identification of strategic supplies for leading mining ... · consultancy for the identification...

Identification of Strategic Supplies for Leading Mining Companies in order to Direct the Promotion and Attraction of

Investment

Final Report

Prepared by: Universidad Santa María Empresas S.A.

Client: CORFO

Santiago, September 2009

Consultancy for the Identification of Strategic Supplies for Leading Mining Companies in order to Direct the Promotion and Attraction of Investment

1 Avda Providencia 2331 ∙ Oficina 802 ∙ Providencia Santiago ∙ Chile Teléfono (56) 2 3610426 ∙ Fax (56) 2 3610425 www.usmsa.cl

CONTENTS

Executive Summary ................................................................................... 6 1. Introduction ....................................................................................... 8 2. Aims ................................................................................................... 9

2.1 General aim ..................................................................................... 9

2.2 Specific aims .................................................................................... 9

3. Activities .......................................................................................... 10 3.1 Preparation of interview tools ...................................................... 10

3.2 Interviews .................................................................................... 11

3.3 Identification of goods and services ............................................. 13

3.4 Analysis matrix ............................................................................ 13

3.5 Identification of current and future projects ................................. 14

3.6 Estimation of amounts ................................................................. 14

3.7 Identification of opportunities for suppliers ................................. 14

4. Current figures and projections ........................................................ 16 4.1 Chile as a producer ...................................................................... 16

4.2 Projected copper-mining investment in Chile ............................... 17

4.3 Main projects .............................................................................. 20

4.4 Mining production in Chile........................................................... 22

4.5 Main copper demanders .............................................................. 26

5 Identification of main supplies .......................................................... 29 5.1 Identification of main supplies ..................................................... 29

6 Demand for strategic supplies .......................................................... 34 6.1 Matrix of strategic supply analysis ............................................... 34

6.2 Strategic supplies ........................................................................ 35

b) Tyres ........................................................................................ 48

c) Explosives ................................................................................ 49

6.3 Regional market .......................................................................... 50



7 Critical supplies for mining ............................................................... 51 8 Potentially successful cases .............................................................. 55 9 Strategies for attraction .................................................................... 58 10 Concluding remarks .......................................................................... 64 Bibliography ........................................................................................... 65 Annexes ................................................................................................. 67

Annex 1. Websites. Suppliers ............................................................... 67

Annex 2. State of mining investment projects ....................................... 69

Annex 3. Methodology for estimating amounts for supplies ................. 70

Annex 4. Relevant mining supplies ....................................................... 76

Annex 5. Value chain in the mining industry......................................... 77



INDEX OF FIGURES Figure 1: Impact of the mining industry on the economy ........................... 8Figure 2: Study methodology ................................................................... 10Figure 3: Major copper-producing countries ............................................ 16Figure 4: Major copper-producing countries ............................................ 17Figure 5: Trend in copper grade in Chile .................................................. 18Figure 6: Major copper-producing countries ............................................ 19Figure 7: Major mining projects ............................................................... 20Figure 8: Copper-mine production in Chile .............................................. 23Figure 9: Breakdown of copper production .............................................. 24Figure 10: Copper-refining capacity ........................................................ 26Figure 11: Main consumers of copper ...................................................... 27Figure 12: Main export destinations ........................................................ 28Figure 13: Breakdown of supplies by consumption .................................. 29Figure 14: Main chemical reagents .......................................................... 30Figure 15: Main chemical reagents .......................................................... 31Figure 16: Main chemical reagents .......................................................... 32Figure 17: Main mining inputs ................................................................. 33Figure 18: Main mining equipment .......................................................... 33Figure 19: Categorisation of strategic supplies ........................................ 35Figure 20: Electricity consumption ........................................................... 36Figure 21: Cost of electricity ................................................................... 38Figure 22: Annual fuel consumption ........................................................ 39Figure 23: Fuels used in mining .............................................................. 39Figure 24: Projected energy costs ............................................................ 40Figure 25: Mineral to be processed .......................................................... 42Figure 26: Projection of hydrometallurgy reagents ................................... 43Figure 27: Projected expenditure on reagents for flotation ...................... 44Figure 28: Projected steel consumption ................................................... 45Figure 29: Projected material to be removed ............................................ 46Figure 30: Projected mining-truck fleet ................................................... 47Figure 31: Projected demand for mining equipment ................................ 48Figure 32: Projected demand for tyres ..................................................... 49



Figure 33: Projected consumption of explosives ...................................... 50Figure 34: Critical supplies for mining ..................................................... 51Figure 35: Criticality in the haulage of ore and intermediate material ....... 52Figure 36: Critical supplies in crushing and grinding ............................... 52Figure 37: Critical supplies in the flotation process .................................. 53Figure 38: Critical aspects of personnel at sites ....................................... 53Figure 39: Critical aspects in prospecting and operation .......................... 54Figure 40: Number of suppliers with a local presence .............................. 54Figure 41: Representation of the effect of treatment on the material ........ 56Figure 42: SWOT analysis to attract investment ........................................ 58Figure 43: Aims, targets and monitoring indicators ................................. 60Figure 44: Methodology for estimating demand ....................................... 70Figure 45: Main supplies identified preliminarily ...................................... 76Figure 46: Value chain of the mining industry .......................................... 77



INDEX OF TABLES Table 1: List of high-priority contacts ..................................................... 11Table 2: List of medium-priority contacts ................................................ 12Table 3: List of back-up contacts ............................................................ 12Table 4: Breakdown of generation fuel .................................................... 37Table 5: Unit hydrometallurgy reagent consumption ................................ 42Table 6: Flotation unit consumption ........................................................ 44Table 7: Unit consumption of steel balls and steel plate ........................... 45Table 8: Truck performance .................................................................... 47Table 9: Shovel loader performance ......................................................... 48Table 10: Projected supply market .......................................................... 50Table 11: Breakdown of mining projects .................................................. 69Table 12: Projected production ............................................................... 71Table 13: Copper grade in mining operations in the country .................... 71Table 14: Mineral and material to be removed ......................................... 72Table 15: Energy consumption ................................................................ 73Table 16: Reagent consumption .............................................................. 73Table 17: Steel consumption ................................................................... 74Table 18 Demand for mining equipment ................................................. 75Table 19: Tyre and explosive consumption .............................................. 75



Executive Summary Future investment in mining projects amounts to almost US$33 billion. Some projects seek to further operations with a very low copper grade. This means that their operating costs do not promote their competitive positions, placing them in a life or death situation. Other projects seek to strengthen their position in order to gain a foothold as producers in a country that contributes approximately 35% of the copper produced worldwide. For current and future projects, suppliers are necessary to deliver services, supplies and goods at cost conditions that will ensure the competitiveness of the mining industry in Chile. This report concludes that supplies, goods and services are not served locally in the country, including applied robotics, innovations in mining equipment, innovations in inputs, water management, monitoring of slopes and inbound logistics services. Others have suppliers that operate in markets with the characteristics of a monopoly, which does not help when it comes to operating with competitive costs either. Critical mining supplies with an impact on various processes were identified; for example, thermal energy, tyres, maintenance and operational services are relevant and influential supplies for the transportation of minerals. Likewise, steel balls, maintenance services and water are crucial for grinding and crushing. Mining companies have been observed to be vigilant in their search for options to improve positions, attracting suppliers on their own. It is a condition to build strategic alliances with very aggressive actions, although these have not yet yielded the desired results. The country's name serves to attract investors and to develop mining in neighbouring countries, thus expanding the market on which suppliers can offer their goods, inputs and services. However, Chile's political, economic and administrative stability does not extend consistently beyond its borders, leading to decisions to postpone local operations.



One aspect that has been gaining momentum in the mining industry is the focus on core business, leaving non-strategic aspects to third parties. This means that mining companies no longer seek a product or a good. They are searching for comprehensive solutions that can guarantee availability. And they are prepared to pay for it. Another important issue pointed out by a representative of one of the companies interviewed is the intention of breaking the paradigm of working only with big suppliers. In the future, they may be willing to back small businesses that deliver solutions and to adopt the model of certain Australian companies that generate spin-offs operating under the auspices of the mining company until they can run the operations by themselves. CORFO is working proactively with specific actions such as the mining forum held in October 2009. This included the participation of suppliers from various countries who were shown the projects for mining industry investment over the coming years. At the same time, the strengthening of existing instruments to support investment attraction should continue to allow for easier decision-making with regard to potential suppliers.



1. Introduction Investments add dynamism to a country's economy, generating benefits in all areas, increasing employment and technological inputs, improving management and creating the conditions for personal development. The mining industry is a rich source of national opportunities (Figure 1). Therefore, in an attempt to maintain the country's favourable competitive position in international markets, it would be convenient to strengthen access to new markets, making it essential to further regional potential. It is necessary, then, to identify the potential commercial and business activities that could strengthen Chile's current position.

Figure 1: Impact of the mining industry on the economy Source: Authors.

Hence, this sector emerges as one of the most crucial for the country's development. Furthermore, the identification of strategic supplies for the sector, as part of the bid to promote and attract foreign investors, is equally relevant. As a result, Universidad Santa María Empresas S.A. has undertaken the project set out in this report using the background information obtained during the study, indicating the necessary guidelines for this national industry.



2. Aims The aims of the project are formulated within the provisions of the tender and are as follows.

2.1 General aim Identify the strategic supplies of leading mining companies for investment projects and operation purchases, and their current suppliers, in order to devise strategies to attract potential investment in Chile.

2.2 Specific aims • Draw up a register of the key inputs and services of the main copper mining

projects in Chile related to mine operation and new investment, the costs of which are expected to rise and thus pose a threat to the global competitiveness of this activity.

• Identify the structure and current tender conditions, type of threat faced and

potential areas of mitigation for each critical input and service.

• Select cases in which enhanced competitiveness is associated with the direct presence in the local market of global manufacturers or suppliers of inputs or services, including those whose presence in Chile could be improved.

• Propose guidelines for a strategy to promote and attract investment to begin

operations in Chile.



3. Activities Under the terms of the technical proposal presented to CORFO by Universidad Santa María Empresas S.A., the following activities were conducted, based on the methodological line shown in the figure below:

Figure 2: Study methodology Source: Authors

3.1 Preparation of interview tools The team identified the key concepts to address and the guidelines for conducting the semi-structured interviews. A form-type annex was designed, together with a form for recording more specific information and figures. These documents were presented to and validated by CORFO before the interviews commenced.



Prioridad Empresa EncuestadoCodelco Fernando MarchantRegic Daniel BarredaSicep Álvaro TapiaQuadrem Iván BragaMEL Marcelo OcampoCesco Juan Carlos GuajardoCollahuasi José Cifuentes (Santiago)Anglo American (Santiago) Juan Alberto RuizBarrick Carlos LobatónEnap William MontesSoquimich Rodrigo CopanoAltonorte (Xstrata) Julio AgurtoBHP Billiton Ricardo ReyesCodelco Teniente Héctor SotoEsperanza Alejandro TreuerMantos de Oro Pablo VillarroelAnglo American (Los Bronces) Eduardo González

Alta

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3.2 Interviews A list was drawn up for the interviews containing the figures of reference in the mining industry. The names were classified into three groups based on the impact of their contribution to the project results. As above, these lists were checked and validated by CORFO prior to contact. High priority The most relevant names to the project and representatives of the country's leading mining operations were defined as high priority. This list contains 17 people directly linked to mining supplies and constitutes the basis of the sampling.

Table 1: List of high-priority contacts Source: Prepared by USM S.A.



Prioridad Empresa EncuestadoCodelco Alex CaqueoCodelco Norte Nallib JodorCollahuasi Giancarlo BrunoBHP Australia Cristhian AllendeMEL José BouzaPolpaico (Holcim) Juan Carlos AgulloMelón (Lafarge) Mauricio HerreraPr

iori

dad

Med

ia

Prioridad Empresa EncuestadoQuebrada Blanca Daniel BoladosPucobre Ignacio RuizConsejo Minero Alejandro PlazaIndependiente Alfredo PérezTransporte Santa Marta Juan Carlos GarcíaBHP Pierre KehrkoffsBHP Andrew CallahanAndina Ricardo FernándezBHP Osvaldo UrzúaAnglo American (Los Bronces) Mario LópezAnglo American (El Soldado) Eric UrrutiaAnglo American (Mantos Blancos) Carlos TolmoAnglo American (Chagres) Juan Carlos Olguín

Back

up

Medium priority This category corresponds to the group identified as being of medium importance, comprising individuals with a vast knowledge of the subject from the companies considered in the above list.

Table 2: List of medium-priority contacts Source: Prepared by USM S.A.

Back-up This was a back-up group of people to be contacted if any of those listed above were not available.

Table 3: List of back-up contacts Source: Prepared by USM S.A.



Some stumbling blocks were identified during contact with the companies, which had an impact on the performance of the project at the information-gathering stage, as summarised below:

• When the mining companies were contacted directly, they stated that both the interviews and the information had to be requested by CORFO.

• This is because mining companies work internally on these issues,

allocating resources and establishing strategic agreements with suppliers. As a result, they are not always willing to share information with other companies, despite the collaborative context of relations between mining companies.

• It is necessary to establish a single channel of communication between

CORFO and the mining companies for this type of initiative, in the light of certain risks such as:

o Submission of incomplete or differing information or information updated at different times when required from different areas of a single company.

o Overlapping of CORFO-led initiatives in the mining industry, resulting in confusion among mining companies.

3.3 Identification of goods and services By gathering information from public sources (corporate reports of the companies, COCHILCO, Cesco, IIMCH and websites, among others) and data obtained through interviews, the team was able to identify a set of goods and services defined as strategic for national mining companies. In some cases, it was possible to identify some suppliers, the websites of which are listed in Annex 1.

3.4 Analysis matrix We determined the basic elements for segmenting the supplies identified as strategic or high priority for mining companies. Based on these parameters, we developed a qualitative four-quadrant matrix allowing the different services,



inputs, goods and services to be grouped into the categories of consumption, strategic and maintenance, repair and operations.

3.5 Identification of current and future projects Additionally, based on information from public and private sources, we were able to identify the main mining projects, both those underway and those which have been postponed or are at the preliminary study phase. This allowed us to predict the country's copper production and estimate strategic demand over a 10-year timeline. Annex 2 contains the list of projects with their investment totals and likely date of implementation.

3.6 Estimation of amounts A method based on projected production, unit consumption and price was used to estimate costs. This used long-term price changes in order to keep the long-term trend above the cyclical effects experienced by copper consumer economies around the world. For somewhat more complex estimates (mining equipment and inputs), an estimate was made both of the ore to be treated and the material to be removed. Forecasts of mineral grade, recovery rates and sterile/mineral ratio were thus used. With this and unit consumptions it was possible to estimate the level of demand (Annex 3).

3.7 Identification of opportunities for suppliers Based on the estimates of projected demand, associated costs and the local presence of competitors in the industry, we identified the relevant items for the mining industry that have the greatest potential for attracting companies to Chile. In this case, we identified four supplier company categories, namely those:

a) Without a presence on the national market.



b) With up to three companies with a local presence. c) With between 4 and 6 companies. d) With more than 7 companies.

This breakdown was carried out for both strategic supplies and for support services and goods.



4. Current Figures and Projections The report will now describe the results of the current dimensioning of the copper mining industry in Chile and of projected future production, based on the different projects currently underway and their development phase.

4.1 Chile as a producer Globally, world copper production has increased by an annual average of 13.4% in recent years, now standing at 15.5 million tonnes. In this context, Chile, with a production of 5.3 million tonnes of fine copper, has contributed 34% to global production, as shown in the figure below.

Figure 3: Major copper-producing countries

Source: Compendio de la minería chilena 2009.

At producer level, five global producers account for 36%, some of which have operate mines in Chile, namely, Codelco, BHP Billiton and Anglo American. The breakdown of production for these producers in recent years is provided in the following figure.

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Figure 4: Major copper-producing countries


4.2 Projected copper-mining investment in Chile Overall, the portfolio of projects underway or about to be implemented amounts to US$32.7 billion over a likely timeline of the next ten years. While all of the projects identified have already passed the preliminary assessment stage, the sharp fall in copper prices produced delays and even the reassessment of some projects in the portfolio. It is important to note that copper reserves in Chile amount to 360 million tonnes. Codelco, with a total investment of US$10.35 billion, is the company with the biggest investment in projects over the next decade, explained largely by the progressive deterioration in the mineral grade at some of its sites, which is linked to the age of the latter. Hence, projects such as the expansion of Andina, the new level of the El Teniente division and the underground Chuquicamata, in Codelco Norte, seek only to prolong the useful life of the sites while keeping production levels up. Figure 5 illustrates the trend in copper grade in Chile, signalling a downward course over recent years, from 1.41 in 1999 to 0.99 in 2009. This behaviour is normal since the operational strategy of mining is to start extraction in the area

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with the best grade so as to optimise results in the shortest time possible. In order to maintain the production rate, this grade reduction requires an increased movement of earth, increasing the distances of movements and leading to the use of slag and other waste with a % of copper.

Figure 5: Trend in copper grade in Chile Source: Anuario de Estadísticas del Cobre y Otros Minerales 1989-2008, COCHILCO, 2008.

Of the total investment figure, US$5.281 billion have been paid out up until December 2008, while the investment to be made over the next five years stands at US$23.319 billion. These values fall dramatically to US$8.63 billion for the following 5 years, since the number of confirmed projects is lower, given that there are several projects in the exploration phase that have not yet undergone a technical-economic assessment. This trend in grade translates to increased development costs, production costs and, ultimately, a decline in competitiveness, as illustrated in the figure below.



Figure 6: Major copper-producing countries Source: Compendio de la minería chilena 2009.

Other aspects that also have a significant impact on the decline in competitiveness are:

• Supply and logistics • Stock shortages in the face of peaks in demand (as occurred a few

years ago). • High transport costs (associated mainly with Chile's geographical

location). • Longer turnaround times (due to the distance from the supply

centres). • Increased costs (associated, for example, with rising fuel prices).

• Lack of resources

• Shortage of water and fuel. • Increasingly distant operations.

Pérdida de competitividad



4.3 Main projects The thirty-one projects in the investment portfolio for the coming years, at varying stages of completion, amount to US$32.7 billion (2009 to 2018), of which 28% are Codelco initiatives. The nine most important projects are together worth US$21.054 billion, representing 68% of the total investment for 2010-2019, as shown in the figure below.

Figure 7: Major mining projects


Esperanza Site located in the Sierra Gorda area, with reserves of 786 million tonnes (0.53% Cu and 0.2 gpt Au) in sulphides. Estimated production is 195 kt per year of fine

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copper in concentrates, containing 200 thousand ounces of gold. It is expected to begin operation in 2010. Los Bronces expansion Project that seeks to increase the ore processing capacity by 100 kt per day, representing a 175 kt increase in fine copper per year. This increased processing includes the addition of a new crushing and grinding line plus a material transport system for taking the latter to concentration plants with a greater capacity. The estimated launch date is 2011.

Caserones This site (formerly Regalito) is located south-east of Copiapó 4,200 metres above sea level. It has reserves of over 600 million tonnes of leachable copper, mainly sulphides and a small quantity of oxides. Annual production is estimated at 30 kt of cathodes through electrowinning and 120 kt per year of concentrate. It is set to begin operation in 2012. El Morro Copper-gold deposit located in the municipality of Alto del Carmen, 84 km from Vallenar. It has reserves of 487 million tonnes of copper and gold (0.56% and 0.44 gpt, respectively). Estimated production is around 195 kt of fine copper in concentrate and 353,000 ounces of gold, for a period of over 15 years. It is expected to begin operation in 2013.

Escondida Phase V The aim of this expansion is to maintain production levels in the medium term, given the impoverished grade of the ore in recent years. It provides for the construction of a third concentrator plant, which would increase the mineral processing capacity. It is currently postponed, so will not be launched until at least 2015. However, in the light of improved copper prices, it could be reactivated before this date.



Sierra Gorda Deposit located in the Atacama region with a presence of copper, molybdenum and gold. Its measured resources total 251 million tonnes in oxides, with average grades of 0.42% copper, 0.03% molybdenum and 0.07 gpt gold. Its useful life is estimated at 25 years and operations are expected to begin in 2014.

Andina Expansion Phase II Project seeking to maximise Andina's productive capacity, ramping it up to an extraction and processing level of 230 kt of ore a day. To do so, underground production is to be maintained at current levels, a pit is to be developed and the processing plants will be relocated. This will increase concentrate production by 320,000 tonnes. It is expected to begin operation in 2015. New level of El Teniente mine Project that seeks to keep the site operating for another 50 years by maintaining current production levels. The pre-feasibility study has been completed and early works are at the implementation stage. Operations are expected to begin in 2017.

Chuquicamata underground mine Project seeking to exploit the mineral resources located below the current pit, which is estimated to become unprofitable by the end of the next decade. The estimated investment is US$2 billion and involves the transformation of the opencast mine to an underground operation. Production capacity is estimated at 340 kt of fine copper per year for at least 50 years. It is at the pre-feasibility stage and operations are expected to begin by 2018.

4.4 Mining production in Chile The country's copper mine production has increased by 21.4% over the past 10 years from 4.4 million tonnes in 1999 to 5.3 million tonnes in 2008.



This increased production is largely due to the strong demand for commodities driven by consumption in China, which has led to the study and implementation of new initiatives and the maintenance or reopening of sites that had not been profitable in previous scenarios. For the same reason, following the onset of the contractionary phase in the business cycle in late 2007, production levels fell by 4.1% following mine closures or a reduction in the level of production, with the aim of adapting rising costs to market prices.

According to estimates, a production of almost 6.1 million tonnes of fine copper is projected for 2019, which represents an increase of 19% on current levels. The future trend, based on COCHILCO figures and USM S.A. estimates, can be seen in the figure below.

Figure 8: Copper-mine production in Chile

Source: Anuario de Estadísticas del Cobre y Otros Minerales 1989-2008, COCHILCO, 2008.

However, a gradual decline in the production levels of current sites is expected in aggregate terms over the coming years, in line with the aging of certain emblematic sites (Chuquicamata, El Teniente) and the impoverishment of ore grades, which will lead to an adjustment in production levels due to rising costs. Production replacement projects, as is the case of the new level of the El Teniente mine, the Chuquicamata underground project and the extension of Lomas Bayas, whose investment aim is based on maintaining current production levels, have

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been given the consideration of new production rather than base production for the purposes of this report. Thus, following the launch of the thirty-one mining projects in the pipeline, production is expected to reach 2.63 million tonnes of fine copper, in addition to the 3.4 million from current sites. At present, most production is copper concentrate, which accounts for around 40% of annual production. However, its relative weight in production has declined by 7.9% over the last five years due to increased refined production, especially of electrowon cathodes, up 20.6%.

Figure 9: Breakdown of copper production Source: Anuario de Estadísticas del Cobre y Otros Minerales 1989-2008, COCHILCO, 2008.

In addition, fire-refined (FR) copper anodes have witnessed a sharp decline in production over this period, from 150 thousand tonnes/year in 2004 to 99 thousand tonnes in 2008, which represents a fall of 34%. Likewise, electrorefined cathodes have also experienced a slight decline over the last five years (2.75%), with production being maintained at around 1 million tonnes. Despite there being seven foundries and three refineries in Chile, the proportion of mined copper converted into refined copper products (SX-EW cathodes, ER cathodes and FR) has declined since its peak of 62% in 2002 to 57% in 2008, reflecting an increase in concentrate not refined in this country. Briefly, we can note the following:



• Production in 2008: 5.3 million tonnes of copper. • Projected production up until 2019: 6 million tonnes. • Main product: copper concentrate (60%). • SX-EW cathodes account for around 35%.

Some initiatives are now emerging to increase the capacity of Chile's refineries in order to cope with production increases in the leading mining companies. Codelco, for example, has made significant technological improvements at its Codelco Norte refinery, increasing its capacity by 200 thousand tonnes per year. It is also planning a generation project for a new smelter and refinery in the central area that will integrate the operations of the Andina, El Teniente and Ventanas division, which is currently under review given current prices. In the same vein, Anglo American is conducting pre-feasibility studies for a similar project to complement the work of its Chagres smelter, which will cut freight costs for concentrates and allow the production of sulphuric acid to be stepped up. Nonetheless, a sharp increase in concentrate production is expected over the next decade (23%), while cathodes obtained by solvent extraction and electrowinning will fall 2% from the levels reached in 2008. In this scenario, refining capacity through electrowinning, fire refining and electrorefining will stand at 56% for 2019, based on the assumption that all of the above initiatives will come into operation within the stated period. The biggest gap between production and refining capacity is projected for 2014 and 2015, deemed to be prior to the start of operations at the smelter and refinery to reinforce Chagres (Anglo American) and the Codelco refinery project in the central area. This situation is expected to remedy itself by the end of the decade.



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Figure 10: Copper-refining capacity Source: COCHILCO figures and USM S.A. estimates.

4.5 Main copper demanders Copper is the third most used metal in the world after steel and aluminium. The main consumers of the metal are the industrialised countries and some emerging countries, the European Union, China, Japan and the United States being the leading demanders.



Unión Europea24%

China21%

Estados Unidos12%

Japón7%

Corea del Sur5%

Rusia4%

Taiwan4%

India2%

Brasil2%

Mexico2%

Otros17%

Principales Consumidores de Cobre

Figure 11: Main consumers of copper Source: Prepared by USM S.A. based on information from COCHILCO, Cesco and various public sources.

Current projections indicate a decline in global demand for 2009 as a result of the global economic crisis. The situation looks set to rebound in 2010, when demand will increase by 3.5% to reach 18.37 million tonnes. Despite this forecasted decline in aggregate demand for 2009, China is expected to resume its level of consumption and increase by 18.9% this year. During 2008, the mining companies operating in Chile together exported 5,405 kt of copper. Its main destinations were China (21%), Japan (12%), South Korea (7%), Italy (7%) and the US (7%).

Current estimates indicate an annual growth in China's consumption of more than 8.8% over the next 5 years, representing a demand for 2.5 million tonnes of refined copper and 2.7 million tonnes in concentrate. A slowdown in consumption growth is expected between 2015-2020 with rates of around 5.5% per annum, reaching 10.7 million tonnes towards the end of the following decade.



China21%

Italia7%

Estados Unidos7%

Japón12%

Brasil6%

Corea del Sur 7%

Holanda6%

Francia 4%

Alemania3%

España 3%

Taiwan4% Otros

20%

Principales Destinos Exportaciones de Cobre

Figure 12: Main export destinations Source: Anuario de Estadísticas del Cobre y Otros Minerales, COCHILCO.



5 Identification of main supplies

5.1 Identification of main supplies To facilitate the analysis, these supplies have been grouped into three main categories: energy and fuel, mining goods and inputs, and services. In addition, the items are grouped into categories according to the nature of the supplies. Thus, there are six categories of goods and inputs and one of services, together covering 29 types of supply, the breakdown of which is attached in the table in Annex 4. Services account for the biggest consumption, with US$2.8 billion, representing 43% of total expenditure, followed by mining goods and inputs (34%) and energy and fuels (23%).

Composición de suministros

Servicios42%

Bienes e insumos mineros

33%

Energía y combustibles

25%

Figure 13: Breakdown of supplies by consumption

Source: Prepared by USM S.A. based on figures from COCHILCO and other public sources.



In the case of energy and fuel, increased production will clearly involve an increase in energy demand (Figure 14). Although this is very obvious, the crucial point is that the sources of energy supply in the Norte Grande mining area are based mainly on primary fossil fuels, resources that are not available in Chile. Moreover, considering the carbon footprint trend, the issue could become even more critical, which is why some companies have taken steps towards non-conventional renewable energy (NCRE) such as wind and solar power. The relevant figures on energy and fuel indicate that:

• It represents 25% of mine expenditure. • There will be an average annual increase from 2009-2019: approximately. • Projected average energy and fuel expenditure: US $3.2 billion.

Figure 14: Main chemical reagents

Source: COCHILCO figures and USM S.A. estimates.

Upon analysis of the main mining goods and inputs, we see that the majority are chemical reagents (48%), followed by supplies and mining equipment, with 37% and 15%, respectively. An overview of the relative weight of some inputs relevant to operations is illustrated below while Figure 15 illustrates the future trend in the same.

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o Reagents and chemicals

o Sulphuric acid: accounts for 70% of hydrometallurgy reagents with around US$500 million.

o Lime: accounts for 40% of flotation reagents. o Grinding balls

o 48% of flotation inputs with US$220 million. o Plate steel

o 25% of flotation inputs with US$120 million. o Explosives

o Will increase from US$250 million in 2008 to US$500 million in 2019, along the lines of the trend that will emerge following start-up of the projects described above.

o Tyres o An increase of US$125 million is estimated over 2008-2019,

consistent with the growth in the fleet of trucks, as shown below.

Figure 15: Main chemical reagents

Source: COCHILCO figures and USM S.A. estimates.

Among the chemical reagents, the biggest consumption is for sulphuric acid (H2SO4), which represents 69% of total demand in this category, followed by sodium hydrosulphide (NaSH) with 10%. All other reagents, analysed individually, have relatively lower shares not exceeding 5%, as shown in the figure below.

Principales Insumos de Producción

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These include cobalt sulphate, foaming agents, flocculating agents, diluents and extractants, among others.

Reactivos químicos

Ácido sulfúrico69%

Extractantes0%

NASH10%

Espumante4%

Colectores4%

Floculante3%

Cal3%

Diluyente2%

Sulfato cobalto5%

Figure 16: Main chemical reagents Source: Prepared by USM S.A. based on figures from COCHILCO and other public sources.

Major mining inputs include the share of milling balls, which, with US$220 million, represent 48% of operating costs in mining, followed by tyres, with a 30% share, as illustrated in Figure 17. In mining equipment, trucks account for 78% of consumption, followed by drilling machines (13%) and loaders (9%), the breakdown of which is also provided below.



Neumáticos30%

Bolas de Molienda

46%

Aceros Revestimient

o24%

Insumos Mineros

Camiones Mineros

78%

Palas Rajo Abierto

2%

Cargadores Frontales

7%

Perforadoras Rajo13%

Equipos Mineros

Figure 17: Main mining inputs


Figure 18: Main mining equipment


With regard to the future trend in the main mining equipment, there follows an overview both of trucks (whose existing fleet of 800 will increase by 600 units, representing an investment of over US$2 billion) and of shovel loaders and loading equipment, which will represent an annual investment of US$100 million) with an average annual increase of 7 shovel loaders, 15 loading machines and 9 drilling machines.



6 Demand for strategic supplies After gathering background information from public sources, interviews and the experience of the consultant team, a set of goods and services was identified which, due to their amount, volume, criticality for the operation and degree of specialisation, were deemed crucial to the national mining industry.

6.1 Matrix of strategic supply analysis To categorise the various inputs, goods and services identified initially, a qualitative analysis matrix was prepared. This consists of four quadrants and allows supplies to be grouped into services, strategic items, consumer items and items of maintenance, repair and operations (MRO). Features of services:

• Mainly labour services. • Handled as per specifications. • Specific contracts used. • Typically with a set duration. Examples: contracts for miners, engineering and maintenance.

Features of consumer items:

• Undifferentiated products. • Choice is determined mainly by price. • Generally handled through tendering tools. Examples: Safety, office items, travel.

Features of MRO items:

• Inputs aimed at maintaining operations. • They are intensive. • Purchasing and payment are automated. Examples: valves, pumps, bearings.



Features of strategic items: • Require detailed negotiations. • Few suppliers. • Require much more detailed cost analyses. • Associated with strategic supply projects. • Tend to generate strategic partnerships with suppliers.

Under this matrix approach, the various supplies are grouped as follows:

Figure 19: Categorisation of strategic supplies Source: Prepared by USM S.A.

6.2 Strategic supplies

Based on the above, a summary now follows of the main supplies deemed strategic for mining. A summary of the features of each supply is provided.

a) Electricity In the 1990s, mining companies overhauled their policy of self-sufficiency in electricity, progressively turning towards external procurement of the input in order to cover the total demand of their installed systems. To this end, they established important contractual agreements, ensuring the continuity of supply over a number of periods. This was largely possible due to the incorporation of natural gas into the energy matrix halfway through the past decade, which led to the development of new plants with relatively low costs.

Servicios

• Mantención y Generales• Transporte• Ingeniería • Construcción

Ítems consumo

• Aseo• Viajes• Artículos de oficina

Ítems estratégicos

• Energía• Combustibles• Insumos de producción • Equipos mineros• Reactivos químicos

Ítems MRO

• Bombas• Válvulas• Automatización y control



Consumo de Energía Eléctrica

-1.0002.0003.0004.0005.0006.000

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hProducción de Cobre Energía Eléctrica

In turn, these decreased costs led to the performance of many projects that had not been sufficiently attractive in earlier scenarios, which resulted in a significant increase in the demand for electricity. Between 1995 and 2008, electricity consumption increased by almost 8.4% annually, above production, which increased at a rate of 7.2%. This is due not only to the increasing number of companies demanding supply but also to other relevant factors, including the aging of deposits, increases in mine size and a substantial increase in refined copper production, since cathode production (whether by electrowinning or electrorefining) is a more energy-intensive process.

Figure 20: Electricity consumption Source: COCHILCO figures and USM S.A. estimates.



Combustible 2004 2008Diesel 1% 27,20%Petróleo Combustible 0,20% 2,30%Carbón Bituminoso 37,60% 41,50%Gas Natural 61,20% 11,90%Carbón + Petcoke 17,30%

Total 100% 100%

Similarly, projected annual electricity consumption averages around 18,900 GWh per year, which translates into a total of US$1.767 billion. For 2019, estimated consumption stands at 25,540 GWh, representing a 77% increase on the level observed in 2008. Due to the trans-Andean natural gas supply being cut off, generation companies found it necessary to diversify their fuel supply in order to maintain the levels of service demanded by the mining companies. Thus, natural gas fell from representing 60% of generating fuel in 2004 to 11.9% in 2008, while diesel was given a strong push, increasing from values of close to 1% to 27% over the same period. This had a major impact on costs, which increased by 213% from US$36/MWh in 2006 to US$113/MWh in 2008 in the SING grid, where 70% of the country's copper is mined.

Table 4: Breakdown of generation fuel Source: Consumo de Energía y Emisiones de Gases de Efecto Invernadero de la minería del Cobre de Chile,

COCHILCO.

To estimate the cost of electricity, the average cost between 2004 and 2006 has been taken as the unit cost per GWh. This corresponds to the period in which the gas cuts from Argentina began, with an annual adjustment similar to the periods before the crisis. This holds both for the new coal-fired generation projects in the Electroandina, Codelco and BHP Billiton portfolios and for the construction of the liquefied natural gas plants of Quinteros and Mejillones, which would cut costs from the current level to values closer to those prior to the gas crisis.



Figure 21: Cost of electricity Source: COCHILCO figures and USM S.A. estimates.

b) Fuel

The energy consumed as fuel in processes associated with copper mine production witnessed a 36% increase between 2004 and 2008, despite production falling by 2% over this period. This represents a 38% increase in the unit rates of fuel consumption over the past 5 years. If we observe the timeline between 1995 and 2008, the situation is the diametric opposite, since a progressive decline in unit consumption rates was witnessed between 1995 and 2004, when they fell by 29%. Therefore, the trend for 1995-2008 is towards a 3% reduction in the values recorded in the mid-1990s. This change of direction is due to a range of factors, including decreased mineral grade, increased haulage distances, change in the portfolio of marketable products and technological changes that have intensified the use of fuel energy.

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Petróleo Diesel79%

ENAP 617%

Gas Natural2%

Otros2%

Combustibles Utilizados en la Minería

Consumo de Combustible

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Figure 22: Annual fuel consumption Source: COCHILCO figures and USM S.A. estimates.

The main fuel used in the mining industry is diesel oil, with 79.6%, followed by ENAP 6 (Fuel Oil 6), with 16.7% and, with a much lower percentage, natural gas.

Figure 23: Fuels used in mining Source: Consumo de Energía y Emisiones de Gases de Efecto Invernadero de la minería del Cobre de Chile,

COCHILCO.

For its part, the cost of fuel has witnessed a dramatic rise in recent years, in line with the international events of the commodities market. This situation drove the price of oil to record levels in July 2008, representing a 37% increase for the industry between 2007 and 2008.



Thus, in 2008, the cost of energy in the mining industry climbed to over US$2 billion, up almost 15% on the previous year. To estimate fuel costs for the coming years, long-term annual variations (20 years) were used as a price projection, since this maintains the trend and eliminates any occasional distortions. Hence, average annual fuel consumption is estimated at 66,000 [terajoules], representing an expenditure of US$1.562 billion per year over the next decade, although a peak of 70,228 [terajoules] is observed in 2013 due to increased levels of production for this year.

Figure 24: Projected energy costs Source: COCHILCO figures and USM S.A. estimates.

As a general observation on electricity and fuel, note that demand will increase as the various projects described begin operation. Nonetheless, although supply can be guaranteed, we need to bear in mind that the fuels used are fossil fuels and that the electricity comes mainly from power plants that use these fuels. So, as explained above, criticality will come into play when the carbon footprint begins to gain momentum. From this point on, the pro-activeness of the mining companies in the shift towards NCRE will become relevant in marking the difference between copper with a "heavy carbon footprint" and one that is "carbon

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neutral" or "low carbon". Given the volumes of energy consumed, this will be no mean feat. It is therefore necessary to attract investment with alternative energies to ensure the competitiveness of Chilean copper.

c) Mining goods and inputs To determine the level of consumption of the main Mining Goods and Inputs, we use a methodology based on projected production and mineral grade and on recovery rate. These will be used to project the amount of ore to be treated in the concentration processes (via flotation) and hydrometallurgical processes, and hence, to determine the requirements of the latter. A gradual increase is envisaged in the amount of ore to undergo hydrometallurgical processing over the next 10 years, which looks set to stand somewhere around 400 million tonnes by 2019, approximately 24% above the value of 2010. For flotation concentration, the situation is intensified further, since it is projected that by 2019 the amount of ore to be processed will exceed 1 billion tonnes. This would be due to the impoverishment of the ore grade and the increase in projected production. As a result, a gap is opened that must be covered by a significant increase in current production capacity.



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Mineral a Remover Flotación Mineral a Remover Hidrometalurgia

Cons. Unitario

US$/ton

Ácido Sulfúrico [g/ton] 3,1 60Aditivo Guarfloc [g/ton] 0,2 5780Extractantes [g/ton] 0,175 3000Sulfato de Cobalto [g/ton] 1,02 8100Diluyente [l/ton] 10,7 670

Figure 25: Mineral to be processed Source: USM S.A. estimates based on COCHILCO data and Brook Hunt database.

d) Reagents for hydrometallurgy

The estimated amount of mineral to be processed for 2010 is 324 million tonnes, which is projected to increase to 403 million tonnes in 2019. This significant increase will have an impact on the requirements for inputs and chemical reagents for the treatment of these new levels of ore. This calculation uses the values in the Guía de Ingeniería y operaciones Mineras de Chile (Guide to Engineering and Mining Operations in Chile), published by Portal Minero, as unit consumption values.

Table 5: Unit hydrometallurgy reagent consumption Source: Guía de Ingeniería en Operaciones Mineras, Portal Minero.

The biggest expense is for sulphuric acid, which annually accounts for over US$300 million. The demand for sulphuric acid increased by 20% between 2004



2004 2009 2014 2019

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Proyección Reactivos Hidrometalurgia (Millones de US$)

Aditivo Guarfloc Extractantes Sulfato de Cobalto

Diluyente Ácido Sulfurico

and 2009, so companies had to turn to outsourcing, mainly through the Interacid Trading company. The latter is planning to set up an acid production plant in Norte Grande that would bridge the gap between demand and local production over the coming years.

Figure 26: Projection of hydrometallurgy reagents Source: COCHILCO figures and USM S.A. estimates.

Demand for this input is expected to continue to rise over 2010-2019, with an annual expenditure of US$370 million and a peak estimated value of US$410 million, which would occur in 2012. The second biggest expenditure in this period will be for extractants, with an average cost of US$28.2 million per annum, followed by diluents, with the sum of US$14.2 million, copper sulphate with US$11.7 and lastly, the additive Guarfloc, with an average cost of US$1.2 million per year.



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Floculante [g/ton] 20 2500Espumantes [g/ton] 30 2200Colectores [g/ton] 35 2000Cal [g/ton] 1500 100

e) Flotation reagents The unit consumption of the main chemical reagents used in the flotation process is indicated in the following table:

Table 6: Flotation unit consumption Source: Guía de Ingeniería en Operaciones Mineras, Portal Minero.

The biggest expense in the flotation concentration process is lime, which represents 45% of the cost of reagents, with a projected average spending of US$61.6 million over the next 10 years and a peak of US$66.1 million in 2016.

Figure 27: Projected expenditure on reagents for flotation Source: COCHILCO figures and USM S.A. estimates.

The second biggest expenditure after lime is collectors, with an average annual total of US$28.7 million, followed by foaming agents with US$27.1 million and lastly flocculating agents, with an average of US$18.5 million per year.



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Bolas de Molienda 775 0,000073Aceros de Revestimiento 150 0,0002

f) Grinding balls and steel plate

As with reagents, it is possible to determine the levels of future consumption based on average yields per tonne of copper produced.

Table 7: Unit consumption of steel balls and steel plate

Source: Guía de Ingeniería en Operaciones Mineras, Portal Minero.

The largest sum corresponds to grinding balls, with an average cost of US$232 million a year, representing 47% of total input costs for flotation.

Figure 28: Projected steel consumption Source: COCHILCO figures and USM S.A. estimates.

For its part, steel plate totals an annual average of US$123 million over the period and accounts for 25% of total inputs for concentration by flotation.

g) Material to be removed To project demand for mining equipment, tyres and explosives, it is essential to estimate the material to be removed both in opencast mines and in underground



Disponibilidad 86%Uso Disponible 80%Rendimiento 8700 t/díaCosto de Inversión US$ 3,5 millones

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operations. To do this, we use the average sterile/mineral ratio for each year, which, combined with the projected production, allow us to quantify the levels of material removed.

Figure 29: Projected material to be removed Source: COCHILCO figures and USM S.A. estimates.

h) Mining equipment

To estimate mining equipment, we used data considered to be representative of the industry. Hence, data recorded at Codelco Norte on equipment performance and operation factors were used.

6.2.a.1 Mining trucks To determine the haulage requirements of material from opencast mines, the average yields, availability and costs associated with 330 tc trucks were used, as this is one of the latest models in Chile.



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Table 8: Truck performance

Source: Guía de Ingeniería en Operaciones Mineras, Portal Minero.

An increase of 596 units is projected in the number of haulage trucks between 2010 and 2019 since, in order to cover the increased requirements, the fleet would need to increase from the 963 trucks in 2010 to the 1,559 units in 2019. This would require an investment of approximately US$2.086 billion.

Figure 30: Projected mining-truck fleet Source: COCHILCO figures and USM S.A. estimates.

6.2.a.2 Loading equipment and opencast drilling machines As above, the increase in material to be removed leads to growth in the demand for drilling and loading equipment, thus generating an increase in the current fleet. Upon analysis of the average performance of this equipment, we obtain the following data.



Disponibilidad 88%Utilización 95%Factor Operacional 77%Rendimiento Medio Nominal 6921 t/hr. Efec.Costo de Inversión US$ 17 millones

Rendimiento Palas

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Perforadoras Cargadores Frontales Palas de Carguío

Table 9: Shovel loader performance Source: Guía de Ingeniería en Operaciones Mineras, Portal Minero.

The increased demand in this mining equipment is expected to occur by the middle of the next decade due to execution of major mining projects in this period, including Phase V of Escondida and Expansion Phase II of Andina.

Figure 31: Projected demand for mining equipment Source: COCHILCO figures and USM S.A. estimates.

Thus, on average, 31 mining machines will be required each year from 2010 to 2019. Of these, 9 will be drilling machines for opencast mines, 15 will be front loaders and 7 will be shovel loaders. This represents an annual investment of around US$58 million in front loaders and US$31 million in shovel loaders.

b) Tyres By estimating the trend in the haulage truck fleet used in Chile, with an average cost per vehicle of US$20,000, it is possible to estimate the demand and sums incurred by companies for this heading.



Neumáticos

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Figure 32: Projected demand for tyres Source: COCHILCO figures and USM S.A. estimates.

Hence, a 10% increase can be observed in the number of units over the past 5 years and an annual consumption of 10,407 tyres is expected over the next decade, requiring a total of US$208 million.

c) Explosives The average unit consumption of explosives at an average cost of US$650 per tonne of input has been used as a load factor for this projection. Thus, an annual consumption of 648,526 tonnes of explosives is projected, which would require an investment of around US$422 million per year.



Explosivos

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Figure 33: Projected consumption of explosives Source: COCHILCO figures and USM S.A. estimates.

6.3 Regional market By way of example and in order to exhibit greater potential of attraction to possible suppliers wishing to set up operations in Chile, the size of the market is described for two strategic inputs, taking into account some of the countries of the Southern Cone. The specific consumption of these inputs per tonne of copper produced in each country was used as the benchmark to estimate market size.

Table 10: Projected supply market Source: Prepared by USM S.A. based on various public sources.

Chile Perú Argentina BrasilNeumático (MMUS$) 282,00 63,80 95,81 53,23Bolas Molienda (MMUS$) 211,68 47,93 71,89 39,93

PaísSuministro



7 Critical supplies for mining Drawing on the value chain illustrated in Annex 5, Figure 34 below shows a matrix with various supplies considered to be critical, based on the results of the interviews and analysis of the information gathered by the team. They have been considered critical because a reduction in supply or lack of the latter has a significant impact on mine operation.

Figure 34: Critical supplies for mining Source: Authors.

For each of the inputs, aspects were identified that make them critical to operation of the mine. In each case, a selection of initiatives is put forward to mitigate the scenario of criticality analysed. In the case of the transportation of ore and intermediate materials, the critical supplies are thermal energy (associated with fuel) used for truck movement, tyres, operational services and maintenance services, as illustrated in Figure 35.



Figure 35: Criticality in the haulage of ore and intermediate material Source: Authors.

In crushing and grinding mining processes, the most critical inputs are related to grinding balls, maintenance services and water supply.

Figure 36: Critical supplies in crushing and grinding

Source: Authors.

In flotation, the most important supplies are electricity and operational services, since both are directly linked to the core business of the mining industry.

Energía térmica (combustible)o Dependencia energéticao Distancia de los centros de consumo desde los

centros de distribucióno No intercambiabilidad de combustibleo Antigüedad de yacimiento: incremento de

consumo por aumento de material base y desplazamiento

Mitigacióno Cambio tecnológico (utilización de cintas

transportadoras)o Estación de transferencia

Neumáticoso Pocos productoreso Puntos de fabricación y distribución alejados de

centros de consumoo Impacto directo en el core del negocioo Disponibilidad (durabilidad)o Antigüedad del yacimiento: incremento del

desplazamiento

Mitigacióno Mejoramiento de caminoso Monitoreo de presión de aireo Nuevo tipo de neumático (sin aire)

Servicios de operacióno Intensivo en mano de obra (4 - 5 operadores)

Mitigacióno Manejo remoto / robótica aplicada

Servicios de mantenimientoo Impacto en la disponibilidado Incremento de la flota: mayor costo directo de

mantenimiento

Mitigacióno Servicio de mantenimiento especializadoo Repuestos in situo Manejo stock crítico de repuestos

Energía térmica (combustible)o Dependencia energéticao Distancia de los centros de consumo desde los

centros de distribucióno No intercambiabilidad de combustibleo Antigüedad de yacimiento: incremento de

consumo por aumento de material base y desplazamiento

Mitigacióno Cambio tecnológico (utilización de cintas

transportadoras)o Estación de transferencia

Neumáticoso Pocos productoreso Puntos de fabricación y distribución alejados de

centros de consumoo Impacto directo en el core del negocioo Disponibilidad (durabilidad)o Antigüedad del yacimiento: incremento del

desplazamiento

Mitigacióno Mejoramiento de caminoso Monitoreo de presión de aireo Nuevo tipo de neumático (sin aire)

Servicios de operacióno Intensivo en mano de obra (4 - 5 operadores)

Mitigacióno Manejo remoto / robótica aplicada

Servicios de mantenimientoo Impacto en la disponibilidado Incremento de la flota: mayor costo directo de

mantenimiento


Bolaso Impacto directo en el core del negocioo Disponibilidad (por durabilidad de bolas)o Aumento de lucro cesante por cambio de bolas

(equipo)

Mitigacióno Aumento de durabilidad del material o Cambio de paradigma (llevar el proceso de

chancado al material)

Servicio de mantenimientoo Impacto en la disponibilidad


Aguao Baja disponibilidad del recursoo Impacto ambiental por generación, manejo y

disposición de riles

Mitigacióno Reutilización de agua de procesoso Reutilización de aguas sanitarias

Bolaso Impacto directo en el core del negocioo Disponibilidad (por durabilidad de bolas)o Aumento de lucro cesante por cambio de bolas

(equipo)

Mitigacióno Aumento de durabilidad del material o Cambio de paradigma (llevar el proceso de

chancado al material)

Servicio de mantenimientoo Impacto en la disponibilidad


Aguao Baja disponibilidad del recursoo Impacto ambiental por generación, manejo y

disposición de riles

Mitigacióno Reutilización de agua de procesoso Reutilización de aguas sanitarias



Figure 37: Critical supplies in the flotation process

Source: Authors.

Another relevant aspect is that associated with human resources. The main reasons relate to the lack of interest among young professionals in working at sites. Another important aspect is safety, to which the mining industry allocates many resources each year in order to try and prevent or at least reduce the frequency of events, especially those relating to personal safety.

Figure 38: Critical aspects of personnel at sites Source: Authors.

In the case of prospecting and operation, one relevant fact is that related to the supply of chemical reagents and explosives in particular, as there are only two suppliers in the domestic market, a scenario that does not help with the competitiveness of mining. The entry of a new player on the market will be no mean feat given the level of penetration of the existing suppliers and the conditions of distribution of the market. Another point that will impede the entry of new suppliers is that the mining industry is seeking solutions, not isolated products or inputs. In the case of the supply of explosives, what is being supplied on the market are services at the mine itself.

Energía eléctricao Impacto directo en el core del negocio

Mitigacióno Modificación de la matriz de energéticos

primarios

Servicios operacionaleso Impacto directo en el core del negocio

Mitigacióno Automatización

Energía eléctricao Impacto directo en el core del negocio

Mitigacióno Modificación de la matriz de energéticos

primarios

Servicios operacionaleso Impacto directo en el core del negocio

Mitigacióno Automatización

Servicio de campamentoo Hotelería crítico para las personaso Disponibilidad de agua sanitaria, energía

eléctricao Higiene (desagües y residuos “domiciliario”o Desarme de faenas

Mitigacióno Campamentos mecanos (prearmados)

Selección y capacitacióno Menor disposición de profesionales jóvenes a

trabajar en faena y en turnos o Formación universitaria: principalmente teórica

y sin carreras orientadas al negocio minero

Mitigacióno Automatizacióno Control remoto del proceso/robóticao Formación especializada y focalizada en el

negocio (formación dual)o Transferencia tecnológica

Aguao Baja disponibilidad del recursoo Crítico para la subsistencia (agua potable)o Aguas sanitarias (salud e higiene)

Mitigacióno Tratamiento de aguas residualeso Reutilización de aguas sanitariaso Separación de aguas fecales

Servicio de campamentoo Hotelería crítico para las personaso Disponibilidad de agua sanitaria, energía

eléctricao Higiene (desagües y residuos “domiciliario”o Desarme de faenas

Mitigacióno Campamentos mecanos (prearmados)

Selección y capacitacióno Menor disposición de profesionales jóvenes a

trabajar en faena y en turnos o Formación universitaria: principalmente teórica

y sin carreras orientadas al negocio minero

Mitigacióno Automatizacióno Control remoto del proceso/robóticao Formación especializada y focalizada en el


Aguao Baja disponibilidad del recursoo Crítico para la subsistencia (agua potable)o Aguas sanitarias (salud e higiene)

Mitigacióno Tratamiento de aguas residualeso Reutilización de aguas sanitariaso Separación de aguas fecales



Figure 39: Critical aspects in prospecting and operation Source: Authors.

The team's research revealed that some supplies are not being served locally, as shown in the figure below.

Figure 40: Number of suppliers with a local presence Source: Authors.

Servicios operacionaleso Servicio especializado

Mitigacióno Formación especializada y focalizada en el


Químicos reactivos y explosivoso Bajo poder de negociación de mineras

Mitigacióno Atracción de nuevos proveedores

Servicios operacionaleso Servicio especializado

Mitigacióno Formación especializada y focalizada en el


Químicos reactivos y explosivoso Bajo poder de negociación de mineras

Mitigacióno Atracción de nuevos proveedores

• Robótica aplicada• Innovaciones en equipos mineros• Innovaciones en insumos

• Gestión de aguas• Monitoreo de taludes• Servicios logística de entrada

• Tribología• Explosivos• Bolas de molienda• Reactivos químicos (extractante,

colectores, sulfato de cobalto, NaSH)• Energía

• Servicios de alimentación• Telecomunicaciones• Estanques• Aseo industrial• Zunchos

• Neumáticos• Combustibles• Lubricantes• Reactivos químicos (flotación)

• Sistemas de automatización y control • Sondajes mineros• Monitoreo ambiental

• Equipos mineros• Correas transportadoras• Aceros revestimiento• Geotextiles

• Bombas• Válvulas• Construcción• Ingeniería• Transporte de personas• Mantenimiento

• Robótica aplicada• Innovaciones en equipos mineros• Innovaciones en insumos

• Gestión de aguas• Monitoreo de taludes• Servicios logística de entrada

• Tribología• Explosivos• Bolas de molienda• Reactivos químicos (extractante,

colectores, sulfato de cobalto, NaSH)• Energía

• Servicios de alimentación• Telecomunicaciones• Estanques• Aseo industrial• Zunchos

• Neumáticos• Combustibles• Lubricantes• Reactivos químicos (flotación)

• Sistemas de automatización y control • Sondajes mineros• Monitoreo ambiental

• Equipos mineros• Correas transportadoras• Aceros revestimiento• Geotextiles

• Bombas• Válvulas• Construcción• Ingeniería• Transporte de personas• Mantenimiento

Suministros Estratégicos Bienes y Servicios de Apoyo



8 Potentially successful cases There are some cases that could be successful and whose experience could be adapted to other strategic mining supplies in Chile. Note that the initiatives being driven by CORFO are on the right track towards attracting new players to supply the mining industry, by gathering them at a single event with the key producers on the local market and explaining the near future. Three notable stories of success now follow:

a) Treatment of grinding bars In Chile, steel bars are only sold without heat treatment, supplied exclusively by CAP in ex-works deliveries. In the international market, there is a limited supply of such bars. These processes applied to the metals are designed to improve their mechanical properties, most notably hardness, strength and toughness. The materials that are heat-treated are basically steel and grey cast iron composed of iron and carbon. The mechanical properties of steels reside in the chemical composition of the alloy and the type of heat treatment applied to them. The heat treatment used is cementing, which increases the surface hardness of the bar associated with an increased concentration of carbon in the peripheral area of the bar. Subsequently, through quenching and tempering, a high surface hardness is obtained, together with resistance to wear and a tough core. This opportunity for success is illustrated in the material shown in the figure below:



Figure 41: Representation of the effect of treatment on the material Source: Authors.

b) Phosphorus pentasulphide This is a chemical compound (P4S10) that is yellow in colour. It is an important compound in the agrochemical and mining industries. It is manufactured as flakes and used in several areas:

• Intermediary in insecticide production. • Mineral flotation agent. • Lube oil additive.

In the case of Codelco, for example, the only supplier of phosphorus pentasulphide is Fosfoquim S.A. This circumstance has resulted in a strategic relationship of supply logistics (customer-supplier relationship) that includes the development of technology for risk prevention and productive efficiency. Together, they have developed waste plants and special containers for the safe handling of P4S10. Other companies have been identified as potential suppliers: National suppliers

• Merck S.A (www.merck.cl/es/company/merck_in_chile_sa/merck_sa.html). • Perez & Jacard (www.portland.cl/).

Foreign companies:

• Tekchem (Mexico) (www.tekchem.com.mx).

52 Rockwell C

39 Rockwell C

¾” (18mm)27±4 Rockwell C

27±4 Rockwell C

52 Rockwell C

39 Rockwell C

¾” (18mm)27±4 Rockwell C

27±4 Rockwell C



• Thermphos/Sudamfos S.A (Argentina) (www.thermphos.com.cn/tianfu/en/index.asp).

• Chemtrade Logistic (Canada) (www.chemtradelogistics.com).

c) Industrial cleaning The mining companies currently use a Roto Power with brush and shovel. Abroad, technical mechanisms are used for dust collection, including the aspiration of dust in underground mines, aspiration of particulate material spills, cleaning of material build-up underneath operating equipment, cleaning of dust and debris from smelting and refining. The suppliers with industrial cleaning technology present in the US market include:

• Clean Earth Environmental Group (www.edainc.net/PastSuccess/ceeg/ceeg.aspx).

• MET–PRO CORPORATION (www.met-pro.com/). • MPW (www.mpwservices.com/).



9 Strategies for attraction To generate optimal and attractive conditions for foreign investment in Chile, it is important to identify aspects that, from the point of view of investors, make the country a market with security guarantees. Thus, the following SWOT analysis will help to identify elements that need to be overcome (weaknesses) and that need to be exploited (strengths). A summary is provided below.

Figure 42: SWOT analysis to attract investment Source: Based on Survey of Mining Companies 2008/2009 (Fraser Institute Annual) and other public sources.

The view of Chile as reflected in the PPI index that measures the effects of government policies is important. This should allow the attraction of investors supplying strategic inputs, given that, from Chile, it is possible to approach the growing mining market developing in Peru and the initiatives of other countries like Colombia, which seeks to become a major player in global mining.

Fortalezas• Chile, con el mayor índice de potencial político (PPI)* de Latinoamérica.

• Baja incertidumbre sobre la administración y aplicación de las regulaciones vigentes.

• Políticas basadas en las “mejores prácticas”, dando apertura económica.

• Régimen de aprobación ambiental transparente, da paso a la inversión.

• Red de apoyo a la inversión.• Estabilidad política

Oportunidades• Aumento de producción por alto precio del cobre

• Chile, país con mayores reservas de cobre• Crecimiento de negocios en países de la región

• Búsqueda de soluciones, no de productos

Debilidades• Potenciales problemas de lenguaje• Bajos niveles de inversión en innovación y desarrollo

• Presencia de “carteles”• Debilidad de ley de protección a la propiedad intelectual

• Inestabilidad en países vecinos

Amenazas• Alza en los precios de los commoditiespor la recuperación de la economía.

• Bajo crecimiento económico• Rigidez del mercado laboral• Guerra de precios• Impacto por cambio de mando



One general aim should be that of generating sustainable optimal conditions to encourage investment by foreign companies in Chile and to promote both the regions and the mining cluster. Based on the above, the specific aims are as follows. The monitoring indicators and proposed targets are indicated in Figure 44.

1. Promote Chile as a platform for the generation of mining business throughout the Southern Cone. The various potential foreign suppliers should be shown the benefits of investing in the country, such as its political, economic and social stability.

2. Bridge existing technology gaps through technology entrepreneurship and

investment by businesses that supply new technologies applied to mining. 3. Develop public, private and mixed tools and incentives to generate the ideal

conditions for the entry of foreign investment to the country. 4. Define lines of action to encourage progressive improvements in the

national panorama. CORFO and its various agencies are considered responsible for driving implementation of the strategy. However, it must be a countrywide strategy in which all of the public instruments work together to seek the effective attraction of suppliers. To this end, besides the review of international initiatives, road shows, promotional fairs and visits to suppliers, among other events, the actions currently promoted by CORFO should be continued.



Figure 43: Aims, targets and monitoring indicators Source: Authors.

In the light of the above, nine basic aspects must be guaranteed to facilitate foreign investment in Chile:

a. Guarantee a sufficient volume of current and projected business

o Promote regional interest while maintaining Chile as the productive and operational platform.

o Encourage the creation of specialised clusters that can be developed in the regional market with a local base.



o Send out clear signals regarding the relevant size of the specific market.

b. Guarantee access to stable and mature financial markets

o Guarantee a stable financial market. o Encourage access to credit at preferential rates (IDB, CORFO, etc). o Well-regulated financial system with high and reliable operating

standards.

c. Minimise investor risk through economic, political and social stability

o Promote clarity in the labour market and in wages. o Send out signals of a clear regulatory framework. o Facilitate the flow of relevant economic information to investors. o Limit currency risk (controlled exchange rate, hedging instruments). o Reduce social tensions in productive areas.

d. Guarantee stability in the short, medium and, most importantly, long term

o Send out signals of seriousness, integrity and institutional agility in

economic, financial and legal affairs. o Set up regional agreements to ensure stability. o Promote investor confidence in the country. o Show signs of seriousness, stability and open government.

e. Offer clear conditions of national competitiveness

o Develop an "Investor's Manual" with practical information for

companies wishing to set up operations in Chile. o Provide guarantees of competitiveness and benefits for foreign

investment. o Provide clear signs of free-market reform. o Generate a plan to privatise inefficient state enterprises.



f. Improve or at least maintain the conditions that exist in the country of origin

o Generate an adequate level of technical education and language

learning. o Implement globally accepted accounting practices with control

measures accepted by other duly developed markets. o Remove barriers to international trade in business, taxation, etc.

g. Generate guarantees for operation and access to the local mining market

(state and private)

o Host road shows and thematic fairs that link mining companies to international strategic suppliers, focusing on areas of low competitiveness.

o Guarantee competitiveness, with limited costs similar to those available abroad.

o Incentivise remittances sent to parent companies. o Build adequate infrastructure for the implementation and expansion

of productive activities (roads, ports, energy, etc). o Promote the incorporation of new suppliers in state enterprises so as

to introduce them gradually to the market.

h. Create clear, competitive national advantages

o Develop public instruments to attract investment (subsidies, tax benefits, etc).

o Develop institutional partnerships (universities, technology centres, CORFO, etc).

o Create tax holidays - extension of free trade zones. o Promote innovation through subsidies or other mechanisms. o Encourage the association of producers using available synergies.

i. Consolidate the country's policy on international investment agreements

o Increase FTAs and agreements to promote and protect investments.



o Seek out companies interested in the international projection of their products.

o Encourage inter-government agreements on technology exchange and the mutual development of markets.



10 Concluding remarks The figures relating to projects in the industry show no signs of a crisis. The reasons for this are varied and range from the need to remain in business and not disappear to taking increasingly stronger and profitable positions in a country that is still a major player when it comes to copper production. CORFO's opportunities for attracting new players are clear. Supplies such as applied robotics, innovations in mining equipment and supplies do not have a local presence. The same applies to the management of water, a scarce resource, particularly in the north of the country. The same can also be said of slope monitoring. Other supplies have suppliers in the local market but their offers cannot guarantee the competitiveness of mining. The need is obvious. The types of supply are obvious. A series of suppliers have now been identified. Some have already been contacted both by companies and by CORFO. Hence, CORFO needs to approach the mining companies with a view to building a permanent project together, using all of its lines and promotional instruments, just as it has done with Innova, for example. Mining companies are eager to have more suppliers competing in a context of economic and political stability such as that witnessed in Chile. CORFO must also interact with its counterparts in neighbouring countries in order to identify and group common needs to offer attractive market sizes to investors. It must lead this movement to ensure that those interested in reaching the South-American market set up operations in Chile and from there, supply the mining market of the region.



Bibliography • Antofagasta PLC. “Annual Report 2008”, Antofagasta PLC, 2009. • CESCO, “Desarrollo de la Industria Minera en América Latina”, Centro de

Estudios del Cobre, Chile, 2009. • COCHILCO. “Anuario de Estadísticas del Cobre y Otros Metales 1999-

2008”, Comisión Chilena del Cobre, Chile, 2009. • COCHILCO. “China: Desarrollo Económico y Consumo de Cobre”, Comisión

Chilena del Cobre, Chile, 2009. • COCHILCO. “Coeficientes Unitarios de Consumo de Energía de la Minería

del Cobre 2001-2007”, Comisión Chilena del Cobre, Chile, 2008. • COCHILCO. “Consumo de Energía y Emisión de Gases de Efecto

Invernadero”, Comisión Chilena del Cobre, Chile, 2009. • COCHILCO. “Demanda de Energía Eléctrica y Seguridad de Abastecimiento

en la Minería del Cobre”, Comisión Chilena del Cobre, Chile, 2008. • COCHILCO. “El Mercado del Ácido Sulfúrico y su Proyección al 2015”,

Comisión Chilena del Cobre, Chile, 2009. • COCHILCO. “Inversión en la Minería del Cobre y del Oro Proyección Período

2009-2013”, Comisión Chilena del Cobre, Chile, 2009. • COCHILCO. “Oportunidades de Negocio para Proveedores de Bienes,

Insumos y Servicios Mineros en Chile”, Comisión Chilena del Cobre, Chile, 2008.

• CODELCO, “Memoria Corporativa 2008”, Corporación Nacional del Cobre, Chile, 2009.

• COLLAHUASI. “Memoria Anual 2007”, Collahuasi, Chile, 2008 • Consejo Minero. “Informe Económico 2007”. Chile, 2007. • EDITEC. “Catastro de Proyectos Mineros”, EDITEC, Chile, 2009. • Minera Escondida. “Memoria Anual 2007”, Minera Escondida, 2008. • Portal Minero S.A., “Guía de Ingeniería en Operaciones Mineras”, Portal

Minero Ediciones, Chile 2007. • Valenzuela, A., Arias, M., “Oportunidades de Negocio en la Minería del

Cobre. Potencial Demanda de Bienes e Insumos Mineros”. Comisión Chilena del Cobre, Chile 2005.



Websites. Sources of information

• http://www.portalminero.com/proyectos/muestra_all_proyecto.php • http://www.abastemin.cl • http://www.aminera.cl/contenido/companias-mineras-y-proveedores-

por-una-relacion-consolidada.html • http://www.finning.cl • http://www.aprimin.cl • http://www.iimch.cl • http://www.portalminero.cl • http://www.cesco.cl • http://www.cochilco.cl • http://www.editec.cl • http://www.sonami.cl • http://www.collahuasi.cl • http://www.escondida.cl • http://www.codelco.cl • http://www.enami.cl • http://www.anglochile.cl • http://www.bcentral.cl • http://www.barrick.cl • http://www.exponor.cl • http://www.cbc.cl • http://www.aia.cl • http://www.estrategia.cl • http://www.minmineria.cl

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Annexes

Annex 1. Websites. Suppliers • www.mobiusinstitute.com • www.swannglobal.com • www.amcconsultants.com.au • www.salveresources.com • www.h2oceanpower.com • www.asa-australia.com • www.engen.com.au • www.crescent-pps.com • www.apssystemms.com.au • www.mpe.com.au • www.bigtyre.com.au • www.itpower.co.uk • www.itpon.com.au • www.klinge.com.au • www.croctyres.com.au • www.acfr.usyd.eder.au • www.acumine.com.au • www.sunemporium.com • www.broons.com • www.mmdsizers.com • www.controlsystems.com.au (already in Chile) • www.jda.com.au • www.trensfieldservices.com (with Inser) • www.adaptfms.com • www.maunsell.com • www.smec.com.au • www.enviroflow.com.au • www.isipl.com • www.groundwatertech.com • www.clemente.com.au

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http://www.smec.com.au/�

http://www.enviroflow.com.au/�

http://www.isipl.com/�

http://www.groundwatertech.com/�

http://www.clemente.com.au/�



• www.grd.com.au (already in Chile) • www.groundprobe.com • www.owencustomproducts.com.au • www.a-i-t.com.au • www.birrena.com.au • www.sageautomation.com • www.biocentral-labs.com • www.globedvill.com.au • www.argontechnology.com.au • www.walenex.com • www.metropower.com.au • www.scananalyse.com.au

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Año Operación Operador Faena Inversión (MM US$) EstadoCentenario Copper Franke 172 ConfirmadaPucobre Expansión Doña Agi 6,8 ConfirmadaCodelco Pilar Norte (Teniente) 120 ConfirmadaCodelco Expansión Gaby Fase II 202 ConfirmadaCodelco Expansión Fase I (Andina) 220 ConfirmadaCodelco Radomiro Tomic (Sulfuros) 382 ConfirmadaAntofagasta Minerals Esperanza 1900 ConfirmadaAntofagasta Minerals Antucoya 200 PostergadaAntofagasta Minerals Ampliación Fase II (Los Pelambres) 925 ConfirmadaCollahuasi Ampliación Fase I 750 ConfirmadaTeck Andacollo Hipógeno 336 ConfirmadaVale a través de CMLA Tres Valles 102 ConfirmadaAnglo American Expansión Los Bronces 1744 PostergadaSinocoop, Tongling Group Minera Catania Verde (Fase I) 25 ConfirmadaCerro Dominador Diego de Almagro 120 ConfirmadaXstrata Lomas Bayas II 200 ConfirmadaPan Pacific Copper Caserones 1700 ConfirmadaAntofagasta Minerals Los Pelambres (Ampliación) 3200 ConfirmadaFreeport-McMoran - Codelco El Abra Sulfolix 450 PostergadaCodelco Mina Ministro Hales 900 ConfirmadaCodelco San Antonio Óxidos (Salvador) 230 ConfirmadaTeck Relincho 1000 ConfirmadaXstrata El Morro 2500 ConfirmadaBHP Escondida Fase V 3250 PostergadaAndes Copper Vizcachitas 1000 Confirmada

2014 Quadra Mining Sierra Gorda 1660 Confirmada2015 Codelco Expansión Fase II (Andina) 4800 Confirmada2017 Codelco Nuevo Nivel Mina (Teniente) 1600 Confirmada2018 Codelco Chuqui Subterránea 1900 Confirmada

- Sinocoop, Tongling Group Minera Catania Verde (Fase II) 30 Confirmada- Sinocoop, Tongling Group Minera Catania Verde (Fase III) 300 En evaluación

2009

2010

2011

2012

2013

Annex 2. State of mining investment projects

Table 11: Breakdown of mining projects Source: Prepared by USM S.A. based on information from Cesco, COCHILCO and various public sources.



Proyecciones de

Producción

Tratamiento por Flotación?

Proyección de ConcentradosProyección Sx-Ew

Proyección de Ley y % de

Recuperación

Proyección de Ley y % de

Recuperación

Mineral a Procesar

No Si

Mineral a Procesasr

Mineral Total a Procesar

Estimación Reactivos

Estimación Reactivos y Bolas

de Molienda

Proyecciones Relación Estéril-

Mineral

Material a Remover

Estimación Equipos Mineros y

Explosivos

Estimación Energía y

Combustibles

Fin

Annex 3. Methodology for estimating amounts for supplies

Figure 44: Methodology for estimating demand Source: Prepared by USM S.A.


Producto 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Concentrados Base 3.776 3.736 3.669 3.725 3.357 3.309 3.389 3.267 3.155 3.178 2.876 2.736 2.727 2.624 2.524 2.420 Cátodos Sx-Ew Base 1.636 1.585 1.692 1.832 1.974 1.940 1.979 1.811 1.786 1.663 1.456 1.401 1.317 1.216 1.119 1.018

5.413 5.321 5.361 5.557 5.330 5.249 5.368 5.078 4.941 4.841 4.332 4.137 4.044 3.840 3.643 3.438 Concentrados Nuevos 201 415 552 1.114 1.359 1.619 1.677 1.741 1.757 1.722 Cátodos Sx-Ew Nuevos 35 154 196 423 500 505 505 521 525 865 914

35 355 611 975 1.614 1.864 2.124 2.198 2.266 2.622 2.635 Concentrados 3.309 3.590 3.682 3.707 4.292 4.235 4.355 4.404 4.365 4.281 4.142 Cátodos Sx-Ew 1.636 1.585 1.692 1.832 1.974 1.975 2.133 2.007 2.209 2.163 1.961 1.906 1.838 1.741 1.983 1.932

5.413 5.321 5.361 5.557 5.330 5.284 5.723 5.689 5.916 6.455 6.196 6.261 6.241 6.105 6.264 6.073 Total Producción Proyectada

Producción Base

Total Producción Base

Producción Nueva

Total Producción Nueva

Producción Proyectada

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Concentración 1,21 1,17 1,19 1,18 1,13 1,10 1,01 0,96 0,94 0,90 0,87 0,88 0,79 0,78 0,76 0,75Lixiviación 0,89 0,84 0,83 0,91 0,85 0,81 0,75 0,72 0,70 0,67 0,65 0,60 0,62 0,64 0,67 0,68Promedio Chile 1,09 1,05 1,06 1,06 1,00 0,99 0,91 0,88 0,85 0,82 0,79 0,79 0,74 0,74 0,73 0,73

Table 12: Projected production Source: Prepared by USM S.A. based on information from Cesco, COCHILCO and various public sources.

Table 13: Copper grade in mining operations in the country

Source: Prepared by USM S.A. based on information from Cesco, COCHILCO and various public sources.


72

Table 14: Mineral and material to be removed

Source: Prepared by USM S.A. based on information from Cesco, COCHILCO and various public sources.


Reactivos 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Floculante 19 19 18 19 17 17 18 18 19 21 21 22 22 22 21 21Espumantes 25 25 24 25 22 22 24 24 24 28 28 29 29 29 28 27Colectores 26 26 26 26 23 23 25 26 26 30 30 30 31 31 30 29Cal 57 56 55 56 50 50 54 55 56 64 64 65 66 65 64 62

Ácido Sulfurico 304,4 294,7 314,7 340,8 367,1 367,4 396,7 373,2 410,9 402,2 364,7 354,4 341,8 323,8 368,9 359,3 Aditivo Guarfloc 1,0 1,0 1,0 1,1 1,2 1,2 1,3 1,2 1,3 1,3 1,2 1,1 1,1 1,0 1,2 1,2 Extractantes 23,2 22,5 24,0 26,0 28,0 28,0 30,2 28,4 31,3 30,7 27,8 27,0 26,1 24,7 28,1 27,4

Sulfato de Cobalto 9,6 9,3 10,0 10,8 11,6 11,6 12,6 11,8 13,0 12,7 11,6 11,2 10,8 10,3 11,7 11,4 Diluyente 11,7 11,4 12,1 13,1 14,1 14,2 15,3 14,4 15,8 15,5 14,1 13,7 13,2 12,5 14,2 13,8

Flot

ació

nH

idro

met

alur

gia

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2016 2017 2018 2019Consumo Energ. Elec. 16.178 16.281 16.422 15.429 14.435 13.110 11.784 13.034 14.451 17.002 18.209 21.445 22.766 24.845 25.545 Costo Energía Electrica 726 730 737 692 648 588 529 585 648 763 817 962 1.021 1.115 1.146 Consumo Combustibles 41592 40164 41998 47998 58600 60624 62.649 62.145 64.498 70.222 67.262 67.473 65.863 67.437 65.243 Costo Combustibles 627 605 633 723 883 914 944 937 972 1.058 1.014 1.017 993 1.016 983

Table 15: Energy consumption Source: Prepared by USM S.A. based on information from Cesco, COCHILCO and various public sources.

Table 16: Reagent consumption

Source: Based on data from COCHILCO, Guía de Ingeniería en Operaciones Mineras (Portal Minero) and USM S.A. estimates.


74

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Bolas de Molienda 213,6 211,4 207,6 210,7 189,9 187,2 203,1 208,3 209,7 242,8 239,6 246,4 249,1 246,9 242,2 234,3 Aceros de Revestimiento 113,29 112,08 110,07 111,75 100,70 99,27 107,69 110,46 111,21 128,77 127,06 130,65 132,11 130,94 128,44 124,25

Table 17: Steel consumption Source: Based on data from COCHILCO, Guía de Ingeniería en Operaciones Mineras (Portal Minero) and USM S.A. estimates.


Table 18 Demand for mining equipment Source: Based on data from COCHILCO, Guía de Ingeniería en Operaciones Mineras (Portal Minero) and USM S.A. estimates.

Table 19: Tyre and explosive consumption Source: Based on data from COCHILCO, Guía de Ingeniería en Operaciones Mineras (Portal Minero) and USM S.A. estimates.


Clases Categorías Items Proveedores Detectados PreliminarmenteEnergía Energía Energía de SING y SIC

Combustibles y Lubricantes

Combustibles y Lubricantes Shell, Copec, YPF

Neumáticos Michelin, Goodyear, Bridgestone, otrosBolas de Molienda Molycop, Proacer

Aceros Revestimiento CAP, Aceros ChileCamiones Mineros Finning Chile, KomatsuPalas Rajo Abierto Bucyrus, Man Takraf

Cargadores Frontales Bucyrus, Komatsu, Finning, JanssenPerforadoras Rajo Bucyrus,WLS Drilling Products

Bombas Vulco, KSB, LaroxVálvulas Fastpack S.A., KSB Chile

Automatización y Control Honeywell ChileFloculanteEspumanteColectores

NaSHÁcido Sulfúrico Prod. Nacional e Importación (Interacid Trading)

ExtractantesSulfato de Cobalto

DiluyenteCal Inacal, Soprocal

Mantención y generales FFE Minerals Chile, Power Train Tech., MABET Suministro Explosivos Enaex, Orica

Transporte Transporte Tamarugal, Tur Bus, FFCC de AFTA.Alimentos Compass Catering, SodexhoIngeniería Fluor Daniels, CADE IDEPE, Aker Kvaerner, Guíñez Ing.

Construcción Extranjeros y Nacionales (Techint, Parina, Salfa Montajes, etc.)

Ener

gía

y Co

mb.

Bien

es e

Insu

mos

Min

eros

Oxiquim, Harting, Cognis, Cytec

Importados de USA e Irlanda

Serv

icio

s

Insumos

Equipos Mineros

Servicios

Equipos de Apoyo

Reactivos Químicos

Annex 4. Relevant mining supplies

Figure 45: Main supplies identified preliminarily




Annex 5. Value chain in the mining industry

Figure 46: Value chain of the mining industry Source: Authors.

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identification of strategic supplies for leading mining ... · consultancy for the identification...

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