1. Panama's economy has been growing steadily at high rates, what are the main sources of electricity in the Country and what are the national authorities doing to keep up with the increasing demand?

 

Since 1997, when the Power Sector was restructured, electric energy production has been the responsibility of multiple enterprises. Initially, most of these where of mixed ownership, state and private, but since the restructuring took place most of the new capacity added to the system has been private investment. About 10% of the total capacity is owned by the Panama Canal Authority, which is state owned.

 

As for the sources of primary energy, approximately 60% is hydroelectric and the balance is thermoelectric, mostly obtained through heavy fuel oil, some light fuel oil and a coal fired plant.

 

The guiding policy for the Panamanian authorities during this period has been the free market rules established in the reorganization laws of 1997. There is a clear correlation between increased investments during the periods when the authorities have shown support of the free market and diminished investments when the signals have not been clear.

 

To keep up with the increasing demand, ETESA (Empresa de Trasmisión Eléctrica, S.A.), which is 100% state owned, is calling for bids for long term Power Purchase Agreements. Two of them will take place in the first quarter of this year (2013). 

 

2. Who are the main players in Panama's energy sector?

Panama’s electrical distribution is handled by geographical exclusivity concessions. Two companies hold these concessions and both are of mixed ownership with the state holding 49% of the stock. The private companies holding the 51% in each case are Gas Natural Fenosa, from Spain and Empresas Públicas de Medellin from Colombia.

 

The transmission system is owned and operated by a state owned company.

 

Regarding the generation subsector, actors are very dispersed. AES Corporation has the largest participation with (i) its 49% stake in AES Panama SA which owns a 481 MW hydro plant and (ii) sole ownership of AES Changuinola which owns a 222 MW hydro plant. SUEZ-GDF has 51% ownership of BLM Corp., a 280 MW thermal facility, and sole ownership of SUEZ-GDF Balboa 87 MW thermal and a 60 MW hydro complex. ENEL has 49% ownership of Fortuna a 300MW hydro plant. There are also other important Central and South American groups.

 

3. How developed is the hydropower sector? 

Panama currently has 1231 MW hydro capacity on line. In addition there are some 540 MW under construction. By most accounts this is a bit more than half the total hydroelectric capacity available. There are still some important projects, such as the 200 MW Changuinola II, that have to be developed but evidently most of the easy affordable hydro has been developed already. What lies ahead will be more difficult and more expensive.

 

4. Please describe the regulation affecting the power generation sector. 

To develop a hydroelectric resource the developer has to obtain a concession. This is a rather lengthy process that starts with requesting authorization to study a site. The developer must perform an environmental impact study, have it approved by the environmental authorities and obtain the water rights required for the hydroelectric development. Once all the requirements are met a concession is awarded usually for a 50 year period. The project can then begin construction.

 

For a thermal facility a license is required. To obtain the license the main requirement is an approved environmental impact study.

 

Once the facilities are ready to come on stream, the operator will become an agent in the electricity wholesale market.

 

5. Hidrotenencias has recently gone through a corporate change of control, what were the factors that made Hidrotenencias an attractive business opportunity for these new investors?

Hidrotenencias is well positioned to take advantage of the attractive power market in Panama, which has good fundamentals given the constrained supply and the continued demand growth, resulting from significant economic growth and a large portion of the population emerging from poverty. The power generation market in Panama has clear and market-driven rules; generators can sell power through PPA contracts that are put out for bid or through the spot market at unregulated prices. Finally, energy prices in Panama are dollar denominated and the country is investment grade, which facilitates the financing of generation projects in favorable terms.

 

6. Who are the new shareholders?

The new shareholder is a group of investors led by ACON Investments (“ACON”), an international private equity investment firm founded in 1996 that has managed US$2.4 billion of capital and invests throughout the United States and Latin America. ACON is headquartered in Washington, D.C. with Latin American offices in Mexico City and São Paulo. The investor group includes FMO, the Dutch development bank, Proparco, the French development bank and Asergen, the largest developer and operator of mini-hydro plants in Mexico, which has developed approximately 134 MW of capacity.

 

7. What does each of the new shareholders bring to the table?

ACON has led the implementation and improvement of governance, reporting and monitoring systems, as well as the operations and maintenance program, which are in line with industry best practices. In addition, ACON together with Asergen have closely supervised the construction of the new plants, which are expected to start operations in 2013. ACON has been actively involved in determining PPA bid prices under analysis prepared by management. In June 2012 each of the company’s three plants was awarded three PPA agreements for the sale of power and energy from July 2012 through December 2015. These PPAs significantly reduce the exposure to spot price volatility and guarantee a price during the contracted period that is in excess of our original expectations. ACON has also leveraged its regional network to source and analyze expansion opportunities via acquisitions and new project development. FMO and Proparco, have provided Environmental and Social guidance and helped implementing a strict E&S Management System. Finally, principals of Asergen participate in the Board and provide ongoing strategic and technical support to refine O&M plans, operational policies and reporting systems.

 

8. What is the current operating status of the power plants under Hidrotenencias' control?

Hidrotenencias has been operating Concepcion Hydroelectric Plant since 2008. We are pleased because it has exceeded all of our expectations. We are currently commissioning Las Perlas Norte Hydroelectric Plant, and we expect to commission Las Perlas Sur Hydroelectric Plant in the next months. It is a very busy period for us!

 

9. Hidrotenencias plans to expand its operations regionally, what are the factors that make renewable energy opportunities in the region attractive?

Hidrotenencias, with the support of ACON, has identified a strong pipeline of investments to multiply by up to 10x its installed capacity. The plan includes the acquisition or development of projects in Panama, Costa Rica, Guatemala, and Mexico among other countries. Hidrotenencias seeks to manage more than 500 MW in renewable energy assets across Latin America by 2017. Latin America is experiencing fast growth in power demand (1.5x – 2.0x annual GDP growth vs. 1.0x in developed world). Currently, there are significant power constraints in the region, such as limited excess generation capacity (demand – supply) and limited access to fossil fuels, and the size of the economies limit the feasibility of large projects. The World Bank estimates that Latin America requires annual investment of US$15 billion in the electrical sector in order to meet demand requirements.

LIQ talks to Luiz Felipe Graziano, Legal Manager

 

1. OAS Soluções Ambientais is part of OAS Investimentos, can you please describe what are the activities of OAS Investimentos?

OAS Soluções Ambientais is a fully owned subsidiary of OAS Investimentos, created to concentrate the group's investments in infrastructure, especially in public service concessions (in its common form or in Public-Private Partnership form). The OAS Investimentos, directly or by its divisions involved, has consolidated operations in roads, subways, and airports, and has recently started its activities in environmental solutions and management of sports arenas. Its origin is before the issue of Brazilian Concessions Law (Federal Law 8.987/95) and the OAS Investimentos participated in early concession projects in Brazil, the construction and operation of the “Linha Amarela” in the city of Rio de Janeiro.

 

2. What is the relationship between OAS Investimentos and Invepar?

OAS Investimentos is a shareholder in Invepar, in association with the three largest pension funds in Brazil. This company concentrates the OAS Group’s investments in transportation, infrastructure, and logistics.

 

3. What is the nature and objective of OAS Soluções Ambientais?

This company is the newest division of OAS Investimentos, created to develop and operate all projects involving environmental solutions for the public and private sectors, providing efficient and sustainable alternatives to water supply and sewage systems and environmental management of industrial waste.

 

4. How does OAS Soluções Ambientais benefit from Grupo OAS's know-how in the concession of public services?

OAS Soluções Ambientais brings the experience acquired by OAS Group in public service concessions with its knowledge acquired when providing construction services to major operators in the sector in Brazil and abroad, such as SABESP, CEDAE, EMBASA, COMPESA, OSE (Uruguay), Aguas Andinas SA (Chile), among others.

 

5. What is OAS Soluções Ambientais current project portfolio?

Although recently established, OAS Soluções Ambientais already has two relevant assets: the SAMAR, which holds the full concession of water and sewage services in the city of Araçatuba (São Paulo - Brazil), serving more than 180,000 users, and EPASA, concessionaire that provides more than 48 million cubic meters of water per year to the city of Lima, capital of Peru, benefiting more than 8 million users.

 

6. What are OAS Soluções Ambientais goals for the future? What markets are you looking at?

The company aims to become one of the largest private operators in this sector in Brazil. The goal is to reach a turnover of US$ 350 million annually by 2017.

To achieve these goals, the company will focus, at this moment, in sanitation concessions of cities with over 100,000 inhabitants, especially in the South, Southeast, and Northeast Brazil. The preference is for full concessions (when water and sewer services are provided), because they present a better financial viability. The treatment of industrial effluents from large industrial parks is also on the radar of the company, especially when integrated into sewage treatment plants already operated by OAS

 

7. What do you look for in your public-sector partner in terms of bringing projects to market and monitoring their development once the contract has been awarded?

The most recent contracts had predicted regulatory agencies to contract monitoring, while not always totally independent. These agencies had their structures strengthened and they are acting in a very diligent way in monitoring the contracts enforcement.

We want strong regulatory agencies in action, because we believe that only strict supervision of contracts will be able to prevent uncommitted companies to join this business. Companies that do not comply with the investment plans and other goals set in the contract are not fair competitors.

For example, a few years ago in the Brazilian road concessions sector an aggressive move by some companies was perceived due to bids that appeared very advantageous. The toll rates proposed by these competitors were really low, causing an initial impact that was very positive among users and the Government. However, after a while, it was realized that these companies were in breach of their contractual obligations, delaying investments and reducing the quality of service. This is a maneuver that is not expected to occur in the sanitation market and, in order to prevent it from happening, we strongly believe in the role of the regulatory agencies.

About new projects, it was developed in Brazil a collaboration mechanism between the Public and private sectors, the PMI (Procedimento de Manifestação de Interesse, or, in a free translation, Procedure to Express Interest), in which the private sector can apply for permission to study new public service concessions projects, proposing solutions to technical, legal, and financial viability of the project. We believe that this procedure will be the keypoint for our development.

 

8. What are the main sources of long-term financing that OAS Soluções Ambientais turns to in order to finance the building and maintenance of water infrastructure?

As well as other developing countries, Brazil has large gaps in the sanitation sector. The country aims to universalize water and sewage services by 2020, but even today there are large cities with irregular supply of water and no sewage treatment.

To face this challenge, CEF (Caixa Econômica Federal) and BNDES (Banco Nacional de Desenvolvimento), encouraged by the Federal Government, have some lines with long-term financing conditions, hardly equaled by banks and private institutions. We're talking about interest rates of 8% per year. This is extremely low for Brazilian standards.

Besides this source, we believe enough in private debt instruments such as debentures, whose market have grown a lot in recent years, due to the strong appetite of the investors. There are even tax incentives for the so-called “infrastructure debentures”.

The main discussion has been limited to receivables and guarantees equity of the project itself. Although this issue seems inherent to the concept of project-finance, Brazilian financial institutions usually require shareholder corporate guarantees in addition to the guarantees of the project – or at least an equity support agreement (ESA). The projects in sanitation are usually a brownfield type, already having cash generation, this is a question that we do not intend to give in, because otherwise, our growth would limit the ability of holding collateral guarantees.

We believe that our differential is precisely the ability to structure sustainable projects that generate value to the shareholders and ensure the necessary investments – and the PMI, as mentioned before, is the instrument to do that.

 

9. How does a company such as yours manage the need for ongoing investment and pricing strategy with the need to ensure that the services remain affordable?

Usually, in bidding for sanitation concessions, water and sewage rates are pre-established, following the pattern of prices charged by major public companies such as SABESP, for example. It is a standard accepted by customers and the counties prefer to follow it.

Because of that, we believe in the efficiency of the operation, especially in the reduction of system losses and energy efficiency, a key factor to enable new investments.

Additionally, the generation of ancillary revenue in providing services for industrial parks located in the vicinity of the project (reclaimed water, industrial wastewater treatment etc.) can be decisive for achieving the necessary investment without harming the returns expected by shareholders.

 

10. How important is for the public to be educated on water preservation?

It is essential for sustainable operations in terms of water and sewer services.

We know that Brazil is a country favored by the availability of water resources, but even with this apparent abundance water remains a finite resource, costing dearly to treat it. We have cities that need to collect water hundreds of miles away from its center, which requires heavy investment for extraction and treatment works.

To encourage responsible use of water, as well as being environmentally correct, it is necessary that the company assumes social commitments; those are means for minimizing investments in collection and treatment, facilitating new investments towards universal services while maintaining reasonable levels of tariffs. 

OSX is an EBX Group company which provides solutions for the offshore oil industry by means of integrated operations in shipbuilding, leasing of exploration and production (E&P) units, and operation and maintenance (O&M) services. 

 

OSX is managing a broad and diversified order book of FPSOs, fixed platforms, supply vessel´s and medium-range tankers. The Açu Shipbuilding Complex (UCN Açu), which will be the largest Shipbuilding Unit in the Americas, is under construction since July 2011 at the Açu Superport Industrial Complex, located in the São João da Barra Industrial District, with technology from its partner Hyundai Heavy Industries, the global leader in naval construction. For the implementation of its projects, OSX has already obtained more than US$ 4.5 billion in funding from the financial and capital markets via its IPO, financing and senior secured bonds in the international markets.

 

Currently OSX is managing an order book of 23 units destined for the production of oil and gas in Brazil which are: 5 FPSOs and 4WHPs for client OGX, 1 PLSV for client Sapura, 11 medium-range tankers for client Kingfish and 2 FPSOs for client Petrobras.

 

The construction of the Açu Shipbuilding Unit in the Açu Superport Industrial Complex in São João da Barra, located in northern Rio de Janeiro State, has been progressing according to schedule since construction began in July of 2011, with partial operation beginning in the first quarter of 2013 and completion estimated for the second quarter of 2014.

 

Main achievements in the construction of UCN Açu are the conclusion of earthworks; equipment and systems contracted: steel plate cutting machines, pipe cutting machines, steel plate pre-treatment system, gantry cranes and overhead cranes, panel lines, shot blasting machines and press and benders; contract for supply and maintenance of the 345kV substation and connection with the transmission line; contract of the Almagesto system, the focus of which is the instrumentalization of the key shipbuilding processes and systems.

 

Technological Partnership with Hyundai

 

UCN Açu is a 5th generation shipyard, built and to be operated with technology from our Korean partner Hyundai Heavy Industries (“HHI”), the world leader in naval construction.

 

For the past almost three years of strategic partnership between OSX and Hyundai, HHI has contributed with its 40 years of experience in naval construction, aiming to provide OSX with Asian levels of productivity, with the implementation of efficient processes in the construction and operation of UCN Açu.

 

In that sense, the company currently counts on eight Hyundai employees in Rio de Janeiro, assisting on technical inquiries regarding construction design of UCN Açu, as well as in the interface with the HHI team in Korea, which is dedicated to the conclusion of operating manuals and the preparation for the UCN Açu’s team training in the HHI’s Korean shipyard.

 

OSX’s partnership with HHI also includes adopting engineering projects for maritime units already built by Hyundai in its Korean facilities (as-built design) and the technical assistance from Hyundai during construction of these units.

 

OSX has contracted additional equipment for UCN Açu with Hyundai, such as the Steel Plate Pretreatment System to protect metal surfaces during manufacturing; press & benders to manufacture pipes and curved surfaces; and the Panel Line to manufacture components (panels) that will form the blocks for vessel hulls.

 

ITN – Institute of Naval Technology (Instituto Tecnológico Naval)

 

OSX has started the first classes of the Professional Training Program in Shipbuilding that ITN – Institute of Naval Technology (Instituto Tecnológico Naval) is conducting in partnership with SENAI/FIRJAN, the most important entity for industrial professional training in Latin America.

 

Of the 3,100 professionals selected for training until 2013, 880 students have begun the 23 free courses offered in Metal-Mechanics, Electricity, Metallurgy, Automation/Instrumentation, Oil, Automotive Operation, Construction and Management in São João da Barra and Campos de Goytacazes. The courses are free and selected candidates receive a scholarship.

 

For this Training Program, approximately 20,000 applications were received and approximately 15,000 candidates performed selection tests and approximately 3,100 candidates were selected for the first phase of the Program.

 

In addition to these training initiatives, the ITN plans to act in partnership with research institutions in the technological development of the shipbuilding and offshore operation sectors in Brazil.

LIQ talks to Juan Carlos Croston, Vice-President Marketing

 

1. What is your overall opinion on the Panamanian institutional and regulatory framework towards ports? 

The state of Panama has a very laissez-faire approach regarding ports. The onus for investment and risk is on the private sector. It seems like the market has accepted the framework given that the overall container terminal throughput growing at a compound annual rate of 19% since 1995.

 

2. Manzanilo International Terminal ("MIT") is well connected through highways to other cities in the region, what would you say are the main reasons for which a port terminal such as yours must be adequately connected to transport infrastructure? 

The main reasons are:

1. Port competitiveness: beneficial cargo owners ("BCOs") will look for the most economical total transport solution and good connectivity to/from the port helps drive down total transport costs; 

2. Country competitiveness: exporters competing in a world-wide market will be able to place their products at a more competitive costs in other countries, opening new markets and helping the trade balance positively, while importers can bring products cheaper to end consumers; and

3. Options for users: while having a good highway is always a benefit, having a good highway and a good rail infrastructure offers the users (shipping lines/BCOs) different alternatives in an ever more complex global supply chain market.

 

3. What are some of the main products exported through MIT and what are the main destinations? Inbound cargo to MIT is well balanced from Asia, Europe and the Americas. On the other hand, 90% of the outbound cargo has the Americas as destination, clearly showing that MIT is the gateway to the Americas for all types of commodities.

 

4. Please describe your facilities and equipment. What services do you offer to shipping lines? 

MIT is strategically placed in the Atlantic Coast of Panama, right adjacent to the Panama Canal entrance. With a labor force mainly from the province of Colon, 17 ship-to-shore gantry cranes and top-of-the-line cargo handling equipment, MIT is one of the few terminals in the area that can offer comprehensive cargo handling solutions, including facilities to move containers, roll-on/roll-off, project and breakbulk cargo.

 

5. MIT has repeatedly won awards for its efficiency, what are the key indicators that make a port terminal efficient? 

The main one is vessel productivity, that is, how much time a vessel takes to clear port, measured from the time the vessel arrives at the port to the time it leaves the port. This key performance indicator takes into consideration aspects such as terminal productivity, tug/pilot services and availability, authorities’ free pratique time and cargo coordination between terminal, line and BCOs. Other important key performance indicators are cargo truck turn-time, cargo damage occurrence, cargo data visibility rate through IT deployment.

 

6. Why is the logistics park important to your clients? 

Now that MIT has helped establish Panama as a cargo hub for the area, it is important for shipping lines using Panama as a cargo distribution center to offer their end customers more integrated services. Having the best connectivity in the continent, world-class third party logistics and great transport infrastructure, it is only natural to go after the so-called “last-mile logistics” services.

 

7. In a recent LIQ article we covered the importance of security providers to infrastructure asset operators, what are the most important security threats to MIT and how do you deal with them? 

MIT is an active member or part of the following international codes and organizations: Customs-Trade Protection Against Terrorism, Business Alliance for a Secure Commerce, International Ship and Port Security Code, and is one of five pilot members of the Panama Customs-led new Authorized Economic Operator. 

 

8. How do MIT's activities affect the city of Colon and what are some of the actions derived from MIT's corporate social responsibility policies? 

MIT has focused on sustainable growth, with six particular areas of interest: 

1. Employees: 90% of our people comes from Colon, close to 200 of our people have been working with MIT since its beginnings in 1995 and some of them now help our parent company Carrix train new international employees at our training center in Colon or as ex-pats in overseas operations; 

2. Environment: MIT is at the fore-front of environmental-friendly cargo handling equipment initiatives that help mitigate impact to nature while also supporting external environmental projects and organizations such as the STRI in Isla Galeta; 

3. Vendors: encouraging and supporting micro and small businesses in Colon, while maintaining and developing a strong relationship with all product and service suppliers, has been one of MIT’s key objective since its beginnings, nurturing best practices along the way; 

4. Commercial drive: MIT has retained, in a very competitive environment, more than 95% of its customer base since 1995, maintaining and developing a strong relationship with its customers; 

5. Community outreach: total investment in Colon is now US$ 6 million and includes development of hospitals, schools, support of sport programs and maintenance of key landmark places in Colon. These projects are developed following international guidelines to ensure community involvement and sustainable projects; 

6. Public advocacy: MIT is an active member of various local and international organizations, and a case-study of successful public-private partnership in Panama. As the leading cargo terminal in Panama, MIT continues to spearhead the development of an up-and-coming logistics industry that currently accounts for over 20% of Panama’s GDP.

Andrés Trivino, President of the Canada-Colombia Chamber of Commerce talks to Stéphane Villeneuve, Vice-President at SNC-Lavalin.

 

a. Could you give us a quick overview of the challenges and opportunities for an international engineering and construction firm interested in participating in the infrastructure sector in Colombia?

The opportunities we see are the following:

• Colombia is the third largest economy in Latin America, following Brazil and Mexico, with an important infrastructure deficit and an economic growth above and beyond most other countries in Latin America.

• The country has a political climate that is stable and, at the macroeconomic level, it operates in a framework of a stable government and macroeconomic politics that are efficient; this translates into an investment grade country, and it is very interesting (at the macro level) for a potential investor.

• Opportunities are also spread across various industry sectors, which makes the country extremely interesting from the perspective of diversifying an infrastructure portfolio.

• The various mechanisms by which the government promotes projects (public tenders, private initiatives and design-build contracts) contribute to the diversification of the ways in which construction companies can target projects in Colombia.

As for the challenges:

• The prequalification requirements for many projects are extremely onerous for international firms.

• Guarantees expected from proponents of various projects are different than what many international firms are accustomed to, especially in terms of exposure of the parent company to contractual and financial obligations.

• The legal framework for liabilities is also very different than what is typically seen by international companies in various markets and, in turn, this creates challenges to understand the exposure and implications, especially for long-term projects.

• It is also expected that the extremely large volume of infrastructure work that is going to be required in the next decade will put a strain on locally available resources in terms of construction capacity, resources, materials, etc.

 

b. How does the potential development of infrastructure in Colombia compare with other countries in Latin America?

Colombia’s large population is putting a strain on the country’s inadequate infrastructure and to date, the level of investment in this infrastructure has been low.  We anticipate that Colombia will be engaging in a variety of infrastructure projects aimed at catching up with the region’s competing countries, making it one of the key countries on which we will be focusing our development efforts.

 

c. What do you think are the main opportunities in the infrastructure sector in Colombia for private investors?

In addition to the road concession projects being tendered by ANI, we see a lot of potential for other infrastructure sectors such as public transport, ports and airports. Furthermore, we envision a sizeable level of business with private clients needing infrastructure related to industrial activities, especially in oil and gas and mining.

LIQ talks to José Damián Sáez Martínez, General Manager 

 

1.- What is the history of Acciona in Colombia? Acciona is well known around the world for the 

development, production and management of renewable energy, water and infrastructure, in which of these sectors of the Colombian economy has Acciona sponsored projects?

 

Since the 1970's Acciona has been a part of major engineering projects in Colombia. Worth highlighting are the Santa Rita, Río Grande II and El Guavio dams, and, in the field of mass transport, the Medellín metro.

 Acciona considers three sectors to be strategic: Infrastructure, Water and Renewable Energy. Acciona has made a strong bet in the development of infrastructure and the whole water cycle in Colombia and we are waiting on a favorable regulatory framework in the field of non-conventional renewable energies such as wind and thermal solar, field in which Acciona is a world-wide leader.  

Acciona Infraestructuras is currently building hydrocarbon transportation lines for TGI and Ecopetrol and Acciona Agua is part of the consortium that will build the Bello water treatment plant for EPM, which will be the largest in Colombia. 

 

2.- What is your opinion on the strategic plan prepared by the Agencia Nacional de Infraestructura (ANI) for the 2010-2014?

 

The strategic plan currently being structured by the ANI will mark a milestone in the development of Colombian road and rail infrastructure. Not only because of investment levels envisioned but also because of the basic change that means treating infrastructure with a medium to long term vision.

While we acknowledge that given the magnitude of the project there is a chance of delays in the structuring phase and that social and environmental matters will have to be consider, at Acciona we believe that the ANI is laying a solid foundation to, once in for all, move Colombia forward in the field of infrastructure development.  

1. The Port of Matarani (the “Port”) is of great importance for the south region of Peru, who are the main clients of Terminal Internacional del Sur (“TISUR”), which are the main products exported from its facilities and the main destinations of Peruvian production coming out of the Port’s facilities?

Our major customers are mining companies that use the terminal facilities to export their different products, considering that the amount of cargo moved through Matarani Port represents the 50% of their total cargo. Among them we can name Sociedad Minera Cerro Verde Port Free McMoran, Xstrata Copper, Compania de Minas Buenaventura, Glencore, Ares and Suyamarca that belong to Hoschild group, and Minera Pampa de cobre of Milpo Group. Copper concentrate, copper cathodes and gold concentrate are the main products which are shipped to ports in Asia.

It is worth mentioning that Tisur is a multi-purpose port due to the experience at handling all types of cargo. The economy of the region is growing significantly and the road infrastructure is improving, allowing the communication among other towns and making new important projects possible. Based on this, we can say Matarani is on its 25% capacity. As a result, a very important growth will be seen in the following years, especially in container cargo by decreasing the mining relative weight in our operations.

In container cargo, our Customers are Tecnológica de Alimentos S.A. – Tasa and Pesquera Diamante which export fishmeal to Asia. Consorcio Peru Murcia and ALSUR S.A produce agro industrial products that are shipped to The USA and Spain, Inkabor S.AC distributes borate in The USA and Europe.

 

2. How would you describe the state of the economic infrastructure assets bringing those products to the Port’s facilities? (Roads, railroads, navigable rivers (if any))

Being a strategically multi-junction of different roads and the southern rail road, among them the main road that connects the country from south to north. Two roads to the Peruvian highlands and connecting with Bolivia and the central states of the Brazilian amazon.

As regards air transport, Rodriguez Ballon International Airport in the city of Arequipa is located 120 km from the port.

 

3. TISUR has held the concession since 1999, could you describe the investment plan for the enlargement and modernization of the Port’s facilities?

The investments in infrastructure have been performed by commitments associated with the Contract of Concession and accompanying the growth of load volumes that we handle.

Tisur has made important investments in the past 12 years, such as the construction of new silos of 25 thousand tons by increasing the capacity from 50 to 75 thousand tons and the acquisition and implementation of a grain tower with an unloading capacity of 400 TM/HR which enabled us to increase our capacity from 200 to 600 TM/HR. Since 1999, Tisur has made investments worth more than $ 35 million dollars.

In the year 2004, Tisur turned into the first Peruvian port in possessing a port mobile crane: the Gottwald HMK 280 E of 60 tons of capacity for the attention of bulk, break bulk and containers.

In 2005, a reception, storage and shipping system was built and implemented for copper concentrate. As of today, this system is the most modern one in the South Pacific coast. Environmental requirements were taken into consideration for this project for the managing of concentrate of mineral. With this implementation it passed from storing the mineral in slabs without coverage to closed stores, the first tubular conveyor belt was implemented and installed in Peru and a "ad hoc” shipper for these operations. This project undoubtedly constitutes a significant improvement in how mining operations of the south of Peru manage environmental matters. The project included: (i) a system of reception for trains and another one for trucks; (ii) the construction of two mineral stores of 75,000 and 45,000 tons of capacity; and (iii) a system of loading of concentrates with a capacity of 1,500 ton/h for the loading of ships handy size. This new system loads near a million and a half tons per year.