Chile’s Mining Industry Historical Background
For much of Chile’s history, mining, in particular that for both gold and copper, has for the most part been the country’s leading industry. Though beginning with Spanish colonists expanding their efforts for mining gold in neighboring Peru, it was the decade starting in 1990 saw the start of what was to become a boom period in the Chilean mining industry, with copper mining in particular surging, primarily due to foreign direct investment (FDI) in the sector.
Over this dramatic period, Chile’s economy was one of the fastest growing in the world, with its mining sector making up 8.5% of its GDP and nearly 47% of its total exports. Due in no small part to a series of continual amendments being made to mining industry legislation and an open and transparent investor-friendly business environment, the Chilean mining industry continues to be both a strong and profitable choice for investors.
With the introduction of new technologies and more effective recovery techniques, such as those intended to better protect and realize Chile’s reserves of natural resources safely, the mining sector will continue to grow more prosperous over the years to come.
Boasting large scale high quality resources, progressive strategic legislation and a healthy investment climate, Chile has naturally found itself becoming the world’s copper mining capital, producing in excess of 1/3 of the total global copper supply. As of 2006, copper already accounted for some 55.6% of all Chilean exports, roughly 8% of the country’s GDP.
A number of conservative estimates state that adjusting for indirect impacts, that mining in Chile would come to represent over 13% of the GDP. In 2013 copper mining alone accounted for a staggering 9.76 percent of the country’s total GDP, even with a fall in world prices for the metal occurring during the reporting period. Within Chile’s borders lies roughly 40% of the world’s known deposits of the metal being found, the majority of these sources occurring in its desert areas in the North in addition to its mountainous Andean region.
According to the US Geological Survey (USGS) in 2013, Chile remained the world’s largest copper producing nation delivering almost 32% of all copper mined worldwide that year. The nation’s vast copper reserves have seen mining in that country undergo a remarkable period of growth, resulting in it being among the largest industries in the country. Last year saw copper exports comprise in excess of half of all total goods exported from Chile, more than 52%.
The USGS report goes on to show that Chile is currently ranked number four worldwide in terms of untapped gold reserves, lagging only slightly behind Russia and higher than the United States. 2011 marked the first time that Chile recovered 50 tons of gold in a single year, though potential output could be conservatively increased to as high as a figure as 3,750 tons, following extensive infrastructure spending which is forecast for the sector. By way of comparison Peru, which is South America’s largest gold producing nation, mined nearly 165 tons in 2011 but is forecast to have only around 2,000 tons of proven gold reserves left to be extracted.
Chilean gold production in 2012 increased further still by 10% up to 55 metric tons as more advanced recovery methods helped to increase yields from existing gold and copper mining sites, the source of 44% of the country’s total gold production. The year’s figures helped see Chile placed as the world’s 14th largest producer of the precious metal but still lagging behind two of its South American neighbors. Peru, which is the largest gold producer on the continent, placed 5th in global rankings with 150 metric tons, down from the year before and Brazil in 11th place with a total gold production of 65 metric tons.
Industry observers are confident that given the influx of capital into the Chilean gold mining industry taking place at present and coupled with falling production levels in Peru as its reserves are diminished, that Chile could quite easily, over the course of the next 15 years, assume the mantle of South America’s largest gold producing country, with only Brazil seen as a likely rival.