…the explanation could have been a little easier to follow. As I’ve now been sent this Crux Investor segment three times in as many hours this evening…
…it’s best not to ignore it any longer. Fact is, Rio2 Ltd (RIO.v) CEO Alex Black is correct when he says Chile isn’t about to nationalize its copper, lithium (and gold) mining industries. He’s also spot on about the dumb English language coverage of the Constitutional Assembly as pertains to the mining industry (and Mining Journal in particular should be thoroughly ashamed of the clickbait idiocies it’s been publishing), so you can’t really blame the casual observer for being a little confused about the whole process and what it might mean to Chile’s mining industry. Alex Black gets it, what’s more I know he gets it because we’ve chatted over the subject on several occasions in the last few months, the only problem I have with the video above (and linked here) is that he tries to condense a big subject into a short explanation and the chain of events gets a little lost, so here are a few more words on the issue.
When you up there read sensationalist headlines such as “Chile Votes To Nationalize Mining”, you are reading about a 20 person committee that packed itself with left wing ideologues and subsequently voted up a pet subject by 10 votes to 7, with 3 abstentions. That’s all you’ve had so far, a backwater committee vote to allow a project to move to the main Assembly, so when your media channel of preference writes “Chile Votes to Nationalize Mining” it’s akin to some far-right website publishing “The USA Votes To Provide Free Health Care” if some Bernie Sanders law project made it out of Committee and onto the floor of the US House of Representatives. So anyway, this bill to nationalize mining passed this 20 seat committee and now goes to the main Assembly, made up of 155 seats, for debate and order to pass it will need 104 of the 155 members to vote in favour. Now, at this point I’ll stick my neck out and say that its passage is very unlikely (see below) but for argument’s sake, if it gets 104 votes the bill then goes to another committee for “adjustments” (i.e. gets watered down). The initative then becomes part of the Draft Constitution that Chile votes on in referendum style later this year (probably September, but not definitely). Then, if Chile gives its new Constitution 50% +1 vote, it becomes part of the new Constitution.
So much theory, now for the reality of what’s going on in Chile and a 155 seat Assembly that is keenly aware of its priorities, which do not include the nationalization of the country’s mining industry. In fact it’s the diametric opposite, as this whole gig came into being after the 2020 protests and its priorities are the things Chile cared about enough to risk wholesale police brutality, e.g. education, healthcare, indigenous rights and yes, those brutal cops and their standard Chilean tactics. In order to make those changes, the Assembly understands that it cannot present a radical draft constitution to the Nation because if it does, the package is bound to be voted down by a country that simply won’t allow a Hard Left agenda to pass. That detail tends to sail over the heads of the average outside observer, but all you really need to do is look at how new President Boric had to move to the centre of the political spectrum in order to win the presidential election run-off (and against a really hardline righty, too). For sure Chile has its hard left wing, just like in any other country, but they are a minority and only get to make a noise in 20-seat environmental and ecological committees, not in truly representative bodies. Talking of which, the Assembly knows it needs to be careful and not pack its draft constitution with a bunch of ideas straight out of the Marxist playbook and a case in point is all this false polemic over whether Chile gets to take over all its mining operations. It’s a Left wing wet dream fantasy that made it out of committee and will now duly die its death, it’s not going to happen for a dozen reasons and the people telling you otherwise are either ignorant or liars. For one, The Assembly will not risk losing support for the reforms it truly wants by taking on stupidities or, if you prefer, the further Left the draft Constitution goes the less chance it has of being voted up in September. For another, the nationalization of mining would cost the country all the cash it has (and more besides), which will leave zero zip nada for the plans for free universities for all and subsidized healthcare. For another, its credit rating would be destroyed along with its currency. For another, the Assembly has other bills and projects concerning mining it can add to the draft constitution that do not involve its nationalization. For another, Chile’s brand new President would hand over all honeymoon period good will to his Right wing opponents. For another, his own pick for Minister of Energy and Mining has been vociferously against the project. For another, mineworkers up and down the country will reject the idea out of hand, including the unions that represent them at the privately owned mining companies (Chile is one of the few countries in the world that actually understands the mining industry at a cultural level). This rant could continue, but the point should be clear by now; we’re not even close to seeing Chile pass a draft bill that won’t even mean anything in the unlikely circumstance that it passes, because Chile as a nation is not stupid and will not vote for financial suicide. The Assembly knows that if they add the Nationalization of its mining industry to the draft Constitution, all the proposed reforms they really care about will be lost. And they know this as a stone cold fact at the same time that you guys up there are being told some new Commie Prez is about to steal La Escondida from BHP. Please, stop the stupid.