The Chilean mining sector could face cost pressures and problems in the supply of raw materials such as steel and metallurgical products in the short and medium term due to the effects of a powerful earthquake that hit central and southern Chile on February 27, Fitch Ratings said in a preliminary report.
The ratings agency said problems related to raw materials supply will be due to increased demand for steel products as a result of the country's reconstruction efforts.
However, the report said the mining sector suffered minor direct damage as a result of the quake. "Most of the mining companies operating in Chile will not have negative economic or operational effects," Fitch said.
While most of the mining operations in Chile are located in the country's far northern regions, away from the quake's epicenter, those affected only suffered power cuts which were rapidly solved and operations returned to normal within four days of the magnitude 8.8 quake.
According to Fitch the most affected company was iron and steel group CAP, which has its Huachipato steel plant in one of the most impacted areas. CAP has already said a return to normal production will not occur for at least three months. Still, the company announced it has taken measures to avoid a steel supply shortage.
Other companies from the mining sector covered by Fitch are state copper producer Codelco, nonmetallic miner SQM (NYSE: SQM), molybdenum processor Molymet and explosives supplier Enaex.