APLA ’18: Chile’s chemical sector faces permitting challenges – Oxiquim

CANCUN, Mexico (ICIS)–Chile’s chemical producers and other manufacturers are finding it more difficult to secure permits to build facilities, limiting industrial growth, the head of a major distribution and logistics company said on Sunday.

“The manufacturing sector is facing a lot more bureaucracy in getting permits for new investments. Authorities are more sensitive to public opinion and have not been supporting the manufacturing sector because of the political impact,” said Edmundo Puentes, general manager of Chile-based Oxiquim.

Puentes spoke to ICIS on the sidelines of the annual meeting of the Latin American Petrochemical Association (APLA).

The chemical industry continues to have a poor image in Chile, where the public focus is on potential accidents. Meanwhile, companies do not talk enough about the positive impacts of chemicals on society, he noted.

Chile’s manufacturing sector participation in the economy has shrunk from 16% of GDP in 2013, to around 10% today, as the country shifts towards services and agriculture, said Puentes.

Demand in Chile is growing at slightly lower than GDP, which is expected to grow 3.5-4.0% in 2018, he said.

“There is more efficiency in the use of products and more recycling. And some regulations such as the ban on plastic bags in groceries is impacting demand. Plus, the manufacturing sector is not growing as much because of the permitting issues,” said Puentes.

“Today, a large project takes 2-3 years of permitting where 10 years ago it was less than one year,” he added.

And once a company secures the permits to build a facility, it still faces uncertainty as communities can file lawsuits against the project, dragging it through time-consuming litigation, said Puentes.

However, Chile’s government has acknowledged this problem and is introducing reforms to reduce complexity in the permitting process and increase certainty for manufacturing projects, he noted.

For a country like Chile, which does not have sufficient hydrocarbon resources but needs to serve a spread-out base of customers, logistics capabilities for chemical distribution are critical, said Puentes.

Oxiquim is involved in chemical production, storage, logistics and distribution, and is seeking to expand storage and logistics activities in Chile.

The company sources commodity and specialty chemicals and plastics from the US, Brazil, Argentina, China and South Korea, among other countries.

The APLA annual meeting runs through Tuesday.