Navigate / search

Protecting Chile’s Miners

Santiago, Chile – October 2012 – as published by BUSiness Chile. Download the PDF (pgs 8-10).

Everything was looking so good when bUSiness CHILE reported on the state of mining safety in Chile last year: mining accidents had halved and the number of mine inspectors doubled in the first half of 2011. Another year on, however, and improvements seem to have stagnated while a debate over how to better protect mining workers is holding back new legislation.  

While the world’s attention was fixed on Chile in 2010, waiting to see the miraculous rescue of 33 miners trapped in the bowels of the Atacama Desert for 69 days, President Sebastian Piñera promised new laws to improve mining safety in the country. Yet two years on, those promises are starting to look as hollow and unstable as the San José mine itself.

It’s true that significant improvements were made following the accident: according to figures from a report published by the Ministry of Mining, fatalities dropped from 45 in 2010 to 29 in 2011. Accidents in Chile’s mines also fell last year by 40% to their lowest level in 21 years.

Chile has also made notable progress in safety inspections. Before the San José incident there were only 18 inspectors for the 5,400 mines nationwide compared with 47 now, and the number of checks has almost tripled in the past two years from 2,586 in 2010 to over 5,000 so far this year.

There are small signs, however, that standards are beginning to slip and accident numbers creep back up. Already this year 15 miners have died which is three more than in the same period of 2011, according to Chile’s National Geology and Mining Service (Sernageomin), the state body tasked with regulating the country’s mining industry. The increase is marginal but perhaps indicative that now the spotlight has moved on, so too has the pressure to improve conditions.

Chile is not the only country that has struggled to improve mining safety standards. New Zealand, another small country that suffered a mining accident in 2010 – the Pike River Mine disaster in which 29 miners died – created a High Hazards unit last year to supervise its 30 mines, but it faces similar problems to Chile including underfunded watchdogs and regulatory inertia.

Failure to reform

Despite the initial improvements after the San José incident, promises to reform mining legislation are still unfulfilled. An example is Chile’s failure to ratify the International Labor Organization (ILO) convention 176, which President Piñera promised to do back in 2010.

This convention establishes workers’ rights to refuse work they consider unsafe, to leave a mine they consider dangerous and to elect their own health and safety representatives. But Chile continues to study it to determine if it would contravene any of its existing laws.

Brian Kohler, Director for Health Safety & Sustainability at IndustriALL Global Union, an international workers’ union that represents 50 million workers in 140 countries, blames big business for the fact that important steps within the legislative process are not being taken.

“President Piñera promised the world that Chile would ratify ILO Convention 176,” says Kohler. “The fact that he has not delivered on that pledge can only be explained by pressure from the business lobby.”

Small-mine managers, not just big business as Kohler alleges, also oppose ratification of the convention. Gaston Araya, operations manager for Laguna Resources, an Australian mining company with small-scale exploration operations in Chile, says ratification would be equivalent to a “loss of sovereignty”.

“In Chile we have laws that already loosely cover what we are looking for in this agreement so personally I am completely against signing a transnational agreement that has more force than the Constitution,” says Araya.

In fact, in the wake of the San José incident the government has developed new legislation to further improve mining safety, particularly for small mines where safety conditions are often the most precarious. Currently in Chile there are two bills pending that would achieve just that.

Problems of scale

Described as the most important piece of mining legislation in the last 30 years, the Mining Safety bill announced by President Piñera in 2011 proposed a major restructuring of the mining regulatory agencies, notably Sernageomin, and improvements in the training of technical experts.

The bill includes a color-coded system to rate mines according to their safety standards, a system to allow miners to make anonymous complaints about the safety of their workplace and an increase in fines levied on those companies that do not comply with regulations.

President Piñera promised that the law would lead to a new “culture of safety in mining”. But in September the bill failed by just one vote to obtain approval in Chile’s Chamber of Deputies.

It was disagreement over how to create fair but equally rigorous standards for both small and big mines that prevented the bill from passing. Some politicians believe that the bill would be the death knell for small mines. Adriana Muñoz, a member of the Democratic Party (PPD), called the proposed legislation “a gravestone and a true funeral for small-scale and artisanal mining.”

“Obviously for smaller mines money spent on safety is going to take a larger proportion of their profits and so cost them more,” says Ernesto Evans, president of Chile’s association of mutual insurance companies.

It is the smaller mines, however, that are in need of the most attention and help. They tend to open only when copper prices are high enough to make mining in such small quantities profitable and employ a lesser-trained, temporary workforce, thus raising the risk of accidents. “The bigger mines with more than 100 employees have an accident rate of around 0.3%, basically nothing. As ever, the issue is the smaller micro-mines,” Evans says.

After the bill was rejected, the then-Undersecretary of Mining Pablo Wagner agreed that the bill should be modified to distinguish between mining operations of different sizes, especially in regards to fines for non-compliance.

But it is a catch 22 as smaller mines are ironically calling out for the very reforms that the bill would enact if passed. “Chile needs to radically improve the staffing and equipping of Sernageomin so that it can effectively supervise small-scale mines and provide training,” Araya said.

The bill proposes the creation of a new Superintendency of Mining that would focus specifically on safety inspection. Such streamlining would help to clear up the confusion that currently exists between the different government bodies that share the duty of performing safety checks.

Separating Sernageomin’s regulatory duties from its responsibilities for monitoring the country’s geology will also safeguard highly trained staff. In the past big mining companies often poached its best employees, trained not only for supervising mine safety but also in mapping mineral resources and advising the government on how to award mining concessions, thus undermining the institutional framework.

If and when the bill is passed, it would clearly mean an important step in mining safety in Chile. But after the now former Undersecretary Pablo Wagner resigned in early October over the lithium auction debacle the future of the bill is uncertain.

Accident insurance

The second bill that the government is hoping will improve not just mining safety but workplace safety in general comes in the guise of a reform to increase competition among Chile’s private workplace accident insurance companies, or Mutuales, the first such reform since 1968.

As it stands, the Labor Ministry’s Workplace Safety Institute (ISL) insures around 22% of workers in Chile including most miners. The other 77% (Codelco has its own system, equivalent to 1%) are covered by one of three private mutual companies.

Workers in the state system receive inferior care to other employees because they are treated in lower-standard public health clinics rather than private hospitals. Paradoxically, their employers actually pay higher premiums than companies in the private system because they undergo greater risks in the workplace.

The insurance bill, which was unveiled on the second anniversary of the San José accident in August, would essentially eliminate the distinction between unskilled laborers and skilled workers. This means the state could send mining workers to be treated, for the first time, at hospitals managed by mutual companies, which could bid on tenders for public health contracts.

In addition, and more controversially, the bill proposes a change in the contributions scheme. Currently the cost of insurance is split between the employer and employee (based on a percentage of the employee’s salary), but the bill would add a third component financed by companies as a group or industry. This premium, adjusted according to the sector’s risk, would be the same amount whether the company is big or small and has excellent safety standards in place or not.

The idea is that bigger, safer mines will be forced to drag those with worse reputations up to their level, lowering the risk for their sector as a whole and thus the cost of insuring their workforce. This should pressure companies with a better safety track record into sharing expertise and resources in order to raise the safety standards of the industry.

This is exactly what the small mines want, according to Araya, and because the mining sector is comparatively low risk compared to the manufacturing and construction sectors, the premium would not be high. But not everyone thinks tackling mining safety through workplace insurance reform is a good idea.

Mutual companies believe that the proposal is fundamentally unjust and that the government needs to find another way of lowering costs. “If you work in a company, whether it is big or small, with a good record but you are in a risky sector then you are going to have to pay more and this is a disincentive. It just doesn’t make sense,” says Evans.

For Brian Kohler, legislation to improve mining safety is, ultimately, a matter of simple business sense. “It is our hope that employers will come to understand that they also will gain from improved health and safety in mines,” he says.

With Chile pushing its mining activities forward, mining safety is only going to become more vital and the need for legislation that benefits the whole industry even more pressing. Accidents will continue to happen but better regulations are needed to protect Chile’s miners – considering their importance for the economy, that’s the least they deserve.