Sernageomin overwhelmed

Regardless of the Government of the day, modernization of the National Geology and Mining Service, (Sernageomin), has been planned, forecast and reported for many years, principally with regard to separating the two sectors: Geology and Mining. However, those interested continue to hear only announcements, especially regarding budget problems.

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Regardless of the Government of the day, modernization of the National Geology and Mining Service, (Sernageomin), has been planned, forecast and reported for many years, principally with regard to separating the two sectors: Geology and Mining. However, those interested continue to hear only announcements, especially regarding budget problems.

The public report in May 2018 indicated that «The National Geology Plan completed its seventh operating year in 2017, with a budget of CLP$5.1B and expenditure of CLP$5.04B, which was spent on increasing the mapping of basic geology, geophysics and geochemistry in the first stage covering the area between parallels 18° to 30°S, being the Arica and Parinacota, Tarapacá, Antofagasta, Atacama and Coquimbo regions».

Meanwhile, five of the six planned basic geology charts have been published, on a scale of 1:100,000, increasing the surface area by 11,006 km². It was reported that «The chart for Pedro de Valdivia, Antofagasta Region, did not achieve the required development, so the plan was amended and its publication postponed.»

Therefore, an indicator of 71.3% (95.51/134) was achieved by December 31, 2017, which is geographically equivalent to 195,266 km2 in the 31 area between 18º to 30ºS. Progress was made with seven basic geological maps ready for publishing (Putre, Lago ChungaraParinacota, Guanillos-Llamaras del Norte, Salar de Llamaras, Calama, Sierra Gorda and Nevados del Jotabeche) and surveying is complete for five charts (Nevados Ojos del Salado comprising two IGM charts, Quehuita, Salar de Punta Negra and Salar de Aguas Calientes).

It was announced during 2018 that seven new basic geological charts of Chile would be published, covering an area of approximately 16,336 km2 in the Arica and Parinacota, Tarapacá, Antofagasta and Atacama regions. It was reported that scheduling the survey of basic geological information south of 30°S needs to begin, as this is the second stage of this program.

Mr. Mario Pereira was formerly National Director of Sernageomin, and is currently Chairman of the Chilean Geologists Association. He remarked on the progress made in modernizing the Service, particularly reducing the fatal accidents in the mining industry between 2014 and 2017 by 48%, from 27 deaths to 14.

This figure should continue to decline, while risk prevention campaigns are maintained. Mr. Pereira said «Progress and improvements to regulations now include a new mining safety instrument and we have progressed with a protocol for mining emergencies, such as the emergencies at the San José mine in Copiapó and the Cerro Bayo mine in Chile Chico. We are pleased that this protocol came into effect in April this year. We migrated the service to a ISO 9001:2015 Quality Management system, which incorporates the risk dimension and knowledge management, which is essential to continually improve Sernageomin’s services and those of any institution.»

Mr. Pereira remarked on the modernization required and said that any transformation of an institution which will result in strengthening it and redefining its mission, requires additional resources to implement.

He welcomed the international prestige enjoyed by Sernageomin, despite its need for strengthening, «Through continuous improvement processes that address staff skills and laboratory equipment and certification. Particularly the dispersion of infrastructure which negatively affects the coordination and efficiency of procedures.»

He denied that Sernageomin’s failings may be an impediment to attracting mining investors. He said «Attracting more mining investment is a systemic issue relating to various variables, such as the price of metals, internal political stability, legal certainty, a geological environment conducive to finding mineral deposits, geological knowledge of the country, the numerous regulations, in particular environmental regulations, the number of permits required, and other variables. The evaluation efficiency and timeliness of projects submitted for authorization are also important variables, which is where Sernageomin can contribute to reducing evaluation times, but this requires the right quantity and quality of staff.»

When asked what a Sernageomin 3.0 would look like, Mr. Pereira said that Chile needs two institutions 3.0, a National Geology Service and a National Mining Service.

«The «mission» of Sernageomin clearly indicates that this institution contains two agencies. These areas are clearly distinguished within the institution and have different purposes and methods.»

He said that a National Mining Service would establish mining standards and regulations, register mining property, evaluate projects, conduct audits, but could also incorporate an innovative component that is currently missing.

Meanwhile, a National Geology Service would continue to produce and publish disciplinary information, provide scientific-technical advice and assistance to authorities and could be more appropriately deployed throughout Chile.

He explained that it should also assume greater social responsibility and familiarity with local communities. He explained «Nevertheless, geology is not just dedicated to mining, but addresses other unrelated issues, such as geological hazards, geo-heritage, deep seabed geology, hydro-geology, and other issues.»

Finally, he pointed out that this proposal has been widely discussed. «The current government has mentioned that creating the National Geology Service and National Mining Service requires an evaluation, so we hope that this is not just a promise, because the Chilean Geologists College is firmly committed to actively promoting this initiative,» he concluded.

Mr. Marcelo Olivares is a partner at the attorneys Q+AN, and he believes that Sernageomin is an administrative body that is expected to regulate, inspect and sanction a wide range of important aspects of the mining industry, and accordingly its material resources are insufficient to fulfill its objectives.

Regarding the impediments to modernizing the Service, he pointed out that «I do not see any particular political impediments or premeditated reasons, but rather that there are so many requirements and issues to analyze that a structural reform becomes complex and long-term. This requires human resources and political will that have not been properly defined.

He believes that political will exists, and all the stakeholders involved should focus on launching an initial discussion regarding genuine service improvements.

Mr. Marcelo Olivares indicated that measures to address the limits to mining investment in Chile include greater access to capital for exploring greenfield sites, renew consideration for sectors that can be explored, strengthen the exploration potential of small and medium-sized miners through producers related to the National Mining Company (Enami), a «retrospection» of mining companies with dormant mining property and identify potential partnership solutions, technically and financially evaluate pragmatic proposals to improve the mining property system to verify whether such a route is worthwhile.»

However, he pointed out that this can be achieved by seeking partnership incentives, where the Ministry of Mining could make a great contribution.

Without modifying the current structure of mining property, look for specific elements that could be improved, such as avoiding the renewal of exploration concessions to maintain captive rights preferences, and conduct an assessment of the feasibility and effect of such amendments.

When Mr. Marcelo Olivares was asked to describe an ideal Sernageomin, he emphasized that «It requires clearly divided functions, with sufficient resources to carry them out and exercise its authority, but should add cooperation and incentives to exploration, and especially provide technical support.»

Exploration was discussed at the Seventeenth World Copper Conference (CRU) and there was consensus regarding the shortage of properties and the requirement for greater liquidity among mining properties.

Mr. Pablo Terrazas is the Undersecretary for Mining and he presented the Government’s plan to Promote Mining Exploration. He mentioned that although there are currently 300 exploration projects in Chile, only 22 are active, which demonstrates the problems facing exploration.

He added that most of these properties are controlled by major mining companies, which creates an imbalance with respect to junior mining companies that needs to be reduced.

He explained «We are in sixth place in the global exploration investment rankings. We are a mining country that is well below where we should be.»

He pointed out that to address this shortfall requires identifying financing mechanisms for exploration companies in Chile, and defining which exploration concessions are interesting to junior mining companies, then creating new business opportunities with major mining companies, and publicizing this policy among interested international companies.

«There is going to be a shortfall in supply in the near future. We know that new structural projects at major mining companies are designed to maintain production, not to increase it. We need new projects, new deposits, and new discoveries, to take advantage of the opportunities.» concluded Mr. Pablo Terrazas.

The National Director for the National Geology and Mining Service has not yet been appointed, and the senior positions are currently held by substitute professionals. However, a shortlist of three is currently being evaluated.

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