Chilean Mining Investments Drop

March 11, 2014


In a surprise to analysts, the Chilean economy contracted in the fourth quarter as investment in the mining industry declined. Chile is known for its prosperous copper mining but investment in the metal has diminished due to rising costs and falling prices. Chile is the world's largest producer of copper and relies on the income it gets through exploration and mining licenses.


While the Chilean mining industry expanded 2.1% from the previous year, it represents the slowest pace since the first quarter of 2012. During the same time construction grew 0.2% and financial services increased 3.6%. Manufacturing contracted 1.3% over the same time frame.


Currently copper makes up 60% of Chile's exports. Copper producers plan to expand mine capacity and output to record levels again this year. China continues to stockpile copper and is the largest market for copper and most other metals. While some analysts doubt the copper expansion is sustainable, others believe it will pan out.


"We think a lot of intended projects are going to come through on time and there will be a surplus of mine output this year and next, although there is always the probability that some will arrive more slowly than intended," Tim Huff, and analyst at RBC Capital Markets told the Financial Times.