Few countries are as pivotal to the world’s green transition as Chile. The country has vast reserves of both copper and lithium, but what truly sets it apart is not just mineral wealth, but its bold embrace of technological innovation. By integrating AI, blockchain and advanced sustainability practices, Chile is forging a new model for resource-rich countries seeking to lead the global shift towards cleaner, more transparent and more ethical supply chains.
Copper and lithium, often dubbed “critical minerals”, are the backbone of the clean energy revolution. They are essential for electric vehicles, solar panels, wind turbines and the batteries that store renewable power. Chile is the world’s largest producer of copper and the second-largest supplier of lithium, accounting for roughly a quarter of global output of both metals. As demand for these minerals is projected to soar – copper by 50% and lithium by 600% by 2040 – Chile will play a key role in ensuring supply can keep up, including companies like SQM which produces 15% of lithium globally.
But Chile’s dominance is not guaranteed. Many of its largest copper deposits are aging and declining in quality, and the process of developing new mines is fraught with political, environmental and social complexities. Local opposition, regulatory hurdles and the imperative to protect fragile ecosystems are real constraints. The challenge is not just to mine more, but to mine smarter – and more sustainably.
World Copper balance breakdown (kt)
Source: WoodMac, Bernstein, December 2024
Chile’s mining sector is undergoing a quiet revolution powered by AI. AI-driven predictive maintenance systems are now commonplace, analysing sensor data to forecast equipment failures and prevent costly downtime. This has led to dramatic reductions in maintenance costs and unplanned outages at major mining operations. Unplanned downtime costs the world’s 500 largest companies nearly $1.4 trillion annually, about 11% of revenues, and predictive maintenance systems have reduced catastrophic failures in critical mining equipment, such as trucks, pumps and mills, by as much as 60%. Real-time environmental monitoring, powered by AI, is also helping companies optimise water usage and energy consumption – critical in a country where water stress is a growing concern. BHP’s Escondida mine in northern Chile has been able to reduce water and power consumption by 2-3%; with its water coming from a desalination plant in the water scarce Atacama Desert, even small reductions in water use are critical for preserving local ecosystems and reducing stress on limited resources.
Perhaps most transformative is AI’s role in resource management. By analysing geological data, AI can pinpoint high-grade ore deposits more accurately and efficiently, reducing exploration costs and environmental impact. Chilean innovators are even using AI-powered scanners to recover copper from mining waste, potentially reclaiming up to 40% of minerals that would otherwise be lost. This not only boosts productivity but also reduces the environmental footprint of mining operations.
Automation, too, is reshaping the workforce. Autonomous haul trucks and drilling equipment, guided by AI, are becoming the norm at large sites. These technologies improve safety by removing workers from hazardous environments and enable round-the-clock operations, further increasing efficiency.
As global consumers and manufacturers demand cleaner, more ethical supply chains, transparency has become a strategic imperative. Blockchain is a technology well suited to track the provenance of minerals and the sustainability of their production. Chile’s National Electricity Coordinator is piloting the Renova initiative, a blockchain platform designed to trace the renewable energy used in copper production. By logging every megawatt of renewable power that goes into mining, Renova provides verifiable proof that Chilean copper is produced with lower carbon emissions. This not only addresses the risk of “greenwashing” but also gives mining companies a competitive edge in global markets where buyers increasingly demand certified, sustainable materials.
Chile’s innovation agenda is not limited to mining. The country is aggressively phasing out coal, with a goal to retire or retrofit 70% of its coal plants by the end of 2025 – well ahead of its initial targets. The government’s National Green Hydrogen Strategy aims to make Chile the world’s lowest-cost producer of green hydrogen by 2030 and a top three global exporter by 2040. Green hydrogen, produced using renewable energy, is seen as a game-changer for decarbonising heavy industry, transportation and even mining itself.
Pilot projects are already underway, operated by Chilean steel company CAP and utility Engie Chile as well as many of the major global energy companies. Projects also include the development of Chile’s first locally made hydrogen bus. The government’s Green Hydrogen Action Plan, published in 2024, outlines steps to build the necessary infrastructure and regulatory framework to scale up production and the use of green hydrogen across sectors. The country is well positioned to be a key player in the production of green hydrogen given its abundant renewable energy resources – vast solar radiation in the Atacama Desert and consistent winds in Patagonia.
Technological disruption is only as effective as the people who drive it. Chile’s innovation story is as much about human capital as it is about hardware and software. The country is investing in STEM education, nurturing a new generation of engineers, data scientists, and entrepreneurs who can harness AI and blockchain for local challenges. Ethical considerations are also coming to the fore. As AI and automation transform the mining workforce, there are questions about job displacement, worker safety, and the role of humans in increasingly digital operations. Chilean innovators and policymakers are actively engaging in these debates, seeking to ensure that technology serves both economic and social goals.
Chile’s unique combination of mineral wealth, technological ambition and commitment to sustainability positions it as a bellwether for the global green transition. By leveraging AI to optimise mining, blockchain to ensure transparency and green hydrogen to decarbonise industry, Chile is not just adapting to disruption – it is actively shaping the future of energy and resource management.
KEY RISKS
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