SUSTAINABLE PORT DEVELOPMENT: CHILE 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 South America 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 Antofagasta 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 Tocopilla 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 Gas company 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!.