Chilean Mining Investments Project Portfolio

Transcription

1 Chilean Mining Investments Project Portfolio DEPP 13/2015 Intellectual Property Registry #256,643

2 Chilean Mining Investments Project Portfolio Brief The objective of this Assessment is to show the updated portfolio of mining projects in Chile, the estimate of investments required to carry it out in the period, and the impact upon the production capacity which the resulting productive contribution would have from the investing processes which would be registered in the aforementioned period up to The portfolio is made up of two groups of initiatives, the first of which correspond to those projects with a greater probability of materializing in the timeframes indicated by the owning companies, which are those in a base and probable condition, a total of 24 initiatives assessed in $31,345 million USD. Furthermore, the second group of projects corresponds to those in a possible and potential condition, meaning mining investments with lesser probability of materializing in the time frames established by the owners, as well as those prone to being affected by changes in market conditions, which total 18 initiatives assessed in $45,945 million USD. The most important part of this project portfolio is not the global value thereof, rather the composition in terms of the number of initiatives, those driving them, their objectives, their location, and the efforts being made to carry them out. Upon analyzing the investments within the investment portfolio, three phases can be identified: - Investment already raised, which corresponds to $15,415 million USD, or 19.9% of the current portfolio, - The investment to be raised during the next five year period, , for $44,894 million USD, equaling 58.1% of the portfolio, with an average yearly investment of $8,979 million USD, - The remainder to be invested in the period, during which those projects whose commissioning is anticipated to happen during that time have an investment total which reaches $16,981 million USD, equaling 22% of the investment portfolio. Within the investment to be raised during the next five year period, the project group with the base and probable conditions make up 40% of the investment, with an average rate of $3,592 million USD. Likewise the group of initiatives in possible and potential conditions make up the remaining 60%, with an annual investment average of $5,386 million USD. This investment primarily seeks to increase the productive capacity, which translates into an increase in the supply available to the international market. In the case of copper, and considering the horizon through , Chile has the potential to reach a maximum copper production of 7.56 million tons of copper, 31.6% above the production registered 1 Two years after the last year of the commissioning thereof as registered in this portfolio. Chilean Copper Commission

3 Chilean Mining Investments Project Portfolio in 2014, if all of the anticipated projects are carried out through 2024, wherein copper production would reach approximately 7.84 million tons, a 36.3% increase over 2014 production. It is worth noting that if only the initiatives with a base and probable condition are carried out, the copper production of the country will fall by 6.4% to around 5.4 million tons of fine copper. If, to this scenario, we add the materialization of the initiatives which are possible this would counteract the loss in production, reaching 6.6 million tons of fine copper, a 15.4% production increase with respects to This increase in production would reflect a structural change in the type of final product of the copper producing operations, as the maximum capacity of concentrate production would increase by 2.84 million tons by 2026, a 72.7% increase from 2014, the production of SxEw cathodes would diminish by 1.03 million tons, registering a decrease of 55.7% with respects to the same year. In the case of gold, it is expected that by 2026 the maximum capacity of this metal could reach 80.5 tons of gold content, a 75% increase over the 46 tons registered in 2014, while the projects included in this report with potential production of silver would reach 1,495 tpa of silver by 2026 over current production, which in 2014, reached 1,572 tons of silver. In the case of molybdenum, the principal by-product of copper mining, the maximum recovery capacity of molybdenum will reach 95.6 thousand tpa by 2026, a 96% increase with respects to the amount produced in 2014, which implies a yearly average rate of 5.3%. The projects with primary production or by-production of iron considered in this report will contribute 18.8mt of iron mineral by 2026, approximately 11.9 Mt of fine content, to reach a maximum production of around 33.3 Mt of iron ore, which is an 80% increase with respects to the quantity registered in In the case of industrial minerals, there are two initiatives in the area of saltpeter, the first of which would contribute 10,000 tpa of iodine equivalent, and around 1,293,000 tpa of NaNO 3. The second initiative would produce around 2,700 tpa of iodine, and 400,000 tpa of nitrates, including 20,000 tpa of boric acid. It is interesting to point out that there is also an initiative to produce titanium dioxide (TiO2) at a capacity which is estimated at 200 ktpa of concentrate (95% of TiO2). Chilean Copper Commission

4 Chilean Mining Investments Project Portfolio Index Brief Figure Index... 5 Table Index Introduction Methodology Coverage Project attributes and conditions for their realizaton Conditions for materialization Project type Stage of advancement Procedure for Environmental Evaluation Service (SEA) Time frame for commissioning Codelco s investment and information sources Private mining investment and information sources Methodological critera to estimate the commissioning date Production capacity estimate of copper mine Investments in Chilean mining Conditionality of the projects Investment purpose Regional investment Investment per originating country Estimate of yearly distribution of the project portfolio Distribution of the investment in copper mining Distribution of the investment in gold, iron and industrial minerals Estimate of the copper production capacity in Chile until Maximum copper mining production capacity in Chile Analysis of the hydrometallurgy production Analysis of the concentrate production Maximum copper mining production capacity per region...40 Chilean Copper Commission

5 Chilean Mining Investments Project Portfolio Global estimate of the production capacity of other minerals Production capacity of gold and silver Production capacity of molybdenum Production capacity of iron Industrial minerals Comparison of the project portfolios from 2015 and Conclusions...54 Investment procedence...54 Investment purpose...55 Investment region...55 Conditionality of the investment...55 Structural change in copper production...56 ANNEX 1: Description of investment projects in copper mining State copper mining projects Structural Projects of CODELCO Projects of the large private copper mines Projects of Anglo American Projects of Antofagasta Minerals Projects of BHP Billiton Project of Capstone Mining Projects of Lunding Mining Projects of Teck Projects of the medium copper mines Project of Amerigo Resources Project of COPEC Project of Hot Chili Projects of Pucobre Metallurgy Plant Projects Project of Codelco Project of LS-Nikko Copper...86 ANNEX 2: Description of the investment projects in gold and silver mining...87 Chilean Copper Commission

6 Chilean Mining Investments Project Portfolio Project of Atacama Pacific Gold Projects of Barrick Gold Project of Exeter Resource Corp Project of Kingsgate Consolidate Ltd Project of Kinross - ANNEX 3: Description of the investment projects in iron mining Project of Andes Iron Project of CAP MINERÍA Project of Hebei Wenfeng Industrial Group - ANNEX 4: Description of the investment projects in industrial minerals Projects of Ingenieros Asesores Ltda Projects of SQM S.A Project of White Mountain Titanium Corp - Figure Index Figure 1: Distribution of the investment in Chilean mining, according to condition Figure 2: Distribution of the investments in Chilean mining, according to project type Figure 3: Total investment of the investment portfolio per region, copper mining, and others Figure 4: Total investment of the investment portfolio according to originating country (MMUS$ and %) Figure 5: Investment per year, realized and to be realized, of the project portfolio according to type of mining Figure 6: Projection of maximum copper production in SxEw cathodes, period Figure 7: Projection of maximum copper production in concentrates, period Figure 8: Production of copper in concentrates and the participation in total production Figure 9: Projection of maximum copper production in concentrates according to destination, period Figure 10: Projection of maximum production of tailings from the copper concentrating process, Figure 11: Capacity for processing in copper concentrating plants up to Figure 12: Relation between treated mineral and fine copper content in concentrate produced.. 39 Chilean Copper Commission

7 Chilean Mining Investments Project Portfolio Table Index Table 1: Conditions to carry out a project Table 2: Register of mining projects in Chile Table 3: Distribution of the investments in Chilean mining per sector and condition of the projects Table 4: Distribution of the investments in Chilean mining per sector and stage of advancement.18 Table 5: Distribution of the investment in Chilean mining according to area and processing before the SEA Table 6: Distribution of the investment in Chilean mining per sector and project type Table 7: Investment in copper mining per region and project condition Table 8: Investment in gold, iron and industrial mineral mining, per region and project condition. 23 Table 9: Distribution of the investment in cooper mining per originating country and condition (MMUS$) Table 10: Investment in gold, iron, and industrial mineral mining, per originating country and condition (MMUS$) Table 11: Yearly distribution of the copper mining investment according to the project condition (MMUS$) Table 12: Yearly distribution of the investment in gold, iron and industrial minerals according to condition (MMUS$) Table 13: Estimated production capacity of copper mining in Chile through 2026 (kt of fine Cu) Table 14: Estimated Chilean production capacity of fine copper in concentrate through 2026 (kt of fine Cu) Table 15: Estimated Chilean production capacity of fine copper in SxEw cathodes through 2026 (Thousands of tons.) Table 16: Maximum regional productive capacity of copper mines in Chile through 2026 (thousands of tons of fine Cu) Table 17: Maximum regional productive capacity of fine copper concentrate through 2026 (thousands of tons) Table 18: Maximum regional productive capacity of fine copper in SxEw cathodes through 2026 (thousands of tons) Table 19: Contribution to maximum production capacity of gold and silver according to project.. 44 Table 20: Maximum production capacity of molybdenum according to project Table 21: Estimate of new iron production capacities according to project Table 22: Comparison of investment portfolios 2015 vs Error! Marcador no definido. Table 23: Comparison of portfolios 2015 and 2014 according to project condition Table 24: Comparison of portfolios 2015 and 2014 according to type of mining Table 25: Comparison of portfolios 2015 and 2014 according to type of mining and project condition Table 26: Comparison of portfolios 2015 and 2014 at a regional level Chilean Copper Commission

8 Chilean Mining Investments Project Portfolio Introduction The following report corresponds to a new update of the yearly report about investments in Chilean mining for the next decade, which is part of a line of work carried out by the Chilean Copper Commission and the Department of Studies and Public Policies for the past almost 10 years. The information herein contained is on based on public records available through June 2015, having the primary objective of providing pertinent information about the registry of mining projects which are currently valid in Chile, with the following projection of the expected investment and the potential capacity of mining production in Chile, considering the productive contribution which results from the investment process during the next ten years. The registration of the mining initiatives in this report does not assure they will materialize within the terms and timeframes planned by the companies, however it shows the interest they have to advance in their current mining activities, in the case of the companies with operations in Chile, or to begin mining in our territory, having considered the geologic potential of the available mining property as well as the economic and political perspectives in the country in the long term. This report is structured in the following manner: a) Specification of the methodological criteria used for the elaboration of this report, showing coverage, attributes which coincide with the condition that each project is in, with the purpose of measuring the level of certainty of the available information, information sources, criteria to estimate the start-up date if it is not readily available, and the estimate of the copper production capacity and of that of other minerals in the long term. b) Analysis of the investment required for the copper mining project portfolio, as well as that of gold, silver mining, iron mining, and that of some industrial minerals, with respects to the conditionality of these initiatives, the purpose of the investment, the regional distribution and the countries wherein the investments originate. The descriptive background of each of the projects considered is included in Annex 1 (copper mining), Annex 2 (gold and silver mining) and Annex 3 (industrial minerals: iodine, nitrates, potassium salts, and titanium oxide,) respectively. c) An estimate of the investment flow coming from the project profile, indicating the amounts already invested, the yearly flow during the next decade, and the amount to be invested after the next five years. It is to be noted that this projection is only referential and does not constitute a commitment with the companies which own the projects. d) Furthermore, and as a result of the investment process, the productive contribution of these projects is shown, through projections of the maximum production capacity of the copper mine, in concentrates such as SxEw cathodes, looking toward 2026 (two years after the last start-up registered in this report) and focusing on the conditionality of the initiatives. Additionally, a global estimate is given for the future production of gold, silver, molybdenum, iron and the industrial minerals considered. As in the case of the Chilean Copper Commission

9 Chilean Mining Investments Project Portfolio annualization of the investments, the production estimates are only referential based on the methodologies and information sources described at the beginning of this document. e) As in the previous two years, a registry is made as a form of comparison of the changes which have been registered between the current project portfolio and the previous, showing variations in investment amounts as well as in the quantity of initiatives considered. In this opportunity a vision is given on a level of the conditionality of the projects, investment purpose, and comparison on a regional level of the changes produced. Finally it concludes with the most relevant background information which can be taken from the information given. Chilean Copper Commission

10 Chilean Mining Investments Project Portfolio Methodology The Methodology which is used for the confection of this register is based on the following criteria: 2.1. Coverage The project register covers the investments with productive purposes (reposition or expansion of the production or new development) anticipated by CODELCO and the private companies of the large and medium metal and non-metal mines, excluding energy minerals. Only projects with investments which surpass 90 million dollars are included, as are those which are already being carried out as well as those in which the companies are assessing and have the intention of initiating the investment process within a five year period. For the effects of the yearly distribution of the estimated investment for each project, included is the sum of the investments already in place from the beginning of the project until the end of the year prior to the present report under the concept of Before xxxx wherein xxxx corresponds to the publication year of the report. Then the estimated investment is assigned for each year of the next five year period. Similarly, for those projects which will begin operations after the next five year period, it is presented as Investment after xxxx, wherein xxxx is the year after the last year of the present five year period, for the accumulated investment which will be carried out until the operations begin. It is worth noting that the information compiled in this document is the best approximation known of the projects being considered. In some cases, without other public information, the yearly distribution of the investments are estimates of the authors and are not binding in any way for the companies who own the projects. The background information of each project includes an estimate of the production of metals which they would supply, when it corresponds to such, as well as the indication of the current state of the project Attributes of the projects and the conditions of carrying them out The information about the investment projects is characterized by the uncertainty due to the quantity and quality of the background information available, which depends on the attributes of the projects up to the date in which the registry is made Conditions for the materialization Each attribute has a degree to which it may be associated to a greater or lesser degree of certainty and the combination of which will give a perception of the conditionality in which it is found to be carried out. Therefore, there are 4 conditions defined: Basic, probable, possible, and potential, as associated with the specific attributes which are detailed in Table 1: Chilean Copper Commission

11 Chilean Mining Investments Project Portfolio Table 1: Conditions for carrying out a project Condition Project type Stage of advance SEA process Implementation BASE Any Execution RCA approved Within the period Any Execution suspended RCA approved or in judicial claims Within the period PROBABLE Any Feasibility RCA approved Within the period Reposition or expansion Feasibility EIA or DIA in process Within the period Reposition or expansion Feasibility suspended EIA or DIA in process Within the period Reposition or expansion Feasibility EIA or DIA not presented Within the period POSSIBLE New Feasibility EIA or DIA in process or not presented Within the period Any Feasibility RCA approved Outside of the period Reposition or expansion Feasibility EIA or DIA in process or not presented Outside of the period Any Feasibility suspended Any Outside of the period POTENTIAL New Feasibility EIA or DIA in process or not presented Outside of the period Any Pre-Feasibility Any Any Source: Prepared by COCHILCO The attributes of a project are associated to their type, the stage of advance they are in, the status of the processing before the SEA, and the estimated date of implementation. The explanation of each is as follows: Project type This attribute gives information about the degrees of certainty of the realization of an investment project, as it relates to the strategic purpose of the Company and the lesser to higher complexities they face for the implementation to be carried out. The categories are as follows: a) Replacement projects: Those wherein the investment is to maintain the productive capacity of a current operation (brownfield) with new mining developments, to deal with a decline in ore grades and/or depletion of sectors being mined. This allows the Company to prolong the lifespan of the site and the use of the installations. b) Expansion projects: Those which seek to enlarge the current operational capacity (brownfield), with the purpose of increasing the production scale and diminishing the unitary costs, especially due to a decline in ore grades of the mining resources to be exploited. c) New projects: Those located at a new deposit (greenfield), and have to begin everything: the environmental and sector permissions, develop infrastructure, and settle into a new Chilean Copper Commission

12 Chilean Mining Investments Project Portfolio location. It also includes projects in current operations (brownfield), which contemplate a complete change in the productive process (For example: from leaching to concentration), which implies a practically new development of the site Stage of advance It is possible to estimate that to the degree that a project advances the certainty that it will be carried out increases. Therefore the projects have been categorized, according to the stage they are in: a) In Execution: The investment has been approved as well as has the corresponding permissions for it to be carried out. It is already in one of the detailed engineering or construction stages from the beginning to the implementation. b) Feasibility Assessment: Those which have already begun the feasibility studies and those of environmental evaluation (EIA or DIA) or they may already have been finished, but the final decision approving the investment has not been made. c) In Pre-feasibility Assessment: Those which are in the initial stage of pre-feasibility studies until the decision is made to continue to the following stage. Most of the projects follow a normal course, notwithstanding the modifications which are seen fit to introduce, however, the advancement of a project may be affected by some type of suspension, be it from internal situations or those outside of the company s control. Upon suspension, the project stops advancing and in some cases will return to the previous stage to redo the studies and thereby resolver the complications which have arisen be they internal or external Processing before the Environmental Evaluation Service (SEA) No project may be carried out without having the Environmental Qualification Resolution (RCA) approved, which occurs after an exhaustive technical-administrative process which includes civic participation, which is submitted to the declaration or the studies of the corresponding environmental evaluation. Therefore, three stages are shown, from most to least certainty: a) RCA approved, b) EIA or DIA in process c) EIA or DIA nor presented Implementation time frame The level of certainty of the background information also depends on the proximity or length of time from the date set for the implementation. The following ranges indicate a greater to lesser certainty: a) Within the period: Date within the period of analysis, or within the five-year period, b) Outside of the period or Long-term: Date after the period of analysis, or outside of the fiveyear period. Chilean Copper Commission

13 Chilean Mining Investments Project Portfolio The investments of Codelco and their information sources The information sources about the investments projected by Codelco are based on public information given by the corporation on their webpage, in presentations from the board of directors, and are compiled primarily on the whole of information available from their Business and Development Plan, and other official information of the Company received regularly by the Direction of Evaluation of Investments and Strategic Management (DEIGE) of Cochilco, which assist in supplying a better estimate. This information is to be understood as being only a prospective tool and does not bind the public entities which would intervene in the evaluation of the investment projects, which may or may not be considered in the projection 2. The investments considered by Codelco, are those which are contemplated in the 2015 Business and Development Plan (PND 2015), justified as development projects or to increase the information necessary for future developments. The development projects are directly related with the productive future of the divisions and should meet profitability norms to be approved. Of these are highlighted: a) Structural projects: a select group of the development projects conceived to take an integral advantage of the mineral resources, and constitute the base for the development of the corporation in the long term. The report of each of these projects gives explicit background information of the characteristics and investment amounts for the implementation stage. b) Other developmental projects: the investment portfolio of Codelco contains diverse projects with more temporary or short term goals, whose execution are essential for the continuity of operations in the productive divisions, considering them to complement that which has been planned for the structural projects. In this report the global background of the investment amounts is considered for this concept. Furthermore, Codelco justifies as informational projects those which allow them to acquire new and relevant information for corporative development, but which are not broken down under a particular investment project. Within this concept, the investments are grouped in studies for future developmental projects (pre-feasibility, feasibility, environmental evaluation, etc.), the investment in basic and generative exploration, and investments in I&D. Given the diversity of these purposes, only a broad background of the financing requirements considered for this concept is given. 2 Before an investment can be confirmed, it is required that an Authorization of Investment Projects be carried out, during the evaluation of which the Chilean Copper Commission and the Social Development Department work together. It does not include those expenses which CODELCO treats as investments (Differed expenses and others) for which the aforementioned authorization is not required. The fact that they are identified in the 2014 PND does not necessarily mean that they have the established investment authorization which is required by the applicable regulations and does not bind the entities mentioned therein. Chilean Copper Commission

14 Chilean Mining Investments Project Portfolio Among the projects included in this report the investments from the 2014 PND are not considered which are justified with other objectives, such as the replacement of equipment, refurbishing of installations, decontamination projects, workplace safety and well-being, even though they also require an API to be carried out. This exclusion meets the purpose of making Codelco s information comparable with the information for private investments, as this type of information from the privately owned companies is not available. Also excluded are those corporate investment which, for their nature, do not require an API and which escape being covered in the present report. However it has been found pertinent to consider the investments of Codelco in companies intending to build metallurgic plants for by-product processing, and thereby obtain final products of a higher value 3. This type of investment is excluded in Codelco s investment total, and as such are consigned as Metallurgic Plants in copper mining Investment in private mining and information sources The information about private mining projects is gathered principally from the announcements made by the companies through the media (company web pages, newspapers, articles in specialized magazines, etc.) and through their presentations to the environmental evaluation department. It includes all of the projects which have begun construction. In the case of the projects which are still in the Assessment phase the advancement has been reviewed and investment predictions have been updated, as well as implementation date and estimated production profiles, with the most recent public information. This implies that at least the following updates are made: a) Identification of the project titleholder for projects which have changed hands. b) Production capacity and types of products of interest. c) Investment amounts, implementation date, and execution order of events. d) Inclusion of new projects. e) Elimination of projects which were recently implemented. f) New requirements, such as the incorporation of the usage of sea water, be it directly or desalinized. With respects to the investment amounts, it is assumed that the projects reflect principally the execution stage, notwithstanding that several of them may include prior investments in the Assessment phase. 3 MOLYB Ltda. is an affiliate to produce molybdenum trioxide from molybdenite. Similarly, PLANTA RECUPERADORA DE METALES, (60% LS NIKKO of Korea and 40% of Codelco), is a company which processes anodic slime to recuperate gold, silver, and other noble minerals. Chilean Copper Commission

15 Chilean Mining Investments Project Portfolio Due to the fact that generally only a general investment amount is known a year prior to the implementation date, the yearly distribution of the investment is estimated by assuming tentative timelines for project development, based primarily in the information given in the presentations to the environmental evaluation system or by empirical estimates of how similar projects are developed chronologically. It is worth noting that in the cases of projects which are lacking precise public data for the implementation year, Cochilco has estimated it based on the context of the available data, which does not bind the companies in any way Methodological criteria for estimating the implementation date Diverse circumstances either internal and/or external may affect the development of the projects. External factors refer to the necessary of: securing the electrical supply at a lower amount than the prevailing costs, fine tuning of the environmental impact Assessment and/or obtaining permits to build infrastructure as required for the project. Furthermore, internal factors refer to the synchronization of the project with the global strategy of the company, acquiring financing, and the need of improving the cost indicators considered for investment and/or operation as determined in the project engineering studies, as well as others. In the instance of a lack of public data about the implementation date of a given project, COCHILCO applies the following methodological criteria: a) A year of delay is considered if the project is only affected by external factors, notwithstanding that the company carries out studies to improve the Feasibility Assessment considering the resolution of the pending topics, which could mean minor modifications in the Assessment. b) Two years of delay are considered if the project requires reworking to take into account the pre-feasibility or Feasibility studies, a normal time frame for this type of studies to be carried out. In the case that there is not sufficient background information to estimate a clear implementation date for the initiatives, these are removed from the portfolio as restructuring projects Estimating the production capacity of copper mines The maximum potential copper production capacity corresponds to the sum of the estimated individual maximum production capacity of each profile for the current mining operations which produce copper concentrates and/or SxEw cathodes, as those which correspond to the new copper projects contemplated in the present investment portfolio which will be implemented within the next decade. The figures are expressed in tons of fine copper. The future profiles of the current operations are projected over the base of the recent productive behavior and the estimate of the evolution of the mining-metallurgic parameters (ore grade and Chilean Copper Commission

16 Chilean Mining Investments Project Portfolio recovery capacity of the concentrating plants or the consumption of rates in acids in hydrometallurgical operations, considering maximum treatment profiles and they do not contemplate usage problems of the processing plant, all of which are according to the information which is available to Cochilco, considering a continuous operation of 360 days per year. At the same time, the projected project profiles for the projects are based in the maximum treatment capacity of the minerals described by the companies for a continuous operation of 360 days per year, and the background of the mining-metallurgical parameters which are expected for future operations. As the projects are assigned distinct materialization conditions (base, probable, possible, and potential), the production profiles are broken down according to these degrees, indicating therein the levels of certainty from most to least. For this reason the projected amounts should be understood as an estimated potential maximum capacity, beginning in the year of the publication of the present report, according to the available background information. Included as referential data is the real production registered the year after the publication of this update. It is worth noting that the production projection horizon is up to two years after the last year of the implementation which is registered in this report. Chilean Copper Commission

17 Chilean Mining Investments Project Portfolio Investment in Chilean mining The present chapter shows information with regards to the investment amounts required for the projects being considered, based on criteria such as investment purpose, conditionality, regional investment, and by country of origin. The list of the projects considered in this update of the investment portfolio in Chilean mining, through July 2015, is shown in the following table. Table 2: Register of Chilean mining projects Implementation Projects Operator Mining Sector Region Project type Condition Development stage Status of environmental permissions Investment through July 2015 (MMUS$) Other development projects Codelco Chile State - Cu Various Replacement BASE Execution N/A 2, Information projects Codelco Chile State - Cu Various New POSSIBLE Feasibility N/A 1, información Romeral Phase V Cía. Minera del Pacífico Iron Coquimbo Replacement BASE Execution EIA approved Escondida OGP I Minera Escondida Ltda. Large mining - Cu Antofagasta Expansion BASE Execution EIA approved 4, Antucoya Minera Antucoya Large mining - Cu Antofagasta New BASE Execution EIA approved 1, Update Esperanza Minera Centinela Large mining- Cu Antofagasta Expansion BASE Execution EIA approved Valle Central Expansion Minera Valle Central Med. Mine - Cu O'Higgins Expansion BASE Execution EIA approved Mo treatment plant Molyb Ltda. Metallurgy Plants Antofagasta New BASE Execution EIA approved Oso Negro Minera San Fierro Chile Ltda Iron Atacama New PROBABLE Feasibility EIA approved Metal recovery plant Planta Rec. de Metales SpA Metallurgy Plants Antofagasta New BASE Execution EIA approved Encuentro Óxidos Minera Centinela Large mining - Cu Antofagasta Replacement BASE Execution EIA approved El Tesoro modifications Minera Centinela Large mining - Cu Antofagasta Replacement BASE Execution EIA approved Quebrada Blanca Update Cía. Minera Teck Quebrada Large mining- Cu Tarapacá Replacement PROBABLE Feasibility EIA presented Blanca Sierra Gorda Expansion 220 ktpd Sierra Gorda SCM Large mining Cu Antofagasta Expansion PROBABLE Feasibility EIA presented 1, Pampa Blanca Expansion SQM Nitrato Industrial Minerals Antofagasta Expansion PROBABLE Feasibility EIA approved Nueva Esperanza Arqueros Laguna Resources Chile Gold Atacama New POSSIBLE Feasibility Without EIA Pascua Cía. Minera Nevada Gold Atacama New PROBABLE Execution EIA suspended 4, Arbiodo Ingenieros Asesores Ltda. Industrial Minerals Antofagasta New POSSIBLE Feasibility Without EIA Cerro Blanco SCM White Mountain Titanium Industrial Minerals Atacama New PROBABLE Feasibility EIA approved Caspiche Óxidos Eton Chile Gold Atacama New POSSIBLE Feasibility Without EIA El Espino Pucobre Medium mining - Cu Coquimbo New POSSIBLE Feasibility EIA presented Cerro Colorado Cont. Pampa Norte Large mining- Cu Tarapacá Replacement PROBABLE Feasibility EIA presented Operacional Los Bronces - phase 7 AngloAmerican Sur S.A. Large mining- Cu Metropolitana Expansion PROBABLE Feasibility EIA presented La Coipa phase 7 Kinross Minera de Chile Ltda. Gold Atacama Replacement PROBABLE Feasibility EIA presented Santo Domingo Santo Domingo SCM Large mining - Cu Atacama New PROBABLE Feasibility EIA approved 1, Candelaria 2030 Cía. Contractual Minera Large mining - Cu Atacama Replacement PROBABLE Feasibility EIA approved Cerro Maricunga Candelaria Minera Atacama Pacific Gold Gold Atacama New POSSIBLE Feasibility Without EIA Diego de Almagro Chile Compañía Ltda. Minera Sierra Norte Medium mining - Cu Atacama New PROBABLE Feasibility EIA approved Productora S.A Sociedad Minera El Águila Medium mining - Cu Atacama New POTENTIAL Pre-feasibility Without EIA Ampliación Marginal los Limitada Minera Los Pelambres Large mining - Cu Coquimbo Replacement POSSIBLE Feasibility Without EIA 1, Pelambres Sulfuros RT phase II Codelco Div. Radomiro Tomic State - Cu Antofagasta New POSSIBLE Feasibility EIA presented 5, Spence Growth Option Pampa Norte Large mining - Cu Antofagasta New POSSIBLE Feasibility EIA presented 3, Dominga Andes Iron Iron Coquimbo New POSSIBLE Feasibility EIA presented 2, Distrito Centinela(*) Minera Centinela Large mining - Cu Antofagasta New POSSIBLE Feasibility EIA presented 4, Development Chuquicamata Subterranean Codelco Div. Chuquicamata State - Cu Antofagasta Replacement BASE Execution EIA approved 3, Rajo Inca Codelco Div. Salvador State - Cu Atacama Expansion POTENTIAL Pre-Feasibility Without EIA Quebrada Blanca Hipógeno Cía. Minera Teck Quebrada Large mining - Cu Tarapacá New POTENTIAL Feasibility Without EIA 5, New Level Mine Blanca Codelco Div. El Teniente State - Cu O'Higgins Replacement BASE Execution EIA approved 4, El Abra Mill Project SCM El Abra Large mining - Cu Antofagasta New POTENTIAL Feasibility Without EIA 5, Mine- Plant Transfer Codelco Div. Andina State - Cu Valparaíso Replacement BASE Execution N/A 1, Relincho Cía. Minera Relincho Copper Large mining - Cu Atacama New POTENTIAL Feasibility Without EIA 4, Nueva Andina Phase II S.A. Codelco Div. Andina State - Cu Valparaíso Expansion POSSIBLE Feasibility EIA presented 6,524 (*): Previously named Encuentro Sulfuros Total Investment in the project portfolio (MMUS$) 77,290 Source: Prepared by COCHILCO, based on information for each project taken from public sources Chilean Copper Commission

18 Chilean Mining Investments Project Portfolio Project conditionality Every mining initiative may be affected by certain variables which cause changes in the planned timeline, these are usually the stage of advancement in the construction or studies, obtaining permission, be it environmental or sectoral, financial strength of the Operating companies, among others. Based on this information it is possible to establish the conditions: base, probable, possible, and potential, based on the greater or less amount of certainty of which the project will come about in the time and with the aforementioned variables 4. Figure 1 shows the investment distribution according to the condition, while table 3 shows how the investment is distributed per mining sector and project condition. Figure 1: Investment distribution in Chilean mining, according to condition POTENTIAL MMUS$ ,9% 5 projects BASE MMUS$ ,4% 13 projects POSSIBLE MMUS$ ,5% 13 projects PROBABLE MMUS$ ,2% 11 projects Source: Prepared by COCHILCO Mining sector Table 3: Investment distribution in Chilean mining per sector and project condition Sector Total Base Probable Possible Potential Project Quantity Investment (MMUS$) Project Quantity Investment (MMUS$) Project Quantity Investment (MMUS$) Project Quantity Investment (MMUS$) Project Quantity Investment (MMUS$) Codelco 8 28, , , ,691 Large mining 17 35, , , , ,090 Medium mining 4 2, Metallurgic Plants Copper subtotal 31 67, , , , ,481 Gold and Silver 5 5, , , Iron 3 3, , Industrial minerals 3 1, Other mineral subtotal 11 10, , , Source: Prepared by COCHILCO, based on information for each project taken from public sources 4 For more information on the Methodology, go to Chapter 2.2 Project attributes and conditions for their realization. Chilean Copper Commission

19 Chilean Mining Investments Project Portfolio Mining sector Therefore the investment portfolio for corresponds to 42 initiatives, broken down into 31 copper mining projects, valued in US$ 67,035 million, and 11 projects belonging to gold, silver, iron, and industrial mineral mining, for a total of US$ 10,255 million. Of this total, we will initially analyze the projects with the greatest probability of being carried out within the time frame indicated by the proprietary mining companies, which correspond to those projects in the base and probable conditions, being 23 initiatives valued in US$ 29,845 million: - 13 initiatives are in base condition, with an investment of US$ 21,139 million, wherein CODELCO has a 63.1% participation rate of the investments in this condition projects in a probable condition, with an investment of US$ 10,206 million, where gold and silver mining make up 43.6% of the total investment. The second group, projects in the possible and potential category, correspond to those initiatives with a lesser probability of materializing within the time frame established by the owners as well as being those more likely to be affected by changes in market conditions, being the equivalent of 18 initiatives valued in US$ 45,945 million: - 13 in the possible condition, valued in US$27,464 million, wherein CODELCO has a 48% participation in the investment total. - Five initiatives in the potential condition, with an investment total of US$ 18,481 million, wherein the large private copper mining has 82% participation. Due to the complex characteristics and ease of being affected by the variables described at the beginning of this chapter, this last group requires more attention so that in the right time they may be implemented within the institutional framework of the country. To better analyze the variables involved up to the moment of defining the condition of the projects in this registry, following is shown the investment distribution of the projects with regards to their stage of advancement and of processing before the Environmental Evaluation Service. Table 4: Investment distribution in Chilean mining per sector and stage of advancement Project Quantity Sector Total Execution Execution suspended Feasibility Pre-feasibility Investment (MMUS$) Project Quantity Investment (MMUS$) Project Quantity Investment (MMUS$) Project Quantit y Investment (MMUS$) Project Quantity Investment (MMUS$) Codelco 8 28, , , ,691 Large mining 17 34, , , Medium mining 4 2, , Metallurgic plants metalúrgicas Copper Subtotal 31 67, , , ,391 Gold and silver 5 5, , , Iron 3 3, , Industrial minerals 3 1, , Other mineral Subtotal 11 10, , , Source: Prepared by COCHILCO, based on information for each project taken from public sources Chilean Copper Commission

20 Chilean Mining Investments Project Portfolio Mining Sector As observed in Table 4, the projects in execution make up 27.4% of the total portfolio with 13 initiatives, of which Mine-Plant Transfer of División Andina and Other development projects of CODELCO which do not possess the Environmental Impact studies due to investments on an operational level. It may also be observed that the investment portfolio concentrates 62.8% of the inversions on 26 projects in the feasibility stage. Project Quantity Table 5: Investment distribution in Chilean mining per sector and SEA process Sector Total EIA approved EIA suspended EIA presented Without EIA N/A Investment (MMUS$) Project Quantity Investment (MMUS$) Project Quantity Investment (MMUS$) Project Quantity Investment (MMUS$) Project Quantity Investment (MMUS$) Project Quantity Investment (MMUS$) Codelco 8 28, , , , ,246 Large mining 17 35, , , , Medium mining 4 2, Metallurgic Plants Copper Subtotal 30 67, , , , ,246 Gold and silver 5 5, , , Iron 3 3, , Industrial minerals 3 1, , Other minerals subtotal 11 10, , , , , Source: Prepared by COCHILCO, based on information for each project taken from public sources Similarly, table 5 shows the 17 initiatives which equal 27.1% of the total inversion which have the RCA approved as of July 2015, which indicates that there are 6 initiatives which, in the next few months, could begin implementation and change their materialization condition. Furthermore, 33.1% of the financing corresponds to 10 initiatives which have not yet received a positive environmental qualification (RCA approved) for their presented projects, and 27.5% of the investment corresponds to projects which have not yet entered their respective EIA into the system. Chilean Copper Commission

21 Chilean Mining Investments Project Portfolio Investment purpose The materialization of the initiatives, as well as being subject to the aforementioned variables, depends on the strategic purpose of the Company with regards to its future development. Following is an investment summary of the inversions for the project portfolio for the period, according to the mining sector it is destined to, distributed by project type 5. Figure 2: Investment distribution in Chilean mining, according to project type NEW MMUS$ ,7% 22 projects REPLACEMENT MMUS$ ,0% 12 projects EXPANSION MMUS$ ,3% 8 projects Mining sector Source: Prepared by COCHILCO Table 6: Investment distribution in Chilean mining per sector and project type Project Quantity Sector Total Replacement Expansion New Investment (MMUS$) Project Quantity Investment (MMUS$) Project Quantity Investment (MMUS$) Project Quantity Investment (MMUS$) CODELCO 8 28, , , ,624 Large mining 17 35, , , ,340 Medium mining 4 2, ,921 Metallurgic plants Copper subtotal 31 67, , , ,406 Gold and silver 5 5, ,331 Iron 3 3, ,978 Industrial minerals 3 1, Other minerals subtotal 11 10, ,192 Source: Prepared by COCHILCO, based on information for each project taken from public sources Upon closer observation of the investment details, it can be determined that the replacement of the productive capacity corresponds to 21% of the total investment with 12 initiatives, wherein projects y CODELCO make up 79% of this segment. Furthermore, the expansion of operations which 5 See subchapter 2.2.2, Project type Chilean Copper Commission

22 Chilean Mining Investments Project Portfolio are currently in production reaches 21.3% of the total inversion in the portfolio with only eight projects, wherein CODELCO again is relevant with 55.9% of this segment. In summary, the brownfield investments of the project portfolio, replacement and expansion of current operations reaches 42.3% of the investment portfolio with CODELCO as the principal investor. Similarly, 22 of the 42 projects considered in the investment portfolio for , making up 57.7% of the portfolio s value, correspond to new projects presented by mining companies operating in the country as well as by 10 companies who would like to enter the Chilean mining market with the new projects. The principal intention of the new companies and their projects are_ one for large copper mining, one for medium copper mining, three in gold mining, two in iron, two in industrial minerals, and one metallurgical plant. These 10 initiatives make up US$ 7,438 million, or 9.6% of the total portfolio value Regional Investment The third look at the mining project portfolio is that of the regional distribution of the investment, in copper mining as well as gold, silver, iron compounds, and industrial minerals, as shown in figure 3. Figure 3: Total investment of the investment portfolio by regions for copper mining and others Tarapacá Antofagasta Atacama Coquimbo Valparaíso Metropolitana 504 O'Higgins Inversiones en minería del cobre (MMUS$) Inversiones en minería del hierro y min. ind. (MMUS$) Inversiones en minería de oro y plata (MMUS$) Source: Prepared by Cochilco As previously explained, the investment distribution by the conditionality of the projects allows to create a realistic image of the investment portfolio, for this reason table 7 also shows the regional distribution of the investment in copper mining according to the condition of materialization of the projects. Chilean Copper Commission

23 Chilean Mining Investments Project Portfolio Table 7: Copper mining investment per region and project condition Region Total Base Probable Possible Potential Region Project Quantity Investment (MMUS$) % of total investment Project Quantity Investment (MMUS$) Project Quantity Investment (MMUS$) Project Quantity Investment (MMUS$) Project Quantity Investment (MMUS$) Tarapacá 3 6, % ,590 Antofagasta 13 32, % 8 12, , , ,000 Atacama 6 11, % , ,891 Coquimbo 2 1, % , Valparaíso 2 8, % 1 1, , Metropolitana % O Higgins 2 6, % 2 5, TOTAL 31 67, % 12 20, , , ,481 Source: Prepared by COCHILCO, based on information for each project taken from public sources Copper mining, with 31 projects, makes up 86.7% of the total investments in the portfolio. Most of these are found in Antofagasta, which, with 13 projects receives 42.7% of the total investment, of which 8 are in base condition and only one in potential. In second place is the Atacama region, with 6 initiatives which make up 14.4% of the total registry. This region is the one which was most affected with respect to the previous version of the investment register, due to the fact that a large percentage of the projects are in a potential condition. In the investment portfolio for 2015, Atacama has 3 initiatives in the potential condition which make up 70.8% of the total investment in copper projects in the region. In third place we find the Valparaiso region, which receives 10.5% of the total investment in the project portfolio, specifically the CODELCO projects Nueva Andina Phase II and Mine-Plant Transfer, both from the Andina Division. Sharing fourth places are the regions of Tarapacá and O Higgins, each with 8.1% of the investment portfolio, with initiatives coming from companies such as Teck and BHP Billiton in Tarapacá and with the projects from El Teniente Division of CODELCO and of Valle Central of Amerigo Resources in the case of the O Higgins region. Table 8 shows the regional distribution of the global investment in gold, iron, and industrial ore mining. Chilean Copper Commission

24 Chilean Mining Investments Project Portfolio Table 8: Investment in gold, iron and industrial ore mining, per region and project condition Region Total Base Probable Possible Potential Region Project Quantity Investment (MMUS$) % of total Project investment Quantity Investment (MMUS$) Project Quantity Investment (MMUS$) Project Quantity Investment (MMUS$) Project Quantity Investment (MMUS$) Antofagasta 2 1, % Atacama 7 6, % , , Coquimbo 2 3, % , TOTAL 11 10, % , , Source: Prepared by COCHILCO, based on information for each project taken from public sources Investing in gold, iron, and industrial ore mining makes up 13.3% of the investment portfolio for with 11 initiatives, concentrated mainly in 7 projects to be carried out in the Atacama region (7.9% of the portfolio), aimed principally at gold mining (92.2% of the total regional investment). In Coquimbo two iron projects are being planned, one of which is on a large scale and plans to coproduce copper, which is the case of the Dominga project by Andes Iron, while in Antofagasta there are two initiatives to produce industrial minerals, one of which corresponds to a iodine and nitrate project, carried out by Chilean investors in the region, named Arbiodo Investment by country of origin An interesting perspective of the investments to be carried out within the next decade is to consider the nationality of the owners of the operating companies of the projects, as well as those which only invest in the new initiatives by participating as a primary partner. Figure 4 shows the total investment in the portfolio, according to country of origin. Chilean Copper Commission

25 Chilean Mining Investments Project Portfolio Figure 4: Total investment in the investment portfolio by country of origin (MMUS$ y %) MMUS$ 825 1,1% MMUS$ ,7% MMUS$ ,8% MMUS$ ,1% MMUS$ ,7% MMUS$ ,0% MMUS$ 573 0,7% MMUS$ ,9% Chile Canadá Canada Australia EE.UU. United States Japón Japan Reino United Unido Kingdom Polonia Poland Corea Korea Source: Prepared by Cochilco Investments come from 8 countries, led by Chile with 60% of total participation, coming from companies such as Codelco and Antofagasta Minerals in state and private copper mining, Pucobre and Copec in medium mining, as well as distinct international investments in gold, iron, and industrial ore mining. In second place we find Canada, with a 21.4% participation, from emblematic companies such as Teck Resources, Lundin Mining (who just acquired Candelaria), Kinross, Capstone and the Santo Domingo project, Barrick Gold and other companies focused on investing in medium copper mining and that of industrial minerals. For a more detailed account, in Table 9 the distribution of investments in copper mine is shown for each country and the total participation in the investment in mining is considered in the registry, all contrasted with the conditionality of the investments. Chilean Copper Commission

26 Chilean Mining Investments Project Portfolio Table 9: Distribution of the investment in copper mining per country of origin and condition (MMUS$) Country of origin Country total % of the total investment Base Probable Possible Potential Chile 41, % 15, ,836 6,455 Canada 10, % 152 1, ,776 Australia 6, % 2, , USA 2, % ,550 Japan 2, % 1, United Kingdom 1, % 1, Poland % Korea % TOTAL 65, % 20,941 5,001 22,612 18,481 Source: Prepared by COCHILCO, based on information for each project taken from public sources The prior Assessment is replicated for the different mineral projects other than copper in table 10. Table 10: Investment in gold, iron, and industrial ore mining, by country of origin and condition (MMUS$) Country of origin Country total % of the total investment Base Probable Possible Potential Chile 3, % ,391 0 Canada 5, % 0 4, USA % Australia % China % Japan % TOTAL 10, % 198 5,585 4,472 0 Source: Prepared by COCHILCO, based on information for each project taken from public sources Chilean Copper Commission

27 MMUS$ Chilean Mining Investments Project Portfolio Estimation of the yearly investment distribution in the project portfolio The estimation of the investment flow in the project portfolio allows for the observation of the short and medium term progress in the mining investment, in the amount that emerged before 2015, US$ 15,415 million, which corresponds to 19.9% of the current portfolio, the investment to be obtained during the next five-year period from of US$44,894 million, equaling 58.1% of the portfolio, and the estimate of the remaining amount to be invested in the period in those projects whose implementation date is set for this time frame, whose investment amount reaches US$16,981 million, equaling 22% of the investment portfolio. Figure 5 graphs the yearly investment distribution in copper mining, and of the other minerals in the 2015 to 2024 period, separated by those already obtained, the yearly amounts for the period, and finally the remnant to be invested after Figure 5: Yearly investments, already obtained and to be obtained, for the investment portfolio according to type of mining Cobre Coppe r Otros minerales Anterior a Source: Prepared by Cochilco However, it is necessary to look at the conditionality of the investment flow, for which, and on the basis of available public information, a yearly investment profile has been estimated according to the anticipated timeline, and has been assigned a condition which reflects the degree of certainty of the implementation for each project Investment distribution in copper mining Table 11 summarizes the yearly investment flow in coper mining for the following segments: CODELCO; large private mining, medium mining, and metallurgical plants, distribution of the Chilean Copper Commission

28 Chilean Mining Investments Project Portfolio investment from degrees of greater to lesser certainty of implementation within the period indicated by the companies which own the projects, meaning, from the base condition to potential. Table 11: Yearly investment distribution in copper mining according to project condition (MMUS$) Copper mining according to condition Before Subtotal TOTAL % of investment TOTAL 10,800 5,380 7,695 8,515 9,377 8,288 39,254 16,981 67, % Of which: Base 8,576 3,154 2,136 2,211 1,840 2,027 11, ,941 31% Probable , , ,501 7% Possible 854 1,003 2,417 3,157 4,027 3,118 13,721 8,037 22,612 34% Potential ,138 2,103 3,244 3,143 9,939 7,947 18,481 28% CODELCO 2,308 2,099 3,202 3,766 3,601 4,138 16,805 9,542 28, % of which: Base 2,168 1,540 2,069 2,175 1,840 2,027 9, ,817 45% Probable % Possible ,085 1,398 1,532 1,738 6,278 6,740 13,148 46% Potential ,805 2,691 9% Large mining 7,824 2,935 3,833 3,851 5,539 4,150 20,522 7,439 35, % Of which: Base 6,002 1, , ,451 22% Probable , , ,404 12% Possible ,022 1,649 2,495 1,380 6,961 1,297 8,840 25% Potential ,570 2,840 2,770 8,413 6,142 15,090 42% Medium mining , , % Of which: Base % Probable % Possible % Potential % Metallurgy Plants % Of which: Base % Source: Prepared by COCHILCO, based on information for each project taken from public sources Discounting the US$ 10,800 million invested before 2015, the investment with possibilities of implementation within the 2015 and 2024 period in copper mining reaches US$ 56,200 million, of which US$ 39.9 million will be reached in the five year period from Analyzing the initiatives with the greatest probability of development within the timeframes estimated by their owners, these corresponds to 38% of the investment to be implemented within the next five years. Of this group, the projects in base condition make up 25.4% of the investment to be obtained between 2015 and 2019, with a yearly average of 2.28 thousand million USD, leaving an investment remained of less than one thousand million for after 2019, while the initiatives in a Chilean Copper Commission

29 Chilean Mining Investments Project Portfolio probable condition only make up a yearly average of around US$ 1.06 thousand million, which corresponds to just 7% of the financing to be obtained in the short term, specifically between 2015 and Conversely, the projects with a lesser probability of being implemented within the proposed timeframes correspond to 62% of the investment between 2015 and 2019, leaving a remnant of almost US$ 16 thousand million for after In this group, the projects in possible condition correspond to 34% of the investment in the five year period, contributing a yearly average of US$ 2.7 thousand million, leaving a remnant of US$ 8.04 thousand million for later execution. Furthermore, and unlike the previous register wherein the potential group made up the greatest investment to be implemented in the five year period, this year these projects reach just 28% of the total estimated for the next five years, supplying an average of US$ 1.99 thousand million, and leaving an investment remnant for the period of around US$ 7.95 thousand million dollars Investment distribution in gold, iron, and industrial minerals Table 12 summarizes the annual investment in the gold, iron and industrial ore mining segments: Table 12: Yearly investment distribution in gold, iron, and industrial minerals according to condition (MMUS$) Gold-silver, iron, and industrial minerals according to condition Before Subtotal TOTAL % of investment TOTAL 4, ,903 1,575 1, , , % Of which: Base % Probable 3, , , , % Possible 1, , , , % Gold 3, , , , % Of which: Probable 3, , , % Possible , % Iron 1, , , , % Of which: Base % Probable % Possible , , , % Industrial minerals , , % Of which: Probable , % Possible % Source: Prepared by COCHILCO, based on information for each project taken from public sources Chilean Copper Commission

30 Chilean Mining Investments Project Portfolio In gold mining, in investment in 5 projects for 5.5 thousand million dollars is expected, which is concentrated in the probable condition, to be carried out before Furthermore, it is estimated that the yearly average investment in the gold project portfolio reach 508 million dollars in the period. For iron mining as well as industrial minerals there are no relevant variations in the investment distribution seen. Chilean Copper Commission

31 Chilean Mining Investments Project Portfolio Estimation of the copper production capacity in Chile through One of the most important effects coming from the mining investment portfolio is the increase in the maximum production capacity, which translates to an increase in supply for the international market. Following is an estimate of the maximum copper production capacity which Chile could reach by 2026, as a result of the work in the current Operations and the contributions which will be added as the new copper projects are implemented Maximum copper mining capacity in Chile The maximum productive potential of copper mining in Chile is summarized in Table 13, which indicates the yearly information from 2015 to 2026, broken down into operations and projects according to their conditionality, as an indicator of the degree of reliability of this information. The real production in 2014 is included as a means of reference and comparison. Additionally, the percentage of yearly variation in the maximum capacity of total production is indicated. Considering a horizon of , Chile has the potential of reaching a copper production capacity of 7.56 million tons of copper, a 31.6% above the production registered in 2014, if all of the planned projects are carried out according to their timelines. The maximum production would be registered for this period during 2024, wherein the copper production would reach approximately 7.84 million tons, 36.3% over 2014 production. Table 13: Estimated production capacity of copper mining in Chile through 2026 (kt of fine Cu) 8 CONDITION BASE/ Operations 5, , , , , , , , , , , ,811.5 BASE/ Projects 0, , , , , ,270.0 PROBABLE/ Projects 0,0 0,0 0, POSSIBLE/ Projects Cu 0,0 0,0 0, , ,227.8 POSSIBLE/ Projects Co-prod. 0,0 0,0 0,0 0, , POTENTIAL/ Projects Cu 0,0 0,0 0,0 0, , TOTAL 5, , , , , , , , , , , , ,563.8 Yearly change % -1.2% 4.4% 2.1% 6.8% -0.8% 4.6% 0.9% 3.7% 1.3% -2.0% -1.5% Source: Prepared by Cochilco 6 Copper mining production capacity corresponds to concentrates and SxEw cathodes. The methodologic criteria used to estimate is shown in point Two years after the last year of implementation registered in this registry (see methodologic criteria shown in point 2.6) 8 Includes the by-productive capacity of copper coming from the gold and iron projects. Chilean Copper Commission

32 Thousands of tons of fine copper Chilean Mining Investments Project Portfolio This projection considers the natural declination in production of the current operations in 1.94 million tons, for which the greatest contribution corresponds to the impact in the investment in the projects, which depend on distinct factors internally as well as externally to reach the productive goals, which is determined through the conditionality of the projects. The following graph shows how the copper production will evolve and the growing importance of the contribution of the projects, to increase national productive capacity according to the condition of these Figure 1: Maximum copper production capacity according to condition Base Probable Posible Potencial Source: Prepared by Cochilco The total estimate for the production capacity of the copper mining is distributed through the respective copper production capacities in concentrates and in SxEw cathodes, which are shown in tables 14 and 15 as follows. Chilean Copper Commission

33 Chilean Mining Investments Project Portfolio Table 14: Estimated Chilean production capacity of fine copper concentrate through 2026 (kt of fine Cu) CONDITION BASE/ Operations 3, , , , , , , , , , , , ,117.4 BASE/ Projects 0, , , , ,193.4 PROBABLE/ Projects 0,0 0,0 0, POSSIBLE/ Projects Cu 0,0 0,0 0, , ,221.7 POSSIBLE/ Projects Coprod. 0,0 0,0 0,0 0, POTENTIAL/ Projects Cu 0,0 0,0 0,0 0, , TOTAL 3, , , , , , , , , , , , ,746.9 Yearly Change % -0.9% 4.8% 4.3% 10.2% 3.3% 7.8% 1.4% 4.7% 3.7% 0.4% 1.1% Source: Prepared by COCHILCO Table 15: Estimated Chilean production capacity for fine copper in SxEw cathodes through 2026 (Thousand tons.) CONDITION BASE/ Operations 1, , , , , , , , , , , BASE/ Projects 0,0 33, PROBABLE/ Projects 0,0 0,0 0, POSSIBLE/ Projects 0,0 0,0 0,0 0, TOTAL 1, , , , , , , , , , , , Yearly Change % -1.9% 3.6% -3.7% -3.0% -13.7% -7.8% -1.3% -0.9% -10.3% -15.9% -18.7% Source: Prepared by COCHILCO In each table there is an opposing trend. While the production capacity in concentrates increments by 2.84 million tons by 2026, a 70.9% increase from 2014, the SxEw cathodes may decrease by 1.03 million tons, registering a 55.7% decrease from the same year Analysis of hydrometallurgy production The hydrometallurgical processing of copper into SxEw cathodes shows in the last decade strong signs of decline since its peak in 2009, when it reached 2.12 million tons. The production of SxEw cathodes will be maintained at about 1.8 million tons until 2017, to then decline rapidly by a yearly average rate of 7.7% in the following ten years, reaching a production loss of 1.03 million tons of SxEw cathodes (figure 6). This decrease in SxEw cathode production is due mainly to the depletion of leachable resources and the closing of some copper sites towards the end of the next decade, for example, Collahuasi, Sagasca, Quebrada Blanca, Mantos Blancos, Michilla, Las Cenizas, Franke, Mantoverde and Carmen de Andacollo. Likewise, it is observed that some of the operations of CODELCO, such as Chilean Copper Commission

34 Thousand tons of copper in SxEw cathodes Chilean Mining Investments Project Portfolio Chuquicamata (Hidrosur), Radomiro Tomic and Salvador, will reduce their production due to the depletion of leachable resources. With respect to the hydrometallurgy projects considered in this portfolio, these principally correspond to replacement projects and of marginal expansions of current operations, and of four new projects: El Espino, Diego de Almagro and the production of oxides coming from the operations of Distrito Centinela, by Antofagasta Minerals, and of Sierra Gorda, property of KGHM. There are not currently any potential projects for the hydrometallurgy line. This operational decrease has a direct effect in a lesser demand for sulphuric acid, which will cause a change in the sulphuric acid market in Chile from the condition of structural deficit to an incipient condition of excess by the year It is worth mentioning that the structural change in the sulphuric market will have negative implications in the importation and exportation structure of this good in the country, as an excess would force producers to export the excess acid, with the following negative implication in the prices of this good. Another impact is the closing of several solvent or electro-winning extraction plants, with no alternative use Figure 6: Projection of maximum copper production in cathodes, period Posible Possible Probable Base Base Source: Prepared by COCHILCO Chilean Copper Commission

35 Thousand tons of fine copper concentrate Chilean Mining Investments Project Portfolio Analysis of concentrate production The project portfolio for reaffirms that which has been observed in the past few years: the structural change in copper production turns toward copper concentrate production, due to diverse factors such as the geologic conditions of the country, the production changes from old hydrometallurgical operations, etc. This will cause an increase in the maximum production capacity of copper concentrate by 2.84 million tons of fine copper per year by With this the projected decline will be surpassed from the current operations, without whose projects in development, would decrease production by 788 thousand tons of fine copper with respects to This substantial increase in production which comes from the concentrate line has strong repercussions in two important aspects of the mining politics in general, which are the increase of the exportable supply of concentrates, without increasing the current production of ER cathodes, and the structural increase of costs in Chilean mining coming from the levels of mineral processing which this type of processing increase brings Figure 7: Maximum production projection in copper concentrate, period Potential Potencial Possible Posible Probable Base Base Source: Prepared by COCHILCO a) Exportable concentrate offer from Chile In million tons of copper concentrate were exported, equaling 65.3% of the concentrate production of the country, the rest should be understood to have been consumed in the Chilean foundries. Even though the production of the foundries reached 1.36 million tons of fine copper in 2014, previous years reached levels around 1.56 million tons of fine copper, which means that there Chilean Copper Commission

36 Thousands of tons of fine copper in concentrate Chilean Mining Investments Project Portfolio is the capacity of treating the equivalent of 1.6 million tons of fine copper content in the feeder concentrates, due to the capacity expansion projects not being considered for the national foundries 9. Toward 2026, the maximum copper production capacity in concentrates will reach 6.75 million tons, reaching 89% of the national copper production participation. However, under the premise that no FURE projects were to exist in the country, this increase in concentrate production would imply that the potential exportation of concentrates would reach 5.2 million tons, or76.9% of the total Chilean concentrate production. Figure 8: Copper concentrate production and the participation in total production % 72% 72% 72% 74% 76% 79% 82% 82% 83% 85% 87% 89% 100% 90% 80% 70% % % % % % % 0 0% Cobre en concentrados a FURE externa Copper concentrates to external FURE Cobre en concentrados a FURE nacional Copper concentrates to national FURE Part. of de copper la prod. concentrate de cobre production en concentrados in the country s en la total prod. prod. total del país Source: Prepared by COCHILCO Likewise, it is estimated that the volume of concentrates with copper concentrates will pass the current 13.3 million tons, with an average ore grade of 29.2% copper, to 23.8 million tons, with the average ore grade of 24.1$. Similarly, the volume of concentrates for exportation would surpass the current8.67 million tons to almost double by 2026, reaching million tons. 9 Only operational adjustments are expected to be required to comply with the gas emission requirements (SO2 and others). Chilean Copper Commission

37 Million tons of concentrate Chilean Mining Investments Project Portfolio Figure 9: Projection of maximum production of copper concentrates according to destination, period 25,0 20,0 15,0 10,0 5,0 0,0 Concentrados Concentrates to a national FURE nacional FURE Concentrados Concentrates a to FURE external externa FURE Source: Prepared by COCHILCO This strong growth in concentrate production could affect the position of the exporters in the negotiations for the costs of treatment and refining, affecting the liquid value of the return, and the tributary utilities of the companies, leaving Chile with a lesser participation in the refined copper business on a worldwide level. Another problem related with this increase in concentrate production is the production of tailings coming from the concentrating plants. Therefore it is estimated that if during Mt of tailings were produced, by 2026 an increase of 121.8% will produced more per year, reaching 1,249.7 Mt of tailings (figure 10). Chilean Copper Commission