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Logo Gobierno: 160x162px. Ministerio, Subsecretaría, Organismo, etc.:160x145px
THE CHILEAN MINING INDUSTRY
Jorge CantalloptsDirector of Research and Policy Planning
Chilean Copper Commission
Brussels 28-29 June, 2016
Chilean Copper Commission
CONTENTS
2 43 5Importance of mining in
Chile
Importance of Chile in
mining
1Impact of
lower copper prices
What are we doing?
Creating value
Conclusions
Chilean Copper Commission
IMPORTANCE OF MINING IN CHILE1
Chilean Copper Commission
ECONOMIC DEVELOPMENT
Chilean Copper Commission
Income tax 2015•6% (US$ 3,048 millions)
Direct foreign investment 2006 -2015•Authorized: US$ 52,446 millions•Materialized: US$ 17,991 millions
Mining participation in GDP 2006 - 2015•14,3% average (9% in 2015)
0
10.000
20.000
30.000
40.000
50.000
60.000
70.000
80.000
90.000
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
MMUS$
Country total
Mining exports
Copper exports
2015:Mining 55%Copper 49%
Source: Central Bank of Chile
IMPORTANCE OF CHILE IN MINING2
Chilean Copper Commission
PRODUCTION
Chilean Copper Commission
País 2014 2015
Chile 5,750 5,764Peru 1,380 1,705China 1,632 1,669USA 1,383 1,373Congo DR 996 1,039Australia 965 957Zambia 756 754Russia 720 720Canada 696 697Indonesia 366 580Others 3,835 4,008
Total world 18,478 19,265
Chile; 30%
Others; 21%
Peru; 9%
China; 9%
USA; 7%
Congo DR; 5%
Australia; 5%
Zambia; 4%Russia; 4%
Canada; 4%
Indonesia; 3%
2015
Source: World Metal Statistics and COCHILCO
Source: USGS Mineral Commodity Summaries (2015)
4.6%
4.2%
4.2%
2.8%
6.4%
Chile
Peru
United States
Russia
China
Mexico
Others countries
Congo DR
Australia
2.8% Zambia
1.5% Canada
29.2%
11.4%
12.2%
20.8%
RESERVES - GEOLOGICAL POTENTIAL
Chilean Copper Commission
IMPACT OF LOWER COPPER PRICES3
Chilean Copper Commission
TAX COLLECTION
Chilean Copper Commission
US$ Millions
Source: USGS Mineral Commodity Summaries (2015)
3.450
12.854
14.078
11.093
4.485
9.696
10.773
8.307
5.8624.728 3.048
126
305323
315
234
342
400
361332
311
249
0
50
100
150
200
250
300
350
400
450
0
2.000
4.000
6.000
8.000
10.000
12.000
14.000
16.000
Average2003 -2005
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Income from mining (US$ millions) Copper price (cUS$/lb)
150
170
190
210
230
250
270
290
310
c/lb
COPPER PRICE CHANGES 2015 - 2016
Chilean Copper Commission
COCHILCO’s copper price forecast
285 c/lb (2015)280 c/lb (2016)
277 c/lb (2015)270 c/lb (2016)
277 c/lb (2015)270 c/lb (2016)
253 c/lb (2015)250 c/lb (2016)
215 c/lb (2016)220 c/lb (2017)
IMF: lower Chinese GDP
Oil: production push down commodities prices
Atacama: production cuts due heavy rains
FED: rise in interest rate should wait
China: signs of not reaching GDP growth goal
China: decrease copper imports
China: yuan devaluation
China: lowest manufacture levels since 2009
China: stock market crash
China: yuan devaluation
FED: rise of interest rate
Iran: lifting trade
sanctions
FED: hold of interest rate
China: expansionary
policy
Chile: Pessimism on copper market
China: reduce GDP goal
China: stock market crash
Greece: reforms acceptance
Source: COCHILCO with LME information
150
170
190
210
230
250
270
290
310
c/lb
Mining Ministry| COCHILCO
Production cut or closure
Investment delay or change
Asset salesRelincho(Chile)
El Abra(Chile)
Lomas Bayas III(Chile)
Los Pelambres IV(Chile)
El Abra Mill(Chile)
Mopani(Zambia)Katanga
(Congo DR)Miami(USA) Ray
(USA)Tyrone(USA)
Boseto(Botswana)
Sierrita(USA)
Troy(USA)
Anglo Norte(Chile)
Zaldívar(Chile)
Kamoa(Congo DR)
Cloncurry(Australia)
Collahuasi(Chile)
Baluba(Zambia)
McCreedy West(Canada)
Andina 244 (Chile)
Collahuasi Expansion(Chile)
Mt Gordon (Australia)
CSPT(China)
Nchanga(Zambia)
Huckleberry(Canada)
Chibuluma South(Zambia)
Minto(Canada)
Jiama(China)Skouries(Greece)
Quebrada Blanca, fwdclosure(Chile)
Cemin(Chile)
Sagasca(Chile)
EncuentroÓxidos(Chile)
Tenke(Congo)
CHANGES IN SUPPLY AT A LOWER COPPER PRICE
Source: COCHILCO, CRU Copper Monitor, Companies press releases
MINING INVESTMENT - INVESTMENT PORTFOLIO VS COPPER PRICE
Chilean Copper Commission
18.925 21.94129.695
43.23151.063
66.890
104.300112.556
104.851
77.290
49.607
0
50
100
150
200
250
300
350
400
450
0
20.000
40.000
60.000
80.000
100.000
120.000
Copper Gold and metallurgical plants (*)
Iron and industrials minerals Total investment
Copper price nominal (cUS/lb)
US$ Millions cUS$/lb
Source: COCHILCONominal copper price (cUS$/lb)
MINING INVESTMENT - PROJECT PORTFOLIO
Chilean Copper Commission
Mill $ 3,9845 projects
Iron and Ind. Min.
Mill US$ 2,1017 projects
Mill US$ 43,52224 projects
Gold and Met. Plants
Copper
Under review
New
Budget constraints
• Pascua (Gold, mill US$4,500)
• El Abra Mill (Priv. Cu Min., mill US$5,000)
• Relincho (Priv. Cu Min., mill US$4,500)
• Andina 244 (State, mill US$6,524)
• Romeral Fase V (Iron, mill US$198)
• Pampa Blanca Exp. (Ind. Min., mill US$665)
• Sierra Gorda 220 ktpd (Priv. Cu Min., mill US$1,500)
• Orcoma (Ind. Min., mill US$ 230)
• Molynor Extension (Met. Plants, mill US$ 240)
• Los Pelambres Marg. Exp. II (Priv. Cu Min., mill US$500)
• Mantoverde Growth Project (Priv. Cu Min., mill US$938)
• QB Hypogene (Priv. Cu Min., mill US$ 55,000)
• Los Pelambres Marg. Exp. I (Priv. Cu Min., mill US$1,100)
• Arbiodo (Ind. Min., MMUS$396)
Source: COCHILCO
0
50
100
150
200
250
300
350
0
2
4
6
8
10
12
14
def14
efm14
fma14
mam14
amj14
mjj14
jja14
jas14
aso14
son14
ond14
nde14
def15
efm15
fma15
mam15
amj15
mjj15
jja15
jas15
aso15
son15
ond15
nde15
def16
efm16
fma16
Desocupación País (%) Desocupación Minería (%) Precio Cu BML (c/lb)
CHANGES IN UNEMPLOYMENT AT A LOWER COPPER PRICE
Chilean Copper Commission
Unemployed country (%) Unemployed mining (%) Copper price LME (c/lb)
% cUS$/lb
Source: COCHILCO with National Statistical Institute INE and LME information
CHANGES IN UNEMPLOYMENT AT A LOWER COPPER PRICE
Chilean Copper Commission
7,25,0
-0,3
1,2
5,3
0,82,2
-1,7 -1,5
0,61,4
-2,0-4,3
-2,4
3,9
6,3
3,7
12,0
-3,1
-8,2
1,6
-7,1
9,1
12,0
18,5
1,5
-9,2
1,1
17,4 16,7
7,8
1,7
-15
-10
-5
0
5
10
15
20
nde
14
def 1
5
efm
15
fma
15
mam
15
amj 1
5
mjj
15
jja 1
5
jas 1
5
aso
15
son
15
ond
15
nde
15
def 1
6
efm
16
fma
16
Cesantes país (%) Cesantes minería (%)Unemployed country (%) Unemployed mining (%)
% Annual variation (%)
Source: COCHILCO with National Statistical Institute INE and LME information
WHAT ARE WE DOING? CREATING VALUE4
Chilean Copper Commission
NATIONAL COMMISSION ON PRODUCTIVITY
Chilean Copper Commission
020406080
100120140
USA
Mex
ico
Peru
Swed
en
Cana
da
Chile
Aust
ralia
Wor
ld
Zam
bia
Cong
o DR
Chin
a
Indo
nesia
Pola
nd
Russ
ia
EXTRACTED TON / WORKER
2000 2005 2010 2015
Source: Wood Mackenzie
CHILEAN EXTRACTED TON/WORKER
NATIONAL COMMISSION ON PRODUCTIVITY
Chilean Copper Commission
Permanent Independent and
autonomousTransversal Technical
capacityParticipative
COSTS CONTROL
Chilean Copper Commission
Sulfuric acid3%
Concentrates freight
3%Fuels4%
Electric power
9%
Depreciation15%
Materials17%
Salaries own and
contractors 21%
Other services and
expenses28%
89 105 134174 149 170
209 220 218 216 225
206
345375
340286
380410
381346
318
247
050
100150200250300350400450
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
cUS$
/lb C
u pa
yabl
e
Unit cost Unit sales
COMPOSITION OF THE OPERATINGCOST AVERAGE 2005-2015
Source: COCHILCO
COCHILCO´S COSTS OBSERVATORY ON COPPER MINING
Chilean Copper Commission
Quarterly monitoring Cash Cost
Public information, specialized databases and proprietary information Cochilco
Modeling of the main elements of Cash Cost
Aggregated results
Quarterly results publication
Source: COCHILCO
PROVIDER DEVELOPMENT– ROADMAP 2015 - 2035
Chilean Copper Commission
CHALLENGES
TAILINGS SMELTER AND
REFINERY
MINING OPERATIONS
AND PLANNING
CONCENTRATION OF MINERALS
HIDRO
PROVIDER DEVELOPMENT– ROADMAP 2015 - 2035
Chilean Copper Commission
1.Facing the increasing scarcity of water andsurface.
2.Minimize the impact of infiltrations and ensurethe stability of deposits.
3.Promoting from a passive to an activeconversion.
4.Promote inclusion and community acceptance.
TAILINGS
PROVIDER DEVELOPMENT– ROADMAP 2015 - 2035
Chilean Copper Commission
SMELTER AND
REFINERY
1.Increase the efficiency of smelting and refiningprocesses.
2. Reduce environmental impact.
3. Improve working conditions.
PROVIDER DEVELOPMENT– ROADMAP 2015 - 2035
Chilean Copper Commission
MINING OPERATIONS
AND PLANNING
1.Increased productivity.
2.Increased resources and mineralreserves.
3.Environmental care and socialresponsibility.
4.Increased safety and quality in theworkplace.
PROVIDER DEVELOPMENT– ROADMAP 2015 - 2035
Chilean Copper Commission
CONCENTRATION OF MINERALS
1.Increased productivity.
2.increased resources and mineralreserves.
PROVIDER DEVELOPMENT– ROADMAP 2015 - 2035
Chilean Copper Commission
1.Environmental care and socialresponsibility.
2.Increased productivity.
3.Increased resources and mineral reserves.
HIDRO
CONCLUSIONS05
Chilean Copper Commission
CONCLUSIONS
• Mining remains as the main economic activity in Chile despite the fall in the
commodities prices.
• Chile remains as the main cooper producer in the world; nevertheless, its
participation is declining.
• The end of the Super cycle impacted the Chilean economy, reducing tax revenues,
labor and investing portfolio.
• Chile is working in enhancing the Mining performance, reducing costs and
increasing productivity.
• The national mining program has developed an strategy to increase added value
in the mining process, and to providers too.
Chilean Copper Commission
Logo Gobierno: 160x162px. Ministerio, Subsecretaría, Organismo, etc.:160x145px
THE CHILEAN MINING INDUSTRY
Jorge CantalloptsDirector of Research and Policy Planning
Chilean Copper Commission
Brussels 28-29 June, 2016