A Chilean Diary
August 14, 2019
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Tremor in Chile

How quickly the world changes.  I was in Chile in August, welcomed by members of state owned copper producer Codelco, and visiting old friends in the metal trade. I visited Calama, Chuquicamata, Antofagasta and Mejillones; and saw the Andes and Atacama for the first time. Everywhere I met people who appeared to talk up the exceptionalism of Chile within South America – the only peaceful nation in that part of the world not run by corrupt politicians, revolutionaries, death squads, drug barons or the gun.

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But in this great country of geological contrasts, straddling the Nazca plate, they know a thing or two about earthquakes. It may be only a tremor, but the demonstrations in the capital and major industrial mining cities recently, the deaths in the capital, the 5% of the population who turned out to march in Santiago, like the rumble of the earth, could portend something greater.

It was apparently no more than a hike in metro fares that ignited the wildfires of protest. And yet, once lit, the flames appeared to seethe far hotter than the issue would have suggested.  How was it that one of the few countries to use its commodity wealth for the common good was so far out of step with its people?

Well, apparently what I did not see, those big families sitting on top of the volcano, did not see either. While their bottoms were being warmed by the steady glow of wealth to emerge from Chile’s copper and iodine mines, lithium brines, and by-products of molybdenum, rhenium, tellurium, selenium, gold and silver, far too many of its citizens considered themselves left out. As is often the case in South America, a high proportion of those skivvying in the unforgiving desert landscape are indigenous peoples unable to share in the nation’s wealth. Unseen by me, this was apparently a country of wealth apartheid, where Chilean families of French, Spanish or Italian origin often live in plush splendour in their town houses, farms and seaside villas, while others live in makeshift shanty camps along the Mapocho river or (as I saw, but did not twig) in the hills above Antofagasta.

At the time of the 2010 disaster at the San José gold mine, during Pinera’s first term, we saw for a brief moment the two sides of Chile united. On the one hand, the world witnessed the breath-taking skill with which the mining community came together to drill a shaft with laser accuracy and bring out the trapped miners, while on the other we noted an accident in an exhausted mine that should never have been active.

Now it seems this coming together as a nation was short-lived, and outsiders like myself are blind. The streets I had seen only in August were clean, the street art on colourfully painted public benches was joyful, stray dogs adopted by Santiagans, and given coats in winter by the locals, spoke of ordinary people’s good nature. And yet it seems the care given to dogs was not a measure of the government’s treatment of its populace.

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Can Chile’s businessman-President Pinera turn it round? He has at the time of writing sacked an entire cabinet. He has rolled back from using the emotive words of ‘war’ when discussing his own nation.

When we, as a company, look at metals such as rhenium (50% of which comes from Chile and without which most aircraft engines cannot be made) we wonder about what the consequences of conflagration could be? We see the future trajectory for copper demand in EVs and find it difficult to imagine the consequences of the loss of even a fraction of Chile’s one fifth contribution to world copper’s 25 mln tons of supply.

The flames of discontent, though, may not be easily doused while communities’ water needs in the Andes come second to those of the miners who process the briny salt flats for lithium carbonate, or when lakes that were once the habitat of the flamingo are fast disappearing.

It would appear the conflict between mines and people is perennial and Chile, a country which I had thought had squared this circle, is now on the edge of the abyss. There have been many times when I wondered whether certain countries might not have been better served by leaving their commodities in the earth until such time as a political system could emerge that would not seek its exploitation by the few.  Chile is fast becoming such a country.

As we move beyond LME week, perhaps these facts are worth pondering.

Published November 13th 2019 on www.lord-copper.com