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Sector-Specific Information

2 April, 2017
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Electricity sector

Where are statistics on gross electricity generation and distribution published?

The institution responsible for publishing statistics relating to the electricity sector is the National Energy Commission (CNE). Generation, distribution and other data are available at http://bit.ly/1psT26P.

How much does electricity cost in Chile?

Large companies can negotiate a Power Purchase Agreement. At present, the prices established in such Agreements are running at around US$92/MWh in the country’s Central Interconnected Grid (SIC) and US$80/MWh in its Northern Interconnected Grid (SING). Small and mid-sized companies must buy electricity at the same regulated price as residential users. This is currently around US$151/MWh. These services are supplied directly by generators or local distributors.

The country’s largest generators are ENEL, AES Gener, Colbún and Engie while the leading distributors are Chilectra, CGE and Chilquinta.

It is important to note that, following the positive results of a tender for the supply of power to distributors in August 2016, the price of electricity for households and small and mid-sized companies is expected to drop by around 20% after 2020.

Where is there information about electricity projects under construction in Chile?

The National Energy Commission (CNE) publishes a monthly report that contains a list of projects under construction.

What is the 20/25 Law?

Law N° 20.698 to foster the expansion of the country’s energy matrix through the incorporation of non-conventional renewable energies (NCRE) came into force in October 2013, modifying Law N° 20.257 and establishing a new obligation as regards NCRE, applicable to power supply contracts or their modification signed as from 1 July 2013.

It established that, in 2014, NCRE must account for 6% of total power supplied under the contract, rising gradually to 20% as from 2025.

 

Food industry

What are the main regions of Chile producing processed foods?

According to the Research Department of the ChileAlimentos business association, market gardening takes place principally in the Santiago Metropolitan, O´Higgins, Maule, Coquimbo and Valparaíso Regions while fruit is grown principally in the Valparaíso, Santiago Metropolitan, O´Higgins and Maule Regions. Aquaculture takes place mainly in the Los Lagos, Aysén, Atacama and Coquimbo Regions.

What are Chile’s main export markets for processed foods? According to information from the Research Department of the ChileAlimentos business association, the government’s Office for Agrarian Studies and Policies (ODEPA) and the ProChile export promotion agency, Chile’s main markets for processed foods are the United States, Brazil, Japan, Mexico, China, Peru, Venezuela, Canada and Russia.

What does the aquaculture industry principally produce? According to the Undersecretariat for Fishing and Aquaculture, its main products are Atlantic salmon, mussels, rainbow trout and Pacific salmon.

 

Mining industry

What are the main laws and regulation applying to the mining industry?

Mining activity in Chile is governed principally by the Political Constitution, the Organic Law on Mining Concessions (Law N° 18.097) and the Mining Code. The Constitution establishes that the state has absolute, inalienable and imprescriptible rights over all mines, with the exception of surface clays. Law N° 18.097 defines the substances for which exploration and exploitation concessions can be granted and specifies that the rights of the holder of a mining concession are protected by the constitutional guarantee of the right of property.

The other main laws regulating mining in Chile are:

  • Law N° 20.235, regulating the figure of Competent Person and establishing the Commission for Qualifying Competence in Mining Resources and Reserves;
  • Law N° 20.026, establishing a Special Mining License for Small-Scale and Artisan Miners, condoning legal surcharges and providing facilities for overdue license payments;
  • Law N° 20.551 on mine closure, requiring that mining companies with a monthly mineral output of more than 10,000 tonnes incorporate closure activities in the useful life cycle of a mining project.

How do exploration and exploitation permits or concessions work? How do licenses work?

Mining concessions

Although Chile’s Political Constitution states that the state has absolute imprescriptible ownership of all the country’s mines, the country has created a mechanism that permits the award of exploration and exploitation concessions to private companies, which are protected by the right of property. These concessions can be mortgaged and otherwise encumbered and, in general, be subject to any act or contract, being governed by the same civil laws as other immovable forms of property. The law determines on which substances concessions can or cannot be awarded.

A mining concession may not be awarded on the following:

  • Liquid or gaseous hydrocarbons;
  • Minerals located in the country’s territorial waters;
  • Minerals in areas that are important from the standpoint of national security.

There are two types of concession: for exploration and for exploitation or mining ownership. The former confers the right to investigate and explore while the latter confers the right to explore, exploit and appropriate the resulting minerals. Concessions are always established through a legal resolution and confer the rights and impose the obligations that the law indicates. Under a mining concession, the holder must undertake the activities required to satisfy the public interest on the grounds of which it was awarded.

An exploration concession has a duration of two years and may, in certain circumstances, be extended for a further two years while an exploitation concession is of indefinite duration, subject in both cases to payment of the corresponding fees.

Surface clays and salt and sand deposits belong to the owner of the land on which they are found and are not mines because they are not considered minerals.

The power to declare a concession extinct rests with the ordinary courts which are also responsible for ruling on any controversies that may arise.

Protection of the environment

In order to obtain environmental authorization and other related permits, mining projects often have to be submitted to the Environmental Impact Evaluation System (SEIA) through the presentation of an Environmental Impact Declaration (DIA) or an Environmental Impact Assessment (EIA) in accordance with the Organic Constitutional Law on the Environment (Law N° 19.300), particularly its Articles 10 and 11. The institutions which play important roles in this field are the Environmental Evaluation Service (SEA), the Superintendency for the Environment and the Environmental Courts.

The permits required vary with the phase of a mining project (prospection, exploration, development, construction, operation and closure). The government body responsible for overseeing safety matters in this field is the National Mining and Geology Service (SERNAGEOMIN).

It is important to note that Chile has ratified Convention 169 of the International Labour Organization (ILO) so some projects may require prior consultation of the indigenous communities that could be affected. This should be borne in mind by those interested in implementing mining projects in the country.

What are the main characteristics of the system of water rights?

In Chile, surface water and groundwater are public goods and only concessions to private parties are awarded. The country’s Water Code establishes the principle of free access to and transfer of water rights granted as a concession.

Some of the Water Code’s characteristics are as follows:

  • Water rights are granted through concessions awarded by the General Water Board (DGA) and registered on the Water Register.
  • The law classifies water rights as consumptive or non-consumptive, depending on whether the water is consumed or returned to its original source after being used.
  • Water rights are completely separable from property rights on the land and can be freely transferred, bought and sold.
  • The award of new water rights is not conditioned by the type of use and there is not a list of priorities.
  • Disputes between holders of water rights are considered a matter between private parties and are resolved by the ordinary courts.

It is important to note that a bill to modify the Water Code is currently before Congress.

 

Tourism sector

What are the requirements for implementing a hotel project?

The most important permits for a hotel project are:

  • Compliance with the urban planning conditions established in the General Law on Urban Planning and Construction and its Regulation and in the corresponding Municipal Regulation in order to obtain approval of the Pre-Project and Planning Permission;
  • Submission of the project to the Environmental Impact Evaluation System (SEIA) through the presentation of an Environmental Impact Declaration or Assessment to the Environmental Evaluation Service (SEA);
  • Favorable report for construction of the project (post land use change);
    Study of Impact on the Urban Transport System (EISTU) as regards the amount of parking space and road mitigations that may be required;
  • Compliance with special regulation established by the Ministry of Economy, Economic Development and Tourism and the Health Ministry;
  • Authorization from the Regional Office (SEREMI) of the Health Ministry in the region where the project will be implemented;
  • Final reception of the building by the Dirección de Obras (Construction Work Office) of the corresponding municipality, constituting the final authorization for its use; o Municipal License, authorizing a for-profit activity.