Invest in Chile Opportunities for Mining Suppliers.

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Blaise Gregory
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1 Invest in Chile Opportunities for Mining Suppliers

2 Land of Opportunities Chile is not only Latin America s best evaluated economy but also one of the best evaluated emerging economies internationally. Its hallmark stability, transparency and competitiveness and excellent business prospects position the country as the best destination for foreign investment in Latin America and one of the world s leading destinations. In its World Investment Report 2015, UNCTAD ranked Chile as the world s 11th largest recipient of foreign direct investment in With an inflow of US$23,000 million in 2014, Chile took second place in Latin America after Brazil and ahead of Mexico. Chile was the six largest recipient of FDI among developing economies in 2014, according to UNCTAD. US$23,000 million in inbound FDI in FDI in Chile 2004/2014 (US billion) Source: Central Bank of Chile

3 Why invest in Chile? 03 A reliable country Chile is a safe place in which to do business as borne out by risk ratings agencies which have increased or maintained their high ratings for the country, highlighting its low level of public debt, the health of its financial system and its solid institutions. A competitive country In the Global Competitiveness Index published by the World Economic Forum, Chile took 33rd place out of 144 economies, ahead of all other Latin American countries. Opportunities for Mining Suppliers An attractive business climate In the Economist Intelligence Unit s Business Environment Ranking , Chile took 13th place out of 82 economies. A transparent country In Transparency International s 2014 Corruption Perceptions Index, Chile obtained a score of 73 points, ranking among the 21 best-placed economies out of the 175 countries included in the Index.

4 An internationally integrated country Chile has signed trade agreements with more than 60 countries, expanding its domestic market of 16.6 million inhabitants to one of over 4,302 million potential consumers around the world (representing 85.7% of global GDP and 63% of the world s population). A globally connected country Chile has world-class highways and telecommunications services, with a high penetration of technology and excellent connectivity. In the Networked Readiness Index 2014 published by the World Economic Forum (WEF), it took 35th place out of 148 economies, ranking first in Latin America. A country with talent Chile stands out not only for its high-standard professionals but also as the home of two of the universities that, according to the latest Academic Ranking of World Universities (ARWU), are among the top ten in Latin America. In addition, it took 26th place out of 60 economies in the Global Talent Index 2015 of the Economist Intelligence Unit (EIU). Why invest in mining in Chile? Demand for copper will grow more than 50% by Source: Cochilco A country to live in The capital Santiago is one of Latin America s most liveable cities, according to the Economist Intelligence Unit (EIU), and the country is also well evaluated in studies such as the Global Peace Index where, in 2014, it ranked 30th out of 162 countries. Headquarters in Chile Santiago offers overseas companies some of the world s most attractive installation costs. In its Prices and Earnings report for 2012, the UBS investment bank gave Chile s capital a score of 52.8 points and 60th position out of 72 cities in a ranking where first place indicates the most expensive city (Oslo) and New York is the base of comparison with 100 points year

Chile is the world s leading copper producer: 38.8% 27.5% 15% of international copper output comes from Chile. of international copper reserves are in Chile.

5 Chile is the world s leading copper producer: 38.8% 27.5% 15% of international copper output comes from Chile. of international copper reserves are in Chile. of international expenditure on exploration for copper takes place in Chile. In other minerals: 1st in production of natural nitrates 1st in iodine production 1st in lithium production 41.7% of the world s copper mining investment portfolio is in Chile. 3rd in molybdenum production 4,572,000 Chile has 4,572,000 tonnes of additional copper production capacity (the largest in the world). 8th in silver production 14th in gold production Sources: USGS, Cochilco. 05 Economic and financial strength In Chile, inflation is controlled, the exchange rate stable and unemployment low. A significant number of multinational companies have established their regional offices in Chile, positioning the country as one of the region s financial hubs. Competitive advantages for copper production Enormous copper deposits. Favorable ore grades. Opportunities for Mining Suppliers High-quality human capital Specialized mining professionals and technicians noted for their quality and level of training. Great geological potential Chile accounts for 15% of international expenditure on exploration for copper. In 2011, Chile accounted for 27.5% of international copper reserves. Appropriate port and road infrastructure Installed port capacity, located at a convenient distance from mine sites. Important railway and road networks to reduce transport costs. Availability of permits Low uncertainty as to legislation facilitates access to permits for mining exploration and operations. Exploration concessions are for a period of two years which can be extended once for a further two years.

6 Investment opportunities Explosives purchases will reach US$3,271 million by 2020 Mill balls purchases will reach US$6,761 million by 2020 Training in the sector will be worth over US$200 million by Open-pit equipment 1,800 off-road trucks will be acquired by 2020, representing a total of US$4,880 million. Water Efficiency US$2,300 million in investment between projected plants and total requirements.

7 Over 20 engineering companies operate in Chile, representing annual sales of more than US$45 million. 75% have foreign capital. Water Efficiency By 2020, demand for water is estimated to increase by 15 m3/sec to supply projected output. Using only seawater would raise the industry s costs by more than US$4,000 million by 2020, equivalent to US$0.30/lb of copper. At least US$2,300 million in investment between projected plants and total requirements. Engineering Over 20 engineering companies operate in Chile, representing annual sales of more than US$45 million, and 75% have foreign capital. Mining accounts for 57% of demand. There is a portfolio of mining projects worth US$112,000 million. The increase in operating costs calls for innovative solutions. Mine closure law. Demand for engineering services in the mining sector is estimated to reach over US$36,000 million by A similar value is estimated for sectors other than mining. Construction work and equipment related to engineering companies may represent a further US$29,700 million. Engineering for closure plans may reach US$20 million per project. Open-Pit Equipment Chile s open-pit mining industry is among the largest in the world and is a key market for high-tonnage trucks and all related services. The increase in prices is encouraging the appearance of new players, but always related to integral services. The opportunity calls for numerous goods and related services. It is estimated that over 1,800 offroad trucks will be acquired by 2020, representing a total of US$4,880 million. As well as trucks, the opportunity also includes ancillary equipment, large shovels, tires, maintenance services, spares and training. The total value reaches over US$10,000 million. Underground Equipment Much of the technology used is not developed locally. This equipment is used in few large mines but in many small and mid-sized mines. The most used items are lowprofile front loaders and Jumbo drills. Over the past five years, around 250 LHD loaders have been imported. It is estimated that over 850 LHD loaders will be acquired by Provision of LHD equipment can be expanded to include supply of Jumbo drills and tippers. The total value reaches over US$535 million. 07 Opportunities for Mining Suppliers

8 Conveyor Belts At present, an estimated 88% of conveyor belts supplied to the Chilean mining industry are imported and even local products correspond to international brands produced directly in Chile. The total market has an annual value of approximately US$90 million. There is an opportunity for manufacturing and marketing related to services. Installed capacity of conveyor belts in Chile will reach over 501,000 meters by Purchases by 2020 will reach US$686 million. Mill Balls The market has an estimated annual value of US$800 million. Over 95% of the market is supplied by multinational companies with plants in Chile. This is an expanding market undergoing structural changes: mergers and acquisitions. Products are needed that cost less, last longer and are more sustainable. Accumulated demand for mill balls in Chile will reach over 3.2 million tonnes by Purchases by 2020 will reach US$6,761 million. Explosives Demand for explosives and, specifically, ammonium nitrate in Chile reaches almost 650,000 tonnes per year, equivalent to some US$360 million. Growing output combined with lower ore grades implies estimated annual growth of over 5% through to Purchases of explosives will reach US$3,271 million by Services related to rock fragmentation are estimated to be worth 10% of the value of explosives. Reagents-Flotation Growing output of concentrate combined with lower ore grades and the increasing use of thickened tailings implies estimated annual growth of over 10% through to Purchases of flocculants alone are estimated to reach US$151 million by Training At present, large-scale mining companies devote approximately US$35 million to training. It is estimated that over 52,000 operators will need to be trained for the mining industry by Market without leadership. Training in the sector will be worth over US$200 million by 2020.

9 Over 52,000 operators will need to be trained for the mining industry by 09 Opportunities for Mining Suppliers 2020.

10 Success story Chile is a country which has maintained a free market policy that has uninterruptedly permitted the entry of capital and goods from abroad and, at the same time, fostered the export of goods and services. This has generated a very sophisticated and highly competitive local market that has obviously forged a stable and healthy economy. In this context, it is important to note that Mitsubishi Corporation s first mining investment outside Japan was in Chile. Toshihiro Shimazaki, President, Mitsubishi Chile Ltda.

The Foreign Investment Committee (CIEChile) is the agency that represents the State of Chile in its dealings with foreign investors and helps to position Chile as a highly attractive destination for

11 The Foreign Investment Committee (CIEChile) is the agency that represents the State of Chile in its dealings with foreign investors and helps to position Chile as a highly attractive destination for foreign investment and international business through its role in matters related to the administration and communication of the corresponding legal norms, the development of promotional activities of different types and the preparation of information concerning foreign investment for investors and potential investors. What can CIEChile do for you? * Provide you with information in Spanish, English or Chinese about Chile s business climate and the investment opportunities offered by different sectors. 11 Opportunities for Mining Suppliers * Supply you with a portfolio of public and private investment projects. * Provide you with legal advice for the signing of an investment contract with the State of Chile. * Help you in preparing schedules of meetings with relevant players. * Guide you in presenting queries to different government services. * Respond to your enquiries and requests in the shortest possible time. For further information, please visit

12 Invest in Chile Opportunities for Mining Suppliers LEGAL DISCLAIMER: The information contained in this document is for the purposes of information only and the particular conditions of each specific case may vary from those set out here. The contents of the document should in no way be interpreted as a legally binding obligation of the Republic of Chile or any other state agency that participates in any way in the processes of administrative approval or of any other nature corresponding under Chilean law. The resulting agreement will be governed and interpreted exclusively according to the laws of the Republic of Chile, their related regulation and the national policies applicable to each particular case. Printed in Chile, July

Opportunities in Chilean Mining Joaquín Villarino President, Chilean Mining Council

Opportunities in Chilean Mining Joaquín Villarino President, Chilean Mining Council Asia Copper Conference November 29, 2012 Agenda 1. Introduction: Mining Council 2. Chile in the mining world: challenges