Mininig in Chile (Dec 3)- Austrade Presentation

Mining in Chile
Latin America: Mining region
1. Latin America, a mining region
2. Chile, a platform to Latin-America
3. Chilean mining Industry
a) Facts
b) Trends
c) Opportunities
4. Entering the Chilean mining industry
5. Conclusions
6. Appendix, material and links
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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
• Large and growing Australian presence
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Chile: Platform for the region
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
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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 to Latam 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.
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Chilean Mining Industry: Facts
1. Major driver of the economy.
a) Growth, quality employment, social development.
b) Tax and revenue to public budget
2. Concentrated Industry : +90% production by 10 companies, 25 “large
scale mine” operations. Majors.
a) Small Mid tier, low exploration
b) Mining houses: BHP, AMSA, Codelco, Glencore/Xstrata, Rio Tinto,
AngloAmerican, Barrick, Freeport Mc
3. Demographics:
a) Mostly Open pit (80%), but changing…..
b) Sulphides and Oxides.
c) Largest copper mines of the world (open and UG, #1,2,3)
d) 60% workforce external contractors (Australia 25%). (up to 7000
e) Innovation: Some world’s best practices (Gaby, Esperanza, UG)
f) Copper by-products: Molybdenum, 50% gold and silver
g) Remote mining areas, northern desert, and high altitude (+3,000)
h) HQ in Santiago, and a whole company in the desert
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Chile Mining Industry: Trends
1. Lower Ore grades and old deposits (open pit):
• Expansion of mines , large investments to maintain production level :
– US$20bn per year 04’-12’ for the same 5,4mtpy of copper
• Relocate facilities (Escondida, Collahuasi)
• Going underground (Codelco): leading technology and expertise (MMT and
block-caving). Mine Site Tech, Minecom
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Chile Mining Industry: Trends
Diego Hernandez, CEO AMSA: “Chile's
mining industry is losing its competitive
advantage”, Copper 2013
2. Uncompetitive industry, costs rising:
OPEX rose 55% 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
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3. 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
4. Sustainable mining: “Mega-expectations”:
• Growing complexity of environmental and legal/regulatory
framework: i.e Mining closure new scheme
• Safety in mining. Always FUNDAMENTAL. High standards, but also
High costs. Low productivity. Requirements for METS.
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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),
2. Australian METS sector well recognized:
• Being mentioned as “leading industry”
• Succeeding in different areas: Innovative equipment (RME, Gekko,
Immersive), engineering firms (6), equipment (Austin), equipment
rental (EMECO), Services (RML).
3. 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
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Entering the Chilean Mining Industry:
• Identify the right time to come. Prepare your visit.
• EXPOMIN and Exponor. Valuable industry shows.
– Access to industry and mining companies (remote mines)
– Exposure to Latin-America
– Real market entry point: valuable business programs. Australian pavillions.
• 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 valuable newtworks with key customers, and services
such as partner search, visit programs.
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• 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
– 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
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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
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Appendix 1: Key links
• Chile foreign investment committee.
Setting Up business:
• National Tax Service.
• Superintendency of Banks and Financial Institutions - SBIF (
• Industrial Property Institute (INAPI),
Mining in Chile:
• Antofagasta Minerals
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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.
• (projects)
• Copper. Greenfield. USD$1,9bn.Lixiviation, SX-EW plant. Austrade is working
on list of equipment.
• 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
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Projects forecaast pipeline
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Mine Company
355.9 Codelco
Radomiro Tomic
El Teniente
Total Codelco
1,075.9 BHP (Rio Tinto)
Cerro Colorado
37.7 AMSA
Los Pelambres
El Tesoro
Los Bronces
365.0 AngloAmerican
Mantos Blancos
El Soldado
Manto verde
Total Anglo American
El Abra
153.7 Freeport
131.1 Barrick
Quebrada Blanca
Lomas Bayas
73.3 Xstrata-Glencore
282.1 Angloamerican
Total chile
Appendix 3: Snapshot
Chilean Mining Industry
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