Miners Buying Hugo Boss Perfume as Chile’s Copper Booms – by Matt Craze & Javiera Quiroga (Bloomberg News – August 20, 2013)


Since starting work at the Esperanza copper mine in northern Chile two years ago, Erick Moreno has tripled his salary and is preparing to buy his first home. The pay, he says, is so good that he’d never take a job elsewhere.

“I am going to die in this industry, I don’t see myself anywhere else,” Moreno said by phone from Antofagasta, a city on the edge of the mineral-rich Atacama desert. “When you start working in a mine, everything changes and in a very little period of time.”

While Moreno, 27, completed his engineering course at Antofagasta University, he says many fellow students dropped out to start work at the mines without graduating. Most of them already own their homes and drive sports cars, while many older miners have five or more houses, some far from the mines that litter the northern desert, he said.

Spending by high-earning miners is spreading through the economy, fueling a consumer boom and driving unemployment to its lowest since 1973. The nation, squeezed between the Andes Mountains and the Pacific Ocean, has become the wealthiest in Latin America, according to the International Monetary Fund, with gross domestic product per capita rising to about $16,300 this year from $4,780 ten years ago. World Bank President Jim Yong Kim last month congratulated the country on earning “high-income” status.

The rapid growth of mining and the consequent shortage of skilled workers means many workers earn bonuses in excess of the equivalent of $30,000 for agreeing to new contracts once every two or three years. BHP Billiton Ltd. says truck drivers at its Escondida mine get paid the equivalent of $80,000 a year, excluding the bonuses, more than their counterparts at mines in the U.S.

No Alternative

Moreno, who works in the maintenance department at the Esperanza mine owned by London-based Antofagasta Plc, says he feels sorry for friends who worked hard to get degrees and don’t work at the mines. Miners earn more than workers in any other industry, according to the pensions’ regulator.

The benefits aren’t limited to those living in the north. Many workers from poorer cities in the south work for weeks at a time in the north, before flying home for a few weeks off. Every day, they fill Latam Airlines Inc. (LAN) flights to the Atacama, where Codelco, the world’s largest copper company, Poland’s KGHM Polska Miedz SA and Japan’s Pan Pacific Co. are expanding to meet growing demand over the past decade from Asia. Chile exported $2.4 billion of copper to Asia in July, compared with $300 million 10 years earlier.

Santiago Flights

Latam has increased flight frequencies from Santiago to the mining town of Calama to as many as 14 a day from eight in 2012, said Gonzalo Undurraga, the airline’s Chilean commercial director. Passenger traffic between the two cities leaped 51 percent to almost half a million in the first half of this year, he said in an e-mailed response to questions.

Chile’s mining boom has been fueled by surging copper prices, which quadrupled in the past 10 years to average $7,952 a ton in 2012. Based on production of 482,252 tons in June, that signifies $2 billion in additional exports every a month.

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