Speyside Corporate RelationsSpeyside Corporate Relations

ILO 169 in Chile: Participation or over litigation?

ILO 169 in Chile: Participation or over litigation?


The signing of ILO Convention 169 was not simply a signature on paper or a "salute to the flag," as they say in Chile, referring to purely symbolic acts. After Chile signed the Convention on indigenous consultations in 2008, native communities in the country took the rights guaranteed by the Convention seriously, and began to demand participation in decisions that would affect their surroundings and quality of life. Due to the broad impact of projects in the energy and mining industries, investments in these sectors quickly came under sharper focus and scrutiny.

Despite efforts by the Chilean government to regulate the consultation process, it has yet to fully comply with the commitment made by ratifying the Convention. The implementation of participation procedures- as admitted by the government - is weak, heterogeneous and ineffective. The conditions under which indigenous communities are consulted have been marked by their shortcomings with the 2014 Annual Report on Human Rights in Chile, conducted by the Diego Portales University (UDP), criticizing its legitimacy. It reported that indigenous communities were being excluded from discussions and that the current process does not include a consultation with indigenous communities prior to natural resources (water concessions and mining) being granted. These matters have greatly affected the quality of the results of the process.

With a lack of clear rules, and its legitimacy being questioned, the consultation process has allowed major development projects to be enveloped in lengthy legal disputes resulting in the growing phenomenon known as "judicialización".

A study commissioned by the Confederation of Production and Commerce (CPC) stated that, between 2009 and 2014, Chile undertook consultations on 29 projects involving US $ 15 billion of investment. In late 2014, only six of them had begun construction. The remaining 23 projects, worth over US $13 billion, still remain under consultation with indigenous consultation being a factor. According to Bloomberg, disputes over both indigenous rights and potential environmental impacts have delayed investments amounting to 10% of Chile?s GDP.

The mining and energy sectors have been most affected as the scope of their projects are far greater. Both the Neltume (US $ 781 million) hydroelectric power plant and the Mediterráneo (US $ 400 million) hydroelectric project have been stalled by demands by indigenous communities who argue that consultations were not made in good faith.

The Chilean government is aware that urgent action is needed to address this if it is to reenergise its economy. The mining industry - through the council that represents it - is asking for clear and concise measures on the standard of indigenous consultations to give certainty to both investors and communities. In light of this, Máximo Pacheco, the Energy Minister, announced that the ministry had submitted to Congress a draft ?Ley de Asociatividad? (Partnership Law) designed to regulate relations between communities and electrical companies and avoid direct payments, "the project aims to develop a model through which businesses, when developing their energy projects, also integrate the development of the area." If successful, Pacheco said, the initiative could be adapted to other industries such as mining. Furthermore, the Mining and Development of Chile Committee (WCRC), headed by former President Ricardo Lagos, is creating a public-private committee to discuss ways to improve relations with communities and measures to unblock projects.

What is clear is that natural resources companies need to navigate the issue very carefully as plans made by specific authorities materialise and become clear. Successful projects commence when companies align themselves socially. This involves informing communities of the requirements made by authorities (on the importance of community involvement) and agreeing on a methodology of work. Companies should work voluntarily with communities in areas that are affected by their projects from the start, acting before the Environmental Assessment Service (SEA) and the Corporation for Indigenous Development (CONADI) initiate a formal consultation. It is necessary, as stated by Sebastián Donoso, lawyer and academic from the Universidad Católica of Chile, to "overcome the limits of conventional social responsibility to push forward with the notion of an all-inclusive business.? Only then can serious delays in projects be avoided.

For additional information or to discuss a potential requirement for support, please contact:

María Pía Gazzella
Vice President - Chile
Phone: +56 22752-1485

Ian Herbison
Chief Executive Officer
Phone: +55 11 96168 2301

Share Share Share Share Share Share