The company was fortunate in obtaining from the Chilean Government various privileges, including the concession of 58,000 hectares, or about 145,000 acres, of southern forest land, estimated to be capable of yielding 50,000,000 cubic metres of fuel wood. The Prudhomme process is employed at Corral; wood fuel alone is required, and an important item in the calculated income from the operation of the plant is that of the sale of by-products (charcoal and alcohol) obtained from the wood, in addition to the output of the blast furnaces. The plant was built to produce 50,000 tons of pig-iron annually, and would require for this purpose nearly half a million cubic metres of fuel wood; the expectations of the company have, however, not been realised, and when I saw the plant in 1920 it had been inactive for several years. A week of trial under the auspices of Chilean Government engineers headed by Dr. Manuel Prieto was undertaken in July of the same year, and an optimistic report issued: a few noteworthy points are quoted below.

With regard to the cost of production, the report states that the iron ore costs at Cruz Grande nearly ten pesos per ton (the peso in mid-1920 being worth about one shilling): but the sea freight, unloading at Corral, and transport to the smelter cost 14 pesos per ton. Despite the high freight charge, the cost of producing the 345 experimental tons worked out to only 152 pesos per ton, a quantity of the company’s ingots finding a sale at 345 pesos per ton. If the calculation is correct that, working sustainedly, the smelter could produce pig-iron at all in costs of about 55 pesos per ton, the only problem is that of finding sufficient local or other South American markets prepared to take yearly 50,000 tons.

To obtain this quantity, the engineers estimate the employment of 70,000 tons of iron ores, purchased from El Tofo at 8.40 pesos per ton. The famous iron hill is no longer operated by the French Company, for during the war the deposits were leased to the Bethlehem Steel Iron Mines Company, and an extensive establishment created. A contract exists by which the Bethlehem interests guarantee to supply a maximum of 100,000 tons of ore free on board at Cruz Grande to the Société Altos Hornos, for thirty years.

If the fate, so far, of the Prudhomme smelter at Corral is misty despite high promise, that of the big installation at El Tofo is no less clouded. As soon as the Bethlehem Company took possession, large sums of money were spent on an entirely new installation. Land was acquired at Cruz Grande, an oil-burning power plant set up, the railway line rebuilt and electrified, and a loading basin for the Company’s special ore-carrying steamers, each of 17,000 tons capacity, cut out of the solid rock. The basin is 500 feet long by 40 feet wide, and on the dock side are 17 chutes each with a storage space for 20,000 tons of ore, operating electrically, and built to discharge their contents into 17 hatches so that each ship would be loaded in four hours’ time.

At El Tofo itself electric shovels attack the face of the hill on four or five levels; the crushing machinery is, like the ore-carrying outfit, the most modern that Bethlehem’s experience has evolved; strings of dwellings for workmen and officials stand upon the spur leading to the iron hillside. The Company’s intention, I was informed by the sole official left in the silent camp, is to ship the rich ores of El Tofo to Sparrows Point, Maryland, where special equipment has been built to unload the Cuban ores imported by the Bethlehem interests. The haul from Chile is however considerably longer than from Cuba, and although transit by way of the Panama Canal has brought the Atlantic Coast of North America into closer commercial touch with the West Coast of South America, the cost of freight or other equally powerful reasons have prevented materialisation of the original plans. In more than one instance, wealthy firms making immense sums of money during the great war appear to have placed capital in investments far afield from which a return was not desired for reasons having a certain relation to the tax collector; and whether or no these considerations had any bearing upon the acquisition of large copper, iron, tin and silver deposits in various parts of South America by powerful companies, the fact remains that vast mineral resources have been added to the properties of a comparatively small group, and that their active operation may in the future affect international markets.

Early in 1921 announcement was made to the effect that a concession for thirty years of 140,000 hectares of forestal land in Llanquihue Province had been granted to a German firm, for the installation of large iron works. At the same time the concessionaires, who were stated to be engineers representing the Krupp firm, secured an option upon the Pleito iron ore deposits in Coquimbo and another series of mines in Atacama known as the Zapallo fields. Several Chilean newspapers, including the energetic Mercurio, took exception to the land grant, pointing out the possibility that Germany was evading the spirit of the Treaty of Versailles, prohibiting her from manufacturing arms or guns within her own territory, by setting up big iron and steel factories upon foreign soil; it was also objected that the territory conceded includes a considerable part of the forestal reserves left in South Chile. A strip of woodland two kilometres wide had been reserved by the Chilean Government between the concession and Lake Todos los Santos, and with this exception the German grant extended from the lake to the foot of Calbuco volcano, with water outlet to the Pacific by way of an arm of the Gulf of Reloncaví. The Petrohue River is said to offer power for large hydraulic installations, and two other and smaller streams also run through the grant.

Ore from the north would, according to the plan, be transported to wood-burning smelters in the south. But difficulties arising from the claims of property-owners in the conceded tract of forest appear to have checked the scheme; the concessionaires announced their withdrawal in early 1922.

The attitude of the Chilean Government is, quite naturally, that it is desirable for large industrial development work to be promoted: and that the concession of forestal land given to the German interests would have been gladly granted to other nationals making similar propositions.

Gold and Silver

In early colonial days there was a fair yield of gold from Chile, chiefly obtained from the sands of the southerly rivers and deposits, as those of Tiltil, situated in the mountains between Valparaiso and Santiago, and the shining sands of the river beds of Huasco. It is estimated that from the days of the first settlement to the end of the fifteenth century Chile produced 131,000,000 pesos’ worth of gold, 63,000,000 worth in the sixteenth century and 167,000,000 in the seventeenth.[[6]] After Independence and the encouragement of foreign enterprise, production rose in less than fifty years (1801 to 1850) to 226,000,000 pesos (all these calculations being reduced to pesos of eighteen pence for purposes of comparison), but weakened abruptly when the deposits of alluvial gold, eagerly sought and worked, became exhausted by the end of the century. The present yearly production of gold averages about 2,000,000 pesos, chiefly from the Alhué mines near Rancagua.