MAC: Mines and Communities

Chile: Partnerships between small miners not feasible, says sector president

Published by MAC on 2011-01-10
Source: Business News Americas (2010-12-28)

Officially the main role of Chile's ENAMI is to "promote [the country's] small and midsize mining sector by carrying out toll milling and processing and granting credit at favorable rates to companies".

This ranks ENAMI as one of the few state-owned mineral enterprises anywhere, whose mandate is to support smallscale miners, rather than compete - and often end up fighting - with them. (As for example has occurred in recent years between Bolivia's state-owned Comibol and groups of small mineworkers. See: Bolivian Mining Groups Declare Truce

According to the following news story, ENAMI's CEO is now offering the country's 80 "small producers" of copper and gold the opportunity to increase their incomes by owning their own ore-crushing plants (although it's not clear whether these would be funded by the state).

However, the president of the Chile small miners' association isn't keen on the idea, citing difficulties in transporting ore from widely-dispersed mining operations to such plants.

Editorial note: Benguet Corporation, one of the Philippines' biggest gold miners, has long had an ambivalent relationship with Indigenous artisanal miners in its concession areas. At its Acupan mine in Benguet province, the company officially shares output with these contracted mineworkers. However, value is added to the company rather than the mineworker organisations, since the ore is crushed and processed at the company's own facilities.

In an address in March 2010 to the Asia Mining Congress, Horacio C Ramos, head of the country's Department of Environment and Natural Resources, launched his "Revitalization Program for the Philippines Mining Industry".

Although this included the aim of developing "community-based supplier industries/services" the program made no reference to the role of small scale miners in the country (except to point out that figures from the sector were unavailable).

ENGLISH

Partnerships between small miners not feasible, says sector expert - Chile

By Victor Henriquez

Business News Americas

28 December 2010

Partnerships between Chile's small miners to ensure sustainability, as has been proposed by state minerals company Enami, are not feasible due to the nature of the activity, Taltal small miners association president Ivan Pavletic told BNamericas.

Earlier this year, Enami CEO William Diaz told BNamericas that the country's small sized mining is not sustainable as it is too vulnerable to volatile metals prices. The creation of partnerships between these small producers is one of the solutions, according to Diaz.

"If you compare a company that mines 50t/m of copper at a cost of US$2.66/lb and a group of miners working together to produce 1,000t/m of copper at a cost of US$1.9/lb, you can see how it makes all the difference," Diaz previously said.

"I think partnerships between small producers is an option that needs to be seriously evaluated, but I think it's hard to achieve as small producers are not located close enough to each other to make these associations sustainable," Pavletic said.

Currently, each small producer mines copper or gold ore, which is then transported in trucks to be sold to Enami. The state company crushes the ore and processes it into copper concentrates or copper cathodes at its own facilities.

However, many of these mines are located far away from each other. "As a result, cost reduction from joint supply purchases or joint transportation is not that easy to achieve," Pavletic said.

"Taltal has close to 80 small producers operating with a production capacity of close to 45,000t/y of copper. Even if all of them work together, the scale of the operation is still not large enough to ensure better prices for supplies or transportation," he added.

Own Facilities

Another way to grant sustainability to the sector is for small producers to have their own crushing facilities to add value to their production before selling to Enami, Diaz was reported as saying by local press.

However, distance remains an obstacle, according to Pavletic. "The possibility of having our own crushing plants would only be feasible if they can be installed on Enami's land," Pavletic said.

Countrywide, the small mining sector produces 100,000t/y of minerals, with copper representing 84.6% and gold 15.4% of total production, according to figures from private miners association Sonami.

Enami's principal role is to promote Chile's small and mid-size mining sector by drawing up development policies and carrying out toll milling and processing. The company is currently drawing up policies and tools to promote partnerships among small producers.

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