Just Released: "Chile Infrastructure Report Q1 2014"

We maintain our positive outlook on Chile's construction industry on the back of an investor-friendly business environment, political stability, and a strong pipeline of projects. However, we forecast a moderate slowdown in real growth for 2013 and 2014 to 6.4% and 5.6% respectively, compared with high 8.1% in 2012, but this is still a promising outlook. In addition, we expect the Chilean construction industry value to more than double in the next decade, reaching US$47.3bn by the end of our forecast period in 2022. There is a strong pipeline of infrastructure projects, particularly in the energy and utilities sector, as the mining industry continues to demand additional power and the country has significant potential for renewable energy.

Key developments in the industry:

* Robust investment in mining infrastructure: BHP Billiton and Rio Tinto have announced a US$3bn investment in the construction of a new seawater desalination plant to support operations at Chile's biggest copper mine - Escondida. This investment shows the commitment of these mining giants to maintaining and expanding their presence in Chile.
* Commitment to the ports: Valparaiso Port General Director, Harald Jaeger, has announced a US$723mn investment that includes the expansion of Terminal 1 (operated by TPS), the expansion of the South Access junction and construction works in progress in Terminal 2. This investment will double the port's transfer capacity to reach 2mn TEUs per year.
* Renewables sector continues to expand: Total announced in September 2013 that it will develop, in conjunction with Swiss company Etrion and Spanish developer Solventus Energias Renovables, a 70MW solar PV farm in the Atacama Desert. The project is expected to cost US$200mn, with 70% of this cost to be financed through the Overseas Private Investment Corporation, and is due online in 2015. Crucially, the solar facility will be developed without relying on government subsidy support; the largest solar project in the world to be built in this way.
* The unanimous passing by parliament of the upward revision to the country's renewable energy targets in September 2013 confirms our constructive view of the Chilean market. The bill indicates that Chile will source 20% of the energy mix from renewables by 2025, including micro hydropower (the previous target was 10% by 2020). The bill is now scheduled to be submitted for enactment into law.

Full Report Details at
- http://www.fastmr.com/prod/723440_chile_infrastructure_report_q1_2014.aspx?afid=303

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