Transcript Business Opportunities in the Chilean Mining Industry

Business Opportunities:
Chilean Mining Industry
Carlos F. Capurro
Senior Commercial Advisor
U.S. Commercial Service
Santiago, Chile
Image courtesy NASA GSFC, MITI, ERSDAC, JAROS, and U.S./Japan ASTER Science Team
Chile?
Geography
•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 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
Chile 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?
Sustained Economic Growth
7
6
Chile
5
4
Latin
America &
Carribean
3
2
1
1985- 1990- 1995- 2000- 2005 2006 2007
1989 1994 1999 2004
Unemployment Level
10.0%
9.7%
9.5%
9.2%
9.2%
9.0%
9.0%
8.8%
8.5%
8.5%
8.1%
8.0%
8.0%
7.5%
7.20%
7.0%
1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: Banco Central de
Chile
Price Stability
Annual Inflation (%)
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
7
2
00
6
2
00
5
2
00
4
2
00
3
2
00
2
2
00
1
2
00
0
2
00
9
1
99
8
1
99
7
1
99
6
1
99
5
99
1
1
99
4
0.0
Business - Why Chile?
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Free Trade Agreements
Steady economic growth
Prudent fiscal policies
Stable democratic government
Solid business practices
Rule of law
U.S.-Chile Trade Agreement
Effective January 2004
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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 U.S. Exporters Guide to the US – Chile FTA at http://www.buyusa.gov/chile/en/ftaguide.html
U.S.-Chile Trade Merchandise/Goods
(In US$ Billion)
9
6.7
7
6
9
8.3
5.5
5.2
4.7
5
3.8
4
3.5
3.3
3.7
3.6
3.5
3.1
3
2.6
2.7
2
1
0
2000
2001
2002
2003
Imports from Chile
2004
2005
2006
Exports to Chile
2007
Best Prospects for
U.S. Exports
• Construction
• Computer Hardware / Software &
Services
• Electric Power Equipment
• Environmental Technologies & Services
• Financial Services
• Food Processing & Packaging
Equipment
Best Prospects (cont.)
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Medical Equipment & Healthcare
Mining Equipment
Plastics Machinery & Materials
Security Equipment & Safety
Telecommunications Equipment &
Services
• Travel & Tourism
Mining Industry Overview
Market Overview
U.S. Position
Competitors
Commercial Opportunities
Other Resources
Market 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
– Copper
– Molybdenum
– Sodium & Potassium Nitrate
– Lithium
– Iodine
producer of:
37.5%
28.1%
100%
42%
55%
Market Overview
• 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 Overview
Market Size
• 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 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 Overview
Foreign Direct Investment in Mining
($21.1 billion 1974-2006)
Canada (31.2%)
U.K. (19.4%)
Japan (6.6%)
Source: Chilean Foreign Investment Committee
U.S. (25.9%)
Australia (13.5%)
Others (3.4%)
Market Overview
Chile: Mining Imports
1.80
1.60
Billion
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
2001
2002
2003
U.S.A.
2004
Total Imports
Source: COCHILCO, based upon Chilean Customs Data (Sept. 2007)
2005
2006
Market Overview
Market Share by Main Supplying Countries
U.S.-Chile FTA
Source: COCHILCO, based upon Chilean Customs Data (Sept. 2007)
Competing Mining Suppliers
Market Share by Country
(2007)
4%
10%
9%
25%
13%
39%
USA
Canada
Japan
Source: Chilean Customs Data
Brazil
Germany
Other countries
Copper Prices
January 1998 – 2008
($ cents/lb)
400
Feb 22, 2008 $ 378 cents /lb
350
300
250
200
150
100
50
0
Jan-98
Jan-00
Jan-02
Jan-04
Source: Chilean Copper Commission – COCHILCO (www.cochilco.cl)
Jan-06
Jan-08
New Copper Mining Projects
(2008-2015)
16
14
12
10
8
6
4
2
0
Argentina
Investment (US$ billion)
Brazil
Chile
New Production (million tons)
Peru
Exploration (US$ billion)
Source: COCHILCO: Based on companies press releases and own data compilation
How this translates into
real business?
2005: $ 2.9 billion Operational Expenses
18%
15%
11%
19%
9%
28%
Energy
Consumables - Plant
Parts & Pieces
Consumables - Mine
Fuel & Lube
Reagents
How to translate all this into
real business?
Capital Goods Demand
– Off-road trucks (240-440
tons)
– Scoop shovels
– Giant tires
– Crushers
– Grinders
– Cabbed truck chassis
(+ 50 tons)
– Part for rock cutters
– Excavators
– 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
How to translate all this into
real business?
2005: $ 1.7 billion Imports
Reagents
Consumables
Other Items
Equipment
Parts
0
100
200
300
400
500
600
How this translates into
real business?
2007: 5.7 million tons of copper
2011: 6.5 million tons of copper
Yearly Demand
65 off road load trucks
19 giant front loaders
Drilling and underground
transportation equipment
24,800 tons Explosives
US$
Million/Year
$247
$74
$22
$16
24 LHD
$11
500 Tires
$10
Source: COCHILCO, Dec. 2007
How to translate all this into
real business?
Electronic Purchasing Systems
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Quadrem
CODELCO
Chile Compras
SICEP
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www.quadrem.com
www.codelco.com
www.chilecompras.cl
www.sicep.cl
A Must
EXPOMIN
EXPOMIN
Santiago, May 2008
www.expomin.cl
EXPONOR
Antofagasta, June, 2009
www.exponor.cl
Need Help?
Count on Us!
U.S. Commercial Service
Carlos F. Capurro
[email protected]
Tel: 011-56-2-330-3307
Fax: 011-56-2-330-3172
Andres Bello 2800, Las Condes, Santiago
Chile
Looking forward to see you soon
in Chile
Many thanks for you kind attention