What does Boric’s victory mean for Chile and the copper industry?

Gabriel Boric’s (left) decisive victory over Jose A. Kast (right) sent a clear signal from Chileans about wanting to adopt a new economic model. This is a model that is closer to what Scandinavian countries have implemented , with a strong and wide social safety net. As such we do not expect to see dramatic changes and forced nationalizations in the mining sector. Moreover, the fact that Boric doesn’t have control of the senate will limit his ability to maneuver. That being said, his policies will not be as friendly as previous right-wing governments. Already he has pledged to oppose a controversial $2.5bn copper-iron ore mine project which was approved in August. Costs for miners in Chile are also likely to increase as he intends to introduce tighter environmental rules along with an increase in royalties. On the mining royalty, Boric ’s economic plan would include a tax structure that is progressive (based on prevailing copper prices ) and could contain an ad-valorem component with the target of increasing revenues by 0.8% of GDP by 2026 and 1.00% by 2030. Our view is that even if royalties and costs increase , the impact on international copper price s and production will be limited given the large margins that producers are currently enjoying.