CARTA DE CODELCO - PULSOs2.pulso.cl/wp-content/uploads/2012/05/1532041.pdf · Codelco (*) Freeport...

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Copyrights © 2010 by CODELCO-CHILE. All Rights Reserved.Copyrights © 2011 CODELCO-CHILE. Todos los Derechos Reservados. Copyrights © 2011 by CODELCO-CHILE. All Rights Reserved.

Codelco UpdateApril 2012

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Codelco´s Highlights

Development Plan Update & Outlook

Operating & Financial Review

Industry Overview

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• Strong operating & financial performance Year-End 2011 compared to 2010

- US$8.81 billion EBITDA 2011, 18.5% higher than 2010

- 40-year record in production during 2011, grew 2.0% compared to 2010,

• Important progress was made in structural projects: MH, El Teniente New Mine

Level, Chuqui Underground, RT Sulphides Phase II, and Andina Phase II

• Improvement in Safety: accident frequency rate in 2011 was 1.39, the lowest in

Codelco’s history, however the Company has to regret 4 fatal accidents

• Began initiatives in human resource and sustainability in order to ensure

excellence in all areas.

2011 Highlights

4


World Leader in the Copper Industry

Long Life Copper Resources*

Copper Ore Grade Useful Life

Million of Tonnes % Years

Chuquicamata 16.3 0.65 46

RT 16.5 0.45 33

MH 7.9 0.83 41

Salvador 8.4 0.49 42

Andina 46.6 0.74 83

El Teniente 34.7 0.84 72

Gaby 2.0 0.36 12

Total Codelco 132.4 0.67 83* Mineral Resources include stocks of ore and broken material identified in Codelco´s BDP

-

500

1.000

1.500

2.000

2.500

Codelco (*) Freeport Xstrata BHP Billiton Chinese

Companies

Southern

Copper

Rio Tinto Anglo

American

Teck

Resources

First

Quantum

KGHM Norilsk Vale Antofagasta Barrick Gold

2011 2015 2021

Source: Codelco and Companies reports

(*): Includes 49% share in El Abra, considers preliminary BDP 2012 (**): Corriente Resources is a Joint Venture between Tongling and China Railways.

Past, Present and Future Leadership in Copper Production

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Smelted & Refined Copper 89%

2011 and 2010 Sales Breakdown by Region2011 and 2010 Sales Breakdown by Product

2011 Copper Sales Breakdown (mft)

US$ millions 2011 2010 %

Copper 15,684 14,715 6.6%

Molybdenum 778 720 8.1%

Other Products

(anodic slimes,

sulfuric acid,

etc..)

1,054 631 66.9%

Total 17,515 16.066 9.0%

2011 Top Clients (mft)

Nexans Copper France France

Southwire Company USA

Codelco Kupferhandel Germany

Cobre Cerrillos S.A. Chile

Wanxiang Resources Co. China

Aurubis AG Germany

LS Cable Ltd. South Korea

Ningbo Sunhu Chemical Prod. Co. China

Maike Metals Int. Ltd China

- Cathodes 82%

- Fire refined 4%

Concentrate 11%

Source: Codelco

- Blister 3%

Well Diversified, Fully Integrated and Stable Operations

41%

36%

17%

22%

20%

21%

9%

11%

11%

10%

2%

1%

0% 20% 40% 60% 80% 100%

2010

2011

China Asia (exc. China) Europe

North America South America Oceania

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Industry Overview



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0

100

200

300

400

500

19

08

19

11

19

14

19

17

19

20

19

23

19

26

19

29

19

32

19

35

19

38

19

41

19

44

19

47

19

50

19

53

19

56

19

59

19

62

19

65

19

68

19

71

19

74

19

77

19

80

19

83

19

86

19

89

19

92

19

95

19

98

20

01

20

04

20

07

20

10

World War I:

Military Demand

Post-World War II:

Golden Years in USA,

European Reconstruction &

Japanese Miracle

Oil Crisis

Substitution

Emergence of China,

India and Other

Developing Economies

Great Depression

Source: WBMS, IMF and Codelco.

*Year 2012 until February 29th. Constant Price in 2010 Currency

Structural Demand Changes and Constant Copper

Price, 1908-2012*

c/lb

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0

5.000

10.000

15.000

20.000

1950 1960 1970 1980 1990 2000 2010

China

Developing Countries

Developed Countries

‘000 tonnes

Solid Medium and Long-Term Market Fundamentals

Sources: WBMS, IMF, World Bank, United Nations and Codelco.

**PPP, 2005 US$.

World Refined Copper Consumption , 1950-2011 GDP and Consumption per Capita, 1980-2011

How Far Can China go?

China (‘79-2009*) Japan (‘60-’90) Korea ( 69-’96)

GDP Growth per Capita (%)

During 8.7 6.5 7.0

After 0.6 3.2

GDP per Capita vs. USA (%)

Initial 4.3 39.8 12.9

End 18.8* 92.4 52.3

Urbanization Rate (%)

Initial 19.36 43.09 54.20

End 46.96* 63.09 59.02

Population (millions)

End 1,300* 126 45Sources: Heston, Summers and Aten (2011), Penn World Table 7.0, May; UN Department of Economicand Social Affairs: World Urbanization Prospects: the 2009 revision

* For China “End", used the latest data available in 2009 PWT

-

10

20

30

40

0 15.000 30.000 45.000

JapanUSA

Taiwan

South Korea

Germany

China

Kg of copper per capita

PIB per capita*GDP per Capita**

9


1,172

7,204

16,062

6,032

8,848

0

4000

8000

12000

16000

1995 1995-2010 Growth 2010 2010-2025 Growth 2025

What Matters is the Size...

Brook Hunt China Copper Consumption

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

CHINA 1960-2025

1970 - 1979

8% growth p.a.

1980 - 1989

5,9% growth p.a.

1990 - 1999

9,6% growth p.a.

2000 - 2009

14,7% growth p.a.

2010 - 2025

5,5% growth p.a.

1960 - 1969

3,5% growth p.a.

CHINA 1995-2025

Annual Average

Growth 95- 10

Source: Brook Hunt, December 2011

Annual Average

Growth 10- 255.5%

12.9%

Annual Average Growth

2010-2025: 5.5%

Total Growth 8,848 kt

=

Total Growth from

1960 to 2013 (53 years)

K tonnes

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Copper Supply Challenges

Industry’s Average Ore Grade

0,65%

0,70%

0,75%

0,80%

0,85%

0,90%

0,95%

1,00%

1985 1990 1995 2000 2005 2010 2015

Source: Codelco and Brook Hunt; * Primary Production

US$ / ‘000 tonnes, 2010 currency

Lumwana

Salobo I

Oyu TolgoiTenke Fugurume

CaseronesToromocho

Gaby

Andina Phase I

RT Sulphides I

MH

Los BroncesExp.

Konkola Deep

Quellaveco

Antamina

Collahuasi (total)

Los PelambresCerro Verde Mill

0

2.000

4.000

6.000

8.000

10.000

12.000

14.000

16.000

18.000

20.000

1995 2000 2005 2010 2015

Capex Cost Escalation

Supply Curve of the Industry*

Cash Cost Curve (C1)

Lower probability of discovering high grade/large size deposits

Many new mines will be U/G operations

Country risk: resource nationalism and sovereign risk

Infrastructure constraints

Environmental challenges

Capital costs escalation and tighter credit market

-20

0

20

40

60

80

100

120

140

160

180

200

220

240

260

280

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

2010

19852000

19951990

2005

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Consensus on Tight Market Balance

‘000 tonnes

CDEL INT BH CRU CDEL INT BH CRU

Refined Production 19.176 19.818 19.668 18.805 19.882 20.481 20.362 19.228

Change % 2,2% 2,5% 3,4% 0,1% 3,7% 3,3% 3,5% 2,2%

Refined Consumption 19.554 19.928 19.804 19.195 20.058 20.421 20.479 19.610

Change% 2,6% 3,4% 2,8% 3,5% 2,6% 2,5% 3,4% 2,2%

Balance -377 -110 -136 -390 -176 60 -117 -382

2011 2012

Sources: CDEL: Codelco, January 2012; INT; Intierra (ex Bloomsbury), Copper Briefing Service, March 2012 (published in February 2012); BH: Brook Hunt, Metals Market Service, Monthly

Update, January 2012; CRU: Copper Quarterly Industry and Market Outlook, January 2012;

‘000 tonnes ‘000 tonnes

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Positive Outlook for Copper Price, with Volatility

Price (c/lb, currency 2012)

2012 2013 2014 2015 2016

Intierra (ex Bloomsbury) 389 361

Brook Hunt 395 362

CRU 400 415 363 322 291

Analysts' Average 395 379 363 322 291

Barclays 404 496 400

Citigroup 355 377 354 337

Deutsche Bank 333 367 324 295 267

Macquarie 379 387 302 295 308

RBS 380 409 363 320 284

Banks' Average 370 407 336 329 286

Analysts and Banks Average 379 397 341 328 288

Cochilco Survey 385 390

Note of Publication Dates: Intierra (ex Bloomsbury), Copper Briefing Service, March 2012 (published in February 2012); Brook Hunt, Metals

Market Service, Monthly Update, January 2012; Copper Quarterly Industry and Market Outlook, January 2012; Banks, Energy and Metals

Consensus Forecast, January 2012. Cochilco: El Mercurio March 21st, 2012.

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Industry Overview



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Chuquicamata

Salvador

Gabriela Mistral

AndinaEl Teniente

Santiago

Calama

C

H

I

L

E

Antofagasta

2011 figures

Production (thousand tons)

Copper 423

Molybdenum 11

Cash Cost (c/lb) 110.8

Resources (mill mft) 63

2011 figures


Copper 118



2011 figures


Copper 69

Molybdenum 1



2011 figures


Copper 400

Molybdenum 6



2011 figures


Copper 234

Molybdenum 3



Radomiro Tomic

2011 figures


Copper 470

Molybdenum 2



Ministro Hales

2011 figures

Starting Operation in

2013


High quality assets: Mine Operations

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8,451

4,968

3,948

5,799

7,033

0

75

150

225

300

375

450

0

1.500

3.000

4.500

6.000

7.500

9.000

2007 2008 2009 2010 2011

Codelco: 5 Year Results

Profit before taxes* and copper price

2011 Accident Frequency Rate**Direct Cash Cost (C1)

Production

** Includes own workers and contractors. Accidents with Lost Time / Million Working Hours

* Includes Export Tax Law

Note: Figures for 2009, 2010 and 2011 are under IFRS and 2006, 2007 and 2008 are under Chilean GAAP.

US$ Million c/lb’000 tonnes

1.665

1.548

1.7821.760

1.796

1.400

1.500

1.600

1.700

1.800

1.900

2007 2008 2009 2010 2011

39,7

70,2

92,9104,4

116,4

0

20

40

60

80

100

120

140

2007 2008 2009 2010 2011

3,5 3,4

2,4

2,0

1,4

0,0

1,0

2,0

3,0

4,0

2007 2008 2009 2010 2011

c/lb

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0

2.000

4.000

6.000

8.000

2010 2011

0

50

100

150

200

250Jan-Sep 2010 Jan-Sep 2011

Codelco’s 2011 Results in Perspective

US$ Million

Cost of SalesProduction

c/lb

Source: Companies’ Reports, Cochilco and Codelco **Codelco includes Export Tax Law. For Los Pelambres, Collahuasi and AAS figures are for Jan-Sep 2011 results, annualized

+37% +47%+16%

+13%

+55%

+17%

-37%

+6% -17%

-12%

0

400

800

1.200

1.600

2.000

2010 2011

Profit before taxes**

+3%

-25%

-10% +7%

-5%

’000 tonnes

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Codelco Costs January-December 2011

2011 2010

Total Costs & Expenses 205.6 197.6

Net Cathode Cost (C3) 171.6 171.7

Direct Cash Cost (C1) 116.4 104.4

Total Costs & Expenses increased ¢8 principally due to CPI effect and the

appreciation of the Chilean Peso against the US Dollar. In addition, prices of most

relevant materials and consumables increased significantly.

Net Cathode Cost (C3) was positive impacted by higher by-product credit

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And Good Results Continue on the Back of a High Copper Price and Record Production

IFRS

2009 2010 2011 2010/2009 2011/2010

Copper Production (thou. mft)(1)

1,782 1,760 1,796 (0.7)% 2.0%

Cash Cost (US¢/pound)(2)

92.9 104.4 116.4 12.4% 11.5%

LME Copper price (US¢/pound) 234.2 342.0 399.7 46.0% 16.9%

Total Sales $12,379 $16,066 $17,515 29.8% 9.0%

Gross Profit $4,713 $6,977 $7,232 48.0% 3.7%

Gross Margin 38.1% 43.4% 41.3% 13.9% (4.8)%

Adjusted EBITDA(3)

$5,369 $7,434 $8,813 38.5% 18.5%

Adjusted EBITDA Margin 43.4% 46.3% 50.3% 6.7% 8.6%

Net Interest Expense(4)

$291 $296 $250 1.7% (15.5)%

Capex $2,127 $2,616 $2,545 23.0% (2.7)%

Ratio of Debt to Adjusted EBITDA 0.9 0.9 0.8 - (11.1)%

Adjusted EBITDA Coverage Ratio(5)

18.4x 25.2x 35.3x 37.0% 40.1%

(US$ million)

1 Includes Codelco’s share of El Abra’s production

2 Cash cost is always relative to a metal and expressed per unit of production. It includes all cash expenses of production net of the revenues from other metals extracted that are not copper

3 Calculated as Net Profit plus Taxes (includes Export Tax), Finance Cost and Depreciations and Amortizations

4 Includes provisions and other financial expenses

5 Adjusted EBITDA coverage ratio is the ratio of Adjusted EBITDA to finance cost net of finance income

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133 133 134

688435 500 500

600

10001150

500 500

165

208

2012 2013 2014 2015 2016 2019 2020 2021 2025 2035 2036

Local bonds International bonds

100

Debt Profile (December, 2011)

Debt Maturities Schedule – US$ million

Bank Debt

20


Industry Overview


Highlights


21


Codelco: Key Strategic Objectives

Secure the planned level of production during the coming years to take advantage of strong prices

Materialize the Key Structural Projects to develop Codelco’smining resources, maintain its leadership in world copper

production and maximize returns to the owner

Ensure medium and long-term competitiveness, introducing new technologies, rationalising its organization, promoting

generational change and improving the decision-making process

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Major Projects and Copper Production Forecast‘000 tonnes

ENMS

Depletion

Salvador

Oxides

Depletion

RT Oxides

Depletion

Chuqui Open

Pit Closure

Southern

Open Pit

MH

San

Antonio

Quetena

RT Phase II

EL TENIENTE

New Mine

Level

ANDINA

Phase II

CHUQUI

Uncerground

Source: Preliminary 2012 Business Development Plan

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Description

• New copper deposit near Chuquicamata (Calama).

• Important content of copper and silver.

• Open pit, concentrator and roaster.

Capacity• 50,000 tpd.

• 160,000 tonnes of copper / year*.

Investment • US$2.5 billion

Start-Up Date • 2013.

Status

• Engineering Progress: 82%

• Construction Progress: 11%

• Successful Pre-Stripping: 83 mn tonnes of material removed

Structural Projects as the Priority

MH

*: Average production during the first 10 years at design capacity. Information updated to March 23, 2012. Investment figures at December 2011. 2011 Decree Currency

MH División will be a new large-scale

operation of Codelco

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Description• Development of a new level of extraction at El Teniente, 300 meters below

the deepest level currently in production.



Investment • US$3,1 billion


Status

• Investment approved.

• Early works in construction

(Platform, access decline).


El Teniente New Mine Level

*: Average production during the first 10 years at design capacity. Investment figures at December 2011. 2011 Decree Currency

Ensure competitiveness and operational continuity in El

Teniente Division, incorporating new reserves (below current

operating level) in order to extend the life for over 50 years

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Description• Development of an underground mine at Chuquicamata.

• Production of copper and molybdenum.



Investment • US$3,7 billion


Status• In feasibility study stage.

• Early works ongoing


Chuquicamata Underground


The Chuquicamata open pit mine will transform

into a large underground mine

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Description• Increase of capacity from 60,000 tpd* to 200,000 tpd.

• Open pit.

Capacity** • 345,000 tonnes of copper / year**.

Investment • US$4,7 –US$5 billion


Status • In feasibility study stage

RT Sulphides Phase II

*: Production currently sent to Chuquicamata. **: Average production during the first 10 years at design capacity. Preliminary investment figures at December 2011. 2011 Decree Currency


Exploit the great potential of sulphide

reserves at RT

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Description• Huge mineral resources with copper and molybdenum content.

• Open pit and underground operations.

Capacity• Capacity increase from 94,000 to 244,000 tpd.

• 306,400 tonnes of copper / year* (additional to current level of production).

Investment • US$6.4 billion


Status • In feasibility engineering stage


Andina Phase II


Andina Division will expand its

capacity to take advantage of its

significant mineral resource base

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Codelco: An integrated Copper Mining Company with

the richest resource base and a lucrative portfolio of

opportunities

An integrated business model that generates stable and growing cash flows

A consistent well defined business plan based on abundant proven reserves and

a sustainable production to serve a large and growing market

A history of solid investment grade credit ratings with an absolute commitment to

maintaining them in time

Republic of Chile’s improving fundaments contribute to higher ratings

Incremental debt used to finance investment plan

Positive cash flow generation

Long term debt maturities designed to match cash flows

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This presentation has been prepared by Corporación Nacional del Cobre de Chile (“Codelco” or the “Company”) This presentation does not constitute

or form part of an offer or any solicitation to any other person or to the general public to subscribe for or otherwise acquire securities issued by Codelco

in any jurisdiction or an inducement to enter into investment activity, nor shall it (or any part of it) or the fact of its distribution or availability, form the

basis of, or be relied on in connection with, or act as any inducement to enter into, any contract or commitment or investment decision.

The information contained in this independently presentation has not been verified and is subject to change without notice. No representation or

warranty express or implied is made as to and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information

or the opinions contained herein. None of the Company, any of its respective affiliates, advisers or representatives shall have any liability whatsoever (in

negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with the

presentation.

This presentation is only for persons having professional experience in matters relating to investments and must not be acted or relied on by people

who are not relevant persons.

This presentation includes „forward-looking statements‟. These statements may include words such as “anticipated”, “believe”, “intend”, “estimate”,

“expect”, “preliminary” and words of similar meaning. All statements other than statements of historical facts included in this presentation, including,

without limitation, those regarding the Company‟s financial position, business strategy, plans and objectives of management for future operations

(including development plans and objectives relating to the Company‟s products and services) are forward-looking statements. Such forward-looking

statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or

achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward looking

statements. Such forward-looking statements are based on numerous assumptions regarding the Company‟s present and future business strategies

and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this presentation.

The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained

herein to reflect any change in the Company‟s expectations with regard thereto or any change in events, conditions or circumstances on which any such

statement is based.

As is standard in the industry, CODELCO divides its mineral holdings into two categories, reserves and resources. Resources are ore bodies of

economic value that have been identified and evaluated through exploration, reconnaissance and sampling. Reserves are the portion of the resource

that can be extracted based on an economic, environmental and technological analysis set forth in the mining plan. Reserves and resources are both

subdivided further, based on the degree of knowledge that CODELCO has of their extent and composition. The system used by CODELCO for

categorizing mineral ore is widely used within the mining industry (and codified in such international regulations as the Joint One Reserves Committee

(JORC) code of Australia, the South African Mineral Resources Committee (SAMREC), and the Reporting Code of Great Britain). Other systems of

categorization are also used; one such system is that used by the U.S. Geological Survey. This presentation may not be taken away with you. The

contents of this presentation may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in

part, for any purpose.

Disclaimer

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