Category: Chile

Striking miners in Chile’s Escondida mine, the world’s largest copper mine, have rejected a pay offer from BHP Billiton and are continuing their two-week long strike, which last week shut down production. Despite mediation by the government over the weekend, which restarted talks between workers and management, a pay rise and bonus offer by the Anglo-Australian owners was rejected late Sunday night. Growing demand for copper has pushed up prices over the past 12 months and workers are looking for a greater share in mining profits. In January contract workers at Chile’s state-owned Codelco copper mine went on strike for 17 days demanding a bigger slice of windfall profits.

Chilean retail group Falabella issued its first bonds in the local market in Peru via its subsidiary Saga Falabella. The local-currency bonds raised $13.9 million, in line with the company’s expectations. The money raised will be used to refinance short-term debt as well as to fund expansion in the local market. A further issue is planned before the end of the year.

Santander Santiago, Chile’s largest private bank, is to offer several new debt issuances for a total of up to $437 million. The bank will offer local inflation-linked bonds worth $269 million, issued in two series: one with a 12-year maturity and an annual interest rate of 3% and one with a 22-year maturity and an annual interest rate of 4%. It will also launch subordinated bonds worth $168 million, which will carry an annual interest rate of 4.8% and mature in 25.5 years. Santander Santiago is a subsidiary of Spain’s Grupo Santander.

Chilean copper mining company Antofagasta has offered $400 million for Australia’s Equatorial Mining in its bid to take control of El Tesoro mine in the north of Chile. Antofagasta has run the mine since 1999 and owns a 61% stake in it; the balance being owned by the Australian company. Antofagasta decided to make the offer after rival mining company Quadra of Canada offered to buy Equatorial’s stake at the end of July.

As expected, Chile’s Central Bank has elected to hold the benchmark overnight lending rate at 5.25%, its highest level in four years. Recent figures showing that growth in the first half of the year had slowed and that inflation was within the target range have prompted the Bank’s decision. Chile posted first-half growth of 4.8%, the slowest pace since 2003, and analysts cut growth forecasts for the year back from almost 6% to nearer 5%. Meanwhile, inflation for the 12 months through July rose to 3.8%, near the top end of the 2%-4% target range set by the government. Last month the Bank raised the rate for the first time since April, lifting it by 25 basis points to its current level.

Chile’s state-run oil company Enap has signed two new contracts with Ecuador’s state-owned Petroecuador and has committed to invest $35 million in the near future to help increase its oil production in Ecuador. Enap has been operating in Ecuador since 2002. The contracts were signed during a state visit to the country by Chile’s president, Michelle Bachelet.

Elías Errázuriz Errázuriz has been appointed the new managing director of Chilean supermarket chain Unimarc. Errázuriz replaces Juan Enrique Barrera Ugarte who resigned after only a year in the post. Unimarc is the fourth-largest food retailer in Chile.

Chile’s family-owned supermarket chain Deca has decided to pull out of a deal to sell its stores to the country’s number one retailer D&S. Although a representative for the owning Rendic family insisted the decision was an independent one, D&S blames the failure of the deal on the anti-monopolies commission which had the transaction suspended for 45 days to analyze claims that the market was becoming concentrated in the hands of too few retailers. D&S currently controls 33% of the domestic market. Rendic Hermanos, which owns Deca, said the company is looking to focus on growing the business themselves.

Chile’s president, Michelle Bachelet, has confirmed that Chile will be joining the Community of Andean Nations (CAN). It will join officially towards the end of August at the same time as signing a free trade agreement with Peru. CAN currently comprises Bolivia, Ecuador, Colombia and Peru. Venezuela withdrew from CAN earlier this year in protest against the free trade agreements being signed by its members with the US.

The Chilean economy expanded by only 4.8% in the first half of the year compared with the same period last year, the lowest first-half growth since 2003. The economy grew by 4.5% in June. Analysts say government growth forecasts of 5.7% for the year now look overly optimistic and have cut forecasts to around 5.2% in light of the disappointing results. The slowdown in growth has been blamed on the poor performance of industry and mining and a cooling off of domestic consumption. Industrial production grew by 4.0% in the first six months of the year, with copper production up only 3.4%. The Central Bank’s hike in interest rates last month, which have curbed investments, have also contributed to the slowdown and most analysts predict the Bank will leave rates unchanged at their August 10 meeting.