Mining in Chile: Insight into one of the top countries for Australian METS
South America is a very popular destination for Australian miners and METS, with Chile currently boasting the highest number of companies present. Around 30 Australian junior miners have an operation or project over there, and approximately 60 Australian METS already export their equipment, technology and services to the country.
• Largest producer of fine copper in the world, with over one third of global production
• Over 100 million tonnes of fine copper is estimated in reserves in Chile, representing 30 percent of global reserves
• Currently contribute more than 50 percent of the world’s lithium
• US$104 billion investment pipeline for mining projects by 2021
Despite Chile being rich in copper and lithium, it does not come without its challenges. A major one lies in the market domination by a few companies -- 90 percent of production is owned by just 10 companies, with 30 percent coming from Codelco. Naturally, if you can break into one of these companies, enormous opportunities exist, but doing that first deal can be difficult. Chile also faces inconsistent and also declining ore grades, and some of their open pit operations are now quite dated. Water (as in many mining locations) is a scarcity and therefore energy costs are at a premium. As with many first world countries, operational costs continue to escalate and there is a high push for sustainable mining operations by local communities and government bodies across most Latin American countries.
However, these challenges for miners provide increasing opportunities for Australian METS. With the high energy costs and water scarcity comes the need for energy efficient solutions, water treatment and recycling or desalination plants. The increasing operational costs have had the same effect on Chilean miners as here in Australia, meaning the need to improve productivity is critical. Automation, process control, smart mining technologies, training and processing equipment upgrades are all required. Also, with the push for sustainability has come a tightening of regulations and scrutiny around mine closure. Tailings management and environmental monitoring solutions are also therefore a focus for Chilean miners. Australia remains the toughest mining nation when it comes to environmental legislation, positioning Australian METS as world experts in the area.
Shannon Powell, Senior Trade Commissioner, Andean LATAM at Austrade commented: “Australian METS are consistently seen as the global leaders in Chile - on price, technology and productivity. Despite the tough conditions, we are well positioned to continue to grow our market share using our competitive advantages. We strongly encourage METS companies to join the Austmine mission to increase their knowledge about the market and opportunities for entry or expansion.”
Chile’s largest mining exhibition and congress, EXPOMIN, takes place on 25 – 29 April 2016 in Santiago. The following week, Austmine plans to lead a trade mission to key mining operations including Escondida, Chuquicamata, Los Bronces in Chile, to meet with senior executives in companies such as BHP Billiton, Rio Tinto, Codelco and Anglo American in order to address their supplier needs and wants.
British Lithium Pressured Due To Calls for Electric Cars
The British demand for lithium is set to reach 75,000 tonnes by 2035 as the government works towards their ban on the sale of high-polluting diesel and petrol vehicles within the UK. This comes as automakers worldwide continue to insist on the benefits electric vehicles will have on slowing the rate of climate change.
It is estimated that the UK will require 50,000-60,000 MT of lithium carbonate a year by 2035 for battery production to satisfy government needs. This is assuming production remains at 1.2 million vehicles per year, and the amount of lithium required does not increase.
British Lithium, which hopes to begin constructing a quarry to produce 20,000 MT of lithium carbonate a year in a $400 million investment, are not without competitors, both within the UK and abroad.
Competition For Lithium Rises In Europe
After only five years after its initial launch, Cornish Lithium is setting its sights on becoming a UK powerhouse in mining lithium, aiming to begin commercial production in under four years. Jeremy Wrathall, a former investment banker and current managing director of Cornish Lithium, had the future in mind when founding the company.
“In 2016, I started to think about the electric vehicle revolution and what that would mean for metal demand, and I started to think about lithium,” he said in an interview with AFP. “A friend of mine mentioned lithium being identified in Cornwall, and I just wondered if that was a sort of unrecognised thing in the UK.”
Lithium was first discovered in Cornwall around 1864 and has not been mined again since 1914 when it was produced as an ingredient in fireworks. Now, however, Cornish Lithium is reportedly in the testing stage to see if the metal can be produced commercially to meet the growing demand required for the electric car sector.
Despite Cornwall’s close historic ties to mining lithium, Wrathall insists that the project is purely commercial.
Cornish Mining Revival For Lithium Production
“It’s not a mission that drives me to the point of being emotional or romantic,” he says. “It’s vitally important that we do get this technology otherwise Europe has got no lithium supply.”
The European Commission has also stated their goal to end the sale of new petrol and diesel cars by 2035 to aid the environment. That being said, the majority of lithium extraction currently relies on power provided by environmentally damaging fossil fuels─a slight contradiction.
Alex Keynes, from the Brussels-based lobby group Transport & Environment, is adamant that mining for lithium should be done sustainably.
“Our view is that medium-to-long term, the majority of materials including lithium should come from efficient and clean recycling.
“Europe from a strategic point of view should be looking at securing its own supply of lithium.”
Despite growing competition from abroad, British Lithium Chairman, Roderick Smith, continues to place importance on the mining of lithium within the UK.
“Imagine what the UK economy would look like if we lost our automotive industry,” Smith says. “The stakes are high for the UK.”
Smith expects the UK to compete with other European countries to secure a lithium battery plant in the near future.