Brazil & Southern Cone - October 2013 (ISSN 1741-4431)

Budget proposal: On 28 September President Piñera unveiled a US$61.7bn 2014 budget proposal, which calls for a 3.9% real increase in central government spending over estimated spending in 2013 and is up 2.1% on the 2013 budget. He listed as the main priorities: “to continue strengthening Chile’s capacity for growth, job creation and higher salaries; to continue improving the quality, financing and access to education; to continue strengthening the fight against crime and drug trafficking”. The presidential press release stated that the allocation for education (which accounts for 21% of spending) would allow the number of beneficiaries of the preferential school subsidy to increase “from 700,000 children and young people in 2009 to over 1.5 million in 2014”. The budget proposal also assigned resources to “ensure that State-financed scholarships are available to every deserving young person from the 60% lowest income households in Chile. This will be achieved by tripling the number of scholarships, from 123,000 in 2009 to almost 400,000 in 2014”. On health, which represents 16% of spending, the proposal assigned funds to operate 20 new hospitals built under the current administration and pledged to finance the construction of another 16 hospitals currently under construction, in addition to “28 more due to be started in 2013 or 2014”.

Raising copper output forecast: On 8 October Mining Minister Hernán de Solminihac and Andrés MacLean, the executive vice president of Chile’s state copper commission (Cochilco), presented their latest report on the international copper market for 2013-2014. De Solminihac said that Chile, the world’s largest copper producer, was expected to produce around 5.7m tonnes (t) of copper this year, a record high and up 4.9% on 2012. In July, Cochilco had forecast that Chile’s output would reach 5.5mt. De Solminihac attributed the expected increase to improved production forecasts at key mines including Escondida, the world's largest mine, controlled by the multinational BHP Billiton. Cochilco also marginally raised its view for 2013 average cooper prices to US$3.32 per pound, up from US$3.27 in June. The improved forecast follows a better-than-expected performance on world markets in July-September, on the stability of the Chinese market and the (incipient) Eurozone recovery. De Solminihac added that the mining ministry maintained its 2014 copper price forecast at US$3.15 per pound. According to Cochilco, Chile’s copper exports were worth US$29.5m in 2012, accounting for 52% of the country’s total exports, down from 54% in 2011 and 56% in 2010.

Barrick ruling: On 25 September Chile’s supreme justice court upheld a July decision by a local appeals court suspending the operations in Chile of the Pascua-Lama gold mine, owned by the Canadian mining giant Barrick Gold, until the necessary infrastructure to protect the environment is in place. The mine straddles the Chile-Argentina border. In a statement issued the following day Barrick declared itself “pleased” with the 25 September ruling, which rejected an appeal presented by local indigenous communities for Barrick’s license to be revoked altogether on environmental grounds. The supreme court found that the measures ordered by the Copiapó appeals court were sufficient to protect constitutional guarantees. In April, the appeals court had ordered Barrick to suspend operations in Chile on environmental concerns, in response to a request filed in October 2012 by representatives of a local indigenous community (Diaguita), who claimed that the project threatened local water supplies and endangered three glaciers, Toro 1, Toro 2 and Esperanza. The project was approved in 2006 by the government led by Ricardo Lagos (2000-2006) and was managed by a Barrick subsidiary, Compañía Minera Nevada. On 11 October however, another appeals court admitted a fresh appeal seeking a new freeze on the mine on the grounds that Compañía Minera Nevada engaged in “illegal and arbitrary acts," in relation to the "installation, execution and realization of works and activities ... that were not authorized by the environmental regulator (SMA).” Barrick has yet to issue a response.

• Inflation

According to Chile’s national statistics institute (INE), the monthly consumer price index for September was 0.5%, bringing the accumulated year-to-date rate in 2013 to 1.9%. The inter-annual rate was 2.0%.