The country’s economic activity has been heavily weighed down by the mining sector, while mining employment has fallen by 15,000 jobs so far in 2026.
“A mining paradox.” This is how several of the most prominent voices in Chile’s mining industry describe the current state of the sector’s key macroeconomic indicators, which have remained in negative territory for months despite record-high metal prices and a steady stream of announcements of multi-billion-dollar mining investments.
While Chile’s Monthly Economic Activity Index (Imacec) declined by 0.9% in May—marking its fifth consecutive monthly contraction—a closer look at the data reveals that the overall index was primarily dragged down by mining activity, which subtracted 1.5 percentage points from monthly growth after contracting 11.6% year-on-year.
The picture is no better in employment. According to Chile’s National Statistics Institute (INE), employment in the “Mining and Quarrying” sector has declined for three consecutive rolling quarters, falling to 291,000 workers between March and May, 7.4% below the 314,000 recorded during the same period a year earlier.
“What is happening to mining?” has become a recurring question at recent industry conferences and seminars.
“The figures show a loss of momentum that we have been warning about for quite some time,” said Jorge Riesco, President of the National Mining Society (Sonami). “Despite a favorable international environment, with high copper prices and growing demand for critical minerals, we have yet to translate those conditions into higher production and employment.”
According to Riesco, “it is important to look at both indicators together,” because “when mining production loses momentum, it inevitably affects employment generation, investment, productive linkages, and fiscal revenues.”
Mining Imacec: Nearly a Year of Declines
Andrés González, Head of Mining Analysis at Plusmining, explains that the decline in the Mining Imacec “essentially reflects lower mining production, which has been declining year- on-year without interruption since August 2025 through May 2026. In other words, Chile has recorded ten consecutive months of year-on-year declines.”
The relationship between production and economic activity is clear. With the exception of February, the Mining Imacec has remained in negative territory over the past eleven months.
As Álvaro Merino, Executive Director of Nuevo Minero, points out, copper production—the country’s main mining product and export, accounting for 88% of mining GDP—fell by 8.8% during the first five months of 2026 compared with the same period in 2025, representing a decline of 198,000 tonnes.
“This decline was mainly driven by a reduction of 64,000 tonnes (-12.2%) at Codelco and 134,000 tonnes (-7.8%) in the private sector,” he said regarding performance so far in 2026. He added that the largest production declines were recorded at El Teniente (-27.2%, which is still dealing with the aftermath of the accident that claimed six lives), Codelco Norte (-10.9%), BHP’s Spence (-28.3%), Antofagasta Minerals’ Centinela Oxides (-24.8%), Freeport’s El Abra (-16.3%), Lundin’s Candelaria (-15.5%), and BHP’s Escondida (-3.8%).
Both experts agree that the production declines stem from the mining industry’s “usual suspects”: declining ore grades, depletion of oxide ores, ageing operations, and rising costs—all longstanding structural challenges facing the sector.
Mining Employment
Mining employment recorded the largest sectoral decline in the latest quarter reported by Chile’s National Statistics Institute (INE). The largest year-on-year employment losses were observed in the Antofagasta Region (-8,440 jobs), the Metropolitan Region (-6,830), O’Higgins (-5,890), and Tarapacá (-4,260). Overall, the sector has lost nearly 15,000 jobs so
far in 2026. Looking at the last four rolling quarters compared with the same period a year earlier, average mining employment declined by 1.6%, equivalent to approximately 5,000 jobs.
According to Andrés González, the figures for the O’Higgins Region may reflect a reduction in workforce at El Teniente due to operational challenges associated with the Nuevo Nivel Mina project. In northern Chile, meanwhile, he notes that the decline could be linked to the completion of Collahuasi’s C20 project, difficulties at Quebrada Blanca related to its tailings facility, and, more broadly, to the transition from construction to operation at expansion projects.
Even so, González emphasizes that, from a longer-term perspective, mining employment has grown from around 185,000 workers at the beginning of 2020, when the COVID-19 pandemic began, to approximately 320,000 by mid-2025.
“Although the decline seen in recent months is significant, mining employment remains at relatively high levels compared with the past ten years,” says the Plusmining expert.
For Álvaro Merino, beyond the specific circumstances affecting certain operations, the current situation reflects decisions made in the past. “It is important to remember that the investments we make today will form the basis of future production, just as the investments we failed to make in the past are reflected in today’s production levels and these figures,” he explains.
“As investment gains momentum—particularly during the construction phase of mining projects—employment in the sector will increase significantly. However, the impact on production will only become evident once those projects begin operating and, especially, once they reach their design capacity,” he emphasizes.
“Mining Paradox”
The macroeconomic indicators presented above reflect what Sonami has described as a “mining paradox.”
“We have historically high prices, a substantial investment pipeline, and enormous international interest in our minerals, yet we continue to face obstacles that prevent us from translating that potential into higher production and employment,” says Jorge Riesco.
In this regard, the mining association leader stresses that “the most important priority is to prevent this loss of momentum from becoming a permanent trend.” To achieve this, he argues, Chile must “move decisively to improve the enabling conditions for investment: greater legal certainty, regulatory stability, faster permitting processes, and institutions with the technical capacity to evaluate projects efficiently while maintaining high environmental and social standards.”
Merino adds: “It is no secret that the most effective way to increase production is to boost investment, because the investments we make today are the foundation of future growth.” Considering that more than US$20 billion worth of mining projects are currently undergoing Chile’s Environmental Impact Assessment System (SEIA), he argues that “we must accelerate the permitting process, provide greater certainty throughout that process, and establish mechanisms that strengthen legal certainty.”
González notes that “while a significant share of this investment is intended to sustain existing operations, another portion is directed toward production expansions and, to a lesser extent, greenfield projects. As these investment plans are executed, we should see higher production over the medium and long term.”
Looking ahead to the second half of the year, the interviewees expect mining production to outperform the first half. Nevertheless, both industry forecasts and projections from Cochilco point to an overall production decline of around 2% by the end of 2026, with production expected to begin recovering “more significantly” only in 2027.
In light of the latest Imacec and employment figures, Riesco insists that “the deterioration shown by these indicators reflects a situation that must be addressed with a sense of urgency.” He also highlights Sonami’s proposal to view Chile as comprising 19 mining districts, which would allow policymakers to develop region-specific strategies to reactivate the mining industry according to the particular characteristics and needs of each territory.
Source: Diario Financiero