coldeco-best buy for pna

PNA has made a wonderful and strategic move in buying 66% of Coldeco, the World's Largest Copper producer, a company with full govt backing. Chile is a sovereign country that does not interfere with foreign investments and as I write there are many OZ mining co doing very well in Chile. It is the gateway to the Asian Market. Check out the following extract to support that Chile is indeed a good investment destination.Thumbs Up PNA:

Mining to Chile



Trends and opportunities
The market

Chile is the largest copper producer of the world. It also has gold, in growing importance, silver, molybdenum and other minerals.


The operational budget of the mines in Chile is around US$7 billion. The projected investment for the period 2006-2012 was US$14 billion before the crisis. Most projects have put on hold but in 2009 it is expected that US$2.5 billion will still be spent.

Opportunities
Chile has mostly hard rock mining and open cut operations. Although it is expected that underground mining should grow significantly in the next 10 years.

The following opportunities exist for Australian suppliers of mining equipment/services for both new mining projects and existing mining operations:


Specialised mining technology and services
Mineral processing technology and equipment
Mine safety
Mine software
Services and technologies related to improving water availability
Some specific projects coming up or currently in development are:

Esperanza: US$1.5 billion construction has started. Antofagasta minerals copper/gold/silver new project.
Regalito: US$700 million approved but subject to resolving water issue. Lumina new copper project.
Andina Expansion II: US$2.3 billion construction to start in 2009. Codelco copper expansion.
El Teniente new level: US$987 million engineering feasibility phase. Codelco copper expansion.
Competitive environment
The market is mature and very competitive. Canada, USA, the EU, China and Japan have Free Trade Agreements with Chile, which make them tough competitors.

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Tariffs, regulations and customs
The basic principles governing Chile's investment environment are non-discriminatory treatment of foreign investors, free access to the foreign exchange market and economic sectors, and minimal state regulation and intervention.

All imported goods must pay a six per cent uniform tariff (ad valorem).

Chile has a number of free trade agreements (FTA) with various countries. The Australia-Chile FTA entered into force on 6 March 2009.The most significant for Australian exporters of mining equipment are the FTAs with Canada, USA, the EU, China and a recently signed commercial agreement with Japan. Imports from these countries attract no import duty.

All services pay a 30 per cent tax. There is a software tax that sometimes treats software as a type of service that can generate a tax of up to 15 per cent for software companies. There is no double taxation treaty with Australia.



Protecting intellectual property (IP)



Although there is a new IP law and the recently signed FTA between Chile and Australia include a special provision for this, it is still good to be cautious. The best way to avoid this risk is looking for a reliable partner.

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Marketing your products and services
Market entry
Over 100 Australian suppliers of mining equipment and services are active in Chile and about 30 have registered offices in Santiago. Most foreign competitors have subsidiaries or branch offices in Chile, while others use distributors or representatives. Chilean companies tend to avoid working with suppliers that do not have a local presence because of their need for on the ground support and effective communications.

The best way for most Australian companies to address these issues and to achieve success in Chile is to commit to establishing a local presence. Having a knowledgeable and well-connected Chilean representative is a critical factor for success.

This is also dependant on the specific product and market characteristics. Ideally, Australian companies should:

Have promotional material and brochures in Spanish
Have a local presence and long-term commitment (tech support)
Offer in-market support and post-sales service, preferable with an office in Chile
Follow-up meetings usually start off with a yes
Visit the market frequently build confidence with the customer
Learn some Spanish it sends a message
Cover the details in paperwork and process
What are your options?:

Selecting a local distributor or representative
Opening up an office and hiring a local sales person
Joint venture with a local partner or purchasing an existing company
In general the technical level of people is good but not always easy to find combined with good English skills.

Attending key events is another way of marketing your products and services. Some events are specific to areas, such as maintenance, exploration, mine closure, environment, etc:

Expomin held every two years, the next one is in April 2010.
Exponor held every two years in the mining capital Antofagasta, the next is in June 2009.
Common mistakes include:

Selecting the first company you meet and like as your local representative. You need to research your best option available.
Coming to the market without pre-arranged meetings
Contacting people in mining companies directly without any introduction.

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Contact details
The Australian Trade Commission (Austrade) is the Australian Governments trade and investment development agency, operating as a statutory agency within the Foreign Affairs and Trade portfolio.

Austrade assists Australian businesses contribute to national prosperity by succeeding in trade and investment, internationally, and promoting and supporting productive foreign investment into Australia.

Austrade:


Delivers services that assist Australian businesses initiate, sustain and grow trade and outward investment.
Promotes Australia as an inward investment destination and, with the States and Territories, supports the inflow of productive foreign direct investment.
Administers the Export Market Development Grants scheme.
Undertakes initiatives designed to improve community awareness of, and commitment to, international trade and investment.
Provides advice to the Australian Government on its trade and investment development activities.
Delivers consular, passport and other government services in designated overseas locations.
A list of Austrade offices (in alphabetical order of country) is available.


More information

For further information please contact Austrade on 13 28 78 or email [email protected]

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