Chinese companies are in negotiations to make substantial investments in Chile, with some potential deals worth as much as US$1 billion, according to an official from the resource rich country.
Three or four Chinese companies are in talks to invest in mining, energy and infrastructure projects, said Matias Mori, executive vice-president of the foreign investment committee of Chile.
'The interest we're perceiving for each deal ranges from US$100 million to US$1 billion,' he said. 'Most of the Chinese companies that contacted us are involved in capital-intensive projects. They are not looking for small operations. They are looking for big moves of capital.'
The companies include state-owned and private firms, Mori added, saying the potential mining deals under negotiation include iron and copper mines.
'Most of the Chinese companies are looking at owning mines and trading.'
Chile is the world's largest copper producer, accounting for over 35 per cent of global production and holding about 30 per cent of known global copper reserves.
Infrastructure investment opportunities were included in a four-year plan launched by the Chilean Ministry of Public Works last year, Mori said. Under this plan, US$8 billion was earmarked for projects such as roads and hospitals to help rebuild areas hit by the earthquake in central Chile in February, 2010.
Chinese firms had expressed interest in investing in electricity projects. 'Our electricity consumption is growing 4 per cent per year. By 2020, we need to build 66 electricity power projects and 11 transmission lines to satisfy internal consumption,' Mori said.
'We need to grow our GDP by 6 per cent a year to be the first developed Latin American nation by 2018. Investment is critical. This is the first Chilean government pushing towards Asia. No other Chilean government has made that effort.'
China accounted for only 0.1 per cent of the US$74 billion in foreign direct investment in Chile between 1974 and 2010. The US is the biggest investor, with 26 per cent.
'We've reached a point in which international trade between Chile and China is very robust. We're entering a second stage where we will see more foreign direct investment between both countries,' Mori said. 'Foreign direct investment from China is in sharp contrast with trade.'
China overtook the US to be the biggest trading partner of Chile in 2010, when Sino-Chilean trade reached US$17 billion, said Chilean Trade Commissioner Guillermo Garrido. Copper is Chile's biggest export item to China.
One reason for the strong growth is the free-trade agreement signed between both countries in 2005, Garrido said.
Next month, Vice-President Xi Jinping will visit Chile, said Luis Schmidt Montes, the Chilean ambassador to China.
Last December, Hong Kong Financial Secretary John Tsang Chun-wah led a Hong Kong trade delegation to Santiago, where a memorandum of understanding was signed on wine-related business. Chile sees China as an important market for its large wine industry.