Mining in Chile

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Latam is a major supplier of metals worldwide

Commodity

Chile Perú Brasil Mexico

Copper 1 2 4 3

Silver 3 2 4 1

Gold 4 1 3 2

Chile accounts for:• 33 % of world Copper Production, and +30%of world copper

reserves. • #1 world producer of molybdenus, Lodine, Lithium, and natural

nitrates; • 15% of gold and 3% of silver.

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Chilean Market• Chile is the best evaluated economy in Latin America and, indeed, one of the

best evaluated among emerging economies worldwide• Favorable investing environment:

• According to the Business Environment Rankings of the Economist Intelligence Unit (EIU), Chile is one of the 20 most attractive economies in which to do business between 2010 and 2014 and leads Latin America in this field.

• Santiago had the 8th cheapest rents out of the main 15 Latin American capitals (average US$36.41 per year per square foot)

• The Chilean business/commercial positive background is built and strengthen by a transparent and protective legal framework; stable economic fundamentals; safe and pleasant living conditions; low costs of opening business starting a business.

• Australian companies have found Chile to have positive conditions for employing workers, enforcing contracts, getting credit, closing a business, registering property, protecting investors, dealing with licenses, paying taxes and trading across borders

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Chilean Mining Industry• Mining activity accounts for 60 % of 2011’s exports and 12 % of the

GDP• Chile contributes with 33 % of world copper production, and +30% of

world’s copper reserves.• Major producer of Lithium, Iodine and Rhenium, gold, silver and

molybdenum. • Mostly hard rock mining and open cut operations, but operations are

moving strong into underground mining• Highly competitive market, World's best technologies and companies

are here.• Strong growing production rates and investment in the pipeline• Planned Investment in Chilean copper and gold mining is expected

to exceed US$100 billion for 2020. One driver for investment is the Exhaustion of deposits and declining ore grades

• Industry is forecasting a gap of 45,000 new professionals by 2020 in order to fulfil projected growth and investment needs

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Chilean Mining Industry• Safety in mining :Major mines have global highest industry

standards. chances of having an accident in are lower than banking industry. Always important and opened fro new solutions.

• Mine closure and remediation is an opening area of opportunity. Recently regulated (2012) and being a requirement for approval of new projects, it opened a whole new area of business.

• Key Market entry actions/opportunities: Participate at Expomin (Santiago) and or Exponor (Antofagasta) mining shows, and Austrade’s business program around those.

• Environmental issues increasingly important: Water management is critical and several technologies and actions are been undertaken (desal plants, other recovery technologies)

• Community relations is increasingly important and has stoped important investments.

Size of Chilean Copper Mines and theirshare of World Production

0

1,000

2,000

3,000

4,000

Small

0-140

Medium

140-400

Large

>400

Mine size (annual production 2005)

MT

tho

usa

nd

Rest of the World Chile

62%33%21%

Source: Brook Hunt

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Chile’s Main Copper Mines

Source: Cochilco

Region I:CollahuasiCerro ColoradoQuebrada Blanca

Region II:EscondidaSpenceChuquicamataRadomiro TomicEl AbraMantos BlancosLomas BayasMichillaEl TesoroZaldívarEsperanza ProjectGaby Project

Region III:CandelariaSalvadorOjos del SaladoRegalito

Region IV:Los PelambresAndacollo

Region V:AndinaEl Soldado

Metropolitan Region:Los Bronces

Region VI:El Teniente

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Major considerations to doing business in this industry:

• Understanding the Mine companies structure (projects, procurement, site vs. HQ, final users), and developing the right contacts and network (allies, industry bodies, potential partners)

• Management and key decision makers change too often, and suppliers have to be up to date with their “key clients”, be highly responsive (if not pro-active) to clients demands.

• Be ready to present your business contribution (innovative solution, costs), and adjust to time and resources constraints from procurement departments.

• As a highly competitive market all brands/products of the world can be found in the market. Procurement managers at big mining companies are looking for “Business relationships” with their suppliers instead of just sending brochures by e-mail and doing one off sales. This is specially critical once initial deals have been done.

• Setting operations in Chile gives a much better perception to the local business community/industry, and sets the ground for more business.

• Although is friendly and business oriented culture, there are language and cultural differences.• Perception of distance and cost, and lack of local presence to support 24/7 the mine

operations needs.• Mines often in remote locations/altitude. How to service?• Tremendous shortage of labour (particularly technical)• Chile is looking for suppliers that can create a local capacity in the Mining Cluster located in

the North of Chile. This strategy is supported co-led by BHP Base Metals and Codelco.

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Positives• US$100 billion valued pipeline of new projects and expansions in

mining 2012-2020.• Hungry for best practice and new solutions.• Australia is well recognized and positioned as a source for

innovation and smart solutions in the industry.• Limited domestic industry issues.• 1 month timeframe to have a company up and running.• Can build a local team confidently.• Favorable geography: Short distances from sea shores to Andes

Mountains, from cities (Antofagasta, Iquique, Copiapo) to mine sites.

• According to the World Bank “Doing business 2012” report, Chile is the easiest Latin American economy in which to do business.

• Efficient transport and communications services and world-class seaport, airport and logistics infrastructure.

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What can Austrade do to help?

• Organised market visit – meet who you need to know• Network of referrals to lawyers, accountants, interpreters

and translators• Assistance with government liaison in market• Network with Australian mining companies and

suppliers/engineering firms• Participate in our Australian pavilions• Join the linkedin group