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Monthly Snapshots - August 2021: Chile

Updated: May 19, 2022

Chile and the United Kingdom define a roadmap to modernize the trade agreement after the Brexit chapter.

Services, the wine industry and agriculture would benefit from the process that aims to deepen tariff liberalization and the discussion on the digital economy, which will conclude in December next year. When the transition period for the United Kingdom’s exit from the European Union -Brexit- ended in January of this year, the Association Agreement (AA) between Chile and said country immediately came into force, which has allowed the maintaining of similar commercial conditions to those who have with the block.

The bilateral agreement includes the commitment to update it with a view to improving the commercial relationship, and last month the national and British authorities gave the go ahead for said modernization, establishing criteria and a tight roadmap to conclude this process in December next year.

Chile is consolidated as the most attractive destination in the region for Chinese investors.

Longyan Shen, Business Director of the Asia Desk of EY Chile, explains that the country is playing a role as an administration center, where entrepreneurs can control their operations in other Latin American economies. Chile climbed a place and became the Latin American country that received the third highest amount of foreign direct investment in 2020, according to ECLAC.

But when it comes to Chinese interests, the country has become the favourite destination for businessmen from the Asian giant. One study conducted by EY in July consulted Chinese executives from 32 companies; energy, banking and mining among other sectors, and revealed that 63% have already invested or taken measures to enter the Chilean market. Of that percentage, 95% believe that the most attractive market in the region to invest or operate in is Chile, while Brazil and Mexico follow with a 43% tie. Further down is Peru with 38%, then Colombia with 29% and Central America with 10%.

JPMorgan raises its forecast for Chile's GDP and becomes the most optimistic in the market.

The fact that the Chilean economy managed to grow more than 20% in June create a feeling of indifference. Several market analysts have updated their outlook for domestic activity this year, but JPMorgan stands out among its peers.Diego Pereira, chief economist for the Southern Cone of the US investment bank, now forecasts that the local Gross Domestic Product (GDP) will grow 9.5% this year, standing at the upper limit of the range established by the Central Bank in its IpoM of June, which estimates an expansion from 8.5% to 9.5% this 2021.With its revision, JPMorgan becomes the most optimistic player in the market, dethroning BCI, which at the end of July updated its forecast for the national product to 9.2%.

Vaccination is once again a crucial factor when projecting Chile’s economic outlook. The report prepared highlights that with 64.5% of the population already fully immunized against Covid-19, and a high probability that a third dose will be applied in the coming weeks, services would recover even more in the third quarter, despite the risk of the Delta variant.

Chile: a mining innovation hub

Telematics, desalination, renewable energies and technologies to recover minerals attached to rocks are just a few of the innovations that have set Chilean mining ahead of the curve in terms of exports and process-linked innovations.Chile is internationally renowned for its mining potential.

In fact, our country produces 28% of the world’s copper. According to a recent Imagen de Chile survey, 25% of the people interviewed in twelve cities around the world acknowledged Chile for its copper and derivatives. Over the past decade, Chilean mining has transformed the way that it operates, through developments that include improved technology and sustainability. Sustainability According to Chile’s National Mining Policy, the goal is for half of the industry to be operating with renewable energies by 2030 and for other green mining projects to keep moving forward, such as the diversification of water sources for extractive processes.

One of the biggest challenges for the Chilean mining industry is how to confront the water shortage. 70% of the water used currently comes from inland sources, while 30% comes from seawater. Its is expected that mining will use 53% inland water and 47% seawater by 2031.

Innovation Remote handling, telematics and information processing have also been at the centre of mining innovation. In December, the Radomiro Tomic Division of Codelco (the National Copper Corporation of Chile), located in the municipality of Calama, began the first 5G pilot program in the mining industry. The program allows the mine to be connected to the Strategic Integrated Operations Centre (CIO-E) at the company headquarters in Santiago.

The pilot project involves the installation of a high-definition camera in the Radomiro Tomic Division, which is connected to a 5G network. The camera transmits images that allow logistical data, such as the waiting and unloading times of materials, to be processed immediately, in order to analyse and optimize processes.

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