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By Fabian Cambero
SANTIAGO, Nov 4 (Reuters) - Chile's world-leading copper
industry will see investment lag for at least two years as the
country rewrites a constitution that underpinned nearly three
decades of mining growth in the South American nation, a senior
mining official told Reuters.
"Hardly a project of a very large magnitude will be carried
out in the next two years until there is clarity around the new
constitution," Diego Hernández, president of Chile's National
Mining Society (Sonami), said on Tuesday. "And I don't think it
is necessary given supply-demand and the market at the moment."
Chileans last month voted overwhelmingly in favor of
scrapping the country's dictatorship-era constitution, but the
process of drafting a new one is expected to extend through
2022.
Several issues on the table could impact mining, from
indigenous and collective bargaining rights to baseline rules
that govern mining rights, environmental protections and worker
benefits.
But Hernández, a former top mining executive, said the
process was not "open season" for changes. Sonami, a trade
group, represents mining firms including BHP,
Anglo-American and Antofagasta.
"Any arbitrary decision that Chile makes against foreign
investment, against any (standing) commitment, will be very
expensive decisions," he said, adding that extreme amendments to
the new charter should be avoided because a two-thirds vote by
the 155-member constitutional convention would be needed to
approve it.
"If two-thirds wanted a radical change, it would have to be
respected, but I do not think that is the case."
The timing of the constitutional rewrite coincides with a
global lag in demand brought on by the coronavirus pandemic that
will also weigh on investors' decisions, Hernández said, a
one-two punch that is likely to put the brakes on new projects
and proposals in Chile for an extended period.
Hernandez said clear rules around mining property and rights
- seen as critical to the development of Chile's metals industry
- must be maintained in the new constitution if the country is
to maintain its world-leading position.
He added that top miners recognized that some changes were
necessary to meet the demands of the people, but mining itself -
the country's top economic driver and a major source of
government tax income - must be protected.
"Chile cannot afford the luxury of dispensing with mining,"
Hernández said, defending the industry's record on hot-button
areas like water use. "Mining can be done while respecting the
environment."
(Reporting by Fabian Cambero; Writing by Dave Sherwood; Editing
by Adam Jourdan and Paul Simao)
