Thirteen production sectors assess damages for the first time since the earthquake

Forestry, fishing and local production of steel are some of the industries most affected. However, in most sectors there is enough stock to meet demand.

Thirteen production sectors assess damages for the first time since the earthquake
The National Agricultural Society warned that their activity has been ''seriously compromised'' by the earthquake.
Foto: El Mercurio

SANTIAGO.- The quake that hit Chile early Saturday mourning caused enormous devastation to the country. Among those hit the hardest was the industrial sector. Following is a summary of the sectors most affected.


Agriculture 


The production of the regions most affected by the earthquake corresponds to 76% of the country's agro-industrial activity. Hence, the National Agricultural Society warned that their activity has been "seriously compromised" by the earthquake. "Furthermore, we must consider that the sector is at its highest production phase. 40% of added value in the forestry and agricultural sector occurs between March and June.


Telecommunications


Telecommunications companies have been among the hardest hit. They have yet to estimate the damage because they are trying to fix both mobile and phone services. It is estimated that losses are not as big as expected (all firms have insurance), whereas cell phones have been mainly affected by the lack of electricity and fuel to keep operating their antennae. Telephone lines where hardest hit due to falling poles.


Energy


17% of the 3.8 million customers between Valparaiso and La Araucanía have no electricity. The electricity sector is still trying to recover the service. Today, the Central Interconnected System (SIC) operates continuously, although there is still some damage in subtransmission and distribution. There is still no cost count for the sector.


Arauco will not produce cellulose in March


For each week that production plants are closed, 2% of Chile’s annual cellulose production will not be processed.


CMPC, linked to the Matte Group, and Celulosa Arauco and Constitución, Angelini family, announced on Monday that the indefinite detention of eight pulp processing units (five in Arauco and three with CMPC), which together produce around 1.7 million tons per year.


This means that around 13 tons of production will be frozen per day. This is about 90 thousand tons per week, and 2% of total annual production.


Loss in productivity is set to increase. In a document sent on Tuesday to the Superintendence of Securities and Insurance (SVS), the firms linked to the Angelini group, said "the five plants of Arauco in Chile, that is to say Licancel, Constitution, Nueva Aldea, Arauco and Valdivia have different levels of damage that are being evaluated, which leads us to believe that during the month of March there will most likely be no cellulose production in our plants".


Taking this into account, Arauco will therefore see a drop of 8.2% in its production.


Fishing


25% of the installed capacity of the country's fishing industry was left unusable after the earthquake and subsequent tidal waves.


Hector Bacigalupo, General Manager of Sonapesca, estimated that it will take at least a year to recover the industry’s capacity in central and southern Chile.


This area, which was affected by the earthquake, represents about 50% of fish production in the country. As a consequence of the earthquake, half of its plants were left inactive, according to preliminary reports.


At the moment there are no estimates of monetary losses. However, one of the factors to affect the industry is looting.


The fishing fleet has not registered major damages, although the affected firms could operate in other plants, which means deriving fisheries to areas located between Coquimbo and Puerto Montt, by using their fishing vessels as carriers.


Mines passed the test
 
6 thousand tons of copper mining production ceased over the weekend due to power failure. Specifically, El Teniente and Andina divisions of Codelco, operations at Bronzes, El Soldado and Mantoverde of Anglo American and Pelambres of Antofagasta Minerals belonging to the Luksic group, ceased to produce 6,300 tonnes.


The drop in Codelco would be 3940 tons (between cathodes and concentrate), which represents 64% of lower industry production and only 0.2% of the firm’s annual production. All the companies resumed their activities between Sunday and Monday.


Salmon industry


SalmonChile’s General Manager, Carlos Odebret, said that infrastructure was severely damaged, but that some crops would be delayed due to lack of fuel for transport. However, he assured that supply will not be seriously affected. He also explained that the main problems are lack of oxygen and diesel. The first is used in fish farms and the fuel in logistics. "What companies are doing is minimizing consumption, but the problem is getting bigger every day," he said. The industry also was suffering as it was unable to send fresh produce from Santiago airport and frozen produce from the different ports affected.


Wines


U.S. $ 250 million is the resulting loss so far for winemakers. According to figures from Wines of Chile, the earthquake damaged about 125 million litres. In comparison with the 2009 harvest, this figure is equivalent to 12.5%. Damage to infrastructure has not yet been quantified. Data was collected through a survey presented by the trade union to its associates, representing 95% of the local wine industry. René Murphy, President of the association, said the wine cellars have not been majorly damaged. Thus, the harvest might not be affected. "Most of the damage is in the wine and packaging", said Murphy, adding that the earthquake did not alter the projection of 8% growth in volume and price for 2010.


Supermarkets


35 supermarkets were affected between the VII and VIII Region. However, all the big chains have insurance.


Of the 260 Unimarc stores throughout Chile, 30 are out of operation. Of these, 18 have been closed due to looting and 12 due to the earthquake. All will be operational within the next 30 days.


Wal-Mart has seen five stores affected: three are expected to open in the coming days, but the remaining two will remained closed for some weeks, as looting has affected their systems.


The industry has explained that sales will not be affected. On Sunday, most stores opened and sold more than normal.


More steel imports due to the closure of Huachipato


295 thousand tons of steel will not be produced by the CAP group in 2010. This occurs following the announcement that the Huachipato subsidiary will be closed for some time due to the extensive damage caused by the earthquake.


CAP commercializes around 1.18 million tons of steel a year, which represents 69% of total domestic sales. The remaining 31%, equivalent to 520 thousand tons, is owned by Gerdau Aza.


However of the total 2009 nationwide market (1.7 million tons), 29.4% (501 thousand tons) was imported exclusively by the CAP group. The closing of Huachipato for three months will increase imports.


On Tuesday Gerdau Aza announced that they have 22 thousand tons of steel in stock, which guaranties supply for at least a month.


Therefore, so as to "reinforce" steel stocks, the company decided to import an additional 40 thousand tons, which should be available by mid April.


A similar situation will occur with CAP. "What needs to be imported will be imported, as will existing inventories in the distribution network, so as to ensure that the market is adequately supplied", stated the company Chairman, Robert de Andraca.


Fruit Producers


20% of production has been damaged, detailed Ronald Bown, President of Asoex. The biggest losses have occurred in the cold processing plants which have suffered power cuts, adds Rodrigo Echeverría, President of Fedefruta.


"The most affected regions involve 76% of agricultural GDP, a figure that rises to 97% if you include Valparaiso to Los Lagos. For this reason, the productive capacity of the sector has been largely compromised", the National Agricultural Society stated.


600 thousand workers will be hired by the construction sector

According to figures from the Chilean Chamber of Construction, the sector employed 552 thousand people in Chile in November representing 6.8% of GDP.

According to Alberto Hardessen, Dean of the Construction School at the Universidad Mayor, employment in the sector could possible increase by 10% above the figure for November in the coming months. The needs for housing reconstruction and infrastructure will increase the demand for labor.

The revival will also come for small firms, specialty contractors. "Individuals who suffered damage, even without insurance, will need repair meaning a boom in demand for small businesses", says Hardessen.

For this year, the Chamber of Construction projected a housing investment of around U.S. $ 6,278 million, a growth of 8.4%. This investment could be changed.

Vicente Dominguez, Executive Director of Real Estate Developers Association, agrees with the high demand for reconstruction. "History shows us that in Chile, after the earthquakes, there has been a boom for some time in the construction sector”.

Banks

At least 14% of the 231 branches that exist in the regions of Maule and Biobío are open. Bank branches are gradually reopening in the areas most affected by the earthquake and that figure could even be 33% according to the Superintendence of the sector (SBIF). With respect to ATMs, 50% are in operation. In both cases, the main problems relate to the lack of electricity and breakdowns in office infrastructure. Most institutions surveyed have implemented specialized teams to resume business. Goods and services, credit and debit cards, and websites are operational. The only problems are with electronic fund transfers. One of those who have seen drawbacks, Banco de Chile, reported that it “will be fully running within the coming hours”.

By El Mercurio Economy & Business team
Jueves, 4 de Marzo de 2010, 15:42
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