SPECIAL OPERATIONS AGREEMENTS

• Jurisdiction: Derecho Internacional

International Mining Law and Investment in Latin America and the Caribbean
(Apr 2005)
CHAPTER 16C
SPECIAL OPERATIONS AGREEMENTS
Carlos P§rez-Cotapos
Cariola Diez Perez-Cotapos y Cia. Ltda.
Santiago, Chile

Carlos P´cmb;erez-Cotapos is a Partner with Cariola Diez Perez-Cotapos y Cia. Ltda. in Santiago, Chile. His Practice Areas are Mining Law; Real Estate; Commercial Law; Foreign Investment; and International Law. Education: Universidad Gabriela Mistral. Member: Chilean Bar Association; Australian Chamber of Commerce; Spanish Chamber of Commerce. Speaker at The Institute for International Research S.A. for "The Argentina's Mining Convention," Buenos Aires, Argentina, 1995 and 1996. He is fluent in Spanish and English.

Carlos P´cmb;erez-Cotapos es socio del estudio Cariola Diez Perez-Cotapos & Cia. Ltda. El Sr. P´cmb;erez-Cotapos ha ejercido la profesi´cmb;on de abogado desde 1988 en las ´cmb;areas de Derecho Corporativo, Comercial, Medio Ambiente y Minero, asesorando clientes chilenos y extranjeros en transacciones nacionales e internacionales. El Sr. P´cmb;erez-Cotapos naci´cmb;o en Santiago, Chile en 1964. Se incorpor´cmb;o como socio de la firma Diez P´cmb;erez-Cotapos Silva & Lira en 1992, y de la firma Cariola Diez P´cmb;erez-Cotapos & C´cmb;ia. Ltda. en 1999. Es profesor de Derecho Minero en la Universidad Andr´cmb;es Bello. Ha liderado los equipos de trabajo en significativos proyectos de inversi´cmb;on extranjera, en el ´cmb;area minera, y adem´cmb;as ha participado en diferentes fusiones y adquisiciones de compa&tildecmb;n´cmb;ias mineras y en varios financiamientos de proyectos mineros.

Ha participado como asesor legal en diferentes proyectos mineros tales como Escondida, Collahuasi, Cerro Colorado, Spence, Iv´cmb;an, Lomas Bayas, Piment´cmb;on, Altonorte, El Morro, Pach´cmb;on, etc.

Idiomas: Castellano e Ingl´cmb;es.

Titulaci´cmb;on: Chile, 1989

Educaci´cmb;on: Facultad de Derecho, Universidad Gabriela Mistral, Santiago (Licenciado en Derecho en 1987).

Miembro de:Colegio de Abogados de Chile A.G.; C´cmb;amara Espa&tildecmb;nola de Comercio; C´cmb;amara Australiana de Comercio, C´cmb;amara Canadiense de Comercio e International Bar Association

I. INTRODUCTION

Chile, a mining country

Mining activity plays an important role in the economy of our country. Chile's geography and geological formation have favored the development of mining activities. The mining sector accounted for 8% of Chile's GDP in 2003, and from 1974, when Decree Law 600 (regulatory body that establishes the Foreign Investment Regulation) was implemented, to 2003, foreign investment in mining projects in Chile has amounted to MUS$ 18,674,400, out of the total MUS $53,449,029 entered to the country as foreign investment protected by said Decree.

In addition, of all Chilean investments in 2004, amounting to MUS$31,460,138, MUS$16,814,878 corresponds to exports of mining products.

Chile is the world's leading copper producer, with a participation amounting to 36% in the production of copper at the mine; 13% in the production of copper at mill; and 19.1% in production or refined copper. Additionally, Chile produces 1.7%, 7.2%, and 26.6% of gold, silver and molybdenum at mine, respectively, at world level.

As for non-metallic mining, Chile is one of the world's major producers of iodine.

The State is the owner of the mines

The Chilean State is the absolute, exclusive, inalienable and indispensable owner of all the mines, save for surface clays. In fact, article 19, N%go%g 24, 6th paragraph, of the Political Constitution of the Republic of Chile "PC"), provides that "The State is the absolute, exclusive, inalienable and indispensable owner of all mines, comprising therein guano-beds, ore-bearing sands, salt deposits, carbon and hydrocarbon deposits and all other fossil substances, except for surface clays, notwithstanding the property of natural persons or legal entities in which they are located". Identical terms as those contained in the mentioned regulation are established in the 1st paragraph of article 1 of the Mining Code ("MC").

Exploration and exploitation of mineral deposits

Notwithstanding what is indicated in the preceding paragraph, the Chilean laws allow private parties to explore and exploit mineral substances by means of the awarding of mining permits, for which the lawmaker has made a distinction between claimable minerals, that is, prone to be subject to mining concessions, and non-claimable minerals, that is, those that cannot be subject to mining concessions.

General rule - minerals are claimable

The general rule in Chilean legislation is that the substances in the mineral reign, whatever their nature, are claimable and with respect thereof the State grants mining concessions for private parties to explore and exploit the minerals that are on the surface as underground, all...