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General Market Commentary
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General Base Metals
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General Market Commentary
Chile's miners eye expansion, but wait until political uncertainty lifts
Mining companies operating in Chile are examining restarting projects that were put on hold in recent years due to a copper price slump, the mining minister and industry executives said, though final investment decisions will wait until political uncertainty lifts after the November presidential elections.
The price of copper [CMCU3], by far Chile's most important export, started to slowly recover in October, after years of weak demand for the red metal. So far in 2017, prices have risen 7 percent, and analysts expect further increases as the copper market moves toward a deficit.
That, in turn, is causing miners to slowly examine projects put on the back burner years ago when prices begin to slide from historic 2011 highs.
"One perceives more movement from the projects that were, one way or another, delayed by price," Chilean Mining Minister Aurora Williams told Reuters in a recent interview.
But even as prices rise, miners are wary of a relatively unsettled policy landscape in the South American country, various industry sources told Reuters in recent weeks.
During the past three years, center-left President Michelle Bachelet has pushed through a series of reforms to the nation's tax and labor code. While supporters say they have been necessary to lessen the nation's biting inequality, many industry leaders say they are squeezing business, and new labor laws contributed to a massive strike at BHP Billiton's Escondida mine earlier this year that led to $1 billion in lost production for the company.
"[The reforms] have made the sector timid to announce new investments. There's been a loss of confidence," said one high-ranking source in a foreign miner, who requested anonymity due to the sensitivity of the matter.
While a business-friendly ex-president, Sebastian Pinera, is the favorite in the November presidential election, leftist independent Alejandro Guillier is close at his heels, and a win by him would unsettle the already-leery industry.
MINERS LOOK, BUT DON'T LEAP
In the meantime, miners are taking a gradual approach to any potential expansions.