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Copper mining productivity: Lessons from Chile

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  • de Solminihac, Hernán
  • Gonzales, Luis E.
  • Cerda, Rodrigo

Abstract

Chile represents almost one third of the world’s copper production. Mining is one of the main industries that contributes to our country’s development with resources and is globally recognized. Due to the end of the commodity cycle, improving productivity will be a key variable in mining performance in incoming years. This paper studies mining productivity in Chile by relying on two indicators: measure of the total factor productivity (TFP) using the traditional Solow methodology, and labor productivity. Since 2000, we found a decrease in TFP, explained mainly by the participation of capital as well as diverse factor adjustments to labor and capital inputs. Average labor productivity also decreases 42% from 1999 to 2010, a decrease explained by four determinants: real mining wages, electricity prices, copper prices and mineral grade. Since 2010, average labor productivity has increased 30%, and there is also an opportunity for additional improvement by reducing energy costs as well as by aligning productivity and labor performances.

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  • de Solminihac, Hernán & Gonzales, Luis E. & Cerda, Rodrigo, 2018. "Copper mining productivity: Lessons from Chile," Journal of Policy Modeling, Elsevier, vol. 40(1), pages 182-193.
    • Handle: RePEc:eee:jpolmo:v:40:y:2018:i:1:p:182-193
    DOI: 10.1016/j.jpolmod.2017.09.001
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    1. David Humphreys, 2020. "Mining productivity and the fourth industrial revolution," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 33(1), pages 115-125, July.
    2. Fang, Chuandi & Cheng, Jinhua & Zhu, Yongguang & Chen, Jiahao & Peng, Xinjie, 2021. "Green total factor productivity of extractive industries in China: An explanation from technology heterogeneity," Resources Policy, Elsevier, vol. 70(C).
    3. Viviana Carriel & Marcelo Lufin & Manuel Pérez-Trujillo, 2022. "Do workers negative self-select when they commute? Evidence for the Chilean case of long-distance commuting," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 69(1), pages 255-279, August.
    4. Zauresh Atakhanova & Seribolat Azhibay, 2023. "Assessing economic sustainability of mining in Kazakhstan," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 36(4), pages 719-731, December.
    5. Correa, Juan A. & Gómez, Marcos & Luengo, Andrés & Parro, Francisco, 2021. "Environmental misallocation in the copper industry," Resources Policy, Elsevier, vol. 71(C).
    6. Cevik, Nuket Kırcı & Cevik, Emrah I. & Destek, Mehmet Akif & Bugan, Mehmet Fatih & Manga, Müge, 2024. "Unleashing power of financial technologies on mineral productivity in G-20 countries," Resources Policy, Elsevier, vol. 90(C).
    7. Ahmad, Shabbir & Steen, John & Ali, Saleem & Valenta, Rick, 2023. "Carbon-adjusted efficiency and technology gaps in gold mining," Resources Policy, Elsevier, vol. 81(C).

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