Business Opportunities: Chilean Mining Industry Carlos F. Capurro Senior Commercial Advisor U.S. Commercial Service Santiago, Chile Image courtesy NASA GSFC, MITI, ERSDAC, JAROS, and U.S./Japan ASTER Science Team

Chile?

Geography 2,600 miles long Just 100 miles wide (average) Diverse climate and geography Opposite seasons from the U.S.A. Isolated by mountains, desert and sea 16 million population Principal city and capital - Santiago

Brief History Spanish Colony 1541 – 1810 Socialists take power 1970 Military coup 1973 “Chicago Boys” take charge Open economy begins to grow Structural changes Democratic elections in 1989

Chile Today President Michelle Bachelet took office March 11, 2006 ( ) “Concertacion” Coalition Socialists Party for Democracy Christian Democrats Broad Consensus – No Change Open Economy – Free Market Democratic Institutions

Why Chile?

Sustained Economic Growth

Unemployment Level Source: Banco Central de Chile

Price Stability Annual Inflation (%)

Free Trade Agreements Steady economic growth Prudent fiscal policies Stable democratic government Solid business practices Rule of law Business - Why Chile?

U.S.-Chile Trade Agreement 95% + of bilateral trade in goods duty-free 75% + of U.S. farm goods duty-free by 2008 Stronger protection of intellectual property rights (IPR) Open and fair government procurement Commitments on labor rights and environmental protection Visit our U.S. Exporters Guide to the US – Chile FTA at Effective January 2004

U.S.-Chile Trade Merchandise/Goods (In US$ Billion)

Construction Computer Hardware / Software & Services Electric Power Equipment Environmental Technologies & Services Financial Services Food Processing & Packaging Equipment Best Prospects for U.S. Exports

Best Prospects (cont.) Medical Equipment & Healthcare Mining Equipment Plastics Machinery & Materials Security Equipment & Safety Telecommunications Equipment & Services Travel & Tourism

Market Overview U.S. Position Competitors Commercial Opportunities Other Resources Mining Industry Overview

Market Overview Mining explains 7.8% of Chile’s GDP and 66% of the nation’s overall exports in Chile is the world’s number one producer of: –Copper 37.5% –Molybdenum 28.1% –Sodium & Potassium Nitrate 100% –Lithium 42% –Iodine 55%

Chile is also a large producer of: –Borates (9.9%) –Silver (7.3 %) –Gold (1.8 %) –Rhenium And produces substantial amounts of gold and silver Market Overview

130 Mining companies (5.7 million tons) –18 companies produce 70% 275 supplying companies –APRIMIN: 50 companies – Selling US$ 3.5 billion (47% imp.) 1,800 reps/distributors –2,500 products & services Market Size Market Overview

Expects to average annual growth of 6% from Projected investments exceeding US $15 billion Foreign investment has been the key: $21 billion or 33% of all foreign investment. Market Overview

Foreign Direct Investment in Mining ($21.1 billion ) Source: Chilean Foreign Investment Committee Market Overview

Chile: Mining Imports Source: COCHILCO, based upon Chilean Customs Data (Sept. 2007) Market Overview Billion

Market Share by Main Supplying Countries Source: COCHILCO, based upon Chilean Customs Data (Sept. 2007) Market Overview U.S.-Chile FTA

Competing Mining Suppliers Market Share by Country (2007) Source: Chilean Customs Data

Copper Prices January 1998 – 2008 ($ cents/lb) Source: Chilean Copper Commission – COCHILCO ( Feb 22, 2008  $ 378 cents /lb

New Copper Mining Projects ( ) Source: COCHILCO: Based on companies press releases and own data compilation

How this translates into real business? 2005: $ 2.9 billion Operational Expenses

–Cranes –Screening machines –Environmental system solutions (water treatment, air pollution/dust abatement, mine closures) –Underground mining technology services –Wear-resistant materials Source: Revista Minería Chilena, Ministry of Mining, El Mercurio, Diario Financiero –Off-road trucks ( tons) –Scoop shovels –Giant tires –Crushers –Grinders –Cabbed truck chassis (+ 50 tons) –Part for rock cutters –Excavators Capital Goods Demand How to translate all this into real business?

2005: $ 1.7 billion Imports

How this translates into real business? Source: COCHILCO, Dec : 5.7 million tons of copper Yearly Demand US$ Million/Year 65 off road load trucks$ giant front loaders$74 Drilling and underground transportation equipment $22 24,800 tons Explosives$16 24 LHD$ Tires$ : 6.5 million tons of copper

Electronic Purchasing Systems Quadrem  CODELCO  Chile Compras  SICEP  How to translate all this into real business?

A Must EXPONOR EXPONOR Antofagasta, June, EXPOMIN EXPOMIN Santiago, May

Need Help? Count on Us! U.S. Commercial Service Carlos F. Tel: Fax: Andres Bello 2800, Las Condes, Santiago Chile

Looking forward to see you soon in Chile Many thanks for you kind attention