Mining nationalization and privatization in Peru and in Chile

Abstract

The nationalization process of mining companies was a global issue from the beginning of the twentieth century. It first occurred in Europe for diverse reasons and at the end of the 1940s, it reached developing countries. The cause for nationalization in the latter was dominated by the search to recover a national patrimony and to regain sovereignty in countries where mining weighed too much economically compared to other activities. Transnational corporations generated so much of exports, taxes, and GDP in these countries that governments had very little room for devising national policies. The future of countries was decided in the secret of foreign board rooms of these companies, without consultation to national governments. Nationalization was also driven by the belief that by managing mining resources, the countries would accelerate economic development. Peru and Chile, indisputable leaders in mine production, experienced nationalization at the end of the 1960s and beginning of the 1970s, but the outcome was very different in each country. This paper explores the successes and failures of mining nationalization in Peru and Chile, and how the outcomes influenced mining policy during the following decades.