Cowan recently opened its first Latin American office in Santiago, Chile.
Chile is the fifth largest economy in South America and the biggest producer of copper in the world. With a positive business environment and a stable economy, Chile contributes significantly to the global mining industry.
Copper mining in Chile represents 20% of its GDP and 60% of its exports. Copper is used widely on a global basis, from smartphones and electronics to construction. It also plays a major role in green energy.
Mining Companies in Chile
BHP Billiton holds the biggest stake (57.5%) in the world’s largest copper mine in Escondida, 1,300 km (800 miles) north of the capital of Santiago in the Atacama Desert. Rio Tinto holds 30% with the remainder held by a Japanese consortium.
In total, the mine at Escondida employs 4,000 mining professionals on site and an additional 13,000 contractors in the surrounding area. Two pits are situated at Escondida and mine managers may reportedly drive up to 150 km in a single shift, such is the size of the mine. A dedicated settlement has been constructed for mining professionals working at Escondida as the nearest town of is 170 km away.
Codelco – known as the Corporacion Nacional del Cobre deChile –controls around 20% of the world’s total copper reserves and is owned by the Chilean government.
Advice for Expats
Chile is a popular destination for expat professionals working in the mining sector
- The business language spoken in Chile is Spanish, although the majority of professionals can speak English. Chile’s version of Spanish is markedly different in pronunciation and its use of words in comparison to how it is spoken in Spain.
- Road signs are all in Spanish so a basic knowledge of the language is essential for expat workers. Chilean road signs generally are also different to those used in Europe and North America.
- Inflation and unemployment is low in Chile and public services are generally good. Poverty is also in decline.
- The climate in Chile is varied. The Atacama Desert is one of the driest in the world, while Santiago’s climate is Mediterranean. Further south, the weather is more temperate. Chile’s summer season falls between December to February.
Chile is also ranked the number one destination in Forbes India’s 7 Hottest Emerging Markets To Live and Work In
Areas for Concern
The following areas for concern have been identified for Chile’s continued growth:-
- Dependence on copper mining for growth. This may be affected if copper prices fall. The economic growth has largely been dependent on increased prices rather than increased copper output.
- Inflated salaries compared to the remainder of the global mining industry. For example, in Chile a truck driver earns around $70,000 per year, $10,000 more than a truck driver in the US.
- As energy demands increase, concern has been expressed over the economy’s ability to respond. Water scarcity has also been an issue with mining companies forced to obtain water supplies from the ocean.
The Chilean government is responding to these issues. In 2012, Chile produced 5.5 million tonnes of copper, representing a 3% rise on 2011. In March this year, copper output alone had grown by 8.4% in comparison to the previous year. It also remains the third most attractive company for copper mining investments behind Canada and Australia.
The outlook for Chile remains strong. On the 2013 Index of Economic Freedom, Chile was ranked 7th. The World Bank also ranked Chile 37th out of 180 countries in its Ease of Doing Business Survey in 2012 due to its positive business environment. In 2010 Chile was also the first South American country to join the Organisation for Economic Co-operation and Development (OECD).
With 36% of the global copper market and holding 28% of the world’s copper reserves, Chile’s position in the global mining industry remains secure for the foreseeable future.