Latest situation in Chile May 2023

According to the Chilean economics report and the Chilean politics report of May 2023 issued by the embassy of Japan in Chile, the latest situation in the country can be summarized as below:

  • Politics

According to the Chilean ministries of finance and mines, parliament has approved a bill of mining royality, which will take effect from 2024.

The contents of the bill are as below:
Mining companies that produce more than 50,000 tons of copper per year will be taxed 1% of an ad valorem tax on their annual copper turnover and 8% to 26% on their profits, depending on their operating profit margin.
The tax burden is capped from 45.5% to 46.5% depending on production volume.
In addition, part of the tax collection (one-third) is returned to each region and municipality as funding.
The rest will be used to improve police and judicial administration systems, and to invest in research and development.
*About the mining royality, please check out this article as well.

[the status of COVID-19]

Since the WHO has lifted the “public health emergency of international concern”, the Chilean ministry of health decided to terminate the obligations of PCR tests, submission of vaccination certificates, and random tests in immigration to Chile, from May this year.

  • Economics

The economic activity index for April recorded -1.1%. In the mining section recorded 3.1%.
The mining production index for the same month was 2.5%, and copper production decreased by 1.1%.
The export amount in May was 7.84 billion dollars (-10.8%), of which mining products raised 4.39 billion dollars (-12.9%, 56.0% of the total), of which copper raised 3.46 billion dollars (6.9%, 78.8% of the total mining export value).
On the other hand, import value in the same month was $6.88 billion (-18.9%), and the trade balance was a surplus of $9.5 billion.
*Percentages from the same month of the previous year

The amount of trade with China, Japan, and South Korea (April) resulted as below:

With China: exportation 2.77 billion (-11.6%), importation 1.53 billion (-7.8%), total amount of trade 4.25 billion (-10.3%)
With Japan: exportation 700 million (22.4%), importation 130 million (-38.8%), total amount of trade 830 million (-5.9%)
With South Korea: exportation 560 million (24.2%), importation 110 million (-30.2%), total amount of trade 660 million (10.5%)
*Dollars, comparing to the same month of the previous year

COCHILCO (Chilean Copper Commission) announced the results of the lithium market forecast up to 2035. According to the forecast, first, the consumption of EV batteries is expected to increase, then global demand for lithium carbonate equivalent is expected to increase from 508,000 tons in 2021 to 3,828,000 tons in 2035 (average annual growth rate will be 15.5%).
Lithium carbonate production is expected to grow by 12.6% annually in average, due to the embodiment of new projects.
On the other hand, depending on the supply status of existing businesses and delays in launching new or expanded businesses, temporary supply shortages, rises in prices of various types of lithium, and expansion of corporate deficits are expected.

References: The regular report of economy May 2023, from the Embassy of Japan in Chile, Department of Economy.
The regular report of politics May 2023, from the Embassy of Japan in Chile
(The original reports are written in Japanese.)