MINING TREATY BETWEEN CHILE AND ARGENTINA — A GLOBAL VIEW (ENGLISH VERSION)

• Jurisdiction: Derecho Internacional

Mining And Oil & Gas Development In Latin America
(2001)
CHAPTER 2B
MINING TREATY BETWEEN CHILE AND ARGENTINA — A GLOBAL VIEW (ENGLISH VERSION)

María Teresa Infante
Fronteras y Límitas del Estado
Santiago, Chile

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1. GENERAL OUTLINE

THE TREATY on Mining Integration between Chile and Argentina, subscribed on December 29, 1997,¹ constitutes a case of great interest in the history of recent economic relations between both countries. The analysis of its meaning and scope requires placing it appropriately within this context.

The study of the Treaty includes besides that of its Complementary Protocol, adopted in 1999, whose purpose was to clarify some of the provisions of the Treaty and to make explicit the mechanisms of functioning of the same.

The conclusion of its negotiation and its coming into force take place within a period of approximately five years, during which the main features of this instrument² are worked out, perfecting aspects that render it internally politically and juridically acceptable, in order to ensure its ratification.

The Treaty has a political meaning, that some will identify with the decision to open the frontier to investments originating in the neighboring country, a matter that in the long run — insofar as a better understanding of the effects of the Treaty is reached at — loses importance with the passing of time. Another important political meaning is the idea that the Treaty deserves to be considered as a commitment to work jointly or in coordination in the international scenario in matters of promotion of mining and of the use of copper and to defend anti-protectionist positions that may present themselves.

This political element had to include, in the opinion of some analysts,³ an element of prudence in the sense of dealing first with the treatment of the demarcation agreement on Campo de Hielo Sur, which was finally reached with the coming into force of a new Agreement to Clarify the Border between Mount Fitzroy and Cerro Daudet, negotiated in 1998, and whose approval and coming into force in 1999 required wide internal consensus.

It also has an economic significance, insofar as it implies the generation of a framework for the development of mining projects of an expanded space and up to a point unified, in accordance with which both countries act simultaneously vis-à-vis a project demanding its full functioning.

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From the point of view of the economy, one of its objectives is considered to be rendering attractive a mining business venture particularly difficult to carry out due to the limitations proper to characteristics of the border, and the juridical differences and of institutional domains marking the limits between territories, which bring about as a consequence the coexistence of different juridical systems applicable in either of them. Up to a point, some questions were raised in the sense that the Treaty should serve to give greater juridical security and reciprocity⁴ in the treatment to investors operating in the neighboring country, as an element of attraction to develop mining projects.

The dominant perceptions at the time of negotiation of the Treaty, on the basis of the examination of public sources, indicate that in the opinion of some analysts it was fundamental to advance within a bolder framework in matters of mining cooperation, going beyond the goals proposed in Protocol Nr. 3 on Mining Cooperation and Integration of 1991, whereas, in the opinion of others, the Treaty allowed the expansion of the area of offer of mining services to the Argentine territory. It was even considered to be a natural consequence of the Chilean mining development that would have an incidence at the beginning of its functioning.⁵

The said Protocol on Mining Cooperation and integration, subscribed within the framework of the Agreement of Economic Complementation of 1991,⁶ emphasized the setting up of a program of exchange of scientific-technical information between the Argentine Dirección Nacional de Minería and the Chilean Servicio Nacional de Minería y Geología, in order to appraise and make possible the development of joint projects of exploration and exploitation of the existent mining resources along the border between both countries. To this end, a strip was determined of a width of about forty kilometers on both sides of the border.⁷

Likewise, another aspect covered by the Protocol was that its stressed the convenience of ensuring, in the cases in which circumstances allowed it, the joint use of the resources extending on both sides of the border, in such a way — it was said — that their exploration and exploitation should be carried out in a rational and integrated way, applying the most advanced norms and practices of mining engineering. The Parties would encourage the establishment of joint enterprises between physical and juridical persons in both countries, as well as the participation of foreign investment in the same.

This Protocol serves as a starting point for the study of Additional Protocols Nr. 19,⁸ and 20⁹ of 1997 which were applied to the first projects which, due to their nature and

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characteristics demanded the need of a particular transborder cooperation between Chile and Argentina. Such was the case of El Pachón (Region IV-San Juan) and Pascua Lama (Region III-San Juan), respectively. The terms of these agreements highlighted the usefulness of a Mining Treaty, and it was precisely this background information whose evaluation allowed a better understanding of the need of the Treaty.

Another point of view that appeared in the great debate generated by the Treaty, stressed that this instrument afforded a wider opportunity for the Argentine mining to have access to ports in the Pacific, granting from this point of view an advantage for its consolidation.¹⁰ Certain aspects that were analyzed in particular during its negotiation and in special the debate that took place in Chile after the signing of the Treaty, a period that extends from the end of 1997 until August 1999, have to do with the strength of perceptions that said agreement had not established an equilibrium between interests and benefits for both countries,¹¹ a concept that although not shared by its negotiators, created serious interference with the possibility of its approval by the Chilean Congress.¹²

There is no doubt that these ideas are generated and discussed concerning the large matters relative to the mining advantages for each country that the mining Treaty would bring about and which were the critical points for each of them. In this process of analysis, Chile proposed the establishment of a Complementary Protocol in 1999, after an intense exchange of opinions with the sector of entrepreneurs¹³ and mining experts.

From the point of view of Chile, there may be pointed out as fundamental points of attraction in favor of an agreement, the themes that through a text of new generation contemplating a regime for transborder mining would improve the conditions to attract mining investments demanding inputs and national services, stressing by way of example, port services, engineering, construction, generating expectations in terms of impact for employment.

The Message sent by the Executive Power to the Congress,¹⁴ for the approval of the Treaty in 1999, stressed that it was expected that, taking into account the number of projects existent to date, there would be generated a substantive demand of goods and services in Chile during the construction of the mining complexes of at least US$1,250 million, apart from other benefits during the operation and useful life of the mines. In its turn, with its coming into force, the provisions about the impact of the Treaty in the matter of demand of goods and services amounted approximately to US$6 billion.

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On the other hand, it was estimated that the geographical element insofar as accessibility to deposits and areas of exploration of difficult localization concerning available routes and infrastructure, space to place camps, location of installations, among other aspects, generated an incentive for the establishment of this instrument.

Among the critical aspects of the mining Treaty from the point of view of its acceptability by the political, entrepreneurial and economic media, there stands out the point whether the Treaty should be carried out by virtue of an explicit mining policy, or whether it was an opportunity to favor its preparation, modification or perfectioning.¹⁵ The theme essentially involved taxation aspects and the impact of the system applicable in Chile as regards foreign investment in the mining area, and there was a tendency that did not prevail in the end in the discussion that intended to render the whole analysis take place in an atmosphere of lack of mining policy.¹⁶

2. THE SCOPE OF APPLICATION AS A SUBSTANTIVE ISSUE

In the arrangement of this theme, a decisive point is constituted by the value of certain objective elements and others of political interest associated with the global balances of the Treaty as well as of the bilateral relation.

The fact that a Mining Treaty should require a spacial specificity, led to a definition of the criterions and elements leading to that purpose. It constituted a substantive issue both during the negotiation as well as during the process of discussion in the Chilean Congress, at first in relation with the determination of interests and criterions, and afterwards with the explanation concerning the sense of said determination. The scope of application finally established in Article 3 of the Treaty is a consequence of a technico-geological study and later of a political and juridical definition.

During the first stage, the competent Services were required to justify an area for the application of the mining Treaty, which led to a report,¹⁷ proposing an area whose extension was in both territories of a variable...