Facing the challenge of a new age:

Transcription

1 Facing the challenge of a new age: Chile and mining in the 21st century COCHILCO Chilean Copper Commission Jorge Cantallopts Research Department May 4th, 2015

2 Content 1. Mining in Chile, a brief summary. 2. Enviromental and social licenses. 3. Costs and productivity challenges. 4. Final comments

3 Imagen Referencial 1. Mining in Chile, a brief summary

4 Mining in Chile, a brief summary General facts Population 2014(e): 17,8 million (e) Surface territorial area: 756,950 km 2 GDP 2014(e): US$250 billion Mining GDP: 11% Sources: Central Bank of Chile, National Statistical Institute

5 Mining in Chile, a brief summary Mineral endowment 52% 52% 61% 58% 35% 1 21% 14% 3 28% 32% 1 14% 5% 7 8% 2% 15 24% Re 186,2 42 Mo 95,9 29 Cu 63,5 47 Ag 107,9 79 Au 197,0 53 Y 126,9 3 Li 6,9 Share of world reserves Share of world production World production ranking Sources: USGS Mineral Commodity Summaries, COCHILCO

6 Mining in Chile, a brief summary Mining in exports Mill. US$ Country total Copper exports Mining exports 2014(e): Mining 55% Copper 50% : Mining 87% : Mining 62% Copper 46% Source: Central Bank of Chile

7 Mining in Chile, a brief summary Fiscal income and FDI Fiscal income 2014 (e) FDI ,5% Mining Other sources Sources: Budget Agency, Foreign Investment Commitee

8 (e) 2015 (f) 2016 (f) 2017 (f) 2018 (f) 2019 (f) 2020 (f) 2021 (f) 2022 (f) 2023 (f) 2024 (f) 2025 (f) Mining in Chile, a brief summary Leading copper production, but Mton Cu 9,0 8,0 7,0 6,0 5,0 4,0 3,0 2,0 1,0 0,0 Source: COCHILCO Operations Projects

9 Mining in Chile, a brief summary There s still job to do Mining projects (Mill. US$ ) Mining projects (Mill. US$ ) 22% 2% 19% 22% 47% 6% 3% 25% 13% 41% Under construction Possible Probable Potential State owned Copper Gold and Silver Industrial minerals Private Copper Iron Other minerals Source: COCHILCO

10 Mining in Chile, a brief summary And it s a global challenge Mill. US$ Copper projects investment CAPEX intensity in copper projects Chile 12, Australasia 13, North America Other Latin America 9,7 12, Africa 6, Eurasia 22,4 0,0 5,0 10,0 15,0 20,0 25,0 k US$/TMF Cu Source: COCHILCO, WoodMac

11 Imagen Referencial 2. Enviromental and social licenses

12 Enviromental and social licenses Mine closure Smelters emissions Local communities Human resources Water availability

13 Enviromental and social licenses Mine closure Smelters emissions Local communities Human resources Water availability

14 Enviromental and social licenses Mine closure Improvement in legal framework in 2011lead to new obligations to mining operation related to mining closure. In 2014 more than 100 mining operations submit their closure plan. Expected value of first approach reach Mill. US$ Source: National Service of Geology and Mines

15 Enviromental and social licenses Smelters emissions In 2013 new policy for smelters emissions was defined. To meet regulations chilean smelters would require major investment in their acid plants and infrastructure. There are 7 smelters in Chile with 1,6 Mton anode production.

16 Direct cash cost (c/lb) Enviromental and social licenses Smelting costs 45 Chile China Japan Global Source: Wood Mackenzie

17 Enviromental and social licenses Production forecast Kton Cu Concentrates Base Concentrates Projects Cathodes SxEw Base Cathodes SxEw Projects Source: COCHILCO

18 Enviromental and social licenses Mine closure Smelters emissions Local communities Human resources Water availability

19 Enviromental and social licenses Local communities Several projects have to deal in a new way with society. Empowered citizens, social awareness, search for mutual benefit and legal framework (C169).

20 Enviromental and social licenses Projects delayed Mining projects (Mill. US$ ) 1% 8% Mill. USD in projects delayed for socio enviromental problems. 34% 57% Normal Suspended by internal causes Postponed Suspended by external causes External causes accounts for 8% of total projects investment.

21 Enviromental and social licenses Human resources 000 people 30 Replacement Projects More than 27 thousand new jobs in mining: o o o o Safety. Disruptions. Work expectancy. Relation with academic institutions. 5 0 Source: Mining Council

22 Enviromental and social licenses Mine closure Smelters emissions Local communities Human resources Water availability

23 Average water flow [m 3 /person/year] Enviromental and social licenses Water availability Water availability in Chile Copper production by region % Chile Source: COCHILCO World Minimun Chilean northern regions Northern regions (I, II, III and IV) Other (V, VI and RM) 79%

24 Millares Enviromental and social licenses Water availability m 3 /s 7,0 6,0 5,0 4,0 3,0 Water for mining in selected regions 2013 Forecast of sea water consumption for new mining projects 2,6 3,6 4,4 5,2 5,4 2,0 1,0 0,0 I II III IV V RM VI 0,0 0,7 1,2 1,3 Sea water Underground water Other sources Surface water Source: COCHILCO

25 Imagen Referencial 3. Costs and productivity challenges

26 Costs and productivity challenges Geology Mining costs Energy costs and consumption Productivity Strategic inputs

27 Costs and productivity challenges Geology Mining costs Energy costs and consumption Productivity Strategic inputs

28 Costs and productivity challenges Geological context Mine production driven by natural conditions: o o o o o Lower ore grades. Deeper mines. Longer hauling distance. Higher Altitude. Deposits near populated cities. % 1,20 1,00 0,80 0,60 0,40 0,20 0,00 Source: COCHILCO Concentrating Plant ROM and/or Dump Leach Heap Leach Chile Average

29 cus$/lb Costs and productivity challenges Mining costs Mine copper cost (C3) 13% lower Higher cost in high price scenario: o o Price for strategic inputs. Productivity awareness % Higer Chile Source: COCHILCO, WoodMac Rest of the world

30 Costs and productivity challenges Geology Mining costs Energy costs and consumption Productivity Strategic inputs

31 ($US/MWh) Costs and productivity challenges Electric energy costs 160 Comparison of electricity costs in the mining industry, * ($US/MWh) 152 Unit cost of electric power in some mining countries in 2012 ($US/MWh) Chile Argentina Brazil Brasil Mexico México Avg. of copper Prom. Minería de Cobre mining sector Australia Peru Perú Canada Canadá 69 0 South Sudáfrica Africa EE.UU. USA Max Range Chile Avg. Promedio w/o Chile sin Chile *Argentina, Australia, Brazil, Canada, Chile, China, Congo, Indonesia, Kazakstan, Mexico, Mongolia, Papua NewGuinea, Peru, Philippines, Russia, South Africa, USA, Zambia Source: COCHILCO, WoodMac

32 Energy (TWh) Costs and productivity challenges Energy consumption Energy consumption forecast 120 Base year 2000 = Open pit [MJ/ton] Milling [MJ/ton ore] Leaching [MJ/ton ore] Underground mine [MJ/ton] Smelter [MJ/ton con.] Source: COCHILCO

33 Costs and productivity challenges Geology Mining costs Energy costs and consumption Productivity Strategic inputs

34 Total Factor Productivity Costs and productivity challenges Productivity measures 110% Chilean copper mines TFP 300 Input index % 100% 90% Base year 2000 = 100% Base year 2000 = % 80% 50 70% 0 Source: COCHILCO Cu Production Energy consumption Cu Reserves Labor Capital stock Ore grade

35 Costs and productivity challenges Productivity measures Cu ton/worker Labor productivity Chile Australia Argentina New Guinea South Africa Indonesia Labor productivity in copper mines 2011 (Kg Cu/HH) USA Mexico Peru Canada Chile Brazil Source: COCHILCO, Mining Council

36 Costs and productivity challenges Geology Mining costs Energy costs and consumption Productivity Strategic inputs

37 RIESGO DE DESABASTECIMIENTO Costs and productivity challenges CAPEX strategic inputs Pala de Cable (mca) Chancador Primario Giratorio (Conc.) Equipos de Bombeo (Bombas) (Lix) 10 9 Cañería HDPE (Lix) 8 Celda de Flotacion (Conc.) Cañería Aceros (Lix) Loop eléctrico (mca) 7 Cañerías y Fitting Metálicos (Conc.) 6 5 Cañerias No Metalicas (Pta. Desal.) 4 1 a 6 Rack Osmosis Inversa (Pta. Desal.) Canaleta de Relaves (Conc.) Valvulas (Pta. Desal.) Variador de Frecuencia (Pta. Desal.) Estación de Bombeo (Pta. Desal.) Correas transportadoras (Lix) Polín (correa) (Lix) Bombas (Pta. Desal.) Molino de Bolas y Barras (Conc.) Geomembrana (Lix) Insumos Eléctricos (Cables, conduit y luminarias) (Lix) Camiones (CAEX) (mca) Source: COCHILCO 1 -Espesador Concentrado (Conc.) 2- Correas de Transporte (Conc.) 3- Molino Vertical (Conc.) 4- Chancador de Cono (Conc.) 5- Alimentador Descarga (Conc.) Espesador de Relave Alta Capacidad (Conc.) 0 0% 5% 10% 15% 20% 25% 30% PESO RELATIVO EN EL CAPEX (Por Subproceso)

38 Costs and productivity challenges CAPEX strategic inputs Higher share in total cost and higher availability risk: o SAG, ball and bar mills (Mill). o Milling infraestructure (Mill). o Mineral conveyor (Leaching). o Geomembrane (Leaching). o Trucks and Electric Shovel (Open Pit).

39 RIESGO DE DESABASTECIMIENTO Costs and productivity challenges OPEX strategic inputs Requerimiento Agua Fresca (Desalada) (Conc.) M&R (Infraestructura, LHD, Camiones, Jumbo, Martillo, Chancador, Correas) (ms) Combustible (Petróleo y lubricantes) (mca) Energía Eléctrica (Sx-Lix-Ew) (Sx-Lix-Ew) Energía Eléctrica Chancado y Molienda (Conc.) Energía Eléctrica Sistema de Impulsión (Imp. Des.) Explosivos (mca) Neumáticos y llantas (mca) Bolas y Barras de Molino (Conc.) Colector Primario (Conc.) 10 M&R Flotación (Conc.) Explosivos (ms) M&R Relaves (Mec-Elec) (Conc.) 9 Cal (Conc.) Reactivos SX - EW Floculante Relaves (Conc.) 8 Arriendo de Camionetas (Sx-Lix-Ew) 7 Arriendo Vehículos y Equipos Pesados (Sx-Lix-Ew) Servicios de M&R Desaladora(Mec-Elec) (Pta. Obras Marinas (Mantención) 6 (Pta. Des.) Des.) Buses transporte de personal) (ms) 5 Reactivo Anti-corrosión (Pta. Des.) M&R Chancado y Molienda (Mec-Elec) (Conc.) M&R Espesamiento Concentrado (Mec-Elec) (Conc.) Depresante Cobre (Conc.) M&R Mina Cielo Abierto (mca) Acido Sulfúrico (Sx-Lix-Ew) Energía Eléctrica Pta. Desaladora (Pta. Des.) 4 3 Reactivo Cal (Pta. Des.) Reactivo CO2 (Pta. Des.) Source: COCHILCO % 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% PESO RELATIVO EN LOS COSTOS DE OPERACIÓN (Por Subproceso)

40 Costs and productivity challenges OPEX strategic inputs Higher share in total cost and higher availability risk for every process: o o o o o o o Electric energy (Leaching, Mill, Sea water pumping). Fuel (Open Pit). Fresh water (Mill). Materials and Replacement parts (Underground Mine, Open pit and Miill). Sulphuric Acid (Leaching). Flotation reagents (Mill). Steel balls and bars (Mill).

41 Imagen Referencial 4. Final comments

42 Final comments Chile has been recognized as a major center for mining investment. Mineral endowment and projects support mining production forecasting. Challenges arise from several interacting factors: o o o o Enviromental. Local communities Productivity. Costs

43 Final comments Lower grades and other natural conditions of deposits encourage the need to sustain mining development. Technology, innovation, changes in processes, community relation models and costs restraints are leading efforts of mining activity in Chile. Improve mining requires better performance in socio-enviromental-economic axis, not only production increments.

44 Facing the challenge of a new age: Chile and mining in the 21st century COCHILCO Chilean Copper Commission Jorge Cantallopts Research Department May 4th, 2015