Chile Finally Gets Tough on Mining Industry

New Environment Superintendent cracking down on domestic and foreign operations

Chile’s new office of the Environment Superintendent was only five months old when, last May, it took the country by surprise: It slammed the largest gold-mining company in the world, the Canada-based Barrick Gold Corporation, with a $16 million fine for water pollution and other environmental violations at its open-pit gold mine Pascua Lama. In response, Barrick Gold indefinitely suspended operations at the mine, which had cost $5 billion to construct. “Companies didn’t realize that the Superintendent was going to be so rigorous in its inspections,” says Ana Lya Uriarte, who was Chile’s environment minister when the law creating the Environment Superintendent was passed.

photo of an enormous open pit mineby James Byrum, on FlickrCodelco’s Chuquicamata Mine, near Calama, Antofagasta Region, Chile

This month, the country’s equally young Environmental Court of Santiago caused another big sensation. The court was initially put in place to protect companies, which wanted a way to challenge the fines imposed by the superintendent. But, instead of protecting Barrick Gold, the court ruled that the $16 million fine was inadequate given the magnitude of the company’s environmental violations. It ordered the superintendent to review its process and return to the mine for another inspection.

The tough attitude toward the mining industry marks a major departure from the past. The Chilean government has long prioritized economic growth above environmental protection, especially since the Pinochet dictatorship’s neoliberal reforms. Now, it seems the government is finally cracking down on the environmental damage and public health risks associated with the country’s mining industry.

Mining is a bedrock of the Chilean economy. Copper alone represents one third of the country’s exports. Before the creation of the Environment Superintendent, mining companies operated with very little regard for the environment, and the government didn’t intervene much. “Everyone did whatever they wanted,” says Fernando Dougnac, a Chilean environmental lawyer. There was an agency responsible for making companies toe the line: the National Environment Commission, or CONAMA, which was created in 1997. But CONAMA had limited power to investigate environmental violations, and the maximum fine it could levy was only about $3,000. Now, the much stronger Environment Superintendent can levy a maximum fine of about $16 million for each infraction it finds.

The more rigorous investigations and higher fines aren’t intended to be punitive, says former environment minister Uriarte. Instead, the hope is that “the fines discourage companies [from breaking the law in the first place]. That is to say, when the company weighs the cost of breaking the law, it should decide that, economically speaking, it’s better to comply.” For example, she says, if a particle filter for a chimney costs $3 million, and the fine for not having a filter is $5 million or $7 million or $10 million, it’s better to comply with the regulation.

Since it came into being a year ago, the superintendent has been busy. In 2012, the office conducted 7,800 inspections and follow-ups, and it fined 70 companies for environmental violations. In the mining sector alone, the superintendent investigated and fined not only Barrick Gold for water pollution in Pascua Lama but also the British company Anglo American for deforestation at its El Soldado copper mine and, this February, the Chilean company Antofagasta Minerals for the destruction of an archaeological site near its Los Pelambres copper mine. It also sought twice to close the Ventanas copper mine owned by the Chilean state company Codelco, alleging that the mine’s emissions represent an imminent risk to the environment and to the health of those living near the mine. The Environmental Court of Santiago struck down that measure both times. Codelco instead agreed to pay $320,000 to plaintiffs in a pollution suit, and it promised to invest more in environmental mitigation and to construct a new school for the nearby community, Puchuncaví, farther from the mine.

The Environment Superintendent has certainly had a bold start, says Flavia Liberona, of the environmental NGO Fundación Terram, but it simply doesn’t have the resources to carry out its mandate. “It’s clear that the superintendent is trying to conduct inspections and has mechanisms in place to do so,” she says, “but it doesn’t have the human and financial resources to be more effective.” She recommends more personnel, offices all over the country instead of just in Santiago, and a bigger budget. Michelle Bachelet, who returned to the Chilean presidency on March 11, made a campaign promise to set aside more resources for the Environment Superintendent. “We hope she follows through,” Liberona says.

Yes, the superintendent could use more manpower, environmental lawyer Dougnac says. But that’s just a political fight. In his view, two much bigger problems exist. First, many companies that have environmental permits should never have gotten them in the first place, and levying a fine or even shutting down a mine can never reverse the damage. Barrick Gold’s mine at Pascua Lama is a prime example of this. According to Dougnac: “During the exploration period, the traffic of cars, trucks, vans, etcetera in the area where the glaciers are located produced so much dust that 60 percent of the glaciers melted.” Unfortunately, he adds, “the damage has already been done. There’s no possible fine that will make the glaciers come back. So there was an enormous irresponsibility on the part of the authorities that gave [Barrick Gold] environmental permits.” Without strengthening the process for obtaining such permits, Dougnac says, Chile can never hope to protect the environment.

The second sticking point, for Dougnac, is the fact that a state-run company, Codelco, owns about a third of the country’s copper mines. “The state should by no means also be a company,” he argues, because then “it plays a double role: On the one hand, it’s regulated, and, on the other, it’s the regulator.”

Former minister Uriarte disagrees. She says the Environment Superintendent has proved that it’s independent by trying to shut down Codelco’s Ventanas mine. Furthermore, copper is a nationally important industry, and the state therefore must own at least a portion of it.

But, Uriarte says, wherever you stand on whether the Chilean government should own all, none, or part of the country’s copper, there is a lesson to take from Chile’s new environmental agencies – one from which Latin America’s other countries with significant mining industries could learn. “The Chilean model,” with its independence from both those who give out environmental permits and from politicians and its “counterweight in environmental courts, is a design that can contribute to environmental compliance.”

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