Amendments to the Chilean mining legal framework in the last four decades have been infrequent and have not involved deep changes. However, this year Law No. 21,420 (the "Law") was enacted, containing the most important amendments to the Mining Code (the "Code") since it was enacted in 1983. You can find more information about the Law in an article published by Mondaq last month.

Although the mentioned amendments will not enter into force until February 2023, the Law was already reformed by Law No 21,462, enacted in July 2022. More importantly, the Government recently presented to the National Congress two bills of law: (i) Bill No 15,510-08, aimed at making deep amendments to the Law and, additionally, to other legal regulations related to the mining sector (the "Bill"); and (ii) Bill No 15,511-08, whose sole purpose is to postpone the entry into force of the mining-related provisions of the Law until January 1, 2024, and which is being discussed with urgency at the National Congress (the "Short Bill").

In this article, I first summarize the most important amendments introduced by the Bill and the Short Bill, and then, I combine the changes introduced by the Bill with those provisions of the Law that will remain unchanged in case the Bill is approved by the National Congress. The purpose is to present in a single place the amendments that both the Law and the Bill (which in turn reforms certain matters of the Law) will make to the mining legal framework.

I. SUMMARY OF THE MOST IMPORTANT AMENDMENTS INTRODUCED BY THE BILL

1. Right to extend the term of the exploration concession.

  • An extension of the term for an additional 4 years could be requested, provided that certain requirements are fulfilled.

2. Temporal restriction on applying for the same area of an extinct exploration concession.

  • Once the exploration concession has expired, the holder may not acquire, for a term of one year, a new exploration concession that includes in whole or in part the area covered by the exploration concession that has been extinguished.
  • Breaches of this provision will be punished with the loss of the preference to establish an exploitation concession in that area. Third parties that denounce these contraventions can apply for mining concessions in the area, which will be dated with the date of the denounced application.

3. Obligation to report by the holder of a mining concession.

  • Certain aspects regarding the obligation to submit geological information to the National Service of Geology and Mining (the "Service") are specified, but the more detailed regulation is left to the Regulation of the Mining Code (the "Regulation"), which should be amended accordingly. The fines applicable for non-fulfillment of this obligation are increased.
  • Reports to the Service containing information about advanced exploration will remain confidential for 3 years.

4. Future changes to the Datum.

  • The change to the SIRGAS datum was abolished (for now). Potential future changes on this matter shall be made by amending the Regulation accordingly.
  • The expiration of the mining concession, established as a sanction for failing to register the new mining coordinates in the Mining Register, as established by the Law, is abolished by the Bill.

5. Definition of mining works for the purpose of reducing the mining fees.

  • For the purposes of reducing the mining fees of exploitation concessions that are being worked, mining works will include advanced exploration in exploitation concessions.
  • Small-scale mining may benefit (but only once) from the reduced mining fees, even if they do not enter the Environmental Impact Assessment System (the "SEIA").

6. Entry into force of the amendments if the Bill is approved.

  • As a general rule, both the amendments made by the Bill and those made by the Law (which is reformed in turn by the Bill), will entry into force on January 1, 2024. Furthermore, for one time only, in the first year (2024), all mining concessionaires will pay the reduced mining fees.

II. EFFECTS OF THE APPROVAL OF THE SHORT BILL

  • The sole purpose of the Short Bill is to postpone the entry into force of the mining-related provisions of the Law until January 1, 2024. Therefore, if passed, the amendments made by the Law to the Code will enter into force on January 1, 2024. Among these amendments is the increase in the mining fees (i.e., the amount to be paid in 2023 will remain the same as currently provided in the Code).
  • Most likely, the Short Bill will be approved within a few weeks (and before the Bill). The Government introduced the Short Bill (notwithstanding the fact that the Bill also postponed the entry into force of the Law) because it is much shorter and simpler than the Bill; therefore, its approval will not require long discussions in the National Congress. Considering that mining companies are already making their budgets for the payment of mining fees in 2023, it is necessary to provide certainty regarding the date in which the mining fees will be increased.

III. AMENDMENTS INTRODUCED BY THE LAW AND THE BILL TO THE CODE AND TO OTHER MINING REGULATIONS

1. Adjustment to the term of the exploration concessions.

  • The term of the exploration concession is increased to 4 years. Once this term has expired, the concession will be extinguished, unless the mining concessionary requests an extension of the term for an additional 4 years.
  • Before requesting the mentioned extension, the mining concessionaire shall submit to the Service, a report with all the geological information obtained in the exploration works, to prove that they were effectively made. Alternatively, the mining concessionaire may submit to the Service proof that an Environmental Qualification Resolution ("RCA") was granted to the project, or that the project has been admitted and there is an ongoing process in the SEIA.
  • The holder of exploration concessions whose date of expiration is during 2024 may choose to extend the term for another 4 years. For this purpose, the concessions will be deemed to expire on December 31, 2024, and the extension right can be exercised by those concessionaires by submitting certain necessary information to the Service within the first semester of 2024. The Service shall issue a certificate, to be presented at the relevant court.
  • In the request of extension submitted to the court, the mining concessionaire may relinquish at least half of the surface of the original concession. It must be noted that this is a right of the concessionaire, not an obligation, as it is nowadays.

2. Temporary restriction on applying for the same area of an extinct exploration concession.

  • Once the exploration concession has expired, the holder may not acquire, for a term of 1 year since its expiration, by himself or through an intermediary (e.g., a relative or a related company), a new exploration concession that includes in whole or in part, the area covered by the original exploration concession that has been extinguished.
  • If the mining concessionaire does not respect this temporary restriction and requests a new exploration concession, the sanction will be the loss of the preference to establish an exploitation concession in that area.
  • A third party who denounces a contravention of the aforementioned restriction and obtains a favorable judicial decision, may file a petition for all or part of the area covered by the denounced application, benefiting from the day of the filing of the denounced application.

3. Obligation to report by the holder of a mining concession.

  • Both the exploration and the exploitation concessionaires shall submit a report with the geological information, in the way that will be outlined in the Regulation and fulfilling the requirements established therein.1
  • The holder of an exploration concession, once said concession has expired or the granting period has elapsed, must submit all the geological information that has been obtained from the exploration works to the Service. Furthermore, to request an extension of the term, a report with all the geological information obtained through the exploration works shall be submitted too.
  • The holder of an exploitation concession must send to the Service, every 2 years, all the geological information obtained from the geological exploration works carried out during that period.
  • If the exploration or exploitation concessionaire has carried out advanced exploration, the information submitted will be deemed as confidential by the Service, for a term of 3 years since its submission.
  • Failure to comply with this obligation to report will be sanctioned with a fine of up to 100 UTM2 on the concessionaire. Notwithstanding the fine, the Service is authorized to require such information anyway, and if the mining concessionaire does not comply, the mentioned fine can be doubled and, additionally, the benefit of a reduced mining fee will be denied if requested.

4. Amendments to exploitation concessions.

  • The applicant of an exploitation concession will have 30 days to request its survey (the current period is 20 days), counted between 90 and 120 days from the date on which the concession is requested to the court.
  • The obligation to carry out the survey (mensura) in the field is eliminated, as well as the placement of landmarks (hitos).
  • The deadline for submitting the map of the survey and the survey minutes to the court is extended from 10 to 15 months.

5. Future changes to the Datum.

  • The Bill establishes the procedure that must be followed in case of changes to the Datum. To make this kind of change, the Regulation will have to be amended.
  • If there is a change in the coordinates system, the new coordinates must be registered in the National Register of Mining Concessions, managed by the Service (i.e., it will not be necessary to file the changes at the Mining Register). In this case, the Service will publish the new coordinates. The holder of a concession will have 90 working days from said publication to challenge them or request their inclusion in the publication (in case they were not included). If there are no objections by the concessionaire within this period, the coordinates provided by the Service will be deemed accepted for all legal purposes.

6. Increase in the amount of mining fees and elimination of the distinction between metallic and non-metallic mining fees.

  • The new article 142 bis of the Code establishes an important increase in the amounts of mining fees.
  • Likewise, the distinction between metallic and non-metallic mining fees is eliminated, thus significantly increasing the amount of the latter.
  • The mining fee of the exploration concession increases from 1/50 to 3/50 of UTM per hectare annually.
  • With respect to exploitation concessions that do not demonstrate mining works, the amount will increase progressively from 4/10 of UTM per hectare for the first 5 years, up to 12 UTM per hectare from year 31 onwards. However, there are 3 scenarios in which a reduced mining fee could be requested.
    • The first scenario applies to exploitation concessions that demonstrate mining works (as defined below); in which case the mining fees will be 1/10 of UTM per hectare annually (the same amount that is currently in force).
    • For the purposes of demonstrating mining works, it will be deemed that a mining concession has begun work when activities are carried out in an exploitation concession or group of exploitation concessions3 that permanently allow the development of mining operations (as defined in the Mining Closure Law).4 Mining operations include advanced geological exploration, which for this purpose is when the exploration activities are subject to the SEIA, and the prospection, construction, exploitation, or benefit of minerals of a mineral establishment (faena minera as defined in the mentioned law). Furthermore, the term in which an approved mining closure plan is in force shall be considered as worked.
    • The second scenario applies to exploitation concessions that do not demonstrate mining works, but that are under environmental assessment or have an RCA. In this case, the amount of the mining fees will be 3/10 of UTM per hectare annually.
    • The third scenario, which applies mainly to small-scale mining, refers to concessions that should not enter to the SEIA, but that are requesting one of the permits established in Title XV of the Mining Safety Regulation (e.g., a permit to start the exploitation of a mine with an extraction of less than 5,000 tons per month). In this case the amount of the mining fees will be 1/10 of UTM per hectare annually. However, the benefit of reduced mining fees in this third scenario can only be granted once.
  • The increase in the mining fees will enter into force in January 2024 (at the same time that most of the amendments to the Code). It must be noted that, for one time only, in the first year (2024), all mining concessionaires will pay the reduced mining fees.

7. Limitation of possessory actions.

  • The Law limits the exercise of possessory actions by the mining concessionaire against the owner or holder of the surface land that covers all or part of its concession, only allowing their filing in cases in which the concessionaire proves that it has a mining easement or other in rem right encumbering the surface land.

8. Miscellaneous amendments made by the Bill.

  • The Service will be able to make the publications required by the Code through its website.
  • The person who approves the list of mining experts (peritos mensuradores) each year will be the National Director of the Service, with approval from the Ministry of Mining.

9. Entry into force of the Bill.

  • The Bill will enter in force, if approved by the Congress, upon publication in the Official Gazette; however, as a general rule, regarding the amendments to the Code, the Bill will enter into force on January 1, 20245. This rule encompasses both the provisions contained in the Bill and the ones outlined in the Law.
  • The amendments to the Code in connection with (i) the reform of the procedure to change the coordinates system;6 (ii) the faculty of the Service to make its publications on its website; and (iii) the change in the person who appoints the mining experts, will enter into force upon publication of the Bill (if approved) in the Official Gazette.
  • The amendment of (i) the Organic Constitutional Law of Mining Concessions, in connection with the term of the exploration concession; and (ii) the Decree Law 3,525, in connection with the abolishment of the current procedure to request basic geological information by the Service, will enter into force on January 1, 2024.
  • The new procedure to request a report of the geological information shall enter into force once the Regulation is amended regarding this matter.
  • The new procedure established to carry out the survey (mensura) will enter into force once the Regulation is amended in connection with the Datum of the coordinates.
  • The mining concessions that are in process of constitution at the time of entry into force of the Law, will follow the procedure that was in force at the time in which they were requested.
  • The deadline to amend the Regulation and other mining regulations that need to be amended as per the Bill and the Law was set for January 1, 2024.

Matters that need to be clarified.

  • The scope of "all the information" that the holder of a concession must report to the Service (see section III.3) is not clear if we just look at the provisions amended or introduced by the Law; however, in the preamble of the Bill, it is stated that the information to be submitted is basic geological information. To know the exact scope of the information to be reported, we will have to wait until the Regulation is amended to specify it.
  • It is not clear when the obligation to submit a report to the Service with the geological information (as stated in the Bill) will enter into force. It could be once the procedure for doing so is enacted in the Regulation (the deadline for this being January 1, 2024); however, the abolishment of the current procedure to request geological information will enter into force on January 1, 2024. Therefore, if the Regulation is amended before that date, we may have two procedures coexisting. If the wording of the Bill is not changed, the solution will probably be that the bill that changes the Regulation to establish the new procedure will state that this new procedure will enter into force on January 1, 2024 (same date of the mentioned abolishment of the current procedure).
  • A point that is not unclear but should include additional scenarios, is the definition of "mining operation", for the purpose of requesting the reduced mining fee for exploitation concessions. Indeed, the Bill makes a reference to the Mining Closure Law, which encompass in the definition of mining operations the exploration made in exploitation concessions, but only the ones that are subject to the SEIA as per Law No 19,300. Therefore, exploration that is not subject to the SEIA because it is not required to, such as early-stage exploration or exploration that does not involve the number of platforms required to be subject to the SEIA. This exclusion puts mining exploration at risk, as it will increase costs significantly, discouraging the exploration, especially by junior companies. And if there is something that the Chile mining sector needs is more greenfield exploration.

Footnotes

1. The regulation on this matter that will be included in the Regulation will abolish the existing procedure for the submission of basic geological exploration work contained in the Decree Law No. 3,525.

2. UTM = Monthly Tax Unit. As of December 2022, one UTM equals $61,157 Chilean pesos.

3. Exploitation concessions that will benefit from the reduced mining fees encompass all those exploitation concessions included in a mining productive unit and its possible expansions, according to the information that the concessionaire has reported to the Service. (Note: The concept of "mining productive unit" is not a concept that is defined in the Law or that is in common use in mining legislation).

4. When determining the progressive increase in the amount of the mining fees for exploitation concessions that are not being worked, the years in which the concession benefitted from a reduced mining fee shall not be counted.

5. Most of the amendments to the Code are contained, originally, in the Law, which in turn is reformed by the Bill. Among the changes made by the Bill to the Law is the date of entry into force of the latter, which was set out, as a general rule, for January 1, 2024.

6. This term refers to the new regulation for making amendments to the coordinate system, not to the actual amendments that could be made in the future to the coordinate system, which will enter in force once said amendment is presented, discussed, approved by the Congress, and enacted.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.