Economic and Social Impact of Mining in Chile: An Updated Vision

Report prepared by Plusmining for the International Copper Association (September 2017)

Executive Summary

From the beginning of the 90s to the present, Chile has managed to drastically reduce poverty indicators and quadruple per capita income, being considered a high-income country. This important leap in development coincides with the period of greatest investment and increased production from mining, especially copper, that Chile has recorded.

Between the years 1990 and the present, Chile has consolidated an economic and mining institutional model that has set the standard at the international level. In the mining area, the exploitation and export of copper is of a mixed nature, as private copper mining accounts for around two thirds of the country’s total production and the rest is exploited by State-owned Codelco. In addition, Chile has experienced an important evolution in terms of institutional structure linked to fluctuations in the price of copper, since it has fiscal responsibility mechanisms, such as the Cyclically Adjusted Balance (or Structural Balance) and sovereign funds to establish public spending, which allows counting with counter-cyclical fiscal policies.

The contribution of copper mining to the national economy has not only meant a direct increase in national wealth but also an indirect one, which fluctuates between an additional 30% and 70%. It also has a strong impact on the regions where this activity is concentrated, through higher wages and economic development. However, the presence of mining activity is not yet fully consistent with other indicators of quality of life, such as health or habitability.

The copper mining industry in Chile has also shown significant progress and improvements in the management and efficiency in the consumption of its critical inputs such as water and energy (fuels and electricity); and it also presents significant challenges in boosting mineral exploration, improving productivity at different levels, and continuing to improve job security.

However, mining companies also make individual efforts to deepen the relationship and contribution to their local and national environment through various programs of their own.

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