Making Sure Chile Doesn’t Miss the Rare Earth Opportunity

ECONOMY | April 8, 2025

A major project in Penco, Chile, is currently stalled due to bureaucracy, despite its potential to produce over 10% of the global supply of rare earths—a resource critical for modern technologies.

Economist Joaquín Lavín, MBA from the University of Chicago and Director of the Institute of Entrepreneurship at Universidad del Desarrollo (UDD), is championing the importance of seizing this economic opportunity. He is advocating for the activation of a rare earth mining project in Penco, located in the Biobío Region.

“Tesla cars have a button called ‘insanity mode,’ and when you press it, the car goes from 0 to 100 km/h in three seconds. That’s because it has rare earths in its motor,” Lavín explains. He emphasizes how these strategic minerals are essential for today’s tech-driven global economy.

The Role of Rare Earths

Rare earth elements are crucial for industries involving high technology, electric vehicles, renewable energy, defense systems, and advanced electronics. These minerals, often rare and hard to find in high concentrations, include magnetic types that are especially valuable due to their heat resistance and longevity.

“The most important are magnetic minerals, which can last for years and are used in motors for electric vehicles and wind turbines,” Lavín says. “They’re also used in defense, missile guidance systems, and even screens for laptops and smartphones.”

He notes that the U.S. is currently dependent on China for most of its rare earth imports and is actively looking for alternative sources. Chile, with its stable institutions and mining experience, could be a natural supplier.

Why Chile?

Lavín argues that Penco could play a crucial role in this global supply chain. “We’re not just talking about lithium anymore. Now we have three assets to negotiate with the world: copper, lithium, and rare earths.”

The proposed project, known as “Módulo Penco,” is led by the Aclara company with backing from the CAP Group. It involves a $130 million USD investment and would create hundreds of jobs, further diversifying Chile’s mining output.

Bureaucratic Delays: The “Naranjillos” Debate

In April 2023, Aclara submitted a new Environmental Impact Assessment (EIA) for the project. But in July 2023, the Regional Environmental Evaluation Service (SEA) of Biobío rejected it, citing objections related to conservation concerns over the native “naranjillos” trees in the area.

“The rejection was technical, based on a Conaf (Chilean Forest Service) report, but it’s not as straightforward,” Lavín says. He argues that thousands of these trees exist in the region and that the company has a clear plan for reforestation.

“It’s a typical case of bureaucratic paralysis. A single person who blocked the permit is no longer in office. But the damage is done—the process needs to start over,” he laments.

Lavín warns that while other countries such as the U.S., Canada, and Australia are rapidly advancing rare earth projects, Chile risks being left behind. “We have a golden opportunity. Let’s not waste it.”

Source: LUN