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Chile's Economic Rebound: Mining Surge Fuels Growth and Investment Opportunities

Clyde MorganSaturday, May 3, 2025 9:11 am ET

2min read

Chile’s economy is experiencing a resurgence in early 2025, driven by a robust performance in its mining sector—the backbone of the country’s GDP. With copper production rebounding, iron ore and nickel output expanding, and strategic investments in green metals, Chile is positioning itself as a global leader in critical mineral supply. This article explores the factors behind the recovery, evaluates risks, and identifies investment opportunities.

Economic Growth: Mining as the Engine

Chile’s GDP is projected to grow by 2.3% in 2025, a significant rebound from the 0.4% quarterly expansion in Q4 2024 (). The mining sector, which contributes over 6% of Chile’s GDP, has been the primary catalyst.

Copper Output Surges, Despite Challenges
Copper production in Q1 2025 reached 168,900 tonnes, a 15% decline from the previous year due to lower grades at Collahuasi. However, this dip was offset by strong performances in Peru and Brazil. Anglo American’s simplified portfolio strategy, focusing on high-grade assets, aims to stabilize output. Meanwhile, Capstone Copper’s Mantoverde mine set records, producing 16,268 tonnes of concentrate—a 20% quarterly increase—thanks to optimized throughput and recovery rates.

Iron Ore and Nickel Growth
Iron ore output rose 2% year-on-year to 15.4 million tonnes, driven by Minas-Rio’s efficiency. Nickel production also increased 3% to 9,800 tonnes, benefiting from stable operations at Brazil’s Barro Alto mine. These gains highlight Chile’s diversification beyond copper, a trend critical for long-term resilience.

Key Companies Leading the Charge

Capstone Copper: A Growth Story

Capstone Copper’s Q1 2025 results underscore its potential. Mantoverde’s sulphide concentrator achieved 31,171 tonnes per day (tpd) throughput, a record, while combined C1 cash costs fell to $2.59/lb—a 10% reduction year-on-year. The company’s MV Optimized project, targeting a 45,000 tpd throughput expansion, could add 368,000 tonnes of copper over 25 years. With its stock price up 22% YTD, Capstone is a top pick for investors ().

Anglo American: Navigating Challenges

Anglo American’s Q1 copper production dipped to 168,900 tonnes, but its focus on portfolio simplification—such as exiting non-core PGMs and steelmaking coal—aims to improve margins. Collaboration with Codelco on the Los Bronces-Andina joint mine plan could unlock 20+ years of production. Despite water constraints and lower grades, the firm’s $185/lb unit cost guidance reflects cost discipline.

Risks and Headwinds

Global Demand Volatility: China’s slowdown and EV market dynamics could impact copper prices.
Operational Hurdles: Water scarcity (e.g., Collahuasi’s constraints) and permit delays (e.g., Mantoverde’s expansion) pose near-term risks.
Policy Uncertainty: Chile’s new mining royalty bill, collecting 0.45% of GDP annually, may pressure margins.

Investment Outlook: Bulls and Bulls with Caution

Bull Case

Copper Demand: Global green energy transitions require 5–6 million tonnes of copper annually by 2030, per the IEA. Chile, with 20% of global reserves, is poised to capitalize.
Capstone’s Catalysts: MV Optimized’s mid-2025 permit approval and Santo Domingo’s $2.3B copper-iron project offer growth visibility.
Valuation: Capstone’s EV/EBITDA of 8.5x is below peers, suggesting upside.

Bear Case

Commodity Cycles: Copper prices at $4.36/lb (Q1 2025) face headwinds if China’s demand weakens further.
Environmental Pushback: Permitting delays for projects like Santo Domingo could extend timelines.

Conclusion: A Miner’s Paradise, with Caveats

Chile’s mining sector is undeniably thriving, with Q1 GDP contributions from mining projected to rebound to 4,461 billion CLP by 2026. Companies like capstone copper and Anglo American are well-positioned to benefit from long-term trends in EVs and renewables. However, investors must remain vigilant to geopolitical risks, commodity price fluctuations, and operational challenges.

For those willing to take on these risks, Capstone Copper (CSPO) stands out as a high-growth play with clear catalysts. Meanwhile, diversified miners like Anglo American (AAL) offer stability amid sector volatility. The data is clear: Chile’s mining renaissance is real, but the path to profit requires selective investing and patience.

Final Note: Monitor Chile’s Q1 2025 GDP release (expected mid-2025) for confirmation of growth trends and adjust strategies accordingly.

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