Conditions for recovery of mining projects would not occur within two years
Projects that are closest to making an investment decision are Phase II of Quebrada Blanca and El Abra and Collahuasi expansions, which will be undertaken in 2015.
The “OK” to private mining investments that are in the pipeline should continue waiting, after the slowdown in initiatives that displays a couple of years ago in the country.
According to sources in the industry, the effect of the uncertainty surrounding tax reform, the future repeal of DL 600 and a new labor law, are the main concerns that are affecting those who face an investment decision.
These internal factors are mixed with international trends that have been reassessing priorities of companies worldwide.
Miguel Angel Duran, director of the School of Mines of Central University and former chief executive of Anglo American Chile, explains that it is difficult to determine the exact moment that will gain momentum again the projects portfolio, but this should gradually evolve in the next two to three years, depending on market conditions into sight.-
For Francisco Klapp, researcher of Economic Freedom and Development Program (LyD), it is already clear that this year is lost because the certainty necessary to revive projects will be accomplished, but he tend to think that in 2015 there would be an evolution.
According to May’s Mining Council Data, its partner companies keep under evaluation a projects portfolio around U.S. $ 43,000 million.
In this sense, according to other sources of market, projects which would be closer to the “OK” would be Phase II of Quebrada Blanca from Teck, which yesterday rejoined environmental assessment; the expansion of El Abra, from Freeport and Collahuasi, from Anglo American and Glencore. Although in the last two cases this does not happen before 2015.
Internal and External
Although the agreement in Congress helped to lower the doubts about tax reform, these have not disappeared. The researcher from LyD says that we need to know the detail of the indications and in the long run, see how it works.
Klapp says that it does not contribute herein to review again the DL 600, a concern shared by Durán, who said that some security to these investments over the long term is required.
In particular, because there are other issues that have not been resolved, as the cost of energy, which remains high, despite the concern shown by the government, or the low labor productivity.
Another issue that affects in the delay of decisions is the prosecution for any differences that may exist. “As there is no certainty on permits is difficult to realize an investment,” says Duran.
Something that industries share, for the long processing and how fragile are proving the Environmental Qualification Resolution (RCA).
But experts agree that external factors must be aligned to be back to normal.
Duran says it’s important to understand all the implications that has been the decline in commodity prices, where copper is 20% lower than two years ago. This and other factors have caused the stock market value of mining has declined, despite the rise of the stock exchanges.
The investment budget worldwide has also decreased and has installed the perception that there was a period of over-investment in the industry, so today there are fewer resources to be available to deliver returns to investors.
Source: Diario Financiero
