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Mining: A Platform for Chile’s Future Report to the President of the Republic of Chile Michelle Bachelet [Seleccionar fecha]
The Commission for Mining and Development of Chile National Council of Innovation and Competitiveness December of 2014
Index Introduction 3
1. Vision 5 2. Agenda of strategic priorities 7 3. Institutional framework for a virtuous, sustainable and inclusive
mining industry 15 4. Members of the group who participated in the elaboration and
agreements arising from this document 17
Mining: A Platform for Chile’s Future
Introduction
The mining future of Chile is a task of the present. Two domains that need to be
addressed are creating the conditions for attracting greater investment and
strengthening public confidence in mining activities. Chile also needs to make
advances in environmental sustainability, to achieve a harmonious encounter with the
people and communities where mining carries out its activities, to increase
productivity and to develop an effective platform for the growth of new industries and
knowledge-‐intensive services.
Making this progression possible is a challenge of proportions. It requires the
concourse of multiple efforts in social innovation, institutional development, and
advances in science and technology. Building these capabilities is at the heart of this
proposal.
The Commission for Mining and Development of Chile and its members, who sign this
agenda, agreed to elaborate a vision and to identify the strategic priorities required
for Chilean mining to consolidate its aspirations and reaffirm its global leadership. The
Commission presents this vision and sets forth the targets that the industry needs to
achieve in the next 20 years.
We are convinced that in its stride towards a virtuous, sustainable, inclusive and
multicultural industry endowed with regional solidarity, mining will be a source of
inspiration for the nation. This will open cultural and scientific paths at the forefront
of global knowledge.
Chile is a global mining power. It is the largest copper producer, supplying 32% of
worldwide production and the third largest producer of molybdenum. It also occupies
leading positions in the processing of other minerals. Mining has been a pillar of
national progress for a long time. A recent study concluded that, if mining exports had
not increased as it did from 1990 on, and if it had continued in the same institutional
and productive trajectory it had during the period spanning 1960-‐1990, the current
national income would be 45% lower than its present level. Mining has been a leading
force to power development and attract investment; it is a crucial contributor to the
progress made in the quality of life the country has enjoyed in recent decades.
The Commission agrees that there is a great opportunity for mining to further its
contribution to the improvement of the welfare of Chileans. To materialize this
opportunity, urgent action is required in order to reap the benefits of this historical
moment that stems from the high demand for minerals from emerging economies in
Asia.
To begin with, all stakeholders must strive to overcome the problems that discourage
investment in mining today. In this regard, it is worrisome to note that far from
increasing, investment in mining in Chile has fallen. According to the last survey of
investment projects, there are over US $ 44 billion being held pending a decision. If
this projection holds true, mining production would decrease by about a third from its
current level by 2030. It is obvious that if this scenario prevails, no part of this
proposal would be viable.
Seizing the opportunity requires also bridging the gaps that exist in terms of
productivity, environmental protection, effective citizen participation and fair
compensation to the localities where mining takes place. To show the magnitude of
the effort involved in closing these gaps, it should be noted that labor productivity in
Chilean mining is one third that of Canada or the United States. As a country, Chile
needs to increase its productivity, and this is urgent for the mining industry.
The challenges we face begin with the need to strengthen citizen confidence in the
sector. The mining industry of the future requires forging and strengthening a
relationship of worth and collaboration among all stakeholders: mining companies,
their workers and their suppliers; the State that directs, regulates and supervises; and
the citizens who see their interests positively or negatively influenced by this activity.
We believe that dialogue that leads to mutually beneficial agreements -‐where each
party meets its agreed commitments-‐ is the best way to avoid or overcome conflict
and move towards a mining of the future.
For this reason, many of the proposals made here address the need to bolster trust.
Prominent among them is the strengthening of national capacities for more effective
environmental protection, and the institutional development agreed upon concerning
the process of consultation with native communities. The reinforcement of overall
citizen participation is paramount.
In parallel, the proposal emphasizes actions seeking to increase the productivity and
the competitiveness of mining in order for the sector to radiate progress to the
country. This includes tackling the profound challenges related to labor productivity,
availability of water and energy, as well as the development of knowledge,
organizational capabilities and human resources that are crucial for the success of this
process; the crafting of a strategic platform for R + D + I; and the unfolding of an
industry of high productivity providers that can undertake a solid exporting role.
The second consideration of the Commission is that it is essential to have a roadmap
to guide the country through the efforts included in this proposal and to measure their
progress. This task requires urgent and continuous long-‐term dedication. A jump-‐start
in the established direction is essential. Therefore, the document herein not only
defines a set of strategic priorities to be adopted immediately, it also includes
initiatives that are already supported by the firm commitment of public and private
stakeholders who are engaged in their promotion.
A third consideration is the identification of the institutions that should be tempered
or created to support the development of this agenda. This proposal suggests giving
the country a public-‐private institutional framework to ensure greater coordination
and joint actions between the different participants in this activity. The idea is to
speed things up and move from a transactional approach to a transformational one,
which will generate collaborative and integrated relationships at all levels. We need
an institutional setting that generates, guides and supervises the blossoming of a
virtuous, sustainable and inclusive mining industry and thus help create greater trust
and value for all parties involved in its development.
Finally, we emphasize the importance of addressing these hurdles with the conviction
that we do not hold the answers to all the puzzles and challenges that will arise.
Therefore, we must assume this task as a learning process. The objectives are
demanding and must be sustained over a long time, so we must exercise extreme
coordination between stakeholders. We therefore invite the nation -‐in the context of a
broad political and social calling-‐ to define and implement a new vision for the
development of a new virtuous, sustainable and inclusive mining industry that is also
respectful of human rights. We therefore begin by presenting our vision. It is a
proposal to contribute to the sustainable development of mining and continue its role
as a driving motor behind an improved quality of life and national welfare for many
years to come.
1. Vision: A virtuous, sustainable and inclusive mining industry to improve the
quality of life of current and future generations.
By 2035 the mining industry in Chile will have achieved:
The export of 130-‐150 billion tons of copper and other minerals during the 20
years between 2015 and 2035, having completed the huge investment required.
Eighty percent of this production will be positioned in the first two cost quartiles
of the global industry. Furthermore, 250 suppliers exporting world-‐class
technology and knowledge intensive services have come on stream. Business at
the end of the period reaches a total of US $ 10,000 million per year.
The establishment of a worldwide leadership in sustainable mining founded on
the implementation of benchmarks and environmental management standards
based on best industrial practices. This clears the way for rationalizing the
processes of environmental requirements and permits, as well as facilitating their
monitoring by the State. In this way, the demand for fresh water and energy, and
also greenhouse gas (GHG) emissions, will have been reduced compared to the
base year projected (BAU 2010). These actions will mitigate net losses in
biodiversity, thereby contributing to the conservation of our natural heritage.
The establishment of relationships based on trust and collaboration between all
parties involved in the mining activity. This is made possible through an ongoing
open and transparent dialogue between parties on an equal standing, leading to
agreements with shared benefits that allow for the advancement of the common
good. Likewise, the existence and compliance of relationship standards by each
stakeholder has become a standard practice that points to the full respect of
agreements in a long-‐term relationship of mutual benefit.
This vision unfolds from the concepts of a “virtuous, sustainable and inclusive mining
industry”. We define each one of these qualifiers below:
Virtuous Mining is the one that, by strengthening its competitiveness and
productivity, tends to create conditions for the emergence of a robust ecosystem of
innovation. Virtuous Mining is driven by individual action and collective effort. The
latter is based on an agenda of shared actions between the mining industry, mining
industry suppliers, the scientific community, native people, local communities, and the
State. Beginning with this agenda, investments increase to expand productive capacity
and complete the transition from an industry based on the country’s natural
advantages to an enterprise of higher complexity. The benefits of this development
are many because they counteract the impact of deteriorating ore grades in our
deposits and act as a springboard for Chile to become a player in the global value
chains and the knowledge society, exhibiting the highest standards of respect for the
rights of the individual.
Virtuous mining assumes its economic, technological, social and environmental tasks
as a driving force for the creation of new capabilities and productive activities. In this
way, it stands as a mining power that invests in knowledge and ensures excellence in
research, innovation, engineering, production and marketing, managing to stay
sustainable, competitive and profitable in the long term. Thus, converted into a state
of the art technological development pole and empowered to solve technological,
environmental and social problems, virtuous mining multiplies its benefits over other
industries and sectors. It not only fortifies its role, but it becomes an agent of change
at the service of society.
Inclusive mining is one that encourages the participation of communities living or
working in areas affected by mining facilities in the benefits generated by their
operations. Inclusive mining seeks to create shared value in its social environment
and maintains a fluid and permanent dialogue with its workers; within a framework
of full respect for the rights of all parties. A present and active State must generate the
institutional conditions of coexistence for the common good and promote a dialogue
between parties as well as a free, ex-‐ante, informed, responsible and in good faith
participation of native and other communities near the mining activities. It should also
manage efficiently and fairly that portion of the income it acquires which corresponds
to a non-‐renewable natural resource whose healthy development benefits the whole
country.
Sustainable mining is one that, in the design of its operations, integrates all variables
affecting the socio-‐environmental system in which it operates. In this way it prevents,
avoids, minimizes, mitigates and compensates its environmental impacts -‐including
effects on the ecology and biodiversity, water and soil quality, and also the social and
cultural impact throughout the life cycle of the facilities until their closure and
abandonment. The industry operates with practices, technologies and verifiable
world-‐class environmental standards. It favors the interests and rights of present and
future generations. In this context, the State assumes a more effective role in the
protection of the environment, through means such as territorial planning, norms and
regulations, and monitoring of industrial externalities.
The three concepts that structure this vision of the future of mining -‐virtuous,
sustainable and inclusive-‐ are grounded on practices currently under way, although
many of these must be improved, extended and institutionalized. These concepts are
closely related, therefore the deployment of all three is required to give form and
substance to the necessary relationship of trust and dialogue between the parties
concerned. Mining development and its success can then meet the expectations of a
better quality of life and a greater well-‐being of all the people in Chile.
2. Agenda of strategic priorities for a virtuous, sustainable and inclusive
mining industry.
To build the mining industry motivated by the vision we have agreed upon requires
launching a comprehensive set of initiatives. These involve public and private
responsibilities, a significant mobilization of resources and, above all, persistence
over time. The commission shaped its proposals around strategic priorities, putting
forth a set of concrete initiatives for each of them. These are detailed in the annexes
accompanying this report, as well as others that serve as a complement.
To achieve the goals set by the commission we must begin to act now. Therefore, the
commission along with public authorities and the corresponding parties in the private
sector, agreed to launch the implementation of a series of initiatives in 2015 that are
central to move in the desired direction. The decision to go-‐ahead with these actions
bears witness to the commitment of business and government with the proposed
agenda.
2.1-‐ Immediate agenda: ten commitments that start in 2015.
a. To complete the institutional development proposed in Section 3. These
institutions are required as drivers for the emergence of a virtuous, sustainable
and inclusive mining industry. The public and private sectors provide the
resources required to promote this immediate agenda.
b. To promote a dialogue aimed at building a shared vision of mining’s future
based on the stated proposal of a virtuous, sustainable and inclusive mining
industry. This task should be the responsibility of a public-‐private council and can
begin with the search for agreements on crucial issues between the mining
industry and the community of citizens at large, as is the case of water resources.
Dialogue is essential to build trust and develop a narrative that demonstrates the
contribution of mining to Chile’s social and economic development, one that is
supported and understood by the public. The resulting definitions will lay the
foundations for a broad and firm commitment of the entire nation with its mining
industry. Particularly relevant will be to feed this dialogue with an analysis of the
challenges and obstacles faced by the next generation of mining projects. Among
these is the development of large-‐scale mining in Central Chile (IV to VI Region).
Mining resources available in these regions represent 16% of world copper
reserves and 50% of the national mining potential. However, this territory is
inhabited by nearly 60% of the population engaged in multiple and significant
activities. Therefore, there are varied uses of soil and other resources that must be
considered to make viable the future of mining in this region.
A public-‐private consortium has already started work to identify risks and
opportunities for mining in these regions and to specify the actions required to
address them. It is essential to maintain and strengthen this effort under the aegis
of the suggested public-‐private institutional framework and, above all, to
incorporate the viewpoint of citizens in this process.
c. To build and finance collaborative R & D + i initiatives by mining companies
and their suppliers. These initiatives will incorporate a set of relevant projects
focusing on technological challenges and innovation. All these projects are aligned
with the proposed vision and they cover issues related to exploration, processing,
sustainability (including energy and water) and inclusive association (relationships
with communities and generation of shared value). In order to give maximum
legitimacy to this R & D + i agenda, its contents are to be discussed with the Public-‐
Private Council that will be created as part of the agreements promoted by the
Commission. The founders of this concerted effort may invite other firms,
producers or suppliers, to participate in the board of the Council, in specific
projects or in related consortia. During 2015 at least two R + D + i collaborative
projects will be launched.
Carrying out these objectives implies a definition of the principles that will
materialize in the respective contracts in order to facilitate the development of
collaborative relationships between mining companies and suppliers as well as the
scaling of their joint initiatives. Furthermore, the initiative must structure and
make public a transparent map of supply and demand for research, services and
technologies to guide the development of the capacities needed to put them on
stream.
d. To expand and enhance the ongoing program for the development of
world-‐class mining providers and other similar initiatives. During 2015, at least
two additional mining companies will develop programs of this type. The idea is to
scale the effort which aims to achieve the targets set in the vision of this document,
and at the same time obtain an adequate return for the projects. As part of the
program, producers and providers should tailor specific contractual arrangements
applicable to incremental innovation projects and technological breakthroughs by
the exchange of information concerning the risks and benefits of the projected
ventures. A second action is to grant greater visibility to mining sector suppliers
through a characterization process validated by third parties. Finally, the program
considers setting up a scheme to attract major global suppliers. The purpose is to
bring their technical capabilities to Chile in collaboration with local counterparts, in
the expectation that they help integrate these local providers into the global value
chains. The funding of this program corresponds to the mining companies,
suppliers and the State, in proportions to be agreed upon.
e. To enhance the productivity of mining, through a technical institution in
charge of monitoring and analyzing the factors affecting productivity and
proposing measures to increase it. This could be a priority for the Productivity
Commission promoted by the Ministry of Economy.
f. To improve the regulatory framework of the free, ex-‐ante and informed
consultation process of the native people and initiate a dialogue on matters
questioned by them concerning Regulation 66. It is necessary to encourage the
construction of specific frameworks for ex-‐ante consultation that fits the context
and needs of each indigenous group in line with the requirements of Convention
No. 169 of the International Labour Organization. We also observe the existence of
unclear concepts in these regulations that can be clarified within a dialogue in good
faith.
Academic meetings for reflection, debate and dialogue between interested parties
and native and non-‐native experts in relations between communities and mining
are also advisable. The aim is to create a shared vision of the opportunities and
mutual benefits that mining can offer all stakeholders, and also to clarify and agree
upon standards and regulations applicable to the industry and the State, in its role
as consultant and guarantor of the rights of indigenous peoples.
g. To strengthen the availability of geological information and improve the
access to mining property. In line with the recently announced pro-‐investment
agenda of the Bachelet administration, we suggest moving towards the creation of a
database on mineral exploration and geological resources following the standards
of the most advanced mining economies. In addition to this, we should study
mechanisms to provide greater liquidity to the mining property market to
stimulate its effective exploitation. One example is to establish a progressive toll
when the owner shows no advances in the exploitation of the resource.
h. To fortify the capacities of environmental institutions. This will be financed
by the Strategic Investment Fund for an amount of approximately US $ 35 million
annually. These revenues will seek:
i. The design and implementation of a program for the accreditation of
laboratories and environmental services endowed with high standards for
monitoring and assuring quality. This will be a key contribution to improving
environmental monitoring capabilities. A top priority will be the socialization
of the new environmental management system by developing a demonstrative
example based on the strict overseeing of one specific area of compliance, such
as the current regulations over emissions by thermo-‐electrical plants.
ii. The development of environmental norms, regulations and
recommendations for the mining sector based on best industrial practices.
iii. The establishment of funding alternatives for world class R & D centers
which put into practice specific capacities for characterizing the state of the
environment. The objective is to systematically produce information about the
state of resources such as water, soil, air, biodiversity and the eco-‐systemic
services of the territory. This information will support the process of strategic
environmental assessment. It will also allow for the definition of criteria for
integrated protection and optimal compensation of biodiversity.
iv. The launching of a plan for strategic environmental assessments in locations
declared national priority due to the existing environmental risk. This plan will
generate environmental baselines –freely available to the public– in prioritized
territories based on their potential for mining and energy development.
i. The new institutional framework will put together a proposal for conduct
standards for all the actors of the mining industry in relation to the labor,
productive, social and environmental setting. The idea is to agree on standards
in areas such as occupational safety, integrity and transparency, energy efficiency,
use of water and water sources, recycling, emissions and community relations.
These standards will stem from the best national and international practices and
lead to the sustainable and inclusive evolution of the extractive activity. To this end
companies will set verifiable annual targets of compliance to standards.
j. To continue strengthening the national research capacity and expand the
number of researchers working in areas relevant to the development of the
virtuous, sustainable and inclusive mining industry. According to the analysis
conducted by the Commission, Chile currently has roughly 350 researchers of
excellence in these areas. This number is clearly insufficient and much less than in
countries with a mining development lower than ours. The public sector will
promote actions to bring the number of active researchers in these areas to 600
within three years, beginning with an increase of 100 researchers during 2016. The
diagnosis of priority areas for research, as well as the preparation of the documents
needed to invite applicants, will conclude in 2015. The Commission proposes that
by 2025 there will be at least 1,000 researchers of excellence in areas directly
linked to the development of mining.
k. To conduct studies co-‐financed by mining and electricity (generation and
transmission) companies to determine the energy requirements of the
mining industry. These studies will focus on the new generation and transmission
capacities associated with mining development and will include a technological mix
to improve the competitiveness of Chile in relation to other exporting countries in
terms of costs, carbon footprint and freshwater use.
2.2 Five strategic development priorities for a virtuous, sustainable and
inclusive mining industry.
The proposal laid out up to this point is the result of the work of subcommittees from
the Commission for Mining and Development of Chile. Its conclusions are presented in
the annexes to this report that provide details on the suggested ideas. We recognize
that in many cases it is necessary to continue working to define more accurately the
specific policies.
Before setting out the strategic priorities it is important to note that many of them are
not only applicable to mining. They are priorities with a national scope and have a
strong impact on mining activity, but they must be assumed as a whole. However, in
several instances this proposal suggests to begin confronting the mining challenges
immediately. The size of the mining sector and the willingness of several actors to
collaborate could help bring forth lessons for the definition of a general policy. It could
also help speed up pressing decisions for the crystallization of the new conception of
mining contained in this proposal. We present the strategic guidelines designed for
the advent of a virtuous, sustainable and inclusive mining industry in the following.
1. To strengthen productivity and innovation in mining: make Chile part of
global value chains. The huge buying power of mining offers the possibility of
boosting a local industry of world-‐class mining suppliers. This, however, requires
multiple actions from the public and private sectors and, above all, bolstering
cooperation between them both. Some of the required tasks have been expressed as
priorities for 2015. This is the case of joint initiatives and the coordinated action of the
public sector. However, additional actions are required. Paramount among them is
risk-‐sharing facilities for piloting and testing the technologies that are being
developed.
We also need to continue invigorating our research capacity. To the proposed increase
in the number of top researchers, it is necessary to add the investment in
infrastructure and equipment required to bring this agenda to fruition. The sector’s
human resources base should also be reinforced. We therefore suggest the
implementation of a system of qualification of mining skills in every educational
institution offering technical and professional training in mining and the creation of
three training centers for them. Another idea is to implement an international
program to attract mining talents from abroad.
Additionally, it is necessary to continue building up the ecosystem of
entrepreneurship and innovation. Greater access to financing is also needed so that
mining providers succeed in developing their activities, especially knowledge-‐
intensive suppliers in services, technology and equipment. The result will be to induce
both local and foreign investors to scale up their undertaking.
We should also implement a policy to position Chile internationally as the mining
center of the future, coupled with a program to attract large multinational suppliers to
conduct productive and innovative activities from Chile. We can leverage the Pacific
Alliance to the same purpose, enhancing our industry in partnership with countries in
the region.
Finally, we should emphasize the importance of the energy, logistics and transport
sectors (and of a potential water supply industry) to provide for the mining industry.
Therefore we must fortify the links between the representatives of these sectors and
the local communities with the people dedicated to elaborating these policies.
2. To establish a Fund for Promoting Citizen Participation. It is necessary to
increase citizen participation and improve the quality management of its processes
with exacting standards for procedures and outcomes. We propose the creation of a
Fund for Promoting Citizen Participation for encouraging and facilitating public
participation under equal conditions of representation for the diverse stakeholders.
The Fund will back the training of players, facilitate dialogue and launch advocacy and
education campaigns on the substance and procedures of dialogue. It would then be
possible to lay down the conditions for all participants to represent their interests and
honor the commitments arising from the negotiations. Additionally, we suggest
devising and implementing a register of specialized consultants.
The strengthening of participation requires considering the municipality as a relevant
space for social dialogue, because the municipality articulates the social involvement
of the community, should ensure the representation and legitimacy of participating
organizations. It is therefore necessary for the local councils of civic organizations and
the municipality to keep an updated registry of the priorities of the inhabitants of
these localities. In this way, these priorities can be considered when companies and
communities negotiate undertakings of mutual benefit.
We propose the execution of pilot participation initiatives to support the definition of
standards for carrying out the processes of consultation and participation in mining
projects.
3. To step up the intercultural dialogue. The country needs to create conditions for
a harmonious coexistence between different cultures and people. We propose two
parallel actions in an effort to create a convergence. The first aims to resolve historical
problems, the second to implement representative, timely and effective mechanisms
validated by the communities concerning the free, ex-‐ante and informed consultation.
Both tasks must be assumed within a public policy that includes process and outcome
standards, and the resources required for their implementation. Among other things,
this policy requires training public officials responsible for executing and defining
standards and methodologies for social participation (including how to evaluate
them). The policy also needs an information system to feed the intercultural dialogue.
Solving historical problems must consider a clear-‐cut delimitation by the State of the
territories which belong to native people. For the mining industry, it is of utmost
importance what happens in the northern part of the country. It is also highly
desirable to begin a dialogue with each indigenous group about the ways in which
they benefit from national and regional development, with full respect for their rights.
Likewise, it is necessary to define a representation system for intercultural dialogue.
This enterprise calls for the creation of a public agency specializing in the design,
implementation and evaluation of intercultural dialogue. This agency would also be
responsible for conducting consultations in coordination with the administrative and
legislative bodies whose main obligation is to perform these processes.
At the same time, we must consider that no institutional modification can stop,
undermine or slow down the environmental assessment or the consultation
processes. Therefore, the parties must recognize and reinforce the current
responsibility of the Environmental Assessment Service (SEA) as a temporary solution
until the new institutions are put into place. Both the new agency and the SEA must
maintain close coordination so that the single-‐window system applied to relevant
investment projects is respected. This mandates that only one institution will define
the eventual involvement of communities that, if indigenous, require a formal
consultation process.
Again it appears appropriate that this new institutional framework is grounded on a
concrete experience of intercultural dialogue. Therefore, we suggest a pilot experience
with the Atacama people to shed light on the challenges triggered by a genuine
intercultural dialogue. The experience can then be replicated with other native
peoples facing a similar situation.
4. To enhance the capacity and legitimacy of environmental Institutions for
mining. The environmental institutions of the country need to accelerate their
improvement and strengthening processes. A significant progress is necessary in
order to avoid discretional measures and increase efficiency, supported by real
overseeing and control capacities. It is also essential to ensure coherence between the
different laws and regulations that govern the relationship of mining with the
environment. Currently, many regulatory norms overlap, dampening the efficacy of
the system. The weaknesses of the current scheme generate public distrust and
judicial uncertainty among investors from diverse types of industries. Given its size
and importance for the country, mining provides a good opportunity to test new
mechanisms to increase the capacity for effective action by the environmental
authority and, as a result, to validate the new institutions.
A first challenge is the evolution of the current regulatory framework, which is very
general, towards a system based on standards and references for each productive
sector. This system and its full compliance should gradually replace the huge number
of RCAs (administrative document that certifies the environmental approval or
rejection of a project) that, because of their quantity, complicate or make their control
impossible. We aspire to a model where the processes to grant environmental permits
are based on verifying that the projects being evaluated incorporate the best available
control techniques (BAT). Greater environmental protection will result in further
reducing discretion in the evaluation process. The best control techniques will be
determined in a transparent process involving the industry, government agencies,
research centers and NGOs. The idea is to ensure robust, simple, efficient and
transparent studies by the institution in charge (Environmental Impact Studies
Service SEIA).
This effort to strengthen environmental institutions should also be applied in other
industries, based on the evolution process of environmental management led by the
mining sector. An increase in the capacity to monitor the rules and resolutions for
environmental qualification is also necessary. Generating knowledge and capabilities
for the control and monitoring of the industry’s discharges and impacts in order to
verify the compliance with rules and regulations is a requirement to accomplish this
task.
Recognizing the inadequacy of the State concerning its capacities in this area and the
need to count on the necessary human resources and infrastructure required for the
task, we suggest charging companies an “entry fee” for each project they send to the
SEIA. If approved, the collected sums could finance the increase in analysis and
control capacity of environmental compliance in investment projects. This would
allow the State to commit to shorter deadlines for environmental assessments and
improve levels of analysis in monitoring tasks. The result would generate greater
public confidence in the institutional framework, and greater security to citizens and
investors. In parallel, it is appropriate to fortify the private system of environmental
audits certified by the State as a complement to the public activity in the field.
An essential add-‐on to carry out the above tasks is to temper and bring forward the
processes of citizen participation within the SEIA as stated in the corresponding
section of this document. It is important to note that improvement in the
environmental institutions and in public participation processes require simultaneity
since they complement one another.
Along with the enhancement of the public environmental framework, it is advisable
that each and every company shows its commitments to sustainability in a
transparent manner, defining verifiable and transparent goals (five-‐year and annual
reports) in matters such as energy efficiency, water use and sources, recycling, air
emissions, biodiversity management and emission of greenhouse gases. The idea is to
lay out criteria and standards for the coexistence of companies and mining cities,
using mining as a driving force for the development and the improvement of the
quality of life in these places. There are several successful examples in Chile and other
countries. The same applies to specific communities. There are a growing number of
mutually beneficial agreements between the mining industry and native and other
types of communities. It is also advisable to grant them the right to participate in the
closure and abandonment plans.
Finally, another priority is to advance in the renewal of the full register of
environmental passives in agreement with current environmental standards and the
enactment of a law on environmental passives applicable to all the industries.
5. To buttress social inclusion in the public and private use of mining revenues.
One main aspect of the effort to build public confidence in mining and in the
institutional regulating framework is that the public perceives a fair the distribution
of mining income. This could be accomplished either by tax decentralization, by
targeting objectives of mutual benefit and/or the emergence of new development
opportunities. Particularly significant is distributing a larger share of mining profits to
the communities surrounding its operations.
This requires a better understanding of the collection and disbursement of the mining
rent by all parties involved. In the same vein, we suggest a comparative study on the
effective taxation of mining in Chile in relation to other nations exporting mining
products, to make citizens more knowledgeable on the subject.
Likewise, it is essential that the population living around mining centers receive a
verifiable part (to be established) of the specific mining taxes and patents paid by the
industry. To achieve this objective we propose a larger decentralization of current
taxes. This can happen once the monies collected from mining patents or from the
Investment Fund for Competitiveness (that is financed by a specific tax on mining,
assuring it will be used exclusively for innovation) is left in the hands of local
authorities. Other ideas can be explored. One possibility, for example, is that a
percentage of the investment by mining companies in local development or
community projects is accounted as a credit for future income taxes. These funds
would be allocated to the community through respective local or regional authorities.
The increase in the money available for local development projects must be
accompanied by a corresponding increase in efficiency, transparency and
participation in the use of these resources.
Furthermore, considering the projected law of associativity discussed in the context of
energy policy, we propose developing a common criteria and not separate formulas
for specific economic sectors. The existence of a single instrument is highly
recommended to avoid confusion and overlapping rules.
We endorse the creation of an institutional framework, to manage resources and to
select the social projects that encourage dialogue and the building of confidence
between company and community, as well as to promote fiscal decentralization. It is
also necessary to avoid politicking and the intermediation of external agents that have
their own agendas.
Another necessary condition to bolster public trust and fairness is that the State and
the industry invest in regional sustainable projects beyond mining. In this context, the
creation of shared value through a dialogue resulting in a commitment between
stakeholders to reach agreements on mutual benefits is very important. It is therefore
useful to agree on impact/benefit standards that include mechanisms for dispute
resolution, transparency of information on potential impact and the establishment of
a system to monitor and evaluate commitments.
The aforementioned standards should stem from the new institutional framework and
refer to the process (social and intercultural dialogue) and the result (agreements of
mutual benefit). The companies will then make public their verifiable goals and report
their progress.
Finally, it is suggested to reinforce dialogue within the mining company, between the
different organizational levels of the enterprise and between the company and unions.
The objective is that all players can commit themselves to the changes required by the
industry and maintain sustainable labor relationships. In this regard, a special effort
should be made to increase the recruitment of women and members of the local
communities where the company operates as well as to take into consideration small
and medium enterprises in the vicinity. In these matters companies could adopt
verifiable standards.
3. Institutional framework for a virtuous, inclusive and sustainable mining
industry.
The mining sector of the future requires an institutional framework that ensures
coordination of actions between the public sector and the private sector and within
each of them. We therefore propose creating three instances of coordination: i) A
Public-‐Private Council that would be responsible for guiding and coordinating the
process to define and implement this proposal; ii) An Office for Collaborative
Initiatives that articulates the actions co-‐financed by companies to support and
forward the agenda; and iii) A Coordination Bureau of Public Initiatives, in charge of
coordinating the different government organisms involved in this proposal and
reporting their progress. The annex presents more details about the composition and
tasks of these institutions.
a. The Public-‐Private Council will be responsible for following up on the
initiatives for 2015 outlined earlier as well as guiding the implementation of the
Agenda for a virtuous, sustainable and inclusive mining. This involves directing,
supervising and evaluating the progress of the agenda as well as informing all
stakeholders. The Council will also convoke meetings and dialogues between the
different parties interested in enriching and updating the agenda and reinforcing
its efficacy. At least every three years, the Council will update the agenda based on
lessons from national and international experience. Finally, the Council will
review and facilitate the discussion of the effect of regulatory and legislative
changes in mining.
We recommend that the Council defines a shared national vision to promote the
development of a virtuous, sustainable and inclusive mining industry during
2015.
b. The Office of Collaborative Initiatives is driven by the companies that outline
and articulate the actions they co-‐finance to promote the agenda. Therefore the
office informs and seeks agreement with the Council concerning these actions.
The participating companies will create their system of governance and manage
the use of the resources they invest or spend. It has been estimated that the
investment or spending could reach the level of $ 25 million annually and will be
complemented by resources or actions on the part of the State.
c. The Coordination Bureau of Public Initiatives is in charge of an existing
government body (to be defined) which points out what department bears the
institutional responsibilities for specific initiatives and what public resources are
available to implement the agenda, informing the Council on the public objectives
of the various executors.
Participants in the elaboration and agreements included in this document. � Alberto Salas, National Society for Medium and Small-‐Sized Mines, President. � Álvaro García, Commission for Mining and Development of Chile, Coordinator � Bárbara Saavedra, Wildlife Conservation Society – Chile, Director. � Bernardo Larraín Matte, Colbún Electric Company, President � Diego Hernández, Antofagasta Minerals, CEO � Edgar Basto, BHP Billiton Copper, President � Felipe Purcell, Angloamerican Chile, Vicepresident of Corporate Affairs. � Gerardo Rojas, Municipality of Salamanca, Mayor. � Gianni López, Centro Mario Molina Chile, Director. � Gonzalo Rivas, CNIC -‐ Commission for Mining and Development of Chile, President. � Hennie Faul, Anglo American, CEO. � Ignacio Irarrázaval, Center for Public Policies, Catholic University, Director. � Javier Ruiz del Solar, Advanced Mining Technology Center, Universidad de Chile. � Jean Paul Luksic, Antofagasta Minerals, President. � Joaquín Villarino, Mining Council, CEO � Jorge Bande, Center for copper and Mining Studies (CESCO), Director. � Juan Andrés Fontaine, Fontaine Consultores.
� Juan Asenjo, Chilean Academy of Sciences, President. � Leopoldo Reyes, Sudmetal, Director. � María Eliana Arntz, Intercultural Program, United Nations. � Mauro Valdés, Mining Program, CORFO-‐Fundación Chile, President. � Óscar Landerretche, Corporación Nacional del Cobre-‐ CODELCO, President. � Pamela Chávez, General manager, Aguamarina S.A. � Patricio Meller, Fundación Chile, President. � Raimundo Espinoza, Federación de Trabajadores del Cobre, President. � Ricardo Lagos Escobar, Fundación Democracia y Desarrollo, President. � Rolando Carmona, Drillco Tools, President. � Rolando Humire, National Society San Pedro de Atacama, President � Servet Martínez, Center for Mathematical Modelling, University of Chile, Professor