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BUSINESS IN BRIEF | Issue 1, 2013 1 Business in Brief Chile September 2013 Embassy of the Kingdom of the Netherlands, Santiago de Chile Issue 1, 2013 New Ambassador of the Netherlands to Chile On August 22nd, Mrs. Marion Kappeyne van de Coppello presented her letters of Credentials to the President of the Republic of Chile, Sebastián Piñera at La Moneda Palace. Embassy of the Kingdom of the Netherlands, Santiago de Chile Among other relevant positions, Marion Kappeyne van de Coppello was former Ambassador to Colombia, Advisor to the Ministry of General Affairs of Aruba and Director of the General Direction for the Western Hemisphere (the Americas) of the Ministry of Foreign Affairs in the Netherlands. Lecture about Coastal Defense Design 30 September – 3 October Boqhoi;hbv;oihbtihbhi Hotel Plaza San Francisco Jentsje van der Meer is a world known expert in the evaluation, design and testing of offshore structures. This activity is organized by the Universidad Católica de Valparaíso, Sociedad Chilena de Ingeniería Hidráulica and GHD S.A. The event has the support of the Embassy of the Netherlands. For more information: www.defensascosteras2013.com Follow the Embassy on Facebook: https://www.facebook. com/EmbajadaHolanda Chile BUSINESS IN BRIEF | Issue 1, 2013 2 Economic development Chile GDP growth slows to 4.1% in second quarter In the second quarter of 2013, Chilean economy expanded 4.1% over the previous year, the slowest expansion in seven quarters, according to the Central Bank. The growth rate for 2013 now stands at 4.3%. The recovery in manufacturing and agriculture was not enough to offset a contraction in fishing, restaurants and hotels’ activities. Mining growth eased to 4.5%, from 7.8% in the previous quarter, mainly due to a slowdown in copper production (4.7% from 8.6%). Retail sales growth averaged an annual 10.6% in the second quarter. Overall, both exports and imports saw growth of respectively 7.2% and 8.4%. On the expenditure side, while private consumption growth eased to 4.5% from 7.2% in the previous quarter, government consumption increased 3.6%, from 1.9% in the first quarter. The current account deficit was 2.4% of GDP in the second quarter. The Central Bank has held its policy rate at 5% since January 2012. The EIU expect that a modest easing cycle will begin in the next several months to bring it to 4.5% by year’s end. The EIU believes Chile’s GDP growth will average 4.9% annually in 2014-17. Sources: The Economist Intelligence Unit (EIU), Bloomberg, The Santiago Times IMF cuts Chile 2013 growth forecast to 4.6% According to the International Monetary Fund, growth in Chile's economy will slow to 4.6% this year due to softer copper prices, investment and domestic demand. The IMF projected that the economy of the country would expand by 4.9% in 2013. The economy grew 5.6% last year, but growth eased in the first quarter of 2013 to 4.1%, compared with a year earlier, its slowest pace of expansion since late 2011. First-half foreign investment through D.L. 600 marks ten-year record In the first half of this year, foreign direct investment (FDI) in Chile through the D.L. 600 Foreign Investment Statute reached US$3,611 million, according to figures released by the Chilean Foreign Investment Committee. This represented an increase of 64% on the same period last year and was the highest figure for the first half in the last ten years. The mining sector accounted for 53% of the inflow (US$1,915 million), followed by services with 38.8% (US$1,401 million), transport and communications with 3.8% (US$137 million), manufacturing with 1.6% (US$56 million), forestry with 1.4% (US$48 million), the electricity, gas and water industries with 1.3% (US$45 million) and agriculture with 0.2% (US$6 million). In terms of country of origin, the inflow was led by the United States which accounted for 39.4% (US$1,424 million) and Japan with 28.5% (US$1,029 million) while the remainder corresponded to a total of 13 countries. Total foreign investment, on the other hand, declined from its record level in 2012 and, at US$6,815 million in the first six months, represented a drop of 46.5% on the same period last year. Source: Foreign Investment Committee Chile's Central Bank anticipates the economy will expand between 4% and 4,5% this year, a half percentage point below its prior projection, according to the bank's quarterly Monetary Policy Report. Source: Reuters Chile, the world’s eleventh largest recipient of foreign investment in 2012 According to the World Investment Report 2013 released by the UN Conference on Trade and Development (UNCTAD), Chile was the world’s 11th largest recipient of foreign direct investment (FDI) in 2012. With a record in flow of US$30,323 million, Chile was among the top 20th recipients for the second consecutive year, rising from 17th place in 2011 to 11th place in 2012. Source: ProChile / Foreign Investment Committee BUSINESS IN BRIEF | Issue 1, 2013 3 Agri/food Chilean horticultural delegation to Holland November 2013 In the first week of November, eight Chilean members of the Horticulture Nursery Association will visit Holland for a complete week. Two other participants will join the delegation on behalf of the Chilean Agriculture Ministry. The week includes visits to a number of horticultural producers, researchers and developers of new technologies, a visit to FloraHolland the largest flower auction in the world, and the International Horticultural Trade Fair (IHTF). The mission is organized by the Department of Agriculture of the Dutch Ministry of Economic Affairs in coordination with the Agricultural counselor responsible for Chile. The mission aims to get acquainted with knowledge and technology available in the Dutch horticulture sector and to meet potential suppliers from the Netherlands. Most of the participating companies are very much interested to know more in the following subjects: nursery production and management, new crops available, greenhouse automation process and equipment, plants movements, streamline logistic operations, grafting new methods, alternative substrates and labor costs reduction. For more information: [email protected] Mixed export results in Chilean fruit season Chilean Agricultural Minister Luis Mayol headed an official reception to close the country’s key fruit exporting season highlighting signs of progress despite some difficulties. Fruit exports in volumes according to the Minister amounted to 2,5 million tons (2013/2012) with a decrease of -0,21% in comparison to last year. The main destination market for fruits was USA (32,7 %), Europe (26,7%), Latin-America (18,3%), Asia (15,2%), and Middle East(4,7%). Some of the largest fruit exported were grapes (32,9%), apples (29,7%), kiwis (8,4%), pairs (5,2%), avocados (4,5%) and prunes (4,5%). The high international prices for the industry within the last two years and a significant depreciation of the Chilean peso strengthening agriculture exports were mentioned by the Minister as significant elements influencing a favorable fruit season. On the other hand, the port strikes taking place in March and April this year were very negative because of the damage produced particularly in the port of San Antonio. Grape exporters were the most hurt with losses reaching over US$48 million. Unfavorable weather conditions affected also negatively a part of the fruit season. The lack of manpower is still a matter of concern for the agriculture business people. A solution to this problem according to the minister is the bill that the government sent to Congress two years ago to improve labor conditions for agriculture workers. Another important bill for agriculture entrepreneurs which was sent to Congress two months ago is discussing the issue of hiring seasonal foreign workers and certain processes that the employers would need to undertake to hire them. Fruittrade 2013 October, 8-9 Espacio Riesco, Santiago de Chile For the eleventh subsequent year, Export Promotion Bureau- ProChile (which reports to the Ministry of Foreign Affairs), with Fruit Growers Federation of Chile FEDEFRUTA, are promoting the Chile Export Fruit and Vegetables International Business Round Table FRUITTRADE, an excellent chance to make direct contact with more than 200 fruit and vegetables producers/exporters from Chile. www.fruittrade.cl Source: El Mercurio Follow the Agricultural Counsil on Twitter: https://twitter.com/ bartvrolijk BUSINESS IN BRIEF | Issue 1, 2013 4 Energy, water and raw materials BHP and Rio Tinto investing in US$3.4 billion Chile water project BHP Billiton Ltd. (BHP) and Rio Tinto Group, the two largest mining companies, will invest in a US$3.43 billion desalination plant that will supply water to Chile's Escondida copper mine. The project includes two pipelines, four high-pressure pumps and a reservoir at the mine site and is scheduled to be finished in 2017. The contract was signed with the company Doosan Heavy Industries & Construction Co., a South Korea maker of power equipment. The Escondida mine produced 1.1 million tons of copper in 2012, almost one fifth of Chile's total output. The plant will increase water supply to the mine by 50%, allowing production to run at more than 1.3 million tons of copper annually. A desalination process will, depending on the elevation of the mine, double the unit cost of production. But with copper prices hovering around US$3 a pound companies see these projects as a worthwhile investment. According to some estimates, demand for desalination projects is set to increase 400% over the next 4-5 years. Globally, the water needed for mining represents a US$7.7 billion market. Sources: Bloomberg / The Santiago Times Atacama Pacific to buy water for gold project from Chañar Atacama Pacific Gold Corp., a Toronto-based gold explorer operating in Chile, agreed to buy 2.5 million cubic meters a year of treated industrial water from the Aguas Chañar company utility for use at its Cerro Maricunga project. Atacama Pacific agreed to pay US$574,000 a year, or the equivalent of 22.5 cents per cubic meter, before the project starts and 75 cents a cubic meter when it goes online. The contract is for 13 years of water from Chañar's plant in Copiapo, Chile, and can be renewed for another five years. Source: Bloomberg Codelco Andina to become the world’s largest open-pit mine State-owned mining giant Codelco recently revealed its latest megaproject, involving the nearly four-square-mile extension of its Andina project that will convert it into the biggest open-pit mine in the world. Located in Los Andes in the Valparaíso Region, the mine opened in 1970, combining both surface and underground projects. This will be the second major expansion to the mine in recent years, after a US$1 billion investment in 2010. The Andina project will cost Codelco US$6.8 billion and is expected to nearly triple the mine’s output by 2021. The life of the mine will also be extended 49 years, until 2085. Nearby residents have, however, questioned the effects it might have on glaciers, water sources and a nearby nature sanctuary. Environmental impact studies on the two projects’ impact on water supplies are ongoing. Source: The Santiago Times BUSINESS IN BRIEF | Issue 1, 2013 5 Solar projects could see big growth in Chile Chile has been at the center of more than US$450 million in mergers and acquisitions in the renewable energy sector over the last year, according to the Green Energy 2013 report from the organization Green Power Conferences. The report indicates that Chile stands out as one of the emerging Latin American markets attracting major investors. The market seems particularly attractive to solar developers and investors. First Solar, for example, announced at the end of 2012 that it plans to build 1.5 gigawatts of solar capacity in Chile by 2020. The massive solar installations will power mining operations in the northern part of the country. Solar is cost competitive even without recently developed government incentives in that remote region. According to the report, mining companies will pay an average of US$100 per megawatt / hour for solar electricity. The companies are currently paying US$350 per megawatt hour and even more. Green Power Conferences is hosting a solar conference in Chile in September 2013. More information: http://www.greenpowerconferences.com/ home/ Solarpack gets USD$66.4 million for three Chile solar-energy plants Etrion to supply solar power to Atacama iodine mine in Chile Inca de Varas seeks permits for $100 million solar project Solarpack Corp. Tecnologica, the Spanish solar-energy developer, will receive $66.4 million in loans for three projects in Chile’s northern desert. The financing comprises $41.4 million from the Inter-American Development Bank that was approved in March and a $25 million senior loan from France’s Proparco, Getxo, according to a statement from Spain-based Solarpack. Proparco is the private investment unit of the French Development Agency. The Pozo Almonte 2 and Pozo Almonte 3 plants will have total capacity of 25.4 megawatts and are expected to begin producing power in October, the Inter-American development Bank said yesterday on its website. The 1.1megawatt Calama Solar 3 project went into operation in April 2012. Etrion Corp., a Geneva-based renewableenergy producer, agreed to supply solar power to an iodine mine in northern Chile operated by Atacama Minerals Chile SCM. Etrion will build and operate a solar farm with as much as 8.8 megawatts of capacity, enough to power 35% of the Aguas Blancas mine, according to a statement from the company. The plant is expected to begin producing power in the second quarter of 2014 and will cost an estimated $25 million. Inca de Varas I, the Chilean renewable-energy developer, filed an environmental request for the construction of a 50-MW PV solar power plant in Chile’s northern Atacama desert. According to the environmental declaration submitted to the country's environmental regulator SEA, apart from the plant, the USD $100 million project includes also a power substation and a high-tension transmission line. They will be connected to the Carrera Pinto substation of Chilean power grid operator Transelec. Source: Bloomberg Source: Clean Energy Authority Sources: Bloomberg / SeeNews BUSINESS IN BRIEF | Issue 1, 2013 6 Environment President Piñera signs bill in favor of recycling President Sebastián Piñera, signed the framework bill for the management of solid waste and Extended Producer Responsibility (Responsabilidad Extendida del Productor – REP), which aims to adopt waste prevention and recycling methods as part of the company’s normal activities. The bill has two main objectives: to establish new responsibilities for producers. It holds them responsible for the whole life cycle, meaning design, product, sales and disposal. For certain products, which are particularly difficult to dispose of, such as tires, lead batteries, alkaline batteries or lubricants, the manufacturer will be responsible for recycling these products. The second objective is to create a real cultural change in society. At the moment Chile is only recycling 10% of the country’s waste, which clearly shows that Chile has a huge deficit in terms of recycling.” Source: Gobierno de Chile Infrastructure & Logistics Chile’s Valparaíso port to double in size The Chilean port of Valparaíso is expected to double in capacity by 2017, following a USD $350 million investment from Spanish company OHL Concesiones. The company won a 30-year concession to build and run the terminal. The company outbid Ports America, Empresas Navieras and Besalco for the opportunity to operate the terminal. The government aims to secure further investment to reach a target of USD $507 million for development of the terminal. Valparaiso-Terminal 2 will see the construction of a second terminal similar in size to the existing port and will increase Valparaiso port capacity to 22 million tonnes of cargo and 950,000 teu and will be able to deck simultaneously two post-panamax ships, of 22 containers wide. With the expansion, Valparaíso would become Chile’s largest port, overtaking San Antonio. Valparaiso’s main cargoes are fruit, copper and iron. Source: Seatrade Communications Limited. Other tenders Infrastructure: Re-bidding project AMB Santiago International Airport (Passengers Terminal) Road project Américo Vespucio Oriente More information: www.ciechile.gob.cl Intentions to build a mega port in Valparaíso or San Antonio The Minister of Transport and Telecommunications, Pedro Pablo Errazuriz has announced the Government intention to study a plan for a new large scale port terminal. Minister Errazuriz is very much interested to develop a new mega-port concept to be carried out in the central macro area around San Antonio or Valparaiso. The project is prepared by the Ministry of Transport in coordination with port companies. Their technical studies are expected to be ready by early next year. The port project capacity is expected to be about 6 million TEU’s per year with an investment around US$3,000 million. According to the Minister, Chile has at present very competitive ports but their infrastructure capacity is not enough to meet the higher demand from future foreign trade and the new requirements coming from larger boats arriving to Chile at the end of the decade. Source: Diario Financiero BUSINESS IN BRIEF | Issue 1, 2013 7 High Tech & IT Chile has one of the OECD's highest rates of growth of broadband subscriptions According to figures published by the OECD in its Broadband Portal, Chile has seen strong growth of fixed and wireless broadband penetration. In 2012, wireless Internet access increased by 62%, four times the average OECD growth rate, while fixed Internet connections were up by 5.9% on the previous year. As a result, Chile took second place in the OECD, with an increase of 8.2% in the rate of fixed broadband penetration to 28.1 per 100 inhabitants, while, for wireless broadband, penetration reached 12.4 per 100 inhabitants. In the case of the total number of connections, Chile ranked 20th on wireless subscriptions, with over 4.8 million, and 22nd on fixed subscriptions, with over 2.1 million. Source: OECD Chile launches plan to double Internet penetration by 2020 Chile land of Opportunities July 2013 Publication available at: www.ciechile.gob.cl Business in brief At a press conference launching the Agenda Digital Imagina Chile 2013-2020, President Sebastián Piñera announced that the Chilean government expects the digital economy to reach 10% of GDP by 2020. The plan will focus primarily on bringing Internet access to 80% of the country’s homes, installing highspeed Internet in 50% of the Andean nation and launching free wifi hotspots in every community throughout the country. Hotspots are already present in a quarter of Chilean towns, often in central plazas. Creative Industry Tender Architecture Outbuilding for the Chilean-National History Museum Santiago de Chile. (2.625,60 m2) More information: www.concursomhn.cl More architecture tenders: http://www.arquitectu ramop.cl/licitaciones_ publicas/Paginas/defa ult.aspx Source: ProChile Information compiled by the Economic Section of the Embassy of the Kingdom of the Netherlands in Santiago de Chile You can find Business in Brief also on the website of the Embassy http://chili.nlambassade.org Please send your comments, suggestions or unsubscribe [email protected] Av. Apoquindo 3500 piso 13, Las Condes Santiago de Chile Tel: (56-2) 2 7569214 Fax: (56-2) 2 7569226 Other newsletters in the region: News from Argentina compiled by the Netherlands Embassy at Buenos Aires. Please subscribe at: [email protected] News from the Andes Region: compiled by the Netherlands Embassies at Lima, Bogotá and Caracas. 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