Category: Chile

US mining company Meridian Gold has bought a 56.7% stake in Chilean mining company Agua de la Falda from state-owned Codelco. The deal is worth $20 million. Agua de la Falda owns gold reserves in the north of the country. Codelco had recently bought the stake from Canada’s Goldcorp to take 100% control of the company’s assets.

Chile has announced that it will increase its investment in infrastructure next year by $115 million, mainly to be spent on improving access to port and airport facilities, as well as upgrading agricultural facilities. The $780 million to be spent on developing competitive and productive infrastructure has been allocated in the 2007 fiscal budget, according to the finance ministry. The budget is due to be submitted to Congress for approval by the end of the month.

Chile’s Central Bank has lowered its growth forecast for the year from 5%-6% to 4.75%-5.25%. According to the Bank, in the second half of the year a lower production of copper will slow economic expansion. However, the Bank expects GDP growth of between 5.25% and 6.25% next year. Last year, Chile’s economy expanded 6.3%. Figures for July showed lower-than-expected year-on-year growth of 4.2%.

The real estate unit of Chilean retailer D&S, Saitec, has said it is to launch a local bond worth $153 million. The inflation-linked bonds will offer an annual interest rate of 4.75%; the bonds have a maturity of 22.5 years. LarraínVial will act as lead manager.

Chilean water company Aguas Décima has been sold by owners Agbar and Almendral to Japanese conglomerate Marubeni for $38 million. The utility controls 1% of the domestic market and operates in the country’s Region X. Market watchers say the purchase may be the start of more acquisitions in the waste water sector by Marubeni. The Japanese company already operates in Chile’s automotive sector.

Chilean energy group Compañía General de Electricidad (CGE) sold local bonds worth $119 million, Friday. The inflation-linked bonds carry a maturity of 23 years and were sold at an annual interest rate of 4.19%, representing a spread of 102 basis points above benchmark Central Bank paper. The issue was structured by BBVA Corredores de Bolsa. The bonds are rated AA by Fitch Ratings.

Chile and Japan expect to sign a free trade agreement by November, according to Chile’s foreign minister, Alejandro Foxley. Japan is an important export market for Chile’s salmon business. Salmon, not native to Chile, was introduced into the country in the 1980s and the salmon farming business has thrived to become the country’s second leading export product, after copper. In August Chile ratified a free trade treaty on goods with China, Chile’s largest Asian trade partner. The countries will open talks on a free trade agreement on services and investment next month.

Chilean state-owned BancoEstado sold $169.6 million local inflation-linked bonds Thursday, to add to the bonds it sold last month worth $85 million. The bonds were sold with an annual interest rate of 3.49%, less than the 3.70% originally offered, and at a spread of 47 basis points over the Central Bank’s benchmark bonds. The Bank plans to use the money raised from the five-year subordinated bonds to help fund its program of expansion. BancoEstado is Chile’s third-largest bank, in terms of loans.

Foreign direct investment (FDI) in Chile rose 97.8% in the first half of the year, compared with the same period last year. FDI into the country between January and June totaled $2.9 billion, according to Chile’s Foreign Investment Committee. Investments under the main regulatory norm for FDI, DL 600, came to $1.69 billion – an increase of 149% versus the same period last year. However, most of this was accounted for by the $1.1 billion investment by Canada’s Brookfield Asset Management in the acquisition of utilities firm Transelec. Meanwhile, capital investments channeled through Chapter XIV of the Central Bank’s Compendium of Foreign Exchange Regulations rose 52.7% to $1.19 billion.

Chile’s trade surplus for the year through August was $15.1 billion, a 122% increase on the same period last year when the difference between the country’s exports and imports totaled $6.8 million. The overall surge in the value of exports was once again due to the high price of copper, Chile’s major export, which is around double what it was this time last year. Copper exports earned the country $20.4 billion for the period, of total exports of $38.4 billion, compared with $11.4 billion for the period last year, of a total of $24.5 billion. And figures for August – which show a narrowing of the trade surplus to $1.84 billion from $2.65 billion in July – are a result of the 25-day strike at the country’s largest copper mine, say the government.