A New Chilean Constitution Could Mean Big Changes to Copper and Lithium Mining

Joe Weisenthal (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:15)

And I'm Tracy Alloway.

Joe Weisenthal (0:17)

Tracy, one of the themes that comes up on a lot of episodes is that there is going to be a lot of demand for various metals and various minerals in the so-called energy transition in order to electrify the economy, but that that process itself is fraught with its own environmental consequences and risks.

Tracy Alloway (0:40)

Right, so this is the ultimate irony of I guess the Green Revolution. In order to save the world and bring down emissions, we have to move to new types of energy electrification, a lot of which requires certain types of minerals and metals, and getting those is actually environmentally destructive in many ways.

Joe Weisenthal (1:01)

Right, so we recently had a conversation, for example, with Nick Snowden of Goldman Sachs. And of course, over the long term, he's extremely bullish on copper, for example. But as he noted, one of the reasons for his super bullish copper call is that there just is not as much mining activity.

And he pointed out, around the world, it's not just in rich countries, around the world, there's been much more concern being raised about the environmental consequences of mining, the water consumption that happens in copper mining specifically. And he noted that Chile, which many people know is one of the biggest sources of copper in the world, it's become a much more difficult place to get a new mine built.

Tracy Alloway (1:47)

Right, so even if there is, theoretically, enough copper in the ground to satisfy the world's demands for electrification, it's becoming harder and more challenging to get it out because there are these additional environmental concerns. And in Chile, in particular, they're even writing some of these environmental concerns into their new constitution, which is very different to the types of constitutional writing that we've seen historically.

Joe Weisenthal (2:13)

Yeah, and so copper, of course, lithium is another big one for batteries because, of course, you have copper at the transmission, and then you have this boom in batteries. But again, lots of similar environmental issues raised.

And so rather than just talking about, yes, there are all these environmental issues that have to be addressed, we should probably talk more about what they are, what the opposition is, what are the concerns, why are politics changing, and how do we resolve or think about resolving some of these tensions?

Tracy Alloway (2:45)

Absolutely, and I'm also very interested in this from an ESG perspective because one of the fundamental questions over ESG has always been, should you let the market decide this or should the government actually be making these restrictions? And Chile is really an interesting case example of all of this.

Joe Weisenthal (3:03)

Well, I'm very, we really have, I think, the perfect guest for this episode. We're gonna be speaking with Dr. Cristina Dorador. She is a microbiologist from Chile and she is a former member of the Constitutional Assembly of Chile. Just recently, just a few days ago, we're recording this July 8th, but on July 4th, this new proposed constitution that it codifies and shrines some of these environmental protections was put forward. It's going to be voted on later in the year, but she was involved in drafting this new proposed constitution.

And for the first time, which really gets at some of these tensions and puts it of mining and protecting the environment right into the constitution itself. So Dr. Dorador, thank you so much for coming on Odd Lots.

So why don't you just give us a little bit of your background and bio. I mentioned that you're a microbiologist. I mentioned that you've been part of this new constitutional assembly in Chile. But where does your interest in this space and work in this space come from?

Cristina Dorador (4:12)

I did my undergrad in biology. Then I did my PhD in Germany, where I focused the study of microorganisms in extreme environments.

So then I come back to Chile to analyze the microorganisms that living in the desert, the Tacama desert, and also in other places such as Salares. They are very special ecosystem, evaporitic lakes that now are the source for lithium. So I'm working in this subject more than, I don't know, 20 years ago. So we have a lot of experience about ecology and also the microorganisms that living there.

Tracy Alloway (4:51)

So you mentioned the unique ecosystem of Chile. Could you maybe give us a little bit more color on that? What exactly is it about the geography of Chile that makes it so important to things like copper and lithium mining?