{"id":26106,"date":"2017-11-15T21:47:20","date_gmt":"2017-11-16T02:47:20","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/the-mining-industry-in-chile-and-its-solar-bet\/"},"modified":"2017-11-15T21:49:48","modified_gmt":"2017-11-16T02:49:48","slug":"the-mining-industry-in-chile-and-its-solar-bet","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-mining-industry-in-chile-and-its-solar-bet\/","title":{"rendered":"The Mining Industry in Chile and its Solar Bet"},"content":{"rendered":"

The mining industry uses an incredibly large amount of energy for its operations, thus increasing CO2 emissions, which leads to climate change. Antofagasta Minerals is the main private mining group in Chile and it is within the tenth largest copper mining groups at a global level [1]<\/a>. Changes in government policy in Chile for clean energy has created an opportunity that is hard for the company\u2019s operations to ignore.<\/p>\n

Chile is a country that is poor in respect to fossil fuels but rich in natural resources such as wind and solar energy. One of the main items in the Ministry of Energy\u2019s agenda is that by the year 2050 70% of energy supplies will come from clean energy[2]<\/a>. In 2014 the Chilean energy scenario changed giving way to a clean energy auction that allowed several companies to place bids and enter the Chilean energy market at record low prices[3]<\/a>. The auction allowed competitive advantages for solar energy suppliers by licensing them to bid by time blocks and also long-term projects[4]<\/a>. This newly found competition allowed for energy prices to come down[5]<\/a>. As mentioned in Al Gore\u2019s \u201cAn Inconvenient Sequel\u201d the investment in solar energy in the country has been exponential thanks to the government\u2019s ability to change the rules of the game for clean energy. The government has also promised to reduce carbon emissions by 30% by the year 2035 [6]<\/a>.<\/p>\n

Industry standards are also moving to more sustainable grounds, encouraging Antofagasta Minerals make changes to be more sustainable in order to remain competitive. Rene Aguilar Saez, Antofagasta\u2019s VP of Corporate Affairs and Sustainability, mentioned how changes in the way the mines operate with respects to sustainability is a matter of survival. The company discloses its carbon emission to the Carbon Disclosure Project (CPD), which holds company\u2019s self-reporting data and their environmental impact[7]<\/a>. This particular measurement gives information to investors on how the company is doing and what are the potential risks of investment. If this measurement is low in any way, it can jeopardize the company\u2019s competitiveness at a national and global level.<\/p>\n

In 2015 the mining industry in Chile accounted for 33% of the energy consumption of the country[8]<\/a>. In order to effectively reduce the carbon emissions of the country, the mining industry has to make significant changes. For Antofagasta Minerals, 72% of carbon emissions are associated with electric energy [9]<\/a> therefore management has agreed to diversify its sources of energy and incorporate renewables. For the management team, one of the most important factors to accomplish this in the short term is the efficient use of energy without reducing the production of copper.<\/p>\n

It is in this sense that the country has enabled Antofagasta to get energy from clean suppliers at a reasonable price given that fuel and electricity make up 15% of the company\u2019s costs [10]<\/a>. The company managed to increase its clean energy supplies efficiently from 5% in 2015 to 17% in 2017[11]<\/a>. Its long-term goals are to implement initiatives that foster efficient energy usage and to invest in innovation and the most modern technologies for its operations so that it is aligned with the sustainability required by Chile and the industry.<\/p>\n

In my opinion, given the opportunity the country has in terms of clean energy suppliers, the company needs to focus on establishing good relationships with them. As stated above, mining is a high user of energy and in order to keep emissions down, changing its supply chain to renewables will become an important factor. I would also encourage management to think about developing their own solar fields and how profitable would that be for the company.<\/p>\n

Overall there are many opportunities that push Antofagasta Minerals into a more sustainable environment. Should they make radical changes in their operations? Would these changes allow them to stay competitive? Another issue worth reflection is that copper is considered a commodity and therefore trades as a commodity in the stock market. Would it be different if the industries decommoditize copper in order to properly track how this metal is being acquired? Will this be enough to change the markets perspective to choose what type of copper they purchase for production?<\/p>\n

Word Count: (784)<\/p>\n

 <\/p>\n

Sources:<\/p>\n

[1]<\/a> Antofagasta Minerals, Sustainability Report 2016, p.4, http:\/\/www.aminerals.cl\/media\/4069\/antofagasta-minerals_reporte-de-sustentabilidad-2016.pdf<\/a> , accessed November 2017.<\/p>\n

[2]<\/a> Antofagasta Minerals, Sustainability Report, p.54, http:\/\/www.aminerals.cl\/media\/4069\/antofagasta-minerals_reporte-de-sustentabilidad-2016.pdf , accessed November 2017.<\/p>\n

[3]<\/a> Reuters, \u201cChile power auction attract 24 bids: official\u201d, https:\/\/www.reuters.com\/article\/us-chile-energy-auction\/chile-power-auction-attracts-24-bids-official-idUSKBN1CG2SG<\/a> , accessed November 2017.<\/p>\n

[4]<\/a> Ministerio de Energia de Chile, Historica Licitacion de Suministro Elecrico, http:\/\/www.energia.gob.cl\/tema-de-interes\/historica-licitacion-de-0<\/a>, accessed November 2017<\/p>\n

[5]<\/a> Ibid., accessed November 2017<\/p>\n

[6]<\/a> Antofagasta Minerals, Sustainability Report, p.54, http:\/\/www.aminerals.cl\/media\/4069\/antofagasta-minerals_reporte-de-sustentabilidad-2016.pdf , accessed November 2017.<\/p>\n

[7]<\/a> CDP, https:\/\/www.cdp.net\/en\/info\/about-us<\/a>, accessed November 2017.<\/p>\n

[8]<\/a> ClimateScope, http:\/\/global-climatescope.org\/en\/country\/chile\/#\/details<\/a>, accessed November 2017.<\/p>\n

[9]<\/a> Antofagasta Minerals, Sustainability Report, p.55, http:\/\/www.aminerals.cl\/media\/4069\/antofagasta-minerals_reporte-de-sustentabilidad-2016.pdf , accessed November 2017.<\/p>\n

[10]<\/a> Ibid., p.59<\/p>\n

[11]<\/a> Ibid., p.55<\/p>\n","protected":false},"excerpt":{"rendered":"

The Chilean energy landscape has changed. In 2014 governmental policies allowed the competitive entrance of clean energy to the Chilean market with solar energy at its center. This creates an opportunity for Antofagasta Minerals, a private copper mining group, to utilize clean energy to lower its carbon emissions and lower costs generated by electrical energy. <\/p>\n","protected":false},"author":10391,"featured_media":26107,"comment_status":"open","ping_status":"closed","template":"","categories":[3736,185,179],"class_list":["post-26106","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-metals-and-mining","category-renewable-energy","category-solar-energy","hck-taxonomy-organization-antofagasta-minerals","hck-taxonomy-industry-mining","hck-taxonomy-country-chile"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\nThe Mining Industry in Chile and its Solar Bet - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-mining-industry-in-chile-and-its-solar-bet\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Mining Industry in Chile and its Solar Bet - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"The Chilean energy landscape has changed. 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