THE WORLD COPPER MARKET AND THE

Transcription

1 Logo Gobierno: 160x162px. Ministerio, Subsecretaría, Organismo, etc.:160x145px THE WORLD COPPER MARKET AND THE IMPACT IN CHILEAN ECONOMY Sergio Hernández EVP Chilean Copper Commission May 17 th, 2016

2 Agenda Economic context and mining investment Quaterly copper market Impact on Chilean mining activity

3 Agenda Economic context and mining investment

4 Economic context and mining investment Latest news for mineral commodities Entrada producción

5 c/lb Economic context and mining investment And copper is not an exemption Oil: production push down commodities prices IMF: lower Chinese GDP Greece: reforms acceptance Atacama: production cuts due heavy rains 285 c/lb (2015) 280 c/lb (2016) FED: rise in interest rate should wait China: signs of not reaching GDP growth goal 277 c/lb (2015) 270 c/lb (2016) China: stock market crash China: lowest manufacture levels since 2009 China: decrease copper imports 277 c/lb (2015) 270 c/lb (2016) China: reduce GDP goal China: yuan devaluation China: stock market crash China: yuan devaluation FED: rise of interest rate Iran: lifting trade sanctions FED: hold of interest rate COCHILCO s copper price forecast 253 c/lb (2015) 250 c/lb (2016) China: Chile: Pessimism expansionary on copper policy market 215 c/lb (2016) 220 c/lb (2017) Source: COCHILCO, CRU Copper Monitor

6 Economic context and mining investment Supply reaction didn t wait c/lb Boseto (Botswana) Troy (USA) Lomas Bayas III Kamoa (Congo DR) Los Pelambres IV Cloncurry (Australia) Zaldívar Production cut or closure Investment delay or change Miami (USA) Anglo Norte El Abra El Abra Mill Mopani (Zambia) Katanga (Congo DR) Ray (USA) Tyrone (USA) McCreedy West (Canada) Baluba (Zambia) Collahuasi Sierrita (USA) Nchanga (Zambia) CSPT (China) Mt Gordon (Australia) Collahuasi Expansion Relincho Andina 244 Minto (Canada) Chibuluma South (Zambia) Huckleberry (Canada) Sagasca Cemin Quebrada Blanca, fwd closure Encuentro Óxidos 170 Jiama (China) Asset sales Skouries (Greece) Tenke (Congo) Source: COCHILCO, CRU Copper Monitor, Companies press releases

7 Economic context and mining investment Copper mining costs 250 C1 Ranking Top Producers Country Chile China Peru USA Australia Congo Rusia C3 (c/lb) C1 (c/lb) Zambia Canada Indonesia Source: Wood Mackenzie 2015

8 Agenda Quaterly copper market

9 Quaterly copper market Latests price trends 235 Copper Oil Average anual copper price 214,3 c/lb Source: LME Cobre Copper (c/lb) (c/lb) Petróleo Oil (WTI, (WTI, US$/b) US$/barril)

10 Quaterly copper market World refined copper consumption CONSUMPTION GROWTH RATE ,3% -2,9% 1,3% 1,4% -0,3% CONSUMPTION GROWTH RATE JAN 2015 VS. JAN ,4% 22% -15% -4% -12% 3% 6% -47,9% -75% China USA Europe Japan Russia Others World CHINA : CHANGE IN ANNUAL COPPER CONSUMPTION RATE China USA Europe Japan Russia Others World 24% 11% 35% 37% 11% 15% 0% 18% 3% 12% 9% 14% -5% 2% 4% -3% 0% 0% 3% -3% 3% 1% 8% 3% 22% Source: WMS

11 Quaterly copper market Copper mine supply 2015: Mine production growth rate 23,6% 0,3% 2,3% 4,4% 4,3% -0,7% -0,9% Chile China USA Peru Congo DR Australia World Source: WMS

12 Quaterly copper market COCHILCO s forecast: demand Demand 2016 f (%) Demand 2017 f (%) 3,0 3,0 2,5 1,5 1,0 1,0 1,2 2,3 1,8 2,5 1,5 1,5 1,5 1,0 2,6 2,1 China USA Europe World China USA Europe World January March January March Country 2015 p 2016 F 2017 F KTMF KTMF DIFF. KTMF DIFF. China USA Europe World Source: COCHILCO

13 Quaterly copper market COCHILCO s forecast: supply Change in copper mine production jan Vs mar 2016 (000 tonnes) 1,5% Copper mine production (000 tonnes) 5,1 % 2,9% ,5% E 2017 E January March f 2017 f Source: COCHILCO

14 Quaterly copper market COCHILCO s forecast: copper price COPPER PRICE FORECAST C/LB COPPER PRICE FORECAST US$/TON , f 4, f 4, p 2016 f 2017 f f 2017 f Source: COCHILCO

15 Agenda Impact on Chilean mining activity

16 Impact on Chilean mining activity Chilean copper mining portfolio 2016 Pascua (Gold, mill US$ 4.500) Under review El Abra Mill (Cu, mill US$ 5.000) Relincho (Cu, mill US$ 4.500) Andina 244 (Cul, mill US$ 6.524) Quebrada Blanca Hipógeno Iron Ore & Ind. Min. Mill US$ projects Budget constraints (Cu, mill US$ (-mill US$ 590)) Marginal Expansion Los Pelambres (Cu, mill US$ (+ mill US$ 410)) Gold and met. Plants Mill US$ projects Arbiodo (Ind. Min., mill US$ 396 (- mill US$ 107)) Copper Source: COCHILCO Mill US$ projects New Orcoma (Min. Ind., mill US$ 230) Expansion Molynor (Met. Plants, mill US$ 240)

17 Impact on Chilean mining activity Investment by condition Low investment probability High investment probability POTENTIAL: 15,3% mill US$ 7.691; 2 projects BASE: 30,5% mill US$ ; 11 projects POSSIBLE: 34,4% mill US$ ; 12 projects PROBABLE: 19,8% mill US$ 9.915; 10 projects Source: COCHILCO

18 Impact on Chilean mining activity Investment condition Brownfield Greenfield MMUS$ proyectos Source: COCHILCO MMUS$ proyectos

19 Impact on Chilean mining activity Copper projects by proccessing type Copper 15,1% 5 projects Mill US$ projects 81,9% 14 projects 3% 4 projects 0% 0 projects Milling projects Smelting projects Source: COCHILCO Leaching projects

20 Impact on Chilean mining activity What should we expect from? Chilean copper production: Chilean copper production could reduce its potential to produce 6.0 million tonnes at current prices. Around 50% of total production has costs (C3) under 200 c/lb. Copper price: Cochilco s forecast for 2016 considers a copper price of 215 c/lb (4,740 US$/ton) and 220 c/lb (4,850 US$/ton) in Long term copper price is expected to be around 287 c/lb (6,330 US$/ton). Chilean mining investment: Several projects are under review given market conditions, but 50% of mining investment projects in Chile have a good probability of being developed. Most of copper production will come from browfield milling projects, given natural depletion of leaching deposits.

21 Logo Gobierno: 160x162px. Ministerio, Subsecretaría, Organismo, etc.:160x145px THE WORLD COPPER MARKET AND THE IMPACT IN CHILEAN ECONOMY Sergio Hernández EVP Chilean Copper Commission May 17 th, 2016