“In the next five years, 33% of the major mining projects will be conducted in Chile. Chile plans to increase the country’s copper production to 8.5 million tons, and it will have 250 multinational suppliers in the mining industry. By 2023, the mining companies have planned to invest 500 Billion dollars.” Carlos Alvarez, deputy director of the Chilean Investment Commission, said at the 2016 Chile Week opening ceremony and investment seminar in Chile.
Looking forward to the deepest cooperation between the largest copper producer and the largest copper producer
The bronze statues of nature have given natural bonds between China and Chile and have linked the two countries closely.
China is the world’s most important copper consumer, consuming nearly 50% of the world’s copper production. In 2015, it consumed over 12 million tons. Chile has a reputation as a “copper kingdom” and is the world’s most important copper producer. Nearly 30% of the world's copper mines. According to 2015 data from the U.S. Bureau of Resources and Resources, Chile has proven to have copper reserves of more than 200 million tons, accounting for nearly one-third of global reserves. In 2015, Chile’s copper production was 581 tons, accounting for 25% of global production. In 2015, Chile exported 12.8 billion U.S. copper mines to China.
Chile was the first country in South America to establish diplomatic ties with China. In 2005, China and Chile signed a bilateral free trade agreement. In August 2010, the two sides signed a supplementary agreement to the free trade agreement, in this context. In 2015, China’s total exports to Chile accounted for 26% of the total, and the bilateral trade volume between the two countries was approximately US$30 billion per year in recent years. In this context, China has become Chile’s largest exporter and largest trading partner country.
Since the establishment of diplomatic relations between China and Chile in 1970, China Minmetals has established a copper trade cooperation with Chile's national copper company (Codelco). In the past 40 years, China Minmetals has maintained and developed its trade cooperation with the National Copper Corporation of Chile in the import of blister copper, electrolytic copper, copper concentrate, and auxiliary production materials, and with other mining companies in Chile ( For example, Antofagasta also maintains good cooperation all year round. After 2000, the cooperation between China Minmetals and Chile expanded from pure trade to resource investment. During the APEC period in Chile in 2004, China Minmetals and Chile signed a memorandum of cooperation for the development of mineral resources in Chile. In February 2006, China Minmetals entered into a capacity investment agreement with Codelco for a period of 15 years, supplying 55.75 million tons of electrolytic copper per year, totaling 836.25 million tons of electrolytic copper supply. (At that time, Codelco needed capital to develop new copper mines, and Minmetals needed to lock in. Electrolytic copper supply to meet China's needs). The project has been successfully operating for 10 years and the shipment of goods exceeds 500,000 tons. This is also the first time China and Chile have had a close relationship on asset relations.
However, it is rather embarrassing that although China and Chile have long-term and deep cooperation in the mining industry, the mutual investment quota between China and Chile is not large, compared with China’s investment in Latin American countries exceeding 100 billion US dollars. The mutual investment between China and Chile is more than 100 million U.S. dollars. The data shows that from 2009 to 2014, Chile attracted US$122 billion in foreign investment, mainly from the United States, the Netherlands, Spain, the United Kingdom, and Canada.
The trick for Chile is that Chile’s investment in copper mining has been too boring in recent years compared with Chile’s “neighbor” Peru and Ecuador, which is also a Latin American country. The investment of Chinese capital in Chile's mining sector is mainly concentrated in the exploration stage, far from the stage of exploitation and output. In terms of Chinese investment, China Aluminum's Toromocho project in Peru, Minmetals' Las Bambas project in Peru, and the Tongling Nonferrous Metal Project in Mirador. With the commissioning of these two major copper mines in Peru, in May of this year, Peru surpassed Chile to become China's largest supplier of copper mines, of which Chile was 403,500 tons, an increase of 36%; Peru's supply was 421,675 tons, an increase of 142%.
In addition, due to the slowdown in copper demand growth in China, the London Metal Exchange (LME) copper price has fallen by more than 50% from the high of 10,190 US$/ton in 2011, hitting a 7-year low of 4,318 US$/ton in January. The sharp drop in copper prices will be transmitted to the mine first. According to data from the Central Bank of Chile, in the first half of this year, the export value of Chile’s copper mines was 13.4 billion U.S. dollars, including 6.356 billion U.S. dollars of electrolytic copper and 5.805 billion U.S. dollars of copper concentrates. The export price of copper ore fell by 16.1% compared with the same period in 2015. The period of the global financial crisis was flat.
Chile faces the impact of the global economic environment and urgently needs reform to change the current embarrassing situation.
In August 2015, Chilean Mining Minister Aurora Williams and the Chilean Copper Council jointly announced that the country intends to develop 31 copper mine projects and 11 other mining projects from 2015 to 2024. The proposed investment is US$67.535 billion and US$10.255 billion, respectively. .
Chilean mining sector officials stated that Chile has a very open mining policy. Chile welcomes powerful mining companies to invest in Chile and develop copper resources. This year, the Ministry of Copper Industry and related departments of Chile, together with the National Development and Reform Commission, have conducted in-depth discussions on deepening the Sino-Chilean bilateral memorandum signed last year. The discussion will focus on technology transfer (the transfer of China's technology to Chile to expand mining production scale), strengthening of bilateral relations, and increasing communication and cooperation between Chinese and Chilean companies.
Sergio Hernandez, vice chairman of the Chilean Copper Association, predicts that Chile’s copper mines will continue to make profits in the next 40 years. With the development of science and technology, it has become possible to mine low-grade copper resources. Therefore, in the next 40 years, Chile will not give up mining of lower-grade surface copper oxide ore by using modern technology. Based on complementary interests, China and Chile should deepen cooperation in the mining industry in the future.