DEVELOPING
MINING FOR A
BETTER FUTURE
Annual Report and
Financial Statements 2021
/ Contents
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
OVERVIEW
Our purpose
Performance highlights
At a glance
Letter from the Chairman
Letter from the Chief Executive Officer
The future of copper
Business model
Delivering value for our stakeholders
through the mining lifecycle
Strategic framework
Key Performance Indicators
Risk management
Risk management framework
Principal risks
Compliance and internal controls
STAKEHOLDER REVIEW
Our approach to sustainability
Committed to positive impact
Our commitment to the Sustainable
Development Goals
How we engage with our stakeholders
Our people
Safety and occupational health
Communities
Climate change
Task Force on Climate-related
Financial Disclosures
Environment
Responsible supply
Customers
Shareholders
Governments and regulators
Non-financial information statement
OPERATING REVIEW
Mining division
Los Pelambres
Centinela
Antucoya
Zaldívar
Transport division
Growth projects and opportunities
Exploration activities
Key inputs and cost base
Operating excellence and innovation
The copper market:
supplying metals for a better future
FINANCIAL REVIEW
1
2
4
6
8
10
12
14
16
18
20
31
34
38
40
42
44
46
48
52
58
60
62
63
64
65
68
70
72
74
75
76
78
81
82
86
88
90
FINANCIAL PERFORMANCE
Independent auditors’ report
Consolidated income statement
Consolidated statement of
comprehensive income
Consolidated statement of changes
in equity
Consolidated balance sheet
Consolidated cash flow statement
Notes to the financial statements
Parent Company financial statements
OTHER INFORMATION
Alternative performance measures
Five-year summary
Production statistics
Ore reserves and mineral resources
estimates
Glossary and definitions
Shareholder information
166
173
174
174
175
176
177
225
229
232
234
235
245
248
APPLYING THE CODE IN 2021
BOARD LEADERSHIP
AND COMPANY PURPOSE
Chairman’s introduction
Senior Independent
Director’s introduction
Group corporate governance overview
Board activities
Stakeholder engagement
Employee engagement
DIVISION OF RESPONSIBILITIES
Directors’ biographies
Board balance and skills
Roles in the boardroom
Executive Committee biographies
Introduction to the Committees
COMPOSITION, SUCCESSION
AND EVALUATION
Nomination and Governance
Committee report
Board effectiveness
AUDIT, RISK AND INTERNAL CONTROL
Audit and Risk Committee report
Sustainability and Stakeholder
Management Committee report
Projects Committee report
REMUNERATION
Remuneration and Talent Management
Committee Chair’s introduction
Remuneration at a glance
2021 Directors’ and CEO
Remuneration Report
Remuneration and Talent Management
Committee report
Implementation of the Directors’ and
CEO’s remuneration policy in 2022
DIRECTORS’ REPORT
STATEMENT OF DIRECTORS’
RESPONSIBILITIES
104
108
110
112
114
116
120
122
124
125
126
128
129
133
134
139
142
144
146
147
156
158
161
163
OUR REPORTING SUITE
Developing
mining for a
better future
Sustainability Report 2020
ANTOFAGASTA PLC
TCFD
Progress
Report
TCFD
2021 Climate
Change Report
Producing Copper Responsibly and Sustainably
Social
Management
Our community engagement and social
investment practices
2021 Climate Change Report
Social Management
Sustainability Report
antofagasta.co.uk/sr20
TCFD Progress Report
antofagasta.co.uk/tcfd21
Climate Change Report
antofagasta.co.uk/ccr21
Social Management Report
antofagasta.co.uk/smr21
/ Our purpose
Developing mining
for a better future
OUR VISION
To be an international mining company, focused on copper and
its by-products, known for its operating efficiency, creation of sustainable value,
high profitability and as a preferred partner in the global mining industry.
CULTURE
Shared values
and the way
we work
O UR VISION
OUR PURPOSE
ORGANISATION
Designed to deliver
results and growth
STRATEGY
People
Safety and
Sustainability
Competitiveness
Growth
Innovation
Antofagasta plc Annual Report 2021
1
/ Performance highlights
An overview of performance
and key highlights from 2021
Copper production2
721.5k tonnes
Net cash costs3
$1.20/lb
704.3
725.3
770.0
733.9
721.5
1.29
1.25
1.22
1.20
1.14
Safety
1
Fatalities
1.5
1.6
1
1.3
LTIFR1
1.3
11
1.0
0.9
0
0
0
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
Profit before tax
$3,477m
EBITDA3
$4,836m
Earnings per share4
$142.5¢/share
3,477
4,836
142.5
130.9
1,831
1,349
1,413
1,253
2,587
2,439
2,228
2,739
76.2
76.1
55.1
51.5
50.9
50.9
51.3
54.7
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
1. The Lost Time Injury Frequency Rate is the number of accidents with lost time per million hours worked.
2. 100% of production at Los Pelambres, Centinela and Antucoya, and 50% of Zaldívar’s production.
3. Non-IFRS measure, refer to the alternative performance measures section on page 229.
4. Underlying EPS from continuing operations, excluding exceptional items, and EPS from continuing and
discontinued operation, including exceptional items. Reconciliation shown on page 199.
2
Antofagasta plc Annual Report 2021
Underlying EPS from continuing operations,
excluding exceptional items
EPS from continuing and discontinued operations,
including exceptional items
Strategic ReportCorporate GovernanceFinancial Statements Other Information / 2021 highlights
SAFETY
Very sadly we had a fatality at Los Pelambres.
COPPER PRODUCTION
Copper production was 721,500 tonnes,
reflecting lower grades and the impact of
the drought at Los Pelambres, partially offset
by higher grades at Centinela Concentrates.
NET CASH COSTS
Net cash costs were $1.20/lb, 5.3% higher
than last year due to the stronger Chilean peso,
higher energy and diesel prices, and lower
production, partially offset by an increase
in by-product credits.
EBITDA
EBITDA increased by 76.6% to $4.8 billion
with an EBITDA margin of 64.7%, reflecting
a strong copper price, controlled costs and solid
production.
DIVIDEND PER SHARE
Total dividend of 142.5 cents per share,
equivalent to a payout ratio of 100%.
EARNINGS PER SHARE
Underlying EPS of 142.5 cents per share,
an increase of 161% compared to 2020
with higher EBITDA partly offset by higher
non-controlling interests and tax.
EPS including discontinued operations and
exceptional items was 130.9 cents per share,
up 155%.
GROWTH PROJECTS
Los Pelambres Expansion and Esperanza Sur
pit growth projects advanced during the year.
Zaldívar Chloride Leach project completed
in January 2022.
Antofagasta plc Annual Report 2021
3
/ At a glance
We are a Chile-based
copper mining group
Key
Concentrate
Cathodes
Rail
Road
LOS PELAMBRES
60% owned
13-year mine life
Produces copper concentrates
containing gold and silver and
a separate molybdenum concentrate
CENTINELA
70% owned
42-year mine life
Produces copper cathodes and copper
concentrates containing gold and silver
and a separate molybdenum concentrate
ANTUCOYA
70% owned
22-year mine life
Produces copper cathodes
ZALDÍVAR
50% owned (and operated)
14-year mine life
Produces copper cathodes
TRANSPORT
Cargo transport system in the
Antofagasta Region of Chile
900 km rail network
PRODUCTS
REVENUE
EBITDA1,2
$3,621m
$2,526m
48.5%
52.2%
COPPER PRODUCTION (TONNES) NET CASH COSTS1
2021
324,700
$0.89/lb
2022 FORECAST
GROWTH POTENTIAL
290-300,000
LOS PELAMBRES
EXPANSION
$1.25/lb
$2,981m
$1,919m
39.9%
39.7%
$698m
$337m
9.3%
7.0%
274,200
$1.13/lb
245-255,000
$1.60/lb
78,600
$2.04/lb
75-80,000
$2.30/lb
$173m
3.6%
44,000
$2.39/lb
50-55,000
$2.20/lb
$170m
$68m
6.7m tonnes
2.3%
1.4%
Phase 1 will increase annual
production by 60,000 tonnes.
Completion in H2 2022
Phase 2 will increase the
capacity of the desalination
plant and extend the mine life
by 15 years
CENTINELA EXPANSION
Opening Esperanza Sur pit in
2022, which will increase
annual production by
10-15,000 tonnes
Evaluating building a second
concentrator. Decision in
late 2022
MINE LIFE EXTENSION
Potential to process satellite
ore bodies
MINE LIFE EXTENSION
Assessing viability of leaching
the primary sulphide ore body
Chloride Leach project
completed in January 2022
increasing annual production
by 10-15,000 tonnes
GROUP
$7,470m
$4,836m
721,500
$1.20/lb
660-690,000
$1.55/lb
1. Non-IFRS measure, refer to the alternative performance measure section on page 229.
2. Totals to more than 100% as excludes $187 million of corporate costs, exploration and evaluation, and other non-operating income and expenses.
See note 6 to the financial statements.
4
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information
ANTUCOYA
CENTINELA
ZALDÍVAR
LOS
PELAMBRES
SANTIAGO
Mining is our core business, representing over 97%
of our revenue and EBITDA.
We operate four copper mines in Chile, two of which produce significant
volumes of molybdenum and gold as by-products. We also have a portfolio
of growth opportunities located mainly in Chile.
In addition to mining, our Transport division provides rail and road cargo
services in northern Chile predominantly to mining customers, which
include some of our own operations.
PRODUCTS
REVENUE
EBITDA1,2
$3,621m
$2,526m
COPPER PRODUCTION (TONNES) NET CASH COSTS1
2021
324,700
2022 FORECAST
290-300,000
$0.89/lb
$1.25/lb
$2,981m
$1,919m
274,200
$1.13/lb
245-255,000
$1.60/lb
$698m
$337m
78,600
$2.04/lb
75-80,000
$2.30/lb
$173m
44,000
$2.39/lb
50-55,000
$2.20/lb
$170m
$68m
6.7m tonnes
GROWTH POTENTIAL
LOS PELAMBRES
EXPANSION
Phase 1 will increase annual
production by 60,000 tonnes.
Completion in H2 2022
Phase 2 will increase the
capacity of the desalination
plant and extend the mine life
by 15 years
CENTINELA EXPANSION
Opening Esperanza Sur pit in
2022, which will increase
annual production by
10-15,000 tonnes
Evaluating building a second
concentrator. Decision in
late 2022
MINE LIFE EXTENSION
Potential to process satellite
ore bodies
MINE LIFE EXTENSION
Assessing viability of leaching
the primary sulphide ore body
Chloride Leach project
completed in January 2022
increasing annual production
by 10-15,000 tonnes
LOS PELAMBRES
60% owned
13-year mine life
Produces copper concentrates
containing gold and silver and
a separate molybdenum concentrate
CENTINELA
70% owned
42-year mine life
Produces copper cathodes and copper
concentrates containing gold and silver
and a separate molybdenum concentrate
ANTUCOYA
70% owned
22-year mine life
Produces copper cathodes
ZALDÍVAR
50% owned (and operated)
14-year mine life
Produces copper cathodes
TRANSPORT
Cargo transport system in the
Antofagasta Region of Chile
900 km rail network
GROUP
$7,470m
$4,836m
721,500
$1.20/lb
660-690,000
$1.55/lb
Antofagasta plc Annual Report 2021
5
/ Letter from the Chairman
Strong results in
challenging times
Jean-Paul Luksic
Chairman
Dear shareholders
In a year when the effects of COVID-19 and
climate change continued to be felt powerfully
across the globe, when the political landscape
was complex and uncertain, and when
setbacks ranging from energy shortages
in the northern hemisphere to supply-chain
bottlenecks all over the world rattled the
global economy, Antofagasta’s resilience
was not only tested – it was demonstrated.
That resilience, as this Annual Report
details, is a testament to the creativity
and commitment of our employees and
contractors. So before sharing the progress
we’ve made this year, I’d like to acknowledge
– and thank – everyone at Antofagasta
who made it possible.
Two of 2021’s defining global issues:
COVID-19 and climate change
The pandemic’s many operational and
economic headwinds continued in 2021, yet
their expected effects on copper prices were
countered by the tailwinds of high demand
and constrained supply. In May, copper
reached an all-time-high of $4.77/lb, and
closed the year at $4.40/lb.
As the world grappled with the ongoing
effects of the pandemic, it also contended
with the accelerating – and increasingly
evident – effects of climate change. In
November, that focus on climate change was
brought into sharp focus with COP26, the UN
climate conference in Glasgow. And the year
ended with 88% of global emissions and 90%
of global GDP covered by net-zero targets.
Copper has a vital role to play in helping
countries, cities, and companies realise those
targets. On average, an electric vehicle uses
four times more copper than a conventionally
powered car. The charging ports for those
electric vehicles, the wiring and components
for greener energy grids, wind power plants,
solar panels – all are copper-intensive. One
estimate concludes that limiting global
warming to 2°C above preindustrial levels will
1 Task Force on Climate-related Financial Disclosures
6
Antofagasta plc Annual Report 2021
require 60% more copper – an additional 19
million tonnes – by 2030 alone.
neutral target for 2050, in line with Chile’s
own national target.
Developing Mining for a Better Future
The copper we produce will be a pivotal part
of the transition to a low-carbon world.
No less important than the metal itself is how
we produce it. We view our responsibility
as operating sustainably, reliably and with
respect for communities and the environment
– to live up to our purpose, both in our
products and practices, of ‘Developing Mining
for a Better Future’.
This is a crucial issue not only for our
business, but also, I believe, for our industry
as a whole. We have a tremendous
responsibility – and opportunity – to provide
the materials for the green transition our
societies are demanding. Yet clearly more
needs to be done to earn society’s trust and
garner its support for the investments and
innovations such a historic transition will
require. It’s a relationship that is being
built over time and with actions, not words,
which is why I’d like to highlight a few
of the steps we have taken – and are
committed to continue taking – that
demonstrate our sincerity to ‘Developing
Mining for a Better Future’.
Attaining the Copper Mark
Inspired by the UN Sustainable Development
Goals, the Copper Mark initiative ensures
responsible production practices across the
industry. Thirteen mines worldwide hold the
Copper Mark distinction – two of which are
Antofagasta’s. Centinela and Zaldívar both
obtained the Copper Mark this year. Our other
two operations, Los Pelambres and Antucoya,
have begun their assurance processes to
obtain the Copper Mark in 2022.
Reducing emissions and setting a net-zero
target
In 2018, Antofagasta set emissions reductions
targets for 2022. This year we achieved –
and surpassed – those targets and set
two new ones: an updated emissions
reduction target for 2025, and a carbon-
This year we also progressed towards the
goal of all our mines operating on fully
renewable power by the end of 2022,
and also published our first Climate Change
Report as well as reporting against the TCFD1
recommendations in this Annual Report.
Our Transport division is already taking steps
to become more eco-friendly, and will start to
explore the use of hydrogen powered
locomotives soon.
Reducing our use of continental water
Our mining operations are in water-stressed
areas, and we know that care for water is vital
for the environment, for local communities,
and for our operations. This is particularly
true as Chile continues to endure a punishing
drought that has lasted more than a decade.
In 2019, we began building a desalination
plant and water pipeline at Los Pelambres.
And, provided environmental permitting
advances as scheduled, we expect that by
2025, raw or desalinated sea water and
recirculated water will account for 90%
of our total usage at our operations.
Whether it is reducing continental water
usage or lowering emissions, these are issues
for which we have a group-level strategy,
board-level focus, and company-wide
initiatives to spur action. And we will continue
to be transparent as we work to deliver
meaningful, measurable progress.
An update on Chile’s economic, social,
and political environment
Chile’s handling of the pandemic has been
widely applauded. The country ended the year
with more than 80% of the population having
had two doses of the vaccine and more than
40% having received a booster. Yet as
the impacts of COVID-19 continued, so did
the efforts of our Community COVID Fund,
to which we have now contributed more than
$12 million since the pandemic began, to
support local causes.
Strategic ReportCorporate GovernanceFinancial Statements Other Information Unfortunately, the political polarisation flaring
up in many countries could also be seen
in Chile. Sharp differences of opinion about
what the country’s priorities should be, and
what changes are most urgently required,
manifested in political candidates as well
as proposed legislation.
In the face of a polarised political
environment, the broad-based government
support provided to workers and citizens was
possible because of the financial discipline
that has characterised Chile over many years.
For example, the massive liquidity injection
as part of the response to the pandemic,
was one of the largest in the world as
a proportion of GDP. However, this has
triggered significant temporary local inflationary
pressures that compounded those associated
with the global economic recovery.
Focusing on our industry, a bill was approved
by the lower house of Congress in mid-2021
that proposed changing mining companies’
royalties to a revenue-based progressive
marginal rate linked to the copper price. Early
in 2022 a committee of the Senate published
its proposal for the royalty, less onerous than
that proposed by the lower house, and this is
now being debated in the Senate. With the
establishment of a new government in March
2022, we expect the bill to then progress
through the legislative process and to come
into law around the middle of the year.
Mining represents over half of Chile’s exports
and 10% of its GDP – while 90% of revenue
generated by the industry remains in the
Chilean economy – and as one of Chile’s
largest mining companies, we continue
to welcome opportunities to constructively
explore how we can support the
competitiveness of Chile’s mining industry
and foster the country’s economic growth
and development.
This year, an elected Constitutional Convention
also began the process of drafting a new
constitution. The text, expected to be finalised
by July 2022, at the latest, will then be
subject to a national referendum. Our hope
is that a framework emerges which
represents and creates opportunities for
all Chileans – a ‘house for everyone,’
as a popular slogan goes.
Antofagasta’s 2021 performance
Redoubling our focus on employee and
contractor safety
Sadly, after 33 months without a fatality,
a contractor suffered a fatal accident at Los
Pelambres in July. Our condolences go to his
family and everyone affected by this tragic
loss. Antofagasta launched an investigation to
prevent this type of accident happening again.
The findings from that investigation were
shared with the Board, and the changes and
actions inspired by that review are being
directly overseen by senior management.
We cannot undo what happened, but we can
– and we will – learn from the mistakes
made and become a stronger, safer company
as a result.
Challenging times
While Antofagasta met its net cash costs
guidance of $1.25/lb, the ongoing drought in
Chile caused us to reduce full-year copper
production guidance during the year to
710,000-740,000 tonnes. However, this
reduction was offset by the strong
performance of the copper price, which
helped increase our annual revenue to
$7.5 billion and our EBITDA to $4.8 billion.
Looking ahead, we have strong embedded
growth options within our portfolio, including
very sizeable mineral resources, and the
levers to unlock that growth that will allow us
to produce sustainably, long into the future.
Governance update
Following the retirement of Ollie Oliveira from
the Board in July, Tony Jensen assumed the
role of Senior Independent Director and Audit
and Risk Committee Chair, having served on
the Committee as a member for more than 12
months. I would like to take this opportunity to
thank Ollie for his sage and considered
counsel over his ten years on the Board.
Michael Anglin assumed the role of Projects
Committee Chair and joined the Sustainability
and Stakeholder Management Committee in
place of Tony who rotated off that Committee
in line with the Company’s policy.
We were delighted to appoint Eugenia Parot
to the Board in April and welcome her to the
Projects and Sustainability and Stakeholder
Management Committees in August. Eugenia’s
technical background and considerable
leadership experience have already been,
and will continue to be, of great benefit.
Our people – diversity & inclusion and talent
The Board has met the Parker Review target
for ethnic diversity, and with Eugenia Parot’s
appointment, 30% of Antofagasta’s Board is
now comprised of women. The Board’s
Nomination and Governance Committee
continues to work with an independent
external search consultancy to identify a
diverse pool of candidates for the future,
although there are currently no plans to
appoint a new director.
This focus on diversity in the boardroom
is mirrored across the Company. Diversity,
as we’ve written before, makes us a more
creative, responsive company. In 2018,
Antofagasta set a goal of doubling the number
of women in its workforce by 2022
– a target achieved in 2021.
Day-to-day we seek to create a better and
more innovative work environment and we
continue to invest in and support initiatives
– from our Young Graduates Programme
to our Apprentices Programme – aimed
at building a diverse pipeline of talent at all
levels of the company.
Dividend
For the second year running, the Board
decided to pay a dividend equal to the year’s
underlying net earnings to reflect the
Company’s continued strong performance.
Outlook for 2022
As vaccines and booster shots become
more widely distributed and available globally,
we are seeing moderate economic recovery
together with stability. Yet inflation poses
a risk in many major economies, as do
shortages of labour and critical components.
If last year is any indication, periods of
recovery will be strong, but uneven.
Meanwhile, demand for copper continues to
climb, with a significant share of that growth
coming from regions other than China. Having
made ambitious commitments to the green
economy in recent years, governments and
companies are set to make sizeable
investments to meet them. The supply of
copper is currently constrained by declining
resource quality as well as very long lead
times – and high scrutiny – for new projects.
In Chile, we have vast sources of renewable
energy, and at Antofagasta we have a large
mineral resources base which positions us
well to meet that demand for copper at the
same time as we reduce our carbon footprint.
But 2021 once again reminded us how swiftly
and starkly change can arrive, and how varied
the catalysts of that change can be – from
political decisions to virus mutations, energy
shortages to inflation. We continue to focus
on managing costs and maintaining a strong
balance sheet. We know we must continue
to work to keep our people safe and healthy,
find ways to strengthen our culture, and drive
innovation across the Company.
Chile is in the process of writing a new
constitution that I hope will help unify the
country’s people and return it to the
development trajectory that characterised it in
the past. Mining will be fundamental in this
process and will help the country overcome
the current weakness forecast in its growth.
Antofagasta has navigated some turbulent
times in its 133-year history and last year
certainly qualifies as among the choppiest.
The resilience our people showed in the face
of such difficulty calls to mind a saying:
‘On the other side of the storm is the strength
of having gone through it.’ That might serve
not only as a lesson from the past year, but
also a motto for the upcoming one.
Jean-Paul Luksic
Chairman
Antofagasta plc Annual Report 2021
7
/ Letter from the Chief Executive Officer
Responding well in
demanding circumstances
Iván Arriagada
Chief Executive Officer
Dear shareholders
I am pleased to share with you this report on
our performance and results for 2021. Given
the ongoing COVID-19 pandemic, it was, like
2020, a challenging year but, at Antofagasta,
we can be proud of our achievements.
Despite the challenges, our mines and plants
performed as planned. This, in turn, reflected
what was certainly one of the highlights of the
year: the way our team has responded to the
circumstances.
Thanks to their commitment and motivation,
we have been able to continue to operate,
contribute to the national economy and
support local communities socially and
economically. And we have done this while
protecting the safety and health of our
employees, contractors and communities.
We have also learned from the pandemic and
have become more flexible in the way we
work to become an organisation fit for the
future. Our new hybrid way of working
– combining in-person and remote formats –
offers a better balance between personal
needs and the demands of work and makes
us more productive as a team. This flexibility
in how we work is something we will be
seeking to consolidate in 2022.
Safety
After almost three years of being fatality free,
I am very saddened to have to report the
fatality of one of our contractor’s employees
at Los Pelambres in July. Our condolences
go to his family, friends and colleagues.
We have completed a rigorous investigation of
the accident’s causes and the lessons learned
have been shared with all our operations to
ensure this does not happen again.
It goes without saying that safety continues
to be our top priority and, in 2021, the general
trend was positive. We achieved a consistent
reduction in high-potential incidents, which
serve as an important leading indicator to
where more serious accidents might occur.
The rate of lost-time incidents has increased
slightly, primarily related to our growth
8
Antofagasta plc Annual Report 2021
projects where incidents tend to be of low
severity and with fewer consequences, but
more frequent than at our operations, which
continued to perform well.
Our strong safety and health culture was also
a key factor in our resilience to the COVID-19
pandemic, facilitating the incorporation of
sanitary protocols into our daily work. In line
with this approach, we made vaccinations
available at our sites and, thanks to this and
our strong health and safety culture, 97% of
our workforce had been immunised by the
end of the year.
Climate change
At Antofagasta, we see climate change as one
of the greatest challenges facing the world
today and are committed to being part of the
solution. As a copper producer, we have a
clear role to play in supplying a metal that is a
critical input for so many low-carbon
technologies – from electromobility to the
generation of renewable energy – where we
expect demand to continue to increase.
It is also paramount that we decarbonise our
own operations and, in 2021, we took a major
step in this direction by deploying our new
Climate Change Strategy, which envisages
broad-ranging measures of both adaptation
and mitigation. Following the achievement of
our previous emissions reduction target, this
year we announced new, more ambitious
targets, carbon neutrality by 2050 – in line
with Chile’s national commitment – and the
shorter-term target of a 30% reduction in
emissions by 2025.
This is supported by the transition of our
operations to electricity generated exclusively
from renewable sources, which we will complete
in 2022. At the same time, we are working
to reduce and, ultimately, eliminate the use
of diesel at our mining operations through
initiatives that include an Electromobility Plan
and a portfolio of energy efficiency initiatives.
In 2019, we committed to implementing the
recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD)
and, having published a TCFD Progress
Report in September, we are reporting
against the recommendations in this Annual
Report. The TCFD framework has already
proved useful in helping us integrate risk
management for climate change into our
planning cycles but, above all, it serves as a
transparent and credible way of informing
stakeholders about the expected impact of
different climate scenarios on our business.
Water management
One of the clear impacts of climate change is
the 12-year drought in central Chile, including
the Choapa Valley where our Los Pelambres
operation is located. Several years ago, we
took the decision to build a sea water
desalination plant for Los Pelambres and the
first stage of this project, with an output of
400 litres per second, is due to start
operation in the second half of 2022. We are
also planning to double its capacity as soon as
the necessary permitting is obtained, and we
expect the plant will be operating at its
expanded capacity in 2025.
At Los Pelambres, water is an integral part of
our relations with the community. In line with
this, we are part of the Choapa Valley’s water
management system. The priority, of course,
is human consumption, which is always
assured, followed by agricultural needs. In the
case of agriculture, we are increasing local
resilience by investing in measures to improve
the sector’s water use efficiency and
minimise losses, and on completion of the
desalination plant’s expansion, this will release
additional water for use in the region.
Our Centinela and Antucoya operations in the
north of Chile already almost only use sea
water. As a result, we expect raw or
desalinated sea water and reused or recycled
water to account for 90% of the consumption
of all our mining operations by 2025.
Operating results
In 2021, we produced 721,500 tonnes of
copper, down from 733,900 tonnes in 2020.
The drop is explained by the planned lower
grades at Centinela and restrictions on water
availability at Los Pelambres due to the
drought. As I indicated above, our mines and
Strategic ReportCorporate GovernanceFinancial Statements Other Information Iván Arriagada
Chief Executive Officer
Thanks to our team’s commitment and motivation,
we have been able to continue to operate,
contribute to the national economy and support
local communities socially and economically.
plants performed at their planned capacity,
despite the difficulties of the COVID-19
pandemic, and we are very pleased with the
level of stability and reliability we consistently
achieved across our operations.
Total transport volume at our Transport division
was up by 4% in 2021, thanks partly to a new
contract with a mining client. We see a
significant opportunity in the train transport
business in the context of climate change to
operate using alternative fuels and offering
mining clients an efficient, low-carbon bulk
cargo service.
At $1.20/lb, our net cash costs in 2021 were
below guidance. The increase from $1.14/lb in
2020 is explained by the fall in production and
the higher cost of inputs, such as oil, steel and
acid, in the context of the global economic
recovery and increased commodity prices.
Set against this, the copper price also rose,
as did the prices of the gold and molybdenum
which made an important contribution to
reducing our net cash costs.
Looking ahead to 2022, we see the copper
market as maintaining its strong fundamentals.
Supply is tight, largely because there have
been very few major discoveries over the last
ten years and grades at existing mines are
declining while, at the same time, demand is
strong. As well as copper’s use in low-carbon
technologies, this reflects factors that include
the economic development in emerging
economies and urbanisation.
Growth outlook
Antofagasta is a reliable and responsible
copper producer, with a large resource base.
At our main sites – Los Pelambres and
Centinela – we have a mineral inventory
that offers options for growth that we can
sequence over time as and when the market
outlook is right. That is a very important
competitive advantage.
In 2021, capital expenditure reached $1.8 billion
and we expect to invest a similar amount
of $1.7-1.9 billion in 2022. A review of the final
cost of the Los Pelambres Expansion project is
currently underway considering the most recent
wave of COVID-19 and its impact. And as well as
this investment in Los Pelambres, we are
looking at extending its mine life beyond 2035. If
we also decide by the end of 2022 to build a
second concentrator at Centinela, our copper
production could increase to approximately
900,000 tonnes by 2026.
Supporting these options, we are looking to
innovation as a key enabler of our strategy.
The initiatives we implemented in 2021, or are
in the process of implementing, include
Centinela’s new remote operating centre in
the city of Antofagasta and its fleet of
autonomous trucks. Similarly, all our sites
have strong data analytics teams to identify
opportunities for efficiency gains and
continuous improvement.
Another potentially important innovation is our
Cuprochlor®-T technology, a chloride leaching
process for treating lower grade primary
sulphides. Until now, treatment in a
concentrator or, occasionally, bacterial
leaching have been the only options for a
mineral of this type, and our process looks
as if it could be an important breakthrough.
Following the completion of industrial-scale
tests in 2021, the process will potentially
unlock value from previously uneconomic
mineral resources at our existing operations.
In March 2022 we reached an agreement in
principle with Barrick Gold and the Governments
of Pakistan and Baluchistan on a framework
that provides for the reconstitution of the Reko
Diq project, and a pathway for the Company to
exit the project. If definitive agreements are
executed and the conditions to closing are
satisfied a consortium comprising various
Pakistani state-owned enterprises will acquire
an interest in the project for consideration of
approximately $900 million to jointly develop the
project with Barrick and we would exit. If all the
conditions are satisfied during 2022, we would
expect to receive the proceeds in 2023.
Our priorities in 2022
We expect copper production in 2022 to
reach 660-690,000 tonnes, affected by lower
grades at Centinela and, in the first half of the
year, restrictions on water availability at Los
Pelambres. This latter constraint will,
however, disappear once the rains return in
the winter months and the operation’s
desalination plant comes on-line.
On costs, net cash costs are expected to be
$1.55/lb reflecting the impact of temporary
water restrictions on throughput at Los
Pelambres, increased input costs, especially
sulphuric acid at our cathode operations, and
lower copper production at our two lowest
cost operations: Los Pelambres due to
temporary water limitations and Centinela
Concentrates due to lower grades which are
then projected to increase in 2023. By-
product credits are also expected to decrease
as gold and molybdenum production falls.
During the year innovations, such as remote
operation and automation, will continue to
produce efficiency gains, helping to offset
some of the higher costs of inputs and
inflation and lower production.
A key event in 2022 will be the completion of
the switch of our mining operations to the use
of electricity generated solely from renewable
sources. This happened at Antucoya and
Centinela early-2022 and Los Pelambres will
switch later in the year.
The implementation of our Climate Change
Strategy will remain a top priority. Our plans
include the deployment of our new internal
carbon-pricing methodology and a new
sustainable procurement strategy, both at the
beginning of the year, as well as several
longer-term initiatives to test the use of
hydrogen as an alternative to diesel in mine
haulage trucks.
Through all these initiatives, we will
be unlocking our embedded growth
and pursuing our purpose of developing
mining for a better future and, in this way,
creating value for our shareholders, other
stakeholders and wider society.
Iván Arriagada
Chief Executive Officer
Antofagasta plc Annual Report 2021
9
/ The future of Copper
Copper in a greener world
The near- to medium-term
outlook for the copper market
will continue to be overshadowed
by the COVID-19 pandemic.
The most significant impact on
the market is likely to be ongoing
supply chain disruption, as has
been the case over the past couple
of years. Given copper’s key role
within the energy transition, and
a realisation that in the medium to
long term there is a growing supply
gap and limited supply elasticity,
the market is expected to move
into deficit in the next few years.
In the shorter term, the emergence of new
COVID-19 variants could derail continued
strong global growth in GDP, which is expected
to exceed 4% during 2022. This will feed
through to demand which, together with a
modest supply response, will keep the metal
market finely balanced in 2022. As new supply
from projects currently under construction
comes to the market, this will push the metal
market into a surplus in 2023.
Copper in a greener world
Demand growth will be shaped by copper’s role
in a greener, more sustainable world. Copper is
central to the delivery of the energy transition
and is a critical element in the generation,
transmission, storage and consumption of low
carbon electricity. According to the UN
Environmental Programme (UNEP), the
International Energy Agency (IEA) and others,
the policy drivers currently in place will deliver
a decarbonisation pathway that limits the global
average temperature rise to just under 3°C, well
short of the “preferably 1.5°C” target set out in
the Paris Agreement.
Our view remains that the copper market is in
long-term structural deficit. It is anticipated that
a shortfall will emerge as global mine supply
begins to contract and growth in demand,
shaped by decarbonisation, builds on the
longer-established trends of urbanisation and
industrialisation. This expected deficit, with the
resulting drawdown of accumulated inventories,
is positive for the market outlook. Some closed
mines may reopen and incremental expansions
and mine life extensions may be undertaken,
but producers remain cautious about committing
to large greenfield projects due to geographic,
ore quality, technical, environmental, social or
other challenges.
Without additional and yet to be committed
investment in mine production, the effect
of grade decline and depletions will mean
a growing supply gap from mid-decade
Global Copper Consumption1 (mt)
60
40
20
2015
2020
2025
2030
2035
2040
Other
Electromobility (incl. charging infrastructure)
Renewables
Source: Wood Mackenzie
1. Including direct use of scrap
10
Antofagasta plc Annual Report 2021
onwards. This is estimated by some
forecasters at approximately five million
tonnes by the end of the decade – the
equivalent of 10 to 20 large new mines.
Increasing investment in the collection, sorting
and use of scrap will be needed to help fill the
supply gap. However, there are limitations to
the speed at which scrap can be delivered in
large volumes back into the product cycle.
The mismatch between the requirement for
new supply and the need to meet the
challenges of a decarbonised world will lead
to turbulence in the copper sector over the
next ten years.
If global leaders are to deliver on their COP26
pledge to maintain a 1.5°C world, this will
support even higher copper demand.
However, in a market that is consistently
short of committed mine supply versus
long-term requirements, the prospect of an
accelerated transition presents a challenge
for the mining industry. Additionally, climate
change pledges that should encourage higher
consumption could hamper supply, with local
environmental and social concerns about the
impact of mining heightened at the same time
as the industry seeks to deliver on global
solutions for climate change. As an industry,
copper miners are part of the solution for the
energy transition and seek to minimise their
direct impact on the environment.
Despite the clear requirement for more copper
to meet the world’s climate change targets,
it could become more challenging to produce
refined metal as restrictions on industrial
activity tighten. The more environmental and
other requirements are needed to meet COP26
pledges, the harder it will be for projects to
reach the required economic and climate
change criteria. However, the emissions profile
of copper is attractive when benchmarked
against other non-ferrous metals, including its
closest substitute, aluminium.
Renewable power generation sources and
cleaner transportation vehicles are considerably
more copper intensive compared to their
conventional counterparts. An offshore wind
power plant can consume around five times
more copper compared to a coal-based plant.
Strategic ReportCorporate GovernanceFinancial Statements Other Information recycled and this proportion is expected to
increase in response to greater environmental
and regulatory pressures, facilitated by
technical and other improvements.
Some of the leading copper mining countries,
such as Chile, Zambia and the Democratic
Republic of the Congo (DRC), are already
heavily reliant on renewable energy sources.
However, beyond power generation, the
reduction of the industry’s use of hydrocarbons
as a fuel is arguably more challenging,
particularly in downstream smelting and
refining. Any meaningful reduction in carbon
emissions will require significant investment in
technology yet to be used or proven,
specifically in the use of green hydrogen and/
or carbon capture.
The COP26 pact emphasises the importance of
long-term climate finance and improving the
flow of money. Several developing countries’
targets, including copper-producing nations, are
conditional on receiving timely funds. With
copper viewed by investors as a key raw
material to enable the energy transition, this
should be a positive for project development.
However, despite the many challenges in
delivering supply growth, access to capital
should not be a major constraint, although the
investment requirement will be considerable.
This represents an unprecedented challenge
and opportunity for the copper industry to
deliver an accelerated energy transition.
The three Rs of waste management – reduce,
reuse, recycle – apply to copper, as to other
materials. Thrifting has been a feature for
many years and will continue within green as
well as traditional end-uses.
As for recycling, copper can be infinitely
recycled without losing any of its chemical or
physical properties. This becomes particularly
marked at higher copper prices. Today some
15-20% of refined copper production is
Total copper consumption1 by industry
sector 2021
Transport
11%
30.6 mt
Total
consumption
Construction
29%
Consumer
& general
22%
Industrial
machinery
11%
Electrical
network
27%
Source: Wood Mackenzie, Copper Outlook December 2021
1. Including direct use scrap
Antofagasta plc Annual Report 2021
11
Copper is used in cables within the turbine
towers, in array cabling (particularly deep
water offshore) and in export cables to bring
power back to shore. Similarly, a passenger
battery electric vehicle (BEV) is nearly four
times more copper intensive than an internal
combustion engine car. A large part of the
copper within a passenger BEV is used within
the battery in the form of copper foil. This is
predominantly from high grade scrap.
Significant quantities will also be required to
strengthen the grid infrastructure to handle
variable sources of energy and support EV
charging requirements. The additional
requirement for grid transmission and
distribution has the potential to be significant,
possibly even matching the rise due to an
expansion of renewables and the EV fleet.
The increase in demand for copper in
electromobility and renewables uses is
expected to account for nearly 40% of total
growth over the next 20 years.
Wood Mackenzie’s Accelerated Energy
Transition scenario delivers a decarbonisation
pathway consistent with limiting the average
global temperature rise to 2°C by 2050 (AET
2.0 scenario). It shows that the demand for
copper in green end-uses – electric vehicles
and renewable power generation (wind and
solar) – will increase by a further two million
tonnes, or more by the end of the decade if a
more challenging decarbonisation pathway is
assumed.
/ Business model
Delivering value for our stakeholders
through the mining lifecycle
Mining is a long-
term business and
timescales can run
into decades.
The period from
initial exploration
to the start of
production can
exceed ten years
and, depending on
the nature of the
project and the
market conditions,
it may take more
than five years
of operation to
recoup the initial
investment.
For geological reasons,
copper deposits frequently
have higher-grade
material nearer the
surface and therefore
grade declines with depth.
This means that unless
action is taken, such as an
expansion, copper
production declines as a
mine gets older. Also, as
an open pit gets deeper,
haulage distances
and rock hardness
increase, and this,
combined with the
declining grade, leads to
higher unit costs. Large
long-life mines will have
several expansions during
their lives. The current
expansion at our
23-year-old Los
Pelambres mine is
its fourth.
INPUTS
Energy
Water
Labour
Service contracts
Fuel and lubricants
Explosives
Grinding balls and
mill liners
Sulphuric acid
Our mining operations
depend on a range of key
inputs such as energy,
water, labour, sulphuric
acid and fuel. The
management of these
inputs has a significant
impact on operating costs
and the sustainability of
mining operations, and
ensuring the long-term
supply of key inputs is a
vital part of the business.
As part of our commitment
to mitigating and adapting
to climate change, all of
our mining operations will
use 100% renewable
energy by the end of 2022
and by 2025 more than
90% of the water used by
the Mining division will be
either sea, reused or
recycled water.
Find out more
P82-85
EXPLORATION
Chile
EVALUATION
Los Pelambres
CONSTRUCTION
Los Pelambres
International
Expansion – Phase 2
Expansion – Phase 1
To ensure the long-term
sustainability of our mining
business, we must focus
on at least maintaining our
mineral resource base.
We undertake exploration
activities in Chile and
abroad, with particular
focus outside Chile on the
Americas. Our international
exploration programmes
are generally carried out in
partnership with other
companies, in order to
benefit from their local
knowledge and experience.
3-5 years
Find out more
P81
Centinela Second
Concentrator
Twin Metals Minnesota
Effective project
evaluation and design
maximise value at
this stage of the mining
cycle. Antofagasta’s
wealth of experience in
both areas helps to make
the best use of mineral
deposits. We integrate
sustainability criteria into
the design process and
project evaluation phase,
developing innovative
solutions for challenges
such as water availability,
long-term energy supply
and community relations.
5 years
Find out more
P78-80
Esperanza Sur pit
Zaldívar Chloride
Leach project
Once a project has been
approved by the Board,
construction begins.
This stage requires
significant input of capital
and resources as well as
effective project
management and cost
control to maximise the
project’s return on
investment.
We have a co-operative
approach to developing
projects. Typically, after
the feasibility stage and
before the construction
phase, we seek a
development partner
to buy an interest in the
project, generating an
immediate cash return,
diversifying risk and
providing broader access
to funding while we
maintain operating control
of the project.
3-5 years
Find out more
P78-80
OUR PURPOSE
We believe in developing mining for a better future. As custodians of natural resources, we have a responsibility not only to manage these
resources efficiently and responsibly, but also to harness copper’s potential to contribute to the development of a greener and more
sustainable world.
12
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information CORE OPERATIONS
EXTRACTION
Los Pelambres
Centinela
Antucoya
Zaldívar
PROCESSING
Antofagasta mines both
copper sulphide and
copper oxide ores, which
require different
processing routes:
Antofagasta’s four
operations in Chile are
Los Pelambres, Centinela,
Antucoya and Zaldívar.
COPPER SULPHIDE
OPERATIONS
Los Pelambres
Centinela Concentrates
The world-class Los
Pelambres and Centinela
mining districts have
sustainable long-life
copper mining operations,
with large mineral
resources, and produce
significant volumes of
gold, molybdenum and
silver as by-products. All
our mines are open pit
operations.
Safety and health are key
elements of operating
efficiency and remain a top
priority for the Board and
management team.
20+ years
Find out more
P68-75
Mined sulphide ore is
milled to reduce its size
before passing to flotation
cells where it is upgraded
to a concentrate
containing 25–35%
copper. This concentrate
is then shipped to a
smelter operated by a
third party and converted
to copper metal.
COPPER OXIDE
OPERATIONS
Centinela Cathodes
Antucoya
Zaldívar
Mined oxide ore,
sometimes combined with
leachable sulphide ore, is
crushed, piled onto heaps
and leached with sulphuric
acid, producing a copper
solution.
This solution is then
put through a solvent
extraction and
electrowinning (“SX-EW”)
plant to produce nearly
pure copper cathodes,
which are sold to
fabricators around
the world.
Find out more
P68-75
MINE CLOSURE
During the operation of a
mine, its impact on the
environment and the
neighbouring communities
is carefully managed. At
the end of its life, a mine
must be closed and
remediated according to
the international standards
and national regulations in
force at the time.
A closure plan for each
mine is maintained and
updated throughout its life
to ensure compliance with
the latest regulations and
provide for a sustainable
closure.
Find out more
P59
MARKETING
The marketing team builds
long-term relationships
with the smelters and
fabricators who purchase
our products, with
approximately 60% of
output by value going to
Asian markets.
As well as copper,
Los Pelambres and
Centinela produce
significant volumes of
gold, molybdenum and
silver as by-products.
Gold and silver are sold
for industrial and
electronic applications
and for jewellery-making.
Molybdenum is used
to produce steel alloys.
Most copper and
molybdenum sales are
made under annual
contracts or longer-term
framework agreements.
Sales volumes are agreed
each year, which
guarantees offtake.
Find out more
P88-89
OUTPUTS
Copper
Molybdenum
Gold
Silver
Our mining operations
create significant
economic and social value
for a wide range of
stakeholders. Local
communities benefit from
job creation and improved
infrastructure, while
the Chilean government
and local municipalities
receive tax payments
and royalties.
There are also benefits to
society in general, with
the copper we produce
being used across many
sectors, from industrial to
medical, and increasingly
playing a vital role in the
world’s major challenges
such as sustainable urban
development, the
availability of clean energy
and electromobility and
green technologies.
Our copper and by-
products go on to
be further processed for
use in end markets,
including property, power,
electronics, transport and
consumer products.
Find out more
P10-11
Antofagasta plc Annual Report 2021
13
/ Strategic framework
Our strategic framework
We are committed to our Purpose of Developing Mining
for a Better Future. This is what drives and motivates us.
Our Purpose is supported by our Strategy, Organisation and Culture through which we seek
to fulfil our Vision. In turn, our Strategy has five pillars, People, Safety and Sustainability,
Competitiveness, Growth and Innovation.
Our Vision is to be an international mining company, focused on copper
and its by-products, known for its operating efficiency, creation of sustainable
value, high profitability and as a preferred partner in the global mining industry.
O UR VISION
CULTURE
Shared values
and the way
we work
STRATEGY
People
Safety and
Sustainability
Competitiveness
Growth
Innovation
OUR PURPOSE
ORGANISATION
Designed to deliver
results and growth
14
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information CULTURE
Our culture represents our shared values and
the way we work. It is evident not only in our
people but also in how we engage with local
communities and our suppliers, partners
and customers. We also understand the
importance of diversity and inclusion
as a driver of our competitive advantage.
The way we work and manage our risks is
anchored in our shared values: Responsibility,
Respect, Commitment to sustainability,
Excellence in our daily performance, Forward-
thinking and Innovation as a permanent
practice, and the Board embraces its important
role in setting the tone for the Group’s culture
and promoting our shared values.
ORGANISATION
The way we manage our activities is paramount
in reaching our goals. Our structure is designed
to deliver results and growth while also having
the flexibility to adjust to challenges and
opportunities as they arise.
This is achieved by stabilising and strengthening
our production processes, improving
collaboration between key areas, defining
clear roles and responsibilities and seeking
to reduce variability and deviation from our
production plans.
STRATEGY
Our strategy is built around five pillars, each of which has defined long-term objectives
with short- and medium-term goals. These pillars are:
People
Safety and Sustainability
Competitiveness
Growth
Innovation
PEOPLE
People are the core of our business. We want
our employees to feel recognised and to have
the maximum opportunities for personal and
professional growth.
We seek to generate a culture of diversity
and inclusion in which our employees can
achieve their full potential. We are committed
to equality and believe that we can develop
our business and make a significant
contribution to Chile’s development.
We work to improve opportunities for
individuals’ internal promotion fostered through
initiatives such as technical and managerial
training programmes. Our goal is to be the best
employer in the mining industry.
To achieve this, we understand the importance
of creating an environment of trust and
collaboration that looks to the long term.
Find out more
P42-43
SAFETY AND SUSTAINABILITY
The safety and health of our employees is
non-negotiable. We are committed to achieving
zero fatalities at our operations and continuing
to reduce the number and seriousness of
accidents and occupational health issues.
We view sustainability as a source of value
creation that is an integral part of our
decision-making processes. This includes
taking into account all socio-environmental
factors throughout the different stages of the
development through to the closure of
a mining operation.
In line with this, we manage natural resources
efficiently and are constantly seeking ways
to reduce water consumption, find energy
from cleaner sources and protect biodiversity,
while always collaborating with local
communities.
We are sensitive to the threats posed
by climate change and are always seeking
to improve our practices accordingly.
Our aim is to maximise the utilisation
of renewable energy sources and to reduce
our greenhouse gas (GHG) emissions.
Find out more
P32-65
COMPETITIVENESS
Our key focus as regards competitiveness is
to achieve productivity gains through cost
control and streamlining our processes.
Our Operating Model seeks to reduce the
variability of our production plans and
includes an operating excellence area, a
discipline that focuses on productivity issues.
Our Cost and Competitiveness Programme
(CCP) also produces significant savings.
Find out more
P86-87
GROWTH
We have a portfolio of growth projects that
allows us to remain competitive and develop
sustainable operations in the long term.
We continue to review our options for
maximising returns and reducing the capital cost
of projects, and are enhancing the capabilities
of the project team to improve our project
execution strategy, management and control.
Our focus is on the production of copper
and by-products in the Americas (particularly
Chile, Peru, the United States and Canada).
Find out more
P78-81
INNOVATION
We innovate as a means of improving social,
environmental and economic conditions while,
at the same time, delivering strong returns for
our shareholders.
Innovation is key to improving productivity
and efficiency and promoting growth. We
are investing in innovation and developing
opportunities, and encourage and reward
employees and contractors who send us
their ideas for improving our operations.
During the year we continued to implement
our digital roadmap to facilitate and accelerate
the adoption of information and analysis
technologies, automation and robotics.
Find out more
P86-87
Antofagasta plc Annual Report 2021
15
/ Key Performance Indicators
Measuring our performance
We use Key Performance Indicators
(KPIs) to assess performance
in terms of meeting our strategic
and operating objectives.
Performance is measured against
the following financial, operating
and sustainability KPIs:
Financial KPIs
EBITDA1
$4,836m
Earnings per share2
$142.5¢/share
4,836
142.5
130.9
Remuneration performance criteria.
P149
2,587
2,228 2,439
2,739
76.2
76.1
55.1
51.5
50.9 51.3
50.9
54.7
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
Underlying EPS from continuing operations,
excluding exceptional items
EPS from continuing and discontinued operations,
including exceptional items
Why it is important
These are measures of the profit attributable
to shareholders, before and after exceptional
items.
Performance in 2021
Underlying earnings per share from continuing
operations increased by 161% compared to
2020 with higher EBITDA partly offset by
higher non-controlling interests and tax.
Earnings per share including discontinued
operations and exceptional items rose by 155%.
Find out more
P99
Profit before tax
$3,477m
3,477
Why it is important
This is a measure of our underlying
profitability.
Performance in 2021
EBITDA increased by 76.6% to $4.8 billion
with an EBITDA margin of 64.7%, reflecting a
strong copper price, controlled costs and solid
production.
Find out more
P92
Net debt/(Net cash)1
($541m)
596
563
456
82
1,831
1,253
1,349
1,413
(541)
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
Why it is important
This measure reflects our financial liquidity.
Performance in 2021
Strong balance sheet with net cash of $541
million at the end of 2021, an improvement of
$623 million from the net debt position at the
end of 2020.
Find out more
P100
Why it is important
This is a measure of our profitability before
the deduction of taxes.
Performance in 2021
Profit before tax increased by 146%
to $3.5 billion.
Find out more
P97
1. Non-IFRS measures, refer to the alternative
performance measures section on page 229.
2. Underlying EPS from continuing operations,
excluding exceptional items and EPS from
continuing and discontinued operation, including
exceptional items. A reconciliation can be found
on page 199.
3. 100% of Los Pelambres, Centinela and Antucoya,
and 50% of Zaldívar’s production.
4. Mineral resources (including ore reserves)
relating to the Group’s subsidiaries on a 100%
basis and Zaldívar on a 50% basis.
5. The Lost Time Injury Frequency Rate is the
number of accidents with lost time during the
year per million hours worked.
6. Mining division only.
7. Tonnes of CO2 equivalent per tonne of
copper produced.
8. The intensity of CO2e emissions for the Mining
division was overestimated at 3.19 tCO2e/tCu and
has been updated.
16
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information Operating KPIs
Copper production3
721.5k tonnes
704.3 725.3
770.0 733.9
721.5
Net cash costs1
$1.20/lb
1.25
1.29
1.22
1.14
1.20
Mineral resources4
19.1bn tonnes
18.7
18.8
19.1
19.2
19.1
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
Why it is important
Copper is our main product and largest
source of revenue.
Why it is important
This is a key indicator of operating efficiency
and profitability.
Why it is important
The Group’s mineral resources base supports
its strong organic growth pipeline.
Performance in 2021
Copper production was 721,500 tonnes
reflecting lower grades and the impact of the
drought at Los Pelambres, partially offset by
higher grades at Centinela Concentrates.
Find out more
P64
Performance in 2021
Net cash costs were $1.20/lb, 5.3% higher
than last year due to the stronger Chilean
peso, higher energy and diesel prices, and
lower production, partially offset by an
increase in by-product credits.
Find out more
P64
Performance in 2021
Mineral resources reduced, partly offset
by the inclusion of the Cachorro deposit for
the first time.
Find out more
P235-244
Sustainability KPIs
Safety
1 Fatalities
1.5
1.6
1
1.3 LTIFR5
1.3
1
1.0
0.9
0
0
0
Water withdrawal
69 GL
Continental water
Sea water
36.5
36.9
32.6
39.1
37.7
CO2e emissions intensity6, 7
3.00 tC02e/tCu
3.87
3.33
3.10
3.00
3.00
29.2
30.4
28.2
29.0
31.3
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
2017
2018
2019
20208
2021
Why it is important
Safety is our top priority, with fatalities and
the LTIFR5 being two of our principal
measures of performance.
Why it is important
Water is a precious resource and we are
focused on using the most sustainable
sources and maximising its efficient use.
Performance in 2021
Very sadly there was a fatality at Los
Pelambres.
Our LTIFR also increased, primarily related to
our growth projects.
Find out more
P44
Performance in 2021
The Mining division’s operational sea water
withdrawals in 2021 increased by 8% compared
to 2020 as ore throughput increased at
Centinela and Antucoya, and continental water
withdrawals reduced by 3%.
Find out more
P51
Why it is important
We recognise the risks and opportunities
arising from climate change and the need
to measure and mitigate greenhouse
gas (GHG) emissions.
Performance in 2021
While CO2e emissions intensity were
unchanged compared to 2020, total emissions
fell by 1.8%.
Find out more
P49
Antofagasta plc Annual Report 2021
17
/ Risk management
Risk management framework
Effective risk management is an
essential part of our culture
and strategy.
The accurate and timely identification,
assessment and management of principal
risks give us a clear understanding of the
actions required to achieve our objectives.
Key elements of integrated risk
management
We recognise that risks are inherent
to our business
Only through adequate risk management can
internal stakeholders be effectively supported
in making key strategic decisions and
implementing our strategy
Exposure to risks must be consistent
with our risk appetite
The Board defines and regularly reviews
the acceptable level of exposure to emerging
and principal risks. Risks are aligned with our
risk appetite, taking into consideration the
balance between threats and opportunities
We are all responsible for managing risks
Each business activity carries out risk
evaluations to ensure the sound identification,
management, monitoring and reporting
of risks that could impact the achievement
of our goals
Risk is analysed using a consistent framework
Our risk management methodology is applied
to all our operating companies, projects,
exploration activities and support areas so
that we have a comprehensive view of the
uncertainties that could affect us in achieving
our strategic goals
We are committed to continuous
improvement
Lessons learned and best practices are
incorporated into our procedures to protect
and unlock value sustainably
Areas of focus and development
during 2021
Our main focus in 2021 was on climate change
risk analysis and the COVID-19 restrictions
required at our operations. We implemented
the TCFD recommendations using their risk
designation for climate change risks dividing
them into two categories; risks related to the
impact of the transition to a low-carbon
economy, and risks related to the physical
impact of climate change. Principal physical and
transition risks were identified, and certain
controls and action plans were agreed.
We maintained our commitment to review and
update our principal risks according to our
risk methodology. These are some of the
actions that our Risk and Compliance
Management Department has undertaken
during the year:
• Organised an external independent risk
evaluation analysis of the Group. The level
of risk maturity for the Group was
re-evaluated and action plans were defined
• Co-ordinated the COVID-19 contingency
committees throughout 2021, in line with
the risk management response system
• Presented an update of the Company’s
risk appetite statement to the Board,
which included some updates relating
to Talent Management/Labour Relations,
Tailings Storage and Cybersecurity.
The level of risk appetite was unchanged
• Updated the Risk Analysis Manual
to include learnings from 2020
• Harmonised the risk of Environment
Management, Climate Change and
Strategic Resources between all the
operating companies
• Implemented automatic reporting, which
is shared monthly with the executive
management team
• Started developing a new risk analysis
model for goods and services agreements
• Continued training risk owners and
main users
• Updated and monitored critical controls and
action plan dashboards
• Prepared new action plans to maintain risk
exposure within acceptable limits
• Embedded timely and comprehensive
risk analysis into each relevant decision-
making process
• Shared best practices across our
operating companies
• Included budgeting and planning processes
related to risk monitoring in the monthly
executive review, to identify and manage
any deviation from expected performance
in a timely fashion
Governance
The Board has overall responsibility for
risk management and determines the nature
and extent of the principal and emerging risks
that we will accept in order to achieve our
strategic objectives.
The Board receives detailed analysis of key
matters in advance of Board meetings. This
includes reports on our operating performance
including safety and health, financial,
environmental, legal and social matters, and
key developments in our exploration, project
and business development activities, as well
as information on the commodity markets,
updates on talent management and analysis
of financial investments.
The provision of this information allows
the early identification of potential issues and
the assessment of any necessary preventive
and mitigating actions.
The Audit and Risk Committee assists the
Board by reviewing the effectiveness of the
risk management process and monitoring
principal and emerging risks, preventive and
mitigation procedures and action plans.
The Chairman of the Committee reports to the
Board following each Committee meeting and,
if necessary, the Board discusses the matters
raised in more detail.
These processes allow the Board to monitor
Antofagasta’s major risks and preventive and
mitigating procedures effectively, and to assess
whether the actual exposure is consistent with
the defined risk appetite. If a gap is identified,
additional action plans are prepared.
The Risk and Compliance Management
Department is responsible for risk management
systems across the Group. It implements the
Company’s risk management policy, vision
and purpose to ensure a strong risk management
culture at all levels of the organisation.
The Department supports business areas
in analysing their risks, identifying existing
preventive and mitigating controls and
defining further action plans. It maintains and
regularly updates the Company’s risk register.
18
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information The Department reports twice a year to the
Audit and Risk Committee on the overall risk
management process, with detailed updates
on principal risks, mitigation activities and
actions being taken.
The General Managers of each of the
operations have overall responsibility for
leading and supporting risk management.
Risk owners within each operation have
direct responsibility for the risk management
processes and for regularly updating
individual business risk registers, including
relevant mitigation activities. The individual
owners of the risks and controls at each
business unit are identified, to provide
effective and direct management of risk.
Mitigation techniques for significant strategic
and business unit risks are reviewed
quarterly by the Risk and Compliance
Management Department.
Each operation holds its own annual risk
workshop at which the business unit’s
risks and mitigation activities are reviewed in
detail and updated as necessary. Workshops
are also used to assess principal risks that
may affect relationships with stakeholders,
limit resources, interrupt operations and/or
negatively affect potential future growth.
We promote a consistent risk management
process across our different business units,
ensuring risk is considered at all levels of
the organisation. Risk information flows from
the business units to the centre and from
the Board back to the business units.
Find out more
P134
Our risk management structure
BOARD OF DIRECTORS
BOARD COMMITTEES
EXECUTIVE COMMITTEE
THIRD LINE OF DEFENCE
SECOND LINE OF DEFENCE
FIRST LINE OF DEFENCE
BOARD OF DIRECTORS
Overall responsibility for risk management and its
alignment with Antofagasta’s strategy
EXECUTIVE COMMITTEE
Assesses risks and their potential impact on the
achievement of our strategic goals
Approves the Risk Management Policy
Defines risk appetite
Promotes our risk management culture in each of
the business areas
Reviews, challenges and monitors principal risks
Is the owner of principal risks
SECOND LINE OF DEFENCE
The Risk and Compliance Management Department
is accountable for monitoring our overall risk
profile and risk management performance,
registering risks and issuing alerts if any deviation
is detected.
BOARD COMMITTEES
Support the Board in monitoring principal risks and
exposure relative to our risk appetite
Make recommendations to the Board on the risk
management system
Review the effectiveness and implementation of
the risk management system
THIRD LINE OF DEFENCE
The Internal Audit Department provides assurance
on the risk management process, including the
effectiveness of the performance of the first
and second lines of defence.
FIRST LINE OF DEFENCE
Each person is responsible for identifying,
preventing and mitigating risks in their business
area and escalating concerns to the appropriate
level if required.
Antofagasta plc Annual Report 2021
19
/ Risk management continued
Principal risks
We maintain a risk register
through a robust assessment
of the potential principal risks
that could affect the Company’s
performance. This register is used
to ensure that principal risks are
identified in a thorough and
systematic way and that agreed
definitions of risk are used.
Risk management
We are aware that not all risks can be
completely eliminated and that exposure to
some risks is necessary in the pursuit of our
corporate objectives.
Mining is, by its nature, a long-term business
and as part of the principal risks update and
evaluation process we identify new or
emerging risks which could impact the
Company’s sustainability in the long run, even
if there is limited information available at the
time of the evaluation.
Any new or emerging identified risks that
could impact our long-term strategic objectives
are included in the principal risk analysis and
are reviewed and monitored periodically by the
Board. As new information based on research,
expert analysis and internal investigations
becomes available, suitable controls and action
plans are defined and incorporated into the
Company’s risk matrix.
We identify, assess and manage the risks critical
to the Company’s success. Overseeing these
risks benefits Antofagasta and protects our
business, people and reputation. The risk
management process provides reasonable
assurance that the relevant risks are recognised
and controlled, and the Company achieves its
strategic objectives and creates value.
Because risks change and are periodically
re-evaluated, the risk map shown here
represents the position, considering the
controls in place, at a specific point in time and
the changes that have taken place since 2020.
The Board carried out a robust assessment
of the Company’s emerging and principal
risks during the year, which are set out
below with their related preventive and
mitigation measures.
Risk appetite
Risk level
Low
Medium
High
Very high
20
Antofagasta plc Annual Report 2021
Risk Heat Map
e
r
e
v
e
S
t
n
a
c
i
f
i
n
g
S
i
T
C
A
P
M
I
e
t
a
r
e
d
o
M
w
o
L
w
o
l
y
r
e
V
8
9
10
11
14
6
3
7
12
13
18
17
16
4
2
15
1
5
Movement since previous year
Very unlikely
Unlikely
Possible
Likely
Almost certain
PROBABILITY
Risk appetite
Risk level
Change in risk
level vs. 2020
Risk
People
1. Talent management
2. Labour relations
Safety and Sustainability
3. Safety and health
4. Environmental management
5. Climate change
6. Community relations
7. Political, legal and regulatory
8. Corruption
Competitiveness
9. Operations
10. Tailings storage
11. Strategic resources
12. Cyber security
13. Liquidity
14. Commodity prices and exchange rates
Growth
15. Growth of mineral resource base and opportunities
16. Project execution
Innovation
17. Innovation and digitisation
Transversal
18. External risks
Strategic ReportCorporate GovernanceFinancial Statements Other Information
Defining risk appetite is key in
the process of embedding the
risk management system into
our organisational culture.
The Company’s risk appetite
statement helps to align our
strategy with each business unit’s
objectives, clarifying which risk
levels are, or are not, acceptable.
It promotes consistent risk
decision-making, allied to the
strategic focus and risk/reward
balance approved by the Board.
PEOPLE
During the year the Board reviewed and
updated Antofagasta’s risk appetite statement,
which included updates relating to Talent
Management/Labour Relations, Tailings Storage
and Cybersecurity risks. The Board considered
the New Ways of Working as a strength in the
evaluation of Talent Management/Labour
Relations risk and a new tailings policy as
a strength in the Tailings Storage risk. Also,
a more strategic statement was defined for
the Cybersecurity risk.
We maintain a risk register through a robust
assessment of the potential principal risks that
could affect the organisation’s performance.
This process ensures that principal risks are
identified in a thorough and systematic way
and that agreed definitions of risk are used.
The principal risks, together with related
preventive and mitigation measures,
have been presented to the Board and
are in line with the organisation’s strategic
pillars of People, Safety and Sustainability,
Competitiveness, Growth and Innovation.
In addition, these strategic pillars are
supported by our corporate governance
structures. The principal risks are outlined
in the risk heat map and table, and
in more detail below.
Description
Preventive and mitigation measures
Highlights
Risk appetite
Risk level
Outlook
During 2021 we changed our methodology for
identifying and managing talent to look for the
competencies we require to ensure the
sustainability of the business. This change allowed
us to identify the key people for our talent pool.
Our New Ways of Working was introduced
at the beginning of the year, facilitating
business continuity and helping us to attract
and retain talent.
Implementation of our diversity and inclusion
strategy progressed during the year, increasing
the proportion of women in our workforce
to 17.2%, achieving our target set in 2018.
Risk appetite
Risk level
Outlook
Three-year labour agreements were
successfully negotiated with two of the unions
at Los Pelambres and one at Centinela,
in a climate of mutual respect.
1. TALENT MANAGEMENT
Managing talent and
maintaining a high-quality
labour force in a fast-changing
technological and cultural
environment is a key priority
for us. Any failures in this
respect could have a negative
impact on the performance
of the existing operations and
prospects for future growth.
2. LABOUR RELATIONS
Our highly-skilled workforce
and experienced management
team are critical to maintaining
our current operations,
implementing development
projects and achieving
long-term growth without
major disruption.
We develop the talents of our employees through training
and career development, invest in initiatives to widen the talent
pool and are committed to our diversity and inclusion policy.
Through these actions we aim to increase employee retention,
as well as the number of women, people with disabilities
and employees with international experience in the workplace.
Our Employee Performance Management System is
designed to attract and retain key employees by creating
suitable reward and remuneration structures and providing
personal development opportunities. We have a talent
management system to identify and develop internal
candidates for key management positions, as well as
identifying suitable external candidates when appropriate.
We maintain good relations with our employees and
unions, founded on trust, regular dialogue and good
working conditions. We are committed to safety, non-
discrimination, diversity and inclusion, and compliance
with Chile’s strict labour regulations.
There are long-term labour agreements (usually three
years) in place with all the unions at our operations,
helping to ensure labour stability.
We seek to identify and address labour issues that may arise
throughout the period covered by the labour agreements and
to anticipate any potential issues in good time. Employees of
our contractor companies are an important part of our
workforce and under Chilean law fulfil the same duties
and are subject to the same responsibilities as our own
employees. We treat contractors as strategic associates and
build long-term, mutually beneficial relationships with them.
We maintain constructive relationships with our employees
and their unions through regular communication and
consultation. Union representatives are regularly involved
in discussions about the future of the workforce.
Antofagasta plc Annual Report 2021
21
/ Risk management continued
Principal risks
continued
SAFETY AND SUSTAINABILITY
Description
Preventive and mitigation measures
Highlights
Risk appetite
Risk level
Outlook
Safety is our top priority. Regrettably, after
almost three years, there was a fatal accident
at Los Pelambres. This served to further
reinforce our commitment to having
outstanding risk management systems.
A new digital safety and health tool was
designed to monitor the effective
implementation of our critical controls for our
high-risk activities. The tool, based in our
ARMSWORD risk management software, uses
QR codes to allow all operators, supervisors
and risk owners to verify the correct use of
critical controls for all high-risk activities.
In 2021, COVID-19 threatened the health of all
employees, contractors and local communities.
We focused on implementing controls to
prevent and mitigate the impact of the virus,
prioritising the health of our employees and
contractors while minimising the impact on
operational continuity.
We are also addressing the mental stress
related risks arising from the prolonged
pandemic.
Risk appetite
Risk level
Outlook
We have strengthened the regulatory risk pillar
of the environmental management model,
incorporating monthly updates of environmental
regulations. Also, a regular monitoring of the
Environmental Authority inspection processes
was included to assure compliance with our
environmental commitments and action plans.
3. SAFETY AND HEALTH
Safety and health incidents
could result in harm to our
employees, contractors and
local communities. Ensuring
their safety and wellbeing is
our ethical obligation, top
priority and one of our
core values.
A poor safety record or serious
accidents could have a
long-term impact on morale and
on our reputation and
productivity.
Our Safety and Occupational Health Strategy is based on
four pillars:
1. Safety and health risk management: workers at all levels
are able to identify hazards and controls, so that all jobs
are carried out safely.
2. Leadership: all employees and contractors are health
and safety leaders and we demonstrate our commitment
through each individual’s responsible behaviour.
3. Contractor management: our contractors are an integral
part of our safety team and culture, and we work
together to improve.
4. Reporting, research and learning from our accidents:
we share good practices and learn from our mistakes.
The Strategy strives to achieve four main goals of: zero
fatalities, zero occupational illnesses, the development of a
resilient culture and the automation of hazardous processes.
As part of our efforts to improve our safety performance,
we increased visible leadership, strengthened our
management of train operators and reinforced the use of
the Job Safety Analysis and the Yo Digo No (I Say No)
tools in the second half of the year.
Critical controls and verification tools are regularly
strengthened through the verification programme and regular
audits of critical controls for potentially high-risk activities.
4. ENVIRONMENTAL MANAGEMENT
An operating incident that
damages the environment
could affect both our
relationship with local
stakeholders and our
reputation, reducing the social
value we generate.
We operate in challenging
environments, including the
largely agricultural Choapa
Valley and the Atacama Desert,
where water scarcity is a
key issue.
Environmental issues directly
related to climate change are
considered under our specific
Climate Change principal
risk below.
We have a comprehensive approach to incident prevention.
Relevant risks are assessed, monitored and controlled in
order to achieve our goal of zero incidents with significant
environmental impact. We work to raise awareness among
employees and contractors, providing training to promote
operating excellence. The potential environmental impact
of a project is a key consideration when assessing its
viability, and we encourage the integration of innovative
technology in the project design to mitigate such impacts.
We prioritise the efficient use of natural renewable
resources by using sea water, favouring the use of
renewable power sources, achieving higher rates of reuse
and recovery of water through the use of thickened tailings
technology and reducing greenhouse gas emissions.
We recognise that environmental sustainability is key to
our ability to generate social value and we perform regular
risk assessments in order to identify potential impacts and
develop preventive and mitigating strategies.
Each site maintains updated environmental emergency
preparedness and detailed closure plans with appropriate
financial provisions to ensure physical and chemical
stability once operations have ceased.
22
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information Description
Preventive and mitigation measures
Highlights
5. CLIMATE CHANGE
The effects of climate change
have had an increasing impact
on our operations. The drought
in central Chile is affecting
water availability at Los
Pelambres, while higher than
expected rainfall in the northern
part of the country is impacting
the infrastructure in the region.
The increasing severity of sea
swells leads to delays in the
delivery of key supply materials
and the export of our
concentrates and cathodes.
We are committed to
contributing to the reduction of
the global problem of growing
greenhouse gas emissions
and water scarcity by reducing
our own emissions. We can do
this by increasing the amount
of power and water we
obtain from renewable and
sustainable sources.
6. COMMUNITY RELATIONS
Failure to identify and manage
local concerns and expectations
could negatively impact the
Company. Relations with local
communities and stakeholders
affect our reputation and impede
our ability to grow and generate
social value.
Risk appetite
Risk level
Outlook
Our Climate Change Strategy seeks to
strengthen our capacity to adapt to and
mitigate climate change. This enables us to
take early action to manage the resulting risks
and opportunities in such a way as to mitigate
the effects of climate change and adapt to new
scenarios.
Having achieved our first emissions reduction
target two years early, we announced two new
targets in May. In the shorter term, we aim to
reduce our Scope 1 and 2 emissions by 30%
by 2025 compared to 2020, equivalent to a
reduction of 730,000 tonnes of CO2e. In
addition, we are committed to achieving carbon
neutrality by 2050, or sooner if technology
permits, in line with Chile’s national
commitment.
During 2021 precipitation levels at Los
Pelambres were lower than expected so
throughput had to be reduced to optimise
water usage in the concentrator plant until the
expected rains in the winter in 2022 and the
completion of the desalination plant.
Risk appetite
Risk level
Outlook
We launched our digital connectivity
programme “En Red - Digital Community” to
enable communities in our areas of influence
to integrate into the world of digitalisation.
We reinforced community programmes related
to water for human consumption and irrigation
to mitigate the impact that the drought has had
in the Province of Choapa.
During the COVID-19 pandemic we have
worked with local and regional government to
support local communities, including
establishing a community support fund that
provided financial support, sanitary protection
and testing equipment.
We recognise that climate change is a threat to human life
and the planet as we know it today.
We measure and report our Scope 1 and 2 greenhouse gas
emissions and have committed to realistic reduction targets.
As regards water scarcity, we are reducing our dependence
on continental water through improved water use efficiency
and the increased use of sea water as a proportion of
our total water consumption. On completion of each phase
of the Los Pelambres desalination plant construction,
the proportion of continental water used will decrease,
particularly after Phase 2 of the project, significantly
lowering the potential impact of water scarcity on the
Group while freeing up water for local communities.
We seek constantly to identify risks associated with climate
change and to implement actions to adapt and mitigate to
their potential impact. For each risk evaluated as “High” or
“Extreme” we produce specific action plans and strategies.
As part of our regular communication with local
stakeholders we discuss the material risks and our
controls, action plans and related strategies.
We have a dedicated team that establishes and maintains
relations with local communities. These relationships
are based on trust and mutual benefit throughout the mining
lifecycle, from exploration to final remediation on closure. We
seek to anticipate any potentially negative operating impacts
and minimise these through responsible behaviour. This
means acting transparently and ethically, prioritising the
safety and health of our employees and contractors, avoiding
environmental incidents, promoting dialogue, complying with
our commitments to stakeholders and establishing
mechanisms to prevent or address a crisis. These steps
are undertaken in the early stages of each project and
continue throughout the lifecycle of each operation.
We contribute to the development of communities in the
areas in which we operate, starting with an assessment,
undertaken together with the communities, of the existing
situation and their specific needs, while looking to develop
long-term, sustainable relations and evaluating the impact of
our contributions. We also focus on developing the potential
of members of local communities through education,
training and employment.
We work to communicate clearly and transparently with local
communities in line with our Community Relations Plan. This
includes a grievance management process, local perception
surveys, and local media and community engagement.
Antofagasta plc Annual Report 2021
23
/ Risk management continued
Principal risks
continued
SAFETY AND SUSTAINABILITY CONTINUED
Description
Preventive and mitigation measures
Highlights
7. POLITICAL, LEGAL AND REGULATORY
Political instability may affect
our operations, projects and
exploration activities in the
countries in which we operate.
Issues regarding the granting
of permits, or amendments
to permits already granted,
and changes to the legal
environment or regulations,
could also adversely affect
our operations and
development projects.
8. CORRUPTION
Our operations or projects
around the world could be
affected by risks related to
corruption or bribery, including
operating disruptions or delays
resulting from a refusal to
make “facilitation payments”.
The level of such risks
depends, in part, on the
economic or political stability
of the country in which
we are operating.
We constantly monitor political, legal and regulatory
developments affecting our operations and projects.
We comply fully with existing laws, regulations, licences,
permits and rights in each of the countries in which
we operate.
We assess political risk as part of our evaluation
of potential projects, including the nature of any foreign
investment agreements.
We also monitor proposed changes in government policies
and regulations, particularly in Chile, and belong to several
associations that engage with governments on these
matters. This helps to improve our internal processes
and means we are prepared to meet any new
regulatory requirements.
We have zero tolerance for any activity that would
contravene anti-bribery and corruption legislation.
We maintain a robust governance regime, including
an Ethics Committee, open channels of communication,
training and multiple layers of controls at all our
operations, projects and exploration activities, as well
as in our third-party relationships.
Our Compliance Model seeks to prevent any activity which
may involve us directly or indirectly in any irregular
situation, to detect any potential risk in good time and
to act accordingly. There are control procedures in place
that help to prevent corruption, covering such issues
as conflicts of interest, suitability of suppliers, the receiving
and giving of gifts and hospitality, and facilitation payments.
All our employees receive training on our Compliance
Model, which is subject to external certification.
Risk appetite
Risk level
Outlook
Monitoring changes to Chile’s constitution,
mining tax legislation and environmental
regulations while supporting the Consejo Minero
(Chilean mining association) in its representations
and responses on behalf of the industry. The
nature of the changes will be significantly
clearer by the end of 2022 and we will evaluate
the impact they may have on our activities and
seek to mitigate any negative impacts.
Risk appetite
Risk level
Outlook
During 2021, a new offence was included in
the Chilean anti-bribery and employment
protection laws. This related to the non-
observance of isolation or other preventive
measures issued by the health authority in the
event of an epidemic or pandemic. Our crime
prevention model was updated accordingly
and the related risk re-evaluated.
The crime prevention model was recertified
during the year.
Whistleblowing investigations were centralised,
guaranteeing independence and standardising
the process.
24
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information COMPETITIVENESS
Description
9. OPERATIONS
Our operations are subject to
a number of circumstances not
wholly within our control.
These include damage to or
breakdown of equipment or
infrastructure, unexpected
geological variations or
technical issues, any of which
could adversely affect
production and/or costs.
10. TAILINGS STORAGE
Ensuring the stability of our
tailings storage facilities (TSFs)
during their entire lifecycle
is central to our operations.
A failure or collapse of any
of our TSFs could result
in fatalities, damage to the
environment, regulatory
violations, reputational damage
and the disruption of the quality
of life of neighbouring
communities as well as the
running of our operations.
Preventive and mitigation measures
Highlights
Principal risks relating to each operation are identified as
part of the regular risk review process undertaken by each
operation. This process also identifies appropriate
mitigation measures for such risks.
Monthly reports to the Board provide variance analysis
of operating and financial performance, allowing potential
issues to be identified in good time and any necessary
monitoring or control activities to be implemented
to prevent unplanned downtime.
Our focus is on maximising the availability of equipment
and infrastructure and ensuring the effective use of our
assets in line with their design capability and technical
limits. We keep the variation of processes within defined
tolerance limits.
We have Business Continuity and Disaster Recovery Plans
for all key processes within our operations, in order to
mitigate the consequences of a crisis or natural disaster.
We also have property damage and business interruption
insurance to provide protection from some, although not
all, of the costs that may arise from such events.
We manage our TSFs in a manner that allows the
effectiveness of their design, operation and closure to be
monitored at the highest level of the Company.
Catastrophic failures of TSFs are unacceptable
and their potential for failure is evaluated and addressed
throughout the life of each facility. Our TSFs are constantly
monitored and all relevant information is provided to the
authorities, regulating bodies and the communities that
could be affected.
We manage our TSFs using data, modelling, and construction
and operating methods validated and recorded by qualified
technical teams and reviewed by independent international
experts, whose recommendations we implement in order
to strengthen the control environment. Risk management
includes timely risk identification, control definition and
verification. Controls are based on the consequences
of the potential failure of the tailings facilities.
Risk appetite
Risk level
Outlook
COVID-related issues during the year impacted
the timing of some deliveries and shipments,
the availability of project labour and the
scheduling of planned maintenance. Due to the
Company’s flexibility and resilience the overall
impact on operations and projects was minor.
After 12 years of drought at Los Pelambres
this climate change risk has impacted
operations reducing production in 2021 and
in 2022. This impact will be mitigated on
completion of the desalination plant in the
second half of 2022.
Risk appetite
Risk level
Outlook
The Global Industry Standard on Tailings
Management (GISTM) was published in 2020
and we have committed to adopting this
standard at all our operations. We launched
a new tailings policy during the year, based
on the GISTM, reinforcing our commitment
to the safety and health of our workforce,
communities and the environment.
In accordance with this new standard, we have
updated our risk assessment methods with
a focus on more detailed risk identification,
failure modes and controls in order to avoid
catastrophic failures.
Our tailings policy ensures the stability of our
TSFs throughout their lifecycles, managing any
potential or actual impact on the environment
with sound governance and open communication
with stakeholders.
Antofagasta plc Annual Report 2021
25
/ Risk management continued
Principal risks
continued
COMPETITIVENESS CONTINUED
Description
Preventive and mitigation measures
Highlights
11. STRATEGIC RESOURCES
Disruption or restrictions to the
supply of any of our key
strategic inputs, such as
electricity, water, fuel,
sulphuric acid or mining
equipment, could negatively
impact production.
In the longer term, restrictions
to the availability of key
strategic resources such as
water and electricity could also
affect our growth opportunities.
12. CYBER SECURITY
Breaches in, or failures of,
our information security
management could adversely
impact our business activities.
Malicious interventions
(hacking) of our information
or operations’ networks could
affect our reputation and/or
operational continuity.
Risk appetite
Risk level
Outlook
In order to maintain our security of supply, contingency
plans are in place to address any short-term disruptions
to strategic resources. We negotiate early with suppliers
of key inputs to ensure continuity. Certain key supplies
are purchased from several sources to mitigate potential
disruption arising from exposure to a single supplier.
During the year, the pandemic and prolonged
sea swells impacted the supply of some key
inputs, but this impact has been prevented
or mitigated through constant monitoring,
contingency planning and actions taken
to improve the supply capability.
To achieve cost competitiveness, we endeavour to buy the
highest possible proportion of our key inputs, such as fuel
and tyres, on as variable a price basis as possible and
to link costs to underlying commodity indices where this
option exists.
We maintain a rigorous, risk-based supplier management
framework to ensure that we engage solely with reputable
product and service providers and keep in place the
necessary controls to ensure the traceability of all supplies
(including avoiding any conduct related to modern slavery).
We are committed to incorporating sustainable
technological and innovative solutions, such as using sea
water and renewable power when economically viable,
to mitigate exposure to potentially scarce resources.
Our Information Security Management Model is designed
with defensive structural controls to prevent cyber risks
and mitigate their effects. It employs a set of rules and
procedures, including a Disaster Recovery Plan, to restore
critical IT functions in the event of an attack.
Our systems are regularly audited to identify any potential
weaknesses or threats to operations, and specific systems
are in place to protect our assets and data.
Risk appetite
Risk level
Outlook
In 2021, preventive controls and constant
communication with users were reinforced
to prevent cyber attacks.
Some “ethical phishing” exercises were
conducted during the year.
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Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information Description
13. LIQUIDITY
Restrictions in financing
sources for future growth
could prevent us from
taking advantage of growth
or other opportunities available
in the market.
Preventive and mitigation measures
Highlights
Security, liquidity and return represent the order of
priorities for our investment strategy. We maintain a strong
and flexible balance sheet, consistently returning capital
to shareholders while leaving sufficient funds to progress
our short-, medium- and long-term growth plans
and maintain the financial flexibility to take advantage
of opportunities as they may arise.
We have a risk-averse investment strategy, managing our
liquidity by maintaining adequate cash reserves and
financing facilities through the periodic review of forecast
and actual cash flows. We choose to hold surplus cash in
demand or term deposits or highly liquid investments.
14. COMMODITY PRICES AND EXCHANGE RATES
Our results are heavily
dependent on commodity prices
– principally copper and, to
a lesser extent, gold and
molybdenum. The prices of
these commodities are strongly
influenced by a variety of
external factors, including world
economic growth, inventory
balances, industry demand and
supply, possible substitution, etc.
Our sales are mainly
denominated in US dollars,
although some of our operating
costs are in Chilean pesos.
As a result, the strengthening
of the Chilean peso may
negatively affect our
financial results.
We consider exposure to commodity price fluctuations an
integral part of our business and our usual policy is to sell
our products at prevailing market prices. We monitor the
commodity markets closely to determine the effect of price
fluctuations on earnings, capital expenditure and cash
flows. Very occasionally, when we feel it is appropriate,
we use derivative instruments to manage our exposure
to commodity price fluctuations.
We run our business plans through various commodity
price scenarios and develop contingency plans as required.
As copper exports account for over 50% of Chile’s
exports, there is a correlation between the copper price
and the US dollar/Chilean peso exchange rate. This natural
hedge partly mitigates our foreign exchange exposure.
However, we monitor the foreign exchange markets and
the macroeconomic variables that affect them and
occasionally implement a focused currency-hedging
programme to reduce short-term exposure to fluctuations
in the US dollar against the Chilean peso.
Risk appetite
Risk level
Outlook
The copper price cycle and the good
performance of the Mining division resulted
in a robust liquidity position. In addition, there
was a high level of interest from financial
institutions offering to provide finance on
competitive terms.
Risk appetite
Risk level
Outlook
Hedge positions taken out in 2020 were closed
and no new positions were entered into.
Antofagasta plc Annual Report 2021
27
/ Risk management continued
Principal risks
continued
GROWTH
Description
Preventive and mitigation measures
Highlights
15. GROWTH OF MINERAL RESOURCE BASE AND OPPORTUNITIES
Risk appetite
Risk level
Outlook
We need to identify new
mineral resources to ensure
continued future growth,
and we do this through
exploration and acquisition.
We may fail to identify attractive
acquisition opportunities or
select inappropriate targets.
The long-term commodity price
forecast, and other assumptions
used when assessing potential
projects and other investment
opportunities, have a significant
influence on the forecast
return of investments.
If incorrectly estimated,
these could result in poor
decision-making.
As regards exploration,
there is a risk that we may
not identify sufficient viable
mineral resources.
16. PROJECT EXECUTION
Failure to effectively manage
our development projects could
result in delays to the start of
production and cost overruns.
Our exploration and investment strategy prioritises
exploration and investment in the Americas. We focus
on growth opportunities in stable and secure countries,
in order to reduce our risk exposure.
Our exploration activities continued to be
focused mostly on the Americas and our risk
exposure level remained at the same level
as in 2020.
We conduct rigorous assessment processes to evaluate
and determine the risks associated with all potential
business acquisitions and strategic exploration alliances,
including conducting stress-test scenarios for sensitivity
analysis. Each assessment includes a country risk analysis
(including corruption) and analysis of our ability to operate
in a new jurisdiction.
The Company has discovered a significant
greenfield manto type deposit in the coastal
belt of the Antofagasta Region. The initial
inferred resource of the Cachorro deposit
is 142 million tonnes, with a copper grade
of 1.2%, and represents just part of the
potential resource.
At the very least, all joint ventures must operate in line
with, or to the equivalent level of, our policies and technical
standards.
Our Business Development Committee reviews potential
growth opportunities and transactions, approving
or recommending them within authority levels set
by the Board.
Two of Twin Metals’ mining leases were
cancelled in January 2022. Twin Metals
believes it has a valid right to the leases and a
strong case to defend its legal rights.
Risk appetite
Risk level
Outlook
Our growth projects’ risks are being proactively
managed and frequently evaluated by the
project team according to a specific project
risk management procedure to minimise the
impact on costs and timing arising from
COVID-related restrictions.
We have a project management system to ensure that best
practices are applied at each phase of a project’s
development. The project management system provides
a common language and standards to support the
decision-making process by balancing risk with the benefit
of growth. In addition, all geometallurgical models are
reviewed by independent experts.
During the project development lifecycle, quality checks for
each of the standards applied are carried out by a panel of
experts from within the Company. This panel reviews each
completed feasibility study to assess the technical and
commercial viability of the project. It also assesses how
the project can be developed safely and considers any
relevant risks or opportunities that could potentially impact
the schedule, cost or future performance of the project.
Detailed progress reports on current projects are regularly
reviewed and include assessments of progress against
key project milestones and performance against budget.
Project robustness is stress-tested against a range
of copper price scenarios. Joint project/operation teams
are established early in the development project in order
to ensure smooth transition of the project into operating
mode once construction is completed.
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Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information INNOVATION
Description
Preventive and mitigation measures
Highlights
17. INNOVATION AND DIGITALISATION
Our ability to deliver on our
strategy and performance
targets may be undermined by
missed opportunities or delays
in adopting new technologies
or innovations.
We seek value-capturing innovations that realise cost
savings and/or improve the efficiency, reliability and safety
of our processes while supporting our corporate strategic
pillars. We evaluate the potential of all ideas using our
stage-gate approval process and Innovation Board.
We maintain partnerships with academic institutions and
companies specialising in technology and engineering
– including peers, where there is no competitive barrier
to doing so – in order to maximise the potential for
improvements in our processes and systems. A dedicated
team monitors, identifies and analyses external innovation
trends with potential application to our business, including
those in non-operational areas such as product sales
and purchasing. The team also maintains and manages
a portfolio of ongoing innovation projects.
We have a recognition and incentives programme to
encourage all staff to suggest innovations to our day-to-day
operating systems. We also dedicate resources to evaluating
and implementing innovations which have the potential
to positively impact our business and growth options.
Risk appetite
Risk level
Outlook
During 2021, various automation projects such
as the autonomous drills at Los Pelambres and
Centinela’s autonomous trucks and Integrated
Remote Operations Centre were progressed.
Also, advanced data analytics were used at our
sites, focusing mainly on increasing throughput,
ore recovery and predictive maintenance.
Additionally, our Data Governance Programme
and Data Platform were deployed across the
organisation, generating benefits in data access,
consistency and quality, thus accelerating our
Advanced Analytics capabilities.
Antofagasta plc Annual Report 2021
29
/ Risk management continued
Principal risks
continued
TRANSVERSAL
Description
Preventive and mitigation measures
Highlights
Risk appetite
Risk level
Outlook
This risk was updated to incorporate lessons
learned during the COVID-19 pandemic.
Control actions were implemented to
guarantee the safety and health of our
employees and provide support to local
communities in order to maintain their
wellbeing and the continuity of our operations.
18. EXTERNAL RISKS
We must develop the ability
to manage external threats that
are complex to predict and can
significantly impact the Group’s
strategic objectives and its
operational continuity.
We promote the flexibility of our business and our labour
force. We have defined a new structure for working both
from home and at the workplace and have implemented
many other measures as part of our New Ways of
Working project.
We incorporate lessons learned into our business,
maintaining good practices and including potential
improvements learned from responses and actions taken
during periods of crisis.
We annually challenge the risk strategies associated
with each principal risk category, including the
diversification of suppliers, routes, levels of autonomy, etc.
We recognise the volatility of the markets and proactively seek
new business models and work to expand our client base.
We regularly review our Business Continuity Plan.
We conduct scenario analysis to challenge the principles
on which we base our financial planning, identifying
potential risks and cost/benefits of feasible action plans.
Viability statement
To address the requirements of provision 31 of the 2018 UK Corporate
Governance Code, the Directors have assessed the prospects of the Group over
a period of five years.
Mining is a long-term business and timescales can run into decades. The Group
maintains Life-of-Mine plans covering the full remaining mine life for each
mining operation. More detailed medium-term planning is completed for a
five-year time horizon (as well as very detailed annual budgets). Accordingly,
five years has been selected as the appropriate period over which to assess the
prospects of the Group.
When taking account of the impact of the Group’s current position on this
viability assessment, the Directors have considered in particular its financial
position, including its significant balance of cash, cash equivalents and liquid
investments and any borrowing facilities in place, including their terms and
remaining durations. The Group had a strong financial position as at
31 December 2021, with combined cash, cash equivalents and liquid investments
of $3,713.1 million. Total borrowings were $3,172.6 million, resulting in a net
cash position of $540.5 million. Of the total borrowings, only 11% is repayable
within one year, and 13% repayable between one and two years. 27%
of the borrowings are repayable after more than 5 years, beyond the viability
review period.
When assessing the prospects of the Group, the Directors have considered the
Group’s copper price forecasts, the Group’s expected production levels,
operating cost profile and capital expenditure. These forecasts are based on the
Group’s budgets and Life-of-Mine models, which are also used when assessing
relevant accounting estimates. This analysis has focused on the existing asset
base of the Group, without factoring in potential development projects, which is
considered appropriate for an assessment of the Group’s ability to manage the
impact of a depressed economic environment. The analysis has only included
the drawdown of existing committed borrowing facilities, and has not assumed
that any new borrowing facilities will be put in place. The Directors have
assessed the principal risks which could impact the prospects of the Group over
this period and consider the most relevant to be risks to the copper price
outlook, as this is the factor most likely to result in significant volatility in
earnings and cash generation. Robust down-side sensitivity analyses have been
performed, assessing the impact of:
• A significant deterioration in the future copper price forecasts by 10% throughout
the five-year period
• In addition to the above deterioration in the copper price throughout the review
period, an even more pronounced short-term reduction of 15% in the copper price
for a period of three months
• The Group’s most significant individual operational risks. In respect of the El Mauro
tailings storage facility at Los Pelambres, the risk of a major failure is considered to
be extremely low, principally because of the nature of its design and construction,
as well as the rigorous ongoing monitoring and controls and its performance since
it was built. Given this, it has not been considered appropriate to include a scenario
incorporating the possible impact of a potential major failure within the sensitivity
analyses
• A shut-down of the Group’s operations for a period of three months as the result
of COVID-19 or other issues
• The proposed new Chilean mining royalty, taking into account the Group’s existing
tax stability agreements
These stress-tests all indicated results which could be managed in the normal
course of business. The analysis indicated that the Group is expected to remain
in compliance with all of the covenant requirements of its borrowings
throughout the review period and retain sufficient liquidity. Based on their
assessment of the Group’s prospects and viability, the Directors confirm that
they have a reasonable expectation that the Group will be able to continue
in operation and meet its liabilities as they fall due over the next five years.
30
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information Compliance and internal controls
How we achieve our objectives
is crucial to the sustainable long-
term development of the Company.
We have zero tolerance for bribery
and corruption, and are committed
to working with integrity and
transparency. We comply with
all applicable anti-corruption and
anti-bribery legislation and ensure
that the necessary controls
are in place to prevent any
unethical behaviour.
Areas of focus and development
during 2021
• Whistleblowing investigations were
centralised, providing independence
and standardising the process
• The due diligence process was automated
and a new system to monitor potential
conflicts of interest is under development
• The crime prevention model was recertified
by Feller Rate
• The Code of Ethics and the Crime
Prevention Manual were updated
• A new method for rating and classifying
complaints according to their severity
was implemented
• All Directors and executives completed
compliance e-learning during the year
• In-depth training and briefings in ethics
and compliance, particularly in higher-risk
areas such as procurement and
community relations
• New employees were trained in the
Compliance Model as part of their
induction programme
• All employees updated their conflict-
of-interest disclosures
• We held an Integrity Week for all employees
and contractors, and some key suppliers
were invited to discuss the importance of
our culture of ethics and integrity in the
whole supply chain
• As part of our focus on Prevention in our
Compliance Model, we conducted a strong
communication campaign
• Compliance was included as a topic in the
local Antofagasta supplier day
• A total of 459 allegations were received, of
which 144 (31%) were ethics related and
315 (69%) were non-ethical concerns
• There were 15 Company Ethics Committee
meetings during the year to consider the
144 ethical allegations which were
classified: 57% (82) harassment, abuse and
mistreatment, 1% (2) bribery and
corruption, 22% (32) fraud or misuse of
property, 11% (15) conflicts of interest, 0%
modern slavery and 9% (13) other
Code of Ethics
The Code of Ethics sets out our commitment to
conducting business in a responsible and
transparent manner. The Code requires
honesty, integrity and accountability from all
employees and contractors and includes
guidelines for identifying and managing potential
conflicts of interest. It is the basis for the
Compliance Model and supports the
implementation of all other related activities.
Compliance Model
Our Compliance Model applies to both
employees and contractors. It is clearly
defined and is communicated regularly
through internal channels as well as being
available on our website. All contracts include
clauses relating to ethics, modern slavery
and crime prevention to ensure contractors’
adherence to our Model.
We actively promote open communication
with all our employees, contractors and local
communities. This helps ensure that our
corporate and value creation objectives
are achieved in an ethical and honest way.
The Compliance Model is reviewed regularly,
both internally and by third parties, and on
corruption-related matters it is certified
under Chilean anti-corruption legislation.
Compliance Model
PREVENTION DETECTION
ACTION
FULL MANAGEMENT OF RISKS
Prevention: The main focus of the
Compliance Model is to prevent any irregular
situations arising. We provide a series of tools
and training opportunities to all employees
and contractors to support appropriate
behaviour through:
• Internal procedures
• Anti-trust guidelines (Politically Exposed
Persons, facilitation fees, etc)
• Due diligence, including the review of
conflicts of interest and of potential
business partners
• Inclusion of anti-corruption clauses
in contracts
• Training and communication
Detection: We have several tools to detect
any potentially irregular situations, including:
• Whistleblowing channels
• Data analysis
• Regular due diligence
• Internal controls
• Internal audit
Action: If an irregular situation is detected,
it is investigated according to our procedures.
Each of our operating companies has an
internal Ethics Committee which reviews the
conclusions of investigations and suggests
action plans to the Company’s Ethics Committee.
The performance of the compliance programme
is reported twice a year to the Audit and Risk
Committee and to the Board. The anonymity
of employees using the whistleblowing
channels is guaranteed, which safeguards
individuals and achieves greater transparency.
Our Crime Prevention Model ensures
compliance with anti-bribery and anti-corruption
laws in the United Kingdom and Chile and is
certified by an external entity.
Due diligence highlights
During the year 6,533 suppliers were
reviewed, of which 0.3% (22) were rejected
and the others were approved. Of the rejected
suppliers, 100% were national and 0% were
international. The reasons for rejection were
mainly due to high financial/tax risk,
non-compliance with Law 20.393 (Criminal
Responsibility of Legal Entities) or non-
compliance with Group guidelines.
Antofagasta plc Annual Report 2021
31
We are incorporating
a digital focus in all our
social programmes
and projects to make
a deeper and lasting
contribution to
communities.
/ René Aguilar
Vice President of
Corporate Affairs
and Sustainability
32
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information Further information about the digital
transformation initiatives underway can be
found throughout the Stakeholder Review
section of this report and in our Social
Management Report.
Find out more online
antofagasta.co.uk/smr21
/ Case study
En Red has three main lines of action:
Creating connected communities
The vital role of digitalisation for
the wellbeing of communities was
laid bare by the COVID-19
pandemic. From one day to the
next many of our stakeholders
were cut off from work, education
and social interaction, either
because of the absence of internet
coverage in remote areas or the
prohibitive costs of acquiring
digital devices or data. Poor digital
skills were another obstacle.
• Connectivity: promoting projects to provide
unconnected communities with internet
access. For example, in 2021 we worked
with a satellite internet provider to install an
antenna in the Camisas Valley in the
Choapa Province, allowing schoolchildren
who previously had no access to the
internet to connect to online classes. In
María Elena and Michilla, in the Antofagasta
Region, we are working with local
authorities and communities to examine
options to provide free wifi hotspots.
• Digital Literacy: fostering the skills to reap
the benefits of digitalisation. In 2021, more
than 600 people in our areas of influence
in the Antofagasta Region took part in
Connectivity and Digital Literacy workshops.
In Michilla, Baquedano and Sierra Gorda we
provided devices to schoolchildren.
At Antofagasta, we are addressing this gap
through our digital connectivity programme,
En Red (Connected). This initiative, launched in
July 2021, aims to integrate communities in our
areas of influence into the Digital Age in order
to promote new possible life paths and hasten
access to the social and economic benefits
offered by digitalisation. The strategy covers
a range of existing and planned programmes
and is focused on five areas: health and
telemedicine, education, job training, water
management and entrepreneurship.
• Participation: making sure no one is left
behind in the digital transformation
process. Initially driven by the pandemic,
we have been using digital platforms to
engage with communities, build community
cohesion and strengthen socio-digital
capital. In many cases, this has led
to increased participation in
our programmes.
/ Strategic Report
STAKEHOLDER
REVIEW
Our approach to sustainability
Committed to positive impact
Our commitment to the Sustainable
Development Goals
How we engage with our stakeholders
Our people
Safety and occupational health
Communities
Climate change
Task Force on Climate-related
Financial Disclosures
Environment
Responsible supply
Customers
Shareholders
Governments and regulators
Non-financial information statement
34
34
38
40
42
44
46
48
52
58
60
62
63
64
65
Antofagasta plc Annual Report 2021
33
/ Our approach to sustainability
Committed to positive impact
At Antofagasta, we are committed
to making a long-term positive
impact on society, and sustainability
considerations are central to how
we make decisions and perform
our work.
Governance
Dedication to safety and health and a
commitment to sustainability are two of our six
core values. Under this framework, we aim to
identify and control safety and health risks,
create economic value, manage our
environmental impact and contribute to the
development of communities in the areas where
we operate. We recognise climate change as
one of the greatest challenges of our times.
Our Sustainability Policy and our Human
Rights Policy state the commitments behind
our Purpose to develop mining for a better
future, establishing the principles that guide
our day-to-day actions on economic, social
and environmental matters. The Board is
responsible for leading and monitoring
sustainability practices, assisted by the
Sustainability and Stakeholder Management
Committee whose recommendations
ensure that these matters are included in
the Board’s deliberations.
We seek to ensure the whole organisation’s
alignment behind our commitment to
sustainability. We do this through
communications, regular training and the
inclusion of sustainability targets in annual
performance bonus agreements. In 2021,
targets associated with safety, diversity and
inclusion, environment and social performance
accounted for 20% of the performance targets.
In 2021 we updated our Sustainability Policy, in
order to incorporate the comments received in
the evaluation and self-assessment processes
of The Copper Mark. We are working on the
update of our Human Rights Policy, which is
expected to be approved in 2022.
ESG disclosure
At Antofagasta, we are committed to
demonstrating how our strategies, policies and
targets are supported by concrete actions and
how we measure the impact of these activities.
As part of this process, during the year, we
complemented our regular Annual and
Sustainability Reports with reports on specific
topics to provide an extra level of disclosure.
In September, we published our first progress
report on the implementation of the
recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD)
antofagasta.co.uk/tcfd21. This provided an
overview of our TCFD-related work and
climate change response. On pages 52-57
of this report, there is a summary of our
disclosures.
Likewise, in the last quarter of the year, we
published detailed reports on our community
engagement and social investment practices
antofagasta.co.uk/smr21 and how we are
addressing climate change antofagasta.co.uk/
ccr21 in response to requests for increased
disclosure on these matters by analysts,
investors and non-governmental
organisations (NGOs).
As a demonstration of our transparency, in
2021 Centinela and Zaldívar received the
Copper Mark, an independent external
assurance of the sites’ compliance with strict,
internationally recognised, sustainable
production standards. Los Pelambres and
Antucoya began the voluntary accreditation
processes at the end of the year.
Inspired by the UN’s Sustainable Development
Goals (SDGs), the Copper Mark was launched
in March 2020 and involves the independent
verification of activities at copper-producing
sites based on 32 criteria in five categories:
governance, labour rights, environment,
community and human rights. It provides a
simple and credible assurance process of
sites’ responsible mining practices.
Our four mining companies also completed
the self-assessment against the International
Council on Mining and Metals’ Performance
Expectations, ahead of the deadline of
September 2022 for member companies.
We expect the associated independent audits
of the four sites to be carried out in 2022.
OUR PURPOSE
We believe in developing mining for a
better future. As custodians of natural
resources, we have a responsibility not
only to manage these resources
efficiently and responsibly, but also to
harness copper’s potential to contribute
to the development of a greener and
more sustainable world.
34
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information Materiality
At Antofagasta, we conduct a full materiality assessment every two years to identify the sustainability issues that are most important
to our business and stakeholders. In 2021, we monitored the material issues raised in the 2020 exercise by reviewing specialist
investor and analyst reports, perception surveys and the media. Our bottom-up approach to engaging with communities also alerts
us to emerging issues.
The most significant issues, in terms of their importance to stakeholders and the potential size of their economic, social and environmental
impact are: greenhouse gas emissions, water management, safety and health, ethics and compliance, creation of local jobs and capacity
building, tailings and dust, and community relations.
2020-2021 Materiality matrix
I
I
S
N
O
S
C
E
D
&
S
T
N
E
M
S
S
E
S
S
A
’
S
R
E
D
L
O
H
E
K
A
T
S
N
O
E
C
N
E
U
L
F
N
I
H
G
H
I
I
M
U
D
E
M
W
O
L
• Higher-quality education
in regions
• Mine closure
• Circular economy
• Renewable energy
• GHG emissions
• Water management
• Safety and health
• Ethics and compliance
• Creation of local jobs and
capacity building
• Tailings and dust
• Community relations
• Economic performance and
contribution
• Talent attraction, development
and retention
• Diversity and inclusion
• Automation and digitalisation
• Political outlook (elections,
constitutional reform)
• Regulatory changes
• Project permitting
• Operational innovation
• Human rights
• Air quality
• Responsible supply
chain management
• Transparency
• Corporate governance
• Labour relations
• Emergency planning
• Indigenous peoples
• COVID-19
• Heritage buildings (Transport
division)
• Extreme weather events
• Traffic congestion
• Biodiversity
• Marine pollution
• Non-mining waste
management
• Urban development plan
(Transport division)
LOW
MEDIUM
HIGH
SIGNIFICANCE OF ORGANISATION’S ECONOMIC, ENVIRONMENTAL & SOCIAL IMPACT
Antofagasta plc Annual Report 2021
35
/ Our approach to sustainability continued
Committed to positive impact
continued
Details of our approach and activities in 2021 to address the challenges below
are contained in the corresponding sections of the Stakeholder Review.
SUSTAINABLE GOVERNANCE
• In July and August respectively, our
SAFETY AND HEALTH
• We conducted a thorough investigation into
PEOPLE
• By the end of 2021, we had surpassed, one
Centinela and Zaldívar operations were
awarded the Copper Mark, the copper
industry’s new responsible production
assurance framework.
• In 2021, we published four thematic reports
providing more detail and transparency on
how we manage our business, including a
Climate Change Report in December.
• We update our Sustainability Policy to
incorporate the comments received in the
evaluation and self-assessment processes
of The Copper Mark, ICMM Performance
Expectations and the Global Industry
Standard on Tailings Management (GISTM).
the tragic death in July of a contract
company worker at Los Pelambres,
communicated these learnings across the
organisation and incorporated the findings
into our safety management system.
• In 2021, we reduced the number of high
potential incidents (HPIs) by 24%.
• We actively promoted the vaccination of
our workers against COVID-19, reaching
a vaccination rate of 97%.
• We approved a Control Strategy
for Psychosocial Risks, which have
increased due to the uncertainty caused
by the pandemic.
year early, the target of doubling the
proportion of women in our Mining division
workforce, compared to our baseline of
8.6% at the beginning of 2018, achieving
a participation rate of 17.4%.
• As part of our digital transformation plan
we began training employees at Centinela
to operate autonomous trucks and the
integrated remote operations management
centre in the city of Antofagasta.
• We provided training opportunities to 197
apprentices, mainly from the regions of
Antofagasta and Coquimbo, of which 82%
were women.
SUPPLIERS
• Our Procurement department began
incorporating new ESG criteria, such
as the internal carbon price, into our
contract adjudication criteria.
• Our Mining division increased the number
and value of contracts awarded to local
suppliers by 4% and 24% respectively,
as part of our commitment to foster
economic development in the regions
where we operate.
• We expect to complete measurement of
Scope 3 emissions attributable to our
suppliers in 2022 and identify ways of
collaborating to jointly achieve reductions in
their emissions.
COMMUNITY
• In July, we launched the En Red (Connected)
digital connectivity programme to enable
communities in our areas of influence
to enjoy the benefits of digitalisation.
• We implemented a single data platform
to register online all our social
management data.
• A new community complaints management
system was approved and will be
implemented in 2022.
• As in 2020, in 2021 we maintained a Covid
Fund of $6 million.
• For the second year running, we
strengthened our two water management
programmes to address the impact of the
Choapa Province’s acute drought on water
for human consumption and irrigation.
ENVIRONMENT AND
CLIMATE CHANGE
• After meeting our 2018-2022 GHG
emissions reduction target in 2020, we
have committed to carbon neutrality by
2050 at the latest and, in the shorter term,
a 30% reduction in our emissions by 2025
(compared to 2020).
• During the year we made important progress
on implementing our new Climate Change
strategy, approved by the Board in late 2020.
• In 2021, we strengthened the regulatory
risk management pillar of our
Environmental Management Model.
René Aguilar
Vice President of Corporate Affairs and Sustainability
We have adapted our social management strategy
to address emerging and growing societal concerns.
These include, for example, climate change, human
rights and indigenous peoples.
36
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information For Antofagasta, creating economic value implies generating
profits responsibly and with a long-term vision, incorporating
unique and innovative solutions in business decisions to address
challenges in the regions in which we operate, and working to
tackle today’s global challenges.
DISTRIBUTION OF ECONOMIC VALUE GENERATED
Our aim is to develop mining for a better future and we understand
that generating economic value means more than making a profit.
We generate economic value for all of our stakeholders; distributed as
wages to our employees, purchases of goods and services from our
suppliers, contributions to local communities, taxes to governments,
dividends to our shareholders and interest paid to our lenders.
In 2021, we distributed a total of $7,132 million.
$7,132m
Total economic contribution
Suppliers
Communities
Lenders
Shareholders
$4,359m
Payments made to suppliers
for the purchase of utilities,
goods and services
$48m
Economic and
social contribution
$83m
Interest payments
$711m
Dividends
Employees
Governments
$537m
Salaries, wages and
incentives
$789m
Income taxes, royalties
and other payments
to governments
Subsidiaries´ non-
controlling interests
$605m
Dividends to minority shareholders
of subsidiary companies
Antofagasta plc Annual Report 2021
37
/ Our approach to sustainability continued
Our commitment to the
Sustainable Development Goals
The Sustainable Development Goals (SDGs) were adopted by all United Nations Member States in 2015
as a universal call to end poverty, protect the planet and ensure that all people enjoy peace and prosperity
by 2030. At Antofagasta, we are committed to playing our part in achieving the SDGs through the creation
of value for our different stakeholders and the approval of commitments, targets and programmes that
seek to contribute to the sustainable development of the regions where we operate.
NO POVERTY
End poverty in all its forms everywhere
We contribute to the reduction of poverty through the distribution of the economic value generated (such as wages and taxes) and our social
programmes. Antofagasta has an ethical monthly minimum wage for contractors of Ch$515,000, 53% above Chile’s legal minimum wage. In response
to COVID-19, we have focused on protecting jobs, alleviating social hardship and supporting local businesses with measures that range from relief in the
form of vouchers to be spent in local shops to grants for small businesses.
GOOD HEALTH AND WELLBEING
Ensure healthy lives and promote wellbeing for all at all ages
For Antofagasta, the safety and health of our employees, contractors and nearby communities is non-negotiable and takes precedence over results.
Our Safety and Health Strategy aims for zero fatal accidents and zero occupational health illnesses. Our Flexitime and Work-Life Balance Guidelines
seek to improve our employees’ work experience and quality of life. As in 2020, in 2021 we mantained a Covid Fund of $6 million to be used on
community healthcare and prevention measures.
QUALITY EDUCATION
Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
We support inclusive access to quality education to improve job opportunities in the regions where we operate. Initiatives range from school and higher
education scholarships to providing and strengthening technical-professional courses. We offer Young Graduate programmes as well as apprenticeships
and internships to provide learning and work opportunities to local young people. In 2021, 162 new professionals graduated from the Choapa Technical
Training Center, through a cooperation agreement between a local university and Minera Los Pelambres Foundation.
GENDER EQUALITY
Achieve gender equality and empower all women and girls
The Group’s Diversity and Inclusion Strategy seeks to increase the participation and retention of women in the workforce. This is reflected in our
recruitment and selection strategies, the promotion of inclusive workspaces and our zero tolerance policy on sexual harassment. In 2021, 98 female
employees took part in career development programmes and women represented 82% of 197 new apprentices.
CLEAN WATER AND SANITATION
Ensure availability and sustainable management of water and sanitation for all
All our operations are in water-stressed areas. In a bid to protect this resource’s availability for our own operations, local communities and the
environment, we apply water management practices aligned with the International Council on Mining and Metals’ (ICMM) Water Stewardship Framework.
Our Antucoya and Centinela mines use mainly raw sea water and Los Pelambres will start using desalinated water in 2022. We anticipate that by 2025
reused, recycled and raw or desalinated sea water will account for more than 90% of the Mining division’s operational water use. Our work with
communities to ensure the provision of water for human consumption and irrigation is a key focus of our social contribution in the Choapa Province.
AFFORDABLE AND CLEAN ENERGY
Ensure access to affordable, reliable, sustainable and modern energy for all
As part of our Climate Change Strategy, our Mining division has renegotiated its power purchase agreements in order to switch from conventional to renewable
energy sources. In 2020, Zaldívar became the first of our operations to use 100% renewables. In January 2022, Antucoya and Centinela switched to 100%
renewably-generated electricity and, later in the year, Los Pelambres will follow, with the exact date depending on the ramp-up of a hydroelectric project being
built by a third party. We anticipate that by the end of 2022 our mining operations will be using electricity solely from renewable sources.
DECENT WORK AND ECONOMIC GROWTH
Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
The Group’s Code of Ethics and Human Rights Policy aim to ensure a harassment-free, inclusive workplace that respects human rights and diversity.
We are also governed by the UK Modern Slavery Act. Our People strategy seeks to promote a diverse and inclusive culture that allows employees to meet
their full potential and prepares them for the future world of work. In 2021, we spent $1.6 million on training initiatives. Our Procurement department is
working with suppliers to support the adoption of environmental, social and governance (ESG) best practice in the supply chain.
INDUSTRY, INNOVATION AND INFRASTRUCTURE
Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation
Innovation is one of the five pillars of our Strategy to develop mining for a better future. We foster innovation among stakeholders through our
InnovaMinerals open platform, participation in the Industrial Weeks for Innovation in the city of Antofagasta and Pitch Days for technology companies
at our operations. In 2021, as part of our Digital Transformation Programme, we began training programmes on Centinela’s integrated remote
management centre in Antofagasta, which will start full operations in 2022, and on the operation of autonomous trucks.
38
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information REDUCED INEQUALITIES
Ensure availability and sustainable management of water and sanitation for all
Antofagasta strives to promote educational opportunities, skills development and job openings for local people and businesses in the regions where we
operate. We contribute to reducing inequality by providing help in the form of scholarships and educational support to promote social mobility in remote
and vulnerable sectors. In 2021, we provided 197 scholarships to students in our areas of influence in the Antofagasta Region and the Choapa Province.
SUSTAINABLE CITIES AND COMMUNITIES
Make cities and human settlements inclusive, safe, resilient and sustainable
Through our Social Management Model, we choose, develop and implement social investment projects together with local communities, strengthening local
leadership and the long-term impact of the initiatives. We work with local authorities, communities and third-party experts to improve public spaces and
social cohesion in communities. Our Transport division plans to rehabilitate 48 hectares of industrial land in the centre of the city of Antofagasta as part
of a broader urban development plan.
RESPONSIBLE CONSUMPTION AND PRODUCTION
Ensure sustainable consumption and production patterns
Our Sustainability Policy establishes the basis for the responsible management of the Group’s activities. In 2021, our Centinela and Zaldívar operations were
awarded the Copper Mark, the copper industry’s new responsible production assurance framework, and Los Pelambres and Antucoya started the
assessment process in late 2021. Our Procurement department is strengthening due diligence on suppliers to cover ESG topics more broadly and has
started to include our internal carbon price in large contracts.
CLIMATE ACTION
Take urgent action to combat climate change and its impact
We recognise climate change as one of the greatest challenges facing the world today and acknowledge our responsibility to be part of the solution.
As a copper producer, we supply an input that is critical for low-carbon technologies and, at the same time, we are working to decarbonise our
operations. In 2021, we made important progress on implementing our Climate Change Strategy, approved in 2020, which sets ambitious goals
for emissions and water use, as well as the resilience of our operations and their areas of influence. In May, we announced our target to achieve
carbon neutrality by 2050, or sooner if the development of technology permits, and to cut our Scope 1 and 2 emissions by 30% by 2025.
LIFE BELOW WATER
Conserve and sustainably use the oceans, seas and marine resources for sustainable development
Our Biodiversity Standard is aligned with the ICMM’s position statement on Mining and Protected Areas. It has three goals: to prevent or minimise impacts
on biodiversity, to restore or provide appropriate compensation for any impact, and to generate additional benefits for the areas where we operate. Centinela
and Los Pelambres monitor the marine environment in the vicinity of their port facilities, studying the water column, sediments and marine fauna. Through
a public-private programme led by the Chilean government’s economic development agency, CORFO, Los Pelambres participates in R&D projects to
repopulate the area near its port and desalination plant facilities with sea urchins, abalone, red kingklip and other species.
LIFE ON LAND
Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification,
and halt and reverse land degradation and halt biodiversity loss
Biodiversity is a key part of our Climate Change Strategy, which seeks nature-based solutions (NbS) both for the capture of CO2 and for adaption to physical
risks. We implement programmes to protect animal, bird and plant species in both the Antofagasta and Coquimbo Regions and administer over 27,000 hectares
of nature sanctuaries and protected areas in the Choapa Province, equivalent to seven times that used by Los Pelambres and its related installations.
PEACE, JUSTICE AND STRONG INSTITUTIONS
Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective,
accountable and inclusive institutions at all levels
Antofagasta’s activities conform to the UK’s Bribery Act and Modern Slavery Act as well as Chilean Law No 20.393 on bribery and asset laundering.
Our Code of Ethics, Compliance Model and Crime Prevention Manual define how we undertake our business in a responsible, accountable, honest and
transparent manner and we conduct annual training for departments with higher exposure to risk on these matters.
PARTNERSHIPS FOR THE GOALS
Strengthen the means of implementation and revitalise the global partnership for sustainable development
We promote the creation of public-private alliances, taking advantage of our partners’ experience and strategies to contribute to the achievement of
the SDGs in the regions where we operate. Our partners include the state, Chilean and international trade associations, other mining companies and/
or industry groups, civil society, academic institutions and NGOs. In particular, we use alliances, mostly with local or national foundations, to implement
our social programmes which, in many cases, leverage or complement government programmes.
For more information on these initiatives, see the Safety and occupational health, Our people,
Communities, Responsible supply, Climate change and Environment sections of this report.
Antofagasta plc Annual Report 2021
39
How we engage with
our stakeholders
To support the long-term success of our business, our engagement with
stakeholders is open, transparent and collaborative. We use appropriate
mechanisms to interact with them, provide them with information and
learn about their interests and concerns.
OUR PEOPLE
Approximately 27,000 people (employees
and contractors) work at our operations,
projects, exploration programmes and
corporate offices. They are almost all
based in Chile.
COMMUNITIES
We operate in Chile’s Antofagasta and
Coquimbo Regions, where our neighbours
include a range of communities around our
mines and transport business, as well as
on the coast near our port facilities.
SUPPLIERS
We work with over 2,000 suppliers
of which 96% are based in Chile. They
provide a broad range of products and
services, from large mining equipment
to catering and transport.
Why we engage
Constructive relationships, anchored in mutual
respect and transparency, are crucial for
a good working environment and talent
retention as well as for productivity and
efficiency. Through our engagement with
contractors, who are essential for operational
continuity, we seek to transfer knowledge and
ensure compliance with our own standards,
particularly on safety and health.
Why we engage
The wellbeing of local communities is directly
related to the sustainable development and
success of our business. Through a bottom-up
approach to engagement, we seek together
to grow with these communities and contribute
to their long-term social and economic
development, while taking care to prevent,
mitigate and compensate for any adverse
impact our activities may have.
Why we engage
Suppliers play a critical role in our ability to
operate sustainably and safely. Through our
engagement with them we seek to improve
their sustainability performance and ensure
they meet our standards and guidelines on
sustainability matters. We also work with
suppliers to ensure that they offer us the
most cost-effective and efficient solutions.
How we engage
We have regular engagement with our workforce
through a variety of channels including site visits
by senior management, on-site reviews, surveys
of the working environment and individual
performance evaluations. We also offer technical
training, provide career opportunities and foster
a culture of knowledge. We meet regularly with
union representatives and the managers of our
contractors and discuss a range of specific
topics including safety and health.
More information on
P42
40
Antofagasta plc Annual Report 2021
How we engage
We engage with communities through different
social programmes, often implemented in
alliance with local foundations. Initiatives are
selected and designed together with the
community, through working groups on specific
areas of community development or concerns.
More information on
P46
How we engage
The procurement team regularly meets with
suppliers. Tenders take place through an online
platform designed to guarantee fairness and
transparency. To ensure the broadest possible
access to tenders, we use an automated
invitation system and participate in different
external platforms. By prioritising local suppliers,
we seek to foster the development of
neighbouring communities.
More information on
P60
Strategic ReportCorporate GovernanceFinancial Statements Other Information S.172(1) STATEMENT
Antofagasta’s purpose is to develop mining
for a better future – to achieve this and
continue to deliver sustainably, we rely on
the support of a range of different
stakeholders. This means always putting
the safety of our people first as we seek
to deliver value to our customers, suppliers,
shareholders and the communities in which
we operate.
The Directors of Antofagasta plc have acted
in accordance with their duties to operate
in the way that they consider, in good faith,
is most likely to promote the success of the
Company for the benefit of its members
as a whole, particularly with regard to
the stakeholders and matters set out in
section 172(1) of the Companies Act 2006,
including among other matters:
• The likely consequences of any decision
in the long term
• The interests of the Company’s
employees
• The need to foster the Company’s
business relationships with suppliers,
customers and others
• The impact of the Company’s operations
on the community and the environment
• The desirability of the Company
maintaining a reputation for high
standards of business conduct, and
• The need to act fairly as between
members of the Company
Section 172 considerations are embedded
in decision-making at Board level and
throughout the Group. Throughout the
Strategic Report we outline the way in
which we engage with our stakeholders
to create value throughout our operational
activity. Within the Corporate Governance
report on page 116 we discuss, in respect
of the key decisions that the Board
has taken in the year, how stakeholders
were considered and how we engaged
with them.
CUSTOMERS
We sell principally to industrial customers,
smelters and fabricators, who further
process our copper concentrate
and cathodes.
SHAREHOLDERS
Shareholders are the companies, financial
institutions and individuals that hold
a stake in the Company. They are entitled
to receive dividends and to vote
at shareholder meetings on certain
matters, including the election of the
Company’s directors.
GOVERNMENTS AND
REGULATORS
Governments and regulators at national,
regional and local levels, draft, implement
and uphold legislation, rules and
regulations, setting and enforcing the
framework within which we operate.
Why we engage
Most sales are made under long-term
framework agreements or annual contracts
with sales volumes agreed for the following
year. Without these long-term customer
relationships we would have to sell a larger
proportion of our concentrate and cathodes
on the spot market, with greater uncertainty
about pricing and volume.
Why we engage
Shareholders, and particularly institutional
investors, are constantly evaluating their
holdings in the Company and require regular
information about its strategy, projects and
performance. We therefore pay special
attention to our communications with them,
maintaining fluent and transparent dialogue to
ensure that they are treated fairly and receive
all relevant information.
Why we engage
Mining is a long-term business and timescales
can run into decades. Political cycles are
typically far shorter and material
developments and changes to policy,
legislation or regulations can have a major
impact on the business.
How we engage
We also hold regular meetings with our
customers around the world. Some of our
major customers are also equity holders in
our mining operations. The Chairman and
several Directors visit Japan each year to
meet our partners and we have a marketing
office in Shanghai.
More iformation on
P62
How we engage
We regularly meet with institutional investors
and brokers’ analysts at industry conferences
and roadshows, as well as in one-on-one
meetings. The Board attends the Company’s
Annual General Meeting, either physically or
virtually, and its members are available to
answer questions. The Company also provides
regular production and financial reports and
other ad hoc information, which are available
on the Company’s website.
More information on
P63
How we engage
We work alongside mining associations and
other industry-related bodies to engage with
governments on public policy, laws, regulations
and procedures that may affect our business.
We interact with governments and regulators
strictly within their engagement mechanisms
which, in Chile, are clearly defined in Law
N° 20.730 on lobbying.
More information on
P64
Antofagasta plc Annual Report 2021
41
/ How we engage with our stakeholders continued
Our people
Diversity and Inclusion remain a
central focus as we embed a hybrid
form of working across the
organisation and train our employees
for the future world of work.
The Group’s People strategy is built around the
four pillars of culture; organisational
effectiveness; labour relations and engagement;
and organisational capabilities and talent
management. It is aligned with the six principles
in our Charter of Values: Passionate about
Safety and Health, Excellence in our Daily
Performance, Respect for Others, Forward-
Looking, Commitment to Sustainability, and
Innovation as a Permanent Practice.
Inclusive culture
Our Diversity and Inclusion (D&I) Strategy,
launched in 2018, seeks to attract and retain
a broad range of talents. It initially focused on
increasing the participation of women, people
with disabilities and people with international
experience in our workforce, but is now
broadening out to incorporate other aspects of
diversity. The aim is to become an organisation
that values and respects diversity in all its forms
and benefits from an inclusive culture.
In 2021, we continued to focus on embedding
an inclusive culture across our organisation
through webinars and communication activities
on issues such as parental co-responsibility,
balancing work with domestic demands and
zero tolerance for sexual harassment in the
workplace. In July, we approved a protocol to
support employees in a process of gender
transition. On average, 88% of our employees
have a positive perception of our D&I culture,
according to workforce surveys.
88%
of our employees have a positive
perception of our D&I culture
As part of our strategy, we updated our
Work-Life Balance Guidelines which include
benefits that go beyond Chilean law, such as
ten days of paternity leave, the possibility of
taking a year off work for health or other
reasons, and a flexitime system for employees
in our corporate offices.
42
Antofagasta plc Annual Report 2021
Gender balance
During the year, we increased the proportion
of women in our workforce to 17.2% (1,221
out of 7,081), achieving our target one year
early, of doubling their participation by the end
of 2022 compared to our baseline of 8.6% at
the beginning of 2018. By comparison,
women represent 12.4% of the national
mining industry. Targets for the inclusion of
women are included in performance
scorecards and a new target for the Company
will be set in 2022.
In 2021, 36% of our new recruits were
women.
Direct reports
to the
Executive
Committee
Executive
Committee
Senior
Management1
Male
Female
9 82% 51 82% 21 81%
5 19%
2 18%
18%
11
1. Includes directors of subsidiaries as defined
in The Companies Act 2006 (Strategic Report
and Directors’ Report) Regulations 2013
People with disabilities
People with disabilities account for 1.2% of
our workforce, of which 60% are employed at
our operations, exceeding the 1% requirement
of Chile’s Workplace Inclusion Law. Together
with the Consejo Minero (Mining Council), an
association of major mining companies in
Chile, we worked with the authorities on the
proposed regulation of universal access to
mine sites for people with disabilities, a
process that includes public consultation.
Organisational effectiveness
In 2021, we rolled out our New Ways of Working
project, comprising a permanent hybrid system
of remote and in-person working adapted to
employees’ roles. Corporate employees are
required to work in-person 50% of the time,
while jobs at the operations have been divided
into three in-person models: 100% of the time
(eg. truck operators), 50% of the time, and at
least one week a month (all subject to COVID-19
restrictions).
The project builds on the successful trial in
2020 of extensive remote working to control
the spread of COVID-19 and aims to:
• Build a resilient and flexible organisation
with the capacity to respond to unexpected
external events
• Capture opportunities to improve
productivity and efficiency by, for example,
reducing travel
• Offer a more attractive work-life balance
as part of our Diversity and Inclusion
(D&I) strategy
Regular Pulse surveys indicate that
employees support the new model but have
concerns related to managing working hours
and fulfilling domestic requirements when
remote working, especially in light of the
pandemic, which prevented children in Chile
from attending school for much of the year.
In December, following a participative
employee process, we drew up a list of good
practices, such as not scheduling meetings
over the lunch period, to address these
challenges.
We have an area dedicated to the wellbeing
of our workforce that provides support,
communications and online resources for
activities such as yoga and mindfulness.
Employees can also access a 24/7
confidential, psychological helpline.
At the end of the year, we conducted an
Engagement and Perception Survey at our
corporate offices and Antucoya to assess
employee satisfaction. The same study will
also be conducted at our other operations
in the first half of 2022.
Leadership brand
In 2021, we provided team-by-team
communications and coaching on our
Leadership Competencies Model, updated
in 2019. Plans for a massive roll-out of the
model across the organisation were
postponed due to the COVID-19 pandemic.
During the year, we reinforced our five
leadership skills – I value all contributions,
I act thinking of the future, I develop myself
and others, I do things with conviction
and commitment, and I create value in
everything we do – to leverage the New
Ways of Working project.
Building human capital
At Antofagasta, we seek to develop human
capital and talent, not only internally but also
in the local communities where we focus
our recruitment efforts. In 2021, 55% of our
workforce were resident in the Antofagasta
and Coquimbo Regions where our operations
are located.
We are committed to promoting a culture
that fosters innovation, allows employees
to develop their full potential and enables
the digital transformation of the business.
In 2021, we invested $1.6 million in employee
training, the equivalent of 44 hours of training
per employee.
Strategic ReportCorporate GovernanceFinancial Statements Other Information 26,991
People
25.5%
Employees
74.5%
Contractors
17.2%
Women
77%
Unionised
employees
In 2021, three-year labour agreements were
successfully negotiated with two of the unions
at Los Pelambres and one at Centinela, in a
climate of mutual respect.
Employees and contractors can make
complaints or raise issues on our confidential
Tu Voz (Your Voice) whistleblowing line, details
of which are published on our website, as well
as at our operations. In 2021, we reinforced
our contractors’ awareness of this channel.
Contractors
Contractor companies perform key tasks
in our businesses and their employees
account for 74% of our total workforce.
They are contractually required to meet
Antofagasta’s safety and health,
environmental and ethical standards, and
to comply with the UK Modern Slavery Act,
and are monitored to ensure compliance.
The Group requires contractor companies
to pay their employees an ethical monthly
minimum wage of Ch$515,000 and provide
them with health and life insurance. In the
case of Los Pelambres and Centinela, they
must also support the education of their
employees’ children.
More information on
P60
Digital Academy
Our Digital Academy was established in 2020
and aims to build the necessary skills to
implement the Group’s Digital Transformation
Programme, as well as to enhance
employees’ future job opportunities. In 2021,
357 employees took courses on data-based
decision-making and 401 new recruits took
courses on digital literacy.
In addition, 79 operators and supervisors at
Centinela began a pilot course on autonomous
trucks. In September, we started upskilling 41
operators and supervisors, also at Centinela, to
operate the mine’s integrated remote operations
management centre in the city of Antofagasta,
due to begin full operations in 2022.
Diversity and Inclusion
A total of 98 women from executive,
supervisor and operator positions took part in
different career development and leadership
programmes during the year. More than 60%
of the female employees who have taken part
in these programmes since 2018 were
promoted internally during 2021.
We also run graduate programmes for our
executive talent pool as well as apprenticeships
and internships at our operations, all of which
particularly seek to recruit women.
In 2021, our Transport division launched
two apprenticeship programmes aimed solely
at women, taking on 45 female apprentices
in its maintenance and operations areas.
Our four mining operations hired 152
apprentices, of which 77% were women.
Members of the indigenous Peine and Socaire
communities represent 27% of participants
in Zaldívar’s programmes.
Labour relations
At Antofagasta, we have 16 unions: 11 in the
Mining division and five in the Transport
division. Together they represent 77% of our
direct employees.
We recognise employees’ rights to union
membership and collective bargaining, and in
Chile freedom of association is protected by
law. Chilean legislation also prohibits forced
and child labour, limits working hours and
includes 15 days’ annual paid leave and a
minimum wage.
Antofagasta plc Annual Report 2021
Antofagasta plc Annual Report 2021
4343
/ How we engage with our stakeholders continued
Safety and occupational health
Antofagasta’s first priority is the
safety and health of its employees,
contractors and nearby communities.
The Group continuously seeks to
improve its performance in this area
to achieve its goal of permanently
eliminating fatalities at its operations.
Strategy
Our Safety and Occupational Health Strategy is
based on four pillars: safety and health risk
management; leadership; contractor
management; and reporting, research and
learning from our accidents. The Strategy
strives to achieve four main goals of zero
fatalities, zero occupational illnesses, the
development of a resilient culture and the
automation of hazardous processes.
Safety performance
We deeply regret that after 33 months without a
fatality at Los Pelambres, a contractor,
Fernando Silva López, lost his life on 20 July
2021 while operating a bulldozer in the open pit.
A senior team, with representatives from
Antucoya, Centinela, Zaldívar and our corporate
offices, conducted a thorough investigation into
the event and the opportunities for improvement
have been shared with all our operating sites to
prevent other similar tragic incidents in the future.
targets are included as a key performance
indicator (KPI) in Performance Agreements to
promote and reinforce a preventive and
resilient safety culture.
This fatality occurred after a prolonged period
of uninterrupted improvements in our key
safety indicators and provoked a deep reflection
process at each of our sites, led by senior
management. We stressed that safety is
paramount and reinforced the importance of
adequate task planning, correct identification
of risks and controls, supervision of all critical
and high-risk tasks and the need for employees
and contractors to feel secure enough to raise
safety concerns.
In 2021, the Group recorded 65 high-potential
incidents (HPIs), 24% less than the previous
year, with improvements by both our Mining
and Transport divisions. We began using HPIs
as a key safety indicator in 2020, after
tightening our classification of such incidents,
as they allow us to learn through
investigations about what failed and why, and
to implement effective corrective actions to
prevent the repetition of such events. HPI
The Group’s Lost Time Injury Frequency Rate
(LTIFR) rose by 56% to 1.34 per million hours
worked, compared to 2020, mainly due to an
increase in low-potential incidents during simple,
routine train operations and maintenance tasks
in our Transport division, which is exposed to
a higher level of manual tasks than our mining
operations. The transport business’ LTIFR of
4.60 compares with an average of 8.46 for
railway operations in Chile. The Mining division’s
LTIFR also slipped in 2021 as a result of
increased construction activities at our growth
projects, which typically register a higher
number of low severity incidents.
As part of our efforts to improve our safety
performance, we increased visible leadership,
strengthened our management of train
operators and reinforced the use of the Job
Safety Analysis and the Yo Digo No (I Say No)
tools in the second half of the year. We will
start investigating low-potential lost time
Number of fatalities
Chilean mining industry
Mining division
Transport division
Group
Lost Time Injury Frequency Rate (LTIFR)1
Chilean mining industry
Mining division
Transport division
Group
Total Recordable Injury Frequency Rate (TRIFR)2
Mining division
Transport division
Group
Occupational Illness Frequency Rate (OIFR)3
Mining division
Transport division
Group
1. Number of accidents with lost time during the year per million hours worked.
2. Number of accidents in the year with and without lost time per 200,000 hours worked.
3. Number of occupational illnesses during the year per million hours worked.
4. Not available.
44
Antofagasta plc Annual Report 2021
2021
N/A4
1
0
1
N/A4
1.12
4.60
1.34
0.46
1.45
0.52
0.07
0.00
0.06
2020
13
0
0
0
1.41
0.73
2.37
0.86
0.55
1.51
0.63
0.00
0.00
0.00
2019
14
0
0
0
1.54
0.75
4.03
1.01
0.54
1.71
0.63
0.08
0.47
0.11
2018
16
1
0
1
1.65
1.10
6.66
1.59
2017
14
0
0
0
1.78
0.99
7.20
1.53
0.09
0.24
0.10
0.00
0.00
0.00
Strategic ReportCorporate GovernanceFinancial Statements Other Information injury events in 2022 and are addressing
psychosocial factors raised by the prolonged
pandemic that have affected concentration
and our safety performance (see below).
We registered four permanent occupational
illnesses during the year.
Safety risk management
Critical controls
During the year, we embedded the use of
QR codes to check all critical controls prior
to conducting a high-risk or critical task.
As a result, we are registering around 80,000
verifications a week, compared to 4,000 in
2020. The automatic digital process registers
in real time the correct management of
critical controls in a database overseen by
risk and control owners.
We continued to strengthen our Control
Strategies and the identification of critical
controls for high-risk and critical activities.
By the end of 2021 we had updated or
designed a total of 27 Control Strategies to
prevent safety incidents and another seven
to avoid occupational illnesses.
In 2021, we began a project to avoid collisions
between heavy equipment and light vehicles
at our mining operations, conducted pilot tests
and began a tender process to acquire
collision avoidance systems.
Visible leadership
Leadership is a key driver for improving
safety performance and all members of the
Executive Committee conducts regular on-site
safety and health reviews to engage with
employees and contractors on safety. In
response to the fatal accident, senior
leadership immediately conducted on-site
SPEAKING UP
In 2021, we reinforced the use of the
Yo Digo No (I Say No) tool to generate
a more proactive safety culture.
Management across our operations
took steps to ensure all levels of the
workforce feel safe and empowered to
speak up about safety concerns and to
stop tasks if they perceive there to be
inadequate safety conditions.
reviews focusing on four key areas: safety
culture, safety management systems and
processes, available safety tools and
contractor management. The results were
shared with all the operations and each drew
up action plans on each of the four pillars.
Investigations
We strengthened our investigations of all
HPIs by establishing investigation teams
independent of the area involved in the
incident, often involving representatives from
other operations. Findings are shared across
the organisation and used to continue closing
risk management gaps.
Occupational health risk management
At Antofagasta, we are committed to
providing a healthy workplace and
contributing to the physical and mental
wellbeing of everyone who works with us. In
2021, we continued to improve the application
of critical controls for health risks and to
investigate high potential health events. Over
the year, the Group registered a near-miss
and hazard to health frequency reporting rate
of 106 per million hours worked, 6% more
than our internal target which aims to
stimulate awareness, reporting and the
implementation of actions to address findings.
Psychosocial risks
In November, we completed our Control
Strategy for psychological and social risks
that have been heightened by the COVID-19
pandemic. We conducted a survey to measure
psychosocial risks in our corporate offices
and are implementing an action plan to
address issues such as “double presence”,
or the need to respond simultaneously to the
demands of paid and domestic/family work.
We have a confidential 24/7 helpline for
employees and contractors who wish
to seek help for mental health issues.
Contractor management
The employees of our contractor and
subcontractor companies are included
in our safety and health performance data,
and they must fully comply with our standards
and procedures.
In 2021, we continued to embed our updated
contractor management manual across
the organisation to ensure understanding
of our requirements and supervision of
contractor tasks.
COVID-19
The control of COVID-19 infection at our
operations continued to be a priority during
2021, especially in the first half of the year,
when the second wave of infections peaked in
Chile. We focused on encouraging vaccination
and adherence to preventive controls among
all our employees and contractors.
The four most important preventive
controls are:
• Health self-assessment questionnaires
and health checks prior to each shift,
including PCR or antigen tests for all
employees throughout most of the year
• Obligatory use of masks in all common
areas
• Physical distancing on buses, pick-up
trucks, charter planes and common areas
• Personal hygiene such as hand cleansing
We continued to hire buses and charter planes
to transfer employees and contractors to and
from site at the start and end of each shift.
In coordination with the authorities, we
offered vaccinations at our mine sites. By the
end of the year, at least 97% of our
employees, contractors and subcontractors
were double vaccinated, a higher rate than
the national average, and we were registering
the take-up of booster shots. Only vaccinated
personnel are allowed to work in-person,
others must work remotely.
In 2021, we continued our intensive testing,
tracing and isolation programme for people in
the workplace who have COVID-19 symptoms.
During the year, we traced and monitored
6,093 suspected cases of COVID-19, of which
3,811 were confirmed. We are sad to report
that five of our contractors, who began
showing symptoms on their rest days, died
of COVID during the year.
Antofagasta plc Annual Report 2021
45
/ How we engage with our stakeholders continued
Communities
Complaints system
In July, we approved a community complaints
management mechanism to be applied across
all our operations to register community-
related concerns, complaints or grievances.
At the end of the year, we began training on
the new system and piloting its
implementation with a view to preparing and
approving an associated standard in 2022.
Digital transformation
In July, we launched the En Red (Connected)
programme to provide rural and
underprivileged communities in our areas of
influence with the infrastructure, connectivity,
tools and skills to take part in the Digital Age.
We are also incorporating a digital approach
to all our social programmes.
COVID-19
The pandemic’s second wave reached its
peak in the first half of the year, leading to full
lockdowns across most of the country and,
for the first time, in the Choapa Province. As
a result, we doubled our initial Covid Fund
commitment of $6 million in 2020 to a total
of $12 million.
As in 2020, our efforts focused on healthcare
and prevention, economic reactivation and relief
measures for local communities, in close
co-ordination with local authorities. Like our
regular social programmes, many initiatives
were implemented jointly with local foundations.
Health measures
We facilitated more rapid test and trace
measures through the donation of
thermocyclers and by supporting campaigns to
test people in rural areas and at local markets.
Other measures involved funding the provision
of specialists for intensive care units and
donating ambulances, medical supplies and
PPE to local hospitals. Our Transport division
made its facilities in the centre of the city of
Antofagasta available as an official Ministry
of Health vaccination centre for eight months.
Economic reactivation
The Choapa Economic Support programme,
implemented by Fundación Minera Los
Pelambres, awarded 2,158 grants out of 3,325
applications, each of up to $2,500, for informal
entrepreneurs and micro and small businesses.
In one key initiative, Centinela’s Safe Return
Plan (launched in September 2020) allowed
the Sierra Gorda hospitality sector to reopen
and receive the employees of the mine’s
contractor companies throughout the year. The
plan included training on COVID-19 protocols,
agreements with contractors to adhere to
certain requirements, and monitoring to ensure
their compliance. This was an important boost
to the town’s economy.
Relief measures
Efforts to alleviate social hardship in local
communities focused on digital initiatives.
In the Antofagasta Region, we joined the
Locales Conectados (Connected Stores)
programme, co-ordinated by the Urbanismo
Social Foundation, in which locals used
digital vouchers to buy goods from
a network of neighbourhood shops,
providing economic relief to families and
boosting local businesses.
For the second year, we worked with the
foundation Educación 2021 to support 17
schools in the Choapa Province in introducing
project-based learning (PBL) methodologies
which, in addition to developing active
learning and research skills, can be done from
home. Pupils were also provided with tablets
containing information and tutorials.
In 2021, we continued to focus
on alleviating the social and
economic impacts of COVID-19
on communities but were also
able to restart regular projects
during the year.
Social management model
At Antofagasta, we have a Social Management
Model designed to ensure that our engagement
principles, methodologies and practices are
applied consistently across our operations.
The Model has four components: Engagement,
Initiative Management, Impact Measurement
and Socio-Territorial Alert Management, each
with their corresponding standard.
For further information, see our Social
Management Report: antofagasta.co.uk/smr21
In the second half of 2021, we set up a single
data platform for all our social management
data – including initiative management and
alerts – to be registered online and in one
place. This strengthens transparency, and the
supervision and management of our
interactions with communities.
We also began developing an Indigenous
Peoples Engagement Standard, which will be
completed in 2022. Relations with indigenous
peoples are already aligned with local
legislation, ILO Convention 169 and the
guidelines of the International Council on
Mining and Metals (ICMM).
Impact measurement
In 2021, we worked to measure the impact of
three social investment programmes, one in
the Coquimbo Region and two in the
Antofagasta Region. All showed a positive
social return on investment (SROI), with Los
Pelambres’ vocational training programme
performing best with an SROI of 11.2.
In addition, we worked to design an Impact
Ecosystem, an integrated model of data
and impact indicators, that we expect
to start using in 2022 for our social
investment projects.
46
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information $47.8m
Mining division
$0.5m
Transport division
$48.3m1
Economic social contribution in 2021
Flagship programmes
We use a bottom-up approach to ensure that
local communities participate in the selection
of our social investment projects through
our Somos Choapa (We are Choapa)
and Diálogos para el Desarrollo (Dialogues
for Development) engagement mechanisms
in the Choapa Province and the Antofagasta
Region, respectively.
In the second half of the year, we began
reactivating suspended projects as the
country’s comprehensive vaccination
campaign took effect and COVID-19 cases
lessened. Highlights include:
Community infrastructure: Los Pelambres
moved ahead with previously approved
projects to improve communal spaces and
build social cohesion through our Recreo and
Promueve programmes, implemented in
alliance with Ciudad Emergente and Mi
Parque Foundation, respectively.
• Dental treatment: With the support of
Centinela, more than 40 Sierra Gorda
residents benefited from dental care provided
in December by volunteers from the
University of Antofagasta’s dental school.
• Pharmacy: Antucoya is funding the
installation of a pharmacy in María Elena
that will be supplied by the National Health
Service Procurement Centre (CENABAST),
allowing locals to get quality medicines at a
low cost. The pharmacy will also serve as a
distribution centre for other towns in the
region and, in alliance with the Teledoc
online health service, will provide
telemedicine to locals.
As in 2020, we strengthened our two Somos
Choapa water management programmes,
APRoxima and Confluye, to address the
impact of the Choapa Province’s acute
drought on water for human consumption and
irrigation. Extra measures include an
emergency service for repairs on rural
drinking water services in the Salamanca
municipal district and intensifying Confluye’s
work on relining irrigation canals to prevent
water losses.
Our Transport division completed the
community consultation about the future use
of Estación Valdivia, a disused railway station
in the city of Antofagasta, built in 1916. Also,
an important milestone was achieved in the
first half of 2021 with the approval of the
project’s Environmental Impact Assessment.
Restoration, including a linear park and new
public spaces, is expected to start in 2023.
The initiative builds on the agreement with the
Antofagasta Fire Service to transform another
of its iconic buildings, the former English
School, into a community fire station that will
include a museum. The projects are part of a
broader plan to gradually vacate the division’s
48 hectares of railway yards in the city for
later urban development.
For further information, see our Social
Management report: antofagasta.co.uk/smr21
Citizen participation processes
In October, we completed the mandatory
Citizen Participation Process as part of the
Environmental Impact Assessment (EIA)
for phase two of the Los Pelambres
Expansion project.
An indigenous community consultation
process led by the Environmental Evaluation
Service (SEA) is underway with the
Atacameño community in Peine, to extend
Zaldívar’s water extraction permit from 2025
to 2031 as part of the operation’s EIA on its
mine life extension.
Building capabilities
An important pillar of our approach to building
social value in host communities is promoting
capacity development, education and
employment opportunities.
In the Antofagasta Region, a key vehicle for
this commitment is the Antofagasta Mining
Cluster, a public-private alliance that seeks to
foster the Region’s economic development.
We were the first mining company to join this
initiative in 2018 and our efforts are focused
on human capital creation and the
development of innovative suppliers.
Under this framework, 299 people from the
Region benefited from our efforts to promote
human capital in 2021, including 47
scholarships for regional school and
university students. In October, we joined
Empleo Región (Regional Employment), a
public-private partnership to further promote
employment in the Region, executed by the
Catholic University of the North (UCN), which
involves the creation of a job portal and
employment agency.
Our scholarship programme supported 394
young people from the Choapa Province
undertaking technical or university studies in
2021. In addition, the first set of 162 students
graduated from the province’s first technical
training centre, established in 2018 following
an agreement between UCN and Los
Pelambres, which funded construction of its
two 3,300 m² buildings in Los Vilos.
394
young people from the Choapa
Province were supported
by our scholarship programme
In 2021, our Transport division and four
mining operations took on 197 apprentices,
mainly from the Antofagasta and Coquimbo
Regions. Members of the indigenous Peine
and Socaire communities represent 27% of
Zaldívar’s programmes.
See page 60 for supplier development and
innovation activities.
1. Includes community investment programmes (Somos Choapa, Dialogues for Development), social projects and programmes established as part of our legal obligations,
as well as donations, sponsorships and contributions under the Caimanes, Salamanca and Cuncumén agreements and by Fundación Minera Los Pelambres.
Antofagasta plc Annual Report 2021
47
/ How we engage with our stakeholders continued
Climate change
Under our new Climate Change
Strategy, we have set ourselves
ambitious goals not only for
emissions and water use, but also
for the resilience of our operations
and their areas of influence.
As a Group, we recognise climate change
as one of the greatest challenges facing
the world today and acknowledge our
responsibility to be part of the solution.
As a copper producer, we supply an input
that is critical for low-carbon technologies,
and at the same time we are working
to decarbonise our operations, putting
climate change at the heart of how
we manage our business.
Our Climate Change Strategy, which was
approved by the Group’s Board of Directors
in 2020, has five pillars: development of
resilience to climate change, reduction of
greenhouse gas (GHG) emissions, efficient
use of strategic resources, management of
the environment and biodiversity, and
integration of stakeholders. For each pillar,
different areas of action have been identified,
accompanied by a plan of short-, medium-
and long-term measures.
The Strategy is co-ordinated by a new
Climate Change Committee, established in
January 2021, which has enabled us to
tighten co-ordination of the many initiatives
already implemented by our operations and
projects, and harness synergies between
them. It has also helped us embed awareness
of climate change more deeply into our
decision-making processes.
The Board of Directors has ultimate
responsibility for the Group’s climate-related
objectives and strategy. It recognises climate
change as one of the principal risks facing the
Group and has approved the associated risk
appetite statement. In its oversight of
climate-related matters, the Board is assisted
by its Sustainability and Stakeholder
Management Committee, Audit and Risk
Committee and Remuneration and Talent
Management Committee (see Board
Committees section).
In 2019, we committed to implementing the
recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD)
and in September, we published our first
TCFD Progress Report, providing an overview
of our TCFD-related work to date and climate
resilience response. A summary can be found
on pages 52-57 of this report.
The five pillars of our Climate Change Strategy
INTEGRATION OF
STAKEHOLDERS
MANAGEMENT OF THE
ENVIRONMENT AND BIODIVERSITY
DEVELOPMENT OF CLIMATE
CHANGE RESILIENCE
TO STRENGTHEN THE GROUP’S
CAPACITY TO MITIGATE AND
ADAPT TO CLIMATE CHANGE
REDUCTION OF
GHG EMISSIONS
EFFICIENT USE OF
STRATEGIC RESOURCES
48
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information Greenhouse gas emissions
In 2017, our Mining division defined a series
of emissions reduction projects and in 2018
went on to set a target of reducing its direct
(Scope 1) and indirect (Scope 2) emissions by
300,000 tCO2e1 by 2022, compared to the
2017 baseline. We met this target in 2020,
two years early, with emissions down by
581,355 tCO2e and in 2021, reduced our
emissions by a further 43,569 tCO2e.
In May 2021, we announced new, more
ambitious emissions reduction targets. In the
framework of our Climate Change Strategy,
we aim to cut our Scope 1 and 2 emissions by
30% by 2025, compared to 2020, equivalent
to the avoidance of 730,000 tCO2e. In
addition, we have committed to achieving
carbon neutrality by 2050, or sooner if the
development of technology permits.
43,569
tCO2e
emissions reduced in 2021
Operational CO2e emissions (tCO2e)1, 2
Los Pelambres
Centinela
Zaldívar
Antucoya
Corporate Offices
(Santiago and
London)
Mining
division
Transport
division
(FCAB)
Total
Scope 1
Direct emissions
2021
2020
2019
2018
Scope 2
Indirect emissions3
2021
2020
2019
2018
Total emissions
2021
2020
2019
2018
226,199
257,801
251,580
262,355
439,484
492,496
448,890
453,898
156,500
152,340
140,623
141,475
466,381
464,492
544,900
523,942
692,580
722,293
796,480
786,297
556,616
542,020
539,300
563,101
996,100
1,034,516
988,190
1,016,999
163,530
162,688
192,862
180,109
320,030
315,028
333,485
321,584
CO2e emissions intensity
tCO2e/t4
2021
2020
2019
2018
2.13
2.01
2.19
2.20
3.63
4.19
3.57
4.10
3.64
3.27
2.87
3.40
165,641
152,577
152,231
168,490
124,467
120,087
114,337
123,353
290,108
272,664
266,568
291,843
3.69
3.44
3.71
4.04
124
108
106
15
987,948
1,055,322
993,430
1,026,219
90,778
88,936
96,854
99,400
1,078,726
1,144,258
1,090,284
1,125,619
894
603
825
1,189
1,018
711
931
1,191
–
–
–
–
1,311,888
1,289,890
1,392,224
1,391,694
2,299,836
2,345,212
2,385,654
2,417,914
823
858
1,118
1,224
1,312,711
1,290,748
1,393,342
1,392,918
91,601
89,794
97,972
100,624
2,391,437
2,435,006
2,483,626
2,518,538
3.00
3.006
3.10
3.33
13.67
13.93
15.20
16.59
–
–
–
–
1. Thousand tonnes of carbon dioxide equivalent.
2. Further information on our CO2e emissions can be found on the Carbon Disclosure Project website (www.cdp.net).
3. To be consistent, all figures use average emission factors for the whole of Chile. By March 2022, the only annual certified emission factors received
for operations using renewable energy was for Los Pelambres and Zaldívar’s consumption in 2020 (giving a reduction of 209,046 tCO2e).
4. Tonnes of CO2 equivalent per tonne of copper produced or per tonne transported in the case of the Transport division.
5. The main category assessed for Scope 1 emissions in our corporate offices did not register activity during 2018.
6. The intensity of CO2 emissions for the Mining division was overestimated at 3.19 tCO2e/tCu and has been updated.
Antofagasta plc Annual Report 2021
49
/ How we engage with our stakeholders continued
Climate change
continued
GHG emissions targets
2020
2021
2022
2023
2025
2050
DEFINED
TARGET
for 30%
emissions
reduction by
2025
TARGET
ACHIEVED
early with a
reduction of
581,355 tCO2e
Target defined
in 2018 to reduce
emissions by
300,000 tCO2e
by 2022
CARBON
PRICE
incorporated into
decision-making
DEFINE
TARGET
for emissions
reduction
CARBON
NEUTRALITY
30%
reduction in total
GHG emissions
compared to 2020
DIAGNOSIS
covering all Scope 3 emission categories
under the GHG protocol
Key
Scope 1 and 2 emissions
Scope 3 emissions
Scope 1, 2 and 3 emissions
Renewable energy
In July 2020, Zaldívar became our first
operation to use 100% renewable energy.
Under the GHG Protocol Standard this
consumption cannot be reflected until certified
emissions factors for each operation are
received from the relevant authority. These
factors for Zaldívar and Los Pelambres
for 2020 were provided by the national
authority (Coordinador Eléctrico Nacional) in
February 2022 and resulted in a reduction of
209,046 tCO2e (relative to the amounts
reported). However, we continue to report the
emissions on the original basis so as to be
consistent with the years before and after
2020. The estimated reduction in emissions
at Zaldívar and Los Pelambres in 2021 was
375,110 tCO2e but this cannot be reflected in
our published emission figures until validation
is received, and this is not expected until
mid-2022.
In 2020 29.4% of the energy consumed by
Los Pelambres was from renewable sources
and this increased to 45% in 2021.
In January 2022, Antucoya and Centinela
switched to 100% renewably-generated
electricity and, later in the year, Los
Pelambres will follow. As a result, we expect
that by the end of 2022 our mining operations
will be using electricity solely from
renewable sources.
Streamlined energy and carbon reporting
Energy consumed (MWh)1
• Outside the UK
• Within the UK
2021
2020
2019
7,571,585
17
7,339,151
49
7,154,015
65
1. To calculate energy in kWh, multiply by one thousand.
Energy consumed is the sum of the electric energy consumed, measured in MWh, and total fuel consumption, measured in GJ. A conversion factor of 0.28 was used to convert
GJ to MWh. Fuels include diesel, petrol and LNG.
50
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information Mine haulage
Our next key emissions challenge is to reduce
and ultimately eliminate the use of diesel at
our mining operations. This is the main
source of our Scope 1 emissions, of which
some two-thirds are generated by mine
haulage trucks.
Measures we are exploring through an
Electromobility Plan, look particularly at the
use of green hydrogen fuel cells as a
substitute for diesel, and a portfolio of energy
efficiency initiatives.
We have also established an internal carbon
price, a key tool for reducing energy use
and fostering a shift to clean fuels, that
we will use in planning and project evaluation
and for financial purposes, including the
selection of suppliers.
Water use
Water use and efficiency have long been
at the forefront of our Mining division’s
concerns. Three of its four operations are
in the Atacama Desert and the fourth, Los
Pelambres, is in an area suffering from a
severe, 12-year drought.
Under different climate scenarios, droughts
such as that in the area around Los
Pelambres will become more frequent and
prolonged. Our Climate Change Strategy
seeks to reduce our withdrawals of
continental water and increase the efficiency
with which we use this strategic resource.
Antofagasta has long been a pioneer of the
use of sea water in the Chilean mining
industry, having first used raw sea water in
the 1990s. In 2021, sea water accounted for
45% of our Mining division’s operational
water withdrawals, led by Antucoya (96%)
and Centinela (86%), and our target is for sea
water and reused and recycled water to
account for more than 90% of the division’s
operational water use1 by 2025.
In the second half of 2022, Los Pelambres
expects to complete construction of a 400 l/s
desalination plant, which will subsequently
be doubled to produce 800 l/s by 2025,
subject to permits.
Operational water withdrawals by source, 2018-21, Mining division (megalitres)
This will ensure the operation’s water supply
security and will reduce withdrawals from the
Choapa River and wells in the upper part of
the Choapa Valley.
The 1.5% increase in the Mining division’s
operational water withdrawals in 2021
compared to 2020 was explained mainly by
the increased ore throughput volumes at
Centinela, Antucoya and Zaldívar.
In 2021, water reuse and recycling rates
at our mining operations ranged from
77% at Centinela to 90% at Zaldívar and
averaged 83% for the division. This is high
compared to the average for Chile’s copper
mining industry, which reached 73% in 2020,
according to the Chilean Copper
Commission (COCHILCO).
Total
Surface water
Groundwater
Supplied by third parties
Total
Sea water
Groundwater
Supplied by third parties
Total
Sea water
Groundwater
Total
Groundwater
Total
Sea water
Surface water
Groundwater
Supplied by third parties
Sea water as a percentage of total
Los Pelambres
Centinela
Antucoya
Zaldívar
Mining division
2021
26,817
15,790
11,018
9
29,223
25,251
3,972
–
6,315
6,081
234
6,653
6,653
69,008
31,332
15,790
21,877
9
45%
2020
27,847
19,481
8,358
9
27,178
23,316
3,862
–
5,923
5,720
204
7,015
7,015
67,963
29,036
19,481
19,438
9
43%
2019
21,633
13,898
7,726
9
26,369
22,602
3,356
410
5,804
5,623
181
7,015
7,015
60,821
28,225
13,898
18,279
419
46%
20182
25,308
16,534
8,766
9
27,036
23,039
3,136
861
6,129
5,910
219
7,229
7,229
65,702
28,949
16,534
19,350
870
44%
1. As defined by the ICMM, operational water is the volume of water used in operational tasks. Operational water use is, therefore, the actual volume of water required or used
to sustain operational activities.
2. An overstatement of Centinela’s sea water withdrawal in 2018 has been corrected. Due to double counting, it was originally reported as 24,538 ML. This also affected the
sea water and total withdrawal figures for the Mining division in 2018.
Antofagasta plc Annual Report 2021
51
/ How we engage with our stakeholders continued
Task Force on Climate-related
Financial Disclosures
In accordance with the Financial Conduct Authority Listing Rule LR.9.8.6(8), Antofagasta has made
disclosures in this report consistent with the Task Force on Climate-related Financial Disclosures (TCFD)
recommendations, except in three areas. Our response to each of the TCFD recommendations is reported
on the following pages. More detail can be found in our TCFD Progress Report and Climate Change Report,
both of which were published in late 2021 and are available on our website (antofagasta.co.uk).
• Metrics & Targets, climate-related
metrics – Climate Metrics & Targets:
We track our performance against a range
of climate-related metrics and targets,
including several which align with the
TCFD’s newly launched ‘cross-industry,
climate-related metric categories’, such as
climate adjusted NPV impacts. We also plan
to take the opportunity to develop additional
metrics, where appropriate, to measure
and manage our most material climate-
related risks and opportunities as well as
developing associated targets, eg indicate
level of required capital deployed towards
climate-related risks and opportunities.
• Metrics & Targets, GHG emissions and
related risks – Scope 3: We are in the
process of calculating our Scope 3
emissions and are working with suppliers
to learn more about the measures they
are implementing with regard to climate
change. We expect to complete
measurement of Scope 3 emissions in
2022 and set reduction targets by the
end of 2023, in line with the ICMM’s
position statement for climate change.
Antofagasta has assessed its disclosure
against each recommendation based
on a review of the TCFD guidance,
associated annex and supporting best practice
publications. To gain a complete
understanding of our alignment against
the recommendations, Antofagasta
has undertaken gap analysis against over
50 disclosure alignment elements.
This process was informed by interviews
and includes a review of our public reports
and internal systems and processes.
We believe we fully comply with the
recommendations, except in the three
areas identified here, and we expect that
our activity in all areas will continue to evolve
and become more sophisticated. You will also
find the results of our climate scenario
analysis on page 57.
The three areas we have not yet complied
with the TCFD recommendations and the
steps we plan to take to achieve full
disclosure in the future are:
• Strategy, impact on business –
Transition Plan: We have identified
a range of measures to achieve our 2050
carbon neutrality and 2025 30% emissions
reduction targets as a part of our Energy
Strategy and Electromobility Plan.
However, further assessment to evaluate
the feasibility and implementation of these
measures at all operations is still underway.
Following the completion of this
assessment, we aim to report our plan
on how we will make the transition,
including milestones and investments
that will support both our own operations
and our value chain.
Governance
Strategy
Risk
Management
Metrics
and Targets
52
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information Progress in 2021
• All Board Committees’
terms of reference
reviewed against best
practice and climate
change
• A management Climate
Change Committee
was created in
January 2021
• Climate change
scenario analysis and
conclusions presented
to the Board in
October 2021
Governance
TCFD Recommendation
Disclosure against recommendation
a. Board oversight
b. Management’s
role
Board responsibility for climate-related risks and opportunities:
Our Board of Directors has ultimate responsibility for the Group’s climate-related objectives
and strategy. Climate change is regularly discussed at Board and Board Committee meetings.
Climate change is a principal risk, and the Board has assessed the Company’s risk appetite
for climate change as medium, as set out in our Principal risks section on page 23.
An important part of our governance is to incorporate climate considerations into the way
we allocate capital and we have recently updated our capital allocation framework to include
climate resilience as part of our decision making processes.
Climate change factors are considered by all our Board Committees in their deliberations
and three in particular support the Board in monitoring and evaluating climate-related
risks and opportunities.
• The Sustainability and Stakeholder Management Committee considers climate change
when reviewing and monitoring relevant strategy, policies and performance matters
• The Audit and Risk Committee oversees the management of risk systems, including
climate change risk
• The Remuneration and Talent Management Committee set and monitor executives and
managers’ short- and long-term incentive scorecards which include climate change
performance as regards compliance against climate targets, alignment to the Copper Mark
and implementation of the Climate Change Strategy
Management’s responsibility for climate-related risks and opportunities:
Climate-related responsibilities are assigned to specific management-level positions. The
Chief Executive Officer is responsible for approving operations and senior management’s
targets, and monitoring the status of emissions-reduction initiatives. The Vice President of
Corporate Affairs and Sustainability, the Chief Financial Officer and the Vice President of
Strategy and Innovation are responsible for proposing targets and reporting on adaptation
and mitigation issues.
The Executive Committee oversees environmental matters including climate change, and has
established new management committees to facilitate this including a Climate Change
Committee that monitors the development and implementation of the climate change strategy
and a Water, Energy and Emissions Committee.
Strategy
TCFD Recommendation
Disclosure against recommendation
a. Identified risks
and opportunities
b. Impact to
business
c. Business
resilience
In 2021 we undertook climate change scenario analysis to inform our forward-looking view
of the potential financial impact of climate-related risks and opportunities on our business. To
align this potential impact to the lifetime and planning cycle of our mining operations we
defined short term as 0-5 years, medium term as 5-15 years and long term as 15-50 years.
We used two climate scenarios to capture the broadest possible spectrum of climate-related
risks and opportunities, an aggressive mitigation scenario and a high warming scenario. This
analysis was supplemented with local climate policy scenarios created by the Government of
Chile’s Ministry of Environment.
Our climate scenario analysis looks at meta scenarios overlayed with mining sector
observations and Chilean climate policy.
Once the risks and opportunities were screened and qualified, the financial impact of the
most material risks and opportunities were estimated at an operational level using
assumptions from these scenarios to quantify the impact.
Transition risks and opportunities:
We have used the International Energy Agency’s Sustainable Development Scenario (IEA’s
SDS), an ambitious and commonly cited scenario, to provide a global view and context of a
low-carbon transition. In the IEA’s SDS, fossil fuel prices decline due to low demand and
lower costs are offset by the introduction of carbon taxes to incentivise the low-carbon
transition. Aligned with this scenario we quantified the financial impact of the introduction of
a carbon tax and changes in diesel price as increasing our direct operating costs in the short
and medium term.
Progress in 2021
• Risks and opportunities
screened to rank and
prioritise most material
risks
• Quantified the financial
impact of our most
material transition and
physical risks and
opportunities
• Adopted and
implemented an
internal carbon price
into our 2022 financial
planning cycle for
procurement and
project evaluation
• Centinela and Zaldívar
received the Copper
Mark, and Los
Pelambres and
Antucoya have started
the assessment
process
Antofagasta plc Annual Report 2021
53
/ How we engage with our stakeholders continued
Task Force on Climate-related
Financial Disclosures
continued
Strategy
TCFD Recommendation
Disclosure against recommendation
Progress in 2021
We also assessed the financial impact of climate change across the lifetime of each mine and
for a 25-year period for the Transport division (see page 57). In addition, when considering
the opportunities we assessed the return on investment coming from the energy
management plans we have implemented at each operation which will reduce our exposure
to transition risks. This included analysis of core measures to decarbonise our mining
operations and reduce our reliance on diesel, most important of which is switching to a low
carbon intensive method of powering our mining trucks.
By understanding the potential financial impact of our material risks and opportunities we
can support the business case for directing capital towards the continued decarbonisation of
our operations to ensure resilience during the transition to a low carbon economy. We are
doing this by using an internal carbon price as part of our capital allocation process, in the
evaluation of projects and in assessing procurement alternatives.
Although it is difficult to isolate the effect of the increased transition-related demand for
copper, preliminary analysis suggests that this represents a significant opportunity for our
business. In all cases, the potential positive impact could significantly offset negative climate
impacts. However, we have not fully quantified this positive impact and so have not included
it in our financial analysis of the impact of climate change.
Physical risks:
This year the Intergovernmental Panel on Climate Change (IPCC) brought renewed focus
globally to the urgency of the threat posed by global warming in its Sixth Assessment Report.
To assess the full range of climate change anomalies we may be exposed to, we have used
the IPCC’s high-warming scenario RCP8.5.1 In this scenario temperatures rise by up to 2.3°C,
heatwaves become more frequent and annual rainfall decreases by nearly 20% in the area
near Los Pelambres by 2050. Raising our awareness and understanding of physical risks
has never been more important than at this time as we experience the effects of the
prolonged 12-year drought in the Choapa Valley where Los Pelambres is located.
To better understand how physical climate changes impact our business, we have focused
on a set of climate change vectors including higher temperatures, water stress, extreme
rainfall events, conditions that generate particulate matter, storm surges and wave events.
Each operation analysed the potential effect of these on its production, cost performance,
and the cost of adaptation measures and control options.
Resilience and transition planning:
Climate scenario analysis has challenged business-as-usual thinking when assessing risks
and opportunities.
Our vision is to minimise our emissions, enhance water security and have resilient
operations that can withstand the effects of climate change. We have introduced an internal
carbon price for financial planning, procurement and project evaluation. This supports the
business case for the implementation of measures identified in our Energy Strategy and
Electromobility Plan. In addition, we are investing in infrastructure to minimise risk and adapt
to physical climate changes, for example the rollout of water efficiency measures and the
construction of a desalination plant at Los Pelambres. Currently, we are developing a plan for
the transition to a low-carbon economy, including milestones and investments that will
support our operations and value chain.
We are committed to accelerating the low-carbon transition process, adapting to physical
climate changes while supporting our local communities and acting as a responsible copper
producer. As a member of the ICMM, we adhere to its principles and commit to strengthen
our capacity to mitigate and adapt to climate change.
In 2021, Centinela and Zaldívar received the Copper Mark certification, evidencing our
commitment to sustainable development and its positive social and environmental impact.
Los Pelambres and Antucoya are currently undertaking the assurance process
for the certification.
1. Representative Concentration Pathway 8.5 assumes emissions continue to increase throughout the 21st Century. Although considered as very unlikely this scenario is widely
regarded as a worst-case scenario in climate change modelling.
54
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information STRATEGY IN ACTION
ADAPTATION RESPONSE
Actions taken by the Company to adapt to climate change
MITIGATION RESPONSE
Actions taken by the Company to mitigate the impact of climate
change
LOS PELAMBRES DESALINATION PLANT
SWITCH TO RENEWABLE ENERGY
Trigger
Trigger
• Prolonged drought with deteriorating conditions year-on-year
• Climate models showing continuing downward trends in
precipitation
• 2015 Paris Accord on climate change signed
Action
Action
• Decision to build 400 l/s desalination plant which is expected
to come online in H2 2022
• Set carbon emissions reduction target of 300,000 tCO2e
• Renegotiated each mining operation’s energy contract to be
• Increase capacity of plant to 800 l/s by 2025
solely from renewable sources
Result
Result
• Decoupling water supply from continental sources
• Ensuring our ability to deliver value throughout the life of the
• Carbon emissions target achieved in 2021, and new
medium- and long-term targets set
mine
• Renewable energy contracts reduced total operating costs by 2%
Risk Management
TCFD Recommendation
Disclosure against recommendation
a. Identifying and
assessing risks
and
opportunities
b. Managing risks
and
opportunities
c. Integrating
climate change
into overall risk
management
Climate change risk is now fully integrated into our Risk Management System and is one of
our 18 principal risks as outlined on page 23. As a principal risk, climate change risk is
continually monitored, measured and reported.
Risk identification and assessment process:
Risks and opportunities were identified through multidisciplinary workshops to identify
climate-related risks at each operation and to the organisation as a whole. A long list of risks
and opportunities was built up from this engagement process and was cross-referenced to
mining sector research, peer review, local climate policy and TCFD resources. Climate
scenario analysis was used to better understand and assess the likelihood and impact of
risks and opportunities and was integrated into our risk assessment processes using ISO
31000 and best practice methodology (Bow Tie which considers cause, consequences and
controls). The estimated financial impact on operating costs and capital expenditure was
calculated against three views 1) no mitigation or adaptation, 2) controls already in place,
and 3) plans and actions implemented in the future.
Risk management process:
Risk owners were identified for each risk to ensure accountability for the monitoring and
management of the risk, controls and action plans. Preventative and recovery controls are
identified as part of the Bow Tie risk assessment. Estimation of financial impact with and
without controls is used to build the business case for implementation of planned and future
risk mitigation and adaptation measures.
The outcomes of the assessment have stimulated us to continue to update and implement
measures in our Energy Strategy and Electromobility Plan as well as to invest in adaptation
infrastructure. For example, to build resilience against higher and stronger tidal events which
can disrupt port activities, we have increased the capacity of our acid and diesel storage
tanks to provide greater operational continuity.
Progress in 2021
• Risk appetite for
climate change
assessed as medium
• Climate change risks
incorporated into the
existing Group’s risk
processes using
ISO 31000
• Climate-related risk
owners identified to
ensure accountability
• Adaptation controls
implemented
Antofagasta plc Annual Report 2021
55
/ How we engage with our stakeholders continued
Task Force on Climate-related
Financial Disclosures
continued
Metrics & Targets
TCFD Recommendation
Disclosure against recommendation
Disclose and
describe:
a. Climate-related
metrics
b. GHG emissions
and related risks
c. Targets and
performance
Emissions and climate metrics:
We use our Scope 1 and 2 emissions profile and emissions intensity (tCO2e/tCu) to monitor
our exposure to our most material transition risks related to power supply and the
consumption of diesel (page 49). We recognise our responsibility for upstream and
downstream emissions.
We also track and monitor several other environmental indicators. Most importantly,
measuring water withdrawal (page 51), which helps us manage water security risks at our
operations and for our local communities, and motivates us to reduce our reliance on
continental sources.
Climate-related targets:
To reduce our negative impact on the environment, and to encourage the low carbon
transition and manage our risks associated with emissions we have set short- and long-term
carbon reduction targets.
During 2021 we committed to reduce our Scope 1 and 2 emissions by 30% by 2025
compared to 2020, and achieve carbon neutrality by 2050, in line with Chile’s
national target.
We are also a signatory to the ICMM environmental stewardship standards and are
committed to implementing the Climate Change Action Plan. In addition, all our operations
are working to reduce their water use rates and their use of continental water. Also, by the
end of 2022 all our mining operations are expected to be using power solely from renewable
sources.
Progress in 2021
• In 2021 we set new
carbon reduction
targets as we achieved
our initial short-term
target a year early
• Continuing collection
of Scope 3 emissions
data
We are developing our climate-related metrics in accordance with the revised guidance provided by the TCFD in October 2021. The table
below describes these metrics in more detail.
Cross-industry, climate related metric categories
GHG
emissions
Transition
risks
Physical
risks
We report our performance against Scope 1 and 2, and our emissions intensity (page 49). We will report our Scope 3
emissions for the first time in 2023.
We report the potential financial impact over the Life-of-Mine for five transition value drivers including the change in
diesel price and carbon tax, as well as the impact arising from the implementation of mitigation measures (page 57).
We report the potential financial impact over the Life-of-Mine for five physical hazards including the change in water
supply, rainfall, temperature and particulate matter, as well as the disruption to logistics (page 57).
Climate-
related
opportunities
The positive impact of climate change on copper demand or the copper price has been assessed internally. We are
undertaking further analysis to better understand the correlation of increasing demand as a result of worldwide
climate policy action and the positive implication for the copper price.
Capital
deployment
Internal
carbon
prices
We report the impact of investment in mitigation and adaption in the results of the Climate Scenario Analysis.
This is based on estimations and projections for the implementation of proposed measures in our Long-term Energy
Reduction Plan. Since 2020 we have been investing in the development of a desalination plant at Los Pelambres.
We intend to monitor these investments closely in the future.
Antofagasta is using an internal carbon price in the economic evaluation of bids from suppliers, capital allocation
decisions, and project evaluation, as well as incorporating it into our financial planning cycles.
Remuneration Short-term incentive for Executives includes a proportion associated with carbon emissions.
Reported externally
Monitored internally
56
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information Results of climate scenario analysis excluding copper market opportunity
Impact calculated over the Life-of-Mine (LOM)
We use the results of climate scenario analysis to build our understanding of how climate risks may develop and impact our operations,
inform our investment plans and enhance prevention and recovery control measures.
The potential magnitude of our business’ exposure is similar under both an extreme physical warming scenario and aggressive mitigation
scenario. Although the likelihood of value at risk is uncertain, this provides a useful reference point against which to assess and prioritise
mitigation and adaptation measures to reduce our exposure and strengthen our resilience.
ANTOFAGASTA PLC
TCFD
Progress
Report
TCFD
TCFD Progress Report
antofagasta.co.uk/tcfd21
2021 Climate
Change Report
Producing Copper Responsibly and Sustainably
2021 Climate Change Report
Climate Change Report
antofagasta.co.uk/ccr21
Antofagasta plc Annual Report 2021
57
1. The positive impact of climate change on copper demand or the copper price, has not been quantified.2. Physical changes in climate and the associated impacts vary by geography and will impact Antofagasta’s operations in different ways.Northern Zone (Centinela, Antucoya, Zaldívar, FCAB)Central Zone (Los Pelambres)Diesel price$0 - 100m$0 - 50m$0 - 50m$100 - 200mCarbon tax $200 - 500mInvestmentin mitigation Change in energycosts dueto mitigation$0 - 100m$100 - 200m$100 - 200m$50 - 100m$50 - 100m$50 - 100m$50 - 100mCarbon tax avoidedby mitigation$200 - 500mTransition1: IEA’s SDSPhysical2: IPCC’s RCP8.5Not applicableNet Present Value Positive ExposureNet Present Value Negative Exposure$200 - 500m$200 - 500mDecrease and/or lossof water supplyExtreme rainfalleventsHigh and/orsustained temperaturesParticulatematterLogisticsdisruption Decrease and/or lossof water supplyExtreme rainfalleventsHigh and/orsustained temperaturesParticulatematterLogisticsdisruption AntofagastaSierra GordaSan Pedro de AtacamaCalamaTarapacá RegionTocopillaMaría ElenaMejillonesZaldívar AntofagastaCentinelaAntucoya BoliviaArgentinaCentinela PortFCABLos Vilos municipal districtIllapel municipal districtCanela municipal districtPacific Ocean Choapa ProvinceLos VilosLos PelambresPunta Chungo portArgentinaEl Mauro tailings storage facilitiesSalamanca municipal district / How we engage with our stakeholders continued
Environment
Through our environmental
practices, we seek to ensure the
sustainable development of our
operations and projects and their
areas of influence.
Our Environmental Management Model has
four pillars: leadership, incident reporting,
operating risk management, and regulatory risk
management. Environmental performance is
reported to the Executive Committee monthly.
In 2021, we strengthened the Model’s
regulatory risk management pillar. The
measures taken include the development
of a new platform to monitor the different
processes through which the
Superintendency of the Environment (SMA)
monitors our compliance with regulations, and
an alert system to ensure that our operations
are fully informed about any new regulatory
requirements that may affect them.
The Internal Audit area performed
environmental audits on all our operations in
2021, reporting no significant negative findings.
Environmental compliance
In Chile, large-scale projects are subject to
strict environmental and social impact
assessments by the Environmental Evaluation
Service (SEA) in order to obtain a Resolution
of Environmental Approval (RCA). These
RCAs include legally binding commitments on
matters related to project development, the
prevention and mitigation of the project’s
impact on the environment and any necessary
compensation measures. Compliance with
commitments is verified by the SMA.
Antofagasta has a total of 72 RCAs, entailing
over 10,000 commitments on matters that
include regulations associated with a project’s
construction, operation and closure as well
as measures related to water use, air quality
and biodiversity. In 2021, the Group obtained
three new RCAs:
• In June, the Transport division obtained the
RCA for its plan to rehabilitate land in the
city of Antofagasta, used historically to
stockpile products such as copper and lead
concentrate. This plan is part of a broader
redevelopment plan for the site.
58
Antofagasta plc Annual Report 2021
• In July, the SEA approved the Declaration
of Environmental Impact (DIA) for the
exploitation of Polo Sur, an oxides ore body
in the Centinela Mining District.
• In November, Centinela also obtained DIA
approval for its Alternative Disposal of
Tailings In-Pit project (see Tailings section
below).
In April, Los Pelambres submitted the
Environmental Impact Assessment (EIA)
for Phase 2 of the Los Pelambres Expansion
project. This covers mainly the expansion
of the operation’s desalination plant from
400 l/s to 800 l/s.
Zaldívar is currently seeking EIA approval for
its mine life extension project. The evaluation
process has advanced through its different
stages and is currently awaiting completion of
an indigenous consultation process with the
nearby Peine community.
Reporting of operating events with
environmental consequences
Operating events with environmental
consequences are reported, evaluated and
managed through an online system. Actual
high or medium-severity incidents are
investigated by a committee established
specifically for this purpose.
One incident of higher significance has been
reported to the SMA. During works relating
to the Los Pelambres Expansion project
industrial water was discharged into a storage
pond that leaked into the surrounding area.
Although there has been no measured impact
on water quality in the area, it continues
to be monitored.
Under the criteria established in the
environmental assessment of each operation
or project, 45 other events, with no severe
environmental consequences, were also
reported to the SMA.
Training
Environmental training programmes for both
our operations and projects continued in
2021. They included workshops on
environmental matters relevant to each
operation, including the Copper Mark
assurance system, biodiversity and heritage.
These workshops are part of a training and
communications programme, implemented at
the corporate level and at each operation, as
part of the Environmental Management Model.
Responsible production
In line with the UN Sustainable Development
Goals and after a voluntary and independent
evaluation process, Centinela and Zaldívar
have obtained the Copper Mark, a global
standard for the copper industry that certifies
responsible and sustainable production. Los
Pelambres and Antucoya are in the process
of seeking this assurance. In addition,
Antofagasta was one of the first nine
companies to register with LMEpassport, the
London Metal Exchange’s new sustainability
credentials register. It was launched in August
and serves as a vehicle for companies to
report their environmental, social and
governance certifications and metrics.
Tailings
Our mining operations have three main
tailings storage facilities (TSFs): the El
Mauro and Los Quillayes conventional TSFs
at Los Pelambres and a thickened TSF at
Centinela. In addition, Zaldívar has a small
TSF from the flotation of some of its
sulphides. Los Quillayes, the original TSF
at Los Pelambres, has limited remaining
capacity, is partially closed and would only
be used in emergencies or when required
for operational reasons.
All our TSFs are built using the downstream
construction method and are designed to
withstand severe earthquakes and extreme
weather. Each has a designated Engineer of
Record. For the TSFs at Los Pelambres and
Centinela, we have an independent Review
Board and, for Zaldívar, an external reviewer.
In 2021, the respective Engineers of Record
once again confirmed the TSFs’ compliance
with international criteria.
Regular TSF inspections are also carried out
by the Chilean government’s National Geology
and Mining Service (SERNAGEOMIN). In 2021,
there were no significant negative findings.
The Superintendency of the Environment
(SMA) approved the plan presented by
Zaldívar to remedy seepage from its TSF,
detected by the authority in 2020. In line with
the results of field studies, the plan envisages
the installation of a hydraulic barrier to extract
water from the TSF for reuse by the
operation.
In 2021, we published a Tailings Policy. It sets
out our guiding principles for the management
of our TSFs and their environmental impact,
their governance and communication with
stakeholders.
Strategic ReportCorporate GovernanceFinancial Statements Other Information Alejandra Vial
Environmental Manager
Our interest and concern about environmental issues goes beyond just fulfilling
our commitments under the Environmental Qualification Resolutions (RCAs) and the
regulations, but also includes implementing international guidelines on sustainability.
Biodiversity
Our Biodiversity Standard, which we are
currently updating, is aligned with the ICMM’s
position statement on Mining and Protected
Areas. The update forms part of the
implementation of our Climate Change
Strategy and will mean an increased focus on
adaptation and mitigation measures as well as
nature-based solutions.
In addition to managing four nature
sanctuaries and other extensive protected
areas, we have a portfolio of biodiversity
initiatives at our operations and projects.
They include activities to protect species,
as well as outreach and research initiatives.
Mine closure
As required under Chilean law, all our
operations have closure plans approved
by SERNAGEOMIN. In addition, we have
our own Integrated Mine Closure Standard.
In 2021, Antucoya presented the required
five-year update of its closure plan for
review by SERNAGEOMIN. The authority
is also reviewing a modification of Centinela’s
closure plan, presented in late 2020,
to incorporate new installations.
We are working to implement the Global
Industry Standard on Tailings Management. It
was launched in August 2020 following the
completion of the Global Tailings Review,
co-convened by the International Council on
Mining and Metals (ICMM), the United Nations
Environment Programme (UNEP) and the
Principles for Responsible Investment (PRI) in
the wake of the failure of two TSFs in Brazil.
We have completed detailed planning for the
Standard’s implementation at Los Pelambres
and Centinela and expect to complete planning
for Zaldívar in 2022. This is in preparation for
complying with our undertaking to implement
the Standard at Los Pelambres by August 2023
and at Centinela and Zaldívar by August 2025.
The El Mauro TSF is serving as a pilot for
Programa Tranque (Tailings Programme), a
public-private initiative managed by Fundación
Chile, a Santiago-based technology transfer
institute, to develop an online system for
monitoring a TSF’s physical and chemical
stability. After a delay in 2020, work resumed
in 2021, with a view to the programme’s
completion in 2022.
In 2021, Centinela completed pre-feasibility
studies for a project to use abandoned mine pits
to store tailings, complementing the operation’s
thickened tailings storage capacity. This received
environmental approval in November and will
move to the feasibility stage in 2022. As well as
its safety and environmental advantages, in-pit
storage would extend the life of the thickened
tailings deposit.
Air quality
All our mining operations have robust
programmes to control dust emissions (PM10
and 2.5). They are monitored constantly, in
some cases with the participation of the local
community. In addition, air quality data is
reported monthly to the regional authority.
At Los Pelambres, climate change in the form
of a prolonged drought and an intensification
of wind patterns has posed new challenges
regarding dust from the mine itself and the El
Mauro TSF. Air quality norms have not been
breached, but concern about air quality has
increased in nearby communities.
In the case of the El Mauro TSF, we have
voluntarily implemented a series of additional
controls in conjunction with the SMA, while
at the mine we have established a working
group advised by an external consultancy
company. This is designed to deepen our
understanding of the phenomenon, review
the effectiveness of existing measures and
adjust our predictive model accordingly.
Antofagasta plc Annual Report 2021
Antofagasta plc Annual Report 2021
59
/ How we engage with our stakeholders continued
Responsible supply
Our Compliance Model applies to both
employees and contractors. It is clearly
defined and is communicated regularly
through internal channels, as well as being
described in our Crime Prevention Manual.
All contracts include clauses relating to ethics,
Chilean Law N° 20.393 on bribery and asset
laundering, and the UK’s Bribery Act and
Modern Slavery Act.
We conduct audits to ensure compliance
with our requirements. In 2021, no major
compliance gaps were identified.
In 2021, our Procurement team received
annual refresher training on the Group’s
Compliance Model, Code of Ethics and Crime
Prevention Manual and updated their
declaration of Conflicts of Interest.
Suppliers can use the Tu Voz (Your Voice)
whistleblowing channel on the Group’s
website to make complaints anonymously.
In 2021, we began reinforcing awareness
among our contractor workers of this
mechanism in meetings and
written communications.
For more information, see our Crime
Prevention Manual: antofagasta.co.uk/cpm
ESG focus
When awarding contracts, we consider health,
safety and energy efficiency criteria as well
as the technical and economic aspects of bids
and we have begun incorporating other ESG
parameters, such as our internal carbon
price, into large contracts. We are training
local suppliers and service provides on ESG
concepts to support the adoption of rigorous
sustainability standards.
In 2021, as part of our Climate Change
Strategy, we began deepening our
expectations regarding emissions in the
supply chain and working with specific
Original Equipment Manufacturers (OEMs) on
the development of low-emission explosives
and mining trucks.
2021 Climate
Change Report
Producing Copper Responsibly and Sustainably
2021 Climate Change Report
Climate Change Report
antofagasta.co.uk/ccr21
For more information, see our 2021
UK Modern Slavey Act Statement:
antofagasta.co.uk/mss
For more information, see pages 58-59
in Environment and our 2021 Climate
Change Report: antofagasta.co.uk/ccr21.
Successful management of our
relationships with our suppliers
contributes to our long-term
success.
Governance
Suppliers play a critical role in our ability to
operate continuously, safely and efficiently
and provide a range of goods and services,
from heavy equipment to catering. In 2021,
our Mining and Transport divisions worked
with 2,184 suppliers, of whom 96% were
based in Chile.
All procurement must be done using a digital
sourcing platform (Ariba) to make acquisition
processes traceable, transparent and fair. In
addition, a minimum number of companies
are required to participate in large tenders to
ensure a competitive process.
At Antofagasta, due diligence is conducted on
all potential suppliers prior to awarding a
contract using various tools that include an
automated system which raises red flags and,
for high-risk cases, analysis by a special
senior management committee. We assess
company ownership, participation of
politically-exposed persons, antitrust issues,
commercial behaviour, legal cases and
conflicts of interest, as well as compliance
models and procedures for the prevention of
slavery and human trafficking. In 2021, we
updated our Sustainability Policy to formalise
our commitment to the OECD Due Diligence
Guidance on Conflict-Affected and High-Risk
Areas for copper and will also be
incorporating the OECD 5-step framework
into contracts.
60
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information Promoting local growth
At Antofagasta, we seek to foster economic
development in the regions where we operate
by improving access to opportunities to supply
the Group for businesses headquartered in
the Antofagasta and Coquimbo Regions.
Likewise, we strive to enhance their business
capabilities and encourage local recruitment.
In 2021, this focus helped us meet our
objectives of increasing the number of tender
invitations, and the number and value of
tenders awarded, to local suppliers. In 2021,
our Mining division increased the number
and value of contracts awarded to local
suppliers by 4% and 24% respectively, as
part of our commitment to foster economic
development in the regions where we
operate and 95% of these companies were
paid within 15 days or less.
Improving opportunities
Our guidelines on regional procurement and
recruitment promote the sourcing of local goods
and services by reducing administrative and
financial barriers for SMEs in these regions.
As part of these efforts, in 2021 we held
online meetings for Antofagasta and
Coquimbo-based businesses during which we
announced 16 upcoming tenders to connect
potential suppliers with opportunities. There
were also three in-person discussion forums
with SMEs on strengthening capabilities,
governance and local employability to identify
improvement opportunities. In a new initiative,
we met with micro and small suppliers in
María Elena, Sierra Gorda and the Atacama
Salt Flat to learn about their businesses and
connect them to larger suppliers with a view
to boosting the local supply chain.
We renewed our agreement with the
Antofagasta Industrialists’ Association
(AIA) to use its digital database of certified
suppliers (SICEP) to publicise upcoming
tenders and update our register of potential
local suppliers. Los Pelambres conducted
a similar updating exercise.
Developing suppliers
As founding members of the Antofagasta
Mining Cluster, we are committed to
promoting the development of the Region’s
human capital and suppliers, the latter with
a focus on innovation.
In 2021, we held a Regional Suppliers’
Academy to help SMEs in the Antofagasta
Region participate in tenders. A total of 250
people from 96 SMEs took part in the
18-hour course covering matters such as
compliance, supply policies, use of digital
platforms, and safety and health standards.
In September, Los Pelambres launched
an 18-month Gap Closure Programme
to develop, implement and evaluate a plan
to train suppliers in Choapa Province
on administration, technical and legal matters.
More than 60 local suppliers were
also trained to use the Ariba
procurement platform.
We continued to participate in the Industrial
Weeks for Innovation in Antofagasta, during
which operational challenges are proposed
to local technology companies. In 2021,
two cycles of workshops were held in which
13 solutions were presented to address
specific operational challenges.
Through an alliance with Expande, an open
innovation programme, the Mining division
held 22 online Pitch Days for suppliers to
present solutions to operational challenges.
This included a “hackaminerals” event to
encourage companies to develop
mathematical models to improve operational
efficiencies. To date, more than 70% of
pitches have led to a pilot or service contract.
In 2021, we also participated in a regional fair
organised by Expande in which seven
prominent regional technological suppliers
presented prototypes that were at an
advanced stage of development or had
been tested.
The Group’s main operational challenges are
published on the Innovaminerals open platform
to capture ideas from inside and outside the
Company with a focus on internal innovation. In
2021, we reinforced this by creating sections
of this platform to present challenges
specifically for Antucoya and Zaldívar.
We also provide secondary school and
further education scholarships to support the
development of skills in the regions where
we operate.
Fostering local employment
Since being launched in 2015, Los Pelambres’
employment programme has increased the
share of local people hired by its contractor
companies from 15% to 45.7% in 2021. The
programme comprises a trades training
programme, a job portal aimed at locals and a
KPI for contractors to recruit at least 30% of
their workforce locally.
In 2021, we ramped up a similar employment
programme in the Antofagasta Region. A total
of 19 large suppliers are now advertising job
openings on our pilot job portal for vacancies
at Centinela, Zaldívar and Antucoya.
For more information, see page 46
in Communities.
ETHICAL MINIMUM WAGE
Our contractor companies are required
to pay employees an ethical monthly
minimum wage of Ch$515,000, which is
more than 50% higher than Chile’s legal
minimum wage of Ch$337,000.
Antofagasta plc Annual Report 2021
61
/ How we engage with our stakeholders continued
Customers
Successful management of
our relationships with our
customers contributes to our
long-term success.
Customers
Most copper and molybdenum sales are
made under annual contracts or longer-term
framework agreements, with sales volumes
agreed for the coming year. Gold and silver are
contained in the copper concentrates and are
therefore part of copper concentrates sales.
Most sales are to industrial customers who
further process the copper into more
value-added products – smelters, in the case
of copper concentrate production, and copper
fabricators and trading companies in the case
of cathode production. We build long-term
relationships with these key smelters and
fabricators, while ensuring customer
diversification. We also maintain relationships
with trading companies that participate
in shorter-term sales agreements, or in the
spot market.
About 70% of our mining sales are under
contracts of a year or longer and metals sales
pricing is generally based on prevailing
market prices.
Structure of sales contracts
Typically, our sales contracts set out the
annual volumes to be supplied and the main
terms for the sale of each payable metal,
with the pricing of the contained copper in
line with LME prices.
Across the industry, neither copper producers
nor consumers tend to make annual
commitments for 100% of their respective
sales or purchases, and normally retain a
portion to be sold or purchased on the spot
market during the year.
In the case of concentrates, a deduction is
made from LME prices to reflect TC/RCs, the
smelting and refining costs to process
the concentrate into refined copper. These
TC/RCs are typically determined annually, in
line with market developments and the
parties’ assessments of the copper
concentrate market at the time of the
negotiation of the terms.
In the case of copper cathode transactions, a
premium, or in some cases a discount, on the
LME price is negotiated to reflect differences
in quality, logistics and financing compared
with the metal exchange’s standard copper
contract specifications.
Similarly, our molybdenum contracts are
made under medium- and long-term
framework agreements, with pricing usually
based on Platts’ average prices for Technical
Molybdenum Oxide with a deduction to reflect
the cost of converting molybdenum sulphide
concentrate into molybdenum oxide.
In line with industry practice, our sales
agreements generally provide for provisional
pricing at the time of shipment, with final
pricing based on the average market price in
the month in which settlement takes place.
For copper concentrates, the final price
remains open until settlement occurs,
on average four months from the shipment
month. Settlement for the gold and silver
contained in the copper concentrates occurs
approximately one month after shipment.
Copper cathode sales remain open for an
average of one month from the month of
shipment. Settlement for copper in
concentrate sales is later than for copper
cathode sales, as copper in concentrate
requires more processing to produce refined
copper for sale. Molybdenum sales generally
remain open for two or three months after
the month of shipment.
Revenue by product and customer location
EUROPE
23%
NORTH
AMERICA
9%
SOUTH
AMERICA
7%
JAPAN
21%
REST OF
ASIA PACIFIC
40%
Copper
Gold
Molybdenum
Transport
Silver
86%
6%
5%
2%
1%
62
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information Shareholders
The shares of Antofagasta plc
are listed on the main market
of the London Stock Exchange.
As explained in the Directors’
Report on page 161, the
controlling shareholders of
the Company hold approximately
65% of the Company’s ordinary
shares. The majority of the
Company’s remaining ordinary
shares are held by institutional
investors, mainly based in the
UK and North America.
We maintain an active dialogue with
institutional shareholders and sell-side
analysts, as well as with potential
shareholders. This communication is
managed by our investor relations team
in London and includes a formal programme
of presentations and roadshows to update
institutional shareholders and analysts on
developments at Antofagasta.
Throughout 2021, as travel restrictions
imposed by the COVID-19 pandemic
continued, we have held virtual meetings with
institutional investors and sell-side analysts,
including international investor roadshows
and presentations at industry conferences.
These were attended by the CEO and various
members of the management team, including
the CFO and the Vice President of Corporate
Affairs and Sustainability.
We publish quarterly production figures as
well as half-year and full-year financial
results. Copies of these production reports,
financial results, presentations and press
releases are available on our website. During
2021 we also published separately
Sustainability Reports for our Mining division
and Transport division, a Climate Change
Report, a Social Management Report and a
TCFD Progress Report. All of these reports
are available on our website.
What investors focused on most in 2021
• Our ability to achieve our full-year
production and cost guidance
2021 SHAREHOLDER
ENGAGEMENT CALENDAR
• Impact of COVID-19 on our operations, our
workers and neighbouring communities
Q1
CEO presented at a virtual industry
conference for institutional investors
• ESG factors and our response
to climate change, especially its impact
on water availability
• Free cash flow generation and
capital allocation
• Our capital expenditure programme and the
potential of our longer-term growth projects
• Progress on the Los Pelambres Expansion,
Esperanza Sur pit and Zaldívar Chloride
Leach growth projects
• Supply and demand factors in the world
copper market
• Potential impact on the Company of the
planned rewriting of Chile’s constitution and
the proposed new mining royalty
Capital Markets Day
In December 2021, we hosted a virtual capital
markets event for investors and analysts, to
provide an update on our operating, financial
and ESG performance and to discuss our
growth opportunities.
The key themes of the event were that
Antofagasta is a responsible and reliable
producer, creating real social value and
unlocking embedded growth and we
highlighted our:
• Very large mineral resource inventory
• New proprietary primary sulphide leach
technology
• Key value-accretive brownfields and
incremental growth potential within our
asset portfolio
• Five-year production plan which could
potentially reach approximately 900,000
tonnes in 2026
• Recently expanded capital allocation
framework that now includes climate
risk mitigation as a factor and applies
an internal carbon price
• Environmental commitments to reduce
our freshwater consumption and emissions
by 2025 or earlier
• Strong social commitments to our
communities
A replay of the event, the transcript and the
presentations are available on our website
antofagasta.co.uk/investors.
In-person and virtual one-on-one and
small group meetings with some 55
investors, of which senior
management participated in 60%
Virtual presentation of full-year 2020
results by the CFO followed by a
question and answer session open
to all investors
Investor relations team attended two
virtual investor conferences
Q2 CEO presented at a virtual industry
conference for institutional investors
Virtual one-on-one and small group
meetings with some 130 investors,
of which senior management
participated in 55%
A recorded presentation by CEO
at the virtual Annual General Meeting
Investor relations team attended four
virtual investor conferences
Q3 Virtual presentation of half-year 2021
results by the CEO, CFO and Vice
President of Corporate Affairs and
Sustainability followed by a question
and answer session open to all
investors, and a virtual roadshow
with investors in Europe and the US
Virtual one-on-one and small group
meetings with some 80 investors,
of which senior management
participated in 60%
Investor relations team attended four
virtual investor conferences
Q4 Video conference question and answer
call by the CEO, CFO and Vice
President of Corporate Affairs and
Sustainability with investors following
the release of the 3Q production report
Virtual Capital Markets Day event for
investors and analysts
Virtual one-on-one and small group
meetings with some 60 investors,
of which senior management
participated in 15%
Investor relations team attended six
virtual investor conferences
Antofagasta plc Annual Report 2021
63
/ How we engage with our stakeholders continued
Governments and regulators
Mining is a long-term business
in which timescales can run into
decades. Political cycles are
typically far shorter and material
developments and changes to
policy, legislation or regulations
can have a major impact on
our business.
Governments and regulators engagement
Our operations, projects and exploration are
mainly located in Chile, where we interact
with both the central government and the
governments of the Antofagasta and
Coquimbo Regions, as well as with the
municipalities that are part of our areas
of direct influence.
The relationship with governments and
regulators is subject to their strict
engagement mechanisms, which in Chile are
clearly defined under Lobby Law No. 20.730.
This Law seeks to regulate the activity of
lobbying and other efforts to represent
particular interests, in order to strengthen
transparency and honesty. It applies to the
officials of central and local administrations
who regulate activities such as the issue,
modification and repeal of administrative
acts and laws, and the decisions of the
authorities and officials.
Outside Chile, we comply with our own
policies and the laws and regulations of the
host countries, at all times maintaining high
standards of engagement.
Payments to governments
Antofagasta makes payments to governments
relating to our activities involving the exploration,
discovery, development and extraction of
minerals, and our Transport division.
These payments are primarily taxes paid to
the Chilean government and mineral licence
fees, which in 2021 totalled $789 million of
which 99.5% was paid in Chile.
Chilean law allows political donations to be
made subject to certain requirements, but
Antofagasta made no political donations in
2021. However, we often contribute towards
the financing of projects benefiting local
communities, in alliance with local
municipalities and the government. These
contributions are regulated by specific laws
and are reviewed by the Chilean Internal
Revenue Service (SII).
Public-private alliances
Since mining is a long-term business, we
seek to contribute to Chile’s development and
prosperity, including through public-private
alliances with local government. Examples
include our active participation in a workshop
jointly organised by the Mining Ministry and
the Women and Gender Equality Ministry to
encourage female participation in the mining
industry, and our commitment to the Mining
Cluster in northern Chile, a public-private
alliance to promote local employment,
technology and skills development.
Another example of our active participation in
a public-private alliance is the Provincial
Water Working Group. This is organised by
the Coquimbo Region government to identify
and implement collective solutions that can
contribute to the area’s water security in the
short, medium and long term.
Chilean Constitutional reform process
In a referendum in October 2020, the Chilean
people voted in favour of rewriting the country’s
Constitution. This process is being conducted
through a Constitutional Convention of 155
members elected in a national vote in May 2021.
The Constitutional Convention has a maximum
of 12 months, to July 2022, to discuss and
agree the text of a new Constitution, which
then must be ratified through the means
of another national referendum within
60 days of its approval by the Convention.
If approved, the new Constitution will
be enacted and replace the current
Constitution. If it is not approved the current
Constitution will remain in force.
Proposed mining royalty
A proposed new mining royalty was approved
by the lower house of Congress in May and,
as at the end of the year, is being considered
by the Senate. The Senate is not restricted to
the specific terms of the proposal presented
by the lower house and has received evidence
from a broad base of interested parties
including academics, union leaders and
mining industry representatives. It is now
assessing these representations prior to
proposing amendments to the draft legislation
which will then be returned to the lower
house for their further consideration.
64
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information Non-financial information statement
The table below sets out where stakeholders can find information in the Strategic Report on non-financial matters, as required under
the Non-Financial Reporting Directive requirements. As described in this report, the effective application of these Policies and Standards
underpins the Group´s management of the risks in relation to these matters.
Relevant policies and standards
Content
Value Chart
Sustainability Policy
ICMM Guidelines
Letter from the Chairman
Letter from the CEO
Committed to positive impact
Reporting
requirement
Sustainability
Safety
and health
Environmental
matters
Our people
Safety and Occupational Health Strategy
Special Corporate Safety and Health
Regulation for Contractors and
Subcontractors (RECCS)
Fatal Risk Standard (ERFT)
Occupational Health Standard (ESO)
Environmental Management Model
Integral closure of mining
operations standard
Climate change standard
Water management standard
Biodiversity standard
People Strategy
Diversity and Inclusion Strategy
Social matters
Social Management Model
Engagement Standard
Management of initiatives standard
Suppliers
Code of Ethics
Purchase and contracts guidelines
Direct award procedure
Material management policy
Human Rights
Code of Ethics
Anti-corruption
and anti-bribery
Code of Ethics
Compliance Model
Anti-Corruption Model
Antitrust Protocol
Safety and Occupational
Health Strategy
Safety risk management
Environmental management
Environmental compliance
Water management
Mining waste
Responsible production
Climate change
Inclusive culture
Building human capital
Labour relations
Social Management Model
Flagship programmes
Engagement mechanisms
Open social innovation
Responsible supply
Local suppliers
Supplier development
Respectful, diverse and inclusive
work culture
Business integrity and compliance
Code of Ethics
Description of principal risks and impact
on business activity
Risk Management Framework
Principal risks
Description of the business model
Non-financial Key Performance Indicators
The mining lifecycle
2021 highlights
Total economic contribution
Key Performance Indicators
How we engage with
our stakeholders
Sustainability and
Stakeholder
Management Committee
Health risk management
Performance
Carbon footprint
Energy management
Biodiversity
Air quality
Mine closure
TCFD
Aligning contractors
Employee wellbeing
Page
40
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44
49
50
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59
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52
43
42
Culture and heritage
Local jobs
Addressing social concerns
Impact measurement
46
47 and 61
46
46
Local alliances
Energy efficiency in
suppliers
Modern Slavery Act
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60
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Antofagasta plc Annual Report 2021
65
We are very well-positioned
to unlock copper from our
primary sulphide resources.
/ Alan Muchnik
Vice President of Strategy
and Innovation
66
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Strategic ReportCorporate GovernanceFinancial Statements Other Information / Case study
Cuprochlor®-T
At Antofagasta, we understand that
the future depends on our ability to
innovate and adapt to the new
challenges facing mining.
As such, we have been investing for many
years in research and development to
produce copper from low grade primary
sulphide minerals that traditionally have been
uneconomic using existing technologies. One
such technology is called Cuprochlor®-T, a
proprietary process developed by
Antofagasta. We believe Cuprochlor®-T will
allow us, over time, to produce copper
cathodes from low grade primary sulphide
minerals at reduced operating and capital
costs, and with a smaller water and carbon
footprint. If successful, it could allow us to
bring forward the processing of ore otherwise
scheduled to be mined in many years’ time or
will allow ore that was previously considered
to be uneconomic, to be profitably processed.
As we mine deeper, an increasing proportion
of our copper resources are chalcopyrite
– a copper iron sulphide mineral – and much
of this material is lower grade and cannot be
processed economically.
With Cuprochlor®-T, Antofagasta has
developed a new solution that allows us to
leach these primary sulphides, specifically
chalcopyrite, and obtain economic recoveries
of 70% or more, after approximately 200
days of leaching.
The process involves using chloride at a
controlled temperature and results in the
economic production of copper cathodes.
Cuprochlor®-T is expected to deliver faster
kinetics than alternative processes, such as
flotation and bacterial leaching, and uses raw
sea water in the process, consuming
significantly less freshwater and energy than
a conventional concentrator plant.
Test work was initially carried out in a
laboratory before moving on to pilot testing,
followed by a range of semi-industrial tests.
Finally, we conducted an industrial-sized
leaching of 40,000 tonnes of ore of which
more than 90% was chalcopyrite. We applied
sulphuric acid and a combination of
chlorinated reagents and temperature.
This is another example of how Antofagasta
develops mining for a better future. The
Cuprochlor®-T technology will allow us to
take advantage of our already installed
capacity of existing heap leach and SX-EW
facilities to produce copper cathodes from
lower grade copper resources using less
water and reducing our carbon footprint.
Find out more online
antofagasta.co.uk/cuprochlor
This technology breaks the bond between
sulphur and copper, allowing copper
extraction to occur. First, in the agglomeration
stage, the necessary reagents are added, and
the ore is left to rest with constant aeration at
a specific temperature. Second, the ore is
irrigated intermittently with continued aeration
and maintained at a constant temperature.
Finally, after approximately 200 days, the
ore completes its leaching cycle.
We are currently progressing the studies
on the primary sulphide ore body near some
of our SX-EW operations.
/ Strategic Report
OPERATING
REVIEW
Mining division
Los Pelambres
Centinela
Antucoya
Zaldívar
Transport division
Growth projects and opportunities
Exploration activities
Key inputs and cost base
Operating excellence and innovation
The copper market:
supplying metals for a better future
68
70
72
74
75
76
78
81
82
86
88
Antofagasta plc Annual Report 2021
Antofagasta plc Annual Report 2021
antofagasta.co.uk
67
67
67
/ Operating review
Mining division
Antofagasta owns and operates four mines. Los Pelambres is located in
the Coquimbo Region of central Chile and Centinela, Antucoya and Zaldívar
are in the Antofagasta Region of northern Chile.
Production highlights
721.5k tonnes
of copper produced
252.2k ounces
of gold produced
704.3
725.3
770.0
733.9
721.5
660-690
282.3
252.2
212.4
210.1
204.1
170-190
2017
2018
2019
2020
2021
2022
Forecast
2017
2018
2019
2020
2021
2022
Forecast
10.5k tonnes
of molybdenum produced
$1.20/lb
Net cash costs
1.55
13.6
12.6
11.6
10.5
8.5-10.0
10.5
1.29
1.25
1.22
1.20
1.14
2017
2018
2019
2020
2021
2022
Forecast
2017
2018
2019
2020
2021
2022
Forecast
Mauricio Larraín
Vice President of
Northern Operations
Despite the challenges
during the year, including
COVID-19 and the continued
drought conditions in central
Chile, our mines and plants
performed as planned
and we have successfully
achieved our production
and cost guidance for
the year. We have the
resources and technology
to grow, to ensure we are
a sustainable partner and
we have the people and
talent to deliver reliably
and responsibly.
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Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information PERU
BOLIVIA
ANTOFAGASTA
REGION
SANTIAGO
COQUIMBO
REGION
ARGENTINA
CENTINELA
PORT
MEJILLONES
ANTOFAGASTA
ANTUCOYA
CENTINELA
ZALDÍVAR
LA SERENA
ILLAPEL
PUNTA
CHUNGO PORT
LOS
PELAMBRES
LOS VILOS
Los Pelambres
Centinela
Antucoya
Zaldívar
Capital city
Cities and town centres
Ports
Antofagasta plc Annual Report 2021
69
/ Operating review continued
Mining division
Los Pelambres
Los Pelambres is a sulphide deposit in Chile’s Coquimbo Region, 240 km
north of Santiago. It produces copper concentrate (containing gold and silver)
and molybdenum concentrate through a milling and flotation process.
Copper production
324.7k tonnes
Gold production
53.2k ounces
Molybdenum production
9.2k tonnes
363.4
359.6
59.7
60.3
11.2
10.9
324.7
290-300
53.2
40-50
9.2
6.5-7.5
2019
2020
2021
2022
Forecast
2019
2020
2021
2022
Forecast
2019
2020
2021
2022
Forecast
2021 financials
$3,621m
Revenue +36.4%
$2,526m
EBITDA +51.9%
Net cash costs
$0.89/lb
1.25
0.91
0.89
0.81
2019
2020
2021
2022
Forecast
Lifecycle of the mine
START OF
OPERATIONS
PROJECTED
MINE LIFE
22 years
2000
2000
2022
13 years
2035
2035
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Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information 2021 Performance
Operating performance
There has been a worsening drought at
Los Pelambres for 12 years, but this year,
for the first time and despite strict water
management protocols, the water shortage
impacted copper production.
EBITDA was $2,526 million, compared with
$1,663 million in 2020, reflecting higher
copper and molybdenum realised prices,
partly offset by lower copper and gold sales
volumes and higher operating costs.
Production
Copper production for the year decreased
by 9.7% to 324,700 tonnes, mainly due to the
lower throughput due to water optimisation
and expected lower copper grade.
Molybdenum production in 2021 was 9,200
tonnes, 1,700 tonnes lower than in 2020
as a result of the lower throughput, grades
and recoveries. Gold production was 53,200
ounces, 11.8% lower than the previous year.
Cash costs
Cash costs before by-product credits
at $1.59/lb were 25.2%, or 32c/lb, higher
than in 2020, reflecting the lower production
due to water restrictions, the stronger Chilean
peso and higher input prices. Net cash costs
for the full year were $0.89/lb, or 9.9% lower
than in 2020 due to higher by-product prices
as Los Pelambres benefits from the sale
of gold, molybdenum and silver.
Capital expenditure
Capital expenditure during 2021 was $880
million, including $219 million on sustaining
and $575 million on growth projects.
As at the end of 2021 the Los Pelambres
Expansion project was 68% complete (design,
procurement and construction). Currently,
the final estimated project costs are under
review, considering the impact of COVID-19,
higher input and logistics costs and project
worker absenteeism.
Outlook for 2022
The forecast production for 2022 is
290–300,000 tonnes of copper, 6.5–7,500
tonnes of molybdenum and 40–50,000
ounces of gold. Lower production is due to
temporary water supply restrictions which
are expected to end once the desalinated
water supply system is commissioned
in second half 2022.
Cash costs before by-product credits
are forecast to be approximately $1.75/lb
and net cash costs $1.25/lb, as throughput is
temporarily reduced because of the drought.
Antofagasta plc Annual Report 2021
71
/ Operating review continued
Mining division
Centinela
Centinela mines sulphide and oxide deposits 1,350 km north of Santiago in
the Antofagasta Region, one of Chile’s most important mining areas. Centinela
produces copper concentrate (containing gold and silver) through a milling
and flotation process, and molybdenum concentrate. It also produces copper
cathodes, using the solvent extraction and electrowinning (SX-EW) process.
Copper production
274.2k tonnes
Gold production
199.0k ounces
Molybdenum production
1.3k tonnes
276.6
274.2
245-255
222.6
246.8
199.0
2.0-2.5
143.7
130-140
1.7
1.3
0.7
2019
2020
2021
2022
Forecast
2019
2020
2021
2022
Forecast
2019
2020
2021
2022
Forecast
2021 financials
$2,981m
Revenue +61.6%
$1,919m
EBITDA +110.5%
Net cash costs
$1.13/lb
1.60
1.26
1.27
1.13
2019
2020
2021
2022
Forecast
Lifecycle of the mine
START OF
OPERATIONS
PROJECTED
MINE LIFE
2022
21 years
42 years
2001
2001
2064
2064
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Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information 2021 Performance
Operating performance
Centinela had a very solid year in 2021
with increased production and lower costs
with higher sulphide ore grades and
increased throughput.
EBITDA at Centinela was $1,919 million,
compared with $912 million in 2020,
on higher copper and gold sales volumes
and higher copper realised prices, partly
offset by higher unit costs.
Production
Copper production was 274,200 tonnes,
11.1% higher than in 2020 due to higher
grades and increased throughput at Centinela
Concentrates, which operated consistently at,
or above, design capacity for the full year.
Production of copper in concentrate was
185,400 tonnes, 20.7% higher than in 2020,
reflecting expected higher ore grades and
throughput above the design capacity
of 105,000 tonnes of ore per day.
Copper cathode production during the year
was 88,800 tonnes, 4.8% lower than in
2020 mainly due to expected lower grades
and recoveries, despite higher throughput
and consistently higher performance at
all the plants.
Capital expenditure
Capital expenditure was $792 million,
including $394 million on mine development
and $308 million on development capital
expenditure, which includes the Esperanza
Sur pit project and new autonomous trucks.
Gold production was 199,000 ounces, 38.5%
higher than in 2020, due to higher throughput
and grades. Molybdenum production was
1,300 tonnes on decreased grades.
Cash costs
Cash costs before by-product credits in 2021
were $1.87/lb, 2c/lb higher than in 2020
as the impact of higher copper production
was offset by the stronger Chilean peso and
higher input costs.
By-product credits were 74c/lb, 16c/lb higher
than in 2020 due to higher gold production
and the improved molybdenum price.
Net cash costs for the year were $1.13/lb,
11.0% lower than in 2020.
Outlook for 2022
Production is forecast at 245–255,000
tonnes of copper, 130–140,000 ounces
of gold and 2–2,500 tonnes of molybdenum.
Copper production will decrease compared
to 2021 as grades fall at Centinela
Concentrates to an expected 0.50%,
before increasing again in 2023.
Cash costs before by-product credits
are forecast to be approximately $2.30/lb
and net cash costs $1.60/lb.
Antofagasta plc Annual Report 2021
73
/ Operating review continued
Mining division
Antucoya
Antucoya is approximately 1,400 km north of Santiago and
125 km north-east of the city of Antofagasta. Antucoya mines
and leaches oxide ore to produce copper cathodes using
the solvent extraction and electrowinning (SX-EW) process.
2021 Performance
Operating performance
Antucoya continued to improve its operational
reliability and consistency during the year with
daily ore throughput increasing by 12.5%
compared to 2020.
EBITDA was $337 million compared with
$166 million in 2020, reflecting higher sales
volumes and realised prices, partially offset by
higher operating costs.
Production
Antucoya produced 78,600 tonnes, 0.9%
lower than last year due to higher throughput,
offset by expected lower grades and resulting
lower recoveries.
Cash costs
Cash costs for 2021 were $2.04/lb, 12.1%
higher than in 2020 due to a stronger Chilean
peso, and higher input costs and maintenance
expenditure.
Capital expenditure
Capital expenditure was $50 million, including
$28 million on sustaining capital expenditure.
Outlook for 2022
Production is forecast to be 75–80,000
tonnes of copper and cash costs are expected
to be approximately $2.30/lb.
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Antofagasta plc Annual Report 2021
Copper production
78.6k tonnes
Net cash costs
$2.04/lb
75-80
79.3
78.6
71.9
2.17
2.04
1.82
2.30
2019
2020
2021
2021
2022
Forecast
2019
2020
2021
2022
Forecast
2021 financials
$698m
Revenue +45.3%
$337m
EBITDA +103.3%
Lifecycle of the mine
START OF
OPERATIONS
PROJECTED
MINE LIFE
2022
6 years
22 years
2016
2016
2044
2044
Strategic ReportCorporate GovernanceFinancial Statements Other Information Mining division
Zaldívar
Zaldívar is an open-pit, heap-leach copper mine which produces
copper cathodes using the solvent extraction and electrowinning
(SX-EW) process. The mine is 3,000 metres above sea level,
approximately 1,400 km north of Santiago and 175 km south-east
of the city of Antofagasta.
2021 Performance
Operating performance
Zaldívar had a challenging 2021 with grades
declining compared to 2020, however it
improved its operational reliability during the
year with daily ore throughput increasing by
12.9% compared to 2020.
Attributable EBITDA was $173 million
compared with $96 million in 2020.
Production
Attributable copper production was 44,000
tonnes, 8.7% lower than in 2020 mainly due
to lower than planned recoveries and
expected lower grades, partially offset by
higher throughput.
Cash costs
Cash costs were $2.39/lb, compared with
$1.80/lb in 2020, mainly due to lower grades,
higher maintenance costs and the stronger
Chilean peso.
Capital expenditure
Attributable capital expenditure in 2021 was
$87 million, of which $49 million was
development capital expenditure, mainly on
the Chloride Leach project.
Outlook for 2022
Attributable copper production is forecast to
be 50–55,000 tonnes at a cash costs of
approximately $2.20/lb.
Other matters
In 2018, Zaldívar submitted an Environmental
Impact Assessment (EIA), which included an
application to extend its water permit from
2025 to 2031 and the mining lease. This has
involved government agencies reviewing the
application and a consultation process with
the indigenous community, led by the
environmental authority. The final stages
of the review are expected to be completed
in H1 2022.
Zaldívar’s final pit phase, which represents
approximately 20% of current ore reserves,
impacts a portion of Minera Escondida’s
mine property, as well as infrastructure
owned by third parties (road, railway,
powerline and pipelines). Mining of the final
pit phase is subject to agreements or
easements to access these areas and relocate
this infrastructure.
Zaldívar’s updated mine life now extends to
2036. Looking beyond this date, field work
and studies are underway on further
extending the life of the mine by exploiting the
primary sulphide ore body that lies below the
current ore reserves. Water planning beyond
the extension to 2031 is being evaluated as
part of these studies.
Copper production
44.0k tonnes
50-55
58.1
48.2
44.0
Net cash costs
$2.39/lb
2.39
2.20
1.75
1.80
2019
2020
2021
2022
Forecast
2019
2020
2021
2022
Forecast
2021 financials
$173m
EBITDA +80.9%
Lifecycle of the mine
START OF
OPERATIONS
PROJECTED
MINE LIFE
27 years
1995
1995
2022
14 years
2036
2036
Antofagasta plc Annual Report 2021
75
/ Operating review continued
Transport division
Our Transport division is known
as Ferrocarril de Antofagasta
a Bolivia (FCAB) and provides
rail and truck services to the
mining industry in the Antofagasta
Region, including our own
mining operations.
2021 financials
$170m
Revenue +13.8%
$68m
EBITDA +11.8%
2021 Tonnage transported
6,702k tonnes
6,533
6,444
6,702
2019
2020
2021
Tocopilla
María Elena
Calama
Sierra Gorda
Antofagasta Region
Mejillones
Antofagasta
Taltal
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Antofagasta plc Annual Report 2021
Customer map
Road route
Rail route
FCAB customers
Strategic ReportCorporate GovernanceFinancial Statements Other Information Sustainability
The maturity of the safety processes
applied at the division continued to
show improvement, with the division
recording its fifth year with no fatalities and
an LTIFR (Lost Time Injury Frequency Rate)
significantly lower than the average in the
Chilean rail and truck transport industries.
In the occupational health area, the operation
successfully met the challenge of managing
the impact of COVID-19 with minimal
disruptions to its operations.
Also, in line with the Group’s Diversity and
Inclusion Policy, the number of women and
people with disabilities in the division
increased to 16.4% and 1.1% of the total
workforce respectively.
Outlook for 2022
The division has recently strengthened its
commercial area in order to ensure the
successful renewal of various sales contracts
and capture new ones in the medium and long
term. Over the next few years, the division
will transport an increasing quantity
of bulk materials.
The division continues to advance its plans
to convert its land in the centre of the city
of Antofagasta from industrial to urban use.
This has involved extensive consultation
with communities, neighbours and other
stakeholders. An important milestone was
achieved in the first half of 2021 with the
approval of the project’s Environmental
Impact Assessment.
2021 Performance
The Transport division continued to improve
its operating activity through the implementation
of its Management Model, which is based
on five key pillars: operating excellence,
growth, transformation, community affairs
and urban development.
Operating performance
Tonnage transported in 2021 was 4.0%
higher than in the previous year as a new
transport contract started.
EBITDA was $68 million, 11.8% higher than in
2020, reflecting the higher revenue from
increased volumes and better contracted
sales prices.
Costs and operating efficiency
Management is focused on optimising the
division’s business processes to ensure its
long-term competitiveness. The Group´s Cost
and Competitiveness Programme continued to
be applied at the division during 2021 to
improve its cost structure, revenue stream
and operating standards and achieved
benefits of some $8 million during the year.
Antofagasta plc Annual Report 2021
77
/ Operating review continued
Growth projects and opportunities
Following the change of scope and delays due
to COVID-19, the project reached 68% overall
completion by the end of the year.
As mining progresses at Los Pelambres,
ore hardness will increase. The expansion is
designed to compensate for this, increasing
plant throughput from the current capacity
of 175,000 tonnes of ore per day to an average
of 190,000 tonnes of ore per day. The project
has two components: the expansion of the
concentrator, including an additional SAG mill,
ball mill and six cells in the flotation circuit, and
the construction of a desalination plant. We
expect the desalination plant to be
commissioned in the second half of 2022
and the concentrator plant early in 2023.
Annual copper production will increase by
an average of 60,000 tonnes per year over
15 years, starting at approximately 40,000
tonnes per year for the first four to five years
and rising to 70,000 tonnes for the rest of the
period as the hardness of the ore increases
and the benefit of higher milling capacity is
fully realised.
The 400 litres per second desalination plant
includes a 62 km pipeline from the coast to
the El Mauro tailings storage facility, where it
will connect with the existing recycling circuit
that returns water to the Los Pelambres
concentrator plant.
Additional permits will be needed to complete
the expansion of the desalination plant to 800
litres per second, but some preparatory work
is being carried out as part of Phase 1 of the
Los Pelambres Expansion project. The
planned investment to enable the future
expansion will be limited to what is allowed
under the existing permits and includes
changes to the marine works associated with
the inlet and outlet pipes, expanding the plant
footprint and changes in the piping, cabling
and civil works.
The capital cost of the project is $1.7 billion but
is under final review, given the challenges of
higher absenteeism and worker rotation as well
as higher logistics costs experienced this year
due to the COVID-19 pandemic.
PHASE 1
+60,000 tonnes
of annual copper production
+400 litres per
second
of desalinated water
Our approach to considered growth
means that we focus on value,
which includes controlling capital
costs and optimising production at
our existing operations and
the development of new mining
operations to deliver replacement
and new production in the future.
We achieve this through careful
project management and constant
monitoring of the efficiency
of our mines, plants and
transport infrastructure.
During 2021, development of our growth
projects at Los Pelambres, Centinela and
Zaldívar was impacted by COVID-19. Work
at the concentrator site of the Los Pelambres
Expansion project was temporarily suspended
in May, while the construction of the
desalination plant progressed according
to plan. Work on the Esperanza Sur pit and
the Zaldívar Chloride Leach projects also
progressed according to plan, despite the
COVID restrictions.
All projects are proceeding with fully integrated
COVID-19 health protocols in place. These are
expected to continue during 2022, but as a
managed health risk consistent with the high
levels of vaccination achieved in Chile. The
Zaldívar Chloride Leach project was completed
in January 2022 and the Los Pelambres
desalination plant and Esperanza Sur pit will
be completed in 2022. The concentrator
expansion at Los Pelambres will be completed
in early 2023.
Los Pelambres Expansion
This expansion project is divided into
two phases.
Phase 1
This phase is designed to optimise throughput
within the limits of the existing operating,
environmental and water extraction permits.
During 2020, the decision was made to
change the scope of the project and double
the planned capacity of the desalination plant
that is part of Phase 1 from 400 litres per
second to 800 litres per second. Enabling
works for this expansion are being carried out
at the same time as the Phase 1 works but
are limited in extent by what is allowed under
the permits that have already been issued.
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Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information The capital expenditure to extend the mine life
was estimated in a pre-feasibility study in
2014 at approximately $500 million, with most
of the expenditure on mining equipment and
increasing the capacity of the concentrator
plant and the El Mauro tailings facility.
PHASE 2
+15 years
mine life extension
+35,000 tonnes
of annual copper production
+400 litres per
second
of desalinated water
Centinela Second Concentrator
We are currently evaluating the construction
of a second concentrator and tailings deposit
some 7 km from the existing concentrator, to
take place in two phases. Phase 1 would have
an ore throughput capacity of approximately
90,000 tonnes per day, producing copper,
and gold and molybdenum as by-products,
with an annual production of approximately
180,000 tonnes of copper equivalent. Once
Phase 1 is operating successfully, a further
expansion is possible and would involve
increasing the capacity of the concentrator to
150,000 tonnes of ore per day, with annual
production increasing to 250,000 tonnes of
copper equivalent, maximising the potential of
Centinela’s large resource base.
Ore for the second concentrator would be
sourced initially from the Esperanza Sur deposit
and later from Encuentro Sulphides. The latter
lies under the Encuentro Oxides reserves,
which are expected to be depleted by 2026.
The EIA for both phases of the project was
approved in 2016 and the initial feasibility
study for Phase 1 was completed during
2020, with further detailed and supplier
engineering progressing during 2021 ahead of
an expected decision by the Board by the end
of 2022. The capital cost estimated in the
2015 pre-feasibility study for Phase 1 was
$2.7 billion, which included capitalised
stripping, mining equipment, a concentrator
plant, a new tailings storage facility, a water
pipeline and other infrastructure, plus
the owner’s and other costs.
Phase 2 – Future expansion
Following the decision in 2020 to increase
the size of the desalination plant, Phase 2
of the expansion requires two separate
EIA applications:
Desalination plant expansion
This project is to protect Los Pelambres from
the future impact of climate change and the
deteriorating availability of water in the region,
and to free up continental water for use by
local communities.
The additional works required, beyond those
being completed as part of Phase 1, include
the expansion of the desalination plant and the
construction of a new water pipeline from the
El Mauro tailings storage facility to the
concentrator plant. This project requires a
new EIA application, which was submitted in
the first half of 2021. The EIA also includes
two sustaining capital infrastructure projects;
the replacement of the concentrate pipeline,
which is approaching the end of its useful life,
and the construction of certain long-term
infrastructure at the El Mauro tailings storage
facility. The EIA is expected to be approved in
2023, with the project completed in 2025
when desalinated and recirculated water will
account for at least 90% of Los Pelambres’
operational water use.
Mine life extension
The current mine life of Los Pelambres is
13 years and is limited by the capacity of the
El Mauro tailings storage facility. The scope
of the second EIA will include increasing the
capacity of the tailings storage facility,
extending the pit’s pushback plan and expanding
the existing waste dumps. This will extend
the mine’s life by a minimum of 15 years, with
a significant portion of Los Pelambres’ six
billion tonne mineral resources converting to
new mine reserves. The EIA will also include
the option to increase throughput to 205,000
tonnes of ore per day by adding a new ball
mill and repowering the conveyor that runs
from the primary crusher in the pit to the
concentrator plant. This option would increase
copper production by 35,000 tonnes per year.
Key studies on tailings and waste storage
capacity have been completed, and the
environmental and social studies are now
being prepared for submission to the
authorities during 2022.
Antofagasta plc Annual Report 2021
79
/ Operating review continued
Growth projects and opportunities
continued
Reko Diq project
In July 2019, the World Bank Group’s
International Centre for Settlement of Investment
Disputes (“ICSID”) awarded $5.84 billion in
damages (compensation and accumulated
interest as at the date of the award) to Tethyan
Copper Company Pty Limited (“Tethyan”), the
joint venture held equally by the Company and
Barrick Gold Corporation, in relation to an
arbitration claim filed against the Islamic
Republic of Pakistan (“Pakistan”) following the
unlawful denial of a mining lease for the Reko
Diq project in Pakistan in 2011. As at 31
December 2021, the outstanding award
amount, including interest, was approximately
$6.45 billion.
In March 2022 the Company reached an
agreement in principle with Barrick Gold and
the Governments of Pakistan and Balochistan
on a framework that provides for the
reconstitution of the Reko Diq project, and a
pathway for the Company to exit the project.
If definitive agreements are executed and the
conditions to closing are satisfied, a consortium
comprising various Pakistani state-owned
enterprises will acquire an interest in the
project for consideration of approximately
$900m to jointly develop the project with
Barrick, and Antofagasta would exit. If all the
conditions are satisfied during 2022, we would
expect to receive the proceeds in 2023.
During 2021, a tender process to invite third
parties to provide water for Centinela’s
current operations, by acquiring the existing
water supply system and building the new
water pipeline, progressed and is expected to
be completed during 2022.
Esperanza Sur pit
The Esperanza Sur pit at Centinela is 4 km
south of the Esperanza pit and is close to
Centinela’s concentrator plant. The deposit
contains 1.4 billion tonnes of reserves with a
grade of 0.4% copper, 0.13 g/t of gold and
0.012% of molybdenum.
Stripping advanced in 2021 and is expected to
be completed in the first half of 2022. The
stripping cost is being capitalised and is being
carried out by a contractor. Once completed,
autonomous trucks operated by Centinela will
be used to mine the deposit.
Opening the Esperanza Sur pit will improve
Centinela’s flexibility in how it supplies ore to its
concentrator. Over the initial years, the
higher-grade material from the pit will increase
production by some 10-15,000 tonnes of
copper per year, compared to the amount that
would be produced if material was solely
supplied by the Esperanza pit. This greater
flexibility will allow Centinela to smooth and
optimise its year-on-year production profile,
which has in the past been variable.
Zaldívar Chloride Leach
The project includes an upgrade of the
Solvent Extraction (SX) plant, and the
construction of new reagents facilities
and additional washing ponds for controlling
chlorine levels. It was completed in
January 2022.
The project will increase copper recoveries
by approximately 10 percentage points, with
further improvement possible depending on
the type of ore being processed. This will
increase copper production at Zaldívar by
approximately 10-15,000 tonnes per annum
over the remaining life of the mine.
As the Group equity accounts for its interest
in Zaldívar, capital expenditure at the
operation is not included in Group total capital
expenditure amounts.
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Twin Metals Minnesota
Twin Metals Minnesota (Twin Metals) is a
wholly owned copper, nickel and platinum
group metals (PGM) underground mining
project, which holds copper, nickel, cobalt-
PGM deposits in north-eastern Minnesota, US.
The project envisages mining and processing
18,000 tonnes of ore per day for 25 years
and producing three separate concentrates
– copper, nickel/cobalt and PGM.
Twin Metals has been progressing its Mine Plan
of Operations (MPO) and Scoping Environmental
Assessment Worksheet Data Submittal,
submitted in December 2019 to the US Bureau
of Land Management (BLM) and Minnesota
Department of Natural Resources (DNR),
respectively. However, over the past year, while
the Twin Metals project was advancing its
environmental review, several actions were
taken by the federal government that have
changed the potential scenarios for the project.
In 2021, the US Forest Service (USFS) and
BLM initiated an up to two-year study
regarding the potential withdrawal of lands
within the Superior National Forest (SNF),
which could ultimately lead to an effective ban
on mining for 20 years. This action alone
would not have impacted Twin Metals’ valid
existing rights in the area or the project.
BLM also rejected advancing Twin Metals’
preference right lease applications (PRLAs)
and prospecting permit applications (PPAs),
using the potential withdrawal as a rationale.
Twin Metals is appealing that decision but
made minor changes to its project
configuration to address this decision.
In early 2022, BLM took an additional action
through a legal opinion issued by the Office of
the Solicitor (M-Opinion). This action arbitrarily
cancelled Twin Metals’ federal leases 1352 and
1353, citing concerns with the reinstatement and
renewal process, Twin Metals considers the lease
cancellation to be contrary to the terms of the
leases and in violation of its existing valid rights.
These actions, taken collectively, create risk to
Twin Metals’ ability to continue the project as
configured in the MPO. Considering the time
and uncertainty related to any legal action to
challenge the government decisions, an
impairment has been recognised as at 31
December 2021 in respect of the intangible
assets and property, plant and equipment
relating to the Twin Metals project. Twin
Metals is currently evaluating its options to
protect its mineral rights and to respond to
these legal challenges.
Strategic ReportCorporate GovernanceFinancial Statements Other Information Exploration activities
Our aim is to at least replace the
mineral resources mined at our
operations each year and ensure
Antofagasta’s sustainable and
long-term growth.
Exploration remains a key contributor to the
sustainable and long-term embedded growth
of the Group´s copper business.
Following reduced activity during 2020 due to
COVID-19 restrictions, exploration has
accelerated in 2021. We continue to focus on
favourable jurisdictions in the Americas,
particularly Chile, Peru, Canada and the USA.
In Chile we are pursuing brownfield and
greenfield projects and in the other countries
we have generative programmes, identifying
early-stage projects while remaining open to
M&A opportunities.
Exploration activity in Chile and Peru is
managed from our Santiago and Lima offices,
and in North America from our Toronto office.
Exploration was conducted using these
in-house teams, utilising a well-balanced
portfolio of land holdings in Chile and Peru
while pursuing third-party opportunities in the
rest of the Americas, with the aim of building
a portfolio of long-term copper projects.
The Group’s exploration and evaluation
expenditure, which includes expenditure on
pre-feasibility studies, increased by 21.3%,
compared to 2020, to $103 million.
Chile
The Group’s exploration programmes are in
the copper belts of northern-central Chile,
particularly in areas with high prospectivity
for porphyry copper, as well as manto and
IOCG (Iron Oxide Copper Gold) type deposits.
International
Our international programme has a strong
focus on Peru, including the development of
a diversified land portfolio with long-term and
massive potential in the prospective coastal
and miocene belts.
During 2021, exploration activity included
63,000 metres of drilling, 55% more than in
2020, mainly at two advanced projects, one
of which is included in our mineral resources
statement this year for the first time and the
other is expected to report in 2022.
Exploration efforts in North America remain
concentrated on the key copper belts in
British Columbia and Arizona – Nevada,
looking for joint venture opportunities with
companies with attractive holdings, local
knowledge and resources.
The Company has discovered a significant
greenfield manto type deposit in the coastal
belt of the Antofagasta Region. The initial
inferred resource of the Cachorro deposit
is 142 million tonnes, with a copper grade
of 1.2%, and represents just part of the
potential resource.
In addition, we advanced drilling evaluation
at several projects in the Centinela Mining
District brownfield programme, maintaining
our focus on identifying new high-quality
projects with leachable oxide mineralisation
in our properties and in third-party areas.
Antofagasta plc Annual Report 2021
81
/ Operating review continued
Key inputs and cost base
Our mining operations depend
on many inputs, from energy
and water to labour and fuel,
the most important of which
are reviewed below.
Contractor services, maintenance and spare
parts account for 48% of the Mining division’s
total production costs, and energy and labour
are the largest direct costs, accounting for
13% and 14% respectively. As concentrate
producers, Los Pelambres and Centinela
require reagents and grinding media. As
cathode producers using the SX-EW process,
Centinela, Antucoya and Zaldívar require
sulphuric acid. The availability, cost and
reliability of these inputs are central to
our cost management strategy, which focuses
on cost control and security of supply.
In recent years, renewable technologies have
significantly reduced in cost and many
renewable power plants are being built in Chile,
mainly in the north. The cost of renewable
power is significantly lower than power from
conventional sources.
Zaldívar started operating on 100% renewable
power in July 2020 and Centinela and Antucoya
did the same from early 2022.
Los Pelambres increased its use of renewable
power in 2021, and during 2022 should start
to use power only from renewable sources.
As a result, all our mining operations are
expected to use energy solely from renewable
sources by the end of 2022.
This transition to solely using renewable power,
with its lower costs and lower emissions,
is important for both the Company’s carbon
footprint and its costs. Energy accounted
for 13% of our production costs in 2021.
Energy
Energy is a strategic resource for our Group
and supply is maintained through a strategy that
considers four factors: safety, cost, efficiency
and source. For this reason, in addition to
reducing the cost of our electricity, we are
working on improving our energy consumption
efficiency and reducing our emissions.
To achieve this, we have strengthened our
Energy Management System, based on
international standard ISO 50.001, in line with
the new Energy Efficiency Law in Chile
published at the beginning of 2021. We are
currently preparing our Energy Policy, with
objectives and goals that will guide our
actions in the short, medium and long term.
We have created specific management
structures to manage our energy usage and
through exhaustive analysis of gaps and
opportunities have identified a set of energy
efficiency initiatives that we will implement
from 2022.
Our operations are on the country’s main
grid, the National Electrical System (SEN) and
each of our operations sources power under
medium- and long-term contracts called
Power Purchase Agreements (PPAs).
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Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information Labour
Antofagasta’s total workforce during 2021
was 26,991 employees and contractors.
Accessing a diverse and talented workforce
is key to our success.
Labour agreements are in place with each
of the 11 unions at our mining operations
and generally last for a period of three years,
when they are renegotiated. However, we
maintain good working relationships with our
employees and unions throughout the contract
periods, so that issues are not left for discussion
only during formal negotiations. During 2021,
three negotiations were successfully
concluded, two at Los Pelambres and one
at Centinela.
Contractors account for approximately 74%
of our workforce and contractor companies are
responsible for labour negotiations with their
own employees. We maintain strong relations
with all contractors to ensure operating
continuity and require all contractors to adhere
to the same key standards as we maintain for
our own employees, particularly in the areas
of safety and health.
26,991
People
74%
Contractors
Antofagasta plc Annual Report 2021
83
Water
Water is a strategic resource and we are
committed to:
• Increasing our water efficiency by
improving recirculation, recovery and reuse
rates, and progressively reducing our
consumption of continental water.
• Managing our water usage in an
environmentally responsible and
sustainable way, in agreement with the
communities where we operate.
• Applying strong and transparent water
governance practices and reporting our
performance, risks, opportunities and
outcomes both internally and externally.
At Los Pelambres and Zaldívar we use water
from continental sources. At Centinela we
mainly use raw sea water and at Antucoya
we only use raw sea water.
In 2021, sea water accounted for 45% of our
Mining division’s operational water withdrawal
and our efficiency metric (reuse and
recycling, as defined by the ICMM) at each
operation ranges from 77% to 90%,
depending on the operation’s characteristics.
In the second half of 2022, Los Pelambres
expects to complete the construction of a 400
litre per second desalination plant, which,
subject to permitting, will double to 800 litres
per second by 2025. This will ensure the
operation’s security of supply and will mean that
the operation will no longer need to withdraw
water from the Choapa River and its wells in the
upper part of the Choapa Valley. From 2025,
sea water and reused and recycled water will
account for more than 90% of the Mining
division’s total operational water use.
Centinela is a pioneer in efficient water
management, becoming the world’s first
large-scale mining operation to use raw sea
water and thickened tailings, which allow
more water to be recycled than conventional
thickening technology. Centinela currently
obtains 14% of its water withdrawal from
nearby wells. However, by the end of 2022
the capacity of its sea water pumping system
will have been increased and water extraction
from these wells will cease.
Antucoya uses only raw sea water, as will
Centinela’s second concentrator if its
construction is approved by the Board.
Zaldívar obtains continental water from wells
in the Atacama Salt Flat. Its current water
extraction permits expire in 2025 and an
application to extend them to 2031 is part of
the Environmental Impact Assessment (EIA)
application to extend the mine’s life.
In reporting our water metrics, we apply the
ICMM’s “Water Reporting – Good Practice
Guide (2nd Edition)”. In addition, we also
report our water risk exposure in accordance
with the requirements of the Water Security
Programme of the Carbon Disclosure Project
(CDP), and to the relevant local authorities
and other national bodies.
83%
Water reused and recycled
Grinding balls and mill liners
Steel is used in the grinding balls and mill
liners which account for approximately 12% of
a concentrator plant’s costs and 4% of the
Group’s production costs. Steel prices fell in
2020 but increased significantly in 2021,
raising the price of grinding balls and liners,
and shipping costs have also increased. We
have been working on circular economy
initiatives to contain escalating costs, and
reusing liners and balls.
Sulphuric acid
Sulphuric acid is one of the main inputs for
the SX/EW leaching process used to produce
cathodes and in 2021 it accounted for
approximately 4% of the Group’s production
costs. Together Centinela, Antucoya and
Zaldívar use approximately 1.5 million tonnes
of sulphuric acid per year, mainly contracted
under one-year agreements to secure supply.
During 2021, the acid price increased
significantly, starting the year at about $75
per tonne in Chile and reaching around $255
per tonne by the end of the year. This was an
increase of over three times, to a level not
seen since 2008.
This price rise followed the revival of global
industrial and agricultural activity during the
year, the delayed recovery of some sectors,
such as the refining of fossil fuels, which is an
important producer of sulphur, and significant
increases in maritime freight costs.
/ Operating review continued
Key inputs and cost base
continued
Service contracts and key supplies
Negotiations for key commercial contracts,
such as mining equipment, fuels, lubricants,
critical spares, tyres, reagents, grinding balls,
explosives and mine maintenance, are
managed centrally to generate synergies and
economies of scale. This achieves significant
savings and allows us to implement new
controls that improve competitiveness and
productivity from our contractor companies.
We have linked our supply prices to the
respective underlying commodity, to minimize
the impact on our margins.
Fuel and lubricants
Fuel and lubricants represent approximately
7% of production costs and are used mainly by
mine haulage trucks. Improving fuel efficiency
remains a priority, with the amount of fuel
consumed per tonne of material mined being a
key measure. Variations in the oil price affect
not only the price of fuel but also the spot price
of energy, shipping rates for supplies and
products, and the cost of items such as tyres
and conveyor belts, which contain oil-based
products. The oil price increased by
approximately 40% during 2021.
Explosives
The explosives market is experiencing high
prices following the reactivation of the
fertiliser market after the peak of the
COVID-19 pandemic. During the year we
renegotiated the explosives supply and
service contracts at Los Pelambres and
Antucoya in order to contain costs and
incorporated new explosives technologies at
Centinela that will allow consumption to be
optimised while maintaining good
fragmentation results.
We have a challenging optimisation
programme at the corporate and operations
levels to improve the administration, control
and risk management of our service
contracts. The procurement team has a
standardised way of working and
considerable technical knowledge and has
developed effective approaches to managing
the purchase of goods and services.
Depending on the strategic position of the
supplier, these range from pure price
competition with e-auctions to long-term
Group-wide agreements with mechanisms
and incentives that provide benefits for both
parties. In 2021, we started strategic review
meetings with our key suppliers in order to
address operational challenges while
simultaneously taking a long-term view.
With the global disruption of the supply
chain caused by COVID-19, we implemented
contingency plans to maintain the quality and
timely delivery of spare parts and materials,
ensuring operational continuity and
cost containment.
Following the introduction of a purchasing
assistant robot in 2020, to help with some
stages of the purchase process and integrate
new technologies, approximately 88% of the
Group’s material stock purchases were done
through this automated process.
On average we have around 2,184 suppliers
of goods and services, of which 96% are
based in Chile.
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Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information The high price of acid will have a significant
impact at our SX-EW operations, where it
accounts for about 23% of production costs.
During 2022 the spot price of acid is
expected to remain relatively high, but
trending downwards during the year.
Exchange rate
The Chilean peso/US dollar exchange rate
generally has a strong correlation with the
copper price as copper exports generate
over 50% of Chile´s foreign exchange earnings,
so if the copper price strengthens so does the
Chilean peso, and vice versa. This provides
a natural hedge for the Company as
approximately half of our operating costs
are in Chilean pesos. However, during 2021
although the copper price strengthened,
the Chilean peso weakened closing the year
at Ch$845/$1 as the impact of local political
events and the liquidity injection as part of
the response to the pandemic outweighed
the strength of the copper price.
Antofagasta plc Annual Report 2021
85
/ Operating review continued
Operating excellence
and innovation
Innovation is one of our five
strategic pillars, designed to
create and add value across the
Group by enabling the progress
and fulfilment of our strategic
priorities.
Our innovation programme has two key
objectives. The first is to improve and achieve
the full potential of our operations by seeking
new ways of using best-in-class digital
technology. We are doing this through the
integration of data with advanced analytics
and by improving operational performance
with automation and robotics. The second is a
longer-term objective; to enable growth in our
business and develop the next generation of
mining practices, including game-changing
process technology and the reduction
of our environmental footprint.
$130.7m
of savings achieved in 2021
45%
through productivity improvements
55%
through more efficient contract
negotiations, reducing
consumption rates and better
use of maintenance resources
Operating excellence
During 2021, our operating excellence
strategy focused on rigorously improving our
production processes throughout the Group.
We achieved this by implementing the
initiatives that are key to successfully creating
value, the most important of which were the
use of advanced analytics to improve
data-driven decision-making and the
development or adoption of new solutions to
improve or transform our existing operational
practices. In doing this, we also reduced our
cost base, improving our competitiveness
within the industry.
Data analytics
During 2021, we created and deployed a Data
Governance Programme throughout the
organisation, generating gains in data access,
consistency and quality, and accelerating the
development of our advanced analytics
capabilities. Data analytics tools and the use
of case study solutions contributed to the
improvement of our performance.
Operational innovation
Our open innovation model is effective in
enabling our employees, collaborators and
external parties, such as suppliers, to
understand our main operational challenges.
They can then propose their own ideas and
solutions through an online collaborative
platform called Innovaminerals and at the
Pitch Days we organise. During the year we
tackled 17 operational challenges and hosted
22 Pitch Days, which led to us doing further
work with the proposers on 11 of the
suggested solutions.
Cost and Competitiveness Programme
The Cost and Competitiveness Programme
(CCP) was introduced in 2014 to capture the
gains from our initiatives to reduce our cost
base and improve our competitiveness. Now,
after seven years, the scope of the CCP has
evolved to reflect the greater maturity level it
has achieved.
The programme focuses on five areas in
order to deliver sustainable cost reductions
and productivity increases: streamlining
goods and services procurement; improving
operating efficiency and asset reliability;
energy efficiency; corporate and organisational
effectiveness; and working capital, capital
expenditure and services efficiency.
During 2021, we achieved savings of $131
million, equivalent to $8.2c/lb for the year.
For 2022, the target is at least $50 million
of further savings.
New ways to operate
Our digital roadmap consists of
transformational strategic programmes that
draw on the adoption of new technologies to
improve productivity and safety.
Integrated Remote Operations Centre (IROC)
Centinela’s Integrated Remote Operations
Centre (IROC) is in the city of Antofagasta. It
went live in December 2021 and will be
completed during 2022. The implementation
of this project allows not only for remote
operations and improved process control but
also better decision-making and greater
efficiency and productivity of operations from
the mine to the port.
An IROC for Los Pelambres is also under
construction and is expected to go live in the
second half of 2022.
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Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information Autonomous systems
The increasing use of autonomous equipment
at Los Pelambres and at Centinela’s
Esperanza Sur pit continued during the year.
Los Pelambres has successfully deployed five
autonomous production drill rigs, significantly
improving productivity. During the year they
drilled 180,000 metres, operating
autonomously from a control room located
more than a mile away.
Meanwhile, at Centinela, we completed the
testing stage for the new autonomous trucks
and drills at Esperanza Sur, with eight
autonomous trucks and two autonomous
production drills in operation by the end of the
year. Three further trucks will be added to the
fleet during 2022.
Next generation in mining technologies
The following examples show how we
continue to advance the development and
validation of new technologies that could
enable new growth and mining practices:
Cuprochlor®-T – our patented primary
sulphide leaching technology
During 2021 we conducted an industrial-scale
trial at Centinela, using a 40,000-tonne heap
of primary sulphide ore (chalcopyrite). The
results are consistent with previous test work.
This technology could allow us to bring
forward the processing of ore or could allow
ore previously considered to be uneconomic
to be profitably processed. We are now
incorporating this technology as an option in
our planning for the medium- and long-term
development of mineral resources
at our operations.
Green hydrogen
In 2021, we became the first mining company
to join the Chilean Hydrogen Association (H2
Chile), which promotes the development of
green hydrogen, a promising clean fuel
alternative that could replace the diesel
consumed by our haulage trucks. We are also
participating in Hydra, a project that seeks to
build a hydrogen-based hybrid engine
prototype with batteries and cells that could
be used in mining trucks. A pilot project is
planned at Centinela.
Case study at Los Pelambres:
Mineral tracking
During 2021 Los Pelambres implemented
an advanced analytics web application that
provides recommendations on how to
increase ore recoveries during the flotation
process. This is based on real-time
information on minerals being fed
into the plant.
Case study at Centinela: Drilling and
blasting management platform
The Drilling and Blasting Management
Platform at Centinela has an integrated data
system that improves the management of
the drilling and blasting processes,
generating a 5% improvement in metres
drilled and a cost reduction of 3% in 2021.
Case study at Centinela: Underflow
pumps restriction model
Centinela developed a predictive
maintenance programme using
technological enablers and analytics tools
to anticipate failures and equipment defects.
This improved plant maintenance,
which is one of the main restrictions
in plant performance.
Antofagasta plc Annual Report 2021
87
/ Operating review continued
The copper market:
supplying metals for a better future
Due to strong copper demand growth in 2021
and the limited capacity of copper supply to
respond quickly, the exchange stocks have
dropped to their lowest level since 2008,
ending the year at less than 0.6 weeks of
consumption. This has consolidated the price
at historically high levels and moved the
copper forward curve into backwardation,
where the uncertainty of having enough
copper for prompt delivery leads to the cash
price being higher than the forward price,
reflecting exceptionally tight availability.
This situation is expected to ease during the
second half of 2022, when several major
greenfield and brownfield projects are
scheduled to come into production. However,
we expect part, or all of the additional
production will be offset by continued falling
grades, COVID-19, political instability, water
restrictions, communities’ unrest, and
logistical and supply constraints.
Looking further ahead, the outlook for copper
remains positive, thanks to the continued
decarbonisation of industrial activity and the
growth of the clean energy sector and
electromobility. Demand is expected to grow
more slowly during 2022 than in 2021, but
still at a high rate of about 2.5-3.0%, requiring
an additional 600 to 700,000 tonnes of
refined copper per year.
Over the year the LME copper price averaged
$4.23/lb, 51% higher than in 2020.
Refined copper
Copper cathode inventories in exchanges and
China bonded warehouses fell by 29% during
2021, reaching a historical low of 440,000
tonnes. China bonded stocks halved to
190,000 tonnes, prompting the Chinese State
Reserves Bureau (SRB) to release some
110,000 tonnes of copper from its strategic
stocks in an attempt to stabilise prices at
lower levels and control inflationary pressure.
Bonded stocks in China are at their lowest
level since records have been available.
This demand for cathodes, combined with low
inventories, drove up cathode premiums in
China from $20-30/tonne to $90-100/tonne,
before weakening to a level of about $80/
tonne towards the end of the year.
Also, the recovery in world trade has been
impaired by shipping delays due to COVID-19
sanitary restrictions and congestion at major
Asian and North American ports. The additional
time required for vessels to be cleared for
docking and unloading has significantly
impacted efficiency and shipping capacity.
Logistical constraints are expected to lessen
during 2022.
Copper concentrate
Some 71% of our copper production is in the
form of copper concentrates, and the amount
miners pay smelters as treatment and refining
charges (“TC/RCs”) is dependant on the
dynamics of the concentrate market. These
charges account for about 6% of our cash
costs before by-product credits.
Most of the new copper production in the
world is in the form of concentrates and these
volumes are largely being absorbed by new
smelter capacity in China, while over the
coming years more smelter capacity is expected
in Indonesia, India and Africa. In the medium
term, therefore, there is not expected to be
a lack of smelting capacity for processing all
the new production in the form of concentrates.
2021 was a volatile year for TC/RCs. Soon
after the conclusion of the annual terms for
the year at $59.5 per dry tonne of concentrate
and 5.95c/lb of refined copper, the spot TC/RCs
started trending downward, reaching an historic
low of $20/t and 2c/lb in April, a level not
seen since 2011. From April onwards TC/RCs
recovered, closing the year at $56/t and 5.6c/lb.
Annual benchmark terms for 2022 were
agreed in December at $65/t and 6.5c/lb,
reflecting some expected easing in concentrate
supply during the year.
As the world becomes ever more
environmentally aware, demand
for copper increases. We
are responding by continuing
to supply the copper needed for
a more sustainable world in a
sustainable way.
During 2021 our Centinela and Zaldívar
operations received the Copper Mark, an
independent verification that they produce
copper according to the highest international
sustainability standards. Los Pelambres and
Antucoya have begun the accreditation
process, which is expected to conclude
during 2022.
The Copper Mark is also expected to enable
companies to comply with the London Metal
Exchange’s (LME) Responsible Sourcing
requirements that come into force at the end
of 2023. This is currently going through an
OECD Alignment Assessment and, once
completed, we will apply to the LME for
formal approval.
Market comment
The year started with the continued upward
trend in the copper price seen in the second
half of 2020, with the price reaching a peak
of $4.86/lb in May. This was an all-time high
and for the rest of the year the copper price
stabilised, trading in a range above $4.20/lb.
This has continued in 2022.
Copper consumption by region
in 2021
China
Other Asia
Europe
North America
Rest of the world
52%
16%
15%
10%
7%
Source: Wood Mackenzie, Copper Outlook
December 2021
88
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information The molybdenum market is expected to
remain strong in 2022, with the market
balanced or slightly in deficit. Supply is
expected to be relatively weak while demand
remains strong due to increasing industrial
activity in Europe and the USA, and higher
oil and energy prices.
Gold
After gold prices reached the highest level
in the last 20 years in August 2020 at
$2,061/oz, the price followed a downward
trend until April 2021, when it reached a low
for the year of $1,681/oz before ending the
year at $1,820/oz.
The market price of gold averaged $1,799/oz
in 2021, compared with $1,770/oz in 2020.
If global economic uncertainty and the high
inflationary environment continues in 2022,
the gold price is expected to remain strong.
Molybdenum
Our molybdenum is a by-product of the
production of copper concentrates at Los
Pelambres and Centinela, where in a separate
flotation process we concentrate the
molybdenum sulphide that is sold to third
parties who then roast it to produce
molybdenum oxide.
This is used mainly in the production of stainless
steel and special alloy steels that require
hardness and resistance to corrosion, abrasion
and/or high temperatures. To a lesser extent,
it is used as a component in the production
of catalysts, lubricants and pigments.
During 2021, the molybdenum price increased
following the significant increase in stainless
steel production during the year. The price
started the year at $10.1/lb, and moved
upwards strongly as the stocks built up in
2020 were run down, with the price reaching
daily highs in June and September of slightly
above $20/lb. After September the price
softened slightly but continued to trade
at or above $18.5/lb. The average over 2021
was $15.9/lb, 83% higher than in 2020.
Antofagasta plc Annual Report 2021
89
We have introduced
an internal carbon price,
which we will use in the
assessment of projects
and in the day-to-day
procurement process.
/ Mauricio Ortiz
Chief Financial Officer
90
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information / Case study
Internal carbon price
The internal carbon price (ICP)
is a key management tool to reduce
the emission of greenhouse gas
(GHG) in organisations. Its value
is set internally and applied in
decision-making processes, to
allow decision-makers to account
for the impact of their decisions
on a company’s GHG emissions.
Using an ICP has many different objectives.
These include managing the risks and
opportunities associated with climate change,
encouraging investments to reduce carbon
emissions, sourcing low-emission supplies
and services, increasing the number of
energy efficient initiatives, changing internal
organisational behaviour, identifying and
capitalising on low-carbon opportunities,
anticipating changes in the regulatory
framework, and influencing the rest of the
value chain, both suppliers and customers.
In March 2021, a multidisciplinary team was
formed from the energy, environment, supply,
planning, projects and finance areas to define
our ICP. The team reviewed the national
context of climate change and the relevant
laws, as well as the carbon prices used
internationally and by other companies in the
mining industry. The results of the study were
presented to the Energy, Water and Emissions
Management Executive Committee who
approved the ICP to be used for planning
in 2022.
We also used the ICP to prepare the Group’s
2022 budget and in the evaluation of supplier
bids, and going forward we will also use it
in project planning and evaluation.
We know that some of our local suppliers
are likely to require support to adapt to the
requirement to measure their GHG emissions,
so we are engaging with them to help them
do this. Although in any event, we believe that
they will see the incorporation of an ICP
as an opportunity, as it will give them an
advantage over more distant suppliers with
larger transport-related carbon footprints.
By incorporating an ICP into our decision-
making processes, we are taking an important
step towards reducing our carbon footprint
and reaching our goal of carbon neutrality
by 2050, or sooner if technology permits.
Find out more online
antofagasta.co.uk/ccr21
/ Strategic Report
FINANCIAL
REVIEW
Antofagasta plc Annual Report 2021
91
/ Financial Review
Record earnings reflecting a strong
copper price environment
Underlying EPS of 142.5 cents per share increased by 161% compared to 2020. Further strengthening of the
balance sheet with net cash of $540 million at the end of 2021, an improvement of $622 million from the net
debt position at the end of 2020.
Financial review for the year ended 31 December 2021
Revenue
EBITDA (including share of EBITDA from associates
and joint ventures)
Total operating costs
Operating profit from subsidiaries
Net share of results from associates and joint ventures
Impairment of investment in associate
Total profit from operations, associates and joint
ventures
Net finance expense
Profit before tax
Income tax expense
Profit from continuing operations
Profit from discontinued operations
Profit for the year
Attributable to:
Non-controlling interests
Profit attributable to the owners of the parent
Basic earnings per share
From continuing operations
From discontinued operations
Total continuing and discontinued operations
Before exceptional
items
$m
7,470.1
Exceptional
items
$m
-
4,836.2
(3,891.1)
3,579.0
59.7
-
3,638.7
16.0
3,654.7
(1,332.9)
2,321.8
-
2,321.8
-
(177.6)
(177.6)
-
-
(177.6)
-
(177.6)
90.6
(87.0)
-
(87.0)
Year ended
31.12.2021
Total
$m
7,470.1
4,836.2
(4,068.7)
3,401.4
59.7
-
3,461.1
16.0
3,477.1
(1,242.3)
2,234.8
-
2,234.8
917.4
1,404.4
27.2
(114.2)
944.6
1,290.2
cents
142.5
-
142.5
cents
(11.6)
-
(11.6)
cents
130.9
-
130.9
Before exceptional
items
$m
Exceptional
items
$m
Year ended
31.12.2020
Total
$m
5,129.3
-
5,129.3
2,739.2
(3,537.1)
1,592.2
5.1
-
1,597.3
(103.4)
1,493.9
(546.2)
947.7
7.3
955.0
408.4
546.6
cents
54.7
0.7
55.4
-
-
-
-
(80.8)
(80.8)
-
(80.8)
19.7
(61.1)
-
(61.1)
(20.9)
(40.2)
cents
(4.1)
-
(4.1)
2,739.2
(3,537.1)
1,592.2
5.1
(80.8)
1,516.5
(103.4)
1,413.1
(526.5)
886.6
7.3
893.9
387.5
506.4
cents
50.6
0.7
51.3
The profit for the financial year attributable to the owners of the parent (including exceptional items and discontinued operations) increased
from $506.4 million in 2020 to $1,290.2 million in the current year. Excluding exceptional items and discontinued operations the profit attributable
to the owners of the parent increased by $539.3 million to $1,404.4 million.
The full reconciliation between 2020 and 2021, including exceptional items, is as follows:
2.340.8
(354.0)
54.6
119.4
(786.7)
(509.0)
1,404.4
(114.2)
1,290.2
506.4
32.9
539.3
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92
Antofagasta plc Annual Report 2021
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Strategic ReportCorporate GovernanceFinancial Statements Other Information
COVID-19
The Group has continued to proactively manage the risks of COVID-19 on its operations and
projects, allowing its operations to continue to operate without interruption throughout the year.
The Group incurred $60 million of operational expenses (including the 50% attributable share
of Zaldívar’s expenditure) during the year in respect of COVID-19 measures, including costs
relating to testing, additional travel expenses for its employees travelling to and from the mine
sites, hygiene supplies and additional costs for third-party services. This compares with $40
million incurred during 2020.
The Group has capitalised $32 million of additional project costs during 2021 linked to the
impact of COVID-19, mainly relating to the additional costs of third-party contractors, testing,
and increased travel for employees and project contractors travelling to the sites.
This compares with $31 million capitalised during 2020.
Revenue
The $2,340.8 million increase in revenue from $5,129.3 million in 2020 to $7,470.1 million
in the current year reflected the following factors:
2,095.9
(61.3)
30.4
78.7
156.9
19.6
20.6
7,470.1
5,129.3
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Revenue from the Mining division
Revenue from the Mining division increased by $2,320.2 million, or 47%, to $7,300.1 million,
compared with $4,979.9 million in 2020. The increase reflected a $2,065.0 million
improvement in copper sales and $255.2 million increase in by-product revenue.
Revenue from copper sales
Revenue from copper concentrate and copper cathode sales increased by $2,065.0 million,
or 47%, to $6,413.2 million, compared with $4,348.2 million in 2020. The increase reflected
the impact of $2,095.9 million from higher realised prices and $30.4 million from lower
treatment and refining charges, partly offset by $61.3 million from lower sales volumes.
(i) Realised copper price
The average realised price increased by 47%
to $4.37/lb in 2021 (2020 – $2.98/lb),
resulting in a $2,095.9 million increase in
revenue. The increase in the realised price
reflected the higher LME average market
price, which increased by 51% to $4.23/lb
in 2021 (2020 – $2.80/lb), and a positive
provisional pricing adjustment of $352.7
million. The provisional pricing adjustment
mainly reflected the increase in the year-end
mark-to-market copper price to $4.42/lb at
31 December 2021, compared with $3.52/lb
at 31 December 2020. In addition, there was
a negative impact of $126.8 million in respect
of realised losses from commodity hedging
instruments which matured during the year
(2020 – $3.4 million negative impact).
Realised copper prices are determined by
comparing revenue (before treatment and
refining charges for concentrate sales) with
sales volumes in the period. Realised copper
prices differ from market prices mainly
because, in line with industry practice,
concentrate and cathode sales agreements
generally provide for provisional pricing at the
time of shipment with final pricing based on
the average market price in future periods
(normally around one month after delivery
to the customer in the case of cathode sales
and normally four months after delivery to the
customer in the case of concentrate sales).
Further details of provisional pricing adjustments
are given in Note 7 to the financial statements.
(ii) Copper volumes
Copper sales volumes reflected within
revenue decreased by 1.3% from 690,200
tonnes in 2020 to 681,000 tonnes in 2021,
decreasing revenue by $61.3 million.
This decrease was due to lower copper
sales volumes at Los Pelambres (41,500
tonnes decrease) mainly as a result of its
decreased production volumes, partly offset
by higher sales volumes at Centinela
(28,400 tonnes increase) due to increased
production volumes as a result of higher
grades and increased throughput at
Centinela Concentrates.
Antofagasta plc Annual Report 2021
93
/ Financial Review continued
(iii) Treatment and refining charges
Treatment and refining charges (TC/RCs)
for copper concentrate decreased by
$30.4 million to $152.0 million in 2021,
compared with $182.4 million in 2020,
reflecting lower average TC/RC rates
as well as the decrease in the concentrate
sales volumes at Los Pelambres.
With sales of concentrates at Los Pelambres
and Centinela, which are sold to smelters
and roasting plants for further processing
into fully refined metal, the price of the
concentrate invoiced to the customer reflects
the market value of the fully refined metal less
a “treatment and refining charge” deduction,
to reflect the lower value of this partially
processed material compared with the fully
refined metal. For accounting purposes, the
revenue amount is the net of the market value
of fully refined metal less the treatment and
refining charges. Under the standard industry
definition of cash costs, treatment and
refining charges are regarded as an expense
and part of the total cash cost figure.
Accordingly, the decrease in these charges
has had a positive impact on revenue
in the year.
Revenue from molybdenum, gold and other by-product sales
Revenue from by-product sales at Los Pelambres and Centinela relate mainly to molybdenum
and gold and, to a lesser extent, silver. Revenue from by-products increased by $255.2 million
or 40.3% to $886.9 million in 2021, compared with $631.7 million in 2020.
Revenue from gold sales (net of treatment and refining charges) was $436.4 million
(2020 – $357.7 million), an increase of $78.7 million which reflected an increase in volumes
slightly offset by a lower realised price. Gold sales volumes increased by 22.6% from 199,600
ounces in 2020 to 244,700 ounces in 2021, mainly due to higher throughput and grades at
Centinela. The realised gold price was $1,787.6/oz in 2021 compared with $1,796.8/oz in 2020,
reflecting the average market price for 2021 of $1,798.9/oz (2020 – $1,770.1/oz) and a
negative provisional pricing adjustment of $10.8 million.
Revenue from molybdenum sales (net of roasting charges) was $366.4 million (2020 – $209.5
million), an increase of $156.9 million. The increase was due to the higher realised price of
$17.4/lb (2020 – $8.8/lb), partially offset by decreased sales volumes of 10,400 tonnes
(2020 – 12,500 tonnes).
Revenue from silver sales increased by $19.6 million to $84.1 million (2020 – $64.5 million).
The increase was due to a higher realised silver price of $24.9/oz (2020 – $21.3/oz)
and higher sales volumes of 3.4 million ounces (2020 – 3.1 million ounces).
Revenue from the Transport division
Revenue from the Transport division (FCAB) increased by $20.6 million or 13.8% to $170.0
million (2020 – $149.4 million), as a result of increased volumes and better prices
in sales contracts and the impact of the stronger Chilean peso on sales denominated
in the local currency.
Total operating costs (excluding exceptional items)
The $354.0 million increase in total operating costs (excluding exceptional items) from
$3,537.1 million in 2020 to $3,891.1 million in the current year reflected the following factors:
291.5
(14.6)
18.1
11.2
14.9
32.9
3,891.1
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94
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information
Closure provisions and other mining expenses
decreased by $14.6 million. Exploration and
evaluation costs increased by $18.1 million
to $103.2 million (2020 – $85.1 million),
reflecting increased exploration expenditure
principally in Chile, the ongoing evaluation and
review work at Twin Metals, and drilling in
relation to the reserve and resource estimates
at Centinela and Antucoya. Corporate costs
increased by $11.2 million.
Operating costs (excluding depreciation,
amortisation and loss on disposals) at the
Transport division
Operating costs (excluding depreciation,
amortisation and loss on disposals)
at the Transport division increased by
$14.9 million to $106.3 million (2020 – $91.4
million), mainly due to the effect of the
stronger Chilean peso, higher diesel prices
and inflation, and to a lesser degree non-
recurrent COVID-19 costs.
Depreciation, amortisation and disposals
(excluding impairments)
The depreciation and amortisation charge
increased by $32.9 million from $1,055.0
million in 2020 to $1,087.9 million. This
increase is mainly due to inventory variation
impacts at Centinela and higher depreciation
at Centinela and Los Pelambres, largely offset
by lower amortisation of IFRIC 20 stripping
cost at Centinela. The loss on disposal
of property, plant and equipment was
$9.2 million, an increase of $2.9 million
(2020 – $6.3 million).
Operating profit from subsidiaries
As a result of the above factors, operating
profit from subsidiaries increased by $1,986.8
million or 124.8% in 2021 to $3,579.0 million
(2020 – $1,592.2 million).
Share of results from associates and joint
ventures
The Group’s share of results from associates
and joint ventures was a profit of $59.7
million in 2021, compared to $5.1 million
in 2020. Of this increase, $56.3 million
was due to the higher profit from Zaldívar.
EBITDA
EBITDA (earnings before interest, tax,
depreciation and amortisation, and
impairments) increased by $2,097.0 million
or 76.6% to $4,836.2 million (2020 –
$2,739.2 million). EBITDA includes the
Group’s proportional share of EBITDA from
associates and joint ventures.
EBITDA from the Mining division increased
by 78.0% from $2,678.2 million in 2020
to $4,768.0 million this year. This reflected
the higher revenue and higher EBITDA from
associates and joint ventures partly offset
by higher mine-site costs and increased
exploration and evaluation expenditure.
EBITDA at the Transport division increased
by $7.2 million to $68.2 million in 2021 ($61.0
million – 2020), reflecting the higher revenue
and slightly increased EBITDA from
associates and joint ventures, partly offset
by higher operating costs.
Operating costs (excluding depreciation,
amortisation, loss on disposals and
impairments) at the Mining division
Operating costs (excluding depreciation,
amortisation, loss on disposals and
impairments) at the Mining division increased
by $306.1 million to $2,696.8 million in 2021,
an increase of 12.8%. Of this increase, $291.5
million was attributable to higher mine-site
operating costs. This increase in mine-site
costs reflected higher key input prices, the
stronger Chilean peso and the cost impact
of the expected lower ore grades and lower
throughput due to water optimisation at Los
Pelambres, partly offset by the cost savings
from the Group’s Cost and Competitiveness
Programme and the lower sale volumes.
On a unit cost basis, weighted average cash
costs excluding by-product credits (which
for accounting purposes are part of revenue)
and treatment and refining charges for
concentrates (which are also part of revenue
for accounting purposes), increased from
$1.43/lb in 2020 to $1.68/lb in 2021 (see
the alternative performance measures on
page 229 for further details in respect of the
definition of cash costs).
The Cost and Competitiveness Programme
was implemented to reduce the Group’s cost
base and improve its competitiveness within
the industry. During 2021 the programme
achieved benefits of $130.7 million, of which
$72.1 million reflected cost savings and $58.6
million reflected the value of productivity
improvements. Of the $72.1 million of cost
savings, $54.5 million related to Los
Pelambres, Centinela and Antucoya, and
therefore impacted the Group’s operating
costs, and $17.6 million related to Zaldívar
(on a 100% basis) and therefore impacted
the share of results from associates and
joint ventures.
Antofagasta plc Annual Report 2021
95
/ Financial Review continued
Commodity price and exchange rate sensitivities
The following sensitivities show the estimated approximate impact on EBITDA for 2021 of a 10% movement in the average copper,
molybdenum and gold prices and a 10% movement in the average US dollar/Chilean peso exchange rate.
The impact of the movement in the average commodity prices reflects the estimated impact on the relevant revenues during 2021, and
the impact of the movement in the average exchange rate reflects the estimated impact on Chilean peso denominated operating costs during
the year. These estimates do not reflect any impact in respect of provisional pricing or hedging instruments, any potential inter-relationship
between commodity price and exchange rate movements, or any impact from the retranslation or changes in valuations of assets or liabilities
held on the balance sheet at the year-end.
Copper price
Molybdenum price
Gold price
US dollar/Chilean peso exchange rate
Average market commodity price/
average exchange rate during the year
ended 31.12.21
$4.23/lb
$15.9/lb
$1,799/oz
760
Impact of a 10% movement in the commodity price/
exchange rate on EBITDA for the year ended 31.12.21
$m
676
36
44
154
Net finance expense
Net finance expense decreased by $119.4 million to $16.0 million, compared with $103.4 million in 2020.
Investment income
Interest expense
Other finance items
Net finance expense
Year ended 31.12.21
$m
Year ended 31.12.20
$m
5.0
(63.4)
74.4
16.0
18.9
(77.1)
(45.2)
(103.4)
Interest income decreased from $18.9 million in 2020 to $5.0 million in 2021, mainly due to a decrease in average interest rates partially offset
by higher average cash and liquid investment balances.
Interest expense decreased from $77.1 million in 2020 to $63.4 million in 2021, reflecting the decrease in the average interest rates and also
a reduction in the average relevant borrowing balances, partially offset by interest expenses related to the bond issue in October 2020.
Other finance items were a net gain of $74.4 million, compared with a net loss of $45.2 million in 2020, a variance of $119.6 million.
This was mainly due to the foreign exchange impact of the retranslation of Chilean peso denominated assets and liabilities, which resulted
in a $49.7 million gain in 2021 compared with a $28.4 million loss in 2020. Also, there was a positive variance of $41.5 million related to the
discounting of long-term provisions, with the increase in the relevant year-end interest rates resulting in a decrease in the net present value
of the provisions and a corresponding credit recognised in other finance items.
Profit before tax
As a result of the factors set out above, profit before tax increased by 146.1% to $3,477.1 million (2020 – $1,413.1 million).
96
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information Income tax expense
The tax charge for 2021 excluding exceptional items increased by $786.7 million to $1,332.9 million (2020 – $546.2 million) and the effective
tax rate for the year was 36.5% (2020 – 36.6%). Including exceptional items the tax charge for 2021 was $1,242.3 million and the effective
tax rate was 35.7%.
Profit before tax
Tax at the Chilean corporate tax rate of 27%
Mining tax (royalty)
Deduction of mining royalty as an allowable expense
in determination of first category tax
Items not deductible from first category tax
Adjustment in respect of prior years
Withholding tax
Tax effect of share of profit of associates and joint
ventures
Impact of previously unrecognised tax losses
on current tax
Impact of recognition of previously unrecognised
tax losses on deferred tax
Impairment of investment in associate
Provision against carrying value of assets
Net other items
Tax expense and effective tax rate for the year ended
Year ended
31.12.2021
Excluding
exceptional
items
$m
3,654.7
%
Year ended
31.12.2021
Including
exceptional
items
$m
3,477.1
%
Year ended
31.12.2020
Excluding
exceptional
items
$m
1,493.9
%
Year ended
31.12.2020
Including
exceptional
items
$m
1,413.1
%
(986.8) 27.0
6.7
(243.8)
(938.8) 27.0
7.0
(243.8)
(403.4) 27.0
6.8
(101.3)
(381.5) 27.0
7.2
(101.3)
67.8
(31.6)
(12.1)
(195.0)
(1.9)
0.9
0.3
5.3
67.8
(31.6)
(12.1)
(195.0)
(1.9)
0.9
0.3
5.6
28.1
(9.8)
(1.6)
(70.0)
(1.9)
0.7
0.1
4.7
28.1
(9.8)
(1.6)
(70.0)
(2.0)
0.6
0.1
5.0
16.1
(0.4)
16.1
(0.5)
1.4
(0.1)
1.4
(0.1)
52.5
(1.4)
52.5
(1.5)
10.5
(0.7)
10.5
(0.7)
-
-
-
-
-
-
-
-
(1,332.9) 36.5
(2.6)
90.6
-
-
1.4
(48.0)
-
-
(1.242.3) 35.7
-
-
-
(0.1)
-
-
-
-
(546.2) 36.6
-
(2.2)
-
(0.1)
-
0.2
-
-
(526.5) 37.3
The effective tax rate excluding exceptional items of 36.5% varied from the statutory rate principally due to the mining tax (royalty) (net impact
of $176.0 million/4.8% including the deduction of the mining tax (royalty) as an allowable expense in the determination of first category tax),
the withholding tax relating to the remittance of profits from Chile (impact of $195.0 million/5.3%), items not deductible for Chilean corporate
tax purposes, principally the funding of expenses outside of Chile (impact of $31.6 million/0.9%) and adjustments in respect of prior years (impact
of $12.1 million/0.3%), partly offset by the impact of unrecognised tax losses (impact of $52.5 million/1.4%) and the impact of the recognition of
the Group’s share of profit from associates and joint ventures, which are included in the Group’s profit before tax net of their respective tax
charges (impact of $16.1 million/0.4%).
The impact of the exceptional items on the effective tax rate including exceptional items was $42.6 million/1.2%.
Antofagasta plc Annual Report 2021
97
/ Financial Review continued
Exceptional items
Exceptional items are material items of
income and expense which are non-regular
or non-operating and typically non-cash,
including impairments and profits or losses on
disposals. The tax effect of items presented
as exceptional is also classified as exceptional,
as are material deferred tax adjustments that
relate to more than one reporting period.
The classification of these types of items
as exceptional is considered to be useful
as it provides an indication of the earnings
generated by the ongoing businesses
of the Group.
2021 – Impairment of Twin Metals’ assets
Twin Metals Minnesota (Twin Metals)
is a wholly owned copper, nickel and platinum
group metals (PGM) underground mining
project, which holds copper, nickel, cobalt-
PGM deposits in north-eastern Minnesota,
US. In recent years Twin Metals has been
progressing its Mine Plan of Operations
(MPO) and Scoping Environmental
Assessment Worksheet Data Submittal,
submitted in December 2019 to the US
Bureau of Land Management (BLM) and
Minnesota Department of Natural Resources
(DNR), respectively. However, over the past
year, while the Twin Metals project was
advancing through environmental review,
several actions were taken by the federal
government that have changed the potential
scenarios for the project.
In September 2021 the United States Forest
Service (USFS) submitted an application to
withdraw approximately 225,000 acres of
land in the Superior National Forest from the
scope of federal mineral leasing laws, subject
to valid existing rights. In October 2021, the
United States Bureau of Land Management
(BLM) rejected Twin Metals’ Preference Right
Lease Applications (PRLAs) and Prospecting
Permit Applications (PPAs). In January 2022
the United States Department of the Interior
cancelled Twin Metals’ MNES-1352 and
MNES-1353 federal mineral leases. The
PRLAs and federal mineral leases form a
significant proportion of the mineral
resources contained within Twin Metals’
current project plan and, accordingly, it was
determined that these events collectively
represented an impairment trigger as at the
balance sheet date.
98
Antofagasta plc Annual Report 2021
Prior to the resulting impairment assessment
being performed, as at 31 December 2021 the
Group had recognised an intangible asset of
$150.1 million and property, plant and
equipment of $27.5 million relating to the
Twin Metals project. The intangible asset
arose upon the acquisition in 2015 of Duluth
Metals, which owned a 60% stake in the Twin
Metals project, with the carrying value of the
intangible asset reflecting the consideration
paid for that acquisition. The property, plant
and equipment balances reflected the
historical cost of acquiring those assets.
These carrying values prior to the impairment
did not, therefore, reflect an estimate of the
commercial potential of the project as at 31
December 2021.
The Group believes that Twin Metals has
a valid legal right to the mining leases and
a strong case to defend its legal rights.
Although the Group intends to pursue
validation of those rights, considering the
time and uncertainty related to any legal
action to challenge the government decisions,
an impairment has been recognised as at 31
December 2021 in respect of the $177.6
million of intangible assets and property,
plant and equipment relating to the
Twin Metals project.
2021 – Recognition of previously
unrecognised deferred tax assets
At 31 December 2021 the Group recognised
$90.6 million of previously unrecognised
deferred tax assets relating to tax losses
available for offset against future profits. In
previous periods the Group had reviewed
these tax losses for potential recognition, and
concluded that it was not probable that future
taxable profits would be available against
which the losses could be utilised, and
accordingly had not recognised a deferred tax
asset in respect of these losses. In making
this assessment in previous periods the
Group had taken into account that the relevant
Group entity (Antucoya) had consistently
generated taxable losses in recent years, was
continuing to generate taxable losses in the
then current period, and was forecast to
continue generating taxable losses in future
periods.
During 2021 there has been a significant
improvement in the current copper price
(with the copper price reaching record levels
in nominal terms during the year) and also the
near-term copper price outlook. As a result of
this improvement in the copper price
environment the relevant Group entity began
to generate taxable profits in 2021. The
improved near-term outlook for the copper
price also means that the entity is now
forecast to generate sufficient future taxable
profits to fully utilise its remaining tax losses.
2020 – Impairment of the investment in
Hornitos
On 31 March 2020 the Group agreed to
dispose of its 40% interest in the Hornitos
coal-fired power station to ENGIE Energía
Chile S.A. (“ENGIE”), the owner of the
remaining 60% interest. This was part of the
value accretive renegotiation of Centinela’s
power purchase agreement which as a result
will be wholly supplied from lower cost
renewable sources from the beginning of
2022. In accordance with the terms of the
agreement the Group disposed of its
investment to ENGIE in December 2021 for a
nominal consideration and has not been be
entitled to receive any further dividend
income from Hornitos from the date of the
agreement. Accordingly, the Group no longer
had any effective economic interest in the
results or assets of Hornitos from 31 March
2020 onwards, and therefore recognised an
impairment of $80.8 million in respect of its
investment in associate balance during 2020,
and no longer recognised any share of
Hornitos’ results. The post-tax impact of the
impairment was $61.1 million, of which $40.2
million was attributable to the equity owners
of the Company.
Non-controlling interests
Profit for 2021 attributable to non-controlling
interests (excluding exceptional items)
was $917.4 million, compared with $408.4
million in 2020, an increase of $509.0 million.
This reflected the increase in earnings
analysed above.
Strategic ReportCorporate GovernanceFinancial Statements Other Information Earnings per share
Underlying earnings per share (excluding exceptional items and discontinued operations)
Earnings per share (exceptional items)
Earnings per share (discontinued operations)
Earnings per share (including exceptional items and discontinued operations)
Earnings per share calculations are based on 985,856,695 ordinary shares.
Year ended 31.12.21
$ cents
Year ended 31.12.20
$ cents
142.5
(11.6)
-
130.9
54.7
(4.1)
0.7
51.3
As a result of the factors set out above, the underlying profit attributable to equity shareholders of the Company (excluding exceptional items
and discontinued operations) was $1,404.4 million compared with $539.3 million in 2020, giving underlying earnings per share of 142.5 cents
per share (2020 – 54.7 cents per share). The profit attributable to equity shareholders (including exceptional items and discontinued operations)
was $1,290.2 million, resulting in earnings per share of 130.9 cents per share (2020 – 51.3 cents per share).
Dividends
Dividends per share proposed in relation to the period are as follows:
Ordinary dividends:
Interim
Final
Total dividends to ordinary shareholders
Year ended 31.12.21
$ cents
Year ended 31.12.20
$ cents
23.6
118.9
142.5
6.2
48.5
54.7
The Board determines the appropriate dividend each year based on consideration of the Group’s cash balance, the level of free cash flow and
underlying earnings generated during the year and significant known or expected funding commitments. It is expected that the total annual
dividend for each year would represent a payout ratio based on underlying net earnings for that year of at least 35%.
The Board has recommended a final dividend for 2021 of 118.9 cents per ordinary share, which amounts to $1,172.1 million and will be paid
on 13 May 2022 to shareholders on the share register at the close of business on 22 April 2022.
The Board declared an interim dividend for the first half of 2021 of 23.6 cents per ordinary share, which amounted to $232.7 million.
This gives total dividends proposed in relation to 2021 (including the interim dividend) of 142.5 cents per share or $1,404.8 million in total
(2020 – 54.7 cents per ordinary share or $539.3 million in total) equivalent to a payout ratio of 100% of underlying earnings.
Capital expenditure
Capital expenditure increased by $470.1 million from $1,307.4 million in 2020 to $1,777.5 million in the current year, mainly due to expenditure
on the Los Pelambres Expansion project, work on the Esperanza Sur pit at Centinela, including the completion of the pre-stripping, and increased
mine development at Centinela.
NB: capital expenditure figures quoted in this report are on a cash flow basis, unless stated otherwise.
Derivative financial instruments
The Group periodically uses derivative financial instruments to reduce its exposure to commodity price, foreign exchange and interest rate
movements. The Group does not use such derivative instruments for speculative trading purposes. At 31 December 2021 the derivative financial
instruments are nil (2020 – negative $36.0 million).
Antofagasta plc Annual Report 2021
99
/ Financial Review continued
Cash flows
The key features of the cash flow statement are summarised in the following table.
Cash flows from continuing operations
Income tax paid
Net interest paid
Capital contributions and loans to associates
Purchases of property, plant and equipment
Dividends paid to equity holders of the Company
Dividends paid to non-controlling interests
Capital increase from non-controlling interest
Dividends from associates and joint ventures
Other items
Changes in net debt relating to cash flows
Other non-cash movements
Effects of changes in foreign exchange rates
Movement in net debt in the period
Net debt at the beginning of the year
Net cash/(net debt) at the end of the year
Cash flows from continuing operations were
$4,507.7 million in 2021 compared with
$2,431.1 million in 2020. This reflected
EBITDA from subsidiaries for the year of
$4,666.9 million (2020 – $2,647.2 million)
adjusted for the negative impact of a net
working capital increase of $140.2 million
(2020 – working capital increase of $242.5
million) and a non-cash decrease in
provisions of $19.4 million (2020 – increase
of $26.4 million).
The working capital increase in 2021 was
mainly due to an increase in receivables,
predominantly due to the higher sales
volumes in December 2021 compared with
December 2020 and the higher average
mark-to-market price at 31 December 2021 of
$4.42/lb (31 December 2020 – $3.52/lb).
The net cash outflow in respect of tax in 2021
was $776.9 million (2020 – $319.7 million).
This amount differs from the current tax
charge in the consolidated income statement
(including exceptional items) of $1,035.5
million (2020 – $515.3 million) mainly
because cash tax payments for corporate tax
and the mining tax include the settlement of
outstanding balances in respect of the
previous year’s tax charge of $30.9 million
(2020 – $8.0 million), withholding tax
payments of $222.9 million, payments on
account for the current year based on the
prior year’s profit levels of $569.6 million, as
well as the recovery of $46.5 million in 2021
relating to prior years.
Contributions and loans to associates and
joint ventures of $33.5 million (2020 – $7.2
million) relate to Hornitos and Tethyan.
Capital expenditure in 2021 was $1,777.5
million compared with $1,307.4 million in
2020. This included expenditure of $880.4
million at Los Pelambres (2020 – $782.6
million), $791.8 million at Centinela (2020 –
$441.5 million), $49.6 million at Antucoya
(2020 – $41.9 million), $24.4 million at the
corporate centre (2020 – $8.3 million) and
$31.3 million at the Transport division (2020
– $33.1 million). The increase at Centinela
reflects work on the Esperanza Sur pit,
including the completion of the pre-stripping,
and increased mine development, and at Los
Pelambres reflects expenditure on the
Expansion project.
Year ended 31.12.21
$m
Year ended 31.12.20
$m
4,507.7
(776.9)
(53.3)
(33.5)
(1,777.5)
(710.8)
(604.5)
-
142.5
1.4
695.1
(73.8)
1.2
622.5
(82.0)
540.5
2,431.1
(319.7)
(40.1)
(7.2)
(1,307.4)
(131.1)
(280.0)
210.0
-
2.3
557.9
(68.0)
(8.5)
481.4
(563.4)
(82.0)
Dividends paid to equity holders of the
Company were $710.8 million (2020 – $131.1
million) of which $478.1 million related to the
payment of the final element of the previous
year’s dividend and $232.7 million to the
interim dividend declared in respect of the
current year.
Dividends paid by subsidiaries to non-
controlling shareholders were $604.5 million
(2020 – $280.0 million).
Dividends received from associates and
joint ventures was $142.5 million for 2021
(2020 – nil).
A capital contribution of $210.0 million
was received from Marubeni during 2020,
the minority partner at Antucoya, in order
to replace part of the subordinated debt
financing with equity.
100
Antofagasta plc Annual Report 2021
Strategic ReportCorporate GovernanceFinancial Statements Other Information Year ended 31.12.21
$m
Year ended 31.12.20
$m
3,713.1
(3,172.6)
540.5
3,672.8
(3,754.8)
(82.0)
materially affect the timing and feasibility
of future projects and developments), trends
in the copper mining industry and conditions
of the international copper markets, the effect
of currency exchange rates on commodity
prices and operating costs, the availability
and costs associated with mining inputs and
labour, operating or technical difficulties
in connection with mining or development
activities, employee relations, litigation,
and actions and activities of governmental
authorities, including changes in laws,
regulations or taxation. Except as required
by applicable law, rule or regulation, the Group
does not undertake any obligation to publicly
update or revise any forward-looking
statements, whether as a result of new
information, future events or otherwise.
Past performance cannot be relied on as
a guide to future performance.
The Strategic Report has been approved by
the Board and signed on its behalf by:
Jean-Paul Luksic
Chairman
Tony Jensen
Senior Independent
Director
Financial position
Cash, cash equivalents and liquid investments
Total borrowings
Net cash/(net debt) at the end of the period
At 31 December 2021 the Group had
combined cash, cash equivalents and liquid
investments of $3,713.1 million (31 December
2020 – $3,672.8). Excluding the non-
controlling interest share in each partly-
owned operation, the Group’s attributable
share of cash, cash equivalents and liquid
investments was $3,299.9 million
(31 December 2020 – $3,046.9 million).
Total Group borrowings at 31 December 2021
were $3,172.6 million, a decrease of $582.2
million on the prior year (31 December 2020
– $3,754.8 million). The decrease was mainly
due to the $222.8 million subordinated debt
repayment by Centinela and Antucoya to
Marubeni, repayment of the senior loan by
Los Pelambres of $209.3 million, repayment
of the senior loan by Centinela of $111.1 million
and the $141.0 million repayment of
Antucoya’s senior loan and short term loan,
and a net decrease of lease liabilities
of $27.1 million, partly offset by the $114.1
million refinancing of the senior loan at Los
Pelambres and the $35.0 million increase
of the short term loan at Antucoya.
Excluding the non-controlling interest share in
each partly-owned operation, the Group’s
attributable share of the borrowings was
$2,409.6 million (31 December 2020 –
$2,805.4 million).
This resulted in net cash at 31 December
2021 of $540.5 million (31 December 2020
– net debt $82.0 million). Excluding
the non-controlling interest share in each
partly-owned operation, the Group had
an attributable net cash position of
$890.3 million (31 December 2020
– net cash $241.5 million).
Going concern
The financial information contained in the
financial statements has been prepared on the
going concern basis. Details of the factors
which have been taken into account
in assessing the Group’s going concern status
are set out in Note 1 to the financial statements.
Cautionary statement about forward-
looking statements
This Annual Report contains certain
forward-looking statements. All statements
other than historical facts are forward-looking
statements. Examples of forward-looking
statements include those regarding the Group’s
strategy, plans, objectives or future operating
or financial performance, reserve and
resource estimates, commodity demand and
trends in commodity prices, growth
opportunities, and any assumptions underlying
or relating to any of the foregoing. Words
such as “intend”, “aim”, “project”, “anticipate”,
“estimate”, “plan”, “believe”, “expect”, “may”,
“should”, “will”, “continue” and similar
expressions identify forward-looking statements.
Forward-looking statements involve known
and unknown risks, uncertainties,
assumptions and other factors that are
beyond the Group’s control. Given these risks,
uncertainties and assumptions, actual results
could differ materially from any future results
expressed or implied by these forward-
looking statements, which apply only as at the
date of this report. Important factors that
could cause actual results to differ from those
in the forward-looking statements include:
global economic conditions, demand, supply
and prices for copper and other long-term
commodity price assumptions (as they
Antofagasta plc Annual Report 2021
101
102
Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic ReportCorporate Governance The Board is responsible for
Antofagasta plc’s long-term,
sustainable success, generating
value for shareholders and
contributing to wider society.
The Board’s governance structures ensure
independent oversight and constructive
challenge. The Board promotes the Group’s
culture and core values of respect,
responsibility for safety and health,
commitment to sustainability, excellence in
daily work, innovation and forward thinking.
It is committed to international best practice
and continuing success as an international
mining company.
Find out more online
antofagasta.co.uk/board
/ Corporate Governance
GOVERNANCE
APPLYING THE CODE IN 2021
BOARD LEADERSHIP AND COMPANY PURPOSE
Chairman’s introduction
Senior Independent Director’s introduction
Group corporate governance overview
Board activities
Stakeholder engagement
Employee engagement
DIVISION OF RESPONSIBILITIES
Directors’ biographies
Board balance and skills
Roles in the boardroom
Executive Committee biographies
Introduction to the Committees
COMPOSITION, SUCCESSION AND EVALUATION
Nomination and Governance Committee report
Board effectiveness
AUDIT, RISK AND INTERNAL CONTROL
Audit and Risk Committee report
Sustainability and Stakeholder
Management Committee report
Projects Committee report
REMUNERATION
Remuneration and Talent Management
Committee Chair’s introduction
Remuneration at a glance
2021 Directors’ and CEO Remuneration Report
Remuneration and Talent Management
Committee report
Implementation of the Directors’ and CEO’s
remuneration policy in 2022
DIRECTORS’ REPORT
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
104
108
110
112
114
116
120
122
124
125
126
128
129
133
134
139
142
144
146
147
156
158
161
163
Antofagasta plc Annual Report 2021
Antofagasta plc Annual Report 2021
103
/ Applying the Code in 2021
How we apply the Code
UK Corporate Governance Code
compliance statement
The UK Corporate Governance Code issued
by the Financial Reporting Council in July
2018 sets out the governance principles
and provisions that applied to the Company
during 2021.
The Code is not a rigid set of rules, it consists
of principles and provisions. The Listing Rules
require companies to apply the principles and
report to shareholders on how they have
done so. This Corporate Governance Report
shows how these principles have been
considered and applied to the Company’s
specific circumstances.
The Company complied with all the principles
and detailed provisions of the Code in 2021
except for Code Provision 19. This Code
Provision recommends that the Chairman
should not remain in post beyond nine years
from the date of first appointment to the
board. The Company’s Chairman, Jean-Paul
Luksic, was appointed to the Board in 1990.
He served as Chief Executive Officer of the
Group’s Mining division from 1998 until 2004
and was appointed Executive Chairman in
2004. In 2014, he stepped back from
executive responsibilities to become
Non-Executive Chairman. Mr Luksic’s
longstanding UK corporate governance and
Chilean mining and business experience,
coupled with his knowledge of the Group’s
businesses have been for many years, and
continue to be, a cornerstone of the
Company’s continuing growth and success.
Mr Luksic is also a member of the family that
is interested in the E. Abaroa Foundation, a
controlling shareholder of the Company for
the purposes of the UK Listing Rules and is
therefore uniquely positioned to promote
governance that the Board is convinced is
best for the Company’s particular
circumstances in the long term.
Mr Luksic is committed to wider succession
and diversity planning and, in his role as
Chairman of the Board and Chair of the
Nomination and Governance Committee, he
has overseen the design and implementation
of succession plans to facilitate increased
diversity, including gender and continual
refreshment of the Board.
The Board considers that Mr Luksic continues
to demonstrate objective judgement and
provides constructive challenge and believes
that his continued appointment is appropriate
without fixing a limit to his service. The
Company’s major shareholders were invited
by the then Senior Independent Director to
discuss this subject ahead of the 2020 AGM
and unanimously expressed their support for
Mr Luksic’s continued service as Chairman
of the Board.
The composition of the Board and its Committees
is entirely in line with the Code provisions and
the Chairman is fully supported by the Board,
the Nomination and Governance Committee
and the Senior Independent Director in ensuring
that, despite non-compliance with Code
Provision 19, good governance is maintained.
Further details on the composition of the
Board and its Committees are set out on page
122 and further details of the role of the
Senior Independent Director are set out
on pages 110 and 125.
The UK Corporate Governance Code
is available on the Financial Reporting
Council website at www.frc.org.uk.
Jean-Paul Luksic
Chairman
We apply the Code to our
circumstances as a leading
international mining company.
104
Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic ReportCorporate Governance Antofagasta plc Annual Report 2021
105
/ Applying the Code in 2021 continued
How the Code principles
were applied in 2021
Board leadership and Company purpose
The role of the Board
• The Company is led by an effective and
entrepreneurial Board, which is collectively
responsible for promoting the Company’s
long-term sustainable success, generating
value for shareholders and contributing to
wider society as shown throughout this
Corporate Governance Report.
• The Board has adopted and actively
promotes the Group’s purpose, vision,
values and strategy and has satisfied itself
that they are aligned with its culture. This is
explained further in the Chairman’s
introduction – pages 108-109.
• The Board has ensured that the necessary
resources are in place for the Company to
meet its objectives and measure
performance against them. It has
established both its risk appetite and a
framework of prudent and effective
controls, which enable risk to be
appropriately assessed and managed
– pages 18-30.
• The Board ensures effective engagement
with, and encourages participation from,
shareholders and other stakeholders to
ensure that its responsibilities are met
– pages 32-65, 110, 116-121 and 156-157.
• The Board ensures that workforce policies
and practices are consistent with the
Company’s purpose, vision and values and
support its long-term sustainable success.
The workforce is able to raise any matters
of concern anonymously through the
Group’s whistleblowing channels
– pages 31, 42-43, 120-121 and 138.
• The Board considers the matters set out in
section 172 of the Companies Act 2006 in
Board discussions and decision-making.
Examples can be found on pages 116-119.
Division of responsibilities
• The Board is structured to ensure that there
is limited scope for an individual or small
group of individuals to dominate its decision-
making, as demonstrated throughout this
Corporate Governance Report.
• The CEO is not a Director of the Company
and therefore not a member of the Board
– page 125.
• There is a clear division of responsibilities
between the Board and the executive
leadership of the Company’s business
– page 125.
• The division of responsibilities between
the Chairman, the CEO and the Senior
Independent Director is recorded in writing
and is available on the Company’s website
at antofagasta.co.uk.
• The roles of the Board and the Board
Committees are recorded in the Schedule
of Matters Reserved for the Board and the
Terms of Reference for each of the Board’s
Committees, which are available on the
Company’s website at antofagasta.co.uk.
• The Board, supported by the Company
Secretary, has the policies, processes,
information, time and resources it needs in
order to function effectively and efficiently
– pages 113 and 130.
The Chairman
• The Chairman leads the Board and is
responsible for its overall effectiveness in
directing the Company. His responsibilities
are set out on page 125.
• The Board considers that the Chairman
demonstrates objective judgement and
promotes a culture of openness, healthy
challenge and debate – pages 104 and 110.
• The Chairman facilitates constructive Board
relations and the effective contribution of all
Directors. He is responsible for setting the
Board’s agenda and ensures that Directors
receive accurate, timely, relevant and clear
information – pages 113, 125 and 130.
Non-Executive Directors
• The Non-Executive Directors provide
constructive challenge and strategic
guidance, offer perspectives across various
specialisms and hold management
to account – pages 122-124.
Commitment
• All Directors have confirmed they are
able to allocate enough time to meet
the expectations of their role – page 122.
• Directors do not undertake additional
external appointments without the Board’s
prior approval – page 122.
• Time commitment is considered during
Board effectiveness reviews and when
electing and re-electing Directors
– page 133.
• A review of Directors’ external
directorships is carried out annually
– pages 111 and 162.
Information and support
• The Board is provided with appropriate
information, in form and quality, to
discharge its duties – page 113.
• The Board has access to independent
professional advice and to the advice
and services of the Company Secretary
– pages 125 and 130.
• The Board is regularly updated on the
Group’s performance between scheduled
Board meetings – page 113.
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Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic ReportCorporate Governance Composition, succession and evaluation
Composition of the Board and Committees
• The Board has 10 Directors, comprising
a Non-Executive Chairman and nine other
Non-Executive Directors, six of whom
are independent – pages 122-125.
• All members of the Audit and Risk and
Remuneration and Talent Management
Committees are independent and two
of the three Nomination and Governance
Committee members are independent
– page 122.
• The Board and its Committees comprise
Directors with the requisite combination
of skills, experience and knowledge to
fulfil their roles – pages 122-125.
• There is a diverse pipeline for succession.
Consideration is given to the length of
service of the Board as a whole and
membership is regularly refreshed –
pages 124 and 130-131.
Appointments to the Board and
succession planning
• There is a formal, rigorous and transparent
process, led by the Nomination and
Governance Committee, to identify and
appoint new Directors – pages 130-131.
• An independent external search
consultancy was used for the appointment
of Eugenia Parot to the Board as a
Non-Executive Director during the year
– page 130.
• An effective succession plan is maintained
for Board and senior management
appointments – pages 130-131 and 157.
• Appointments and succession plans are
based on merit and objective criteria and
promote diversity of gender, social and
ethnic backgrounds, cognitive and personal
strengths and experience – pages 130-131.
Development
• New Directors receive a thorough induction
upon joining the Board – pages 130 and 132.
• Directors are regularly updated with
information and training and, as a
minimum, receive an annual briefing on
legal, regulatory, market and other
developments that are relevant to directors
of UK-listed companies – page 130.
Evaluation
• Annual evaluation of the Board considers
composition, diversity and how effectively
members work together to achieve
objectives – page 133.
• Individual evaluation is part of the annual
Board evaluation and assesses whether
each Director continues to contribute
effectively – page 133.
• The Board has agreed an action plan
to close gaps identified by Board and
Committee effectiveness reviews
– page 133.
• An internally facilitated Board and
Committee effectiveness review was
conducted in 2021 – page 133.
• The Board has arranged an externally
facilitated Board and Committee
effectiveness review for 2022 – page 133.
Re-election
• All Directors stand for re-election annually.
Audit, risk and internal control
Governance
• The Board has established formal and
transparent policies and procedures to
ensure the independence and effectiveness
of internal and external audit functions and
to satisfy itself on the integrity of financial
and narrative statements – pages 134-138
and 163.
Financial and business reporting
• The Board considers that the Annual
Report presents a fair, balanced and
understandable assessment of the
Company’s position and prospects
– page 163.
Risk and internal control
• The Board has established procedures to
manage risk, oversee the internal control
framework and determine the nature and
extent of the key risks that the Company is
willing to take in order to achieve its
long-term strategic objectives – pages 18-19
and 137-138.
Experience and competence
• All Audit and Risk Committee members
are considered to have recent and relevant
financial experience and have competence
relevant to the mining industry
– pages 122-124.
Remuneration
Policy
• The Company has no executive directors;
however, the CEO’s remuneration is
disclosed as if he were a director.
• The Directors’ and CEO’s Remuneration
Policy, approved at the 2020 AGM, is
aligned to the Company’s purpose, vision
and values and is clearly linked to the
successful delivery of the Company’s
long-term strategy – pages 144-145, 147
and 154.
• The Remuneration and Talent Management
Committee Chair, Francisca Castro, served
as a member of the Committee for more
than 12 months before being appointed as
Chair.
• The CEO’s remuneration includes
transparent, stretching and rigorously
applied performance-related elements
designed to promote the Company’s
long-term sustainable success
– pages 148-159.
Procedure
• The Board has a formal and transparent
procedure for developing policy on
executive remuneration and determining
Director and senior management
remuneration – pages 134-160.
• No Director, nor the CEO, is involved in
deciding his or her own remuneration.
• Directors exercise independent judgement
and discretion when authorising
remuneration outcomes, taking account of
Company and individual performance and
wider circumstances including internal and
external factors – pages 144-147.
Antofagasta plc Annual Report 2021
107
/ Chairman’s introduction
Our governance
framework
Jean-Paul Luksic
Chairman
Dear fellow shareholders
Some of you may have noticed that my letters
in this section have tended to cover similar
topics and themes, like how the Board thinks
about Antofagasta’s culture and values,
long-term strategy, stakeholder engagement
and succession-planning. This recurrence
reflects our belief that these are the
foundations upon which a responsible, reliable
business is built. Such focus feels especially
important in a time of constant change and
historic challenges, particularly those
presented by COVID-19 and climate change.
The broad categories and topics may appear
familiar, but in this letter – and in this Annual
Report – you will find much that is new,
reflecting the progress we’ve made and
actions we’ve taken on a number of important
fronts, from climate change to diversity and
inclusion, over this past year.
Purpose, strategy, culture and vision
Three years ago, the Board approved the
Company’s purpose: “Developing mining for a
better future.” That purpose informed – and
informs still – Antofagasta’s strategic
framework, to which all the Board’s activities
continue to be aligned.
The Board also continues to work to set the
tone for Antofagasta’s culture and core
values. In 2021, following the implementation
of our “New Ways of Working” project, the
Board commissioned a workforce
engagement survey to monitor the progress
being made in connecting and empowering
our people. When safe and feasible, Board
members also made site visits to get a
first-hand sense of our operating companies’
culture and values.
Purpose, values, culture – stewarding these is
an important responsibility of our Board,
which is why these topics regularly shape
decisions and influence conversations. We
know that great people are the heartbeat of a
108
Antofagasta plc Annual Report 2021
great company and that they want to be part
of modern, safe and values-inclusive cultures.
Climate change
One issue in particular that demonstrates how
Antofagasta’s purpose informs the Board’s
decision-making is climate change. A number
of important medium- and long-term decisions
made this year highlight the link between
action and purpose. Those range from the
Board approving the Group’s carbon-emissions-
reduction target for 2025 and net-zero target
for 2050, to initiatives exploring the viability
of mining haulage trucks being powered by
electricity or green hydrogen.
Water management remains an area of critical
focus. The drought in central Chile – now
entering its 13th year – continues to affect
local communities, as well as our operations.
In 2018, the Board approved a $500 million
project to develop a desalination plant and
pipeline and more recently approved an
investment to double the capacity of that
plant. The plant is on track to be completed in
the second half of 2022 and the expansion is
expected to be completed in 2025. Water
management remains an issue for which the
Board continues to oversee the near-term
operational challenges and longer-term
strategic shifts.
We know that addressing climate change is
vital for the world, for Chile and for
Antofagasta. Since 2019, the Board’s risk
matrix has specifically included climate
change and in 2020 the Board approved a
comprehensive Climate Change Strategy
comprised of five pillars:
1. Development of resilience to climate change
2. Reduction of greenhouse gas emissions
3. Efficient use of strategic resources
4. Management of the environment
and biodiversity
5. Integration of stakeholders
You can read about our progress and
approach to climate change in our Climate
Change Report, which is available on our
website, as well as our progress on applying
the TCFD recommendations on pages 52 to 57
of this Annual Report.
Engaging with stakeholders
Mining is a long-term business. Our
operations, the relationships we build with
local communities, suppliers, employees,
contractors and governments – they last for
decades and decades.
The Board’s ability to continue to deliver
long-term sustainable success relies on a
detailed understanding of the views of our
workforce and other stakeholders in Chile,
where our corporate headquarters, senior
management team and our operating
companies are located. I, along with other
Directors, visit the Group’s operations and
projects to build personal relationships and
ensure the Board can see the situation on the
ground and is hearing directly from our
workforce.
A particular priority is ensuring that our
senior management team is engaging with
our workforce in open, ongoing dialogue to
maintain good relations and the trust that has
been built up between the Company and its
employees. It is a testament to these
relationships that wage negotiations were
satisfactorily completed with unions at Los
Pelambres and Centinela during the year.
Details of our workforce engagement
mechanisms are on pages 120-121.
The pandemic has revealed, whether in
logistical disruptions or supply-chain
pressures, just how important it is to work in
partnership with our stakeholders, particularly
suppliers and customers. The Board
continues to ensure that those processes are
aligned through our ongoing monitoring.
And finally, the Group’s governance
structures include a network of arrangements
to ensure that the views and interests of
Other InformationFinancial Statements Strategic ReportCorporate Governance Jean-Paul Luksic
Chairman
Our operations, the relationships we build
with local communities, suppliers, employees,
contractors and governments—they last for
decades and decades.
stakeholders are represented in the boardroom
and considered as part of the Board’s
deliberations. You can see a few examples
of Board decisions made during the year
that were shaped by stakeholder engagement
on pages 116-119.
Workforce safety
It goes without saying that safety is our top
priority and in 2021 we achieved further
improvements in our safety performance
including a consistent reduction in high-
potential incidents, which serve as an
important leading indicator to where more
serious incidents might occur. Despite this
performance we were incredibly saddened by
a fatal accident involving one of our
contractors at Los Pelambres in July. Our
condolences go to the family of our colleague.
The Board commissioned a full investigation
and the actions identified during the review
are being implemented under the direct
oversight of senior management to ensure
this does not happen again. Safety remains
the Group’s top priority and the Board will
continue to closely monitor our safety
performance in 2022 so that we continue to
became a stronger and safer Company.
Risk management
The Board oversees a framework of internal
controls as well as a system to identify and
manage risk. As part of this process the
Board decides the nature and extent of the
significant risks the Group is willing to accept
in achieving its strategic objectives.
The framework provides structure to policies
and practices throughout the business and
enables the Board to focus on key issues. An
update of the Company’s risk management
framework was reviewed by the Board during
the year and updates were made to the
Company’s Talent Management and Labour
Relations, Tailings and Cybersecurity risk areas.
Further details can be found on pages 18-19
and 135-138.
Board changes and succession planning
We were delighted to appoint Eugenia Parot
to the Board on 20 April 2021 and she was
subsequently elected by shareholders at the
2021 AGM. Eugenia’s strong leadership
experience and technical background,
particularly in its emphasis on environmental
and sustainability matters, are an asset for
our Board and for Antofagasta. Following a
thorough induction process (as described on
page 132), she joined two committees in
August, the Projects Committee and the
Sustainability and Stakeholder Management
Committee. Eugenia has also been
incorporated into the Board’s succession plans.
Following the retirement of Ollie Oliveira from
the Board in July, Tony Jensen assumed the
role of Senior Independent Director and Audit
and Risk Committee Chair. Tony, who had
served on that Committee as a member for
more than 12 months, also joined the
Nomination and Governance Committee.
Michael Anglin assumed the role of Projects
Committee Chair and joined the Sustainability
and Stakeholder Management Committee in
place of Tony Jensen, who rotated off that
Committee in line with the Company’s policy
that Directors should not serve concurrently
on more than three Committees except where
this is a temporary arrangement as part of the
Board’s succession plan. That succession
plan – and the act of succession planning
– is one we take seriously as a Board and
revisit regularly.
I’d like to add a final point about our Board.
The pandemic has meant that we haven’t
been able to all meet in person, as a group, for
two years. Nevertheless, I’m proud of the way
we’ve been able to stay connected and I’m
looking forward to the opportunity, when it’s
safe, to get together once more to deepen our
camaraderie.
Diversity and Inclusion
We believe that diverse companies outperform
and attract better talent than their peers. The
Board has met the Parker Review target for
ethnic diversity and following Eugenia’s
appointment, 30% of the Board are now
women. The Board’s Nomination and
Governance Committee continues to work
with an independent external search
consultancy to improve the Board’s gender
diversity and build a strong talent pipeline.
Gender and ethnicity are two crucial
components of diversity, yet in setting policies
and making appointments, the Board
considers diversity through a broader lens
that includes disabilities, educational and
professional experience, culture, personality
type, skills and perspective. In short, we look
to build a team that is richly diverse in ways
that quotas alone might fail to account for.
Details on the Board’s diversity policy can be
found on pages 130-132.
Shareholder engagement
In another year that saw COVID-19 limit our
ability to meet in person, the Board ensured
that shareholders could engage with the
Board digitally. Shareholders approved
changes to the Company’s articles of
association at the 2021 AGM that will allow
them to attend and vote at future general
meetings remotely.
As Tony Jensen transitioned to his role as
Senior Independent Director, I know some of
you were able to meet him and I hope this
year it is possible for you to safely meet our
newest director, Eugenia and connect with
other members of the Board. Your views and
voices are important to us.
I’d like to thank you all for your ongoing
engagement and support and look forward to
connecting with you at our AGM.
Jean-Paul Luksic
Chairman
Antofagasta plc Annual Report 2021
109
/ Senior Independent Director’s introduction
Board balance
Tony Jensen
Senior Independent Director
My role is to
ensure that the
Chairman, the
Board and the
management
team receive
a balanced view
of issues that
are relevant and
important for our
shareholders.
110
Antofagasta plc Annual Report 2021
family who serve on the Board,
commending their long-term vision, which
has contributed to the Company’s prudent
operating, financial and growth strategy,
as well as its stability.
Shareholder support is, of course,
conditional on the strength of the current
corporate governance framework,
which rigorously protects the interests of
all shareholders equally.
I, and all the other Independent Directors,
guard our independence and place a strong
emphasis on maintaining this governance
and protection regime. We are supported
and encouraged by the other Directors
who – like the Independent Directors –
bring their own perspectives and opinions
and are committed to the long-term
sustainable success of the Company.
The controlling shareholders and the
members of the Luksic family who serve
on the Board (including the Chairman),
actively support this framework and
encourage the Independent Directors
to provide the independent input and
challenge that, we are convinced, proves
valuable in Board decision-making.
Tony Jensen
Senior Independent Director
Q. What are your responsibilities as Senior
Independent Director?
I have three main responsibilities as Senior
Independent Director. First, I must be
available to shareholders to ensure that
the Board considers their views, interests
and concerns. Second, I provide support
to the Chairman, ranging from advice on
corporate governance matters to presiding
over potential conflict of interest decisions
by the Board, and making sure that the
views of the other Directors are conveyed
to him and reflected in Board discussions.
Third, I lead the annual review of the
Chairman’s performance and steward the
closure of any gaps identified by internal
and externally facilitated reviews of Board
and Committees’ performance.
I discharge these responsibilities through
close co-ordination with the Chairman,
Directors and the management team.
While the COVID-19 pandemic has been
challenging in terms of organising
face-to-face meetings, I met virtually with
various shareholders during the year to
understand their views. This has helped
me ensure that the Chairman, the Board
and the management team receive a
balanced view of issues that are relevant
and important for our shareholders.
Q. What impact does the controlling
shareholding have on Company decisions?
Members of the Luksic family have been
involved in the Company for over
40 years. During this time, the Company
has demonstrated an excellent track
record in terms of safety, operational
performance and financial strength.
I have discussed the role of the controlling
shareholders with other shareholders. The
widely held view is that the substantial
controlling interest is positive, with
shareholders satisfied that the interests of
the controlling shareholder are aligned
with theirs. They have expressed their
appreciation of the members of the Luksic
Other InformationFinancial Statements Strategic ReportCorporate Governance
Relationship agreement
The E. Abaroa Foundation is a controlling
shareholder of the Company for the purposes
of the Listing Rules and certain other
shareholders of the Company (including
Aureberg Establishment) are also treated as
controlling shareholders. Details of the
Company’s substantial shareholders are set
out on page 162.
In 2014, the Company entered into
relationship agreements in respect of each
controlling shareholder, which contain the
mandatory independence provisions required
by the Listing Rules. The Company complied
with and, so far as the Directors are aware,
each controlling shareholder and its associates
(including Metalinvest Establishment and
Kupferberg Establishment) also complied
with the mandatory independence
provisions throughout 2021.
Related party transactions
Certain related party transactions outside the
ordinary course of business must be subject
to independent assessment and approval. The
Company has for many years presented all
such related party transactions between the
Company and the controlling shareholders or
their associates to a committee of Directors
independent from the controlling shareholders,
to make an assessment as to whether the
Company should enter into such transactions
and, if so, to steward the corresponding
negotiation process. In most cases, transactions
of this nature will also be subject to independent
review by third-party shareholders in each of
the Group’s mining operations.
Any proposed related party transaction over
$25 million, whether or not in the ordinary
course of business, is also tabled for Board
approval. Any Director with a potential conflict
or connection with the related party does not
take part in the decision on that transaction.
Related party governance in practice
There are several checks and balances to
ensure that there is full transparency in the
way that related party transactions are
handled by the Board. The following diagram
summarises the approach taken to identify
and manage related party transactions and
actual or potential conflicts of interest.
Identifying Directors’ interests
PROCESS
HOW THIS IS MANAGED
MONITORING OF
DIRECTORS’
INTERESTS
If a Director has an interest in any other entity, the Board will normally consider
that interest under its arrangements for authorising conflicts of interest under
section 175 of the Companies Act. See page 162 for more information.
Managing related party transactions
PROCESS
HOW THIS IS MANAGED
PROPOSED
TRANSACTION
Ongoing monitoring of Directors’ interests and the Company’s related parties
provides information to determine if a related party approval is required for
a proposed transaction.
CONTRACT
NEGOTIATION
AND VERIFICATION
The Executive Committee seeks to ensure that the best possible terms are
achieved for a proposed transaction and, where appropriate or necessary, that
they are verified by industry benchmarking reports or independent third-party
valuation or assessment.
If the potential transaction is between the Group and a controlling shareholder or
its associates and is a transaction to which the UK Listing Rules related party
transaction rules apply, a committee of Directors independent from the controlling
shareholder and its associates is formed to oversee and support management with
this process and to ensure compliance with the corresponding Relationship
Agreement.
RESPONSIBILITY
Directors
RESPONSIBILITY
Company Secretary,
senior management
and the Executive
Committee
Senior management
and the Executive
Committee and,
if involving a
controlling
shareholder,
Independent
Directors
APPROVAL BY
INDEPENDENT
DIRECTORS
Potential related party transactions outside the ordinary course of business that
involve a controlling shareholder, or its associates, are reviewed and if appropriate,
approved by Directors independent from the controlling shareholders.
Independent
Directors
All potential related party transactions over $25 million, whether or not in
the ordinary course of business, are approved by the Board. Any Director with
a potential conflict or connection with the related party will not take part in that
decision. Transactions within the ordinary course of business that are below
$25 million require approval by the relevant operating company board. All the
operating company boards in the Mining division have directors representing
third party shareholders.
Antofagasta plc Annual Report 2021
111
/ Group corporate governance overview
Our structure for effective
decision-making
Antofagasta plc Board
The Board’s role is to promote the long-term, sustainable success of the Company,
generating value for shareholders and contributing to wider society. The Board has
established the Company’s purpose, values, strategy and risk appetite and monitors
the culture of the Group as well as its performance against defined measures.
The schedule of matters reserved for the Board is available on the Company’s
website at antofagasta.co.uk.
Board Committees
The Board has delegated authority to these Committees to perform certain
activities as set out in their terms of reference, which are available on the
Company’s website at antofagasta.co.uk.
The Chair of each Committee reports to the Board following each Committee
meeting, allowing the Board to understand and, if necessary, discuss matters in
detail and to consider the Committee’s recommendations.
The Board is assisted in discharging its responsibilities by five Board Committees:
Key responsibilities
• Culture
• Strategy and management
• Governance
• Shareholder engagement
• Internal controls, risk management and compliance
• Financial and performance reporting
• Structure and capital
• Approving material transactions
Key responsibilities
The key responsibilities of each Committee
and their focus areas for 2021 are set out
on page 128.
NOMINATION
AND GOVERNANCE
AUDIT
AND RISK
SUSTAINABILITY
AND STAKEHOLDER
MANAGEMENT
PROJECTS
REMUNERATION AND
TALENT MANAGEMENT
CEO and Executive Committee
The Board has delegated day-to-day responsibility for implementing
the Group’s strategy and fostering the corresponding organisational
culture to the Company’s CEO, Iván Arriagada.
Mr Arriagada is not a Director of the Company but is invited to attend
all Board and Committee meetings and is supported by the members
of the Executive Committee, each of whom has executive responsibility
for his or her respective function.
Mr Arriagada chairs the Executive Committee.
The Executive Committee reviews significant matters and approves
expenditure within designated authority levels.
The Executive Committee leads the annual budgeting and planning
processes, monitors the performance of the Group’s operations and
investments, evaluates risk and establishes internal controls, promoting
the sharing of best practices across the Group.
Subcommittees of the Executive Committee
Members of the Executive Committee also sit on the boards of the Group’s operating companies and report on the activities of those companies
to the Board, Mr Arriagada and the Executive Committee.
The Board has delegated to the Disclosure Committee primary internal responsibility for identifying information that may need to be disclosed to
the market and for managing its disclosure in line with the Group’s current Disclosure Procedures Manual.
The Executive Committee is assisted in its responsibilities by the following Subcommittees:
BUSINESS
DEVELOPMENT
CLIMATE
CHANGE
DISCLOSURE
ETHICS
OPERATING
PERFORMANCE
REVIEW
PROJECT
STEERING
WATER, ENERGY
& EMISSIONS
MANAGEMENT
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Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic ReportCorporate Governance Board and Board Committee information flows
01
02
Chairman
agrees agenda
with Directors
Papers
circulated
in advance of
meetings
03
Board and
Committee
meetings
04
05
Minutes
prepared,
circulated and
approved
Action lists
prepared
and updated as
key actions are
implemented
06
Information
between
meetings
03
Board and Committee meetings
Each Board and Committee meeting has one or
more in-camera sessions without management
present to allow Directors to set expectations
for the meeting and to reflect on and evaluate
the meeting’s progress. During regular
sessions, the CEO provides timely updates to
the Board on emerging issues, while executives
present to the Board and its Committees on
operating and development matters, allowing
close interaction between Directors and a wide
range of executive management.
04
Minutes prepared, circulated and approved
The Company Secretary minutes all Board
and Committee meetings, which are circulated
and reviewed by the Board and management,
updated as necessary and tabled for approval
at the following session.
01
Chairman agrees agenda
with Directors
The Chairman, in consultation with the Senior
Independent Director and the CEO, maintains
an agenda of standing topics to be considered
by the Board and Committees each year,
which is then supplemented, during the year,
with agreed key topics and events
requiring consideration.
02
Papers circulated in advance of meetings
Materials are sent to Board and Committee
members a week in advance of each meeting.
Each presentation has a summary sheet
setting out the objective, background,
proposal, justification, risk analysis and next
steps. Materials include the CEO’s report,
which is an open and candid summary of his
views on evolving strategic challenges,
changes in risk assessments and emerging
issues, as well as the management report
with detailed information on the Group’s
performance against key safety, health,
environmental, community, financial, project
development and organisational culture
indicators.
05
Action lists prepared and updated
as key actions are implemented
The Board and each Committee maintain an
action list that is reviewed at the beginning of
each meeting to ensure that Directors’
enquiries and concerns are clearly identified
and timely addressed.
06
Information between meetings
Between Board meetings, Directors receive
flash reports with monthly and year-to-date
production and financial results, including key
metrics in respect of safety, health,
environmental and community relations
performance, ensuring that the Board is
regularly updated on the Group’s progress.
Where appropriate, Directors may receive
general information on the commodity markets
and additional reports highlighting key
developments in the Group’s exploration,
projects, business development and
innovation activities.
The Group’s management team, led by
Iván Arriagada, performs an essential
role in ensuring that the Board has the
information required to make effective
decisions, reporting in real time on the
implementation of the Group’s strategy
and the Company’s performance.
Antofagasta plc Annual Report 2021
113
/ Board activities
Strategic vision
The Board’s activities in 2021 addressed the challenges posed by the COVID-19 pandemic, protecting the health
and safety of the workforce and local communities while ensuring operational continuity. In addition, the Board
provided oversight on the pursuit of the Group’s strategy, addressed critical issues in a timely manner and
advised management on the development of strategic priorities and plans, all while seeking to align with the
values of the Group and stakeholders’ best interests.
Our strategic framework
The COVID-19 pandemic has tested not only the flexibility of our organisation, but also the
resilience of our strategy and governance framework. As we have faced the daily challenges of
the pandemic, we have strengthened our commitment to Developing Mining for
a Better Future as the purpose that mobilises us and gives meaning to everything we do.
We are an international mining company, focused on copper and its by-products, known and
respected for its operating efficiency, creation of sustainable value, high profitability and as a
preferred and reliable partner in the global mining industry.
We want to generate a diverse and inclusive culture, with key values shared by all. We have a
Code of Ethics and our own way of doing things, while managing our risks. To achieve this, we
rely on the talent and capabilities of our workforce. Our flexible organisation allows us to overcome
current and future challenges, as demonstrated during the pandemic.
Below are examples of how the Board’s activities in 2021 have furthered the Group’s strategy.
CULTURE
Shared values
and the way
we work
O UR VISION
OUR PURPOSE
ORGANISATION
Designed to deliver
results and growth
STRATEGY
People
Safety and
Sustainability
Competitiveness
Growth
Innovation
COVID-19 pandemic
• Monitored developments and supported
management in addressing challenges
arising from the COVID-19 pandemic with
particular focus on safety and health,
people, sustainability and stakeholder
management, project development and
operational continuity.
• Approved a new $6 million fund
(complementing the $6 million fund
established in 2020) to aid neighbouring
communities including the provision of
health infrastructure and medical equipment.
Culture
• Monitored operational and projects
performance and their link with the Group’s
culture, particularly concerning safety
and health.
• Oversaw the continued implementation
of the Group’s strategic framework,
including the Group’s purpose, vision,
values and culture.
• Approved changes to the membership
of several of the Board Committees.
• Reviewed Directors’ independence.
• Reviewed Directors’ conflict of
interest declarations.
• Reviewed and approved requests by Directors
to undertake additional external appointments.
• Reviewed Committees’ terms of reference
and approved a change to one of them.
• Reviewed corporate governance
arrangements in the context of
recommendations issued by the Task Force
on Climate-related Financial Disclosures
(TCFD), determining that no amendments
related to climate change were required.
• Oversaw the implementation of key
recommendations arising from the
2020 internally facilitated Board
effectiveness review.
• Monitored feedback from investors and
proxy agencies regarding the Group’s
corporate governance arrangements.
• Monitored progress on the implementation
• Reviewed the results of a perception study
of the Group’s Diversity and Inclusion Strategy.
• Monitored the implementation of behavioural
guidelines which connect specific expected
behaviours to the Group’s culture.
• Reviewed workforce engagement survey
results and meetings with representatives
of the Group’s labour unions.
Governance and engagement
• Reviewed Board and Executive Committee
succession plans.
• Appointed Eugenia Parot to the Board.
on the views of existing and potential
shareholders, investors and bank equity
research analysts.
Internal controls, risk management
and compliance
• Reviewed the risk management system’s
maturity level.
• Reviewed key and emerging risks;
conducted the annual review of the Group’s
risk appetite statements, which are aligned
with the Group’s strategic pillars and
adjusted three risk appetite declarations.
• Reviewed and updated the Group’s risk
matrix, materialised risks and risk mitigation.
• Reviewed budgets for initiatives designed
to mitigate material identified risks.
• Reviewed physical and transition risks
associated with climate change in the
context of the TCFD review.
• Addressed representations and confirmations
which the Board are required to provide,
attesting to the effectiveness of the risk
management and internal control systems.
• Reviewed actions planned for 2022 to
prepare for a potential future requirement
for the Board to confirm the effectiveness
of internal controls over financial reporting.
• Reviewed half-yearly compliance reports.
• Reviewed results of the Group’s whistle-
blowing processes.
• Certified the Group’s compliance and crime
prevention models.
• Reviewed Internal Audit’s progress and
2022 Audit plan.
Financial and performance reporting
• Approved the Group’s 2020 full-year
and 2021 half-year results and
corresponding announcements.
• Proposed the dividends paid
to shareholders during 2021.
• Reviewed and approved going concern
and viability statements and conducted
stress tests related to a potential future
resilience statement.
• Monitored progress towards achieving the
accelerated audit timetable to enable a
February 2022 results announcement.
114
Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic ReportCorporate Governance Our strategy is designed to enable us to achieve our purpose. The strategy is supported by five pillars; each has
defined short- and medium-term goals.
People
People are central to our business. We want our employees to feel recognised and to have the maximum opportunities for personal and
professional growth. We seek to generate a culture of diversity and inclusion in which our employees can achieve their full potential. Our goal is
to be the best employer in the mining industry in Chile. To achieve this, we understand the importance of creating an environment of trust and
collaboration focused on the long term.
• Implemented the “New Ways of Working” initiatives to facilitate
flexible on-site, home-based and hybrid working arrangements,
with the goal of creating a more flexible and adaptable organisation.
• Monitored progress on the implementation of the Group’s Diversity
• Monitored labour relations at the Group’s mining and transport
and Inclusion Strategy.
• Reviewed the annual talent management exercise, including
succession plans for the CEO and the Executive Committee.
• Reviewed employee performance including short-term and
long-term scorecards.
operations and reviewed the results of collective bargaining negotiations.
• Monitored the implementation of behavioural guidelines which
connect specific expected behaviours to the Group’s culture.
• Monitored the progress of the annual Human Resources plan.
Safety and Sustainability
The safety and health of our employees and contractors is non-negotiable. We are committed to achieving zero fatalities at our operations and
continuing to reduce the number and seriousness of accidents and occupational health issues. We view sustainability as a source of value
creation that is an integral part of our decision-making processes.
• Implemented and monitored COVID-19 protocols aimed at
protecting the Group’s workforce and neighbouring communities.
• Reviewed and monitored the Group’s safety and health
performance.
• Monitored the Group’s implementation of its Climate Change Strategy.
• Continued to monitor the independent review of tailings dam
safety and assessed it versus industry best practice and the
ICMM’s standard.
• Reviewed the Group’s compliance with environmental commitments.
• Continued to monitor the progress of local community interactions
at Los Pelambres.
Competitiveness
Our key focus as regards competitiveness is to achieve productivity gains through cost control and streamlining our processes.
• Monitored results of the Group’s Cost and Competitiveness
• Reviewed and approved the Group’s copper concentrate and
Programme, including estimated future savings.
• Approved key procurement and sales contracts.
• Reviewed and monitored the Group’s operating and financial
copper cathode sales strategy.
• Reviewed the progress of proposed legislation which could
affect the Group.
performance.
Growth
We have a portfolio of growth projects that allows us to remain competitive and develop sustainable operations in the long term.
• Reviewed execution progress on the Los Pelambres Expansion
• Reviewed and approved the acquisition and divestment of mining
project, Zaldívar’s Chloride Leach project and Centinela’s
Esperanza Sur project.
• Reviewed progress on the Centinela Second Concentrator project.
• Reviewed progress on the Twin Metals Minnesota project.
• Reviewed development and exploration activities, including an
assessment of business development opportunities.
• Reviewed progress on the Group’s material Environmental
Impact Assessments.
properties in Chile.
• Reviewed and approved the Group’s long-term price assumptions.
• Reviewed and approved the base case and development case
for the Group’s assets.
• Reviewed and approved the Group’s 2022 budget.
• Reviewed the Group’s reserves and resources statements.
Innovation
We innovate as a means of improving social, environmental and economic performance while, at the same time, delivering strong returns for
our shareholders. Innovation is key to improving productivity and efficiency and promoting growth, especially in the medium and longer term.
• Stewarded progress on the Group’s portfolio of innovation initiatives.
• Reviewed progress on the implementation of the Group’s digital
• Monitored construction progress for the Zaldívar Chloride
Leaching project.
transformation programme.
• Monitored the development of autonomous haulage and drilling
• Monitored progress on Centinela’s and Los Pelambres’ remote
systems.
operations centre projects.
• Reviewed the development of the Group’s proprietary
Cuprochlor®-T primary sulphide leach technology.
Antofagasta plc Annual Report 2021
115
/ Stakeholder engagement
Engaging with stakeholders to make
decisions for a better future
Three of the principal 2021 Board decisions
are explained here as examples of how
stakeholder considerations, and the factors
set out in section 172(1) of the Companies Act
2006, were central to the decision-making
processes. As part of its decision-making, the
Board had regard to the different interests of
stakeholders but with an overarching focus,
as required by section 172(1), on acting in the
way that would be most likely to promote the
success of the Company for the benefit of its
members as a whole. Among other things, the
likely consequences of the decision in the long
term were key considerations for the Board.
Approval of new greenhouse gas
emissions reduction targets:
In May, the Board approved two new
greenhouse gas (GHG) emissions reduction
targets as part of our Climate Change
Strategy and our wider commitment to
operate sustainably as a leading copper
producer. The first target is to reduce our
direct (Scope 1) and indirect (Scope 2) GHG
emissions by 30%, or by 730,000 tonnes of
CO2e by 2025, relative to 2020. The other,
longer-term, target is to achieve carbon
neutrality by 2050, in line with Chile’s own
national target, or earlier if technologies are
developed over the coming years that would
allow this goal to be achieved sooner.
In 2018, the Board approved the Company’s
previous GHG emissions reduction target to
reduce both its Scope 1 and Scope 2 CO2e
emissions by 300,000 tonnes of CO2e by
2022. This target was achieved two years
early with emissions reduced by over
580,000 tonnes of CO2e by the end of 2020.
The Group maintains ongoing
dialogue with stakeholders to
understand their expectations and
concerns, and their views are
considered in the Board’s
deliberations. A description of the
Group’s key stakeholders, their
importance to the Group’s long-
term sustainable success and the
key initiatives that are in place to
recognise their interests and
concerns is set out in detail within
the Strategic Report on pages
32-65.
Further details on the Board’s workforce
engagement mechanisms are set out on
pages 120-121.
Jean-Paul Luksic
Chairman
In 2018,
Antofagasta
set emissions
reductions
targets for 2022.
This year we
achieved – and
surpassed –
those targets and
set two new ones.
116
Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic ReportCorporate Governance How the Board considered, and had regard
to, the interests of key stakeholders and the
requirements of section 172(1)
The decision to approve new emissions
reduction targets was taken following
extensive discussions between the Board and
management over several years and taking
into account the broad impact that climate
change could have on the long-term success
of the Company.
• The reduction of GHG emissions is one of
the five pillars of the Climate Change
Strategy that was approved by the Board in
2020. The five pillars are: (1) the
development of climate change resilience;
(2) the reduction of greenhouse gas
emissions; (3) the efficient use of strategic
resources; (4) environmental and
biodiversity management; and (5)
stakeholder integration. Stakeholder
integration ensures that decisions made
pursuant to the climate change strategy
reflect shifting societal expectations of the
extent and pace of climate change
mitigation, government and regulatory
expectations, ways to meet existing
investors’ expectations and what would be
needed to attract new investors in the
future, and strategic partnerships, including
with customers and suppliers.
• In developing the Climate Change Strategy
and GHG emissions reduction targets, the
Board was regularly updated on the views,
expectations and challenges facing our
local communities, suppliers and customers
to understand the current and future
impact of climate change on these
stakeholders and their own objectives to
address this global challenge.
• The Board considered the specific actions
that would allow the emissions reduction
targets to be achieved and the impact on
stakeholders including suppliers. These
actions included plans to move all power
supply contracts to renewable energy by
the end of 2022 as the fundamental
enabler for the 30% reduction target. The
Board also considered the importance of
technology in allowing the Group to achieve
carbon neutrality by 2050 and the interests
of stakeholders including communities,
employees, contractors and suppliers in
identifying and deploying this technology.
• The Board monitors technological advances
» increase flooding risk to our processing
plants and infrastructure; and
» force our operations to be suspended
or restricted due to weather conditions.
• an increase in daily wind speed would:
» trigger dust events which may require
operations to be suspended; and
» restrict or lower the efficiency of
certain activities including transport
and logistics.
• changes in sea conditions, including
sea levels, wave surges and extreme
events, would:
» restrict or suspend port operations;
» impact product stockpiles or
supplies; and
» require repairs and infrastructure
maintenance (e.g. to docks and water
capture installations).
• The Board considered the impact of these
physical risks on our stakeholders including
communities, employees, contractors
and suppliers.
• The Board also considered that copper will
be a key enabler of a modern low carbon
economy and the importance of working
with stakeholders to produce it in a
sustainable and responsible way.
• Under the Board’s supervision, we are
currently in the process of evaluating our
Scope 3 emissions which includes working
with suppliers to learn more about the
measures they are implementing regarding
climate change. We expect to complete
measurement of Scope 3 emissions in
2022 and set reduction target by the end of
2023, in line with the ICMM’s position
statement for climate change.
• The expectations of shareholders and the
impact of any decision on them were a key
consideration for the Board, with a view to
balancing investor priorities given the
importance of protecting the environment
and contributing to the resolution of this
global challenge, while generating
sustainable returns for shareholders.
in electromobility, green hydrogen and
electric batteries and has supported active
investment in technology. In January 2021,
we became the first mining company to join
the Chilean Hydrogen Association (H2
Chile), an organisation that promotes the
development of green hydrogen. As a fuel,
green hydrogen has the potential to reduce
carbon emissions by replacing the diesel
used by our mine haulage trucks.
According to estimates by the Chilean
energy industry, green hydrogen solutions
could begin to be implemented as early as
the end of this decade.
• The Board’s objective is to position the
Company as a leader in the implementation
of an integrated climate change strategy,
managing mitigation factors and adaptability
throughout the business’ value chain. We
are aligned with the ICMM members’
approach to climate change and are
committed to implementing the
recommendations set out by the Task
Force on Climate-related Financial
Disclosures (TCFD).
• In considering the financial implications of
climate-related risks and opportunities
under the TCFD recommendations, the
Board considered transition risks as well as
physical risks, including such risks as:
• an increase in the maximum daily
temperature would:
» require increased maintenance and
equipment replacement;
» increase evaporation rates, impacting
tailings and water storage systems;
» require changes in work conditions
and shifts; and
» increase pollution as lower humidity
would increase airborne dust.
• a reduction in annual rainfall would:
» reduce continental water flows,
impacting production and creating
community issues;
» increase pollution with higher airborne
dust particles; and
» increase the risk of forest fires.
• extreme rainfall events would:
» damage transport and local
infrastructure due to flooding;
Antofagasta plc Annual Report 2021
117
/ Stakeholder engagement continued
Engaging with stakeholders to make
decisions for a better future
continued
• The Board analysed Los Pelambres’ water
• The limited availability of water also has an
balance, which only considers a 15%
intake of continental water, as 85% of the
water used by the operation is reused or
recirculated. The 15% intake equals 850 l/s,
59% of which comes from surface sources,
primarily from the Choapa River and 41%
from underground, mainly from two wells
in Cuncumén and from the pit.
• The Board monitored the 2019-2021 water
management plan, designed to improve
intake, increase efficiency in water use and
support neighbouring communities.
• The Board monitored Los Pelambres’
initiatives focused on enabling water
consumption by neighbouring communities.
They include the APRoxima Programme
which benefits four municipalities and
54,000 people in the Choapa province,
collaboration agreements in Illapel and
Salamanca, emergency plans, and the
design and construction of new rural water
systems. The Confluye Programme focuses
on supporting the availability of water and
improving its use for farming. An
emergency drought fund has been set up to
support human water consumption.
impact on air quality. Although water
continues to be used at the tailings storage
facility and the mine to suppress dust, the
dry surface area that is prone to emitting
dust has increased.
• The Board requested an evaluation of the
drought’s impact and the Company
communicated the results to shareholders
in the 2021 Half Year Results
announcement with 2021 guidance being
revised downward from 730-760,000
tonnes to 710-740,000 tonnes and
indicating that up to approximately 50,000
tonnes of production could be at risk at Los
Pelambres in 2022.
• The expanded desalination plant will enable
Los Pelambres to source over 90% of
its water needs from sea, reused or
recirculated water, and to reduce extraction
from the Choapa River and underground
wells. Los Pelambres will be the first
mining company in central Chile operating
essentially with only sea water.
Los Pelambres’ drought response
2021 was the driest year of the ongoing
12-year drought in Chile, with precipitation
significantly less than in 2019, which had been
the driest year of the drought. Strict water
management protocols are in place at Los
Pelambres and various actions to mitigate the
continued impact of reduced rainfall and
higher temperatures continue to be evaluated.
Production at Los Pelambres was impacted in
2021 and it is expected that up to
approximately 50,000 tonnes of copper is at
risk in 2022. The next rainy season is in the
Chilean winter and Los Pelambres’ desalination
plant is expected to be completed in the
second-half of 2022, which will mitigate any
further water shortages.
How the Board considered, and had regard
to, the interests of key stakeholders and the
requirements of section 172(1)
Los Pelambres formulated a drought
response plan focusing on 2021 as an
extraordinarily dry year which had to be
managed, while also strengthening long-term
relationships with neighbouring communities.
• The Board recognised the threat to water
availability years ago and Los Pelambres
submitted an Environmental Impact Study
(EIA) for the Los Pelambres Expansion
project in 2016, which included a 400 l/s
desalination plant. The environmental
permit (RCA) was received in 2018 and in
2021 Los Pelambres submitted a new EIA
which included an application to double the
capacity of its desalination plant to 800 l/s.
• The decision to use desalinated water
is a solution generated by the dialogue
with neighbouring communities and
local authorities.
• The Board accepts that the current situation
is ongoing and is a part of expected
long-term climate change. Forecasts set out
in the Chilean Government’s climate change
model estimate a sharp increase in the
drought threat in the Coquimbo Region,
where Los Pelambres is located, projecting
a drought lasting from 2025 to 2060. The
model indicates a high increase in the
probability of sustained drought conditions
with river flows significantly lower than
historical averages. It is forecast that the
Choapa River flow would be as low as in
2019 and 2021, some 7% of the maximum
potential flow.
118
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Other InformationFinancial Statements Strategic ReportCorporate Governance Jean-Paul Luksic
Chairman
In considering the implications of the proposed
royalty, the Board considered and had regard
to the interests of key stakeholders.
How the Board considered, and had regard
to, the interests of key stakeholders and the
requirements of section 172(1)
• The Board has monitored closely the
progress of this proposed legislation.
• The Board held a special meeting in June
2021 to discuss, with an external facilitator,
the current political context in Chile and the
potential implications of the proposed
mining royalty.
• In considering the implications of the
proposed royalty, the Board considered and
had regard to the interests of key
stakeholders, noting that:
• Under the proposed royalty scheme, a
company in the third or fourth quartile,
with 20 years of reserves, will be able to
recover only 60% of its initial investment
before all its reserves have been mined.
This would have a significant impact on
mining investment in Chile, favouring
other countries.
• The proposed royalty would especially
harm companies and projects in the
fourth quartile, reducing Chile’s share of
the world’s copper production, reducing
employment and negatively impacting
suppliers and contractors.
• The Board authorised management
to communicate these impacts on
stakeholders in the relevant forums
to allow for these considerations to
be taken into account in the development
of this legislation.
• The Board is also taking these potential
impacts into account in its broader
decision-making.
• Between 2013 and 2019, approximately
80% of copper industry revenue was
used to pay salaries, services, materials
and supplies to operations and projects.
The remaining 20% covered, in almost
equal parts, dividends paid to
shareholders and taxes.
• Mining has a multiplier effect. For
every $100 produced by mining an
additional $78 is generated in other
sectors of the economy.
• There is already a mining-specific tax in
addition to corporate and withholding tax,
and if a company distributes 100% of its
profits, the effective tax rate is currently
44.5%.
• The lower house’s royalty proposal
would increase the effective tax rate to
over 75% at copper prices of over
$4.00/lb, which would be the highest
rate in the world, by a significant margin.
• 90% of Chile’s copper is produced by 22
companies. Five are in the third quartile
of the industry’s cost curve and 12 are in
the fourth quartile, and so their
profitability is more sensitive to copper
price variations. In 2019, the 12
companies in the fourth quartile had
losses of approximately $700m after
having spent over $4.8 billion in salaries,
and purchases of goods and services.
Board oversight of mining royalty
discussions in Chile
The total tax rate for Chilean companies that
remit profits to shareholders abroad is 35%,
which comprises a standard corporate tax at
27%, which is payable as profits are earned,
and a withholding tax payable on profits
distributed out of Chile (at 35% less first
category tax already paid).
There is also a separate, additional, mining-
specific tax of 5–14% of operating profits
based on the operating margin.
In May 2021, the lower house of Congress
approved a proposal to establish a new
mining royalty to fund social needs, which is
now being considered by the Senate. The
Senate is not restricted to the specific terms
of the proposal presented by the lower house
and has received evidence from a much
broader base of interested parties including
academics and mining industry
representatives. It is now assessing these
representations before proposing
amendments to the draft legislation.
The terms of the proposal are: (1) a 3%
royalty of copper sales; plus (2) an additional
royalty on a progressive scale of: (a) 15% for
copper sales between $2.00/lb and $2.50/lb;
(b) 30% for copper sales between $2.50/lb
and $3.00/lb; (c) 50% for copper sales
between $3.00/lb and $3.50/lb; (d) 65% for
copper sales between $3.50/lb and $4.00/lb;
and (e) 75% for copper sales above $4.00/lb;
minus (3) a refining cost deduction for refined
products (cathodes).
As at the end of 2021 the Senate has
indicated that it will revise the proposal to
reduce the proposed royalty percentages
substantially. However, formal debate in the
full Senate has not yet started and final
approval by both houses of Congress is not
expected until after March 2022.
All the Group’s operating companies have tax
invariability agreements; Los Pelambres and
Zaldívar’s agreements run until the end of
2023, Centinela’s agreement runs until 2029
(2031 for Encuentro Oxides) and Antucoya’s
agreement runs until 2030. Any impact from
a change in the royalty tax would take effect
after the end of the invariability period.
Antofagasta plc Annual Report 2021
119
/ Employee engagement
/ Employee engagement
Fostering a collaborative dialogue
and working environment
The Group’s workforce comprises of 26,991
people. More than 99% are in Chile and more
than 50% come from communities in the
Antofagasta and Coquimbo Regions, where all
of the Group’s operating companies are
located. Approximately 26% of the workforce
are Group employees and 74% are employees
of contractor or subcontractor companies.
Approximately 77% of the Group’s employees
are unionised. This number is close to 100%
at the operator level. The Group maintains
ongoing dialogue with labour unions and all
key issues are raised with and discussed by,
the Remuneration and Talent Management
Committee and the Board.
The Group has established control
mechanisms to ensure that contractors and
subcontractors, who are often members of
their own labour unions, meet the Group’s
standards and guidelines on labour,
environmental, social and ethical matters and
adopt good practices with regard to safe
workplaces and the quality of employment.
Contractors and subcontractors receive the
same protections as the Group’s employees
under Chilean labour law and the Group
requires contractors to pay their employees
ethical wages at least two thirds higher than
Chile’s legal minimum and to provide other
basic benefits including life and health
insurance. These protections are reinforced
through bank guarantees and contractors and
subcontractors are subject to regular audits
by independent third parties to ensure
full compliance with these standards.
Below is a selection of the workforce
engagement mechanisms that the Board
currently has in place:
• Directors visit the Group’s operations
individually or in small groups throughout
the year where they engage informally with
the workforce. Impressions and views
arising from these visits are reported to the
Board and related questions are raised with
the management team.
• Labour relations matters and the feedback
from labour negotiations are reported directly
to the Board and the Remuneration and
Talent Management Committee throughout
the year and typically form a key part of the
CEO’s general update to the Board.
• The CEO, Vice President of Operations,
Vice President of Human Resources, and
the General Managers and HR Managers of
each relevant operation meet with unions
at least annually to share relevant
information and listen to concerns and
suggestions, the results of which are
shared with the Remuneration and Talent
Management Committee and the Board.
Additional meetings with union
Mining is a long-term business
whose timescales often run into
decades. Our relationships with our
stakeholders are central to our long-
term success and to our purpose of
developing mining for a better
future. The Group’s governance
structures include a network
of arrangements to ensure that the
views and interests of stakeholders,
including our employees and
contractors, are discussed in the
boardroom and considered as part
of the Board’s deliberations.
The Group maintains strong relations with its
workforce based on trust, continuous dialogue
and favourable working conditions. The Board
has carefully considered and thoroughly
reviewed the mechanisms that are in place to
allow the Board to understand the views of
the Group’s workforce. Ultimately, the
Board has decided not to adopt any of the
three workforce engagement mechanisms
that are recommended in the UK Corporate
Governance Code (a Director appointed from
the workforce, a formal worforce advisory
panel or a designated non-executive director).
The Board considers that adopting any of
these mechanisms would interfere with the
effective, structured and formal
combination of mechanisms that the Board
already has in place.
26,991
Total Group’s workforce
99%
Are based in Chile
50%
Come from communities in the
Antofagasta and Coquimbo
Regions
120
Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic ReportCorporate Governance Jean-Paul Luksic
Chairman
The Board’s ability to continue to deliver long-term
sustainable success relies on a detailed understanding
of the views of our workforce and other stakeholders.
representatives took place during the year,
enabling the CEO to share business
performance, the main challenges
associated with the Group’s strategic
framework, reinforce shared culture
and values and listen to concerns and
ideas. The purpose of these meetings
is to foster a collaborative dialogue
and working environment.
• Group-wide employee engagement surveys
are conducted every two or three years.
These surveys are conducted by
independent third parties on behalf of the
Group and the results are reported to the
Remuneration and Talent Management
Committee and the Board. Engagement
surveys were conducted at the mining
division’s corporate headquarters and
Antucoya during the year and the results
were shared with the Remuneration and
Talent Management Committee and the
Board. Further engagement surveys are
scheduled to be conducted at Los
Pelambres, Centinela and Zaldívar
during 2022.
• More targeted and specific ad hoc
workforce surveys are conducted and/or
focus groups are convened throughout the
year in relation to specific areas of interest
such as the Group’s response to the
COVID-19 pandemic and employee
wellbeing and the Diversity and Inclusion
Strategy. The results of these activities are
overseen by the Executive Committee and
reported to the Remuneration and Talent
Management Committee and the Board.
• The workforce is engaged in the design
and development of programmes that
impact the Company’s culture or have a
high impact on working conditions. In 2021
this resulted in the Board overseeing the
implementation of the New Ways of
Working project (see extract).
• The Group’s workforce is encouraged to
report any concerns to the Ethics
Committee through the confidential
whistleblowing hotline. Reports may be
made anonymously. All reports are
investigated and reported to the Audit and
Risk Committee and the Board.
New Ways of Working project
During 2019 the Remuneration and Talent Management Committee and the Board
oversaw the development of a new employee Total Rewards Programme which was
designed with the input of employees through working groups and staff surveys to
enable the Group to provide the flexibility required by a changing workforce. This
included a flexitime system to allow employees to fit working hours around their
individual needs, giving them more flexibility, particularly as regards shifts and allowing
employees to take up to a year off work for family or other reasons.
As a consequence of the COVID-19 pandemic, fully flexible working arrangements were
implemented simultaneously across the Group in 2020 to meet health protocols and
safety requirements. The implementation of these arrangements demonstrated that
remote and flexible working arrangements were feasible for the Group. They also
reflected increased productivity, stronger engagement, commitment with the Group’s
Diversity and Inclusion Strategy, talent attraction and better work-life balance. The Board
received regular feedback on views and experiences of employees during the pandemic
through regular staff surveys and events hosted by the CEO where questions were
asked and feedback provided directly by employees. This feedback was used to design
the Group’s New Ways of Working project which enables permanent flexible on-site,
home-based and hybrid working arrangements following the pandemic, with the goal of
creating a more flexible and adaptable organisation. The design of this project
was reviewed and approved by the Board. The implementation of the project and
experience of our employees was monitored through the use of surveys and events during
the year.
Antofagasta plc Annual Report 2021
121
/ Directors’ biographies
Members of the Board
Biographical details for each Director are set out below. All Directors have confirmed that their other
commitments do not prevent them from devoting sufficient time to fulfilling their roles and the Board
acknowledges that the skills and experience gained by the Directors from these external appointments are
of benefit to the Group. Additional external appointments cannot be undertaken without the prior approval of
the Board. The availability of Directors to attend the significant number of ad hoc informal meetings in response
to the challenges arising from the COVID-19 pandemic throughout the year demonstrated that all Directors
are able to devote sufficient time to fulfilling their roles. Ages are as at the date of the 2022 AGM.
KEY TO COMMITTEES
ANTOFAGASTA PLC DIRECTORS’ BOARD MEETING ATTENDANCE
Number attended
Number attended
9/9
9/9
6/6
9/9
9/9
7/9
9/9
02
05
08
Jorge Bande
Francisca Castro
Michael Anglin
Eugenia Parot3
9/9
9/9
9/9
7/7
1. Tony Jensen became Senior Independent Director
on 1 August 2021.
2. Ollie Oliveira retired from the Board on 31 July 2021.
3. Eugenia Parot joined the Board on 20 April 2021.
03
06
09
Nomination and Governance
Audit and Risk
Sustainability and Stakeholder Management
Jean-Paul Luksic
Tony Jensen1
Ollie Oliveira2
Projects
Remuneration and Talent Management
Ramón Jara
Juan Claro
Chairman
Andrónico Luksic C
Vivianne Blanlot
01
04
07
10
122
Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic ReportCorporate Governance Non-Executive Director, 71
Current positions
Current positions
Previous roles
Previous roles
• Executive Director of the Comisión
• Strategic Business Manager
01 Jean-Paul Luksic
Chairman, 57
Independent: No
Appointed to the Board: 1990
Appointed Chairman: 2004
(Non-Executive since 2014)
Over 30 years’ experience with
Antofagasta, including responsibility
for overseeing development of the Los
Pelambres and El Tesoro (Centinela
Cathodes) mines
Previous roles
• Chairman of Consejo Minero, the
industry body representing the largest
mining companies operating in Chile
• CEO of the Group’s Mining division
Current positions
• Member of the board of Consejo Minero
• Non-Executive Director of Quiñenco SA
and Quiñenco group listed companies
Banco de Chile and Sociedad Matriz
SAAM SA
• Member of the board of Centro de
Estudios Públicos, a not-for-profit
academic foundation in Chile
02 Tony Jensen
Non-Executive Director, 60
Independent: Yes
• Chairman of Fundación Minera Los
Pelambres (charitable foundation)
• Director of Fundación Andrónico
Luksic A (charitable foundation)
• Member of the Advisory Council of
Centro de Estudios Públicos,
not-for-profit academic foundation in
Chile
• Member of the board of the Centre of
Arbitration of the Chilean Chamber of
Commerce
04 Juan Claro
Independent: No
Appointed to the Board: 2005
Extensive industrial experience in Chile,
including an active role representing
Chilean industrial interests nationally
and internationally
Previous roles
• Chairman of the Sociedad de Fomento
Fabril (Chilean Industrial Council)
• Chairman of the Confederación de
la Producción y del Comercio (Chilean
Business Confederation)
• Chairman of the Consejo Binacional
de Negocios Chile-China (Council for
Bilateral Chile-China Business)
Appointed to the Board: 2020
Current positions
Mining engineer with over 35 years of
mining experience in the United States
and Chile in operational, financial,
business development and management
roles.
Previous roles
• Director of Golden Star Resources
Limited
• President, CEO and Director
of Royal Gold Inc
• Mine General Manager of the Cortez
joint venture in Nevada and in treasury,
business development and a wide
range of other operating roles with
Placer Dome in the USA and Chile
Current positions
• Director of Black Hills Corporation
• Member of the University Advisory
Board for the South Dakota School of
Mines and Technology
03 Ramón Jara
Non-Executive Director, 69
Independent: No
Appointed to the Board: 2003
Lawyer with considerable legal and
commercial experience in Chile
Previous roles
• Partner, Jara del Favero Abogados
• Director of Empresa Nacional del
Petróleo (ENAP)
• Vice President, SONAMI (National
Mining Association)
• Chairman of Coca-Cola Andina SA
and Energía Coyanco SA
• Director of Melón SA and Agrosuper
SA
• Member of the board of Centro de
Estudios Públicos, not-for-profit
academic foundation in Chile
• Country Adviser, Goldman Sachs
05 Andrónico Luksic C
Non-Executive Director, 68
Independent: No
Appointed to the Board: 2013
Extensive experience across a range
of business sectors throughout Chile,
Latin America and Europe
Current positions
• Chairman of Quiñenco SA and of
Compañía Cervecerías Unidas SA;
Vice Chairman of Banco de Chile and
Compañía Sudamericana de Vapores
SA, all of which are listed companies
in the Quiñenco group
• Director of Nexans SA, a company
listed on NYSE Euronext Paris
• Member of the International Business
Leaders’ Advisory Council for the
Mayor of Shanghai; the Chairman’s
International Advisory Council at the
Council of the Americas
06 Vivianne Blanlot
Non-Executive Director, 67
Independent: Yes
Appointed to the Board: 2014
Economist with extensive experience
in public and private energy, mining,
water and environmental sectors
in Chile
Nacional de Medio Ambiente (Chile’s
Environmental Agency)
• Undersecretary of the Comisión
Nacional de Energía (Chile’s National
Energy Commission)
• Chile’s Minister of Defence
• Director of Scotiabank Chile
• Member of Consejo para la
Transparencia (Transparency
Council), the Chilean body responsible
for enforcing transparency in the
public sector
• Director of Empresas CMPC SA, a
pulp, paper and packaging company
listed in Chile
• Director of Colbún SA, an energy
company listed in Chile
• Director of Instituto Chileno
de Administración Racional de
Empresas (ICARE), a business think
tank in Chile
07 Jorge Bande
Non-Executive Director, 69
Independent: Yes
at Codelco
• General Co-ordinator of Concessions
at Chile’s Ministry of Public Works
• Held various roles within Chile’s
Finance Ministry and the World Bank,
Washington DC
• Member of the independent Technical
Panel of Chile’s Public Works
Concessions
Current positions
• Member of the Chilean Pension Funds
Risk Classification Committee
• Director of SalfaCorp SA
• Director of the Fraunhofer Chile
Research Foundation
09 Michael Anglin
Non-Executive Director, 66
Independent: Yes
Appointed to the Board: 2019
Mining engineer with over 30 years’
experience in base metals, including
the development, construction and
operation of large-scale mining
operations in the Americas.
Appointed to the Board: 2014
Previous roles
Economist with over 40 years’
experience in the mining, energy and
water industries in Chile
• Vice President Operations and Chief
Operating Officer of BHP Base Metals
• Director of EmberClear Corp
Previous roles
Current positions
• Chairman of SSR Mining Inc
• Adviser to IntelliSense.io
• Director of Tulla Resources, Australia
10 Eugenia Parot
Non-Executive Director, 62
Independent: Yes
Appointed to the Board: 2021
Civil biochemical engineer with over
35 years’ experience working for
leading engineering and consulting
companies providing services to some
of the largest mining projects in Latin
America in the areas of environment,
sustainability and mine waste
management.
Previous roles
• Vice President of Latin America,
Regional President for South America
and Managing Director for Chile,
Golder Associates
• Director on Golder’s holding company
board, member of the Audit and
Finance and Investments Committees.
• Member of the boards of Golder
South America, Chile, Peru and
Argentina.
• Co-founder and Executive Director of
Copper and Mining Studies CESCO,
an independent not-for-profit think
tank focused on mining policy issues
• Vice President of Development and
later Director of Codelco
• CEO of AMP Chile
• Adviser to the World Bank
• Member of the Global Agenda Council
for Responsible Minerals Resource
Management at the World Economic
Forum
• Director of Edelnor SA, Electroandina
SA (now E-CL SA) and Bupa
Chile SA
• Member of the Experts Committee for
Copper Prices for Chile’s Ministry of
Finance
Current positions
• Director of CESCO
• Director of NextMinerals SA
• Professor of the International
Postgraduate Programme in Mineral
Economics at the University of Chile
• Member of the Advisory Council of
the School of Economics and
Business at the University of Chile
08 Francisca Castro
Non-Executive Director, 59
Independent: Yes
Appointed to the Board: 2016
Commercial engineer with over 25
years’ experience in industry, including
mining, energy, finance and public/
private infrastructure projects in the
United States and Chile
Antofagasta plc Annual Report 2021
123
/ Board balance and skills
A balance of skills
and experience
The Board comprises 10 Directors with a broad and complementary set of technical skills,
educational and professional experience, nationalities, personalities, cultures and perspectives.
Board balance
Independence1
Gender diversity2
Tenure
Nationality3
Chairman
Chairman
Independent
Independent
Non-Independent
Non-Independent
ent
1
6
3
Male
Male
Female
Female
ent
7
3
1-5 years
1-5 years
6-10 years
6-10 years
10+ years
10+ years
Chile
Chile
USA
USA
4
3
3
8
2
1. The Board reviews the independence of Directors annually. The Board has
carefully considered the independence of all Directors and is satisfied that Vivianne
Blanlot, Jorge Bande, Francisca Castro, Mike Anglin, Tony Jensen and Eugenia
Parot continue to be independent in character and judgement and that there are no
relationships or circumstances that are likely to affect, or could appear to affect,
their judgement.
2. The Board’s Nomination and Governance Committee continues to work with an
independent external search consultancy to identify potential female candidates
who could provide an important contribution to the Board in the future. Further
details on the Board’s diversity policy can be found on pages 130-132.
3. The Company has met the Parker Review target and in 2021, more than half the
Board identified as being from an ethnic minority background according to the
criteria in the Parker Review survey. As noted throughout this Annual Report, the
Group’s footprint is primarily in Chile where ethnicity profiles and representation in
society differ significantly from those in the UK. Nevertheless, the Board
recognises that the mining industry is international and the Board includes several
Directors from outside Chile in support of its vision and strategy.
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Director
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Juan Claro
Andrónico Luksic C
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Jorge Bande
Francisca Castro
Michael Anglin
Tony Jensen
Eugenia Parot
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124
Antofagasta plc Annual Report 2021
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Other InformationFinancial Statements Strategic ReportCorporate Governance
/ Roles in the boardroom
Board and senior management’s
roles and responsibilities
The Group’s CEO, Iván Arriagada, is not a Director, which reflects law and practice in Chile1. Despite this,
interaction between the Board and executive management is as expected between Non-Executive Directors and
management in a typical UK-listed company. The Board considers that there are considerable benefits
associated with having a Board comprising exclusively Non-Executive Directors, as not only does it provide
a broad range of perspectives, but it also encourages robust debate with, and independent oversight of, the
Group’s executive management.
Non-Executive Chairman
Jean-Paul Luksic
Leads the Board and ensures its
effectiveness overall.
• Promotes the highest standards of
integrity, probity and corporate
governance.
• Sets the agenda for Board meetings
in consultation with other Directors,
members of senior management and
the Company Secretary.
• Chairs meetings and ensures that there
is adequate time for discussion of all
agenda items, focusing on strategic,
rather than routine, issues.
• Promotes a culture of openness and
debate within the Board by facilitating
the effective contribution by all Directors.
• Oversees Director induction,
development and performance reviews.
• Leads relations with shareholders.
Non-Executive Directors
Juan Claro
Ramón Jara
Andrónico Luksic C
Provide a range of outside perspectives
to the Group and encourage robust
debate with, and challenge of, the
Group’s executive management.
• The Board does not consider these
Directors to be independent because
they do not meet one or more of the
independence criteria set out in the
UK Corporate Governance Code.3
• Ensure that no individual or small group
of individuals can dominate the Board’s
decision-making.
Independent Non-Executive Directors
Tony Jensen
CEO
Iván Arriagada
Michael Anglin
Jorge Bande
Vivianne Blanlot
Francisca Castro
Eugenia Parot
Ensure that no individual or small group
of individuals can dominate the Board’s
decision-making.
• Meet the independence criteria set out
in the UK Corporate Governance Code.2
• No connection with the Group or any
other Director which could be perceived
to compromise independence.
• Provide a range of outside perspectives
to the Group and encourage robust
debate with, and challenge of, the
Group’s executive management.
Senior Independent Director
Tony Jensen
Provides a sounding board for the
Chairman and supports the Chairman
in the delivery of his objectives
as required.
• Where necessary, acts as an
intermediary between the Chairman
and the other members of the Board
or the CEO.
• Acts as an additional point of contact for
shareholders, focusing on the Group’s
governance and strategy and gives
shareholders an alternative means of
raising concerns other than with the
Chairman or senior management.
Leads the implementation of the Group’s
strategy set by the Board.
• Manages the overall operations and
resources of the Group.
• Leads the Executive Committee and
ensures its effectiveness in all aspects
of its duties.
• Provides information and makes
recommendations to the Board regarding
the Group’s day-to-day activities and
long-term plans.
Executive Committee members
Present proposals, recommendations
and information to the Board within
their areas of responsibility.
• Support the CEO in the implementation
of the Group’s strategy set by the Board.
Company Secretary
Julian Anderson
Ensures that Directors have access
to the information they need to
perform their roles.
• Provides a conduit between Board
and Committee communications and a
link between the Board and management.
• Advises the Board on corporate
governance and supports the Board in
applying the UK Corporate Governance
Code and complying with the UK listing
regime and obligations.
The division of responsibilities between the Chairman, the CEO, and the Senior Independent Director is recorded in writing and is available on the
Company’s website at antofagasta.co.uk.
1. Chilean law prohibits CEOs of listed companies from being directors of those companies. The CEO and CFO are invited to attend all Board meetings. The CEO is also invited
to attend all Board Committee meetings and there is regular formal and informal dialogue between management and the Board.
2. The Board reviews the independence of Directors annually. The Board has carefully considered the independence of all Directors and is satisfied that Vivianne Blanlot, Jorge
Bande, Francisca Castro, Mike Anglin, Tony Jensen and Eugenia Parot continue to be independent in character and judgement and that there are no relationships or
circumstances that are likely to affect, or could appear to affect, their judgement.
3. Ramón Jara provides advisory services to the Group. Andrónico Luksic C is the brother of Jean-Paul Luksic, the Chairman of the Company, and is Chairman of Quiñenco SA
and Chairman or Director of Quiñenco’s other listed subsidiaries. Jean-Paul Luksic is also a Non-Executive Director of Quiñenco and some of its listed subsidiaries.
Like Antofagasta plc, Quiñenco is controlled by a foundation in which members of the Luksic family are interested. Ramón Jara and Juan Claro have served on the Board for
more than nine years from the date of their first election.
Antofagasta plc Annual Report 2021
125
/ Executive Committee biographies
Members of the Executive Committee
01
04
07
10
02
05
08
11
03
06
09
12
126
Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic ReportCorporate Governance 01 Iván Arriagada
CEO appointed in 2016
Joined the Group in 2015
• Commercial engineer and economist with almost 30
years’ international experience in the mining and oil
and gas industries
Previous roles
• Chief Financial Officer of Codelco
• Various positions over six years at BHP, including
President of Pampa Norte (Spence and Cerro
Colorado), Vice President Operations and Chief
Financial Officer of the Base Metals division
• Almost 15 years’ experience with Shell in Chile, the
United Kingdom, Argentina and the United States
05 Georgeanne Barceló
Vice President of Human Resources
appointed in 2022
Joined the Group in 2021
• Human resources specialist with a degree in Law
and Masters in Strategic Management of Human
Resources, with more than 20 years’ experience
in international and national companies across a
range of sectors, including insurance and industry
Previous roles
• Labour Relations Manager of Antofagasta Minerals
• Corporate Director of People at Bupa Chile
• Human Resources Vicepresident at Komatsu
Latin America
09 Patricio Enei
Vice President of Legal appointed in 2014
Joined the Group in 2014
• Lawyer and MBA, with over 20 years’ experience in
mining
Previous roles
• General Counsel at Codelco
• Corporate Affairs Manager at Minera Escondida
• Senior lawyer at BHP Billiton in Chile
• Chief Legal Counsel at Minera Doña Inés de
Collahuasi
• Lawyer at the Instituto de Normalización Previsional
and in private practice
Joined the Group in 2007
11 Alan Muchnik
02 Mauricio Ortiz
CFO appointed in 2020
Joined the Group in 2015
06 Gonzalo Sánchez
Vice President of Sales appointed in 2004
Joined the Group in 1996
• Electrical engineer and two Master of Science
• Civil engineer with over 25 years’ experience in
degrees (Metals and Energy Finance and Electrical
Engineering) with 15 years’ experience in the energy,
mining and railway industries
marketing and metals hedging
Previous roles
Previous roles
• General Manager of FCAB (Transport division)
• Business Development Manager of Antofagasta
Minerals
• Finance Manager at Codelco – Chuquicamata
• Business Development Principal at Rio Tinto plc,
London
• Various operating project roles at BHP
03 Mauricio Larraín
Vice President of Northern Operations
appointed in 2022
• Deputy Commercial Director of Antofagasta Minerals
• Copper sales at Codelco
07 Francisco Walther
Vice President of Projects appointed in 2018
• Mining engineer with over 25 years’ experience in
open pit and underground mining and engineering
Previous roles
• Corporate Project Manager of Antofagasta Minerals
• Project Director of Reko Diq
• Director of Codelco’s Chuquicamata underground
Joined the Group in 2017
mine project
• Civil mining engineer and Master of Science (Mineral
Economics) with over 25 years’ experience in mining
• Head of Engineering for Codelco’s Ministro Hales
project
Previous roles
• General Manager of Los Pelambres
• General Manager at Codelco’s El Teniente Division
• Operations Manager at El Teniente
• Mine Planning Corporate Manager of Codelco
• Various positions at Codelco and Los Pelambres
04 Alejandro Vásquez
Vice President of Los Pelambres Operations
appointed in 2022
Joined the Group in 2022
• Civil mining engineer with over 30 years’
experience in mining
Previous roles
• Vice President, South America of Teck
• President of Pampa Norte (BHP’s Spence and Cerro
Colorado operations)
• General Manager of the Yandi iron ore operation in
Australia
• Vice President of Operations for Minera Escondida
08 René Aguilar
Vice President of Corporate Affairs and
Sustainability appointed in 2017
Joined the Group in 2017
• Industrial psychologist with 20 years’ experience in
mining, including in sustainability, safety, human
resources and corporate affairs
Previous roles
• Group Head of Safety at Anglo American, London
• Vice President of Corporate Affairs and Sustainability
at Codelco
• Health and Safety Director of the International
Council on Mining and Metals (ICMM), London
10 Andrónico Luksic L
Vice President of Development appointed
in 2015
Joined the Group in 2006
• Business administrator with broad mining
experience in sales, exploration, business
development and general management
Previous roles
• Corporate Manager in the Mining division
• Director, Antofagasta Minerals, Toronto Office
• Various positions at Banco de Chile
Vice President of Strategy and Innovation
appointed in 2021
Joined the Group in 2016
• Civil engineer, Master’s degree in engineering and
MBA
Previous roles
• Group Innovation and Energy Manager, and Growth
Assets, Energy and Innovation Portfolio Manager of
Antofagasta Minerals
• Several positions in strategy, planning, studies and
business development over 10 years at BHP (Chile
and the USA)
12 Katharina Jenny
General Manager – FCAB (Transport division)
appointed in 2019
Joined the Group in 2016
• Mining engineer and MBA, with over 15 years’
experience in mining
Previous roles
• Safety and Health Manager at Antofagasta Minerals
• Productivity and Costs Manager, and Safety Manager
at Codelco
• Various roles at BHP, including mine planning, safety
and health and environment
Antofagasta plc Annual Report 2021
127
/ Introduction to the Committees
Active Board committees
The Board’s Committees ensure that Board deliberations are focused on key issues and
that proposals are submitted after specialist review, thorough debate and rigorous challenge.
Each Committee provides a forum to allow the views and perspectives of stakeholders
to be discussed, so that they are represented in the Board’s deliberations.
Nomination and Governance Committee
Key responsibilities
Focus areas for 2021
• Corporate governance framework
• Succession planning for the CEO and the Board
• Board and Committee composition
• Nomination to the Board
• Board effectiveness reviews
• Succession planning for Board and Committee roles
• Appointment of new Directors
• Board Committee composition
• Monitoring shareholder feedback on Governance
• Board and Committee evaluation
Audit and Risk Committee
Key responsibilities
• Financial reporting
• External audit
• Internal audit
• Risk management and internal control
• Compliance
Focus areas for 2021
• Monitoring the impact of the COVID-19 pandemic
on the Group’s internal controls, audit and risk
management capabilities
• Assessing financial controls and reporting
• Monitoring risk management and compliance
• Assisting the Board with updates to the Group’s risk
appetite assessment
Sustainability and Stakeholder Management Committee
Find out more online
antofagasta.co.uk/bc
Find out more online
antofagasta.co.uk/bc
Key responsibilities
• Policies and commitments
• Safety and health
• Community relations
• Environmental and social matters
• Stakeholder engagement
Projects Committee
Focus areas for 2021
• Overseeing measures to protect the health and safety of
employees, contractors and local communities in response to
the COVID-19 pandemic
• Endorsing key policies for the Group’s long-term sustainable
success
• Reviewing climate change strategy implementation
Find out more online
antofagasta.co.uk/bc
Key responsibilities
Focus areas for 2021
• Oversight of project standards, guidelines and best practices
• Project development lifecycle matters
• Project reviews
• Lessons learned from completed projects
• Monitoring progress in the execution of the Los Pelambres
Expansion and Zaldívar Chloride Leach projects
• Monitoring development of the Group’s organic growth
opportunities
Find out more online
antofagasta.co.uk/bc
Remuneration and Talent Management Committee
Key responsibilities
Focus areas for 2021
• Remuneration governance
• Directors’ remuneration
• Executive remuneration
• Group pay structures
• Talent management and succession planning
for the Executive Committee
• Employee engagement
• Talent retention
• Diversity and inclusion
• HR Planning
128
Antofagasta plc Annual Report 2021
• Determining the application of the Group’s executive remuneration
framework in response to the COVID-19 pandemic
• Considering feedback from shareholders in relation to the 2020
Directors’ and CEO Remuneration Policy that was approved at
the 2020 AGM
• Monitoring Directors’ and CEO remuneration
• Reviewing talent management and Executive Committee
succession plans
Find out more online
antofagasta.co.uk/bc
Other InformationFinancial Statements Strategic ReportCorporate Governance / Nomination and Governance Committee report
Planning for the future
Jean-Paul Luksic
Chair of the Nomination and Governance Committee
2021 MEMBERSHIP AND
MEETING ATTENDANCE
Jean-Paul Luksic (Chair)
Vivianne Blanlot
Tony Jensen 1
Ollie Oliveira 2
Number attended
5/5
5/5
1/1
4/4
1. Tony Jensen joined the Committee on 1 August 2021.
2. Ollie Oliveira retired from the Board on 31 July 2021.
• Other regular attendees included the CEO and
the Company Secretary.
• The Committee meets as necessary and at least
twice per year.
• Except for the Chairman, all Committee members
are independent.
Key responsibilities
The Nomination and Governance Committee
supports the Board in ensuring that the Group
has effective governance structures in place
and that the Board and its Committees are
appropriately staffed and operate effectively.
The Committee identifies qualified individuals
to join the Board, recommends any changes
to the composition of the Board and its
Committees and monitors an annual process
to assess Board effectiveness.
This involves:
• monitoring trends, initiatives and proposals
in relation to corporate governance
• overseeing and facilitating annual reviews
of the Chairman, the Board, its Committees
and individual Directors, including
externally-facilitated reviews
• evaluating and overseeing the balance of
skills, knowledge and experience on the
Board and its Committees
• monitoring the independence of Directors
• overseeing Board succession plans and
leading the process to identify suitable
candidates to fill vacancies, nominating
such candidates for approval by the Board
and ensuring that appointments are made
on merit and against objective criteria
• overseeing the induction of new Directors
and the development of all Directors
• overseeing CEO succession plans
The Committee identifies qualified individuals to join the
Board, recommends any changes to the composition of
the Board and its Committees and monitors an annual
process to assess Board effectiveness.
Key activities in 2021
Corporate governance
• Monitored the fulfilment of Code
requirements.
• Reviewed Directors’ declarations on
potential conflicts of interest.
• Reviewed requests by Directors to
undertake additional appointments.
• Reviewed the Governance section of the
2020 Annual Report and recommended
it to the Board for approval.
• Reviewed the 2021 AGM Notice.
• Reviewed arrangements for the 2021 AGM
in response to the COVID-19 pandemic.
• Reviewed feedback from investors and
proxy advisers on the shareholder
resolutions tabled at the 2021 AGM.
Succession planning
• Reviewed and endorsed detailed
succession plans for the Board and its
Committees.
• Reviewed and endorsed the succession
plan for the Senior Independent Director.
• Continued to provide input to the
Remuneration and Talent Management
Committee in relation to succession plans
for the Executive Committee (excluding the
CEO) and the Group’s diversity and
inclusion programme.
Board and Committee composition
• Reviewed the independence of all
Directors, making recommendations to
the Board.
• Monitored the global search carried out
by Spencer Stuart for an Independent
Non-Executive Director.
• Interviewed and considered potential
Board candidates.
• Recommended that Eugenia Parot
be appointed to the Board.
• Recommended that Tony Jensen assume
the roles of Senior Independent Director
and Chair of Audit and Risk Committee, join
the Nomination and Governance Committee
and step down from the Sustainability and
Stakeholder Management Committee.
• Recommended that Michael Anglin assume
the Chair of the Projects Committee and
join the Sustainability and Stakeholder
Management Committee.
• Recommended that Eugenia Parot join the
Projects Committee and the Sustainability
and Stakeholder Management Committee.
• Reviewed and endorsed updates to the
Board’s skills matrix.
Board effectiveness reviews
• Oversaw the implementation of
recommendations arising from the 2020
internal evaluation of Board and
Committees’ performance.
• Oversaw the 2021 internal evaluation of the
Board and Committees’ performance.
• Requested a performance review of the
Chairman by Directors, led by the Senior
Independent Director, and of individual
Directors, led by the Chairman.
• Recommended that Clare Chalmers Limited
be appointed to perform the 2022
externally-facilitated evaluation of the
Board and Committees.
Antofagasta plc Annual Report 2021
129
/ Nomination and Governance Committee report continued
Diversity, inclusion
and succession planning
experience, skills, leadership capabilities,
contribution to Board diversity and
whether they had sufficient time to devote
to the role. Members of the Committee
interviewed short-listed candidates and
collectively selected Eugenia Parot to
be recommended to the Board for
appointment in 2021.
Q. What support does the Company
provide to facilitate induction and assist
with professional development?
Induction
New Directors receive a thorough
induction on joining the Board. This
includes: meetings with the Chairman,
other Directors, the CEO and Executive
Committee members; briefings on the
Group’s strategy, UK corporate
governance, operations, projects and
exploration activities; and visits to the
Group’s operating companies.
The induction process for Eugenia Parot
is explained in more detail on page 132.
Continuing personal development
Directors receive an annual briefing on
governance, legal, regulatory and market
developments that are relevant to directors
of UK-listed companies, complemented by
discussions on Board-related matters.
Directors have access to, and are
encouraged to regularly attend, round-
table discussions, seminars and other
events that cover topics relevant to the
Group and their roles.
Resources
The Company provides Directors with
the necessary resources to maintain and
enhance their knowledge and capabilities.
All Directors have access to management
and to such information as they need to
discharge their duties and responsibilities
fully and effectively.
Directors are also entitled to seek
independent professional advice
concerning the affairs of the Group at the
Company’s expense.
Q. What is the Board’s position in relation
to diversity?
The Board’s Diversity and Inclusion Policy
reflects the Board’s belief in the benefits of
diversity and that more diverse companies
attract and maintain the best talent and
achieve stronger overall performance.
The Board considers a broad definition
of diversity when setting policies and
appointing Directors, including gender,
disability, nationality, educational and
professional experience, personality type,
culture and perspective.
The Committee has worked hard to ensure
that the Board is suitably diverse
according to these criteria. The Board
reviews its effectiveness in meeting
diversity goals each year as part of the
annual Board and Committees’ evaluation
process.
The Company has met the Parker Review
target and in 2021 more than half the
Board identified as being from an ethnic
minority background according to the
criteria in the Parker Review survey.
As noted throughout this Annual Report,
the Group’s activities are focused in Chile
where ethnicity profiles and representation
in society differ significantly from those in
the UK. Nevertheless, the Board recognises
that the mining industry is international,
and the Board includes several Directors
from outside Chile in support of its vision
and strategy. It is important for overall
Board effectiveness that potential candidates
are proficient in Spanish and it is preferable
for candidates to have relevant mining or
extractive industry experience.
Gender diversity is a fundamental pillar
of the Group’s diversity and inclusion
strategy, and the Board recognises and
supports the important work performed
by the Hampton-Alexander Review in
pursuing a 33% target for women on
FTSE 350 boards and on executive
committees and their direct reports.
Three of the six Board appointees since
2014 (50%) have been women and the
Board actively seeks to increase female
representation beyond the current level,
while ensuring that appointments continue
to be made on merit.
Q. What is the scope of the Board’s
succession planning?
The Board’s succession plan is reviewed
formally at least once per year and
addresses Board size, Committee
structure and composition, skills on the
Board, Board and Committee members’
tenure, independence of Directors,
diversity (including gender), Board roles,
Board policies and individual succession
plans for all Board and Committee
positions. Succession plans include
contingency plans in the event of an
unexpected departure, medium-term plans
for orderly replacement of current Board
members and long-term plans linking
strategy with the skills needed on the
Board in the future.
Q. How does the Board identify desirable
skills for new Board candidates?
The Board maintains a Board skills matrix
and the Committee reviews the balance of
skills, experience and expertise at least
annually. This process enables the Board
and the Committee to identify the desirable
skills required of new Board candidates
and to instruct search firms to identify the
candidates who fit these criteria when
making new appointments to the Board.
Q. What steps does the Committee take to
identify and appoint new Directors?
The Committee discusses relevant profiles
for future appointments and potential
candidates, taking into account the results
of Board effectiveness reviews, as shown
on page 133, the Group’s purpose, vision,
values and strategy, as shown on pages
114-115, the Board’s diversity policy
(below) and the core competencies and
areas of expertise on the Board, as shown
on page 124. When making new
appointments of Directors to the Board,
the Committee has appointed independent
external search consultancies with no
connection to the Group to assist with
searches for Board candidates. During
2019 to 2021 the Committee appointed
Spencer Stuart to assist with the search
for new independent Non-Executive
Directors. Spencer Stuart was briefed on
the skills and experience of the existing
Directors and was asked to identify
potential candidates who would best meet
a number of criteria, including relevant
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Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic ReportCorporate Governance As at the date of this report, there are
three women on our Board of ten
Directors (30%). Vivianne Blanlot joined
the Board in 2014 and has chaired the
Board’s Sustainability and Stakeholder
Management Committee since January
2017. Francisca Castro joined the Board in
2016 and has chaired the Board’s
Remuneration and Talent Management
Committee since May 2019. Eugenia Parot
joined the Board in 2021 and sits on the
Sustainability and Stakeholder
Management Committee and the Projects
Committee.
The two searches performed in 2019 and
2020 aimed to identify candidates with
mining operations experience (to cover the
valuable skill set of a departing Director)
and recent and relevant financial
experience (as part of the succession plan
for the role of chair of the Audit and Risk
Committee). An external search
consultancy was instructed to access the
widest possible talent pool and, as has
been the case for many years, instructions
were given to specifically identify potential
female candidates. For example, for the
March 2020 appointment several hundred
potential candidates were considered as
part of a global search, from which a short
list of seven were interviewed, four of
whom were female. The search performed
in 2021 concluded with the appointment of
a female Director. The Group is committed
to developing a pipeline of diverse talent
for the future.
The Committee, with the support of an
independent external search consultancy,
continues to search for potential female
candidates who could make an important
contribution to the Board in the future.
We are committed to increasing the
percentage of women on our Board, in
senior management positions and,
importantly, in the Group’s workforce.
We believe that this will support the Group,
the industry and Chile in increasing the
percentage of women in leadership roles.
Q. What policies are in place to promote a
diverse pipeline of talent for the future?
The Group is committed to developing a
pipeline of female talent that will widen the
pool of female candidates for board and
leadership positions in the future. In this,
the Group is leading the way in Chile, where
female participation in the workforce remains
well behind more developed economies
such as the United Kingdom.
In 2019, we sponsored the creation of
a Chilean chapter of the 30% Club, the
campaign launched in the UK in 2010 to
foster gender balance on companies’
boards and in senior management positions.
To further promote diversity at the Executive
Committee level and below, the current
Diversity and Inclusion strategy was
approved following an in-depth exercise
to assess whether the Group’s existing
diversity and inclusion model was
appropriate, which included interviews
with stakeholders, a benchmarking
exercise and a comprehensive review
of the Group’s policies and processes.
This review identified structural impediments
that needed to be addressed to achieve
a sustained improvement in the Group’s
diversity and inclusion model and these
issues were addressed in the first years
following approval of the new strategy.
Metrics associated with the development
of the Diversity and Inclusion strategy form
part of the Group’s Annual Bonus Plan and
formal talent management and succession
planning exercise, and performance is
assessed by the Remuneration and Talent
Management Committee at the end of each
year. The Remuneration and Talent
Management Committee is also responsible
for succession planning for the Executive
Committee, which allows for ongoing
monitoring of the impact of the Diversity
and Inclusion strategy on appointments
that are made and their progress within
the Company, including at the level of those
who report to the Executive Committee.
As part of the Diversity and Inclusion
strategy, female senior executives have
been appointed to the boards of all our
operating companies and we have two
women in the Senior Management team:
the General Manager of our Transport
division and the Vice President of Human
Resources.
Historically it has been difficult for the
mining industry to attract female talent, as
has been the case in Chile. However, we
are pleased to report that this is beginning
to change. The Group has not only committed
to doubling the percentage of women in
the Group’s workforce by 2022 compared
with the 2018 baseline (this was achieved
in 2021), but for these improvements to be
embedded, sustained and improved upon
from that point. The gender balance of the
Group’s Executive Committee and direct
reports is set out on page 42. In 2018,
8.6% of the workforce was female, but by
the end of 2021 this figure had increased
to 17.2%, compared with 12.4% on average
for the Chilean mining industry, with women
in supervisory roles (the level immediately
below management) now at 25.2%. To track
this metric, progress is reported monthly
to the Executive Committee, and we have
taken steps to create more opportunities
for women to work at our operating
companies. These are our largest employers,
but they have found the challenge of
attracting female talent particularly acute.
In our Mining division, female recruitment
has included apprentice programmes
specifically for women and the launch of
a relief workers’ programme under which
residents of local communities are
employed to cover breaks during mining
shift work, such as lunch periods. This
programme provides opportunities mainly
for women, but also for other residents
who, for family or other reasons, are
unable to work a full shift.
Antofagasta plc Annual Report 2021
131
/ Nomination and Governance Committee report continued
Jean-Paul Luksic
Chairman
We are committed to increasing the percentage
of women on our Board, in senior management
positions and, importantly, in the Group’s workforce.
18.5%
26.1%
of executives in the Mining division
in 2021 were women
of supervisors in the Mining division
in 2021 were women
The General Managers of the mining
operating companies provided an overview,
outlining the challenges and opportunities
of each of their operations. The General
Manager of the Transport division
described the operation and the new
contracts and projects to renew equipment.
The Internal Audit Manager outlined the
internal audit plan and audit initiatives.
Ms Parot visited the Los Pelambres and the
Los Pelambres Expansion project, and,
once travel restrictions are lifted, will visit
the Group’s operations in the north of Chile.
New Senior Independent Director
Tony Jensen’s Induction
The handover of the role of Senior
Independent Director from Ollie Oliveira to
Tony Jensen in 2021 consisted of a series
of meetings, including those with the
Chairman and the Nomination and
Governance Committee. Mr Jensen and
Mr Oliveira met with three of the
Company’s largest free-float investors.
They also met with one of the Company’s
corporate brokers and with the Group’s
external legal and external affairs advisers.
Investors commented that they appreciated
the opportunity to meet the new Senior
Independent Director, who noted that while
the principal channels of communication
would remain through management
contacts, he would be available as a
permanent point of contact for investors
and proxy agencies.
New Director Eugenia Parot’s Induction
Eugenia Parot joined the Board in 2021.
Her induction included an introductory
meeting with the Chairman to discuss
Board and Directors’ responsibilities.
The Company Secretary briefed her on
the UK listing framework and UK Corporate
Governance Code, Board and Committee
composition and the Board’s calendar and
protocols. The Senior Independent Director
briefed her on Board dynamics. The Chairs
of each of the Board Committees described
the functioning of the Committees, their
Terms of Reference and current areas
of focus.
The CEO outlined the Group’s purpose and
strategy. The CFO outlined the operating
companies’ financing status and the risk
and compliance management model. The
Vice President of Operations provided a
general overview of the operations and the
operating model. The Vice President of
Corporate Affairs and Sustainability briefed
her on the safety and health model, Los
Pelambres’ community relationship plan
and the current application to extend
Zaldívar’s water rights. The Vice President
of Development described the exploration
programme in Chile and abroad. The Vice
President of Projects outlined the Group’s
growth strategy, describing projects at
each operation and at Twin Metals. The
Vice President of Strategy and Innovation
briefed her on the digital transformation
plan. The Vice President of Legal presented
the status of legal matters. The Vice
President of Sales described the cathode
and concentrate sales strategy and
sulphuric acid purchase plans. The Vice
President of Human Resources discussed
talent management, diversity and inclusion,
labour relations and the New Ways of
Working project.
In our Transport division, we launched a
programme in 2018 to incorporate women
into maintenance roles and this has now
been expanded to other parts of the
division.
We are also promoting the professional
development of women in both our Mining
and Transport divisions. In 2021, 27.4% of
the talent pool were women, 11.4% more
than in 2020, and 98 women participated
in coaching, leadership and mentoring
programmes. We have also enrolled 7
women in the “Promociona” programme,
a local initiative that supports women in
reaching senior leadership positions.
Similarly, we have sponsored the
participation of four of our women in the
Inter-American Development Bank
Programme that empowers, makes visible
and strengthens the leadership skills of
women with high potential in the mining
industry.
It is important to acknowledge that culture
plays a key role in this and we have
therefore implemented actions and
programmes to strengthen an inclusive
culture, encompassing unconscious bias
training, work-life balance measures,
sexual harassment and domestic violence
prevention, and information campaigns.
Human resources processes, such as
recruitment and the individual
performance management system, have
been reviewed and adjusted to assure
their inclusiveness and lack of bias.
These initiatives are producing results.
The Mining division expects to reach more
than 19% female participation during
2022, surpassing its 17.2% goal. Mining
division female executive participation has
increased from the baseline of 8% to
18.5%; female supervisory participation
has increased from a base 17% to 26.1%
and the number of women workers had
increased from the baseline 5% to 12.8%
by the end of 2021.
The Board will continue to monitor
developments in 2022.
Jean-Paul Luksic
Chair of the Nomination and
Governance Committee
132
Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic ReportCorporate Governance / Board effectiveness
Board effectiveness reviews
During 2021, the Committee oversaw an
internal evaluation of the Board and its
Committees, focusing on the areas identified
in the 2019 externally-facilitated evaluation
and the 2020 internal evaluation. Led by the
Senior Independent Director, the other
Directors also met without the Chairman
present to evaluate the Chairman’s
performance and, separately, the Chairman
evaluated the performance of Directors.
In accordance with the Code, the Board
undertakes an externally-facilitated
effectiveness review at least once every three
years. In 2019, the effectiveness review was
facilitated by an external consultant, Clare
Chalmers, who is independent and has no
other connection with the Group. Ms Chalmers
interviewed Directors and Executive
Committee members who regularly attend
Board and Committee meetings. She also
observed a Board meeting, visited Chile twice
and participated in a safety leadership site
visit to Los Pelambres. The review was
designed to recognise and raise key themes
identified collectively by the Directors and for
the Directors to reflect on how these themes
should be addressed going forward.
Ms Chalmers discussed her report initially
with the Chairman and the Senior
Independent Director and then presented
it to the full Board in October 2019.
Ms Chalmers highlighted the Board’s
strengths as its diversity, the experience
and balance of skills of the Directors, its
collegiate working environment and the
contribution of each Director at meetings.
The Group’s strong safety culture and
relations with local communities were also
highlighted as key strengths. She
recommended opportunities for further
improvement which formed the basis for a
gap closure plan facilitated by the Company
Secretary and monitored by the Chairman
and the Senior Independent Director.
In 2020 and 2021, internal evaluations of
the Board and its Committees were carried
out to monitor progress and identify further
opportunities for improvement, using
targeted anonymous surveys of the Directors.
The survey results demonstrated how
recommendations made in the 2019 external
review had been addressed despite the
challenges associated with the pandemic.
The 2021 survey was prepared by
Ms Chalmers and she will conduct her
second externally-facilitated review in 2022.
Strengths identified included: the Chairman’s
engagement with the Board; effective
definition of key roles and Committees’ roles;
effective leadership of the Board; strong
interaction with management; productive
management of meetings; quality of Board
papers; strong stewardship of purpose,
people, culture, risk management; and
interaction with shareholders and
stakeholders. Areas for improvement
included enhancing strategic discussions,
focusing on market developments and peers’
initiatives and further strengthening
succession planning.
Based on the results of the 2021 internal
review, the Directors were satisfied that the
Board and its Committees operated effectively
in 2021.
Jean-Paul Luksic
Chair of the Nomination and
Governance Committee
2019
2020
2021
The external review focused on evaluating
the following key areas:
The Board focused on a number
of areas to improve effectiveness:
• Board focus and prioritisation
• alignment of the Company’s purpose,
strategy, values, and culture with its vision
• the nature and quality of the information
and support provided by management to
the Board
• the visibility of the Board within
the organisation
• the interests of shareholders
and stakeholders
• the composition of the Board and
its Committees, including balance of skills,
size, succession and dynamics
• the Chairman’s leadership
• greater strategic scene-setting in executive
summaries provided to the Board before
Board meetings, to ensure that appropriate
time is spent on strategic discussions
• the requirement for more information to be
presented to the Board in relation to talent
management and succession planning
• continuing to keep diversity targets in mind
regarding the appointment of women to
Board and Executive Committee positions
• paying special attention to emerging risks
The Board focused on a number of
areas to improve Board and Committees’
effectiveness:
• continue to keep diversity targets in mind
regarding the appointment of women to
Board and Executive Committee positions
• Directors to visit each of the Group’s
operations at least once a year after the
lifting of COVID-19 travel restrictions
• complete the formal induction process for
Tony Jensen and Eugenia Parot after the
lifting of COVID-19 travel restrictions
• maintain some dedicated virtual meetings
during the year
• maintain the practice of co-ordinating ad
hoc sessions to cover specific key issues
under discussion during the year
Antofagasta plc Annual Report 2021
133
/ Audit and Risk Committee report
Robust internal and
external controls
Tony Jensen
Chair of the Audit and Risk Committee
2021 MEMBERSHIP AND
MEETING ATTENDANCE
Tony Jensen (Chair) 1
Jorge Bande
Francisca Castro
Ollie Oliveira 2
Number attended
5/5
5/5
5/5
2/2
1. Tony Jensen became Chair of the Committee
on 1 August 2021.
2. Ollie Oliveira retired from the Board on 31 July 2021.
• Other regular attendees included representatives
from PricewaterhouseCoopers (PwC), the Group’s
external auditor, the CEO, the CFO, the Group
Financial Controller, the Head of Internal Audit, the
Head of Risk, Compliance and Internal Control and
the Company Secretary.
• Committee members participate in the other Board
Committees, allowing the Committee to consider the
full spectrum of risks faced by the Group.
• The Committee meets as necessary and at least
twice a year.
• All Committee members are independent.
• All Committee members are considered to have
recent and relevant financial experience.
• The Committee as a whole has significant experience
relevant to the mining sector.
Key responsibilities
The Audit and Risk Committee assists the
Board in meeting its responsibilities relating
to financial reporting and control and
risk management. The Committee’s
main responsibilities cover:
• monitoring the overall financial reporting
process, which includes responsibility for
reviewing the year-end and half-year
financial reports
• overseeing the external audit process
and managing the relationship with PwC,
the Group’s external auditor
• reviewing and monitoring PwC’s
independence and objectivity
• overseeing internal audit, including
monitoring and reviewing the effectiveness
of the Group’s internal audit function, plans,
processes and findings
• assisting the Board with its responsibilities
in respect of risk management, including
reviews of the Group’s risk appetite
and key risks
• monitoring the performance of the Group’s
compliance and crime prevention models.
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Antofagasta plc Annual Report 2021
As a Committee we sought to ensure that the travel and
social distancing restrictions due to the COVID-19
pandemic and ensuing remote working arrangements did
not reduce the robustness of the external and internal
audit functions, internal control and risk management
capabilities and results.
Key activities in 2021
Financial reporting
• Responded to queries raised by the
Financial Reporting Council’s corporate
reporting review team (“CRRT”) following
their review of our 2020 Annual Report,
with the CRRT confirming we had
provided satisfactory explanations in
respect of their queries.
• Reviewed the 2020 year-end and 2021
half-year financial reports, focusing on
significant accounting issues relating to
the Group’s results. Reviewed accounting
matters which were likely to impact 2021
year-end results.
• Reviewed the Group’s 2020 ore reserves
and mineral resources statement and
corresponding audits. Reviewed highlights
of the 2021 statement.
• Assisted the Board in ensuring that the
2020 Annual Report was fair, balanced
and understandable.
External audit
• Reviewed and approved the 2021 audit
plan, including fees.
• Assessed the effectiveness of the external
audit process.
• Reviewed PwC’s independence.
• Reviewed the key audit findings in respect
of the 2020 audit and reviewed PwC’s
progress reports in respect of the
2021 audit.
• Reviewed plans to accelerate the audit
timetable for a February 2022 results
announcement.
Internal audit
• Reviewed key findings from the internal
audit reviews conducted during 2021.
• Reviewed the quality, experience and
expertise of the internal audit function,
confirming its suitability to the business.
• Reviewed methodological enhancements
to the internal audit function.
• Agreed the scope and focus areas for the
• Reviewed preparation for the 2021 going
2022 internal audit plan.
concern and long-term viability
statements, including tests for an eventual
future resilience statement.
• Reviewed plans to accelerate the financial
reporting cycle, enabling a February
2022 results announcement.
• Reviewed action plans to prepare for a
potential future requirement for the Board
to confirm the effectiveness of internal
controls over financial reporting.
• Reviewed the Group’s tax position,
including the effective tax rate, recovery
of tax refunds, tax-disallowed expenses
and proposed changes to tax laws.
Other InformationFinancial Statements Strategic ReportCorporate Governance Key role in overseeing financial
reporting and control and risk
management
Risk and internal control
• Assisted the Board with its
assessment of the Group’s key risks
and its review of the effectiveness of
the risk management and
internal control processes.
• Assisted the Board in conducting the
annual review of risk appetite
statements, including updates to three
declarations (talent management and
labour relations, tailings and
cybersecurity).
• Conducted detailed reviews with
General Managers of each of the
Group’s operations, covering the
operations’ key risks.
• Reviewed the activities undertaken
during the year to further develop the
maturity of the Group’s
risk management processes.
• Reviewed an action plan to address
the requirements of the Task Force on
Climate-related Financial Disclosures
(TCFD).
Compliance
• Reviewed the Group’s whistleblowing
arrangements, including details of
the most significant reports and
actions taken, along with plans to
strengthen the function.
• Reviewed the process to identify and
manage Group employees’ potential
conflicts of interest.
• Reviewed the due diligence process
conducted in respect of the
Group’s suppliers.
• Reviewed the Group’s compliance
model, crime prevention manual
and activities undertaken during the
year to develop their maturity.
• Monitored the functioning of the
Group’s crime prevention model,
in accordance with Chilean and
UK anti-corruption legislation.
• Reviewed and proposed a change to
the Committee’s terms of reference.
Q. What were the key areas of focus for
the Committee in 2021?
As noted throughout this Annual Report, the
COVID-19 pandemic generated a range of
health, operational and financial challenges
for the Group during the year. As a
Committee we sought to ensure that the
travel and social distancing restrictions due
to the COVID-19 pandemic and ensuing
remote working arrangements did not
reduce the robustness of the external and
internal audit functions, internal control and
risk management capabilities and results.
Our work with management was proactive
during the year. We monitored action plans
to accelerate the financial reporting cycle,
enabling us to make a February 2022
results announcement, three weeks earlier
than in 2021. Secondly, we published a
TCFD progress report prior to the 2022 UK
Listing Rules requirement. And third, we
began to prepare a process for new
potential regulations regarding Board
confirmation of the effectiveness of internal
controls over financial reporting.
We also worked closely with PwC to ensure
that external audit quality was maintained
throughout the year.
We continue to assess the maturity of our
risk management processes. We
conducted the annual review of risk
appetite, updating three declarations
covering talent management and labour
relations, tailings and cybersecurity.
Financial reporting
Q. What are the Committee’s main
activities in respect of the Group’s
financial reporting?
The Committee reviews the year-end
financial statements and half-year financial
reports and ensures that the key
accounting policies, estimates and
judgements applied in those financial
statements are reasonable.
We also monitor the overall financial
reporting process to ensure it is robust
and well-controlled. This includes: ensuring
that the Group’s accounting and finance
function is adequately resourced, with
the appropriate segregation of duties and
internal review processes; that the Group’s
accounting policies and procedures are
appropriate and clearly communicated;
and that the Group’s accounting and
consolidation systems operate effectively.
The Committee assists the Board in
undertaking its assessment that the
Annual Report is, when taken as a whole,
fair, balanced and understandable and
provides the necessary information to allow
shareholders to assess the Group’s position
and performance, business model and
strategy. As part of this assessment, we
use our detailed knowledge of the
Company, its financial results and the key
accounting judgements applied in the
financial statements to ensure that the tone
and content of the narrative reporting fairly
reflect the financial results for the year.
The Committee reviews the ore reserves
and mineral resources statement included
in the Annual Report and reviews the
corresponding reserve and resource
independent audits.
We also review the going concern basis
adopted in the financial statements, as well
as the detailed long-term viability
statement in the Annual Report. We have
considered tests for an eventual future
resilience statement.
The Committee reviews the Group’s tax
position, including the effective tax rate,
the status of the recovery of tax refunds,
tax-disallowed expenses and the impact
of any regulatory changes.
Q. What were the significant accounting
issues in relation to the financial
statements considered by the
Committee during 2021?
The main accounting issues we
considered were:
• Twin Metals: we concluded that the United
States federal government’s cancellation
of a number of the mining leases relating
to the Twin Metals project was an
impairment indicator as at 31 December
2021. Following the resulting impairment
test we determined that an impairment in
respect of the full value of the intangible
assets and property, plant and equipment
relating to the project was appropriate. In
reaching this conclusion, considerations
included the time and uncertainty related
to any legal action to challenge the
government decisions.
• Asset valuations: we have considered and
concluded that there are no indicators of
impairment (or reversal of previous
impairments) at the Group’s operations.
Accordingly, we have not performed any
impairment reviews in respect of the
Group’s operations at the 2021 year end.
1. Committee of Sponsoring Organizations of the Treadway Commission
Antofagasta plc Annual Report 2021
135
/ Audit and Risk Committee report continued
However, in order to assess the sensitivities
of the indicative valuations of the Group’s
mining operations, and to make appropriate
disclosures within the financial statements
in respect of this, an indicative valuation
and sensitivity analysis has been performed.
As part of this analysis, we considered the
appropriate copper price forecasts to use
in these indicative valuation models, with
reference to the forward curve as at 31
December 2021 and consensus analyst
forecasts of the long-term copper price.
We have also reviewed the key operating
assumptions in the indicative valuation
models. We considered the estimates of
the potential future costs relating to climate
risks (consistent with the TCFD scenario
analyses) which were incorporated into the
indicative valuations. In the case of
Zaldívar, we considered the relevance of
the renewal of the permits for water
extraction and general mining activities to
the indicative valuation. We also reviewed
the additional sensitivity disclosures
included in the financial statements.
• Deferred tax asset recognition at
Antucoya: we concluded that it was
appropriate to recognise a deferred tax
asset in respect of Antucoya’s accumulated
tax losses as at 31 December 2021. In
reaching that conclusion, we considered
the current performance and future
forecasts of the operation and the strong
current copper price environment and
future outlook.
• Provision for decommissioning and
restoration costs at the Group’s mining
operations: we have reviewed updates
to the mine closure provisions, including
changes to the financial parameters used
in calculating the provision balance.
• Going concern and viability: we reviewed
the going concern and viability assessments
and related disclosures. In particular,
we considered the Group’s current
strong financial position, its forecast
future performance, the key risks which
could impact the future results and the
robust down-side sensitivity analyses
which indicated results which could
be managed in the normal course
of business.
External audit
Q. What are the Committee’s activities in
respect of the external audit process?
The Committee is responsible for overseeing
the Company’s relationship with PwC,
the Group’s external auditor. As the new
Chairman of the Audit and Risk Committee,
I worked during the year to establish
an effective direct relationship with
Simon Morley, who is our lead audit
partner at PwC.
The Committee reviews and approves the
scope of the external audit, the terms of
engagement and fees. The Committee
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Antofagasta plc Annual Report 2021
monitors the effectiveness of the audit
process and is responsible for ensuring
the independence of the external auditor.
The Committee informs the Board of the
outcome of the external audit and explains
how the external audit contributes to the
integrity of the Group’s financial reporting.
We also make recommendations to the
Board in respect of the appointment,
reappointment, or removal of the external
auditor. The Committee formally meets
with PwC without management present at
least once a year.
During 2021 we discussed in detail with
PwC how to manage the external audit
process, considering the COVID-19 related
restrictions and the need to accelerate
audit timing to enable a February 2022
results announcement. We are satisfied
that PwC have implemented an
appropriate mix of remote checks and
on-site reviews, preserving the robustness
of the audit process.
Q. How long has PwC been the
Group’s auditor?
We carried out a tender process during
2014, which resulted in PwC replacing the
previous auditor and being appointed with
effect from 2015 onwards. In line with
relevant regulatory guidance, we expect to
undertake a tender process in respect of
the external audit at least every ten years
which would see us complete a competitive
tender process no later than 2024. This will
allow the Committee to understand the
capabilities and coverage that external audit
firms can offer the Company and further
promote the independence and objectivity
of the external auditor. In addition, Jason
Burkitt was the lead audit partner at PwC
for five years from 2015 to 2019 and, in line
with normal regulatory requirements
rotated off the engagement, with Simon
Morley assuming the role as lead
audit partner from 2020 onwards.
Q. How do you assess the effectiveness of
the external audit process?
The Committee considered the following
factors as part of its review of the
effectiveness of the external audit
process during the year:
• the appropriateness of the proposed
audit plan, the significant risk areas and
areas of focus and the effective
performance of the audit
• the technical skills and industry
experience of the audit engagement
partner and the wider audit team
• the quality of the external auditor’s
reporting to the Committee
• the effectiveness of the co-ordination
between the UK and Chilean audit teams
• the effectiveness of the interaction and
relationship between the Group’s
management and the external auditor
• feedback from management in respect of
the effectiveness of the audit processes
for the individual operations and the
Group overall
• the review of reports from the external
auditor detailing its own internal quality
control procedures, as well as its
annual transparency report
• the review of the FRC’s annual Quality
Inspection Report for PwC.
In light of this assessment, the Committee
considers it appropriate that PwC be
reappointed as external auditor.
Q. How do you assess the independence
and objectivity of the external auditor?
The Committee regularly monitors the
external auditor’s independence and
objectivity in line with Group policy, which
was updated in 2020.
New regulatory requirements applied from
2020 onwards in respect of prohibited
non-audit services. The FRC issued an
updated Ethical Standard which introduces
a “white list” of specifically-permitted
services, with all other services prohibited.
Permitted services relate to specific activities
which are required by law or regulation and
a limited number of types of review or
verification work, such as half-year reviews,
verification of additional information
contained within the Annual Report or
cross-referenced from the Annual Report,
and work as a reporting accountant on
transactions or debt issues. The provision
of non-audit services is also subject to a cap,
so that the total annual fees from non-audit
services may not exceed 70% of the average
audit fee over the prior three years.
A breakdown of the audit and non-audit
fees is disclosed in Note 8 to the financial
statements. PwC has provided non-audit
services (excluding audit-related services)
which amounted to $nil, or 0% of the fees
for audit and audit-related services.
In general, where the external auditor
is selected to provide non-audit services,
it is because it has specific expertise or
experience in the relevant area and is
considered to be the most suitable
provider. The Committee has reviewed the
level of these services over the year
and is confident that the objectivity and
independence of the auditor are not
impaired by such non-audit work.
The external auditor provides a report to
the Committee at least once a year, setting
out its firm’s policies and procedures for
maintaining its independence.
The Committee considers that PwC
remained independent and objective
throughout 2021.
The UK regulatory requirements in respect
of competitive audit tendering and other
related audit committee responsibilities in
Other InformationFinancial Statements Strategic ReportCorporate Governance Tony Jensen
Chair of the Audit and Risk Committee
In 2021 we assisted the Board with its annual update of the
Group’s risk appetite assessment and assessment of emerging
and principal risks.
respect of the external auditor are set out in
the Competition & Markets Authority´s “The
Statutory Audit Services for Large Companies
Market Investigation (Mandatory Use of
Competitive Tender Processes and Audit
Committee Responsibilities) Order 2014”
(“the Order”). The Company has complied
with the provisions of the Order during 2021.
Internal audit
Q. What are the Committee’s main
activities in relation to internal audit?
The Committee monitors and reviews the
effectiveness of the Group’s internal audit
function. The Head of Internal Audit
reports directly to the Committee and
meets with us without management
present at least once a year.
The Committee reviews and approves
Internal Audit’s work plan for the coming
year, including its focus areas as well as
budget, headcount and other resources.
We ensure the plan is flexible and
has sufficient resources to allow for
special reviews that may be required
during the year.
We also monitor the resources available
to the Internal Audit team so that it has an
appropriate mix of skills and experience
for the Group’s businesses. Internal Audit
utilises a mix of permanent team
members, temporary secondees from
elsewhere in the Group and third parties,
particularly for areas such as IT-related
reviews. The permanent team includes
members with specific expertise in some
of the most relevant areas for the Group,
including mining technical experience, IT,
risk, compliance, internal control
and sustainability.
Internal Audit presents to the Committee
summaries of the key findings from the
reviews conducted during the year and any
actions that have been taken or proposed.
All Internal Audit reports, when finalised,
are distributed to Committee members.
The Committee monitors the interaction
between Internal Audit and PwC, to ensure
an efficient relationship between the
internal and external audit processes, to
avoid duplication of work and achieve the
effective and timely sharing of findings.
During 2021, Internal Audit performed part
of its work remotely due to the COVID-19
pandemic. The Committee monitored the
quality of the audit work and is
comfortable that an appropriate controls
environment has been maintained.
Risk management and internal control
Q. What are the Committee’s main
activities in relation to risk management
and internal control?
The Committee plays an important role in
assisting the Board with its responsibilities
with regard to risk management and related
controls. The Board has ultimate
responsibility for overseeing the Group’s
emerging and principal risks and its risk
appetite, as well as maintaining adequate
control systems which were in place
throughout the year and up to the date of
this report. The Committee’s terms of
reference incorporate the FRC’s Guidance
on Risk Management and Internal Control
and the Board is satisfied that the
Company’s risk management and internal
control systems accord with this guidance.
In order to achieve our business objectives,
internal control systems are designed to
identify and manage, rather than eliminate,
the risk of failure, but can only provide
reasonable, not absolute, assurance against
material misstatement or loss.
Q. What were the Committee’s main
activities in 2021 relating to risk?
We assisted the Board with its annual
update of the Group’s risk appetite
assessment and assessment of emerging
and principal risks. Emerging risks are
identified through the reporting of events
that have had an impact on the Group’s
operations and budgets during the year
and whether and by how much the risk
has impeded the budget for each risk
mitigation objective and through a
benchmarking review of emerging and
principal risks that have been identified by
our peers. During 2021, the Board
approved updates to the risk appetite
statements for Talent Management and
Labour Relations, Tailings and
Cybersecurity.
The Committee reviewed the ongoing
activities undertaken by the Group during
the year to further develop the maturity of its
risk management processes and to identify
emerging risks. Principal risks were updated.
The risk, compliance and internal control
function presented to the Committee
several times during the year on
developments in the Group’s risk
management processes and Group-level
strategic risks. The General Managers of
the Group’s operations presented to
the Committee their assessments of their
respective operations’ material potential
risks, trends, residual risks and any
significant materialised risks as well as
operational opportunities.
The analysis of emerging and principal
risks includes an assessment of the
significance of the risks based on the
probability of the risk materialising and the
potential impact of the risk, as well as an
evaluation of the quality of the controls in
place in respect of those specific risks.
The evaluation of the potential impact is
not limited to economic factors
but includes issues such as safety, health,
environmental, regulatory, community
and reputational issues. We also examine
whether those risks have been increasing
or decreasing in significance and the
budget for each risk mitigation objective to
assist with the identification of emerging
risks. The General Managers present their
forecasts of any expected change in
principal risks over the coming 12 months.
If there is a specific issue at one of the
operations that requires more detailed
understanding, we ask the General
Manager to attend the next meeting to
discuss that issue. This direct interaction
between the Committee and the General
Managers is extremely valuable – not just
in terms of the direct insight into each
operation it affords the Committee, but
also in allowing us to emphasise the
importance we attach to strong risk
management processes.
The Committee closely monitored the
assessments relating to the COVID-19
pandemic during the year.
Q. How does the Committee interact with
the Board and other Committees?
I report to the Board following each
Committee meeting, summarising the
main matters reviewed by the Committee.
These regular reports allow Directors
to understand the main issues under
consideration and, when relevant, to
discuss them in more detail with the Board.
The Risk Management function presents
directly to the Board, providing updates of
the analysis of the Group’s principal risks
and relevant developments in the risk
management and compliance processes.
Antofagasta plc Annual Report 2021
137
/ Audit and Risk Committee report continued
We try to ensure that the review of risk by
the Board is not compartmentalised into
isolated sessions but is integrated into
everything that the Board considers. To
this end, the operating update provided by
the CEO to the Board at each meeting
covers any significant materialised risks
and each proposal presented to the Board
incorporates an analysis of its impact on
the principal risks.
These processes have assisted the Board
in carrying out a robust assessment of the
emerging and principal risks facing the
Company, including those that could
threaten its business model, future
performance, solvency, or liquidity and to
assess the acceptability of the
level of risks that arise from the Group’s
operations and development activities.
Each year the Board, with the support of
the Committee, reviews the effectiveness
of the Group’s risk management and
internal control systems. The review
covers all material controls, including
financial, operating and compliance
controls. The 2021 review confirmed the
effectiveness of the Group’s risk
management and internal control systems,
with no significant failures or weaknesses
being identified.
Members of the Audit and Risk Committee
participate on all the other Board
Committees, allowing the Committee a
good understanding of risks being
considered by these Committees and the
full spectrum of risks faced by the Group.
This year, the Sustainability and
Stakeholder Management Committee held
a joint session with the Audit and Risk
Committee to review the methodology and
risks associated with the Group’s climate
change case, aligned with the
requirements of the Task Force on
Climate-related Financial Disclosures
(TCFD). Under the UK Listing Rules, from
2022 the Company is required to report
against the TCFD recommendations, as set
out on pages 52 to 57 of this Annual Report.
Transition and physical risks and opportunities
were identified and their impact on the
Group was assessed. Each General Manager
presented an evaluation of physical risks,
including more frequent heatwaves,
permanent reduction in annual precipitation
and an increase in extreme rainfall events.
The net present value impact of the physical
risks on the Group was determined and
is reported as part of the Group’s TCFD
report and action plans were reviewed
and agreed.
Compliance
Q. What are the Committee’s main
responsibilities relating to compliance?
The Committee ensures that appropriate
compliance policies and procedures are
observed throughout the Group. The risk,
compliance and internal control function
makes regular presentations to the
Committee covering developments in the
Group’s compliance processes and
significant compliance issues. Chilean law
requires the Mining division’s holding
company, Antofagasta Minerals SA, and
each of the operations, to appoint a
Crime Prevention Officer. The Committee
makes recommendations regarding these
appointments as well as monitoring and
overseeing the performance of these
roles. The Crime Prevention Officer for
Antofagasta Minerals SA is currently
Patricio Enei, the Vice President of Legal.
As the compliance function resides in the
Finance Vice Presidency, this arrangement
provides for the appropriate segregation
of duties.
The Committee receives reports from the risk,
compliance and internal control function in
respect of the Group’s crime prevention
model, in accordance with Chilean and UK
anti-corruption legislation.
Q. What were the Committee’s
main activities in 2021 relating
to compliance?
The Committee reviewed the Group’s
whistleblowing arrangements, which
encourage employees and contractors to
raise concerns in confidence about
possible improprieties or non-compliance
with the Group’s Code of Ethics. We
received regular reports on reported
whistleblowing incidents, detailing the
number and type of incidents, along with
details of the most significant issues and
the actions resulting from their
investigation.
As approved by the Committee, a
centralised whitsleblowing investigation
process was implemented, providing
greater independence and standardising
processes.
The crime prevention model was
recertified and compliance e-learning
training was completed by all directors
and executives.
We reviewed the process to identify
and manage Group employees’ potential
conflicts of interest and the due diligence
process conducted in respect of the
Group’s suppliers. We also reviewed the
Group’s compliance model and details of
the preventative compliance activities that
were conducted during the year.
Tony Jensen
Chair of the Audit
and Risk Committee
Audit and Risk Committee, Board, and risk management function interaction
BOARD
The Chair of the Audit and Risk Committee reports to the Board following each Committee
meeting, allowing a wider discussion of the risk and compliance issues reviewed in detail
by the Committee. The Board also provides feedback on the analysis of emerging and key
risks for Board agenda items which is incorporated into the Board’s review of the
effectiveness of the Group’s risk management and internal control systems.
AUDIT AND RISK COMMITTEE
The Committee supports the Board in its review of the effectiveness of the Group’s risk
management and internal control systems.
GENERAL MANAGERS OF THE OPERATIONS
General Managers are responsible for the risks relating to their operation and give
detailed presentations to the Committee at least once a year, including on each operation’s
emerging, key and materialised risks.
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Antofagasta plc Annual Report 2021
RISK MANAGEMENT
FUNCTION
The risk management function
provides regular presentations
covering changes in the Group’s
emerging and key risks, major
materialised risks and updates
on risk management and
compliance processes.
There are detailed presentations
at each Committee meeting
covering the risk management
process, significant
whistleblowing reports
and updates on compliance
processes and activities.
Other InformationFinancial Statements Strategic ReportCorporate Governance / Sustainability and Stakeholder Management Committee report
Sustainability and stakeholder
management
Vivianne Blanlot
Chair of the Sustainability and Stakeholder Management Committee
2021 MEMBERSHIP AND
MEETING ATTENDANCE
Vivianne Blanlot (Chair)
Jorge Bande
Juan Claro
Ramón Jara
Michael Anglin 1
Eugenia Parot 2
Tony Jensen 3
Number attended
4/5
4/5
4/5
4/5
2/3
3/3
2/2
1. Michael Anglin joined the Committee on 1 August
2021.
2. Eugenia Parot joined the Committee on 1 August
2021.
3. Tony Jensen stepped down from the Committee
on 31 July 2021.
• Other regular attendees included the CEO, the Vice
President of External Affairs and Sustainability and
the Company Secretary.
• Sessions were also regularly attended by Directors
who were not Committee members.
• The Committee meets as necessary and at least
twice per year.
Key responsibilities
• The Sustainability and Stakeholder
Management Committee supports
the Board in the stewardship of the
Group’s safety, health, environmental
and social responsibility programmes
and makes recommendations to the Board
to ensure the views and interests of the
Group’s stakeholders are considered in
the Board’s deliberations.
• The Committee reviews the Group’s
framework of safety, health, environmental,
human rights and social policies, monitors
the Group’s performance in setting and
meeting environmental, social, safety and
occupational health commitments and
provides guidance on how the Company
should reflect the views and interests
of stakeholders in relation to potential
projects and other business matters.
Committee meetings provide a forum for the
detailed discussion of many of the key issues that
matter to our workforce (such as safety and health),
local communities, national and local governments,
regulators and other stakeholders.
Key activities in 2021
Policies and commitments
• Reviewed the Group’s Sustainability
Report, TCFD Progress Report and
Climate Change Report.
• Reviewed the environmental and social
aspects of the Group’s expansion
projects.
• Reviewed the Committee’s terms
of reference.
Safety and health
• Reviewed the Group’s 2021 safety and
occupational health performance and
strategy and plans for 2022.
• Reviewed the Group’s strategy and
monitored the effectiveness of
protocols in response to the COVID-19
pandemic.
• Monitored Group safety performance,
including high-potential incidents.
• Reviewed the 2021 report issued by the
independent technical review board
appointed to advise the Group on the
operation of its tailings storage facilities.
Community relations
• Reviewed the Group’s Social Management
Model.
• Monitored the implementation of a second
$6 million community support fund
(following the implementation of the first
$6 million community support fund in
2020) designed to provide healthcare
equipment, community initiatives and
economic support to local entrepreneurs
and businesses during the COVID-19
pandemic.
• Reviewed the Group’s communications
strategy and monitored results from the
Group’s communications activities.
Environment
• Reviewed environmental management
reports.
• Reviewed environmental events and
monitored mitigation steps.
• Reviewed jointly with the Audit and Risk
Committee an assessment of the physical
and transition risks of climate change and
their impact on the net present value of
the Group.
• Reviewed environmental reviews related
to Zaldívar’s water rights extension.
• Reviewed the Climate Change Report.
Antofagasta plc Annual Report 2021
139
/ Sustainability and Stakeholder Management Committee report continued
Q. How was the safety performance in
Q. What was the Committee’s role in
2021?
Sadly, after 33 months without a fatality,
a contractor suffered a fatal accident at
Los Pelambres in July. Our condolences
go to the family of our colleague. Following
a full investigation, we strengthened our
commitment to a fatality-free work
environment and have shared the
learnings from the internal independent
investigation widely. Reflection meetings
were held at Los Pelambres by the
General Manager and his executive
committee and were followed by virtual
and physical gatherings of the Los
Pelambres workforce in October. Similar
events were also held at the corporate
level (led by the CEO) and at our other
operations (led by their General
Managers).
Due to the importance of this matter, the
subject, including the results of the
independent investigation, were reviewed
by the full Board.
The main learnings shared throughout the
organisation were: the importance of
effective planning to allow for the even
better identification of risks and controls
needed to execute tasks effectively and
safely; the relevance of ensuring even
better supervision of the execution of high
and critical risk tasks at all times to ensure
controls are consistently applied; the use
of the task risk assessment tool; and the
individual responsibility of the workforce to
speak up and highlight risks.
The Group is working hard to ensure safe
operations, including the systematic
and thorough application of safety
standards and high levels of near-miss
reporting for the full spectrum of risks. In
2021, the Group had 65 high-potential
incidents, 24% fewer than in 2020. The
Lost Time Injury Frequency Rate was 1.34.
The Total Recordable Injury Frequency
Rate was 17% lower than in 2020.
relation to the COVID-19 pandemic?
Along with the Board, the Committee
played an important role in overseeing
the development and implementation of
the Group’s strategy and protocols in
response to the pandemic and monitored
results regularly. The protocols that were
implemented were designed to protect the
safety and health of our employees,
contract workers and local communities
while ensuring operational continuity to
support the livelihoods of some of our key
stakeholders. Procedures that were
implemented included office staff working
from home, dedicated air and land
transport services to and from the
operations, the implementation of social
distancing measures, strict personal and
facilities hygiene measures, mandatory
self-evaluations before entering the
Group’s facilities, thorough cleaning,
physical separation in lodging facilities, a
flu vaccination campaign and the provision
of safe places to stay for members of the
workforce requiring isolation or who
needed to be cared for. Agreements were
signed to support PCR testing, and the
evolution of COVID-19 cases in the
communities close to the Group’s
operations continues to be closely
monitored.
The Committee also monitored the
implementation of a second $6 million
community support fund (in addition to the
$6 million fund established in 2020) set up
by the Group to address needs related to
the COVID-19 pandemic. This fund has
been used to support medical, educational,
local entrepreneurs and local businesses,
and provide humanitarian assistance to
neighbouring communities. Further details
are set out on page 46.
Q. How did the Committee consider
climate change during the year?
As noted by the Chairman on page 108,
climate change is a global issue and Chile
is particularly vulnerable to its
consequences.
The Committee assisted the Board in
considering various climate change-related
initiatives during the year including and
assessment of the physical and transition
risks of climate change and their impact
on the net present value of the Group,
the Group’s climate change report,
environmental management reports and
new emissions reduction target. The Group’s
Climate Change Strategy, reviewed by the
Committee and approved by the Board in
2020, takes a multidisciplinary approach
to the challenges posed by climate change.
This strategy focuses on:
1. Development of resilience to climate
change
2. Reduction of greenhouse gas emissions
3. Efficient use of strategic resources
4. Management of the environment and
biodiversity
5. Integration of stakeholders
Q. How does the Committee ensure
that the Board considers the views and
interests of stakeholders?
Committee meetings provide a forum for
the detailed discussion of many of the key
issues that matter to our workforce (such
as safety and health), local communities,
national and local governments, regulators
and other stakeholders. These issues are
identified as part of the risk management
and community engagement processes
and are submitted by management to the
Committee for review. Communicating
with our stakeholders during difficult times
has been key to strengthening mutual trust
and understanding. We work hard to
understand their interests and ensure that
they understand our ambitious safety,
occupational health, environmental and
social commitments.
As Chair of the Committee, I report to the
Board following each Committee meeting,
summarising the main matters reviewed
by the Committee.
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Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic ReportCorporate Governance Vivianne Blanlot
Chair of the Sustainability and Stakeholder Management Committee
The Committee makes recommendations to the Board to ensure
the views and interests of the Group’s stakeholders are considered
in the Board’s deliberations.
The Committee and the Board receive
regular reports on the operation of the
Group’s tailings storage facilities and
following the Group’s adoption of a tailings
management policy aligned with the Global
Industry Standard on Tailings Management
in 2020, the Committee will monitor the
implementation and compliance with this
policy along with reports from management
and the ITRB.
Further information on our tailings
facilities, including the risks and the
governance measures in place, can be
found on pages 58-59.
Q. How are community relations managed
throughout the Group?
Dialogue with local communities is crucial
for aligning views, preventing disputes
and addressing concerns. To strengthen
such dialogue we use various engagement
mechanisms, including conversations with
members of the community, round tables,
community meetings, participatory
environmental monitoring with the
community and site visits to our
operations, as well as communicating
through the media and on websites and
social networks.
The subjects and results of this
engagement are reported to the
Committee periodically through standalone
reports and as part of broader Committee
discussions.
Q. What are the Committee’s priorities
in 2022?
Our number one priority continues to be
the safety and health of our employees,
contractors and local communities as we
continue to respond to the COVID-19
pandemic. We will also strive to work
during 2022 without fatal accidents.
The Committee will continue to monitor
the implementation of the Group’s
environmental management system at our
operations and we will continue to deploy
our Climate Change Strategy, aimed at
meeting our greenhouse gas target for
reduced carbon dioxide emissions. The
Group has contracted power supply
agreements that, by the end of 2022, will
provide all the Mining division’s power
requirements from renewable sources.
The Committee will continue to oversee
the implementation of the Group’s Climate
Change Strategy during the year.
The Committee will continue to monitor
the implementation of the Group’s social
programmes and the work done with
communities close to our operations in
accordance with the Group’s Social
Management Model.
Vivianne Blanlot
Chair of the Sustainability and
Stakeholder Management Committee
Q. How does the Committee ensure that
the Group’s tailings facilities are safe?
The stability and safety of tailings storage
facilities is a primary concern for us and
many of our stakeholders and the
Committee and the Board are focused on
ensuring that appropriate monitoring and
management are in place to ensure that
they continue to be stable and safe.
Chile experiences a significant amount of
seismic activity and as a consequence
there are strict regulations governing
construction in the country. These
regulations apply to all mining and other
construction, including the storage
facilities where tailings are deposited.
Chilean standards have prohibited the
construction of tailings storage facilities
using the upstream method, which is
commonly used in other countries but can
pose significant safety risks. Current
Chilean legislation also requires stability
analysis of dam walls, a review of safety
measures and the development of detailed
emergency plans in the event of a major
incident.
The Group’s governance structures are
designed to encourage the independent
management and monitoring of our tailings
facilities. This includes internal teams with
reporting lines not linked to the mine
operation teams and an independent
tailings review board (ITRB) that visits our
tailings facilities regularly, assessing risks
and making recommendations to continue
to ensure their safety. The Committee and
the Board review these reports and
challenge management on any
recommendations made.
During the year, the Committee and the
Board reviewed the 2021 report issued by
ITRB, which noted that Los Pelambres and
Centinela’s tailings deposits represent
‘state of practice’ in modern tailings
impoundment design and construction in
seismically active regions. They fully
accommodate extreme loading from floods
and earthquakes, have been tested in
recent years and performed well. The
ITRB is satisfied that the dams are being
operated according to good practice and
are moving to full compliance with The
Global Industry Standard on Tailings
Management requirements.
Antofagasta plc Annual Report 2021
141
/ Projects Committee report
Project pipeline advanced
during the year
Michael Anglin
Chair of the Projects Committee
2021 MEMBERSHIP AND
MEETING ATTENDANCE
Michael Anglin (Chair) 1
Jorge Bande
Ramón Jara
Eugenia Parot 2
Ollie Oliveira 3
Number attended
6/6
6/6
6/6
3/3
3/3
1. Michael Anglin became Chair of the Committee
on 1 August 2021.
2. Eugenia Parot joined the Committee on 1 August
2021.
3. Ollie Oliveira retired from the Board on 31 July 2021.
• Other regular attendees included the CEO, the CFO,
the Vice President of Projects, the Vice President of
Operations, the Projects Finance Manager and the
Company Secretary.
• Sessions were also regularly attended by Directors
who were not Committee members.
• The Committee meets as necessary and at least
twice per year.
Key responsibilities
• The Projects Committee reviews all
aspects of projects to be submitted for
Board approval, highlighting key matters
throughout the project development
lifecycle for the Board’s consideration
and making recommendations to
management to ensure that all projects
submitted to the Board are aligned with the
Group’s strategy and risk appetite.
• The Committee adds an important level of
governance and control to the evaluation
of the Group’s projects and plays a key
role in providing the Board with additional
oversight of the projects portfolio. This
includes overview of the establishment of
project development guidelines, which
draw from best practice, industry
experience and lessons learned from other
Group projects.
142
Antofagasta plc Annual Report 2021
The Committee reviews all aspects of projects to be
submitted for Board approval, highlighting key matters
for the Board’s consideration.
Key activities in 2021
Policies and commitments
• Reviewed the Group’s projects portfolio,
including budgets and schedules.
• Reviewed the Committee’s terms
of reference.
• Reviewed Centinela’s minor capital
projects governance.
Project reviews – studies phase
• Reviewed Phase 2 of the Los Pelambres
Expansion Project involving the expansion
of the desalinated water system and mine
life extension.
• Reviewed progress with Centinela’s
Second Concentrator project’s
commitment phase and activities in the
2021 work plan and reviewed the award
of the project’s concentrator, camps and
infrastructure contracts.
• Reviewed the Polo Sur project’s
pre-feasibility study.
• Reviewed the Twin Metals project.
Project reviews – execution phase
• Monitored progress in the execution of
Phase 1 of the Los Pelambres Expansion
project and the Zaldívar Chloride Leach
project.
• Reviewed an update of Antucoya’s Dust
Suppression project.
• Reviewed progress on Los Pelambres’
replacement concentrate pipeline project.
Project reviews – lessons learned
• Reviewed the performance of Centinela’s
molybdenum plant.
Q. What is the Projects Committee’s
Q. What tools does the Committee use?
approval authority?
The Committee is not responsible for
approving projects – that is for the Board
to decide. Our role is to assist the Board
by ensuring that projects follow a
standard, structured process with
consistent analysis, execution and
evaluation practices. The Committee
oversees the full project lifecycle, from
the early stages to the start of operations,
carefully assessing and robustly
challenging investment proposals prior
to submission to the Board, monitoring
development and construction progress
and ensuring lessons learned are applied
to future proposals. The Committee invites
management to consider different
perspectives, ideas and improvements to
enhance the value of the Group’s projects,
enabling focused deliberation when the
project is presented to the Board.
The Committee provides guidance to each
project manager, from the early stages of
project planning through to completion,
to ensure that policies, strategies and the
Group’s standard Asset Delivery System
(ADS) implementation framework are
applied.
ADS is a project management system
whose processes and practices are widely
used in the mining industry. ADS sets
standards and common criteria, including
governance by a steering committee,
functional quality assurance reviews
and risk management.
In some cases, the Committee may
recommend additional measures, including
independent peer reviews, trade-off
studies or further analysis in relation
to the incorporation of potential new
technologies or processes.
Other InformationFinancial Statements Strategic ReportCorporate Governance Michael Anglin
Chair of the Projects Committee
The Committee supports the Board by ensuring that the Group’s projects
portfolio follows approved and consistent guidelines and that project
execution decisions have been thoroughly reviewed before being put
forward for Board approval.
Studies – Centinela Second Concentrator
project
The Committee reviewed progress on
Centinela’s Second Concentrator project
and endorsed work continuing in the
commitment phase leading up to the
investment decision, with the purpose of
progressing project development with
detailed engineering and construction
permitting and mitigating risks. The
investment decision is planned by the end
of 2022 with the start of production in late
2025. The Committee also reviewed the
concentrator EPC, camp and
infrastructure contracts. The Committee
noted that the project has been under
analysis since 2014 and solutions have
been incorporated over this period to
enhance its technical profile, ensure
flexibility and maximise the project’s
financial returns.
See page 79 for more information on
Centinela’s Second Concentrator
project
Studies – Polo Sur project
The Committee reviewed the results of the
Polo Sur prefeasibility study. Polo Sur is
located 21 km south of Encuentro Oxides
and is an oxide deposit that could be
leached on the leach pads at Encuentro
Oxides, providing feed to Centinela
Cathode’s SX/EW plant. Next steps include
completing the drilling campaign for the
feasibility study, permitting, engineering
and preparing a detailed execution plan.
Studies – Twin Metals project
The Committee reviewed progress at the
Twin Metals project. The project has a
small footprint and includes an 18ktpd
underground mine with a simple flotation
flowsheet, dry stack tailings and paste
backfill producing three concentrates,
copper, nickel and PGMs.
See page 80 for more information
on Twin Metals project
Lessons Learned – Centinela’s molybdenum
plant review
The Committee reviewed the performance
of Centinela’s molybdenum plant, which
came into operation in 2018. During the
first two years the plant was unable to
operate continuously and did not meet
design parameters, principally due to feed
grade variability and bottlenecks. In 2020,
an operational improvement plan was
implemented, which enabled a significant
increase in molybdenum production.
Q. What are the Committee’s priorities
in 2022?
The Committee will continue to ensure that
project activities continue to follow strict
safety and health protocols.
The Committee will continue to oversee
the progress of construction at Phase 1 of
the Los Pelambres Expansion project.
The Committee plans to review the
investment decisions for Centinela’s
Second Concentrator project and the Polo
Sur project.
The Committee will review the progress of
studies for Phase 2 of the Los Pelambres
Expansion project.
Michael Anglin
Chair of the Projects Committee
Q. What were the Committee’s key
activities in 2021?
Execution – Phase 1 of the Los Pelambres
Expansion project
In December 2020, a new timeline and
capital estimate of $1.7 billion were
approved, addressing the impact of the
COVID-19 pandemic, incorporating
changes in the marine works of the
desalinated water system and early works
for the planned expansion of the
desalinated water system from 400 l/s to
800 l/s.
During 2021, the Committee reviewed the
project’s progress, which was impacted by
COVID-19’s second and third waves during
the year. The desalinated water system
commissioning was scheduled for the
second half of 2022 and the concentrator
plant for early 2023.
The Committee also reviewed the
proposed renegotiated terms of Bechtel’s
EPC/CM contract.
See page 78 for more information on
Phase 1 of the Los Pelambres
Expansion project
Execution – Zaldívar Chloride Leach
project
In December 2020, a revised timetable for
the project was approved, reflecting the
impact of the delayed start of construction
activities for some four months due to the
pandemic. During 2021, the Committee
reviewed project progress and how it was
impacted by the COVID-19 pandemic.
See page 80 for more information on
the Zaldívar Chloride Leach project
Studies – Future development of Los
Pelambres
The Committee reviewed progress of
the separate EIA applications for Phase 2
of the Los Pelambres Expansion project
involving the desalinated water system
expansion and mine life extension.
See page 79 for more information on
Phase 2 of the Los Pelambres
Expansion project
Antofagasta plc Annual Report 2021
143
/ Remuneration and Talent Management Committee Chair’s introduction
Ensuring alignment
between pay and
performance
Francisca Castro
Chair of the Remuneration and Talent Management Committee
2021 MEMBERSHIP AND
MEETING ATTENDANCE1
Francisca Castro (Chair)
Michael Anglin
Vivianne Blanlot
Tony Jensen
Number attended
5/5
5/5
4/5
5/5
1. The Committee also met with independent
remuneration consultants Willis Towers Watson
during the year outside formal meetings to receive
an update on global remuneration and talent
management strategies and implementation, and on
investor and proxy adviser advice ahead of the voting
season. Willis Towers Watson also provided feedback
after the 2021 AGM.
• Other regular attendees include the CEO, the
Vice President of Human Resources and the
Company Secretary.
• At least one Committee member serves on each
of the other Board Committees, which allows the
Committee to consider strategic priorities and the
views of all stakeholders in its deliberations.
• The Committee meets as necessary and at least
twice per year.
• All Committee members are independent.
Key report sections:
Remuneration ‘at a glance’
Single figure remuneration table
Remuneration for 2022
146
148
158
144
Antofagasta plc Annual Report 2021
The Committee is focused on attracting and retaining talent
to deliver strong shareholder returns. The Committee makes
pay decisions considering the views of stakeholders and
overall business performance.
Dear shareholders
I am delighted to present the 2021 Directors’
and CEO Remuneration Report.
• This year’s report has been reconfigured
to make it simpler for our shareholders to
read. We have followed the reporting
format set out in the UK remuneration
reporting regulations and included a new
‘at a glance’ section.
• This report is comprised of this letter, an
‘at a glance’ section, and the 2021 annual
report on remuneration, which details the
implementation of our pay policy in 2021
and our plans for 2022. We will be seeking
approval from shareholders for this report
at the AGM on 11 May 2022.
• The current Directors’ and CEO
Remuneration Policy was approved by
shareholders at the AGM on 20 May 2020
and is available on the Company’s website
(antofagasta.co.uk).
Remuneration in context
• The Committee considered a range of factors
when making decisions on remuneration
this year, including the views of our
stakeholders (including shareholders and
employees) and the Company’s performance.
A summary of these factors is set out in
the ‘at a glance’ section.
• I am proud of our CEO and leadership team
for prioritising the safety and wellbeing of our
employees and contractors during the year
while contributing to the Chilean economy
and supporting local communities. Our
hardworking and skilled workforce has also
demonstrated remarkable resilience over
the past year. I am grateful for their efforts
and proud of their collective achievements.
• Despite challenges, the Group has reported
record results in 2021 including EBITDA
of $4.8 billion and a 65% EBITDA margin,
while making excellent progress in
unlocking the growth options embedded
in our portfolio.
• Responsibility for health and safety is one
of the Company’s core values. Sadly, a fatal
accident involving one of our contractors
occurred at Los Pelambres in July. This,
along with causing deep reflection by
management and the Board, caused the
Committee to support adjusting (down)
by 15% the Mining division’s performance
score for the 2021 annual bonus.
• The Committee is keenly aware of the
impact of the pandemic on our workforce
and on broader society and has carefully
considered the fairness of CEO pay decisions
and overall pay levels in this context. The
Committee is comfortable that the outcomes
documented here are fair and appropriate.
• In 2021, a Group-wide employee engagement
survey was launched, focussed on improving
productivity and work quality – keys to the
success of our business. The survey will be
completed in 2022 and the Committee will
apply this very important feedback in its
decisions moving forward.
Other InformationFinancial Statements Strategic ReportCorporate Governance
LTIP outturn
The overall anticipated LTIP vesting level is
99% of the maximum. 100% of the targets
were achieved for Mineral Resources
Increase, and Social and Environmental KPIs.
Project portfolio progress achieved 92% of
the maximum. Targets were achieved in
relation to the Zaldívar Chloride Leach project
and Phase 2 of the Los Pelambres Expansion
project but the maximum target was not
achieved for construction of Phase 1 of the
Los Pelambres Expansion project. The
Relative TSR outcome is expected to be 100%
of maximum, however, performance will be
assessed after this report is published. The
actual vesting result will be included in next
year’s report.
Find out more
P151
Our approach to the CEO’s remuneration
for 2022
Base salary
The Committee does not expect to increase
the CEO’s base salary for 2022 outside of the
inflationary adjustments that automatically
apply to the CEO and employees’ base
salaries, and due to exchange rate variation,
if applicable. The CEO receives a base salary
and benefits in line with market conditions in
Chile, and the Committee will continue to also
take into consideration the pay levels for
international comparators, as appropriate.
Find out more
P158
Annual bonus for 2022
The 2022 annual bonus will continue
to operate in line with the policy. The
performance measures and targets for
2022 have been updated in response to
a review of our strategic priorities for
the forthcoming year.
Find out more
P158
LTIP for 2022
The LTIP will continue to operate in line with
the policy. However, some adjustments have
been made to the Performance Award
metrics for this year. In addition, the TSR
performance period for Performance Awards
granted in 2022 has been adjusted so that the
end of the performance period aligns to the
financial year end rather than the third
anniversary of the date of grant. This change
is intended to simplify and add clarity to the
LTIP and to make reporting more efficient.
Find out more
P159
Directors’ fees
No fee changes are anticipated for Directors
in 2022.
Find out more
P160
We hope that you find the new report format
useful and we look forward to your continued
support at the AGM in May 2022.
Francisca Castro
Chair of the Remuneration and Talent
Management Committee
Our approach to the CEO’s remuneration
in 2021
Base salary
The CEO’s annual base salary as at 1 January
2022 was $795,214 (2021: $663,908). As
disclosed in the 2020 Annual Report, the
CEO’s base salary is paid in Chilean pesos
and was increased by 25% from 1 April 2021
following a market review, the CEO’s
performance and changes in the Chilean peso/
US dollar exchange rate since 2017. The CEO’s
base salary was again reviewed in December
2021 where a further 6.7% increase was
applied to reflect further depreciation in the
exchange rate over the year.
Annual bonus outturn
The overall bonus outturn for the CEO was
72% of the maximum. The result for core
business objectives was 60% of the maximum.
The EBITDA targets were met in full and Copper
Production and Cost targets were partially met.
The result for Business Development was
65% of the maximum, with all targets being
partially met. The outturn for Sustainability
was 85% of the maximum with Safety (measure
according to a reduction in high-potential
incidents), People (Diversity and Inclusion
Strategy) and Social performance being met
in full with Environmental performance targets
partially met. The following adjustments were
made, in line with our Plan’s policy:
• Adjustment for not meeting zero
fatality target: A standalone downwards
adjustment trigger amounting to 15% of
the performance score outcome was
applied to the Annual Bonus Plan.
• Adjustment for COVID-19 management
and record results: In recognition of the
extraordinary handling of the COVID-19
pandemic and the Company’s record
results during the year, the Committee
applied its discretion to increase the Annual
Bonus Plan outturn by 13% of the performance
score after the application of the adjustment
for not meeting the zero fatality target.
Find out more
P149
Antofagasta plc Annual Report 2021
145
Remuneration at a glance
Group financial and strategic performance outcomes in 2021
721.5k
tonnes
Copper
production
$1.20/
lb
Net cash
costs
19.1bn
tonnes
Mineral
resources
$4.8bn
EBITDA (Non
IFRS)
$1.425/
share
Underlying EPS
1
Fatality
3.00
tC02e /tCu
C02e emissions
intensity
Indexed Total Shareholder Returns
250
200
150
100
50
0
Dec 11
Dec 12
Dec 13
Dec 14
Dec 15
Dec 16
Dec 17
Dec 18
Dec 19
Dec 20
Dec 21
Antofagasta
FTSE All-Share
Global X Copper Miners ETF
$1.425/
share
Total dividend for 2021.
Equivalent to a 100%
payout ratio
Rewards, benefits and the work experience of our employees in Mining division in 2021
Group ESG objectives
100%
of employees received
a salary increase in 2021
0
COVID-19 related
redundancies
100%
of eligible employees
received a performance-
related bonus in 2021
17.4%
Percentage of female
employees1
30%
Reduction in Scope 1
and 2 emissions by 2025
2050
Carbon neutrality
target
CEO remuneration in 2021
72%
Bonus outturn
(as a % of the maximum)
99%
Performance Award
outturn (as a % of the
maximum)
$3,775k
Single figure total
remuneration for
the CEO
1. As at December 2021
146
Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic ReportCorporate Governance / 2021 Directors’ and CEO Remuneration Report
Our remuneration philosophy
Our remuneration philosophy
reflects local regulations and
market practice, while also
reflecting UK best practices and
governance.
• Local regulations, market practice and
remuneration structures available in Chile
are a central consideration when
structuring the CEO’s remuneration. Real
share awards have not been part of the
executive remuneration structure
for employees since the LTIP was first
implemented a decade ago, as until recently,
in Chile they were taxable in full at the date
they were granted. Despite recent changes
to Chilean tax laws that have removed this
disincentive for using real shares, these
awards continue to be uncommon in Chile.
Consequently, all awards relating to shares
are cash awards linked to a notional number
of shares and share price performance.
• Although our CEO is not a Director of the
Company, for a number of years we
voluntarily disclosed his remuneration and
provided details throughout the Remuneration
Report to allow shareholders to understand
how these structures support the strategy
and promote long-term sustainable success.
Since the implementation of the European
Shareholders’ Rights Directive II in 2019,
these disclosures became mandatory and
are included in this report.
The Committee follows the UK Corporate
Governance Code. The table below
summarises how we have considered Code
provision 40 when developing and
implementing our remuneration strategy.
Factor
How the Committee addresses the factor
Clarity
Remuneration arrangements are
transparent and promote effective
engagement with shareholders and
the workforce.
Predictability
The range of possible values of
rewards for the CEO are identified
and explained at the time of
approving the policy.
Simplicity
Remuneration structures are
uncomplicated, and their rationale
and operation are easy to understand
and are consistent for the CEO and
those, where applicable, below him.
Proportionality
The link between individual awards,
the delivery of strategy and the
long-term performance of the
Company is clear.
Risk
Reputational and other risks from
excessive rewards, and behavioural
risks that can arise from target-
based incentive plans, are identified
and mitigated.
Our rationale for operating two different long-term (performance and restricted) incentive plans is clear
and well communicated. The performance measures used in both the Annual Bonus Plan and LTIP are
used internally and externally in tracking and communicating business performance, ensuring that they
are well understood by participants. The Committee Chair engages and seeks the views of our shareholders
on material changes to Executive Remuneration, and in the year prior to a remuneration policy resolution.
Feedback from shareholders is received by the Committee and informs the Committee’s decisions on
remuneration policy and material changes to pay. The impact this has on decisions and approach taken
by the Committee is highlighted by the Chair in our annual statement. Views of the workforce are
understood in accordance with the workforce engagement mechanisms described in more detail on
page 120. Remuneration-related topics on which employee views are sought include: benefits, pay
fairness, alignment between individual performance and pay and sharing in Company success.
Target ranges and potential pay-out levels are disclosed in advance allowing shareholders and
participants to understand the potential value of the package in different performance scenarios.
The Committee carefully considers the performance measures for the annual bonus and LTIP each
year, and seeks to achieve consistency (where it is appropriate) with only necessary changes being
made, in order that the plans are sufficiently predictable.
When setting performance targets the Committee considers the same range of internal and external
factors each year. This provides consistency in policy implementation.
Each element of pay is clearly communicated.
Where appropriate, incentive arrangements are filtered down through the organisation to align the
interests of employees and executives with those of our shareholders, and to encourage and share
value creation.
Performance conditions in the annual bonus and performance share awards require a minimum level
of performance before any payment is made to executives and performance targets are clearly aligned
to our business plan and strategy. There are clearly defined maximum opportunities, as set out in our
Remuneration Policy.
Incentive plan performance measures are balanced to motivate the right behaviours and appropriate
safeguards are put in place, including adjustments for safety performance.
While clawback has not been introduced due to uncertainty around its legal validity in Chile, LTIP
awards are subject to malus.
The Committee retains discretion to adjust outcomes under the plans for variable remuneration.
Alignment to culture
Incentive plans drive behaviours
consistent with the Company’s
purpose, values and strategy.
Our Remuneration Policy aligns to the business’ objectives to create sustainable value and high profitability.
We reward strong performance in line with our business objectives, but only if the methods used align to our
safety and sustainability objectives. All Group employee performance bonuses, including the CEO’s, include
an assessment of individual performance relative to the Group’s Charter of Values.
Antofagasta plc Annual Report 2021
147
/ 2021 Directors’ and CEO Remuneration Report continued
CEO single figure of remuneration
(audited)1
Base salary/ fees
The CEO’s annual base salary as at 1 January 2022 was $795,214 (2021: $663,908). As disclosed on page 150 of the 2020 Annual Report, the
CEO’s base salary paid in Chilean pesos was increased by 25% from 1 April 2021 following a market review, the CEO’s performance and
changes in the Chilean peso/US dollar exchange rate since 2017. The CEO’s base salary was further reviewed in December 2021 and a further
6.7% increase was applied to reflect further depreciation in the exchange rate over the year.
Benefits
Benefits include life and health insurance. Other benefit values are based on what the Company believes would be deemed by HMRC to be
taxable benefits in the UK. The Company also pays the professional fees incurred to complete the CEO’s tax returns and the actual tax incurred
by the CEO on these expenses which are in connection with the fulfilment of his duties. The Company makes no pension contributions
on behalf of the CEO.
The table below sets out the remuneration received by the CEO in respect of the years ending 31 December 2021 and 31 December 2020.
Iván Arriagada1 2021
Iván Arriagada1 2020
Salary/ Fees
$’0002
Benefits
$’000
755
589
36
24
Bonus
$’0003
1,147
1,216
Restricted
Awards
$’0004
Performance
Awards
$’0005,6
Total
remuneration
$’000
Total fixed
remuneration
$’000
Total variable
remuneration
$’000
390
372
1,447
2,474
3,775
4,675
791
612
2,984
4,062
1. Mr Arriagada is paid in Chilean pesos and his remuneration is reported in US dollars adjusted for the exchange rate during the year.
2. The salary in the table above is calculated based on amounts actually paid in Chilean pesos in each month of the relevant year converted into US dollars at the relevant
average exchange rate for the month it was paid.
3. Iván Arriagada’s 2020 annual bonus was paid following the date of publication of the 2020 annual report and the exchange rate used has been updated with the rate
applicable at the date the bonus was paid.
4. Restricted Award amounts are reported in the year of grant based on the face value of the awards on the date of grant.
5. Performance Awards are reported in the year the performance period ends. The Total Shareholder Return (TSR) performance is an estimation based on substantial
completion and it is determined after the publication of this report. The share price used to value these awards is the three-month average share price to the end of 31st
December 2021 performance period £13.98/share and USD/GBP 1.35.
6. The Performance Awards included in the 2020 total vested on 27 March 2021. 50% of the award was based on the TSR performance, which was determined after the
publication of last year’s report. The figure included in the table has been updated to reflect the TSR performance outcome that was 100% of the maximum, leading to a total
award outcome of 99% of the maximum. The increase in the value reported for the 2020 LTIP reflects the change in share price and exchange rate at vesting. The exchange
rate and share price used to value this award are: £16.60/share and USD/GBP 1.37. For the 2021 LTIP, the value attributable to an increase in the Company’s share price is
$754,345. This figure has been calculated using the market value of a share on the date the award was granted versus the average share price for the last three months of
2021.
148
Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic ReportCorporate Governance Annual bonus
Group performance (70%)
The targets and achievements for the 2021 annual bonus are set out below. 70% of the CEO and Executive Committee’s 2021 annual bonuses
were calculated based on the Group’s performance against these criteria in 2021:
Weighting %
Threshold
(0% vesting)
On-target
(50% vesting)
Maximum
(100% vesting)
Actual
achievement
Achievement
(% of maximum)
Measure
Core business (60%)
EBITDA – Mining division1 ($m)
Copper production2 (kt)
17%
3%
Cash costs before by-product credits3 ($/lb)
Corporate expenditure ($m)
Business development – Growth and innovation projects execution (20%)
Growth projects4
Exploration programmes5
Innovation and digital transformation projects6
Sustainability and organisational capabilities (20%)
Safety – Mining division7
People – Diversity and Inclusion Strategy8
Environmental performance9
Social performance10
Total outturn – pre-adjustments
Adjustment (-15%) for not meeting zero fatality target11
5%
5%
5%
5%
13%
3%
4%
Board discretion applied12
Total outturn – post-adjustments
15%
25%
3,854
4,283
679.8
701.5-723.2
1.87
134.2
1.77
127.8
4,711
744.9
1.66
121.5
4,769
721.5
1.79
123.3
Measured according to the schedule and budget
as described in more detail in the footnotes
Measured according to the KPIs and milestones
as described in more detail in the footnotes
Adjustments are described in more detail
in the footnotes
60%
100%
50%
40%
85%
65%
55%
85%
90%
85%
100%
100%
40%
100%
67%
-10%
8%
65%
1. The EBITDA targets were adjusted for exchange rate and copper price fluctuations, the impact of hedging arrangements, and diesel, acid and grinding balls price fluctuations, expenses relating to the
Group’s response to the COVID-19 pandemic, the impact of the water shortage at Los Pelambres and the effect of one-off bonuses paid on conclusion of labour negotiations at Los Pelambres and
Centinela, which were not included in the Group’s budget.
2. 100% basis, except for Zaldívar (50%). The targets for production were adjusted for the impact of the water shortage at Los Pelambres.
3. The cash cost targets were adjusted for the same factors as the EBITDA targets (except for copper price fluctuations which do not impact this measure). The figures for corporate expenditure were
adjusted for the exchange rate and the difference between budgeted annual bonus payments and actual bonus payments made to employees.
4. Split between the Los Pelambres Expansion project (6%), the Centinela Second Concentrator (4%), the Zaldívar Chloride Leach project (1.5%) and the Environmental Impact Assessment (EIA) for the
Zaldívar mine life extension project (1.5%). Targets for the Los Pelambres Expansion project related to execution progress and ensuring that there were no material environmental incidents. Threshold
was achievable upon (75%) a delay of less than three months for the critical construction milestones for the year and (25%) one or fewer serious environmental incidents. Target was achievable upon
(75%) achieving critical construction milestones for the year on schedule and (25%) if there were no serious environmental incidents. Maximum was achievable if further specified construction milestones
were achieved during the year. Targets for the Centinela Second Concentrator and for the Zaldívar Chloride Leach project were based on execution progress. Threshold for the Centinela Second
Concentrator was achievable upon (60%) a delay in the detailed engineering against plan of less than one month and (40%) a delay in the award of critical equipment orders of less than one month.
Target was achievable on (60%) detailed engineering being completed according to plan and (40%) critical equipment orders being awarded on schedule. Maximum was achievable if specified additional
critical milestones were achieved by the end of the year. Threshold for the Zaldívar Chloride Leach project was achievable upon two critical construction milestones being achieved with a delay of less
than three months. Target was achievable on the two critical construction milestones being achieved on schedule. Maximum was achievable if ramp up of the project was achieved before the end of the
year. Threshold for the Zaldívar EIA was achievable if the submission of responses due under the EIA process was delayed by less than one month. Target was achievable on responses being received
on schedule. Maximum was achievable if the environmental permit was granted by the end of the year. The outcome was 55% of the maximum, comprising 35% of the maximum for the Los Pelambres
Expansion project, 75% of the maximum for the Centinela Second Concentrator project, 100% of the maximum for the Zaldívar Chloride Leach project and 50% of the maximum for the EIA for the
Zaldívar mine life extension project.
5. Includes targets to assess the progress of exploration programmes and consolidation of exploration ownership interests. The infill programme on Cachorro deposit was advanced according to the plan.
6. Split between implementation of the Group’s Digital Transformation Programme (67%) and implementation of the “New Ways of Working” project (33%). Targets for the Group’s Digital Transformation
Programme related to implementation progress, the use of autonomous trucks (with threshold at test isolated environment, target at test in productive environment and maximum at target plus
compliance with performance test for autonomous drilling machines in a productive environment) execution progress for integrated remote operations management centre for Centinela (with threshold at
80% of construction and compliance of training plan, target at enabling Infrastructure in Q4 and maximum at target plus remote control and operational in Q4). Targets for the “New Ways of Working”
project related to the adoption of the model with threshold at 50% of adoption, target at 80% of adoption and maximum for 100% of adoption plus level of effectiveness and satisfaction of the deployed
tools. 100% of maximum was achieved for the Group’s Digital Transformation Programme (67% of the overall award), due to compliance with performance test for autonomous drilling machines in
productive environment and enabling infrastructure plus remote and operational control in Q4, and 70% of maximum for the “New Ways of Working” project (23% of the overall award) with a 85% of
adoption of the model.
7. Performance against a target for reducing high potential accidents versus the recorded high potential accidents in 2020, with threshold at no reduction, target a 10% reduction and maximum a 15%
reduction. The actual outcome was a 30% reduction in recorded high potential accidents.
8. Performance against targets for implementation of the Diversity and Inclusion Strategy. 50% was based on the results of an evaluation of the Group culture, with threshold at no improvement in culture,
target of an expected improvement in culture and maximum for an improvement in culture above expectations based on the Committee’s approval of an evaluation overseen by the CEO and Vice
President of Operations. 50% was based on an increase in the percentage of female employees with threshold at 14.8%, target at 16.4% and maximum at 17.2% as at 31 December 2021. The outcome
was 100% of the maximum for the cultural evaluation and 100% of the maximum for the percentage of female employees which stood at 17.4% as at 31 December 2021.
9. The control of risks relating to environmental performance across all operations measured against KPIs relating to compliance with an internal plan for the implementation of controls for high and
moderate environmental risks and a reduction in the Group’s overall emissions of CO2 versus budget for the year with the threshold at 80% implementation of the internal plan and less than 3.5% over the
CO2 emissions budget for the year or no environmental incident with an impact on production or reputation, the target at 100% implementation of the internal plan and no environmental incident with an
impact on production or reputation, compliance with the CO2 emissions target and achieving the Copper Mark at Centinela and Zaldívar, and the maximum at compliance with the target KPIs plus a 3.5%
reduction in CO2 emissions versus the budget for the year. The outcome was 91% of the maximum for reduction in the Group’s overall consumption of CO2 emissions and achieving the Copper Mark at
Centinela and Zaldívar, but the final outcome was 40% of the maximum due to one incident of higher significance reported to the SMA.
10. Performance against the planned execution of social initiatives (50%) and a planned programme to measure the impact of initiatives (50%) with the threshold at 70% implementation for each plan, and the
maximum at full implementation of the execution plans plus a 3% saving versus budget and an agreed action plan defined to address any gaps in the impact measurement plan. The outcome was 100%
of the maximum.
11. A standalone adjustment trigger amounting to 15% of the calculated outcome applies to the Annual Bonus Plan – upwards if there are no fatalities during the year and downwards if there are one or more
fatalities during the year. This resulted in an automatic decrease of 15% to the final Group outcome for 2021. This adjustment reduced the outcome by 10% to 57%, before the application of the Board’s
discretionary adjustment noted below.
12. The Group was forced to respond to unforeseen circumstances arising from the COVID-19 pandemic during the year. The Board believes that the Group’s employees, led by the CEO, handled these
circumstances in an exceptional manner. The Company also achieved record results. Because of these two achievements, the Committee exercised its discretion to increase the calculated outcome of the
Group’s performance, at each of the individual operations, as well as at the Group level, resulting in an increase under the Group’s 2021 Annual Bonus Plan from 57% of the maximum to 65%. This
decision confirmed alignment between the discretion applied to the performance outcome for the individual operations and at Group level, which impacts senior management and the CEO’s pay.
Antofagasta plc Annual Report 2021
149
/ 2021 Directors’ and CEO Remuneration Report continued
Individual performance (30%)
The Committee, based on individual feedback received from each Director, assessed Iván Arriagada’s performance against his individual
objectives as 90% of the maximum for his individual contribution to the business during the year. This performance outcome reflects exceptional
performance during the year, in which all his individual objectives were met or exceeded and count towards 30% of his annual bonus. Iván
Arriagada’s performance against his individual objectives is summarised below:
Key Goals
Keeping the Board well-informed and
responding to feedback received during
the year
Leading the Group’s core values and
developing a culture of excellence
Implementing strategy including in relation
to long-term growth and the management
of environment, social and governance
(ESG) matters
Performance
• Strong communication throughout the year kept the Board apprised of key developments.
• Receptive to Directors’ input, ensuring that the Board’s perspectives, ideas and feedback were
shared and implemented throughout the Group.
• Strong commitment to the Group’s values, demonstration of desired behaviours and effective
leadership of a corporate culture of excellence.
• Demonstrated long-term strategic vision to strengthen the Group’s operations and projects.
• Enhanced the Group’s ESG focus, including setting new CO2 emissions reduction targets.
Focusing on the Group’s core business
• Record financial performance in a challenging business environment.
Developing talent, ensuring appropriate
succession planning and performance
management
Enhancing the organisation to support
efficiency and cost effectiveness
• Evident personal commitment to talent management, succession planning and performance
management.
• Restructured the Operations Vice Presidency and strengthened Zaldívar’s management team.
Pursuing exploration and business
development opportunities
• Progressed the Group’s exploration programme through the COVID-19 pandemic.
• Business development opportunities thoroughly evaluated throughout the year.
Promoting the Group’s reputation, working
with key stakeholders and local
communities
Addressing business challenges including
the Group’s response to the COVID-19
pandemic, diversity and inclusion initiatives
and environmental performance
• Outstanding stakeholder management in response to the COVID-19 pandemic.
• Strong market presence and engagement with investors.
• Outstanding leadership during the COVID-19 pandemic.
• Diversity and inclusion initiatives progressing according to plan.
• Good overall environmental performance.
Performance adjustments, discretion and total bonus for 2021
Based on performance achieved against targets during the 2021 financial year, the Committee determined that Iván Arriagada would receive
a bonus payment of $1,147,493 for 2021. This figure was determined as follows:
Overall performance score
(as a percentage of the maximum) 72% of $1,590,427
Gross annual bonus
= $1,147,493
(70% x 65%) + (30% x 90%) = 72% of the maximum
Calculated in US dollars using the exchange rate as at 31 December 2021 of $1 = Ch$844.7
Because the annual bonus is calculated and paid in Chilean pesos, it is subject to exchange rate movements when reported annually in US dollars.
The amount of bonus paid was not linked to share price appreciation.
150
Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic ReportCorporate Governance Long-term incentives
Anticipated vesting in 2022
As noted in the single figure remuneration table on page 148, performance against the Performance Awards granted in 20191 will not be finally
determined by the Committee until after the date of this report. The performance criteria attaching to these Performance Awards and the
anticipated performance against these criteria, based on estimates as at the date of this report, are as follows:
Weighting
%
50%
Measure
Relative total
shareholder
return2
ESTIMATED
25%
Mineral
resources
increase
12.5%
Project
portfolio
progress
This KPI will vest on
or after 29 March
2022. The estimate
is based on
performance of 8%
greater than the
index as of
1 March 2022.
Resources
increased to 87.5m
tonnes of contained
copper as at 31
December 2021.
Achievement
%
Discretion
applied
100%
No
100%
No
92%
No
Threshold
On-target
Maximum
Performance
Vs. EMIX
Global Mining
Index
Below index
Equal to index
≥5% above
index
% Score
0%
33%
100%
Tonnes of
contained
copper
% Score
% progress in
Los Pelambres
Expansion
project
construction
(70%)
% progress in
Zaldívar
Chloride Leach
project (20%)
% progress in
Phase 2 of the
Los Pelambres
Expansion
project (10%)
81.8m
83.0m
84.2m
0%
50%
100%
50%
progress
against end
goal
75% progress 85% progress Performance of the
construction of the
Los Pelambres
Expansion project is
88%.3 Performance
for the Zaldívar
Chloride Leach
project and Phase 2
of the Los
Pelambres
Expansion project is
100%.
In
construction
Achievement
of feasibility
study
advancement
target
Sustainability
commitments
12.5%
% Score
0%
75%
100%
Agreements
with
communities
near Los
Pelambres
(80%)
CO2 emissions
(20%)
50% or less
progress
against end
goal
50%
progress of
commitments
and goal
75% progress
100% vesting
when 100%
compliance is
achieved.4
75% progress
% Score
0%
75%
All goals achieved.
100%
No
100%
Total outturn
99%5
1. The number of shares and share price used and impact of vesting % for this award is available in the notes to the single figure table and the table setting out long-term
incentive awards outstanding for the CEO from prior periods.
2. The TSR outturn is an estimate as the performance period ends after this report is published and the actual outturn will be included in next year’s report.
3. Progress in the construction of the Los Pelambres Expansion project: The date for this KPI was amended to allow for the 9.5 month delay attributable to COVID-19 and the
additional scope of enabling work added to allow for the future expansion of the desalination plant from 400 l/s to 800 l/s, which was approved after this KPI was set in 2019.
4. 100% compliance means: agreements with communities near Los Pelambres, 100% compliance with historical commitments and agreements and CO2 emissions reduction in
accordance with forecasts set on the grant date, certified by an independent third party.
5. The impact of this vesting level on the CEO’s 2021 remuneration is set out in footnote 5 of the CEO single figure total remuneration table on page 148.
Performance adjustments and discretion
No adjustments or discretion have been applied to any of the performance calculations for the 2019 LTIP outcome.
Antofagasta plc Annual Report 2021
151
/ 2021 Directors’ and CEO Remuneration Report continued
Directors’ single figure
of remuneration (audited)
The remuneration of the Directors for 2021 and 2020 is set out below in US dollars. Unless otherwise noted, amounts paid in Chilean pesos
have been converted at the exchange rate on the first day of the month following the date of payment. Any additional fees payable for serving
on subsidiary and joint venture company boards are also included in the amounts below.
Chairman
Jean-Paul Luksic
Non-Executive Directors
Ollie Oliveira (departed 31 July 2021)
Ramón Jara1
Juan Claro
Andrónico Luksic C
Vivianne Blanlot
Jorge Bande
Francisca Castro
Michael Anglin
Tony Jensen (appointed 13 March 2020)
Eugenia Parot (appointed 20 April 2021)
Total Board
Fees
Benefits2, 3
Total4
20215
$000
2020
$000
2021
$000
2020
$000
2021
$000
2020
$000
1,012
1,005
210
965
278
260
318
314
309
311
333
199
4,509
332
904
272
260
306
296
293
284
198
-
4,150
16
1
7
2
2
2
2
2
-
-
-
34
12
7
5
4
4
4
4
9
10
-
-
59
1,028
1,017
211
972
280
262
320
316
312
311
333
199
4,543
339
910
276
264
309
300
302
294
198
-
4,209
1. During 2021, remuneration of $645,053 (2020 – $597,335) was paid to Asesorías Ramón F Jara Ltda for the provision of services by Ramón Jara. The reported increase
in 2021 is due to a decrease in the Ch$/USD exchange rate, partially offset by an annual adjustment for inflation in Chile. This remuneration is included in the fees attributable
to Ramón Jara of $965,000 (2020 – $904,000).
2. Amounts for Jean-Paul Luksic include the provision of life and health insurance. Amounts for Ramón Jara include the provision of life insurance. These insurances are not
in place for other Directors.
3. All “benefits” included in this table arose in connection with the fulfilment of Directors’ duties and, in particular, the cost of attending Board meetings. These calculations have
been based on what the Company believes would be deemed by HMRC to be taxable benefits in the UK. Given these expenses are incurred by Directors in connection with
the fulfilment of their director duties, the Company also pays the professional fees incurred to complete each Director’s tax returns and the actual tax incurred by Directors
on these expenses. Figures are reported in the year that they are paid, or would be payable, by the Company.
4. Totals reflect the total fixed remuneration for each Director. Directors did not receive any variable remuneration.
5. In April 2021, an increase was made in the fees paid to the members and chairs of each committee. Details of these increases are set out in detail in the 2020 annual report.
Notes relevant to single figure disclosures for 2020 can be found on page 141 of the 2020 annual report. These remain unchanged.
1. Jean-Paul Luksic’s interest relates to shares held
by Aureberg Establishment, an entity that he
ultimately controls.
2. Ramón Jara’s interest relates to shares held by
a close family member.
There have been no changes to the Directors’
interests in the shares of the Company between
31 December 2021 and the date of this report.
The Directors and CEO had no interests in
the shares of the Company during the year
other than those set out above or on page
148. No Director had any material interest in
any contract (other than a service contract in
the case of Ramón Jara) with the Company
or its subsidiary undertakings during the year
other than in the ordinary course of business.
The Group does not have shareholding
guidelines or requirements for Directors, all of
whom are Non-Executive.
The Chairman Mr Luksic and Non-Executive
Director Andrónico Luksic C are members of
the Luksic family. Members of the Luksic family
are interested in the E. Abaroa Foundation
which controls Metalinvest Establishment and
Kupferberg Establishment (which, in aggregate,
hold approximately 60.66% of the Company’s
ordinary shares and approximately 94.12% of
the Company’s preference shares). In addition,
Mr Luksic controls the Severe Studere
Foundation which, in turn, controls Aureberg
Establishment (which holds approximately
4.26% of the Company’s ordinary shares).
This creates significant alignment between
these members of the Board and shareholders.
During the period, no Non-Executive Director
was eligible for any short-term or long-term
incentive awards and no Non-Executive
Director owns any shares as a result of the
achievement of performance conditions.
Payments to past directors (audited)
There were no payments made to
past directors.
Payments for loss of office (audited)
There were no payments made for
loss of office.
Directors and CEO’s shareholding and
share interests (audited)
The Directors who held office at 31 December
2021 had the following interests in the
ordinary shares of the Company:
Ordinary shares of 5p each
31 December
2021
1 January
2021
41,963,110 41,963,110
–
–
5,260
5,260
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Jean-Paul Luksic1
Tony Jensen
Ramón Jara2
Juan Claro
Andrónico Luksic C
Vivianne Blanlot
Jorge Bande
Francisca Castro
Michael Anglin
Eugenia Parot
Ollie Oliveira
152
Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic ReportCorporate Governance
Other relevant information
Long-term incentive plan awards made to the CEO during the financial year (audited)
As stated earlier in this report all LTIP awards are cash awards linked to a notional number of shares and share price performance.
Type of award
Restricted Award
Date of grant
29 Mar 21
Number of
shares/options
16,905
Award as
% of salary
59%
Face value (market value
at date of grant)
$390,000
Performance period
N/A
Performance Award
29 Mar 21
39,442
137%
$910,000
29 Mar 2021 to
29 Mar 2024
Performance conditions attaching to long-term incentive plan awards granted to the CEO in 2021
Vesting date
29 Mar 22
29 Mar 23
29 Mar 24
29 Mar 24
Objective
Relative total shareholder
return vs. Global X Copper
Miners ETF (CopX Index)
Mineral resources increase
(contained copper)
Projects portfolio:
(1) Los Pelambres
concentrate transport system
(2) Desalination plant
expansion
(3) Centinela Second
Concentrator
Sustainability
commitments
Choapa Valley
(30%)
North District
(10%)
Climate
change &
environment
(60%)
Weighting Threshold
50%
Performance below
index
Target
Equal to index
Maximum
≥5% above index
Vesting at
threshold
0%
Vesting at
Vesting at
target
maximum
33% 100%
25%
82.6m tonnes
85.6m tonnes
86.6m tonnes
0%
50% 100%
12.5% (1) and (2) feasibility
study not started.
(3) Not submitted for
Board approval.
(1) and (2) feasibility
study 75% complete.
(3) Submitted for Board
approval and
construction underway.
(1) and (2) feasibility study
100% complete.
(3) Construction progress
in accordance with the
approved plan.
0%
75% 100%
≥ 85% compliance.
Considers existing
initiatives as of 31 March
2021 and those that may
be added by 31 December
2023.
100% includes compliance
with the implementation
timelines and budget.
100% compliance.
0%
75% 100%
0%
75% 100%
0%
75% 100%
12.5% 50% compliance with
75% compliance.
the social management
plan initiatives. Final
compliance is calculated
as the average
compliance of all
initiatives.
50% compliance with
the emissions budget.1
50% compliance with
the climate change
strategy roadmap.
50% compliance with
the internal plan for
extreme, high and
moderate risk
regulatory
requirements.
75% compliance.
1. Emissions budget is according to the 2023 emissions reduction target of 900,000 tonnes of Scope 1 and Scope 2 CO2 emissions by 2023, compared with the 2020 level.
The Committee set stretching targets which incentivise the CEO and Executive Committee members to deliver exceptional performance and
to drive sustainable results. The Committee ensures that targets are appropriately stretching in the context of the business plan and prior year
achievements and that there is an appropriate balance between incentivising the CEO to meet financial targets and to deliver specific non-
financial goals.
Antofagasta plc Annual Report 2021
153
/ 2021 Directors’ and CEO Remuneration Report continued
Long-term incentive plan awards outstanding for the CEO from prior periods (audited)
The following LTIP awards with one or more outstanding tranches have been granted to Mr Arriagada. The number of shares to which each
grant relates is determined based on the limits set out in the LTIP rules, consideration around retention and the share price at the time of grant.
Year of grant
2019
2019
Type of award
Performance Awards
Restricted Awards
Date of grant
29 Mar 19
29 Mar 19
Number of awards as
at start of year
77,516
22,148
Vested during year
N/A
11,074
Lapsed during year
0
0
Under award as at
31 December 2021
77,516
2020
2020
2021
2021
Performance Awards
Restricted Awards
27 Mar 20
27 Mar 20
Performance Awards
Restricted Awards
29 Mar 21
29 Mar 21
105,295
45,126
39,442
16,905
N/A
15,042
N/A
0
0
0
0
0
11,074
105,295
15,042
15,042
39,442
5,635
5,635
5,635
Vesting date
29 Mar 22
29 Mar 21
29 Mar 22
27 Mar 23
27 Mar 21
27 Mar 22
27 Mar 23
29 Mar 24
29 Mar 22
29 Mar 23
29 Mar 24
The performance conditions and face values at grant for the awards granted in 2019 and 2020 are set out in the annual reports for 2019 and
2020. No variations to the original terms of the awards have been made.
Restricted awards are not subject to performance conditions.
CEO pay history and Company performance
The total remuneration of the lead executives in the Group for the past ten years is as follows:
Single figure of remuneration for
the Group’s lead executive $000
Chairman – Jean-Paul Luksic
CEO – Diego Hernández
CEO – Iván Arriagada
Annual bonus payout (% of maximum)
LTIP payout (% of maximum)3
2012
3,598
–
–
–
–
2013
3,615
–
–
–
–
20141
2,196
688
–
69%
76%
2015
–
2,445
–
39%
16%
20162
–
1,525
681
61%
–
2017
–
–
1,790
79%
85%
2018
–
–
2,513
66%
60%
2019
–
–
2,458
83%
65%
20204
–
–
4,675
93%
99%
2021
–
–
3,775
72%
99%
1. The single figure remuneration for the Group’s lead executive in 2014 comprises Jean-Paul Luksic’s remuneration until 1 September 2014 (when he became Non-Executive
Chairman) and Diego Hernández’ remuneration from 1 September 2014. The Chairman was not eligible for variable remuneration and the 2014 percentage figures therefore
only relate to the 2014 annual bonus and LTIP awards vesting to the CEO.
2. The single figure remuneration for the Group’s lead executive in 2016 comprises Diego Hernández’ remuneration until 8 April 2016 (when he stepped down as CEO) and Iván
Arriagada’s remuneration from 8 April 2016 (when he became CEO). No Performance Awards vested to the CEO in 2016.
3. As Restricted Awards do not have a performance element, they are not included in these calculations.
4. 2020 figures have been restated to reflect actual 2020 outcomes as explained in the CEO single figure remuneration table on page 148.
Relative TSR performance
The chart below sets out the TSR performance of the Company over the past ten years. The FTSE All-Share Index and the Global X Copper
Miners ETF (CopX Index) has also been shown over the same period. The FTSE All-Share Index has been selected as an appropriate broad
equity market index benchmark as it is the most broadly-based index to which the Company belongs and relates to the London Stock Exchange,
where the Company’s ordinary shares are traded. The Global X Copper Miners ETF is also shown (new this year) because this index has been
determined to be the most appropriate specific comparator group for the Company, and the Global X Copper Miners is one of the peer groups
used in the Group’s LTIP as set out on page 151.
Indexed total shareholder returns
250
200
150
100
50
0
Dec 11
Dec 12
Dec 13
Dec 14
Dec 15
Dec 16
Dec 17
Dec 18
Dec 19
Dec 20
Dec 21
Antofagasta
FTSE All-Share
Global X Copper Miners ETF
This graph shows the value of £100 invested in Antofagasta on 31 December 2011 compared with £100 invested in the comparative indices.
154
Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic ReportCorporate Governance Change in remuneration of Directors and employees
The table below sets out the percentage change, compared to the previous year, in key elements of the remuneration of the Directors, the CEO
and employees.
Non-Executive Directors1
Jean-Paul Luksic
Ollie Oliveira (departed 31 July 2021)
Ramón Jara
Juan Claro
Andrónico Luksic C
Vivianne Blanlot
Jorge Bande
Francisca Castro
Michael Anglin5
Tony Jensen6 (appointed 13 March 2020)
Eugenia Parot7 (appointed 20 April 2021)
CEO
Company employees2
Mining division employees3
Percentage
change in fees/
base salary4
2021
Percentage
change
in benefits
Percentage
change in
annual bonus
Percentage
change in fees/
base salary
2020
Percentage
change
in benefits
Percentage
change in
annual bonus
1%
8%
7%
2%
–
4%
6%
6%
9%
34%
N/A
28.3%
1.6%
7.2%
36%
-87%
33%
-32%
-32%
-32%
-32%
-73%
–
–
N/A
51.5%
-0.3%
16.3%
–
–
–
–
–
–
–
–
–
–
–
-5.7%
19.7%
-10.6%
–
–
-4.3%
–
–
0.2%
–
1.0%
0.6%
–
–
-8.0%
1.8%
-9.8%
28%
-91%
17%
-64%
23%
-45%
-63%
-29%
-75%
–
–
-65.0%
19.9%
-10.1%
–
–
–
–
–
–
–
–
–
–
–
38.8%
7.5%
7.0%3
1. The percentage change in fees for Directors who served for only part of a comparator year has been annualised.
2. The parent company, Antofagasta plc, has fewer than 10 employees. The reporting of these figures is mandatory, and the parent company is not considered to be an
appropriate comparator group.
3. Mining division employees are considered to be a relevant comparator group because the Mining division accounts for more than 97% of the Group’s revenue and the Annual
Bonus Plan that applies to the Executive Committee is the same plan that applies to the Mining division employees at management and professional level. This annual bonus
figure relates to the percentage change in the average annual bonus for the Mining division employees and does not include any one-off bonuses paid to employees as a
result
of the conclusion of collective bargaining agreements with labour unions.
4. Increase in Committee fees from 1 April 2021.
5. Michael Anglin 's role changed from being a member to the chair of the Project Committee and was also appointed as a member of the Sustainability and Stakeholder
Management Committee.
6. Tony Jensen was appointed as the Senior Independent Director and his role changed from being a member to the chair of the Audit and Risk Committee. He was also
appointed as a member of the Nomination and Governance Committee and stepped down as a member of the Sustainability and Stakeholder Management Committee.
7. Eugenia Parot was appointed as a member of the Project Committee and the Sustainability and Stakeholder Management Committee.
An explanation for the percentage change in remuneration for 2020 can be found in the 2020 Annual Report.
Relative importance of remuneration expenditure
The table below shows the total expenditure on employee remuneration, the distributions to shareholders and tax expenses in 2020 and 2021.
Employee remuneration1
Distributions to shareholders2
Taxation3
2021
$m
498.0
1,404.8
1,035.5
2020
$m
453.8
539.3
515.3
Percentage change
9.7%
160.5%
101.0%
1. Employee remuneration includes salaries and social security costs, as set out in Note 9 to the financial statements.
2. Distributions to shareholders represent the dividends proposed and approved for payment in relation to the year as set out in Note 14 to the financial statements.
3. Tax has been included because it shows the Group’s tax contribution, almost all of which is paid by the Group’s operations in Chile to the Chilean state. The tax expense
represents the current tax charge in respect of corporate tax, mining tax (royalty) and withholding tax, as set out in Note 11 to the financial statements.
Antofagasta plc Annual Report 2021
155
Remuneration and Talent
Management Committee report
Key responsibilities
• The Committee ensures that the Group’s remuneration arrangements support the Group’s purpose and the effective implementation
of strategy and enables the recruitment, motivation, reward and retention of talent.
• The Committee is responsible for setting remuneration for the Chairman, Directors and the CEO and for monitoring the compensation strategy,
level, structure and reward outcomes for Executive Committee members.
• The Committee actively participates in the Group’s talent management strategy, including the review, consideration and implementation
of succession plans for the Executive Committee (excluding the CEO).
• The Committee also reviews workforce remuneration and related policies, including the Diversity and Inclusion Policy, the alignment
of incentives and rewards with the Group’s culture, the terms and limits of collective negotiations with the Company’s unions and the
implementation of policy changes that affect the workforce as a whole.
2021 Remuneration and Talent Management Committee activities
The key matters considered by the Committee are set out in the table below:
Jan 21
Mar 21 #1
Mar 21 #2
Aug 21
Nov 21
Directors’ and Executive Remuneration and Governance
2020 annual bonus and LTIP
2021 annual bonus and LTIP
Review of total shareholder return performance
Review of 2020 performance appraisal and Executive Committee
individual performance
Directors’ Remuneration Report
Annual General Meeting season governance update
LTIP governance
Executive benefits
Workforce, HR policies and talent management
Gender Pay Gap Reporting
CEO to worker pay ratio
HR plan
Talent management and succession planning
2022 Mining division scorecard
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Activities during the year
Executive remuneration
Executive Remuneration
Director Remuneration
Director remuneration
Pay related governance
Pay-related governance
Workforce and HR policies
Workforce and HR policies
Talent management and succession
Talent management and succession
50%
8%
14%
14%
14%
156
Antofagasta plc Annual Report 2021
Engagement with colleagues
As explained in last year’s Annual Report,
when the Committee reviews the
remuneration of Directors and the CEO, it
takes into consideration pay conditions across
the Group. This is set in the context of
different working environments and
geographies and therefore is not a mechanical
process. The Company does not have any
executive directors and the executive pay
policy that applies to the CEO (who is not
a Director) is the same as the Group’s wider
pay policy. This pay policy includes access
to the same benefits, and participation in the
same Annual Bonus Plan. Members of the
Executive Committee and certain key
executives participate in the LTIP and this
plan is the same for the CEO as for the other
participants. The same principles apply to our
workforce remuneration plans as to the CEO,
seeking to drive the same aligned culture,
values and behaviours across the Group.
Approximately 77% of the Group’s employees
are unionised and the number is close to
100% at the operator level. The Committee
reviews gender pay gap, CEO pay ratio
figures and a range of other internal and
external remuneration comparison metrics
and benchmarks when determining the
quantum and structure of the CEO’s
remuneration. This includes feedback
received from shareholders and more general
feedback received from employees on the
Group’s pay policies, including through
regular engagement with union
representatives and oversight of the
parameters for collective bargaining
negotiations.
The Committee communicates with, and
receives feedback from, the workforce
through a variety of channels, including
employee engagement surveys (carried out
during October and November 2021 at
Other InformationFinancial Statements Strategic ReportCorporate Governance implementation of ‘New Ways of Working’ for
employees, providing more flexibility and
adaptability after extensive engagement with
the workforce. This policy applies to the CEO,
senior management and employees.
Additionally, with its advisers, the Group
reviewed market practice and considered the
developing environment for talent and the
needs of the business before making
proposals to the Committee across a number
of areas impacting the reward and talent
proposition for employees. The proposals
sought to continue to maximise value and
increase the overall employee experience and
ensure that the Group remains a world class
employer attracting and retaining the best
mining talent to succeed.
Consideration by the Directors of matters
relating to Directors’ remuneration
During the year the Committee reappointed
Willis Towers Watson to provide advice to
the Committee on remuneration issues.
This reappointment was on the basis of the
Committee’s satisfaction of advice provided in
previous years. The Committee is satisfied
that the advice provided by Willis Towers
Watson was objective and independent and
that no conflict of interest arose in relation to
these services. Willis Towers Watson’s fees
for this work were charged in accordance
with time and materials and amounted
to £73,915. Willis Towers Watson also
provided advice and support during the year
to management, primarily on general
remuneration issues, benchmarking, best HR
practices and ad hoc advice on topics such as
equality and gender remuneration.
In determining that advice received was
independent, the Committee took into account
that Willis Towers Watson is an independent
global professional services firm that is
a signatory to, and adheres to, the Code
of Conduct for Remuneration Consultants.
This can be found at
www.remunerationconsultantsgroup.com.
The Committee also received assistance from
the Chairman, Jean-Paul Luksic, the CEO,
Iván Arriagada, the then Vice President of
Human Resources, Ana Maria Rabagliati and
the Company Secretary, Julian Anderson,
during 2021, none of whom participated in
discussions relating to their own remuneration.
Additionally, part of each Committee meeting
is held without management present to ensure
that individual views or areas of concern can
be debated between Committee members.
The responsibilities of the Committee are
defined by its Terms of Reference, which can
be found on the Company’s website.
Antofagasta Minerals and Minera Antucoya
and scheduled for H1 2022 at Centinela, Los
Pelambres and Zaldívar) and the
corresponding results are shared with the
Committee and the Board. The Group also
conducts ad hoc focused surveys on specific
issues which in 2021 included COVID-19,
employee wellbeing and the Group’s
employee value proposition. The results of the
surveys were also shared with the
Committee. The Committee is regularly
updated on workforce pay and benefits by the
senior management team who consult with
the workforce on issues including
remuneration policy. The workforce receives
regular communications throughout the year
on the Group’s performance targets and
incentive awards. As well as receiving regular
feedback in the performance of their roles,
the senior management team regularly
engage with employees to specifically
understand their views on workforce
remuneration policy and practices.
In addition, the Board as a group and
independently, visit Group operations
throughout the year and hear directly from
employees their views on labour issues
including workforce remuneration, culture
and values as well as the application of
remuneration policy across the Group,
including executive remuneration. More detail
on the Board’s engagement with the
workforce is provided on pages 120 and 121.
Consequently, the Committee has multiple
touchpoints with the workforce in order to
receive feedback on the Group’s workforce
remuneration policy which includes senior
management and the CEO. At the beginning of
every Committee meeting the CEO provides
an update to the Committee on key workforce
issues relating to remuneration and talent and
Committee meetings are focused on this
subject. A summary of matters considered by
the Committee is reported by the Committee
Chair to the full Board following each
Committee meeting. The Committee receives
regular feedback on safety performance,
community relations, the working
environment, operations and critical projects
and the Committee ensures that the
workforce remuneration policy (including
senior management and CEO) and its
outcomes reflect the desired culture and
ensure alignment with the values and
behaviours of the organisation, as well as
being fair and transparent. The Committee
also ensures that the process for setting pay
and establishing KPIs and performance
outcomes across the workforce reflects the
governance and outcomes for senior
management and the CEO. The Committee
ensures these principles and application are
applied to the whole workforce including
senior management and the CEO. In 2021 the
Committee took into account the views of the
workforce in adjusting KPI weightings in the
Annual Bonus Plan and also oversaw the
Talent management and
succession planning
Oversight of talent management and
succession planning is an important part of
the Committee’s responsibilities and directly
relate to the Group’s ability to achieve
long-term sustainable success. The talent
review is carried out on an annual basis,
in order to update succession planning for
key positions, identify talent pools, define
individual development plans and agree
on recruitment needs.
During 2020 and 2021, a new methodology
was to put into practice, looking for a more
effective and simple exercise, to add focus
to implementing a development mindset in
the business. The purpose of this exercise
is to continue to improve employees’ overall
experience and ensure that the Group
remains a world class employer attracting
and retaining the best talent to succeed.
Antofagasta plc Annual Report 2021
157
/ Implementation of the Directors’ and CEO’s remuneration policy in 2022
Implementation of the CEO’s
Remuneration Policy in 2022
Base salary
Base salary from 1 January 2022 will be $795,214 and is not intended to change following the increases and adjustments made during 2021.
The Chilean peso/US dollar exchange rate will continue to be monitored and may result in changes to pay during 2022 if the Committee
considers this appropriate.
Benefits
Benefits will be provided in line with the remuneration policy and prior years.
Annual bonus for 2022
The operation of the bonus for 2022 will be in line with the Remuneration Policy. Bonus measures, weightings and targets have been updated for
2022 in response to a review of our strategic priorities for the forthcoming year. The approach to calculating the targets and outturns will reflect
the 2021 bonus plan.
The performance targets which are not commercially sensitive are set out below. The remaining targets will be disclosed retrospectively.
Measure
Core business
EBITDA1 – Mining division ($m)
Weighting %
Threshold
(0% pay-out)
50%
12%
≤-10%
On-target
(50% pay-out)
Maximum
(100% pay-out)
The Group’s future metals price assumptions are
commercially sensitive and therefore the target for
EBITDA will not be disclosed in advance. The Company
will disclose the 2022 target and outcome in the 2022
Annual Report.
≤+10%
Copper production (kt)2
Cash costs before by-product credits ($/lb)3
Corporate expenditure ($m)4
Business development
Growth projects5
Exploration programmes6
Innovation and digital transformation projects7
Sustainability and organisational capabilities
Safety – Mining division8
People – Diversity and Inclusion Strategy9
Environmental performance10
Social performance11
22%
13%
3%
25%
15%
5%
5%
25%
5%
5%
10%
5%
635
2.14
128.5
655.3-675.6
2.02
122.4
685.7
1.90
116.3
Measured according to the schedule and budget
as described in more detail in the footnotes.
Measured according to the schedule and budget
as described in more detail in the footnotes.
1. The EBITDA targets will be adjusted for exchange rate changes, the impact of hedging arrangements, copper price fluctuations and the impact of any one-off bonuses paid
on conclusion of labour negotiations during the year.
2. 100% basis, except for Zaldívar (50%).
3. The cash cost targets will be adjusted for exchange rate changes, key input price deviations above 20% and the impact of any one-off bonuses paid on conclusion of
labour negotiations.
4. The figures for corporate expenditure will be adjusted for exchange rate changes and the difference between budgeted annual bonus payments and actual bonus payments
made to employees for the year.
5. Progress of growth projects according to predefined milestones. Split between the Los Pelambres Expansion project desalinated water system (6%), the Los Pelambres
Expansion project concentrator plant construction (4%) and the Centinela Second Concentrator project detailed engineering (5%).
6. Maximum and target are defined according to the progress of a planned exploration programme for one target previously discovered to have potential mineralisation and
the consolidation of exploration ownership interests, including infill drilling campaigns and increasing the mineral resources inventory.
7. Split between KPIs for the implementation of Remote Operation Centres for Centinela and Los Pelambres (33.3%), Data Analytics Impact (measured as the cumulative
US dollar annual savings of all implemented data analytics projects) (33.3%) and implementation of the New Ways of Working project (33.3%).
8. Performance against targets for reducing high potential accidents.
9. Performance against diversity and inclusion targets with the threshold at 17.4% female employees, target at 19.3% female employees and maximum at 20.2% female
employees and results of an evaluation of the Group culture in relation to inclusion. A 15% negative trigger applies if the overall target of 1% of people with disabilities is not met.
10. Split between environmental commitments (4%) and the implementation of the Group’s climate change roadmap (6%).
11. Performance against the planned execution of social initiatives, improvements in measured social programmes and the control of risks relating to social incidents
performance within the budget across all operations.
158
Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic ReportCorporate Governance LTIP
The operation of the LTIP for 2022 will be in line with the Remuneration Policy:
• Restricted Awards (30% of overall award) – vest one-third each year over a three-year period following grant.
• Performance Awards (70% of overall award) – awards subject to a three-year performance period with no holding period.
The Performance Awards measures, weightings and targets are set out in the table below:
Weighting
50%
Objective
Relative total shareholder
return
25%
Mineral resources increase
12.5%
Projects’ performance
12.5%
Environmental and social
commitments
Measure
Comparison against Global X Copper Miners ETF (CopX Index) with 0% vesting if the
Company’s performance is below the index during the three-year period, 33% vesting at
equal performance index and 100% vesting at performance equal or greater than the index
plus 5% during the three-year period to the 2024 financial year end.
Maximum is expected to be 87.5 million tonnes of contained copper, with target and threshold
of 86.4 and 83.1 million tonnes of contained copper respectively as at
31 December 2024.
Maximum is achievable if the Concentrate Transportation System (30%) and Desalination
Plant Expansion (40%) projects have an approved environmental impact assessment and are
under construction, and Centinela’s Second Concentrator project meets its respective budget
and construction plans approved by the Board (30%).
This KPI has two parts:
1. Social Management Plan (40%)
Maximum is achievable for equal or greater than 85% compliance with the initiatives included
in the Group’s social management plan, including initiatives existing as at 31 March 2022 and
added before 31 December 2024, on time and on budget; with target at 75% and threshold at
50%. The final score is calculated as the average score of all initiatives.
2. Climate change and environment (60%)
Maximum is achievable for compliance with the Group’s emissions budget according to the
emissions reduction goal of 1 milliont CO2e by 2024, 100% compliance with the climate
change strategy roadmap and 100% compliance with the internal plan to address regulatory
requirements.
Antofagasta plc Annual Report 2021
159
/ Implementation of the Directors’ and CEO’s remuneration policy in 2022 continued
Implementation of the Directors’
Remuneration Policy in 2022
Chairman
Jean-Paul Luksic’s total fee for 2022 is $1,015,000, (2021 – $1,012,000) comprising:
• $730,000 per annum for his services as Chairman of the Board;
• $25,000 per annum for his services as Chairman of the Nomination and Governance Committee; and
• $260,000 per annum for his services as Chairman of the Antofagasta Minerals board.
This fee level reflects his responsibility, experience and time commitment to the role.
Non-Executive Directors
There has been no change to Non-Executive Director base fees of $130,000 since 2012. Given the core role which Antofagasta Minerals plays in
the management of the mining operations and projects, all Directors also serve as directors of Antofagasta Minerals. The annual fee payable to
directors of Antofagasta Minerals remains $130,000 (as it has since 2012). Therefore, the combined base fees payable to Non-Executive
Directors amount to $260,000 per annum. The Board periodically reviews both the structure and levels of fees paid to Non-Executive Directors
and will continue to review these fees from time to time, in accordance with the Directors’ Remuneration Policy.
Benefits that were reported for 2021 will continue to apply. Directors are not expected to receive any other remuneration in 2022.
The fees payable for Committee roles and the role of Senior Independent Director from January 2022 are set out below:
Additional Director fees payable from 1 January 2022
Role
Senior Independent Director
Audit and Risk Committee Chair
Audit and Risk Committee member
Nomination and Governance Committee Chair
Nomination and Governance Committee member
Projects Committee Chair
Projects Committee member
Remuneration and Talent Management Committee Chair
Remuneration and Talent Management Committee member
Sustainability and Stakeholder Management Committee Chair
Sustainability and Stakeholder Management Committee member
AGM voting history
Votes for
Votes against
Votes cast as a percentage of issued share capital
Votes withheld
Additional fees ($000)
33
42
20
25
10
35
20
35
20
35
20
2021 Directors’ and CEO Annual Report on Remuneration
1,062,537,379
97.27%
29,858,307
2.73%
92.12%
2,885,387
2020 Remuneration Policy
1,062,750,494
98.17%
19,832,684
1.83%
91.29%
16,811
I hope that this report demonstrates the importance that we place on the transparency of the decisions we make and how they are arrived at and
I look forward to meeting shareholders at our AGM when I will be available to answer questions.
Francisca Castro
Chair of the Remuneration
and Talent Management Committee
160
Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic ReportCorporate Governance
Directors’ Report
Directors
Directors who have served during the year
and summaries of current Directors’ key skills
and experience are set out in the Corporate
Governance Report on pages 122-124.
Post-balance sheet events
In March 2022 the Company reached an
agreement in principle with Barrick Gold and
the Governments of Pakistan and Balochistan
on a framework that provides for the
reconstitution of the Reko Diq project, and a
pathway for the Company to exit the project.
If definitive agreements are executed and the
conditions to closing are satisfied, a consortium
comprising various Pakistani state-owned
enterprises will acquire an interest in the project
for consideration of approximately $900m
to jointly develop the project with Barrick,
and Antofagasta would exit. If all the conditions
are satisfied during 2022, we would expect
to receive the proceeds in 2023.
Financial risk management
Details of the Company’s policies on financial
risk management are set out in Note 25
to the financial statements.
Results and dividends
The consolidated profit before tax has
increased from $1,413.1 million in 2020
to $3,477.1 million in 2021.
The Board has recommended a final dividend
of 118.9 cents per ordinary share (2020 –
48.5 cents). An interim dividend of 23.6 cents
was paid on 1 October 2021 (2020 interim
dividend – 6.2 cents). This gives total
dividends per share proposed in relation
to 2021 of 142.5 cents (2020 – 54.7 cents)
and a total dividend amount of 1,404.8 million
(2020 – $539.3 million).
Preference shares carry the right to a
fixed cumulative dividend of 5% per annum.
The preference shares are classified within
borrowings and preference dividends are
included within finance costs. The total cost
of dividends paid on preference shares and
recognised as an expense in the income
statement was $0.1 million (2020 – $0.1 million).
Further information relating to dividends
is set out in the Financial Review on page 99
and in Note 14 to the financial statements.
Political contributions
The Group did not make any political
donations during the year ended 31 December
2021 (2020 – nil).
Auditor
The Company’s auditor,
PricewaterhouseCoopers LLP, has indicated
its willingness to continue in office and
a resolution seeking its reappointment will
be proposed at the Annual General Meeting.
Disclosure of information to auditors
The Directors in office at the date of this report
have each confirmed that:
• so far as they are aware, there is no relevant
audit information of which the Group’s
auditor is unaware; and
• they have taken all the steps that they ought
to have taken as Directors in order to make
themselves aware of any relevant audit
information and to establish that the Group’s
auditor is aware of that information.
Capital structure
Details of the authorised and issued ordinary
share capital are shown in Note 30 to the
financial statements. The Company has one
class of ordinary shares, which carry no
right to fixed income. Each ordinary share
carries one vote at any general meeting of
the Company.
Details of the preference share capital are
shown in Note 23 to the financial statements.
The preference shares are non-redeemable
and are entitled to a fixed cumulative dividend
of 5% per annum. Each preference share
carries 100 votes on a poll at any general
meeting of the Company.
When the preference shares were issued, they
each carried one vote at any general meeting
of the Company in parity with the ordinary
shares in issue at that time. The number of
ordinary shares in issue has increased since
then through stock splits and bonus issues and
the preference shares were not split at the
same time as the ordinary shares. Therefore,
in order to maintain proportionate voting rights
attaching to the preference shares, the voting
rights attaching to preference shares have
increased to 100 votes on a poll at any general
meeting of the Company.
There are no specific restrictions on the
transfer of shares or on their voting rights
beyond those standard provisions set out in
the Company’s Articles of Association and
other provisions of applicable law and
regulation (including, in particular, following
a failure to provide the Company with
information about interests in shares as
required by the Companies Act 2006). The
Company is not aware of any agreements
between holders of the Company’s shares
that may result in restrictions on the transfer
of securities or on voting rights.
With regard to the appointment and
replacement of Directors, the Company is
governed by, and has regard to, its Articles
of Association, the UK Corporate Governance
Code 2018, the Companies Act 2006 and
related legislation. The Articles of Association
may be amended by special resolution of
the shareholders. There are no significant
agreements in place that take effect, alter
or terminate upon a change of control of
the Company. There are no agreements in
place between the Company and its Directors
or employees that provide for compensation
for loss of office or employment resulting
from a change of control of the Company.
The percentages of the total nominal share
capital of the Company represented by each
class of share are:
Class
Ordinary
shares of
5p each
Preference
shares of
£1.00 each
Number
in issue
Nominal
value per
share
Percentage
of capital
985,856,695
5p
96.10%
2,000,000
£1
3.90%
Authority to issue shares and authority
to purchase own shares
At the 2021 AGM, held on 12 May 2021,
authority was given to the Directors to allot
unissued relevant securities in the Company
up to a maximum amount equivalent to
two-thirds of the ordinary shares in issue
(of which one-third may only be offered by
way of rights issue). This authority expires
on the date of this year’s AGM, scheduled to
be held on 11 May 2022. No shares have been
issued as at the date of this report or during
the year. The Directors propose to seek
renewal of this authority at this year’s AGM.
A further special resolution passed at the 2021
AGM granted authority to the Directors to allot
equity securities in the Company for cash up to
an aggregate nominal amount of £2,464,641,
without regard to the pre-emption provisions
of the Companies Act 2006. This authority also
expires on the date of this year’s AGM and the
Directors will seek to renew this authority by
way of two separate resolutions, in line with
the Investment Association’s guidance and the
Pre-Emption Group’s Statement of Principles.
Antofagasta plc Annual Report 2021
161
/ Directors’ Report continued
The Company was also authorised by a
shareholders’ resolution passed at the 2021
AGM to purchase up to 10% of its issued
ordinary share capital. Any shares bought
back may be held as treasury shares or, if not
so held, must be cancelled immediately upon
completion of the purchase, thereby reducing
the amount of the Company’s issued and
authorised share capital. This authority will
expire at this year’s AGM and a resolution to
renew the authority for a further year will be
proposed. No shares were purchased by the
Company during the year.
Directors’ interests and indemnities
Details of Directors’ contracts and letters of
appointment, remuneration and emoluments
and their interests in the shares of the Company
as at 31 December 2021, are given in the
Directors’ Remuneration Report. No Director
had any material interest in a contract of
significance (other than a service contract
– see page 152) with the Company or any
subsidiary company during the year.
In accordance with the Company’s Articles
of Association and to the extent permitted
by the laws of England and Wales, Directors
are granted an indemnity from the Company
in respect of liabilities personally incurred
as a result of their office. The Company also
maintained a Directors and Officers’ liability
insurance policy throughout the financial year.
A new policy has been entered into for the
current financial year.
Conflicts of interest
Each year, the Directors complete a form
identifying interests that may constitute a
conflict of interest, including, for example,
directorships in other companies. Directors
are also required to notify the Company
during the year of any relevant changes in
those positions or situations.
The Board, with assistance from the
Nomination and Governance Committee,
considers the potential and actual conflict
situations and decides in relation to each
situation the steps, if any, which need to
be taken to manage it.
The authorisation process is not regarded as
a substitute for managing an actual conflict of
interest if one arises and the monitoring and, if
appropriate, authorisation of actual and potential
conflicts of interest is an ongoing process.
162
Antofagasta plc Annual Report 2021
Substantial shareholdings
As at 31 December 2021, the following
significant holdings of voting rights in the
share capital of the Company had been
disclosed to the Company under Disclosure
and Transparency Rule 5:
Ordinary
share
capital %
Preference
share
capital %
Total
share
capital %
Shareholder
1. Metalinvest
Establishment
50.72
94.12
58.04
2. Kupferberg
Establishment
9.94
3. Aureberg
Establishment
4.26
–
–
8.27
3.54
Metalinvest Establishment and Kupferberg
Establishment are both controlled by the
E. Abaroa Foundation (“Abaroa”), in which
members of the Luksic family are interested.
As explained in Note 37 to the financial
statements, Metalinvest Establishment is the
immediate Parent Company of the Group and
the E. Abaroa Foundation is the Ultimate
Parent Company. Aureberg Establishment is
controlled by the Severe Studere Foundation
that, in turn, is controlled by Jean-Paul Luksic,
the Chairman of the Company.
No interests have been disclosed to
the Company between 31 December 2021
and the date of this report.
Exploration and research and development
The Group’s subsidiaries carry out exploration
and research and development activities that
are necessary to support and expand
the Group’s operations.
Going concern
The Directors, having made appropriate
enquiries, have satisfied themselves that it
is appropriate to adopt the going concern
basis of accounting in preparing the financial
statements, as detailed in Note 1 to the
financial statements. Additionally, the Directors
have considered the Company’s longer-term
viability, as described in their statement
on page 30.
Business relationships with suppliers,
customers and others
A statement of how the Directors have had
regard to the need to foster the Company’s
business relationships with suppliers,
customers and others and the effect of that
regard, including on the principal decisions
made by the Company during the year, are set
out on pages 32-65 of the Strategic Report
and pages 116-117 of the Corporate
Governance Report.
Other statutory disclosures
The Corporate Governance Report on
pages 102-160, the Statement of Directors’
responsibilities on page 163 and Note 25
to the financial statements are incorporated
into this Directors’ Report by reference.
Other information can be found in the
following sections of the Strategic Report:
Future developments in
the business of the Group
Viability statement
Subsidiaries, associates
and joint ventures
Employee engagement
Greenhouse gas emissions
Streamlined energy
and carbon reporting
Location in
Strategic Report
Pages 78-81
Page 30
Pages 68-77
Pages 42-43
Pages 49-50
Pages 49-50
Disclosures required pursuant to Listing Rule
9.8.4R can be found on the following pages of
the Annual Report:
Location in
Annual Report
See Notes 10
and 16 to the
financial
statements.
See pages
144-160 and
Note 4 to the
financial
statements.
Page 111
Statement of interest
capitalised by the Group
(LR 9.8.4(1))
Long-term Incentive Plan
(LR 9.8.4(7))
Relationship agreement
(LR 9.8.4(14))
By order of the Board
Julian Anderson
Company Secretary
24 March 2022
Other InformationFinancial Statements Strategic ReportCorporate Governance / Statement of Directors’ responsibilities
Statement of Directors’
responsibilities in respect
of the financial statements
• the Strategic Report includes a fair review
of the development and performance of
the business and the position of the Group
and parent company, together with a
description of the principal risks and
uncertainties that it faces.
In the case of each director in office at the
date the directors’ report is approved:
• so far as the Director is aware, there is
no relevant audit information of which the
Group and parent company’s auditors are
unaware; and
• they have taken all the steps that they
ought to have taken as a director in order
to make themselves aware of any relevant
audit information and to establish that the
Group and parent company’s auditors are
aware of that information.
By order of the Board
Jean-Paul Luksic
Chairman
24 March 2022
Tony Jensen
Senior Independent
Director
The Directors are responsible for preparing the
Annual Report and Financial Statements 2021
in accordance with applicable law and
regulation.
Company law requires the Directors to prepare
financial statements for each financial year.
Under that law the Directors have prepared the
Group financial statements in accordance with
UK-adopted international accounting standards
and the parent company financial statements in
accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 101
“Reduced Disclosure Framework”, and
applicable law).
Under company law, Directors must not
approve the financial statements unless they
are satisfied that they give a true and fair
view of the state of affairs of the Group and
parent company and of the profit or loss of
the Group for that period. In preparing the
financial statements, the Directors are
required to:
• select suitable accounting policies and then
apply them consistently;
• state whether applicable UK-adopted
international accounting standards have
been followed for the Group financial
statements and United Kingdom Accounting
Standards, comprising FRS 101, have been
followed for the parent company financial
statements, subject to any material
departures disclosed and explained in the
financial statements;
• make judgements and accounting estimates
that are reasonable and prudent; and
• prepare the financial statements on the going
concern basis unless it is inappropriate to
presume that the Group and parent company
will continue in business.
The Directors are responsible for
safeguarding the assets of the Group and
parent company and hence for taking
reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are also responsible for keeping
adequate accounting records that are
sufficient to show and explain the Group’s
and parent company’s transactions and
disclose with reasonable accuracy at
any time the financial position of the Group
and parent company and enable them to
ensure that the financial statements and
the Directors’ Remuneration Report
comply with the Companies Act 2006.
The Directors are responsible for the
maintenance and integrity of the parent
company’s website. Legislation in the United
Kingdom governing the preparation and
dissemination of financial statements may
differ from legislation in other jurisdictions.
Directors’ confirmations
The Directors consider that the Annual Report
and Financial Statements 2021 and accounts,
taken as a whole, is fair, balanced and
understandable and provides the information
necessary for shareholders to assess the
Group’s and parent company’s position and
performance, business model and strategy.
Each of the Directors, whose names
and functions are listed in the Corporate
Governance Report confirm that, to the
best of their knowledge:
• the Group financial statements, which
have been prepared in accordance with
UK-adopted international accounting
standards, give a true and fair view of the
assets, liabilities, financial position and
profit of the Group;
• the parent company financial statements,
which have been prepared in accordance
with United Kingdom Accounting Standards,
comprising FRS 101, give a true and fair view
of the assets, liabilities and financial
position of the parent company; and
Antofagasta plc Annual Report 2021
163
164
Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic Report Corporate Governance Supported by a strong copper price,
our EBITDA increased by 77% to $4.8 billion,
a record for the Group, with an EBITDA
margin of 65%.
Our solid cash flow from operations allowed
us to improve our already strong financial
position, completely deleveraging our balance
sheet to a net cash position of $540 million.
Based on this, our pay-out ratio for 2021 was
100%, a record total dividend of 142.5 cents
per share.
/ Mauricio Ortiz
Chief Financial Officer
/ Financial Statements
FINANCIAL
PERFORMANCE
Independent auditors’ report
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of changes in equity
Consolidated balance sheet
Consolidated cash flow statement
Notes to the financial statements
Parent company financial statements
166
173
174
174
175
176
177
225
Antofagasta plc Annual Report 2021
165
/ Independent auditors’ report to the members of Antofagasta plc
Report on the audit of the financial statements
Opinion
In our opinion:
Our audit approach
Overview
Audit scope
• Antofagasta plc’s Group financial statements and Parent Company
financial statements (the “financial statements”) give a true and fair
view of the state of the Group’s and of the Parent Company’s affairs
as at 31 December 2021 and of the Group’s profit and the Group’s
cash flows for the year then ended;
• the Group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
• the Parent Company financial statements have been properly
prepared in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 101 “Reduced Disclosure Framework”, and
applicable law); and
• We identified two components (2020: two) as individually financially
significant components, which required an audit of their complete
financial information due to their financial significance to the Group,
and a further three components (2020: three) where we concluded
that a full scope audit of the component financial information was
warranted.
• We also determined that specified procedures were necessary in
respect of certain balances within the corporate segment and
transport division to ensure that we had sufficient coverage from
our audit work over each line of the Group’s financial statements.
• Taken together, the components at which audit work was performed
accounted for 98% of Group revenue.
• the financial statements have been prepared in accordance with the
Key audit matters
requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual
Report and Financial Statements 2021 (the “Annual Report”), which
comprise: the consolidated and Parent Company balance sheets as at
31 December 2021; the consolidated income statement, the
consolidated statement of comprehensive income, the consolidated
cash flow statement, and the consolidated and Parent Company
statements of changes in equity for the year then ended; and the notes
to the financial statements, which include a description of the
significant accounting policies.
Our opinion is consistent with our reporting to the Audit and Risk
Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
under ISAs (UK) are further described in the Auditors’ responsibilities
for the audit of the financial statements section of our report. We
believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical
requirements that are relevant to our audit of the financial statements
in the UK, which includes the FRC’s Ethical Standard, as applicable to
listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit
services prohibited by the FRC’s Ethical Standard were not provided.
Other than those disclosed in note 8 to the Group financial statements,
we have provided no non-audit services to the Parent Company or its
controlled undertakings in the period under audit.
• Assessment of indicators of impairment and impairment reversal
for property, plant and equipment and intangible assets, in particular
in respect of the Antucoya cash generating unit and Twin Metals
mining licences (Group) and investments in subsidiaries (Parent)
Materiality
• Overall Group materiality: $108 million (2020: $64 million) based on
5% of three year average profit before tax adjusted for one-off
items.
• Overall Parent Company materiality: $26.5 million (2020: $22.0
million) based on 1% of total assets.
• Performance materiality: $81 million (2020: $48 million) (Group) and
$19.875 million (2020: $16.5 million) (Parent Company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed
the risks of material misstatement in the financial statements.
In planning our work, including identifying areas of audit risk and
determining an appropriate audit response, we were mindful of the
increased focus on the impact of climate change risk on companies
and their financial reporting, and also that the Group has identified
climate change as a principal risk. As part of our audit, we made
enquiries of management to understand its processes to assess the
extent of the potential impact of climate change risks on the Group and
its financial statements. This included consideration of the Group’s
Climate Change Strategy and specific targets to reduce Scope 1 and 2
emissions by 30% by 2025 relative to the 2020 baseline, to use
electricity solely from renewable sources at its mining operations by
the end of 2022, and, in the long term, to achieve carbon neutrality.
We considered the financial statement line items, including accounting
estimates, that are most likely to be impacted by climate change risks
and related commitments. Given that the material impact of climate
change on the Group is likely, principally, to crystallise in the medium
to long term, we concluded that the risk of material misstatement in
the financial statements associated with climate change relates
primarily to the valuation of property, plant and equipment and
associated estimates of future cash flows. Our audit response to this
aspect of climate change risk is included in the related key audit matter
set out below.
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Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic Report Corporate Governance Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified
by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing
the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in
the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
This is not a complete list of all risks identified by our audit.
COVID-19 (Group and Parent Company), which was a key audit matter last year, is no longer included because the key audit matter was to
address the response to the initial year impacted by COVID-19. We have addressed the continuing impact of COVID-19 on the financial statements
but do not consider COVID-19 itself to constitute a key audit matter. Otherwise, the key audit matters below are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
Assessment of indicators of impairment and impairment reversal for
property, plant and equipment and intangible assets, in particular in
respect of the Antucoya cash generating unit and Twin Metals mining
licences (Group) and investments in subsidiaries (Parent)
In accordance with IAS 36 ‘Impairment of Assets’, the Directors are
required to perform an impairment assessment of long-lived assets at
any time an indicator of impairment exists. The Directors considered
various external and internal factors, as set out in IAS 36 ‘Impairment
of Assets’, in assessing whether an indicator of impairment, or in
respect of Antucoya, impairment reversal, existed as at 31 December
2021 in respect of the operating mine cash generating units (“CGUs”),
such as short- and long-term forecast copper prices, the operational
performance of these mines and estimates of movements in indicative
value during the year based on the latest Life of Mine plans. This
assessment included consideration of the impact of climate risks,
including scenario analysis, as detailed in note 5 to the Group financial
statements. The Directors concluded that no indicators of impairment
or impairment reversal existed as at 31 December 2021 in respect of
these CGUs and, therefore, no detailed impairment tests were
performed.
This assessment required judgement on the part of the Directors
in determining whether an impairment trigger existed and was,
therefore, considered a key audit matter. As a result of the strong
copper price environment through the year and an associated
increase in market consensus forecast pricing for copper, there
is a heightened risk of potential impairment reversal at Antucoya,
given the cumulative historical impairments of $716 million recorded
in 2012 and 2016.
Refer to note 5 to the Group financial statements and the Audit and
Risk Committee’s views set out on pages 135 and 136.
We assessed management’s conclusion that there were no indicators
of impairment or impairment reversal, other than for Twin Metals as
discussed below, as at 31 December 2021.
Our procedures included evaluating management’s assessment,
including its completeness by reference to both internal and external
factors, including but not limited to the impact of COVID-19, operational
performance in the year, macro-economic factors including forecast
copper prices, foreign currency exchange rates and market interest
rates, climate change, and expected future production profiles and
capital expenditure as included in the latest Life of Mine plan for each
operation.
In addition, we evaluated management’s quantitative impairment
indicator assessments, and the process by which the indicative
valuations were determined, including verifying the mathematical
accuracy of the cash flow models and agreeing future capital and
operating expenditure to the latest Board approved budgets and the
latest approved Life of Mine plans. We assessed the reasonableness of
the expected capital and operating expenses in light of their historical
levels and recent operational performance, and considered the
competence and objectivity of management’s internal technical experts
who prepared the Life of Mine plans. We evaluated the appropriateness
of key market related assumptions in the indicative valuation models,
including the copper prices, discount rates and foreign currency
exchange rates, with the support of our valuation experts. We also
performed sensitivity analysis around the key assumptions within the
cash flow forecasts, using both lower long-term copper prices and a
stronger Chilean peso. In addition, we assessed the impact of
incorporating estimates of the potential future costs relating to climate
change risks, based on the Task Force on Climate-related Financial
Disclosures “TCFD” scenario analyses prepared by management
during the year, into these quantitative impairment indicator
assessments. In light of the above, we assessed the appropriateness
of the related disclosures in note 5 to the Group financial statements,
including the sensitivities provided. Overall, we identified no material
issues in our work.
Antofagasta plc Annual Report 2021
167
/ Independent auditors’ report to the members of Antofagasta plc continued
Key audit matter
How our audit addressed the key audit matter
During the year, the Directors identified an indicator of impairment of
the intangible asset associated with the Twin Metals project. This asset
was assessed for impairment indicators in accordance with the
requirements of IFRS 6 ‘Exploration for and Evaluation of Mineral
Resources’, with a trigger identified due to the uncertainty associated
with the project as a result of legal challenges and the cancellation of
certain permits and leases. Based on the impairment assessment, an
impairment has been recognised in the year for $150.1 million in
respect of the intangible asset. In addition, associated property, plant
and equipment of $27.5 million has also been impaired.
Refer to note 4 to the Group financial statements and the Audit and
Risk Committee’s views set out on page 135.
As at 31 December 2021, the Parent Company holds investments in
subsidiaries amounting to $529.1 million (2020: $538.6 million),
comprising shares and long-term funding balances that the Directors
do not intend to demand repayment of in the foreseeable future.
Judgement is required to assess whether impairment triggers exist
and, where triggers are identified, to determine whether the
recoverable amount is no lower than the investment carrying value. In
assessing for impairment triggers, management considers whether
the underlying net assets of the investment support the carrying
amount, the nature of the underlying assets and whether other facts
and circumstances, including impairments recorded in the Group
financial statements, could also represent a trigger. For loan balances,
the Directors considered whether the relevant subsidiary could repay
the loans if they were demanded at the balance sheet date.
Based on management’s assessment, no impairment triggers in
respect of the carrying value of investments in subsidiaries were
identified at the balance sheet date, and nor was the recognition of an
expected credit loss warranted.
Refer to note C to the Parent Company’s financial statements.
In respect of Twin Metals, we assessed the developments during 2021
and subsequent to the year end and determined that they should, taken
collectively, be considered as an indicator of impairment as at 31
December 2021. In assessing management’s determination of the
recoverable amount of the associated assets, we read the most recent
pre-feasibility study for the project (prepared in 2019) and met with
management to understand how the various project permits impact
the accessible resource base and potential mine plan, obtained legal
letters from management’s external counsel in respect of the likelihood
of reinstatement of cancelled permits through the available legal
pathways, and considered alternative valuations that might be
determined by a market participant. We also assessed the
appropriateness of the related disclosures in note 4 to the Group
financial statements and considered the appropriateness of the
presentation of the impairment charge as an exceptional item. Overall,
we identified no material issues in our work.
In respect of investments in subsidiaries in the Parent Company, we
performed the following:
• evaluated and challenged management’s assessment and
judgements in relation to the identification of impairment triggers,
including ensuring that consideration had been given to the results
of the Group’s impairment assessment in respect of intangible
assets and property, plant and equipment of the Twin Metals
project;
• independently performed an assessment of other potential internal
and external impairment triggers, including considering the market
capitalisation of the Group with reference to the carrying value of
investments in subsidiaries in the Parent Company; and
• evaluated the ability of the subsidiaries to repay loan balances.
As a result of our work, we are satisfied that the carrying value of the
Parent Company’s investments in subsidiaries is appropriate as at 31
December 2021.
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Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic Report Corporate Governance How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial statements
as a whole, taking into account the structure of the Group and the
Parent Company, the accounting processes and controls, and the
industry in which the Group operates.
The core mining business comprises four mining operations: Los
Pelambres; Centinela; Antucoya and Zaldívar, a joint venture with
Barrick Gold Corporation operated by the Group. These mines produce
copper cathodes, copper concentrates and significant volumes of
by-products.
In addition to mining, the Group has a transport division that provides
rail and road cargo services in northern Chile, predominantly to mining
customers, including to the Group’s own operations.
All of the above operations are located in Chile. In addition, the Group
has corporate head offices located in both Santiago, Chile (Antofagasta
Minerals S.A.) and London, UK (Antofagasta plc). The Group also has
exploration projects in various countries.
In establishing the overall approach to the Group audit, we determined
the type of work that needed to be performed at each of the four mine
sites and the corporate offices in Chile, by us, as the Group
engagement team and by component auditors from PwC Chile
operating under our instruction. Los Pelambres and Centinela were
considered to be financially significant components of the Group, due
to their contribution towards Group profit before tax, and so required
audits of their complete financial information. Antucoya and Zaldívar,
as well as the Parent Company Antofagasta plc, were also subject to
an audit of their complete financial information. We also requested that
component auditors perform specified procedures over the corporate
head office in Chile, and specific line items of other entities within the
Group (including the transport division) to ensure that we had
sufficient coverage from our audit work over each line of the Group’s
financial statements. The Group engagement team also performed
specified procedures in respect of the recoverability of the intangible
asset associated with the Twin Metals’ mining licences. For all other
components, the Group team performed analytical review procedures.
Where work was performed by component auditors, we determined
the level of involvement we needed to have in the audit work to be able
to conclude whether sufficient appropriate audit evidence had been
obtained as a basis for our opinion on the Group financial statements
as a whole. As a result of Covid-19, we were unable to visit Chile for
the 2021 audit. As such, our oversight procedures included the
issuance of formal, written instructions to the component auditors
setting out the work to be performed, regular communication
throughout the audit cycle including regular component calls, review
of certain component auditor workpapers and participation in audit
clearance meetings. In most cases communication was performed
through video conferencing.
Taken together, the components where we performed our audit work
accounted for 98% of consolidated revenue, 97% of consolidated profit
before tax and 94% of consolidated profit before tax adjusted for
one-off items. This was before considering the contribution to our
audit evidence from performing audit work at the Group level, including
disaggregated analytical review procedures, which cover a significant
portion of the Group’s smaller and lower risk components that were
not directly included in our Group audit scope.
The Parent Company financial statements are prepared in the
corporate head office in Santiago, with oversight from the Group
Financial Controller based in London, and are ultimately reviewed and
approved by the Directors alongside the Group financial statements.
The Parent Company financial statements were audited by the Group
engagement team.
Materiality
The scope of our audit was influenced by our application of materiality.
We set certain quantitative thresholds for materiality. These, together
with qualitative considerations, helped us to determine the scope of
our audit and the nature, timing and extent of our audit procedures on
the individual financial statement line items and disclosures and in
evaluating the effect of misstatements, both individually and in
aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for
the financial statements as a whole as follows:
Overall
materiality
How we
determined it
Rationale for
benchmark
applied
Financial statements - Group
$108 million (2020: $64 million).
Financial statements - Parent Company
$26.5 million (2020: $22.0 million).
5% of three year average profit before tax adjusted for
one-off items
1% of total assets
For overall Group materiality, we chose to use an underlying
earnings measure as the benchmark because an underlying
measure removes the impact of material items that do not
recur from year to year or otherwise significantly affect the
underlying trend of performance from continuing operations.
The adoption of a multi-year average benchmark for
materiality responds to longer term trends in commodity
markets and reduces volatility in the measure year-on-year.
Using our professional judgement, we determined materiality
for this year at $108 million, which equates to 3.0% of the
current year’s profit before tax adjusted for one-off items.
For the Parent Company materiality, we determined our
materiality based on total assets, which is more relevant
than a performance-related measure as the Parent
Company is an investment holding company for the
Group.
Antofagasta plc Annual Report 2021
169
/ Independent auditors’ report to the members of Antofagasta plc continued
For each component in the scope of our Group audit, we allocated a
materiality that is less than our overall Group materiality. The range of
materiality allocated across components was between $9 million and
$90 million.
We use performance materiality to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically, we use
performance materiality in determining the scope of our audit and the
nature and extent of our testing of account balances, classes of
transactions and disclosures, for example in determining sample sizes.
Our performance materiality was 75% (2020: 75%) of overall
materiality, amounting to $81 million (2020: $48 million) for the Group
financial statements and $19.875 million (2020: $16.5 million) for the
Parent Company financial statements.
In determining the performance materiality, we considered a number
of factors - the history of misstatements, risk assessment and
aggregation risk and the effectiveness of controls - and concluded that
an amount at the upper end of our normal range was appropriate.
We agreed with the Audit and Risk Committee that we would report to
them misstatements identified during our audit above $5.4 million
(Group audit) (2020: $3.2 million) and $1.325 million (Parent Company
audit) (2020: $1.1 million) as well as misstatements below those
amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the Directors’ assessment of the Group’s and the
Parent Company’s ability to continue to adopt the going concern basis
of accounting included:
• Obtaining and examining management’s base case forecasts and
downside scenarios, checking that the forecasts had been subject to
board review and, in the case of the base case, approval;
• Considering the historical reliability of management forecasting by
comparing budgeted results with actual performance;
• Assessing the future cash flows included in the base case to ensure
that these were consistent with our understanding from work
performed over other key accounting estimates in the financial
statements such as the impairment indicator assessment;
• Performing our own sensitivity analysis to understand the impact of
changes in cash flows and net debt on the resources available to the
Group;
• Assessing the covenants applicable to the Group’s borrowings and
considering whether management’s forecasts supported ongoing
compliance with the covenants; and
• Reading management’s paper to the Audit and Risk Committee in
respect of going concern, and agreeing the forecasts set out in this
paper to the underlying base case cash flow model.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group’s and the
Parent Company’s ability to continue as a going concern for a period of
at least twelve months from when the financial statements are
authorised for issue.
In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
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Antofagasta plc Annual Report 2021
However, because not all future events or conditions can be predicted,
this conclusion is not a guarantee as to the Group’s and the Parent
Company’s ability to continue as a going concern.
In relation to the Directors’ reporting on how they have applied the UK
Corporate Governance Code, we have nothing material to add or draw
attention to in relation to the Directors’ statement in the financial
statements about whether the Directors considered it appropriate to
adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections of this
report.
Reporting on other information
The other information comprises all of the information in the Annual
Report other than the financial statements and our auditors’ report
thereon. The Directors are responsible for the other information,
which includes reporting based on the TCFD recommendations.
Our opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion or,
except to the extent otherwise explicitly stated in this report, any form
of assurance thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. If we identify an
apparent material inconsistency or material misstatement, we are
required to perform procedures to conclude whether there is a
material misstatement of the financial statements or a material
misstatement of the other information. If, based on the work we have
performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing
to report based on these responsibilities.
With respect to the Strategic report and Directors’ Report, we also
considered whether the disclosures required by the UK Companies Act
2006 have been included.
Based on our work undertaken in the course of the audit, the
Companies Act 2006 requires us also to report certain opinions and
matters as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the
audit, the information given in the Strategic Report and Directors’
Report for the year ended 31 December 2021 is consistent with the
financial statements and has been prepared in accordance with
applicable legal requirements.
In light of the knowledge and understanding of the Group and Parent
Company and their environment obtained in the course of the audit, we
did not identify any material misstatements in the Strategic Report and
Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Directors’ and CEO remuneration report
to be audited has been properly prepared in accordance with the
Companies Act 2006.
Other InformationFinancial Statements Strategic Report Corporate Governance Corporate governance statement
The Listing Rules require us to review the Directors’ statements in
relation to going concern, longer-term viability and that part of the
corporate governance statement relating to the Parent Company’s
compliance with the provisions of the UK Corporate Governance Code
specified for our review. Our additional responsibilities with respect to
the corporate governance statement as other information are
described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded
that each of the following elements of the corporate governance
statement is materially consistent with the financial statements and our
knowledge obtained during the audit, and we have nothing material to
add or draw attention to in relation to:
• The Directors’ confirmation that they have carried out a robust
assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal
risks, what procedures are in place to identify emerging risks and an
explanation of how these are being managed or mitigated;
• The Directors’ statement in the financial statements about whether
they considered it appropriate to adopt the going concern basis of
accounting in preparing them, and their identification of any material
uncertainties to the Group’s and Parent Company’s ability to
continue to do so over a period of at least twelve months from the
date of approval of the financial statements;
• The Directors’ explanation as to their assessment of the Group’s
and Parent Company’s prospects, the period this assessment covers
and why the period is appropriate; and
• The Directors’ statement as to whether they have a reasonable
expectation that the Parent Company will be able to continue in
operation and meet its liabilities as they fall due over the period of its
assessment, including any related disclosures drawing attention to
any necessary qualifications or assumptions.
Our review of the Directors’ statement regarding the longer-term
viability of the Group was substantially less in scope than an audit and
only consisted of making inquiries and considering the Directors’
process supporting their statement; checking that the statement is in
alignment with the relevant provisions of the UK Corporate
Governance Code; and considering whether the statement is
consistent with the financial statements and our knowledge and
understanding of the Group and Parent Company and their
environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we
have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial
statements and our knowledge obtained during the audit:
• The Directors’ statement that they consider the Annual Report,
taken as a whole, is fair, balanced and understandable, and provides
the information necessary for the members to assess the Group’s
and Parent Company’s position, performance, business model and
strategy;
• The section of the Annual Report that describes the review of
effectiveness of risk management and internal control systems; and
• The section of the Annual Report describing the work of the Audit
and Risk Committee.
We have nothing to report in respect of our responsibility to report
when the Directors’ statement relating to the Parent Company’s
compliance with the Code does not properly disclose a departure from
a relevant provision of the Code specified under the Listing Rules for
review by the auditors.
Responsibilities for the financial statements and the audit
Responsibilities of the Directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities
in respect of the financial statements, the Directors are responsible for
the preparation of the financial statements in accordance with the
applicable framework and for being satisfied that they give a true and
fair view. The Directors are also responsible for such internal control
as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Directors are responsible for
assessing the Group’s and the Parent Company’s ability to continue as
a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Parent Company
or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditors’ report that
includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with
laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in
respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud, is
detailed below.
Based on our understanding of the Group and industry, we identified
that the principal risks of non-compliance with laws and regulations
related to breaches of environmental regulations, health and safety
regulations, and unethical and prohibited business practices, and we
considered the extent to which non-compliance might have a material
effect on the financial statements. We also considered those laws and
regulations that have a direct impact on the financial statements such
as the Companies Act 2006 and tax law in the jurisdictions in which
the Group operates. We evaluated management’s incentives and
opportunities for fraudulent manipulation of the financial statements
(including the risk of override of controls), and determined that the
principal risks were related to the posting of inappropriate journal
entries to increase revenue or reduce expenditure, and management
bias in accounting estimates. The Group engagement team shared this
risk assessment with the component auditors so that they could
include appropriate audit procedures in response to such risks in their
Antofagasta plc Annual Report 2021
171
/ Independent auditors’ report to the members of Antofagasta plc continued
work. Audit procedures performed by the Group engagement team
and/or component auditors included:
• Inquiries with management, including the Group’s Vice President of
Legal, regarding its consideration of known or suspected instances
of non-compliance with laws and regulations;
• Obtaining legal letters from the Group’s external legal advisers in
respect of litigation and claims and other such matters, where
considered necessary;
• Evaluation of management’s controls designed to prevent and detect
irregularities;
• Challenging assumptions and judgements made by management in
respect of critical accounting judgements and significant accounting
estimates; and
• Identifying and testing journal entries, in particular any journal
entries posted with certain unusual account combinations.
There are inherent limitations in the audit procedures described above.
We are less likely to become aware of instances of non-compliance
with laws and regulations that are not closely related to events and
transactions reflected in the financial statements. Also, the risk of not
detecting a material misstatement due to fraud is higher than the risk
of not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain
transactions and balances, possibly using data auditing techniques.
However, it typically involves selecting a limited number of items for
testing, rather than testing complete populations. We will often seek to
target particular items for testing based on their size or risk
characteristics. In other cases, we will use audit sampling to enable us
to draw a conclusion about the population from which the sample is
selected.
A further description of our responsibilities for the audit of the financial
statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditors’
report.
Use of this report
This report, including the opinions, has been prepared for and only for
the Parent Company’s members as a body in accordance with Chapter
3 of Part 16 of the Companies Act 2006 and for no other purpose. We
do not, in giving these opinions, accept or assume responsibility for
any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in
our opinion:
• we have not obtained all the information and explanations we
require for our audit; or
• adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
• certain disclosures of Directors’ remuneration specified by law are
not made; or
• the Parent Company financial statements and the part of the
Directors’ and CEO remuneration report to be audited are not in
agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit and Risk Committee, we
were appointed by the members on 20 May 2015 to audit the financial
statements for the year ended 31 December 2015 and subsequent
financial periods. The period of total uninterrupted engagement is seven
years, covering the years ended 31 December 2015 to 31 December 2021.
Other matter
In due course, as required by the Financial Conduct Authority
Disclosure Guidance and Transparency Rule 4.1.14R, these financial
statements will form part of the ESEF-prepared annual financial report
filed on the National Storage Mechanism of the Financial Conduct
Authority in accordance with the ESEF Regulatory Technical Standard
(‘ESEF RTS’). This auditors’ report provides no assurance over
whether the annual financial report will be prepared using the single
electronic format specified in the ESEF RTS.
Simon Morley (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
24 March 2022
172
Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic Report Corporate Governance Consolidated income statement
For the year ended 31 December 2021
Group revenue
Total operating costs
Operating profit from subsidiaries
Net share of results from associates and joint ventures
Impairment of investment in associate
Total profit from operations, associates and joint
ventures
Note(s)
6,7
6,8
6,18
3
8
Investment income
Interest expense
Other finance items
Net finance income /(expense)
Profit before tax
Income tax expense
Profit from continuing operations
Profit from discontinued operations
Profit for the year
Attributable to:
Non-controlling interests
Owners of the parent
Basic earnings per share
From continuing operations
From discontinued operations
Total continuing and discontinued operations
10
6
11
6
12
31
13
13
Excluding
exceptional
items
2021
$m
7,470.1
(3,891.1)
3,579.0
59.7
–
Exceptional
Items
2021
$m
2021
$m
–
(177.6)
(177.6)
7,470.1
(4,068.7)
3,401.4
–
–
59.7
–
Excluding
exceptional
items
2020
$m
5,129.3
(3,537.1)
1,592.2
5.1
–
3,638.7
(177.6)
3,461.1
1,597.3
5.0
(63.4)
74.4
16.0
–
–
–
–
5.0
(63.4)
74.4
16.0
18.9
(77.1)
(45.2)
(103.4)
Exceptional
Items
2020
$m
–
–
–
–
(80.8)
(80.8)
–
–
–
–
3,654.7
(177.6)
3,477.1
1,493.9
(80.8)
(1,332.9)
2,321.8
–
90.6
(87.0)
–
(1,242.3)
2,234.8
–
2,321.8
(87.0)
2,234.8
(546.2)
947.7
7.3
955.0
19.7
(61.1)
–
(61.1)
2020
$m
5,129.3
(3,537.1)
1,592.2
5.1
(80.8)
1,516.5
18.9
(77.1)
(45.2)
(103.4)
1,413.1
(526.5)
886.6
7.3
893.9
917.4
27.2
944.6
1,404.4
(114.2)
1,290.2
408.4
546.6
(20.9)
(40.2)
387.5
506.4
142.5
–
142.5
(11.6)
–
(11.6)
130.9
–
130.9
54.7
0.7
55.4
(4.1)
–
(4.1)
US cents
50.6
0.7
51.3
Antofagasta plc Annual Report 2021
Antofagasta plc Annual Report 2021
173
117733
/ Financial statements continued
Consolidated statement of comprehensive income
For the year ended 31 December 2021
Profit for the year
Items that may be or were subsequently reclassified to profit or loss:
Losses on cash flow hedges
Losses in fair value of cash flow hedges transferred to the income statement
Currency translation adjustment
Tax relating to these items
Total items that may be or were subsequently reclassified to profit or loss
Items that will not be subsequently reclassified to profit or loss:
Actuarial gains on defined benefit plans
(Losses)/gains in fair value of equity investments
Tax relating to these items
Total items that will not be subsequently reclassified to profit or loss
Total other comprehensive income/(expense)
Total comprehensive income for the year
Attributable to:
Non-controlling interests
Equity holders of the Company
Total comprehensive income for the year – continuing operations
Total comprehensive income for the year – discontinued operations
Note(s)
2021
$m
2020
$m
6
2,234.8
893.9
25
27
19
(90.9)
126.8
(1.6)
(4.4)
29.9
3.1
(2.1)
(2.5)
(1.5)
28.4
2,263.2
(32.1)
3.4
0.9
2.4
(25.4)
9.8
5.5
(2.6)
12.7
(12.7)
881.2
31
952.8
1,310.4
383.2
498.0
2021
$m
2,263.2
–
2,263.2
2020
$m
873.9
7.3
881.2
Consolidated statement of changes in equity
For the year ended 31 December 2021
At 1 January 2020
Capital increases from non-controlling interest
(Note 23)1
Profit for the year
Other comprehensive (expense)/income for the
year
Dividends
At 31 December 2020
Profit for the year
Other comprehensive income for the year
Dividends
At 31 December 2021
Share
premium
$m
199.2
–
Other
reserves
(Note 30)
$m
(18.1)
–
Retained
earnings
(Note 30)
$m
7,112.8
–
Equity
attributable
to equity
owners of
the parent
$m
7,383.7
–
Non-
controlling
interests
$m
Total
equity
$m
2,017.3
210.0
9,401.0
210.0
–
–
–
(12.5)
506.4
4.1
506.4
(8.4)
387.5
(4.3)
893.9
(12.7)
–
199.2
–
–
–
199.2
–
(30.6)
–
20.2
–
(10.4)
(131.1)
7,492.2
1,290.2
–
(710.8)
8,071.6
(131.1)
7,750.6
1,290.2
20.2
(710.8)
8,350.2
(280.0)
2,330.5
944.6
8.2
(604.5)
2,678.8
(411.1)
10,081.1
2,234.8
28.4
(1,315.3)
11,029.0
Share capital
$m
89.8
–
–
–
–
89.8
–
–
–
89.8
1. In 2020, a capital contribution of $210 million was received from Marubeni, the minority partner at Antucoya, in order to replace part of Antucoya’s subordinated debt financing
with equity.
174
117744
Antofagasta plc Annual Report 2021
Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic Report Corporate Governance
Consolidated balance sheet
As at 31 December 2021
Non-current assets
Intangible assets
Property, plant and equipment
Other non-current assets
Inventories
Investment in associates and joint ventures
Trade and other receivables
Derivative financial instruments
Equity investments
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Current tax assets
Derivative financial instruments
Liquid investments
Cash and cash equivalents
Total assets
Current liabilities
Short-term borrowings
Derivative financial instruments
Trade and other payables
Short-term decommissioning and restoration provisions
Current tax liabilities
Non-current liabilities
Medium and long-term borrowings
Trade and other payables
Liabilities in relation to joint ventures
Post-employment benefit obligations
Decommissioning and restoration provisions
Deferred tax liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Other reserves
Retained earnings
Equity attributable to equity owners of the parent
Non-controlling interests
Total equity
Note(s)
2021
$m
2020
$m
15
16
20
18
21
25
19
28
20
21
25
22
22
23
25
24
29
23
24
18
27
29
28
30
30
30
30
31
–
10,538.5
1.3
270.4
905.8
51.2
–
8.7
96.8
11,872.7
532.8
1,146.1
13.7
–
2,969.7
743.4
5,405.7
17,278.4
(337.1)
–
(829.1)
(33.8)
(374.2)
(1,574.2)
(2,835.5)
(16.8)
(0.6)
(107.5)
(302.3)
(1,412.5)
(4,675.2)
(6,249.4)
11,029.0
89.8
199.2
(10.4)
8,071.6
8,350.2
2,678.8
11,029.0
150.1
9,851.9
2.6
278.1
914.6
55.9
0.3
11.1
6.4
11,271.0
592.7
1,016.9
49.8
1.1
2,426.0
1,246.8
5,333.3
16,604.3
(603.4)
(37.4)
(808.8)
(22.2)
(153.9)
(1,625.7)
(3,151.4)
(11.0)
(1.1)
(123.2)
(498.0)
(1,112.8)
(4,897.5)
(6,523.2)
10,081.1
89.8
199.2
(30.6)
7,492.2
7,750.6
2,330.5
10,081.1
The financial statements on pages 173 to 224 were approved by the Board of Directors on 24 March 2022 and signed on its behalf by
Jean-Paul Luksic
Chairman
Tony Jensen
Senior Independent Director
Antofagasta plc Annual Report 2021
Antofagasta plc Annual Report 2021
175
117755
/ Financial statements continued
Consolidated cash flow statement
For the year ended 31 December 2021
Cash flow from continuing operations
Interest paid
Income tax paid
Net cash from operating activities
Investing activities
Capital contributions to joint ventures
Dividends from associates
Acquisition of mining properties
Proceeds from sale of property, plant and equipment
Purchases of property, plant and equipment
Net increase in liquid investments
Interest received
Net cash used in investing activities
Financing activities
Dividends paid to equity holders of the Company
Dividends paid to preference shareholders of the Company
Dividends paid to non-controlling interests
Capital increase from non-controlling interest 1
Proceeds from issue of new borrowings
Repayments of borrowings
Principal elements of lease payments
Net cash (used in)/generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Net (decrease)/increase in cash and cash equivalents
Effect of foreign exchange rate changes
Cash and cash equivalents at end of the year
Note(s)
32
18
18
22
14
14
31
32
32
32
32
32
22,32
2021
$m
4,507.7
(60.7)
(776.9)
3,670.1
(33.5)
142.5
(4.5)
1.5
(1,773.0)
(543.7)
7.4
(2,203.3)
(710.8)
(0.1)
(604.5)
–
149.1
(694.7)
(88.9)
(1,949.9)
(483.1)
1,246.8
(483.1)
(20.3)
743.4
2020
$m
2,431.1
(52.7)
(319.7)
2,058.7
(7.2)
–
(1.5)
0.8
(1,305.9)
(886.3)
12.6
(2,187.5)
(131.1)
(0.1)
(280.0)
210.0
2,398.6
(1,393.8)
(86.5)
717.1
588.3
653.7
588.3
4.8
1,246.8
1. In 2020, a capital contribution of $210 million was received from Marubeni, the minority partner at Antucoya, in order to replace part of Antucoya’s subordinated debt financing
with equity.
176
117766
Antofagasta plc Annual Report 2021
Antofagasta plc Annual Report 2021
Other InformationFinancial Statements Strategic Report Corporate Governance
Notes to the financial statements
1 Basis of preparation
The financial statements have been prepared in accordance with UK-
adopted International Accounting Standards. The financial statements
have been prepared on the going concern basis.
On 31 December 2020, IFRS as adopted by the European Union at that
date was brought into UK law and became UK-adopted International
Accounting Standards, with future changes being subject to
endorsement by the UK Endorsement Board. Antofagasta plc
transitioned to UK-adopted International Accounting Standards in its
financial statements on 1 January 2021. This change constitutes a
change in accounting framework. However, there is no impact on
recognition, measurement or disclosure in the period reported as a
result of the change in framework.
Going concern
The Directors have assessed the going concern status of the Group,
considering the period to 31 December 2023.
The Group’s business activities, together with those factors likely to
affect its future performance, are set out in the Strategic Report, and in
particular within the Operating Review. Details of the cash flows of the
Group during the period, along with its financial position at the period-
end, are set out in the Financial Review. The consolidated financial
statements include details of the Group’s cash, cash equivalents and
liquid investment balances in Note 22, and details of borrowings are set
out in Note 23.
When assessing the going concern status of the Group, the Directors
have considered in particular its financial position, including its
significant balance of cash, cash equivalents and liquid investments and
the terms and remaining durations of the borrowing facilities in place.
The Group had a strong financial position as at 31 December 2021, with
combined cash, cash equivalents and liquid investments of $3,713.1
million. Total borrowings were $3,172.6 million, resulting in a net cash
position of $540.5 million. Of the total borrowings, only 11% is repayable
within one year, and 13% repayable between one and two years.
When assessing the prospects of the Group, the Directors have
considered the Group’s copper price forecasts, the Group’s expected
production levels, operating cost profile and capital expenditure. These
forecasts are based on the Group’s budgets and Life-of-Mine models,
which are also used when assessing relevant accounting estimates.
This analysis has focused on the existing asset base of the Group,
without factoring in potential development projects, which is considered
appropriate for an assessment of the Group’s ability to manage the
impact of a depressed economic environment. The analysis has only
included the draw-down of existing committed borrowing facilities, and
has not assumed that any new borrowing facilities will be put in place.
The Directors have assessed the key risks which could impact the
prospects of the Group over the going concern period and consider the
most relevant to be risks to the copper price outlook, as this is the factor
most likely to result in significant volatility in earnings and cash
generation. Robust down-side sensitivity analyses have been
performed, assessing the impact of:
• A significant deterioration in the future copper price forecasts by 10%
throughout the going concern period.
• In addition to the above deterioration in the copper price throughout
the review period, an even more pronounced short-term reduction of
15% in the copper price for a period of three months.
• The Group’s most significant individual operational risks. In respect of
the El Mauro tailings storage facility at Los Pelambres, the risk of a
major failure is considered to be extremely low, principally because of
the nature of the design and construction, as well as the rigorous
ongoing monitoring and controls and its performance since it was
built. Given this, it has not been considered appropriate to include a
scenario incorporating the possible impact of a potential major dam
failure within the sensitivity analyses.
• A shut-down of the Group’s operations for a period of three months
as the result of COVID-19 or other issues.
• The proposed new Chilean mining royalty, taking into account the
Group’s existing tax stability agreements.
These stress-tests each indicated results which could be managed in
the normal course of business. The analysis indicated that the Group is
expected to remain in compliance with all of the covenant requirements
of its borrowings throughout the review period and retain sufficient
liquidity. Based on their assessment of the Group’s prospects and
viability, the Directors have formed a judgement, at the time of
approving the financial statements, that there are no material
uncertainties that the Directors are aware of that cast doubt on the
Group’s going concern status and that there is a reasonable expectation
that the Group has adequate resources to continue in operational
existence for the period to 31 December 2023. The Directors therefore
consider it appropriate to adopt the going concern basis of accounting in
preparing its financial statements.
Company structure
Antofagasta plc is a company limited by shares, incorporated and
domiciled in the United Kingdom at 103 Mount Street, London W1K 2TJ.
The immediate parent of the Group is Metalinvest Establishment, which
is controlled by the E. Abaroa Foundation, in which members of the
Luksic family are interested.
The nature of the Group’s operations is mining and exploration activities
and the transport of rail and road cargo.
A) Adoption of new accounting standards
The following accounting standards, amendments and interpretations
became effective in the current reporting period:
• Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9,
IAS 39, IFRS 7, IFRS 4 and IFRS 16)
The application of these standards and interpretations effective for the
first time in the current year has had no significant impact on the
amounts reported in these financial statements.
B) Accounting standards issued but not yet effective
At the date of authorisation of these financial statements, the following
standards and interpretations, which have not been applied in these
financial statements, were in issue but not yet effective:
• IFRS 17, Insurance Contracts
• Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (Amendments to IAS 12)
• Classification of Liabilities as Current or Non-Current (Amendments
to IAS 1)
• Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS
Practice Statement 2
• Definition of Accounting Estimates – Amendments to IAS 8
• Reference to the Conceptual Framework (Amendments to IFRS 3)
• Property, Plant and Equipment – Proceeds before Intended Use
(Amendments to IAS 16)
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When the Group loses control of a subsidiary, a gain or loss is
recognised in profit or loss and is calculated as the difference between
(i) the aggregate of the fair value of the consideration received and the
fair value of any retained interest and (ii) the previous carrying amount
of the assets (including goodwill), and liabilities of the subsidiary and any
non-controlling interests. When assets of the subsidiary are carried at
revalued amounts or fair values and the related cumulative gain or loss
has been recognised in other comprehensive income and accumulated
in equity, the amounts previously recognised in other comprehensive
income and accumulated in equity are accounted for as if the Group had
directly disposed of the relevant assets (ie reclassified to profit or loss
or transferred directly to retained earnings as specified by applicable
IFRSs). The fair value of any investment retained in the former
subsidiary at the date when control is lost is regarded as the fair value
on initial recognition for subsequent accounting under IFRS 9 Financial
Instruments: Recognition and Measurement or, when applicable, the
cost on initial recognition of an investment in an associate or a joint
venture.
Acquisitions and disposals are treated as explained in Note 2(G) relating
to business combinations and goodwill.
Investments in associates
C)
An associate is an entity over which the Group is in a position to
exercise significant influence, but not control or joint control, through
the power to participate in the financial and operating policy decisions of
that entity. The results and assets and liabilities of associates are
incorporated in these consolidated financial statements using the equity
method of accounting. This requires recording the investment initially at
cost to the Group and then, in subsequent periods, adjusting the
carrying amount of the investment to reflect the Group’s share of the
associate’s results less any impairment and any other changes to the
associate’s net assets such as dividends. When the Group loses control
of a former subsidiary but retains an investment in associate in that
entity, the initial carrying value of the investment in associate is
recorded at its fair value at that point. When the Group’s share of losses
of an associate exceeds the Group’s interest in that associate, the Group
discontinues recognising its share of further losses. Additional losses
are recognised only to the extent that the Group has incurred legal or
constructive obligations or made payments on behalf of the associate.
D) Joint arrangements
A joint arrangement is an arrangement in which two or more parties
have joint control. Joint arrangements are accounted depending on the
nature of the arrangement.
i) Joint ventures – are accounted for using the equity method in
accordance with IAS 28 Investment in Associates and Joint
Ventures as described in Note 18.
ii) Joint operations – are accounted for recognising directly the
assets, obligations, revenues and expenses of the joint operator in
the joint arrangement. The assets, liabilities, revenues and expenses
are accounted for in accordance with the relevant IFRS.
When a Group entity transacts with its joint arrangements, profits and
losses resulting from the transactions with the joint arrangements are
recognised in the Group’s consolidated financial statements only to the
extent of interests in the joint arrangements that are not related to
the Group.
/ Notes to the financial statements continued
1 Basis of preparation continued
• Onerous Contracts – Cost of Fulfilling a Contract (Amendments to
IAS 37)
• Annual Improvements to IFRS Standards 2018-2020 (Amendments
to IFRS 1, IFRS 9, IFRS 16 and IAS 41)
The item which is expected to have most relevance to the Group is the
amendment to IAS 16 Property, Plant and Equipment – Proceeds before
intended use. Currently the Group deducts amounts received from the
sale of products during the initial ramp-up of new projects, before
commercial production is achieved, from the capital cost of the project.
Under the amendment to IAS 16, such amounts will instead be
recognised as revenue in the income statement along with a
corresponding allocation of related operating expenses, which is likely to
result in increased revenue and operating expenses and a higher initial
capitalised amount. The amendment will be applicable in the year
beginning on 1 January 2022. The amendment would apply
retrospectively only to relevant projects in progress at 1 January 2021
which were generating proceeds, and there were no such projects at
1 January 2021.
2 Principal accounting policies
A) Accounting convention
These financial statements have been prepared under the historical cost
convention as modified by the use of fair values to measure certain
financial instruments, principally provisionally priced sales as explained
in Note 2(F) and financial derivative contracts as explained in Note 2(W).
B) Basis of consolidation
The financial statements comprise the consolidated financial statements
of Antofagasta plc (“the Company” or "the Parent" or "the Parent
Company") and its subsidiaries (collectively “the Group”).
Subsidiaries – A subsidiary is an entity over which the Group has
control, which is the case when the Group is exposed to, or has rights
to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity. The
consolidated financial statements include all the assets, liabilities,
revenues, expenses and cash flows of the Company and its subsidiaries
after eliminating inter-company balances and transactions. For partly-
owned subsidiaries, the net assets and profit attributable to non-
controlling shareholders are presented as “Non-controlling interests” in
the consolidated balance sheet and consolidated income statement.
Non-controlling interests that are present ownership interests and
entitle their holders to a proportionate share of the entity’s net assets in
the event of liquidation may be initially measured either at fair value or
at the non-controlling interests’ proportionate share of the recognised
amounts of the acquiree’s identifiable net assets. The choice of
measurement basis is made on an acquisition-by-acquisition basis.
Other types of non-controlling interests are measured at fair value or,
when applicable, on the basis specified in another IFRS. Subsequent to
acquisition, the carrying amount of non-controlling interests is the
amount of those interests at initial recognition plus the non-controlling
interests’ share of subsequent changes in equity. Total comprehensive
income is attributed to non-controlling interests even if this results in
the non-controlling interests having a deficit balance.
Changes in the Group’s ownership interests in subsidiaries that do not
result in the Group losing control over the subsidiaries are accounted
for as equity transactions. The carrying amounts of the Group’s
interests and the non-controlling interests are adjusted to reflect the
changes in their relative interests in the subsidiaries. Any difference
between the amount by which the non-controlling interests are adjusted
and the fair value of the consideration paid or received is recognised
directly in equity and attributed to owners of the Company.
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E) Currency translation
The functional currency for each entity in the Group is determined as
the currency of the primary economic environment in which it operates.
Transactions in currencies other than the functional currency of the
entity are translated at the exchange rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in currencies
other than the functional currency are retranslated at year end
exchange rates. Gains and losses on retranslation are included in net
profit or loss for the period within other finance items.
The presentational currency of the Group and the functional currency of
the Company is the US dollar. On consolidation, income statement items
for entities with a functional currency other than the US dollar are
translated into US dollars at average rates of exchange. Balance sheet
items are translated at period-end exchange rates. Exchange
differences on translation of the net assets of such entities are taken to
equity and recorded in a separate currency translation reserve.
Cumulative translation differences arising after the transition date to
IFRS are recognised as income or as expenses in the income statement
in the period in which an operation is disposed of.
On consolidation, exchange gains and losses which arise on balances
between Group entities are taken to reserves where that balance is, in
substance, part of the net investment in a foreign operation, ie where
settlement is neither planned nor likely to occur in the foreseeable
future. All other exchange gains and losses on Group balances are
recognised in the income statement within other finance items.
Fair value adjustments and any goodwill arising on the acquisition of
a foreign entity are treated as assets of the foreign entity and translated
at the period-end rate.
F) Revenue recognition and other income
Revenue represents the value of goods and services supplied to third
parties during the year. Revenue is measured at the fair value of
consideration received or receivable, and excludes any applicable
sales tax.
Revenue is recognised when the Group satisfies a performance
obligation by transferring a promised good or service (ie an asset) to a
customer. An asset is transferred when (or as) the customer obtains
control of that asset.
For the Group’s mining products, the customer generally gains control
over the material when it has been loaded at the port of loading, and so
this is the point of revenue recognition. The Group sells a significant
proportion of its products on Cost, Insurance & Freight (CIF) Incoterms,
which means that the Group is responsible for shipping the product to a
destination port specified by the customer. The shipping service
represents a separate performance obligation, and revenue in relation
to such services is recognised separately from the sale of the material
over time as the shipping service is provided, along with the associated
costs. Shipment revenue is recognised at the contracted price to the
Group as this reflects the standalone selling price.
Revenue from mining activities is recorded at the invoiced amounts with
an adjustment for provisional pricing at each reporting date, as
explained below. For copper and molybdenum concentrates, which are
sold to smelters and roasting plants for further processing into fully
refined metal, the price of the concentrate invoiced to the customer
reflects the market value of the fully refined metal less a “treatment
charge” deduction, to reflect the lower value of this partially processed
material compared with the fully refined metal. Revenue includes
amounts from the sale of by-products such as gold and silver.
Copper and molybdenum concentrate sale agreements and copper
cathode sale agreements generally provide for provisional pricing of
sales at the time of shipment, with final pricing based on the monthly
average London Metal Exchange (“LME”) copper price or the monthly
average market molybdenum price for specified future periods. This
normally ranges from one to four months after delivery to the customer.
For sales contracts which contain provisional pricing mechanisms, the
initial invoice typically reflects the month-average market price for the
metal in the month of shipment, with the associated receivable balance
subsequently measured at fair value through profit or loss. Gains and
losses from the marking-to market of the receivable balance in relation
to open sales are recognised through adjustments to other income
presented within revenue in the income statement and to trade
receivables in the balance sheet. The fair value calculations are based
on forward prices at the period end for copper concentrate and cathode
sales, and period-end average prices for molybdenum concentrate sales
due to the absence of a futures market for this product.
For the Transport division, revenue in respect of its transportation and
ancillary services are recognised over time in line with the performance
of those services.
Interest income
Interest income is accrued on a time basis, by reference to the principal
outstanding and the effective interest rate applicable, which is the rate
that exactly discounts estimated future cash receipts through the
expected life of the financial asset to that asset’s net carrying amount.
Dividend income
Dividend income from equity investments, associates and joint ventures
is recognised when the shareholders’ right to receive payment has been
established. For associates and joint ventures, it is recorded as a
decrease of the investment.
G) Business combinations and goodwill
Acquisitions of businesses are accounted for using the acquisition
method. The consideration transferred in a business combination is
measured at fair value, which is calculated as the sum of the
acquisition-date fair values of the assets transferred by the Group,
liabilities incurred by the Group to the former owners of the acquiree
and the equity interests issued by the Group in exchange for control of
the acquiree. The results of businesses acquired during the year are
brought into the consolidated financial statements from the effective
date of acquisition. The identifiable assets, liabilities and contingent
liabilities of a business, which can be measured reliably, are recorded at
their provisional fair values at the date of acquisition. Provisional fair
values are finalised within 12 months of the acquisition date.
Acquisition-related costs are expensed as incurred.
When the consideration transferred by the Group in a business
combination includes assets or liabilities resulting from a contingent
consideration arrangement, the contingent consideration is measured at
its acquisition-date fair value and included as part of the consideration
transferred in a business combination. Changes in the fair value of the
contingent consideration that qualify as measurement period
adjustments are adjusted retrospectively, with corresponding
adjustments against goodwill. Measurement period adjustments are
adjustments that arise from additional information obtained during the
“measurement period” (which cannot exceed one year from the
acquisition date) about facts and circumstances that existed at the
acquisition date.
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/ Notes to the financial statements continued
2 Principal accounting policies continued
The subsequent accounting for changes in the fair value of the
contingent consideration that do not qualify as “measurement period”
adjustments depends on how the contingent consideration is classified.
Contingent consideration that is classified as equity is not remeasured at
subsequent reporting dates and its subsequent settlement is accounted
for within equity. Contingent consideration that is classified as an asset
or a liability is remeasured at subsequent reporting dates in accordance
with IFRS 9.
When a business combination is achieved in stages, the Group’s
previously held equity interest in the acquiree is remeasured to fair
value at the acquisition date (ie the date when the Group obtains
control) and the resulting gain or loss, if any, is recognised in profit or
loss. Amounts arising from interests in the acquiree prior to the
acquisition date that have previously been recognised in other
comprehensive income are reclassified to profit or loss where such
treatment would be appropriate if that interest were disposed of.
If the initial accounting for a business combination is incomplete by the
end of the reporting period in which the combination occurs, the Group
reports provisional amounts for the items for which the accounting is
incomplete. Those provisional amounts are adjusted during the
measurement period (see above), or additional assets or liabilities are
recognised, to reflect new information obtained about facts and
circumstances which existed at the acquisition date that, if known,
would have affected the amounts recognised at that date.
Goodwill arising in a business combination is measured as the excess of
the sum of the consideration transferred, the amount of any non-
controlling interest in the acquiree and the fair value of the acquirer’s
previously held equity interest in the acquiree (if any) over the net
identifiable assets acquired and liabilities assumed. Any goodwill on the
acquisition of subsidiaries is separately disclosed, while any goodwill on
the acquisition of associates and joint ventures is included within
investments in equity accounted entities. Internally generated goodwill is
not recognised. Where the fair values of the identifiable net assets
acquired exceed the sum of the consideration transferred, the surplus is
credited to the profit or loss in the period of acquisition as a bargain
purchase gain.
The Group sometimes enters into earn-in arrangements whereby the
Group acquires an interest in a project company in exchange for
funding exploration and evaluation expenditure up to a specified level of
expenditure or a specified stage in the life of the project. Funding is
usually conditional on the achievement of key milestones by the partner.
Typically there is no consideration transferred or funding liability on the
effective date of acquisition of the interest in the project company and
no goodwill is recognised on this type of transaction.
The results of businesses sold during the year are included in the
consolidated financial statements for the period up to the effective date
of disposal. Gains or losses on disposal are calculated as the difference
between the sales´ proceeds (net of expenses) and the net assets
attributable to the interest which has been sold. Where a disposal
represents a separate major line of business or geographical area of
operations, the net results attributable to the disposed entity are shown
separately in the income statement as a discontinued operation.
H) Exploration and evaluation expenditure
Exploration and evaluation costs, other than those incurred in acquiring
exploration licences, are expensed in the year in which they are
incurred. When a mining project is considered to be commercially viable
(normally when the project has completed a pre-feasibility study, and
the start of a feasibility study has been approved) all further directly
attributable pre-production expenditure is capitalised. Capitalisation of
pre-production expenditure ceases when commercial levels of
production are achieved.
Costs incurred in acquiring exploration and mining licences are
classified as intangible assets when construction of the related mining
operation has not yet commenced. When construction commences the
licences are transferred from intangible assets to the mining properties
category within property, plant and equipment.
I) Stripping costs
Pre-stripping and operating stripping costs are incurred in the course of
the development and operation of open-pit mining operations.
Pre-stripping costs relate to the removal of waste material as part of
the initial development of an open-pit, in order to allow access to the ore
body. The capitalised costs are depreciated once production
commences on a unit of production basis, in proportion to the volume of
ore extracted in the year compared with total proven and probable
reserves for that pit at the beginning of the year.
Operating stripping costs relate to the costs of extracting waste material
as part of the ongoing mining process. The ongoing mining and
development of the Group’s open-pit mines is generally performed via a
succession of individual phases. The costs of extracting material from
an open-pit mine are generally allocated between ore and waste
stripping in proportion to the tonnes of material extracted. The waste
stripping costs are generally absorbed into inventory and expensed as
that inventory is processed and sold. Where the stripping costs relate to
a significant stripping campaign which is expected to provide improved
access to an identifiable component of the ore body (typically an
individual phase within the overall mine plan), the costs of removing
waste in order to improve access to that part of the ore body will be
capitalised within property, plant and equipment. The capitalised costs
will then be amortised on a unit of production basis, in proportion to the
volume of ore extracted compared with the total ore contained in the
component of the pit to which the stripping campaign relates.
Intangible assets
J)
Exploration and mining licences are classified as intangible assets when
construction of the related mining operation has not yet commenced.
When construction commences, the licences are transferred from
intangible assets to the mining properties category within property, plant
and equipment.
K) Property, plant and equipment
The costs of mining properties and leases, which include the costs of
acquiring and developing mining properties and mineral rights, are
capitalised as property, plant and equipment in the year in which they
are incurred, when a mining project is considered to be commercially
viable (normally when the project has completed a pre-feasibility study,
and the start of a feasibility study has been approved). The cost of
property, plant and equipment comprises the purchase price and any
costs directly attributable to bringing the asset to the location and
condition necessary for it to be capable of operating in the manner
intended. Once a project has been established as commercially viable,
related development expenditure is capitalised. This includes costs
incurred in preparing the site for mining operations, including pre-
stripping costs. Capitalisation ceases when the mine is capable of
commercial production, with the exception of development costs which
give rise to a future benefit.
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Interest on borrowings related to construction or development of
projects is capitalised, until such time as the assets are substantially
ready for their intended use or sale which, in the case of mining
properties, is when they are capable of commercial production.
L) Depreciation of property, plant and equipment
Depreciation of an asset begins when it is available for use, ie when it is
in the location and condition necessary for it to be capable of operating
in the manner intended.
Property, plant and equipment is depreciated over its useful life, or over
the remaining life of the operation if shorter, to residual value. The
major categories of property, plant and equipment are depreciated as
follows:
(i) Land – freehold land is not depreciated unless the value of the land
is considered to relate directly to a particular mining operation, in
which case the land is depreciated on a straight-line basis over the
expected mine life.
(ii) Mining properties – mining properties, including capitalised
financing costs, are depreciated on a unit of production basis, in
proportion to the volume of ore extracted in the year compared
with total proven and probable reserves at the beginning of the
year.
(iii) Buildings and infrastructure – straight-line basis over 10 to 25
years.
(iv) Railway track (including trackside equipment) – straight-line basis
over 20 to 25 years.
(v) Wagons and rolling stock – straight-line basis over 10 to 20
years.
(vi) Machinery, equipment and other assets – are depreciated on a
unit of production basis, in proportion to the volume of ore/material
processed or on a straight-line basis over 5 to 20 years.
(vii) Assets under construction – no depreciation until asset is
available for use.
(viii) Lease right-of-use assets – depreciated over the shorter of the
asset’s useful life and the lease term on a straight-line basis.
(ix) Stripping cost – capitalised costs are amortised on a unit of
production basis, in proportion to the volume of ore extracted
compared with the total ore contained in the component of the pit
to which the stripping campaign relates (Note 16).
Residual values and useful lives are reviewed, and adjusted if
appropriate, at least annually, and changes to residual values and useful
lives are accounted for prospectively.
M)
Impairment of property, plant and equipment and intangible
assets
Property, plant and equipment and intangible assets relating to
exploration and mining licences are reviewed for impairment if there is
any indication that the carrying amount may not be recoverable. In
respect of historical impairments recognised in prior years, the Group
assesses whether there is any indication that impairment may no longer
exist or may have decreased.
If any such indications exist, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment or reversal
(if any). Where the asset does not generate cash flows that are largely
independent from other assets, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs of disposal and
value in use. Fair value less costs of disposal reflects the net amount the
Group would receive from the sale of the asset in an orderly transaction
between market participants. For mining assets, this would generally be
determined based on the present value of the estimated future cash
flows arising from the continued use, further development or eventual
disposal of the asset. The estimates used in determining the present
value of those cash flows are those that an independent market participant
would consider appropriate. Value in use reflects the expected present
value of the future cash flows which the Group would generate through
the operation of the asset in its current condition, without taking into
account potential enhancements or further development of the asset.
The fair value less costs of disposal valuation will normally be higher
than the value in use valuation, as realisation of the full potential of the
Group’s mining operations typically requires further capital expenditure
and ongoing mine development, and accordingly the Group typically
applies this valuation estimate in its impairment assessments, unless
indicated otherwise. Details of the valuations and sensitivities of the
Group’s mining operations considered as part of the impairment trigger
assessment are included in Note 5.
If the recoverable amount of an asset or cash-generating unit is
estimated to be less than its carrying amount, the carrying amount is
reduced to the recoverable amount. An impairment charge is
recognised in the income statement immediately. Where an impairment
subsequently reverses, the carrying amount is increased to the revised
estimate of recoverable amount, but so that the increased carrying
amount does not exceed the carrying value that would have been
determined if no impairment had previously been recognised after
taking into account the depreciation and/or amortisation that would
otherwise have been recorded in the intervening period. A reversal is
recognised in the income statement immediately.
Inventory
N)
Inventory consists of raw materials and consumables, work-in-progress
and finished goods. Work-in-progress represents material that is in the
process of being converted into finished goods. The conversion process
for mining operations depends on the nature of the copper ore. For
sulphide ores, processing includes milling and concentrating and results
in the production of copper concentrate. For oxide ores, processing
includes leaching of stockpiles, solvent extraction and electrowinning
and results in the production of copper cathodes. Finished goods
consist of copper concentrate containing gold and silver at Los
Pelambres and Centinela and copper cathodes at Centinela and
Antucoya. Los Pelambres and Centinela also produce molybdenum as a
by-product.
Inventory is valued at the lower of cost, on a weighted average basis,
and net realisable value. Net realisable value represents estimated
selling price less all estimated costs of completion and costs to be
incurred in marketing, selling and distribution. Cost of finished goods
and work-in-progress is production cost and for raw materials and
consumables it is purchase price. Production cost includes:
• labour costs, raw material costs and other costs directly attributable
to the extraction and processing of ore;
• depreciation of plant, equipment and mining properties directly
involved in the production process; and
• an appropriate allocation of production overheads.
Stockpiles represent ore that is extracted and is available for further
processing. Costs directly attributable to the extraction of ore are
generally allocated as part of production costs in proportion to the
tonnes of material extracted. Operating stripping costs are generally
absorbed into inventory, and therefore expensed as that inventory is
processed and sold. If ore is not expected to be processed within 12
months of the balance sheet date it is included within non-current
assets. If there is significant uncertainty as to when any stockpiled ore
will be processed it is expensed as incurred.
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2 Principal accounting policies continued
O) Taxation
Tax expense comprises the charges or credits for the year relating to
both current and deferred tax.
Current tax is based on taxable profit for the year. Taxable profit may
differ from net profit as reported in the income statement because it
excludes items of income or expense that are taxable and deductible in
different years and also excludes items that are not taxable or
deductible. The liability for current tax is calculated using tax rates for
each entity in the consolidated financial statements which have been
enacted or substantively enacted at the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on
temporary differences (ie differences between the carrying amount of
assets and liabilities in the financial statements and the corresponding
tax basis used in the computation of taxable profit). Deferred tax is
accounted for using the balance sheet liability method and is provided
on all temporary differences with certain limited exceptions as follows:
(i)
tax payable on undistributed earnings of subsidiaries, associates
and joint ventures is provided except where the Group is able to
control the remittance of profits and it is probable that there will be
no remittance of past profits earned in the foreseeable future;
(ii) deferred tax is not provided on the initial recognition of an asset or
liability in a transaction that does not affect accounting profit or
taxable profit and is not a business combination; nor is deferred tax
provided on subsequent changes in the carrying value of such
assets and liabilities, for example where they are depreciated; and
(iii)
the initial recognition of any goodwill.
Deferred tax assets are recognised only to the extent that it is probable
that they will be recovered through sufficient future taxable profit. The
carrying amount of deferred tax assets is reviewed at each balance
sheet date.
Deferred tax is calculated at the tax rates that are expected to apply in
the period when the liability is settled or the asset is realised. Deferred
tax is charged or credited in the income statement, except when it
relates to items charged or credited directly to equity, in which case the
deferred tax is also taken directly to equity.
P) Provisions
Provisions are recognised when the Group has a present obligation
(legal or constructive) as a result of a past event, it is probable that the
Group will be required to settle the obligation and a reliable estimate can
be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the end of the
reporting period, taking into account the risks and uncertainties
surrounding the obligation. When a provision is measured using the
cash flows estimated to settle the present obligation, its carrying amount
is the present value of those cash flows (when the effect of the time
value of money is material).
When some or all of the economic benefits required to settle a provision
are expected to be recovered from a third party, a receivable is
recognised as an asset if it is virtually certain that reimbursement will be
received and the amount of the receivable can be measured reliably.
Q) Provisions for decommissioning and restoration costs
An obligation to incur decommissioning and restoration costs occurs
when environmental disturbance is caused by the development or
ongoing production of a mining property. Costs are estimated on the
basis of a formal closure plan and are subject to regular formal review.
Such costs arising from the installation of plant and other site
preparation work, discounted to their net present value, are provided
and capitalised at the start of each project, as soon as the obligation to
incur such costs arises. These decommissioning costs are charged
against profit or loss over the life of the mine, through depreciation of
the asset and unwinding or amortisation of the discount on the
provision. Depreciation is included in operating costs while the
unwinding of the discount is included within other finance items.
Changes in the measurement of a liability relating to the
decommissioning of plant or other site preparation work are added to,
or deducted from, the cost of the related asset in the current year.
The costs for restoration of site damage, which is created on an
ongoing basis during production, are provided for at their net present
values and charged against profit or loss as extraction progresses.
Changes in the measurement of a liability relating to site damage
created during production, which relate to changes in the estimate of
the closure costs, are charged against operating profit, and changes
relating to the discount rate and foreign exchange are recorded within
other finance items.
R) Share-based payments
For cash-settled share-based payments, a liability is recognised for
the goods or services acquired, measured initially at the fair value of the
liability. At the end of each reporting period until the liability is settled,
and at the date of settlement, the fair value of the liability is remeasured,
with any changes in fair value recognised in profit or loss for the year.
The Group currently does not have any equity settled share-based
payments to employees or third parties.
S) Post-employment benefits
The Group operates defined contribution schemes for a limited number
of employees. For such schemes, the amount charged to the income
statement is the contributions paid or payable in the year.
Employment terms may also provide for payment of a severance
indemnity when an employment contract comes to an end. This is
typically at the rate of one month for each year of service (subject in
most cases to a cap as to the number of qualifying years of service) and
based on final salary level. The severance indemnity obligation is treated
as an unfunded defined benefit plan, and the calculation is based on
valuations performed by an independent actuary using the projected
unit credit method, which are regularly updated.
The obligation recognised in the balance sheet represents the present
value of the severance indemnity obligation. Actuarial gains and losses
are immediately recognised in other comprehensive income.
T) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits held on call
with banks, highly liquid investments that are readily convertible into
known amounts of cash, are subject to insignificant risk of changes in
value and are held for the purpose of meeting short-term cash
commitments rather than for investment or other purposes. The cash
balance is presented net of bank overdrafts which are repayable on
demand. Cash and cash equivalents have a maturity period of 90 days
or less.
U) Liquid investments
Liquid investments represent highly liquid current asset investments
such as term deposits and managed funds invested in high quality fixed
income instruments. They do not meet the IAS 7 definition of cash and
cash equivalents, normally because even if readily accessible, the
underlying investments have an average maturity profile greater than
90 days from the date first entered into, or because they are held
primarily for investment purposes rather than meeting short-term cash
commitments. These assets are designated as fair value through profit
or loss.
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V) Leases
Leases are recognised as a right-of-use asset and a corresponding
liability at the date at which the leased asset is available for use by the
Group. Each lease payment is allocated between the liability and finance
cost. The finance cost is charged to profit or loss over the lease period
so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. The right-of-use asset is
depreciated over the shorter of the asset's useful life and the lease term
on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a
present value basis. Lease liabilities include the net present value of the
following lease payments:
• fixed payments (including in-substance fixed payments), less any
lease incentives receivable
• variable lease payments that are based on an index or a rate
• amounts expected to be payable by the lessee under residual value
guarantees
• the exercise price of a purchase option if the lessee is reasonably
certain to exercise that option, and
• payments of penalties for terminating the lease, if the lease term
reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the
lease. If that rate cannot be readily determined, the lessee’s incremental
borrowing rate is used, being the rate that the lessee would have to pay
to borrow the funds necessary to obtain an asset of similar value in a
similar economic environment with similar terms and conditions.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of the lease liability
• any lease payments made at or before the commencement date less
any lease incentives received
• any initial direct costs, and
• restoration costs.
W) Other financial instruments
Financial assets and financial liabilities are recognised on the Group’s
balance sheet when the Group becomes a party to the contractual
provisions of the instrument. Financial assets are derecognised when
the contractual rights to the cash flows from the financial asset expire
or the Group has transferred the asset to another party. Financial
liabilities are removed from the Group’s balance sheet when they are
extinguished – ie when the obligation specified in the contract has been
discharged, cancelled or expired.
(i)
Investments – Equity investments which are not subsidiaries,
associates or joint ventures are recognised at fair value. The
Group generally applies an irrevocable election for each equity
investment to designate them as Fair Value through Other
Comprehensive Income (FVOCI). Dividends from equity
investments are recognised in the income statement when the
right to receive payment is established.
(ii) Trade and other receivables – As explained above, for sales
contracts which contain provisional pricing mechanisms the total
receivable balance is measured at fair value through profit or loss.
Other receivable balances are recognised at amortised cost.
(iii) Trade and other payables – Trade and other payables are
generally not interest-bearing and are normally stated at their
nominal value.
(iv) Borrowings (loans and preference shares) – Interest-bearing
loans and bank overdrafts are initially recorded at fair value which
is typically equal to the proceeds received, net of direct issue costs.
They are subsequently measured at amortised cost using the
effective interest method, with interest expense recognised on an
effective yield basis. The effective interest method is a method of
calculating the amortised cost of a financial liability and of allocating
interest expense over the relevant period. The effective interest
rate is the rate that exactly discounts estimated future cash
payments through the expected life of the financial liability, or,
where appropriate, a shorter period. Finance charges, including
premiums payable on settlement or redemption and direct issue
costs, are accounted for on an accruals basis using the effective
interest rate method. Amounts are either recorded as financing
costs in profit or loss or capitalised in accordance with the
accounting policy set out in Note 2(K). Finance charges are added
to the carrying amount of the instrument to the extent that they are
not settled in the period in which they arise.
The Sterling-denominated preference shares issued by the
Company carry a fixed rate of return without the right to
participate in any surplus. They are accordingly classified within
borrowings and translated into US dollars at period-end rates of
exchange. Preference share dividends are included within other
finance items within net finance expense in the income statement.
(v) Equity instruments – Equity instruments issued are recorded at
the proceeds received, net of direct issue costs. Equity instruments
of the Company comprise its Sterling-denominated issued ordinary
share capital and related share premium. As explained in Note
2(E), the presentational currency of the Group and the functional
currency of the Company is US dollars, and ordinary share capital
and share premium are translated into US dollars at historical
rates of exchange based on dates of issue.
(vi) Derivative financial instruments – As explained in Note 25(D),
the Group periodically uses derivative financial instruments to
reduce exposure to foreign exchange, interest rate and commodity
price movements. The Group does not use such derivative
instruments for trading purposes. The Group has applied the
hedge accounting provisions of IFRS 9 Financial Instruments. The
effective portion of changes in the fair value of derivative financial
instruments that are designated and qualify as hedges of future
cash flows have been recognised directly in equity, with such
amounts subsequently recognised in profit or loss in the period
when the hedged item affects profit or loss. Any ineffective portion
is recognised immediately in profit or loss. Realised gains and
losses on commodity derivatives recognised in profit or loss are
recorded within revenue. The time value element of changes in the
fair value of derivative options is recognised within other
comprehensive income.
Financial assets with embedded derivatives are considered in their
entirety when determining the appropriate classification and
measurement. The treatment of embedded derivatives arising from
provisionally priced commodity sales contracts is set out in further
detail in Note 2(F) relating to revenue. Derivatives embedded in
financial liabilities are treated as separate derivatives when their
risks and characteristics are not closely related to those of the host
contract and the host contract is not measured at fair value.
Changes in fair value are reported in profit or loss for the year.
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/ Notes to the financial statements continued
2 Principal accounting policies continued
(vii) Impairment of financial assets – The Group applies the forward-
looking expected credit loss model to its financial assets, other than
those measured at fair value through profit or loss. The Group
applies the IFRS 9 “simplified approach” to its trade receivables,
measuring the loss allowance at the lifetime expected credit loss.
For other financial assets, where the credit risk has not increased
significantly since initial recognition, the loss allowance is
measured at the 12 month expected credit loss. If there has been a
significant increase in credit risk, the loss allowance is measured
at the lifetime expected credit loss. Increases or decreases to the
credit loss allowance are recognised immediately in profit or loss.
X) Exceptional items
Exceptional items are material items of income and expense which are
non-regular or non-operating and typically non-cash, including
impairments and profits or losses on disposals. The tax effect of items
presented as exceptional is also classified as exceptional, as are
material deferred tax adjustments that relate to more than one reporting
period.
Y) Rounding
All amounts disclosed in the financial statements and notes have been
rounded to the nearest million dollars unless otherwise stated.
These policies have been consistently applied to all the years presented,
unless otherwise stated.
3 Critical accounting judgements and key
sources of estimation uncertainty
Determining many of the amounts included in the financial statements
involves the use of judgement and/or estimation. These judgements and
estimates are based on management’s best knowledge of the relevant
facts and circumstances having regard to prior experience, but actual
results may differ from the amounts included in the financial statements.
Information about such judgements and estimates is included in the
principal accounting policies in Note 2 or the other notes to the financial
statements, and the key areas are set out below.
A) Judgements
The following are the critical judgements, apart from those involving
estimations (which are dealt with separately), that have been made in
the process of applying the Group’s accounting policies and that have
the most significant effect on the amounts recognised in the financial
statements.
(i) Non-financial assets impairment
As explained in Note 2(M), the Group reviews the carrying value of
its intangible assets and property, plant and equipment to
determine whether there is any indication that those assets are
impaired. In performing assessments for impairment triggers,
assets that do not generate largely independent cash inflows are
allocated to an appropriate cash generating unit (“CGU”). Details of
the valuations and sensitivities of the Group’s mining operations
considered as part of the impairment trigger assessment are
included in Note 5, including quantitative sensitivity analyses.
Details of the value of assets and liabilities for each of the mining
operations are set out in Note 6.
When an impairment trigger is identified, an impairment test is
performed, wherein the recoverable amount of those assets, or
the CGU, is measured at the higher of their fair value less costs of
disposal and value in use.
When an impairment test is performed, management necessarily
applies its judgement in allocating assets to CGUs, in estimating the
probability, timing and value of underlying cash flows and in
selecting appropriate discount rates to be applied within the fair
value less costs of disposal calculation. The key assumptions are
set out in Note 2(M). Subsequent changes to CGU allocation,
licensing status, reserves and resources, price assumptions or
other estimates and assumptions in the fair value less costs of
disposal calculation could impact the carrying value of the
respective assets.
As explained in Note 4, the United States federal government has
cancelled a number of the mining leases relating to the Twin
Metals project. This was judged to be an impairment indicator as at
the balance sheet date, and following the resulting impairment test
an impairment has been recognised in respect of the $177.6 million
of intangible assets and property, plant and equipment relating to
the project.
As explained in Note 5, based on an assessment of both qualitative
and quantitative factors, there were no indicators of potential
impairment, or reversal of previous impairments, for the Group’s
non-current assets associated with its mining operations at the
2021 year-end, and accordingly no impairment tests have been
performed.
(ii) Capitalisation of project costs within property, plant and
equipment
As explained in Note 2(K) the costs of developing mining properties
are capitalised as property, plant and equipment when the mining
project is considered to be commercially viable. Commercial
viability is normally considered to be demonstrable when the
project has completed a pre-feasibility study, and the start of a
feasibility study has been approved. Management reviews amounts
capitalised to ensure that the treatment of that expenditure as
capital rather than operating expenditure is reasonable, in
particular in respect of the commercial viability of the project.
As at 31 December 2021, $180 million of feasibility study costs
relating to the Centinela Second Concentrator project, which is still
under evaluation and has not yet received final Board approval,
were capitalised within property, plant and equipment. Should the
Group ultimately take the decision not to proceed with the
development of this project, then it is likely that the corresponding
element of the capitalised feasibility study costs would need to be
impaired.
The capitalisation of the construction and commissioning costs for
a new mining operation ceases, and depreciation commences,
when the operation is in the condition necessary for it to be
capable of operating in the manner intended (which is termed as
achieving commercial production).
The determination of the commercial production date requires
judgement which involves the consideration of a number of
relevant factors, including the successful completion of
commissioning tests and the processing and production levels
achieved compared with expected design capacity.
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The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom equal the
related actual results. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are addressed
below.
(i) Deferred taxation
No deferred tax liability is recognised in respect of the
undistributed earnings of subsidiaries where it is not likely that
those profits will be distributed in the foreseeable future. When
determining whether it is likely that distributions will be made in the
foreseeable future, and what is the appropriate foreseeable future
period for this purpose, the Group considers factors such as the
predictability of the likely future Group dividends, taking into
account the Group’s dividend policy and the level of potential
volatility of the Group’s future earnings, as well as the current level
of distributable reserves at the Antofagasta plc entity level. As set
out in Note 28, at 31 December 2021 deferred withholding tax
liabilities of $23.1 million have been recognised, which relate to
undistributed earnings of subsidiaries where it is considered likely
that the corresponding profits will be distributed in the foreseeable
future. The value of the remaining undistributed earnings of
subsidiaries, for which deferred tax liabilities have not been
recognised, because the Group is in a position to control the timing
of the distributions and it is likely that distributions will not be made
in the foreseeable future, was $6,483 million (31 December 2020
– $4,980 million - restated from the previously reported amount of
$4,810 million, reflecting the removal of amounts relating to entities
with accumulated losses). If deferred withholding tax liabilities
were recognised in respect of all of these remaining undistributed
earnings of subsidiaries this would result in an additional deferred
tax liability and expense of approximately $1,232 million.
As explained in Note 2(O), deferred tax assets are recognised only
to the extent that it is probable that they will be recovered through
sufficient future taxable profits. When assessing the probable
future taxable profits, the Group considers whether the relevant
Group entity has sufficient taxable temporary differences which
will result in taxable amounts against which the unused tax losses
can be utilised.
Generally under Chilean tax law most tax losses can be carried
forward indefinitely, and so the expiry of tax losses is not generally
an issue. The key assumptions to which the forecasts of the
probable level of future taxable profits are most sensitive are
future commodity prices, production levels and operating costs.
As set out in Note 28, the Group has recognised $96.8 million of
deferred tax assets as at 31 December 2021, relating to tax losses,
provisions and short-term timing differences. This includes $90.6
million of previously unrecognised deferred tax assets in respect of
tax losses available for offset against future profits, which have
been recognised at 31 December 2021. These losses may be
carried forward indefinitely.
In previous periods the Group had reviewed these tax losses for
potential recognition, and concluded that it was not probable that
future taxable profits would be available against which the losses
could be utilised, and accordingly had not recognised a deferred
tax asset in respect of those losses. In making this assessment in
previous periods, the Group had taken into account that the
relevant Group entity (Antucoya) had consistently generated
taxable losses in recent years, was continuing to generate taxable
losses in the then current period, and was forecast to continue
generating taxable losses in future periods. During 2021, there has
been a significant improvement in the current copper price (with
the copper price reaching record levels in nominal terms during
the year) and also the near-term copper price outlook. As a result
of this improvement in the copper price environment, Antucoya
began to generate taxable profits in 2021. The improved near-term
outlook for the copper price also means that Antucoya is now
forecast to generate sufficient future taxable profits to fully utilise
its remaining tax losses.
In addition to the above estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities, we have also set out the following additional
estimates and assumptions which have a significant impact on the
financial statements, but which are not considered to be key sources of
estimation uncertainty as defined in IAS 1.
(i)
Inventory valuation
The valuation of work in progress inventories involves a number of
estimates, including the average ore grade, volume and density of
ore stockpiles, and the recoveries in respect of material on the
leach piles. Evaluating the net realisable value of the inventories
also requires an estimate of the likely future copper price for the
periods when it is expected that the inventories will be completed
and sold. As set out in Note 20, the value of work in progress
inventories at 31 December 2021 was $586.9 million.
If the copper spot price at 31 December 2021 (used for forecasting
the likely sales price of short-term inventories) had been 10%
lower, this would not have resulted in any net realisable value
provision.
The valuation of leachpile inventories can be particularly complex,
given the required estimates including in respect of the total
recoveries and the speed of recovery in relation to the material on
the piles. This is particularly the case with leachpiles with a long
leaching cycle, where material may remain on the pile for several
years before it has been fully leached. The operation with the most
significant long-term leachpile inventory is Zaldívar, with a long-
term leachpile with a value of approximately $140 million (on a
50% attributable basis) at 31 December 2021. This balance is
forecast to be consumed over the operation's remaining 14-year
mine life and its recoverability is based on the same assumptions
about future operational considerations as detailed in Note 5. As a
simple, high-level sensitivity, if this balance were reduced by 10%
(due to changes in recovery estimates for example), this would
result in a reduction in Zaldívar’s inventory balance of
approximately $14 million (on a 50% attributable basis).
(ii) Useful economic lives of property, plant and equipment and
ore reserves estimates
As explained in Note 2(L), mining properties, including capitalised
financing costs, are depreciated in proportion to the volume of ore
extracted in the year compared with total proven and probable
reserves at the beginning of the year.
There are numerous uncertainties inherent in estimating ore
reserves, and assumptions that were valid at the time of estimation
may change when new information becomes available. These
include assumptions as to grade estimates and cut-off grades,
recovery rates, commodity prices, exchange rates, production
costs, capital costs, processing and reclamation costs and discount
rates. The actual volume of ore extracted and any changes in these
assumptions could affect prospective depreciation rates and
carrying values.
The majority of other items of property, plant and equipment are
depreciated on a straight-line basis over their useful economic
lives. Management reviews the appropriateness of useful economic
lives at least annually and, again, any changes could affect
prospective depreciation rates and asset carrying values.
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4 Exceptional items
Exceptional items are material items of income and expense which are
non-regular or non-operating and typically non-cash, including
impairments and profits or losses on disposals. The tax effect of items
presented as exceptional is also classified as exceptional, as are
material deferred tax adjustments that relate to more than one reporting
period. The classification of these types of items as exceptional is
considered to be useful as it provides an indication of the earnings
generated by the ongoing businesses of the Group.
nickel
2021 – Impairment of Twin Metals’ assets
Twin Metals Minnesota ("Twin Metals") is a wholly owned copper,
and platinum group metals (PGM) underground mining project, which
holds copper, nickel, cobalt-PGM deposits in north-eastern Minnesota,
US. In recent years, Twin Metals has been progressing its Mine Plan of
Operations (MPO) and Scoping Environmental Assessment Worksheet
Data Submittal, submitted in December 2019 to the US Bureau of Land
Management (BLM) and Minnesota Department of Natural Resources
(DNR), respectively. However, over the past year, while the Twin Metals
project was advancing through environmental review, several actions
were taken by the federal government that have changed the potential
scenarios for the project.
In September 2021, the United States Forest Service (USFS) submitted
an application to withdraw approximately 225,000 acres of land in the
Superior National Forest from the scope of federal mineral leasing laws,
subject to valid existing rights. In October 2021, the United States
Bureau of Land Management (BLM) rejected Twin Metals’ Preference
Right Lease Applications (PRLAs) and Prospecting Permit Applications
(PPAs). In January 2022, the United States Department of the Interior
cancelled Twin Metals’ MNES-1352 and MNES-1353 federal mineral
leases. The PRLAs and federal mineral leases form a significant
proportion of the mineral resources contained within Twin Metals’
current project plan and, accordingly, it was determined that these
events collectively represented an impairment trigger as at the balance
sheet date.
Prior to the resulting impairment assessment being performed, as at 31
December 2021, the Group had recognised an intangible asset of $150.1
million and property, plant and equipment of $27.5 million relating to the
Twin Metals project. The intangible asset arose upon the acquisition in
2015 of Duluth Metals, which owned a 60% stake in the Twin Metals
project, with the carrying value of the intangible asset reflecting the
consideration paid for that acquisition. The property, plant and
equipment balances reflected the historical cost of acquiring those
assets. These carrying values prior to the impairment did not, therefore,
reflect an estimate of the commercial potential of the project as at 31
December 2021.
The Group believes that Twin Metals has a valid legal right to the mining
leases and a strong case to defend its legal rights. Although the Group
intends to pursue validation of those rights, considering the time and
uncertainty related to any legal action to challenge the government
decisions, an impairment has been recognised as at 31 December 2021
in respect of the $177.6 million of intangible assets and property, plant
and equipment relating to the Twin Metals project.
/ Notes to the financial statements continued
3 Critical accounting judgements and key
sources of estimation uncertainty continued
The operation with the most significant depreciation expense is
Centinela, with a depreciation expense of $655 million in 2021,
representing approximately 60% of the total Group depreciation
charge. As a simple high-level sensitivity, a 10% adjustment to the
useful economic lives of Centinela’s property, plant and equipment
would result in an impact of approximately $65 million on the
annual depreciation charge.
In the particular case of the Zaldívar joint venture, the following
factors have been considered when assessing the appropriate
useful economic lives, depreciation rates and asset carrying
values:
– an Environmental Impact Assessment (EIA) has been submitted
to extend the permits for water extraction (which currently
expire during 2025) and general mining activities (which
currently expire at the end of 2023) until 2031. Subsequent
applications will be required in due course to further extend the
permits beyond 2031. The assets’useful economic lives assume
that essential permits will be extended to the end of the mine
life, and other permits can be extended, or alternative solutions
to enable the ongoing operation of the mine can be
implemented. However, if essential permits are not extended,
this may result in a change in the assets’ useful economic lives
or carrying value.
– Zaldívar’s final pit phase, which represents approximately 20%
of current ore reserves, impacts a portion of Minera Escondida’s
mine property, as well as infrastructure owned by third parties
(road, railway, powerline and pipelines). The assets’useful
economic lives assume that mining of the final pit phase, which
is subject to agreements or easements to access these areas
and relocate this infrastructure, will be possible.
(iii) Provisions for decommissioning and site restoration costs
As explained in Note 2(Q), provision is made, based on net present
values, for decommissioning and site rehabilitation costs as soon
as the obligation arises following the development or ongoing
production of a mining property. The provision is based on a
closure plan prepared with the assistance of external consultants.
Management uses its judgement and experience to provide for and
(in the case of capitalised decommissioning costs) amortise these
estimated costs over the life of the mine. The ultimate cost of
decommissioning and site rehabilitation is uncertain and cost
estimates can vary in response to many factors including changes
to relevant legal requirements, the emergence of new restoration
techniques or experience at other mine sites.
The expected timing and extent of expenditure can also change, for
example in response to changes in ore reserves or processing
levels. As a result, there could be significant adjustments to the
provisions established which would affect future financial results.
Details of the decommissioning and restoration provisions are set
out in Note 29. The total value of these provisions as at 31
December 2021 was $336.1 million. As a simple high-level
sensitivity, a 10% increase in the forecast closure costs would
increase the provision balance by approximately $34 million, the
capitalised decommissioning costs asset within property, plant and
equipment by approximately $12 million and the on-going annual
operating expenses by approximately $1 million.
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2021 – Recognition of previously unrecognised deferred tax assets
At 31 December 2021, the Group recognised $90.6 million of previously
unrecognised deferred tax assets relating to tax losses available for
offset against future profits. In previous periods, the Group had
reviewed these tax losses for potential recognition, and concluded that it
was not probable that future taxable profits would be available against
which the losses could be utilised, and accordingly had not recognised a
deferred tax asset in respect of those losses. In making this assessment
in previous periods, the Group had taken into account that the relevant
Group entity (Antucoya) had consistently generated taxable losses in
recent years, was continuing to generate taxable losses in the then
current period, and was forecast to continue generating taxable losses
in future periods, and the Group could not use these taxable losses to
offset profits in other Group entities. During 2021, there has been a
significant improvement in the current copper price (with the copper
price reaching record levels in nominal terms during the year) and also
the near-term copper price outlook. As a result of this improvement in
the copper price environment, the relevant Group entity began to
generate taxable profits in 2021. The improved near-term outlook for
the copper price also means that the entity is now forecast to generate
sufficient future taxable profits to fully utilise its remaining tax losses.
Current forecasts indicate that the losses will be utilised over
approximately the next eight years (compared with the remaining mine
life for Antucoya of 22 years). The forecasts are based on Antucoya’s
Life-of-Mine model. When the tax losses are utilised in future years it is
expected that the impact will be recorded within the underlying tax
charge for that year, in order to match with the similar classification of
the corresponding taxable profits of that year.
2020 – Impairment of the investment in Hornitos
On 31 March 2020, the Group agreed to dispose of its 40% interest in
the Hornitos coal-fired power station to ENGIE Energía Chile S.A.
(“ENGIE”), the owner of the remaining 60% interest. This was part of
the value accretive renegotiation of Centinela’s power purchase
agreement, which as a result will be wholly supplied from lower cost
renewable sources from 2022. In accordance with the terms of the
agreement, the Group disposed of its investment to ENGIE in December
2021 for a nominal consideration, and has not been entitled to receive
any further dividend income from Hornitos from the date of the
agreement. Accordingly, the Group no longer had any effective
economic interest in the results or assets of Hornitos from 31 March
2020 onwards, and therefore recognised an impairment of $80.8
million in respect of its investment in associate balance as of that date,
and no longer recognised any share of Hornitos’ results. The post-tax
impact of the impairment is $61.1 million, of which $40.2 million is
attributable to the equity owners of the Company.
5 Asset sensitivities
Other asset sensitivities
Based on an assessment of both qualitative and quantitative factors,
there were no indicators of potential impairment, or reversal of previous
impairments, for the Group’s non-current assets associated with its
mining operations at the 2021 year-end, and accordingly no impairment
tests have been performed. The quantitative element of the trigger
assessment, which is based on the Group’s life-of-mine models,
provides an indication of what the approximate recoverable amount of
the Group’s operations would be, were a full impairment test under IAS
36 to be performed. In order to provide an indication of the sensitivities
of the approximate recoverable amount of the Group’s mining
operations, sensitivity analysis has been performed on the indicative
valuation, prepared as part of the Group’s impairment indicator analysis.
This impairment indicator valuation exercise demonstrated positive
headroom for all of the Group’s mining operations, with the recoverable
amount of the assets in excess of their carrying value.
Relevant aspects of these indicative valuation estimates include:
Fair value less costs of disposal and value in use valuations
If a full IAS 36 impairment test were to be prepared, which was not the
case as at 31 December 2021, the recoverable amount is the higher of
fair value less costs of disposal and value in use. Fair value less costs of
disposal reflects the net amount the Group would receive from the sale
of the asset in an orderly transaction between market participants. For
mining assets, this would generally be determined based on the present
value of the estimated future cash flows arising from the continued use,
further development or eventual disposal of the asset. Value in use
reflects the expected present value of the future cash flows which the
Group would generate through the operation of the asset in its current
condition, without taking into account potential enhancements or further
development of the asset. The fair value less costs of disposal valuation
will normally be higher than the value in use valuation for mining
companies, and accordingly the Group typically applies this valuation
estimate in its impairment or valuation assessments.
Climate risks
The indicative valuations incorporate estimates of the potential future
costs relating to climate risks. During 2021, the Group has implemented,
and disclosed against, the recommendations of the Task Force on
Climate-related Financial Disclosures (“TCFD”). This process is
described in detail in the Task Force on Climate-related Financial
Disclosures section of the Strategic Report. This process included
scenario analyses assessing the potential future impact of transition and
physical risks. In preparing this analysis, the Group used two climate
scenarios to capture the broadest possible spectrum of climate-related
risks and opportunities, an aggressive mitigation scenario and a high
warming scenario. The total of the estimated potential transition and
physical risk impacts under this approach is likely to overstate the
probable overall impact, for example because if relatively aggressive
actions are taken in order to minimise transition risks, this should
reduce the risk of relatively significant physical impacts. However, in
order to incorporate a simple and conservative estimate of the potential
future costs of climate risks we have combined the estimates of the
potential costs of the transition risk and physical risk scenarios, and
incorporated those total cost forecasts into the indicative valuations.
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The impairment trigger assessments for Los Pelambres and Centinela
are not sensitive to movements in these assumptions. While Zaldívar is
also not particularly sensitive to changes in the assumptions used in the
indicative valuation prepared as part of the quantitative impairment
indicator assessment, the conclusion that there are no impairment
indicators does reflect certain assumptions about future operational
considerations, which include the following:
• an Environmental Impact Assessment (EIA) has been submitted to
extend the permits for water extraction (which currently expire
during 2025) and general mining activities (which currently expire at
the end of 2023) until 2031. Subsequent applications will be required
in due course to further extend the permits beyond 2031. The
indicative valuation assumes that essential permits will be extended to
the end of the mine life, and other permits can be extended, or
alternative solutions to enable the ongoing operation of the mine, can
be implemented. However, if essential permits are not extended, this
is likely to be considered an indicator of a potential impairment,
requiring a full impairment assessment at that point.
• Zaldívar’s final pit phase, which represents approximately 20% of
current ore reserves, impacts a portion of Minera Escondida’s mine
property, as well as infrastructure owned by third parties (road,
railway, powerline and pipelines). The indicative valuation assumes
that mining of the final pit phase, which is subject to agreements or
easements to access these areas and relocate this infrastructure, will
be possible.
Indicators of potential reversal of previous impairments
Antucoya recognised impairments totalling $716 million in 2012 and
2016. Of the original impairment amounts, approximately $550 million
remains in effect unamortised as at 31 December 2021. Based on an
assessment of both qualitative and quantitative factors, there were no
indicators of a potential reversal of these previous impairments at the
2021 year-end. As noted above, the indicative valuation exercise for
Antucoya at the 2021 year-end indicated positive headroom for
Antucoya. However, the headroom position is relatively marginal – the
down-side sensitivity reflecting a 10% reduction in the long-term copper
price resulted in a potential deficit of $160 million; the sensitivity using a
10% stronger long-term Chilean peso exchange rate assumption
indicated a potential break-even position. Given this marginal headroom
position, reasonably possible changes in the general market
environment, the operational performance of the mine or the regulatory
and taxation environment in Chile could result in a break-even or a
potential deficit position for Antucoya and hence it was concluded that
there was no impairment reversal trigger as at 31 December 2021.
However, if there is a future significant improvement in the
performance and value of Antucoya, for example due to one, or a
combination of, the following – a significant increase in the long-term
copper price outlook, strong operational performance that is expected to
be sustained into the future, and/or positive resolution of uncertainty
with the regulatory and taxation environment in Chile – a full or partial
reversal of these impairments could be triggered in future periods.
/ Notes to the financial statements continued
5 Asset sensitivities continued
Copper price outlook
The assumption to which the value of the assets is most sensitive is the
future copper price. The copper price forecasts (representing the
Group’s estimates of the assumptions that would be used by
independent market participants in valuing the assets) are based on the
forward curve for the short term and consensus analyst forecasts for
the longer term. A long-term copper price of $3.30/lb (reflecting 2021
real terms) has been used in the base valuations used in the impairment
indicator assessment. As an additional down-side sensitivity a valuation
was performed with a long-term copper price of $2.97/lb, reflecting a
10% reduction in the long-term price forecast. Los Pelambres,
Centinela, and Zaldívar still showed positive headroom in this alternative
down-side scenario. However, the Antucoya valuation indicated a
potential deficit of $160 million. This was a simple sensitivity exercise,
looking at an illustrative change in the forecast long-term copper price
in isolation. In reality, a deterioration in the long-term copper price
environment is likely to result in corresponding improvements in a
range of input cost factors. In particular, given that copper exports
account for over 50% of Chile’s exports, movements in the US
dollar/Chilean peso exchange rate have historically been highly
correlated to the copper price, and a decrease in the copper price is
likely to result in a weakening of the Chilean peso, with a resulting
reduction in the Group’s operating costs and capital expenditure. These
likely cost reductions, as well as potential operational changes which
could be made in a weaker copper price environment, could partly
mitigate the impact of the lower copper price modelled in these
estimated potential sensitivities.
The US dollar/Chilean peso exchange rate
The value of the assets is also sensitive to movements in the US
dollar/Chilean peso exchange rate. A long-term exchange rate of
Ch$770/$1 has been used in the base valuations used in the impairment
indicator assessment. As an additional down-side sensitivity an
indicative valuation was performed with a 10% stronger long-term
Chilean peso exchange rate assumption. Los Pelambres, Centinela, and
Zaldívar all still showed positive headroom in this alternative down-side
scenario. In the case of Antucoya, this down-side scenario indicated a
potential break-even position. As noted above, movements in the US
dollar/Chilean peso exchange rate have historically been highly
correlated to the copper price and so in reality the exchange rate would
not be expected to move in isolation.
Other relevant assumptions
In addition to the impact of climate change risks, the future copper price
and the US dollar/Chilean peso exchange rate, the indicative valuations
are sensitive to the assumptions in respect of future production levels,
operating costs, sustaining and development capital expenditure,
potential changes in the Chilean mining royalty regime, and the discount
rate used to determine the present value of the future cash flows.
A real post-tax discount rate of 8% has been used in determining the
present value of the forecast future cash flow from the assets as part of
the impairment indicator assessment.
The COVID-19 situation is not expected to have a significant negative
impact on the future production or capital projects of the Group’s mining
operations. The forecasts within the indicative valuations reflect
estimates of the expected ongoing costs of managing the situation over
the near-term.
As indicated by the sensitivities for movements in the long-term copper
price and the US dollar/Chilean peso exchange rate described above,
Antucoya is particularly sensitive to movements in the input
assumptions.
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6 Segment information
The Group’s operating and reportable segments are as follows:
• Los Pelambres
• Centinela
• Antucoya
• Zaldívar
• Exploration and evaluation
• Corporate and other items
• Transport division
For management purposes, the Group is organised into two business divisions based on their products – Mining and Transport. The Mining division
is split further for management reporting purposes to show results by mine and exploration activity.
Los Pelambres produces primarily copper concentrate, molybdenum, gold and silver as a by-product. Centinela produces copper concentrate
containing gold and silver as a by-product, molybdenum concentrates and copper cathodes. Antucoya and Zaldívar produce copper cathodes. The
Transport division provides rail cargo and road cargo transport together with a number of ancillary services. All the operations are based in Chile.
The Exploration and evaluation segment incurs exploration and evaluation expenses. “Corporate and other items” comprises costs incurred by the
Company, Antofagasta Minerals SA, the Group’s mining corporate centre and other entities, that are not allocated to any individual business
segment. Consistent with its internal management reporting, the Group’s corporate and other items are included within the Mining division.
The chief operating decision-maker (the Group’s Chief Executive Officer) monitors the operating results of the business segments separately for the
purpose of making decisions about resources to be allocated and assessing performance. Segment performance is evaluated based on the
operating profit of each of the segments.
A) Segment revenues and results
For the year ended 31 December 2021
Revenue
Operating cost excluding depreciation
Depreciation
Loss on disposals
Provision against the carrying value of assets4
Operating profit/(loss)
Net share of results from associates and joint
ventures
Investment income
Interest expense
Other finance items
Profit/(loss) before tax
Tax
Tax – exceptional items3
Profit/(loss) for the year
Non-controlling interests
Profit/(losses) attributable to the owners of
the parent
EBITDA1
Additions to non-current assets
Additions to property, plant and equipment
Segment assets and liabilities
Segment assets
Investment in associates and joint ventures
Segment liabilities
Los
Pelambres
$m
Centinela
$m
Antucoya
$m
Zaldívar
$m
Exploration
and
evaluation2
$m
Corporate
and other
items
$m
Mining
$m
Transport
division
$m
3,621.0
2,981.3
(1,095.0) (1,062.0)
(654.7)
(4.0)
–
1,260.6
(281.8)
(3.7)
–
2,240.5
–
1.4
(3.5)
41.1
2,279.5
(743.7)
–
1,535.8
607.5
–
1.5
(16.4)
26.1
1,271.8
(382.0)
–
889.8
252.2
697.8
(360.7)
(98.3)
(0.5)
–
238.3
–
0.3
(15.5)
4.9
228.0
(7.1)
90.6
311.5
84.4
–
–
–
–
–
–
68.5
–
–
–
68.5
–
–
68.5
–
928.3
2,526.0
637.6
1,919.3
227.1
337.1
68.5
172.8
–
(103.2)
–
–
(177.6)
(280.8)
–
–
–
–
(280.8)
–
–
(280.8)
–
(280.8)
(103.2)
–
7,300.1
(76.0) (2,696.9)
(1,047.8)
(13.0)
–
(8.2)
(177.6)
–
3,369.6
(89.0)
170.0
(106.3)
(30.9)
(1.0)
–
31.8
(9.0)
1.7
(27.2)
5.1
(118.4)
(188.3)
–
(306.7)
0.5
59.5
4.9
(62.6)
77.2
3,448.6
(1,321.1)
90.6
2,218.1
944.6
(307.2)
(84.0)
1,273.5
4,768.0
0.2
0.1
(0.8)
(2.8)
28.5
(11.8)
–
16.7
–
16.7
68.2
Total
$m
7,470.1
(2,803.2)
(1,078.7)
(9.2)
(177.6)
3,401.4
59.7
5.0
(63.4)
74.4
3,477.1
(1,332.9)
90.6
2,234.8
944.6
1,290.2
4,836.2
903.1
826.4
62.7
–
0.6
30.4
1,823.2
32.7
1,855.9
5,667.1
–
(2,642.0)
5,924.2
–
(1,797.0)
1,735.9
–
(548.7)
–
900.0
–
–
–
–
2,661.1 15,988.3
900.0
(1,174.5) (6,162.2)
–
384.3
5.8
(87.2)
16,372.6
905.8
(6,249.4)
1. EBITDA refers to Earnings Before Interest, Tax, Depreciation and Amortisation. EBITDA is calculated by adding back depreciation, amortisation, profit or loss on disposals and
impairment charges to operating profit. This comprises 100% of the EBITDA from the Group´s subsidiaries, and the Group´s proportional share of the EBITDA of its associates
and joint ventures (refer to the Alternative Performance Measures section on page 229).
2. Operating cash outflow in the exploration and evaluation segment was $49.9 million.
3. During 2021, there was an exceptional item of $90.6 million which reflects the recognition of a deferred tax asset at Antucoya (see Note 4).
4. An impairment has been recognised as at 31 December 2021 in respect of the $177.6 million of intangible assets and property, plant and equipment relating to the Twin Metals
project, presented as an exceptional item.
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/ Notes to the financial statements continued
6 Segment information continued
For the year ended 31 December 2020
Revenue
Operating cost excluding depreciation
Depreciation
Loss on disposals
Operating profit/(loss)
Equity accounting results
Impairment of investment in associate3
Net share of results from associates and
joint ventures
Investment income
Interest expense
Other finance items
Profit/(loss) before tax
Tax
Profit/(loss) for the year from continuing
operations
Profit for the period from discontinued
operations
Profit/(loss) for the year
Non-controlling interests
Profit/(losses) attributable to the owners of
the parent
EBITDA1
Additions to non-current assets
Additions to property, plant and equipment
Segment assets and liabilities
Segment assets
Deferred tax assets
Investment in associates and joint ventures
Segment liabilities
Centinela
$m
Antucoya
$m
Zaldívar
$m
Exploration
and
evaluation2
$m
Corporate
and other
items
$m
Los
Pelambres
$m
2,655.1
(992.1)
(252.6)
(2.5)
1,407.9
–
–
–
4.7
(4.3)
(26.0)
1,382.3
(435.8)
1,844.5
(932.8)
(662.9)
(1.8)
247.0
–
(95.6)
(95.6)
4.3
(24.9)
(13.7)
117.1
(23.0)
480.3
(314.5)
(94.6)
–
71.2
–
–
–
0.8
(25.5)
(4.0)
42.5
(0.3)
–
–
–
–
–
12.2
–
12.2
–
–
–
12.2
–
–
(85.1)
–
–
(85.1)
–
–
–
–
–
–
(85.1)
–
Mining
$m
4,979.9
(2,390.7)
(1,017.9)
(4.3)
1,567.0
5.7
–
(66.2)
(7.8)
–
(74.0)
(6.5)
–
(95.6)
(6.5)
9.0
(20.7)
(5.5)
(97.7)
(59.2)
(89.9)
18.8
(75.4)
(49.2)
1,371.3
(518.3)
Transport
division
$m
149.4
(91.4)
(30.8)
(2.0)
25.2
(0.6)
14.8
14.2
0.1
(1.7)
4.0
41.8
(8.2)
Total
$m
5,129.3
(2,482.1)
(1,048.7)
(6.3)
1,592.2
5.1
(80.8)
(75.7)
18.9
(77.1)
(45.2)
1,413.1
(526.5)
946.5
94.1
42.2
12.2
(85.1)
(156.9)
853.0
33.6
886.6
–
946.5
371.5
575.0
1,663.0
–
94.1
12.9
81.2
911.7
–
42.2
3.1
39.1
165.8
–
12.2
–
12.2
95.5
827.3
441.8
44.6
–
5,475.9
–
–
(2,700.1)
5,898.8
–
–
(1,823.2)
1,641.5
–
–
(702.5)
–
–
909.0
–
–
(85.1)
–
(85.1)
(85.1)
–
–
–
–
–
7.3
(149.6)
–
7.3
860.3
387.5
(149.6)
(72.7)
472.8
2,678.2
–
33.6
–
33.6
61.0
7.3
893.9
387.5
506.4
2,739.2
8.4
1,322.1
26.2
1,348.3
2,284.2
2.7
–
(1,202.6)
15,300.4
2.7
909.0
(6,428.4)
382.9
3.7
5.6
(94.8)
15,683.3
6.4
914.6
(6,523.2)
1. EBITDA refers to Earnings Before Interest, Tax, Depreciation and Amortisation. EBITDA is calculated by adding back depreciation, amortisation, profit or loss on disposals and
impairment charges to operating profit. This comprises 100% of the EBITDA from the Group´s subsidiaries, and the Group´s proportional share of the EBITDA of its associates
and joint ventures (refer to the Alternative Performance Measures section on page 229).
2. Operating cash outflow in the exploration and evaluation segment was $43.1 million.
3. On 31 March 2020, the Group agreed to dispose of its 40% interest in Hornitos coal-fired power station to ENGIE Energía Chile S.A. (“ENGIE”), the owner of the remaining 60%
interest. This has resulted in a $80.8 million impairment in respect of the Group’s investment in associate balance.
Notes to segment revenues and results
(i)
Inter-segment revenues are eliminated on consolidation. The only inter-segment revenue related to sales from the Transport division to the
mining division of $8.2 million (year ended 31 December 2020 – $6.8 million), has been eliminated and is therefore not reflected in the above
figures.
(ii) Revenue includes provisionally priced sales of copper, gold and molybdenum concentrates and copper cathodes. Further details of such
adjustments are given in Note 7.
(iii) For sales of concentrates, which are sold to smelters and roasting plants for further processing into fully refined metal, the price of the
concentrate (which is the amount recorded as revenue) reflects the market value of the fully refined metal less a “treatment and refining
charge” deduction, to reflect the lower value of this partially processed material compared with the fully refined metal. Treatment and refining
charges for copper and molybdenum concentrates are detailed in Note 7.
(iv) The effects of tax and non-controlling interests on the expenses within the Exploration and evaluation segment are allocated to the mine that
the exploration work relates to.
(v) The assets of the Transport division segment include $5.8 million (31 December 2020 – $5.6 million) relating to the Group’s 30% interest in
Antofagasta Terminal International SA (“ATI”), which operates a concession to manage installations in the port of Antofagasta. Further details
of these investments are set out in Note 17.
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B) Entity-wide disclosures
Revenue by product
Copper
• Los Pelambres
• Centinela concentrate
• Centinela cathodes
• Antucoya
Provision of shipping services1
• Los Pelambres
• Centinela concentrate
• Centinela cathodes
• Antucoya
Gold
• Los Pelambres
• Centinela concentrate
Molybdenum
• Los Pelambres
• Centinela concentrate
Silver
• Los Pelambres
• Centinela concentrate
Total
Transport division
2021
$m
2020
$m
3,097.0
1,735.4
774.1
693.3
2,269.2
908.6
599.1
475.9
57.8
46.8
4.3
4.5
91.0
345.4
329.2
37.2
46.0
38.1
7,300.1
170.0
7,470.1
54.4
31.8
4.8
4.4
106.4
251.3
181.8
27.7
43.3
21.2
4,979.9
149.4
5,129.3
1. These prior year figures have been re-presented to separately analyse revenue from the sale of products and from the provision of shipping services.
Revenue by location of customer
Europe
• United Kingdom
• Switzerland
• Spain
• Germany
• Rest of Europe
Latin America
• Chile
• Rest of Latin America
North America
• United States
Asia
• Japan
• China
• Singapore
• South Korea
• Hong Kong
• Rest of Asia
2021
$m
2020
$m
54.4
1,303.7
67.6
121.5
177.4
282.0
214.7
123.3
593.5
29.3
116.4
92.3
224.4
182.0
666.5
216.5
1,842.3
1,236.9
726.1
322.6
217.1
237.3
7,470.1
1,631.1
531.4
667.5
353.4
235.7
132.5
5,129.3
Information about major customers
In the year ended 31 December 2021, the Group’s mining revenue included $1,015.1 million related to one large customer that individually accounted
for more than 10% of the Group’s revenue (year ended 31 December 2020 – one large customer representing $763.4 million).
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/ Notes to the financial statements continued
6 Segment information continued
Non-current assets by location of assets
Chile
USA
2021
$m
11,715.2
1.0
11,716.2
2020
$m
Restated
11,023.2
178.3
11,201.5
The above amounts reflect non-current assets excluding financial assets and deferred tax assets. The non-current assets shown above exclude
$96.7 million ($6.4 million – 2020) of deferred tax assets, $51.1 million ($51.7 million – 2020) of receivables (being financial assets), $8.7 million of
equity investments ($11.1 million – 2020) and nil ($0.3 million – 2020) of derivative instruments. The prior period comparatives have been restated
to exclude financial assets and deferred tax assets, resulting in a reduction in respect of the assets located in Chile of $69.5 million as at
31 December 2020.
7 Group Revenue
Copper and molybdenum concentrate sale contracts and copper cathode sale contracts generally provide for provisional pricing of sales at the time
of shipment, with final pricing being based on the monthly average London Metal Exchange copper price or monthly average molybdenum price for
specified future periods. This normally ranges from one to four months after shipment to the customer. For sales contracts which contain
provisional pricing mechanisms the total receivable balance is measured at fair value through profit or loss. Gains and losses from the mark-to-
market of open sales are recognised through adjustments to revenue in the income statement and to trade receivables in the balance sheet. The
Group determines mark-to-market prices using forward prices at each period-end for copper concentrate and cathode sales, and period-end
month average prices for molybdenum concentrate sales due to the absence of a futures market in the market price references for that commodity
in the majority of the Group’s contracts.
With sales of concentrates, which are sold to smelters and roasting plants for further processing into fully refined metal, the price of the concentrate
(which is the amount recorded as revenue) reflects the market value of the fully refined metal less a “treatment and refining charge” deduction, to
reflect the lower value of this partially processed material compared with the fully refined metal.
The shipping service represents a separate performance obligation, and is recognised separately from the sale of the material over time as the
shipping service is provided.
An analysis of the Group’s revenue is as follows:
Revenue from contracts with customers
Sale of products
Provision of shipping services associated with the sale of products1
Transport division2
Provisional pricing adjustments in respect of copper, gold and molybdenum
Total revenue
2021
$m
2020
$m
6,809.0
113.4
170.0
377.7
7,470.1
4,617.3
95.4
149.4
267.2
5,129.3
1. The Group sells a significant proportion of its products on Cost, Insurance & Freight (CIF) Incoterms, which means that the Group is responsible for shipping the product to a
destination port specified by the customer.
2. The Transport division provides rail and road cargo transport together with a number of ancillary services.
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For the year ended 31 December 2021
Provisionally priced sales of products
Revenue from freight services
Effects of pricing adjustments to
previous year invoices
Reversal of mark-to-market adjustments
at the end of the previous year
Settlement of sales invoiced in the
previous year
Total effect of adjustments to previous
year invoices in the current year
Effects of pricing adjustments to
current year invoices
Settlement of sales invoiced in the
current year
Mark-to-market adjustments at the
end of the current year
Total effect of adjustments to
current year invoices
Los
Pelambres
Copper
concentrate
$m
2,966.6
57.8
3,024.4
Centinela
Copper
concentrate
$m
1,685.3
46.8
1,732.1
Centinela
Copper
cathodes
$m
824.3
4.3
828.6
Antucoya
Copper
cathodes
$m
749.7
4.5
754.2
Los
Pelambres
Gold in
concentrate
$m
Centinela
Gold in
concentrate
$m
Los
Pelambres
Molybdenum
concentrate
$m
Centinela
Molybdenum
concentrate
$m
93.3
–
93.3
354.8
–
354.8
322.1
–
322.1
38.4
–
38.4
(58.7)
(26.8)
0.1
(0.5)
–
(0.9)
0.2
(0.3)
175.1
74.7
116.4
47.9
1.8
1.9
1.5
(1.0)
(4.0)
6.4
1.2
1.0
(1.0)
(4.9)
6.6
0.9
92.2
58.8
10.2
6.0
(1.1)
(4.1)
30.6
5.8
12.0
5.2
0.3
0.8
–
0.4
(5.7)
(0.7)
104.2
64.0
10.5
6.8
(1.1)
(3.7)
24.9
5.1
Total pricing adjustments
Realised losses on commodity derivatives
220.6
–
111.9
–
12.4
(62.6)
7.8
(64.2)
(2.1)
–
(8.6)
–
31.5
–
Treatment and refining charges
Revenue
(90.2)
3,154.8
(61.8)
1,782.2
–
778.4
–
697.8
(0.2)
91.0
(0.8)
345.4
(24.4)
329.2
6.0
–
(7.2)
37.2
The categories of revenue which are principally affected by different economic factors are the individual product types. A summary of revenue by
product is set out in Note 6.
The table above sets out the impact of provisional pricing adjustments, derivative commodity instruments and treatment and refining charges for the
more significant products. The revenue from these products, along with the revenue from other products and services, is reconciled to total
revenue in Note 6.
The revenue from the individual products shown in the above table excludes revenue from sales of silver and the Transport division, which are
presented in the revenue by product table in Note 5 to reconcile to Group Revenue.
With sales of concentrates at Los Pelambres and Centinela, which are sold to smelters and roasting plants for further processing into fully refined
metal, the price of the concentrate invoiced to the customer reflects the market value of the fully refined metal less a “treatment and refining
charge” deduction, to reflect the lower value of this partially processed material compared with the fully refined metal. For accounting purposes, the
revenue amount is the net of the market value of fully refined metal less the treatment and refining charges. Under the standard industry definition
of cash costs, treatment and refining charges are regarded as an expense and part of the total cash cost figure.
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/ Notes to the financial statements continued
7 Group Revenue continued
For the year ended 31 December 20201
Provisionally priced sales of products
Revenue from freight services
Provisionally invoiced gross sales
Effects of pricing adjustments to
previous year invoices
Reversal of mark-to-market adjustments
at the end of the previous year
Settlement of sales invoiced in the
previous year
Total effect of adjustments to previous
year invoices in the current year
Effects of pricing adjustments to
current year invoices
Settlement of sales invoiced in the
current year
Mark-to-market adjustments at the
end of the current year
Total effect of adjustments to
current year invoices
Los
Pelambres
Copper
concentrate
$m
2,202.3
54.4
2,256.7
Centinela
Copper
concentrate
$m
917.5
31.8
949.3
Centinela
Copper
cathodes
$m
590.0
4.8
594.8
Antucoya
Copper
cathodes
$m
470.4
4.4
474.8
Los
Pelambres
Gold in
concentrate
$m
Centinela
Gold in
concentrate
$m
Los
Pelambres
Molybdenum
concentrate
$m
Centinela
Molybdenum
concentrate
$m
104.9
–
104.9
250.6
–
250.6
205.0
–
205.0
31.6
–
31.6
(29.1)
(15.2)
(0.4)
(0.4)
–
(1.2)
0.4
–
(43.6)
(18.7)
(0.3)
(0.3)
(72.7)
(33.9)
(0.7)
(0.7)
0.2
0.2
3.7
(1.5)
(0.2)
2.5
(1.1)
(0.2)
194.6
67.0
11.2
58.7
26.8
(0.1)
253.3
93.8
11.1
7.8
0.5
8.3
7.6
(2.1)
1.5
(2.0)
4.6
–
0.9
(0.2)
1.5
1.7
–
(1.1)
4.4
1.4
–
3.3
–
2.1
0.3
2.4
2.2
–
Total pricing adjustments
Realised losses on commodity derivatives
180.6
–
59.9
–
10.4
(1.3)
Treatment and refining charges
Revenue
(113.6)
2,323.7
(68.8)
940.4
–
603.9
–
480.3
(0.2)
106.4
(0.7)
251.3
(26.5)
181.8
(6.1)
27.7
1. These prior year figures have been re-presented to separately analyse revenue from the sale of products and from the provision of shipping services.
The revenue from the individual products shown in the above table excludes revenue from sales of silver and the Transport division, which are
presented in the revenue by product table in Note 5 to reconcile to Group Revenue.
With sales of concentrates at Los Pelambres and Centinela, which are sold to smelters and roasting plants for further processing into fully refined
metal, the price of the concentrate invoiced to the customer reflects the market value of the fully refined metal less a “treatment and refining
charge” deduction, to reflect the lower value of this partially processed material compared with the fully refined metal. For accounting purposes, the
revenue amount is the net of the market value of fully refined metal less the treatment and refining charges. Under the standard industry definition
of cash costs, treatment and refining charges are regarded as an expense and part of the total cash cost figure.
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(I) Copper concentrate
The typical period for which sales of copper concentrate remain open until settlement occurs is a range of approximately three to four months from
shipment date.
Sales provisionally priced at the balance sheet date
Average mark-to-market price
Average provisional invoice price
2021
2020
Tonnes
$/lb
$/lb
177,900
4.41
4.37
162,300
3.52
3.28
(II) Copper cathodes
The typical period for which sales of copper cathodes remain open until settlement occurs is approximately one month from shipment date.
Sales provisionally priced at the balance sheet date
Average mark-to-market price
Average provisional invoice price
Tonnes
$/lb
$/lb
2021
15,000
4.42
4.39
2020
13,800
3.52
3.50
(III) Gold in concentrate
The typical period for which sales of gold in concentrate remain open until settlement occurs is approximately one month from shipment date.
Sales provisionally priced at the balance sheet date
Average mark-to-market price
Average provisional invoice price
Ounces
$/oz
$/oz
2021
32,300
1,801
1,791
2020
16,300
1,917
1,861
(IV) Molybdenum concentrate
The typical period for which sales of molybdenum remain open until settlement occurs is approximately two months from shipment date.
Sales provisionally priced at the balance sheet date
Average mark-to-market price
Average provisional invoice price
Tonnes
$/lb
$/lb
2021
2,400
18.60
19.65
2020
2,000
9.34
9.38
As detailed above, the effects of gains and losses from the marking-to-market of open sales are recognised through adjustments to revenue in the
income statement and to trade debtors in the balance sheet. The effect of mark-to-market adjustments on the balance sheet at the end of each
period are as follows:
Los Pelambres – copper concentrate
Los Pelambres – molybdenum concentrate
Centinela – copper concentrate
Centinela – molybdenum concentrate
Centinela – gold in concentrate
Centinela – copper cathodes
Antucoya – copper cathodes
Effect on debtors of year end mark-
to-market adjustments
2021
$m
12.0
(5.7)
5.2
(0.7)
0.4
0.3
0.8
12.3
2020
$m
58.7
(0.2)
26.8
0.3
0.9
(0.1)
0.5
86.9
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/ Notes to the financial statements continued
8 Profit before tax
Operating profit from subsidiaries and total profit from operations and associates and joint ventures is derived from Group revenue by deducting
operating costs as follows:
Group revenue
Cost of sales
Gross profit
Administrative and distribution expenses
Other operating income
Other operating expenses1
Operating profit from subsidiaries
Net share of results from associates and joint ventures
Impairment of investment in associate
Total profit from operations, associates and joint ventures
2021
$m
7,470.1
(3,120.2)
4,349.9
(550.4)
31.8
(429.9)
3,401.4
59.7
–
3,461.1
2020
Restated
$m
5,129.3
(2,856.9)
2,272.4
(453.9)
27.0
(253.3)
1,592.2
5.1
(80.8)
1,516.5
1. The prior period comparatives have been restated to reflect a reclassification from Administrative and distribution expenses to Other operating expenses of $30.7 million related
to project labour costs.
Other operating expenses comprise $103.2 million of exploration and evaluation expenditure (2020 – $85.1 million), $19.8 million in respect of the
employee severance provision (2020 – $17.9 million), $11.3 million in respect of the closure provision (2020 – $45.2 million), $177.6 million in
respect of the provision against the carrying value of assets relating to the Twin Metals project (2020 – nil) and $118.0 million of other expenses
(2020 – $105.2 million).
Profit before tax is stated after (charging)/crediting:
Foreign exchange gains/(losses)
• included in net finance costs
• included in income tax expense
Depreciation of property, plant and equipment
• owned assets
• leased assets
Loss on disposal of property, plant and equipment
Cost of inventories recognised as an expense
Employee benefit expense
Decommissioning and restoration (operating expenses)
Severance charges
Exploration and evaluation expense
Provision against carrying value of assets1
Auditors´ remuneration
2021
$m
49.9
–
(997.1)
(81.6)
(9.2)
(2,033.0)
(498.0)
(11.3)
(19.8)
(103.2)
(177.6)
(1.9)
2020
$m
(28.4)
0.1
(966.9)
(81.8)
(6.3)
(1,810.0)
(453.8)
(45.2)
(17.9)
(85.1)
-
(1.8)
1. Includes impairment provision recognised in respect of $27.5 million of property, plant and equipment (note 16) and $150.1 million of intangible assets (note 15) relating to the
Twin Metals project.
A more detailed analysis of auditors´ remuneration on a worldwide basis is provided below:
Group
Fees payable to the Company´s auditors and its associates for the audit of the parent company and consolidated
financial statements
Fees payable to the Company´s auditors and its associates for other services:
• The audit of the Company’s subsidiaries
• Audit-related assurance services1
• Other assurance services2
2021
$000
1,242
415
200
–
1,857
2020
$000
920
323
185
352
1,780
1. The audit-related assurance services relate to the half-year review performed by the auditors.
2. The other assurance services in 2020 related to the bond issue in that year, which required the Group to engage PwC to act as the reporting accountant for that transaction,
work which is in effect required to be performed by the Group’s auditor.
Details of the Company’s policy on the use of auditors for non-audit services: the reason why the auditor was used rather than another supplier and
how the auditor’s independence and objectivity was safeguarded are set out in the Audit and Risk Committee report on page 134. No services were
provided pursuant to contingent fee arrangements.
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9 Employees
A) Average monthly number of employees
Los Pelambres
Centinela
Michilla
Antucoya
Exploration and evaluation
Corporate and other employees
• Chile
• United Kingdom
• Other
Mining and Corporate
Transport division
2021
Number
959
2,226
–
817
71
566
4
4
4,647
1,336
5,983
2020
Number
944
2,092
3
798
67
528
4
4
4,440
1,379
5,819
(i) The average number of employees for the year includes all the employees of subsidiaries. The average number of employees does not include contractors who are not directly
employed by the Group.
(ii) The average number of employees does not include employees from associates and joint ventures.
B) Aggregate remuneration
The aggregate remuneration of the employees included in the table above was as follows:
Wages and salaries
Social security costs
2021
$m
(469.9)
(28.1)
(498.0)
2020
$m
(430.2)
(23.6)
(453.8)
C) Key management personnel
In accordance with IAS 24, key management personnel are those persons having authority and responsibility for planning, directing and controlling
the activities of the Group, directly or indirectly, including any Directors (Executive and Non-Executive) of the Company. Key management personnel
who are not Directors have been identified as responsible senior management at the Corporate Centre and those responsible for the running of the
key business divisions of the Group.
Compensation for key management personnel (including Directors) was as follows:
Salaries and short-term employee benefits
2021
$m
(40.1)
(40.1)
2020
$m
(18.6)
(18.6)
Disclosures on Directors’ remuneration required by Schedule 8 of the Large and Medium-sized Companies and Group (Financial Statement)
Regulations 2008, including those specified for audit by that Schedule, are included in the Remuneration report on pages 148 to 155.
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/ Notes to the financial statements continued
10 Net finance income/(expense)
Investment income
Interest income
Gains on liquid investments held at fair value through profit or loss
Interest expense
Interest expense
Other finance items
Unwinding of discount on provisions
Adjustment to provision discount rates
Effects of changes in foreign exchange rates
Preference dividends
Net finance income/(expense)
2021
$m
3.4
1.6
5.0
(63.4)
(63.4)
(6.2)
30.8
49.9
(0.1)
74.4
16.0
2020
$m
3.4
15.5
18.9
(77.1)
(77.1)
(7.5)
(9.2)
(28.4)
(0.1)
(45.2)
(103.4)
During 2021, amounts capitalised and consequently not included within the above table were as follows: $12.1 million at Los Pelambres (year ended
31 December 2020 – $21.0 million) and $2.1 million at Centinela (year ended 31 December 2020 – $5.7 million).
The interest expense shown above includes $7.9 million in respect of leases (2020 – $9.7 million).
11 Income tax expense
The tax charge for the year comprised the following:
Current tax charge
• Corporate tax (principally first category tax in Chile)
• Mining tax (royalty)
• Withholding tax
• Exchange gains on corporate tax balances
Deferred tax charge
• Corporate tax (principally first category tax in Chile)
• Mining tax (royalty)
• Withholding tax
Total tax charge
2021
$m
2020
$m
(560.8)
(250.0)
(224.7)
–
(1,035.5)
(237.4)
0.9
29.7
(206.8)
(1,242.3)
(353.5)
(106.1)
(55.8)
0.1
(515.3)
(1.1)
4.2
(14.3)
(11.2)
(526.5)
The rate of first category (ie corporate) tax in Chile is 27.0% (2020 – 27.0%).
In addition to first category tax and the mining tax, the Group incurs withholding taxes on any remittance of profits from Chile. Withholding tax is
levied on remittances of profits from Chile at 35% less first category (ie corporate) tax already paid in respect of the profits to which the
remittances relate.
The Group’s mining operations are also subject to a mining tax (royalty), which is calculated as a percentage of taxable mining operating profit.
Production from Los Pelambres and Antucoya is subject to a rate of between 5–14%, depending on the level of operating profit margin. At
Centinela, production from Encuentro Oxides, the Tesoro North East pit and the Run-of-Mine processing at Centinela Cathodes are subject to a
rate of between 5–14%, depending on the level of operating profit margin, and production from Centinela Concentrates and the Tesoro Central
and Mirador pits is subject to a rate of 5% of taxable operating profit.
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Profit before tax
Year ended
Excluding
exceptional items
Year ended
Including
exceptional items
Year ended
Excluding
exceptional items
Year ended
Including
exceptional items
2021
%
$m
3,654.7
$m
3,477.1
2021
%
2020
2020
$m
%
$m
%
1,493.9
1,413.1
Tax at the Chilean corporate tax rate of 27%
(986.8)
27.0
(938.8)
27.0
(403.4)
27.0
(381.5)
27.0
Mining tax (royalty)
Deduction of mining tax (royalty) as an allowable expense in
determination of first category tax
Withholding tax
Items not deductible from first category tax
Adjustment in respect of prior years
(243.8)
6.7
(243.8)
7.0
(101.3)
6.8
(101.3)
7.2
67.8
(1.9)
67.8
(1.9)
28.1
(1.9)
28.1
(2.0)
(195.0)
(31.6)
(12.1)
5.3
0.9
0.3
(195.0)
(31.6)
(12.1)
5.6
0.9
0.3
Tax effect of share of profit of associates and joint ventures
16.1
(0.4)
16.1
(0.5)
Impact of previously unrecognised tax losses on current tax
Impact of recognition of previously unrecognised tax losses on
deferred tax
Provision against carrying value of assets
Impairment of investment in associate
Net other items
52.5
(1.4)
52.5
(1.5)
–
–
–
–
–
–
–
–
90.6
(2.6)
(48.0)
1.4
–
–
–
–
(70.0)
(9.8)
(1.6)
1.4
10.5
–
–
–
(0.1)
4.7
0.7
0.1
(0.1)
(0.7)
–
–
–
–
(70.0)
(9.8)
(1.6)
1.4
10.5
–
–
(2.2)
(0.1)
5.0
0.6
0.1
(0.1)
(0.7)
–
–
0.2
–
Tax expense and effective tax rate for the year
(1,332.9)
36.5
(1,242.3)
35.7
(546.2)
36.6
(526.5)
37.3
The effective tax rate excluding exceptional items of 36.5% varied from the statutory rate principally due to the mining tax (royalty) (net impact of
$176.0 million/4.8% including the deduction of the mining tax (royalty) as an allowable expense in the determination of first category tax), the
withholding tax relating to the remittance of profits from Chile (impact of $195.0 million/5.3%), items not deductible for Chilean corporate tax
purposes, principally the funding of expenses outside of Chile (impact of $31.6 million/0.9%) and adjustments in respect of prior years (impact of
$12.1 million/0.3%), partly offset by the impact of previously unrecognised tax losses (impact of $52.5 million/1.4%) and the impact of the
recognition of the Group’s share of profit from associates and joint ventures, which are included in the Group’s profit before tax, net of their
respective tax charges (impact of $16.1 million/0.4%).
The impact of the exceptional items on the effective tax rate including exceptional items was $42.6 million/1.2%.
The main factors which could impact the sustainability of the Group’s existing effective tax rate are:
• the level of future distributions made by the Group’s Chilean subsidiaries out of Chile, which could result in increased withholding tax charges
• the impact of expenses which are not deductible for Chilean first category tax. Some of these expenses are relatively fixed costs, and so the
relative impact of these expenses on the Group’s effective tax rate will vary depending on the Group’s total profit before tax in a particular year.
There are no significant tax uncertainties which would require critical judgements, estimates or potential provisions other than deferred tax
judgements and estimates as explained in Note 3 B (i).
12 Discontinued operations
There are no profits from discontinued operations in the year ended 2021.
In 2016, the Group disposed of Minera Michilla SA, with the profit on disposal, along with the results for that year, being presented on the “Profit for
the period from discontinued operations” line in the income statement. The Group retained certain residual options over the Michilla operation, and
in December 2020, the current owner of Michilla paid the Group $10.0 million in order to extinguish those options, resulting in a post-tax gain for
the Group of $7.3 million. Consistent with the original presentation in 2016, this gain has been reflected on the “Profit for the period from
discontinued operations” line in the income statement for the year ended 2020.
13 Earnings per share
Profit for the period attributable to equity holders of the Company (exc. exceptional items)
Exceptional Items
Less profit from discontinuing operations
Profit for the period attributable to equity holders of the Company (inc. exceptional items) from continuing operations
Ordinary shares in issue throughout each year
2021
$m
1,404.4
(114.2)
–
1,290.2
2020
$m
546.6
(40.2)
(7.3)
499.1
2021
Number
2020
Number
985,856,695 985,856,695
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/ Notes to the financial statements continued
13 Earnings per share continued
Basic earnings per share (exc. exceptional items) from continuing operations
Basic earnings per share (exceptional items) from continuing operations
Basic earnings per share (inc. exceptional items) from continuing operations
Basic earnings per share from discontinued operations
Total continuing and discontinued operations (inc. exceptional items)
2021
cents
142.5
(11.6)
130.9
–
130.9
2020
cents
54.7
(4.1)
50.6
0.7
51.3
Basic earnings per share are calculated as profit after tax and non-controlling interests, based on 985,856,695 (2020: 985,856,695) ordinary shares.
There was no potential dilution of earnings per share in either year set out above, and therefore diluted earnings per share did not differ from basic
earnings per share as disclosed above.
Reconciliation of basic earnings per share from continuing operations:
Profit for the year attributable to equity holders of the Company
Less: profit for discontinued operations attributable to equity holders of the Company
Profit from continuing operations attributable to equity holders of the Company
Ordinary shares
Basic earnings per share from continuing operations
14 Dividends
Amounts recognised as distributions to equity holders in the year:
Final dividend paid in June (proposed in relation to the previous year)
• Ordinary
Interim dividend paid in October
• Ordinary
2021
2020
$m
$m
$m
506.4
1,290.2
(7.3)
–
499.1
1,290.2
Number 985,856,695 985,856,695
50.6
130.9
cents
2021
$m
478.1
232.7
710.8
2020
$m
70.0
61.1
131.1
2021
cents
per share
2020
cents
per share
48.5
23.6
72.1
7.1
6.2
13.3
The recommended final dividend for each year, which is subject to approval by shareholders at the Annual General Meeting and has therefore not
been included as a liability in these financial statements, is as follows:
Final dividend proposed in relation to the year
• Ordinary
2021
$m
2020
$m
2021
cents
per share
2020
cents
per share
1,172.1
478.1
118.9
48.5
This gives total dividends proposed in relation to 2021 (including the interim dividend) of 142.5 cents per share or $1,404.8 million (2020 – 54.7
cents per share or $539.3 million).
In accordance with IAS 32, preference dividends have been included within net finance expense (see Note 10) and amounted to $0.1 million (2020
– $0.1 million).
Further details of the currency election timing and process (including the default currency of payment) are available on the Antofagasta plc website
( antofagasta.co.uk) or from the Company’s registrar, Computershare Investor Services PLC on +44 370 702 0159.
Further details relating to dividends for each year are given in the Directors’ Report on page 161.
15 Intangible assets
At 1 January 2020
Additions
Disposals
At 31 December 2020
Additions
Provision against carrying value
At 31 December 2021
$m
150.1
–
–
150.1
–
(150.1)
–
The $150.1 million intangible asset reflects the cost of Twin Metals’ mining licences assets included within the corporate segment. As explained in
Note 4, an impairment provision has been recognised in respect of this asset as at 31 December 2021.
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16 Property, plant and equipment
Mining
properties
$m
Stripping
costs
$m
Buildings and
infrastructure
$m
Railway
track
$m
Land
$m
Wagons
and rolling
stock
$m
Machinery,
equipment and
others
$m
Assets under
construction
$m
Right-of-
use assets
$m
60.6
1.4
–
–
–
–
–
(0.1)
61.9
61.9
–
–
–
–
–
–
–
61.9
–
–
–
–
–
–
–
–
–
–
–
(25.0)
–
(25.0)
667.5
–
–
–
–
–
–
–
667.5
667.5
4.5
–
1,880.5
356.7
67.8
–
–
–
–
–
2,305.0
2,305.0
502.5
72.0
5,464.8
0.2
–
59.4
–
–
403.7
–
5,928.1
5,928.1
–
–
99.7
–
–
–
–
–
9.7
(1.1)
108.3
108.3
–
–
–
–
–
–
–
672.0
–
–
–
–
–
2,879.5
(119.9)
–
–
1.4
(5.7)
5,803.9
–
–
–
14.5
–
122.8
(530.3)
(31.8)
–
–
–
(562.1)
(562.1)
(26.0)
–
–
–
–
–
(588.1)
(704.1)
(413.0)
–
–
–
(1,117.1)
(1,117.1)
(255.3)
–
–
–
–
–
(1,372.4)
(2,383.2)
(230.4)
–
–
–
(2,613.6)
(2,613.6)
(274.1)
–
–
–
(2.2)
–
(2,889.9)
(34.0)
(4.8)
–
–
0.3
(38.5)
(38.5)
(5.9)
–
–
–
–
–
(44.4)
203.6
–
–
–
–
–
14.6
(10.2)
208.0
208.0
–
–
–
–
–
5.8
(7.3)
206.5
(91.2)
(18.8)
–
–
9.2
(100.8)
(100.8)
(17.1)
–
–
–
–
6.4
(111.5)
7,059.0
0.3
–
–
8.0
10.2
192.5
(3.1)
7,266.9
7,266.9
3.9
–
1,335.3
937.4
–
–
18.7
–
(620.5)
(4.3)
1,666.6
1,666.6
1,283.2
–
430.6
33.6
–
–
–
–
–
(5.3)
458.9
458.9
61.8
–
Total
$m
17,201.6
1,329.6
67.8
59.4
26.7
10.2
–
(24.1)
18,671.2
18,671.2
1,855.9
72.0
–
–
0.9
4.7
(32.0)
7,244.4
–
14.2
–
(26.6)
(8.2)
2,929.2
(119.9)
–
14.2
–
0.9
–
(3.0)
(2.8)
(17.6)
(70.8)
500.3 20,420.5
(3,731.2)
(268.1)
(74.8)
(67.8)
2.1
(4,139.8)
(4,139.8)
(418.7)
54.1
(72.0)
–
(0.3)
36.0
(4,540.7)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(170.9)
(81.8)
–
(7,644.9)
(1,048.7)
(74.8)
–
5.3
(247.4)
(247.4)
(81.6)
–
–
1.4
–
17.6
(310.0)
(67.8)
16.9
(8,819.3)
(8,819.3)
(1,078.7)
54.1
(72.0)
1.4
(27.5)
60.0
(9,882.0)
Cost
At 1 January 2020
Additions
Additions – capitalised depreciation
Adjustment to capitalised decommissioning
provisions
Capitalisation of interest
Capitalisation of critical spare parts
Reclassifications
Asset disposals
At 31 December 2020
At 1 January 2021
Additions
Additions – capitalised depreciation
Adjustment to capitalised decommissioning
provisions
Capitalisation of interest
Capitalisation of critical spare parts
Reclassifications
Asset disposals
At 31 December 2021
Accumulated depreciation and impairment
At 1 January 2020
Charge for the year
Depreciation capitalised in inventories
Depreciation capitalised in property, plant and
equipment
Asset disposals
At 31 December 2020
At 1 January 2021
Charge for the year
Depreciation capitalised in inventories
Depreciation capitalised in property, plant and
equipment
Reclassifications
Impairment
Asset disposals
At 31 December 2021
Net book value
At 31 December 2021
At 31 December 2020
36.9
61.9
83.9
105.4
1,507.1
1,187.9
2,914.0
3,314.5
78.4
69.8
95.0
107.2
2,703.7
3,127.1
2,929.2
1,666.6
190.3 10,538.5
9,851.9
211.5
The Group has no (2020 – nil) assets pledged as security against bank loans provided to the Group.
At 31 December 2021, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to
$599.3 million (2020 – $849.5 million) of which $396.7 million was related to Los Pelambres and $169.4 million to Centinela.
The average interest rate for the amounts capitalised was 1.9% (2020 – 4.2%).
At 31 December 2021, assets capitalised relating to the decommissioning provision were $263.9 million (2020 – $199.5 million).
Depreciation capitalised in property, plant and equipment of $72.0 million related to the depreciation of assets used in mine development (operating
stripping) at Centinela, Los Pelambres and Antucoya (2020 – $67.8 million).
As explained in Note 4, an impairment provision has been recognised in respect of $27.5 million of property, plant and equipment relating to the
Twin Metals project.
Antofagasta plc Annual Report 2021
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201
/ Notes to the financial statements continued
17 Investments in subsidiaries
The subsidiaries of the Group, the percentage of equity owned and the main country of operation are set out below. These interests are
consolidated within these financial statements.
Country of
incorporation
Country of
operations Registered office
Nature of
business
Economic
interest
UK
UK
UK
Bermuda
Chile
Chile
Chile
Chile
Jersey
Chile
Chile
Jersey
UK
USA
Canada
UK
USA
USA
USA
USA
USA
USA
USA
USA
UK
Jersey
BVI
BVI
Australia
Peru
UK
UK
USA
USA
Bermuda
Canada
China
Jersey
USA
Chile
Chile
Chile
Chile
UK
Chile
Bermuda
Chile
Chile
Chile
Chile
Jersey
Chile
Chile
Jersey
UK
USA
Canada
UK
USA
USA
USA
USA
USA
USA
USA
USA
UK
Jersey
BVI
BVI
Australia
Peru
UK
UK
USA
USA
Bermuda
Canada
China
Jersey
USA
Chile
Chile
Chile
1
1
1
4
2
2
2
2
3
2
2
3
1
5
7
1
6
6
6
13
14
13
13
13
1
3
8
8
9
10
1
1
5
15
4
9
16
3
5
2
2
2
Railway
Investment
Investment
Insurance
Mining
Mining
Mining
Mining
Investment
Energy
Energy
Investment
Investment
Investment
Investment
Investment
Investment
Mining
Mining
Investment
Investment
Investment
Investment
Investment
Investment
Mining
Mining
Mining
Mining
Mining
Investment
Investment
Investment
Investment
Investment
Agency
Agency
Investment
Investment
Investment
Investment
Mining
100%
100%
100%
100%
60%
70%
70%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
51%
51%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
82.0%
Direct subsidiaries of the Parent Company
Antofagasta Railway Company plc
Andes Trust Limited (The)
Chilean Northern Mines Limited
Andes Re Limited
Indirect subsidiaries of the Parent Company
Minera Los Pelambres SCM
Minera Centinela SCM
Minera Antucoya SCM
Antofagasta Minerals SA
Alfa Estates Limited
Energía Andina Geothermal SpA
MLP Transmisión SA
Northern Minerals Investment (Jersey) Limited
Northern Metals (UK) Limited
Northern Minerals Holding Co
Duluth Metals Limited
Twin Metals (UK) Limited
Twin Metals (USA) Inc
Twin Metals Minnesota LLC
Franconia Minerals (US) LLC
Duluth Metals Holdings (USA) Inc
Duluth Exploration (USA) Inc
DMC LLC (Minnesota)
DMC (USA) LLC (Delaware)
DMC (USA) Corporation
Antofagasta Investment Company Limited
Minprop Limited
Antomin 2 Limited
Antomin Investors Limited
Antofagasta Minerals Australia Pty Limited
Minera Anaconda Peru
Los Pelambres Holding Company Limited
Los Pelambres Investment Company Limited
Lamborn Land Co
Anaconda South America Inc
El Tesoro (SPV Bermuda) Limited
Antofagasta Minerals Canada
Antofagasta Minerals (Shanghai) Co Limited
Andes Investments Company (Jersey) Limited
Bolivian Rail Investors Co Inc
Inversiones Los Pelambres Chile Limitada
Equatorial Resources SpA
Minera Santa Margarita de Astillas SCM
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Other InformationFinancial Statements Strategic Report Corporate Governance
Minera Penacho Blanco SA
Michilla Costa SpA
Minera Pampa Fenix SCM
Minera Mulpun Limitada
Fundación Minera Los Pelambres
Inversiones Punta de Rieles Limitada
Ferrocarril Antofagasta a Bolivia
(Permanent Establishment)
Inversiones Chilean Northern Mines Limitada
The Andes Trust Chile SA
Forestal SA
Servicios de Transportes Integrados Limitada
Inversiones Train Limitada
Servicios Logisticos Capricornio Limitada
Embarcadores Limitada
FCAB Ingenieria y Servicios 2 Limitada
Inmobiliaria Parque Estación SA
Emisa Antofagasta SA
Registered offices:
Country of
incorporation
Country of
operations
Registered office Nature of business
Economic interest
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
2
2
2
2
2
12
12
Mining
Logistics
Investment
Mining
Community
development
Investment
Railway
Investment
12
Investment
12
12
Forestry
12 Road transport
Investment
12
Transport
12
Transport
12
12
Transport
Real Estates
12
Transport
12
66.6%
99.9%
90.0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
103 Mount Street, London, W1K 2TJ, UK
1
2 Avenida Apoquindo N° 4001, Piso 18, Las Condes, Santiago, Chile
22 Grenville Street, St Helier, Jersey, JE4 8PX3, Channel Islands
3
Crawford House, 50 Cedar Avenue, Hamilton HM 11, Bermuda
4
1209 Orange Street, Wilmington, DE 19801, USA
5
6040 Earle Brown Drive, 480 Brooklyn Center, MN 55430, USA
6
161 Bay Street, Suite 4320, Toronto, Ontario, M5J 2S1, Canada
7
PO Box 958, Road Town, Tortola VG1110, British Virgin Islands
8
Riparian Plaza, Level 28, 71 Eagle Street, Brisbane, Qld 4001, Australia
9
10 Avenida Paseo de la Republica Nº 3245 Piso 3, Lima, Peru
11 Avenida 16 de Julio N° 1440, piso 19 oficina 1905, La Paz, Bolivia
12 Simon Bolivar 255, Antofagasta, Chile
13 6041 Earle Brown Drive, 480 Brooklyn Center, MN 55430, USA
14
15 2711 Centerville Road, Suite 400, Wilmington, DE 19808, USA
16 Unit 3309, IFC 2, 8 Century Avenue, Shanghai, China
1010 Dale Street N, St Paul, MN 55117-5603, USA
With the exception of the Antofagasta Railway Company plc, all of the above Group companies have only one class of ordinary share capital in issue.
The Antofagasta Railway Company plc has ordinary and preference share capital in issue, with the ordinary share capital representing 76% of the
Company’s total share capital, and the preference share capital representing 24%. Antofagasta plc holds 100% of both the ordinary and preference
shares.
The proportion of voting rights is proportional to the economic interest for the companies listed above.
Antofagasta plc Annual Report 2021
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203
203
/ Notes to the financial statements continued
18 Investment in associates and joint ventures
Balance at the beginning of the year
Obligations on behalf of JV and associates at the beginning of the year
Capital contribution
Share of net profit/(loss) before tax
Share of tax
Share of profit/(loss) from JV and associates
Dividends receivable
Balance at the end of the year
Obligations on behalf of JV and associates at the end of the year
Balance at the beginning of the year
Obligations on behalf of JV and associates at the beginning of the year
Capital contribution
Impairment of investment in associate (i)
Share of net (loss)/profit before tax
Share of tax
Share of (loss)/profit from JV and associates
Dividends receivable
Balance at the end of the year
Obligations on behalf of JV and associates at the end of the year
Inversiones
Hornitos
2020
$m
56.9
–
23.9
(80.8)
–
–
–
–
–
–
ATI (ii)
2021
$m
5.6
–
–
0.2
–
0.2
–
5.8
–
ATI
2020
$m
6.1
–
–
–
(0.9)
0.4
(0.5)
–
5.6
–
Minera
Zaldívar (iii)
2021
$m
Tethyan
Copper (iv)
2021
$m
909.0
–
–
99.0
(30.5)
68.5
(77.5)
900.0
–
Minera
Zaldívar
2020
$m
961.8
–
–
–
19.6
(7.5)
12.1
(65.0)
909.0
–
–
(1.1)
9.5
(9.0)
–
(9.0)
–
–
(0.6)
Tethyan
Copper
2020
$m
–
(1.8)
7.2
–
(6.5)
–
(6.5)
–
–
(1.1)
Total
2021
$m
914.6
(1.1)
9.5
90.2
(30.5)
59.7
(77.5)
905.8
(0.6)
Total
2020
$m
1,024.8
(1.8)
31.1
(80.8)
12.2
(7.1)
5.1
(65.0)
914.6
(1.1)
The investments which are included in the $905.2 million balances at 31 December 2021 are set out below:
Investment in associates
(i) On 31 March 2020, the Group agreed to dispose of its 40% interest in the Hornitos coal-fired power station to ENGIE Energía Chile S.A.
(“ENGIE”), the owner of the remaining 60% interest. This was part of the value accretive renegotiation of Centinela’s power purchase
agreement which as a result will be wholly supplied from lower cost renewable sources from 2022. Under the terms of the agreement, the
Group disposed of its investment to ENGIE in December 2021 for a nominal consideration, and has not been entitled to receive any further
dividend income from Hornitos from the date of the agreement. Accordingly, the Group no longer had any effective economic interest in the
results or assets of Hornitos from 31 March 2020 onwards, and therefore recognised an impairment of $80.8 million in respect of its
investment in associate balance as at that date, and no longer recognises any share of Hornitos’ results. The post-tax impact of the provision is
$61.1 million, of which $40.2 million is attributable to the equity owners of the Company.
(ii) The Group’s 30% interest in Antofagasta Terminal Internacional (“ATI”), which operates a concession to manage installations in the port of
Antofagasta.
Investment in joint ventures
(iii) The Group’s 50% interest in Minera Zaldívar SpA (“Zaldívar”).
(iv) The Group’s 50% interest in Tethyan Copper Company Limited (“Tethyan”), which is a joint venture with Barrick Gold Corporation in respect
of the Reko Diq project in the Islamic Republic of Pakistan (“Pakistan”). Tethyan has been pursuing arbitration claims against Pakistan
following the unlawful denial of a mining lease for the project in 2011. Details in respect of the arbitration are set out in Note 35.
As the net carrying value of the interest in Tethyan is negative, it is included within non-current liabilities, as the Group is liable for its share of
the joint venture’s obligations.
204
204
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Other InformationFinancial Statements Strategic Report Corporate Governance
Summarised financial information for the associates is as follows:
Cash and cash equivalents
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Revenue
Profit from continuing operations
Total comprehensive income
Cash and cash equivalents
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Revenue
Loss from continuing operations
Total comprehensive expense
Summarised financial information for the joint ventures is as follows:
Cash and cash equivalents
Current assets
Non-current assets
Current financial liabilities (excl. trade and other payables and provisions)
Current liabilities
Non-current financial liabilities (excl. trade and other payables and provisions)
Non-current liabilities
Revenue
Depreciation and amortisation
Interest income
Interest expense
Income tax expense
Profit/(loss) after tax from continuing and discontinued operations
Total comprehensive income/(expense)
ATI
2021
$m
1.2
13.7
99.3
(22.5)
(75.0)
47.2
1.3
1.3
ATI
2020
$m
0.2
11.3
108.2
(19.9)
(83.5)
40.4
(1.9)
(1.9)
Tethyan
Copper
2021
$m
3.6
3.6
–
–
(5.1)
–
(0.1)
–
(3.0)
2.0
–
–
(18.0)
(18.0)
Total
2021
$m
1.2
13.7
99.3
(22.5)
(75.0)
47.2
1.3
1.3
Total
2020
$m
0.2
11.3
108.2
(19.9)
(83.5)
40.4
(1.9)
(1.9)
Total
2021
$m
50.0
667.6
1,675.1
(54.3)
(175.3)
(124.4)
(155.2)
849.2
(163.4)
2.3
(0.5)
(62.1)
119.1
119.1
Minera
Zaldívar
2021
$m
46.4
664.0
1,675.1
(54.3)
(170.2)
(124.4)
(155.1)
849.2
(160.4)
0.3
(0.5)
(62.1)
137.1
137.1
Antofagasta plc Annual Report 2021
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205
205
/ Notes to the financial statements continued
Cash and cash equivalents
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Revenue
Depreciation and amortisation
Interest income
Interest expense
Income tax expense or income
Profit/(loss) after tax from continuing and discontinued operations
Total comprehensive income/(expense)
Minera
Zaldívar
2020
Restated1
$m
66.8
958.2
1,427.2
(290.0)
(241.3)
599.3
(145.2)
0.9
(0.6)
(16.1)
24.3
24.3
Tethyan
Copper
2020
$m
4.2
4.2
–
(6.2)
(0.1)
–
(1.0)
5.0
–
–
(12.9)
(12.9)
Total
2020
Restated
$m
71.0
962.4
1,427.2
(296.2)
(241.4)
599.3
(146.2)
5.9
(0.6)
(16.1)
11.4
11.4
1. The prior period comparatives have been restated to reflect the net position in respect of deferred tax assets/liabilities ($429.1 million) and to reclassify liquid investments which
had been included within the cash and cash equivalents line ($214.2 million).
The above summarised financial information is based on the amounts included in the IFRS financial statements of the associate or joint venture
(100% of the results or balances of the associate or joint venture, rather than the Group’s proportionate share), after the Group’s fair value
adjustments and applying the Group’s accounting policies.
19 Equity investments
Balance at the beginning of the year
Movement in fair value
Foreign currency exchange differences
Balance at the end of the year
2021
$m
11.1
(2.1)
(0.3)
8.7
2020
$m
5.1
5.5
0.5
11.1
Equity investments represent those investments which are not subsidiaries, associates or joint ventures and are not held for trading purposes. The
fair value of all equity investments is based on quoted market prices.
20 Inventories
Current
Raw materials and consumables
Work-in-progress
Finished goods
Non-current
Work-in-progress
Total
2021
$m
155.6
316.5
60.7
532.8
270.4
803.2
20201
$m
178.2
339.3
75.2
592.7
278.1
870.8
During 2021, no net realisable value (“NRV”) adjustment has been recognised (2020 – $1.5 million). Non-current work-in-progress represents
inventory expected to be processed more than 12 months after the balance sheet date.
The carrying value of the Group’s inventory balances has been reassessed with consideration of the effects of the COVID-19 pandemic. No material
adjustments have been made to the carrying values of the inventory balances for the years ended 31 December 2021 and 31 December 2020 as a result of
the COVID-19 pandemic.
21 Trade and other receivables
Trade and other receivables do not generally carry any interest, are principally short-term in nature and are normally stated at their nominal value
less any impairment.
Trade receivables
Other receivables
Due in one year
Due after one year
2021
$m
1,040.0
106.1
1,146.1
2020
$m
832.6
184.3
1,016.9
2021
$m
–
51.2
51.2
2020
$m
–
55.9
55.9
2021
$m
1,040.0
157.3
1,197.3
Total
2020
$m
832.6
240.2
1,072.8
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Other InformationFinancial Statements Strategic Report Corporate Governance
The largest balances of trade receivables are with equity participants in the key mining projects. Many other significant trade receivables are
secured by letters of credit or other forms of security. There is no material element which is interest-bearing. Trade receivables include mark-to-
market adjustments in respect of provisionally priced sales of copper and molybdenum concentrates which remain open as to final pricing. Further
details of such adjustments are given in Note 7. Other receivables includes employee loans of $42.9 million (31 December 2020 – $47.4 million).
Movements in the provision for doubtful debts were as follows:
Balance at the beginning of the year
Utilised in year
Foreign currency exchange difference
Balance at the end of the year
The ageing analysis of the trade and other receivables balance is as follows:
2021
$m
(1.5)
0.1
0.2
(1.2)
2020
$m
(3.1)
1.8
(0.2)
(1.5)
2021
2020
Neither
past due
nor impaired
$m
1,187.1
1,064.3
Past due but not impaired
Up to
3 months
past due
$m
8.4
8.0
3-6 months
past due
$m
0.3
0.2
More than
6 months
past due
$m
1.5
0.3
Total
$m
1,197.3
1,072.8
With respect to the trade receivables that are neither past due nor impaired, there are no indications that the debtors will not meet their payment
obligations. The carrying value of the trade receivables recorded in the financial statements represents the Group’s maximum exposure to credit risk.
The recoverability of the Group’s trade receivables has been reassessed with consideration of the effects of the COVID-19 pandemic. No material
adjustments have been made to the carrying values of trade receivables for the years ended 31 December 2021 and 31 December 2020 as a result
of the COVID-19 pandemic.
22 Cash and cash equivalents, and liquid investments
The fair value of cash and cash equivalents, and liquid investments is not materially different from the carrying values presented. The credit risk on
cash and cash equivalents is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.
Cash and cash equivalents, and liquid investments comprised:
Cash and cash equivalents
Liquid investments
At 31 December 2021 and 2020 there is no cash which is subject to restriction.
The denomination of cash, cash equivalents and liquid investments was as follows:
US dollars
Chilean pesos
Sterling
Other
The credit quality of cash, cash equivalents and liquid investments are as follow:
AAA
AA+
AA
AA-
A+
A
A-
BBB+
Subtotal
Cash at bank1
Total cash, cash equivalents and liquid investments
1. Cash at bank is held with investment grade financial institutions.
2021
$m
743.4
2,969.7
3,713.1
2020
$m
1,246.8
2,426.0
3,672.8
2021
$m
3,673.8
37.8
1.2
0.3
3,713.1
2021
$m
1,772.4
2.2
54.4
121.1
799.5
904.0
–
–
3,653.6
59.5
3,713.1
2020
$m
3,558.9
112.8
–
1.1
3,672.8
2020
$m
2,007.1
–
46.0
279.5
553.3
741.5
33.9
2.1
3,663.4
9.4
3,672.8
There have been no impairments recognised in respect of cash or cash equivalents in the year ended 31 December 2021 (31 December 2020 - nil).
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23 Borrowings
A) Analysis by type of borrowing
Borrowings may be analysed by business segment and type as follows:
Los Pelambres
• Senior loan
• Leases
Centinela
• Senior loan
• Subordinated debt
• Leases
Antucoya
• Senior loan
• Subordinated debt
• Short-term loan
• Leases
Corporate and other items
• Senior loan
• Bond
• Leases
Transport division
• Senior loan
• Leases
Preference shares
Total
Note
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
(xii)
(xiii)
(xiv)
(xv)
2021
$m
2020
$m
(1,188.3)
(54.8)
(1,288.1)
(91.4)
(386.8)
–
(59.8)
(196.3)
(184.5)
(35.0)
(23.4)
(497.3)
(496.1)
(20.4)
(496.5)
(203.0)
(78.0)
(261.1)
(191.5)
(75.0)
(19.9)
(496.6)
(495.6)
(18.6)
(25.8)
(1.4)
(2.7)
(3,172.6)
(36.5)
(0.3)
(2.7)
(3,754.8)
(i) The senior loan at Los Pelambres is divided into three tranches. The first tranche has a remaining duration of 4 years and has an interest rate
of US LIBOR six-month rate plus 1.05%. The second tranche has a remaining duration of 7 years and has an interest rate of US LIBOR six-
month rate plus 0.85%. The third tranche has a remaining duration of 6.5 years and has an interest rate of US LIBOR six-month rate plus
1.10%. As at 31 December 2021, $1,420 million of the loan facility had been drawn-down and $209 million had been paid. The loans are
subject to financial covenants which require that specified net debt to EBITDA and EBITDA to finance expense ratios are maintained.
(ii) Leases at Los Pelambres are denominated in US dollars with an average interest rate of US LIBOR six-month rate plus 1.74% and a remaining
duration of 0.5 years.
(iii) The senior loan at Centinela is US dollar denominated with a duration of 4 years and an interest rate of US LIBOR six-month rate plus 0.95%.
The loan is subject to financial covenants which require that specified net debt to EBITDA and EBITDA to finance expense ratios are
maintained.
(iv) The US dollar denominated subordinated debt at Centinela was repaid on 19 November 2021.
(v) Leases at Centinela are denominated in US dollars with an average interest rate of US LIBOR six-month rate plus 4.8% and a remaining
duration of 5 years.
(vi) The senior loan at Antucoya represents a US dollar denominated syndicated loan. This loan has a remaining duration of 3 years and has an
interest rate of US LIBOR six-month rate plus 1.3%. The loan is subject to financial covenants which require that specified net debt to EBITDA
and EBITDA to finance expense ratios are maintained.
(vii) Subordinated debt at Antucoya is US dollar denominated, provided to Antucoya by Marubeni Corporation with a remaining duration of 3 years
and an interest rate of US LIBOR six-month rate plus 3.65%. Subordinated debt provided by Group companies to Antucoya has been
eliminated on consolidation.
(viii) The short-duration loan at Antucoya is US dollar denominated, comprising a working capital loan for an average period of 0.8 years and has
an interest rate of US LIBOR six-month rate plus a weighted average spread of 0.25%.
(ix) Leases at Antucoya are denominated in US dollars with an average interest rate of US LIBOR six-month rate plus 2.0% and a remaining
duration of 2.5 years.
(x) The senior loan at Corporate (Antofagasta plc) is US dollar denominated with an interest rate of US LIBOR six-month rate plus 2.25% and has
a remaining duration of 4 years.
(xi) Antofagasta plc in October 2020 issued a corporate bond for $500 million with a 10-year tenor with a yield of 2.415%.
(xii) Leases at Corporate and other items are denominated in Unidades de Fomento (inflation-linked Chilean pesos) and have a remaining duration
of 5 years and are at fixed rates with an average interest rate of 5.2%.
(xiii) Long-term loans at the Transport division are US dollar denominated, and have a remaining duration of 1.5 years and an interest rate of US
LIBOR six-month rate plus 1.06%.
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(xiv) Leases at the Transport division are US dollar denominated in with an average interest rate of US LIBOR six-month rate plus 3.2% and a
remaining duration of 5 years.
(xv) The preference shares are Sterling-denominated and issued by Antofagasta plc. There were 2 million shares of £1 each authorised, issued and
fully paid at 31 December 2018. The preference shares are non-redeemable and are entitled to a fixed cumulative dividend of 5% per annum.
On winding up, they are entitled to repayment and any arrears of dividend in priority to ordinary shareholders but are not entitled to participate
further in any surplus. Each preference share carries 100 votes in any general meeting of the Company.
B) Leases
Information in respect of the Group’s leases is contained in the following notes:
• Note 16 – depreciation charges, additions and disposals in respect of the right of use assets relating to the leases
• Note 32(B) – repayments of the lease balances and new lease liabilities arising during the period
• Note 10 – interest expense in respect of the lease balances
C) Analysis of borrowings by currency
The exposure of the Group’s borrowings to currency risk is as follows:
At 31 December 2021
Corporate loans
Bond
Other loans (including short-term loans)
Leases
Preference shares
At 31 December 2020
Corporate loans
Bond
Other loans (including short-term loans)
Leases
Preference shares
D) Analysis of borrowings by type of interest rate
The exposure of the Group’s borrowings to interest rate risk is as follows:
At 31 December 2021
Corporate loans
Bond
Other loans (including short-term loans)
Leases
Preference shares
At 31 December 2020
Corporate loans
Bond
Other loans (including short-term loans)
Leases
Preference shares
Chilean
pesos
$m
–
–
–
(113.5)
–
(113.5)
Chilean
pesos
$m
–
–
–
(169.5)
–
(169.5)
Sterling
$m
–
–
–
(4.3)
(2.7)
(7.0)
Sterling
$m
–
–
–
–
(2.7)
(2.7)
US dollars
$m
(2,294.5)
(496.1)
(219.5)
(42.0)
–
(3,052.1)
US dollars
$m
(2,578.8)
(495.6)
(469.5)
(38.7)
–
(3,582.6)
Fixed
$m
–
(496.1)
–
(143.9)
(2.7)
(642.7)
Floating
$m
(2,294.5)
–
(219.5)
(15.9)
–
(2,529.9)
Fixed
$m
–
(495.6)
–
(177.6)
(2.7)
(675.9)
Floating
$m
(2,578.8)
–
(469.5)
(30.6)
–
(3,078.9)
2021
Total
$m
(2,294.5)
(496.1)
(219.5)
(159.8)
(2.7)
(3,172.6)
2020
Total
$m
(2,578.8)
(495.6)
(469.5)
(208.2)
(2.7)
(3,754.8)
2021
Total
$m
(2,294.5)
(496.1)
(219.5)
(159.8)
(2.7)
(3,172.6)
2020
Total
$m
(2,578.8)
(495.6)
(469.5)
(208.2)
(2.7)
(3,754.8)
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/ Notes to the financial statements continued
23 Borrowings continued
E) Maturity profile
The maturity profile of the Group’s borrowings is as follows:
At 31 December 2021
Corporate loans
Bond
Other loans
Leases
Preference shares
At 31 December 2020
Corporate loans
Bond
Other loans
Leases
Preference shares
Within
1 year
$m
(233.0)
–
(35.0)
(69.9)
–
(337.9)
Within
1 year
$m
(454.3)
–
(75.0)
(74 .1)
–
(603.4)
Between
1-2 years
$m
(367.0)
–
–
(38.2)
–
(405.2)
Between
1-2 years
$m
(471.3)
–
–
(62.6)
–
(533.9)
Between
2-5 years
$m
(1,526.7)
–
(184.5)
(51.7)
–
(1,762.9)
Between
2-5 years
$m
(941.0)
–
–
(67.4)
–
(1,008.4)
The amounts included above for leases are based on the present value of minimum lease payments.
The total minimum lease payments for these leases may be analysed as follows:
Within 1 year
Between 1 – 2 years
Between 2 – 5 years
After 5 years
Total minimum lease payments
Less amounts representing finance charges
Present value of minimum lease payments
After
5 years
$m
(167.8)
(496.1)
–
–
(2.7)
(666.6)
After
5 years
$m
(712.2)
(495.6)
(394.5)
(4.1)
(2.7)
(1,609.1)
2021
$m
(74.7)
(40.5)
(54.8)
–
(170.0)
10.2
(159.8)
All leases are on a fixed payment basis and no arrangements have been entered into for contingent rental payments.
24 Trade and other payables
Trade creditors
Other creditors and accruals
Due in one year
Due after one year
2021
$m
(579.5)
(249.6)
(829.1)
2020
$m
(536.5)
(272.3)
(808.8)
2021
$m
–
(16.8)
(16.8)
2020
$m
–
(11.0)
(11.0)
2021
$m
(579.5)
(266.4)
(845.9)
2021
Total
$m
(2,294.5)
(496.1)
(219.5)
(159.8)
(2.7)
(3,172.6)
2020
Total
$m
(2,578.8)
(495.6)
(469.5)
(208.2)
(2.7)
(3,754.8)
2020
$m
(81.3)
(66.7)
(71.9)
(4.3)
(224.2)
16.0
(208.2)
Total
2020
$m
(536.5)
(283.3)
(819.8)
Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. Other creditors are mainly related to
property plant and equipment payables, finance interest and employee retentions.
The average credit period taken for trade purchases is 20 days (2020 – 21 days).
At 31 December 2021, the other creditors and accruals include $10.1 million (2020 – $3.8 million) relating to prepayments. Prepayments are offset
against payables to the same suppliers where there is a right of offset.
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25 Financial instruments and financial risk management
A) Categories of financial instruments
The carrying value of financial assets and financial liabilities is shown below:
Financial assets
Equity investments
Loans and receivables
Cash and cash equivalents
Liquid investments
Financial liabilities
Trade and other payables
Borrowings and leases
Financial assets
Derivative financial assets
Equity investments
Loans and receivables
Cash and cash equivalents
Liquid investments
Financial liabilities
Derivative financial liabilities
Trade and other payables
Borrowings and leases
At fair value
through profit
and loss
At fair value
through other
comprehensive
income
Held at
amortised cost
2021
$m
Total
–
1,011.7
–
2,969.7
3,981.4
–
–
–
8.7
–
–
–
8.7
–
83.3
743.4
–
826.7
8.7
1,095.0
743.4
2,969.7
4,816.8
–
–
–
(835.6)
(3,172.6)
(4,008.2)
(835.6)
(3,172.6)
(4,008.2)
At fair value
through profit
and loss
At fair value
through other
comprehensive
income
Held at
amortised cost
1.4
–
808.0
–
2,426.0
3,235.4
(37.4)
(0.3)
–
(37.7)
–
11.1
–
–
–
11.1
–
–
–
–
–
–
184.6
1,246.8
–
1,431.4
–
(815.8)
(3,754.8)
(4,570.6)
2020
$m
Total
1.4
11.1
992.6
1,246.8
2,426.0
4,677.9
(37.4)
(816.1)
(3,754.8)
(4,608.3)
The fair value of the fixed rate bond included within the “Borrowings and leases” category was $476.2 million at 31 December 2021 compared with
its carrying value of $496.1 million. The fair value of all other financial assets and financial liabilities carried at amortised cost approximates the
carrying value presented above.
Financial assets
Trade and other receivables (non-current) per balance sheet
Trade and other receivables (current) per balance sheet
Total trade and other receivables per balance sheet
Less: non-financial assets (including prepayments and VAT receivables)
Total loans and receivables (financial assets)
Financial liabilities
Trade and other payables (current) per balance sheet
Trade and other payables (non-current) per balance sheet
Total trade and other payables per balance sheet
Less: non-financial liabilities (including VAT payables)
Total loans and payables (financial liabilities)
2021
$m
2020
$m
51.2
1,146.1
1,197.3
(102.3)
1,095.0
(829.1)
(16.8)
(845.9)
10.3
(835.6)
55.9
1,016.9
1,072.8
(80.2)
992.6
(808.8)
(11.0)
(819.8)
3.7
(816.1)
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/ Notes to the financial statements continued
25 Financial instruments and financial risk management continued
B) Fair value of financial instruments
Financial assets
Equity investments (b)
Loans and receivables (c)
Liquid investments (d)
Financial liabilities
Trade and other payables
Financial assets
Derivative financial assets (a)
Equity investments (b)
Loans and receivables (c)
Liquid investments (d) (restated)
Financial liabilities
Derivative financial liabilities (a)
Trade and other payables
Level 1
$m
Level 2
$m
Level 3
$m
8.7
–
–
8.7
–
–
–
1,011.7
2,969.7
3,981.4
–
–
–
–
–
–
–
–
Level 1
$m
Level 2
$m
Level 3
$m
–
11.1
–
–
11.1
–
–
–
1.4
–
808.0
2,426.0
3,235.4
(37.4)
(0.3)
(37.7)
–
–
–
–
–
–
–
–
Total
2021
$m
8.7
1,011.7
2,969.7
3,990.1
–
–
Total
2020
$m
1.4
11.1
808.0
2,426.0
3,246.5
(37.4)
(0.3)
(37.7)
Recurring fair value measurements are those that are required in the balance sheet at the end of each reporting year.
a) Derivatives in designated hedge accounting relationships are valued using a discounted cash flow analysis valuation model, which includes
observable credit spreads and using the applicable yield curve for the duration of the instruments for non-optional derivatives, and option
pricing models for optional derivatives. These are level 2 inputs as described below. Hedging instruments in place during 2021 and 2020
related to commodity and foreign exchange options.
b) Equity investments are investments in shares on active markets and are valued using unadjusted quoted market values of the shares at the
financial reporting date. These are level 1 inputs as described below.
c) Provisionally priced metal sales for the period are marked-to-market at the end of the period. Gains and losses from the marking-to-market of
open sales are recognised through adjustments to revenue in the income statement and trade receivables in the balance sheet. Forward
prices at the end of the period are used for copper sales while period-end average prices are used for molybdenum concentrate sales. These
are level 2 inputs as described below.
d) Liquid investments are highly liquid current asset investments that are valued reflecting market prices at the period end. These are level 2
inputs as described below. The 2020 comparative figures have been restated to reclassify these amounts from level 1 to level 2 inputs.
The inputs to the valuation techniques described above are categorised into three levels, giving the highest priority to unadjusted quoted prices in
active markets (level 1) and the lowest priority to unobservable inputs (level 3 inputs):
• Level 1 fair value measurement inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
• Level 2 fair value measurement inputs are derived from inputs other than quoted market prices included in level 1 that are observable for the
asset or liability, either directly or indirectly.
• Level 3 fair value measurement inputs are unobservable inputs for the asset or liability.
The degree to which inputs into the valuation techniques used to measure the financial assets and liabilities are observable and the significance of
these inputs in the valuation are considered in determining whether any transfers between levels have occurred. In the year ended 31 December
2021, there were no transfers between levels in the hierarchy.
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C) Financial risk management
The Group’s activities expose it to a variety of financial risks: market risk (including commodity price risk, currency risk, interest rate risk and other
price risk), credit risk and liquidity risk. The Group periodically uses derivative financial instruments, to reduce its exposure to commodity price,
foreign exchange and interest rate movements. The Group does not use such derivative instruments for speculative trading purposes.
The Board of Directors is responsible for overseeing the Group’s risk management framework. The Audit and Risk Committee assists the Board
with its review of the effectiveness of the risk management process, and monitoring of key risks and mitigations. The Internal Audit department
undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit and Risk
Committee.
(I) Commodity price risk
The Group generally sells its copper and molybdenum concentrate and copper cathode output at prevailing market prices, subject to final pricing
adjustments which normally range from one to four months after delivery to the customer, and it is therefore exposed to changes in market prices
for copper and molybdenum both in respect of future sales and previous sales, which remain open as to final pricing. In 2021, sales of copper and
molybdenum concentrate and copper cathodes represented 90.8% of Group revenue and therefore revenues and earnings depend significantly on
LME and realised copper prices.
The Group periodically uses futures and min-max options to manage its exposure to copper prices. These instruments may give rise to accounting
volatility due to fluctuations in their fair value prior to the maturity of the instruments. Details of those copper and molybdenum concentrate sales
and copper cathode sales, which remain open as to final pricing, are given in Note 7. Details of commodity rate derivatives entered into by the Group
are given in Note 23(E).
Commodity price sensitivity
The sensitivity analysis below shows the impact of a movement in the copper price on the financial instruments held as at the reporting date. A
movement in the copper market price as at the reporting date will affect the final pricing adjustment to sales that remain open at that date, impacting
the trade receivables balance and consequently the income statement. A movement in the copper market price will also affect the valuation of
commodity derivatives, impacting the hedging reserve in equity if the fair value movement relates to an effective designated cash flow hedge, and
impacting the income statement if it does not. The calculation assumes that all other variables, such as currency rates, remain constant.
• If the copper market price as at the reporting date had increased by 10 c/lb, profit attributable to the owners of the parent would have increased
by $18.4 million (2020 – increase by $16.8 million).
• If the copper market price as at the reporting date had decreased by 10 c/lb, profit attributable to the owners of the parent would have decreased
by $18.4 million (2020 – decrease by $16.8 million). In addition, a movement in the average copper price during the year would impact revenue
and earnings. A 10 c/lb change in the average copper price during the year would have affected profit attributable to the owners of the parent by
$64.8 million (2020 – $73.5 million) and earnings per share by 6.6 cents (2020 – 7.5 cents), based on production volumes in 2021, without
taking into account the effects of provisional pricing and hedging activity. A $1/lb change in the average molybdenum price for the year would
have affected profit attributable to the owners of the parent by $9.2 million (2020 – $11.8 million), and earnings per share by 0.9 cents (2020 –
1.2 cents), based on production volumes in 2021, and without taking into account the effects of provisional pricing. A $100/oz change in the
average gold price for the year would have affected profit attributable to the owners of the parent by $11.5 million (2020 – $10.1 million), and
earnings per share by 1.2 cents (2020 – 1.0 cents), based on production volumes in 2021, and without taking into account the effects of
provisional pricing.
(II) Currency risk
The Group is exposed to a variety of currencies. The US dollar, however, is the currency in which the majority of the Group’s sales are
denominated. Operating costs are influenced by the countries in which the Group’s operations are based (principally in Chile) as well as those
currencies in which the costs of imported goods and services are determined. After the US dollar, the Chilean peso is the most important currency
influencing costs and to a lesser extent sales.
Given the significance of the US dollar to the Group’s operations, this is the presentational currency of the Group for internal and external reporting.
The US dollar is also the currency for borrowing and holding surplus cash, although a portion of this may be held in other currencies, notably
Chilean pesos and Sterling, to meet short-term operating and capital commitments and dividend payments.
When considered appropriate, the Group uses forward exchange contracts and currency swaps to limit the effects of movements in exchange rates
in foreign currency denominated assets and liabilities. The Group may also use these instruments to reduce currency exposure on future
transactions and cash flows. Details of any exchange rate derivatives entered by the Group in the year are given in Note 25(D).
The currency exposure of the Group’s cash, cash equivalents and liquid investments is given in Note 22, and the currency exposure of the Group’s
borrowings is given in Note 23(C). The effects of exchange gains and losses included in the income statement are given in Note 10. Exchange
differences on translation of the net assets of entities with a functional currency other than the US dollar are taken to the currency translation
reserve and are disclosed in the Consolidated Statement of Changes in Equity on page 174.
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/ Notes to the financial statements continued
25 Financial instruments and financial risk management continued
Currency sensitivity
The sensitivity analysis below shows the impact of a movement in the US dollar/Chilean peso exchange rate on the financial instruments held as at
the reporting date.
The impact on profit or loss is as a result of the retranslation of monetary financial instruments (including cash, cash equivalents, liquid investments,
trade receivables, trade payables and borrowings). The impact on equity is as a result of changes in the fair value of derivative instruments which
are effective designated cash flow hedges, and changes in the fair value of equity investments. The calculation assumes that all other variables,
such as interest rates, remain constant.
If the US dollar had strengthened by 10% against the Chilean peso as at the reporting date, profit attributable to the owners of the parent would
have increased by $6.1 million (2020 – increase of $15.8 million). If the US dollar had weakened by 10% against the Chilean peso as at the reporting
date, profit attributable to the owners of the parent would have decreased by $7.4 million (2020 – decrease of $19.3 million).
(III) Interest rate risk
The Group’s policy is generally to borrow and invest cash at floating rates. Fluctuations in interest rates may impact the Group’s net finance income
or cost, and to a lesser extent the value of financial assets and liabilities. The Group occasionally uses interest rate swaps and collars to manage
interest rate exposures on a portion of its existing borrowings. Details of any interest rate derivatives entered into by the Group are given in Note
25(D).
The interest rate exposure of the Group’s borrowings is given in Note 23.
Interest rate sensitivity
The sensitivity analysis below shows the impact of a movement in interest rates in relation to the financial instruments held as at the reporting date.
The impact on profit or loss reflects the impact on annual interest expense in respect of the floating rate borrowings held as at the reporting date,
and the impact on annual interest income in respect of cash and cash equivalents held as at the reporting date. The impact on equity is as a result of
changes in the fair value of derivative instruments which are effective designated cash flow hedges. The calculation assumes that all other variables,
such as currency rates, remain constant.
If the interest rate increased by 1%, based on the financial instruments held as at the reporting date, profit attributable to the owners of the parent
would have decreased by $6.4 million (2020 – decrease of $1.7 million). This does not include the effect on the income statement of changes in the
fair value of the Group’s liquid investments relating to the underlying investments in fixed income instruments.
(IV) Other price risk
The Group is exposed to equity price risk on its equity investments.
Equity price sensitivity
The sensitivity analysis below shows the impact of a movement in the equity values of the equity investment financial assets held as at the reporting
date.
If the value of the equity investments had increased by 10% as at the reporting date, equity would have increased by $0.9 million (2020 – increase
of $1.1 million). There would have been no impact on the income statement.
(V) Cash flow risk
The Group’s future cash flows depend on a number of factors, including commodity prices, production and sales levels, operating costs, capital
expenditure levels, and financial income and costs. Its cash flows are therefore subject to the exchange, interest rate and commodity price risks
described above as well as operating factors and input costs. To reduce the risk of potential short-term disruptions to the supply of key inputs such
as electricity and sulphuric acid, the Group enters into medium and long-term supply contracts to help ensure continuity of supply. Long-term
electricity supply contracts are in place at each of the Group’s mines, in most cases linking the cost of electricity under the contract to the current
cost of electricity on the Chilean grid or the generation cost of the supplier. The Group seeks to lock in supply of sulphuric acid for future periods of
a year or longer, with contract prices agreed in the latter part of the year, to be applied to purchases of acid in the following year. Further
information on production and sales levels and operating costs are given in the Operating review on pages 68 to 89.
(VI) Credit risk
Credit risk arises from trade and other receivables, cash, cash equivalents, liquid investments and derivative financial instruments. The Group’s
credit risk is primarily to trade receivables. The credit risk on cash, cash equivalents and liquid investments and on derivative financial instruments is
limited as the counterparties are financial institutions with high credit ratings assigned by international credit agencies.
The largest balances of trade receivables are with equity participants in the key mining projects. Many other significant trade receivables are
secured by letters of credit or other forms of security. All customers are subject to credit review procedures, including the use of external credit
ratings where available. Credit is provided only within set limits, which are regularly reviewed. The main customers are recurrent with a good credit
history during the years they have been customers.
Outstanding receivable balances are monitored on an ongoing basis.
The carrying value of financial assets recorded in the financial statements represents the maximum exposure to credit risk. The amounts presented
in the balance sheet are net of allowances for any doubtful receivables (Note 21).
The Group has recognised an expected credit loss provision for its employee receivables, with the main inputs into the provision calculation being
the average level of staff turnover and the average level of recovery of receivables from former employees. For the reasons set out above, the
expected credit loss risk for other trade and other receivable balances is considered to be immaterial to the Group.
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Other InformationFinancial Statements Strategic Report Corporate Governance
(VII) Liquidity risk
The Group manages liquidity risk by maintaining adequate cash reserves and financing facilities, through the review of forecast and actual cash flows.
The Group typically holds surplus cash in demand or term deposits or highly liquid investments, which typically can be accessed or liquidated within
24 hours.
At the end of 2021, the Group was in a net cash position (2020 – net debt position), as disclosed in Note 32(C). Details of cash, cash equivalents
and liquid investments are given in Note 22, while details of borrowings including the maturity profile are given in Note 23(E). Details of undrawn
committed borrowing facilities are also given in Note 23.
The following table analyses the maturity of the Group’s contractual commitments in respect of its financial liabilities and derivative financial
instruments. The table has been drawn up based on the undiscounted cash flows on the earliest date on which the Group can be required to pay.
The table includes both interest and principal cash flows.
At 31 December 2021
Corporate loans
Other loans (including short-term loans and bond)
Leases
Preference shares*
Trade and other payables
At 31 December 2020
Corporate loans
Other loans (including short-term loans and bond)
Leases
Preference shares*
Trade and other payables
Derivative financial instruments
Less than
1 year
$m
(267.1)
(47.0)
(74.7)
–
(829.1)
(1,217.9)
Less than
1 year
$m
(444.5)
(88.3)
(81.2)
–
(808.8)
(36.0)
(1,458.8)
Between
1-2 years
$m
(398.5)
(11.9)
(40.5)
–
(16.8)
(467.7)
Between
1-2 years
$m
(462.6)
(24.1)
(66.7)
–
(11.0)
–
(564.4)
Between
2-5 years
$m
(1,574.8)
(242.7)
(54.5)
–
–
(1,872.0)
Between
2-5 years
$m
(1,046.5)
–
(71.8)
–
–
–
(1,118.3)
After
5 years
$m
(170.6)
(555.5)
–
(2.7)
–
(728.8)
After
5 years
$m
(792.0)
(1,011.7)
(4.4)
(2.7)
–
–
(1,810.8)
2021
Total
$m
(2,411.0)
(857.1)
(169.7)
(2.7)
(845.9)
(4,286.4)
2020
Total
$m
(2,745.6)
(1,124.1)
(224.1)
(2.7)
(819.8)
(36.0)
(4,952.3)
* The preference shares pay an annual dividend of £100,000 in perpetuity, and accordingly it is not possible to determine total amounts payable for periods without a fixed
end date.
(VIII) Capital risk management
The Group’s objectives are to return capital to shareholders while leaving the Group with sufficient funds to progress its short, medium and long-
term growth plans as well as preserving the financial flexibility to take advantage of opportunities as they may arise. This policy remains unchanged.
The Group monitors capital on the basis of net cash/debt (defined as cash, cash equivalents and liquid investments less borrowings) which was net
cash of $540.5 million at 31 December 2021 (2020 – net debt $82.0 million), as well as gross cash (defined as cash, cash equivalents and liquid
investments) which was $3,713.1 million at 31 December 2021 (2020 – $3.672.8 million). The Group’s total cash is held in a combination of on
demand and term deposits and managed funds investing in high quality, fixed income instruments. The managed funds are held primarily for
investment purposes rather than meeting short-term cash commitments and accordingly these amounts are presented as liquid investments;
however they are included in net cash for monitoring and decision-making purposes. The Group has a risk averse investment strategy. The Group’s
borrowings are detailed in Note 23. Additional project finance or shareholder loans are taken out by the operating subsidiaries to fund projects on a
case-by-case basis.
Under the terms of the major borrowing facilities, the Group is required to comply with the following financial covenants:
1) Net Financial Debt/EBITDA
2) EBITDA/Interest Expense
3) Total Indebtedness/Tangible Net Worth
The Group has complied with these covenants throughout the reporting period.
D) Derivative financial instruments
The Group periodically uses derivative financial instruments, to reduce its exposure to commodity price, foreign exchange and interest rate
movements. The Group does not use such derivative instruments for speculative trading purposes.
The Group has applied the hedge accounting provisions of IFRS 9 “Financial Instruments”. Changes in the fair value of derivative financial
instruments that are designated and effective as hedges of future cash flows have been recognised directly in equity, with such amounts
subsequently recognised in the income statement in the period when the hedged item affects profit or loss. Any ineffective portion is recognised
immediately in the income statement. Realised gains and losses on commodity derivatives recognised in the income statement have been recorded
within revenue. The time value element of changes in the fair value of derivative options is recognised within other comprehensive income. Realised
gains and losses and changes in the fair value of exchange and interest derivatives are recognised within other finance items for those derivatives
where hedge accounting has not been applied. When hedge accounting has been applied, the realised gains and losses on exchange and interest
derivatives are recognised within other finance items and interest expense respectively.
Antofagasta plc Annual Report 2021
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215
/ Notes to the financial statements continued
25 Financial instruments and financial risk management continued
Hedges for future cash flows at the 2021 year-end relate to provisionally priced trade receivables and foreign exchange and commodity options,
and are immaterial to the Group.
26 Long-term incentive plan
The long-term incentive plan (the “Plan”) forms part of the remuneration of senior managers in the Group. Directors are not eligible to participate in
the Plan.
Details of the Awards
Under the Plan, the Group may grant awards based on the price of ordinary shares in the Company and cannot grant awards over actual shares.
• Restricted Awards: These awards are conditional rights to receive cash payment by reference to a specified number of the Company’s ordinary
shares, subject to the relevant employee remaining employed by the Group when the Restricted Award vests; and
• Performance Awards: These awards are conditional rights to receive cash payment by reference to a specified number of the Company’s
ordinary shares subject to both the satisfaction of a performance condition and the relevant employee remaining employed by the Group when
the Performance Award vests.
When awards vest under the Plan, participants become entitled to receive a cash payment by reference to the number and portion of awards that
have vested and the market value of the Company’s ordinary shares on the date of vesting. There is no exercise price payable by participants in
respect of the awards.
Restricted Awards can only vest in full if participants remain employed by the Group for three years from the date that Restricted Awards are
granted. In ordinary circumstances, the first one-third of a Restricted Award will vest after one year, the second one-third will vest after two years
and the remaining one-third will vest after three years. There are no performance criteria attached to Restricted Awards. The fair value of
Restricted Awards granted under the Plan is recorded as a compensation expense over the vesting periods, with a corresponding liability
recognised for the fair value of the liability at the end of each period until settled.
Performance Awards only vest if certain performance criteria are met. The performance criteria reflect a number of factors including total shareholder
return, earnings levels, growth in the Group’s reserves and resources and project delivery targets. The fair value of Performance Awards under the Plan
is recorded as a compensation expense over the vesting period, with a corresponding liability at the end of each period until settled.
Valuation process and accounting for the awards
The fair value of the awards is determined using a Monte Carlo simulation model. The inputs into the Monte Carlo simulation model are as follows:
Weighted average forecast share price at vesting date
Expected volatility
Expected life of awards
Expected dividend yields
Discount rate
2021
$18.0
39.23%
3 years
3.94%
0.08%
2020
$19.2
49.56%
3 years
0.73%
0.08%
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous five years. The expected life of
awards used in the model has been adjusted based on management’s best estimate for the effects of non-transferability and compliance of the
objectives determined according to the characteristic of each plan.
The number of awards outstanding at the end of the year is as follows:
Outstanding at 1 January 2021
Granted during the year
Cancelled during the year
Payments during the year
Outstanding at 31 December 2021
Number of awards that have vested
Restricted
Awards
Performance
Awards
738,735
197,631
(65,993)
(326,230)
544,143
245,089
1,629,526
312,198
(114,990)
(441,259)
1,385,475
The Group has recorded a liability of $18.9 million at 31 December 2021, of which $9.2 million is due after more than one year (31 December 2020
– $22.3 million of which $11.0 million was due after more than one year) and total expenses of $9.0 million for the year (2020 – expenses of
$17.2 million).
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27 Post-employment benefit obligations
A) Defined contribution schemes
The Group operates defined contribution schemes for a limited number of employees. The amount charged to the income statement in 2021 was
$0.1 million (2020 – $0.1 million), representing the amount paid in the year. There were no outstanding amounts which remain payable at the end of
either year.
B) Severance provisions
Employment terms at some of the Group’s operations provide for payment of a severance payment when an employment contract comes to an
end. This is typically at the rate of one month for each year of service (subject in most cases to a cap as to the number of qualifying years of
service) and based on final salary level. The severance payment obligation is treated as an unfunded defined benefit plan, and the obligation
recognised is based on valuations performed by an independent actuary using the projected unit credit method, which are regularly updated. The
obligation recognised in the balance sheet represents the present value of the severance payment obligation. Actuarial gains and losses are
immediately recognised in other comprehensive income.
The most recent valuation was carried out in 2021 by Ernst & Young, a qualified actuary in Santiago, Chile who is not connected with the Group.
The main assumptions used to determine the actuarial present value of benefit obligations were as follows:
2021
%
6.3%
2.3%
4.9%
2021
$m
(19.8)
(3.6)
19.6
(3.8)
2021
$m
(123.2)
(19.8)
3.1
(3.6)
16.4
19.6
(107.5)
2020
%
3.5%
2.0%
5.7%
2020
$m
(17.9)
(4.9)
(6.2)
(29.0)
2020
$m
(118.7)
(17.9)
9.8
(4.9)
14.5
(6.0)
(123.2)
Average nominal discount rate
Average rate of increase in salaries
Average staff turnover
Amounts included in the income statement in respect of severance provisions are as follows:
Current service cost (charge to operating profit)
Interest cost (charge to other finance items)
Foreign exchange credit/(charge) to other finance items
Total charge to income statement
Movements in the present value of severance provisions were as follows:
Balance at the beginning of the year
Current service cost
Actuarial gains
Unwinding of discount on provisions
Paid in the year
Foreign currency exchange difference
Balance at the end of the year
Assumptions description
Discount rate
Nominal discount rate
Reference rate name
Governmental or corporate rate
Reference rating
Corresponds to an Issuance market (primary) or secondary market
Issuance currency associated to the reference rate
Date of determination of the reference interest rate
Source of the reference interest rate
31 December 2021
31 December 2020
6.50%
20–year Chilean Central Bank
Bonds
Governmental
AA–/AA+
Secondary
Chilean peso
31 October 2021
Bloomberg
3.64%
20–year Chilean Central Bank
Bonds
Governmental
AA–/AA+
Secondary
Chilean peso
15 November 2020
Bloomberg
The discount rate is the interest rate used to discount the estimated future severance payments to their present value. The table above shows the
principal instruments and assumptions utilised in determining the discount rate.
Rate of increase in salaries
This represents the estimated average rates of future salary increases, reflecting likely future promotions and other changes. This has been based
on historical information for the Group for the period from 2017 to 2021.
Antofagasta plc Annual Report 2021
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217
/ Notes to the financial statements continued
27 Post-employment benefit obligations continued
Turnover rate
This represents the estimated average level of future employee turnover. This has been based on historical information for the Group for the period
from 2017 to 2021.
Sensitivity analysis
Significant actuarial assumptions for the determination of the defined obligation are discount rate, expected salary increase and staff turnover. The
sensitivity analysis below has been determined based on reasonably possible changes of the respective assumptions occurring at the end of the
reporting period, while holding all other assumptions constant.
• If the discount rate is 100 basis points higher, the defined benefit obligation would decrease by $5.3 million. If the discount rate is 100 basis points
lower, the defined benefit obligation would increase by $6.0 million.
• If the expected salary growth increases by 1%, the defined benefit obligation would increase by $5.4 million. If the expected salary growth
decreases by 1%, the defined benefit obligation would decrease by $5.0 million.
• If the staff turnover increases by 1%, the defined benefit obligation would decrease by $2.4 million. If the staff turnover decreases by 1%, the
defined benefit obligation would increase by $2.8 million.
28 Deferred tax assets and liabilities
Accelerated
capital
allowances
$m
Temporary
differences
on provisions
$m
Withholding
tax
$m
Short-term
differences
$m
Mining tax
(Royalty)
$m
Tax losses
$m
Disposal
$m
At 1 January 2020
(Charge)/credit to income
Disposal of subsidiary
Charge deferred in equity
Reclassifications
At 31 December 2020 and
1 January 2021
(Charge)/credit to income
Exceptional items
Charge deferred in equity
At 31 December 2021
(1,111.8)
(10.3)
–
–
–
(1,122.1)
(248.9)
–
–
(1,371.0)
120.0
2.9
–
2.0
(0.3)
124.6
(7.5)
–
(2.1)
115.0
(38.5)
(14.3)
–
–
–
(52.8)
29.7
–
–
(23.1)
35.5
6.5
–
–
–
42.0
(103.3)
–
–
(61.3)
(107.4)
4.2
–
(0.3)
–
(103.5)
1.0
–
(0.4)
(102.9)
5.2
(0.2)
–
–
0.3
5.3
31.7
90.6
–
127.6
Total
$m
(1.097.0)
(11.2)
0.1
1.7
–
–
–
0.1
–
0.1
(0.1)
–
–
–
(1,106.4)
(297.4)
90.6
(2.5)
(1,315.7)
The charge to the income statement of $206.8 million (2020 – $11.2 million) included an impact from foreign exchange differences of nil (2020 –
included a credit of $0.1 million).
Certain deferred tax assets and liabilities have been offset. Deferred tax assets and liabilities are offset where there is a legally enforceable right
to do so, which under Chilean tax regulations is only possible within individual legal entities.
The following is the analysis of the deferred tax balance (after offset):
Net deferred tax assets
Net deferred tax liabilities
Net deferred tax balances
2021
$m
96.8
(1,412.5)
(1,315.7)
2020
$m
6.4
(1,112.8)
(1,106.4)
At 31 December 2021, the Group had unused tax losses associated with Chilean entities (predominantly Antucoya) of $472.5 million (2020 – $599.4
million) available for offset against future profits. Generally under Chilean tax law most tax losses can be carried forward indefinitely. A deferred tax
asset of $127.6 million has been recognised in respect of 100% of these losses as at 31 December 2021 (31 December 2020 – $5.3 million in respect of
$19.6 million of the losses). In addition, at 31 December 2021, the Group had unused tax losses associated with entities outside of Chile (predominantly in
respect of the Twin Metals project) of $428.0 million (2020 – $399.7 million - which were previously not disclosed) in respect of which no deferred tax
asset has been recognised. A portion of the Twin Metals tax losses expire in the period from 2030 – 2037, and the remainder can be carried forward
indefinitely.
At 31 December 2021, the Group recognised $90.6 million of previously unrecognised deferred tax assets relating to tax losses available for offset
against future profits. In previous periods, the Group had reviewed these tax losses for potential recognition, and concluded that it was not probable that
future taxable profits would be available against which the losses could be utilised, and accordingly had not recognised a deferred tax asset in respect of
those losses. In making this assessment in previous periods the Group had taken into account that the relevant Group entity (Antucoya) had consistently
generated taxable losses in recent years, was continuing to generate taxable losses in the then current period, and was forecast to continue generating
taxable losses in future periods. During 2021, there has been a significant improvement in the current copper price (with the copper price reaching
record levels in nominal terms during the year) and also the near-term copper price outlook. As a result of this improvement in the copper price
environment, Antucoya began to generate taxable profits in 2021. The improved near-term outlook for the copper price also means that Antucoya is
now forecast to generate sufficient future taxable profits to fully utilise its remaining tax losses. Current forecasts indicate that the losses will be utilised
over approximately the next eight years (compared with the remaining mine life for Antucoya of 22 years). The forecasts are based on Antucoya’s Life-
of-mine model. When the tax losses are utilised in future years, it is expected that the impact will be recorded within the underlying tax charge for that
year, in order to match with the similar classification of the corresponding taxable profits of that year.
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Other InformationFinancial Statements Strategic Report Corporate Governance
28 Deferred tax assets and liabilities continued
At 31 December 2021, deferred withholding tax liabilities of $23.1 million have been recognised (31 December 2020 – $52.8 million) which relate to
undistributed earnings of subsidiaries where it is considered likely that the corresponding profits will be distributed in the foreseeable future. The
value of the remaining undistributed earnings of subsidiaries, for which deferred tax liabilities have not been recognised, because the Group is in a
position to control the timing of the distributions and it is likely that distributions will not be made in the foreseeable future, was $6,483 million
(31 December 2020 – $4,980 million - restated from the previously reported amount of $4,810 million, reflecting the removal of amounts relating to
entities with accumulated losses).
Temporary differences arising in connection with interests in associates are insignificant.
The deferred tax balance of $1,315.7 million (2020 – $1,106.4 million) includes $1,272.6 million (2020 – $1,053.4 million) due in more than one year.
All amounts are shown as non-current on the face of the balance sheet as required by IAS 12 Income Taxes.
29 Decommissioning and restoration provisions
Balance at the beginning of the year
Charge to operating profit in the year
Unwind of discount to net interest in the year
Adjustment to provision discount rates
Capitalised adjustment to provision
Utilised in year
Foreign currency exchange difference
Balance at the end of the year
Short-term provisions
Long-term provisions
Total
2021
$m
(520.2)
(11.3)
(2.6)
30.8
119.9
33.8
13.5
(336.1)
(33.8)
(302.3)
(336.1)
2020
$m
(413.2)
(45.2)
(2.6)
(9.2)
(59.4)
22.2
(12.8)
(520.2)
(22.2)
(498.0)
(520.2)
Decommissioning and restoration costs relate to the Group’s mining operations. Costs are estimated on the basis of a formal closure plan and are
subject to regular independent formal review by Sernageomin, the Chilean government agency which regulates the mining industry in Chile. There
have not been any significant updates to the mining operations closure plans approved by Sernageomin during the year. During 2020, the
Pelambres, Centinela and Zaldívar balances were updated to reflect new plans approved by Sernageomin during that year. The provision balance
reflects the present value of the forecast future cash flows expected to be incurred in line with the closure plans, discounted using Chilean real
interest rates with durations corresponding with the timings of the closure activities. At 31 December 2021, the real discount rates ranged from
2.3% to 2.5% (31 December 2020: 0.5% to 0.9%).
It is estimated that the provision will be utilised from 2022 until 2064 based on current mine plans, with approximately 19% of the total provision
balance expected to be utilised between 2022 and 2031, approximately 48% between 2032 and 2041, approximately 9% between 2042 and 2051
and approximately 23% between 2052 and 2068.
Given the long-term nature of these balances, it is possible that future climate risks could impact the appropriate amount of these provisions, both in
terms of the nature of the decommissioning and site rehabilitation activities that are required, or the costs of undertaking those activities. During
2021, the Group has implemented, and disclosed against, the recommendations of the Task Force on Climate-related Financial Disclosures
(“TCFD”). This process included scenario analyses assessing the potential future transition and physical risks. As a simple high-level sensitivity, we
have considered whether the level of estimated costs relating to the potential future risks, identified under the scenario analysis could indicate a
general level of future cost increases as a consequence of climate risks, which could indicate a significant potential impact on these provision
balances. This analysis did not indicate a significant potential impact on the decommissioning and restoration provision balances. However, more
detailed specific analysis of the potential impacts of climate risks in future periods could result in adjustments to these provision balances. When
future updates to the closure plans are prepared and submitted to Sernageomin for review and approval, it is likely that there will be more detailed
consideration of potential climate risk impacts which may need to be incorporated into the plan assumptions. In addition, Sernageomin may
introduce new regulations or guidance in respect of climate risks which may need to be addressed in future updates to the Group’s closure plans.
Antofagasta plc Annual Report 2021
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219
/ Notes to the financial statements continued
30 Share capital and other reserves
(I) Share capital
The ordinary share capital of the Company is as follows:
Authorised
Ordinary shares of 5p each
Issued and fully paid
Ordinary shares of 5p each
2021
Number
2020
Number
2021
$m
2020
$m
1,300,000,000
1,300,000,000
118.9
118.9
2021
Number
2020
Number
2021
$m
2020
$m
985,856,695
985,856,695
89.8
89.8
The Company has one class of ordinary shares which carry no right to fixed income. Each ordinary share carries one vote at any general meeting.
There were no changes in the authorised or issued share capital of the Company in either 2021 or 2020. Details of the Company’s preference
share capital, which is included within borrowings in accordance with IAS 32 Financial Instruments, are given in Note 23A(xiv).
(II) Other reserves and retained earnings
Details of the share premium account, hedging, fair value and translation reserves and retained earnings for both 2021 and 2020 are included
within the consolidated statement of changes in equity on page 174.
Share premium
At 1 January and 31 December
Hedging reserves1
At 1 January
Parent and subsidiaries net cash flow hedge fair value losses
Parent and subsidiaries net cash flow hedge losses transferred to the income statement
Tax on the above
At 31 December
Equity investment revaluation reserves2
At 1 January
(Losses)/gains on equity investment
At 31 December
Foreign currency translation reserves3
At 1 January
Currency translation adjustment
At 31 December
Total other reserves per balance sheet
Retained earnings
At 1 January
Parent and subsidiaries’ profit for the period
Equity accounted units’ profit after tax for the period
Actuarial gains/(loss)4
Total comprehensive income for the year
Dividends paid
At 31 December
2021
$m
2020
$m
199.2
199.2
(23.9)
(100.4)
126.8
(2.5)
–
(5.3)
(2.1)
(7.4)
(1.4)
(1.6)
(3.0)
(10.4)
7,492.2
1,230.5
59.7
–
8,782.4
(710.8)
8,071.6
(5.0)
(24.2)
3.4
1.9
(23.9)
(10.8)
5.5
(5.3)
(2.3)
0.9
(1.4)
(30.6)
7,112.8
582.1
(75.7)
4.1
7,623.3
(131.1)
7,492.2
1. The hedging reserves record gains or losses on cash flow hedges that are recognised initially in equity (through other comprehensive income), as described in Note 25.
2. The equity investments revaluation reserves record fair value gains or losses relating to equity investments, as described in Note 19.
3. Exchange differences arising on the translation of the Group’s net investment in foreign-controlled companies are taken to the foreign currency translation reserves.
The cumulative differences relating to an investment are transferred to the income statement when the investment is disposed of.
4. Actuarial gains or losses relating to long–term employee benefits, as described in Note 27.
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Other InformationFinancial Statements Strategic Report Corporate Governance
31 Non-controlling interests
The non-controlling interests of the Group during 2021 and 2020 are as follows:
Non-controlling
Interest
%
40.0
30.0
30.0
Non-controlling
Interest
%
40.0
30.0
30.0
Country
Chile
Chile
Chile
Country
Chile
Chile
Chile
At
1 January 2021
$m
Share of profit
for the financial year
$m
Capital
Increase
$m
1,107.3
1,113.7
109.5
2,330.5
608.0
252.2
84.4
944.6
At
1 January 2020
$m
Share of profit/(losses)
for the financial year
$m
1,012.4
1,103.2
(98.3)
2,017.3
371.5
12.9
3.1
387.5
–
–
–
–
Capital
Increase1
$m
–
–
210.0
210.0
Los Pelambres
Centinela
Antucoya
Total
Los Pelambres
Centinela
Antucoya
Total
Share of
dividends
$m
(512.0)
(92.5)
–
(604.5)
Share of
dividends
$m
(280.0)
–
–
(280.0)
Hedging and
actuarial
gains
$m
At
31 December
2021
$m
1.2
2.5
4.5
8.2
1,204.5
1,275.9
198.4
2,678.8
Hedging and
actuarial
gains/
(losses)
$m
3.4
(2.4)
(5.3)
(4.3)
At
31 December
2020
$m
1,107.3
1,113.7
109.5
2,330.5
1. A capital contribution of $210 million was received from Marubeni, the minority partner at Antucoya, in order to replace part of Antucoya’s subordinated debt financing with
equity.
The proportion of the voting rights is proportional with the economic interest for each of the companies listed above.
Summarised financial position and cash flow information for the years ended 2021 and 2020 is set out below:
Non-controlling interest (%)
Cash and cash equivalents
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net cash from operating activities
Net cash used in investing activities
Net cash used in financing activities
Non-controlling interest (%)
Cash and cash equivalents (restated)1
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net cash from operating activities
Net cash used in investing activities
Net cash from/(used in) financing activities
Los Pelambres
2021
$m
40.0%
14.2
1,073.3
4,593.8
(519.1)
(2,123.0)
1,816.8
(878.6)
(1,408.4)
Los Pelambres
2020
$m
40.0%
247.6
1,466.5
4,009.4
(764.6)
(1,935.5)
1,196.9
(776.6)
74.8
Centinela
2021
$m
30.0%
122.7
1,358.0
4,561.2
(714.5)
(1,082.6)
1,885.5
(837.6)
(1,152.6)
Centinela
2020
$m
30.0%
239.2
1,490.8
4,408.0
(495.5)
(1,327.7)
790.8
(460.4)
(88.0)
Antucoya
2021
$m
30.0%
48.4
381.4
1,354.6
(183.8)
(364.9)
295.3
(49.3)
(206.9)
Antucoya
2020
$m
30.0%
52.5
324.5
1,317.0
(246.4)
(456.1)
147.3
(41.3)
(75.8)
1. The prior period comparatives have been restated to reclassify liquid investments of $657.2 million at Los Pelambres, $497.1 million at Centinela and $91.1 million at Antucoya out
of the cash and cash equivalents line.
Notes to the summarised financial position and cash flow
(i) The amounts disclosed for each subsidiary are based on the amounts included in the consolidated financial statements (100% of the results
and balances of the subsidiary rather than the non-controlling interest proportionate share) before inter-company eliminations.
(ii) Summarised income statement information is shown in the segment information in Note 6.
(iii) There are some subsidiaries with a non controlling interest portion not included in this note where those portions are not material to the
Group.
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/ Notes to the financial statements continued
32 Notes to the consolidated cash flow statement
A) Reconciliation of profit before tax to cash flow from continuing operations
Profit before tax
Depreciation
Net loss on disposals
Net finance (income)/expense
Net share of results from associates and joint ventures (exc. exceptional items)
Provision for impairment
Decrease/(increase) in inventories
Increase in debtors
Increase in creditors
(Decrease)/increase in provisions
Cash flow generated from continuing operations
B) Analysis of changes in net debt
2021
$m
3,477.1
1,078.7
9.2
(16.0)
(59.7)
177.6
10.9
(206.8)
55.7
(19.0)
4,507.7
2020
$m
1,413.1
1,048.7
6.3
103.4
(5.1)
(80.8)
(13.6)
(259.9)
31.0
26.4
2,431.1
At
1 January
2021
$m
1,246.8
2,426.0
Cash flow
$m
(483.1)
543.7
3,672.8
60.6
(529.8)
545.6
(3,013.8)
(73.6)
(134.9)
(2.7)
(3,754.8)
(82.0)
–
88.9
–
–
634.5
695.1
Fair value
gains
$m
New leases
$m
Amortisation
of finance
costs
$m
Capitalisation
of interest
$m
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(61.8)
–
(61.8)
(61.8)
–
–
–
–
(5.7)
–
–
–
(5.7)
(5.7)
–
–
–
–
(16.6)
–
–
–
(16.6)
(16.6)
At
1 January
2020
$m
653.7
1,539.7
Cash flow
$m
588.3
887.9
2,193.4
1,476.2
(648.4)
200.1
(1,861.8)
(75.6)
(168.4)
(2.6)
(2,756.8)
(563.4)
(1,204.9)
18.2
68.3
–
(918.3)
557.9
Fair value
gains
$m
New leases
$m
Amortisation
of finance
costs
$m
Capitalisation
of interest
$m
–
(1.6)
(1.6)
–
–
–
–
–
–
(1.6)
–
–
–
–
–
–
(33.5)
–
(33.5)
(33.5)
–
–
–
–
(12.5)
–
–
–
(12.5)
(12.5)
–
–
–
–
(23.4)
–
–
–
(23.4)
(23.4)
Movement
between
maturity
categories
$m
–
–
–
Other
$m
Exchange
$m
At
31 December
2021
$m
–
–
(20.3)
–
743.4
2,969.7
–
(20.3)
3,713.1
(294.2)
10.4
–
(268.0)
294.2
(84.4)
84.4
–
–
–
Movement
between
maturity
categories
$m
–
–
–
(88.8)
88.8
(14.1)
14.1
–
–
–
–
–
–
–
10.4
10.4
(0.2)
–
21.6
–
21.4
1.1
(2,742.1)
(69.1)
(90.7)
(2.7)
(3,172.6)
540.5
Other
$m
Exchange
$m
At
31 December
2020
$m
–
–
–
4.7
–
(2.1)
0.3
–
2.9
2.9
4.8
–
1,246.8
2,426.0
4.8
3,672.8
2.6
(529.8)
–
–
(15.7)
(0.1)
(13.2)
(8.4)
(3,013.8)
(73.6)
(134.9)
(2.7)
(3,754.8)
(82.0)
Cash and cash equivalents
Liquid investments
Total cash and cash
equivalents and liquid
investments
Borrowings due within one
year
Borrowings due after one
year
Leases due within one year
Leases due after one year
Preference shares
Total borrowings
Net cash/(debt)
Cash and cash equivalents
Liquid investments
Total cash and cash
equivalents and liquid
investments
Borrowings due within one
year
Borrowings due after one
year
Leases due within one year
Leases due after one year
Preference shares
Total borrowings
Net debt
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32 Notes to the consolidated cash flow statement continued
C) Net cash/(debt)
Cash, cash equivalents and liquid investments
Total borrowing
Net cash/(debt)
2021
$m
3,713.1
(3,172.6)
540.5
2020
$m
3,672.8
(3,754.8)
(82.0)
33 Exchange rates
Assets and liabilities denominated in foreign currencies are translated into US dollars and Sterling at the period-end rates of exchange.
Results denominated in foreign currencies have been translated into US dollars at the average rate for each period.
Year-end rates
Average rates
2021
2020
$1.3490 = £1
$1 = Ch$844.69
$1.3750 = £1
$1 = Ch$759.81
$1.3600 = £1
$1 = Ch$710.95
$1.2820 = £1
$1 = Ch$792.07
34 Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in
this note. Transactions between the Group and its associates and joint ventures are disclosed below.
The transactions which Group companies entered into with related parties who are not members of the Group are set out below. There are no
guarantees given or received and no provisions for doubtful debts related to the amount of outstanding balances.
A) Quiñenco SA
Quiñenco SA (“Quiñenco”) is a Chilean financial and industrial conglomerate, the shares of which are traded on the Santiago Stock Exchange, and in which
members of the Luksic family are interested. Two Directors of the Company, Jean-Paul Luksic and Andronico Luksic, are also directors of Quiñenco.
The following transactions took place between the Group and the Quiñenco group of companies, all of which were on normal commercial terms at
market rates:
• the Group made purchases of fuel from ENEX SA, a subsidiary of Quiñenco, of $263.9 million (2020 – $212.6 million). The balance due to ENEX
SA at the end of the year was $20.4 million (2020 – nil);
• the Group earned interest income of nil (2020 – $1.7 million) during the year on deposits with Banco de Chile SA, a subsidiary of Quiñenco.
Deposit balances at the end of the year were nil (2020 – nil);
• the Group earned interest income of $0.1 million (2020 – $0.3 million) during the year on investments with BanChile Administradora General de
Fondos SA, a subsidiary of Quiñenco. Investment balances at the end of the year were $2.2 million (2020 – nil);
• the Group purchased shipping services from Hapag Lloyd, an associate of Quiñenco, of $8.9 million (2020 – $7.0 million). The balance due to
Hapag Lloyd at the end of the year was $0.4 million (2020 – nil).
B) Compañía de Inversiones Adriático SA
In 2021, the Group leased office space on normal commercial terms from Compañía de Inversiones Adriático SA, a company in which members of
the Luksic family are interested, at a cost of $0.8 million (2020 –$0.7 million).
C) Antomin 2 Limited and Antomin Investors Limited
The Group holds a 51% interest in Antomin 2 Limited (“Antomin 2”) and Antomin Investors Limited (“Antomin Investors”), which own a number of
copper exploration properties. The Group originally acquired its 51% interest in these properties for a nominal consideration from Mineralinvest
Establishment, which continues to hold the remaining 49% of Antomin 2 and Antomin Investors. Mineralinvest is owned by the E. Abaroa
Foundation, in which members of the Luksic family are interested. During the year ended 31 December 2021, the Group incurred $0.1 million (year
ended 31 December 2020 – $0.1 million) of exploration expense at these properties.
D) Tethyan Copper Company Limited
As explained in Note 18 the Group has a 50% interest in Tethyan Copper Company Limited (“Tethyan”), which is a joint venture with Barrick Gold
Corporation over Tethyan’s mineral interests in Pakistan. During 2021, the Group contributed $9.5 million (2020 – $7.2 million) to Tethyan.
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/ Notes to the financial statements continued
34 Related party transactions continued
E) Compañia Minera Zaldívar SpA
The Group has a 50% interest in Zaldívar (see Note 18), which is a joint venture with Barrick Gold Corporation. Antofagasta is the operator of
Zaldívar. The balance due from Zaldívar to Group companies at the end of the year was $2.5 million (2020 – $0.5 million). During 2021, Zaldívar
declared dividends of $77.5 million to the Group (2020 – $65.0 million).
Inversiones Hornitos SA
F)
As explained in Note 3, on 31 March 2020 the Group agreed to dispose of its 40% interest in Hornitos coal-fired power station to ENGIE Energía Chile
S.A. (“ENGIE”), the owner of the remaining 60% interest. Under the terms of this agreement, the Group agreed to make a final capital contribution to
Hornitos of $24 million, the payment of which took place during 2021. During 2020 the Group paid $128.2 million to Inversiones Hornitos in relation to
the energy supply contract at Centinela. During 2020 and 2021, the Group has not received dividends from Inversiones Hornitos SA.
G) Directors and other key management personnel
Information relating to Directors’ remuneration and interests is given in the Remuneration Report on page 152. Information relating to the
remuneration of key management personnel including the Directors is given in Note 9.
35 Reko Diq project
In July 2019, the World Bank Group’s International Centre for Settlement of Investment Disputes (“ICSID”) awarded $5.84 billion in damages
(compensation and accumulated interest as at the date of the award) to Tethyan Copper Company Pty Limited (“Tethyan”), the joint venture held
equally by the Company and Barrick Gold Corporation, in relation to an arbitration claim filed against the Islamic Republic of Pakistan (“Pakistan”)
following the unlawful denial of a mining lease for the Reko Diq project in Pakistan in 2011. As at 31 December 2021, the outstanding award amount,
including interest, was approximately $6.45 billion.
In March 2022 the Company reached an agreement in principle with Barrick Gold and the Governments of Pakistan and Balochistan on a
framework that provides for the reconstitution of the Reko Diq project, and a pathway for the Company to exit the project. If definitive agreements
are executed and the conditions to closing are satisfied, a consortium comprising various Pakistani state-owned enterprises will acquire an interest
in the project for consideration of approximately $900m to jointly develop the project with Barrick, and Antofagasta would exit. If all the conditions
are satisfied during 2022, we would expect to receive the proceeds in 2023.
36 Litigation and contingent liabilities
The Group is subject from time to time to legal proceedings, claims, complaints and investigations arising out of the ordinary course of business.
The Group cannot predict the outcome of individual legal actions or claims or complaints or investigations. As a result, the Group may become
subject to liabilities that could affect our business, financial position and reputation. Litigation is inherently unpredictable and large judgments may at
times occur. The Group may incur, in the future, judgments or enter into settlements of claims that could lead to material cash outflows. The Group
considers that no material loss to the Group is expected to result from the legal proceedings, claims, complaints and investigations that the Group is
currently subject to. Provision is made for all liabilities that are expected to materialise through legal claims against the Group.
37 Ultimate Parent Company
The immediate parent of the Group is Metalinvest Establishment, which is controlled by the E. Abaroa Foundation, in which members of the Luksic
family are interested.
Both Metalinvest Establishment and the E. Abaroa Foundation are domiciled in Liechtenstein. Information relating to the interest of Metalinvest
Establishment and the E. Abaroa Foundation is given in the Directors’ Report.
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Antofagasta plc – balance sheet of the
Parent company and related notes
The Balance Sheet of the Parent Company as at 31 December 2021 is as follows:
Non-current assets
Investment in subsidiaries
Other receivables
Property, plant and equipment
Current assets
Other receivables
Liquid investments
Cash and cash equivalents
Total assets
Current liabilities
Amounts payable to subsidiaries
Other payables
Non-current liabilities
Medium and long-term borrowings
Total liabilities
Net assets
Equity
Share capital
Share premium
Retained earnings
At 1 January
Profit for the year attributable to the owners
Other changes in retained earnings
At 31 December
Total equity
Note
E
E
F
2021
$m
2020
$m
529.1
–
5.1
534.2
57.8
1,649.4
422.8
2,130.0
2,664.2
(302.2)
(15.4)
(317.6)
(993.4)
(993.4)
(1,311.0)
1,353.2
89.8
199.2
626.0
1,149.0
(710.8)
1,064.2
1,353.2
538.6
485.0
–
1,023.6
573.5
447.2
177.7
1,198.4
2,222.0
(303.7)
(8.3)
(312.0)
(994.9)
(994.9)
(1,307.0)
915.0
89.8
199.2
197.7
559.4
(131.1)
626.0
915.0
The financial statements on pages 225-228 were approved by the Board of Directors on 24 March 2022 and signed on its behalf by
Jean-Paul Luksic
Chairman
Tony Jensen
Senior Independent Director
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/ Antofagasta plc – Balance sheet of the Parent Company and related notes continued
Parent Company statement of changes in equity
At 1 January 2020
Comprehensive income for the year
Dividends
At 31 December 2020
Comprehensive income for the year
Dividends
At 31 December 2021
Share capital
$m
Share premium
$m
89.8
–
–
89.8
–
–
89.8
199.2
–
–
199.2
–
–
199.2
Retained
earnings
$m
197.7
559.4
(131.1)
626.0
1,149.0
(710.8)
1,064.2
Total equity
$m
486.7
559.4
(131.1)
915.0
1,149.0
(710.8)
1,353.2
The ordinary shares rank after the preference shares in entitlement to dividend and on a winding-up. Each ordinary share carries one vote at any
general meeting.
Antofagasta plc is a company limited by shares, incorporated and domiciled in the United Kingdom at 103 Mount Street, London W1K 2TJ.
A) Basis of preparation of the balance sheet and related notes of the Parent Company
The Antofagasta plc Parent Company balance sheet and related notes have been prepared in accordance with the Companies Act 2006 applicable
to companies using FRS 101, which applies the recognition and measurement bases of IFRS with reduced disclosure requirements. The financial
information has been prepared on an historical cost basis. The financial statements have been prepared on a going concern basis. The functional
currency of the Company and the presentation currency adopted is US dollars.
The following exemptions from the requirements of IFRS have been applied in the preparation of these financial statements, in accordance with
FRS 101:
• Paragraphs 45(b) and 46 to 52 of IFRS 2, ‘Share-based payment’ (details of the number and weighted-average exercise prices of share options
and how the fair value of goods or services received was determined)
• IFRS 7, ‘Financial Instruments: Disclosures’
• Paragraphs 91 to 99 of IFRS 13, ‘Fair value measurement’ (disclosure of valuation techniques and inputs used for fair value measurement of
assets and liabilities)
• Paragraph 38 of IAS 1, ‘Presentation of financial statements’ comparative information requirements in respect of:
(i) paragraph 79(a)(iv) of IAS 1, ‘Presentation of financial statements’
(ii) paragraph 73(e) of IAS 16, ‘Property, plant, and equipment’
(iii) paragraph 118(e) of IAS 38, Intangible assets (reconciliations between the carrying amount at the beginning and end of the period)
• The following paragraphs of IAS 1, ‘Presentation of financial statements’:
– 10(d), (statement of cash flows)
– 10(f) (a statement of financial position as at the beginning of the preceding period when an entity applies an accounting policy retrospectively or
makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements)
– 16 (statement of compliance with all IFRS)
– 38A (requirement for minimum of two primary statements, including cash flow statements)
– 38B-D (additional comparative information)
– 40A-D (requirements for a third statement of financial position)
– 111 (cash flow statement information), and
– 134-136 (capital management disclosures)
• IAS 7, ‘Statement of cash flows’
• Paragraph 30 and 31 of IAS 8 ‘Accounting policies, changes in accounting estimates and errors’ (requirement for the disclosure of information
when an entity has not applied a new IFRS that has been issued but is not yet effective)
• Paragraph 17 of IAS 24, ‘Related party disclosures’ (key management compensation)
• The requirements in IAS 24, ‘Related party disclosures’ to disclose related party transactions entered into between two or more members of a
group. All of the Parent Company’s inter-company transactions and balances are with wholly-owned subsidiaries of the Group.
As permitted by section 408 of the Companies Act 2006, the profit and loss account of the Parent Company is not presented as part of these
financial statements. The profit after tax for the year of the Parent Company amounted to $1,149.0 million (2020 – $559.4 million).
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B) Principal accounting policies of the Parent Company
A summary of the principal accounting policies is set out below. These accounting policies have been applied consistently.
A) Currency translation
The Company’s functional currency is the US dollar. Transactions in currencies other than the functional currency are translated at the exchange
rate ruling at the date of the transaction. Monetary assets and liabilities, including amounts due from or to subsidiaries, denominated in currencies
other than the functional currency (being US dollars) are retranslated at year-end exchange rates. Gains and losses on retranslation are included in
net profit or loss for the year.
B) Revenue recognition
Dividends proposed by subsidiaries are recognised as income by the Company when they represent a present obligation of the subsidiaries, in the
period in which they are formally approved for payment.
Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable, which is the rate that
exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.
C) Dividends payable
Dividends proposed are recognised when they represent a present obligation, in the period in which they are formally approved for payment.
Accordingly, an interim dividend is recognised when paid and a final dividend is recognised when approved by shareholders.
Investments in subsidiaries
D)
Investments in subsidiaries represent equity holdings in subsidiaries and long-term amounts owed by subsidiaries. Such investments are valued at
cost less any impairment provisions. Investments relating to equity holdings in subsidiaries are reviewed for impairment if events or changes in
circumstances indicate that the carrying amount may not be recoverable; the recoverable amount of the investment is the higher of fair value less
costs of disposal and value in use. Investments relating to long-term amounts owed by subsidiaries are reviewed to assess if a material expected
credit loss provision is required in respect of these balances.
E) Liquid investments and cash and cash equivalents
Liquid investments represent highly liquid current asset investments such as term deposits and managed funds invested in high quality fixed income
instruments. They do not meet the IAS 7 definition of cash and cash equivalents, normally because even if readily accessible, the underlying
investments have an average maturity profile greater than 90 days from the date first entered into, or because they are held primarily for
investment purposes rather than meeting short-term cash commitments. Cash and cash equivalents comprise cash on hand, deposits held on call
with banks, highly liquid investments that are readily convertible into known amounts of cash, and which are subject to insignificant risk of changes
in value and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. The cash balance is
presented net of bank overdrafts which are repayable on demand. Cash and cash equivalents have a maturity period of 90 days or less.
F) Borrowings
Interest-bearing loans and bank overdrafts are initially recorded at the proceeds received, net of direct issue costs. They are subsequently
measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest
method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where
appropriate, a shorter period. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for
on an accruals basis using the effective interest rate method.
G) Borrowings – preference shares
The Sterling-denominated preference shares issued by the Company carry a fixed rate of return without the right to participate in any surplus. They
are accordingly classified as borrowings and translated into US dollars at year-end rates of exchange. Preference share dividends are included
within finance costs.
H) Equity instruments – ordinary share capital and share premium
Equity instruments issued are recorded at the proceeds received, net of direct issue costs. Equity instruments of the Company comprise its
Sterling-denominated issued ordinary share capital and related share premium.
The presentational and the functional currency of the Company is US dollars, and ordinary share capital and share premium are translated into US
dollars at historical rates of exchange based on dates of issue.
C) Significant accounting estimates and judgements
We do not consider there to be critical accounting judgements or key sources of estimation uncertainty which could have a significant risk of
causing a material adjustment to the carrying amounts of the Company’s assets and liabilities within the next financial year. We have set out below
the most significant judgements and estimates applied in the preparation of the Company’s balance sheet. The most significant accounting
judgement is whether there are impairment indicators in respect of the carrying value of the Company’s investments in subsidiaries. The most
significant accounting estimate is whether a credit loss provision is required in respect of any of the Company’s receivable balances. Over 99% of
the receivable balances relate to intercompany balances, primarily with Group holding companies which hold the Group’s investments in the
operating companies. There is not considered to be any significant risk of a relevant overstatement of these carrying values. In assessing this, the
Group has considered the overall market capitalisation of the Group, which was $17.8 billion at 31 December 2021, the cash and other assets held
by the relevant Group companies and the level of earnings generated by the Group’s operations.
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/ Antofagasta plc – Balance sheet of the Parent Company and related notes continued
D) Employee Benefit Expense
A) Average number of employees
The average monthly number of employees was 4 (2020 – 4), engaged in management and administrative activities.
B) Aggregate remuneration
The aggregate remuneration of the employees mentioned above was as follows:
Wages and salaries
Social security costs
Other pension costs
2021
$m
2.3
0.3
0.1
2.7
2020
$m
1.8
0.2
0.1
2.1
The above employee figures exclude Directors who receive Directors’ fees from Antofagasta plc. Details of fees payable to Directors are set out in
the Remuneration Report.
E) Subsidiaries
A)
Investment in subsidiaries
Shares in subsidiaries at cost
Amounts owed by subsidiaries due after more than one year
1 January 2021
31 December 2021
2021
$m
60.6
468.5
529.1
Loans
$m
478.0
468.5
2020
$m
60.6
478.0
538.6
Total
$m
538.6
529.1
Shares
$m
60.6
60.6
The above amount of $468.5 million (31 December 2020 – $478.0 million) in respect of amounts owed by subsidiaries due after more than one
year relates to long-term funding balances for which the Company does not expect to demand repayment in the foreseeable future and which form
an integral part of the Company’s long-term investment in those subsidiary companies.
B) Trade and other receivables – amounts owed by subsidiaries due after one year
At 31 December 2021, an amount of nil (31 December 2020 – $485.0 million) was owed to the Company by an indirect subsidiary, pursuant to a
10-year loan agreement. There have been no impairments recognised in respect of subsidiary receivables as at 31 December 2021.
C) Trade and other receivables – amounts owed by subsidiaries due within one year
At 31 December 2021, amounts owed by subsidiaries due within one year were $54.5 million (31 December 2020 – $568.4 million). These
balances principally relate to inter-company dividends declared but not yet paid to the Company by its immediate subsidiary companies. There have
been no impairments recognised in respect of subsidiary receivables as at 31 December 2021.
F) Borrowings – preference shares
The authorised, issued and fully paid preference share capital of the Company comprised 2,000,000 5% cumulative preference shares of £1 each
at both 31 December 2021 and 31 December 2020. As explained in Note 23C, the preference shares are recorded in the balance sheet in US
dollars at period-end rates of exchange.
The preference shares are non-redeemable and are entitled to a fixed 5% cumulative dividend, payable in equal instalments in June and December
of each year. On a winding-up, the preference shares are entitled to repayment and any arrears of dividend in priority to ordinary shareholders, but
are not entitled to participate further in any surplus. Each preference share carries 100 votes (see Note 23A (xv)) at any general meeting.
228
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Other InformationFinancial Statements Strategic Report Corporate Governance
Alternative performance measures
(not subject to audit or review)
This Annual Report includes a number of alternative performance measures, in addition to IFRS amounts. These measures are included because
they are considered to provide relevant and useful additional information to users of the financial statements. Set out below are definitions of these
alternative performance measures, explanations as to why they are considered to be relevant and useful, and reconciliations to the IFRS figures.
A) Underlying earnings per share
Underlying earnings per share is earnings per share from continuing operations, excluding exceptional items. This measure is reconciled to
earnings per share from continuing and discontinued operations (including exceptional items) on the face of the income statement. This measure is
considered to be useful as it provides an indication of the earnings generated by the ongoing businesses of the Group, excluding the impact of
exceptional items which are irregular or non-operating in nature.
B) EBITDA
EBITDA refers to Earnings Before Interest, Tax, Depreciation and Amortisation. EBITDA is calculated by adding back depreciation, amortisation,
profit or loss on disposals and impairment charges to operating profit. This comprises 100% of the EBITDA from the Group´s subsidiaries, and the
Group´s proportional share of the EBITDA of its associates and joint ventures.
EBITDA is considered to provide a useful and comparable indication of the current operating earnings performance of the business, excluding the
impact of the historical cost of property, plant and equipment or the particular financing structure adopted by the business.
For the year ended 31 December 2021
Operating profit/(loss)
Depreciation
Loss on disposals
Provision against the carrying value
of assets1
EBITDA from subsidiaries
Proportional share of the EBITDA
from associates and JV
EBITDA
Los
Pelambres
$m
Centinela
$m
2,240.5
281.8
3.7
1,260.6
654.7
4.0
–
2,526.0
–
1,919.3
–
2,526.0
–
1,919.3
Antucoya
$m
238.3
98.3
0.5
–
337.1
–
337.1
Exploration
and
evaluation
$m
(280.8)
–
–
Corporate
and other
items
$m
Mining
$m
Transport
division
$m
Total
$m
(89.0)
13.0
–
3,369.6
1,047.8
8.2
31.8
30.9
1.0
3,401.4
1,078.7
9.2
177.6
(103.2)
–
(76.0)
177.6
4,603.2
–
63.7
177.6
4,666.9
Zaldívar
$m
–
–
–
–
–
172.8
172.8
–
(103.2)
(8.0)
(84.0)
164.8
4,768.0
4.5
68.2
169.3
4,836.2
1. An impairment has been recognised as at 31 December 2021 in respect of the $177.6 million of intangible assets and property, plant and equipment relating to the Twin Metals
project, presented as an exceptional item.
For the year ended 31 December 2020
Operating profit/(loss)
Depreciation
Loss on disposals
EBITDA from subsidiaries
Proportional share of the EBITDA
from associates and JV
EBITDA
Los
Pelambres
$m
1,407.9
252.6
2.5
1,663.0
–
1,663.0
Centinela
$m
Antucoya
$m
Zaldívar
$m
Exploration
and
evaluation
$m
Corporate
and other
items
$m
Mining
$m
Transport
division
$m
247.0
662.9
1.8
911.7
–
911.7
71.2
94.6
–
165.8
–
165.8
–
–
–
–
95.5
95.5
(85.1)
–
–
(85.1)
–
(85.1)
(74.0)
7.8
–
1,567.0
1,017.9
4.3
(66.2) 2,589.2
25.2
30.8
2.0
58.0
Total
$m
1,592.2
1,048.7
6.3
2,647.2
(6.5)
89.0
(72.7) 2,678.2
3.0
61.0
92.0
2,739.2
Antofagasta plc Annual Report 2021
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229
/ Alternative performance measures continued
C) Cash costs
Cash costs are a measure of the cost of operating production expressed in terms of cents per pound of payable copper produced.
This is considered to be a useful and relevant measure as it is a standard industry measure applied by most major copper mining companies which
reflects the direct costs involved in producing each pound of copper. It therefore allows a straightforward comparison of the unit production cost of
different mines, and allows an assessment of the position of a mine on the industry cost curve. It also provides a simple indication of the profitability
of a mine when compared against the price of copper (per lb).
With sales of concentrates at Los Pelambres and Centinela, which are sold to smelters and roasting plants for further processing into fully refined
metal, the price of the concentrate invoiced to the customer reflects the market value of the fully refined metal less a “treatment and refining
charge” deduction, to reflect the lower value of this partially processed material compared with the fully refined metal. For accounting purposes, the
revenue amount is the net of the market value of fully refined metal less the treatment and refining charges. Under the standard industry definition
of cash costs, treatment and refining charges are regarded as an expense and part of the total cash cost figure.
Reconciliation of cash costs excluding treatment and refining charges and by-product revenue:
Total Group operating cost (Note 6)
Zaldívar operating costs
Less:
Depreciation (Note 6)
Loss on disposal (Note 6)
Provision against the carrying value of assets
Elimination of non-mining operations:
Corporate and other items – Total operating cost (excl. depreciation) (Note 6)
Exploration and evaluation – Total operating cost (excl. depreciation) (Note 6)
Transport division – Total operating cost (excl. depreciation) (Note 6)
Closure provision and other expenses not included within cash costs
Inventory variation
Total cost relevant to the mining operations’ cash costs
2021
$m
2020
$m
4,068.7
231.7
(1,078.7)
(9.2)
(177.6)
(76.0)
(103.2)
(106.3)
(90.7)
2.1
2,660.8
3,537.1
190.9
(1,048.7)
(6.3)
–
(64.3)
(85.1)
(91.4)
(105.8)
11.1
2,337.5
Copper production volumes (tonnes)
721,450
733,920
Cash costs excluding treatment and refining charges and by-product revenue ($/tonne)
3,688
3,185
Cash costs excluding treatment and refining charges and by-product revenue ($/lb)
1.68
1.43
Reconciliation of cash costs before deducting by-product revenue:
Treatment and refining charges – copper and by-product – Los Pelambres (Note 7)
Treatment and refining charges – copper and by-product – Centinela (Note 7)
Treatment and refining charges – copper – total
Copper production volumes (tonnes)
Treatment and refining charges ($/tonne)
Treatment and refining charges ($/lb)
Cash costs excluding treatment and refining charges and by-product revenue ($/lb)
Treatment and refining charges ($/lb)
Cash costs before deducting by-product revenue ($/lb)
115.4
70.4
185.8
113.6
68.8
182.4
721,450
733,920
257.5
0.11
1.68
0.11
1.79
248.5
0.13
1.43
0.13
1.56
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Corporate GovernanceFinancial Statements Strategic ReportOther Information
Reconciliation of cash costs (net of by-product revenue):
Gold revenue – Los Pelambres (Note 6)
Gold revenue – Centinela (Note 6)
Molybdenum revenue – Los Pelambres (Note 6)
Molybdenum revenue – Centinela (Note 6)
Silver revenue – Los Pelambres (Note 6)
Silver revenue – Centinela (Note 6)
Total by-product revenue
Copper production volumes (tonnes)
By-product revenues ($/tonne)
By-product revenues ($/lb)
Cash costs before deducting by-product revenue ($/lb)
By-product revenue ($/lb)
Cash costs (net of by-product revenue) ($/lb)
2021
$m
91.2
346.2
353.6
44.4
46.6
38.7
920.7
2020
$m
106.4
251.3
181.8
27.7
43.3
21.2
631.7
721,450
733,920
1,276.0
0.59
1.79
(0.59)
1.20
860.7
0.42
1.56
(0.42)
1.14
The totals in the tables above may include some small apparent differences as the specific individual figures have not been rounded.
D) Attributable cash, cash equivalents and liquid investments, borrowings and net debt
Attributable cash, cash equivalents and liquid investments, borrowings and net debt reflects the proportion of those balances which are attributable
to the equity holders of the Company, after deducting the proportion attributable to the non-controlling interests in the Group’s subsidiaries.
This is considered to be a useful and relevant measure as the majority of the Group’s cash tends to be held at the corporate level and therefore
100% attributable to the equity holders of the Company, whereas the majority of the Group’s borrowings tends to be at the level of the individual
operations, and hence only a proportion is attributable to the equity holders of the Company.
Cash, cash equivalents and liquid investments:
Los Pelambres
Centinela
Antucoya
Corporate
Transport division
Total (Note 22)
Borrowings:
Los Pelambres (Note 23)
Centinela (Note 23)
Antucoya (Note 23)
Corporate (Note 23)
Transport division (Note 23)
Total (Notes 23 and 32)
Net (debt)/cash
Total
amount
$m
2021
Attributable
share
$m
Attributable
amount
$m
Total
amount
$m
2020
Attributable
share
$m
Attributable
amount
$m
427.9
625.3
181.5
2,436.5
41.9
3,713.1
(1,243.1)
(446.6)
(439.2)
(1,016.5)
(27.2)
(3,172.6)
540.5
60%
70%
70%
100%
100%
60%
70%
70%
100%
100%
256.7
437.7
127.1
2,436.5
41.9
3,299.9
(745.9)
(312.6)
(307.5)
(1,016.4)
(27.2)
904.8
736.3
143.6
1,843.4
44.7
3,672.8
(1,379.5)
(777.5)
(547.5)
(1,013.5)
(36.8)
(2,409.6)
(3,754.8)
890.3
(82.0)
60%
70%
70%
100%
100%
60%
70%
70%
100%
100%
542.9
515.4
100.5
1,843.4
44.7
3,046.9
(827.7)
(544.2)
(383.3)
(1,013.5)
(36.8)
(2,805.5)
241.4
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231
231
Five year summary
Consolidated balance sheet
Intangible asset
Property plant and equipment
Other non-current assets
Inventories
Investment in associates and joint ventures
Trade and other receivables
Derivative financial instruments
Equity investments
Deferred tax assets
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Share capital
Share premium
Reserves (retained earnings and hedging, translation and fair value
reserves)
Equity attributable to equity holders of the Company
Non-controlling interests
Consolidated income statement
Group revenue
2021
$m
2020
$m
2019
$m
2018
$m
2017
$m
–
10,538.5
1.3
270.4
905.8
51.2
–
8.7
96.8
11,872.7
5,405.7
(1,574.2)
(4,675.2)
11,029.0
89.8
199.2
8,061.2
8,350.2
2,678.8
11,029.0
150.1
9,851.9
2.6
278.1
914.6
55.9
0.3
11.1
6.4
11,271.0
5,333.3
(1,625.7)
(4,897.5)
10,081.1
89.8
199.2
7,461.6
7,750.6
2,330.5
10,081.1
150.1
9,556.7
2.1
208.0
1,024.8
48.2
1.7
5.1
8.2
11,004.9
3,605.5
(1,548.9)
(3,660.5)
9,401.0
89.8
199.2
7,094.7
7,383.7
2,017.3
9,401.0
150.1
9,184.1
2.6
172.7
1,056.1
56.1
–
4.7
37.2
10,663.6
3,438.9
(1,307.1)
(3,357.3)
9,438.1
89.8
199.2
7,070.4
7,359.4
2,078.7
9,438.1
150.1
9,064.3
3.5
111.1
1,069.7
67.0
0.2
6.5
69.1
10,541.5
3,668.2
(1,562.1)
(3,506.0)
9,141.6
89.8
199.2
7,029.4
7,318.4
1,823.2
9,141.6
2021
$m
2020
$m
2019
$m
2018
$m
2017
$m
7,470.1
5,129.3
4,964.5
4,733.1
4,749.4
Total profit from operations and associates
3,461.1
1,516.5
1,400.2
1,367.2
1,900.8
Profit before tax
Income tax expense
Profit from continuing operations
Profit from discontinued operations
Profit for the year
Non-controlling interests
Net earnings (profit attributable to equity holders of the Company)
3,477.1
(1,242.3)
2,234.8
–
2,234.8
(944.6)
1,290.2
1,413.1
(526.5)
886.6
7.3
893.9
(387.5)
506.4
1,349.2
(506.1)
843.1
1,252.7
(423.7)
829.0
–
843.1
(341.7)
501.4
51.3
880.3
(336.6)
543.7
1,830.8
(633.6)
1,197.2
0.5
1,197.7
(447.1)
750.6
EBITDA
4,836.2
2,739.2
2,438.9
2,228.3
2,586.6
Earnings per share
Basic and diluted earnings per share
2021
cents
2020
cents
2019
cents
2018
cents
2017
cents
130.9
51.3
50.9
55.1
76.2
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Dividends per share proposed in relation to the year
Ordinary dividends (interim and final)
2021
cents
142.5
142.5
2020
cents
54.7
54.7
2019
cents
34.1
34.1
2018
cents
2017
cents
43.8
43.8
50.9
50.9
Dividends per share paid in the year and deducted from equity
72.1
13.3
47.7
47.4
25.6
Consolidated cash flow statement
Cash flow from continuing operations
Interest paid
Income tax paid
Net cash from operating activities
2021
$m
2020
$m
2019
$m
2018
$m
2017
$m
4,507.7
(60.7)
(776.9)
3,670.1
2,431.1
(52.7)
(319.7)
2,058.7
2,570.7
(76.3)
(403.6)
2,090.8
1,877.0
(68.2)
(498.0)
1,310.8
2,495.0
(59.1)
(338.4)
(2,097.5)
Investing activities
Acquisition and disposal of subsidiaries, joint venture and associates
Dividends from associates
Equity investments, investing activities and recovery of VAT
Purchases and disposals of intangible assets, property, plant and equipment
Interest received
Net cash used in investing activities
–
142.5
(577.2)
(1,776.0)
7.4
(2,203.3)
–
–
(893.5)
(1,306.6)
12.6
(2,187.5)
–
58.0
(678.3)
(1,076.9)
41.0
(1,656.2)
Financing activities
Dividends paid to equity holders of the Company
Dividends paid to preference holders and non-controlling interests
Capital increase from non-controlling interest
New borrowings less repayment of borrowings and leases
Net cash (used in)/generated from financing activities
(710.8)
(604.6)
–
(634.5)
(1,949.9)
(131.1)
(280.1)
210.0
918.3
717.1
(470.3)
(400.1)
–
60.8
(809.6)
145.2
16.6
284.2
(872.2)
26.4
(399.8)
(466.9)
(120.1)
–
(347.1)
(934.1)
3.1
81.8
115.9
(894.4)
14.3
(679.3)
(252.3)
(320.1)
–
(487.0)
(1,059.4)
Net increase/(decrease) in cash and cash equivalents
(483.1)
588.3
(375.0)
(23.1)
358.8
Consolidated net cash
Cash, cash equivalents and liquid investments
Short-term borrowings
Medium and long-term borrowings
2021
$m
2020
$m
2019
$m
2018
$m
2017
$m
3,713.1
3,672.8
2,193.4
1,897.6
2,252.3
(337.1)
(2,835.5)
(3,172.6)
(603.4)
(3,151.4)
(3,754.8)
(723.9)
(2,032.9)
(2,756.8)
(646.0)
(1,847.9)
(2,493.9)
(753.6)
(1,955.1)
(2,708.7)
Net cash/(debt)at the year-end
540.5
(82.0)
(563.4)
(596.3)
(456.4)
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233
Production statistics
Production and sales volumes, realised prices and
cash costs by mine
Copper
Los Pelambres
Centinela
Antucoya
Zaldívar (attributable basis – 50%)
Group total
Group weighted average (net cash costs)
Group weighted average (excluding
treatment and refining charges and
before by-products)
Group weighted average (before
by-product credits)
Cash costs at Los Pelambres comprises
Cash costs before by-product credits
By-product credits (principally
molybdenum and gold)
Net cash costs
Cash cost at Centinela comprises
Cash costs before by-product credits
By-product credits (principally gold)
Net cash costs
LME average
Gold
Los Pelambres
Centinela Concentrates
Group total
Market average price
Molybdenum
Los Pelambres
Centinela
Group total/average realised price
Market average price
Production
2020
‘000
tonnes
359.6
246.8
79.3
48.2
733.9
2021
‘000
tonnes
324.7
274.2
78.6
44
721.5
2021
‘000
tonnes
324.5
276.1
80.4
44.6
725.6
Sales
2020
‘000
tonnes
366.0
247.7
76.5
48.3
738.5
Net cash costs
Realised prices
2021
$/lb
2020
$/lb
2021
$/lb
0.89
1.13
2.04
2.39
1.20
0.81
1.27
1.82
1.80
1.14
4.54
4.31
3.94
–
4.37
2020
$/lb
3.02
2.95
2.85
–
2.98
1.68
1.43
1.79
1.56
1.59
1.27
(0.70)
0.89
(0.46)
0.81
1.87
(0.74)
1.13
1.85
(0.58)
1.27
2021
‘000
ounces
53.2
199.0
252.2
Production
2020
‘000
ounces
60.4
143.7
204.1
2021
‘000
ounces
51.1
193.5
244.6
Sales
2020
‘000
ounces
58.4
141.2
199.6
4.23
2.80
Realised prices
2021
$/oz
2020
$/oz
1,783
1,789
1,788
1,799
1,827
1,784
1,797
1,770
‘000
tonnes
‘000
tonnes
‘000
tonnes
‘000
tonnes
$/lb
$/lb
9.2
1.3
10.5
10.9
1.7
12.6
9.2
1.2
10.4
10.8
1.7
12.5
17.5
17.2
17.4
15.9
8.8
8.9
8.8
8.7
234
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Ore reserves and mineral resources estimates
At 31 December 2021
Introduction
The ore reserves and mineral resources
estimates presented in this report comply with
the requirements of the Australasian Code for
Reporting of Exploration Results, Mineral
Resources and Ore Reserves 2012 edition (the
JORC Code) which has been used by the Group
as the minimum standard for the preparation
and disclosure of the information contained
herein. The definitions and categories of ore
reserves and mineral resources are set out
below.
The information on ore reserves and mineral
resources was prepared by or under the
supervision of Competent Persons as defined in
the JORC Code. The Competent Persons have
sufficient experience relevant to the style of
mineralisation and type of deposit under
consideration and to the activity which they are
undertaking. The Competent Persons consent
to the inclusion in this report of the matters
based on their information in the form and
context in which it appears. The Competent
Person for Exploration Results and Mineral
Resources is Osvaldo Galvez (CP, Chile),
Deputy Manager of Mineral Resource Evaluation
for Antofagasta Minerals SA. The Competent
Person for Ore Reserves is Jaime Díaz (CP,
Chile), Expert Reserves Engineer for
Antofagasta Minerals SA.
The Group’s operations and projects are
subject to a comprehensive programme of
audits aimed at providing assurance in respect
of ore reserves and mineral resources
estimates. The audits are conducted by suitably
qualified Competent Persons from within an
operation, another operation of the Company or
from independent consultants. The ore reserves
and mineral resources estimates are the total
reserves and resources, with the Group’s
attributable share for each mine shown in the
‘Attributable Tonnage’ column. The Group’s
economic interest in each mine is disclosed in
the notes following the estimates on pages 243
to 244. The totals in the table may include some
small apparent differences due to rounding.
Definitions and categories of ore reserves and
mineral resources
A ‘Mineral Resource’ is a concentration or
occurrence of material of intrinsic economic
interest in or on the Earth’s crust in such form,
quality and quantity that there are reasonable
prospects for eventual economic extraction. The
location, quantity, grade, geological
characteristics and continuity of a Mineral
Resource are known, estimated or interpreted
from specific geological evidence and
knowledge. Mineral Resources are sub-divided,
in order of increasing geological confidence,
into Inferred, Indicated and Measured
categories.
An ‘Ore Reserve’ is the economically mineable
part of a Measured and/or Indicated Mineral
Resource. It includes diluting materials and
allowances for losses, which may occur when
the material is mined. Appropriate assessments
and studies have been carried out and include
consideration of and modification by realistically
assumed mining, metallurgical, economic,
marketing, legal, environmental, social and
governmental factors. These assessments
demonstrate at the time of reporting that
extraction could reasonably be justified. Ore
Reserves are sub-divided in order of increasing
confidence into Probable Ore Reserves and
Proved Ore Reserves.
A ‘Probable Ore Reserve’ is the economically
mineable part of an Indicated, and in some
circumstances, a Measured Mineral Resource. It
includes diluting materials and allowances for
losses which may occur when the material is
mined. Appropriate assessments and studies
have been carried out and include consideration
of and modification by realistically assumed
mining, metallurgical, economic, marketing,
legal, environmental, social and governmental
factors. These assessments demonstrate at the
time of reporting that extraction could
reasonably be justified.
A ‘Proved Ore Reserve’ is the economically
mineable part of a Measured Mineral Resource.
It includes diluting materials and allowances for
losses which may occur when the material is
mined. Appropriate assessments and studies
have been carried out and include consideration
of and modification by realistically assumed
mining, metallurgical, economic, marketing,
legal, environmental, social and governmental
factors. These assessments demonstrate at the
time of reporting that extraction could
reasonably be justified.
An ‘Inferred Mineral Resource’ is that part of a
Mineral Resource for which tonnage, grade and
mineral content can be estimated with a low
level of confidence. It is inferred from geological
evidence and assumed but not verified
geological and/or grade continuity. It is based
on information gathered through appropriate
techniques from locations such as outcrops,
trenches, pits, workings and drillholes which
may be limited or of uncertain quality and
reliability.
An ‘Indicated Mineral Resource’ is that part of
a Mineral Resource for which tonnage,
densities, shape, physical characteristics, grade
and mineral content can be estimated with a
reasonable level of confidence. It is based on
exploration, sampling and testing information
gathered through appropriate techniques from
locations such as outcrops, trenches, pits,
workings and drillholes. The locations are too
widely or inappropriately spaced to confirm
geological and/or grade continuity but are
spaced closely enough for continuity to be
assumed.
A ‘Measured Mineral Resource’ is that part of
a Mineral Resource for which tonnage,
densities, shape, physical characteristics, grade
and mineral content can be estimated with a
high level of confidence. It is based on detailed
and reliable exploration, sampling and testing
information gathered through appropriate
techniques from locations such as outcrops,
trenches, pits, workings and drillholes. The
locations are spaced closely enough to confirm
geological and grade continuity.
Antofagasta plc Annual Report 2021
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231
/ Ore reserves and mineral resources estimates continued
Ore reserves estimates
Group Subsidiaries
Ore reserves
Los Pelambres (see note (a))
Proved
Probable
Total
Centinela (see note (b))
Centinela Cathodes (oxides)
Proved
Probable
Subtotal
Centinela Concentrates (sulphides)
Proved
Probable
Subtotal
Proved
Probable
Total
Antucoya (see note (c))
Proved
Probable
Total
Tonnage
(millions of tonnes)
Copper
(%)
Molybdenum
(%)
Gold
(g/tonne)
Attributable Tonnage
(millions of tonnes)
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
612.3
678.8
343.8
331.7
956.1
1,010.5
0.60
0.57
0.59
0.60 0.020
0.020
0.58
0.019
0.019
0.59 0.020
0.020
0.05
0.05
0.05
0.05
0.05
0.05
367.4
407.3
206.3
199.0
573.7
606.3
76.4
93.3
222.9
230.5
299.3
323.9
545.6
571.6
1,138.7
1,166.5
1,684.3
1,738.1
622.0
665.0
1,361.6 1,397.0
1,983.6 2,062.0
435.9
402.3
309.6
308.4
745.5
710.7
0.54
0.34
0.39
0.45
0.39
0.41
0.46
0.38
0.40
0.33
0.30
0.32
0.53
0.35
0.40
0.46
0.38
0.41
0.47
0.38
0.41
0.34
0.30
0.32
53.5
156.1
65.3
161.4
209.5
226.7
0.012
0.013
0.012
0.012
0.012
0.012
0.17
0.12
0.14
0.18
0.12
381.9
400.2
797.1
816.5
0.14
1,179.0
1,216.7
435.4
465.5
953.1
977.9
1,388.5
1,443.4
305.1
216.7
281.6
215.9
521.9
497.5
Total Group Subsidiaries
3,685.3 3,783.2
0.43
0.44
2,484.1 2,547.2
Group Joint Ventures
Ore reserves
Zaldívar (see note (l))
Proved
Probable
Total
Tonnage
(millions of tonnes)
Copper
(%)
Molybdenum
(%)
Gold
(g/tonne)
Attributable Tonnage
(millions of tonnes)
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
366.6
344.2
84.3
123.2
450.8
467.5
0.45
0.34
0.43
0.46
0.41
0.45
183.3
42.1
172.1
61.6
225.4
233.7
Total Group
4,136.2 4,250.7
0.43
0.44
2,709.5 2,780.9
236
236
223322
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Corporate GovernanceFinancial Statements Strategic ReportOther Information
Mineral resources estimates (including ore reserves)
Group Subsidiaries
2021
2020
2021
Los Pelambres (see note (a))
Tonnage
(millions of tonnes)
Sulphides
Measured
Indicated
Measured + Indicated
Inferred
Total
Los Pelambres total
Measured
Indicated
Measured + Indicated
Inferred
Total
Centinela (see note (b))
Centinela Cathodes (Oxides)
Measured
Indicated
Measured + Indicated
Inferred
Subtotal
Centinela Concentrates (Sulphides)
Measured
Indicated
Measured + Indicated
Inferred
Subtotal
Centinela total
Measured
Indicated
Measured + Indicated
Inferred
Total
1,093.4
1,165.8
2,135.0
2,117.8
3,228.4 3,283.5
2,729.0 2,762.5
5,957.4 6,046.1
1,093.4
1,165.8
2,135.0
2,117.8
3,228.4 3,283.5
2,729.0 2,762.5
5,957.4 6,046.1
109.6
316.2
425.8
16.1
126.7
329.0
455.7
18.5
441.9
474.2
956.3
980.5
1,903.3
1,917.1
2,859.7 2,897.6
1,232.5
1,228.4
4,092.1 4,126.0
1,065.9
1,107.2
2,219.5 2,246.1
3,285.4 3,353.3
1,248.6
1,246.9
4,534.0 4,600.2
0.58
0.52
0.54
0.46
0.50
0.58
0.52
0.54
0.46
0.50
0.52
0.32
0.37
0.33
0.37
0.48
0.37
0.41
0.30
0.38
0.49
0.36
0.40
0.30
0.38
Copper
(%)
2020
0.58
0.52
0.54
0.46
0.50
0.58
0.52
0.54
0.46
0.50
0.51
0.33
0.38
0.34
0.37
0.49
0.37
0.41
0.31
0.38
0.49
0.36
0.41
0.31
0.38
Molybdenum
(%)
Gold
(g/tonne)
Attributable Tonnage
(millions of tonnes)
2021
2020
2021
2020
2021
2020
0.020
0.020
0.016
0.018
0.016
0.017
0.016
0.018
0.016
0.017
0.020
0.020
0.016
0.018
0.016
0.017
0.016
0.018
0.016
0.017
0.05
0.05
0.05
0.06
0.06
0.05
0.05
0.05
0.06
0.06
0.05
656.1
699.5
0.05
1,281.0
1,270.7
0.05
1,937.1
1,970.1
0.06
1,637.4
1,657.5
0.05 3,574.5
3,627.6
0.05
656.1
699.5
0.05
1,281.0
1,270.7
0.05
1,937.1
1,970.1
0.06
1,637.4
1,657.5
0.05 3,574.5
3,627.6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
76.7
221.3
298.0
11.3
309.3
88.7
230.3
319.0
12.9
331.9
0.013
0.013
0.013
0.011
0.013
0.013
0.013
0.013
0.011
0.012
0.19
0.12
0.14
0.08
0.12
0.19
669.4
686.4
0.12
1,332.3
1,342.0
0.14 2,001.8
2,028.3
0.08
862.7
859.9
0.13 2,864.5
2,888.2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
746.2
775.0
- 1,553.6
1,572.3
- 2,299.8
2,347.3
-
874.0
872.8
- 3,173.8
3,220.1
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/ Ore reserves and mineral resources estimates continued
Mineral resources estimates (including ore reserves) continued
Group Subsidiaries
2021
2020
2021
Tonnage
(millions of tonnes)
Antucoya (See Note (c))
Oxides
Measured
Indicated
Measured + Indicated
Inferred
Total
Antucoya total
Measured
Indicated
Measured + Indicated
Inferred
Total
Polo Sur (see note (d))
Oxides
Measured
Indicated
Measured + Indicated
Inferred
Subtotal
Sulphides
Measured
Indicated
Measured + Indicated
Inferred
Subtotal
Polo Sur total
Measured
Indicated
Measured + Indicated
Inferred
Total
Penacho Blanco (see note (e))
Oxides
Measured
Indicated
Measured + Indicated
Inferred
Subtotal
Sulphides
Measured
Indicated
Measured + Indicated
Inferred
Subtotal
Penacho Blanco total
Measured
Indicated
Measured + Indicated
Inferred
Total
465.4
388.9
854.3
337.4
1,191.6
465.4
388.9
854.3
337.4
1,191.6
32.4
69.5
101.9
6.6
108.5
281.4
654.9
936.4
612.1
1,548.5
313.8
724.5
1,038.3
618.7
1,657.0
-
-
-
18.3
18.3
-
-
-
321.9
321.9
-
-
-
340.2
340.2
427.0
390.3
817.3
418.4
1,235.8
427.0
390.3
817.3
418.4
1,235.8
32.4
69.5
101.9
6.6
108.5
281.4
654.9
936.4
612.1
1,548.5
313.8
724.5
1,038.3
618.7
1,657.0
-
-
-
18.3
18.3
-
-
-
321.9
321.9
-
-
-
340.2
340.2
0.33
0.30
0.31
0.26
0.30
0.33
0.30
0.31
0.26
0.30
0.49
0.40
0.43
0.41
0.43
0.39
0.34
0.35
0.27
0.32
0.40
0.34
0.36
0.27
0.33
-
-
-
0.29
0.29
-
-
-
0.38
0.38
-
-
-
0.37
0.37
Copper
(%)
2020
0.33
0.30
0.31
0.26
0.30
0.33
0.30
0.31
0.26
0.30
0.49
0.40
0.43
0.41
0.43
0.39
0.34
0.35
0.27
0.32
0.40
0.34
0.36
0.27
0.33
-
-
-
0.29
0.29
-
-
-
0.38
0.38
-
-
-
0.37
0.37
238
238
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Antofagasta plc Annual Report 2021
Molybdenum
(%)
Gold
(g/tonne)
Attributable Tonnage
(millions of tonnes)
2021
2020
2021
2020
2021
2020
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
325.7
272.2
598.0
236.2
834.1
325.7
272.2
598.0
236.2
834.1
32.4
69.5
101.9
6.6
108.5
0.007
0.006
0.006
0.005
0.006
0.007
0.006
0.006
0.005
0.006
0.07
0.05
0.06
0.04
0.05
0.07
0.05
0.06
0.04
0.05
281.4
654.9
936.4
612.1
1,548.5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.002
0.002
-
-
-
0.002
0.002
-
-
-
0.05
0.05
-
-
-
0.05
0.05
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
313.8
-
724.5
- 1,038.3
-
618.7
- 1,657.0
-
-
-
-
-
-
-
-
9.3
9.3
-
-
-
164.2
164.2
-
-
-
173.5
173.5
298.9
273.2
572.1
292.9
865.0
298.9
273.2
572.1
292.9
865.0
32.4
69.5
101.9
6.6
108.5
281.4
654.9
936.4
612.1
1,548.5
313.8
724.5
1,038.3
618.7
1,657.0
-
-
-
9.3
9.3
-
-
-
164.2
164.2
-
-
-
173.5
173.5
Corporate GovernanceFinancial Statements Strategic ReportOther Information
Group Subsidiaries
2021
2020
2021
Tonnage
(millions of tonnes)
Mirador (see note (f))
Oxides
Measured
Indicated
Measured + Indicated
Inferred
Subtotal
Sulphides
Measured
Indicated
Measured + Indicated
Inferred
Subtotal
Mirador Total
Measured
Indicated
Measured + Indicated
Inferred
Total
Los Volcanes (see note (g))
Oxides
Measured
Indicated
Measured + Indicated
Inferred
Subtotal
Sulphides
Measured
Indicated
Measured + Indicated
Inferred
Subtotal
Los Volcanes total
Measured
Indicated
Measured + Indicated
Inferred
Total
Brujulina (see note (h))
Oxides
Measured
Indicated
Measured + Indicated
Inferred
Total
Copper
(%)
2020
0.23
0.27
0.27
0.26
0.27
0.34
0.28
0.32
0.26
0.31
0.33
0.28
0.30
0.26
0.30
-
-
-
0.31
0.31
-
-
-
Molybdenum
(%)
Gold
(g/tonne)
Attributable Tonnage
(millions of tonnes)
2021
2020
2021
2020
2021
2020
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.006
0.008
0.007
0.008
0.007
0.006
0.008
0.007
0.009
0.007
0.12
0.07
0.11
0.06
0.10
0.13
0.08
0.11
0.05
0.10
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1.6
17.6
19.2
7.6
26.8
35.4
19.9
55.3
4.0
59.2
36.9
37.5
74.4
11.6
86.0
-
-
-
15.7
15.7
-
-
-
1.3
15.8
17.1
7.9
25.0
35.2
20.2
55.3
4.9
60.2
36.5
35.9
72.4
12.8
85.2
-
-
-
15.7
15.7
-
-
-
2.0
22.6
24.6
9.7
34.3
35.4
19.9
55.3
4.0
59.2
37.4
42.5
79.8
13.7
93.5
-
-
-
1.7
20.2
21.9
10.2
32.1
35.2
20.2
55.3
4.9
60.2
36.9
40.4
77.2
15.0
92.3
-
-
-
0.29
0.27
0.28
0.27
0.27
0.34
0.28
0.31
0.25
0.31
0.33
0.28
0.30
0.26
0.30
-
-
-
30.8
30.8
30.8
30.8
0.31
0.31
-
-
-
-
-
-
-
-
-
1,873.4
1,873.4
1,873.4
1,873.4
0.50
0.50
0.50
0.50
0.011
0.011
0.011
0.011
0.03
0.03
0.03
0.03
955.4
955.4
955.4
955.4
-
-
-
-
-
-
-
-
-
-
-
-
1,904.2
1,904.2
1,904.2
1,904.2
0.50
0.50
0.50
0.50
-
-
-
-
-
-
-
-
-
-
-
-
87.2
87.2
87.2
87.2
0.49
0.49
0.49
0.49
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
971.1
971.1
971.1
971.1
-
-
-
-
-
-
44.5
44.5
44.5
44.5
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/ Ore reserves and mineral resources estimates continued
Mineral resources estimates (including ore reserves) continued
Group Subsidiaries
Brujulina total
Measured
Indicated
Measured + Indicated
Inferred
Total
Sierra (see note (i))
Oxides
Measured
Indicated
Measured + Indicated
Inferred
Total
Sierra total
Measured
Indicated
Measured + Indicated
Inferred
Total
Cachorro (see note (j))
Oxides
Measured
Indicated
Measured + Indicated
Inferred
Subtotal
Sulphides
Measured
Indicated
Measured + Indicated
Inferred
Subtotal
Cachorro total
Measured
Indicated
Measured + Indicated
Inferred
Total
Tonnage
(millions of tonnes)
2020
2021
-
-
-
-
-
-
Copper
(%)
2020
-
-
-
2021
-
-
-
87.2
87.2
87.2
87.2
0.49
0.49
0.49
0.49
-
-
-
-
-
-
-
-
-
-
-
-
52.0
52.0
52.0
52.0
0.69
0.69
0.69
0.69
-
-
-
-
-
-
-
-
-
-
-
-
52.0
52.0
52.0
52.0
0.69
0.69
0.69
0.69
-
-
-
12.4
12.4
-
-
-
129.2
129.2
-
-
-
141.6
141.6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1.23
1.23
-
-
-
1.21
1.21
-
-
-
1.21
1.21
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Molybdenum
(%)
Gold
(g/tonne)
Attributable Tonnage
(millions of tonnes)
2021
2020
2021
2020
2021
2020
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
44.5
44.5
44.5
44.5
-
-
-
-
-
-
52.0
52.0
52.0
52.0
-
-
-
-
-
-
52.0
52.0
52.0
52.0
-
-
-
12.4
12.4
-
-
-
129.2
129.2
-
-
-
141.6
141.6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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Group Subsidiaries
2021
2020
2021
Twin Metals (see note (k))
Tonnage
(millions of tonnes)
Copper
(%)
2020
2021
Maturi
Measured
Indicated
Measured + Indicated
Inferred
Subtotal
Maturi South West
Measured
Indicated
Measured + Indicated
Inferred
Subtotal
Birch Lake
Measured
Indicated
Measured + Indicated
Inferred
Subtotal
Spruce Road
Measured
Indicated
Measured + Indicated
Inferred
Subtotal
Twin Metals total
Measured
Indicated
Measured + Indicated
Inferred
Total
Group subsidiaries
Measured + Indicated
Inferred
291.4
818.3
291.4
818.3
1,109.7
1,109.7
534.1
534.1
1,643.8
1,643.8
-
93.1
93.1
29.3
-
93.1
93.1
29.3
122.4
122.4
-
90.4
90.4
217.0
307.4
-
90.4
90.4
217.0
307.4
-
-
-
-
-
-
435.5
435.5
435.5
435.5
291.4
291.4
1,001.8
1,001.8
1,293.2
1,293.2
1,215.9
1,215.9
2,509.1
2,509.1
9,779.5 9,862.9
8,688.4
8,661.1
Group Subsidiaries total
18,467.9 18,524.0
0.63
0.57
0.59
0.50
0.56
-
0.48
0.48
0.43
0.47
-
0.52
0.52
0.46
0.48
-
-
-
0.43
0.43
0.63
0.56
0.57
0.47
0.52
0.46
0.44
0.45
0.63
0.57
0.59
0.50
0.56
-
0.48
0.48
0.43
0.47
-
0.52
0.52
0.46
0.48
-
-
-
0.43
0.43
0.63
0.56
0.57
0.47
0.52
0.46
0.42
0.44
0.20
0.18
0.19
0.16
0.18
-
0.17
0.17
0.15
0.17
-
0.16
0.16
0.15
0.15
-
-
-
0.16
0.16
0.20
0.18
0.18
0.16
0.17
-
-
-
Nickel
(%)
2020
0.20
0.18
0.19
0.16
0.18
-
0.17
0.17
0.15
0.17
-
0.16
0.16
0.15
0.15
-
-
-
0.16
0.16
0.20
0.18
0.18
0.16
0.17
-
-
-
TPM
(g/tonne Au+Pt+Pd)
Attributable Tonnage
(millions of tonnes)
2021
2020
2021
2020
0.57
0.57
0.57
0.57
0.57
-
0.31
0.31
0.26
0.30
-
0.87
0.87
0.64
0.70
-
-
-
-
-
0.57
0.57
0.57
0.37
0.47
-
-
-
0.57
0.57
0.57
0.57
224.6
771.6
996.1
483.2
224.6
771.6
996.1
483.2
0.57
1,479.3
1,479.3
-
0.31
0.31
0.26
0.30
-
0.87
0.87
0.64
0.70
-
-
-
-
-
-
65.2
65.2
20.5
85.7
-
63.3
63.3
151.9
215.2
-
-
-
-
65.2
65.2
20.5
85.7
-
63.3
63.3
151.9
215.2
-
-
-
304.8
304.8
304.8
304.8
0.57
0.57
0.57
0.37
224.6
900.0
224.6
900.0
1,124.6
1,124.6
960.4
960.4
0.47 2,085.0
2,085.0
- 7,072.2
7,124.9
- 5,720.9
5,656.3
- 12,793.2
12,781.2
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/ Ore reserves and mineral resources estimates continued
Mineral resources estimates (including ore reserves) continued
Tonnage
(millions of tonnes)
Group Join Ventures
2021
2020
2021
Zaldívar (see note (l))
Oxides & Secondary Sulphides
Measured
Indicated
Measured + Indicated
Inferred
Subtotal
Primary Sulphides
Measured
Indicated
Measured + Indicated
Inferred
Subtotal
Zaldívar total
Measured
Indicated
Measured + Indicated
Inferred
660.5
168.7
829.2
23.0
852.2
119.5
309.8
429.3
28.3
555.4
242.3
797.7
33.8
831.5
104.6
305.3
409.9
27.4
457.6
437.4
780.0
478.5
660.0
547.6
1,258.5
1,207.6
51.3
61.2
Group Joint Ventures total
1,309.9
1,268.8
0.40
0.30
0.38
0.30
0.38
0.41
0.40
0.40
0.37
0.40
0.40
0.36
0.39
0.34
0.38
Tonnage
(millions of tonnes)
Total Group
2021
2020
2021
Measured + Indicated
Inferred
Total
11,038.1
11,070.6
8,739.7
8,722.3
19,777.8
19,792.8
0.45
0.43
0.44
Copper
(%)
2020
0.40
0.35
0.39
0.43
0.39
0.40
0.39
0.40
0.36
0.39
0.40
0.38
0.39
0.40
0.39
Copper
(%)
2020
0.45
0.42
0.44
Molybdenum
(%)
Gold
(g/tonne)
Attributable Tonnage
(millions of tonnes)
2021
2020
2021
2020
2021
2020
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
330.2
84.4
414.6
11.5
426.1
59.8
154.9
214.7
14.1
228.8
390.0
239.3
629.3
25.7
654.9
277.7
121.1
398.8
16.9
415.7
52.3
152.7
205.0
13.7
218.7
330.0
273.8
603.8
30.6
634.4
Molybdenum
(%)
Gold
(g/tonne)
Attributable Tonnage
(millions of tonnes)
2021
2020
2021
2020
2021
2020
-
-
-
-
-
-
-
-
-
-
7,701.5
7,728.7
- 5,746.6
5,686.9
- 13,448.1
13,415.6
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Notes to ore reserves and mineral resources estimates
The ore reserves mentioned in this report were determined considering specific cut-off grades for each mine and using a long-term copper price of
$3.10/lb (unchanged from 2020), $11.00/lb molybdenum ($9.50/lb in 2020) and $1,500/oz gold (unchanged from 2020), unless otherwise noted.
These same values have been used for copper equivalent (CuEq) estimates, where appropriate.
In order to ensure that the stated resources represent mineralisation that has “reasonable prospects for eventual economic extraction” (JORC Code)
the resources are enclosed within pit shells that were optimised based on measured, indicated and inferred resources and considering a copper price
of $3.60/lb (unchanged from 2020). Mineralisation estimated outside these pit shells is not included in the resource figures.
Group policy on auditing of resource and reserve estimates is that prior to first publication, an independent external audit is done. External audits are
also done on resources and reserves for any material changes (incorporation of a significant amount of drillhole information, for instance) or every
three to five years, whichever comes first. All the resource models that support the reserve estimates and reserves have been audited as per Group
policy, with an audit carried out during 2021 on the Cachorro resource model. All resource and reserve estimates have been found to comply with
the JORC Code (2012).
LLooss PPeellaammbbrreess
aa))
Los Pelambres is 60% owned by the Group. The cut-off grade applied to the determination of mineral resources is 0.35% copper, while the cut-off
grade applied for mineral reserves is variable over 0.35% copper. Ore reserves have decreased 54 million tonnes due principally to depletion in the
period and reflects the remaining capacity of the existing tailing dams, limiting the amount of mineral resource that can be converted into ore
reserves. Mineral resources decreased overall by a net 89 million tonnes, including depletion. Due to the new drilling – 34 drillholes for a total of
9,042 m – to improve the quality of resources, measured and indicated resources increased by 12 million tonnes while inferred resources decreased
by 25 million tonnes.
bb)) CCeennttiinneellaa ((CCoonncceennttrraatteess aanndd CCaatthhooddeess))
Centinela is 70% owned by the Group and consists of Centinela Concentrates (Esperanza + Esperanza Sur and Encuentro Sulphide, mostly sulphide
porphyry deposits) and Centinela Cathodes (Tesoro Central and Tesoro Sur, oxide deposits, including the oxide portion of the Mirador, Encuentro and
Llano deposits). The cut-off grade applied to the determination of ore reserves for Centinela Concentrates is 0.15% equivalent copper, with 0.15%
copper used as a cut-off grade for mineral resources. The cut-off grades used at Centinela Cathodes are 0.20% copper for ore reserves and 0.15%
copper for mineral resources.
The Centinela Cathodes ore reserves have decreased by a net 25 million tonnes, due mainly to depletion and to higher processing costs. Centinela
Cathodes ore reserves are made up of 185 million tonnes at 0.47% copper of heap leach ore and 114 million tonnes at 0.26% copper of ROM ore.
Centinela Cathodes mineral resources decreased by a net 34 million tonnes, due mainly to depletion and higher processing costs.
Centinela Concentrates ore reserves have decreased by a net 54 million tonnes, including depletion of 25 million tonnes and the remaining due to
higher ore rehandling from stockpiles.
cc)) AAnnttuuccooyyaa
Antucoya is 70% owned by the Group. The ore reserve cut-off grade is 0.16% copper, while the cut-off grade for mineral resources is 0.15% copper.
For 2021 the mineral resource model has been updated with 44 drillholes for a total of 11,000 metres. Ore reserves have increased by a net 35
million tonnes, including a depletion of 33 million tonnes and 10 million tonnes less due to revised economic parameters, offset by an increase in
resources converted to reserves of 78 million tonnes. Mineral resources have decreased by a net 44 million tonnes, due mostly to depletion.
dd)) PPoolloo SSuurr
Polo Sur is 100% owned by the Group. The cut-off grade applied to the determination of mineral resources for both oxides and sulphides is 0.20%
copper. The 2021 resource model has not been updated.
ee)) PPeennaacchhoo BBllaannccoo
Penacho Blanco is 51% owned by the Group. The cut-off grade applied to the determination of mineral resources for both oxides and sulphides is
0.20% copper. For 2021 the resource model has not been updated.
ff)) MMiirraaddoorr
Mirador is 100% owned by the Group. A portion of Mirador Oxides is subject to an agreement between the Group and Centinela, whereby Centinela
purchased the rights to mine the oxide ore reserves within an identified area. The mineral resources for Mirador Oxides subject to the agreement
with Centinela are included in the Centinela Cathodes section. The resources not subject to the agreement are reported in this section. The cut-off
grade applied to the determination of mineral resources for oxides is 0.15% copper and for sulphides is 0.20% copper. Mineral resources have
increased by a net 1.2 million tonnes due to lower mining and processing costs.
LLooss VVoollccaanneess
gg))
Los Volcanes is 51% owned by the Group. The cut-off grade applied to the determination of ore reserves and mineral resources is 0.20% copper. For
2021 the mineral resource model has not been updated.
hh)) BBrruujjuulliinnaa
Brujulina is 51% owned by the Group. The cut-off grade applied to the determination of mineral resources is 0.30% copper. For 2021 the mineral
resource model has not been updated.
SSiieerrrraa
ii))
Sierra is 100% owned by the Group. The cut-off grade applied to the determination of mineral resources is 0.30% copper. For 2021 the mineral
resource model has not been updated.
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243
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239
/ Ore reserves and mineral resources estimates continued
CCaacchhoorrrroo
Notes to ore reserves and mineral resources estimates continued
jj))
Cachorro is 100% owned by the Group. It is a maiden mineral resource report, supported by 105,042 metres of drilling from 176 drillholes. The cut-
off grade applied to the determination of mineral resources for both oxides and sulphides is 0.50% copper. This project corresponds to the Group´s
last discovery generated by the greenfield exploration programme based upon exploratory methods in gravel covered areas. It will become one of the
most important manto type deposits in the coastal metallogenic belt of northern Chile. The inferred mineral resource estimated for the central body in
the year 2021, represents just a part of the total potential resource of the project.
kk)) TTwwiinn MMeettaallss MMiinnnneessoottaa LLLLCC
Twin Metals Minnesota LLC ("Twin Metals") is owned 100% by the Group.
Twin Metals has a 70% interest in the Birch Lake Joint Venture ("BLJV"), which holds the Birch Lake, Spruce Road and Maturi Southwest deposits,
as well as a portion of the main Maturi deposit. With these interests taken into consideration, Twin Metals owns 83.1% of the resource. For 2021 the
mineral resource model has not been updated.
The cut-off grade applied to the determination of mineral resources is 0.3% copper, which when combined with credits from nickel, platinum,
palladium and gold, is deemed appropriate for an underground operation. In the resource table ‘TPM’ (Total Precious Metals) refers to the sum of
platinum, palladium and gold values in grammes per tonne. The TPM value of 0.57 g/tonne for the Maturi resource estimate is made up of 0.15
g/tonne platinum, 0.34 g/tonne palladium and 0.08 g/tonne gold. The TPM value of 0.30 g/tonne for the Maturi Southwest resource estimate is made
up of 0.08 g/tonne platinum, 0.17 g/tonne palladium and 0.05 g/tonne gold. The TPM value of 0.70 g/tonne for the Birch Lake resource estimate is
made up of 0.19 g/tonne platinum, 0.41 g/tonne palladium and 0.10 g/tonne gold. The Spruce Road resource estimate does not include TPM values as
they were not assayed.
As described in the Strategic report section, TMM is currently evaluating its legal options in light of the federal lease cancellation and rejection of its
preference right lease applications (PRLAs) and prospecting permit applications (PPAs).
The PRLAs and federal mineral leases form a significant proportion of the mineral resources contained within Twin Metals’ current project plan. If
TMM is unsuccessful reverting the decisions on the federal leases 1352 and 1353 and the PRLAs through litigation, it will not have entitlement to the
mineral resources associated with those mineral licences.
ZZaallddíívvaarr
ll))
Minera Zaldívar is 50% owned by the Group. Heap leaching (HL) and dump leaching (DL) materials are defined based on total copper cut-off grades
(COG). The cut-off grade applied to the determination of ore reserves for Heap Leach ore is 0.30% copper, while the cut-off grade for dump leach
material is 0.21% copper. For resources the COG is 0.21% for HL and 0.10% for DL, throughout the LOM period. The COG applied to the primary
mineral resources is 0.30%. For the 2021 statement report, the resources model was updated through the addition of geological and grade
information obtained from 18,191m new drillholes. The mineral resources increased by 41 million tonnes because of the combined effects of depletion
and new information added. Ore reserves have decreased by a net 17 million tonnes, due mainly to depletion and the remaining decrease is due to
higher mining and processing costs.
In the southern part of the deposit (Phase 13), the final pit impacts a portion of Minera Escondida mine property and some infrastructures owned by
third parties (road, railway, powerline, and pipeline). Mining of this pit phase is subject to agreements or easements to access these areas and
relocate this infrastructure.
mm)) AAnnttoommiinn 22 aanndd AAnnttoommiinn IInnvveessttoorrss
The Group has an approximately 51% interest in two indirect subsidiaries, Antomin 2 Limited (“Antomin 2”) and Antomin Investors Limited (“Antomin
Investors”), which own several copper exploration properties in Chile’s Antofagasta Region and Coquimbo Region. These include, among others,
Penacho Blanco, Los Volcanes and Brujulina. The remaining approximately 49% of Antomin 2 and Antomin Investors is owned by Mineralinvest
Establishment (“Mineralinvest”), a company controlled by E. Abaroa Foundation, in which members of the Luksic family are interested. Further details
are set out in Note 34(c) to the financial statements.
244
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AMSA
Antofagasta Minerals SA, a wholly-owned
subsidiary of the Group incorporated in Chile,
which acts as the corporate centre for the Mining
division.
Contained
copper
Continental
water
Annual Report
The Annual Report and Financial Statements
of Antofagasta plc.
Antucoya
Minera Antucoya, a 70%-owned subsidiary
incorporated in Chile.
Banco de Chile
A commercial bank that is a subsidiary
of Quiñenco.
Barrick Gold
Brownfield
project
By-products
(credits in
copper
concentrates)
Capex
Cash costs
CDP
Centinela
Barrick Gold Corporation, incorporated in
Canada and our joint venture partner in Zaldívar
and Tethyan.
A development or exploration project in the
vicinity of an existing operation.
Products obtained as a result of copper
processing. Los Pelambres and Centinela
Concentrates receive credit for the gold and
silver content in the copper concentrate sold.
Los Pelambres and Centinela also produce
molybdenum concentrate.
Capital expenditure.
A measure of the cost of operating production
expressed in terms of US dollars per pound
of payable copper produced. Cash costs are
stated net of by-product credits and include
treatment and refining charges for concentrates
for Los Pelambres and Centinela. Cash costs
exclude depreciation, financial income and
expenses, hedging gains and losses, exchange
gains and losses, and corporation tax.
Carbon Disclosure Project.
Minera Centinela SA, a 70%-owned subsidiary
incorporated in Chile that holds the Centinela
Concentrates and Centinela Cathodes operations.
CGU
Cash-Generating Unit.
Chilean peso
CO2e
Comex
Chilean currency.
Carbon dioxide equivalent
A commodity exchange that trades metals such
as gold, silver, copper and aluminium.
Companies Act
2006
Principal legislation for United Kingdom
company law.
Company
Antofagasta plc.
Concentrate
The product of a physical concentration process,
such as flotation or gravity concentration, which
involves separating ore minerals from unwanted
waste rock. Concentrates require subsequent
processing (such as smelting or leaching)
to break down or dissolve the ore minerals and
obtain the desired elements, usually metals.
Centinela Mining
District
Copper district located in the Antofagasta region
of Chile, where Centinela is located.
Flotation
The proportion or quantity of copper contained
in a given quantity of ore or concentrate.
Water that comes from the interior of land
masses including rain, snow, streams, rivers,
lakes and groundwater.
Copper cathode
Refined copper produced by electrolytic refining
of impure copper by electrowinning.
Corporate
Governance
Code
Cut-off grade
Directors
Duluth
EBITDA
EIA
Encuentro
The UK Corporate Governance Code is a set
of principles of good corporate governance, most
of which have their own more detailed provisions
published by the Financial Reporting Council,
most recently updated in 2018 and which applies
to accounting periods beginning on or after
1 January 2019.
The lowest grade of mineralised material
considered economic to process and used
in the calculation of ore reserves and
mineral resources.
The Directors of the Company.
Duluth Metals Limited, a wholly-owned subsidiary
of Antofagasta plc acquired on 28 January 2015
through which the Group holds the Twin
Metals Project.
Earnings Before Interest, Tax, Depreciation
and Amortisation.
Environmental Impact Assessment.
Copper oxide and sulphide prospect in the
Centinela Mining District.
EPS
Earnings per share.
Esperanza Sur
Copper deposit in the Centinela Mining District.
EU
FCA
FCAB
FTSE All-Share
Index
FTSE350 Index
GAAP
European Union.
Financial Conduct Authority. UK regulatory body.
Ferrocarril de Antofagasta a Bolivia, the
corporate name of our Transport division.
A process of separation by which chemicals in
solution are added to finely crushed materials,
some of which are attracted to bubbles and float,
while others sink, which results in the production
of concentrate.
A market-capitalisation weighted index
representing the performance of all eligible
companies listed on the London Stock
Exchange’s main market.
A share index of the 350 companies listed
on the London Stock Exchange with the highest
market capitalisation.
Generally Accepted Accounting Practice
or Generally Accepted Accounting Principles,
a collection of commonly-followed accounting
rules and standards for financial reporting.
GHG
Greenhouse Gas.
Antofagasta plc Annual Report 2021
245
/ Glossary and definitions continued
Government
The Government of the Republic of Chile.
LTIP
Grade A copper
cathode
Greenfield
project
Group
Heap-leaching
or leaching
Hedge
accounting
IAS
IASB
ICMM
IFRIC
IFRS
Inversiones
Hornitos
IVA
JORC
KPI
ktpd
LIBOR
Life-of-Mine
(“LOM”)
Highest-quality copper cathode, 99.99% pure.
The development or exploration of a new project
at a previously undeveloped site.
Antofagasta plc and its subsidiary companies
and share of joint ventures.
A process for the recovery of copper from ore,
generally oxides. The crushed material is laid on
a slightly sloping, impermeable pad and leached
by uniformly trickling (gravity fed) chemical
solution through the heaps to collection ponds.
The metal is then recovered from the solution
through the SX-EW process.
Accounting treatment for derivative financial
instruments permitted under IFRS 9 “Financial
Instruments”, which recognises the offsetting
effects on profit or loss of changes in the fair values
of a hedging instrument and the hedged item.
International Accounting Standards.
International Accounting Standards Board.
International Council on Mining and Metals.
International Financial Reporting Standards
Interpretations Committee.
International Financial Reporting Standards.
Inversiones Hornitos SA owns the 150MW
Hornitos thermoelectric power plant in Mejillones
in Chile’s Antofagasta region. The Group entered
into an agreement to dispose of its 40% interest
in April 2020, effective in 2021.
Impuesto al Valor Agregado, or Chilean Value
Added Tax (Chilean VAT).
The Australasian Joint Ore Reserves Committee.
Key performance indicator.
Thousand tonnes per day.
London Inter Bank Offered Rate.
The remaining life of a mine expressed in years,
calculated by reference to scheduled production
rates (ie comparing the rate at which ore is
expected to be extracted from the mine to
current defined reserves).
LME
London Metal Exchange.
Los Pelambres
Minera Los Pelambres, a 60%-owned subsidiary
incorporated in Chile.
LSE
LTIFR
London Stock Exchange.
Lost Time Injury Frequency Rate. The number
of accidents with lost time during the year per
million hours worked.
246
Antofagasta plc Annual Report 2021
Marubeni
Michilla
Mineral
resources
Long Term Incentive Plan in which the Group’s
CEO, Executive Committee members and other
senior managers participate.
Marubeni Corporation, the Group’s 30% minority
partner in Centinela and Antucoya.
Minera Michilla SA, a 99.9%-owned subsidiary
incorporated in Chile which was closed at
the end of 2015 and sold in November 2016.
Material of intrinsic economic interest occurring
in such form and quantity that there are
reasonable prospects for eventual economic
extraction. Mineral resources are stated inclusive
of ore reserves, as defined by JORC.
MW
Megawatts (one million watts).
Net cash cost
Gross cash costs less by-product credits.
Open pit
Ore
Ore grade
Ore reserves
Oxide and
sulphide ores
Mine working or excavation that is open to
the surface.
Rock from which metal(s) or mineral(s) can be
economically and legally extracted.
The relative quantity, or percentage, of
metal content in an ore body or quantity
of processed ore.
Part of mineral resources for which appropriate
assessments have been carried out to demonstrate
that at a given date extraction could be
reasonably justified. These include consideration
of and modification by realistically assumed
mining, metallurgical, economic, marketing, legal,
environmental, social and governmental factors.
Different kinds of ore containing copper. Oxide
ore occurs on the weathered surface of ore-rich
lodes and normally results in the production
of cathode copper through a heap-leaching
process. Sulphide ore is an unweathered parent
ore normally treated using a flotation process
to produce concentrate which then requires
smelting and refining to produce cathode copper.
Payable copper
The proportion or quantity of contained
copper for which payment is received
after metallurgical deduction.
PEP
Platts
Porphyry
Politically Exposed Person, an individual who
holds or has held a prominent public position
in a national or international organisation within
the last year.
A provider of energy and metals information and
source of benchmark price assessments.
A large body of rock which contains
disseminated chalcopyrite and other sulphide
minerals. Such a deposit is mined in bulk on
a large scale, generally in open pits, for copper
and its by-products.
Corporate GovernanceFinancial Statements Strategic ReportOther Information Tailings dam or
tailings storage
facility (TSF)
Construction used to deposit the rock waste
which remains as a result of the concentrating
process after the recoverable minerals have
been extracted in concentrate form.
TC/RCs
TCFD
Tethyan
Tonne
tpd
TSR
Treatment and refining charges, being terms
used to set the smelting and refining charge
or margin for processing copper concentrate and
normally set on either an annual or spot basis.
Task Force on Climate-related Financial
Disclosures.
Tethyan Copper Company Limited, a 50-50
joint venture with Barrick Gold incorporated
in Australia.
Metric tonne.
Tonnes per day, normally with reference to the
quantity of ore processed over a given period
of time expressed as a daily average.
Total Shareholder Return, being the movement
in the Company’s share price plus reinvested
dividends.
Twin Metals
Minnesota
Project
A copper, nickel and platinum group metals
underground-mining project located in
Minnesota, US.
UK
UKLA
United Kingdom.
United Kingdom Listing Authority, part of
the FCA.
Underground
mine
Natural or man-made excavation under the
surface of the ground.
US
US dollar
Zaldívar
United States.
United States currency.
Compañía Minera Zaldívar SpA is a 50-50 joint
venture with Barrick Gold and is operated by
the Company.
PPA
Provisional
pricing
Quiñenco
Ramsar
Convention
RCA
Realised prices
Reko Diq
Run-of-Mine
(“ROM”)
SDGs
SERNAGEOMIN
SHFE
SONAMI
Sterling
Stockpile
SVS
SX-EW
Power Purchase Agreement.
A sales term in several copper and molybdenum
concentrate sale agreements and cathodes sale
agreements that provides for provisional pricing
of sales at the time of shipment, with final pricing
being based on the monthly average LME copper
price or monthly average molybdenum price
for specific future periods, normally ranging from
30 to 180 days after delivery to the customer.
Quiñenco SA, a Chilean financial and industrial
group listed on the Santiago Stock Exchange and
controlled by a foundation in which members of
the Luksic family are interested.
International treaty for the conservation and
sustainable utilisation of wetlands.
Resolución de Calificación Ambiental,
Environmental Approval Resolution.
Effective sale price achieved comparing revenues
(grossed up for treatment and refining charges
for concentrate) with sales volumes.
A copper-gold deposit in Pakistan, previously
a subsidiary of Tethyan.
A process for the recovery of copper from ore,
typically used for low-grade ores. The mined,
uncrushed ore is leached with a chemical
solution. The metal is then recovered from
the solution through the SX-EW process.
The United Nations’ Sustainable Development
Goals, which were adopted by all member
states in 2015.
Servicio Nacional de Geología y Minería,
a government agency that provides geological
and technical advice and regulates the mining
industry in Chile.
Shanghai Futures Exchange.
Sociedad Nacional de Minería. Institution that
represents the mining industry in Chile, for large,
medium and small scale, metallic and non-
metallic mining companies.
Pounds sterling, UK currency.
Material extracted and piled for future use.
Superintendencia de Valores y Seguros de Chile,
the Chilean securities regulator.
Solvent extraction and electrowinning. A process
for extracting metal from an ore and producing
pure metal. First the metal is leached into
solution, the resulting solution is then purified
in the solvent-extraction process before being
treated in an electrochemical process
(electrowinning) to recover cathode copper.
Antofagasta plc Annual Report 2021
247
Shareholder information
Dividends
Details of dividends proposed in relation to the year are given
in the Directors’ Report on page 161, and in Note 14 to the
Financial Statements.
If approved at the Annual General Meeting, the final dividend of
118.9 cents will be paid on 13 May 2022 to ordinary shareholders
that are on the register at the close of business on 22 April 2022.
Shareholders can elect (on or before 25 April 2022) to receive this
final dividend in US dollars, Sterling or Euro, and the exchange rate,
which will be applied to final dividends to be paid in Sterling or Euro,
will be set as soon as reasonably practicable after that date, which is
currently anticipated to be on 28 April 2022.
Further details of the currency election timing and process (including
the default currency of payment) are available on the Antofagasta plc
website (antofagasta.co.uk) or from the Company’s registrar,
Computershare Investor Services PLC on +44 37 0702 0159.
Dividends are paid gross without deduction of United Kingdom
income tax. Antofagasta plc is a resident in the United Kingdom for
tax purposes.
Annual General Meeting
The Annual General Meeting will be held as a hybrid meeting at Church
House Conference Centre, Dean’s Yard, Westminster, London SW1P
3NZ and electronically by live broadcast using the Lumi platform at
2.00 pm on Wednesday 11 May 2022. The formal notice of the Annual
General Meeting and resolutions to be proposed are set out in the
Notice of Annual General Meeting.
London Stock Exchange listing and share price
The Company’s shares are listed on the London Stock Exchange.
Share capital
Details of the Company’s ordinary share capital are given in Note 30
to the Financial Statements.
Currency abbreviations
$
US dollar
$000
$m
£
£000
£m
p
C$
C$m
Ch$
Ch$000
Ch$m
Thousand US dollars
Million US dollars
Pound sterling
Thousand pounds sterling
Million pounds sterling
Pence sterling
Canadian dollar
Million Canadian dollars
Chilean peso
Thousand Chilean pesos
Million Chilean pesos
Definitions and conversion
of weights and measures
lb
Pound
oz
A troy ounce
1 troy ounce
31.1 grammes
’000 m3
Thousand cubic metres
1 kilogramme
2.2046 pounds
1 tonne
2,204.6 pounds or 1,000 kilogrammes
’000 tonnes
Thousand metric tonnes
1 kilometre
0.6214 miles
GL
Gigalitre
1 megalitre
Thousand cubic metres
1 GL
Thousand megalitres
Chemical symbols
Copper
Cu
Mo
Au
Ag
Molybdenum
Gold
Silver
248
Antofagasta plc Annual Report 2021
Corporate GovernanceFinancial Statements Strategic ReportOther Information Shareholder calendar 2022
19 January 2022
Q4 2021 Production Report
22 February 2022
Full Year 2021 Results Announcement
21 April 2022
Q1 2022 Production Report
21 April 2022
2021 Final Dividend – Ex Dividend date
22 April 2022
2021 Final Dividend – Record date
25 April 2022
28 April 2022
11 May 2022
13 May 2022
2021 Final Dividend – Final date for receipt
of Currency Elections
2021 Final Dividend – Pound sterling/Euro
Rate set
Annual General Meeting
2021 Final Dividend – Payment date
20 July 2022
Q2 2022 Production Report
11 August 2022
Half Year 2022 Results Announcement
1 September 2022
2022 Interim Dividend – Ex Dividend date
2 September
2022
2022 Interim Dividend – Record date
5 September 2022 2022 Interim Dividend – Final date for receipt
of Currency Elections
8 September 2022 2022 Interim Dividend – Pound sterling/Euro
30 September
2022
Rate set
2022 Interim Dividend – Payment date
19 October 2022
Q3 2022 Production Report
18 January 2023
Q4 2022 Production Report
Dates are provisional and subject to change.
Registrars
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS99 6ZY
United Kingdom
Tel: +44 370 702 0159
www.computershare.com
Website
www.antofagasta.co.uk
Registered office
103 Mount Street
London
W1K 2TJ
United Kingdom
Tel: +44 20 7808 0988
Santiago office
Antofagasta Minerals SA
Av. Apoquindo 4001 – Piso 18
Las Condes
Santiago
Chile
Tel: +56 2 2798 7000
Registered number
1627889
Additional information can be found in the Shareholder Information
section of the Notice of Annual General Meeting and on our website.
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Antofagasta plc
103 Mount Street
London
W1K 2TJ
United Kingdom
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