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BTG Pactual IV Andean CEO Conference – Nov 2015
Raúl Gamonal CFO – Javiera Mercado IR
Ownership structure
2
19,3% 2,0% 31,3% 47,4%
49,0% 47,32%
52,68%
51,0% 99,0%
75,0% 99,9%
50,93% 30,56%
25,0%
11,03% 57,79%
Iron Ore Mining Steel Production Steel Processing
Mitsubishi
Corporation
Pension
FundsInvercap Other
Compañía Minera
del Pacífico
Compañía Siderúrgica
Huachipato
Intasa
Novacero
Cintac
Infrastructure
Cleanairtech Tecnocap
Source: CAP, as of October 2015
3
Iron ore mining
4
CAP Mining has three
different areas of operation
in the north of Chile,
located around the cities of:
• Copiapó
• Vallenar
• La Serena
Cities
Mines
Plants
Ports
Copiapó
La Serena
Punta Totoralillo Port
Vallenar
Guacolda II Port
Los Colorados
Pellets Plant
El Algarrobo
Magnetite Plant
El Romeral
Guayacán Port
El Tofo
Cristales
Desalination Plant
El Laco
Cerro Negro Norte
Copiapó Valley
Huasco Valley
Elqui Valley
Mining sites
5
Cerro Negro Norte mine
6
Magnetite plant
Los Colorados mine
Pellets Plant
9
Iron ore El Romeral mine
10
Mining property
Source: SERNAGEOMIN
• Top 3 position in exploration concessions
• More than 700.000 meters drilled over the period 2008-2014
Hectares in exploration concessions - Chile
N° Company Hectares %
1 BHP Chile Inc 1.917.100 11,33
2 Compañía Contractual Minera Los Andes 841.100 4,97
3 CAP 677.700 4,01
4 Teck Exploraciones Mineras Chile Ltda 629.700 3,72
5 Antofagasta Minerals S.A. 514.500 3,04
6 Codelco 435.500 2,57
Hectares in exploitation concessions - Chile
N° Company Hectares %
1 Soquimich S.A. 2.861.157 20,06
2 Codelco 840.704 5,89
3 Minera Escondida Limitada 363.798 2,55
4 SCM Virginia 252.532 1,77
5 Enami 250.847 1,76
6 Antofagasta Minerals S.A. 231.392 1,62
7 CAP 205.788 1,44
As a result of continued successful exploration campaigns, iron ore resources have increased
progressively over the years, reaching 7,250 million tons in 2014
(1) Resources: Minerals measured on a geological ore content feasible of being mined. (2) Reserves: Minerals measured on a geological content feasible of being mined economically. (3) CMP has the contract for processing the tailings of the Candelaria copper mine.
Source: CAP Minería 11
0
1.000
2.000
3.000
4.000
5.000
6.000
7.000
8.000
2009 2010 2011 2012 2013 2014
Mineral resources (1)
Tofo 27,7%
Pleito Cristales 32,8%
Los ColoradosDistrito 43,3%El Laco 49,2%
El Algarrobo Distrito30,3%El Algarrobo 45,5 %
CNN 31,7%
Candelaria 10,0%
Romeral 28,2%
Los Colorados 34,7%
3.249 3.478
4.716
5.367
6.351
7.250
Mine/Deposits & Grade (% Fe)
0
500
1.000
1.500
2.000
2.500
2009 2010 2011 2012 2013 2014
Reserves (2)
Tofo 26,1%
El Laco 56,7%
El AlgarroboDistrito 35,5%
El Algarrobo 49,0%
CNN 36,3%
Candelaria 10,0%
Romeral 30,5%
Los Colorados36,5%
2.278
2.040 2.039
1.364 1.403
2.214
Mine/Deposits & Grade (% Fe)
Resources and reserves of magnetic ore
BF and DR Pellets (Fe 65% - 67%)
Pellet Feed (Fe 66% - 69%)
Lumps (Fe 62%)
Fines (Fe 62%-63%)
12
Mining products
Shipments (Th.MT)
Shipments by markets and products as of September 2015
13
China 69%
Chile 8%
Japan 8%
Bahrein 8%
Korea 6%
Others 1%
10.213
11.469 12.246 12.086
12.952
9.595
2010 2011 2012 2013 2014 2015 (E)
Jan – Sep 2015
14.396
Contracts, 68%
Spot, 32%
Iron ore shipments and markets
Self - fluxing pellets and DR pellets,
25,5%
Pellet feed, 61,7%
Sinter feed, 11,0%
Lumps, 1,1% Other, 0,8%
14
Qingdao Iron and Steel
Wuhu Fuxin Iron & Steel
RGL Group*
HBIS Group
Xinyu Iron and Steel
Rizhao Iron and Steel
Yaochang Group
Fangda Iron and Steel
Hangzhou Iron and Steel
Jinan Iron and Steel
Wanbao Group
CAP Acero
JFE Steel Corporation
Kobelco
Nisshin Steel
Bahrain Steel
Koch
Cargill*
Deutsche Bank*
Posco
Glencore*
* Acts as trader
Top ten client, by volume, as of September 2015
Main clients
15
Steel production
CAP Acero
• Steel business reorganization to produce 700 kt/y, with one
blast furnace
• Strong adjustment in its industrial processes and workforce
lowering costs and expenses
• Sustainable growth in long products demand mainly due to the
need of grinding media supply to the mining sector
Shipments and prices
Talcahuano
16
671
1.113 1.124 859
701 526
799
883
811 737
700
590
0
100
200
300
400
500
600
700
800
900
1.000
0
200
400
600
800
1.000
1.200
1.400
1.600
1.800
2.000
2010 2011 2012 2013 2014 As of September 2015
US$
/To
n
Th.M
T
Shipments Prices
Steel focus on long products
-22
-17
-9 -12
-9 -7 -6 -5 -3 -3 -4
-14
-44
-10 -7 1 2 2 5
3
5 8 7
4
-60
-50
-40
-30
-20
-10
0
10
20
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15
Impairment
Net income
EBITDA
-56
-31
Net Income and EBITDA evolution
• Due to the reorganization and adjustment in industrial processes, the steel company has managed to
generate positive cash flow over the last nine quarters
EBITDA: Gross Margin – S&AE + Depreciation and Amortization, over the last twelve months
Recovery of cash generation (EBITDA)
18 Steel processing
• Creates value-added solutions for the construction,
industry and infrastructure sectors in Chile, Peru and
Argentina
• Chile is LATAM´s most intensive user of steel in
construction
• Main flat steel importer of the Pacific coast of South
America
Shipments and prices Sales by Sector September 2015
19
297
370 400 412
381
286
1.199 1.252
1.167 1.119
1.013 985
,0
200,0
400,0
600,0
800,0
1000,0
1200,0
1400,0
,0
100,0
200,0
300,0
400,0
500,0
600,0
2010 2011 2012 2013 2014 As ofSeptember
2015
US$
/To
n
Th. M
T
Shipments Price
Construction 62%
Infrastructure/Roads 7%
Industrial 26%
Other 5%
Steel processing
Steel processing reorganization towards a lighter and lower cost structure
Cac S.A.
Cintac SAIC Inmobiliaria Cintac S.A.
Centroacero S.A.
Steel Trading Company
INC.
Cintac S.A.
Cintac SAIC Tupemesa S.A.
99.99% 99.99% 99.99% 100%
99.99% 89.48%
• Assets availability for rental (or sale): Centroacero, 55,600 m2, US$1.3 million yearly
Varco Pruden, 36,000 m2, US$0.8 million yearly
20
2014 2015
• As of september 2015, Tupemesa and Cintac sold non strategic real estate assets, generating an income of MUS$ 4,166
Reorganization and assets availability
21
Infrastructure
Desalination plant
22
Infrastructure
Power transmission line
23 23
• Cleanairtech (desalination plant) and Tecnocap (power transmission line) started their operations
during 2014. As of September 2015, the infrastructure business has contributed to the holding
company as follows:
US$ million Jan – Sep 2014 Jan – Sep 2015
EBITDA 25,4 42,9
Net Income (2,2) 6,6
Water desalination and power transmission
24 Global industry update
• Shift in growth strategy in China from investment to consumption
• Lower demand for commodities push prices down
-3.0% -1.0% 2.3% 2.4% 2.4% 2.9% 3.1% 3.0%
6.8% 6.3% 6.0% 6.1%
-3.8% -0.6% 1.0% 1.5%
2015 2016 2017 2018
Source: IMF GDP growth estimates, October 2015
25
Emerging markets performance and China economic
influence worldwide
Source: Goldman Sachs 26
0
200
400
600
800
1.000
1.200
1.400
1.600
1.800
0
200
400
600
800
1.000
1.200
1.400
1.600
1.800
2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E
Mill
ion
to
nn
es
Mill
ion
to
nn
es
Australia Brazil RoW Seaborne demand
Seaborne iron ore supply/demand projection
Source: Platts, October 2015
Platts IODEX and 1% diff vs Platts IO fines 65%
27
45,00
65,00
85,00
105,00
125,00
145,00
165,00
185,00
Jan
-13
Feb
-13
Mar
-13
Ap
r-1
3
May
-13
Jun
-13
Jul-
13
Au
g-1
3
Sep
-13
Oct
-13
No
v-1
3
De
c-1
3
Jan
-14
Feb
-14
Mar
-14
Ap
r-1
4
May
-14
Jun
-14
Jul-
14
Au
g-1
4
Sep
-14
Oct
-14
No
v-1
4
De
c-1
4
Jan
-15
Feb
-15
Mar
-15
Ap
r-1
5
May
-15
Jun
-15
Jul-
15
Au
g-1
5
Sep
-15
Oct
-15
($/dmt)
Platts IO fines 65% Fe
IODEX CFR CHINA 62% Fe plus 3* Mid Range Diff
Iron ore price evolution
Cliffs Canada
Price/cost related mine closure
1.5 Mtpy
Northland Resources
Sweden
Price related production cut
2.0 Mtpy
IMX Resources
Australia
Placed into administration – likely closure
1.6 Mtpy
Shree Minerals
Australia
Price related mine closure
0.1 Mtpy
Kimberley Metals
Australia
Price related production cut
1.7 Mtpy
Noble Resources Australia
Price related mine closure
1.5 Mtpy
Labrador Iron Mines Canada
Price related mine closure
1.7 Mtpy
Feb – 14, US$ 121 per ton
Jun – 14, US$ 93 per ton Jul – 14, US$ 96 per ton
Aug – 14, US$ 92 per ton
IRC Russia
Lack of finance
1.0 Mtpy
MMX Brazil
Price related, lack of finance
6.0 Mtpy
Bellzone Guinea
Lack of finance
0.5 Mtpy
Sep – 14, US$ 83 per ton W Desert Resources
Australia
Price related mine closure
2.0 Mtpy
Oct – 14, US$ 81 per ton
JSW/Minera Santa Fe
Chile
Price related mine closure
2.0 Mtpy
London Mining
Sierra Leone
Price related, lack of finance
5.0 Mtpy
Mt. Gibson
Australia
Technical failure
4.0 Mtpy
Nov – 14, US$ 73 per ton
Pluton Resources Australia
Price related mine closure
0.8 Mtpy
Cliffs Canada
Price related mine closure
6.0 Mtpy
Iron Valley Australia
Price related mine closure
0.2 Mtpy
Source: Platts and The Commodity Manual, Morgan Stanley, February 2, 2015 * Others include Iran, Canada, Malaysia, Peru, Mongolia, Indonesia, Mexico, Russia, Venezuela, USA, New Zealand, Kazakhstan, Serbia
Dic – 14, US$ 69 per ton
African Minerals
Sierra Leone
Lack of finance, price related
20 Mtpy
Dannemora
Sweden
Lack of finance
1.2 Mtpy
Others
China, India, Others*
Price related closures
99 Mtpy
Jan – 15, US$ 67 per ton
Arrium Australia
Price related mine closure
3.6 Mtpy
CITIC Australia
Technical, commissioning issues
4.0 Mtpy
Iron ore – production cuts of 170 Mtpy in 2014
28
Iron ore – production cuts in 2015
2015 Iron Ore mine production/capacity cuts (price driven)
Date Country Company Asset Mt
Price Platts
62% CFR China
(US$/dmt)
Reason/Impact
China Various privately owned 100 Price related closures
15-mar USA US Steel Keetac pellet plant 5.5 57.0 Price / demand related
15-ene Australia Arrium Southen Iron 4.0 67.6 Price related mine closure
15-mar Brazil Ferrous 2.2 57.0 Price / demand related
15-sep Argentina MCC Sierra Grande 57.1 Price related cut - vol unknown
Total 111.7
2015 Iron Ore mine production/capacity cuts (non-price driven)
15-ene Australia CITIC Sino Iron 4.0 67.6 Technical, commissioning issues
15-jul Australia Rio Tinto Pilbara 10.0 52.1 Weather-Infrastructure related
15-jul South Africa Kumba Thabazimbi 1.0 52.1 Slope failure
Total 15.0
Source: Morgan Stanley, October 2015
“China’s production quantity of iron ore (crude ore) in September surveyed by the National Bureau of Statistics
of China was 131,564 thousand tons, down 4.4% from the same month last year. Its cumulative production
quantity in the period of January-September was 1,015,999 thousand tons, down 9.0% from the same period
last year.” The Tex Report, October 29, 2015 29
Iron ore – trade balance and price forecast
Source: Wood Mackenzie, October 2015
30
Iron ore – short term price forecast consensus
US$/dmt (62% Fe) 2016:
Institution Report date Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
Commerzbank AG 19-Oct-15 56 60 63 64 66
Westpac Banking Corp 16-Oct-15 50 51 56 51 47
Itau Unibanco Holding SA 1-Oct-15 52 50 50 50 50
Prestige Economics LLC 28-Sep-15 57 61 65 70 75
Citigroup Inc 23-Sep-15 50 45 40 38 40
Capital Economics Ltd 11-Sep-15 45 45 50 55 55
Intesa Sanpaolo SpA 9-Feb-15 55 60 60 60 60
Toronto-Dominion Bank 24-Aug-15 58 60 62 64 64
Goldman Sachs Group Inc, 14-Aug-15 48 46 44 n.a. n.a.
Spot price 53,7
Median - 52 51 56 58 58
Median vs. Spot - -3,2% -5,1% 4,2% 7,0% 7,0%
Source: Santander, Bloomberg, October 2015
31
Source: Wood Mackenzie, July 2015 32
• Even though the forecasted increase in iron ore volumes has happened, the global export
volumes are showing a decline in Fe grade
Higher supply…but lower Fe grade
Source: Wood Mackenzie, July 2015
33
• Under a low demand scenario, the discount for sub-60% iron ore could increase, impacting
the margins of low grade producers
• Producers such us Fortescue are highly sensitive to low grade discounts
Risk of higher low grade discounts
34
50
55
60
65
70
75
80
85
Au
stra
lia
Bra
zil
S. A
fric
a
Ukr
ain
e
Iran
Pe
ru
Ch
ile
Ru
ssia
Mau
rita
nia
Oth
ers
US$/t Average price (US$/t) – 1H15
Source: China Customs Statistics
43,5%
3,6% 0,7%
5,2%
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
30,0%
35,0%
40,0%
45,0%
50,0%
Ukraine Chile S. Africa Brazil
Pellets versus total imports – 1H15
Source: China Customs Statistics
CMP produces high quality products
Premium for higher grades ... but most concentrate producers are struggling …
Source: Platts, December 2014
35
2013 2014
CMP’s cash cost (US$/t) 57,4 49,2
International iron ore price adjustment and
CMP’s cost reduction
Premium for higher grades ... but most concentrate producers are struggling …
Source: Platts, August 2015
36
1Q 2015 1H 2015
CMP’s cash cost (US$/t) 37,8 36,4
International iron ore price adjustment and
CMP’s cost reduction
34,3
3,3 7,6
2,4 1,3 0,0 1,4
1,1 2,6
1,5
51,8
20
30
40
50
60
70
80
90
100
110
120
130
Cash cost asof Sep 2014
CandelariaTailings
Outsourcing Rawmaterials
Materials Energy Personneland GE
Oil Exchangerate
Various(Incl. water)
Cash cost asof Sep 2015
US$
/t
CMP cost and expenses reduction efforts
Average Platts 62% Fe CFR China (US$ /dmt) as of September 2015
Realized CMP’s average iron ore price as of September 2015
104,2
83,1
52,4
58,5
Decrease in cash cost Increase in cash cost
Cash cost = Cost of sales – Depreciation & Amortization [Cost of sales = Operational cost (excl. SG&A)]
37
CMP cash cost projected by operation (2H15)
Cash Cost (US$/t)
Magnetite plant 36.8
Cerro Negro Norte mine 36.1
Los Colorados mine 34.4
El Romeral mine 44.2
Average Cash Cost 35.9
38
Source: Platts, November 2015
39
Freight rates Brazil - China
0
5
10
15
20
25
30
02
/01
/20
14
23
/01
/20
14
13
/02
/20
14
06
/03
/20
14
27
/03
/20
14
17
/04
/20
14
08
/05
/20
14
29
/05
/20
14
19
/06
/20
14
10
/07
/20
14
31
/07
/20
14
21
/08
/20
14
11
/09
/20
14
02
/10
/20
14
23
/10
/20
14
13
/11
/20
14
04
/12
/20
14
25
/12
/20
14
15
/01
/20
15
05
/02
/20
15
26
/02
/20
15
19
/03
/20
15
09
/04
/20
15
30
/04
/20
15
21
/05
/20
15
11
/06
/20
15
02
/07
/20
15
23
/07
/20
15
13
/08
/20
15
03
/09
/20
15
24
/09
/20
15
15
/10
/20
15
05
/11
/20
15
US$
/dm
t
Steel price evolution
Source: CRUspi, November 2015
00
50
100
150
200
250
300
350
Jan
20
07
May
20
07
Sep
20
07
Jan
20
08
May
20
08
Sep
20
08
Jan
20
09
May
20
09
Sep
20
09
Jan
20
10
May
20
10
Sep
20
10
Jan
20
11
May
20
11
Sep
20
11
Jan
20
12
May
20
12
Sep
20
12
Jan
20
13
May
20
13
Sep
20
13
Jan
20
14
May
20
14
Sep
20
14
Jan
20
15
May
20
15
Sep
20
15
US$
pe
r to
n
CRUspi North America
CRUspi Europe
CRUspi Asia
00
100
200
300
400
500
600
Jan
20
07
May
20
07
Sep
20
07
Jan
20
08
May
20
08
Sep
20
08
Jan
20
09
May
20
09
Sep
20
09
Jan
20
10
May
20
10
Sep
20
10
Jan
20
11
May
20
11
Sep
20
11
Jan
20
12
May
20
12
Sep
20
12
Jan
20
13
May
20
13
Sep
20
13
Jan
20
14
May
20
14
Sep
20
14
Jan
20
15
May
20
15
Sep
20
15
US$
pe
r to
n
CRUspi Flats
CRUspi Longs
CRUmpi
41
Financial performance
CAP’s financial highlights as of September 2015
42
USD Million 2010 2011 2012 2013 2014 Jan-Sep
2015
Sales 1.994 2.787 2.470 2.297 1.790 1.079
EBITDA (L12M) 740 1.184 764 708 381 286
EBITDA Margin 37,1% 42,5% 30,9% 30,8% 21,3% 20,1%
Net Income 590 442 234 184 56 4
Cash 981 883 711 309 348 397
Gross Financial debt 1.001 628 719 932 1.270 1.284
Net Financial debt 20 (255) 8 623 922 887
Capex 207 282 777 975 450 54
Net Financial Debt/EBITDA - - - 0,88 2,42 3,10
Iron Ore Shipments (Th tons) 10.213 11.469 12.246 12.086 12.952 9.595
Platts 62% Fe CFR China (US$/t) 146,82 169,37 130,08 135,13 96,77 58,5
CMP’s financial highlights as of September 2015
43
USD Million 2010 2011 2012 2013 2014 Jan-Sep
2015
Sales 1.271 1.770 1.406 1.431 942 459
EBITDA (L12M) 782 1116 720 678 309 206
EBITDA Margin 61,5% 63,1% 51,2% 47,4% 32,8% 29,9%
Net Income 902 700 355 402 113 17
Cash 558 501 205 46 50 53
Gross Financial debt - - - 159 483 566
Net Financial debt (558) (501) (205) 113 433 513
Capex 121 222 655 911 299 29
Net Financial Debt /EBITDA - - - 0,17 1,40 2,68
Iron Ore Shipments (Th tons) 10.213 11.469 12.246 12.086 12.952 9.595
Platts 62% Fe CFR China (US$/t) 146,82 169,37 130,08 135,13 96,77 58,5
44
EBITDA contribution by business (L12M)
77%
97% 94% 94%
98%
89%
69%
18%
-3%
0%
-2% -2%
4% 9%
5% 6% 6% 8%
4% 7% 8%
15%
-20%
0%
20%
40%
60%
80%
100%
2009 2010 2011 2012 2013 2014 As of September 2015
Iron Steel Steel Processing Infrastructure
45
Flexibilization of financial covenants with CAP and CMP lenders*
Additional liquidity available: US$300 million
2,00x
2,50x
3,00x
3,50x
4,00x
4,50x
5,00x
5,50x
6,00x
Old New
0,00x
0,50x
1,00x
1,50x
2,00x
2,50x
3,00x
Old New
* Covenants included in CAP’s syndicated loan and CMP’s revolving credit facility
CAP syndicated loan matures in April, 2016
• As of today, the CAP group has access to three revolving credit facilities: CMP’s, which was negotiated in 2014, and two new facilities for CAP that were closed this year
CMP revolving credit facility (BTMU) CAP revolving facility (EDC) CAP Revolving facility (SMBC)
Amount Up to US$350 million Up to US$100 million Up to US$50 million
Tenor 5 years 5 years 3 years
Financial covenants New New New
Undrawn amount US$150 million US$100 million US$50 million
Net Financial Debt to EBITDA EBITDA to Net Financial Expenses
Relevant financial updates
46
2013 2014 2015
Fitch Ratings BBB/Stable
outlook BBB/Stable
outlook BBB-/Stable
outlook
S&P BBB-/Stable
outlook BBB-/Stable
outlook
BB+/Stable
outlook
Credit agencies last review
47
Business outlook
Seeking higher margins in CAP Mining
48
Reorientation of product mix • Shipments for around 14.3 million MT in 2015 consider an increase in pellets, to a total of 4 million MT • The change in the mix should enhance margins, as pellets have a premium over the pellet feed
2014 As of September 2015
Pellet feed, 72%
Self-fluxing and DR pellets, 14%
Sinter Feed, 7%
Others, 6%
Pellet feed, 62%
Self-fluxing and DR pellets, 26%
Sinter Feed, 11%
Others, 2%
Continued efforts in reducing costs and expenses, combined with a weaker Chilean Peso, lower oil prices and idle capacity in the mining services industry in Chile will reduce the average 2014 FOB cash cost of US$ 49.2 per ton to approximately US$ 36.1 per ton in 2015
49 49
• Cleanairtech (desalination plant) and Tecnocap (electric transmission line) started their operations
during 2014 and are projected to contribute to the consolidated 2015 EBITDA and net income as
follows:
US$ million Cleanairtech Tecnocap
EBITDA (E) 43,6 7,4
Net Income (E) 7,1 3,0
New EBITDA from CAP Infrastructure in 2015
29
43
60
40 33
13
0
10
20
30
40
50
60
70
2010 2011 2012 2013 2014 Jan-Sep2015
US$
mill
ion
50
There are no relevant investments planned for the short-term, therefore pressure on cash disbursements has been diminished.
Investment rate has followed a slower pace, of around US$20 million per quarter, mainly related to maintenance CAPEX
Drilling and exploration expenses reduction • Expenses have averaged US$41 million per year
during the last 5 years.
• As of September, 2015, this concept amounts to US$12.5 million
Protecting CAP’s cash flow and liquidity levels
142 207
282
777
975
450
18 21 15 0
200
400
600
800
1.000
1.200
2009 2010 2011 2012 2013 2014 1Q15 2Q15 3Q15
US$
mill
ion
CAPEX limitation
0
20
40
60
80
100
120
140
2016E 2017E 2018E 2019E 2020E
US$
mill
ion
Growth
Cost reduction
Sustainability
Maintenance
68
87
115 102
95
• Maintenance for the period 2016 – 2018 includes the replacement of machinery and equipment
at Los Colorados mine, maintenance at the Pellets Plant and the blast furnace lining at CAP
Acero, among others
• The growth CAPEX for the period 2018 – 2020 considers an increase of sinter feed production at
the Huasco Valley and thermal power generation in Huachipato
51
Steel safeguards
Wire rod price evolution
CAP Acero vs CIF imports of Chinese steel
Source: CAP Acero, Aduana de Chile Source: Steel Orbis, CRU
Wire rod FOB prices in China and other markets
• Wire rod accounts for 20% of CAP Acero’s production
• Due to the openness of the Chilean economy, CAP Acero is competing with international steel prices,
highly influenced by Chinese imports
• Chilean authorities imposed a provisional safeguard of 37.8%, which will be in place for 200 days, starting
in October 2015
52
Future maximization of EBITDA contribution from
our ports
53
Punta Totoralillo:
• 29 km north of Caldera
• Iron ore shipping
• 200,000 dwt
• Max capacity: 12 million t/y
• Effective utilization: 4.5 million t/y
Guacolda II:
• Located in Huasco City
• Iron ore shipping
• 300,000 dwt
• Max capacity: 12 million t/y
• Effective utilization: 7.2 million t/y
Huachipato:
• San Vicente bay
• Unloading coal, limestone an iron ore & finished steel shipping
• Max capacity: 2 million t/y
• Effective utilization: 1 million t/y
Guarello:
• Guarello island, south
• Limestone shipping
• 800 kt/y
• Max capacity: 0.8 million t/y
• Effective utilization: 0.5 million t/y
Guayacán:
• Herradura bay, Coquimbo
• Iron ore shipping
• 165,000 dwt
• Max capacity: 6 million t/y
• Effective utilization: 2.7 million t/y
Las Losas:
• Located in Huasco City
• Multi purpose port
• Max capacity: 2 million t/y
• Effective utilization: 0.4 million t/y
Total capacity CAP ports: 34.8 Mt/y
Note: Weighted average of port utilization: 47%
Efforts for growth and value creation –
Diversifying to copper
Productora
• Pre feasibility study underway
Alice
• Broadening scope together with
Productora
Pajonales/Frontera
• Future prospects
Cities
Mines
Plants
Ports
Copiapó
La Serena
Punta Totoralillo Port
Vallenar
Guacolda II Port Los Colorados
Pellets Plant
El Algarrobo
Magnetite Plant
El Romeral
Guayacán Port
Tofo North
Cristales
Desalination Plant
El Laco
Cerro Negro Norte
Productora
Alcaparra
Pajonales
Sierra Tofo + Chupete
54
Frontera
Alice
Conclusions
55
Under current market conditions, the protection of the company’s cash flow and liquidity levels are of
the utmost importance
Cost reduction initiatives and productivity improvements are at the center of management efforts
CAP Mining
Efficiency plans have resulted in significant cash
cost reductions, which together with a value added
product mix are maintaining positive margins
Despite the current negative global environment,
the company has improved its operational
productivity allowing for the projection of a positive
long term view
Product diversification towards copper exploitation
CAP Steel
Positive cash generation attained and continuous
cost cutting efforts applied towards profitability
Studying alternative use of CSH’s assets to create
value
Safeguards attained from government authorities
after providing evidence of unfair competition
CAP Steel Processing
Largest flat steel processor in the Pacific coast of
South America
Transition to value added innovative solutions for
industrial (electricity self-generation through
photovoltaic warehouse roof designs) and
residential construction
CAP Infrastructure
Stable business supported by long term contracts
Potential growth in desalinated water production and
port businesses
This information material may include certain forward-looking statements and projections provided by CAP S.A. (the “Company“) with respect to the financial condition, results of operations, cash flows, plans, objectives, future performance, and business of the Company. Any such statements and projections reflect various estimates and assumptions by the Company concerning anticipated results and are based on the Company’s expectations and beliefs concerning future events and, therefore, involve risks and uncertainties. Such statements and projections are neither predictions nor guarantees of future events or circumstances, which may never occur, and actual results may differ materially from those contemplated (expressed or implied) by such forward-looking statements and projections. No representations or warranties are made by the Company or any of its affiliates as to the accuracy of any such statements or projections. Whether or not any such forward looking-statements or projections are in fact achieved will depend upon future events, some of which are not within the control of the Company. Accordingly, the recipient of this material should not place undue reliance on such statements. Any such statements and projections speak only as of the date on which they are made, and the Company does not undertake any obligation, and expressly disclaims any obligation, to update or revise any such statements or projections as a result of new information, future events, or otherwise
56
BTG Pactual IV Andean CEO Conference – Nov 2015
Raúl Gamonal CFO – Javiera Mercado IR
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