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Mining, historically the mainstay of the Chilean economy, has been a catalyst for both external commerce and domestic industrial development. Copper, molybdenum, iron, nitrates, and other concentrated minerals make up a large part of the total value of national exports.
Metals account for the highest percentage of mining exports, copper being primary. Chile is the world’s largest producer and exporter of copper. Copper mines are located in northern Chile (Chuquicamata and El Salvador) and along the Andes of north-central Chile (especially El Teniente and Andina). Small-scale extractions are carried out by individuals, or pirquineros, who operate in the uplands of north-central Chile and in the coastal ranges of central Chile. Medium-sized activity is conducted by companies with larger investment capacities and with their own treatment plants. Large-scale mining was developed with U.S. capital at the beginning of the 20th century.
Copper plays the role in the Chilean economy that was occupied by nitrates prior to World War I. The large U.S. corporations were tranformed into mixed-ownership enterprises during the late 1960s and totally nationalized during the early 1970s, when mining and sales were turned over to the Corporación Nacional del Cobre de Chile (Codelco). A drop in world market prices influenced production and sales and created financial hardship. During the 1990s the government enacted new laws to open up the industry to private companies, but the majority of copper mines in Chile are still controlled by the state (Codelco). By the early 21st century, demand for copper had risen, and copper accounted for about two-fifths of export income.
Iron-ore mining in El Tofo and El Romeral, both in north-central Chile, is significant, and manganese, silver and gold, and molybdenum (a metal derived from the large copper deposits) are also mined. Among nonmetallic minerals, sulfur, gypsum, lithium, and limestone are moderately exploited. Nitrate deposits occur in the northern interior desert. Their economic value, so important during the 19th century, has decreased, but the production of iodine, a by-product of nitrate, is of major importance.
Energy resources
Hydroelectric potential and installed capabilities, as well as coal and moderate oil and natural gas reserves, furnish Chile with good energy resources. The steady flow of the Andean rivers has been used by the Empresa Nacional de Electricidad (ENDESA; National Electric Company) to produce electricity. Hydroelectric development has been extended to the coastal mountain ranges. Prior to the installation of Chile’s huge hydroelectric system, most of the country’s energy was obtained from soft coal, mined since the 19th century in the Gulf of Arauco, south of Concepción. Oil and natural gas are extracted on Tierra del Fuego and along the northern shore of the Strait of Magellan and are shipped to refineries in central Chile. Production, however, meets only about half of the country’s oil needs.
Forestry resources
South of the Biobío river, climatic conditions favour the growth of natural forests. The primary species used for lumber and paneling are the coigue, oak, rauli, ulmo, tepa (laurel tree), and monkey puzzle tree. Pine for the manufacture of paper and pulp is taken from forests in central Chile and the Biobío region.
Fishing resources
Since 1974, after the collapse of the Peruvian fishing industry, Chile has become the chief fishery of South America, and it is one of the foremost fishing countries of the world. Sardines, jack mackerel, chub mackerel, hake, and anchovy constitute most of the catch. The principal products are fish meal and fish oil, which are shipped to Europe and the United States for the production of animal feed and industrial oil. The fish-processing plants—all privately owned—are mainly located in the northern cities of Iquique, Arica, and Antofagasta.
Agriculture
While good climatic conditions and abundant water resources favour Chile’s agriculture, outdated land-tenure patterns, managerial ineptitude, and inadequate price policies have combined to make agriculture one of the most inefficient sectors of the economy. Employing approximately one-sixth of the labour force, agriculture generates less than one-tenth of the gross domestic product. To meet expenditures and credit payments abroad, the military government that took over in 1973 strongly encouraged exports of agricultural commodities by private national and international companies. Within the framework of this policy, Chile increased remarkably the export of fresh fruit, canned vegetables, and wines.
In temperate central Chile the primary crops are cereals (chiefly wheat), followed by grapes, potatoes, corn (maize), apples, beans, rice, and a variety of vegetables. Industrial crops, such as sugar beets and sunflower seeds for cooking oil, are also common.
Stock raising has been one of the most underdeveloped activities in rural areas, partly because of poor technology and inefficient breeding. Cattle are the major livestock. There has been, however, some expansion in poultry, lamb, and pork production, as well as that of beef.
Industry
An estimated one-seventh of the economically active population is employed in manufacturing, which accounts for about one-sixth of the gross domestic product. Factories are concentrated in the principal urban centres—Santiago, Valparaíso, and Concepción. Light industries produce appliances, chemical products, food products, textiles and clothing, and construction materials.
Larger industrial complexes are located at the San Vicente harbour of Concepción; they include the Huachipato iron and steel mill, fish-processing factories, and a petroleum refinery associated with a petrochemical complex. Another such refinery is situated in Concón, at the mouth of the Aconcagua River. Pulp and paper mills thrive in the vicinities of the Biobío and Laja rivers.