Chile’s mining under scrutiny

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.

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 on government priorities.

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. “If you look at the laws, they are good. We need to enforce the laws, not make more laws or increase fines.”

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.