According to Bloomberg's report on July 22, Chile’s top diplomat stated that in the next decade, Chile plans to invest approximately $100 billion in developing its copper industry. This investment is aimed at meeting the demand generated by data centers and promoting diversification of customer bases, thereby reducing dependence on the Chinese market.
"Currently our customers are too concentrated, we need to expand the market for purchasing Chilean copper products."
He said that to achieve this goal, Chile needs to make large-scale investments and gradually shift from exporting copper concentrate to exporting refined copper.
Percy MacKenna said: “Due to China's large industrial system, it is likely that China will remain a very important customer for Chilean copper products.” However, he also noted that as global competition in data center construction increases, demand for copper will become even wider.
Currently, countries are competing to ensure a supply of copper resources. Copper is an essential material for power grids, electric vehicles, and data centers, which have played a key role in supporting the global AI boom in recent times.
Perez Macenar also said that Chile has begun negotiations on free trade agreements with India, and will strengthen existing trade agreements with neighboring countries as part of its overall strategy to expand export markets.
Over the years, China has been Chile’s largest buyer of copper products, accounting for more than half of Chile’s total copper exports. However, in recent years, due to disruptions in mining production leading to a tightening global supply, along with rapid expansion of China’s smelting capacity, competition for refined copper ore has increased, making annual supply contract negotiations even more challenging.
Nanhua Early News analysis indicates that this is the most explicit statement made by the new government in Santiago so far, aiming to reduce its dependence on Chinese demand.
However, no matter how Santiago decides to increase its processing capabilities, it must be considered within the context of its relationship with Washington. This has reduced the room for negotiation between the Chilean government and Chinese partners.
President Jose Antonio Kast took office in March this year. Prior to that, there was a dispute during the transition of power over a submarine optical cable project that connected Chile to Hong Kong and was operated by the Chinese side.
At the end of February this year, U.S. Secretary of State Rubio imposed visa restrictions on three Chilean officials due to this project. Subsequently, former President Gabriel Boric revoked the approval for the project after receiving warnings including that "Chile might lose its status as a country eligible for U.S. visa-free travel."
Before this incident, several projects supported by China were suspended on the pretext of 'security reasons'. These included the early plans for the same undersea optical cable project, which was put on hold after then-U.S. Secretary of State Pompeo visited Santiago in 2020.
Additionally, the Vinta Ronez Mountain Observatory project, which was jointly constructed with the Chinese Academy of Sciences, also ceased construction after the US Ambassador to Chile warned that it might be used for satellite tracking.
Chile's 37% of exports are directed to China, mainly consisting of copper, lithium, lemons, and cherries. At the same time, about a quarter of Chilean consumer goods come from imports from China.
From 2020 to 2025, bilateral trade between Chile and China will grow at an average annual rate of 7%. Last year, the trade volume reached $65.33 billion. The United States remains Chile’s largest source of foreign direct investment, with cumulative investments amounting to $12.5 billion; China has made cumulative investments of $4.6 billion, mainly in the mining sector.
Castle said that maintaining as good relations as possible with China and the United States does not conflict with each other, and promised to continue fulfilling its trade relations with both countries.
The Chinese Embassy in Chile has stated that the continuous threats from the United States do not demonstrate the power of hegemony, but rather their own weakness. Latin American countries will eventually become weary of the US's bullying behavior. The sooner this superpower abandons its hegemonic mindset and treats other countries equally, the more it can benefit the security, development, and prosperity of the countries in the region, as well as the international image of the United States itself.
