BMI View: Chile's mining sector value will continue to contract through 2017, on the back of subdued copper prices and elevated operating costs. Nonetheless, country will remain the top global copper producer by a wide margin over our forecast period to 2020.
|e/f = BMI estimate/forecast. Source: BCC, BMI|
|Mining Industry Value, USDbn||27.48||23.40||20.93||20.60||21.54||22.58||23.51|
|Mining Industry Value, USDbn, % y-o-y||-10.93||-14.85||-10.56||-1.55||4.55||4.83||4.13|
Latest Updates & Structural Trends
Chile's mining industry value will continue a multi-year decline through 2017 on the back of subdued copper prices. We forecast the country's mining industry value to contract by 1.6% in 2017, to USD20.6bn and edge higher thereafter, reaching USD23.5bn by 2020.
Chile, the largest copper producer, will experience relatively flat growth over 2017 to 2020, as weak copper prices, operational disruptions and declining copper ore grades curb output. We forecast Chile's annual copper production growth to average 1.5% over this period, increasing in volume from 5.5 million tonnes (mnt) in 2017 to 5.8mnt by 2020.
Chile's gold sector will experience muted production growth over our forecast period to 2020, due to tightening environmental regulations and elevated costs. Improving gold prices, which we now forecast to average USD1,300/oz in 2016 and USD1,400/oz in 2017, will be an upside risk to the country's gold sector outlook.
Chile's lithium sector, already a top global producer, will see rapid development over the coming years, supported by rising prices and a solid project pipeline.
Increasingly strict environmental regulations will result in further project delays and elevated operating costs for Chile's mining sector. For instance, in October, Chile's environmental regulatory body levelled nine charges against Antofagasta Minerals' Los Pelambres copper mine for mismanaging water resources and nearby flora. Previously, on June 1, Barrick Gold settled the class action lawsuit alleging the firm hid environmental problems at the Pascua-Lama project for USD140mn. In July, Kinross Gold announced plans to halt mining at the Maricunga gold mine in Q416 after Chile's environmental regulators shut down the mine's water system in March, making costs untenable.
The Chile Mining Report has been researched at source and features BMI Research's mining and commodity forecasts for metals, minerals and gems, covering all major indicators including reserves, production, exports and values. The report also analyses trends and prospects, national and multinational companies and changes in the regulatory environment.
BMI's Chile Mining Report provides industry strategists, service companies, company analysts and consultants, government departments, trade associations and regulatory bodies with BMI's independent forecasts and competitive intelligence on the mining industry in Chile.
- Use BMI's independent industry forecasts on Chile to test other views - a key input for successful budgeting and planning in this mining market.
- Target business opportunities and risks in Chile's mining sector through our reviews of latest mining industry trends, regulatory changes and major deals, projects and investments in Chile.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity), Key Projects Tables and Competitive Landscape Tables.
BMI Industry View
Summary of BMI’s key forecasts and industry analysis, covering mining reserves, supply, demand and prices, plus analysis of landmark company developments and key changes in the regulatory environment.
Industry SWOT analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the mining sector and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (2009-2013) and forecasts to end-2019 for key industry and economic indicators, supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:
- Mining industry: Industry size (USDmn), real growth (%), % of GDP, employment (‘000), workforce as % of total workforce, average wage (USD).
- Output: Production volumes (‘000 tonnes, carats etc.) for all major metals, minerals, ores and gems mined in each state, including bauxite, copper, gold, coal, lead, silver, tin, titanium, uranium, zinc etc.
- Exports: Value of exports (USDmn) for all major metals, minerals, ores and gems mined in each state.
- Commodity markets: Global demand, supply, stocks and benchmark prices (USD) for aluminium, copper, lead, nickel, tin, zinc, gold and steel.
BMI’s Mining Risk Reward Index
BMI’s Risk Reward Indices provide investors (mining companies and support service providers) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
Competitive Landscape Tables & Analysis
Comparative company analyses and tables detailing USD sales, % share of total sales, number of employees, year established, market cap/NAV, ownership structure, production and % market share.
Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by metal/ore.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Mining reports are based on an extensive network of primary sources, such as multilateral organisations (UN, WB, IMF), national chambers of commerce and industry, national statistical offices, government ministries and central banks, and multinational companies.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.