Market Opportunities in Chile
Turning our focus back on Santiago and the central part of Chile, retail is booming and the rapidly growing Chilean middle class is eagerly looking for high quality goods and is prepared to pay for expensive brands. Car sales in 2013 were an all-time record for the 3rd year running, and there are plenty of Jaguars and Range Rovers amongst the other luxury European marques. Construction has been booming for the last few years and there remains opportunity for high quality fittings and fixtures. Chileans love technology, Facebook and their mobile phones, and are hungry for the most up to date models.
27 May 2014
Last Wednesday morning I had to get up at 05:30 and go to the airport in Santiago to fly up to Antofagasta, which is 1400 km and 2 hours to the North. Antofagasta is at the heart of Chile’s copper mining operations, but on this occasion our hosts had chartered a whole plane to fly guests up to the official opening of a new LNG storage and regasification plant in the port of Mejillones.
The guest of honour for the ceremony was Chile’s new President, Michelle Bachelet, who was accompanied on this occasion by the energy Minister Maximo Pacheco, the Mining Minister Aurora Williams and the Estates Minister Victor Osorio, plus another 500 dignitaries and guests.
The very high profile attendance demonstrates the importance that the government is placing on finding solutions to Chiles short, medium and long term energy needs. The industry has been paralyzed for the last 4 years by indecision, a tightening of environmental legislation and a sharp increase in the awareness of communities in relation to the indigenous property rights legislation adopted when Chile signed up to Convention 169 of the International Labour Organisation.
What this means is that the investment in energy infrastructure in Chile in the very short term will be of the order of $US20B, targeted towards efficiency, traditional and renewable generation, transmission, distribution and potentially new technology such as smart metering and carbon capture and sequestration. Any UK companies that can demonstrate technological innovation or novel and leading solutions to overall project timescales, environmental planning and community liaison capability will find business opportunities in this marketplace. In addition there are other knock on opportunities for new ports and other logistics operations.
The shortage of generation reserve, relatively high energy spot costs and uncertainty about the future supply matrix are having a delaying effect on the potentially huge mining investment that has been anticipated in Chile for the next few years, which could amount to over $US100B up to 2020. The slowdown in China and the subsequent stabilisation of the copper price at around $US3 per ton is also causing the industry to tighten its belt and look to efficiency to maintain its margins. Efficiencies are being sought in all parts of the value chain, ranging from new technologies to optimise extraction processes, automation to reduce manual operations (which are getting expensive compared to neighbouring producers), even training to up skill essential workers.
Turning our focus back on Santiago and the central part of Chile, retail is booming and the rapidly growing Chilean middle class is eagerly looking for high quality goods and is prepared to pay for expensive brands. Car sales in 2013 were an all-time record for the 3rd year running, and there are plenty of Jaguars and Range Rovers amongst the other luxury European marques. Construction has been booming for the last few years and there remains opportunity for high quality fittings and fixtures. Chileans love technology, Facebook and their mobile phones, and are hungry for the most up to date models.
Finally, it is worth knowing that Chile tops all but one of the LA Business indices. It’s the most accessible market in Latin America where a company can be set up in one day. It is a great place to enter the LA for the first time, and size for size punches way above its weight.
Greg Holland is the General Manager of The British Chilean Chamber of Commerce. For more - get in touch with this Chamber here.
All views expressed in guest blogs are that of the authors, and not of the British Chambers of Commerce.
