Codelco

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Codelco

• Matthew Dahar
• Mark Hall
• Chloe Pletner

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Introduction to Chile
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Culture

• Chileans value honor3
• Chileans do not like saying No 3
• Fashion is more conservative4
• Good manners are important4
• People go out of their way to greet
  acquaintances4
• Chewing gum is not popular4

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Business

• Say hello to each person within a group
  individually3
• Business is built on personal connections4
• Significant business is conducted in formal
  settings4
• Simple is better than fancy (business cards) 4

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Copper Industry
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Product Categories1

• Copper concentrate (copper, iron, sulfide)
• Anodic and blister copper (purity of
  approximately 99.5)
• Copper cathodes
• RAF ingots (fire-refined ingots) 99.9 pure
  copper
• Copper wire rod

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Challenges and Opportunities

• Production costs
• Cyclical industry
• Market share within high-demand markets
• Time, cost, and demand
• Industry capacity versus market demand2

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Why is the industry of interest?

• Business
• Automotive, building construction, electronic2
• Leading indicator of change in consumer demand
• Engineering
• Copper is strong, reliable, and extremely energy
  efficient, but cheaper than most metals2
• Innovation using copper

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Politics and Economics

• All copper mines were nationalized in 1971 by the
  Allende Government and consolidated in to what we
  now know as Codelco by the Pinochet regime in
  1976.
• 7 Person board of directors is appointed by the
  President of the Republic
• Includes governments Finance and Mining
  Ministers
• Nearly a million dollars per hour, 24 hours a
  day, 365 days a year
• Excess profits a 10 tax on foreign sales
  7.394 Billion in 2007
• Law provides that 10 of this money is spent on
  the Military
• Foreign investment and allocation problems.

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Environmental and Technology

• Pollution
• Smelting process leads to high amount of arsenic
  in the air and nearby bodies of water
• Technology
• Invested 1.7B in 2007
• Experiments with a new Seismic Telemetric System
• Developed better geophysical and geochemical
  technologies
• Building a 5th Selenium Roasting Facility and a
  Teniente 5 Converter that will reduce anode
  sludge and fugitive gases respectively
• Exploring the prospect of building a wind power
  park to help power mines in an effort to become
  more environmentally friendly

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Contract Disputes

• 97.5 of workers belong to a union.
• CBAs have been the focal point of many strikes
• Contributed to the Volatility of Copper Prices

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Mining

• Copper ore is mined pit mines in concentration of
  10-15 pure copper
• Copper ore is transported by truck to crushing
  plant

Chuquicamata mine in the north of Chile
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Milling and Refining

• Crushed ore is put in to furnace
• Copper separates form other elements
• copper(II) sulfate goes through electrolysis
  copper metal formed at cathode.
• impurities drop to the bottom including gold,
  silver, nickel, platinum
• Copper can be shipped directly to customers, Or
  be sent to a rod plant

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Environmental and Safety

• every ton of copper produced, 1.5 tons of slag
  and 2 tons of sulfur dioxide are also produced as
  waste products
• Pollution from smelter increase arsenic levels
• Hearing loss

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Engineering Background

• Find better ways to purify
• How transformation takes place
• Need to understand process
• Only some engineers need to supervisee and give
  directions

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• Questions for Professionals?
• How will the current economic recession and
  subsequent drop in copper prices effect CBA
  negotiations?
• What technological advancements are you actively
  pursuing to become more environmentally friendly
  and safer for workers but maintaining efficiency
  simultaneously?
• Question for Students?
• How does the average blue-collar Chilean feel
  about an entire national resource sector being
  controlled by their government?

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Questions

• Students
• Is business education widely available? Is it
  emphasized?
• What are some examples of websites or products
  that have recently become popular among young
  adults?
• Professionals
• What is your opinion of the recent Chilean
  stimulus package?
• What is Codelcos future strategy in regards to
  China, both as a consumer and producer?

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Questions

• How are you changing production as technology
  increase?
• What is done with waste from process?
• How are you streamline coast in tough economy?

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Bibliography

1. Codelco. 5 Apr. 2009 lthttp//www.codelco.cl/gt.
2. SIC 1021 COPPER ORES. 2008. 4 Apr. 2009
   lthttp//www.referenceforbusiness.com/industries/M
   inin g/Copper-Ores.htmlgt.
3. Olson, Josephine. Plus 3 hand-outs and lecture.
4. Roraff, Susan, and Laura Camacho. Culture Shock!
   Chile A Survival Guide to Customs and Etiquette
   (Culture Shock! Guides). New York Marshall
   Cavendish Corporation, 2007.