Accident puts Chile’s mining industry under microscope, but overhaul won’t be easy

Accident brings scrutiny to Chile’s mining system

COPIAPO, Chile — While 33 men trapped in a mine cling to hope that they’ll get out alive, the company that put them there says it can’t afford to pay their salaries and may go bankrupt.

The San Esteban mining company is in such bad shape that it has neither the equipment nor the money to rescue the men; Chile’s state-owned mining company is digging the escape tunnel, which will cost about $1.7 million.

In the days after the Aug. 5 tunnel collapse at the San Jose gold and copper mine, company leaders defended their safety measures, but have since gone mum and attempts to reach anyone at San Esteban were not successful.

Earlier this week, lawyers for the small mining company said that with the mine shut down, and no income coming in, the company was at a high risk for bankruptcy.

How such a financially unstable business was allowed to operate is a question that is putting one of Chile’s top industries under the microscope, exposing a dark underside of questionable regulation that may ultimately reflect more on government priorities than one rogue company.

Sen. Baldo Prokurica, who is on the Senate mining committee, says he has been pushing Congress for years to increase the number of inspectors for the state regulatory agency, Sernageomin. It has only 18, he said, which makes regulating the country’s several hundred mines a daunting task.

“The government has abandoned (the regulator),” Prokurica said in an interview with The Associated Press. “If you look at the laws, they are good. We need to enforce the laws, not make more laws or increase fines.”

Prokurica said the mine operator had a poor safety record. In 2007, company executives were charged with involuntary manslaughter for the death of a miner. The worker’s family settled, but the mine was closed until it could comply with key safety regulations, said Prokurica.

In 2008, the mine reopened even though the company apparently hadn’t complied with all the regulations, he said, adding that the circumstances surrounding the reopening are being investigated.

President Sebastian Pinera has fired top regulators and created a commission to investigate the accident and the agency. Since the collapse, the agency has shut down at least 18 small mines for safety violations, a possible sign that lax safety measures are open secrets at many mines.

On Thursday, the first of many expected lawsuits against San Esteban and the government were filed, and a judge ordered the retention of $1.8 million of company money in anticipation of the suits.

Despite advances in technology and increased emphasis on safety — at least publicly — mining remains a dangerous profession.

Since 2000, about 34 people have died every year on average in mining accidents in Chile, with a high of 43 in 2008, according to a review of Sernageomin data.

The agency declined interview requests, citing the investigation and internal overhaul that Pinera ordered.

Changing the industry will not be easy.

Chile’s stable and regional powerhouse economy is in large part built around exports of copper, gold and other minerals. Copper alone accounts for roughly a third of government revenue, and the state has a policy of shoring up national reserves during periods of high copper prices.

Mining also offers many of the country’s poor the best shot at a middle-class life, especially in the largely rural and rugged desert areas of northern Chile, where the majority of mines are located.

The mine closures and the possibility of future crackdowns are already prompting concerns among mining leaders.

Eduardo Catalano, president of the Miners Association of Copiapo, said he worries about what increased scrutiny could mean for the operators of small mines, which employ about 10,000 people in northern Chile.

“There is a before and after this accident, especially when it comes to safety,” Catalano said.

Even at the site of the accident, where dozens of families are camped out awaiting news of their loved ones, contemplating life without mining isn’t easy.

Hellen Abalos, 17, said her 19-year-old husband, Jimmy Sanchez, one of the men trapped in the mine, had only been working there four months but would often come home with scary stories about safety.

“He panicked every day he went in,” she said, holding the couple’s newborn in her arms.

Abalos said she doesn’t want him to return to mining, adding that they might have to move to another region for him to find different work.

In the meantime, the government has said it will try to help the workers at the San Jose mine in the face of their employer’s economic troubles.

But even how it proposes to do this speaks to a deep dependency on mining.

“We want relocate these workers in other mines so they don’t lose their salaries,” Prokurica said.

Associated Press writers Federico Quilodran and Bradley Brooks in Copiapo, Eduardo Gallardo in Santiago, and Michael Warren in Buenos Aires, Argentina, contributed to this report.