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Direct and Indirect Mining Expropriation in the Chilean Legal System (English and Spanish)

Juan Paolo Bambach, Mining and Oil and Gas Law, Development, and Investment - Book 1 (2007)

Everybody is aware of the risks inherent to mining activities, such as randomization in exploration and prospecting; geographic and climatic difficulties; usually decreasing variations in ore grades; technological problems associated to recuperation; limited useful life of mine deposits; environmental challenges; and, especially, great fluctuations of mineral prices in international markets.

In spite of these risks, mining companies and financial institutions have been willing to risk capitals, resources and efforts to materialize the enormous investments required for developing a mining project, considering, however, other variables that go beyond the risks inherent to mining and that are essential when adopting investment decisions in mining. I refer to political and legal evaluations, especially as regards the degree of certainty and legal security offered by mining titles and the guarantees of stability, equality and non-discrimination in the free development of mining activities. The combined analysis of these two types of variables will permit not only to establish which the return on investment will be, but also to ensure that said payback can be really obtained.

However, after the investment has been materialized, there will always be a latent risk for the investor and which is difficult to foresee in the analysis mentioned above. This risk implies the