Harris Gomez Group

You Are Viewing

A Blog Post

Chile Update: Interesting News from this Week

Chile launches consultancy tender for Osorno airport concession

Chile’s public works ministry (MOP) launched a 540mn-peso (US$700,000) consultancy tender for the upcoming expansion of the Cañal Bajo airport in Osorno, Los Lagos region.

Operation of the airport is expected to be tendered in 2022 as part of a US$111mn concession package.

The contract involves drafting the preliminary design for the expanded airport and the technical bidding rules for the concession tender, documents show.

Technical bids for the consultancy contract will be opened on July 6, while economic offers will be revealed on July 14. The documents can be seen here, in Spanish.

The Osorno airport will be tendered alongside that of El Tepual airport (Puerto Montt) and Mocopulli (Chiloé island) as a single contract, according to the MOP’s concessions office.

Chile opens US$39mn credit line aimed at renewable projects

Chilean state development agency Corfo has launched a new credit line aimed at spurring investment in renewable energy and other eco-friendly initiatives.

The program, called Crédito Verde, will finance projects that help mitigate the effect of climate change or help private companies improve their sustainability, the agency said in a release. It will focus on renewable projects with a storage component, energy efficiency and waste reuse.

The line will have a 2020 budget of US$39mn and is part of a series of government initiatives aimed at boosting growth and investment in the face of lockdown measures to combat the spread of COVID-19.

In order to qualify, a company must have annual sales below 600,000 UFs (some US$22mn) and can access funding of up to 70% of total investments for up to 15 years. Credit lines are expected to average US$7mn for renewable projects, making them perfect for financing small distributed generators (PMGDs).

The line is expected to be available in July.

Chile’s Drought Threatens Copper Mines

Despite the COVID-19 health crisis and its effect on the mining sector worldwide, Chile’s copper production has been relatively unscathed, although mines are facing problems due to a drought. 

State copper miner Codelco confirmed to daily El Mercurio the restriction on copper processing at the El Teniente mine near Rancagua in central Chile. 

In April, the reservoir that supplies water to the mine was at 25% of capacity and in May the company decided to reduce the processing rate at the Sewell mill to prioritize operations at the Colón plant. 

The company has not disclosed figures on current processing rates at the Sewell mill but a spokesperson told BNamericas that normal operations could resume if there is rain this month. Meanwhile, the restriction is mitigated by the extraction of higher-grade ore.

La Negra lithium expansion sees slowdown

US lithium producer Albemarle aims to finish construction of its US$300mn La Negra 3 and 4 expansions in northern Chile by mid-2021. La Negra 3, which was expected to be finished earlier in 2021, would increase current production capacity to over 80,000t/y of battery grade lithium carbonate from 44,000t/y. 

Amid the economic uncertainty generated by the COVID-19 pandemic, work on the project has slowed in the last month to preserve capital, but according to Meredith Bandy, VP of investor relations and sustainability, the initiative is still a high priority for the company. 

“The project is still ongoing, but it just changed the way we do it. La Negra will be finished around mid-2021,” Bandy said at the 2020 Global Industrial & Materials Summit organized by Deutsche Bank on Tuesday. 

“Depending on how the situation evolves we could decide to accelerate or maybe even make a harder stop of the project if we need to,” she added. 

Chile financial portability bill becomes law

Chile’s President Sebastián Piñera signed into law a financial portability bill.

Regulatory changes introduced under the legislation make it easier for people and companies to switch the likes of current accounts, credit cards, mortgages and consumer and auto loans to new financial services providers.

The law will boost competition and transparency in the financial services market, said Piñera.

It establishes a mechanism that makes it easier for people to compare products. Also, the provider a person or company wants to move their product to handles the associated paperwork.

“The commitment of the government is to better combat abusive practices and advance faster to a society that is fairer and that better protects consumers,” Piñera said.

With measures to ease the process of transferring loan guarantees from one lender to another, the cost associated with refinancing is expected to fall by 60%. And the time required for paperwork should drop 40%.

All financial products will be portable, with special rules in place for mortgage loans.

The law enters into force in 90 days from the date of its publication in the country’s official gazette. Secondary legislation will be published in 45 days of the publication date, the government said in a statement.

Chile FDI rises 35% in January-April, hits US$7.2bn

Foreign direct investment in Chile rose 35% year-on-year to US$7.16bn in January-April, investment promotion agency InvestChile said in a release, citing central bank data. The figure is the second highest for the period since 2012.

Equity purchases accounted for the bulk of FDI, with US$3.81bn reported – the biggest total since 2003, when the current data series began. Reinvestment of profits accounted for US$2.32bn, followed by debt instruments (US$1.03bn).InvestChile director Juan Araya welcomed the January-April figures but said gauging future flows was difficult on account of the global health crisis

OECD: Chile has more room for economic stimulus

During a webinar, the OECD’s economics chief, Álvaro Pereira, still has room to provide more economic stimulus. Being better positioned for a post-pandemic take off than its regional peers, Chile could still increase its fiscal stimulus and debt.

Chile’s economy is likely to be less impacted than its peers in the region, but it is still projected to contract 5.6% this year. However, a second outbreak would put GDP contraction at 7%, the OECD said. 

Pereira told BNamericas that Chile could ramp up infrastructure spending as part of the stimulus.

“ Chilean ports can still improve their quality in intermodal transport. It is also important to invest in trains. Chile is a very long country and it needs to improve its rail infrastructure. But also in digital infrastructure. One of the effects of the pandemic is that the income gap is even clearer through internet access,” he told BNamericas.

Harris Gomez Group is a Common Law firm, with offices in Santiago, Bogotá, and Sydney. We also have legal teams in Mexico, Peru, Ecuador, Brazil, and Argentina. Over the last 19 years, we have been supporting foreign companies with their growth in Latin America. Many of our clients are technology companies, service providers and engineering companies that focus on the mining, energy and infrastructure markets. 

To better understand how we can support your management team in the Region, please contact Cody Mcfarlane at cmm@hgomezgroup.com