SUSTAINABLE PORT DEVELOPMENT:

Rodrigo Galleguillos Ultramar OCTOBER 2015 Shipping Towing & Salvatage Agency, Ports and Logistics Other investments

• +200 vessels • 87 tugboats + PSV • 12 ports in Chile, Argentina, • Energy Uruguay and Brasil • Crude Tankers • Harbour Towage • Real Estate • Port operations and • Gas Carriers • Salvage and special Services Stevedoring services • Coal Mining

• Chemical tankers • Offshore Supply Vessels • Transport Agency • Sulfuric Acid plants

• Container feeders • Pilot boat sevices • Airline representations •Others

• Break bulk / Project cargo • Port consultancy.

• Ship management • Inland terminals and container depots. Global presence Schedule i. LATAM today ii. Chilean Port Scenario iii. Our model

6 LATAM today

7 LATAM Hoy

LATAM: The big picture

40.2 M total teus

42% Central America & Caribbean 58% Colombia to the south

45% West Coast 55% East Coast

Source: CEPAL 2013 LATAM: still growing…

Throughput TEUs (2011-2013) 10.0 4.9%

9.0 8.7

MTEUs 8.2 7.9 8.0 6.9 7.0 6.6 6.6 8.0% 6.0 4.2% 4.9 4.9 2011 5.0 5.2% 4.2 2012 3.8 4.0 3.6 2013 5.4% 3.4 3.5 3.1 2.8 3.0 2.0 2.2 2.1 1.8 2.0 1.9 2.0

1.0

0.0 Perú Argentina Colombia Chile México Panamá Brasil

Source: CEPAL Still growing…but we must face new

challenges

10 LATAM: still growing… Evolution of maximum and middle size vessels within selected routes 2000-2015

11 The New Challenge: Panama Canal

PMX

12 Turbulent waters for shipping companies That has resulted in strategic alliances

13 And the changes in shipping companies

14 How is the region preparing itself to face

this challenges?

15 New large port projects and expansion of existing ones

Deepwater port Ecuador Megaport Chile

Deepwater port Argentina Deepwater port Uruguay

16 New large port projects and expansion of existing ones Brasil México Panamá New port’s law Corozal Manzanillo • Greenfield • Greenfield Colombia Block 1 • Post Panamax Uraba • Santos y Para • Greenfield Block 2 Ecuador • Aratú, Sao Sebastiao, Manta Paranaguá y Salvador • Brownfield • Panamax Block 3 Posorja • Itaquí, Suape, Recife, • Greenfield Cabedelo, Fortaleza, • PostPanamax Maceió, Macapá

Block 4 Peru • Manaus, Imbituba, Itaquaí, Itajaí, Niterói, Pisco Chile Porto Alegre, Rio de • Brownfield Janeiro, Rio Grande, Iquique EPI • PostPanamax Vitória • Brownfield • PostPanamax Ilo • Brownfield Uruguay EPA • Brownfield Argentina Montevideo Fospac • PostPanamax • Greenfield • Greenfield Punta Indio • PostPanamax • Panamax Mega puerto • Greenfield • Greenfield • PostPanamax • PostPanamax However, existing ports must deal with

infrastructure expansion…

18 Chile: Existing ports having difficulties to expand because of cities…

19 And on the other hand, low utilization on mining dedicated ports…

% Berth Utilization 33%

Capacity 2.700 Kton

Throughput 1.800 Kton

Idle capacity 900 KTon

% Berth Utilization 10%

Capacity 4.200 KTon

Throughput 700 Kton

Idle capacity 3.400 KTon

20 Our value proposal

21 Our business model for Port development…

Typical scenario Each project owns a port Port 1 Copper Concentrate

Coal Port Complex Port 2

Port 3 Our Model Iron Ore Generate a port complex that Port 4 transfers each project tonnage, minimizing the CAPEX and OPEX

Agricultural products22 Mejillones, Chile • Population of 10,000 habitants • Only 68 km from Antofagasta, main mining city of Chile • Well Protected from South Pacific swells

N

150 km from Swel l

68 km from 23 Antofagasta city 23 What we did in Mejillones Bay… Port Mejillones

Thermoelectric Power Plant Liquid Terminal Client: Suez Energy Year : 1995 Storage: 1.0 M ton Bulk Terminal Copper Concentrate Future project

Bulk Minerals Clinker Client: Sumitomo Corp. Client: Polpaico Year : 2007 Year: 2001 Storage Capacity: 72.000 ton Storage: 100 K ton

10,3 Ha available

Sulfuric Acid plant: Noracid Sulfuric Acid Storage Tanks Client: Copec, Ultraterra Client: Codelco, Xstrata, Freeport Mc-Moran, Barrick. Year : 2011 Year : 1996 Troughput: 700 k ton Storage Capacity: 220.000 ton 24 11 tanks each of 20.000 ton What we did in Mejillones Bay… Port Angamos

Area Copper cathodes yard Stuffing area Year : 2003 Storage Capacity: 450 Teus Storage Capacity: 80,000 tonnes Container Deposit Year : Storage Capacity: 6,550 Teus

Stacking Storage: 3,400 Teus

Copper Concentrate Project Cargo – Gral Cargo Storage Capacity: +100.000 ton Year 2014 Storage: 1,300 Teus

CAPEX USD 350 MM… Shared by different 366 mts Loa clients! 13,5 mts draft •43 Ha, + 45 Ha available 135,000 displacement (ft) •With experts reducing OPEX •Increasing service quality. Ready for the new Panama Canal 25 However, what´s needed to go from port development to sustainable port development?

26 Current Scenario….

Slower growth in China Growth Rate (PPP) % the global economy

Complex and social movements Mergers and challenging and community alliances in the environment empowerment shipping industry for industry

Increase d labour costs 27 Our model: Sustainable port development

Safety & Stakeholders Environment

Infrastructure Productivity & Technology

28 Efficiency: USD/CTR

México 378 usd

Guatemala * Colombia 454 usd Panamá 833 usd

Ecuador 299 usd

Perú 467 usd Brasil Central 574 usd Chile Norte 489 usd Brasil Sur 686 usd

Chile Central 333 usd Uruguay 459 usd

Argentina 488 usd

29 Productivity: No more warehouses Introducing technology: Bulk mineral shipment in rotainers

Mine Loading Transport to Port Port Storage

30 Transference Unloading Productivity: Mejillones Training Centre Project

Experts training Experts Functional Map . 204 new operators (2014) Certification Skills and . Working with government and unions Training competences Internal Cycle . New collaborators comes from Mejillones Training Curriculum

Gap Course detection design

31 Productivity: Equipment

New equipment

. New mobile cranes. . Yard equipment was updated and additional new units arrived, still investing in more equipment.

32 Productivity

That has brought great results…

In terms of efficiency and Berth availability

Box/hr Possitive effect on availability 48 45 37

24

Jan - 14 Jun - 14 Dec - 14 Jun - 15 33 Productivity: More berthing site available

Transferred Tonnage vs Terminal Utilization Rate

Use

Site % %

% Site Use Lower terminal utilization allow us to offer reduced berth waiting time to shipping lines and more availability for growing demand. 34 34 Stakeholders: Our people

New port law

• ½ hr break in each work shift • Dedicated areas to rest

Sports Center • Fitness classes for women • Soccer field • Barbecue zone

35 Stakeholders: Our people 60% of our workers live in Mejillones Ultraport PANG PMEJ Bay(1026) (63) (32)

84% 66% 63% Women at our operations 16% 34% 37% +328% 166 142 59 57 83

58 107 85 Administration 25 Operation 36 2013 2014 2015 Stakeholders: Community

Mejillones community as port ambassador

37 Stakeholders: Community Good relations with community and authorities Environment: Clean Ports! Port Mejillones shipping lead and zinc since 2007

Port Angamos shipping copper concentrates since 2014

•Evironmentally friendly technology

•0 harm to the health of our people

•Awarded by community and recognized by authorities

Safe for community, our people and the environment! Safety: Life at our center

Leadership

Organization Culture Organization & Operational discipline Culture

•Operational risks • Organizational structure •Knowledge and skills Machine/Equipment •Performance management •Rules and procedures Work Interphase •Recognition , penalty & •Improvement mechanism reward policy •Recruitment & training • Courageous and visible leadership • Conditions Process Actions Safety: Life at our center

The journey to zero accidents Accidentability Frequency Index Evolution it´s based on a Safety culture

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 How important and relevant is to Mejillones?

4.2 4.2 4.2 4.1 4.0 4.0 3.9 3.9 3.9 3.7 3.7 3.6 3.6 3.6 3.6 3.6 3.5 3.5 3.4 3.4 3.3 14 14 11 10 10 23 23 18 20 16 16 20 20 28 33 27 30 43 40 42 37 35 35 38 41 42 33 45 43 44 34 36 44 47 44 49 38 40 44 45 38 42 43 39 34 31 34 29 25 20 29 41 28 27 19 23 25 16 18 22 21 13 13 13 11 11 12 13 11 17 19 11 16 18

2 2 2 3 4 8 6 3 10 6

Ultraport

Oil Terminal Oil Terminal Oil

Molybdenun…

Pto.Angamos

Molybdenum…

Pto. Mejillones Pto.

Sulphuric acid… Sulphuric acid… Sulphuric

Port company B company Port

Gas company B company Gas

Port company A company Port

Garbage/Waste…

Gas company A company Gas

Thermoelectric B Thermoelectric

Thermoelectric A Thermoelectric

Fishing company Fishing

Shipping Agency Shipping

Mining company B company Mining

Mining company A company Mining Explosive company Explosive

Not important (1-2) Not much(3) Important (4) Very important (5) SUSTAINABLE PORT DEVELOPMENT: CHILE

Rodrigo Galleguillos Ultramar OCTOBER 2015 Mauruuru!