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Chile and the world market of copper - Referat

Chile – General information
Copper – General Information
The Use of Copper
The Demand for Copper
Copper Production
The Producers of Copper
The Global Market of Copper
Trade Problems
Pro and Cons

- South-west South America
- Population: 17.113.688 (in 2010)
- HDI: 0.783
- High variety of climate and vegetation
- Decreasing population growth (0.856%)
- National language: spanish
- Communistic history

Chile‘s Gross Domestic Product
GDP: $257.9 billion (2010) --> Rank 46 worldwide
$245 billion (2009)
GDP - per capita:
$15,400 (2010) --> Rank 72 worldwide
GDP - composition by sector:
agriculture: 5.1%
industry: 41.8%
services: 53.1% (2010)

- semi-precious soft metal
- conductor of heat and electricity
- extracted from the earth in huge open pit mines

Copper mining in Chile
1960: president got back the copper mines from the USA
nationalization of the copper mines
mines are controlled by military

- 1/3 belongs to Codelco 2/3 are privatised
- all companies must pay 17% taxes

Global Market - CIPEC
- founded in 1967 by Chile, Peru, Democratic Republic of Congo, Zambia
- 1975 Australia, Indonesia, Papua New Guinea and Yugoslawia joined CIPEC
Aim: keeping a steady price
But: CIPEC controlled 30% of sold copper → no big influence price
- 1988 CIPEC was dissolved

Situation for Codelco and Chile
- Copper prices rise
- Codelco produces 11% of the world‘s copper
--> Huge revenues for Chile

But: High Investments necessary to keep production at the same level /to increase it

Situation for workers
- High Exports
--> Currency Peso rises
- Low wages
- Bad working conditions  Risk to health
--> Life expectancy: 77.53 years – male: 74.26 years – female: 80.96 years

Problem: Inequality in Chile
- High Gini coefficient: 52.1 (2009) (comparison to the world: rank 17)
- Only few profit from increasing GDP

“75% of that went to the richest 10%. The growth is much lower for the average Chilean.” (Gonzalo Durán)

- Minority have incomes of a developed country
- Majority earn significantly less

Trade with Copper - Problems:
- Copper price depends on offer and demand
- Depending on industrialized countries
- Economy depending on raw materials  fragile to price developments
- High inequality (high Gini coeffecient)

high demands encourage a high price
→ high prices lead to trade surplus
Chile has a monopoly position (40% of the resources)
→ the market depends on chile's copper
→ rising price if Chile decreases the extraction

insecure price stability → catastrophe for Chile's economy because of falling prices can't be eliminated
competition can decrease the copper price
→ Chile can't sell as much copper for a profitable price

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