(Bloomberg) -- Lundin Mining Corp.’s $950 million purchase of a majority stake in a Chilean copper mine is the strongest indication yet of declining political risk in the South American nation. 

The Caserones deal announced late Monday means Lundin will invest at least $2 billion in a mining district that spans the Chile-Argentine border, said Juan Carlos Guajardo, who heads consulting firm Plusmining.

“This huge investment speaks for itself,” Guajardo said in a text message. “They have a tolerable risk perception for Chile and Argentina.”

Chile’s credentials as an investor-friendly jurisdiction were put to the test after an outbreak of social unrest in 2019 led to efforts to draft a new constitution and ushered in a left-leaning government promising sweeping tax reform. The upheaval, including a new royalty level on mining, led companies such as Lundin, BHP Group and Freeport-McMoRan Inc. to say they wouldn’t be pulling the trigger on new investments until the political and regulatory environment improved.

Read More: Copper M&A Heats Up as Lundin Pays $950 Million for Chile Mine

Tensions have eased somewhat more recently, with an initial constitutional process giving way to a more conservative format and the government appearing to open the door to further concessions in its royalty bill on the mining industry.

To be sure, Toronto-based Lundin agreeing to buy 51% of the company that operates Caserones from Japan’s JX Nippon Mining & Mtals Corp. may say more about copper’s favorable outlook in the energy transition and the relative appeal of buying old mines rather than building new ones. 

Still, it’s also an almost $1 billion bet that the top-producing nation will be able to navigate social and political pressures without radical changes that would erode its competitiveness.

“It also says that the company is comfortable with current political dynamics and that Chile will protect one of its critical industries,” said BTG Pactual analyst Cesar Perez-Novoa.

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