Copper hits record heights as Chile's mines stumble and output falls

Copper prices brushing US$6.54 a pound on the London Metal Exchange —near this year's all-time high and 39% above levels of a year ago— sets the tone for Chile's economic day, but the real story isn't the price itself; it's the paradox surrounding it: while the red metal trades at exceptional levels, Chilean output will fall this year. Cochilco revised its average 2026 price projection upward to US$5.95 a pound, a 7.2% increase over its previous estimate, while simultaneously trimming its national output forecast to 5.27 million tonnes, a 2.6% contraction from 2025 attributed to weaker performance from Codelco and BHP. Chile is losing share in the market it supposedly dominates, precisely when that market is paying more.

The El Teniente case illustrates the depth of the problem. Gustavo Reyes, general manager of the Codelco division, laid out before the Senate Mining Committee a landscape of four projects worth US$7 billion with timelines stretching to 2035, all against the backdrop of operational shutdowns tied to seismic events. Mining Minister Daniel Mas acknowledged that elevated prices simultaneously represent a fiscal opportunity and a productivity challenge, a tension the sector has failed to resolve. For 2027, Cochilco holds its projection at US$5.10 a pound, anticipating that the current bonanza won't last indefinitely.

That macroeconomic backdrop contrasts with the euphoria described by BTG Pactual Chile chief economist Pablo Cruz, who noted that the best of the Chilean economy is still to come: the second half will show signs of recovery, but the real momentum will arrive in 2027, when the mega-reform could push growth to rates near 4% monthly in certain periods. It's the first time in years, Cruz observed, that growth occupies the center of the economic policy agenda.

That recovery, however, faces regulatory and legal frictions that accumulate costs. The government appeared before the Constitutional Court to defend two pillars of the reconstruction law —tax invariability and the Environmental Qualification Resolution— invoking both the "century-old tradition" of the system and the Escazú Agreement. At the same time, it requested that the article requiring free reconnection of basic services in disaster zones be declared unconstitutional, a maneuver that triggered a politically sensitive episode: Interior bi-minister Claudio Alvarado publicly admitted he was unaware the Executive had filed that request, drawing fire from the opposition. Internal government coordination is showing cracks at a moment when the legislative agenda is moving with unusual speed.

That speed was on display in the handling of the mortgage subsidy. The Senate unanimously approved the extension of the benefit —which cuts credit rates from 4% to 3%— in less than a week, expanding coverage to 80,000 slots and raising the eligible housing cap from 4,000 to 6,000 UF through May 2028. Finance Minister Jorge Quiroz emphasized the combined effect with the transitory VAT exemption for new housing contemplated in the reconstruction law. The real estate market, which has accumulated roughly 100,000 units ready for delivery, found tangible relief in the measure. The CBRE and Acafi survey reinforces that reading: 65% of sector executives plan to increase purchase activity in 2026, compared with 38% last year, with a notable pivot from opportunistic strategies toward investment in high-quality stabilized assets.

The trading session ran in the opposite direction. The IPSA closed sharply lower, giving back roughly half the ground gained the previous week, dragged down by global uncertainty stemming from the escalating conflict in the Middle East. The correction arrived in the middle of an earnings season that, in operational terms, has been solid for several local companies. A relevant accounting issue for the market is the open debate around deferred taxes: the corporate tax cut contemplated in the reconstruction law could affect companies' assets, equity and results, depending on the interpretation adopted by the Comisión para el Mercado Financiero. Corporate finance departments are watching for that determination with considerable attention.

On the infrastructure front, Sacyr confirmed it will submit a bid for the Ruta 57 Santiago-Los Andes and is evaluating the Caldera-Antofagasta concession. The Spanish group, which concentrates 36% of its global concession assets in Chile, thereby consolidates its position as a strategic operator in the country. On digital connectivity, Google announced the Alisios submarine cable, which will link Chile with Panama and the Dominican Republic as part of the Americas Connect initiative, reinforcing the company's cloud infrastructure in the region and adding redundancy along the Pacific route. On the export front, Brazil is asserting itself as a key destination: it's the leading global market for Chilean wine and the second for salmon, while in North Africa Chile signed a sanitary protocol with Morocco with export potential estimated at US$48 million by 2030. The foreign ministry also advanced talks with Bangladesh toward an FTA, with bilateral trade already reaching US$310 million in 2025 and growing at an average annual rate of 26% over two decades.

Two factors deserve close watch in the coming days: the CMF's interpretation on deferred taxes —whose impact on corporate financial statements could be significant— and the trajectory of copper prices against a Chilean supply that is failing to respond to the upward cycle. Adding to that is the Constitutional Court's reading on the challenged articles of the reconstruction law, whose resolution will define the real operating room of a legal instrument the government has presented as the cornerstone of its economic agenda.

**Falabella (IPSA: FALABELLA)** — The company reported a 9.7% increase in revenues for the second quarter of 2026, with an operating result the company described as the best second quarter in its history, reaching US$423 million. Net income fell 16.5% due to a fair-value remeasurement of investment properties, but excluding that accounting impact, adjusted earnings of US$242 million set an all-time record for the period.

**Banco Santander Chile (NYSE: BSAC)** — The Chilean subsidiary of the Spanish group returned to the Swiss capital markets with a five-year green bond issuance of US$123 million, priced at a spread of 82 basis points over the benchmark, consolidating its access to sustainable international financing.

**BYD (HKEX: 1211)** — The Chinese electric vehicle manufacturer will unload 1,918 units this Wednesday at the Port of San Antonio via the BYD Changzhou vessel, in the largest maritime operation of its kind received in Chile in a single call; the company projects surpassing 10,000 units in the local market by the end of 2026.