Fast Market Research recommends "Chile Mining Report Q4 2013" from Business Monitor International, now available
Boston, MA -- (SBWIRE) -- 10/04/2013 -- We forecast Chile's mining sector will grow through 2017, albeit at a more moderate pace than in previous years. Major miners will continue to develop several large projects, though rising costs and falling prices will lead to more conservative expansion and acquisition plans. Our forecast is for Chile's mining sector to expand by 1.5% on average per annum through 2017.
The Chilean mining sector will continue to rely on copper production for the foreseeable future. The pipeline of copper projects and the country's global dominance in copper production will ensure the country's dominance despite falling ore grades and more modest production growth. With future supply looking relatively robust and Chinese fixed asset investment slowing, we forecast falling demand growth and hence lower prices. Indeed, we see prices averaging US$6,800/tonne in 2014, which will heavily affect the Chilean economy. Despite weakness in 2013, copper prices remain elevated by historical standards, encouraging production for the time being.
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Precious Metals Key To Growth
Chile's mining sector will grow in part thanks to investment in gold mining, diversifying the sector away from copper. We forecast Chile's gold output will grow by an annual average rate of 3.1%, reaching 1.82moz (mn ounces) by 2017. Gold's share of Chile's mining exports in US dollar terms rose from 1.4% in 2007 to 3.5% in 2012. Though we recently downgraded our gold price forecasts as prices continue to weaken, various projects remain in the development stage. Major companies, including Barrick Gold and Goldcorp, are developing large gold projects, although rising costs have seen several mines delayed.
Barrick Gold, Codelco and Antofagasta have all reported rising labour, energy and water costs forcing the companies to increase pre-production expenditure estimates on mine projects. These factors, in addition to falling prices, are leading some firms to question investment and expansion, which presents a downside risk to our forecasts.
Both Large & Mid-tier Key Players
Chile's mining sector will remain dominated by state-owned copper miner Codelco. That said, other large global diversified miners, such as Xstrata and Anglo American, are developing and investing heavily in mine projects in Chile. The rest of Chile's mining sector is made up of mid-sized miners that specialise in the production of a single mineral, such as copper or gold. London headquartered Antofagasta is a growing copper producer that is expected to continue ramping up production at one of its flagship mines through the end of 2013.
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