Chile’s proposed constitutional amendments signal new risks for mining investments into South America

Current site :    AU   |   EN
China Hong Kong SAR
United States

Written by Edwina Kwan, Erin Eckhoff, Nick Horton and Rose Vassel

Foreign investors in Chile’s mining industry should be aware of new reforms proposed by Chile’s constitutional convention. If implemented, these reforms may negatively impact the value of foreign investments in Chile’s mining industry. 

In February 2022, Chile’s environmental committee proposed reforms that may see the cancellation of  mining concessions and the seizure of privately owned mines, including copper and lithium mines. There are a number of hurdles before the proposals can be passed. However, if passed, the proposed reforms have the potential to breach Chile’s obligations under international investment agreements. 

 1. Mining a pillar of Chile’s economy

Mining plays a substantial role in Chile’s economy, contributing 10% of the country’s GDP in 2020 and over 50% of GDP in some regions.  Chile is especially prominent in its production of copper and lithium, both of which are central to clean energy technologies such as electric vehicles and wind turbines.  Propelled by the clean energy transition, demand for these minerals is expected to increase significantly over the coming decades.

Sources: Mining in Numbers (5th ed, Consejo Minero) <>; Chile – Country Commercial Guide - Mining (2022) <>.

As Chile’s mining industry has attracted significant foreign investment, the proposed constitutional reforms are likely to have a global impact.  Over 70% of copper mines in Chile are owned and operated by private companies, and major global mining companies from the US, China, Australia and Europe have significant investments.  Foreign direct investment amounted to US$8.5billion in 2020, and in the mining sector large mining investment projects under execution for the period 2020-2024 total US$24billion.

2. Proposals emerge from Chile’s constitutional convention

Chile has one of the most stable and free economies in the region, driven by export-oriented growth, but has recently been shaken by increasing discontent, protests and a polarising presidential election.  Protests broke out in October 2019 following an increase in public transport fares and evolved into a major movement against inequality, eventually giving rise to calls for a constitutional convention to rewrite the country’s 1980 constitution.  In a 2020 referendum, 77% of those voting approved this convention.

The convention convened on 4 July 2021 and is to  prepare a text within nine months (with an optional three month extension), which will then be put to a national referendum within sixty days. 

Under the proposed amendments, put forward on 1 February 2022, Chile would cancel mining concessions and seize privately controlled mines that are exploiting “strategic assets”, including copper and lithium.  The proposal has been described as opening the door to the nationalisation of some of the world’s biggest copper and lithium mines.  Given the complexity of the requirements for these proposals to pass, which includes a referendum and the possibility of further revision, the details of the proposed reforms remain fluid and we continue to monitor them closely.

The proposed constitutional amendments are also part of a broader shift in the legislative landscape in Latin America towards greater government intervention in the resource sector.  For example, in Mexico, the government has proposed Constitutional amendments to significantly re-nationalise the electricity sector by returning control to the Mexican state and introducing new restrictions on private investment. 

3. How does this affect foreign investors into Chile?

If Chile’s proposed measures are incorporated into the constitution, there will be significant consequences for foreign companies that have invested in the Chilean mining industry. Compensation for foreign investors negatively impacted by these proposed reforms may be available under international investment treaties for qualified investors if they are successful in the relevant dispute mechanism prescribed in the treaty.

International investment treaties are agreements entered into between countries that provide protections for investors and often entitle them to bring a claim directly against the host state if those protections are violated. 

In addition to protecting against extreme acts, such as direct expropriation or nationalisation, international investment agreements also put in place protections for investors by, for example, requiring governments to treat investors fairly and equitably and not discriminate against foreign investors. 

Chile has international investment agreements with over thirty countries, and agreements containing investments provisions with many more including; Australia, the United Kingdom, and Hong Kong China SAR.  Chile’s obligations under these agreements typically require that any nationalisation or expropriation be accompanied by the payment of prompt, adequate and effective compensation (which is usually to be the equivalent of the fair market value of the expropriated investment).  

The table below provides a snapshot of some of the agreements that Chile has entered into with other states, and the availability of protection against expropriation under those agreements:


Currently in force

No expropriation without compensation

Investor-State dispute resolution mechanism

Chile-Hong Kong SAR BIT

Yes (14 July 2019)



Chile-Hong Kong FTA

Yes (9 October 2014)



Australia-Chile FTA

Yes (6 March 2009)



Chile-Switzerland BIT

Yes (2 May 2002)



Chile-United Kingdom BIT

Yes (21 April 1997)



CPTPP (2018)

(Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam)

Signed, but not yet in force for Chile



It is unclear how Chile proposes to deal with the inconsistencies between its obligations under its existing international investment treaties and the reforms proposed by the constitutional convention.  However, the timeframe for the convention to prepare a draft text is tight, and reforms are expected to progress swiftly.  Accordingly, investors and potential investors should closely monitor these reforms and seek early advice regarding the availability of investment protections.  

Following recent high profile cyber breaches, ASX has included a new data breach worked example in its updated Guidance Note 8 (effective 27 May 2024).

20 May 2024

Like their workers, Australia’s employers are grappling with the confronting reality of a national crisis of violence against women.

20 May 2024

You have entered into a licence agreement with a software provider to use a brand-new contract automation tool for your business.

17 May 2024