Presentation Transcript

1. Mining in Chile

2. Latin America: Mining region Latin America, a mining region Chile, a platform to Latin-America Chilean mining Industry Facts Trends Opportunities Entering the Chilean mining industry Conclusions Appendix, material and links
3. Latin America: The premier mining region #1 world destination for investment in mining and exploration (green fields) Region is enjoying period of sustainable growth Differences across countries but relative to other parts of the world, many synergies Need to choose carefully where you enter and then where you spread Comparative strengths compared to other mining regions Large and growing Australian presence
4. Chile: Platform for the region “Sanhattan” Easy market to do business: Great economic fundamentals. Member of OECD Economic and politic stable model Business environment: comparable to “developed countries” Start-up costs & timings Transparency
5. Chile: Platform for the region Open Trade economy model “Gain access to markets” 20 FTA’s with +60 countries, +90% worlds GDP “Pacific Allianz”:comprehensive integration (capital, goods, people) Historical gateway/HUB toLatam markets: Australian METS Connectivity, time zone, language With Australia: FTA /DTA: +95% products 0% import duty +90 Australian subsidiaries in Chile (mostly METS).120 doing business.
6. Chilean Mining Industry: Facts Major driver of the economy. Growth, quality employment, social development. Tax and revenue to public budget Concentrated Industry : +90% production by 10 companies, 25 “large scale mine” operations. Majors. Small Mid tier, low exploration Mining houses: BHP, AMSA, Codelco, Glencore/Xstrata, Rio Tinto, AngloAmerican, Barrick, Freeport Mc Demographics: Mostly Open pit (80%), but changing….. Sulphides and Oxides. Largest copper mines of the world (open and UG, #1,2,3) 60% workforce external contractors (Australia 25%). (up to 7000workers) Innovation: Some world’s best practices (Gaby, Esperanza, UG) Copper by-products: Molybdenum, 50% gold and silver Remote mining areas, northern desert, and high altitude (+3,000) HQ in Santiago, and a whole company in the desert
7. Chile Mining Industry: Trends Lower Ore grades and old deposits (open pit): Consequences: Expansion of mines , large investmentsto maintain production level : US$20bn per year 04’-12’ for the same 5,4mtpy of copper Relocate facilities (Escondida, Collahuasi) Going underground(Codelco): leadingtechnology and expertise (MMT and block-caving). Mine Site Tech, Minecom “Chuquicamata”
8. Chile Mining Industry: Trends Diego Hernandez, CEO AMSA: “Chile's mining industry is losing its competitive advantage”, Copper 2013 Uncompetitiveindustry, costs rising: OPEX rose55% in last 5 years (vs 25% developed mining markets) Energy: 130% increase from 2006 Water supply. Large desal plants. Second tier Lower ore grades: enlarge processing lines, be more efficient Labour: 35% increase in 5 years. Low productivity ! . Australia referred as industry benchmark
9. USD$70bn of Investments confirmed until 2020: Some projects on hold or decelerated. Supply costs!, CAPEX CAPEX vs OPEX. Operational continuity. Do it better! Codelco can’t stop. USD$30bn investment to 2020 Sustainable mining: “Mega-expectations”: Growing complexity of environmental and legal/regulatory framework: i.eMining closure new scheme Safety in mining. Always FUNDAMENTAL. High standards, but also High costs. Low productivity. Requirements for METS.
10. Chile Mining Industry: Opportunity and implications Need for higher efficiency and productivity: Energy saving, water re-use or saving, reduce admin (i.e Safety), Innovation and R&D : new technologies, ways of doing things, services. Business proposal: Leasing, equipment's upgrade vs. CAPEX, spear parts, maintain and repair. Oniqua, TSG consulting (modelling), AustralianMETS sector well recognized: Being mentioned as “leading industry” Succeedingin different areas: Innovative equipment (RME, Gekko, Immersive), engineering firms (6), equipment (Austin), equipment rental (EMECO), Services (RML). Austrade focus working with key customers: CODELCO: Largest world’s copper producer. US$30bn to 2020 AMSA: 4 operations in Chile, 5 continents. 4 projects in-progress. Understand mining companies: complex structure (projects, procurement, site vs. HQ), Hierarchy (PA’s. Top-Down or vice versa), Identify decision makers (influencers, final users); Have a strategy. A good investment pipeline ahead
11. Entering the Chilean Mining Industry: Identify the right time to come. Prepare your visit. EXPOMIN and Exponor. Valuableindustry shows. Access toindustry and miningcompanies (remote mines) ExposuretoLatin-America Real marketentrypoint: valuablebusinessprograms.Australianpavillions. Value proposition: productivity and efficiency (business case) Be prepared, be competitive: Compelling material, spanish?? Shorten the distance!. Km’s, language, culture. Initial perception of long distance and high costs. Identify your business model: Local partner, agent, distributor Set-up in Chile. Commitment and confidence. remote mines Develop relationships, network and credibility. Conservative market. Business success potential related to origin of the need. Austrade’s valuablenewtworkswithkeycustomers, and servicessuch as partnersearch, visitprograms.
12. Conclusions Latin America: Mining region with great opportunity. Chile: Great emerging economy, right platform to LATAM, easy business environment Chilean mining industry is under pressure: Great need for higher productivity and efficiency Dynamic investment levels, OPEX vs CAPEX Australia is well recognized and positioned, METS succeeding Market opportunities for you: Prepare a strategy to meet with customers: executives and operations. Elaborate a concrete value proposition (even customized) Setting-up in Chile is a strong message to clients. Mature market in some ways; easy and natural for Australia Understand the mining company structure and processes. Austrade can help: briefings, advice and contacts
13. What can Austrade do to help? EMDG program will help you cover the costs to start. Organised market visit & visit program: meet who you need to know. Contacts (referrals) for setting up: lawyers, accountants, custom agents Specific advice and briefings on: key customers, banking, setting-up, hiring, etc. Networking with Australian mining companies, other Australian METS, Industry bodies, key allies, authorities. Participate in Australian pavilions at Expomin/Exponor, and other key networking activities in the market. Join the linkedin group
14. Appendix 1: Key links Chile: Chile foreign investment committee. www.cie.cl www.doingbusiness.org/data/exploreeconomies/chile/ Setting Up business: www.foreigninvestment.cl NationalTaxService. www.sii.cl Superintendencyof Banks and Financial Institutions - SBIF (www.sbif.cl). Industrial PropertyInstitute (INAPI), www.inapi.cl Mining in Chile: www.codelco.cl www.aminerals.cl Antofagasta Minerals
15. Appendix 2: Projects 2013-2018 Codelco: 5 structural projects Ministro Hales: Copper (180 tpa)/Silver (300,tpa 25% of Chile production). High efficiency standards. Chuqui UG :USD$4,200. Feasibility stage. Largest UG mine in 2020. Teniente NML (UG): USD$3,500; implementation for next 6 years. Andina expansion 244 RT sulphides phase II: USD$5,700. Large concentrator plan, desal plant, feasibility stage. www.codelco.com (projects) AMSA-Antucoya: Copper. Greenfield. USD$1,9bn.Lixiviation, SX-EW plant. Austrade is working on list of equipment. BHP-Escondida: OGP1: USD$4,7bn. New Concentrator plant, desal plant. OLALP: Oxide Leach project. USD$800 million. Dynamic lixiviation, conveyors Lumina copper-Caserones: USD$3,000. Copper. Lixiviation, SX_EW plant, concentrator plant
16. Projects forecaast pipeline
17. Appendix 3: Snapshot Chilean Mining Industry