Private Mining: The engine of Chile's growth

The 1981 Mining Law unlocked the vast mineral “treasure” that God had buried deep beneath Chilean soil, allowing it to be discovered and developed.

What emerged was a modern private mining sector that the Chile of the 1960s would scarcely recognize.

The shift is striking: in 1981 the state produced 85% of the country’s copper; today private companies account for 76% (4.2 million out of a total 5.5 million tonnes a year).

Even Óscar Guillermo Garretón, a socialist economist, concedes the point: “Without a single protest, the entire country has quietly agreed that copper production should be overwhelmingly private—and it is telling that the whole left has gone along with this silent national consensus.”

In effect, without touching state ownership of Codelco, the Mining Law achieved “the privatization of copper.”

This extraordinary private-mining boom has set in motion a cascade of changes that are transforming the country as a whole.

Mining has been at the forefront of technological adoption, and those innovations are now spilling over into other sectors. Both state and private operations have pioneered automation and robotics—driverless haul trucks guided by pre-programmed software, for instance. Today many tasks are controlled from remote operation centers in Santiago, more than 1,000 km from the pits. Biotechnology has introduced bacteria that extract copper from low-grade ore through bioleaching, using six times less water and three times less energy. All of this explodes the old myth that mining contributes little in the way of technology or value added.

By its very nature, mining decentralizes economic activity. With the sole exception of Los Bronces high above Santiago, the big deposits lie far from the capital—unlike many of Chile’s other leading industries. The biggest beneficiary has been the long-neglected north. A region once so poor that governments tried to prop it up with artificial industries (such as assembling bad, overpriced cars in Arica) has become an engine of national growth. Antofagasta is now the undisputed world capital of mining and boasts by far the highest per capita GDP in the country, at around $50,000.

Mining has also forged powerful up and downstream economic activities. Private ports dominate the north; inland, the industry has spurred transport, catering, high-quality worker camps, explosives, air services, and much more—creating wealth, jobs, and stability for hundreds of thousands of Chileans. Enaex, working with the Stanford Research Institute and other research bodies, has become a global leader in robots that manufacture and place explosives inside mines, boosting productivity and safety.

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In 1981 just 100,000 passengers a year flew in or out of Antofagasta; by 2024 that figure had risen eighteen-fold to 1.8 million. Mining products now account for 55% of Chile’s seaborne exports.

Modernization has brought first-world equipment as well—the Wall Street Journal singled out the T-180 drill rig for its starring role in the dramatic rescue of the 33 trapped miners at San José in 2010.

Two linkages deserve particular mention because they have supercharged sectors critical to the entire country: water and energy.

BHP has poured $3.5 billion into seawater desalination. At Antofagasta Minerals’ Centinela mine, half the process water now arrives through a 145 km aqueduct across the driest desert on earth; the ripple effect has pushed the city of Antofagasta to 85% desalinated supply, and by 2026 it will be the first in Latin America to rely 100% on seawater for its residents.

Mining’s demand for power, meanwhile, has catalyzed renewable-energy projects, especially in the Atacama Desert—the sunniest place on the planet and home to the world’s largest copper and lithium operations. El Romero Solar, with 776,000 panels spread over 280 hectares and a capacity of 200 MW, is Latin America’s biggest photovoltaic plant.

Surpluses from these renewable projects (which already generate 42% of Chile’s electricity) also justified linking the northern and central grids with 1,355 high-voltage towers capable of moving 1,500 MW.

One anomaly remains: Codelco is still 100% state-owned. The 1981 decision to open the door to private mining was the right one, but Codelco now produces only 24% of national output and generates just 17% of Chile’s export earnings. A partial privatization that brings in private capital, management, and oversight would seem eminently sensible.

On the horizon looms a new mining supercycle. The US Geological Survey credits Chile with 40% of global lithium reserves and 30% of copper reserves—first place in both.

Copper has already ridden the wave of clean-energy adoption as a vital input for electric vehicles (which need four times as much—80 kg versus 20 kg in a conventional car). By 2030 some 25 million EVs are expected on the roads, driving lithium demand worth roughly $15 billion.

From here on, copper will be lifted by two additional megatrends: the explosion of artificial intelligence, which requires power-hungry data centers worldwide, and the sharp rise in global defense spending—from today’s 2.5% of GDP toward 4%, a level not seen since the Cold War.

To seize this colossal opportunity, Chile needs to rediscover with vigor the public policies that built its economic success in the first place.