Chile Mining Report Q2 2008

Chile's copper production would increase by 5% to 6mn tonnes in 2009, according to Ana Isabel Zuniga director of research at Cochilco, the country's copper commission, Reuters news agency reported in early April. 'Chile's production will continue to grow, with an estimated US$22bn in new investment in the sector between 2007 and 2011' Zuniga was quoted as saying. She said total copper output in 2007 had been 5.5mn tonnes, and she expected the total in 2008 to be 5.7mn tonnes.

Chile is the global copper capital, accounting for about 35% of the world copper output. The country is also home to the world's largest copper miner - state-owned Corporacin Nacional del Cobre (Codelco). Besides, copper the Chilean geology also hosts other significant metals and minerals including gold, silver, molybdenum, lithium, zinc and iron ore. In fact, gold exploration and mining in the country has also picked up steam in the recent times, widening the prospects of the Chilean mining industry.

Moreover, the country's mining industry highlights its importance for Chile's economy by contributing in double digits to its gross domestic product (GDP).

Chile has not only made a mark by fully leveraging its natural resources to its advantage but also by gradually establishing firm rules and standards for protecting its environment and human rights in the context of democratisation and globalisation. However, it must still overcome challenges such as guaranteeing energy and water supplies to the mining industry. That said, the overall economic environment of Chile is notably conducive for business: lower labour costs, investor friendly laws and free-trade agreements with major economies around the world. In particular, attractive foreign investments have helped the Chilean mining industry gain a strong momentum over the last few years.

A new mining law is on the anvil that seeks to further streamline the processes for better management of natural resources in Chile. Under the new law, mining and exploration companies will have to declare their reserves and resources, and report drilling results. The law also aims to facilitate funds for mining projects across the country. Besides the mining law, the Organic Constitutional Law on Mining Concessions (1982) and the Mining Code of 1983 are the two key mechanisms governing mining activities in Chile.

Industry Forecast Owing to its rich geology, the Chilean mining industry is expected to continue deriving benefits from high metal prices. According to this report, the industry is forecast to grow at an average 3.8% per annum over 2008-2012.