Mining Investment and Mining Business in Chile. Eduardo Titelman Chilean Copper Commission

Transcription

1 Mining Investment and Mining Business in Chile Eduardo Titelman Chilean Copper Commission JOGMEC, Tokyo March 6 th, 2007

2 Contents Chile s Mining Sector The Chilean Economy Chile s Attraction to Foreign Investment

3 Chile s Mining Sector

4 Chile in World Mining (Main metals and minerals) (MT=Metric Tons) Product Production 2006 Position in World Ranking of Production Share of World Production (%) Share of World Reserves Forecast 2010 Copper (MT million) % 38% 6,2 Molybdenum (MT thousand) % 13% 52 Silver (MT) 1, % NA 3,250 Gold (MT) % NA 100 Nitrates ( MT Million) 1.3 (*) 1 100% 100% 1,7 Lithium Carbonate (MT thousand) 44(*) % 27% 50 Source: Cochilco and USGS (reserve base) (*) 2005 figures

5 Chile s Main Copper Mines Region I: Collahuasi Cerro Colorado Quebrada Blanca Region III: Candelaria Salvador Ojos del Salado Regalito Project Region IV: Los Pelambres Andacollo Project N E S W Region II: Escondida Spence Chuquicamata Radomiro Tomic El Abra Mantos Blancos Lomas Bayas Michilla El Tesoro Zaldívar Esperanza Project Gaby Project Region V: Andina El Soldado Metropolitan Region: Los Bronces Region VI: El Teniente Source: COCHILCO

6 Size of Chilean Copper Mines and their Share of World Production Rest of the World Chile 4,000 21% 33% 62% 3,000 MT thousand 2,000 1,000 0 Small Medium Large >400 Mine size (annual production 2005) Source: Brook Hunt

7 Large and Modern state-owned company Copper Production in Chile Public/Private Sector % 2010 (est) 32% Thousand MT % 68% Public Sector Private Sector (est) Source: Cochilco

8 250 Investment in Mining Exploration US$ million Source: Metals Economics Group

9 Challenges for Chile s Copper Industry Energy and water Mining cluster Investment, exploration R&D. Sustainable Development

10 The Chilean Economy

11 Key Economic Indicators Unit GDP (current prices) US$ billion GDP growth (constant prices) % Population million GDP per capita (current prices) US$ 7,089 8,500 Inflation % Unemployment % 9,3 8.0 Exports US$ billion Imports US$ billion Mining exports/total exports % Copper exports/total exports % Sources: Central Bank of Chile, Finance Ministry, IMF, National Institute of Statistics (INE)

12 Per Capita Income, (Constant Prices, 1980=100) Source: IMF

13 Socioeconomic Indicators 45% 40% 38.6% 35% 32.6% 30% 25% 27.5% 23.2% % pop. below poverty line income of poorest 50% of pop. 20% 21.7% 20.2% 18.7% 15% 17.6% 18.2% 17.6% 17.3% 17.0% 17.6% 17.7% 10% 5% 0% Source: CASEN survey, Chilean government

14 Human Development Index (HDI) 88% Chile 85,9% 86% 85,4% 84% 84,3% 82% 80% 78% 76% 76,3% 78,5% 81,6% 74% 73,9% 72% 70% 68% 66% Source: UNDP Chile: 38/177

15 Human Development Index 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 91,2% 96,5% 78,7% 85,9% 79,3% 84,1% 7,2% 5,3% 40,7% 44,8% 4,8% 4,1% Norway Chile Costa Rica Nigeria 8,0% 7,0% 6,0% 5,0% 4,0% 3,0% 2,0% 1,0% 0,0% Growth Source: UNDP

16 Sep.06 Ene.07 May.99 Sep.99 Ene.00 May.00 Sep.00 Ene.01 May.01 Sep.01 Ene.02 May.02 Sep.02 Ene.03 May.03 Sep.03 Ene.04 May.04 Sep.04 Ene.05 May.05 Sep.05 Ene.06 May Spread Sovereign Bonds (basic points) Source: : Central Bank of Chile Global Chile Latin America Asia Europe 81 b.p.

17 Chile s Attraction to Foreign Investment

18 Source: Foreign Investment Committee less Civic Safety Friendly towards Foreign Investment Open Economy Good Infrastructure Qualified labor force in mining Excellent Mining Potential Successful strategy of growth based upon F.I. Friendly Non-discriminatory legal system Stable rules, policies and political system 20 th (20/163) place in Corruption Perception Index 2006 Low crime level compared to other developing countries

19 Chile & Economic Agreements Economic Complementary Agreement: Argentina, Uruguay, Paraguay, Brazil, Venezuela, Bolivia, Colombia, Ecuador y Perú Free Trade Agreement: China, USA, Canada, Japan, South Korea, Mexico, Panama, Costa Rica and El Salvador Partial Scope Agreement: India Economic Partnership Agreement: EU, P4 (New Zealand, Brunei, Singapore and Chile), 2007: Malaysia, Australia, Vietnam, Turkey and India

20 General Tariff in Latin American Countries Uruguay México Brasil Perú Argentina Venezuela Colombia Ecuador Paraguay Bolivia Chile 2005 Source: : WTO

21 Effective Tariff Less Than 2% Evolution Ge ne ral Tariff v/s Effective Tariff (%) 10 9 General Tariff Ef f ective Tariff Ene- 00 Jul- 00 Ene- 01 Jul- 01 Ene- 02 Jul- 02 Ene- 03 Jul- 03 Ene- 04 Jul- 04 Ene- 05 Jul- 05 Source: : Central Bank of Chile

22 Sound Infrastructure Indicator Australia Canada Argentina Brazil Chile Mexico Population (mill. of inh). 20,3 33,1 39,9 188,1 16,4 107,4 Area( mill. of km2) 7,7 10 2,8 8,5 0,8 1,9 Internet users per inh. 0,72 0,66 0,25 0,14 0,42 0,17 Airports (N / mill of inh) 22,4 40,4 34,6 22,7 22,1 17,1 Sea Ports (N / mill of Km2 ) 1,4 0,8 2,9 1,1 10,0 3,7 Phones - main lines in use (lines/ inh.) 0,57 0,55 0,22 0,23 0,21 0,18 Mobille cellulars per inh. Source: World Factbook 0,9 0,5 0,6 0,5 0,7 0,4

23 Foreign Investment Statute (DL-600) Main guarantees: Right to repatriate all capital and earnings Access to the banking system to purchase foreign currency for remittances at market exchange rates Invariable income-tax rate; maximum of 42% (instead of 35%) Right to maintain accounts in US dollars Right to export products freely Source: Foreign Investment Committee

24 Source: Foreign Investment Committee Very Friendly Legal Framework for Foreign Investment in Mining Mining concession property rights guaranteed under the Constitution and granted by law, not the incumbent government. Legal framework: Political Constitution Organic Constitutional Law on Mining Concessions Mining Code

25 Specific Mining Tax Introduced on January 1, 2006 Tax rate of 0% to 5% on operating income from mining (deducted as cost for income tax purposes). Investors able to choose between DL-600 or SMT tax invariability systems. International comparison of tax burden and changes in Fraser Index. Source: Foreign Investment Committee

26 World Copper Reserve Base Poland 5% Reserve Base : 937 million MT Others 23% USA 8% Australia 5% Evolution of Copper Reserves in Chile (MT million ) Peru 6% Mexico 4% Indonesia 4% China 7% Chile 38% Sources: USGS Mineral Commodity Summaries 2007, Sernageomin, Central Bank of Chile Reserves Resources

27 Conymet Chilean Know how in Mining

28 Excellent potential for mining investment Current Mineral Potential, Assuming Current Regulations/Land Use Restrictions (Survey of 64 jurisdictions around the world, published in March 2006) 1 Chile 96 pts. 2 Nevada 3 Mongolia 90 pts. 89 pts. 4 Québec 89 pts. 5 Mali 86 pts. Source: The Fraser Institute Annual Survey of Mining Companies 2005/20062

29 Direct Foreign Investment in Chile Other 22% Mining 32% Communications 11% Financial Services & Insurance 14% Electricity, Gas & Water Supply 21% Source: Foreign Investment Committee Total = US$ 55 billion Mining =US$ 17,5 billion

30 Source: Yahoo Finance (01/07/2005) Source : COCHILCO Large number of foreign-owned companies Ivanhoe Mines Ltd. Antofagasta PLC Falconbridge Southern Peru Copper Freeport-McMoRan Cameco Corp. Phelps Dodge Barrick Gold Corp. New mont Mining Market Capitalization Main Mining Companies Inco Alcan Xstrata Alcoa Rio Tinto (US$ billion) Main Private Copper Companies in Chile Name Escondida Collahuasi Los Pelambres Owners BHP Billiton (57%), RTZ Corp. (Rio Tinto) (30%), JECO (Mitsubishi and others) (10%), IFC (2.5%) Xstrata (44%), Anglo American (44%) Nippon-Mitsui (12%) Antofagasta Minerals (60%), Nippon Mining, Manuberi, Mitsui, Mitsubishi Materials Corp. and Mitsubishi Corp.(40%) Production 2006 (TMT Cu) 1, Sur Andes Anglo American (100%) 295 Candelaria Free Port-Phelps Dodge Corp. (80%), Sumitomo Corp.(20%). 170 El Abra Phelps Dodge (51%), Codelco (49%) 219 Mantos Blancos Anglo American (100%) 152 Zaldívar Placer Dome (100%) 146 Anglo American Vale do Rio Doce BHP Billiton Cerro Colorado Quebrada Blanca BHP Billiton (100%) 116 Aur Resources (76.5%), Inversiones Mineras S.A. (13.5%), Enami (10%) 82

31 Chile-Japan: Copper Mining Nittetsu Mining Mitusubishi Corp Mitsui Nippon Mining Sumitomo Corp. Pan Pacific Marubeni Collahuasi Escondida Candelaria Los Pelambres Japan Copper Concentrate Chile Regalito Project Atakama Kozan Smelters Mining Projects Investment Copper Mines

32 Japan-Chile: Copper Mining Related Business Estimated Investment in Copper Mining in Chile ( ) : US$ Million Potential Business ( ): US$ Mill/yr..supplies US$ 570 Mill/yr... investment goods US$ Mill/yr.services

33 Opportunities for mining related business Energy efficiency and water management New technologies for mining exploration Management software Information and communication technologies (ITC s) Environmental technology Mine closures Modeling, simulation & robotic Designing Logistic Bioleaching

34 The Challenge: Sustainable Development sharing business complementing both economies strengthening friendship between our nations.

35 Mining Investment and Mining Business in Chile Eduardo Titelman Chilean Copper Commission JOGMEC, Tokyo March 6 th, 2007