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Chile's presidential hopefuls propose sweeping changes in mining sector

SANTIAGO, Aug 25 (Reuters) - Two of Chile's three main candidates in the November presidential election proposed broad changes for the mining sector at a forum on Friday hosted by the country's largest business organization.

At the event organized by business group Sofafa in downtown Santiago, center-left candidate Alejandro Guillier struck a pro-business tone but said he would consider modifying free trade accords to promote the local smelting industry.

Hard-left candidate Beatriz Sanchez, meanwhile, pushed for billions of dollars in new taxes on mining companies, a stark contrast to proposals from a representative of conservative frontrunner Sebastian Pinera to streamline the permitting process for new mines.

Pinera, a billionaire former president, currently has a large lead in the polls over Guillier and Sanchez. However, it is unlikely any candidate will win enough votes in the Nov. 19 election to avoid a December runoff, and any second-round vote with Pinera looks to be much closer.

Among the key policy areas that investors are watching is mining, as Chile is the world's number one copper exporter but faces falling productivity as much of the country's best-quality ore has already been mined.

Guillier told the gathering that his government would speed up Chile's environmental permitting process, which many have accused of being too onerous. He said the government could avoid inter-agency confusion by delegating more decision-making to regional authorities.

Guillier added that the government needed to take a more hands-on approach to promoting value-added industry, given that Chile - despite being the wealthiest nation in Latin America - is still heavily dependent on raw material exports.

He said his campaign team was studying the possibility of modifying free trade accords which penalize refined copper exports from Chile, in effect incentivizing raw concentrate.

"We can't keep growing only on raw material exports," Guillier said. "We have to advance toward adding value."

Sanchez, who represents the newly formed Frente Amplio bloc, pledged to hike mining taxes to raise an estimated $1.8 billion to $2.5 billion in funds to pay for a revamp of the nation's increasingly unpopular social security system.

She added that she would like to see state-run copper giant Codelco play a larger role in Chile's mining industry.

Francisco Orrego Bauza, a lawyer and legislative aide representing investor favorite Pinera, gave relatively few specifics and did not take questions. His speech focused on spurring private sector investment, and he said a Pinera government would create an agency that actively supports large-scale and greenfield mining projects.

(Reporting by Gram Slattery; Editing by Cynthia Osterman)