How Copper Riches Helped Shape Chile’s Economic Story

Although Chile has always been noted for its abundant mineral wealth, the country was actually not a notable copper producer even at the beginning of the 20th century.

In 1907, for example, the United States was able to produce nearly 14X as much copper as Chile. The reality was that shortages in capital, organization, and water kept the country’s massive, low-grade deposits from being developed at any significant scale.

The Copper Standard

Things would change dramatically for Chile. The country has been the world’s top copper producer now for over 30 years, and today close to 50% of the country’s exports come from copper-related products.

Today’s infographic comes from Altiplano Minerals and it tells the story of how Chile tapped into its copper wealth to become the richest and freest economy in Latin America.

New milling technology, economic reforms, and increasing investment attractiveness were catalysts that turned Chile into a copper powerhouse. In turn, copper exports helped propel the Chilean economy to new heights.

“The Miracle of Chile”

This incredible leap can be summed up aptly with two facts:

1) Copper production went from under 1 million tonnes per year (late-1970s) to over 5 million tonnes per year (2000s).
2) Despite this massive rise, copper as a percent of exports fell. It went from a peak of 80% of exports to closer to 50% today.

Over this time, as the economy diversified, Chilean GDP per capita (PPP) gained massive ground on the Latin American average and passed it in the early 1990s.

Chile’s GDP per capita (PPP) today is the highest in Latin America of major economies:

That said, critics of Chile’s economy will point to its inequality. The country’s Gini Coefficient, according to the World Bank, is higher (less equal) than only a handful of Latin American & Caribbean economies: Panama, Belize, Haiti, Suriname, Honduras, and Colombia.

Mining in Chile Today

Today, Chile’s mines produce copper, gold, molybdenum, iron, and silver. The country also produces more lithium than any country from its salars.

The country is the world’s undisputed copper heavyweight champion – it’s been the top producer for 30+ years and holds an impressive seven of the world’s top 14 copper mines. The biggest mine, Escondida, produces over a million tonnes of the red metal each year, equal to 5% of the world’s annual copper supply.

The copper crown is likely to be held by Chile in the future, as well. According to Cochilco, between 2000-2015 about 35 copper deposits and three gold deposits were discovered in central-north Chile. They increased the country’s resources by 208.6 million tons of copper and 34.3 million oz of gold.

The new copper discovered is roughly equal to 30% of global discoveries over the same time period.