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Chile Mining Report Q2 2016

Chile Mining Report Q2 2016

BMI View: Chile's mining sector will experience limited growth, as copper and gold prices remain weakover our forecast period to 2020.The country will remain the top global copper producer, although risingproduction costs and falling ore grades will curb output growth.

Latest Updates & Structural Trends

Chile, the largest copper producer, will experience relatively flat growth over 2016 to 2020, as weakcopper prices and rising operational costs limit investment. We forecast Chile's annual copper productiongrowth to average 1.6% over this period, increasing in volume from 6.0 million tonnes (mnt) in 2016 to6.4mnt by 2020.

Chile's gold sector will experience limited growth over our forecast period to 2020 due to persistently lowgold prices. We expect production to increase at an average y-o-y rate of 1.5% between 2016 and 2020,with output growing from 1.8moz to 1.9moz.

Elevated operating costs, notably water and power costs, will weigh on Chile's extractive sector, deterringinvestment particularly in light of lower costs in neighbouring Peru. While lower oil prices and a weakerChilean peso on the back of US dollar strength will cap growth in input costs, providing a boon to minersfacing subdued metal prices, the benefit will be outweighed by rising operating costs.

State-owned Codelco will remain Chile's largest copper miner as measured in output, and indeed thelargest copper miner globally, through 2020. Nonetheless, the company recently pushed back its forecastfor 2.0mnt of copper output annually to 2025, from its earlier target of 2020. The firm's USD22bn multiyearinvestment plan will continue to face project delays due to weak copper prices.


BMI Industry View
Table: Chile Mining Industry Value Forecast (2014
2020)
Latest Updates & Structural Trends
SWOT
Industry Forecast
Copper: Insufficient Water, Power To Weigh On Growth
Table: Copper Production Forecast (Chile 2014
2020)
Table: Chile
Major New Copper Projects & Expansions
Structural Trends
Gold: Weak Prices To Delay Projects
Table: Gold Production (Chile 2014
2020)
Table: Chile
Key Gold Projects
Industry Risk Reward Ratings
Chile Risk/Reward Index
Rewards
Industry Rewards
Country Rewards
Risks
Industry Risks
Country Risks
Americas Risk/Reward Divergence To Emerge
Key Takeaways
Latest Revisions
Table: Americas
Mining Risk/Reward Index
Regulatory Development
Commodities Forecast
Commodities Outlook
Table: BMI Commodities Price Forecasts
Competitive Landscape
Sectors
Table: Chile
Select Companies Financial Data, 2014
Company Profile
Antofagasta Q2 2016
Latest Results
Table: Enter table header
Codelco Q2 2016
Latest Results
Table: Codelco
Key Financial Data
Global Company Strategy Anglo American Q2 2016
Company Strategy
Latest Results
Table: Anglo American
Financial Data
Regional Overview
Methodology
Industry Forecast Methodology
Sources
Risk/Reward Index Methodology
Table: Weighting Of Indicators

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