Days Before Key Vote, BHP Is Confident in Chile’s Mining Future

(Bloomberg) --

Just days before a vote that could change the ground rules for Chile's giant copper mines, the president of Minerals Americas at BHP Group is hopeful for the future of an industry that accounts for more than half the country's exports. 

The body charged with rewriting Chile's constitution will vote on a series of proposals within the next week that include articles that could severely restrict private ownership in mining. At stake are future investments in the world's largest copper reserves that are crucial for supplying the clean energy transition.

BHP, the biggest mining company, is hoping for a swift resolution of all the uncertainties to allow it to execute on “some really, really exciting plans for Chile,” Ragnar Udd said. They may include new processing facilities or even underground operations at the giant Escondida mine that BHP has run for 30 years. Without investments, Escondida ore quality will continue to decline.

“I'm actually really confident that Chile will be able to appreciate the huge opportunity that it has in front of it as a country,” Udd said in an interview. “We need to let the process resolve itself before we get too fixated one way or the other in terms of what the outcomes are.”

In the meantime, the Canadian executive who joined BHP 25 years ago and now resides in Chile, said the industry must “respect the voice of the people.” 

The process to rewrite the magna carta was born from a wave of protests that began in October 2019 over inequality in the Latin American nation. The Constitutional Convention has to present the new charter by July 4, which will then be put to a referendum two months later.

Among other possible projects cited by Udd was Cerro Colorado, BHP's smallest mine in Chile, where the company is looking at alternatives for water supply that could extend operations beyond the current permit expiry of end-2023. Udd sees “a potential future” for Cerro Colorado with “options that look like desalination.”

Beyond constitutional proposals that threaten private ownership, BHP is aligned with the push for higher environmental, social and governance standards, he said. BHP has moved forward its target for using 100% renewable power to 2023 and has already weaned its major mining operations off fresh water.   

“On balance, we fully agree with President Boric,” Udd said. “We think that dialog and collaboration are indispensable for building a better country for all.”

In the meantime, all eyes are on Saturday's vote on the floor of the constitutional convention. If the package of proposals is rejected in general, mining may be left out of the constitution entirely, leaving the industry exposed to new rules passed in congress. 

“A company like BHP of course we're going to have plans for all sorts of scenarios,” Udd said. “We've been here for 30 years. Our intent basically is to continue to invest in this country and we really do hope that the uncertainty gets resolved soon.”

©2022 Bloomberg L.P.