# Mining Investment Surge Masks Chile's Stubborn Labor Market Weakness

Chile's economy closed the week with the kind of tension characteristic of this stage in the cycle: robust signals from the mining sector and capital markets coexisting with a labor market that cannot get off the ground and an exchange rate that mirrors global geopolitical volatility. The dollar closed above $900, accumulating a weekly gain of $7.4 after three consecutive sessions of increases driven in part by the fallout from the latest Federal Reserve meeting on rate expectations, as Diario Financiero reported. The agreement between the United States and Iran, which had initially pushed down oil prices and local fuel costs, failed to sustain its moderating effect on the exchange rate once the first round of direct nuclear talks was canceled.

Against that uncertain external backdrop, the Banco Central released its June Monetary Policy Report, whose central message economists read with relative structural optimism. Former central bank vice president Pablo García, now at Universidad Adolfo Ibáñez, told La Tercera that the IPoM points to "an economy that is on solid footing," with growth projected at around 2.5% for 2027 and 2028 and inflation converging toward target. The downward revision of the 2026 GDP estimate to a 1%-1.75% range reflects transitory cyclical factors rather than structural damage, according to García. Economist Jorge Selaive, for his part, told Diario Financiero that absent new confidence shocks, the economy should grow no less than 3% in 2027, though he warned that the Monetary Policy Rate is in no position to come down for now.

The mining sector was the true protagonist of the week. Capstone Copper submitted the Mantos Blancos expansion project to the Environmental Impact Assessment System, with capital expenditure of US$500 million and an extended mine life through 2041, generating 900 jobs during construction and sustaining 3,000 in operation in the Antofagasta Region. In parallel, Codelco announced it will assess asset sales as part of its Strategic Plan, signaling that the state copper producer is seeking to bolster its financial sustainability through portfolio rationalization. Executive movement also mattered: Compañía Minera del Pacífico, part of Grupo CAP, signed the former general manager of Los Bronces to lead the company starting in August, in a reshuffle that reflects the talent rotation triggered by the departure of Anglo American executives from Chile. Komatsu Latinoamérica CFO Veronika Holtz perhaps offered the broadest framing when she told Diario Financiero that "we are seeing a new copper supercycle," underscoring that Latin America is the group's largest mining market worldwide—a reading that backs the sustained flow of investment into northern Chile.

The investment agenda of José Antonio Kast's government also had its chapter. The economic team, led by Finance Minister Jorge Quiroz through the Economic Committee, is tracking 600 investment projects worth US$60 billion and has managed to reduce the rate of environmental review delays from close to 35% at the start of the administration to roughly 10% today, La Tercera reported. On port infrastructure, CAF granted a US$50 million credit to begin enabling works for the Puerto Exterior de San Antonio, whose bid opening is scheduled for August. Grupo CAP, meanwhile, is exploring attracting Argentine cargo to export to Asia through its terminals in Atacama and Biobío, although blockades in Bolivia are complicating logistics in the north: the Port of Arica is operating at 120% of capacity, forcing the temporary suspension of cargo deconsolidation.

In local markets, the stock exchange closed higher, with Enel Américas surging nearly 10% after announcing a new share buyback program, while Falabella concentrated the largest traded volumes with more than $100 billion in operations—a reflection of institutional portfolio moves rather than consumer optimism. The Quiñenco holding company, owned by the Luksic family, ended March with $2.6 trillion in cash—roughly US$2.807 billion—three quarters of which is held in term deposits of less than 90 days and two thirds denominated in dollars, a defensive position that illustrates how Chile's large capital pools are managing uncertainty. BlackRock's executive for Chile, Argentina and Uruguay, Silvia Fernández, warned that the pension reform timeline could require legal changes and raised doubts about the effectiveness of capital repatriation under the capital markets reform that the government is preparing for the second half of the year.

On the labor and regulatory front, the week was marked by a simultaneous offensive from the private sector and the government. SOFOFA presented an agenda of five reforms, including the replacement of the severance-by-years-of-service system with individual accounts and universal day care, calculating that a four-percentage-point cut in the corporate tax—from 27% to 23%—could generate between 80,000 and 210,000 jobs over four years. Labor Minister Tomás Rau acknowledged that all-event severance "is under analysis," though he noted that "it is not the best moment" given the sustained rise in labor costs. The CAE crisis added a new legislative angle: the PPD-Independientes bloc introduced a bill to bar the Tesorería General from collecting the loan administratively, in response to mass garnishments that triggered constitutional protection actions in multiple appellate courts. At ENAP, the situation worsened with the start of criminal proceedings over the alleged manipulation of environmental data in Quintero.

Next week will concentrate several vectors of risk. The Chamber of Deputies will vote on the constitutional indictment against former Finance Minister Nicolás Grau, a signal of the political climate surrounding fiscal management. In markets, the evolution of nuclear talks between Washington and Tehran will continue to drive oil prices and, through that channel, local inflation expectations. In mining, the progress of Mantos Blancos's environmental review and the definition of which assets Codelco will put under review will be the most relevant indicators of real investor appetite in the sector that underpins the country's external accounts.