Despite an increased appetite in copper assets, the rate of new discoveries continues to be low, especially in top world’s producer Chile, where the bulk of exploration is in the hands of major miners, the head of the Chilean Mining Society (Sonami) said Monday.
Speaking on the sidelines of the 17th World’s Copper Conference being held this week in Santiago, Chile, Diego Hernández, President of Sonami and a former Codelco CEO, said that one of the main problems is that big companies already have in their hands most of the known assets available for exploration.
Additionally, he said, there is the issue of how cheap is to hold a property in Chile — only $2 per hectare for exploration projects and $5 p/h for those already in exploitation.
“Companies have no incentives to do anything with those assets, most of them brownfield projects, and that needs to change to both boost exploration in the country and let juniors in,” he told MINING.com.
Hernandez says one of the main modifications to current rules should be making it gradually more expensive for companies to hold on to their assets if they are not actively working on them.
“Juniors come to Chile and the big miners already own most of the available resources. They have to negotiate with them and also go through so much red tape that they end up giving up and looking for other jurisdictions,” he said.
In other places, such as in South Australia, companies have to demonstrate they are working on their properties or else risk losing them. Charles Moore, from the State’s government, warns that unfortunately there are always ways to trick the system. “Some companies do the very minimum just to keep ownership of their assets,” Moore, who is leading the development and implementation of South Australia’s copper strategy, told MINING.com.
Despite the difficulties juniors face in Chile, the country managed to attract 7.6% of the $600 million companies spent on exploration in 2017.
Most of that spending came from majors, including State-owned copper miner Codelco. Juniors, in turn, accounted for 8.8% of the total exploration carried out in the country last year.
Not all discoveries are financially viable. Some have to wait years until it makes sense to start developing them, which seems to be feeding an imminent supply crunch, experts attending the World’s Copper Conference said.
“The current rate of copper discoveries is unlikely to satisfy expected long-term demand. It’s urgent to change the way we do exploration and where we do it, including looking at drilling the seafloor,” José Pesce Rosenthal, VP Resource Development at Codelco, said.
In terms of applying new technologies, Angelo Peri, exploration manager at Sumitomo Metal Mining, said that many companies are using technology more to control staff than to actually improve drilling results.
“Some geologists are forced to report back three times a day. If they are up in the mountains, where there’s no cell signal or Internet, they have to come down every time in order to file a report. That’s an absolute waste of time and resources,” Peri said.
Hernández noted that Chile’s new President Sebastián Piñera hinted during his campaign he wanted to introduce some modifications to the mining code in order to speed up exploration pace. “I hope he does it and that he does it rather soon,” Hernández says. “Otherwise, Chile will miss the ‘cycle boat’ and will have to wait until the next century to develop those dormant assets.”