Chile’s mining sector facing tighter environmental regulations under new leftist presidency

The National Mining Society (Sonami) of Chile has welcomed the country’s new leader Gabriel Boric after the 35-year old former law student swept to victory on Sunday night in a fiercely opposed presidential election.

The industry body said voters ‘sent a clear message’ about the need to maintain Chile’s economic and social development. Boric, a leftist millennial, vowed to bury Chile’s ‘neoliberal’ economic model during his campaign and increase government royalty fees.

“We trust that the spirit of programmatic convergence, moderation and openness to dialogue shown during the last week of the campaign will prevail,” Sonami said in a statement.

During his victory speech, Boric reiterated his opposition to mining that destroys the environment, particularly the controversial US$2.5 billion Dominga copper and iron ore project that was approved in April.

Critics of Dominga point to its proximity to ecologically sensitive areas and the potential of the mine to cause undue damage. Supporters of the project highlight an ‘excessive’ eight-year permitting process.

“Destroying the world is destroying ourselves. We do not want more ‘sacrifice zones’, we do not want projects that destroy our country, that destroy communities and we exemplify this in a case that has been symbolic: No to Dominga,” Boric said.

A further slowdown in permitting or higher costs imposed by the government could slow investment in capacity to produce copper, a metal seen as key to the energy transition. That could send prices back up to record levels seen earlier this year.

“Copper and lithium miners will naturally be in the crosshairs, particularly with both commodities at or close to record prices, while we would expect a weakening of the Chilean peso,” BMO Capital Markets analyst Colin Hamilton said.