Mining for efficiency: how blockchain could boost productivity in Chile’s copper industry

Abstract

This paper explores the potential impact of blockchain technology on the productivity of Chile’s copper mining industry. Amid rising global demand for copper and declining mining productivity, Chile faces challenges which include complex contractor management and administrative inefficiencies. We review the recent trends in mining productivity and blockchain technology and conduct a preliminary survey to assess the status of blockchain adoption in Chile’s mining industry. The study also explored the impact of smart contracts in Chile’s mining sector by analyzing contracts information of a large mining company in Chile. Our results suggest that high-impact projects in Chile’s mining industry could benefit from integrating blockchain technology. However, these benefits will likely be concentrated among larger projects and contracts, where the costs of implementation and maintenance could be justified by the potential benefits. An exploratory survey on a selected group of senior professionals and executives shows most of respondents do not know the blockchain, and a small fraction of them are barely implementing it. Adoption barriers include limited internal capabilities, implementation challenges, resistance to change, procedural culture, and uncertain financial returns. In spite of these challenges, smart contracts are viewed as highly important for the organization. Our findings also suggest that blockchain could improve transparency, supply chain, reduce accreditation times, and streamline compliance in large-scale operations. A single-site analysis shows modest economic gains (USD 5.6 million NPV) but high returns (~ 2,300% ROI), indicating viability for low-risk implementation. Finally, our study concludes that blockchain offers incremental but valuable improvements, helping Chile’s mining sector enhance efficiency and competitiveness in a rapidly evolving global market. Our contribution is of an exploratory nature, and further research in the direction of designing a model is part of our broader research agenda.