U'S' Commercial Service Chile

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U.S. Commercial Service Chile

• Chile Briefing
• Trade Americas Conference
• Denver, CO
• May 4-5, 2006

Americo Tadeu Senior Commercial Officer U.S.
Embassy Santiago
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Geography

• 2,600 miles long
• Just 100 miles wide (average)
• Diverse climate and geography
• Opposite seasons from the U.S.
• Isolated by mountains, desert and sea
• 16 million population
• Principal city and capital - Santiago

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Brief History

• Spanish Colony 1541 1810
• Socialists take power 1970
• Economy destroyed
• Military coup 1973
• 3,000 died from both sides
• Chicago Boys take charge
• Open economy begins to grow - 1974
• Structural changes - 1981

Democratic elections in 1989
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Chile Today

• President-Elect Michelle Bachelet takes office
  March 11, 2006 (2006-2010)
• Concertacion Coalition
• Christian Democrats
• Party for Democracy
• Socialists
• Broad Consensus No Change
• Open Economy Free Market
• Democratic Institutions

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Sustained Economic Growth

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Unemployment Level
Source Banco Central de Chile
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Price StabilityAnnual Inflation ()
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Declining Poverty Rates(as a percent of
population)
Note Indigence is defined as having income
inadequate for a basket of goods sufficient to
support a family of 4. Poverty is defined as
income less than 2x the value of the same basket.
Source Mideplan, Biannual CASEN Study, 2003
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Business - Why Chile?

• Free Trade Agreements
• Steady 6 growth
• Prudent fiscal policies
• Stable democratic government
• Solid business practices
• Rule of law

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Investment Welcome

• A credit rating (SP and Fitch Ratings)
• 7.2 billion in new foreign investment in 2004
  (173 increase)
• Since 1974, total FDI in Chile has topped 41
  billion. Top investors Spain, the U.S., Canada
  and the U.K.
• Santiago selected as Best City for Business in
  Latin America
• A springboard to other markets

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Our Free Trade Agreement
Effective January 2004

• 95 of bilateral trade in goods duty-free
• 75 of U.S. farm goods duty-free by 2008
• Stronger protection of intellectual property
  rights (IPR)
• Open and fair government procurement
  (www.chilecompras.cl)
• Commitments on labor rights and environmental
  protection

Visit our U.S. Exporters Guide to the US Chile
FTA at http//www.buyusa.gov/chile/en/ftaguide.htm
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Certificates of Origin

• Certificates of Origin may be provided by the
  importer, exporter or producer.
• Remain valid for four years from date of issue.
• Can cover multiple shipments of identical
  merchandise.
• Importers have up to one year to claim a refund
  for excess duties paid.

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Certificates of Origin

• Documents supporting claims of origin must be
  maintained for at least five years.
• Supporting documents can include
• Bills and/or receipts for materials used
• Commercial invoices
• Letter or affidavit from producer
• Certificate of origin for components used

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(No Transcript)
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U.S.-Chile Trade in Merchandise/Goods (In US
Billions)
U.S. Department of Commerce, Bureau of the Census
(www.census.gov)
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Main U.S. Exports to Chile
Source Bureau of Census
HS Chapter (2 digits) US
Millions CIF 2004
2005 Total Exports (HS)
3,605.9 5,197.7 84--INDUSTRIAL MACHINERY
PARTS 84 1,090.0
1,294.6 27--MINERAL FUEL, OIL ETC. 85
324.4 867.4 87--VEHICLES, NOT
RAILWAY 27 308.5 535.0 85--ELECTRIC
MACHINERY/TELECOM EQUIP. 87 356.1
435.7 88--AIRCRAFT, SPACECRAFT 39 59.3
334.6 90--OPTIC, MEDICAL, SURGICAL
INSTRUM. 90 167.0
203.7 39--PLASTICS AND ARTICLES THEREOF 29
192.4 195.0 98--SPECIAL OTHER 38
145.7 190.9 29--ORGANIC
CHEMICALS 28 92.7
97.0 38--CHEMICAL PRODUCTS 98
77.4 81.6
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Main Chilean Exports to the U.S.
Source Bureau of Census
HS Chapter (2 digits) US Million
CIF 2004 2005 Total Exports
(HS) 4,732.2 6,665.7
74--COPPER AND ARTICLES THEREOF 08 731.8
1,699.0 08--EDIBLE FRUIT NUTS 44
925.2 1,059.0 44--WOOD AND ARTICLES OF
WOOD 74 914.4 881.8 03--FISH
CRUSTACEANS 03 635.2
717.9 26--ORES, SLAG AND ASH 22
117.7 366.6 27--MINERAL FUEL, OIL ETC.
71 136.8 363.4 71--PRECIOUS STONES
METALS 27 147.8 260.1 28--INORGANIC
CHEMICALS 26 113.9
184.3 22--BEVERAGES, SPIRITS AND VINEGAR 28
152.6 166.6 20--PRESERVED FOOD
29 94.8 102.6
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Main Destinations for Chilean Exports
Source SOFOFA
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Best Prospects for U.S. Exports

• Construction
• Electric Power Equipment
• Medical Equipment Healthcare
• Computer Hardware / Software Services
• Financial Services
• Franchising
• Food Processing Packaging Equipment

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Best Prospects (cont.)

• Environmental Technologies Services
• Mining Equipment
• Plastics Machinery Materials
• Security Equipment Safety
• Telecommunications Equipment Services
• Travel Tourism

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Mining Equipment and Services
Industry Profile
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Contents

• 1. Market Overview
• 2. U.S. Position
• 3. Competitors
• 4. Principal Sub Sectors
• 5. Commercial Opportunities
• 6. Other Resources

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Market Overview

• In 2005, the local mining equipment and services
  market exceeded 1 billion and is expected to
  grow at an annual minimum average of 10 for the
  next 5 to 8 years.
• Over 18 billion in identifiable projects are
  scheduled to break ground by 2013.

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Market Overview

• Chile is the worlds largest producer and
  exporter of
• potassium nitrate,
• sodium nitrate,
• copper, and
• lithium
• Chile is the worlds second largest producer of
• rhenium,
• iodine, and
• molybdenum
• Chile produces substantial amounts of
• gold and
• silver

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Market Overview

• The Chilean Mining industry is made up of
• over 70 private mining companies that own 120
  mining operations, with Chilean and multinational
  ownership
• one state-owned mining corporation, CODELCO,
  one of the largest copper producers and exporters
  in the world
• over 270 supplying companies, most of which
  represent the U.S. as well as other brands of
  imported products, 38 of which are members of
  APRIMIN

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Market Overview

• Copper prices increased from US0.65/lb in 1998
  to US3.14/lb in April 24, 2006, creating strong
  incentives for new mines and mining projects.
• Between 2003 and early 2006, the number of active
  mines jumped from 70 to 220.
• The launch of new mining projects and the US
  -Chile Free Trade Agreement (2004) are the
  driving forces for the demand that reached a peak
  of US1.6 billion/year in 2005.

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Mining Equipment Supplies and Services
Market Overview
Source These figures are unofficial estimates
and were elaborated based on Chilean Customs
Statistics and mining industry experts
estimates.
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U.S. Position

• Historically, 50-55 of all mining equipment
  imports come from the U.S.
• This high market share is supported by excellent
  quality, after-sales service, and compliance with
  delivery dates.
• However, with explosive market growth and the
  entrance of new suppliers, the U.S. market share
  has decreased from 52 in 2003 to 40 in 2005.

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Competitors

• During 2005, manufacturers of mining equipment
  from Brazil, Canada, Germany, Japan and Sweden
  were the most aggressive competitors for the U.S.
  suppliers in the Chilean market..
• The U.S. plus the five traditional suppliers,
  provided 80 of Chilean imports.
• The mix of mining equipment suppliers has
  changed by the increased participation of smaller
  suppliers from the rest of the world,
  particularly from Asia.

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Principal Sub Sectors

• Copper mining
• Silver mining
• Other metals and minerals include
• Gold - Boron
• Rhenium - Selenium
• Lithium - Calcium Carbonate
• Iodine - Sodium Chloride (rock salt)
• Molybdenum - Diatomite
• Manganese
• Iron ore

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Commercial Opportunities

• Many opportunities currently exist for U.S. firms
  and exporters, in the following areas
• New mines and modernization of existing
  facilities
• Mining Equipment
• Crushers
• Grinders
• Off-road vehicles
• Cabbed chassis
• Rock cutters and necessary parts
• 360 degree revolving excavators
• Cranes and screening machines

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Commercial Opportunities

• Production technology
• Biotech applications to copper processing
• Innovative companies to provide solutions to cut
  costs
• Robotics, automation, continuous mining
• Environmental services
• Codelco is currently obtaining ISO certification
  and must meet higher environmental standards

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Other Resources

• Chilean Mining Ministry www.minmineria.cl
• Chilean Geology Mining Service
  www.sernageomin.cl
• Chilean Mining Metallurgic Center of Research
  www.cimm.cl
• National Mining Society www.sonami.cl
• Chilean Mining Council www.consejominero.cl
• Large Mining Suppliers Association
  www.aprimin.cl
• Minería Chilena (Mining Magazine) www.mch.cl
• Supplying CODELCO www.codelco.com/english/areas_n
  egocio/fr_abastecimiento.html

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Contact Us

• Interested in more information on this sector or
  in obtaining assistance from the U.S. Commercial
  Service in Chile?
• Please visit
• http//www.buyusa.gov/chile/en
• or contact
• Carlos Capurro at Carlos.Capurro_at_mail.doc.gov

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We Can Help!
Visit www.buyusa.gov to locate your nearest U.S.
Export Assistance Center and get information on
our services.

• Counseling and Advocacy
• Finding International Partners
• Customized Market Research
• Trade Events

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Thank you!
U.S. Embassy / Department of
Commerce Santiago, Chile www.buyusa.gov/chile E-m
ail carlos.capurro_at_mail.doc.gov Tel (56-2)
330-3316 Fax [phone]