CHILE’S plans to nationalise its mining sector are causing ripples in the international mining community. According to UK research and broking firm SP Angel, investors are reducing their exposure to Chile and looking to alternative jurisdictions with less threat of resource nationalisation. African mining countries, particularly the Democratic Republic of Congo (DRC) and Zambia, are expected to benefit from this shift.
This development has long been predicted by billionaire mining entrepreneur Robert Friedland. In 2020, Friedland commented at the Mining Indaba in Cape Town that, ‘It’s absolutely silly to think that Chile is a safe place to mine and should have a three or four percent discount rate and, somehow, the Democratic Republic of Congo should have a 12 percent discount rate. There’s this fiction that somehow Africa is dangerous and it’s safe for industry to go to Chile or Peru. I challenge that. I would rather be in Africa – in the DRC.’
Friedland’s prediction seems to have come to fruition as Chilean President Gabriel Boric announced plans to create a state-owned lithium company, which would control the world’s largest lithium reserves, in a move that analysts are viewing as effective nationalisation of the sector. Friedland told Bloomberg that President Boric’s move amounted to nationalisation of Chile’s lithium sector and would make it harder to invest in Chile.
South American countries are the world’s major copper producers, but Bloomberg pointed out that Chile’s new policy comes at the same time as proposed royalty hikes in
the country, social unrest in Peru, and the threat of tax increases in Panama. These measures – being looked at by South American governments that are increasingly moving their political stances to the Left – could hit copper production in their countries.
Friedland has been harping on about the looming copper supply crunch for at least the past five years. At this year’s Mining Indaba, he highlighted the political unrest in Peru, saying it could derail global copper supply, commenting, ‘we need a way to work this out because if Peru melts down that will affect our attempts to keep the lights on globally.’ Friedland described renewable energy technology as ‘absurdly copper-intensive’ and quoted statistics predicting that some $700bn had to be invested in copper mining over the next 22 years to produce another 700mt of the metal – which is the same amount as the total mass of copper historically mined to date.
Friedland’s conclusion was that Africa was the place to go mining for copper, and he dramatically claimed the continent could ‘make or break’ the future evolution of the human species. It appears most international investors either have not grasped this or are ignoring the situation, judging by the lacklustre movements in copper mining equities and the copper price i
tself.
