THE CHILEAN MINING Ingls/2016 06 21 Chilean min… · Logo Gobierno: 160x162px. Ministerio,...

Logo Gobierno: 160x162px. Ministerio, Subsecretaría, Organismo, etc.:160x145px

THE CHILEAN MINING INDUSTRY

Jorge CantalloptsDirector of Research and Policy Planning

Chilean Copper Commission

Brussels 28-29 June, 2016


CONTENTS

2 43 5Importance of mining in

Chile

Importance of Chile in

mining

1Impact of

lower copper prices

What are we doing?

Creating value

Conclusions


IMPORTANCE OF MINING IN CHILE1


ECONOMIC DEVELOPMENT


Income tax 2015•6% (US$ 3,048 millions)

Direct foreign investment 2006 -2015•Authorized: US$ 52,446 millions•Materialized: US$ 17,991 millions

Mining participation in GDP 2006 - 2015•14,3% average (9% in 2015)

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

90.000

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

MMUS$

Country total

Mining exports

Copper exports

2015:Mining 55%Copper 49%

Source: Central Bank of Chile

IMPORTANCE OF CHILE IN MINING2


PRODUCTION


País 2014 2015

Chile 5,750 5,764Peru 1,380 1,705China 1,632 1,669USA 1,383 1,373Congo DR 996 1,039Australia 965 957Zambia 756 754Russia 720 720Canada 696 697Indonesia 366 580Others 3,835 4,008

Total world 18,478 19,265

Chile; 30%

Others; 21%

Peru; 9%

China; 9%

USA; 7%

Congo DR; 5%

Australia; 5%

Zambia; 4%Russia; 4%

Canada; 4%

Indonesia; 3%

2015

Source: World Metal Statistics and COCHILCO

Source: USGS Mineral Commodity Summaries (2015)

4.6%

4.2%

4.2%

2.8%

6.4%

Chile

Peru

United States

Russia

China

Mexico

Others countries

Congo DR

Australia

2.8% Zambia

1.5% Canada

29.2%

11.4%

12.2%

20.8%

RESERVES - GEOLOGICAL POTENTIAL


IMPACT OF LOWER COPPER PRICES3


TAX COLLECTION


US$ Millions

Source: USGS Mineral Commodity Summaries (2015)

3.450

12.854

14.078

11.093

4.485

9.696

10.773

8.307

5.8624.728 3.048

126

305323

315

234

342

400

361332

311

249

0

50

100

150

200

250

300

350

400

450

0

2.000

4.000

6.000

8.000

10.000

12.000

14.000

16.000

Average2003 -2005

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Income from mining (US$ millions) Copper price (cUS$/lb)

150

170

190

210

230

250

270

290

310

c/lb

COPPER PRICE CHANGES 2015 - 2016


COCHILCO’s copper price forecast

285 c/lb (2015)280 c/lb (2016)

277 c/lb (2015)270 c/lb (2016)

277 c/lb (2015)270 c/lb (2016)

253 c/lb (2015)250 c/lb (2016)

215 c/lb (2016)220 c/lb (2017)

IMF: lower Chinese GDP

Oil: production push down commodities prices

Atacama: production cuts due heavy rains

FED: rise in interest rate should wait

China: signs of not reaching GDP growth goal

China: decrease copper imports

China: yuan devaluation

China: lowest manufacture levels since 2009

China: stock market crash

China: yuan devaluation

FED: rise of interest rate

Iran: lifting trade

sanctions

FED: hold of interest rate

China: expansionary

policy

Chile: Pessimism on copper market

China: reduce GDP goal

China: stock market crash

Greece: reforms acceptance

Source: COCHILCO with LME information

150

170

190

210

230

250

270

290

310

c/lb

Mining Ministry| COCHILCO

Production cut or closure

Investment delay or change

Asset salesRelincho(Chile)

El Abra(Chile)

Lomas Bayas III(Chile)

Los Pelambres IV(Chile)

El Abra Mill(Chile)

Mopani(Zambia)Katanga

(Congo DR)Miami(USA) Ray

(USA)Tyrone(USA)

Boseto(Botswana)

Sierrita(USA)

Troy(USA)

Anglo Norte(Chile)

Zaldívar(Chile)

Kamoa(Congo DR)

Cloncurry(Australia)

Collahuasi(Chile)

Baluba(Zambia)

McCreedy West(Canada)

Andina 244 (Chile)

Collahuasi Expansion(Chile)

Mt Gordon (Australia)

CSPT(China)

Nchanga(Zambia)

Huckleberry(Canada)

Chibuluma South(Zambia)

Minto(Canada)

Jiama(China)Skouries(Greece)

Quebrada Blanca, fwdclosure(Chile)

Cemin(Chile)

Sagasca(Chile)

EncuentroÓxidos(Chile)

Tenke(Congo)

CHANGES IN SUPPLY AT A LOWER COPPER PRICE

Source: COCHILCO, CRU Copper Monitor, Companies press releases

MINING INVESTMENT - INVESTMENT PORTFOLIO VS COPPER PRICE


18.925 21.94129.695

43.23151.063

66.890

104.300112.556

104.851

77.290

49.607

0

50

100

150

200

250

300

350

400

450

0

20.000

40.000

60.000

80.000

100.000

120.000

Copper Gold and metallurgical plants (*)

Iron and industrials minerals Total investment

Copper price nominal (cUS/lb)

US$ Millions cUS$/lb

Source: COCHILCONominal copper price (cUS$/lb)

MINING INVESTMENT - PROJECT PORTFOLIO


Mill $ 3,9845 projects

Iron and Ind. Min.

Mill US$ 2,1017 projects

Mill US$ 43,52224 projects

Gold and Met. Plants

Copper

Under review

New

Budget constraints

• Pascua (Gold, mill US$4,500)

• El Abra Mill (Priv. Cu Min., mill US$5,000)

• Relincho (Priv. Cu Min., mill US$4,500)

• Andina 244 (State, mill US$6,524)

• Romeral Fase V (Iron, mill US$198)

• Pampa Blanca Exp. (Ind. Min., mill US$665)

• Sierra Gorda 220 ktpd (Priv. Cu Min., mill US$1,500)

• Orcoma (Ind. Min., mill US$ 230)

• Molynor Extension (Met. Plants, mill US$ 240)

• Los Pelambres Marg. Exp. II (Priv. Cu Min., mill US$500)

• Mantoverde Growth Project (Priv. Cu Min., mill US$938)

• QB Hypogene (Priv. Cu Min., mill US$ 55,000)

• Los Pelambres Marg. Exp. I (Priv. Cu Min., mill US$1,100)

• Arbiodo (Ind. Min., MMUS$396)

Source: COCHILCO

0

50

100

150

200

250

300

350

0

2

4

6

8

10

12

14

def14

efm14

fma14

mam14

amj14

mjj14

jja14

jas14

aso14

son14

ond14

nde14

def15

efm15

fma15

mam15

amj15

mjj15

jja15

jas15

aso15

son15

ond15

nde15

def16

efm16

fma16

Desocupación País (%) Desocupación Minería (%) Precio Cu BML (c/lb)

CHANGES IN UNEMPLOYMENT AT A LOWER COPPER PRICE


Unemployed country (%) Unemployed mining (%) Copper price LME (c/lb)

% cUS$/lb

Source: COCHILCO with National Statistical Institute INE and LME information

CHANGES IN UNEMPLOYMENT AT A LOWER COPPER PRICE


7,25,0

-0,3

1,2

5,3

0,82,2

-1,7 -1,5

0,61,4

-2,0-4,3

-2,4

3,9

6,3

3,7

12,0

-3,1

-8,2

1,6

-7,1

9,1

12,0

18,5

1,5

-9,2

1,1

17,4 16,7

7,8

1,7

-15

-10

-5

0

5

10

15

20

nde

14

def 1

5

efm

15

fma

15

mam

15

amj 1

5

mjj

15

jja 1

5

jas 1

5

aso

15

son

15

ond

15

nde

15

def 1

6

efm

16

fma

16

Cesantes país (%) Cesantes minería (%)Unemployed country (%) Unemployed mining (%)

% Annual variation (%)

Source: COCHILCO with National Statistical Institute INE and LME information

WHAT ARE WE DOING? CREATING VALUE4


NATIONAL COMMISSION ON PRODUCTIVITY


020406080

100120140

USA

Mex

ico

Peru

Swed

en

Cana

da

Chile

Aust

ralia

Wor

ld

Zam

bia

Cong

o DR

Chin

a

Indo

nesia

Pola

nd

Russ

ia

EXTRACTED TON / WORKER

2000 2005 2010 2015

Source: Wood Mackenzie

CHILEAN EXTRACTED TON/WORKER

NATIONAL COMMISSION ON PRODUCTIVITY


Permanent Independent and

autonomousTransversal Technical

capacityParticipative

COSTS CONTROL


Sulfuric acid3%

Concentrates freight

3%Fuels4%

Electric power

9%

Depreciation15%

Materials17%

Salaries own and

contractors 21%

Other services and

expenses28%

89 105 134174 149 170

209 220 218 216 225

206

345375

340286

380410

381346

318

247

050

100150200250300350400450

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

cUS$

/lb C

u pa

yabl

e

Unit cost Unit sales

COMPOSITION OF THE OPERATINGCOST AVERAGE 2005-2015

Source: COCHILCO

COCHILCO´S COSTS OBSERVATORY ON COPPER MINING


Quarterly monitoring Cash Cost

Public information, specialized databases and proprietary information Cochilco

Modeling of the main elements of Cash Cost

Aggregated results

Quarterly results publication

Source: COCHILCO

PROVIDER DEVELOPMENT– ROADMAP 2015 - 2035


CHALLENGES

TAILINGS SMELTER AND

REFINERY

MINING OPERATIONS

AND PLANNING

CONCENTRATION OF MINERALS

HIDRO



1.Facing the increasing scarcity of water andsurface.

2.Minimize the impact of infiltrations and ensurethe stability of deposits.

3.Promoting from a passive to an activeconversion.

4.Promote inclusion and community acceptance.

TAILINGS



SMELTER AND

REFINERY

1.Increase the efficiency of smelting and refiningprocesses.

2. Reduce environmental impact.

3. Improve working conditions.



MINING OPERATIONS

AND PLANNING

1.Increased productivity.

2.Increased resources and mineralreserves.

3.Environmental care and socialresponsibility.

4.Increased safety and quality in theworkplace.



CONCENTRATION OF MINERALS


2.increased resources and mineralreserves.



1.Environmental care and socialresponsibility.


3.Increased resources and mineral reserves.

HIDRO

CONCLUSIONS05


CONCLUSIONS

• Mining remains as the main economic activity in Chile despite the fall in the

commodities prices.

• Chile remains as the main cooper producer in the world; nevertheless, its

participation is declining.

• The end of the Super cycle impacted the Chilean economy, reducing tax revenues,

labor and investing portfolio.

• Chile is working in enhancing the Mining performance, reducing costs and

increasing productivity.

• The national mining program has developed an strategy to increase added value

in the mining process, and to providers too.


Logo Gobierno: 160x162px. Ministerio, Subsecretaría, Organismo, etc.:160x145px

THE CHILEAN MINING INDUSTRY

Jorge CantalloptsDirector of Research and Policy Planning


Brussels 28-29 June, 2016

THE CHILEAN MINING Ingls/2016 06 21 Chilean min… · Logo Gobierno: 160x162px. Ministerio,...

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