Investing in Barranquilla s Metals Industry. Investing in Barranquilla s Metal Industry.

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1 Reasons to Invest in the State of Atlántico Metalmechanics. 2015

2 Investing in Barranquilla s Metals Industry Investing in Barranquilla s Metal Industry Our experience facilitating the investments of companies such as CSP Steel and Austin engineering into Barranquilla, allowed us to realise Barranquilla s true advantages; the city characterizes for having a tactical location for companies of this sector. In both cases they found in Barranquilla a package, in which location is highlighted. According to CSP, their geostrategic hub with access to three major ports along the Atlantic Coast, in conjunction with Colombia's multiple bi-lateral and multilateral free-trade agreements (FTA) are the key to reach new markets and be competitive.

3 Investing in Barranquilla s Metals Industry Why Barranquilla? Market Opportunities Metals has growing market opportunities because this sector is the principal supplier for the Construction, Mining and Shipyard sectors, these, have had an important growth in the past years in the caribbean region. Existing Capacities At this moment the metals Industry is represented in Atlantico by over 400 companies, including small and distinguished ones like Thysenkrupp, Sigmasteel, Norton, polyuprotec Ternium-Ferrasa Industry Support The government has generated several initiatives to strengthen the shipyard sector, including shipbuilding as a potential world-class sector in Colombia vision 2032

4 Investing in Barranquilla s Metal Industry Contents Competitive Positioning Connectivity Talent Utilities Industrial Sites Promising Investment Market Oppotunities Barranquilla, a hub for minning industry providers Barranquilla, a robust cluster for metallic structures and building materials Industry Support

5 Competitive Positioning 8

6 Competitive positioning - Connectivity Barranquilla strategically located to reach international markets Thanks to its sea, river, air and land connectivity, Barranquilla is at the logistic heart of the Caribbean, offering connectivity to a lucrative market of million consumers in Central America, USA, Canada, the European Union and the 50 countries with which Colombia has trade agreements. La Habana Miami Kingston Rio Haida San Juan From Barranquilla, companies have the opportunity to use alternative port terminals of other 2 important cities in the Coast: Cartagena and Santa Marta 2 hours away from the city. Puerto Limón Puerto Colón Barranquilla Cartagena Santa Marta Puerto Cabello

7 Competitive positioning - Connectivity while being well-connected to domestic markets. The city has a terrestrial infrastructure that easily connects the industrial areas of the State of Atlántico with the national road network. The National Government is currently investing in infrastructure for optimizing the priority port corridors between Barranquilla and Cartagena, Barranquilla and Ciénaga and Autopista Ruta del Sol, connecting the Caribbean coast and the center of the country. US $1 million will be invested to ensure full navigability of the Magdalena River through its 1,092 km journey. The ultimate goal is that the river become the major arterie for the movement of cargo by % reduction in transportation cost Cost-effective solutions to transport cargo domestically by river/land.

8 Competitive positioning Specialist metal terminals in the region. The largest multipurpose port in the Colombian Caribbean region. It mobilizes all types of cargo, such as containers, liquid and solid bulk, general cargo and coke. They have a linear dock of 1058 meters with a 36 foot authorized depth and an additional 550 meters to the boats. 60% of Barranquilla metal load coming through this port. It is the number one in steel handling in Colombia, accumulating 40% of total traffic Within its wide range of services, there are: maritime and fluvial services, port services, maritime and terrestrial operation services, and a logistics center for trucks. Its infrastructure include a Free Trade Zone and an Industrial & Petrochemical Park where they handle all type of cargo: Project Cargo, Containers, Pallets, Isotanks, Vehicles & Tubing.

9 Competitive positioning Talent Barranquilla has a pool of relevant and competitive talent. Recovery from OLE, (09/2014) PHD in Mechanical engineering PHD in Industrial engineering Graduates in engineering 2012 in Atlántico 63% Belong to mechanical, industrial, electrical, mining and civil engineering SENA Atlantico has two specialties, metalworking and automation. It is also chosen as the core center for the metalworking 241 industry and its has secretariat at the national level % Of all the technicians and technologists graduates between 2011 and 2012 in the Atlantico graduated in areas related to Metalworking.

10 Graduados en ATL Atlántico s participation in the región graduates and other state s reception Total: Atlántico (5.02%) Salary: $ COL Guajira Recep. 19.2% Salary $ (2.66%) (1.12%) Magdalena Recep. 13.2% Salary $ Bolívar Recep. 9.01% Salary $ Cesar Recep. 8.94% Salary $ Fuente: Observatorio Nacional Laboral. Ministerio de Educación Nacio

11 Competitive positioning Utilities Electricity 0,16 0,14 0,12 0,10 0,08 0,06 0,04 0,02 0,00 Value per Kw USD 2013 Electrical Substation

12 Power generation with natural gas 71% of non-regulated customers (heavy users), successfully self-generate electricity used in their plants. For consumption greater than 300,000 m3 per month (self-generation projects exceed this consumption) rate in USD is $ / m3. Generation of energy with natural gas is better for the environment, and cheaper than coal investments. Some cases of generation with natural gas: 0,60 0,50 0,40 0,30 0,20 0,10 0,00 Natural Gas per cubic meter USD 2013

13 Competitive positioning Utilities Water & Sewage 1,40 Value per cubic meter USD 1,20 1,00 0,80 0,60 0,40 0,20 0,00 Barranquilla Bogotá Cali Cartagena Medellín

14 Competitive positioning Industrial sites Available sites Free Trade Zones

15 M2 AVAILABLE PRICE Land m2 Sale price: USD 55 LANDS Industrial Park m2 Sale price: USD 206 Free Trade Zone m2 Sale price: USD 234,5 Warehouses m2 Sale price: USD 43,4 Rent price: USD 5,7 WAREHOUSES Industrial Park A: m2 Sale price: USD 925 Rent price: USD 7,32 B: m2 Rent price: USD 6,42 Free Trade Zone m2 Rent price: USD 8,1

16 Competitive positioning Industrial sites Location of current companies 1. Triple-S Steel 2. Polyuprotec 3. CSP Tubo 360 Corpacero Inducol Procables Barranquilla s Free trade Zone 18 companies of the sector Drilling Structures Comdistral Casaval 1 Zona Franca La Cayena Free Autofax Norton Steel pipe Sigma Steel IGP Pimsa 7 metals companies 3 2 Acesco Ternium Thyssenkrupp

17 Market Oportunitties 21

18 Market opportunities Barranquilla s Metals Industry 42% of the imports in the state of Atlántico belong to metals sector Second largest exporter of the department after the chemicals sector Most imported products Steel Products Tons Steel Coils Wire Rod Steel Plates Rods Bars Profiles

19 Market opportunities Local Market Barranquilla is located in the center of the 23% of Colombian population. The project to recover the Magdalena River s Navigability is currently stimulating new ports and companies to locate in Barranquilla in order to attend national and international markets. Currently the main products imported by the industry are Steel Coils, Wire Rod and Steel plates. National Market The national policy of promoting the mining sector and our proximity to Guajira represents an opportunity for companies that provide goods, services or equipment to this sector. Companies like Liebherr and Komatzu. Barranquilla and Cartagena 2013 were the second and third cities in the country with the major growth in construction.

20 Northern Region of Colombia Bolívar Magdalena Cesar Atlántico Sucre Córdoba GDP USD 62M Twice the size of Panamá Three times the size of El Salvador Six times the size of Nucaragua 23% of colombian population

21 Promising Investment 25

22 Promising Investment Opportunities Recent Investment in Barranquilla in the metal sector. Some of the most representative multinationals have discovered the benefits of investing in Barranquilla and the state of Atlántico. Since the year 2008, the region has received over USD$ 256 million from companies such as SigmaSteel, Norton, Triple S, among others and they are also responsible for employing 980 people. Thanks to the positive dynamic of the sector, the program of productive transformation (PTP- Programa de transformación productiva) is working with the principal actors in the chain of value, including providers, manufacturers, distributors and consumers.

23 Market opportunities Barranquilla A hub as provider for the mining industry Nacional Coal Mining State Guajira Cesar Guajira and Cesar s total Coal Located in the center of the country Units: Thousands of metric tonnes Boyaca, Cundinamarca, Norte Santander, other states Total Participation of the Caribean Region on the national coal mining: 92% Source: Ingeominas/ SIMCO

24 American company dedicated to the production and processing of steel tubing, specializing in standard pipe, conduit and structural products. Its products are used in the oil and gas, energy, construction, infrastructure, telecommunications, and other sectors. They have their plant located in Malambo since 2013 to distribute to different markets, specially USA. American company that has over 40 years of experience in the oil an gas industry. They produce rig components, large-scale industrial materials and updates existing rigs. DSII specializes in rig inspection, maintenance, installation, and repair services. They are located in Barranquilla s Free Trade Zone, to export to USA. Australian company with presence in the United States, South America and the Middle East, responsible for the manufacture of excavators, loaders and other assembly parts for industrial machinery. The company is located in Malambo since 2012 in order to meet the high demand of the mining industry in Colombia GECOLSA was born as General Electric de Colombia SA, and from that time until now is the only authorized Caterpillar dealer in Colombia. in 1986 he became General Equipment Colombia SA, the Colombian company national coverage.

25 We chose the metropolitan area of Barranquilla because we consider it the industrial city in which we must be to meet the large mining industry in Colombia because many of our customers are set in the departments of La Guajira and Cesar, but are also developing very large projects of coal and metal mining in other departments of Colombia " Omar Abril General Manager, Industrial Machinery and Equipment, Komatsu

26 A robust cluster of metallic structures & building materials Building Sector Colombia s growth 6,38% Caribbean region s growth 37,8% Jan Jul 2013 vs 2014 State Variation Atlántico ,68% Bolivar ,96% Antioquia ,72% Total Colombia ,38% Cundinamarca ,13% Santander ,64% Valle ,78% Source: Camacol Regarding the main departments, Atlantico is the one with the largest increase in the number of square meters granted, an increase of 52.68%. The main sectors that mark this increase is housing construction sector (representing 69%) and VIS (19%), followed by Hospitality sector (3.8%) and Commerce (3, 4%).

27 ThyssenKrupp is a German steel industry dedicated to the foundry and steel forging. ThyssenKrupp has around 160,000 employees in nearly 80 countries working with expertise to develop technologies, products and services for sustainable progress. The company is located in Malambo since 2007 Colombian company dedicated to steel processing. Some of their products are steel sheets, roofing and structural products, among others, for construction and industry. In 2013 the closed the plant located in the center of the country to concentrate all their production in Barranquilla Colombian company that manufactures beams, structural tubing, profiles, angles, tiles and road defenses, among other products, they are located in Juan Mina since 2009, where the plant has 12 production lines. They are located in Barranquilla to attend projects like Cartagena Refinery and infrastructure projects. Ternium is an Argentinean manufacturer dedicated to the production of flat and long steel with over 50 years experience, it belongs to the group Techint. It is located in Malambo and has over 280 employees.

28 Industry Support Source: Fundesarrollo 32

29 Relevant institutions

30 Research and Development Corporación Universitaria de la Costa - CUC: Land and structures Universidad Autónoma del Caribe: Materials, Processes and Manufacturing Technologies INTEF Universidad del Atlántico: Group of Simulation and Process Control Universidad del Norte: Materials, Processes and Designs, Productivity and Competitiveness, Rational Use of Energy and Environment Preservation, Research Group Trasnporte TRANVIA, Computer Networks and Software Engineering, Institutes of Water and Environmental Studies, Robotics and Intelligent Systems, Gas Thermodynamics, Research Group Structures and Geotechnics, Electrical Power Systems

31 Tax exemptions Municipality Benefits Jobs generated Time of exemption Yearly exemption behaviour. Barranquilla New industrial companies 40 permanent jobs. 5 years 100%: first two years 75%: third year 50%: fourth and fifth year Galapa Industrial, commercial or service companies 60% of employess should be from Galapa and the 40% remaining should be employed for over 10 months. 10 years 100%: first 2 years 80%: third and fourth year 60%: fifth and sixth year 40%: seventh and eighth 20%: nineth and tenth Malambo Industrial, commercial or service companies 60% should be residents of Malambo. 10 years 100% Sabanagrande New companies 40% of the labor force should live in Sabanagrande. 10 years 100% Soledad Industrial, commercial or service companies 25 permament jobs 5 years 100%: first two years 75%: third year 50%: fourth and fifth year Juan Mina Relocations or new industrial or commercial companies N/A 10 years 100%

32 A robust network of suppliers and service prodivers. Preparation Establishment Operation ProBarranquilla Financing/ Banks Law Firms Universities Talent recruitment (Manpower, Addecco, SENA) Security Engineering consulting Construction Utilities (Electricaribe, Gases del Caribe, Triple A) Logistics (shipping lines/specialist logistics)

33 How can we help? 37

34 Alvaro Marrugo Investment advisor ProBarranquilla