(D) Business Potential Analysis, full

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(D) Business Potential Analysis, full

  1. 1. SAMPLE REPORT BUSINESS POTENTIAL IN CHILE FOR INDUSTRIAL BOILERS AND HEATERS
  2. 2. Index Introduction p. 6 PART 1 7 Current Situation and Trends in Energy and Environment in Chile, highlighting its relationships with the segments and applications of interest to CLIENT 1. Energy 8 1.1 Energy overview 8 a) Primary Energy b) Secondary Energy Disruptions on the gas supply from Argentine 10 1.3 Electrical generation and non-conventional sources 11 1.4 Perspectives 14 1.5 Learnings 17 2. Environmental restraints 18 2.1 Current regulations and perspectives 19 a) Overview b) Legal Frame c) Key Issues 2.2 Other issues of interest 22 2.3 Learnings 25 Availability in Chile for biomass, agricultural wastes, oil, gas and coal, 26 in quantitative and qualitative terms and for the short and medium term 3. Fuels 27 3.1 Fuels sources 27 3.2 Current situation and trends regarding fuels use 33 3.3 Learnings 46 -Conclusions Part 1 48
  3. 3. PART 2 4 Market potential 49 4.1 Market size 50 a) Local manufacturing b) Imports and exports c) Current market size (2006) -by broad end user segment -by broad fuels types -by broad tonnage range across the targeted end users segments 4.2 Industry Challenges, Market drivers and Restraints, Legislations 55 4.3 Future market potential for 2006-2010 55 a) Total b) Particular case: Solid fuels fired boilers 4.4 Learnings 56 5 Competitive Analysis 58 5.1 Major Players 59 5.2 Product range offerings & technical collaborations 60 5.3 Fuel types in greater demand and eu segments going for the same 61 5.4 Revenues from the base year spread across critical eu segments 62 5.5 OEM’s 63 5.6 Revenues from the base year from exports /countries of destiny 63 5.7 Swot Analysis of leading manufacturers catering the broad eu segment 64 5.8 Key Competitive Factors 65 5.9 End User Segments Driving the Demand 65 a) Inside the Metropolitan Region b) Outside the Metropolitan Region 5.10 Manufacturer’s views on the future 69 5.11 Possible markets in Chile 69 5.12 Learnings 69
  4. 4. 6 Customer Mapping 70 -End Users: 6.1 Equipments in use 71 6.2 Satisfaction levels 72 6.3 Preference for domestic vs imported 72 6.4 Specific decision making criteria while selecting a supplier 74 -Epc Contractors: 6.5 Decision making 74 6.6 Buying from manufacturers vs distributors 75 6.7 Views on the technological aspects of the product 76 6.8 Procedure adopted with respect to procurement for the clients. 77 -Steam & Heat Services Providers: 6.9 Other important players: the Steam & Heat Services providers 78 6.10 Fuel & Steam Costs (10 real cases) 79 6.11 Learnings 7 Marketing Strategies Catering Market Segments 81 7.1 Demand Potential by end user segment 82 a) Inside the Metropolitan Region b) Outside the Metropolitan Region 7.2 Easy of Account Penetration 84 7.3 Competitive Position Should Client 85 a)Inside the Metropolitan Region b) Outside the Metropolitan Region 7.4 Pricing Strategy 85 7.5 Customer account /segments should Client target 86 a) In the long term b) In the short term 7.6 Learnings 86
  5. 5. 8 Conclusions & Recommendations 87 8.1 Business potential in Chile for Client’s industrial boilers 88 8.2 Recommendations on what to do and how to proceed 89 8.3 Potential Partners for Client to enter 90 Annexes to this report: Chilean Imports 93 1. 2. List of Interviewed Companies 100 3. 4. Annexes (other): 5. Chile, Statistical Synthesis 6. Chilean Imports & Exports for Boilers 2002 - 2006 7. Inventory of Boilers at the Metropolitan Region & Great Concepcion 8.
  6. 6. INTRODUCTION Chile’s gross domestic product (GDP)1 grew by 5.7% in 2005, 4.0% in 2006 and the estimated values2 for 2007, 2008, 2009 and 2010 are 5.7%, 5.2%, 5.2% and 5.0% respectivelly. There is more information about Chile’s main indicators in the Annexes. The principal drivers of these growth rates are booming prices for Chile’s mineral exports especially copper as state-owned copper mining firm Corporacion Nacional del Cobre de Chile (CODELCO) is the world's largest copper producing company. But, while copper and other minerals remain the mainstays of Chile’s exports, trade of other non-traditional products such as agricultural and forestry products have also grown considerably over the past two decades. To support this growth, the country must import the bulk of its energy consumption as it has limited domestic conventional energy resources. Chile's reliance on energy imports, particularly on natural gas from Argentina, has not been without consequences. In April 2004, Argentina began restricting natural gas exports to Chile, with cuts reaching nearly 50 percent of contracted volumes on some days. Chile, in turn, began to reconsider its energy policy, which, prior to the import restrictions, had assumed an increased use of natural gas and power imports from Argentina. In fact, Chile has begun to pursue other sources of natural gas, such as liquefied natural gas (LNG), piped gas from other countries and also a fast development of NCRE. Additionally several international commercial compromises as been assigned that obligates Chile to apply severe environmental regulations to producers, in order to accomplish clean production standards developed market expect from its providers. All the above results in a complex situation for most Chilean industries as the strong uncertainty in the natural gas supply press them to return to the use of oil or other more contaminant fuels to produce heat and steam while new regulation punish them for this. Currently most boilers have already been installed with dual-type burners prepared to burn natural gas or the much more expensive Diesel oil, but this is not a comfortable situation for the end users that look at the cheaper solid fuels coal and biomass hoping for better solutions. In synthesis the scenario in Chile is near ideal for a manufacturer like Client, capable to offer solutions based on any fuel but specialy on solid fuels. This report provides a significative amount of hard data and recommendations on how to proceed to insert the company deeper in the market. 1 http://www.bcentral.cl/publicaciones/estadisticas/actividad-economica-gasto/pdf/CCNN2003-2006.pdf 2 http://www.bcentral.cl/estadisticas-economicas/series-indicadores/index_ee.htm
  7. 7. -CURRENT SITUATION AND TRENDS IN ENERGY AND ENVIRONMENT IN CHILE, HIGHLIGHTING ITS RELATIONSHIPS WITH THE SEGMENTS AND APPLICATIONS OF INTEREST TO CLIENT 1.-ENERGY Schedule 1.1 Energy Overview a) Primary Energy b) Secondary Energy 1.2 Disruptions on the gas supply from Argentina 1.3 Electrical generation and non-conventional sources 1.4 Perspectives 1.5 Learnings ______________________________________________________________________
  8. 8. 1.1 Energy Overview a) Primary Energy Along the last ten years the Chilean primary energy consume increased at an annual average rate of 4.5%. In 2005 the total primary energy consumed by the country was 286,049 Tcal. Crude oil representing a 39% (on energy base), Natural gas 27%, Firewood and others (Firewood, vegetable coal, wood wastes and black liquor) 16%, Coal 10% and Hydroelectricity 8%. A 68% of the total primary energy consumed was imported (98% of Crude Oil, 73% of Natural gas and 88% of Coal). Exports were null. Primary energy balance Year 2005 (Tera-calories) Gross National Imports Var. Gross Consume Production Stock + Loss Energetic Tcal % Tcal % Tcal % Tcal % Crude Oil 1,752 2 110,974 57 2,360 45 110,365 39 Natural Gas 21,428 22 58,667 30 1,782 34 78,313 27 Coal 3,536 4 26,027 13 795 15 28,768 10 Hydroelectricity 22,924 24 0 0 308 6 22,616 8 Firewood and others 45,988 48 0 0 0 0 45,988 16 TOTAL 95,627 100 195,667 100 5,245 100 286,049 100 Total. % 33.4% 68.4% 1.8 100% Source: National Commission of Energy (CNE) Chile, “National Balance of Energy 2005”. October 2006. Equivalency: 860Kcal/KWh Imports of primary energy increased from 48% in 1990 to 68% in 2005. 100 Primary energy imported, % 90 80 73 69 67 66 69 68 70 60 54 48 50 40 30 20 10 0 1990 1995 2000 2001 2002 2003 2004 2005 Year Evolution of percentage of Primary energy imported. 1990-2005 Source: “Statistics Energy Industry Chile: 1990-2004”; “National Balance of Energy 2004”; “National Balance of Energy 2005”. CNE Equivalency: 860Kcal/KWh
  9. 9. Historically, low domestic production of Natural gas constrained its consumption, only constituting 8% of total energy consumption in 1996. A combination of increasing energy demand, environmental concerns, and the unreliability of hydropower prompted the Chilean government to re-consider its energy policy and encourage the use of natural gas. To that end, Chile began large-scale imports of natural gas for the first time in 1997; since then, the country’s natural gas consumption has increased by an average of 21.7% per year, reaching 27% of total energy consumption in 2005. Production and consume of natural gas, 1994-2004. Source: Energy Information Administration USA: “International Energy Annual Country Analysis Briefs, Chile”. Sept. 2006 b) Secondary Energy Through energy conversion processes performed in transformation centers, the primary energies are transformed to more convenient forms of energy called secondary energies. Secondary Energy Balance, Year 2005 (Teracalories) Energetic Gross Imports Exports Var. Stock Consume Consume Consume Production + loss Final Transf. Total Centers Oil derivates 108,668 35,065 18,359 3,099 118,335 3,940 122,275 Electricity 45,136 1,851 0 3,904 43,083 0 43,083 Coal (*) 28,768 0 0 0 9,118 19,650 28,768 Coke 6,639 4,275 273 580 2,202 7,859 10,061 Tar (**) 207 0 0 37 170 0 170 Current Gas 1,322 0 0 19 1,303 0 1,303 Blast Furnace Gas 1,411 0 0 210 1,201 0 1,201 Natural Gas (*) 77,579 0 0 0 45,510 32,069 77,579 Methanol 16,394 0 15,637 757 0 0 0 Firewood & others 45,988 0 0 0 40,278 5,710 45,988 Biogas 0 0 0 0 0 0 0 TOTAL 332,113 41,191 34,270 8,606 261,199 69,228 330,427 (*) The Imports –Exports are considered in the Primary Energetic step. (**) Tar for energetic use (produce in Steel industry) Source: National Balance of Energy 2005, CNE
  10. 10. The total secondary energy consume in 2005 was 330,427 Tcal. The main ones were Oil derivates, 37%; Natural gas, 24%; Firewood and others, 14% and Electricity, 13%. FIREWOOD 14% TOTAL OIL DERIVATIVES 37% NATURAL GAS 24% COK 3% ELECTRICITY COAL 13% 9% Energetic consume as secondary energy, 2005. Source: National Balance of Energy 2005, CNE The main economic sectors and consumers of energy are Transport (24%) and Industry and Mining (24%). Cent.deTransf. Transport 21% 24% Energetic 13% Ind. and Min. Com.Púb.Res. 24% 18% Percentage distribution of secondary energy by economic sector, 2005 Note: Com.Púb.Res= Sector Commercial, Public and Residential. Source: National Balance of Energy 2005, CNE 1.2 Disruptions in gas supply from Argentine In recent years, repeated disruptions in the supplies of natural gas from Argentina to Chile have strained relations between the two countries. In 2004, Argentina underwent an energy crisis, forcing it to cut natural gas exports to Chile. Since then, exports to
  11. 11. Chile have been fluctuating between 20-50 percent below contracted volumes, with natural gas flows ceasing completely on some occasions. The import cuts have caused shutdowns at power plants and methanol facilities, as well as forced consumers to switch to costlier fuels. Along with the cuts in volumes, Argentina has also increased natural gas prices: in July 2006, Argentina increased its natural gas export tax to 45%, from 20 %. Chronic structural difficulties in Argentina’s natural gas sector could lead to chronic supply problems in the future. 1.3 Electrical generation and non-conventional sources Chilean Government interest in the adoption of Non-Conventional Renewable Energies NCRE (self commitment to achieve a NCRE 15% share of the whole demand increase in 2010) is explained by the high dependence of electric generation on low reliable availability non-hydric sources (natural gas) and /or higher costs (Diesel Oil). From the total installed electricity generating capacity of 12.3 TW, the Hydro sources represent a 39% and Thermal represents a 61%. The contribution of conventional thermal sources grew rapidly since the start of natural gas imports from Argentina in the late 1990s. Eolic Biomass 0.02% 1.40% Fuel oil Natural gas 3.90% 8.11% Gas natural/Diesel 29.22% Hydroelectricity Coal 39.43% 17.91% Energetic used in electrical generation. 2005 Source: National Balance of Energy 2005, CNE The country has four separate electric systems: The Central Interconected System (SIC) (Sistema Interconectado Central), which serves the central part of the country. The Norte Grande Interconected System (SING) (Sistema Interconectado del Norte Grande), which serves the desert mining regions in the north; and The Aysen and Magallanes Systems (Aysen and Magallanes systems), which serve small areas of the extreme southern part of the country.
  12. 12. Unlike the SIC, the large majority of the electricity supply of the SING comes from thermal sources, chiefly imported natural gas from Argentina. In the SIC, conventional thermal sources constitute about half of the total electricity supply, while in the SING they constitute almost all of the supply. 3,596 MW SING (29.2%) (99.6% Thermal; 0.04% Hydroelectric) 8,632 MW SIC (70 %) (45% Thermal; 55% Hydroelectric) 33.5 MW Aysen (0.27%) (41% Thermal; 53% Hydroelectric; 6% Eolic) Magallanes (0.52%) 64.7 MW (100% Thermal) Installed Capacity of Electrical Generation, by system Total Capacity: 12,326 MW. 2006. Source: CNE All the above explains why many of the proposed gas-fired power projects shall also have the ability to run on fuel oil or diesel. Also why coal-fired power plants have begun to receive renewed attention (Chile has two existing coal-fired facilities) and why, in the longer term, it is expected liquid natural gas (LNG) provide the country with fresh source for electricity generation.
  13. 13. With regards to the use of Eolic plants, the System of Aysen (Southern) has one Eolic plant in the center Alto Baguales, of the company EDELAYSEN S.A. that generates 1.98 MW in 2006 (0.02% of the total electrical energy system). With regards to Biomass: According to official data from CNE, there are 9 generation plants delivering Biomass electricity in the SIC. The process with forestal waste as fuel generated 103.9MW and black liquor (lignite, a sub-product of cellulose industry) 73 MW. Comments from Industry sources state that the additional biomass capacity could amount to 225 MW in 2007. Center that use biomass as fuel, for electric generation. 2006 Name Center Owner Year in Turbine type Nº TOTAL process units MW Laja E. Verde S.A. 1995 Steam-forestall waste 1 8.7 Constitución E. Verde S.A. 1995 Steam-forestall waste 1 8.7 Cholguán Arauco Generacion S.A. 2003 Steam-forestall waste 1 9.0 Valdivia Arauco Generacion S.A. 2004 Steam-forestall waste 1 61.0 Licantén Arauco Generacion S.A. 2004 Steam-forestall waste 1 5.5 Nueva Aldea I Arauco Generacion S.A. 2005 Steam-forestall waste 1 13.0 Arauco Arauco Generacion S.A. 1996 Steam-black liquor 5 33.0 Celco Arauco Generacion S.A. 1996 Steam-black liquor 2 20.0 Nueva Aldea III CENELCA 2006 Steam-black liquor 1 20.0 TOTAL 176.9 Source: Statistics-Electrical installs capacity-CNE. 2006 Other strong factor influencing the development of NCRE’s is naturally the increase of imported fuel prices. As for example, between the years 2003 and 2005 imports of crude oil went from USD2.125 to USD3.779 millions with an average 77.7% price increase; Diesel imports went from USD 187 to USD 910 millions where price affected in 88.8% and Thermal Coal imports went from USD 38 to USD 181 millions with an average 69.8% price increase. CIF Prices variation of some fuels between 2003-2005 years. Quantity Value CIF (USD millions) % Variation on CIF price 2003 2005 2003 2005 2005 to 2003 Crude Oil (millions 74.5 74.6 2,125 3,777 77.7 barrels) Diesel (thousands m3) 756 1,948 187 910 88.8 Liquid gas (thousands 519 629 157 301 58.9 Ton) Gas Oil (thousands m3) 672 829 160 346 75.0 Thermal Coal (thousands 1,937 2,531 67 181 69.8* Ton) Metallurgycal Coal 710.3 820.8 38 82 84.2 (thousands Ton) Total 2,734 5,597 Source: “Energetic situation faced by Chile”, by Jorge Rodríguez G. Dean of the Economy end Business Faculty of Alberto Hurtado University, Santiago November 2006. * Our calculus on the % Variation on CIF unitary price for Thermal Coal results in a 106.7% of growth.
  14. 14. Projections of the Demand of Electrical Energy The following table shows the CNE projections of demand for the SIC and SING systems until the year 2009. The total increase in demand in 2009 year (1,020 MW) should be composed among other sources by a 15% corresponding to NCRE which amounts to 150MW. In a recent Wokshop about Science Earth, a value of 320 MW was estimated for the additional requeriments of NCRE for 2010 year. (Source: “Energetic source and sustainable development: Ecologic Consequences”. Chilean Academy of Science: Workshop “Present Situation of Science Earth in Chile: Energy and Fuel to sustainable development in the country”. Santiago, October 2006) Estimated rate growth of install capacity of SIC and SING systems. SIC SING SIC+SING Year Growth, % MW Growth, % MW Total increment, MW 2005 (actual values) 8,288 3,596 2006 7.1 8,877 8.4 3,898 890.52 2007 7.7 9,560 5.6 4,116 901.79 2008 8.1 10,335 5.2 4,330 988.42 2009 7.7 11,130 5.2 4,555 1,020.94 Source: CNE (National Comission of Energy). If the Industry projections, concerning the feasibility of 225 MW Biomass Generation Capacity in the year 2007, become true then the goal of the Chilean Government could be achieved easily. This could encourage other industries to increase the use of biomass in the production of heat and steam. 1.4 Perspectives The Global Context: It seems methodologically convenient to review what is being done by the developed countries to approach the problems of the increase of oil price, energetic dependence and pollution, ever since those practices will eventually become local practices in Chile adopted both by the Government and Industrial operators. -High prices of Oil lead to its substitution by Coal, Natural Gas or NCRE. The projections made by the USA Ministry of energy make that assumption in their estimates for the increased share of coal, natural gas and renewable sources including water (from 56% in 2003 to 62% in 2030) in the matrix of the world energetic balance and as a counterpart, the relative weight of oil will tend to decrease from 39% in 2003 to 33% in 2030. -In the the search of strategic independence, the American government has provided considerable amounts of resource to promote the development of oil and natural gas saving technologies and those using some other kind of fuels. The USA initiative funded USD 2.1 billions in 2007 for this ends.
  15. 15. These kinds of initiatives are also being implemented in Europe, Japan and China. The inversion in NCRE amounts to 25% of the total of investment in the energy sector in 2005 (30,000 USD millions). The next table, The Renewable Power Capacities in EU, shows Top 5 countries, and Development Word, 2004. In USA the power capacity based in Biomass was approximately 8 GW (from the graphic of Fig. 2.11). Compare this value with the 176.9 MW generated by biomass in Chile. Renewable Power Capacities in EU- Top 5 countries, and Development Word, 2004. Source: “Energetic source and sustainable development: Ecologic Consequences” Chilean Academy of Science: Workshop “Present Situation of Science Earth in Chile: Energy and Fuel to sustainable development in the country”. Santiago, October 2006 b) Support Programs to Renewables Energies use. The inestability in the supply of Natural Gas form Argentina has lead the Chilean Government to promote a Sustainable Energy Security Plan and the need for a saving of energy led it to promote a Country Energetic Efficiency Program. Sustainable Energy Security Plan This Plan is mainly based on: -Boost development of new generation sources, both traditional and non-traditional. -Create a framework for the energetic interchange among countries of the region. - Ease clerical procedures environmental impact studies without affecting environmental requirements -The assurance of the compatibility of new coal thermal generation plants consistent with environmental policies
  16. 16. -Instruments leading to a 15% increase share of the electric generation in the year 2010 come from NCRE. -National plan implementation for the use of efficient energy (Country Program for Energetic Efficiency). See details in the following paragraph. Government Policies to support the attainability oft these goals in the NCRE real are: i) Small Sized Energy Projects based on renewable sources. Grants for studies pre-investment studies or specialized consultory during the stage of pre-investment for projects related to NCRE. Co-Funding up to 50% of the total cost of the study or consultory activity The amount to be subsidied will be up to 2% of the estimated total value of the project investment with a maximum of $US 60,000 per project. So far, 3 calls for propposals have been done. ii) Innova Chile – Public Interest Innovation – National 2007 Funding channels to support projects aimed to improve conditions of markets and contexts for the innovation and technological development. The results of these initiatives must have high impact and involves significant work in research and development. Companies and institutions must provide 20% of the value of the project. Innvova Chile provides 80% of the money with no return. Typically bids are USD 1 million. Country Energy Efficiency Program As during the last ten years the Chilean primary energy consume increased at an annual average rate of 4.5% while GDP of the country grew at a 3.6% per year in average, the Government started in 2005 the design a energetic efficiency program (/www.programapaiseficienciaenergetica.cl/). The estimated impact of the Energy Efficiency Program is an annual 1.5% of consume decrease. To achieve these goals, besides the finnancial instruments already mentioned above, CORFO (Corporación de Fomento), the National Institution for Industrial Promotion, sponsors the Energetic Efficiency Pre-Investment Program which allows companies to hire a consultant to do all or some of the following tasks: -Energetic Efficiency Audits. -Implementation plans for the energetic efficiency measures. -Formal Formulation of the Investment Project to be presented before a finnancing source. Corfo funds 70% of the total cost of the consultancy with a maximun of USD 10,000.
  17. 17. 1.5 Learnings a) Chile has limited domestic energy resources and relies on imports (68% of total primary energy consumption) to meet its rapidly growing energy demand, driven by its economic development. b) In terms of primary energy consumption, the share per energetic is: Crude oil, 39%; Natural gas, 27%; Firewood, vegetable coal, wood wastes and black liquor, 16%; Coal, 10%; and Hydroelectricity, 8%. c) In terms of secondary energy consumption, the share per energic is: Oil derivates, 37%; Natural gas, 24%; Firewood and others, 14%; Electricity, 13%; Coal, 9%; and Coke, 3%. d) Most of Chile’s electricity supplies come from Hydroelectricity, 39.4%; Diesel, 29.2%; Coal, 17.9%; Natural gas, 8.1%; Fuel oil, 3.9%; Biomass, 1.4%; and Eolic, 0.02%. e) For almost all of its natural gas needs the country depends upon imports and the repeated disruptions in the supply from Argentina and the increase of its price, drove local operators to look for substitutes. f) The Chilean Government is committed to achieve a 15% of the whole increment of the energetic demand by the year 2010 be supplied by NCRE through the execution of a plan to develop these resources. g) Also, for security reasons, environmental sustainability and energetic efficiency, the Chilean Government has commited itself to achieve an annual 1.5% of energy saving in the medium and long term.
  18. 18. 6. CUSTOMER MAPPING Schedule -End Users: 6.1 Equipments in use 6.2 Satisfaction levels 6.3 Preference for domestic vs imported 6.4 Specific decision making criteria while selecting a supplier -Epc Contractors: 6.5 Decision making 6.6 Buying from manufacturers vs distributors 6.7 Views on the technological aspects of the product 6.8 Procedure adopted with respect to procurement for the clients. -Steam & Heat Services Providers: 6.9 Other important players: the Steam & Heat Services providers 6.10 Fuels and Steam Costs (10 real cases) 6.11 Learnings ______________________________________________________________________
  19. 19. 6.1 Equipments in use: Thermal Oil Heaters&Industrial Boilers /brands, capacities, type of equipment, fuel type, year of installation, etc. In Chile there are two powerful data sources to understand on a per company basis the current situation of these equipments: The inventories of pollution emission sources managed by the sanitary authorities from each Region and the imports and exports registers availables from the local Customs. Inventories of emission sources show variables like Company name and location; Boiler registry number, year of fabrication, operative status, maker, fuel and cubic meter of gas per hour delivered, and additional complementary analytic columns with Industry of pertinence of the every company and classification with respect to target Size range have been inserted. Along this research, the two of more important inventories for this project were found: Metropolitan Region and the VIII Region. Following tables show synthetically their profiles: PROFILE OF RM BOILERS DATABASE Target size range Equipment status: In Out Total Out, disabled - - 821 Currently Inactive - - 1,188 Currently Operative 561 2,212 2,773 Total 561 2,212 4,782 Source: Sanitary Authority from the Metropolitan Region PROFILE OF GREAT CONCEPCION BOILERS DATABASE (operative units only) Target size range Equipment status: In Out Total Currently Operative 106 28 134 Total 106 28 134 Source: Sanitary Authority from the VIII Region And imports and exports registers show variables like: Importer (exporter) name and tax code; Boiler maker, values in USD Fob and USD Cif, freight and insurance costs, net weight in kilograms, country of origin (destiny), etc; also in this case additional complementary analytic columns with Industry of pertenence of the every company and classification with respect to target Size range between others have been inserted Because the extension of these databases it is not possible to insert it here in complete appart from the tables this report already presents and it is strongly suggested to consult the Excel files in Annex for valuable informations. In the case of imports database, it can be consulted also the Annex in Word corresponding to an actualization of advance report-chapter four.
  20. 20. 6.2 Satisfaction levels: With respect to equipments performance and the service aspects The performance of actual equipments is not a matter of preoccupation for the Chilean end users today. In part this is probably related with the huge fuel provision problem they are daily facing because the shortage in Argentine natural gas. Also the pre and post sales services are not specialy complex issues for the Chilean end users. In part this could be associated with the fact that companies directly perform the boilers maintenance through internal teams (except in case of bigger interventions like burner changing). SATISFACTION OF CHILEAN END USERS sample of leading companies Foods Non foods Sugar Bever. Foods Dairy Noodles Candy Meats Fruits Chem. Oils Textile Metall. Wood Rubber Paper % I E N S L D L A B D C M P G P a c e o u o o c a y o a r o a o n u s p c s V o s n h d o o p f s s t r h a n f a e e d d e a a l o e e l c l n c e y l c Sample Comments: e l t n l a o m e e a e t e g a a s s i u d u r C e n o a a s o r F r r Problems with current equipment /s? 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0% Rest (97%) is satisfyed with current equipment Problems with current service quality? 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0% Rest (97%) is satisfyed with current services 1 = Yes 0 = No Source: A.Valladares & Asociados, based on set of Interviews performed 6.3 Preference for domestic vs imported brands & specific brand /company preferences Local boilers manufacturers are preferred providers for just a 13% of leading end users in the table from below. PREFERENCES OF CHILEAN END USERS sample of leading companies Foods Non foods Sugar Bever. Foods Dairy Noodles Candy Meats Fruits Chem. Oils Textile Metall. Wood Rubber Paper % I E N S L D L A B D C M P G P a c e o u o o c a y o a r o a o n u s p c s V o s n h d o o p f s s t r h a n f a e e d d e a a l o e e l c l n c e y l c Sample a Comments: e l t n l a o m e e e t e g a a s s i u d u r C e n o a a s o r F r r Preference for local providers is low and out-of - Preference for local 0 0 0 0 0 1 0 1 0 0 0 0 0 0 0 13% the-record comments dealt with the notorious provider? differences existing 1 = Yes 0 = No Source: A.Valladares & Asociados, based on set of Interviews performed
  21. 21. Consistently Chilean companies qualify the importance of providers’s country of origin with just a Somewhat Important and link this relative importance to the fact that some names of countries are more associated to good manufacturing than others. PREFERENCES OF CHILEAN END USERS Qualifications given to factors by a sample of leading companies Foods Non foods Services EPCMs Sugar Bever. Foods Dairy Noodles Candy Meats Fruits Chem. Oils Textile Metall. Wood Rubber Paper Steam & Heat Epcm A A I E N S L D L A B D C M P G P V C C M v v a c e o u o o c a y o a r o a a a a i e e n u s p c s V o s n h d o o p p t d n r r s s t r h a n f a e e d d e o a e m a a a a l o e e l c l n c e y l r m e g g Sample e e Comments: e l t n l a o m e e e u I t e t e g a a s s t d a i u d u r C L u e l n o a a t n p S o r F r d e k r a m Somewhat Important. The country of origin has certain importance principally as an indirect reference for quality, Supplier’s country of origin 5 6 6 7 3 7 4 5 4 5 6 5 5 6 6 6 5 2 3 5,3 5.3 because countries like USA and Germany for example are associated with good manufacturing. Location of Supplier’s 2 5 6 7 2 6 4 4 4 5 1 2 7 2 1 4 3 4 3 3,9 3.8 Neither important nor unimportant. manufacturing plant Qualifications: 1 Least important 2 Unimportant 3 Somewhat Important 4 Neither Important nor Unimportant 5 Somewhat Important 6 Important 7 Very Important Source: A.Valladares & Asociados, based on set of Interviews performed
  22. 22. 6.4 Specific decision making criteria while selecting the supplier By far the more important factors Chilean end user consider to build decision regarding providers of boilers are compliance to pollution and safety norms as well as guarantee /warranty terms. And, on the contrary, the location of supplier’s manufacturing plant is the less important issue for them. IMPORTANCE CHILEAN END USER GIVE TO A SET OF BUYING FACTORS Qualifications given to factors by a sample of leading companies Foods Non foods Sugar Bever. Foods Dairy Noodles Candy Meats Fruits Chem. Oils Textile Metall. Wood Rubber Paper A I E N S L D L A B D C M P G P v a c e o u o o c a y o a r o a e n u s p c s V o s n h d o o p r s s t r h a n f a e e d d e a a a l o e e l c l n c e y l g Sample e Comments: e l t n l a o m e e e t e g a a s i u d u r C n o a a o r F r r Compliance to pollution and 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7.0 Very important, specially in the Metropolitan Region. safety norms Guarantee /Warranty terms 7 6 6 6 7 7 7 7 7 7 7 6 6 7 7 6.7 Very important, in special for a new player in Chile. Use of branded components in Important, as for example valves and control systems are 6 6 7 6 7 6 7 7 5 7 7 6 6 6 7 6.4 the equipment evaluated as key components. Important, but all suppliers actually would present similar Quality certifications of Supplier 7 6 7 6 6 7 6 6 7 7 4 7 7 7 4 6.3 quality certifications. Deviations to technical 6 4 7 6 6 6 6 6 7 6 6 6 6 6 6 6.0 Important. specifications Important. It can even be outside the country, but spare parts After-sales network 7 6 6 7 6 7 7 5 5 1 7 7 6 6 7 6.0 and components shall be provided very fastly Standarisation 6 6 4 6 5 5 6 5 5 7 5 6 6 7 5.6 Important. Somewhat Important. The country of origin has certain importance principally as an indirect reference for quality, Supplier’s country of origin 5 6 6 7 3 7 4 5 4 5 6 5 5 6 6 5.3 because countries like USA and Germany for example are associated with good manufacturing. Reference installations within the 4 6 6 7 7 4 5 6 5 7 1 7 6 2 1 4.9 Somewhat important. country Pre-sales service 4 5 6 6 6 7 6 5 6 1 4 7 6 4 4 5.1 Somewhat important. Reference inst. within the country 4 3 5 7 5 6 4 6 3 7 1 7 7 2 1 4.5 Somewhat important. & in the same industry Location of Supplier’s 2 5 6 7 2 6 4 4 4 5 1 2 7 2 1 3.9 Neither important nor unimportant. manufacturing plant Qualifications: 1 Least important 2 Unimportant 3 Somewhat Important 4 Neither Important nor Unimportant 5 Somewhat Imp. 6 Important 7 Very Important Source: A.Valladares & Asociados, based on set of Interviews performed 6.5 Decision making: Who decides on the type of equipment viz Thermal Oil Heaters as well as Industrial Boilers to be installed at the site or is it the client? EPC Contractors as well as all end users reported that in the case of Chile is the end user who makes the decisions regarding boilers acquisitions. Main reason is most Chilean EPC Contractors are rather small and avoid become involved in finantial operations that could even compromise their business stability.
  23. 23. 6.6 Buying: From manufacturers or distributors In Chile the buying is performed directly with the manufacturer as when boilers are locally manufactured the distributors don’t participate at all and according the table from below in the period 2002 - 2006 the buying of imported boilers was performed in an 89% of the total value by end users dealing directly with the manufacturers from overseas -distributors explaining just a 7% of the total figure. CHILEAN IMPORTS OF BOILERS - PER COUNTRY OF ORIGIN Fob USD Main activity of the importer Country of origin: End User Distributor Packager Manufacturer Steam & Heat Other & not Total % GERMANY 5.265.040 8.376 15.502 Services ident. 5.752 5.294.670 24% BRAZIL 4.820.678 374.696 89.247 5.284.621 23% U.S.A. 3.388.133 794.978 111.345 4.294.455 19% ITALY 1.574.663 376.567 92.573 12.836 2.056.638 9% SPAIN 1.849.990 9.934 196.377 2.056.300 9% ARGENTINA 858.075 102.873 10.000 11.778 982.725 4% FRANCE 751.348 751.348 3% DENMARK 535.915 535.915 2% URUGUAY 402.700 402.700 2% CANADA 239.773 30.683 270.456 1% NEW ZEALAND 180.703 180.703 1% SOUTH KOREA 95.479 63.379 158.859 1% NORWEG 126.028 126.028 1% MEXICO 58.000 58.000 0% BELGIUM 22.277 22.277 0% TAIWAN 20.000 20.000 0% PERU 11.000 11.000 0% NETHERLAND 3.017 3.017 0% Total 20.053.774 1.667.423 417.995 15.502 10.000 345.019 22.509.713 100% 89% 7% 2% 0% 0% 2% 100% Source: A.Valladares & Asociados, based on Customs data
  24. 24. 6.7 Views on the technological aspects of the products. According the expressions from EPC Contractors, End users that leads industrial areas as for example the Wood, paper & cellulose and the Agroindustry & food processing industries, tend to use top technology units from world players like Cleaver Brooks and Loos. And when they look for solids fired equipments in the neighborhood, go for brasilian specialist like Biochamm and Engecass. Import data in the table from below confirms the above. CHILEAN IMPORTS OF BOILERS - PER SIZE RANGE Fob USD Year: 2002 2003 2004 2005 2006 Total % CLEAVER BROOKS 203.345 909.700 537.415 745.240 2.395.700 11% BIOCHAMM 1.885.547 325.490 2.211.037 10% ENGECASS 374.696 253.928 1.374.867 2.003.492 9% IBAIONDO 1.481.795 1.481.795 7% VAPORITA 995.663 995.663 4% BREMER 994.170 994.170 4% LOOS 408.316 30.193 251.223 689.732 3% BURTON MECHANICAL 633.145 633.145 3% COMPTE 582.614 582.614 3% HAARSLEV 505.722 505.722 2% GEA 481.915 481.915 2% BROACH 468.310 468.310 2% SALCOR S.A.C.E.I. 10.000 399.512 409.512 2% TURBOFLOW 402.700 402.700 2% Ferrostaal (packager) 3.794.989 3.794.989 17% T. MAIN PROVIDERS 1.695.139 6.214.779 1.571.945 4.966.889 3.601.743 18.050.495 80% OTHER 350.589 1.149.255 1.397.076 644.199 918.100 4.459.218 20% TOTAL 2.045.728 7.364.034 2.969.020 5.611.088 4.519.843 22.509.713 100% Source: A.Valladares & Asociados, based on Customs data On the other side, according comments received from some end users and also from local Steam & Heat Services providers, there are companies that make firstly all efforts to locate cheap used boilers able to be refurbished. However, the same comments establish that there is a growing shortage of these used boilers.
  25. 25. 6.8 Procedure adopted with respect to procurement It is very clear from the table from below that Chilean end users prefer to have a solid influence over the procurement process and in a 93% of cases specify and buy by themselves directly. BUYING PROCEDURES OF CHILEAN END USERS sample of leading companies Foods Non foods Sugar Bever. Foods Dairy Noodles Candy Meats Fruits Chem. Oils Textile Metall. Wood Rubber Paper % I E N S L D L A B D C M P G P a c e o u o o c a y o a r o a o n u s p c s V o s n h d o o p f Option s s t r h a n f a e e d d e a a l o e e l c l n c e y l c that best describes the mode of Comment: e l t n l a o m e e a procurement of boilers: e t e g a a s s i u d u r C e n o a a s o r F r r Company directly specify and buys 1 0 1 1 1 1 1 1 1 1 1 1 1 1 1 93% Most used mode of procurement EPC Contractor specify & comp. buys 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 7% EPC Contractor did all, but civil work 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0% EPC Contractor did all, incl civil work 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0% EPC Contractor did all, Bot/Boot basis 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0% 1 = Yes 0 = No Source: A.Valladares & Asociados, based on set of Interviews performed
  26. 26. 6.9 Other important players: the Steam & Heat Services providers Along the research, the following Steam & Heat Service companies were revealed as relevant to this project: Comercial Catamutun S.A. (www.catamutun.cl) that -appart from the above mentioned services- imports and distributes coal. Also forms part of the Catamutun Group that is now looking for ways to diversify from its original coal focus; Vapores Industriales Ltda. (www.vaporesindustriales.cl) a family owned medium- sized enterprise than operates togheter with Arrimac Ltda another company focused on boiler rental from the same family; Conade S.A., now Dalkia-Chile (www.dalkia.cl) that forms part of the Steam & Heat Services French specialist Dalkia Group, and Energía Verde S.A. (www.energiaverde.cl) that forms part of world player in energy AES Gener Corp. There is more information about these four companies on their web sites and in the chapter 8 of this report.
  27. 27. 6.10 Fuels & Steam costs (10 real cases) Most persons interviewed were necessarily from the technical area as for example Chief Maintenance and in general refused to become involved in the delivery of company cost data going furter than,as for example, qualitative expressions like “cost of fuels doulble when changing from natural gas to diesel oil”. Fortunately, an additional desk research permited to locate the following informations about the current situation on fuels and steam costs in Chile. Fuels costs: By taking as a reference the fuels costs in USD/MMBTU from March 2007, the table from below shows that when Chilean companies must change from Natural Gas to Diesel oil, an increase of 70% in the fuel costs occurs. Same comparison performed with prices from November 2006 shows the total jump in costs was of almost a 500%. But when Chilean companies are able to change to solid fuels (Wood; Coal), their fuel cost can diminish in around a 50%. This explains the interest in Chile for solid fuels. Between the solid fuels, forest wastes are perceived as a fuel actually or potentially controlled by the hugest companies from the Wood, paper and cellulose industry, while agricultural wastes are considered as fuels requiring a complex logistic and involving a risky dependence from small and unstable agricultural wastes producers. Coal, on the contrary, is perceived as a very available fuel from overseas and this explains the renewed interest in Chile for this material. COST OF FUELS IN CHILE March 2007 (1) November 2006 (2) FUEL UNIT $/UNIT USD/MMBTU USD/MMBTTU Electricity Kwh 52,00 24,91 286 Diesel Lt 303,30 14,75 170 12,10 484 Liquified Gas Lt 179,39 13,70 157 4,50 180 Fuel Oil Nº 5 Kg 199,60 9,07 104 Natural Gas m3 176,61 8,70 100 2,50 100 Fuel Oil Nº 6 Kg 162,90 7,51 86 Wood Kg 45,00 4,99 57 2,40 96 Coal Kg 58,30 3,70 43 3,15 126 (1) Source: Dalkia Chile, March 07 2007 (2) Source: Energia Verde, November 14 2006 Source: A.Valladares & Asociados, based on set of Interviews performed
  28. 28. 6.10 Fuels & Steam costs (10 real cases) Steam costs (10 real cases): As the table from below shows, average steam cost for ten Dalkia centers in Chile using diesel oil was 12,32 USD/m3 in 2005. It is interesting to note these Chilean companies decided to pay Dalkia a Margin of 32.63% (48.5% mark-up); in other words, an average price of 18.29USD/m3. As since then the diesel cost has experienced important changes, the figures in the table from belo shall be taken as an approximation to current situation. COST PROFILE OF DALKIA STEAM CENTERS IN 10 CHILEAN COMPANIES Data from each company correspond to 2 months of operation in 2005 Loncoche Mar El Paico Cultivos Agro Chilem Frutos del Metso Indarroz Viña Total Average Profundo Marinos Super pack Maipo Santa OPERATION Rita Fuel: Diesel oil Diesel oil Diesel oil Diesel oil Diesel oil Diesel oil Diesel oil Diesel oil Diesel oil Diesel oil Fuel consumption, lt 846.020 424.995 224.700 219.070 171.190 177.270 126.035 92.035 80.296 42.218 2.403.829 240.383 Steam production, m3 36.846 6.866 4.145 3.008 2.907 2.472 1.958 1.371 1.181 601 61.355 6.135 Fuel /steam, lt/m3 23,0 61,9 54,2 72,8 58,9 71,7 64,4 67,1 68,0 70,2 39,2 SALES, USD (1) Variable 267.341 154.432 149.355 127.874 73.722 57.411 67.304 61.098 30.662 30.352 1.019.552 101.955 91% Fix 14.171 7.801 7.880 12.804 11.671 5.017 9.827 7.880 12.898 10.779 100.726 10.073 9% Other 0 0 581 0 226 0 0 0 0 1.038 1.845 184 0% Total 281.513 162.233 157.815 140.678 85.619 62.428 77.131 68.978 43.560 42.169 1.122.123 112.212 100% EXPENSES, USD (1) Fuel, diesel oil 209.404 107.277 66.818 58.892 43.876 26.711 32.184 19.361 21.033 15.867 601.422 60.142 80% Personnel 11.336 7.897 14.657 12.276 10.170 6.836 9.138 12.648 11.694 11.485 108.136 10.814 14% Other 5.082 4.472 14.051 1.943 4.796 3.684 3.123 3.249 1.956 4.110 46.466 4.647 6% Electricity 0 0 0 0 0 0 0 0 0 0 0 0 Maintenance 384 460 8.215 196 1.670 2.520 1.360 1.906 465 1.052 18.228 1.823 2% Water treatment 3.939 2.650 3.706 1.208 928 76 699 134 207 2.153 15.699 1.570 2% Others 494 540 1.052 449 2.033 913 652 1.044 494 631 8.302 830 1% Leasing 0 0 948 0 0 82 241 0 601 173 2.045 205 0% Communications 100 128 95 89 124 75 133 123 171 71 1.110 111 0% Assessment 0 0 0 0 0 0 0 0 0 0 0 0 0% Insurances 0 694 36 0 41 18 38 41 18 31 916 92 0% Others 166 0 0 0 0 0 0 0 0 0 166 17 0% Total 225.822 119.647 95.527 73.111 58.841 37.231 44.444 35.258 34.683 31.462 756.024 75.602 100% MARGIN, USD (1) Total 55.691 42.586 62.289 67.567 26.778 25.197 32.687 33.719 8.877 10.708 366.099 36.610 Steam price, USD/m3 7,64 23,63 38,07 46,77 29,45 25,25 39,39 50,31 36,88 70,17 18,29 Diesel unit. price, USD/lt 0,25 0,25 0,30 0,27 0,26 0,15 0,26 0,21 0,26 0,38 0,25 Steam cost-fuel, USD/m3 5,68 15,63 16,12 19,58 15,09 10,81 16,44 14,12 17,81 26,40 9,80 80% Steam cost-total, USD/m3 6,13 17,43 23,05 24,31 20,24 15,06 22,70 25,72 29,37 52,35 12,32 100% Profit /sales 19,78% 26,25% 39,47% 48,03% 31,28% 40,36% 42,38% 48,88% 20,38% 25,39% 32,63% (1)Exchange rate, Ch$/USD : 525 Source: DALKIA CHILE – Presentation in a Seminar on Energy Efficience at Santiago
  29. 29. 8. CONCLUSIONES & RECOMMENDATIONS Schedule 8.1 Business potential in Chile for Client’s industrial boilers 8.2 Recommendations on what to do and how to proceed 8.3 Potential Partners for Client to enter ______________________________________________________________________
  30. 30. 8.1 Business potential in chile for Client’s industrial boilers It was estimated that the Chilean market size in 2006 (base year) was USD 8.2Million and 52 boilers and that will grow up to USD 13.7Million in 5 years (2011) including USD 5.15Million in solid fired boilers. Thermal oil based equipments, that had an almost negligible share in 2006, will probably remain similar along the period as there are no signals of any inminent change; Pyrotubular units, that in 2006 had a 13% of market share, shows a trend to grow and they could represent in 2011 for example a 20% the rest corresponding to acuotubular (60%) and mix systems (20%) and geographically the Metropolitan Region, that has been representing around a 50% of total local markets for a lot of years, will probably still represent approximately the same portion on the market in 5 years more.. Potential buyers will come principally from the driving sectors Wood, paper & cellulose and Agroindustry & food processing. Most boilers already have dual diesel-natural gas burners but solid fired boilers in 2011 will represent around a 40% of total market size in USD, so there is a solid potentiality around this speciality. In this segment the main competition will come from Brasil but also local manufacturers will be fighting on it. And between solid fuels, coal will be receiving special attention from most end users all the time of interest as the first liquefied gas plant will be operative only around the end of the period while boimass from agriculture will suffer the lack of an industry developed around the concept but end users that already produce wastes shall be targets all the time.
  31. 31. 8.2 Recommendations on what to do and how to proceed The following table shows a brief synthesis of the suggested strategy for Chile. MARKETING STRATEGIES CATERING POSSIBLE MARKET FOR INDUSTRIAL BOILERS IN THE TONNAGE RANGE UNDER STUDY Inside the Metropolitan Region Outside the Metropolitan Region 1. Targets: To give priority to leading companies from the Agroindustry & food To give priority to leading companies from the Agroindustry & food processing, Textile, Healthcare and Wood, paper & cellulose segments. processing and Wood, paper & cellulose segments, located between regions VI and X principally. 2. Products: If because a clear tech differential Thermax's solid fired equipments are Same coment from the left regarding a tech differential is valid outside the prepared to accomplish emission restraints and the company open to MR.Otherwise, both solid and oil/ gas fired equipments can be offered provide respective warranties, push solid fired boilers (coal specially) outside the MR but up to the moment an agricultural waste based biomass as the company first line to position the brand and secure maximum industry appears, only interesting targets for the company solid fired boilers benefits. Otherwise only oil / gas fired product lines should be offered will be end users with processes that generate enough internal waste inside the MR. as to use it like a fuel. 3. Prices: Follow the suggested pricing strategy and price references provided. Follow the suggested pricing strategy and price references provided. Regarding how to implement actions to enhance the company presence in the market, it is recommended to develop a partnership with a good linkage with the market to secure in all the possible to be present in most potential business and specialy at the minutes of truth from each of them. -In the next slides two possible partners are recommended.
  32. 32. 8.3 Potential partners for Client in Chile From the comparison between four potential parteners for Client in Chile exposed in the table from below, we believe: The first option for Client to perform a partnership in Chile should be XXXXXXXX because XXXXXXXXXXX is very well know, has a complete contact network in the market and additionally is able to secure the fuel provision (coal). This partner should provide the company with the better results in the short and medium term. The second option for Client should be the company YYYYYYYYYYYY a specialist in steam and heat services provision by using solid fired boilers, specialy catering the biomass fired boilers development in the long term.
  33. 33. POTENTIAL PARTNERS CATERING CHILEAN MARKETS Company Parent Group + - Comment COMERCIAL CATAMUTUN S.A. Catamutun Group Catamutun is well know local player already Catamutun could face some internal restraints As the Chilean coal is not competitive the Tax number: 96653630-6 Major coal producer in Chile that providing Steam & Heat from Regions IV to X, because it is related with a Group with focus in Catamutun Group is diverting from the coal Web site: www.catamutun.cl through filial Catamutun with coal fired (80% of cases) and oil fired coal business. mining; in fact also acts in the provision of Address: Santa Lucia 280 P.7, Santiago Comercial S.A. also imports and boilers (rest). imported coal, carbonate and Steam & Heat City: Santiago distributes coal from overseas. In Services provision. . Catamutun shows a clear interest in to introduce Catamutun has only 20 boilers installed up to Region: Metropolitan 2006 Catamutun Comercial In 2006 the company imported 10 USD Million boilers prepared to fire other solid fuels and multi- this moment. Telephone: +56 02 632 7355 imported an 8% of total thermal in coals and sold same value in Steam & Heat fuels. Contact: Mr. Paulo Aravena coal imported to Chile. Services, meaning SHT is not merely a Charge: Commercial Manager - Steam Div. secondary business. As long as we see this is The company is able to guarantee the provision the best potential partner in Chile for of coal, the fuel most end users prefer because Thermax.. its better cost (vs diesel) & availability (vs nat.gas). VAPORES INDUSTRIALES LTDA Energías Industriales Vapores is the only family owned company in Vapores' focus is to use biomass as fuel and, Because its interest in boiler price over Tax number: 85145500-0 It includes companies Vapores this list of possible partners, meaning a more when client waste production is limited, must technology and less expedite accesss to fuel, Web site: www.vaporesindustriales.cl Industriales Ltda. With focus in flexible attitude would eventually result. buy it from diverse small and rather unstable business potential with this player seems Address: Juan de la Fuente 734, Lampa Steam & Heat provision and waste producers. smaller than with Catamutun. City: Santiago Arrical Ltda. The focus of Arrical . Vapores and its Group are more precisely Company has only 5 plants operating steadly, Region: Metropolitan Ltda is to rent mobile & fixed However Vapores and Arrical conform a centered on the boilers business than any of the while sister company Arrical would have Telephone: +56 02 784 2250 boilers for end users to cover cleaner boilers business centered Group that other potential partner in this list. around 100 clients but most of them Contact: Mr. Luis Calvo peaks and other needs that don't in addition work togheter over the Chilean occasional. Charge: Production & Finantial Manager justify to buy a unit. market meaning an interestingly dense Existence of sister company Arrimac working on Both companies do all efforts to buy cheaper contact network should exist. Considering all the same market enhance image of Vapores used boilers according to the Production & this we also recommend Vapores as partner and its business contacts as well. Finance Manager (a very non usual mix of (after Catamutun). responsabilities here). CONADE S.A. (now DALKIA CHILE) Dalkia (France) Conade is actually in charge for 100 boilers Company does not invest in equipments of its Before 2005 -when it was bought by Dalkia-, Tax number: 96534190-0 Leading European ESCO owned by 70 local companies, a 50% inside and own, providing external services only Conade could be an interesting potential Web sitet: www.dalkia.cl (Energy Services Company) that a 50% outside the Metropolitan Region. (Outsorcing). partner for Thermax. Client Address: Av. del Valle 945, Huechuraba operates in Chile through Dalkia . City: Santiago Chile. Dalkia Chile is a company Now that the company forms part of a Visibility of Conade is rather high as it As part of a big multinational entity, this Region: Metropolitan fromed in 2005 by Dalkia France multinational entity, what we suggest is to participates in Universitary Programs, Seminars company should be the less flexible of this list. Telephone: +56 02 580 9900 and CONADE a local ESCO that develop a close business relationship with on Energy Efficiency, etc. Contact: Mr. Sergio Burns serve the Chilean market for 23 their local executives in order to be Charge: Operations Manager years. recommended to end users exploring for a While Conade serve industries Esener -also from new boilers provider. It would be ideal if Dalkia Chile- serve Hospitals, Shoppings, Hotels, Thermax had previous experiences with Client etc. Together they sell app USD 40Million/year in Dalkia in other markets around the world. services. ENERGIA VERDE S.A. AES Gener Corp. (USA) Energía Verde is the strongest local player in According the financial statements from AES As long as we can see this is the less . Tax number: 96673040-4 Biggest electricity company in the cogeneration & production of steam from forest Gener Chile, in 2005 Energía Verde had USD interesting potential partner for Thermax in Web site: www.energiaverde.cl world that operates in Chile via wastes that already provides for the biggest 1,0 Million in loses and in 2006 USD 2,6 Million Chile as it is extremely focused in the Address: O'Higgins 940, Concepción AES Gener Chile. AES Gener users in Chile: Arauco and CMPC. (also negative). provision of services for biggest wood and City: Concepción Chile is the biggest cellulose companies and, because this, the This Company has probably the strongest Region: VIII termoelectricity generator and the boilers Energia Verde uses are in addition out economic back up between all the players acting Telephone: +56 41 24018900 biggest thermal coal importer of the desired size range of up to 30 tph. in this services area. Contact: Mr.Alejandro Pacheco (over 50% of total imports in Charge: Responsible for fuels 2006). Company performs all the investments needed to provide the comprised services, from boilers to buildings.

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