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Ministerio,

Subsecretaría,

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CHILEAN COPPER INDUSTRY

Insights and challenges

Jorge Cantallopts

Director of Research and Policy Planning

Chilean Copper Commission

@CochilcoChile

Jun 27th 2017

AGENDA

02 0403

CHILE AND

THE MINING

IT´S TIME FOR

A CHANGE

01

NEW

CHALLENGES –

NEW VISION

FINAL

REMARKS

CHILE AND THE MINING01

Mining Ministry | COCHILCO

Highest GDP per cápita in Latin America.

Strong presence of FDI (~7% GDP)

Foreign Investment Regime: 3°in the world (EIU 2015-2019)

Global Competitiveness: 35 among 140 countries (WEF, 2016)

• Chile, leader in Latin America

Competitiveness Strengths:

Solid institutions

Macroeconomic stability

Human Capital

Financial development

Source: InvestChileMining Ministry | COCHILCO

• A connected country

Access to severalmarkets 85% of Global

GDP. 93,8% of exports

markets. 65% of world

population.

Double taxationagreements with25 countries

Investment protection treatieswith 76,4% of world GDP.

Source: InvestChileMining Ministry | COCHILCO

EXPORTATIONS

57% 2003-2016

FOREIGN INVESTMENT

18%2005-2015

Tax Revenue

18,4% 2003-2016

Mining represent

13% of GDP 2003-2016

MINING IN CHILE

Source: Banco Central de Chile, INE and FMI* Quarter December 2015 -February 2016 (INE)

Mining Ministry | COCHILCO

4.6%

4.2%

4.2%

2.8%

6.4%

Chile

Peru

United States

Russia

China

Mexico

Others countries

DR Congo

Australia

2.8% Zambia

1.5

%Canada

29.2%

11.4%

12.2%

20.8%

• Main copper reserves.• Important gold, silver, molybdenum and potassium reserves.• Main lithium reserves.

Source: USGS Mineral Commodity Summaries (2016)Mining Ministry | COCHILCO

• Most important world mining reserves

Fuente: Cochilco, basado en Maksaev y otros (2007).Source: USGS Mineral Commodity Summaries (2016), GFMS (2016)

Mining Ministry | COCHILCO

• Mineral endowment

IT´S TIME FOR A CHANGE02

Mining Ministry | COCHILCO

COPPER PRODUCTION AND ITS IMPACT IN THE CHILEAN ECONOMY

COPPER PRODUCTION AND ITS IMPACT IN THE CHILEAN ECONOMY

COPPER PRODUCTION AND ITS IMPACT IN THE CHILEAN ECONOMY

NEW CHALLENGES – NEW VISION03

Mining Ministry | COCHILCO

Source: COCHILCO

TREND ON MINERAL POLICY

Mineral policy based on economic development

Geological potential and mineral rights

Investmentattraction

Economic rentdistribution

Suppliersdevelopment

Exportingmining, servicesand supplies

R+D+i

LOW LEVELFirst stage

DEVELOPMENT ADVANCED

@CochilcoChile

Source: Cochilco

NEW MODEL PROPOSAL

Creating value

Mining METS

Productions Productivity

Community Participations

Market Share

Investment Climate

Funding Human Capital

Innovations policies

Infrastructure

Environmental Governance Tech Transf

Water Land Electricity

Geological potential

Communities Environment

Government

Universities and TC

Workers NGOJunior C.

Providers Codelco S&M Mining

Mayor C.

Sustainable basis

Key Drivers

Market drivers

Players

Strategies

Pillars

Main Goal

RECOVERING THE MOMENTUM

Governmet

Workers

Junior C.

Mayor C.

NGO

S&M Mining

Universitiesand TC

StateCompanies

Providers

Multiplayer solutionsChallenges

Reducing conflicts Environmental permisson

system improvement Productivity improvement Increase linkages

FACTORS THAT DETERMINES THE RELATION

Identification of actors and

area of influence

Early consultation

and participation

Company´s reputation

Knowledge of community´s

culture

Expectation and benefits distribution

Development of local

capacities

Natural resources availability and

distribution

1 2 3 4

5 6 7

REDUCING CONFLICTS

• Incomplete

report

• Missing

information

• Lack of

experience of

medium size

miners

• Requirements

presented in a

complicated

way

19

% of

projects

Not allowed to

process

8%of

project

s 23%of projectsBig size

miningMedium

size

mining

Reasons } Solutions:Requirements in a

simpler way

Create a simple

template for the

reports

ENVIRONMENTAL PERMISSON SYSTEM IMPROVEMENT

Source: The Conference Board. 2016. The Conference Board Total Economy Database

http://www.conference-board.org/data/economydatabase/

0

50

100

150

200

250

300

350

400

60

80

100

120

140

160

180

TPFCommodities’s

Super Cycle

Latin American

Debt CrisisGDP/

pc

• Productivity is behindChile’s success in the last30 years

19

PRODUCTIVITY IMPROVEMENT

• Aggregate TFP slowdownsince 2000 with Miningbeing one of the biggestsectors

Annual TFP growth rate (%)

1990/2000 2000/2010 2000/2015

Aggregate TPF 2.3% 0.3% 0.1%

Aggregate TPF without Mining

2.3% 1.6% 1.4%

Creating value

Mining METS

Producción Productividad

Participación ciudadana

Participación de mercado

Gobernanza

Financiamiento Capital Humano

Innovación

Infraestructura

Institucionalidad Ambiental

Transferencia Tecnológica

Agua Territorio Energía

Recursos y Reservas Comunidades

Medio Ambiente

Estado

Universidades e IT

Trabajadores ONGJunior

Proveedores Codelco PyM Minería

M. Privada

Sustentabilidad del

negocio minero

Factores críticos

Factores de desarrollo

Actores

Estrategias

Fuente: Cochilco

INCREASE LINKAGES

• Providers Development Programs (Alta Ley, FCH, Corfo).

• Science and technology programs(Conycit).

• Including providers in the mining development strategy (Cochilco)

FINAL REMARKS04

Mining Ministry | COCHILCO

Chile is in another step

Adding Value is the new goal

Multiplayer solutions are the only way

Logo Gobierno:

160x162px.

Ministerio,

Subsecretaría,

Organismo,

etc.:160x145px

CHILEAN COPPER INDUSTRY

Insights and challenges

Jorge Cantallopts

Director of Research and Policy Planning

Chilean Copper Commission

@CochilcoChile

Jun 27th 2017