CAP Group update - November 2015

CAP Group update - November 2015
Punta Totoralillo Port, Atacama region
Fernando Reitich CEO - Raúl Gamonal CFO
Ownership structure
Mitsubishi
Corporation
Pension
Funds
19,3%
2,5%
2,0%
Other
Invercap
31,3%
46,9%
47,4%
49,0%
47,32%
52,68%
51,0%
99,0%
75,0%
Cleanairtech
Compañía Minera
del Pacífico
Tecnocap
99,9%
Compañía Siderúrgica
Huachipato
Novacero
50,93%
30,56%
25,0%
11,03%
57,79%
Cintac
Infrastructure
Iron Ore Mining
Steel Production
Intasa
Steel Processing
1
Source: CAP, as of September 2015
Iron ore mining
2
Mining sites
Punta Totoralillo Port
CAP Mining has three
different areas of operation
in the north of Chile,
located around the cities of:
El Laco
Cerro Negro Norte
Desalination Plant
Copiapó
Magnetite Plant
Copiapó Valley
• Copiapó
• Vallenar
• La Serena
Los Colorados
Guacolda II Port
Cities
Vallenar
Pellets Plant
Mines
El Algarrobo
Huasco Valley
Plants
Cristales
Ports
El Tofo
Elqui Valley
El Romeral
La Serena
Guayacán Port
3
Cerro Negro Norte mine
4
Magnetite plant
5
Los Colorados mine
Pellets Plant
Iron
ore
El Romeral
mine
8
Mining property
Hectares in exploration concessions - Chile
N°
Company
1
BHP Chile Inc
2
Compañía Contractual Minera Los Andes
3
CAP
4
5
6
Teck Exploraciones Mineras Chile Ltda
Antofagasta Minerals S.A.
Codelco
Hectares in exploitation concessions - Chile
N°
Company
1
Soquimich S.A.
2
Codelco
3
Minera Escondida Limitada
4
SCM Virginia
5
Enami
6
Antofagasta Minerals S.A.
7
•
•
CAP
Hectares
1.917.100
841.100
%
11,33
4,97
677.700
4,01
629.700
514.500
435.500
3,72
3,04
2,57
Hectares
2.861.157
840.704
363.798
252.532
250.847
231.392
%
20,06
5,89
2,55
1,77
1,76
1,62
205.788
1,44
Top 3 position in exploration concessions
More than 700.000 meters drilled over the period 2008-2014
9
Source: SERNAGEOMIN
Resources and reserves of magnetic ore
As a result of continued successful exploration campaigns, iron ore resources have increased
progressively over the years, reaching 7,250 million tons in 2014
Mineral resources (1)
Mine/Deposits &
Grade (% Fe)
8.000
7.250
7.000
Tofo 27,7%
Reserves (2)
2.278
2.039
Pleito Cristales 32,8%
6.351
Mine/Deposits
& Grade (% Fe)
2.500
2.214
2.040
Tofo 26,1%
2.000
6.000
Los Colorados
Distrito 43,3%
El Laco 49,2%
5.367
4.716
5.000
4.000
3.249
El Algarrobo Distrito
30,3%
El Algarrobo 45,5 %
3.478
3.000
El Laco 56,7%
1.500
1.403
El Algarrobo
Distrito 35,5%
El Algarrobo 49,0%
1.364
1.000
CNN 36,3%
CNN 31,7%
2.000
Candelaria 10,0%
Candelaria 10,0%
500
1.000
Romeral 30,5%
Romeral 28,2%
0
2009
2010
2011
2012
2013
2014
Los Colorados 34,7%
0
2009
2010
2011
2012
2013
2014
Los Colorados
36,5%
(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.
10
Source: CAP Minería
Mining products
BF and DR Pellets (Fe 65% - 67%)
Lumps (Fe 62%)
Pellet Feed (Fe 66% - 69%)
Fines (Fe 62%-63%)
11
Iron ore shipments and markets
Shipments (Th.MT)
14.396
12.246
12.086
12.952
11.469
10.213
6.293
2010
2011
2012
2013
2014
1H15
2015 (E)
Shipments by markets and products 1H15
Lumps, 1%
Sinter feed,
11%
Self - fluxing
pellets and DR
pellets, 28%
Bahrein
8%
Korea Others
1%
6%
Spot, 31%
Japan
9%
Chile
8%
Pellet feed,
60%
China
68%
Contracts,
69%
12
Main customers
Deutsche Bank*
Posco
Glencore*
Koch
Cargill*
JFE Steel Corporation
Bahrain Steel
Qingdao Iron and Steel
Xinyu Iron and Steel
Kobelco
Nisshin Steel
RGL Group*
HBIS Group
Wuhu Fuxin Iron & Steel
Rizhao Iron and Steel
Yaochang Group
CAP Acero
Fangda Iron and Steel
Hangzhou Iron and Steel
Jinan Iron and Steel
Wanbao Group
Top ten client, by volume, as of June 2015
* Acts as trader
13
Steel production
14
Steel focus on long products
•
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
CAP Acero
2.000
1.000
883
1.600
900
811
737
799
Th.MT
1.400
800
700
611
1.200
700
600
1.000
500
800
400
600
400
1.113
300
1.124
859
671
US$/Ton
1.800
Talcahuano
200
701
200
346
0
100
0
2010
2011
2012
Shipments
2013
2014
1H15
Prices
15
Recovery of cash generation (EBITDA)
Net Income and EBITDA evolution
20
10
0
-10
-7
1
2
-9
-10
-17
-12
2
-9
5
-7
3
-6
8
7
-3
-3
5
-5
Impairment
-20
-22
Net income
-14
EBITDA
-30
-31
-44
-40
-50
-60
-56
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
•
Due to the reorganization and adjustment in industrial processes, the steel company has managed to
generate positive cash flow over the last eight quarters
EBITDA: Gross Margin – S&AE + Depreciation and Amortization, over the last twelve months
Steel processing
17
Steel processing
•
Creates value-added solutions for the construction,
industry and infrastructure sectors in Chile, Peru and
Argentina
•
Chile is LATAM´s most intensive user of steel in
construction
•
Main flat steel importer of the Pacific coast of South
America
Shipments and prices
1.199
1.252
1400,0
1.167
1.119
Th. MT
500,0
370
400,0
300,0
400
412
Other
5%
1200,0
1.013
988
1000,0
381
800,0
297
600,0
189
200,0
100,0
400,0
200,0
,0
US$/Ton
600,0
Sales by Sector June 2015
Industrial
26%
Infrastructure
/Roads
8%
Construction
61%
,0
2010
2011
2012
2013
Shipments
2014
Price
1H15
18
Reorganization and assets availability
Steel processing reorganization towards a lighter and lower cost structure
2014
2015
Cac S.A.
Cintac S.A.
99.99%
99.99%
99.99%
100%
99.99%
Cintac SAIC
Inmobiliaria
Cintac S.A.
Centroacero
S.A.
Steel Trading
Company
INC.
Cintac SAIC
•
Assets availability for rental (or sale): Centroacero, 55,600 m2, US$1.3 million yearly
Varco Pruden, 36,000 m2, US$0.8 million yearly
•
During 2Q15, Tupemesa sold a non strategic real estate asset, generating an income of
MUS$ 2,013
89.48%
Tupemesa S.A.
19
Infrastructure
20
Desalination plant
Infrastructure
21
Power transmission line
Water desalination and power transmission
•
Cleanairtech (desalination plant) and Tecnocap (power transmission line) started their operations
during 2014. As of June 2015, the infrastructure business has contributed to the holding company as
follows:
US$ million
1H14
1H15
EBITDA
13
30
Net Income
2
6
22
Chile economic outlook
23
Chile economic overview
Investment
Consumption
78%
25%
77%
24,1%
24%
76%
23,8%
23%
21%
75%
74%
22,4%
22%
76%
73%
22,0%
72%
21,0%
71%
70%
20%
68%
19%
2010
2011
2012
2013
2010
2014
2011
2012
Inflation
Unemployment
5,0%
10,0%
4,4%
8,2%
8,0%
3,3%
3,0%
3,0%
2,0%
1,0%
7,1%
6,4%
6,0%
5,9%
6,4%
6,6%
4,0%
1,8%
1,4%
2014
Final consumption expenditure, etc. (% of GDP)
Gross fixed capital formation (% of GDP)
4,0%
2013
2,0%
0,0%
2010
2011
2012
2013
Inflation, consumer prices (annual %)
Source: IMF and the World Bank
2014
0,0%
2010
2011
2012
2013
2014
2015(e)
Unemployment rate (Percent of total labor force)
24
Chile economic overview
Imports
Exports
36,0%
35,0%
35,0%
35,0%
40,0%
38,0%
34,0%
33,0%
36,0%
33,0%
32,0%
32,0%
38,0% 38,0%
34,0%
34,0%
32,0%
31,0%
32,0%
34,0%
32,0%
30,0%
30,0%
28,0%
2010
2011
2012
2013
2014
2010
Imports of goods and services (% of GDP)
2011
2012
2013
2014
Exports of goods and services (% of GDP)
Trade balance
GDP growth
7,0%
7,0%
6,0%
5,0%
4,0%
3,0%
2,0%
1,0%
0,0%
-1,0%
-2,0%
6,0%
6,4%
5,7%
5,8%
5,5%
5,0%
4,3%
4,0%
3,2%
3,0%
1,5%
2010
2011
-0,2%
2012
2013-0,7% 2014
External balance on goods and services (% of
GDP)
Source: IMF and the World Bank
2,0%
1,9%
1,0%
0,0%
2010
2011
2012
GDP growth
2013
2014
25
Political reforms underway, being implemented by the new administration
which reached office in March 2014
Tax reform
Educational reform
• Increase in corporate tax rate from 17% to 27%
• Free college/university education
• New VAT applied to the real estate sector
• Free pre-school, elementary and high school education
• Increase in stamp tax from 0.4% to 0.8%
• Focus in improving access to education (regardless of
quality)
Labor reform
Constitutional process
• Increasing union power
• No replacement during strike periods allowed, either with
internal personnel or outsourcing
• Complete review of the current constitution, approved by
Pinochet and modified under the successive democratic
governments
26
Increasing economic uncertainty due to the proposed reforms package
Investment as % of GDP forecast
22.3%
22.7%
22.8%
23.0%
GDP growth forecast
2.3%
2.5%
2.9%
3.1%
Unemployment rate forecast
6.6%
7.0%
7.2%
7.0%
Source: IMF, October 2015
2015
2016
2017
2018
27
Global industry update
28
Emerging markets performance and China economic influence
worldwide
-3.0%
-1.0%
2.3%
-3.8%
-0.6%
1.0%
1.5%
6.8%
6.3%
6.0%
6.1%
2.4%
2.4%
2.9%
3.1%
3.0%
• Shift in growth strategy in China from investment to consumption
• Lower demand for commodities push prices down
Source: IMF GDP growth estimates, October 2015
2015
2016
2017
2018
29
1.800
1.800
1.600
1.600
1.400
1.400
1.200
1.200
1.000
1.000
800
800
600
600
400
400
200
200
0
0
2009
2010
2011
2012
Australia
Source: Goldman Sachs
Million tonnes
Million tonnes
Seaborne iron ore supply/demand projection
2013
Brazil
2014E
2015E
2016E
RoW
Seaborne demand
2017E
2018E
30
Iron ore price evolution
Platts IODEX and 1% diff vs Platts IO fines 65%
($/dmt)
185,00
Platts IO fines 65% Fe
IODEX CFR CHINA 62% Fe plus 3* Mid Range Diff
165,00
145,00
125,00
105,00
85,00
65,00
Source: Platts, October 2015
Oct-15
Sep-15
Aug-15
Jul-15
Jun-15
May-15
Apr-15
Mar-15
Feb-15
Jan-15
Dec-14
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
May-14
Apr-14
Mar-14
Feb-14
Jan-14
Dec-13
Nov-13
Oct-13
Sep-13
Aug-13
Jul-13
Jun-13
May-13
Apr-13
Mar-13
Feb-13
Jan-13
45,00
31
Iron ore production cuts: 170 Mtpy in 2014
Cliffs
Northland Resources
Feb – 14, US$ 121 per ton
Canada
Sweden
Price/cost related mine
closure
Kimberley Metals
Price related production
cut
1.5 Mtpy
Australia
2.0 Mtpy
IRC
Price related production cut
1.7 Mtpy
JSW/Minera Santa Fe
Chile
Price related mine closure
2.0 Mtpy
Noble Resources
Sierra Leone
Price related, lack of finance
Russia
Australia
Lack of finance
Placed into administration
– likely closure
1.0 Mtpy
1.6 Mtpy
Australia
Price related mine closure
MMX
1.5 Mtpy
Jun – 14, US$ 93 per ton
Jul – 14, US$ 96 per ton
London Mining
IMX Resources
Labrador Iron Mines
Shree Minerals
Brazil
Australia
Price related mine closure
Price related, lack of
finance
0.1 Mtpy
6.0 Mtpy
Canada
Price related mine closure
1.7 Mtpy
Bellzone
Aug – 14, US$ 92 per ton
Guinea
5.0 Mtpy
Lack of finance
0.5 Mtpy
Sep – 14, US$ 83 per ton
Mt. Gibson
Australia
W Desert Resources
Australia
Oct – 14, US$ 81 per ton
Price related mine closure
Technical failure
2.0 Mtpy
4.0 Mtpy
Pluton Resources
African Minerals
Australia
Sierra Leone
Price related mine
closure
Lack of finance, price
related
Nov – 14, US$ 73 per ton
0.8 Mtpy
20 Mtpy
Dic – 14, US$ 69 per ton
Dannemora
Sweden
Lack of finance
Jan – 15, US$ 67 per ton
1.2 Mtpy
Arrium
Cliffs
Australia
Canada
Price related mine
closure
Price related mine
closure
3.6 Mtpy
6.0 Mtpy
Others
CITIC
Iron Valley
China, India, Others*
Australia
Australia
Price related closures
Technical,
commissioning issues
Price related mine
closure
4.0 Mtpy
0.2 Mtpy
99 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
32
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$/dmt)
100
Reason/Impact
China
Various privately owned
15-mar
USA
US Steel
Keetac pellet plant
5.5
57.0
Price / demand related
15-ene
Australia
Arrium
Southen Iron
4.0
67.6
Price related mine closure
15-mar
Brazil
Ferrous
2.2
57.0
Price / demand related
15-sep
Argentina
MCC
57.1
Price related cut - vol unknown
Sierra Grande
Total
Price related closures
111.7
2015 Iron Ore mine production/capacity cuts (non-price driven)
15-ene
Australia
CITIC
Sino Iron
15-jul
Australia
Rio Tinto
Pilbara
15-jul
South Africa Kumba
Total
Thabazimbi
4.0
67.6 Technical, commissioning issues
10.0
52.1
Weather-Infrastructure related
1.0
52.1
Slope failure
15.0
Source: Morgan Stanley, October 2015
“China’s production quantity of iron ore (crude ore) in September surveyed by the National Bureau of Statistics
of China was 131,564 thousand tons, down 4.4% from the same month last year. Its cumulative production
quantity in the period of January-September was 1,015,999 thousand tons, down 9.0% from the same period
last year.” The Tex Report, October 29, 2015
33
Iron ore – trade balance and price forecast
34
Source: Wood Mackenzie, October 2015
Higher supply…but lower Fe grade
•
Even though the forecasted increase in iron ore volumes has happened, the global export
volumes are showing a decline in Fe grade
Source: Wood Mackenzie, July 2015
35
Risk of higher low grade discounts
•
•
Under a low demand scenario, the discount for sub-60% iron ore could increase, impacting
the margins of low grade producers
Producers such us Fortescue are highly sensitive to low grade discounts
Source: Wood Mackenzie, July 2015
36
CMP produces high quality products
Average price (US$/t) – 1H15
US$/t
85
80
75
70
65
60
55
Others
Mauritania
Russia
Chile
Peru
Iran
Ukraine
S. Africa
Brazil
Australia
50
Source: China Customs Statistics
Pellets versus total imports – 1H15
50,0%
45,0%
40,0%
35,0%
30,0%
25,0%
20,0%
15,0%
10,0%
5,0%
0,0%
43,5%
3,6%
Ukraine
Source: China Customs Statistics
Chile
5,2%
0,7%
S. Africa
Brazil
37
International iron ore price adjustment and CMP’s cost reduction
Premium for higher grades ... but most concentrate producers are struggling …
Source: Platts, December 2014
CMP’s cash cost (US$/t)
2013
2014
57,4
49,2
38
International iron ore price adjustment and CMP’s cost reduction
Premium for higher grades ... but most concentrate producers are struggling …
Source: Platts, August 2015
CMP’s cash cost (US$/t)
1Q 2015
1H 2015
37,8
36,4
39
CMP’s plan to improve margins has worked
The difference between
the realized average iron
ore price and the average
Platts 62% Fe CFR China
decreased from 1H14 to
1H15, as a consequence
of the change in the
product mix
130
120
110
111,5
100
US$/t
90
88,8
80
70
60
60,4
52,2
50
57,3
4,1
3,7
2,3
1,5
40
0,1
0,5
1,3
3,0
36,4
0,8
30
20
Cash cost
1H14
Candelaria Outsourcing
Raw
Tailings
materials
Materials
Energy
Personnel
and GE
Oil
Exchange Various (Incl. Cash cost
rate
water)
1H15
1H average Platts 62% Fe CFR China (US$ /dmt)
1H realized CMP’s average iron ore price
Decrease in cash cost
Increase in cash cost
Cash cost = Cost of sales – Depreciation & Amortization [Cost of sales = Operational cost (excl. SG&A)]
Further reduction during 2H15
Cash Cost (US$/t)
Magnetite plant
36.8
Cerro Negro Norte mine
36.1
Los Colorados mine
34.4
El Romeral mine
44.2
Average Cash Cost
35.9
41
Source: Platts, October 2015
42
21/10/2015
30/09/2015
09/09/2015
19/08/2015
29/07/2015
08/07/2015
17/06/2015
27/05/2015
06/05/2015
15/04/2015
25/03/2015
04/03/2015
11/02/2015
21/01/2015
31/12/2014
10/12/2014
19/11/2014
29/10/2014
08/10/2014
17/09/2014
27/08/2014
06/08/2014
16/07/2014
25/06/2014
04/06/2014
14/05/2014
23/04/2014
02/04/2014
12/03/2014
19/02/2014
US$/dmt
Freight rates Brazil - China
30
25
20
15
10
5
0
Source: CRUspi, July 2015
May 2015
Jan 2015
Sep 2014
May 2014
Jan 2014
Sep 2013
May 2013
Jan 2013
Sep 2012
May 2012
Jan 2012
Sep 2011
May 2011
Jan 2011
Sep 2010
May 2010
Jan 2010
Sep 2009
May 2009
Jan 2009
Sep 2008
May 2008
Jan 2008
Sep 2007
May 2007
Jan 2007
US$per ton
May 2015
Jan 2015
Sep 2014
May 2014
Jan 2014
Sep 2013
May 2013
Jan 2013
Sep 2012
May 2012
Jan 2012
Sep 2011
May 2011
Jan 2011
Sep 2010
May 2010
Jan 2010
Sep 2009
May 2009
Jan 2009
Sep 2008
May 2008
Jan 2008
Sep 2007
May 2007
Jan 2007
US$ per ton
Steel price evolution
350
300
250
200
150
CRUspi North America
CRUspi Europe
100
CRUspi Asia
50
00
600
500
400
300
CRUspi Flats
200
CRUspi Longs
CRUmpi
100
00
43
Financial performance
44
CAP’s financial highlights in 1H15
USD Million
2010
2011
2012
2013
2014
1H15
Sales
1.994
2.787
2.470
2.297
1.790
723
EBITDA (L12M)
740
1.184
764
708
381
303
EBITDA Margin
37,1%
42,5%
30,9%
30,8%
21,3%
22,0%
Net Income
590
442
234
184
56
13
Cash
981
883
711
309
348
398
1.001
628
719
932
1.270
1.297
20
(255)
8
623
922
899
207
282
777
975
450
39
-
-
-
0,88
2,42
2,97
Iron Ore Shipments (Th tons)
10.213
11.469
12.246
12.086
12.952
6.293
Platts 62% Fe CFR China (US$/t)
146,82
169,37
130,08
135,13
96,77
60,35
Gross Financial debt
Net Financial debt
Capex
Net Financial Debt/EBITDA
45
CMP’s financial highlights in 1H15
USD Million
2010
2011
2012
2013
2014
1H15
Sales
1.271
1.770
1.406
1.431
942
309
EBITDA (L12M)
782
1116
720
678
309
206
EBITDA Margin
61,5%
63,1%
51,2%
47,4%
32,8%
32,2%
Net Income
902
700
355
402
113
21
Cash
558
501
205
46
50
75
-
-
-
159
483
572
(558)
(501)
(205)
113
433
497
121
222
655
911
299
19
Net Financial Debt /EBITDA
-
-
-
0,17
1,40
2,42
Iron Ore Shipments (Th tons)
10.213
11.469
12.246
12.086
12.952
6.293
Platts 62% Fe CFR China (US$/t)
146,82
169,37
130,08
135,13
96,77
60,35
Gross Financial debt
Net Financial debt
Capex
46
EBITDA contribution by business (L12M)
97%
100%
94%
98%
94%
89%
80%
77%
70%
60%
40%
20%
18%
15%
5%
6%
8%
6%
0%
4%
4%
7%
8% 8%
0%
2009
2010
-3%
2011
2012
-2%
2013
-2%
2014
1H15 (L12M)
-20%
Iron ore
Steel
Steel Processing
Infrastructure
47
Relevant financial updates
Flexibilization of financial covenants with CAP and CMP lenders*
Net Financial Debt to EBITDA
6,00x
5,50x
5,00x
4,50x
4,00x
3,50x
3,00x
2,50x
2,00x
CAP syndicated loan matures in April,
2016
EBITDA to Net Financial Expenses
3,00x
2,50x
2,00x
1,50x
1,00x
0,50x
0,00x
Old
New
Old
New
Additional liquidity available: US$300 million
• 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$50 million
48
* Covenants included in CAP’s syndicated loan and CMP’s revolving credit facility
Credit agencies last review
2013
2014
2015
Fitch Ratings
BBB/Stable
outlook
BBB/Stable
outlook
BBB-/Stable
outlook
S&P
BBB-/Stable
outlook
BBB-/Stable
outlook
BB+/Stable
outlook
49
Business outlook
50
Seeking higher margins in CAP Mining
Reorientation of product mix
•
Shipments for around 14.3 million MT in 2015 consider an increase in pellets, to a total of 4 million MT
•
The change in the mix should enhance margins, as pellets have a premium over the pellet feed
2014
2015
Others,
14%
Others,
14%
Pellet feed,
72%
Self-fluxing
and DR
pellets,
14%
Pellet feed,
58%
Self-fluxing
and DR
pellets,
28%
Continued efforts in reducing costs and expenses, combined with a weaker Chilean
Peso, lower oil prices and idle capacity in the mining services industry in Chile will
reduce the average 2014 FOB cash cost of US$ 49.2 per ton to approximately
US$ 36.1 per ton in 2015
51
New EBITDA from CAP infrastructure in 2015
•
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
52
Protecting CAP’s cash flow and liquidity levels
1.200
Current investment plan reached
its final stage
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$20 million per
quarter, mainly related to maintenance
CAPEX
US$ million
•
975
1.000
777
800
600
450
400
282
207
142
200
18
21
1Q15
2Q15
0
2009
Drilling and exploration expenses
reduction
2010
2011
2012
2013
2014
70
60
60
•
•
Expenses have averaged US$41 million
per year during the last 5 years.
As of June, 2015, this concept amounts to
US$9.6 million
US$ million
50
43
40
30
40
33
29
20
10
10
0
2010
2011
2012
2013
2014
1H15
53
CAPEX limitation
140
115
120
102
87
US$ million
100
80
95
Growth
68
Cost reduction
60
Sustainability
Maintenance
40
20
0
2016E
2017E
2018E
2019E
2020E
•
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
54
Steel safeguards
•
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
Wire rod price evolution
Wire rod FOB prices in China and other markets
CAP Acero vs CIF imports of Chinese steel
55
Source: Steel Orbis, CRU
Source: CAP Acero, Aduana de Chile
Future maximization of EBITDA contribution from our ports
Total capacity CAP ports: 34.8 Mt/y
Punta Totoralillo:
Guayacán:
• 29 km north of Caldera
• Herradura bay, Coquimbo
• Iron ore shipping
• Iron ore shipping
• 200,000 dwt
• 165,000 dwt
• Max capacity: 12 million t/y
• Max capacity: 6 million t/y
• Effective utilization: 4.5 million t/y
• Effective utilization: 2.7 million t/y
Guacolda II:
Huachipato:
• Located in Huasco City
• San Vicente bay
• Iron ore shipping
• Unloading coal, limestone an iron
ore & finished steel shipping
• 300,000 dwt
• Max capacity: 12 million t/y
• Max capacity: 2 million t/y
• Effective utilization: 7.2 million t/y
• Effective utilization: 1 million t/y
Las Losas:
Guarello:
• Located in Huasco City
• Guarello island, south
• Multi purpose port
• Limestone shipping
• Max capacity: 2 million t/y
• 800 kt/y
• Effective utilization: 0.4 million t/y
• Max capacity: 0.8 million t/y
• Effective utilization: 0.5 million t/y
56
Note: Weighted average of port utilization: 47%
Conclusions
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 higher grade
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.
• CAP Steel
• Positive cash generation attained, continuous cost cutting efforts applied towards profitability
• Studying alternative use of CSH’s assets to create more value
• CAP Steel Processing
• Largest flat steel processor in the Pacific coast of South America
• Leader in innovative solutions for industrial and residential construction
• CAP Infrastructure
• Stable business supported by long term contracts
• Potential growth in the port business
57
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 forwardlooking 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
58
CAP Group update - November 2015
Punta Totoralillo Port, Atacama region