Overview of the Chilean Mining Industry

Mining is Chile’s principal economic activity, accounting for 11.7% of national GDP and 57% of total exports. Chile is a global leader in the production of critical minerals. In the case of copper, the country maintains a leading position at the global level: with annual production of approximately 5.5 million tonnes, Chile accounts for close to 24% of world output and has consistently positioned itself as the world’s largest producer. This role is further reinforced by its share of around 19% of global copper reserves, confirming that its primacy is not circumstantial but rather rests on a solid, long-term geological base, notwithstanding the progressive decline in ore grades.

In addition to the strength of copper, Chile also holds a prominent position in lithium mining, a mineral that is essential for the energy transition. Chile possesses 33.6% of global lithium reserves and ranks first in South America as a lithium producer, with 271,000 tonnes of lithium carbonate equivalent (LCE) produced in 2023, while globally it ranks second after Australia.

Furthermore, Chile plays a leading role in other critical minerals. This is the case with rhenium, where it is the world’s leading producer of primary rhenium, accounting for 50% of global production. A similar situation exists with molybdenum, for which Chile represents approximately 15% of world production.

The specialisation developed by Chile in both traditional metals and critical minerals enhances its strategic relevance in global markets for energy storage technologies and electric mobility. This has contributed to attracting mining investment by positioning the country as a jurisdiction with relative regulatory stability and a highly developed mining services and infrastructure market.

Based on official data from the Chilean Copper Commission (COCHILCO), over the next decade there is an investment portfolio of USD104.549 billion through 2034, of which 81% corresponds to copper brownfield projects – mainly expansions, optimisations and operational continuities. This composition reflects the maturity of the Chilean mining industry.

A notable trend is the development of mergers and acquisitions (M&A) involving large-scale mining projects, through which key alliances have been formed to advance major developments. Examples include:

• the proposed Anglo American–Teck merger (“AngloTeck”), aimed at creating a mega mining district by integrating the Quebrada Blanca and Collahuasi assets;
• the collaboration between Codelco and Anglo American for the joint development of the Andina–Los Bronces district;
• the partnership between Lundin Mining and BHP to develop the Josemaría project within the Vicuña District, a binational project spanning Argentina and Chile; and
• the agreement between SQM SA and Codelco, which will allow continuity of the lithium project located in Salar de Atacama – Chile’s most important lithium operation – through 2060.

Stabilisation of the Chilean Constitutional Regime

The Political Constitution of Chile enshrines robust protection for mining concession holders and establishes the foundations of the concession-based mining system. This constitutional framework has withstood two constituent processes aimed at replacing or substantially amending the Constitution, as well as two constitutional plebiscites with high levels of citizen participation that ultimately resulted in the rejection of the proposed replacement texts (September 2022 and December 2023), thereby leaving the 1980 Constitution in force. In this context, it can be argued that the Chilean constitutional mining regime currently enjoys a significant degree of democratic legitimation, notwithstanding the historically contested origins of the Constitution.

This does not preclude the fact that mining legislation has undergone – and continues to undergo – significant legal amendments in matters relating to mining concessions and economic public order. However, such reforms have not altered the essential structure of the mining regime, particularly the core guarantees that ensure a minimum level of regulatory stability for mining activities.

Current Regulatory Landscape

Over the past 10–15 years, there has been a sustained increase in regulatory density affecting all economic sectors, including the mining industry. This phenomenon has materialised through the progressive incorporation of rules of a diverse nature – criminal (eg, Law No 21,595 on Economic Crimes), tax (eg, Law No 21,591 establishing the Mining Royalty), environmental (eg, Law No 21,600 creating the Biodiversity and Protected Areas Service) and labour – as well as through norms of varying hierarchical rank. These include not only statutory and regulatory provisions, but also a growing body of infra-regulatory instruments, particularly guidelines, instructions and administrative criteria issued by the Environmental Assessment Service. Such developments have introduced new requirements, duties of diligence and regulatory burdens for the conduct of economic activities.

In addition, there has been an increasingly intensive and demanding application of pre-existing regulations, as evaluation and oversight standards have evolved significantly. Indeed, it can be stated with confidence that an Environmental Qualification Resolution (Resolución de Calificación Ambiental; RCA) or a mine operation method permit approved a decade ago differs substantially – in terms of requirements, conditions and level of scrutiny – from those approved today.

This process has not only expanded the scope of formal obligations borne by project proponents, but has also raised standards of control, traceability and risk management, shifting regulatory compliance from a predominantly reactive approach towards preventive models associated with strengthened corporate governance frameworks. This, in turn, has direct effects on companies’ internal organisation as well as on the legal assessment of the feasibility, continuity and compliance of the different stages of investment projects.

At the same time – and in a certain tension with the trend described above – there has been a parallel push towards regulatory simplification and the strengthening of legal certainty for investment projects. In this regard, Law No 21,770, the Framework Law on Sectoral Authorizations(Ley Marco de Autorizaciones Sectoriales; LMAS), constitutes the most significant milestone.

Nevertheless, the processing of a bill aimed at a structural reform of the Environmental Impact Assessment (EIA) System (“Environmental Assessment 2.0”) is still pending. Its stated objectives include, inter alia, enhancing legal certainty and reducing evaluation timelines. To that end, the bill proposes strengthening the role of the Environmental Assessment Service as administrator of the EIA system and restricting the involvement of politically driven bodies in decision-making concerning investment projects under review.

This reform, together with other initiatives required to promote investment, will need to be addressed by the new government administration taking office in March 2026, which, from a right-of-centre political orientation has expressed a programmatic commitment to reducing burdens associated with permitting (permisología), advancing regulatory simplification and reinforcing legal certainty within the regulatory system to promote investment.

Law No 21,770 (LMAS) as Applied to Mining

The LMAS has been recently enacted, and several key implementation milestones remain pending, upon which its overall effectiveness will largely depend. Among these is the classification of mining permits issued by the National Geology and Mining Service (Servicio Nacional de Geología y Minería; SERNAGEOMIN) – the authority responsible for mining safety oversight and for the regulation of mine closure and mining facilities – as well as permits granted by other agencies that issue authorisations relevant to mining activities. Such classification is necessary to determine the application of alternative enabling techniques as an alternative to administrative authorisations, as well as the category of administrative silence applicable to each permit, including procedural deadlines and whether positive or negative silence applies.

In any event, permits applicable to mining projects will be governed by a new set of minimum procedural rules and principles aimed at facilitating more expeditious processing, based on clearer and more determinate criteria, together with a dedicated state institutional framework tasked with overseeing compliance with these standards.

In addition, three further aspects of the LMAS are particularly relevant in the mining context.

• Tailings storage facilities and mining pipelines are exempted from the hydraulic works construction permit provided for in Article 294 of the Water Code. As a result, the duplication of permits that previously arose in conjunction with Supreme Decree No 248/2006, which regulates tailings deposits and falls under the authority of SERNAGEOMIN, is resolved, with the latter remaining as the applicable regulatory framework.
• Fines for violations of mining safety regulations are increased to up to 100 annual tax units (unidad tributaria anual; UTA (approximately USD71,000)), representing a substantial increase in the maximum level of applicable penalties.
• Amendments are introduced to Law No 20,551 on mine closure and mining installations. The sectoral permit for the mine closure plan is decoupled from the environmental permit, by requiring an environmental qualification resolution (resolución de calificación ambiental; RCA) only where such approval exists. In addition, within the context of sanctioning procedures, the amendments broaden the scope for the application of the principle of proportionality in the imposition of coercive fines (daily fines for ongoing non-compliance) for breaches of the law or of the approved closure plan, among other modifications.

Recent Amendments to the Mining Code

The Mining Code has recently undergone the most significant amendments in its 40 years of existence, through Law Nos 21,420 and 21,649, although these reforms did not affect the concession system in its essential structure. The former was enacted with a clear fiscal incentive, aimed at increasing public revenue to finance pensions, while the latter sought to address certain shortcomings identified in the former. The main amendments are as follows.

Introduction of an incremental patent system for “non-working” concessions

The reform established a regime of progressive mining patents linked to the absence of effective mining work, based on the identification of a structural gap in the mining concession system that allowed idle concessions to be held indefinitely at a low cost. Such concessions, in addition to failing to generate productive activity, hindered third-party access to mining property and the development of exploration, thereby undermining the economic function of the concession regime. In this context, the reform provides that maintaining the patent at its base rate requires annual certification of the performance of effective mining works, in accordance with the statutory criteria. Failing such certification, the concessionaire becomes subject to an incremental patent system, under which the amount increases progressively in five-year tranches, reaching its maximum after 30 years and thereafter stabilising in accordance with the statutory scale.

Alongside the above, the reform reduced the need for non-mining project developers to obtain mining concessions merely as a means of protecting their projects, by restricting a judicial remedy previously available to concessionaires that had been abusively used to suspend the development of projects through court proceedings (denuncia de obra nueva).

This design pursues a dual objective: to discourage mining speculation and to promote the effective use of mining concessions, thereby reinforcing their instrumental role in the development of mining activity and in the generation of public revenue.

This legislation is currently in its second year of implementation, making it premature to draw definitive conclusions as to its effectiveness, which will largely depend on its implementation by SERNAGEOMIN. In this regard, the authority faces the challenge of issuing clear guidance to mining concessionaires regarding the scope of the statutory definitions of effective mining work.

Prohibition of the renewal of exploration concessions

The renewal of exploration concessions was prohibited, although their term of validity was extended, and the conditions for accessing an extension were amended. Previously, areas encumbered by exploration concessions were often maintained through the continuous constitution of new exploration concessions as the prior ones expired. Following the reform, this practice is no longer permitted, as a public action was established to challenge such conduct, and upon proof thereof, the mining rights are forfeited. Notwithstanding the foregoing, the term of exploration concessions was extended from two to four years, and they may be extended for an additional four years if the holder certifies the performance of exploration works by submitting geological information or alternatively demonstrates that an environmental assessment procedure is at least underway.

Strengthening of SIGEX

The Exploration Geological Information System (Sistema de Información Geológica de Exploración; SIGEX) is a public electronic platform hosted on the website of SERNAGEOMIN, through which geological information generated by exploration projects is made available, with the aim of ensuring that such information – potentially useful to other explorers – is preserved and accessible. Prior to the reform, the Mining Code only required the submission of basic geological information upon request by the authority. Following the amendments, reporting becomes mandatory after certain time periods, depending on whether the concession is for exploration or exploitation, and the explorer must submit all geological information, without prejudice to the possibility of requesting confidentiality, which may be granted for up to four years.

Change of co-ordinate reference datum (pending implementation)

Finally, a significant amendment – still pending implementation – lays the groundwork for a change in the reference datum used for the co-ordinates associated with mining concessions. Mining concessions are currently tied to the Provisional South American Datum 1956 (PSAD56) or South American Datum 1969 (SAD69), which isolates them from other state databases that operate under the Geocentric Reference System for the Americas (Sistema de Referencia Geocéntrico para las Américas; SIRGAS) or the World Geodetic System 1984 (WGS84). The government has been working on this co-ordinate system transition, which requires the adoption of specific procedures and regulations. This process has generated considerable uncertainty within the industry and among stakeholders.

National Lithium Strategy: Implementation and Outlook

It is important to note that, given the non-concessionable nature of lithium – a legal regime distinct from that applicable to copper, molybdenum, gold and most mineral substances in Chile – the mining industry associated with this resource is subject to a special statutory framework that must be analysed separately.

Since approximately 2012, the Chilean state has promoted various tender processes and defined public policies aimed at improving the development and exploitation of this strategic resource for the energy transition; however, these initiatives have generally failed to materialise effectively. Notwithstanding the foregoing, the National Lithium Strategy (NLS), adopted in 2023, established guidelines, objectives and concrete actions that have begun to generate meaningful progress in this area.

Specifically, the NLS enabled multiple pathways for lithium project development, distinguishing between those oriented towards a leading role for state-owned enterprises and those allowing for the entry of new actors and private investment through public-private partnership schemes.

In the first case, relevant public-private partnerships have been implemented. Thus, Codelco developed a lithium project in Salar de Maricunga through a strategic partnership with Rio Tinto. Similarly, ENAMI, within the framework of its Altoandinos salt flats project, conducted a national and international call for proposals that culminated in the selection of the same company as its strategic partner. Both projects are expected to strengthen Chile’s position in the global development of new lithium projects.

In parallel, the NLS also created avenues for the development of private initiatives. To this end, a national and international request for information (RFI) was conducted to identify areas with high potential, as well as companies and investors interested in participating in the lithium industry.

As a result of this process, 12 areas with high economic interest for lithium exploitation were identified. These areas are to be enabled through special lithium operation contracts (contratos especiales de operación de litio; CEOL), the legal instrument through which the public-private partnerships required for the development of such projects are structured.

To date, four simplified procedures aimed at granting CEOLs have been opened for interested parties that meet the established requirements, including experience in the mining industry, sufficient financial solvency and ownership of at least 80% of the mining concessions covering the area of interest. Through these procedures, the entry of new participants into the lithium market has been facilitated, and it is estimated that the first CEOLs arising from these processes could be awarded during the first quarter of 2026.

Finally, one of the most significant milestones of 2025 was the execution of the agreement between SQM and Codelco, which provided continuity and a long-term horizon for the country’s most important lithium project. This agreement will allow the operation of the so-called Salar Futuro project through 2060, with an estimated annual production of between 280,000 and 300,000 tonnes of LCE.

Binational Mining Treaty With Argentina

The Treaty on Mining Integration and Complementation between Chile and Argentina, signed on 29 December 1997 and in force since 2000, constitutes a strategic and exceptional bilateral legal instrument aimed at facilitating the development of mining activities in border areas through the establishment of a special regime of co-operation and sectoral integration.

Its primary purpose is to provide legal certainty and regulatory stability for cross-border mining investments, through specific rules designed to enable the implementation of binational projects. To this end, the Treaty regulates key matters related to the movement of goods, personnel, services and associated infrastructure, and promotes the co-ordination of administrative, customs, tax and sectoral authorities of both states, thereby ensuring a sufficient degree of regulatory compatibility for projects developed under its framework. From this perspective, the Treaty opens significant opportunities for binational mining integration, as it allows for the optimisation of contiguous geological resources and enhances project competitiveness through the development of shared cross-border infrastructure, particularly with respect to roads and mountain passes, energy, logistics and port access, and – at a more advanced stage – even the potential use of seawater as a source for project development.

In the recent context, characterised by processes of integration and consolidation among major players in the mining industry, this instrument has consolidated itself as a suitable legal framework for structuring large-scale corporate alliances, as evidenced by the partnership between BHP and Lundin Mining in the development of the Vicuña District and the Filo del Sol project.

Nevertheless, the effective materialisation of the benefits associated with the Treaty requires addressing significant regulatory and institutional challenges, particularly with regard to the harmonisation and co-ordination of sectoral permitting procedures, the alignment of environmental standards, and the design of a robust binational governance framework that incorporates environmental and social sustainability criteria as a cross-cutting requirement, which is essential to ensure the legitimacy and long-term viability of this type of development.