Copper Supply 27 th International Copper Conference Metal Bulletin Roberto Ecclefield VP Non Refined Copper Sales 10-12 March 2014, Milan
Review on additional copper production Mining companies and the challenge for delivering new production. Capex Production Forecast, volume and time wise 2
Consensus on surplus for 2015 700 Refined Copper Balance (ktf) 600 500 400 300 200 Analyst 1 Analyst 2 Analyst 3 100 0-100 2013 2014 2015 Sources: Wood Mackenzie, Long Term Copper Outlook Q4 2013; Intierra Monthly Copper Briefing Report Feb.2014; CRU Copper Market Outlook Feb.2014 3
Stocks can reach 1.7 million tons by 2015 2,500 Long Term Outlook Q4 2013 2,000 1,500 1,000 500 0-500 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Exchange Stocks 688 568 545 589 770 1,118 1,772 1,980 2,014 1,839 1,487 1,484 Balance 922-229 90 531 181 348 654 208 34-175 -352-2 Exchange Stocks Balance 4
5 5
6 6
In 2010 5 New Projects represented more than 90% of total New Projects 1,000 New Projects (1Q 2010) 900 800 700 600 500 400 300 200 100 0 2009 2010 2011 2012 2013 2014 2015 2016 Konkola Andacollo Salobo I Los Bronces Caserones Esperanza 7
Same Projects in Q4 2013 had delivered half of the forecasted production in their first year and 35% less than forecasted in their first 4 years 1,000 900 800 700 600 500 400 300 200 100 0 New Projects (Q4 2013) 2009 2010 2011 2012 2013 2014 2015 2016 Konkola Andacollo Salobo Los Bronces Caserones (ex regalito) Esperanza 8
Production from projects was not delivered With a focus on those 5 major projects mentioned before, the total average deviation of these past forecasts in 2013 represents f -35% f These figures even do not include projects whose production did not start until 2013, although they were scheduled for 2013 - For example Q1 2010: 375 kt Cu Toromocho Peru 75 Highly probable Toquepala Peru 80 Highly probable Boleo Mexico 20 Highly probable Galeno Peru 200 Probable 375 9
Global Copper Supply 2013 Copper supply forecast from December 2013 for the next 7 years. The outlook remains very optimistic. 22,000 Global Copper Supply ktf (outlook 2013) 21,000 20,000 19,000 18,000 149 1,012 1,735 1,936 2,101 2,203 2,213 2,196 17,000 16,000 15,000 2013 2014 2015 2016 2017 2018 2019 2020 Current Assets New Projects 10
A more realistic forecast After adjusting major projects coming until 2016 with the average deviation of 35% calculated before, potential production could be impacted at least by 1.4 million ton less. 1,800 1686 1375 1,200 1096 ktf 841 894 600 547 0 2014 2015 2016 Main projects Adjusted main projects 11
Adjusted Balance A -35% adjustment, only from major new projects, would have an impact of at least 200k ton in 2014, 400k ton in 2015 and almost 500k in 2016. 1,000 800 600 654 ktf 400 200 348 148 254 208 0-200 2009 2010 2011 2012 2013 2014 2015 2016-250 -400 12
Adjusted Balance And the stocks should remain in similar levels to the current stock 2,500 Exchange Stocks Balance Adj.Balance 2,000 1,500 1,000 500 0 654 348 148 254 208 2009 2010 2011 2012 2013 2014 2015 2016-250 -500 13
Pipeline of Major New Projects (Q1 2013) accounts for 90% of total New Projects 1,800 1,600 Sentinel 1,400 Sentinel KOV 1,200 KOV Toromocho 1,000 Toromocho Las Bambas 800 KOV Las Bambas 600 Toromocho S. Gorda S. Gorda S. Gorda DMH 400 DMH DMH Caserones 200 0 Caserones Caserones KOV DMH Oyu Tolgoi Caserones Oyu Tolgoi Oyu Tolgoi Oyu Tolgoi 2013 2014 2015 2016 14
DMH Project: Codelco making the difference 2010 Forecast 2014 Actual Startup 4Q 2013 4Q 2013 Production in 2013 ktft 30 kft 33 kft REASONS FOR THIS SUCCESS: - Huge pipeline of Projects all of them in Chile Permanent staff and resources Internal expertise 15
Codelco Pipeline of Projects (all located in Chile) DMH MUS$ 3,435 170 kfmt/year Chuqui Underground MUS$ 4,080 315 kfmt/year 2013 2017 2018 2021 El Teniente New Mine Level MUS$ 3,500 430 kfmt/year RT Sulphide Phase II MU$ 5,430 380 kfmt/year Andina 244 MUS$ 6,750 318 kfmt/year Under Construction Feasibility Study 16
Copper Supply 27 th International Copper Conference Metal Bulletin Roberto Ecclefield VP Non Refined Copper Sales 10-12 March 2014, Milan