Category: Chile

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.

Chile says that final negotiations are underway with British Gas (BG Group), the UK oil and gas company that won the contract earlier this year to build and supply liquid natural gas (LNG) in the country. BG beat off France’s Suez and Spain’s YPF Repsol to win the contract in February, with a $350 million commitment to help build an LNG regasification plant on the central coast at Quintero bay. The plant will increase Chile’s production of petroleum and natural gas – part of its program of energy diversification – and reduce its dependence on imported natural gas from neighboring Argentina. Chilean power company Endesa Chile and gas distributor Metrogas have committed to buying from the plant, which is likely to be operational in 2008/9.

Miners at Chile’s Escondida mine, the world’s largest copper facility, have returned to work after ending their 25-day strike. The metalworkers’ union agreed a deal late Thursday with Anglo-Australian mine owners BHP Billiton that comprises an overall 5% pay rise and special bonus payment worth about $17,000 per worker. It has been estimated that the stoppage cost the company about $300 million in lost revenue. Escondida accounts for around 8.5% of worldwide copper production.

Banco de Chile, Chile’s second-largest bank sold $171 million worth of local bonds Monday. The five-year bonds were placed with an annual interest rate of 3.69%, a spread of 63 basis points above benchmark Central Bank bonds. Banco de Chile last issued bonds in mid-July, when it placed $200 million of 10-year bonds in the international markets. At the end of last week, the country’s fourth-largest bank, Banco de Crédito e Inversiones (BCI), placed $34 million worth of subordinated bonds in the local market at an annual interest rate of 4.35% and with a maturity of 25 years. In July, the Bank sold bonds worth $33.3 million with a coupon of 3.83% and a maturity of 3.45 years. Both BCI deals were managed by BCI Corredores de Bolsa.

Chile has returned disappointing growth figures for July, prompting the finance minister, Andrés Velasco, to say that the government is “unsatisfied” with the month’s 4.2% expansion of the economy and will look to stimulate “more dynamic growth” moving forward. Velasco stressed that growth was a “priority” for the government. The July growth rate, as measured by Imacec, the monthly economic activity index, is the slowest pace in three months and reflects the impact of high energy prices on consumer spending and investment. Meantime, despite recording a nine-year high for the month, inflation in August slowed to 0.3% from 0.5% in July, meaning annual inflation remains at 3.8%. The Central Bank is expected to maintain the benchmark interest rate at 5.25% at the next review.

Striking miners at Chile’s Escondida mine, the world’s largest copper facility, are due to vote today, Thursday, on ending their action. A preliminary agreement between miners’ unions and mine owners, Anglo-Australian BHP Billiton, was signed Wednesday with unions agreeing broadly to the latest offer by the company which included a wage increase of 4 percentage points above inflation and a $17,633 bonus for each worker, according to BHP Billiton. The three-week strike at the mine was led by workers looking to share in the company’s windfall from high global copper prices.

Chilean state-owned BancoEstado is to sell local inflation-linked bonds on September 7, to add to the bonds it sold earlier this month worth $85 million. The Bank plans to sell up to $170.5 million of the five-year subordinated bonds to help fund its program of expansion. BancoEstado is Chile’s third-largest bank, in terms of loans.

Chilean water utilities company, Aguas Nuevas, has closed a syndicated credit worth $40 million with BCI and Corp Banca. The funds will be used to refinance debt and to invest in expansion plans. The company operates in the country’s central region and groups together three companies: Aguas del Altiplano, Aguas Araucanía and Aguas Magallanes. Of the total raised, 60% will be directed at sanitary firm Aguas Aruacanía, according to a company spokesman.

Chilean copper mining company Antofagasta has announced that it has closed the deal to take control of Australia’s Equatorial Mining company, via its subsidiary Sierra Gorda Copper. The 97% stake in Equatorial gives it ownership of El Tesoro mine in the north of Chile. Antofagasta has run the mine since 1999 and owned a 61% stake in it; the balance being owned by the Australian company. Antofagasta decided to make the offer of $400 million after rival mining company Quadra of Canada made a bid to buy Equatorial’s stake at the end of July.

Chilean retailer Cencosud has sold $155 million worth of local inflation-linked bonds with a yield of 4.41%. The bonds mature in July 2027. The issue, which was led by BBVA Corredores de Bolsa, was oversubscribed by 55%.