We recently compiled a list of the 6 Wealthiest People in Chile and in this article, we will look at the richest person in Chile.
An Outlook of the Chilean Economy
The Chilean economy has suffered the repercussions of the pandemic which led to a sharp economic downturn in 2023, resulting in soaring consumer prices, interest rate hikes, and a struggling economy. The country is picking momentum after a weak 2023, the economic activity in the largest copper producer surged by 1.9%, compared to the first quarter of 2023. This February, the country’s economic index logged the highest year-over-year increase in the past two years, reinforcing the growth in the previous month. Chile recorded a 4.5% YoY economic growth in February.
The country has brought down high inflation and account deficit due to the pandemic, by implementing strong policies. However, increasing investments in the country is critical to sustain its growth and diversify economic activity. The central bank of the country revised its GDP growth forecast for 2024 to 2% to 3% compared to 2023. The previous forecast for the year was 1.25% to 2.25%. The upside in economic activity in early 2024 raised the growth projections for 2024. The inflation in the country has also declined sharply to 3%, after reaching its peak in 2022. However, headline inflation is expected to end this year at 3.8% due to the local currency depreciation, according to the central bank. In the next 2 years, the bank has projected the GDP growth to range between 1.5% to 2.5%.
Investment Climate in Chile
Chile has been attracting foreign direct investments from countries, despite having a relatively smaller domestic market. The sound legal framework and private property rights in Chile foster foreign investments, supported by its market-oriented policies. Mining, telecom, chemical, manufacturing, hydrocarbon, and energy are some of the sectors attracting considerable foreign direct investments in the country. However, market challenges still persist including economic and political uncertainty, leading to cautious spending by consumers and companies.
The situation seems to be improving as reflected by the investments so far in 2024. In the first half, the country recorded the highest authorized foreign investment over the past 8 years for the same period, reaching $4.391 billion. These investments were led by Australia, Spain, and the United States.
Chile has the highest energy costs among the South American countries. The country is looking to expand its installed capacity to meet the growing demand over the next ten years, by seeking the technology and capital required for new energy generation and increased energy efficiency. Electric power generation accounted for 15% of the total investments in the first half of 2024.
Chile’s Role in Global Energy Transition
Chile has set ambitious goals for its energy transition, aiming to increase its total renewable energy consumption to 70% by 2030. Currently, the country generates 40% of its energy from traditional coal power plants. In 2018, the government announced its plans to shut down coal plants by 2040. It is pertinent for Chile to phase out coal in order to achieve its clean energy transition and climate neutrality goals.
Chile accounts for over a third of the total lithium reserves globally. It is the second largest producer of lithium holding a 25% share in global lithium production. With the rise in sustainable energy transition, demand for critical minerals is expected to grow for technologies like solar panels, energy storage, and EV batteries. As a mineral-rich country, Chile has a pivotal role in the global energy transition. It is also the largest copper producer in the world, which has applications in electrification.
In order for Chile to achieve its climate neutrality goals by 2050, it is crucial to invest in renewable energy and green technology. Currently, 75% of its greenhouse gas emissions come from the energy sector.
Beyond its mineral abundance, Chile also has the optimal climatic conditions for solar and wind farms. Its northern side, Atacama Desert has some of the most intensive solar radiation in the world, offering ideal conditions for solar energy production. Moreover, its coastline offers a perfect opportunity to develop wind farms. A study by its energy authorities found that it is capable of generating over 5,000 terawatt-hours of electricity from renewable sources annually, significantly higher than the current electricity consumption of 75 terawatt hours per year in the country. Since 2014, renewable accounted for 6% of its total energy mix but it has increased significantly over the past decade to nearly 25%.
Growing Lithium Market
Not only is Chile looking to expand its energy efficiency but it is also aiming to reduce carbon emissions. It has committed to reaching carbon neutrality by 2050 and reducing 45% of its net emissions by 2030. As the second largest producer of lithium, the country has the opportunity to increase lithium use for energy storage. The increasing demand for energy-efficient solutions will support the growing lithium production and other related industries in the country. It is a key sector of the Chilean economy, reflected by its contribution to exports and fiscal revenue in recent years. The lithium production output in Chile increased to 39,000 MT in 2022, up nearly 38% from 2021. Chile plans to accelerate lithium production through public-private partnerships.
Recently, there has been a growing interest of companies in developing lithium projects in Chile. Over 50 companies from 10 countries have expressed their interest. These firms are seeking extraction and battery production in Chile. The Chilean government had called for proposals from companies to boost investments by developing lithium projects in unexplored salt flats.
Sociedad Quimica y Minr de Chile SA (NYSE:SQM) is one of the biggest lithium producing companies in the world. The diversified mining company develops and produces a wide range of products including specialty plant nutrition, iodine, potassium, and other industrial chemicals. It is also one of the largest public companies in the country, boasting a market cap of $11.45 billion. In 2023, its lithium business recorded the highest sale volumes of 170,000 metric tonnes, up 10% from last year. The growing EV market is expected to further drive lithium production. Despite the challenging 2023, global EV sales reached over 14 million units at the end of the year. International Energy Agency forecasts that electric car sales to surge even stronger in 2024. Moreover, high electric vehicle penetration in Europe and the US will require further innovations and charging improvements, ultimately fueling the lithium demand. Management expects that over the next decade, the demand for lithium could increase to nearly 4 million tonnes.
Not only is SQM capitalizing on the current trend but it is also actively preparing for the future. It recently completed the modification of the Dixin lithium hydroxide conversion facility. The plant has an annual capacity of 20,000 metric tons. In the first quarter of 2024, the strong electric vehicle market fueled the growth in lithium, especially in China which accounts for 75% of the global lithium demand. SQM expects that rising EV sales will make the lithium demand to exceed 1.1 million tonnes in 2024, a 20% increase from 2023. This growth in demand will accelerate SQM’s sales reaching 200,000 metric tonnes.
Sociedad Quimica y Minr de Chile SA (NYSE:SQM) recorded strong sales volume growth across all of its key business segments in the first quarter of 2024. Its iodine business logged record-high production volumes, reaching more than 13,000 metric tonnes, increasing its sales volume. Its lithium sales volume also surged 30% compared to the same period in 2023. However, high sales volume could only partially offset the impact of lower average prices in Q1. Overall, the largest miner in the country has expanded its lithium carbonate capacity to 210,000 metric tonnes.
Sociedad Quimica y Minr de Chile SA (NYSE:SQM) recently entered into a long term lithium supply agreement with leading automakers, Hyundai and Kia. The company will provide the carmakers with lithium hydroxide. Currently, SQM stands at a lithium hydroxide capacity of 40,000 metric tons. This partnership solidifies SQM’s commitment to increasing its lithium supply to support the global energy transition. SQM is on track to achieve a 100,000 tonnes output by 2025.
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Methodology
To compile our list of the 6 wealthiest people in Chile, we consulted the real time billionaires data from Forbes and ranked the wealthiest people in Mexico in ascending order of their net worths, as of July 9.
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The Wealthiest Person in Chile
1. Iris Fontbona & family
Net Worth as of July 9: $29.2 billion
Iris Fontbona is ranked 1st on our list of the wealthiest people in Chile. She along with her children controls the copper mining business, Antofagasta Plc. She is the widow of the late mining business tycoon, Andrónico Luksic who died in 2005. Fontbona and her children are majority stakeholders in the Chilean conglomerate, Quiñenco. Her son, Jean-Paul Luksic serves as the chairman of Antofagasta. The family has raised their wealth by over 137% since 2020, to $29.2 billion in 2024.
Curious to learn about other wealthy individuals in Chile? Check out our report on the 6 Wealthiest People in Chile.
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