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Business Opportunities:Business Opportunities:Chilean Mining IndustryChilean Mining Industry
Carlos F. CapurroCarlos F. CapurroSenior Commercial AdvisorSenior Commercial Advisor
U.S. Commercial ServiceU.S. Commercial Service
Santiago, ChileSantiago, Chile
Image courtesy NASA GSFC, MITI, ERSDAC, JAROS, and U.S./Japan ASTER Science Team
Chile?Chile?
GeographyGeography
•2,600 miles long
•Just 100 miles wide (average)
•Diverse climate and geography
•Opposite seasons from the U.S.A.
•Isolated by mountains, desert and
sea
•16 million population
•Principal city and capital - Santiago
Brief HistoryBrief History
• Spanish Colony 1541 – 1810
• Socialists take power 1970
•Military coup 1973
• “Chicago Boys” take charge
• Open economy begins to grow - 1974
• Structural changes - 1981
Democratic elections in
Democratic elections in
19891989
Chile TodayChile Today
• President Michelle Bachelet took office March 11, 2006 (2006-2010)
• “Concertacion” Coalition
• Socialists
• Party for Democracy
• Christian Democrats
•Broad Consensus – No Change
• Open Economy – Free Market
• Democratic Institutions
Why Chile?Why Chile?
Sustained Economic GrowthSustained Economic Growth
1
2
3
4
5
6
7
1985-1989
1990-1994
1995-1999
2000-2004
2005 2006 2007
Chile
LatinAmerica &Carribean
Unemployment LevelUnemployment Level
9.7%
9.2% 9.2%
9.0%
8.5%
8.8%
8.1%
8.0%
7.20%
7.0%
7.5%
8.0%
8.5%
9.0%
9.5%
10.0%
1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: Banco Central Source: Banco Central de Chilede Chile
Price StabilityPrice StabilityAnnual Inflation (%)Annual Inflation (%)
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
• Free Trade Agreements• Steady economic growth • Prudent fiscal policies• Stable democratic
government• Solid business practices• Rule of law
Business - Why Chile?Business - Why Chile?
U.S.-Chile Trade AgreementU.S.-Chile Trade Agreement
• 95% + of bilateral trade in goods duty-free• 75% + of U.S. farm goods duty-free by 2008• Stronger protection of intellectual property
rights (IPR)• Open and fair government procurement • Commitments on labor rights and
environmental protection
Visit our Visit our U.S. Exporters Guide to the US – Chile FTAU.S. Exporters Guide to the US – Chile FTA at http://www.buyusa.gov/chile/en/ftaguide.html at http://www.buyusa.gov/chile/en/ftaguide.html
Effective January 2004Effective January 2004
U.S.-Chile Trade U.S.-Chile Trade Merchandise/Goods Merchandise/Goods
(In US$ Billion)(In US$ Billion)
3.33.5 3.5
3.1
3.8
2.6
3.7
2.7
4.7
3.6
6.7
5.2
9
5.5
9 8.3
0
1
2
3
4
5
6
7
2000 2001 2002 2003 2004 2005 2006 2007
Imports from Chile Exports to Chile
• Construction• Computer Hardware / Software &
Services • Electric Power Equipment • Environmental Technologies &
Services• Financial Services• Food Processing & Packaging
Equipment
Best Prospects for Best Prospects for U.S. ExportsU.S. Exports
Best Prospects (cont.)Best Prospects (cont.)
• Medical Equipment & Healthcare• Mining Equipment• Plastics Machinery & Materials• Security Equipment & Safety• Telecommunications Equipment &
Services• Travel & Tourism
Market OverviewU.S. PositionCompetitorsCommercial
OpportunitiesOther Resources
Mining Industry OverviewMining Industry Overview
Market OverviewMarket Overview
• Mining explains 7.8% of Chile’s GDP and 66% of the nation’s overall exports in 2007.
• Chile is the world’s number one producer of:– Copper 37.5%– Molybdenum 28.1%– Sodium & Potassium Nitrate 100%– Lithium 42%– Iodine 55%
• Chile is also a large producer of: – Borates (9.9%)– Silver (7.3 %)– Gold (1.8 %)– Rhenium
• And produces substantial amounts of gold and silver
Market OverviewMarket Overview
• 130 Mining companies (5.7 million tons)– 18 companies produce 70%
• 275 supplying companies– APRIMIN: 50 companies – Selling US$
3.5 billion (47% imp.)
• 1,800 reps/distributors– 2,500 products & services
Market Size
Market OverviewMarket Overview
• Expects to average annual growth of 6% from 2008-2015
• Projected investments exceeding US $15 billion
• Foreign investment has been the key: 1974-2006 $21 billion or 33% of all foreign investment.
Market OverviewMarket Overview
Foreign Direct Investment in MiningForeign Direct Investment in Mining($21.1 billion 1974-2006)($21.1 billion 1974-2006)
Canada (31.2% ) U.S. (25.9%)U.K. (19.4%) Australia (13.5%)J apan (6.6%) Others (3.4%)
Source: Chilean Foreign Investment CommitteeSource: Chilean Foreign Investment Committee
Market OverviewMarket Overview
Chile: Mining ImportsChile: Mining Imports
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2001 2002 2003 2004 2005 2006
U.S.A. Total Imports
Source: COCHILCO, based upon Chilean Customs Data (Sept. 2007)
Market OverviewMarket Overview
Bill
ion
Market Share by Main Supplying Market Share by Main Supplying CountriesCountries
Source: COCHILCO, based upon Chilean Customs Data (Sept. 2007)
Market OverviewMarket Overview
U.S.-Chile FTA
Competing Mining Suppliers Competing Mining Suppliers Market Share by CountryMarket Share by Country
(2007)(2007)
39%
13%
4%10% 9%
25%
USA Brazil Canada Germany Japan Other countries
Source: Chilean Customs Data
Copper Prices Copper Prices January 1998 – 2008January 1998 – 2008
($ cents/lb)($ cents/lb)
0
50
100
150
200
250
300
350
400
Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08
Source: Chilean Copper Commission – COCHILCO (www.cochilco.cl)
Feb 22, 2008 $ 378 cents /lb
New Copper Mining ProjectsNew Copper Mining Projects(2008-2015)(2008-2015)
0
2
4
6
8
10
12
14
16
Argentina Brazil Chile PeruInvestment (US$ billion) New Production (million tons) Exploration (US$ billion)
Source: COCHILCO: Based on companies press releases and own data compilation
How this translates intoHow this translates intoreal business?real business?
28%
19%
18% 15%
11%
9%
Energy Consumables - Plant
Parts & Pieces Fuel & Lube
Consumables - Mine Reagents
2005: $ 2.9 billion Operational Expenses
– Cranes– Screening machines – Environmental system
solutions (water treatment, air pollution/dust abatement, mine closures)
– Underground mining technology services
– Wear-resistant materials
Source: Revista Minería Chilena, Ministry of Mining, El Mercurio, Diario Financiero
– Off-road trucks (240-440 tons)
– Scoop shovels– Giant tires– Crushers – Grinders – Cabbed truck chassis
(+ 50 tons) – Part for rock cutters– Excavators
Capital Goods DemandCapital Goods Demand
How to translate all this intoHow to translate all this intoreal business?real business?
0 100 200 300 400 500 600
Parts
Equipment
Other Items
Consumables
Reagents
How to translate all this intoHow to translate all this intoreal business?real business?
2005: $ 1.7 billion 2005: $ 1.7 billion ImportsImports
How this translates intoHow this translates intoreal business?real business?
Source: COCHILCO, Dec. 2007
2007: 5.7 million tons of copper2007: 5.7 million tons of copper
Yearly DemandUS$
Million/Year
65 off road load trucks $247
19 giant front loaders $74
Drilling and underground transportation equipment
$22
24,800 tons Explosives $16
24 LHD $11
500 Tires $10
2011: 6.5 million tons of copper2011: 6.5 million tons of copper
Electronic Purchasing SystemsElectronic Purchasing Systems
• Quadrem www.quadrem.com
• CODELCO www.codelco.com
• Chile Compras www.chilecompras.cl
• SICEP www.sicep.cl
How to translate all this intoHow to translate all this intoreal business?real business?
A MustA Must
EXPONOREXPONOREXPONOREXPONORAntofagasta, June, 2009Antofagasta, June, 2009
www.exponor.clwww.exponor.cl
EXPOMINEXPOMINEXPOMINEXPOMINSantiago, May 2008Santiago, May 2008
www.expomin.clwww.expomin.cl
Need Help?Need Help?Count on Us!Count on Us!
U.S. Commercial ServiceU.S. Commercial Service
Carlos F. [email protected] [email protected]
Tel: 011-56-2-330-3307Tel: 011-56-2-330-3307
Fax: 011-56-2-330-3172Fax: 011-56-2-330-3172
Andres Bello 2800, Las Condes, SantiagoAndres Bello 2800, Las Condes, Santiago
ChileChile
Looking forward to see you Looking forward to see you soonsoon
in Chilein ChileMany thanks for you kind attentionMany thanks for you kind attention