COCHILCO INCREASES COPPER ESTIMATE

(Sept. 21, 2005) The Chilean Copper Commission (COCHILCO) increased the estimated price of copper to between US$1.50 and 1.55 per pound for the end of 2005.

With this new prediction, the state-owned copper company CODELCO expects to earn US$5 billion for the government this year. As well, tax revenue from private companies is expected to increase by US$200 million over estimates made at the end of July.

Patricio Cartagena, executive vice-president of COCHILCO, estimates that the 10-year price of copper will average US$0.99 per pound and that mining companies should estimate US$0.95 per pound for their long-term budgets.

He also cautioned that the price of copper has been very high for an unusually long period of time, but said that the market seemed to be stabilizing and that 10-year projections should remain relatively high.

Private investment in the mining industry has also made news recently, with US$18.5 million to be spent on mining projects between 2006 and 2015 (ST, Sept 9).

All of this is good news for Chile’s government, which recently presented the 2006 budget to Congress with a 6 percent increase in government spending for the fiscal year 2006 (ST, Sept 15). Chile is using high copper prices to help finance new government programs, and in 2006, notable increases will occur in health and education spending, including a historic new initiative to finance university educations for the nation’s poorest 60 percent of the population.

Still, Cartagena warned that between 2010 and 2020, many laws benefiting mining in the country will expire. The expiration of these laws jeopardizes many investments in mining and could reduce profit margins, forcing mines to close down.

“We need to increase our efforts to protect mining in the country” said Cartagena. “These laws are the reason there have been so many new investments in mining and technology, and we must keep them competitive.”