Chile urged to clarify regulations for cross-border mining projects

Chile should clarify regulations on mining projects straddling its borders with Argentina and Peru, according to an expert.

“The geographic and geodetic coordinates of the locations of this type of project could mean a dispute tomorrow,” Pía Moscoso, a mining law specialist at Universidad de Atacama, told a webinar hosted by Chile’s mining chamber and mining arbitration and mediation center Cammin.

In Chile, mining property is regulated by the mining code and the organic mining law.

Peru regulates ownership under a system of administrative authorizations and Argentina bases decisions on natural resource use, handled by the provinces, which “makes it necessary to establish interpretive criteria on the importance and prevalence of the legal assets at stake,” said Moscoso. This approach is crucial when addressing national security, particularly since the federal constitution prohibits the entrance of potentially dangerous and radioactive waste.

Chile modified the geographical measurement system of mining territories through changes in the mining code and outlawed mining concessions for liquid or gaseous hydrocarbons, lithium and deposits in areas deemed vital for national security. But the locations of these areas have not yet been established, Moscoso said.

Negotiating broader treaties is crucial because they extend sovereignty over natural resources, govern environmental damage or contractual breaches related to cross-border mining, health, labor safety, water use, or waste disposal and diminish the risks to binational mining projects when regulations change in one country, she added.

Moreover, such treaties could help mining development and integration, facilitate general cooperation, and joint mining equipment and services use for increased efficiency.

Chile and Argentina have a cross-border mining treaty dating from 1997, which was updated this year by presidents Gabriel Boric and Alberto Fernández to deepen the bilateral relationship. The treaty is currently covering the projects El Pachón, Filo del Sol, Los Azules, Pascua Lama and Vicuña.

In the case of Pascua Lama, which belongs to Canada’s Barrick Gold, Chile’s supreme court ratified this year its final closure for environmental reasons. But the project is mentioned in the company's 2Q22 financial results report on a map titled “growth projects continue to advance” so it is likely that the company will continue to reassess this project's potential.

Chile and Peru do not have a binational mining treaty, although diplomatic ties could help mining projects, according to Moscoso.

Data from each country’s geology and mining service should also be considered to anticipate – and prevent – disputes over sovereignty or natural resources, she said.

States may be reluctant to sign treaties that impose obligations related to water rights or waste disposal, however. 

Moscoso suggested protocols might be needed to complement international treaties and better align binational regulations, including operational dimensions, the labor regime, cross-border movement, and health and environmental protections. This way, mining-related controversies would be easier to avoid, she said.

Assets that could benefit from cross-border agreements are Minsur's Pucamarca gold project in Peru’s Tacna region. Pucamarca uses water from the Azufre River, which originates and terminates in northern Chile but passes through Peru.

On the Chilean-Argentine border, Canada’s NGEx Minerals is exploring copper, gold and silver deposits at Filo del Sol in Argentina’s San Juan province and at Los Helados in Atacama region.

The Josemaría project also straddles the border. Canada’s Lundin Mining is aspiring to create a copper mining district in the area.