The Chilean government have established a Stabilization Fund to put aside the surpluses of good years to cover the shortfall of others, but the unpredictability of such a core element of the entire country's economy is a great source of risk.

3) Environmental concerns
Copper mining produces 99 tons of waste for every ton of usable material. When you consider the usable copper output of Chile, that's a lot of waste.

It isn't often that Latin American countries get to reap the benefits of their natural resources, and Chile is a good example of a country that turns it's rich mineral deposits into benefits that reach the population. However, in the rush to make the most of what it's got, Chile has lost control of the smaller players in the mining industry, and it's any one's guess if they will be able to rein things in to the point where accidents like San Jose are a distant memory.

Gary Sargent is the Managing Director of the tour companies Escaped to Peru and Escaped to Latin America and has lived in South America for over 10 years. Gary is passionate about Latino life, people, customs and places. Visit his website for more Latin American travel advice or to book Latin American vacations.

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