by James West on 8th Aug, 2008, 11:10:50 AM EST

The world’s number one producer of Copper is Chile, and there is no sign that 2009 will see any slowdown in activity. Copper is central to Chile’s economy and the country’s largest mines, such as those owned by state run copper company Codelco, pay some of the highest wages, averaging $40,000 a year.

Since it produces 10 percent of the world copper supply, prices are affected when events such as the strikes that are once again threatened, the copper price goes up on supply concerns.

This time, the miners are threatening to strike unless the government initiates discussion on nationalizing Chile’s resources. And three of the country’s most powerful unions are uniting to put pressure on the presidential candidates in the upcoming federal elections due in 2009.

The rhetoric is tactical however.

All the unions really want is to keep more of the profit from its resources in the country, so that the health care, infrastructure and education can be brought up to those of Europe and North America.

Mining exploration companies are already feeling that pressure from an increasing number of countries that host substantial mineral and hydrocarbon wealth. Everywhere from the province of Alberta to Africa, ruling political parties are enacting taxes and royalties on miners of their resources.

That situation is both a threat and an opportunity to mining executives who have an inside edge in countries where the phenomenon is prevalent.

Take, for example, Apoquindo Minerals (TSX.V:AQM). Apoquindo is currently drilling it’s Copper Oxide project in the heart of the Antofagasta Mining belt, an area that hosts some of the world’s largest copper mines in operation today.

Apuquindo is ideally suited for political maneuvering within Chile because its senior management are essentially veteran Chilean mining executives, with the exception of its president, Cesar Lopez, who heads Lopez and Ashton, the premier legal firm in Chile for foreign companies seeking to establish operations in Chile.

But the Chairman of the company, Juan Villarzu, spent 9 years as the president and CEO of the Codelco. He was also Chairman of the International Copper Association (ICA), considered the leading organization for the promotion of copper worldwide. Mr. Villarzu has held other such prestigious positions as Member of the APEC Business Advisory Council, Minister Secretary General of the Presidency of Chile and Senior Economist to the World Bank.

Jozsef Ambrus, Geologist & PhD, has over 38 years in exploration and development of mineral resources, evaluation of mining projects, strategic planning, and mining business assessment. He spent 10 years with Codelco, the largest mining company in Chile. During the nineties Mr. Ambrus was Senior Vice President of Exploration and Strategic Planning for TVX Gold Inc. Since 1996 Mr. Ambrus has been President of Geovectra S.A., and since 1998 has been a Board Member of Antofagasta Minerals. Mr. Ambrus holds degrees from the University of Chile and Salamanca University in Spain, and has been designated a geologist since 1970 and a Doctor of Earth Sciences since 1979. Throughout his career, Mr. Ambrus has been actively involved in the discovery and early development of several mineral deposits in Chile.
So to suggest that Apoquindo will not be adversely affected by the political pressures of the unions is perhaps hubris, there is no doubt that if any Canadian listed exploration company is ideally equipped in terms of management to negotiate a satisfactory outcome for its investors, its surely Apoquindo.

This article is by James West of The Midas Letter