Critical Review of the Mine Closure Policy in Chile
Martin Elton
Critical Review of the Mine Closure Policy in Chile
The Mine Closure Policy in Chile does not recognize the social impact that Mining, Oil and Gas Industries have in their surrounding communities. The only social feature in the law is a compulsory communication plan that companies should undertake along with the communities. This requirement, while necessary, is not enough to protect the people from possible negative effects associated to mine closure. The most important change that the policy should include is a mandatory consultation process with relevant stakeholders. There should be a review of the possible obligation to incorporate a retraining and demobilization programme for workers. Obligatory exit strategies for social programmes and a plan and budget for handover of any remaining monitoring actions related with resettlement should also be reviewed. Currently, there is no comprehensive mine closure legislation in Chile and for many years mining companies have worked under these conditions. A new policy project was presented in 2009 by the former President and has been reviewed and given back to the President for his approval. The initial message made an emphasis on the need of an industry embracing sustainability. However, there has been almost no mention of social impacts associated to closure in the debate. In fact, the Minister of Mining recently stated that “this is the project with the most important environmental effects that have ever been discussed in Chile”. Possibly, the law will be approved in 2011. Chilean economy is mostly based on mining activity. The mining industry is the largest contributor to the nation with 19.9% of the GDP and 65.3% of the exports. During the last two decades there have been only three mine closures, with one of them causing one of the biggest social problems of the country in recent years. After the closure of the Enacar coalmine in 1997, unemployment rates in Lota have remained as the highest in the country, almost doubling the average. Today, the people of Lota struggle with high indexes of poverty and other indirect problems. Probably, this impact could have been reduced with appropriate social measures in the closure strategy. It is possible that legislators trust on other regulations to minimise social risks, but the only mechanism in place that analyses social issues of mining projects is the Environmental Impact Assessment (EIA). EIAs are only conducted at the beginning of projects, which neglects the dynamic characteristic of social issues. Another reason for ignore these risks is that there is confidence on the industry’s social responsibility. Big corporations have actually developed best practices that can be considered superior compared to any current regulation. However, not all companies fall into this category. Furthermore, there is an increasing trend of big corporations selling operations to smaller companies two or three years before closing. These smaller corporations estimate a longer life and better value for the operation, and usually operate to meet the minimum regulation requirements. Most mining jurisdictions have a closure policy that includes financial assurance. However, just a few of them contain social risks mitigation. According to a UN report regarding mining policies, the social side is considered the weakest pillar in sustainability assessment. Many institutions like the World Bank and the International Council of Mining and Metals (ICMM) have published a series of reports making recommendations to include social issues. However, most countries have only made mandatory a consultation process of the closure plan. At least this shows a first recognition of the need of stakeholder engagement. Chile must follow this example in order to align the objectives of the company with those of the community. Still, social problems generated from mine closure need a more stringent regulation. The specific law should incorporate measures to minimise social risks, especially those related with unemployment, mass-migration and sudden disruption of particular development programmes. It would be the first time that the law recognises the socio-economic impacts of closing mines. Furthermore, it would shift the policy and the industry towards sustainability, which was one of the initial objectives back in 2009.