Foreign Investment: The keys for mining suppliers in Chile

A panel de experts set out their vision of an industry worth US$15,000 million a year in a country that is the world’s leading copper producer. 

Find good local partners, do things innovatively and more efficiently and use Chile as a port of entry to the rest of the region: that was some of the advice given by a panel of experts to overseas mining suppliers during the latest EXPOMIN trade fair, the most important event of the year for Chile’s mining industry and one of the most important internationally. The panel, invited by InvestChile, comprised Susan Lasecki, Head of Supply Innovation at BHP; Annika Glatz, Manager of the Mining Business Center of the Chilean-German Chamber (Camchal); Shannon Powell, Senior Trade and Investment Commissioner at the Australian Embassy in Chile; and Franz-Josef Paus, CEO of Hermann Paus, a German mining supplier with operations in Chile.

With annual revenues of around US$15,000 million, the mining suppliers sector in Chile is optimistic. The price of copper - of which Chile, with an annual output of 5.5 million tonnes, is the world’s largest producer - has risen to over US$3/lb and the value of planned investment projects through to 2026 now reaches US$64,856 million, according to the Chilean Copper Commission (COCHILCO), up by over 30% on that envisaged for 2016-2025.

In view of the industry’s expected upturn, Susan Lasecki, Head of Supply Innovation at BHP, indicated that “This is a century-old industry where we are accustomed to always doing things the same way. As a company, we have taken the strategic decision going forward to integrate technology. Suppliers must, as a result, seek more innovative and efficient ways of doing things.” She added that “One of the best ways to derive value from technology is to work with the suppliers market. It doesn’t make sense for us to develop each capability internally.”

Technologies such as the Internet of things, big data and the automation of mines and mining processes are a means of increasing productivity in a sector that has historically been resistant to change but, today, seems to be creating space for innovative developments.  

Chile, port of entry to the continent

Annika Glatz, Manager of the Mining Business Center of the Chilean-German Chamber, highlighted the need for companies to look at the opportunities the region offers, using a safe environment as the base for possible expansion. “Chile is a port of entry to all the continent. The country’s stability and the sophistication of its market make it a good place to start. Here, overseas mining suppliers find the right conditions and a very good institutional network,” she said. As regards the “technological leap”, she noted that “There are many new technologies that have already entered the Chilean mining industry and may gain importance in the other countries over the coming years. There’s a natural line of progress in the industry and that starts in Chile.”

Similarly, Shannon Powell, Senior Trade and Investment Commissioner at the Australian Embassy in Chile, highlighted the maturity of the country’s business environment. “It is important to note that, today, there are some 230 Australian companies active in Chile. Around 70% of them are related to the mining business so the Chilean market is exceptionally important for us,” she said, adding that the presence of the principal international players in the mining market is an incentive for the installation of overseas suppliers. “The large companies have been extremely important in contributing to the arrival of overseas suppliers. Twenty-five years ago, when Escondida (the world’s largest copper mine) began operation, BHP attracted many Australian suppliers to Chile and that continues to be the case,” she said.

Josef Paus, CEO of Germany’s Hermann Paus, underlined the need to be attentive to the opportunities the market offers. “What’s important is to be in constant contact with your clients and to get their vision and inputs so as to be able to offer them the best possible product which, given the distance, you cannot do from the factory in Europe,” he said. Referring to his company’s experience in Chile, Paus reported that “Business is done very personally so it’s very important to come here and for your face to be familiar. They say that, culturally, Chile is the ‘Germany of Latin America’; it’s a very orderly and stable country and it’s a good place to establish operations. It wasn’t difficult to start here, once you have the right contacts. Laws and regulation on starting a business are not very different from in Germany; it’s quite easy. It wasn’t difficult to start operations in Chile,” he concluded.

To learn more about the opportunities Chile offers for mining suppliers, go to this link.