▌ 2007 figures Population 16.6 millions Unemployment (seasonally adjusted) 7.0% GDP (current prices) $ 163.9 billions GDP per capita (current prices) $ 9.884 Total Trade $ 111.6 billions Trade Balance $ 23.6 billions Current Account (% of GDP) 4,4% Inflation (Dec/Dec) 7.8% Fiscal Balance (% of GDP) 9.0% Source: Chilean Central Bank, IMF, National Institute of Statistics. Chile has free-trade agreements with the main economies of the world, and it is also an associated member of Mercosur.
Source: Chilean Central Bank.
▌ World Copper Production 15.5 m tons. (#1) ▌ World Molybdenum Production 216 k tons (#3) Chile; 21% World ; 64% World; 79% Chile; 36% ▌ World Gold Production 2,207 tons (#16) ▌ World Silver Production 19,694 tons (#5) Chile; Chile; 9% 2% World ; 98% World; 91% Source: Chilean Copper Commision.
“La Moneda”
Ministry of Mines • Chilean Copper Commission (Cochilco) Agencies • National Geology and Mining Service (Sernageomin) • Chilean Copper Corporation (Codelco) Companies • National Mining Corporation (Enami) Research • Mining and Metallurgy Research Centre (CIMM) Centre
Using Foreign Investment Law (DL 600), foreign investors enter into a contract with the Foreign Investment Committee, which acts on behalf of the government of Chile, granting fixed tax rates, repatriation of profits at any time, foreign currency accounting and other benefits. Chilean law does not allow monopolies in production of steel or steel-related raw materials (i.e., iron, manganese, molybdenum). Free competition is protected and guaranteed by the Antitrust Department and the Free Competition Tribunal. Concessions (exploration or exploitation) takes the form of a legal contract subject to review by the courts rather than by an administrative authority, reducing unpredictability.
In the exploration stage, there is not discrimination between domestic or foreign investors. The Chilean labour legislation does not restrict foreign staff and managers in any sector of the economy. As a conclusion, Chilean law makes no distinctions among economic sectors or ownership types, that could give rise to discriminatory or preferential treatment among nationals or to foreign investment.
A specific tax on mining activities came in force on January 1, 2006. The tax is applied to mining companies whose sales are equal to or greater than the equivalent value of 12,000 metric tons of fine copper. It varies from 0% (less than 12 thousand tons) to 5% (more than 50 thousand tons), and the tax base is applied to the net operational income It also modifies Foreign Investment Law (DL 600), allowing investors to opt to a new tax invariability for the following 15 years.
We did not found any important government support measure -described in the survey- in areas such as: Investment Promotion Trade-Related Support Assistence to Ailing Enterprises
Created in 1993 by the Ministry of Mining, is oriented to small-scale miners (mostly subsistence miners) acting in metallic and non metallic extraction, in order to improve their quality of life. In 2007 it financed 314 projects for around US$ 1.5 million, benefiting two thousand subsistence miners, and made a total of 28 courses to 890 miners.
“Titanium Tower”
• The Chilean Iron and Steel Industry started with a feasibility study and the request of government support. 1888 • The government created an agency to promote infrastructure, with the I&S industry as a priority. 1939 • A Steel Commission is created by the Ministry of Economy, that later laid the groundwork for CAP (Compañía de Aceros del Pacífico) as a public-private company, under private 1946 management. • In the beginning of the “Popular Unity” Government, CAP became a part of the “social ownership area”, becoming an state-owned iron monopoly. 1970 • CAP´s “new privatization” lasted from 1980 to 1987. The company was sold into the stock market and to the government workers. 1980-87
▌ Steel Production 60 0.16 Production (m tons) 0.14 50 0.12 40 Share (%) 0.10 30 0.08 0.06 20 0.04 10 0.02 0 0.00 2003 2004 2005 2006 2007 Chile South America Chilean Production Relative to World (%) Domestic production meets about 70% of local market needs and the remaining 30% is imported mainly from Brazil, Argentina and China. Only a small share of locally made rolled products is exported, while 90% is sold locally.
Chilean steel market is served by two producers (CAP and Gerdau Aza), which provide around 70% of domestic needs of 2.4 million tons. Most of the Chilean iron and steel mining business is led by CAP subsidiaries, a former public company. Vertically integrated for secure a stable supply of raw materials, has 66% share of the market. Gerdau Aza, subsidiary of Brazilian Gerdau, is a scrap recycler that produces the remaining 33%.
▌ Demand by Sector Others Construction Construction Industry Growth 12% 33% Through the past five years Wiredrawing 11% nominal construction spending has increased 27.8%, representing 7.2% of GDP in 2007. Mining 19% Forming Industry 25% The apparent consumption per capita has increased 35% in the last five years, reaching 151 kg/capita in 2007, due to growth of mining and construction sectors, that set us above the regional average of 102kg/capita.
▌ Exports (tons): 156,9 k tons Africa; 107 ROW; 354 Asia- Europe; Pacific; 7,496 Nafta; 4,354 16,223 C&S America; 128,063 Source: Chilean Customs. Changes in trade by origin/destination: Increase in exports to South American countries (mainly Peru) and a decrease to NAFTA countries; in imports there is a change in sourcing from CIS and NAFTA, to Asia-Pacific countries.
Within the context of the Iron and Steel Development Plan, CAP production will increased its capacity to 3 million tons a year, effective 2013. Gerdau Aza plans to increased its production capacity from 520 to 800 thousand tons, effective 2011.
▌ Steel Production Historic Forecast 2.5 2.0 m tons 1.5 1.0 0.5 0.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Capacity Total Production Prod. BOF Prod. EF Source: ILAFA. Before financial crisis, the local steel industry was facing growth opportunities in local and regional markets, without threats to its long-term viability.
“Division Andina, Codelco”
Molyddenum (tons fine) 4,039 Manganese (tons ore) - Molyddenum (tons fine) 19,065 Iron Ore (m tons ore) - Manganese (tons ore) - Iron Ore (m tons ore) - Molyddenum (tons fine) 1,214 Molyddenum (tons fine) 10,157 Manganese (tons ore) - Manganese (tons ore) 26,808 Iron Ore (m tons ore) 6,840 Iron Ore (m tons ore) 1,977 Molyddenum (tons fine) 2,583 Molyddenum (tons fine) 2,525 Manganese (tons ore) - Manganese (tons ore) - Iron Ore (m tons ore) - Iron Ore (m tons ore) - Molybdenum is produced in the central and Molyddenum (tons fine) 5,192 north of Chile, in zones where copper mining Manganese (tons ore) - is important. Iron Ore (m tons ore) 6,840 Iron ore and Manganese production is more geographically concentrated. Source: Chilean Copper Commision
▌ Iron ore Production 2500 0.8 0.7 Production (m tons) 2000 0.6 0.5 Share (%) 1500 0.4 1000 0.3 0.2 500 0.1 0 0 2003 2004 2005 2006 2007 World Total Chile Chilean Share Source: USGS, Chilean Copper Commission. Chilean share of world iron resources and reserves is only 0.5% (1.5 billion tons of mineral), and the production is 8.8 million tons of mineral, made by two companies. A 23% of this production is exported mainly to China, Japan, Peru, Indonesia, United States, Malaysia and Australia. Bulk Iron exports grew 85% between 2003-07, to 3.5 thousands tons, and Pellet iron exports decreased 9% to 3.2 thousands tons.
There are new projects and investment oriented to sustain domestic demand and increasing exports. The biggest one is part of the Iron and Steel Development Plan by CAP that considers an US$2.5 billion investment. Although, some of the projects could suffer a delay under the current economic circumstances.
▌ Manganese Production 45 0.15 40 0.12 35 30 Production Share (%) 0.09 25 20 0.06 15 10 0.03 5 0 0.00 2003 2004 2005 2006 2007 Chile (ktons) World (Mtons) Chilean Share (%) Source: World Bureau of Metals Statistics. Manganese reserves and resources in Chile are marginal (0.25% of world reserves), as well as ore production, which in 2007 stood at 26.8 thousands tons (slightly under 0.1% of world production). Only one company produces the mineral, Manganesos Atacama, related to CAP. Chilean International Trade ore and products (alloys) is marginal on a world basis.
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