Chile Mining Sector

CHILE
MINING SECTOR
2016/2017
An EMIS Insights Industry Report
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CHILE MINING SECTOR 2016/2017
ABBREVIATIONS
APRIMIN Mining Industrial Suppliers Association
CNE National Energy Commission
COCHILCO Chilean Copper Commission
CORFO National Development Agency
GVA Gross Value Added
SERNAGEOMIN National Geology and Mining Service
SII Chilean Tax Service
SMA Superintendence for the Environment
SVS Superintendence of Securities and Insurance
USGS United States Geological Survey

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01 EXECUTIVE SUMMARY
EXECUTIVE SUMMARY p. 5
Sector in Numbers
CONTENT Sector Overview

Sector Snapshot
Sector Outlook
Sub-Sector Outlook
Driving Forces
Restraining Forces
02 SECTOR IN FOCUS p.14
Focus Point
Main Economic Indicators
Main Sector Indicators
Production
Global Positioning
External Trade
Exports
Imports
Foreign Direct Investment
Main Investment Projects
Employment and Wages
03 COMPETITIVE LANDSCAPE p.27
Competitive Landscape Highlights

Market Shares
Copper Mine Competition
Molybdenum Mine Competition
Top M&A Deals
M&A Activity, 2014-2015
04 COMPANIES IN FOCUS p.34
Corporación Nacional del Cobre de Chile (CODELCO)

Minera Escondida Ltda.
Anglo American Sur S.A.
CAP S.A.
Minera Centinela
3
05 REGULATORY ENVIRONMENT p.45
Government Policy
CONTENT 06 METALLIC AND FUEL MINERALS p.48
Metallic and Fuel Minerals Highlights

Metallic and Fuel Minerals Main Events
Metallic and Fuel Minerals Production
Metallic and Fuel Minerals Exports
07 NON-METALLIC MINERALS p.54
Non-Metallic Minerals Highlights

Non-Metallic Minerals Main Events
Non-Metallic Minerals Production
Non-Metallic Minerals Exports

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CONTENT
01
EXECUTIVE
SUMMARY

Copyright © 2016 EMIS, a l l rights reserved. 5
Investor company.
CONTENT
Sector in Numbers
CLP
№1 14.2tn
1.2%
CAGR
Global copper Mining GVA, Mining GVA
mine producer current prices 2010-2015
12th 5.76mn
position tonnes 238,454
Fraser’s Investment Copper mine Number of
Attractiveness production employees
Index
USD USD 1.5%

553.4mn 33.0bn CAGR
Copper mine
Foreign direct Mining trade
production
investment surplus
2016-2020
Source: Fraser Institute, COCHILCO, UN Comtrade, BMI Research, Central Bank of Chile

Investor company.
CONTENT
Sector Overview
Chile is a key global player in the production of metallic minerals. In 2015, the country was the world’s
largest copper mine producer, with a 29.9% share in global output, the second biggest molybdenum
mine producer (18.2% share) and the fourth largest producer of silver (5.5%). In terms of non-metallic
minerals, the country ranked first in production of iodine (a 66% share), second in lithium compounds
(36%) and eighth in potassium compounds (3.1%). In 2015, mining was the fourth largest economic
sector of Chile, accounting for 9.9% of the country’s GDP, for 2.9% of total employment and for 53.6%
of national exports. Yet, over the period 2010-2015, mining exports’ value declined by an average 5.1%,
as a result of the dropping international metal commodity prices. In the same period, exports rose
significantly in volume terms by a cumulative 38.5%, resulting in a moderate expansion of domestic
production at a CAGR of 5.2%.
Entry Modes
The level of competition in the sector varies from segment to segment. In the iron and coal segments
the largest players had shares of 52% and 94.9% in total output respectively in 2015. In copper mining,
on the other hand, Chilean state-run company CODELCO had a 31.3% share in production volume. The
sector offers entry opportunities through both greenfield and brownfield investments. The most
recent example was the acquisition of Anglo American Norte S.A., a copper unit of Anglo American, by
a consortium of investment firms Audley Capital Advisors and Orion Mine Finance for USD 300mn in
August 2015. Entry opportunities also exist in the non-metallic minerals segment, as the Chilean
government is challenging the concession rights of the largest player in the segment – SQM.
Segment Opportunities
Chile has competitive advantages in the production of several non-metallic minerals in high demand
such as lithium, iodine and potassium compounds. In 2015, the country had the world’s largest lithium
reserves (a total of 7.5mn tonnes, equivalent to 53.5% of global reserves), the second biggest iodine
reserves (1.8mn tonnes or 24% of global reserves), and the seventh largest potassium reserves (150mn
tonnes or a share of 4.05%). Chile is also well positioned in the molybdenum sub-segment, as the
country has become a key supplier to the South Korean and Japanese automotive industries.
Moreover, according to Sergio Hernandez, vice-president of COCHILCO, Chile remains very competitive
on a global scale in terms of copper concentrates production.
Government Policy
The government policy, in particular a proposed labour reform that would increase the bargaining
power of trade unions, is being perceived as a threat to the sector’s growth prospects, according to
Andres Aguirre, president of APRIMIN. Also, environmental policy is becoming harsher following
concerns about potential disruption of water supply to local communities. The government considers
the protection of scarce fresh water resources in northern Chile a priority, forcing mining companies
to obtain water through costlier means (e.g. sea water desalination).
Source: El Mercurio, SMA, COCHILCO, EMIS DealWatch, USGS, APRIMIN

Investor company.
CONTENT
Sector Snapshot
Chile Mining Sector 2015
PRODUCTION
USD 40,095mn* 43.1mn tonnes*
Production Value Production Volume
Metallic and Fuel Minerals: USD 35,918mn Metallic and Fuel Minerals: 18.2mn tonnes*
Non-Metallic Minerals: USD 4,177mn Non-Metallic Minerals: 24.9mn tonnes*
EXPORTS IMPORTS
USD 34,152mn USD 1,157mn
Export Value Import Value
31.48mn tonnes DOMESTIC MARKET 10.40mn tonnes

Export Volume Import Volume
USD 7,100mn*
Domestic Market Value
Metallic and Fuel Metallic and Fuel
Minerals Exports 22.2mn tonnes* Minerals Imports
USD 33,100mn Domestic Market Volume USD 1,039mn
Copper & Molybdenum: USD 31,277mn Coal: USD 752mn

Iron, Gold & Silver: USD 1,731mn Others: USD 287mn
Others: USD 92mn
KEY PLAYERS NET REVENUES:
1. CODELCO: USD 11,693mn 6. SQM: USD 1,728mn

2. Minera Escondida: USD 6,575mn 7. CAP: USD 1,475mn
3. Anglo American Sur: USD 2,080mn 8. Minera Centinela: USD 1,266mn
4. Collahuasi SCM: USD 1,991mn 9. Minera Spence: USD 1,170mn
5. Minera Los Pelambres: USD 1,807mn 10.Minera Candelaria: USD 950mn
Source: COCHILCO, USGS, UN Comtrade, SVS, company data, - * EMIS Insights estimate

Investor company.
CONTENT
Sector Snapshot
Chile Mining Sector 2015
In 2015, the production of Chile’s mining sector amounted to USD 40.1bn and 43.1mn tonnes of
minerals, compared to 43.0mn tonnes in 2014. The majority of domestic production was destined to
the international markets, consolidating the positions of the country as a major global supplier of
several products of the metallic and fuel minerals segment like copper, molybdenum, and silver.
During the year, mining exports stood at USD 34.2bn, equivalent to 84.9% of domestic production,
with the bulk of external sales comprising copper and molybdenum (USD 31.3bn). The value of
imports reached USD 1.16bn. However, foreign supplies had a significant share in the domestic
market in value terms (16.3%), and especially in volume (46.8%). Coal accounted for the bulk of
imports with USD 752mn or a 64.9% share, as Chile is heavily dependent on coal for energy
production – 40% of the electric power generated in the country in 2015 came from coal-based
plants. In addition, domestic coal production is rather insignificant. Its value stood at USD 195mn,
of which 18.9% were exported.
According to EMIS Insights estimates, the domestic market of metallic and non-metallic minerals
had a size of USD 7.1bn in value terms and 22.2mn tonnes in volume terms in 2015. Three minerals
had a combined 52.5% share of the domestic market - copper with 22.5%, coal with 12.8% and
calcium carbonates with 17.2%. Calcium carbonates are mostly produced domestically and used as
key inputs for the Chilean copper, gold mining, and iron and aluminium processing industries.
The key players on the market are Chilean miners CODELCO, Antofagasta Minerals, CAP and SQM,
as well as UK-based peer Anglo American and Anglo-Australian miner BHP Billiton, with estimated
combined net revenues of USD 26bn in 2015, or 73.7% of the sector’s total net revenues. The sector
features overall medium to high degree of concentration. Some of the segments are dominated by
a single domestic company - Mina Invierno is the dominant player in coal mining, SQM in lithium,
iodine and potassium and CAP in iron mining. In other sectors, however, there are more large
players. Copper mining, for example, is dominated by state-run CODELCO, which is closely followed
by private companies Antofagasta Minerals, BHP Billiton and Anglo American.
The extreme concentration in some segments is a result of the inconsistent mining concession
policies in Chile over the last 50 years, combined with volatile policies regarding promotion and
regulation of FDI. These inconsistent policies are particularly challenging for large Chilean private
companies with a portfolio of several exclusive mining concessions in their respective segments.
Therefore, foreign companies can take advantage of particularly good opportunities for market
entry over the following years.
Source: EMIS Insights, SVS, company data, SNA, COCHILCO, UN Comtrade

Investor company.
CONTENT
Sector Outlook
Comments
The short term outlook for the mining sector is quite negative, with many key minerals in Chile, such
as copper, gold, nitrates and potassium compounds, projected to record a contraction in production
volume during 2016. Nevertheless, a few minerals, such as lithium and silver, are expected to post
growth, whereas others such as iron and iodine have positive prospects, but high uncertainty over the
near-term outlook. The main restraining factor in the short term stems from the environment of low
international metal prices, which hit bottom lows in 2015 and are expected to remain subdued in 2016.
The medium term outlook by 2020 presents a scenario of positive but slow growth of the production
of most metallic minerals such as gold, copper, molybdenum and silver, as ore grades are generally
declining and key resources such as water and electricity tend to become scarce and more expensive.
The development of domestic coal production is particularly uncertain, as the main player Mina
Invierno is facing severe financial difficulties as a result of low carbon prices and is considering
suspending production by the end of 2016, according to Alejandro Kusanovic, president of the Trade
and Production Confederation of the Magallanes region. On the other hand, the medium term outlook
for non-metallic minerals remains quite positive, supported by strong fundamentals from the supply
side – abundant reserves of lithium and iodine coupled with cost competitive domestic production,
and from the demand side – robust demand from the global electronics, automotive and
biotechnology industries.
Main Indicators Forecast
2016f 2017f 2018f 2019f 2020f
Copper Mine Production (thou tonnes) 5,713.29 5,770.42 5,856.98 5,944.83 6,063.73
Copper Mine Production (yoy change, %) -0.5 1.0 1.5 1.5 2.0
Gold Mine Production (mn ounces) 1.38 1.38 1.4 1.42 1.43
Gold Mine Production (yoy change, %) -1.0 0.5 1.0 1.25 1.0
Silver Mine Production (mn ounces) 43.95 44.61 45.06 45.28 n/a
Silver Mine Production (yoy change, %) 1.8 1.5 1.0 0.5 n/a
Source: BMI Research, EMIS Insights, Editec

Investor company.
CONTENT
Sub-Sector Outlook
Metallic Minerals
Copper mine production, the largest segment of the domestic mining industry, is expected to grow
at a CA GR of 1.5% over 2016-2020. The short-term context is particularly difficult, with an expected
0.5% y/y decrease in output in 2016, according to BMI Research. The persistently weak copper
prices, the rising consumption of energy, the ongoing decline in ore grades and the heavy rainfall
in the autumn of 2015 that affected negatively the mining operations of CODELCO and Anglo
American Sur are among the major restraining factors. In the long run, water scarcity, labour
conflicts and the projected substantial increase in electricity prices are the main constraints
before the segment. Gold output is expected to grow at a CAGR of 0.9% over 2016-2020, marked by
a difficult 2016 with an expected decline by 1% in production, according to BMI Research. The drop
in gold output in the short term is mostly due to low prices, while the weak long term growth
forecast is explained by ongoing conflicts with local communities over alleged contamination of
water resources which have paralysed several large projects such as Pascua Lama, developed by
Canadian miner Barrick Gold. Finally, silver output is forecast to grow at a CAGR of 1.4% over 2015-
2019, with a slowing trend, as silver is mostly obtained as a by-product of copper production in
Chile.
Non-Metallic Minerals
The short-term outlook for the non-metallic minerals segments hinges on the performance of
Chilean miner SQM, which has almost absolute dominance in the production of lithium, iodine,
nitrates and potassium compounds. According to the company, the lithium segment’s outlook is
favourable due to the strong global demand, which is forecast to grow by 10% y/y in volume terms
in 2016, and the continuing rise in international prices. Although SQM, which accounted for 26% of
global lithium output in 2015, may lose some market share, a strong growth in lithium production
is expected over the following years. The company expects iodine demand to increase by 2% y/y in
2016, but weaker international prices may pose a challenge to SQM’s global position - the
company claimed a 30% share of global iodine output in 2015. In the case of nitrates, the short
term outlook for SQM is negative, as the company is rapidly shifting its business strategy, moving
from granulated fertilisers to water-soluble fertilisers, following the changes in global demand.
SQM expects an increase in the production of water-soluble fertilisers, which will not offset the
forecast fall in granulated fertilisers output. In the case of potassium compounds, positive growth
is projected for 2016, mainly due to the low comparison base in 2015 which was a result of harsh
weather conditions.
Source: BMI Research, SQM, EMIS Insights

Investor company.
CONTENT
Driving Forces
A very negative international context marked by decade-low international prices for multiple
minerals, caused a major drop in the export value of both metallic and fuel minerals (-21.6% y /y) and
non-metallic minerals (-14.5% y/y) in 2015. As a result, the net revenues of the top five players in the
domestic mining sector fell by an average 22.5% y/y. However, Chile holds strong competitive
advantages in many sub-segments such as lithium, iodine, potassium compounds, molybdenum and
copper concentrates, offering strong growth opportunities despite the current difficult context.
External
The Chilean mining sector is heavily focused on exports, which accounted for about 85% of total
production in value terms in 2015. Thus the current macroeconomic environment, marked by a
favourable real exchange rate (according to the Central Bank, Chile is 7% more price competitive in
2016 against 19 major trading partners than in the 2012-2013 period), contained inflation (4.2% y/y in
June 2016) and subdued salary pressures in the sector (3.1% up y/y in 2015), would support the
development of the mining industry. A key example are labour costs, as real wages in the mining
sector in 2015 were 12.8% higher than in 2010. Yet , nominal wages, measured in current U.S. dollar
terms, were 11.6% lower, as a result of the sharp depreciation of the Chilean peso against the U.S.
dollar by a cumulative 34.2% between 2010 and 2015. This, coupled with the rising unemployment
(overall unemployment in the country reached 6.8% in May 2016, the highest level since November
2011), should allow mining companies to hire and retain highly qualified workforce in a context of
output contraction, while at the same time containing labour costs.
Internal
Chile’s mining sector is very well positioned in many non-metallic mineral segments that have
experienced high growth in international demand in recent years, such as lithium, used for the
production of batteries for both hybrid cars and electronic products, and iodine, used in the
healthcare industry for X-ray studies. Notably, in 2015, Chile had the world’s largest lithium reserves -
a total of 7.5mn tonnes, equivalent to 53.5% of global reserves. It also had the second biggest iodine
reserves of 1.8mn tonnes or 24% of global reserves, and the seventh largest potassium reserves of
150mn tonnes or a share of 4.05%. Chile is a leader in the global iodine market, as a result of its
relatively low production costs and higher flexibility to respond to changes in the global demand,
according to COCHILCO. The longstanding traditions in metallic minerals, coupled with developed
production and transportation infrastructure and established supply chains to large Asian markets
also drive the development of domestic mining sector, especially the copper concentrates and
molybdenum segments.
Source: EMIS Insights, Portal Minero, USGS, COCHILCO, Central Bank of Chile

Investor company.
CONTENT
Restraining Forces
A combination of unsupportive government policies in the sector in recent years, including sanctions
for environmental pollution, an intense public and political scrutiny of the mining concessions
granted in the past, prioritisation of key resources (e.g. water) for use in other sectors; and long-term
internal factors (e.g. a persistent decline in ore grades) have hampered the investment activity in the
main metallic minerals segments, raising concerns about the long-term growth.
External
Recently, the government policy is being perceived as a threat to the sector’s growth prospects,
particularly due to a proposed labour reform that would increase the bargaining power of trade
unions, according to Andres Aguirre, president of APRIMIN. Another main concern is that the
environmental policy is becoming stricter, as the Superintendence for the Environment (SMA) has
sanctioned and even halted several mining operations such as Antofagasta Minerals’ Los Pelambres
mine and Barrick Gold’s Pascua Lama mine over potential contamination and disruption of water
supply to local communities. Furthermore, the government considers the protection of scarce fresh
water resources in northern Chile a priority, forcing mining companies to build expensive seawater
desalination plants to meet their water demands. The mining concessions policy is also a concern, as
the National Development Agency (CORFO) is revising the concessions for non-metallic minerals. The
government agency claims that mining company SQM, which holds the bulk of iodine and lithium
mining rights in Chile, has failed in several ways to comply with their contractual obligation, mostly
on issues regarding the safekeeping and integrity of the mineral properties owned by CORFO.
Internal
In recent years, the intensity of the internal restraining factors for the domestic mining sector has
increased. A key negative factor is that many copper, gold, silver and molybdenum mining operations
are becoming mature and ore grades have been rapidly degrading, which increases substantially the
costs for electric power. This rise in production costs is very ill-timed, as most international prices of
metallic minerals and some non-metallic minerals are at decade-low levels as of the beginning of
2016. As a result, investments in the sector plummeted in 2014 and 2015, with an average of just USD
1.2bn of FDI per year, compared to USD 2.7bn per year over the 2010-2013 period. On the other hand,
Chile is specialised in the production of some non-metallic minerals such as sodium and potassium
nitrates, which face increased competition in the international market from cheaper synthetic
products such as calcium nitrates and ammonium nitrates.
Source: EMIS Insights, CORFO, SMA, Mining.com, Telegraph.co.uk, COCHILCO, SQM, APRIMIN

Investor company.
CONTENT
02
SECTOR IN
FOCUS

Investor company.
FOCUS POINT
Mining Production Volume by Region*, 2015
24.1%
Atacama
28.9% 17%
Tarapaca Antofogasta
30%
Others
Source: COCHILCO, SERNAGEOMIN, EMIS Insights, - * Includes metallic minerals, non-metallic minerals and coal

Investor company.
CONTENT
Main Economic Indicators
2010 2011 2012 2013 2014 2015
Total Population (mn) 17.1 17.3 17.4 17.6 17.8 18.0
GDP, current prices (CLP tn) 111.0 121.3 129.0 137.0 147.2 157.1
GDP, constant prices (yoy change, %) 5.8 5.8 5.4 4.2 1.9 2.1
GDP per capita, current prices (USD) 12,679.7 14,469.7 15,138.6 15,642.9 14,443.8 13,250.9
Consumer Price Index (yoy change, %) 3.0 4.4 1.5 3.0 4.4 4.3
Monetary Policy Rate (year-end, %) 3.3 5.3 5.0 4.5 3.0 3.5
Exchange Rate USD/CLP (year-end) 462.0 519.2 478.3 525.1 605.8 702.4
Mining Sector Trade Surplus, USD mn 42,697.9 48,556.6 46,311.2 43,451.2 41,665.9 32,994.9
Mining Sector Exports, USD mn 44,294.6 51,185.0 48,513.3 45,469.6 43,450.8 34,152.3
Mining Sector Exports (% of total exports) 62.1 62.7 62.1 59.1 56.5 53.6
Mining Sector Imports, USD mn 1,596.7 2,628.4 2,202.1 2,018.4 1,784.9 1,157.5
Mining Sector Imports (% of total imports) 2.7 3.5 2.8 2.5 2.5 1.8
Total Actual FDI Inflow Under Decree Law 600 (USD mn) 2,988.9 4,278.8 9,897.3 7,406.0 11,886.2 2,718.2
Actual FDI Inflow in Mining Sector Under Decree Law 600

1,190.8 2,616.3 3,083.2 3,936.5 1,793.0 553.4
(USD mn)
Actual FDI Inflow in Mining Sector Under Decree Law 600

39.8 61.1 31.2 53.2 15.1 20.4
(% of total)
Source: National Statistics Institute (INE), Central Bank of Chile, World Bank, OANDA, UN Comtrade, COCHILCO, CEIC

Investor company.
CONTENT
Main Sector Indicators
2010 2011 2012 2013 2014 2015
Mining Gross Value Added, current prices (CLP tn) 17.7 18.1 16.5 15.4 16.5 14.2
Mining Gross Value Added, constant prices (yoy change, %) 1.5 -5.2 3.8 5.9 1.3 -0.2
Mining Gross Value Added, current prices (% of total) 17.4 16.2 14.0 12.2 12.2 9.9
Copper Mining Gross Value Added, current prices (CLP tn) 16.4 16.1 14.6 13.6 14.7 12.7
Copper Mining Gross Value Added, constant prices

0.4 -6.2 3.9 6.5 0.6 -0.1
(yoy change, %)
Copper Mining Gross Value Added, current prices (% of total) 16.0 14.5 12.4 10.7 11.0 8.9
Non-Copper Mining Gross Value Added, current prices (CLP tn) 1.3 2 1.9 1.8 1.8 1.4
Non-Copper Mining Gross Value Added, constant prices

14.0 6.6 3.2 3.0 1.2 -1.4
(yoy change, %)
Non-Copper Mining Gross Value Added, current prices

1.4 1.8 1.6 1.4 1.2 1.0
(% of total)
Number of Enterprises in Mining Sector (year-end) 5,736 5,775 5,954 5,962 6,018 6,091*
Number of Enterprises in Coal Mining Segment (year-end) 95 100 104 91 84 81*
Number of Enterprises in Metallic Minerals Segment (year-end) 3,047 2,953 2,881 2,825 2,852 2,805*
Number of Enterprises in Non-Metallic Minerals Segment

2,594 2,722 2,969 3,046 3,082 3,218*
(year-end)
Number of Employees in Mining Sector (year-end) 191,043 197,197 236,771 229,375 249,815 238,454
Number of Employees in Mining Sector (% of total) 2.6 2.6 3.1 2.9 3.1 2.9
Source: Central Bank of Chile, COCHILCO, SII, - * EMIS Insights estimate

Investor company.
CONTENT
Production
Comments Metallic Minerals Production Index

Evolution*, points
Between January and May 2016, copper mine
production dropped by 5.1% y/y in line with the 111.4 110.9
110.0
ongoing trend of decreasing ore grades. The
latter also dragged gold production down by
106.3
1.4% y/y , as gold is generally obtained as a by-
product of copper in Chile. Molybdenum 103.6
output, on the other hand, surged by 22.4% y/y 100.8

99.8
due to lower comparison base, as the largest
player in the segment, Sierra Gorda SCM, was
not operative in the same period of 2015. The
production of non-metallic minerals rose by
9% y/y in January-May 2016, supported by
strong expansion of the output in lithium 2010 2011 2012 2013 2014 2015 Jan-May
carbonates and calcium carbonates. 2016
Non-Metallic Minerals Production Index Coal Production Index Evolution*, points

Evolution*, points
638.0
135.5 137.6
130.4 130.8 128.6
123.5
109.1 480.8
450.1
388.0
97.3 102.6 109.7
2010 2011 2012 2013 2014 2015 Jan-May 2010 2011 2012 2013 2014 2015 Jan-May
2016 2016
Source: COCHILCO, INE, BNamericas, - * Base year 2009=100

Investor company.
CONTENT
Global Positioning
Comments Top 10 Global Copper Miners, thou

tonnes, 2015
In 2015, Chile was the world’s largest copper
mine producer, with a 29.9% share in global Chile 5,764
output. However, its dominance has declined Peru 1,705
from a 33.62% share in 2010, due to the high
China 1,667
cumulative growth in output in Peru and China
by 36.6% and 41.3%, respectively. In the case of United States 1,382
molybdenum production, Chile managed to Congo 1,039
climb from the third place with a 15.2% share
Australia 971
in 2010 to the second place with an 18.2%
share in 2015, overtaking the United States. Zambia 754
Chile’s share of global silver production Russia 720

remained 5.5% in 2015 but he country climbed Canada 697
from the fifth to the fourth place, as
Indonesia 580
Australian production slumped significantly
over the period 2010-2015.
Top 10 Global Molybdenum Miners, thou Top 10 Global Silver Miners, tonnes, 2015
tonnes, 2015
China 127 Mexico 5,592
Chile 53 Peru 4,102
United States 52 China 3,568
Peru 20 Chile 1,504
Mexico 12 Russia 1,412
Russia 8 Australia 1,372
Armenia 5 Bolivia 1,306
Iran 4 Kazakhstan 1,305
Mongolia 3 Poland 1,283
Canada 2 United States 1,103
Source: COCHILCO

Investor company.
CONTENT
External Trade
Comments
Over the 2010-2015 period, mining exports contracted by an average 5.1% a year in value terms,
while imports declined by an average 6.2% a year. As a result, the sector’s trade surplus narrowed
by a cumulative 22.7%, reaching USD 33bn in 2015. The main factor for this development was the
huge decrease in the prices of most minerals, especially of metallic minerals. In contrast, exports
in volume terms expanded by a cumulative 38.5% over 2010-2015, reaching 31.5mn tonnes in 2015,
while the volume of imports surged by 35.1%, reaching 10.4mn tonnes. Among mining exports, the
best performing segment was coal – expanding its external sales by 30 times to 12.1mn tonnes in
2015.The main factor for this was the export-led strategy of the key player in the segment Mina
Invierno, since the company produces sub-bituminous coal that has lower calorific power and is
less adequate for the old thermoelectric plants in Chile when compared with imported coal. In the
case of imports, a very large increase in volume occurred in sulphur (17 times), supported by high
demand for imported sulphur by the main Chilean sulphuric acid producer – Noracid S.A., which
began operations in 2012.
External Trade in Mining Products*, Share of Mining Products in Total

USD mn Exports/Imports
62.3% 62.9% 62.2%

59.3%
56.7%
48,557 53.9%
46,311
42,698 43,451 41,666
32,995
51,185
48,513
45,470
44,295
43,451
34,152
2,628
2,202
2,018
1,785
1,597
1,157
2.7% 3.5% 2.8% 2.5% 2.5% 1.8%

2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015
Exports Imports Trade Balance Exports Imports
Source: COHILCO, UN Comtrade, Portal Minero, PMIMineria, company data, - * Exports (FOB), Imports (CIF)

Investor company.
CONTENT
Exports
Comments Mining Products Exports
In 2015, China was the main export destination

for Chilean mining products, with copper 51,185
48,513
accounting for 94.8% of the value of exports to 44,295 45,470
43,451
the Asian country. On the other hand,
molybdenum oxide was exported mainly to 34,152
countries with developed automotive
industries, such as Japan with a 35.1% share of
total molybdenum oxide exports and South 15.6%
Korea with 17.4%. Iodine was mostly exported
to the United States (26.7% of total exports) -5.2% -6.3% -4.4%
and Belgium (21.6%), although the highest -21.4%
growth rate in external sales over 2010-2015
was observed in exports to emerging 2010 2011 2012 2013 2014 2015
economies such as South Korea and the Export Value (USD mn, FOB) yoy change %
United Arab Emirates.
Top 10 Export Products in Value Terms, Top 10 Mining Export Destinations in

2015 Value Terms, 2015
Copper 88.9% China 39.3%
Molybdenum 2.7% Japan 10.3%
Gold 2.3% South Korea 8.4%
Iron 2.1% United States 7.5%
Iodine 1.5% India 5.6%
Lithium carbonate 0.7% Brazil 4.5%
Silver 0.6% Taiwan 3.1%
Salt 0.6% Canada 2.3%
Sodium nitrate 0.2% Spain 2.2%
Zinc 0.2% Netherlands 2.1%
Source: UN Comtrade, Portal Minero, - * Exports (FOB), Imports (CIF)

Investor company.
CONTENT
Imports
Comments Mining Products Imports

In 2015, coal was the main import product of
the sector, as 40% of the gross electricity 2,628
generation in the country for the year, or 2,202
64.6%
72,175 GWh, were supplied by coal-based 2,018
thermoelectric plants. Yet, this high external 1,785
1,597
dependence is expected to decline, since a
mere 8% of the 4,908 MW electricity 1,157
generation projects currently under
-8.3% -11.6%
construction in Chile are based on coal. In -16.2%
2010-2015, the imports of copper ores and -35.2%
molybdenum concentrates dropped by a
cumulative 42.4% and 27.6%, as the Chilean
2010 2011 2012 2013 2014 2015
metal processing industry’s output decreased
because of the growing competition from Import Value (USD mn, CIF) yoy change %
China.
Top 10 Import Products in Value Terms, Top 10 Coal Import Source Countries in
2015 Value Terms, 2015
Coal 65.0% Colombia 45.5%
Copper Ores 13.9% United States 27.2%
Molybdenum Concentrates 10.5% Australia 20.5%
Sulfur 3.8% Canada 4.0%
Calcium Phosphate 2.3% New Zealand 1.1%
Chalk 0.6% Argentina 0.9%
Guano 0.5% Peru 0.2%
Dolomite 0.5% Netherlands 0.2%
Talc 0.4% Latvia 0.2%
Bentonite 0.4% Germany 0.0%
Source: UN Comtrade, CNE, COCHILCO - * Exports (FOB), Imports (CIF)

Investor company.
CONTENT
Foreign Direct Investment
Comments
Over the period 2010-2015, the mining sector was the largest recipient of FDI in Chile under the FDI
regime established by Decree Law 600, attracting a total of USD 13.2bn or 33.6% of total
investment in the country. However, in 2014 and 2015, F DI in the mining sector slowed down
significantly, with the sector ranking fourth in 2014 with USD 1.8bn and second in 2015 with USD
0.6bn. Marcela Blazquez, spokesperson of the Corporation of Technological Development on
Capital Goods (CBC), attributes the recent fall in mining investment to the temporary halts and
postponement of several megaprojects due to energy, environmental and legal issues, besides the
drop in the prices of most metallic minerals. In this regard, in a special report in July 2014, CBC
projected a total mining investment, both foreign and domestic, of USD 33.5bn for the 2015-2018
period, only for projects with a defined timetable. This is well below Peru’s investment portfolio of
USD 59.5bn for the same period. Of Chile’s 12 largest investment projects in terms of value in 2015,
five with a combined value of USD 23.9bn are being developed by foreign companies. Yet, the
largest project – the USD 8.5bn Pascua Lama copper and gold mining project, developed by
Canadian company Barrick Gold, is currently stalled due to environmental issues.
FDI in Mining Sector Under Decree Law FDI in Mining Sector Under Decree Law
600, USD mn 600, % of total
3,936.5
61.1%
3,083.2 53.2%
2,616.3
39.8%
1,793.0 31.2%
1,190.8
20.4%
15.1%
553.4
2010 2011 2012 2013 2104 2015 2010 2011 2012 2013 2014 2015
Source: Central Bank of Chile, COCHILCO, Corporation of Technological Development on Capital Goods (CBC)

Investor company.
CONTENT
Main Investment Projects

Main Investment Projects in Chile’s Mining Sector
Value
Country Investment Commune
Company Investment Project (USD Start Year End Year
of Origin Type (Region)
mn)
Pascua Lama Mine. Proven
Alto del n/a
reserves: 39mn tonnes of fine
Barrick Gold Canada New Project 8,500 Carmen 2009 (currently
copper, 15mn ounces of gold,
(Atacama) stalled)
675mn ounces of silver
Cerro Casale Mine. Proved Tierra
Barrick Gold (75%), Amarilla
Canada New Project reserves: 172.3mn tonnes of 6,000 n/a n/a
Kinross Gold (25%)
fine copper (Atacama)
Codelco Norte (Radomiro
2019
Tomic), including Calama
CODELCO Chile Expansion 5,400 2011 (operational
Chuquicamata underground (Antofagasta)
status)
mine
Caspiche Mine. Measured Under

Maricunga
Exeter Resources Canada New Project resources: 554.2mn tonnes of 4,800 feasibility n/a
(Atacama)
fine copper study
Pre-
Los Andes
CODELCO Chile Expansion Andina Division 4,800 feasibility n/a
(Valparaiso)
stage
Project Corridor Mine. Pre-

Teck Resources (50%), Vallenar n/a
Canada New Project Estimated output: 190,000 3,500 feasibility
Goldcorp (50%) (Atacama)
tonnes of fine copper per year stage
El Espino Mine. Estimated Under

Ilapel
Pucobre Chile New Project output: 40,000 tonnes of fine 600 feasibility n/a
(Coquimbo)
copper per year study
Tovaku Mine. Estimated Under

Pucobre (60%), Tocopilla
Chile New Project output: 40,000 tonnes of fine 600 feasibility n/a
CODELCO (40%) (Antofagasta)
copper per year study
Inca de Oro Mine. Measured Diego de

PanAust (61%), Australia,
New Project resources: 186mn tonnes of 600 Almagro 2016 n/a
CODELCO (39%) Chile
fine copper (Atacama)
San Antonio Mine. Estimated Diego de 2015 2016

CODELCO Chile New Project output: 60,000 tonnes of fine 300 Almagro (operational (operational
copper per year (Atacama) trial) status)
Can-Can Mine, Estimated Diego de 2016

Copec S.A. Chile New Project output: 34,000 tonnes of fine 107 Almagro 2014 (operational
copper per year (Atacama) status)
La Coipa Mine (Phase Seven), Mantos de 2015 (pre-

Kinross Gold Canada New Project Measured resources: 19,400 199 Oro feasibility n/a
tonnes of fine gold (Atacama) study)
Source: Company data, BMI Research, SVS, BNamericas

Investor company.
CONTENT
Employment and Wages
Number of Employees in Mining Sector, Nominal Wage Index in Mining Sector vs

year-end CPI*, year-end
143.0
138.6
129.5
124.6
249.8
122.8
117.7
236.8 238.5
114.9
229.4
112.4
109.1
107.5
106.3
103.0
197.2 3.12%
191.0 3.08%
2.90% 2.93%
2.60% 2.61%
2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015
Employed Persons in Mining Sector (thou) Nominal Wage Index (points) Consumer Price Index (points)**
Share in Total Employed Persons (%)
Number of Enterprises in Mining Sector, Number of Enterprises by Type of

year-end Mineral, December 2014
6,018
5,962 Metallic
5,954
Minerals
2,852
5,775
5,736
Rocks and
Coal 84
Industrial
Minerals
3,082
2010 2011 2012 2013 2014
Source: INE, COCHILCO, Chilean Tax Service (SII), - * Base year 2009=100 for both indices, ** Own calculations

Investor company.
CONTENT
Employment and Wages (cont’d)
Comments
In 2010-2015, the number of employees in the mining sector expanded at a robust CAGR of 4.5%,
well above the 2% growth in employment in the overall economy. Interestingly, the real wages in
the sector in 2015 were 12.8% higher than in 2010. However, nominal wages, measured in current
U.S. dollars, were 11.6% lower, as the sharp depreciation of the Chilean peso against the U.S. dollar
by a cumulative 34.2% over 2010-2015 mitigated the increase of labour costs. As of December 2015,
only 29.7% of the workers were employed directly by mining companies against 30.7% in 2010, with
the remaining being outsourced employees to contractors. In September 2015, Andres Aguirre,
president of APRIMIN, remarked that outsourcing to contractors has become widespread in recent
years, as it has given companies access to experienced and flexible workforce. Nevertheless, Juan
Carlos Guajardo, CEO of Chilean consultancy Plusmining, commented in February 2016 that mining
companies were disappointed with work outsourcing, as they lost control over human capital and
were witnessing rising labour unrest among outsourced workers. In addition, in 2015, Oscar
Landerretche , CEO of Chilean copper mining giant CODELCO, said that the work outsourcing model
would be heavily revised as part of cost cutting efforts. In fact, in 2015, CODELCO reduced its
subcontracted workforce by 2,187 persons to reach 26,103 at the end of the year.
One of the main concerns of domestic mining companies is the labour reform proposed by the
administration of President Michelle Bachelet in December 2014, which is expected to increase the
bargaining power of trade unions representing outsourced workers and promote union
membership among workers from small companies. The amendment would have a substantial
effect on the mining sector, in which outsourced employees accounted for 70.3% of the labour
force in 2015. According to Andres Aguirre, president of APRIMIN, the measure is likely to result in
more frequent labour strikes, production interruptions and hike of labour costs, which would
reduce the investment attractiveness of the domestic mining sector. On the other hand, the
Minister of Mining, Aurora Williams, claimed that the reform is expected to improve working
conditions and tighten collective bargaining rules. Notably, the average remuneration costs per
worker for contracted employees at copper mining companies were only 43% that of direct
employees in 2014, according to government statistics. In April 2016, the Congress approved the
reform, which was subsequently appealed before the Constitutional Court. In May 2016, the Court
declared some of the measures unconstitutional. As a result, the government exercised a
presidential right of veto and submitted the bill again to a legislative discussion. The final law is
expected to be enacted by the end of 2016.
Source: CODELCO, APRIMIN, Plusmining, Law Business Research, Reuters

Investor company.
CONTENT
03
COMPETITIVE
LANDSCAPE

Investor company.
CONTENT
Competitive Landscape
Highlights
Overview
The level of competition in Chile’s mining sector varies across different segments. It ranges from
extreme concentration in segments such as iron and coal, where the largest players had a 52% and
94.9% share in total production in 2015, respectively, to medium concentration in others like copper. In
the case of copper, a complex historical process that included a full nationalisation of the segment in
1971 under Law 17,450, and a reversal of this policy since 1981 with the promulgation of Law 18,097 that
encouraged FDI, has resulted in today’s highly heterogeneous segment, in which the leader is state-
run company CODELCO (31.3% of copper production in 2015), with an additional ten foreign companies
accounting for 49% of copper output during the year.
Main Players
In 2015, the top ten companies in the Chilean mining sector accounted for 84.5% of the segment’s net
revenues, indicating an overall medium to high degree of concentration. Large companies tend to
specialise in a small number of products - 18 out of the top 25 companies by net revenues were
copper producers. Molybdenum is produced by six out of the top 25 companies, gold by five firms and
Iodine by three companies. Only one enterprise was engaged in iron production – CAP S.A., while
another – SQM, was a diversified non-metallic minerals specialist, with large scale operations for
iodine, lithium, sodium nitrates and potassium nitrates. The latter two are entirely controlled by
Chilean private capitals.
Market Barriers
The non-metallic minerals segment in Chile is characterised by strong entry barriers. In the 1990s
Chilean company SQM obtained exclusive exploitation rights until 2030 over 140,000 h a of Salar de
Atacama, the largest salt flat in Chile, which gave it almost exclusive control of potassium nitrates
and lithium resources. In addition, mining rights for lithium are extremely difficult to obtain, as
lithium has been classified as a strategic material under the Chilean law since 1976 due to concerns
about exports destined to the development of nuclear weapons. In the case of iodine, SQM possesses
the bulk of water rights in the salt flat Salar de Llamara, located in the Tarapaca region, which allows
it to restrict the access of competitors to the scarce hydraulic resources.
Source: EMIS Insights, Ciperchile, SVS, COCHILCO

Investor company.
CONTENT
Market Shares
Top 20 Mining Companies in Chile by Net Revenues, 2015
Net Revenues Market Share

Ranking Company
(USD mn) (% of sector revenues)
1 CODELCO 11,693.0 33.2%
2 Minera Escondida Ltda. 6,574.7 18.6%
3 Anglo American Sur S.A. 2,080.4 5.9%
4 Collahuasi SCM 1,990.5 5.6%
5 Minera Los Pelambres 1,807.2 5.1%
6 SQM 1,728.3 4.9%
7 CAP S.A. 1,475.3 4.2%
8 Minera Centinela 1,266.1 3.6%
9 Minera Spence S.A. 1,170.3 3.3%
10 C.C.M. Candelaria 950.3 2.7%
11 Minera el Abra S.C.M. 808.0 2.3%
12 Mantos Copper S.A. 555.4 1.6%
13 Minera Cerro Colorado Ltda. 502.2 1.4%
14 Minera Lomas Bayas 383.0 1.1%
15 Minera Meridian Ltda. 365.5 1.0%
16 C.M. Teck Carmen de Andacollo 345.8 1.0%
17 Sierra Gorda S.C.M 286.4 0.8%
18 Minera Maricunga S.A. 244.9 0.7%
19 Lumina Copper Chile S.C.M. 230.8 0.7%
20 Sociedad Punta del Cobre S.A. 195.7 0.6%
Source: SVS, own calculations

Investor company.
CONTENT
Copper Mine Competition
Comments
The copper mine production segment is relatively fragmented, marked by the presence of public and
private companies, both local and foreign, with an estimated medium level of competition. According
to data provided by COCHILCO, in 2015, the 24 largest copper mining operations in Chile had a 94.3%
combined share in total copper mine production. Of these 24 mining operations, 11 were controlled by
Chilean capitals (four by private holding company Antofagasta Minerals, seven by the state-run
company CODELCO), and accounted for 36.2% of total production. In addition, there were 11 mining
operations controlled by foreign capitals (with a 49% share in total production), and two operations
of mixed Chilean and foreign ownership (a 9.1% share). There are several foreign players in the
segment including Anglo-Australian companies BHP Billiton and Rio Tinto; Japanese companies
PanPacific Copper, Mitsui, Nippon Resources and Sumitomo; British firms Anglo American and Audley
Capital Advisors; Swiss company Glencore; Polish company KMHG; U.S. companies Freeport McMoran
and Orion Mine Finance; and Canadian companies Teck Resources and Lundin Mining.
Top 20 Mines by Copper Production, thou tonnes, 2015
Escondida (BHP Billiton, Rio Tinto, JECO) 1,153

El Teniente (Codelco) 471
Collahuasi (Anglo American, Glencore, Mutsui) 455
Anglo American Sur (Anglo American) 438
Los Pelambres (Antofagasta Minerals, Nippon Resources) 376
Radomiro Tomic (Codelco) 316
Chuquicamata (Codelco) 309
Ministro Hales (Codelco) 238
Andina (Codelco) 224
Spence (BHP Billiton) 176
Candelaria (Lundin Mining, Sumitomo) 150
El Abra (Freeport McMoran, Codelco) 147
Esperanza (Antofagasta Minerals) 145
Gaby (Codelco) 125
Anglo American Norte (Audley Mining, Orion Mine) 106
Zaldívar (Antofagasta Minerals) 103
Sierra Gorda (KMHG, Sumitomo) 88
El Tesoro (Antofagasta Minerals) 76
Caserones (PanPacific Copper, Mutsui) 75
Cerro Colorado (BHP Billiton) 74
Source: COCHILCO, company data, EMIS Insights

Investor company.
CONTENT
Molybdenum Mine Competition
Comments
Molybdenum mine production in Chile features a relatively high level of concentration, marked by the
presence of a few public and private companies, both Chilean and foreign. According to COCHILCO, in
2015, ten mining operations in Chile accounted for 100% of molybdenum mine output, in which
molybdenum was produced as a by-product of copper. Of these ten mining operations, four were
wholly-owned by Chilean state-run company CODELCO and had a 52.7% share in total production in
2015. On the other hand, there were five mining operations controlled by foreign capitals with a 28%
share in total production and one operation of mixed Chilean and foreign ownership with a 19.3%
share. The foreign players in the segment include Japanese companies PanPacific Copper, Mitsui,
Nippon Resources and Sumitomo; British company Anglo American; Polish company KMHG; Swiss
company Glencore; and Canadian company Amerigo Resources. CODELCO has an important role as
one of the main suppliers of molybdenum to the Japanese steel industry. Notably, the state-run
company accounted for more than 50% of the molybdenum oxide imports of the Japanese steel
industry in 2014.
Top 10 Mines by Molybdenum Production, tonnes, 2015
Chuquicamata and Radomiro Tomic (Codelco) 13,812
Los Pelambres (Antofagasta Minerals, Nippon Resources) 10,150
El Teniente (Codelco) 7,326
Sierra Gorda (KMHG, Sumitomo) 6,873
Andina (Codelco) 5,717
Collahuasi (Anglo American, Glencore, Mutsui) 5,181
Anglo American Sur (Anglo American) 2,430
Salvador (Codelco) 828
Caserones (PanPacific Copper, Mutsui) 218
Minera Valle Central (Amerigo Resources) 44
Source: COCHILCO, company data, EMIS Insights

Investor company.
CONTENT
Top M&A Deals

Top M&A Deals in Chile’s Mining Sector*, 2014-2015
Country of Deal Value Stake

Date Target Company Deal Type Buyer
Buyer (USD mn) (%)
Candelaria/Ojos del Salado copper mining 1,852

Oct-14 Acquisition Lundin Mining Corp Canada 80.0
operations in Chile (Official data)
1,005
Jul-15 Zaldivar copper mine Acquisition Antofagasta PLC Chile 50.0
(Official data)
United
Audley Capital Advisors LLP; Orion Kingdom; 300.0
Aug-15 Anglo American Norte SA Acquisition 100.0
Mine Finance; Private investor(s) United (Official data)
States
Minority stake 90.0

Aug-15 El Morro copper-gold project in Chile Goldcorp Inc Canada 30.0
purchase (Official data)
Productora copper-gold-molybdenum project Minority stake Compania Minera del Pacifico SA 50.9 (DW
Jun-15 Chile 17.5
in Chile purchase (CMP) estimate)
Gebr. Knauf Verwaltungsgesellschaft 20.0

Oct-15 A gypsum quarry in Chile Acquisition Germany 100.0
KG (Official data)
12.0
Jun-14 Amancaya project in Chile Acquisition Eduardo Elsztain - private investor Argentina 100.0
(Official Data)
7.1
Oct-14 Polar Star Mining Corp Acquisition Iron Creek Capital Corp Canada 100.0
(Official data)
Minority stake 7.0

Oct-14 Filo del Sol copper-gold-silver project NGEx Resources Inc Canada 40.0
purchase (Official data)
3.87
May-14 Southern Legacy Minerals Inc Acquisition Regulus Resources Inc Canada (Market 100.0
estimate)
Humberto Reyes Arriendo de Maquinarias 2.7

Jun-14 Acquisition Eduardo Elsztain - private investor Argentina 51.0
SpA (Official data)
Minority stake 2.3

Oct-14 Tuina copper project located in Chile RMG Ltd Australia 25.0
purchase (DW estimate)
2.19
Sep-14 Aegean Metals Group Inc Acquisition Mariana Resources Ltd Australia 100.0
(Official data)
1.92
Jan-14 Coro Mining Corp SPO Undisclosed investor(s) n/a 13.2
(Official data)
1.5
Jan-14 Minera Li Energy SpA Acquisition BBL SpA Chile 51.0
(Official data)
Source: EMIS DealWatch, - * NAICS code: 212

Investor company.
CONTENT
M&A Activity, 2014-2015
Number and Value of Deals in Chile’s Number of Deals by Deal Value, USD
Mining Sector*
Undisclosed;
4 4 4 15.8%
50.1-100mn;
3
10.5%
2
1,868
1 1
1,395
0 > 1000mn;
10.5%
19
51
20
3
0-50mn;
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 57.9% 100.1-
500mn; 5.3%
2014 2015
Value of Deals (USD mn) Number of Deals
Number of Deals by Deal Type Number of Deals by Region of Investor
South
Minority America
stake 11.1% International
purchase Chile 16.7% 11.1%
26.3%
Oceania
Acquisition Joint Venture 11.1%
57.9% 10.5%
North
America EMEA 5.6%
SPO 5.3% 44.4%
Source: EMIS DealWatch, - * NAICS code: 212

Investor company.
CONTENT
04
COMPANIES IN
FOCUS

Investor company.
CONTENT
Corporación Nacional del

Cobre de Chile
Highlights Income Statement (Consolidated, USD mn)
Corporacion Nacional del Cobre de Chile 27.6% 26.9%

(CODELCO) is a state-owned company, created
in 1976, as a result of the nationalisation
process of all private mining companies 14,956 12.5%
initiated in 1971 during Salvador Allende’s
13,827
11,693
4,121
3,717
government. In 2015, the company was the
world’s largest copper mine producer,
1,462
1,115
711
accounting for 9.5% of global output and for
31.3% of Chilean output, according to the
World Bureau of Metal Statistics. It was also
the largest molybdenum producer in Chile,
-2,328
with an output of 27,638 tonnes (a 52.7% share 2013 2014 2015
of domestic production). Net Revenues EBITDA
Net Profit EBITDA margin
The main business operations of CODELCO are
the manufacture and sale of copper cathodes
and molybdenum. The company operates Balance Sheet (Consolidated, USD mn)
seven mining fields in Chile, a copper smelter
operation and a refinery in the Ventanas
9.20
industrial complex. As of December 2015, it
had total mineral resources of 137.7mn tonnes
of fine copper, enough for sustaining
operations for the next 70 years. Proved and
2.73 3.10
probable reserves amounted to 51.0mn tonnes
35,257
33,434
33,365
of fine copper. As of December 2015, the

company employed 19,117 people.
13,445
12,530
12,408
11,526
11,252
9,733
The largest production site of the company is

CODELCO Norte, which encompasses the
Chuquicamata, Ministro Hales and Radomiro 2013 2014 2015
Tomic fields, located near Calama in the Total Assets Shareholders' Equity
Antofagasta region. Net Debt Net Debt/EBITDA
Source: Company data, World Bureau of Metal Statistics, own calculations

Investor company.
CONTENT
Corporación Nacional del

Cobre de Chile (cont’d)
Highlights Copper Mine Production, thou tonnes
The other production sites of CODELCO are:

1,735
Andina, located 3,700m above see lev el, 80km 1,732
far from Santiago de Chile; Gabriela Mistral,

situated in Sierra Gorda, Antofagasta region;
1,689
Salvador, located in the Atacama region; and
1,672
El Teniente, located in the Rancagua region,
80km south of Santiago. 1,647
In 2014, the management of the company 1,622

approved a USD 3.3bn expenditure for the
construction of the Chuquicamata Subterranea
copper mine project, one of the seven ongoing
projects over the 2015-2020 period, which will
require a total investment of USD 23bn. 2010 2011 2012 2013 2014 2015
Chuquimata Subterranea is expected to
become operational by 2019, and would
expand the production capacity of the Copper Mine Production by Site, 2015
company by 320,000 tonnes of fine copper and
15,000 tonnes of fine molybdenum. Ministro
Hales
In August 2012, CODELCO purchased a 29.5% Chuquicam… 13.8%
stake in Anglo American Sur S.A., one of its

main competitors, for USD 2.9bn. Later in the
same year, it sold back 4.5% of these shares to Andina
Japanese industrial conglomerate Mitsui & Co 13.0%
Ltd. for USD 998mn. By the end of 2016, Inca de

Oro, a joint copper & gold mining project by Radomiro Gabriela
Tomic Mistral
CODELCO (39.6% stake) and Australian miner 18.2% 7.2%
PanAust South America (60.4% stake), is
Salvador
expected to enter into construction phase.
El Teniente 2.8%
Inca de Oro will produce 50,000 tonnes of 27.2%
copper and 40,000 ounces of gold per year.
Source: Company data, World Bureau of Metal Statistics, own calculations, EMIS DealWatch

Investor company.
CONTENT

Minera Escondida is the largest individual
mining operation in the world, ranking second 56.9%
in terms of copper production in Chile, with a 52.1%
20% share in national output in 2015,

according to the World Bureau of Metal 34.5%
Statistics. It was founded in 1985, as a joint
8,865
3,213
venture between Anglo-Australian miner BHP
8,004
2,413
6,575
Billiton (57.5% stake), British-Australian peer
5,043
Rio Tinto (30% stake), Japanese peer Jeco Corp.
4,168
1,072
(10% stake) and the International Finance
2,269
Corporation (2.5% stake). In 2010, IFC sold its
minority stake to Mitsubishi Corporation in a 2013 2014 2015
deal estimated at more than USD 537mn.
Net Revenues EBITDA
Net Profit EBITDA margin
Minera Escondida engages in the production
of copper concentrates and copper cathodes.
As of June 2015, it had proved and probable Balance Sheet (Consolidated, USD mn)
reserves of 50.7mn tonnes of fine copper and a
production capacity of 1.1mn tonnes of copper
mine. The mining operation of the company is 0.85
located in the Antofagasta region in Chile, 0.24
0.15
170km south of Antofagasta city and 3,100m
above sea level. The infrastructure comprises
two open pits (Escondida and Escondida
15,882
14,515
Norte), mineral transportation systems, two

12,177
11,398
10,826
concentration plants (Laguna Seca and Los

9,250
1,938
Colorados), two leaching piles, two plants for

994
solvent extraction, two ducts, one

769
electrowinning plant and one filtering plant.

The company also has own port installations 2013 2014 2015
(Puerto Coloso) and a sea water desalination Total Assets Shareholders' Equity
plant. Net Debt Net Debt/EBITDA
Source: Company data, World Bureau of Metal Statistics, own calculations, EMIS DealWatch

Investor company.
CONTENT

(cont’d)
In 2015, copper concentrates accounted for
71.7% of the company’s production, with the 1,194 1,165 1,153
remaining 28.3% being attributable to copper 1,087 1,076
cathodes. As of December 2015, Minera
Escondida directly employed 3,798 people and
818
subcontracted an additional 5,846 workers.
The company is implementing a USD 8bn

investment plan over the period 2011-2017,
mainly targeting the development of new
mining extraction and processing projects.
One of the new investment projects is called

Organic Growth Project (OGP1), which aims to
2010 2011 2012 2013 2014 2015
replace the Los Colorados concentration plant
with a new treatment plant and to allow the
access to higher grade minerals. The project
was valued at USD 3.8bn and became
Copper Production by Type, 2015
operational in the first half of 2015.
Among the other investment projects are the

Escondida Oxide Leach Area, which consists of
a new dynamic leaching pile and a belt Copper
cathodes
mineral transport system. The latter became 28.3%
operational in 2014, following an investment
of USD 721mn.
In 2013, the company announced plans to

construct a second desalination plant by 2017.
The purpose of the new plant is to sustain the Copper
concentrates
operations of Minera Escondida once the OGP1 71.7%
projects is finished. The planned investment
amounts to USD 3.4bn.
Source: Company data, COCHILCO, Mineria de Chile, Aminera

Investor company.
CONTENT
Highlights Income Statement (Consolidated, USD

mn)
Anglo American Sur was the fourth largest
48.1%
copper mining company in terms of output in
39.3%
2015, with a 7.6% share of Chilean copper
production, according to the World Bureau of
Metal Statistics. It is controlled by UK-based 1,585
3,296
12.6%
1,097
2,792
mining group Anglo American Plc., which also 878
2,080
has operations for molybdenum and silver
436
production in Chile. As of December 2015, the
262
ownership structure of the company is as
follows: 50.1% for Inversiones Anglo American
Sur SA, 29.5% for Inversiones Mineras Becrux
-109
SpA (a joint venture between Chilean state-run 2013 2014 2015
miner CODELCO and Japanese peer Mitsui & Net Revenues EBITDA
Co.) and 20.4% for Japanese trading company Net Profit EBITDA margin
Mitsubishi Corporation.
Anglo American Sur controls three operations Balance Sheet (Consolidated, USD mn)
in Chile: the Los Bronces and El Soldado
mines, with fine copper reserves of 11.2mn 0.60
tonnes, and the Chagres smelter. As of
December 2015, the company employed 2,717
people. El Soldado is located in the Nogales
commune, Valparaiso region, 600m above sea 0.20
5,965
5,704
level. The complex comprises an open pit

5,170
4,435
mine, an underground mine and treatment

4,272
4,129
plants for mineral oxides and sulphides.

950
Chagres is one of the most modern copper

215
smelters in Chile, located in the Catemu

municipality, 100km away from Santiago. The
-29
2013 2014 2015

smelting process is done with a flash oven
with a capacity of 184,000 tonnes of fine Total Assets Shareholders' Equity
copper per year. Net Debt Net Debt/EBITDA
Source: Company data, World Bureau of Metal Statistics, own calculations

Investor company.
CONTENT

(cont’d)
Los Bronces is a copper and molybdenum 467

437 438
mine located 65km away of Santiago de Chile, 417
3,500m above sea l evel. It has two plants for
treatment of sulphur minerals and two
processing plants for solutions obtained from
264
leaching of low grade minerals in waste zones. 258
The mineral is transported by duct from the

mines to Las Tortolas, where the company has
a concentration plant.
In 2015, Anglo American Sur invested a total of

USD 335mn in all its mines to maintain current
operations.
2010 2011 2012 2013 2014 2015
In June 2015, Anglo American Plc. announced a
process of selling non-essential assets around
the world, as part of a new strategy focused Production by Type, 2015
on improvement of profitability and
optimisation of operations. Copper
Copper
concentrates
36.9% anodes/blisters
In line with the new corporate strategy, in 13.3%
August 2015, Anglo American Plc. sold one of
its Chilean subsidiaries (Anglo American Norte
S.A.) to a consortium led by UK-based
investment firm Audley Capital Advisors LLP
and U.S. private investment firm Orion Mine
Finance in a deal valued at USD 300mn. Copper
cathodes
As of February 2016, the company is also open 3.2%
to the sale of the El Soldado mining operation,

owned by Anglo American Sur S.A. Molybdenum
Sulphuric concentrates
acid 46.4% 0.2%
Source: Company data, Reuters, Deutsche Bank

Investor company.
CONTENT
CAP S.A.

CAP S.A. is a Chilean group focused on iron ore
mining and steelmaking. CAP Mineria, the 25.6%
mining division of the group, is the largest
producer and exporter of iron ores and pellets 20.0%
19.0%
in Chile, accounting for 0.94% of global iron
exports in 2015, according to the World Bureau
2,305
of Metal Statistics.
1,790
CAP was founded in 1946, as a mixed public-
590
1,475
private company. It began operations as a
358
282
281
pure steelmaking company in 1950 and then as
85
12
an iron miner in 1959. It has been listed on the
Santiago Stock Exchange since 1982. The 2013 2014 2015
Chilean government sold all its shares in the Net Revenues EBITDA
company by 1987. As of December 2015, CAP is Net Profit EBITDA margin
controlled by Chilean investment trust
Invercap S.A. (31.3%) and Japanese
Balance Sheet (Consolidated, USD mn)
conglomerate Mitsubishi Corporation (19.3%)
with the remaining shares being owned by
4.46
Chilean banks and institutional investors.
3.20
CAP Mineria engages in the production of iron
ore and pellets. Its product portfolio includes
1.39
pellet feed, self-fluxing pellets and sinter feed,
which accounted for 96% of the sales of the
5,745
5,709
5,691
division in 2015. Other products include

madder, pellet chips and direct reduction
1,251
1,139
3,238
3,161
3,160
pellets. As of December 2015, CAP Mineria had

820
proved and probable reserves of 2.72bn tonnes

of iron mineral, with an estimated average
iron content of 32.3%. Its production capacity 2013 2014 2015
stood at 15mn tonnes of iron ore and pellets Total Assets Shareholders' Equity
per year. Net Debt Net Debt/EBITDA
Source: Company data, own calculations, COCHILCO, World Bureau of Metal Statistics

Investor company.
CONTENT
CAP S.A. (cont’d)
Highlights Iron Ore Production, thou tonnes
The mining operations of the company are

located in three different regions. The core
business is in Valle del Huasco, Atacama
region, located 660km north of Santiago,
which includes two mining complexes, Mina
Los Colorados and Mina el Algarrobo, one
pellets plant and an own port (Puerto Gacolda
15,431
13,032
II). In Valle del Elqui, Coquimbo region, located
12,055
11,883
11,754
10,544
396km north of Santiago, the company

operates the El Romeral mine, a concentration
plant, a mill plant, and a port (Puerto de
Guayacan). Moreover, in Valle del Copiapio,
Atacama region, 673km north of Santiago, the
2010 2011 2012 2013 2014 2015
company has a concentration plant, which
processes the fresh tailings of the Candelaria
copper mine, controlled by Canadian miner
Iron Ore and Pellets Sales by Country of
Lundin Corporation. Also in this valley, the Destination, 2015
company owns the Cerro Negro Norte mine
Japan 8.3%
and an own port (Puerto Punta Totoralillo).
As of December 2015, CAP S.A. and its Chile 8.0%

subsidiaries directly employed 4,193 people, of
which 2,310 worked in the mining division.
Bahrain 6.9%
Over the period 2010-2015, CAP S.A. invested a
total of USD 2.75bn in expansion of its
South Korea
operations and maintenance works. 6.5%
In 2014, the company opened a new water

Indonesia
desalination plant, which will supply both the China 68.4%
1.2%
Cerro Negro Norte mine and the SCM Lumina
Others 0.8%
Copper Chile mine.
Source: Company data, COCHILCO, La Tercera, COPESA

Investor company.
CONTENT
Minera Centinela

Minera Centinela was created in 2014 as a
result of the merger of two mining companies 48.3%
that belonged to the Chilean miner 39.9%
Antofagasta Minerals: Minera Esperanza,

1,063
founded in 2006, and Minera El Tesoro, created 18.3%
2,202
in 1996. In 2015, Minera Centinela was the sixth
1,986
793
largest copper producer in Chile, with a 3.8%
519
1,266
share of national output. Moreover, it was one
232
172
of the largest fine gold producers with a 11.1%
share of total output, according to COCHILCO.
Minera Centinela is controlled by Chilean
-183
mining group Antofagasta Minerals (70% 2013 2014 2015
stake) and Japanese trading company Net Revenues EBITDA
Marubeni Corporation (30%), as of December Net Profit EBITDA margin
2015.
Minera Centinela engages in the production of Balance Sheet (Consolidated, USD mn)
copper and gold concentrates, with 40% of the
production being sold to the Japanese market.
It also produces copper cathodes, of which 6.89
50% are exported to China. As of December

2015, it had proved and probable reserves (2P)
of 1.84bn tonnes of minerals suitable for 1.09
1.69
concentrates production, with estimated
5,465
5,392
4,954
contents of 0.44% copper, 0.012%

1,599
1,337
molybdenum, and 0.15 grams per tonne of

1,161
2,962
2,840
2,783
gold. Furthermore, it had 2P reserves of

188.5mn tonnes of minerals suitable for SX-EW
cathodes production, with estimated copper
content of 0.45%. The company ended 2015 2013 2014 2015
with a production capacity of 270,000 tonnes Total Assets Shareholders' Equity
of fine copper and 200,000 troy ounces of gold. Net Debt Net Debt/EBITDA
Source: Company data, own calculations, COCHILCO

Investor company.
CONTENT
Minera Centinela (cont’d)
The mining operations of Minera Centinela are 280

278 275
located in Sierra Gorda, Antofagasta region,
1,350km north of Santiago. The company
221
exploits four pits: Esperanza, Tesoro Central,
194
Noreste, and Mirador, and has a port in the
city of Michilla. The company ended 2015 with
a total of 1,954 direct employees.
In April 2015, Antofagasta Minerals announced 95

that it had decided to expand the investment
plan for Minera Centinela, due to the ongoing
difficulties with its main operation, Minera Los
Pelambres. The new plan involves the
development of two new pits: Esperanza Sur, 2010 2011 2012 2013 2014 2015
which will require a USD 2.7bn investment and
will begin operations by 2019; and Encuentro
Sulfuros, which will require USD 1.7bn and is Gold Mine Production, thou ounces
expected to reach operational status by 2024.
Once these new projects are completed, the
production capacity of Minera Centinela will 248
237
reach 400,000 tonnes per year.
204
Also in 2015, Minera Centinela started the
construction of a separate molybdenum plant 157 163
that would produce approximately 3,500

tonnes of molybdenum per year over the
remaining life of the mine. Molybdenum
production is expected to begin in 2017.
Overall, in 2015, the company invested USD

550mn, with an additional USD 430mn 0
projected to be disbursed in 2016. 2010 2011 2012 2013 2014 2015
Source: Company data, COCHILCO, Mineria de Chile

Investor company.
CONTENT
05
REGULATORY
ENVIROMENT

Investor company.
CONTENT
Government Policy
Mining Concession Policy

According to COCHILCO, the current mining concession system guarantees strong protection of
property rights, but could potentially hinder exploration activities that are key for the sustainable
development of the mining industry. The problem arises because exploration concessions, which
are of limited duration (two years), can be easily converted to production concessions, which once
obtained are of indefinite time duration. The latter cannot be terminated even if the beneficiary
does not invest or execute mining activities. Statistics by COCHILCO show that areas with
production concessions occupy more than 40% of the territory in the Northern regions in 2013,
with operations increasingly being concentrated in few agents. Therefore, the share of small
companies in the Chilean mining sector is relatively low, with the five largest players accounting
for more than 50% of total exploration expenditure in 2013. Large miners tend to favour brownfield
exploration (i.e. exploration of zones adjacent to operational mines), whereas companies focused
exclusively on exploration devote more resources to grassroot exploration (i.e. exploration of
completely new areas). This reflects in a gradual reduction of the share of grassroot exploration
from more than 50% of total exploration expenditure in 2005 to about 35% in 2013.
Water Supply
The scarcity of water supply in Chile coupled with the rising demand by the copper mining sector
in the last decade has led to several legal disputes between domestic mining companies and the
local communities. A recent case is that of Chilean miner Antofagasta Minerals, which made a
large tailings dam over the Pupio stream, near the town of Caimanes, to serve its flagship mine
Los Pelambres. Since the opening of the dam in 2008, there have been a series of legal claims by
some members of the local community that the dam affects the flow and quality of the Pupio
stream. There were several protests in February and March 2015, which disrupted the work flow at
the Los Pelambres mine and resulted in lost production of 8,000 tonnes of copper. In March 2015, a
civil court ordered the demolition of part, or all, of the tailings dam wall, which was subsequently
appealed by the company. In May 2016, Antofagasta Minerals signed an agreement with local
communities in the area of its Los Pelambres mine, encompassing 81% of the inhabitants of the
Los Caimanes commune. According to the company, the deal includes works to improve the water
flow of Pupio stream, measures to ensure fresh water availability for human and animal
consumption, and the creation of a community development fund financed by the company.
Source: Metal Bulletin, CIRSO, Ministry of Environment, Superintendence for the Environment, Environmental Evaluation
Service, COCHILCO, CORFO, Editec
Investor company.
CONTENT
Government Policy (cont’d)
Sustainable Mining
Among the competitive advantages that allowed Chile to become the world's 17th largest recipient
of FDI in 2014 were the sound macroeconomic environment, the strong enforcement of property
rights and the free market economy. For the mining sector, the most important factor was the
clear legal framework for obtaining exploration and exploitation concessions. However, Nelson
Pizarro, CEO of Chilean state-run miner CODECLO, warned that many mining projects probably
would not reach operational status as the current sustainability rules are harsh. One prominent
example is Barrick Gold’s Pascua Lama copper and gold mining project. In May 2013, the
Superintendence for the Environment (SMA) sanctioned the company and halted the operations of
the mining project for failing to build drainage channels for the tailings deposit. Although the
Chilean Supreme Court ruled the reopening of the mine in December 2014, SMA raised new charges
against the company in April 2015, related to the flora and fauna protection and glacier
monitoring. Moreover, in April 2016, a new SMA study claimed that Pascua Lama would present
serious health risks for the local population of 202 people living in Chollay in the Alto del Carmen
area, including the risk of contracting cancer from arsenic exposure of the water.
Energy Policy
Chile is highly dependent on imported fossil fuels for its energy generation, with around 87% of
total energy consumption being supplied by foreign energy sources. Thus, the price and supply of
energy are very volatile, which has a considerable impact on energy-intensive industries, including
mining. As a result, the government has developed an ambitious plan to promote the development
of non-conventional renewable energy sources (NCRE). The main objective of the plan, approved by
the parliament in 2010, is to reach a 20% share of total energy production from NCRE sources by
2025. The government also introduced a series of measures, including tax exemptions for the
transport of energy from NCRE and a quota system that obliges power generation companies with
more than 200MW of installed capacity to sell a minimum amount of energy produced from such
sources. Moreover, the state-owned company Production Promotion Corporation (CORFO) created a
special credit facility, CORFO NCRE Credit, to promote access to long-term financing for companies
that generate or distribute this type of energy. So far, the development of NCRE in the country
seems on track with the plan, as the share of those energy sources in total energy production
reached 12.4% in 2015, up from 7.3% in 2013.
Source: Superintendence for the Environment, CORFO, M-Brain, CNE, Reuters, Mining.com, Bio-Bio Chile, Emol, La Tercera

Investor company.
CONTENT
06
METALLIC AND FUEL
MINERALS

Investor company.
CONTENT
Metallic and Fuel Minerals

Highlights
Sector Structure and Development
In 2015, the metallic and fuel minerals segment in Chile, comprising the production of eight minerals,
had a combined production volume of 18.2mn tonnes of fine content for a value of USD 35.9bn in 2015,
according to EMIS Insights estimates. In terms of production value, copper is the largest segment,
with an 88.5% share, followed by gold (4.8%), silver (2.3%), molybdenum (2.1%), iron (1.4%), coal (0.5%),
zinc (0.3%) and lead (0.01%). The segment is highly export-oriented, as in 2015, metallic and fuel
minerals’ exports amounted to USD 33.1bn (21.6% down y/y), equivalent to 92.1% of the production
value. Over 2010-2015, production volume increased at a solid CAGR of 7.1%, but in spite of this, export
value contracted by an average 5.3% per y ear, pushed down by a significant drop in the international
metal commodity prices.
Drivers and Constraints

Among the major metallic minerals by production value in 2015, copper mining faces the greatest
challenges: the reduction in copper ore grades combined with the hardening of the mineral increased
the energy usage for ore extraction by 35.8% per unit of copper content over the period 2010-2015.
Gold production also faces headwinds, with environmental concerns (halting of large projects such as
Pascua Lama), reduction in ore grades and tax policies (e.g. the 15% luxury tax on jewellery in Chile)
being the main impairments. On the other hand, molybdenum output increased by a cumulative 35.8%
over the 2013-2015 period, driven by the establishment of Chilean state-run miner CODELCO as main
supplier to the Japanese steelmaking industry.
Main Players
Unlike the highly concentrated copper and molybdenum sub-segments, the production of other
metallic and fuel minerals in Chile features few key players. In the case of gold, the largest player in
2015 was Minera Centinela with a production of 163,000 ounces of fine gold, equivalent to 11.1% of
Chilean production. It is controlled by Chilean mining group Antofagasta Minerals (70% stake) and
Japanese trading company Marubeni Corporation (30%). In the case of iron, the dominant player was
Chilean conglomerate CAP S.A. with 15.4mn tonnes of iron ore, or 52% of national production. The
major player in coal mining was Mina Invierno with 3mn tonnes of coal or 94.9% of Chilean
production. Mina Invierno controlled by local holding companies Copec and Ultramar.
Source: COCHILCO, Mineria de Chile, La Tercera, company data, EMIS Insights

Investor company.
CONTENT

Main Events
In August 2015, new foreign players entered the copper mining segment in Chile. UK-based mining
company Anglo American Plc. sold one of its Chilean subsidiaries, Anglo American Norte S.A., to a
consortium led by UK-based investment firm Audley Capital Advisors LLP and U.S. private
investment firm Orion Mine Finance (focused on mining investments, with a USD 1.86bn portfolio
as of December 2015) in a deal valued at USD 300mn. Following the acquisition, Anglo American
Norte S.A. was renamed Mantos Copper S.A. British executive John MacKenzie played a pivotal role
in the acquisition process, as he was the CEO of Anglo American’s copper unit between 2009 and
2013, then CEO of the Audley Capital Advisors mining unit between 2013 and 2015, and from then
on CEO of Mantos Copper S.A. The assets of Mantos Copper S.A. consist of two copper mining
operations located in the north of Chile, Mantos Blancos and Mantoverde. Mantos Blancos is
located in the Antofagasta region, 45km northwest of Antofagasta city, and produced 56,598
tonnes of fine copper in 2015. Mantoverde is located in the Atacama region, 56km away from the
Charanal port, and produced 50,444 tonnes of fine copper in 2015.
Also in August 2015, Canadian mining companies Goldcorp and Teck Resources announced the
combination of their respective USD 3.9bn El Morro and USD 4.5bn Relincho mining projects to
form a single copper-gold project. The projects, located approximately 40 km apart in the Atacama
region, became integrated in a joint venture named Project Corridor. In essence, the project is
crucial for the development of both mining operations, as the development of the Relincho project
had been postponed by Teck Resources, while El Morro had been put on hold by local courts due to
community opposition. The combined project is expected to help slash development costs as
metal prices have dropped to multiyear lows. The two companies estimated that Project Corridor
will have a 32-year lifespan and produce an average of 190,000 tonnes of copper and 315,000
ounces of gold per year over the first decade of its operations, using a concentrator with a
capacity of 90,000-110,000 tonnes per day. Both companies agreed to work on a pre-feasibility
study, which is expected to be completed by the end of 2017. In June 2016, Project Corridor was
rebranded Nueva Union, with the prefeasibility study confirmed to be completed in the second
half of 2017.
Source: Editec, EMIS DealWatch, Mining.com, BNamericas, company data

Investor company.
CONTENT

Production
Comments
Over the 2010-2015 period, the production volume of the metallic and fuel minerals segment
expanded at a solid CAGR of 7.1%, essentially due to the strong performance of iron ore production
(CAGR of 6.1%) and coal (fivefold increase). In the case of iron, the developed and efficient
infrastructure that makes domestic production competitive on the international markets was the
main growth factor. The growth of coal production was due to the increase in external demand for
the type of coal produced in Chile (sub-bituminous). Despite this robust growth, in 2015, coal and
iron accounted for a mere 1.9% of the production value of the segment. On the other hand, the
performance of the three major sub-segments in terms of production value in 2015 – copper (an
88.5% share), gold (4.8%) and silver (2.3%), was much weaker. Silver was the best performer with
production volume rising at a CAGR of 3.2% over 2010-2015, followed by gold (1.5%) and copper
(1.2%). In terms of reserves, Chile is a leading global player in several sub-segments, outlining the
positive growth prospects before the domestic mining sector. According to USGS, in 2015, Chile had
the world’s largest copper reserves (210mn tonnes of fine copper or 29.1% of global reserves), the
third biggest molybdenum reserves (1.8mn tonnes of fine molybdenum or a 16.4% share), and the
third largest silver reserves (77,000 tonnes of fine silver or a 13.5% share).
Metallic and Fuel Minerals Production Metallic and Fuel Minerals Production by
Evolution, thou tonnes Type in Volume Terms, 2015
Copper
31.7%
19,444
18,179
17,838
15,638
13,744
12,910
Coal 17.4%
Iron 50.3%
Molybdenum…
Others
2010 2011 2012 2013 2014 2015 0.3%
Source: COCHILCO, USGS

Investor company.
CONTENT

Production (cont’d)
Copper Mine Production vs Price Molybdenum Production vs Price
52.6
5,776 5,750 5,764 48.8
5,419 5,263 5,434
40.9
37.2 38.7
35.1
400.5 15.8 15.4

342.5 361.4 23.3
334.1 312.0 2,296 12.7
11.4
250.8 10.3
211.8
6.7 6.1
2010 2011 2012 2013 2014 2015 H1´2016 2010 2011 2012 2013 2014 2015 H1´2016
Molybdenum Production (thou tonnes of fine molybdenum)
Copper Mine Production (thou tonnes of fine copper)
COMEX* Refined Copper Prices (USD cents/lb.) American Traders Molybdenum Oxide Price (USD thou/lb.)
Gold Production vs Price Silver Production vs Price
51.3 1,571.8
49.9 1,504.3
45.1 46.0
42.5 1,286.7 1,291.3
39.5 1,194.5 1,173.8
1,669.2
1,572.1 35.2
31.1
1,408.7 643.5
23.7
16.5 20.2 19.0
1,265.8 15.7 15.9
1,227.5 1,223.2
1,158.8
2010 2011 2012 2013 2014 2015 H1´2016 2010 2011 2012 2013 2014 2015 H1´2016
Gold Production (tonnes of gold content) Silver Production (tonnes of silver content)
COMEX* Gold Price (USD/oz t) COMEX* Silver Price (USD/oz t)
Source: COCHILCO, - * Commodity Exchange of New York

Investor company.
CONTENT
Metallic and Fuel Minerals Exports
Comments Metallic and Fuel Minerals Exports
Over the 2010-2015 period, metallic and fuel
49,311
47,032
minerals exports contracted by an average
44,152
43,438
42,219
5.3% per year in v alue terms, with a
particularly sharp drop in 2015 (-21.6% y/y). This
33,100
13.52%
is related to the significant decrease in
international prices of copper, molybdenum,
gold and iron ore since 2011.
-4.62% -4.38%
-6.12%
Exports fared better in terms of volume,
particularly for molybdenum concentrates
(twofold expansion, reaching 17,259 tonnes in -21.60%
2015) and silver ores (15 times expansion, 2010 2011 2012 2013 2014 2015
reaching 9,213 tonnes), supported by strong
Export Value (USD mn, FOB) yoy change %
external demand.
Top 10 Export Products in Value Terms, Top 10 Export Destinations in Value

2015 Terms, 2015
Copper 91.8% China 40.6%
Japan 10.6%
Molybdenum 2.7%
South Korea 8.5%
Gold 2.4% United States 6.7%
India 5.6%
Iron 2.2%
Brazil 4.4%
Silver 0.6% Taiwan 3.2%
Canada 2.3%
Zinc 0.2%
Spain 2.2%
Coal 0.1% Italy 2.1%
Source: UN Comtrade, COCHILCO

Investor company.
CONTENT
07
NON-METALLIC
MINERALS

Investor company.
CONTENT
Highlights
Sector Structure and Development

In 2015, the non-metallic minerals segment in Chile, comprising 23 minerals, recorded a combined
production of 24.9mn tonnes for a value of USD 4 .2bn, according to EMIS Insights estimates. In terms
of production value, calcium carbonates was the largest sub-segment, with a 29% share of the total
in 2015, followed by potassium compounds (16.5%), iodine (16.2%), nitrates (12.7%), lithium compounds
(9.4%), boron compounds (8.9%), silica ores (2.6%) and salt (2.4%). In 2015, the exports of the segment
amounted to USD 1.1bn, equivalent to 25.2% of domestic production. Over 2010-2015, production
volume increased at a CAGR of 4%. Simultaneously, exports expanded by 4.2% per year in value terms,
supported by strong external demand and rising prices.
Drivers and Constraints

Chile is the leader in the global iodine market, as a result of its relatively low production costs and
higher flexibility to respond to changes in the global demand, according to COCHILCO. Nitrates
production in the country has been losing pace in the recent years, as Chilean natural nitrates must
compete with cheaper products of synthetic origin, such as calcium nitrates and ammonium nitrates,
supplied mainly by Israel, Jordan and China. Although Chile is a minor player in the global market for
potassium salts, the segment benefits from the co-production with lithium. In addition, Chile's main
advantage in the boron compounds segment lies in the production of boric acid from ulexite – a
borate mineral abundant in Chile.
Main Players
The production of non-metallic minerals in Chile is dominated by Chilean company Sociedad Quimica
y Minera de Chile S.A. (SQM), which, as of December 2015, claimed to be the world’s largest producer
of iodine and potassium nitrates, and among the leaders in lithium compounds. Despite the market
dominance of SQM, two companies recently entered the iodine segment: Chilean-Japanese miner
Algorta Norte, which began operations in the Antofagasta region in 2012, and Chilean miner Bullmine,
which operates in the Tarapaca region. In the lithium segment, besides SQM, another relevant player
is German miner Rockwood Lithium, both operating in the salt flat Salar de Atacama, Atacama region.
Source: COCHILCO, SQM, SVS, EMIS Insights

Investor company.
CONTENT
Main Events
For Chilean company SQM, 2015 and the first half of 2016 were an extremely eventful period. In
October 2015, Chile's securities and insurance regulator SVS fined five current and former board
members of the company, following an investigation over alleged illegal political campaign
contributions. In May 2016, the national development agency CORFO began an arbitration process
against SQM, aiming at the early termination of a contract signed in 1986 for lithium extraction
from the Salar de Atacama salt flat, while a previous arbitration process initiated in 2014 by CORFO
concerning mining concessions royalty payments was still to be settled.
The legal disputes between SQM and the Chilean government in recent years have led to political
speculation about a potential takeover of the company by the Chilean government. However, in
March 2016, the Minister of Mining, Aurora Williams, discarded such a scenario and remarked that
the government would not stop foreign companies from buying a stake SQM. These comments,
coupled with the December 2015 announcement by Chilean investor Julio Ponce, the controlling
shareholder of the firm, of his intention to sell part of his stake in the company, attracted the
attention of foreign players, including Israeli chemical manufacturing company ICL and Chinese
company Tianqi Lithium Industries, the leading producer of lithium in Asia.
Amidst the political turmoil engulfing the company and the foreign takeover speculations, SQM
made several announcements regarding a profound revision of its current business plan. In
September 2015, SQM announced a temporary halt between November 2015 and December 2015 of
its nitrate and iodine mining operations and part of its industrial activities in Pedro de Valdivia
commune, Antofagasta region. The company quoted as main factors the build-up of inventories
and excess production capacity. In March 2016, SQM announced that it was evaluating options to
expand its lithium production business to other markets, such as China and Argentina, as its
lithium mining concessions in Chile were being disputed by CORFO. In this regard, in March
2016, SQM and U.S. mining company Lithium Americas Corp. announced a partnership to develop
lithium deposits in Jujuy province, Argentina, through a subsidiary called Minera Exar (with a 50%
stake for each partner). Minera Exar will invest USD 25mn to extract around 40,000 tonnes of
lithium carbonates per year. Meanwhile, in June 2016, SQM disclosed plans to increase its
potassium nitrate production capacity by 500,000 tonnes over the 2016-2018 period, in order to
reach a capacity of 1.5mn tonnes.
Source: BNamericas, Diario Financiero, M-Brain, SABI

Investor company.
CONTENT
Comments
Over the 2010-2015 period, the production volume of non-metallic minerals expanded at a CAGR of
4%. Yet, the performance of the three major sub-segments in terms of production value in 2015 –
calcium carbonates (a 29.0% share), potassium compounds (16.5%) and iodine (16.2%), was uneven.
Among these, iodine and potassium compounds performed well, with production volume surging
at a CAGR of 6% and 4.4%, respectively, supported by high external demand. Meanwhile, calcium
carbonates’ output virtually stagnated, growing at a weak CAGR of 0.5%, as the sub-segment is
heavily dependent on demand for specialised limestone used by Chilean copper, gold mining, iron
and aluminium processing industries, all of them recording poor growth over 2010-2015.
Overall, the non-metallic minerals production in Chile remains with high growth prospects,
stemming from strong fundamentals from the supply side. Notably, in 2015, Chile had the world’s
largest lithium reserves (a total of 7.5mn tonnes, equivalent to 53.5% of global reserves), the
second biggest iodine reserves (1.8mn tonnes or 24% of global reserves), and the seventh largest
potassium compounds reserves (150mn tonnes or a share of 4.05%).
Non-Metallic Minerals Production Non-Metallic Minerals Production by

Evolution, thou tonnes Type in Volume Terms, 2015
Calcium
carbonate Potassium
26.9% compounds
7.6%
Silica ores
5.1%
24,892
23,578
22,260
Gypsum
20,786
20,489
19,663
3.5%
Pumicite
3.2%
Sodium
chloride
47.5% Others 6.2%
2010 2011 2012 2013 2014 2015
Source: COCHILCO, El Mercurio, Mineria de Chile

Investor company.
CONTENT

(cont’d)
Iodine Production vs Price Potassium Compounds Production vs

Price 1,901 1,870
1,889
20.7 21.2 1,686
19.0 1,526
17.5 1,372
15.8 16.0
459.0
435.0
379.0 365.0
90,000
85,000 332.0
297.0
55,000 55,000
33,000 32,000
2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015
Iodine Production (thou tonnes)
Potassium Compounds Production (thou tonnes)
Iodine Price, 99.5% Crude (USD/tonne) Potassium Chloride Price, standard grade, Vancouver (USD/tonne)
Nitrates Production vs Price Lithium Compounds Production vs Price
1,058.7 69.6 71.6
927.9 60.6 62.3

822.6 56.4
759.4 722.1 795.3 52.9
7,716 7,716
793.0 797.0
7,000
755.0 757.0
6,614 6,614
732.0
666.0 5,291
2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015
Nitrates Production (thou tonnes) Lithium Compounds Production (thou tonnes)
Sodium Nitrate Price, 98%, Chile (USD/tonne) Lithium Carbonate Price, Technical Grade, United States
(USD/tonne)
Source: COCHILCO

Investor company.
CONTENT
Non-Metallic Minerals Exports
Comments Non-Metallic Minerals Exports

After a peak in 2011, the exports of non-
metallic minerals decreased at an annual
118.7%
average rate of 13.4% in v alue terms through
2015. Yet, the external sales of the three
largest products rose over the period 2010-2015
at a CAGR of 4.4% for iodine, 7% for lithium
carbonates and 10.9% for salt, supported by 1,874
1,482
increasing shipments at stable prices. In
1,317
1,232
1,053
contrast, sodium and potassium nitrates
857
exports shrunk by a cumulative 25.8% and

-6.5%
62.4% in volume terms, as a result of -11.1% -14.5%
-20.9%
increasing international competition from 2010 2011 2012 2013 2014 2015
cheaper products of synthetic origin, supplied
Export Value (USD mn, FOB) yoy change %
by producers from emerging countries.
Top 10 Export Products in Value Terms, Top 10 Export Destinations in Value

2015 Terms, 2015
Iodine 48.1% United States 28.2%
Belgium 11.0%
Lithium carbonate 23.3%
China 10.3%
Salt 17.9%
Other 9.3%
Sodium nitrate 7.1% South Korea 7.1%
Potassium nitrate 2.8% Brazil 7.0%
Mexico 5.5%
Borates 0.7%
Japan 4.5%
Siliceous earths 0.0%
Netherlands 2.9%
Sodium sulfate 0.0% India 2.3%
Source: UN Comtrade, COCHILCO

Investor company.
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CHILE

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CNE National Energy Commission

COCHILCO Chilean Copper Commission

CORFO National Development Agency

GVA Gross Value Added

SERNAGEOMIN National Geology and Mining Service

SII Chilean Tax Service

SMA Superintendence for the Environment

SVS Superintendence of Securities and Insurance

USGS United States Geological Survey

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CONTENT Sector Overview

02 SECTOR IN FOCUS p.14

03 COMPETITIVE LANDSCAPE p.27

Competitive Landscape Highlights

04 COMPANIES IN FOCUS p.34

Corporación Nacional del Cobre de Chile (CODELCO)

CONTENT 06 METALLIC AND FUEL MINERALS p.48

Metallic and Fuel Minerals Highlights

Metallic and Fuel Minerals Production

Metallic and Fuel Minerals Exports

07 NON-METALLIC MINERALS p.54

Non-Metallic Minerals Highlights

Non-Metallic Minerals Production

Non-Metallic Minerals Exports

EMISPDF dobere from 180.232.71.74 on 2017-02-21 10:55:13 GMT. DownloadPDF.

Announcing a New Event from the Organisers of

Learn more at www.miningcumbre.com

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USD USD 1.5%

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31.48mn tonnes DOMESTIC MARKET 10.40mn tonnes

Copper & Molybdenum: USD 31,277mn Coal: USD 752mn

KEY PLAYERS NET REVENUES:

1. CODELCO: USD 11,693mn 6. SQM: USD 1,728mn

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Source: EMIS Insights, SVS, company data, SNA, COCHILCO, UN Comtrade

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Main Indicators Forecast

2016f 2017f 2018f 2019f 2020f

Source: BMI Research, EMIS Insights, Editec

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Source: BMI Research, SQM, EMIS Insights

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Main Economic Indicators

2010 2011 2012 2013 2014 2015

Total Population (mn) 17.1 17.3 17.4 17.6 17.8 18.0

Actual FDI Inflow in Mining Sector Under Decree Law 600

Actual FDI Inflow in Mining Sector Under Decree Law 600

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Main Sector Indicators

2010 2011 2012 2013 2014 2015

Copper Mining Gross Value Added, constant prices

Non-Copper Mining Gross Value Added, constant prices

Non-Copper Mining Gross Value Added, current prices

Number of Enterprises in Coal Mining Segment (year-end) 95 100 104 91 84 81*

Number of Enterprises in Non-Metallic Minerals Segment

Source: Central Bank of Chile, COCHILCO, SII, - * EMIS Insights estimate