Transcript Chile - Invest in Northern Ontario

Chilean Representative Office of the Ontario Ministry of
Economic Development & Trade
Copyright 2007© TradeChile
TradeChile S.A.
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Leader in international consulting services in Chile
Over 10 years of experience
Assisted over 2,000 SMEs and over 33,000 matchmaking meetings
Clients:
 Ontario Ministry of Economic Development and Trade
 PEI, STEP
 Council of Great Lakes Governors (CGLG): NY, PA
 Ohio in Chile, Peru and Argentina
 Chilean Economic Development Agency (CORFO)
Member of relevant organizations and business associations:
 Chile Canada Chamber of Commerce, Canadian Commercial
Service in Santiago, Santiago Chamber of Commerce,
Corporation of Capital Goods, industry associations
www.tradechile.cl
Copyright 2010© TradeChile
Strategies & Services Provided
Objective: “To achieve a measurable increase in the exports of the
Ontario products and services to Chile.”
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Agent/Distributor Searches and Matchmaking
Trade event organization and participation
Business referrals and advising
Maintenance and development of trade contacts database
Identification and submitting of trade contacts and leads
Arrangement of business appointments and logistical support
Participation in Seminars and Conferences / Annual State Trips
Organization of Group Trade Missions
Promotion of foreign client’s industry and economic information
Copyright 2010© TradeChile
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Chile at a Glance
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Area: 293,000 m2
Population – 16.8 M (Growth rate: 0.94%)
Language: Spanish
Capital: Santiago
Urban Centers:
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Santiago 6.5M
Valparaiso 1M
Concepcion 1M
Workforce - 7.2 M (~41% women)
Life expectancy – 78.5 yrs
Mobile phone penetration: 97%
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Sustained Economic Growth
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Declining Poverty Rates
(as percentage of population)
50
40
45.1
38.6
32.6
27.5
30
20
10
17.4
12.9
8.8 7.6
Below Poverty
Line
23.2 21.7 20.6
18.8
13.7 15.7
5.8
5.6 5.3
0
4.7
3.2
3.8
1987 1990 1992 1994 1996 1998 2000 2003 2006 2009
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Indigent
Global Competitiveness Index
2008-2009
Global Competitiveness Index
Institutions
Infrastructure
Macroeconomic Stability
Health and Primary Education
Higher Education / Training
Goods Market Efficiency
Labour Market Effciency
Financial Marke Sophistication
Technological Readiness
Market Size
Business Sophistication
Innovation
South America Rank
1
12 Pillars
1
1
1
6
1
1
1
1
1
6
1
2
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World Rank
28
37
30
14
73
50
26
17
29
42
47
31
56
Inflation Comparison
280
260
240
(2000 = 100)
Index
220
200
180
160
140
120
100
2005
2006
Chile
2007
Colombia
2008
Brazil
2009*
2010*
Argentina
Chile has had the lowest inflation rate among the major Latin
American economies
Source: IMF World Economic Outlook Database: October 2008
Copyright 2010© TradeChile
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Country Facts
Chile
Peru
-1.5%
1.1%
5% - 5.5%
7% - 9%
US$257 billion
US$243 billion
US$14,939
US$8,646
17 million
30 million
Inflation 2010 (est.)
3.9%
2.5%
Unemployment rate 2009
9.6%
8.1%
Total trade 2009
US$93.5 billion
US$47.9 billion
Trade balance 2009
+US$14 billion
+US$5.9 billion
GDP growth 2009
GDP growth 2010 (est.)
GDP (PPP*)
GDP per capita (PPP*)
Population
Main trade partners
*PPP = Purchasing Power Parity
United States, China, United States, China,
Japan, Argentina
Canada, Ecuador
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Country Ratings & Rankings
Chile
Peru
S&P 2010
AA
BBB+
Fitch 2010
A
BBB-
Aa3
Baa3
30th
73rd
43rd
(3rd, after Peru &
Colombia)
36th
(1st in SA)
22 days
27days
795
730
68th
480 days
118th
842 days
Moody's 2010
Global Competitiveness
Index 2010-2011
(out of 133 countries)
World Economic Forum
Doing Business 2011
(out of 183 countries)
World Bank
Number of days for starting a
business
Cost to import (US$ per container)
Enforcing contracts
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Public Debt vs GDP
70
60
50
% of GDP
40
30
20
10
hi
le
C
ne
z
ue
la
ico
Ve
ex
M
ra
gu
ay
ru
Pa
Pe
il
az
Br
ia
liv
Bo
ol
o
m
bi
a
a
C
ge
nt
in
Ar
U
ru
gu
ay
0
Chile’s public debt to GDP ratio is the lowest in South America and
4th lowest in the world.
Source: CIA The World Factbook 2008
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Chile: World’s most open economy
Chile
FTA, Economic Complementary
Agreement, or Association Agreement
Trade Agreements with more than 50 markets: Canada, Mexico, USA, Central America,
South Korea, EU, India, Singapore, New Zealand, China, Japan, Peru, Colombia, China
Negotiating with Malaysia, Nicaragua, Thailand, Vietnam
…and numerous Double Taxation Agreements including Canada and the USA.
Became an OECD member in January, 2010!
Duty-free access to 86% of the world’s GDP
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Chile: Leader in Free Trade
FTAs:
 Canada
1997
 Mexico
1998
 Central America
1999
 European Union
2003
 S. Korea & USA
2004
 P4
2005
 China
2006
 Japan, India
2007
 Peru, Aus., Colombia 2008
P4 = New Zealand, Singapore & Brunei Darusalam
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CEAs:
 Bolivia
 Venezuela
 Colombia
 Ecuador
 Mercosur
1993
1994
1994
1995
1996
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Key Benefits
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Entered into force in July, 1997: Chile’s first FTA
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Comprehensive
 covers trade in goods and services (including professional services), and
investment
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As of January 1, 2003, 98.8% of products are free from custom duties for both
countries
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Results
 Canada’s bilateral merchandise trade with Chile has flourished and
diversified. Two-way trade has more than tripled growing to $2.5 billion in
2008 since signing of FTA.
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Total trade in 2008 reached US$126 B, 16% increase over 2007.
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Canada is the third largest investor in Chile and accounted for C$ 2.19 B in
FDI in 2008, mainly directed towards the mining, electricity, gas and water.
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In addition, Canadian companies have invested in other key sectors
including electricity transmission, methanol production,
telecommunications, utilities and banking.
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Canadian Investment in Chile
US$ 13.2 billion (2008)
SERVICES
0,03%
ENVIRONMENT
0,01%
PRINTING
0,15%
MANUFACTURING
0,08%
WATER
10,20%
REAL ESTATE
0,09%
ICT
0.26%
MINING SUPPLIERS
2,15%
ACQUACULTURE
0,17%
CHEMICAL
10,51%
MINING
48.81%
FORESTRY
0,61%
RETAIL
0,31%
FINANCIAL
10,82%
OIL & GAS
1,36%
POWER
13,87%
Copyright 2010© TradeChile
AGRIFOOD
0,31%
TELECOM
0.29%
EDC in Chile
 EDC is very active in Chile: conducted $900 billion of
business in 2008 (increase of 300% compared to
2006)
 Chile is EDC’s second largest market in South
America.
 EDC deployed a Regional (Country) Manager in
Santiago as of January 2008: Mr. Christian Daroch
([email protected])
Copyright 2010© TradeChile
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Figures
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Went into effect 2009
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More than 90% of tariffs on both countries’ exports will be
eliminated.
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Provisions on cross-border trade in services will also benefit
Canadian business
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Two-way merchandise trade with Peru: $2.8 billion (2008)
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Canadian merchandise exports to Peru: $390.8 million (2008),
including cereals, pulses, paper, technical instruments and
machinery
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Canadian merchandise imports from Peru: $2.5 billion (2008),
including gold, zinc and copper ores, oil, animal feed and vegetables
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Canadian direct investment in Peru: $2.35 billion (2008)- 4th
largest investor
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EDC also has an agreement with the Corporación Financiera de
Desarrollo S. A. (COFIDE), one of Peru’s major financial
development agencies.
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Ontario- Chile Trade
Ontario Exports to Chile
(Value in Thousands of Canadian $)
2007
2008
2009
$125,009
$146,201
$112,903
Ontario Imports from Chile
(Value in Thousands of Canadian $)
Source: Statistics Canada, International Trade Division, May 2010
Copyright 2010© TradeChile
2007
2008
2009
$468,906
$480,046
$810,061
Top Exports & Imports
Top 5
Ontario Exports to Chile
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Machinery parts
Machinery for sorting/screening
minerals, etc.
Moving, grading etc. machinery;
snow ploughs
Telephone equipment (includes
modems)
Electric transformers, static
converters, etc.
Top 5
Chilean Imports to Ontario
 Precious metals waste/scrap
 Gold unwrought
 Silver unwrought
 Grapes - fresh/dried
 Fish fillets - fresh/frozen/chiled
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Ontario Trading Partners
Goods Exports 2009
Goods Imports 2009
(% of total Ontario exports)
(% of total Ontario imports)
United States
79.8%
United States
58.6%
United Kingdom
6.0%
China
10.2%
China
1.3%
Mexico
6.2%
Norway
1.2%
Japan
3.6%
Mexico
1.1%
Germany
2.1%
Chile (32)
0.09%
Chile (18)
0.39%
(In 2008 Chile was in the 33rd place)
(In 2008 Chile was in the 29th place)
Sources: Statistics Canada
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NEW ROYALTY
 Companies have until Dec. 28 to choose
 Voluntary- social cost
 New royalty:
 4-9% according to operational margins (companies that
currently have tax invariability)
 5-9% for new projects b/w 2010 and 2012
 For companies that have 35-70% margins
 From 2018 companies pay b/w 5-14% for margins of 35
to 100%; invariability until 2023 (currently until 2017)
 Companies currently pay 4-5% but can voluntarily choose
new system.
 Monies go to the reconstruction of the country
 Government hopes to collect US$1B b7W 2010-2012:
health, education, housing and jails
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Not part of invariability scheme
Applicable to new mine exploits y current ones
that are not part of invariability scheme
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Royalty: Period 2010-2012
Applicable to mining exploits that are part of
invariability scheme, can opt for new royalty
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Royalty: Period 2013-2017
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Royalty: Period 2018-2023
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Total Taxes to Mining Industry
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Mining Industry
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Sector will grow 6% in 2011 reaching 5.9M tons and US$45B in
exports
2010-2013: US$50B from Codelco and royalty (if copper over
US$3.2/lb)
New mines found could signify 8.5M tons by 2020
 BHP: Pampa Escondida
 Codelco: La Americana
 Anglo: Los Sulfatos
 PBX Intl (CA)- Copaquire
Challenges:
 older mines- 35% more than 50 yrs old
 More complex operations
 lower ore grade
 Stricter environmental laws
 Higher E & fuel costs
 Quality demands of the product
 Insufficient qualified workforce
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Investment in Mining
Mine
La Escondida
La Escondida
La Escondida
La Escondida
Los Bronces
US$
2.5B
3.0B
Esperanza
Company
BHP
BHP
BHP
BHP
Anglo
Anglo, Xstrata,
Mitsui
Antofagasta
Minerals
Antofagasta
Minerals
Ministro Hales*
Chuquicamata
Andina
El Teniente
Bellavista
Codelco
Codelco
Codelco
Codelco
JSW&Farkas
2.2B
2.0B
5.3B
1.7B
30M
Collahuasi
Sierra Gorda,
Antucoya, Mirador,
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700M
2.5B
750M
NA
2.2M
Description
desalination plant
New concentrator
sulfur Bioleach pad
relocation of Truck shop
expansion
expansion; increase production
by 20%
double production to reach 1M
tons by 2017
Expansion
construction; only to develop
new deposit; begin production
2013; major player in silver 287
T b/w 2014-2027; top 10 in
copper
underground
expansion
new level for exploitation
iron; 2.5M tons/yr for 25 yrs
Investment by 2015: US$50 to 60B
Foreign Investment Committee authorized US$11B to nov 2011
Investment 2010-2014: mining represents 30% (2nd after
energy)
* Largest in history
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Opportunities in Mining
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Automatization
Virtualization
Cloud computing
Wireless systems- vibration, pressure & temp measurement
(Codelco/Ventanas); maintenance of equip when it requires it; how
bioleaching is working (Zaldivar)
Intelligent sensors
GPS/RFID
Processing of digital imaging
Photonic transmission
Mitigation of emissions (95% in greenhouse gas 01-09)
Fluid bed roasting plant for reduction of arsenic
Mine safety- “the 33”
Instability of deep ground rock: Reinforced shotcrete; hitensile
mesh (Chuqui, Teniente); fortication systems for high stress mines
Mine closures: new law
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Opportunities: SQM*
New and used equipment: front loaders, bulldozers
Tubing and pumps for high altitude
High tension towers
Interested in engineering, procurement and construction
companies (EPC)
Rail transport: 12M tons/year for 27 km
New technologies in exploration
Valves that resist corrosion
Polymers
Need to be registered with SQM
Like to work with foreign companies via subsidiary in Chile
Rodrigo Vera, Technology Manager: [email protected]
Produce iodine, lithium, nitrates
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Opportunities: Minera Esperanza
Energy sources and renewable energy alternatives
Water treatment
Modular camp systems: Tecnofast US$50M in 1 yr
Smart access: installation of towers for celular signals; cards
with chips for location of personnel- need to put antenna in
mine cause 80% of staff is there
 Smart communication of warehouses with HQ for inventory
purposes
 Truck hoppers for 380T for the Caterpillar 797
 If equip needs after sales then require foreign company to
have a distributor or rep in Chile
 Work only with Quadrem
 Crucial for Canadian cos to do due diligence- have to
approach them with a value added proposal- have to
differentiate themselves from the competition: why
change the equip? What is the value? Is it necessary?
What are advantages?
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Guillermo Teare, Purchase & Contract Manager:
[email protected]
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Opportunities: Molymet
Process molybdenum
Need to diversify the final product
Need to add value to molybdenum
Need technology to reduce emissions- plant
close to a city
Have no problems in working with foreign
companies
No requirements to work with them
Edgar Pape, Finance Manager: [email protected]
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Codelco Incorporation of
Technology
Processing
Extraction
Remote supervision of operational
variables for critical equipment (All
divisions).
Monitoring systems for grinders, SAG,
conventional and flotation mills, with more
than 8000 variables (All divisions).
Information System for drilling and
blasting for operational control (All
divisions).
Particle Imaging processing and cathode
quality (All divisions).
 Automatic and controlled ventilation
systems (El Teniente, Salvador & Andina).
Remote control of Operation of hammers
(El Teniente y Andina).
Semiautomatic trains (El Teniente).
Automated monitoring of operational
variables in concentration plants (Codelco
Norte, El Teniente, Andina).
 Advanced control of smelters (Codelco
Norte, El Teniente).
Autonomous LHD (El Teniente).
Satellite control of trucks, shovels and
drills (Codelco Norte y Andina).
Autonomous trucks (Gaby).
Copyright 2010© TradeChile
Recommendations to
Ontario Companies
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Have a clear objective and projected vision
Be committed to the market
Define what format of business activities would be viable for the Chilean
market, differs by company and product type
Define type of product/service with value-added characteristics that could be of
interest for Chilean clients
Chile is a very price-sensitive market. Develop a thorough and aggressive
marketing campaign and pricing strategy appropriate for the local market
 Strong competition: Chile has FTAs with 19 countries, plus other types of
trade agreements with 35 more countries
Be proactive in communications and follow-up activities with interested Chilean
companies
Provide strong support to the local counterpart (ie. after sales)
Visit the market
Chilean will ask for exclusivity
Use Chile as your Springboard
Free services: Make use of the services provided by the Ontario Representative
Office in Chile
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Current Major Mining Hot Spots
CAJAMARCA AND LA LIBERTAD
Gold, Copper and Silver
MADRE DE DIOS
Gold
ANCASH
Copper, Gold, Silver, Lead,
Molibdenum and Zinc
CUZCO
Copper
PASCO, LIMA AND JUNIN
Copper, Gold, Silver, Lead and Zinc
ICA
Iron
PUNO
Gold, Tin
AREQUIPA
Gold, Copper
MOQUEGUA AND TACNA
Copper and Molibdenum
Peru is one of the most diversified mineralized regions in the world.
Copyright 2010© TradeChile
Mining Industry
 Only 10% of territory with mining potential has been explored
in Peru, and 6%i
is currently being mined.
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The Fraser Institute describes Peru as one of the most
attractive destinations for mining exploration in Latin America,
stating that US$ 350 million were invested in this activity in
2009.
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The Peruvian Geological, Mining and Metallurgical Institute
provides complete cadastre information of projects via internet.
 Additionally, there are still diverse investment opportunities in
nonmetal mining, particularly borates, diatomites, bentonite,
rock phosphate and travertine.
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Mining Exports
 Exports have become significantly dynamic during the last
decade, going from an annual average of US$ 4.4B from ´99
to ´04 to an average of US$ 15.5B from ´05 to ´09.
 Diversification of mining exports: gold (42% of total exports
in 2009), copper (36%), zinc (7%) and lead (7%).
1999-2009
US$ Millions
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Leading Export Companies
In 2009, 5 mining companies exceeded US$ 1.25B annually in exports.
Many of these deposits are polymetal; although the most exported
metals were gold and copper.
Other 28 companies show exports over US$ 100 million.
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Investment Projects
Investments showed an increasing trend, reaching its highest level
to date in 2009 with US$ 2.77 B.
Result of growing interest by multinational companies in exploring
new deposits & expansion of projects
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Investment Projects
 Growth perspectives in the mining sector are increasing:
announced or under evaluation projects exceed US$ 37B
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Among the announced investments are the copper Project
expansions of Antamina and Cerro Verde, and the iron ore
project of Shougang Mining in Marcona; and the Quellaveco
(Anglo American) and Tía María (Southern) projects.
 In regards to exploration: 23 projects programmed. The most
important are copper, the Las Bambas (Xstrata) and Galeno
(Jiangxi) projects; in iron, Hierro Apurímac (Strike) and
Pampa de Pongo (Nanjinzhao); and in gold, Minas Conga
(Newmont).
 These new investments along with the ongoing project
operations will allow Peru to consolidate its leadership as
global mining producer.
Copyright 2010© TradeChile
Investment Projects: 2010-2015
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Opportunities
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In 2008: 60% of Peru´s exports were minerals; 50% of imports
destined for mining
Table shows product´s shares of total imports
HTS Codes
Description
%
Dumpers designed for off?highway use
8704230000 G.V.W. exceeding 20 MT
842951 Front end shovel loaders
14.1
10.9
Air or vacuum pumps, air other gas
compressors and fans ventilating or recycling
hoods incorporating a fan, whether or not fitted
84148020 with filters, over 262.5 kw, and parts thereof
10.2
Mechanical shovels, excavators and shovel
loaders: machinery with a 360º revolving
842952 superstructure
6.0
Bulldozers and angle dozers, track laying, self
84291100 propelled
5.7
870410 Dumpers designed for off highway use
Parts of sorting, screening, separating or
84749000 washing machines
Other parts suitable for use solely or
principally with the machinery of headings
8431410080 8426, 8429 or 8430
5.0
4.5
3.8
Copyright 2010© TradeChile
Purchase of equipment,
machinery and services:
 Totaled US$2.8B in 2009;
65% over 2008
Reached US$1.7B 1st
semester of 2010
 Expect to reach US$3.0B
by end 2010
Opportunities
 Prospecting activities (mapping, sampling and drilling),
 Feasibility and/or environmental studies.
 Potential for non-metal mining products such as limestone, which
represents approximately 53% of the nonmetal mining
production, as well as travertine, diatomite, bentonite, borates,
uranium and lithium
 For the mine exploration stage: manual remote sensors.
 For the mine production stage: design and construction, drilling
and blasting, loading, hauling, backfilling, ventilation, drainage
and pumping, roof supporting, and communications.
 For the processing stage: crushing, milling, flotation, leaching,
and tailings disposal.
 During operation, the mine requires supplies such as tires,
explosives, mill balls, reactives and spare parts
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CHILEAN BUSINESS
CULTURE
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Socio-Business Culture
Interacting with Others
Which of the following situations do you find
most difficult to handle?
...complain
...ask
others
for help
...express my
feelings to other
people
...establish
limits and say
no
...talk
about
intimate
subjects
with my
partner
No
answer
18.5%
27.3%
21.9%
22.5%
7.2%
2.4%
A sort of “shy attitude”
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Socio-Business Culture
Chileans & Conflict
When conflict arises, what should one do?
Let conflicts show so that
problems are discovered
Try to avoid conflicts so that they
don’t become a serious problem
No
answer
27.5%
69.9%
2.6%
Chileans AVOID CONFLICT!
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Socio-Business Culture
Attitude towards Foreigners
During recent years, the Chilean economy has received the influence
from foreign companies and investment. Do you think that this
represents...
...an opportunity to develop for
our country
...a threat for the autonomy of
our country
No answer
60.8%
35.6%
3.6%
Chileans welcome FOREIGN COMPANIES!
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Socio-Business Culture
Price & Quality
When you need to buy a blouse or a shirt, you prefer to buy...
...an item of a
better brand
...three pieces for
the same price as
one
No
answer
36.5%
62.1%
1.5%
If you had to choose between two products, you would
choose the...
...most
beautiful
...cheapest
No
answer
28.2%
69.6%
2.1%
Regarding consumable products, PRICING is key!
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Socio-Business Culture
THE CHILEAN ENTREPRENEUR
HIGH LEVEL OF INDIVIDUALISM
HIGH LEVEL OF FORMAL EDUCATION ( POST-GRADUATE STUDIES)
ASSERTIVE & ENTREPRENEURIAL
OPEN-MINDED AND CONSISTENTLY SEARCHING FOR NEW BUSINESS
LOOKING TO MAXIMIZE PRODUCTIVITY AND PROFIT MARGINS
INTERESTED IN OBTAINING A LONG TERM RELATIONSHIP WITH RELIABLE FOREIGN SUPPLIERS
Copyright 2010© TradeChile
Verónica Medina
Director
Ontario Representative Office in Chile
C/O TradeChile
Tel.: +(56-2) 2442435
Fax.: +(56-2) 2442436
E-mail: [email protected]
Copyright 2010© TradeChile