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Developing mining
for a better future
Annual Report and Financial Statements 2022
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 copper market
Business model
Our strategic framework
Key Performance Indicators
Risk management
Stakeholder review
Highlights
Our approach to sustainability
How we engage with our stakeholders
Our people
Safety and occupational health
Communities
Environment
Climate change
Task Force on Climate-related
Financial Disclosures (TCFD)
Suppliers
Customers
Shareholders
Governments and regulators
Non-financial information statement
Operating review
Mining division
Transport division
Growth projects and opportunities
Exploration activities
Key costs
Operating excellence and innovation
Financial Review
1
2
4
6
9
12
16
18
22
24
40
42
46
48
51
54
57
60
64
67
70
71
72
73
76
84
86
89
90
92
94
Applying the Code in 2022
Board leadership and
Company purpose
Division of responsibilities
Composition, succession
and evaluation
Audit, risk and internal control
Remuneration
Remuneration and Talent Management
Committee Chair’s introduction
Remuneration at a glance
2023 Directors’ and CEO’s
Remuneration Policy
2022 Directors’ and CEO’s
Remuneration Report
Remuneration and Talent Management
Committee report
Implementation of the Directors’ and
CEO’s remuneration policy in 2023
Directors’ Report
Statement of Directors’
responsibilities
104
106
118
125
129
142
146
148
155
163
165
168
171
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
174
181
182
182
183
184
185
234
238
242
244
245
256
259
Our reporting suite
Sustainability Report
antofagasta.co.uk/sr22
Social Management Report
antofagasta.co.uk/smr22
Tax Progress Report
antofagasta.co.uk/tax21
ESG Data Book
antofagasta.co.uk/esgdb
Climate Change Report
antofagasta.co.uk/ccr22
In this Annual Report, the terms “Company”, “Group”, “we”, “us”, “our” and “ourselves” are used to refer to Antofagasta plc and, unless the context requires otherwise, its subsidiaries.
These terms may be used as collective expressions where general reference is made to the companies in the Group and/or where no useful purpose is served by identifying any
particular company or companies.
We are committed
to our purpose of
developing mining
for a better future
Read more on how we are delivering
on our strategic framework on P18
Antofagasta plc Annual Report 2022
1
/ Performance highlights
Key performance
highlights in 2022
Record year for safety, and strong growth in
mineral resources. Production in transition while
Los Pelambres advances its expansion projects.
NON-FINANCIAL HIGHLIGHTS
Safety
0
Fatalities
0.84
LTIFR1
Record safety performance, with no fatal
accidents, and all our safety indicators
improved during the year.
Copper production2
Mineral resources3
646,200
tonnes
Copper production decreased by 10% mainly
due to the temporary reduction in throughput
at Los Pelambres as a result of the drought
and the reduced concentrate pipeline
availability in June, and expected lower
grades at Centinela Concentrates.
20.1bn
tonnes
Total mineral resources increased by 1 billion
tonnes during the year.
Water withdrawals
Scope 1 and 2 emissions
Growth projects
73 GL
of which 45.4% was sea water.
1.3 million
tCO2e
Decreased by 37% since 2021.
Gender diversity
Total economic contribution
20.4%
of our employees are women.
$7.4bn
We generate economic value for all our
stakeholders, 4% higher than last year.
More information
on P41
2
Antofagasta plc Annual Report 2022
Zaldívar Chloride Leach project
100%
completed in 2022.
Esperanza Sur Pit project
100%
pre-stripping completed in July 2022.
Los Pelambres Expansion project
93%
complete as at the end of 2022 with the
desalination plant and the concentrator plant
expansion due to be in production during the
second quarter of 2023.
Centinela Second Concentrator
project
Engineering and pre-investment studies
underway.
Strategic Report FINANCIAL HIGHLIGHTS
Net cash costs4
EBITDA4
Profit before tax
$1.61/lb
$2,930m
Increased by 34% since 2021 mainly due
to the impact of the drought and higher input
prices, partly offset by the weaker Chilean
peso and savings coming from our Cost and
Competitiveness Programme.
Decreased by 39% with an EBITDA margin
of 50%, reflecting a decrease in copper sales,
a lower copper price, higher inflation and
higher input prices.
$2,559m
Profit before tax decreased by 26%.
Underlying earnings per share
excluding exceptional items4
Earnings per share including
exceptional items
Total dividend
per share
$59.7¢
$155.5¢
$59.7¢
Underlying earnings per share decreased
by 82.8 cents or 58% compared with 2021
on lower EBITDA.
Earnings per share including exceptional
items for the year, reflect the impact of an
exceptional gain of 95.8 cents per share,
and were 18% higher than in 2021.
Equivalent to a payout ratio of 100%.
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. Mineral resources (including ore reserves) relating to the Group’s subsidiaries on a 100% basis and Zaldívar on a 50% basis.
4. Non-IFRS measure, refer to the alternative performance measures section on page 238.
Antofagasta plc Annual Report 2022
3
/ At a glance
A portfolio that delivers
We operate four copper mines in Chile, two of which produce significant volumes of molybdenum
and gold as by-products.
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.
Copper production
Net cash costs1
LOS PELAMBRES
60% owned
12-year mine life
Produces copper concentrates containing
gold and silver and a separate molybdenum
concentrate
275,000 tonnes
2022
320-335,000 tonnes
2023 forecast
CENTINELA
70% owned
43-year mine life
Produces copper cathodes and copper
concentrates containing gold and silver
and a separate molybdenum concentrate
247,500 tonnes
2022
235-250,000 tonnes
2023 forecast
ANTUCOYA
70% owned
21-year mine life
Produces copper cathodes
ZALDÍVAR
50% owned (and operated)
13-year mine life
Produces copper cathodes
79,200 tonnes
2022
70-75,000 tonnes
2023 forecast
44,500 tonnes
2022
45-50,000 tonnes
2023 forecast
TRANSPORT
Cargo transport system in the Antofagasta
Region of Chile
7.1m tonnes
2022
$1.10/lb
2022
$1.25/lb
2023 forecast
$1.75/lb
2022
$1.70/lb
2023 forecast
$2.50/lb
2022
$2.45/lb
2023 forecast
$2.39/lb
2022
$2.70/lb
2023 forecast
900 km rail network
GROUP
646,200 tonnes
2022
670-710,000 tonnes
2023 forecast
$1.61/lb
2022
$1.65/lb
2023 forecast
1. Non-IFRS measure, refer to the alternative performance measures section on page 238.
2. Employees, excludes contractors as at 31 December 2022.
3. Group includes 630 employees in our corporate offices, 35.2% of them are women.
4
Antofagasta plc Annual Report 2022
Employees2
Gender diversity
1,144
22.2% women
2,484
20.9% women
894
15.2% women
932
12.8% women
1,410
19.9% women
7,4943
20.4%3 women
Strategic Report Antucoya
Centinela
Zaldívar
Los Pelambres
Santiago
ESG COMMITMENT
Sustainability is at the heart of our decision-making as we seek to achieve our purpose
of developing mining for a better future.
Each of our four mining operations has been awarded the Copper Mark, the copper industry’s new
responsible production assurance framework, and completed the ICMM’s Performance Expectations
third-party validation process.
Revenue
EBITDA4
$5,862m
$2,930m
Los Pelambres
Centinela
Antucoya
Transport
$2,559m
$2,406m
$704m
$193m
Los Pelambres
Centinela
Antucoya
Zaldivar
Transport
$1,473m
$1,157m
$261m
$147m
$80m
FUTURE GROWTH
The Group has a pipeline of growth projects
to develop our significant mineral resource
base which we are currently advancing through
a disciplined process of project evaluation.
We also have a portfolio of growth opportunities
located mainly in Chile.
sent to the Board for final investment approval
during 2023 following completion of the Los
Pelambres Expansion project and once there is
sufficient clarity on the outcomes of the ongoing
discussions on the mining royalty and tax reform
bills, and the rewriting of the Chilean constitution.
The Zaldívar Chloride Leach project was completed
in 2022 and pre-stripping of the Esperanza Sur
pit project was completed in July.
The Los Pelambres Expansion project was
93% complete as at the end of 2022 with the
desalination plant and the concentrator plant
expansion due to be in production during the
second quarter of this year.
Progress continues on the engineering and
pre-investment studies for the $3.7 billion Centinela
Second Concentrator project. In line with our strict
approach to capital allocation, the project will be
4. 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.
Antofagasta plc Annual Report 2022
5
/ Letter from the Chairman
At our core, we are
a long-term business
A powerful long-term tailwind for copper also continued to gather
strength: the transition to a low-carbon economy. The United States
passed the Inflation Reduction Act in 2022 and the European Union
recently announced its Net Zero Industry Act. Together they promise
to spur further investment in the many copper-intensive products and
technologies integral to a net-zero world. And in November 2022,
COP27 took place in Egypt, drawing further attention and commitments
from governments to a net-zero future.
Chile’s economic, social and political environment
The centrality of climate change to Chile – and to Antofagasta
Heat waves, wildfires, a drought stretching into its 13th year; the effects
of climate change were once again powerfully felt in Chile. It’s a vital
issue for the country, for business, for the communities where we
operate, and for our people and their families. It is important that
I highlight what we’re doing to align ourselves with Chile’s vision for
a net-zero future.
Achieving and setting new climate-related targets
Combatting climate change sits at the centre of Antofagasta’s strategy.
Lowering emissions and reducing continental water use remain two key
issues for which we have a group-level strategy, board-level focus and
company-wide initiatives.
In line with Chile’s national target, Antofagasta is working towards being
carbon-neutral by 2050. Last year we surpassed our 2025 emission
target to reduce our emissions by 30%, achieving this three years early,
and we are now in process of setting a new target.
In April 2022, the last of our mining operations started using solely
renewable energy and all our mining operations have now received The
Copper Mark, an independently verified responsible production standard.
Our project to build a desalination plant and water pipeline at Los
Pelambres will start operating in the second quarter of 2023 and by
2025 we expect that 90% of the Group’s water usage will be sea or
recirculated water, substantially reducing our continental water
withdrawals.
Our commitment to Environmental, Social and Governance (ESG)
Our efforts on climate change are an integral part of our ESG strategy,
but far from the only ones. The copper we produce has a key role to
play in a net-zero world; our responsibility is to produce it sustainably,
efficiently, and with respect for local communities and the environment.
ESG considerations are integrated into our business and we are working
with our suppliers, not just in the application of our safety standards,
but also of our sustainability practices. In 2022, Antofagasta set new
standards for sustainability for our suppliers, and by doing so we plan to
gradually align their ESG capabilities with our own. Whether it’s lowering
emissions, insisting on enhanced minimum wages, or ensuring that
mining becomes more diverse and inclusive, such partnerships are
poised to deliver progress in areas that are fundamental to our purpose:
“Developing Mining for a Better Future”.
Jean-Paul Luksic
Chairman
Dear shareholders
At its core, Antofagasta is a long-term business. Our mines operate on
decades-long timelines and our strong balance sheet is the result of
years of disciplined capital allocation. We continue to be mindful of
short-term developments but remain committed to thinking and acting
for the long-term.
This year has certainly had its challenges, but it is times such as these
that make demands on us that calmer times do not. They test our
resolve and resilience, and in this Annual Report you’ll find stories about
what we have done to demonstrate both. My thanks go out to everyone
across our company who helped us to navigate the year successfully.
I also want to take this opportunity to acknowledge everyone’s efforts
that have led to us having a record safety performance this year. Not
only did we not have any fatal accidents, but we also improved our high
potential incidents and lost time injury frequency rate to record lows.
I know this requires constant care and attention from everyone at our
operations, from the leadership team to every employee and contractor
and I applaud them for their success.
2022 – A volatile year for copper and the global economy
Copper’s price fluctuations reflected the broader volatility in the global
economy. Although the details differed in important ways for each major
economy, their growth was similarly dampened in 2022. Driving the
slowdown were headwinds that dominated the headlines for much
of the year: Russia’s invasion of Ukraine and the economic shockwaves
and energy crisis it sparked; rising inflation and interest rates; the
lingering effects of COVID-19; China’s reduced economic activity;
and ongoing supply shortages and strained global supply chains.
Yet it wasn’t entirely a year of headwinds for copper. As China, a market
that consumes over half of the world’s metals, relaxed its zero-COVID
policies in the final weeks of 2022, and as the country’s property market
started to show signs of recovery, commodity prices lifted due to low
stocks and an anticipation of a return to stronger economic growth.
In March, copper reached a historic high of $4.86/lb before falling to
a low of $3.18/lb in July and then recovering to end the year at $3.81/lb.
6
Antofagasta plc Annual Report 2022
Strategic Report A notable operational issue that Antofagasta faced this year related to
water. The drought in central Chile continued to affect communities in
the region and Los Pelambres. The water shortage has reduced our
production in the short-term, but we will soon complete construction
of a new desalination plant and this will lift the water constraints at
Los Pelambres.
Challenges such as this reinforce the importance of planned investment,
our engagement with local communities and decisions we’ve taken over
the years to become a more resilient business. The desalination plant
would have been completed earlier but for the pandemic, and we need
to expand this plant to improve the water availability for other consumers
in the region. The expansion is currently being permitted and if this is
completed on schedule over 95% of Los Pelambres’s water will then be
either sea or recirculated water.
Los Pelambres also advanced its concentrator plant expansion during the
year and this will come into production in the second quarter of 2023.
Exit from Reko Diq, Pakistan
Ten years after work on the Reko Diq project stopped, Antofagasta
finalised an agreement with Barrick Gold Corporation and the
Governments of Pakistan and Balochistan to exit the project and receive
proceeds of $946 million. This enables us to refocus our time and
resources on strengthening Antofagasta’s business in other priority
locations, notably in the Americas.
Twin Metals Minnesota, USA
In January 2022, the US Department of Interior cancelled two mineral
leases which Twin Metals had renewed in 2019. The Company is
challenging this decision and we still believe that Twin Metals represents
a world-class project to provide the critical metals that a growing and
greener world requires.
“ESG considerations
are integrated into
our business.”
Chile’s handling of COVID-19
COVID-19’s effects waned during the year, but Chile was not immune
to the economic challenges felt by many countries, particularly rising
inflation and supply chain disruptions. The country’s budget deficit during
the pandemic period was over 7% of GDP, but in 2022 the deficit is
expected to have reversed to a surplus of approximately 1.6% of GDP,
a commendable achievement.
Chile’s uncertain political environment
In a September referendum, the country rejected a proposed draft for
a new Constitution, reflecting support for a more centrist approach going
forward. A new Constitution will be drafted in 2023, with a new
referendum scheduled for December. My hope is that this new
Constitution will unite Chileans and provide the clarity and stability that
helps attract investments and all the opportunities that flow from them
to Chile.
After a long period of discussion between Congress, government and
industry, the proposed mining royalty bill is now with the Senate for
review before moving to the lower house. Our focus remains on
ensuring that Chile’s mining industry, which accounts for more than 10%
of the country’s GDP, remains competitive globally and thereby able to
contribute to furthering Chile’s economic and societal growth.
The upcoming year presents Antofagasta with important capital
decisions, notably the construction of a second concentrator at Centinela
and we will make these decisions when we have a clearer picture of the
Constitution and the mining royalty legislation.
Antofagasta’s 2022 performance
Our performance reflected the challenges of a difficult operating
environment with copper production falling and net cash costs
increasing, and revenue of $5.9 billion and $2.9 billion of EBITDA. We
ended the year strongly, with our performance improving in key areas,
from lower cash costs to increased production, compared with the first
half of the year.
Antofagasta plc Annual Report 2022
7
/ Letter from the Chairman continued
Transport division
It was a strong year for our Transport division, which had a record year
for both safety and the tonnage transported.
The division has been based in the city of Antofagasta for over a century
and during this period the city has grown extensively. The location of its
facilities and workshops are now in the city centre, providing a
long-term opportunity to repurpose the area and fully integrate it into the
future urban development of the city. We have therefore made the
decision to relocate the facilities and workshop 40 miles north to an
industrial area near the town of Mejillones.
We have been making progress and in 2022, prior to beginning the
urban redevelopment, we started the process of converting the former
railyard into a historic neighbourhood. This involved us working closely
with the local community and authorities to ensure the project meets the
needs of the area and is environmentally sustainable.
Governance update
This year saw our entire board meet in person for the first time since
early 2020. It also saw our directors make site visits to at least one of
our operations, including to the desalination plant and concentrator plant
expansion projects, and to Los Pelambres’ tailings dams. The insights
from these visits were shared at board and committee meetings,
deepening the directors’ understanding of our activities.
By the date of our 2023 AGM, Vivianne Blanlot will have served on our
Board for nine years and, although she has agreed to continue on the
Board, she will no longer be considered ‘independent’. She has therefore
stepped down from the Nomination and Governance Committee and
Remuneration and Talent Management Committee, and has been
appointed to the Projects Committee.
To fill the vacancies on these committees, Francisca Castro has joined
the Nomination and Governance Committee and Eugenia Parot has
joined the Remuneration and Talent Management Committee.
Vivianne joined the Board in 2014 and since then, half of our Board
appointments have been female, with women currently comprising 30%
of our Board. However, we aim to increase female representation to
40%, and we are actively working towards this target.
Outlook for 2023
The IMF forecasts that global growth will slow in 2023 affected by
a number of issues, particularly the war in Ukraine, China’s economic
performance, the rate of economic growth in the US and Europe, and
the energy crisis. In addition, Chile’s political and economic environment
further complicates the outlook.
Uncertainty clouds the short-term picture, yet important features of the
long-term are clearer. The world is moving towards net-zero. That
journey will demand more copper, according to some forecasters almost
10 million more tonnes over the next decade alone, at a time when the
global copper supply is constrained by declining resource quality and
long lead times for project development and permitting. Our focus
remains on being a leading, responsible producer of the copper that the
low-carbon world requires.
We know that in any environment, the diversity, safety and health of our
people matter. So do the vibrancy of our culture and the discipline with
which we manage costs. Such steps not only strengthen the core of our
business but position us so that 2023 is not defined by the challenges
we face, but by our responses to them.
Jean-Paul Luksic
Chairman
8
Antofagasta plc Annual Report 2022
Strategic Report / Letter from the Chief Executive Officer
Rising to the challenges
of a transition year
Iván Arriagada
Chief Executive Officer
Dear shareholders
I am pleased to share with you the significant progress we made in
2022 in the areas of project development, climate change, diversity and
inclusion and, above all, safety. It was a challenging year for our
operations, as expected, but we have been implementing transitions that
will drive higher copper production and improved cost competitiveness
in 2023 and future years.
Safety is our top priority and I am particularly pleased to report that we
suffered no serious accidents during the year. We achieved a continuing
reduction in high-potential incidents, which are an important leading
indicator of where more serious incidents might occur, and the rate of
lost time injuries fell by 37% to 0.84, a record for the Group.
These positive safety indicators reflect the maturity of our safety
management system, which is based on critical controls, identifying key
risks, and promoting the right behaviours among our employees and
contractors. The year’s strong safety results were also underpinned by
an increase in on-site verification visits and interaction with teams
by senior management as COVID-19 restrictions were gradually lifted.
New ways of working
In 2022, we consolidated our new hybrid way of working, which we
adopted during the pandemic. The model combines in-person and
remote formats and has several advantages. First, it has made the
organisation more flexible – and therefore resilient – and more able
to adapt to unexpected events and manage risk.
It also supports our Diversity and Inclusion Strategy by offering
employees a better balance between personal needs and the demands
of work. This, in turn, has enabled us to attract and retain more women
in the workforce and, by the end of 2022, they represented one in five
of our employees, meeting our target for the year. This achievement has
encouraged us to set a more ambitious goal for women to represent
30% of the workforce by the end of 2025.
Similarly, an improved life-work balance enhances employees’ job
satisfaction with knock-on benefits on the organisation’s productivity.
So, while we still seek to perfect and refine the hybrid model, it is here
to stay and a feature of how we are organising our work going forward.
As in other organisations, we have seen an increase in mental health
issues arising from the pandemic and have implemented support
strategies to identify and help employees suffering from mental illnesses.
In a key initiative, we launched our Wellbeing Strategy during the year
to support people’s physical and emotional welfare.
Climate change
At Antofagasta, we regard the climate crisis as the greatest
environmental emergency of our times. A key priority for us is the
implementation of our Climate Change Strategy, which plans for us to
be carbon neutral by 2050 at the latest. During the year, we met our
short-term target of achieving a 30% reduction in greenhouse gas
(GHG) emissions by 2025 three years early, and will set a new
nearer-term goal in 2023.
In a major achievement, in 2022 we were among the first companies
in Chile to complete the transition of all our operations to electricity
generated exclusively from renewable sourced contracts. The process
began in Zaldívar in July 2020, followed by Centinela and Antucoya in
January 2022 and finally by Los Pelambres in April.
Now the main challenge is to reduce and, ultimately, completely replace
the use of diesel at our mines, particularly in haulage trucks which are
heavy consumers of the fuel. We are testing various potential solutions
at our operations, including the use of green hydrogen and electric
batteries, to help develop and become early adopters of whichever is the
winning technology.
Our efforts involve close collaboration with suppliers of mining
equipment, with whom we are also working to calculate and reduce
emissions in our value chain (Scope 3) that we do not directly control.
In 2022, we began using an internal carbon price and other emission
criteria to evaluate bids for contracts as part of growing efforts to
influence best practice among suppliers.
In another milestone, in October our Transport division became the first
rail Company in Chile to order a hydrogen-fuelled cargo locomotive,
which we expect to start operating in 2024. It forms part of a plan to
renew our entire fleet.
Antofagasta plc Annual Report 2022
9
/ Letter from the Chief Executive Officer continued
Water management
The evidence of climate change is clear in central Chile, where a severe
drought has entered its thirteenth year. In early 2023, we began
commissioning the desalination plant for Los Pelambres which will
provide a permanent solution to the restrictions on operational water
supply caused by the drought. The plan is to double the plant’s capacity
to 800 litres per second as soon as permitting allows.
In parallel, we work closely with communities near Los Pelambres in the
Choapa Province, a farming area, to strengthen water management and
ensure water availability for human consumption, as well as for
irrigation. The desalination plant and its planned expansion will make
more water available to the area as we replace current continental
water usage with sea water.
We already only use sea water for our Antucoya and Centinela
operations in northern Chile, the latter fully transitioning from continental
water at the end of 2022. By 2025, we expect 90% of our mining
operations’ water consumption will be recirculated or sea water.
Responsible production
As a copper producer, we supply a key metal to address climate change
through its use in low-carbon technologies, such as electric vehicles and
the generation of renewable energy and are committed to its responsible
and reliable production. In 2022, Los Pelambres and Antucoya were
awarded the Copper Mark, an independent external verification of their
sustainable practices. Zaldívar and Centinela completed the same
assurance process in 2021.
Operating results
As expected, 2022 was a transition year for the Group with the impact
of the drought while the desalination plant at Los Pelambres was being
completed, which will be in 2023 paving the way for strong growth.
We produced 646,200 tonnes of copper, 10% less than in 2021 with the
decrease primarily due to expected lower throughput as a result of the
drought and planned lower grades at Centinela.
10
Antofagasta plc Annual Report 2022
“We are committed
to supplying the
copper required for
the energy transition.”
The Transport division had a good year with total transport volume up
by 6% to an all-time record of 7.1 million tonnes, as we increased share
of the transport market for mining. We expect the planned renewal of
our fleet to low-carbon technologies to maintain this positive trend.
For our mining operations, it was a challenging year in terms of unit
costs due to general inflationary pressures, particularly for diesel and
sulphuric acid in global markets, as well as the temporary decrease in
production. We were successful in partially offsetting this trend through
our continuous focus on productivity and cost containment, together
with the contributions from our gold and molybdenum by-products.
Full-year net cash costs came in within guidance at $1.61/lb, compared
to $1.20/lb in 2021.
It is worth noting that we are implementing important structural changes
to contain costs. As an example, our new renewable energy supply
contracts are lower cost than the previous fossil-fuel agreements.
Our innovation and technology programme is also bearing fruit in this
sense. Centinela’s and Los Pelambres’ new remote operating centres
in Antofagasta and Santiago, respectively, are designed to streamline
processes from mine to port and reduce transport and mine camp
logistics. Productivity will also be enhanced by Centinela’s fleet of
automated haulage trucks, which successfully started operation
during the year.
Similarly, the increased processing capacity that will come on-stream
in 2023 with the completion of the Los Pelambres Expansion project’s
fourth milling line will bring further structural cost benefits. These
improvements are reflected in our estimated copper production for
2023 of between 670,000 and 710,000 tonnes and will help us
counteract the impact of inflation and the expected strengthening
of the Chilean peso.
Looking ahead, we see strong copper market fundamentals for the
foreseeable future. Demand will be supported as the global economic
recovery gathers pace coupled with copper’s significant role in the
energy transition. Supply will remain tight due to the lack of major
new discoveries in recent years and the long time it takes to bring
new projects online. Projects are also getting technically more complex.
Against this backdrop, the Group is uniquely positioned to deliver
growth opportunities from its existing large resource base.
Strategic Report The continued implementation of our Climate Change Strategy will be
another key focus. During the year, we plan to complete decarbonisation
roadmaps for our operations, which will help us to define a new
nearer-term emissions reduction target. We will also press ahead on
measuring Scope 3 emissions with a view to setting a reduction target
during 2023 or as soon as possible thereafter.
We believe the mining industry plays a critical role in Chile’s economic
and social development. We are committed to supplying the copper
required for the energy transition and to further general economic
progress and people’s wellbeing in a responsible and sustainable way,
creating value for our shareholders and other stakeholders in Chile and
society in general.
Iván Arriagada
Chief Executive Officer
Growth outlook
Our growth strategy to focus on copper, primarily in the Americas,
remains unchanged. We are pursuing robust organic growth options
embedded in the large mineral resources of our first-tier sites, Los
Pelambres and Centinela. The Los Pelambres Desalination Plant and
Concentrator Expansion projects will be in production in 2023. A second
phase expansion to extend the mine life beyond 2035 and double
desalination capacity is in the permitting stage.
The $3.7 billion investment to build a second concentrator at Centinela
is subject to greater clarity on tax and royalty bills under discussion
by Chile’s congress and the process to draft a new constitution, and
is expected to be put to the Board for approval by the end of 2023.
We expect these growth projects to increase annual copper production
to approximately 900,000 tonnes, once implemented.
On the innovation front, our patented Cuprochlor®-T technology
has completed industrial-scale testing and unlocked a solution to
economically leach low-grade primary sulphides. It is now being
incorporated into our Centinela and Antucoya mine plans. We are
also excited by the potential of our Cachorro and Encierro exploration
projects in northern Chile whose 765 million tonnes of mineral
resources are now included in our resource inventory.
Our priorities in 2023
The safety and health of our employees, contractors and local
communities will remain our first priority as we build on our positive
2022 performance.
We will reach a major milestone with the start of operation of the Los
Pelambres Expansion project in 2023. The new desalination plant and
expanded concentrator will lift water supply restrictions and increase
production in 2023, helping to deliver on our commitment to lower
cash costs.
On innovation, we will continue to work on introducing more automation
in our operations and consolidating our integrated remote operating
centres. This focus on changing how we work and transforming the
way we do mining will produce more efficiency gains.
We are also committed to moving forward the Centinela second
concentrator project, subject to the necessary conditions being
in place.
Antofagasta plc Annual Report 2022
11
/ The copper market
Copper’s critical role
In 2022, copper price volatility rose to its
highest levels in over a decade. Growing
economic uncertainty, rising inflation and
slowing growth in metal demand was set
against increasing mine supply disruption.
Looking ahead, the prospects for copper demand in the near-term will
partly depend on how rapidly the Chinese economy recovers following
the removal of its zero COVID-19 measures. The pace at which interest
rates will rise and subsequently fall, and economic growth rates in
North America and Europe will also be key factors. Visible inventories
were at historically low levels at the beginning of 2023, and this will
sustain price volatility.
Potentially, the stronger growth in mine production forecast over the
next two years could alleviate the current market tightness. However,
there are ongoing risks of disruption and the operating environment in
major producing countries remains uncertain. Beyond the middle of the
decade, the rapid uptake of copper-intensive clean technologies will
underpin future copper demand as the world looks to a greener and
more sustainable future.
Copper’s critical role in a net-zero pathway
To put the world on a Paris Agreement net-zero pathway, a very
significant build out of low-carbon electric vehicles (EVs) and renewable
power generating capacity will be needed. As the world reduces its
dependence on hydrocarbons, metals will provide the foundation for
a zero-carbon economy. Copper in the form of wire, cable and foil will
bind and connect the batteries, motors and electrical networks that will
help limit the rise in global temperature. Furthermore, the pressure on
the world’s resources to achieve this structural change will be
transformational.
Electric vehicles are expected to be by far the largest single sector
contributing to the boost in green demand for copper over the next two
decades, with global EV sales growing three-fold in three years.
Government subsidies in China, the US and Europe have helped to
support greater market penetration. The plants that will provide the
copper foil for batteries are being developed apace across Asia, North
America and Europe (and close to the battery hubs) and further copper
foil manufacturing capacity is scheduled for completion over the next
few years to meet anticipated demand.
As with the automobile market, the decarbonisation of power generation
is well underway. Global wind power generation capacity has increased
by over 40% in the last three years. Cable makers are expanding
capacity in North America and Europe to meet the necessary growth
in electrical networks. Rising offshore wind generation developments
are in turn supporting copper wire rod demand. The use of copper
in solar power generation is also just as impactful as wind.
Copper consumption growth
Copper (Mt)
50
45
40
35
30
25
2020
2023
2026
2029
2032
2035
2038
Green End Uses - EVs, Renewables, Energy Storage
Other End Uses
Source: Wood Mackenzie
12
Antofagasta plc Annual Report 2022
Strategic Report The transition to a more electrified world and higher electricity output
will require power grid upgrades and expansions, connected by wire
and cable. This will lead to higher demand growth for refined copper
intensive wire rod.
These pressures are all in addition to the constant upward pressure
from global population growth and the increased consumption per
capita that will arise with increased urbanisation.
What does the energy transition mean for regional demand? For more
mature markets including Europe and North America, legislation such as
the recently approved Inflation Reduction Act (IRA) in the US will ensure
an uptick in end-use demand from this stimulus for increased green
energy use. This demand will be fulfilled by a return to domestic,
downstream manufacturing. For developing Asian regions, such as
ASEAN and India, the conventional drivers of low-cost production,
urbanisation and industrialisation are still at play. The energy transition
will further strengthen copper demand in these markets.
Supply challenges
Substantial growth in new mine supply will be needed to meet zero
carbon targets. The industry will have to deliver new projects at a
frequency and with a consistent level of investment never previously
accomplished.
According to one leading forecaster’s base case outlook, over six million
tonnes of new mine supply will be required over the next decade from
projects that have yet to be sanctioned. Under an accelerated energy
transition scenario, whereby the Paris Agreement targets are met and
zero carbon is achieved by 2050, the requirement jumps to over nine
million tonnes. This is equivalent to nearly a third of current refined
consumption. This estimate of new mine supply requirements also
assumes a larger contribution of recycled material to meet refined
demand, which would require investment in more scrap processing
capacity and a significant increase in scrap availability.
Volume of copper committed to in new projects each year
Copper (Mt)
Copper price ($/t)
2.5
2.0
1.5
1.0
0.5
0.0
10,000
8,000
6,000
4,000
2,000
2007
2010
2013
2016
2019
0
2022
Source: Wood Mackenzie, LME
Mtpa Cu
LME Copper Price
Antofagasta plc Annual Report 2022
13
/ The copper market continued
“Demand for copper is
growing and the industry’s
ability to satisfy this
growth is stretched.”
There are limitations to the speed at which scrap can be delivered back
into the product cycle in large volumes, especially as the world looks to
manufacture products that are made to last and that can be repaired and
shifts away from the throwaway culture of recent years. The mismatch
between the requirement for new supply and the need to meet the
challenges of a decarbonised world will lead to considerable pressures
in the copper sector over the next decade.
One important source of future copper production will be expanding
existing mining operations. These brownfield projects are usually less
capital intensive than greenfield projects and require less capital
investment. All mines strive to optimise their unit operating costs and
this is often achieved through productivity improvements, with
investment in debottlenecking and expansions. These increases in
production are an important source of future production.
Estimates of total identified global mineral resources appear sufficient to
satisfy future demand but in practice the conversion of these resources
to operating mines is uncertain and slow. Many were identified decades
ago and still have little likelihood of being developed. The better quality,
easier to develop deposits have mostly been built. Current mineral
resources tend to be of lower quality and smaller than those already
developed. Some have not been developed because of poor economics.
But even those that can offer an attractive return on investment often
have other hurdles to overcome before they can be developed.
One of the key characteristics of a deposit is its grade, or the
concentration of copper in the deposit. Average grades have been
declining for decades, not just for new mining operations but existing
ones as well. The grade declines at existing mines because grade often
declines with depth for geological reasons. The grades of new mines
decline as higher-grade deposits are mined first.
For a new mine, obtaining the necessary social and environmental
permits can take a significant time, even in major producing countries.
Many sites are remote and require substantial investment in
infrastructure, including power, water and transport. Project lead times
are longer and timing is critical as the race to control climate change
gathers pace. It can take 10 to 15 years, or longer for a major project
to be developed, from the identification of a resource to development.
The investment needed to produce a tonne of copper has also been
steadily rising. The current inflationary environment is one reason. But a
more fundamental change is the decline in grades. The cost of producing
one tonne of copper is also increasing and projects need to scale up to
the greatest extent possible relative to the size of the deposit in order to
improve the economics. This raises the initial capital cost, often limiting
the list of potential developers to those that can afford multi-billion-dollar
upfront costs.
Assuming the average capital intensity of the project pipeline, and taking
into account the volume of copper required to achieve zero-carbon
climate targets, one leading forecaster estimates that the level of
investment needed to deliver new projects over the next 30 years will
have to be at a rate only previously achieved between 2012 and 2016,
at the back end of the China-induced commodity super cycle.
In view of this challenging backdrop, mining project approval rates have
fallen to cyclical lows. In 2022, the volume of committed copper projects
was well below the level needed to meet the requirements of an
accelerated energy transition, despite copper prices having been close
to their highest level for a decade.
The implication is that more projects need to be advanced along the
pipeline and quickly, or there will be insufficient copper available to meet
demand, even under a base case pathway.
Demand for copper is growing and the industry’s ability to satisfy this
growth is stretched. Considerable efforts are required to overcome
these challenges including those to boost productivity through innovation
and investment while continuing to satisfy social and environmental
requirements about how mines are developed.
The industry will continue to strive to satisfy demand while being
responsible producers for a changing world.
The pathway to net zero
In March 2023 the International
Copper Association published
a report setting out the copper
industry’s roadmap to net zero,
including an outline of the role
of copper and the industry’s
decarbonisation challenges.
antofagasta.co.uk/
ica_zero
14
Antofagasta plc Annual Report 2022
Strategic Report Gold
During 2022 gold prices were affected by the contrasting effects of
persistently high inflation and central banks raising interest rates to battle
soaring consumer prices. Central banks were also buyers in the market
with purchases during the year reaching a 55 year high.
In February 2022, gold prices increased to near-record levels of
$2,000/oz as Russia invaded Ukraine, but a strong US dollar and
aggressive interest rate increases by central banks led to a fall of over
20% by September 2022. However, from late 2022 to early 2023, gold
saw a trend reversal with the gold price rising by 14% since November
2022, supported by a less hawkish tone from the US Federal Bank and
the reopening of China's economy.
The market price of gold averaged $1,800/oz in 2022, compared with
$1,799/oz in 2021.
Molybdenum
The molybdenum price started 2022 at historically high levels and was
initially stable, in a balanced market. As the year progressed,
consumption in China grew steadily and production declined moving
the market into deficit and towards the end of the year the price began
to rise significantly.
The average annual price in 2022 was $18.7/lb, with a monthly low for
the year of $15.1/lb and a monthly high of $26.1/lb, before reaching
a price of $30/lb in the last days of December.
There are some primary producers of molybdenum but a substantial
share of demand is satisfied from mines that produce molybdenum as
a by-product, and recycled scrap. By-product producers are generally
insensitive to the molybdenum price and demand for molybdenum-
containing steels is expected to be strong, factors that are expected
to support the molybdenum price during 2023.
The year in review
Copper
The copper price started the year strongly reaching an historic high
in March of $4.87/lb before falling to a low of $3.18/lb in July and
recovering to close the year at $3.81/lb.
Copper’s price fluctuations reflected the broader volatility in the global
economy. Though the details differed in important ways for each major
economy, their growth was similarly dampened in 2022. Driving the
slowdown were headwinds that dominated headlines for much of the
year: Russia’s invasion of Ukraine and the economic shockwaves and
energy crisis it sparked; rising inflation and interest rates; the lingering
effects of COVID-19; China’s reduced economic activity; and the ongoing
supply shortages and strained global supply chains.
Over the year the LME copper price averaged $4.00/lb, 5% lower than
in 2021. The average realised copper price for 2022 was $3.84/lb.
The copper market started 2023 strongly but faded as economic and
geopolitical uncertainty increased. Looking forward, the strength of the
market will depend on the recovery of the Chinese market and whether
there are any disruptions to global trade.
LME Copper average price
$4.00/lb
Gold average price
$1,800/oz
Molybdenum average price
$18.7/lb
Antofagasta plc Annual Report 2022
15
/ Business model
Delivering value for our stakeholders
through the mining lifecycle
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.
Responsible mining
We believe it is possible to mine sustainably
by prioritising environmental protection
and the efficient use of natural resources.
Resources
World-class assets
We have a portfolio of large, high-quality,
low-cost assets. We are investing in
technology to improve productivity and drive
sustainable growth across our operations.
Inputs
Our mining operations depend on a range
of key inputs such as energy, water, labour,
sulphuric acid and fuel.
Financial resources
We have a strong balance sheet and a large
portfolio of available undrawn credit facilities.
For more information on
our operations see P74-85
WHAT WE NEED
Long-term relationships
Our people
Approximately 31,000 employees and
contractors. 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.
Communities
The wellbeing of our neighbours is directly
related to the sustainable development and
success of our business.
Suppliers
We work with on average over 1,700
suppliers, who provide a broad range of
products and services, from large mining
equipment to catering and transport.
They are vital to our ability to operate
continuously, safely and efficiently.
Customers
Most sales are made under long-term
framework agreements or annual
contracts, with sales volumes agreed
for the following year.
Shareholders
We pay special attention to our communications
with them, maintaining fluent and transparent
dialogue to ensure that they are all treated
fairly and receive all relevant information.
Governments and regulators
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.
For more information on
our stakeholders see P38-73
16
Antofagasta plc Annual Report 2022
Strategic Report WHAT WE DO
Exploration / Acquisition
We undertake exploration activities in Chile and
abroad, with particular focus on the Americas.
Extraction and processing
Safety and health, operating efficiency
and innovation are all key elements of how
we run our operations.
Evaluation
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.
Sales and marketing
We build long-term relationships with the
smelters and fabricators who purchase our
products, with approximately 60% of output
by value going to Asian markets.
Construction
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.
Mine closure and rehabilitation
At the end of a mine’s life, it must be closed
and remediated according to the international
standards and national regulations in force
at the time.
WHAT WE GENERATE
Our products
Copper
646,200 tonnes
Gold
176,800 ounces
Molybdenum
9,700 tonnes
Silver
2.8 million ounces
For more information on
our products see P76
Our footprint
CO2e emissions intensity
1.75 tCO2e/tCu
Continental water withdrawal
39.7 GL
For more information on
our footprint see P57-66
Our outcomes
Total economic contribution
$7,445m
We generate economic value for all our
stakeholders, distributing it as wages to
employees, purchases of goods and services
to suppliers, social investment programmes
in communities, taxes to governments,
dividends to shareholders and interest
payments to lenders.
For more information on our
outcomes see P41
Antofagasta plc Annual Report 2022
17
/ Our strategic framework
How we deliver
our purpose
In order to deliver a better future we need a robust
strategy. Our five strategic pillars are the key
areas we focus on as a business, and these will
drive us onwards to achieve our purpose.
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.
Our purpose
For whom we want to achieve our purpose
Developing mining
for a better future
Planet
We recognise that climate change is one of the greatest
challenges faced by humanity. Our vision of a better
future reflects the quest for a more sustainable planet,
with copper playing a central role in the energy
transition, economic progress and improved livelihoods.
Society
Our vision of a better future, is one that is developed together with our
local communities, and aims for a society that recognises the economic
and social value generated by mining.
Organisation
To tackle the challenges we face in our daily operations and growth, we need a robust
organisation that consistently meets these challenges and is grounded in clear and
unshakeable values and principles.
Our vision of a better future therefore encompasses our ethical organisational behaviour
and our continuous pursuit of a sustainable culture of trust, inclusivity, collaboration, agility
and willingness to embrace change and continuous learning.
People
Our success relies on having the best people at the heart of everything we do. Our vision of a better future would
be incomplete without the shared values of our workforce, a diverse and inclusive group of individuals open
to learning and to enjoying their personal and professional growth, who strive for excellence in their results.
18
Antofagasta plc Annual Report 2022
Strategic Report How we will achieve this
Through our five strategic pillars
Safety and
Sustainability
to enhance our current
operations, while
keeping an eye
on the future
People and
culture
to cultivate the
talent necessary
for a better future
Competitiveness
Innovation
Growth
is key to us achieving
excellence and creating
long-term value
to constantly pushing
back boundaries and
exploring new ways
of advancing
to keep contributing
to the development
of a better future
For more information on our
strategic pillars see P20-21
Underpinned by our values
Respect for others
We respect people and care about their opinions, which is why we
engage in an open, transparent and collaborative way. We trust them
and have a genuine interest in their wellbeing. We promote a work
environment that fosters diversity and inclusion.
Responsibility for safety and health
We are responsible for our own safety and health, as well as for that
of others. We identify and control our risks, and we are aware of the
impacts of our actions.
Committed to sustainability
We operate responsibly and efficiently, with long-term vision.
We maximise the economic value of our assets, contribute to social
development and minimise our environmental impacts.
Excellence in our performance
We continually seek to achieve the best possible results through
operational discipline. We look after our resources and we are efficient,
austere and honest. We build trust by fulfilling our commitments.
Innovation as a permanent practice
We recognise and promote new ideas that improve our work practices
and the way we relate to others. We aim to create value for the
organisation, people and the environment.
Forward thinking
Our business strategy aims to generate value with a long-term vision for
shareholders and other stakeholders. We learn from our mistakes and
have the flexibility and courage to face new challenges.
Antofagasta plc Annual Report 2022
19
/ Our strategic framework continued
Our strategic pillars
Our strategy is built around five pillars, each of which has defined long-term objectives
with short- and medium-term goals.
Safety and
Sustainability
People
and culture
Emphasising safety and sustainability
to enhance our current operations,
while keeping an eye on the future.
Description
We aim to create value and growth throughout
the mining lifecycle, from exploration to mine
closure. Our goal is to be a Company known
for its ethical and transparent conduct,
respectful of human rights and the law.
To achieve this, we are determined to continue
to develop a comprehensive and long-term
commitment to all our stakeholders,
particularly our communities and workers.
We align ourselves with the UN Sustainable
Development Goals (SDG), developing
responsible mining practices that are certified
by the Copper Mark and ICMM’s Performance
Expectations. We prioritise the efficient use of
renewable natural resources and the
reduction of our greenhouse gas (GHG)
emissions by using sea water and energy
from cleaner sources.
All of this is done while ensuring the
occupational health and safety of all our
employees and contractors. We do this
through the active leadership of our workers,
who by their responsible behaviour and
proactive management of risks and critical
controls ensure a safe and healthy working
environment for all.
Investing in people and fostering a positive
culture to cultivate the talent necessary
for a better future.
Description
Our goal is to create and nurture a working
environment that incorporates new ways of
thinking, with innovation at the forefront, to
tackle current and future challenges. We strive
to inspire people to tackle more complex and
dynamic problems, and to develop new
management approaches to solve them. The
demands of today’s and tomorrow’s adaptive
challenges require us to collaborate and excel
while developing new skills.
We aim to truly understand what our people
value, to treat them fairly, and to engage and
inspire them based on their personal
motivations and unique qualities as individuals.
This is a challenge that requires us to change
the understanding of the traditional
employment relationship to one of deeper
commitment to the Company.
We will continue to drive forward our cultural
transformation, promoting the organisation as
a safe and supportive space that actively
listens, empathises, connects and builds
strong relationships with our people.
Competitiveness
Our competitiveness is key to us achieving
excellence and creating long-term value.
Description
Competitiveness is essential as it ensures
resilience and makes the business viable.
By producing copper efficiently we are able to
grow and contribute to the development of
mining while promoting the energy transition.
We aim to maintain our strong financial
position through efficient capital allocation,
the proper execution of our projects and the
renewal of our asset portfolio, allowing us
to continue operating and growing as we
address increasingly complex challenges.
We strive to be one of the most cost-
competitive companies in the industry, and
towards that end, we are dedicated to
achieving excellence in our work and seeking
new and efficient ways to manage our
operations.
Additionally, we are undergoing a process of
operational transformation that allows us to
integrate technology and innovation, utilise
data analytics and promote efficient resource
management by strengthening key operational
processes that will enable us to achieve the
full potential of our assets’ performance.
Key initiatives
• Climate Change Strategy
• Social contribution
• Health and Safety Control Strategy
Key initiatives
• Diversity and Inclusion Strategy
• Leadership brand
• Digital Academy
Key initiatives
• Cost and Competitiveness Programme
• Full potential
• Operational excellence
Performance
• Zero fatal accidents since July 2021
• 35% reduction of High Potential Incidents
• 100% renewable energy (Mining division)
• All operations had achieved the Copper
Mark accreditation by the end of 2022
• $57m investment in social value creation
Performance
• Wellbeing Strategy rolled out
• 20.4% of our employees are women
• Inclusive practices are an integral part
of how we work
Performance
• Copper production of 646,200 tonnes
at a net cash cost of $1.61/lb
• EBITDA margin remains strong at 50%
• Our Cost and Competitiveness Programme
achieved more than double its target,
yielding benefits of $124 million
Read more
on P38-73
Read more
on P48-50
Read more
on P90-93
20
Antofagasta plc Annual Report 2022
Strategic Report Innovation
Growth
Through innovation we are constantly
committed to pushing back boundaries
and exploring new ways of advancing.
Growth to continue contributing
to the development of a better future.
Description
We aim to create new ways of operating and
using existing technology more effectively,
incorporating our own and others’ learning
to improve performance.
Description
Growth enables us to maintain our viability and
fulfil our purpose. It allows us to realise the full
potential of our resources and assets, creating
additional value and diversifying risk.
We further aim to discover new ways of
advancing our operations through technology
that is yet to become available. With our
experience we are convinced that we can
contribute to the development of new solutions
such as Cuprochlor®-T, integrated remote
operation centres (IROCs), autonomous
haulage and drilling, advanced analytics
and data management for decision making,
robotics for tailings and water management,
decarbonisation of our processes and dust
suppression.
Our Innovation Roadmap serves as a guide
for the Group to achieve our operational vision
for the future. This allows our operations to
become smart, integrated and sustainable,
optimising the use of strategic resources such
as water and energy.
To accomplish this, we aim to:
• Expand and increase the Group’s
production capabilities by building projects
such as Los Pelambres Expansion Phase 1
and Phase 2 (mine life extension) and the
Centinela Second Concentrator project.
• Increase our mineral resource base through
the exploration for new resources and/or
the development of new ore deposits such
as Cachorro and Encierro.
Our strategy for growth beyond our existing
operations is focused on producing copper
and its by-products in the Americas
(particularly Chile, Peru, the United States and
Canada), a region that is highly attractive due
to its geological potential, mining activity,
relative proximity, political and administrative
similarities, culture and language.
Key initiatives
• Integrated Remote Operations Centres
• Autonomous trucks and drilling
• Cuprochlor®-T
Key initiatives
• Los Pelambres Expansion Phase 1
• Centinela Second Concentrator
• Los Pelambres Expansion Phase 2
Performance
• Inaugurated our first fully autonomous
operation at the Esperanza Sur pit
• New integrated remote operations centres
for Los Pelambres and Centinela
• Validated our proprietary primary sulphides
leaching technology (Cuprochlor®-T)
Performance
• At the end of 2022 the Los Pelambres
Expansion project was 93% complete
• Following two exploration discoveries in
Chile our mineral resources have increased
by 1 billion tonnes
Read more
on P92-93
Read more
on P86-89
For further information on the risks
associated with each strategic pillar,
please see P26-35
For more information on how we align
our strategic performance with
remuneration, please see our
Remuneration report on P147
Antofagasta plc Annual Report 2022
21
/ Key Performance Indicators
Measuring our performance
We use Key Performance Indicators (KPIs) to assess our performance in meeting our strategic
and operating objectives. Performance is measured against the following financial, operating
and sustainability KPIs:
Financial KPIs
EBITDA1
$2,930m
4,836
Profit before tax
$2,559m
Net debt/(Net cash)1
$886m
3,477
2,559
2,228
2,439
2,739
2,930
1,253
1,349
1,413
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
Why it is important
This is a measure of our underlying
profitability.
Performance in 2022
EBITDA decreased by 39% and an EBITDA
margin of 50%, reflecting the decrease in
copper sales, lower copper price, higher
inflation and higher input prices.
Why it is important
This is a measure of our profitability before
the deduction of taxes.
Performance in 2022
Profit before tax decreased by 26%.
886
596
563
82
(541)
2018
2019
2020
2021
2022
Why it is important
This measure reflects our financial liquidity.
Performance in 2022
Strong balance sheet with net debt of $886
million at the end of 2022 and a Net debt/
EBITDA ratio of 0.3x.
Find out more
P94
Find out more
P94
Find out more
P100
1. Non-IFRS measures, refer to the alternative
performance measures section on page 238.
2. From continuing operations excluding
exceptional items.
3. From continuing and discontinued operations
including exceptional items.
4. 100% of Los Pelambres, Centinela and Antucoya,
and 50% of Zaldívar’s production.
5. Mineral resources (including ore reserves)
relating to the Group’s subsidiaries on a 100%
basis and Zaldívar on a 50% basis.
6. The Lost Time Injury Frequency Rate is the
number of accidents with lost time during the
year per million hours worked.
7. Scope 1 and 2, Mining division only.
8. Tonnes of CO2 equivalent per tonne of copper
produced.
Underlying earnings per share2
$59.7¢
Earnings per share3
$155.5¢
142.5
155.5
130.9
51.5
50.9
54.7
59.7
55.1
50.9
51.3
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
Why it is important
These are measures of the profit attributable
to shareholders before exceptional items.
Why it is important
These are measures of the profit attributable
to shareholders after exceptional items.
Performance in 2022
Underlying earnings per share were
59.7 cents, a decrease of 82.8 cents or 58%
compared with 2021 on lower EBITDA.
Performance in 2022
Earnings per share including exceptional items
for the year were 155.5 cents, reflecting the
impact of an exceptional gain of 95.8 cents,
and were 19% higher than in 2021.
Remuneration performance
criteria P156
Find out more
P99
Find out more
P99
22
Antofagasta plc Annual Report 2022
Strategic Report
Operating KPIs
Copper production4
646.2k tonnes
770.0
725.3
733.9
721.5
646.2
Net cash costs1
$1.61/lb
1.29
1.22
1.14
1.20
Mineral resources5
20.1bn tonnes
1.61
18.8
19.1
19.2
19.1
20.1
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
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.
Performance in 2022
Copper production decreased by 10% mainly
due to the temporary reduction in throughput
at Los Pelambres as a result of the drought
and the reduced concentrate pipeline
availability in June, and expected lower grades
at Centinela Concentrates.
Performance in 2022
Net cash costs were 34% higher than last
year mainly due to the impact of the drought,
inflation and higher input prices during the
period, partly offset by the weaker Chilean
peso and the savings coming from our Cost
and Competitiveness Programme.
2018
2019
2020
2021
2022
Why it is important
Our mineral resource base supports our
strong organic growth pipeline.
Performance in 2022
Total mineral resources increased by 1 billion
tonnes during the year, including a maiden
inferred resource at Encierro and additional
resources at Cachorro, both of which are
in northern Chile.
Find out more
P76
Sustainability KPIs
Find out more
P76
Find out more
P245
Safety
0 Fatalities
0.84 LTIFR6
Water withdrawals
73 GL
Continental water
Sea water
CO2e emissions intensity7,8
1.75 tC02e/tCu
1.6
1
1.3
1
36.8
32.6
38.9
37.7
39.7
3.33
3.10
1.0
0.9
0
0
0.84
0
28.9
28.2
29.0
31.3
33.1
2.79
2.56
1.75
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
Why it is important
Safety is our top priority, with fatalities
and the LTIFR6 being two of our principal
measures of performance.
Performance in 2022
Record safety performance with no
fatalities and the LTIFR improving by 37%
due to strengthened control strategies for
high-risk tasks.
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 2022
Total water withdrawals increased by 5.4% as
precipitation tripled at Los Pelambres in 2022
from the low levels in 2021, and Centinela
Concentrates and Antucoya achieved record
annual throughput.
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 2022
CO2e emissions intensity decreased as Scope
1 and 2 emissions fell by 37%.
Find out more
P53
Find out more
P63
Find out more
P61
Antofagasta plc Annual Report 2022
23
/ 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 supported in making key 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 the
achievement of our strategic goals. The framework is based on
ISO 31000 and COSO ERM.1
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 2022
Our main focus in 2022 was in the socio-political environment, as
a result of the armed conflict in Europe and political uncertainty in
Chile. The latter continued following the rejection of the proposed
new constitution in September and will extend into 2023 as a second
rewrite is carried out. However, lessons learned during previous social
contingencies in Chile meant the impact on our operations was minor.
The war in Ukraine affected the sourcing of some of our strategic
supplies and it remains a concern, although our risk analysis of the
war allowed us to mitigate its impact on our business.
Other risks during the year included those arising from the reform
of the mining royalty and tax bills proposed by the government, expected
to be implemented during 2023.
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 undertook
during the year:
• Implemented on-site risk reviews of certain selected risk areas
accompanied by senior management, increasing the risk maturity
level of the Group
• Co-coordinated contingency committees in line with our risk
management process
1. The Committee of Sponsoring Organizations of the Treadway Commission Enterprise
Risk Management framework
24
Antofagasta plc Annual Report 2022
• Updated the Company’s risk appetite statement, including the sections
relating to Environmental Management, Operations and Tailings
Storage, and the Project Execution risk section was expanded to
incorporate the conversion of mineral resources to ore reserves.
The updated statement was approved by the Board and the level
of risk appetite for all risk areas was unchanged
• Reported monthly to the Executive Committee to identify and manage
any deviation from expected performance
• Defined and implemented lessons learned from the COVID-19
pandemic
• Tested and validated the Business Continuity Plan
• Introduced new controls identified during the assessment of
the impact of the conflict in Ukraine
• Participated in the review of the FQAR (Functional Quality Assurance
Review) project
• Continued training risk owners and main users
• Updated and monitored critical controls and action plans
• 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
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;
key developments in our exploration, project and business development
activities; and 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 effectively monitor Antofagasta’s
major risks and preventive and mitigating procedures, and to assess
whether actual exposure is consistent with the defined risk appetite.
If a gap is identified, an action plan is prepared to fill it.
The Risk and Compliance Management Department is responsible
for the Group’s risk management systems. It implements the Company’s
risk management policy, vision and purpose to ensure there is 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.
Strategic Report The General Manager, with the Department support, 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 taken in each company.
The General Manager of each operation has 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 in order to provide effective
and direct risk management.
Each operation holds an annual risk workshop, at which the business
unit’s risks and mitigation activities are reviewed in detail and updated
as necessary. Workshops are used to assess principal risks that
may affect relationships with stakeholders, limit resources, interrupt
operations and/or negatively affect potential future growth.
Mitigation techniques for significant strategic and business
unit risks are reviewed quarterly by the Risk and Compliance
Management Department.
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.
Our risk management structure
Risk Management Cycle
Risk appetite is the expression of the acceptable exposure to
uncertainties that the organisation is willing to assume in the pursuit
of its objectives. Our risk management cycle has four stages, and
is designed to identify, assess, treat and follow up our risks.
R i s k Appetite
1. Identify
2. Assess
3. Treat
4. Follow Up
Board of Directors
• Has overall responsibility for risk management and its alignment with Antofagasta’s strategy
• Approves the Risk Management Policy
• Defines risk appetite
• Reviews, challenges and monitors principal risks
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
Executive Committee
• Assesses risks and their potential impact on the achievement of our strategic goals
• Promotes our risk management culture in each of the business areas
• Ensures there is transparent and satisfactory dialogue with stakeholders
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.
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.
First line of defence
Each person is responsible for identifying, preventing and
mitigating risks in their business area and escalating their
concerns to the appropriate level if required.
Antofagasta plc Annual Report 2022
25
/ 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 ensures 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 eliminated and that exposure
to some risk is necessary in the pursuit of our corporate objectives.
Mining is 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 only
limited information available at the time of the evaluation.
Any identified new or emerging 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
becomes available, based on research, expert analysis and internal
investigations, 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 such risks protects our business, people and
reputation. The risk management process provides reasonable
assurance that the relevant risks are recognised and controlled, allowing
the Company to achieve its strategic objectives and create value.
Because risks are periodically re-evaluated, the risk map shown here
represents the position and controls in place at a specific point in time,
as well as showing the changes that have taken place since 2021.
Throughout the year, the Board carried out a robust assessment of
the Company’s emerging and principal risks, which are set out on the
following pages with related preventive and mitigation measures.
During 2022, the probability of the External Risks principal risk (18)
was lowered from “Possible” to “Unlikely” following the reduction of
risks related to the COVID-19 pandemic. The impact of the Political,
Legal and Regulatory principal risk (7) was reduced from “Significant”
to “Moderate” following the rejection of the proposed new constitution
and the improved clarity on the outcome of the mining royalty reform.
26
Antofagasta plc Annual Report 2022
Risk
level
Change
in risk level
vs 2021
Outlook
Appetite
Risk appetite
Risk level
Risk area
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 rate
Growth
15. Growth of mineral resource
base and opportunities
16. Project development
and execution
Innovation
17. Innovation and digitalisation
Transversal
18. External risks
Key
Low
Medium
High
Very high
Strategic pillars
Safety and Sustainability
People and culture
Competitiveness
Innovation
Growth
Strategic Report Risk Heat Map
T
C
A
P
M
I
e
r
e
v
e
S
t
n
a
c
i
f
i
n
g
S
i
e
t
a
r
e
d
o
M
w
o
L
w
o
l
y
r
e
V
8 10 9
14
12 13
18
11
6
4 15
16 17
1
2
3
5
7
Movement since
previous year
Very unlikely
Unlikely
Possible
PROBABILITY
Likely
Almost certain
The risk impact scale rating has five levels of Probability and Impact:
Probability
Level
Quantitative
Almost certain
Once a week
Qualitative
Happens often
Likely
Possible
Unlikely
Once a month or more
Could happen easily and has occurred under similar conditions
Once or twice a year
Could happen and has happened in similar conditions
Once or twice every 10 years
Has not happened yet, but could happen
Very unlikely
Once or twice every 50 years
Only in extreme circumstances
Impact
Level
Severe
Significant
Moderate
Low
Very low
EBITDA / Safety and Health / Environment / Communities / Legal / Reputation
• Any incident with an impact of more than 50% of EBITDA.
• Accident causing multiple fatalities or permanent disabilities.
• Irreversible environmental damage or serious incident that impacts a community, with long-term effects.
• Regulatory breaches which may lead to a revocation of operating permits or a financial impact exceeding 20% of EBITDA.
• Severe impact on Company’s international reputation with long-term effects.
• Any incident with an impact of between 20% and 50% of EBITDA.
• Accident that causes a single fatality or permanent disability.
• Reversible environmental damage or major incident affecting a community, with medium-term effects.
• Regulatory breaches which may lead to a criminal conviction or a financial impact of more than 20% of EBITDA.
• High impact on the Company’s national reputation with medium-term effects.
• Any incident with an impact of between 10% and 20% of EBITDA.
• Accident resulting in lost time.
• Moderate environmental impact or small incident that affects a community, with short-term effects.
• Regulatory breaches which may lead to criminal charges or a financial impact of between 0.05% and 3% of EBITDA.
• Moderate adverse claims and in the national news for a medium-term period.
• Any incident with an impact of between 5% and 10% of EBITDA.
• Accident without lost time.
• Minor environmental or community impact.
• Regulatory breaches which may result in a financial impact of less than 0.05% of EBITDA.
• Moderate claims and in national news for a short-term period.
• Any incident with an impact of less than 5% of EBITDA.
• Minor occupational accident.
• Very minor environmental or community impact, easily resolved.
• Regulatory breaches that will not result in a financial penalty.
• Claims that do not reach the formal media.
Antofagasta plc Annual Report 2022
27
/ Risk management continued
Defining risk appetite is key in embedding
the risk management system into our
organisational culture.
The Company’s risk appetite statement helps
to align our strategy with the objectives of
each business unit, clarifying which
risk levels are, or are not, acceptable.
It promotes consistent decision-making on risk,
allied to the strategic focus and risk/reward
balance approved by the Board.
The principal risks, together with related prevention and mitigation
measures, have been presented to the Board and are grouped in line
with our strategic pillars: People, Safety and Sustainability,
Competitiveness, Growth and Innovation. These pillars are supported
by our corporate governance structures.
The principal risks are outlined in the risk heat map and table on the
previous two pages, and in more detail below.
Description
Preventive and mitigation measures
Highlights
Risk appetite
Risk level
Outlook
Our methodology for identifying and managing
talent to look for the competencies we require to
ensure the sustainability of our business, allows
us to identify the key people for our talent pool.
We embedded our New Ways of Working model
(hybrid), which was introduced in 2021 to
facilitate business continuity and attract and
retain talent.
This year, our Diversity and Inclusion Strategy
has increased the proportion of our female
employees to 20.4%, 3.2 percentage points
higher than in 2021.
Risk appetite
Risk level
Outlook
Three-year labour agreements were
successfully negotiated with two of the unions
at Antucoya, one at Los Pelambres and one at
Zaldívar, all of them 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
could have a negative impact
on the performance of our
existing operations and
prospects for growth.
2. LABOUR RELATIONS
Our highly-skilled workforce
and experienced management
team are critical to 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
and add to 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 and
competitive 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 selecting 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 comply with Chile’s strict labour regulations.
There are long-term labour agreements (usually three years)
in place with all the unions at our operations, which helps
ensure labour stability.
We seek to identify and address any labour issues that may
arise during 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.
28
Antofagasta plc Annual Report 2022
Strategic Report
Description
Preventive and mitigation measures
Highlights
Risk appetite
Risk level
Outlook
We had no fatalities during 2022.
Our lagging indicators continue to fall and were
below our targets for the year.
This year we put extra effort into promoting the
correct use of our Job Safety Analysis tool, to
help supervisors and operators standardise safe
working practices for high-risk tasks.
After dealing with the COVID-19 aftermath, we
refocused on occupational health and updated
our medical surveillance programmes. This
included putting more preventative controls
in place to reduce exposure to our main
occupational health risks-noise and dust.
Risk appetite
Risk level
Outlook
We have strengthened our environmental
management model, updating it monthly with
new or revised environmental regulations.
We also implemented the regular monitoring
of Environmental Authority inspection processes
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, and one
of our core values.
A poor safety record or
a serious accident 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
trained 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 safety culture, which 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 our four main goals: zero
fatalities, zero occupational illnesses, the development of a
resilient culture; and the automation of hazardous processes.
Leadership visibility and strong use of Job Safety Analysis and
Yo Digo No (I Say No) tools are part of our safety performance.
Critical controls and verification tools are constantly
strengthened through the verification programme and regular
audits of critical controls for potential high-risk activities.
4. ENVIRONMENTAL MANAGEMENT
An operating incident that
impacts the environment
could affect 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.
We have a comprehensive approach to incident prevention.
Risks are assessed, monitored and controlled to achieve our
goal of zero incidents with significant environmental impact.
We work to raise awareness in our employees and contractors
by providing training to promote operating excellence related
to the environment in which we operate. 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 resources by using sea
water, favouring the use of renewable power, and achieving
higher rates of reuse and recovery of water by using thickened
tailings technology.
We recognise that environmental performance is key to our
ability to generate social value and perform regular risk
assessments to identify our potential impact and develop
preventive and mitigating strategies.
Each site regularly updates their environmental emergency
preparedness and detailed closure plans, including appropriate
financial provisions to ensure physical and chemical stability at
their sites once operations have ceased.
Antofagasta plc Annual Report 2022
29
/ Risk management continued
Description
Preventive and mitigation measures
Highlights
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.
By 2025 we aim to reduce our Scope 1 and 2
emissions by 30% compared to 2020. We are
also committed to achieving carbon neutrality
by 2050, or sooner if technology permits.
Since April 2022, all our mining operations use
only renewable power, significantly reducing our
Scope 2 emissions.
Risk appetite
Risk level
Outlook
We reinforced community programmes related
to water for human consumption and irrigation
to mitigate the impact of the drought in the
Province of Choapa.
We seek to stimulate the generation of economic,
social and human capital in the regions where
we operate by promoting local employment,
fostering local suppliers and offering education
and training opportunities. We run various
programmes to support local entrepreneurs and
micro and small businesses.
We have launched a community concerns
management system to report any issues caused
by our operations on neighbouring communities.
Concerns can be made confidentially and tracked
to monitor their progress.
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. In addition, the
increasing severity of sea
swells leads to delays in the
delivery of key supply
materials and the export
of our concentrates and
cathodes.
The Chilean government’s
increased climate ambitions
may result in higher
compliance and operating.
We are committed to
contributing to the reduction
of greenhouse gas emissions
and water scarcity. We 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.
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 more efficient water use and
the increased use of sea water as a proportion of our total
water consumption. As each phase of the Los Pelambres
desalination plant construction is completed, 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 to and mitigate their
potential impact. For each risk evaluated as “High” or “Extreme”
we produce specific action plans and strategies.
We continue to seek ways to decarbonise our operations and
this requires greater investment in innovative solutions,
including in developing low-carbon technology, and can
increase operating costs.
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
life 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.
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Antofagasta plc Annual Report 2022
Strategic Report
Description
Preventive and mitigation measures
Highlights
7. POLITICAL, LEGAL AND REGULATORY
Political instability could 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.
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 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 that
we are prepared to meet any new regulatory requirements.
Risk appetite
Risk level
Outlook
There is currently a heightened level of political
uncertainty in Chile that has been somewhat
reduced by the rejection of the proposed new
constitution and the advancement of the mining
royalty reform.
The Group is supporting the Chilean industry
associations, particularly the Consejo Minero
(Mining Council) in its representations and
responses on the proposed legislation to the
government on behalf of the industry.
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 have zero tolerance for any activity that would contravene
anti-bribery and corruption legislation. We maintain a robust
governance regime, open channels of communication,
Group-wide training programmes, and multiple layers of
controls at all our operations, projects and exploration activities,
as well as in our third-party relationships using enhanced due
diligence procedures.
Our Compliance Model is set to prevent actions which may
involve us directly or indirectly in any potential irregularities
(including any kind of bribery), detect possible risks in a timely
fashion and respond to any misconduct in an adequate manner.
Internal policies, procedures and controls have been
implemented to prevent corruption.
An anonymous whistleblowing hotline is available to employees
and external parties to report compliance-related concerns,
which are investigated and followed-up by an expert team
and reviewed by a senior management Ethics Committee.
All our employees receive training on our Crime Prevention
Model, which is subject to external certification.
We strive to establish a Compliance culture throughout the
Group, through extensive training and user-friendly internal
communications.
Risk appetite
Risk level
Outlook
In 2022 cyber crime was included as a new
offence in the Chilean anti-bribery and
employment protection laws. The Group’s
controls were updated accordingly.
The Crime Prevention Model was recertified until
mid-2023 by an expert third party.
Following a compliance risk assessment carried
out by external auditors, our risk matrix was
updated to ensure we have a robust and
transparent control framework.
During the year, all our employees completed
an online Code of Ethics course as part of our
preventative measures programme.
Antofagasta plc Annual Report 2022
31
/ Risk management continued
Description
Preventive and mitigation measures
Highlights
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 how we
operate. A failure or collapse
of any of our TSFs could
result in fatalities, damage to
the environment, regulatory
violations, reputational
damage and disruption of the
quality of life of neighbouring
communities as well as the
running of our operations.
Principal risks relating to each operation are identified as part
of the regular risk review processes they undertake. This
process also identifies 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 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 to allow the effectiveness of their design,
operation and closure to be monitored at the highest level of the
Company. All our TSFs are built using the downstream
construction method and are designed to withstand
earthquakes and extreme weather.
Catastrophic failures of TSFs are unacceptable. 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 to strengthen
the control environment. Risk management includes timely risk
identification, control definition and verification.
Our controls are based on the consequences of the potential
failure of the tailings facilities.
11. STRATEGIC RESOURCES
Disruption or restriction of
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.
Contingency plans are in place to address any short-term
disruptions to strategic resources and maintain our security
of supply. 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.
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, keeping in place the controls
necessary to ensure the traceability of all supplies (including
the avoidance of any conduct related to modern slavery).
We are committed to incorporating sustainable technological
and innovative solutions, such as the use of sea water and
renewable power when economically viable, to mitigate
exposure to potentially scarce resources.
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Antofagasta plc Annual Report 2022
Risk appetite
Risk level
Outlook
Lessons learned from previous cases of
community concern has improved the resilience
of our operations and minimised the impact of
incidents this year.
Many years of drought at Los Pelambres has
reduced production in 2021 and in 2022. This
climate change impact will be mitigated by the
completion of the desalination plant in the first
half of 2023.
The Los Pelambres concentrate pipeline incident
was quickly and appropriately mitigated and a
project to assess the entire pipeline
implemented.
Risk appetite
Risk level
Outlook
The Global Industry Standard on Tailings
Management (GISTM) was published in 2020.
We are implementing this standard at all our
operations.
Our 2021 tailings policy sets out the guiding
principles for the management of our TSFs and
any potential or actual impact on the
environment, using sound governance and open
communication with stakeholders.
In accordance with this standard, we continue to
update our risk assessment methods, focusing
on more detailed risk identification, failure modes
and controls in order to avoid catastrophic
failures.
Risk appetite
Risk level
Outlook
During the year, some transport interruptions
and the war in Ukraine threatened the supply of
some key inputs. However, the impact was
either prevented or mitigated through constant
monitoring, contingency planning and actions
taken to improve our supply alternatives, such
as inventory management and increase the
stockpile capacity.
The main exposure during the year was related
to water scarcity at Los Pelambres due to the
drought. By the year end the desalination plant
was 93% complete and will be in production
in 2023.
Strategic Report
Description
Preventive and mitigation measures
Highlights
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.
Our Information Security Management Model provides
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 our assets, and specific systems are
in place to protect them and our data.
Risk appetite
Risk level
Outlook
We have further strengthened our protective
controls and regularly communicate with users
to prevent cyber attacks.
To reinforce our controls we organised “ethical
phishing” and “ethical hacking” exercises during
the year.
Risk appetite
Risk level
Outlook
We maintained our solid balance sheet and
financing ratios, safeguarding our capability
to raise debt.
We have focused on diversifying our funding
sources, retaining a high level of interest from
financial institutions offering to provide finance
on competitive terms.
During 2022 we issued our second $500 million
corporate bond and we agreed a Revolving
Credit Facility (RCF) for $500 million, diversifying
the sources and term of our debt financing.
Risk appetite
Risk level
Outlook
The impact of the political uncertainty during
the year often outweighed the usual
correlation between the US dollar/Chilean
peso exchange rate.
No new hedging positions were entered into
during 2022.
13. LIQUIDITY
Restrictions in financing
sources available for future
growth could prevent us from
taking advantage of growth
or other opportunities in the
market.
Security, liquidity and return are the order of priorities for our
treasury 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. This gives us 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 those of
copper and, to a lesser extent,
gold and molybdenum.
The prices of these
commodities are influenced
by many external factors,
including world economic
growth, inventory balances,
industry supply and demand,
possible substitution, etc.
Our sales are mainly
denominated in US dollars,
although some of our
operating costs are in Chilean
pesos. Thus any
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 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 under 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.
Antofagasta plc Annual Report 2022
33
/ Risk management continued
Description
Preventive and mitigation measures
Highlights
15. GROWTH OF MINERAL RESOURCE BASE AND OPPORTUNITIES
Risk appetite
Risk level
Outlook
Our exploration and investment strategy prioritises
exploration and investment in the Americas. To reduce our
risk exposure, we focus on growth opportunities in stable
and secure countries.
Our rigorous assessment processes evaluate and determine
the risks associated with all potential business acquisitions
and exploration opportunities, including stress-test scenarios
conducted for sensitivity analysis. Each assessment includes
a country risk analysis (including corruption) and analysis of
our ability to operate in a new jurisdiction.
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
opportunities and transactions, approving or recommending
them within authority levels set by the Board.
Our exploration activities continued to be focused
on the Americas and our risk exposure level was
unchanged.
The Company has discovered a significant
greenfield copper/gold deposit in the Chilean
High Andes. The initial inferred resource of the
Encierro deposit is 522 million tonnes, with
a copper grade of 0.65%.
Two of Twin Metals’ federal mining leases were
cancelled during 2022. In August 2022 Twin
Metals filed a federal claim challenging these
actions.
We need to identify new
mineral resources to ensure
continued future growth. 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, will influence
the forecast return of
investments. Incorrect
estimates could cause poor
decision-making.
Regarding exploration, there
is a risk that we may not
identify sufficient viable
mineral resources.
16. PROJECT DEVELOPMENT AND EXECUTION
Failure to effectively manage
our development projects or
transform our resources into
reserves could result in
delays to the start of
production and cost overruns.
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 benefits of growth. In addition, all
geometallurgical models are reviewed by independent experts.
Delays on information capture
and/or not achieving required
enablers could limit the
conversion of resources into
reserves.
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 under a range of copper
price scenarios. Joint project/operation teams are established
early in a project’s development to ensure a smooth transition
into the operating phase once construction is completed.
All new reserves and growth projects must comply with our
internal procedures and all applicable environmental and social
laws and regulations.
Risk appetite
Risk level
Outlook
Our projects are developed in accordance with
the practices set out in our Asset Delivery
System (ADS), including the Functional Quality
Assurance Review (FQAR), and are reviewed
by external experts.
Project risks are proactively managed and
frequently evaluated to minimise their impact
on costs.
Project estimates include a contingency
provision, calculated using a probability-based
method that considers the systemic and specific
risks of each project.
The risks associated with converting mineral
resources to reserves are properly identified
and managed by the teams to ensure accurate
conversion.
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Antofagasta plc Annual Report 2022
Strategic Report
Description
Preventive and mitigation measures
Highlights
17. INNOVATION AND DIGITALISATION
Our ability to deliver on our
strategy and our performance
targets may be undermined
by missed opportunities or
delays in adopting new
technologies or innovations.
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 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, when there is no competitive barrier – to
maximise the potential for improvements in our processes and
systems. A dedicated team monitors, identifies and analyses
external innovation trends that have potential applications in 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 innovative improvements 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.
Changes in the global or Chilean economic or political
environment can impact the Group’s strategy.
We maintain our good practices and adopt lessons learned
during periods of crisis.
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 use scenario analysis to challenge the principles on which
we base our financial planning, identifying potential risks, costs
and benefits of feasible action plans.
Risk appetite
Risk level
Outlook
During 2022, various automation projects were
progressed. These included the use of
autonomous drills and autonomous trucks at
Centinela and the commissioning of its new
Integrated Remote Operations Centre (IROC).
The IROC for Los Pelambres will be
commissioned in 2023.
Advanced data analytics are used at our
operations to increase throughput and ore
recovery and to improve predictive maintenance.
During the year our Data Governance
Programme and Data Platform were deployed
across the organisation to improve data access,
consistency and quality, thus accelerating our
Advanced Analytics capabilities.
Risk appetite
Risk level
Outlook
The controls for this risk were updated to
incorporate lessons learned during the year,
such as the geographic diversification of our
suppliers and actions taken to guarantee the
safety and health of our employees during a
pandemic.
We also increased our stocks of strategic
resources to improve our supply resilience.
Emerging Risks
In addition to our principal risks, we are constantly on the lookout for emerging risks that may become new principal risks in the future.
Current emerging risks are:
Emerging risk
New tax regulations
Wide-ranging Chilean tax reform is expected during 2023.
Geopolitical
Global political and economic uncertainty is affecting short-term
demand for copper and other metals, as well as trade flows
and our supply chains.
Impact
During 2022, each of our mining operations had tax stability agreements
in place and the future financial impact on them will be assessed if the
reforms become law.
The potential impact may include lower revenue, longer lead times
for critical supplies and increased input costs.
The above risks are closely monitored and actively managed to minimise their threat.
Antofagasta plc Annual Report 2022
35
/ Risk management continued
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
necessary controls are in place to prevent
any unethical behaviour.
Areas of focus and development during 2022
• Whistleblowing investigations, performed by a group of experts,
were centralised and standardised, guaranteeing independence
to the process
• A robust due diligence process is in place
• The Company’s Crime Prevention Model was recertified by an
independent expert
• All of the Group’s employees completed online Code of Ethics training
during the year
• Employees in high-risk areas completed more in-depth training
on ethics and compliance
• New employees were trained in the Compliance Model as part
of their induction programme
• All employees updated their conflict-of-interest disclosures
• An “Integrity Week” event was held for all employees during which
the value of respect in the workplace was discussed
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 in accordance
with Chilean anti-corruption legislation.
The Model has three pillars:
Prevention: The main focus of the Compliance Model is to prevent
the occurrence of any irregular or illegal situations. We provide a series
of tools and training opportunities to all employees and contractors
to support appropriate behaviour through:
• Internal policies and procedures
• Anti-trust guidelines
• The management and update of our Compliance Risk Matrix
• Our robust due diligence processes
• Anti-corruption clauses in suppliers’ and employees’ contracts
• Compliance training and communication
• Access Control and Governance, Risk and Compliance (GRC)
tools are used as part of the segregation of duties control
Detection: We have several tools to detect any potentially irregular
or illegal situations, including:
• Robust whistleblowing channels
• Data analysis
• Anti-corruption internal controls
• Normative Instruments, such as internal policies, procedures
or guidelines, which are continually reviewed
• Anti-corruption events took place at all our operations to reinforce
• Internal audit
our compliance with our Integrity values
• The Compliance team was included as part of the approval process
for social contributions, to strengthen monitoring and governance
• A communication campaign was carried out as part of our focus
on Prevention in our Compliance Model
• Compliance was included as a topic in the “Antofagasta Supplier Day”
event, with a particular focus on local suppliers
• Our Compliance Risk Matrix and all the controls related
to it were reviewed
• All allegations regarding ethical and non-ethical concerns
are presented to the Ethics Committee.
Code of Ethics
Our Code of Ethics sets out our commitment to conducting business
in a responsible and sustainable 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 core of our Compliance Model and supports the
implementation of all other related activities.
Our Code is available on our website.
Compliance Model
Our Compliance Model applies to both our 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.
Action: If an irregular or illegal situation is detected, it is investigated
according to our internal procedures using fact-based, objective and
professional standards. Each of our operations has an Ethics Committee
which reviews the findings of every investigation and suggests
remediation plans to the Corporate 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 the whistleblowing
channels is guaranteed to safeguard individuals and so achieve greater
transparency and bolster our non-retaliation policy.
During the year we received 624 allegations. Of these 245 (39%) were
ethics related and 379 (61%) were non-ethical concerns. The ethical
allegations were classified as: 73% (180) harassment, abuse and
mistreatment, 11% (28) fraud or misuse of property, 5% (10) conflicts of
interest, 2% (4) bribery and corruption, 0% (0) modern slavery and 9%
(23) other. Remediation action were defined and implemented for all
substantiated allegations.
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 6,612 suppliers were reviewed, of which 1.6% were
rejected. Of these 97% were Chilean suppliers and 3% were
international. The reasons for rejection were mainly due to high financial
or tax risk, non-compliance with Law 20.393 (Criminal Responsibility
of Legal Entities) or non-compliance with Group guidelines.
36
Antofagasta plc Annual Report 2022
Strategic Report 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 model 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 the terms and remaining
durations of the borrowing facilities in place. The Group had a strong
financial position as at 31 December 2022, with combined cash, cash
equivalents and liquid investments of $2,391.2 million. Total borrowings
were $3,277.0 million, resulting in a net debt position of $885.8 million.
Of the total borrowings, only 13% is repayable within one year, and 17%
repayable between one and two years. 35% of the borrowings are
repayable after more than five 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,
including depreciation, deferred stripping and closure provisions. 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
standalone impact of each of:
• A significant deterioration in the future copper price forecasts
by 20% throughout the five-year period.
• An even more pronounced short-term reduction of 50 c/lb in the
copper price for a period of three months, in addition to the above
deterioration of 20% in the copper price throughout the review
period.
• The potential impact of the Group’s most significant individual
operational risks.
• A shutdown of any one of the Group’s operations for a period
of three months.
• Potential changes to the Chilean mining royalty, taking into
account the Group’s existing tax stability agreements.
The stability of tailings storage facilities represents a potentially
significant operational risk for mining operations globally. The Group’s
tailings storage facilities are designed to international standards,
constructed using downstream methods, subject to rigorous monitoring
and reporting, and reviewed regularly by an international panel of
independent experts. Given these standards of design, development,
operations and review, the impact of a potential tailings dam failure has
not been included in the sensitivity analysis.
The above downside sensitivity analyses indicated results which could
be managed in the normal course of business, including the aggregate
impact of a number of the above sensitivities occurring at the same time.
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.
Antofagasta plc Annual Report 2022
37
Stakeholder
Review
Highlights
Our approach to sustainability
How we engage with our stakeholders
Our people
Safety and occupational health
Communities
Environment
Climate Change
Task Force on Climate-related
Financial Disclosures (TCFD)
Suppliers
Customers
Shareholders
Governments and regulators
Non-financial information statement
40
42
46
48
51
54
57
60
64
67
70
71
72
73
38
Antofagasta plc Annual Report 2022
Strategic Report “Sustainability for Antofagasta plc
is about deploying a strategy that
improves the lives of our
employees, embraces and
supports the development of our
surrounding communities, and
manages the environmental
aspects of our operations.”
René Aguilar
Vice President of Corporate Affairs and Sustainability
Antofagasta plc Annual Report 2022
39
/ Highlights
We have made strong progress
against our targets
We had record safety performance, and
achieved our female participation and
emissions reduction goals.
Sustainability-related governance
• In August and December respectively, our Antucoya and Los
Pelambres operations were awarded the Copper Mark, the copper
industry’s responsible production assurance framework. Zaldívar and
Centinela received this recognition in 2021.
• Our four mining operations completed the independent audits required
to validate their performance against the International Council on
Mining and Metals’ (ICMM) Performance Expectations.
• We updated our Human Rights Policy to strengthen our explicit
commitment to respect the rights, culture and traditions of indigenous
peoples and approved an Indigenous Peoples Engagement Standard.
• We prepared a Sustainable Procurement Policy to govern both
our management and our expectations of the companies in our
supply chain.
Safety and health
• In 2022, there were no fatalities in the Group.
• The Group’s safety performance continued to improve; compared
to 2021, high potential incidents (HPIs) and the Lost Time Injury
Frequency Rate fell by 40% to 0.12 and 37% to 0.84, respectively.
• The Mining division began installing the latest generation collision
avoidance system in its transport equipment, and also in the transport
equipment of its contractors and subcontractors.
People
• In 2022, we rolled out our Wellbeing Strategy, focusing on physical,
emotional, financial and social welfare.
• We increased the proportion of our female employees to 20.4%,
compared to 17.2% in 2021, continuing the steady improvement
achieved since 2018 and meeting our target for the year.
• As our digital transformation plan advanced, we trained employees
at Centinela and Los Pelambres to work in our integrated remote
operations centres (IROCs) and use autonomous equipment such
as trucks and drill rigs.
• Our Transport and Mining divisions launched new apprenticeship
programmes, accepting 233 candidates, of whom 81% are women,
mainly from communities close to our operations.
Suppliers
• In 2022, we began applying ESG criteria to evaluate bids for contracts
worth over $10 million. These criteria included the contractors’
emissions, D&I, local recruitment and governance strategies
and practices.
• The number and value of tenders awarded by our Mining division
to local suppliers increased by 49% to 7,139 and 10% to $374m
respectively as part of our commitment to foster economic
development in the regions where we operate.
40
Antofagasta plc Annual Report 2022
• We signed Greenhouse Gas Agreements with mining equipment
suppliers Komatsu and Caterpillar in a step towards developing
zero-emission vehicles and machinery, which currently account for
approximately two-thirds of our Scope 1 emissions.
• In December, we launched our Suppliers for a Better Future
programme, which sets targets for suppliers on environmental, social
and governance (ESG) matters, to be achieved by 2025.
Community
• In March, we launched a new community grievances management
system to report concerns, complaints or grievances caused by our
operations.
• We dedicated extra resources to measuring the impact of our
investments in our areas of influence, as we continue to evaluate our
programmes and improve our performance.
• In 2022, we ramped up our En Red (Connected) digital connectivity
programme, comprising over 20 initiatives to address the deficit of
digital infrastructure and skills in the rural and vulnerable communities
near our operations.
• In September, as part of our efforts to combat the acute drought in
the Choapa Province, we launched a 30-month project to digitalise
and automate the 80 Rural Sanitary Services (SSRs) that provide
water to people’s homes.
Environment
• In 2022, we updated our Biodiversity Standard as part of the
implementation of our Climate Change Strategy, improving its
alignment with the position statement from the International Council
on Mining and Metals (ICMM) on Mining and Protected Areas.
• We continued to implement the Global Industry Standard on Tailings
Management at Los Pelambres and at Centinela and Zaldívar,
aiming to finish by the prescribed deadlines of August 2023 and
August 2025.
• Los Pelambres is planting some 48,000 native trees and shrubs
across 300 hectares at the Quillayes tailings dam. This will help
control particulate material events while blending the dam in with its
surrounding environment.
Climate change
• We approved new Water and Energy Policies to improve our
management of these critical resources in the fight against climate
change and aligned our Energy Management System with Chile’s new
Energy Efficiency Law.
• We completed the conversion of all the electricity supply of our mining
sites to renewable contracts, leading to a reduction of 873,695 tCO2e
in our Scope 2 emissions compared to 2021.
• We continued to refine our calculation of Scope 3 emissions with the
aim of setting a reduction target in 2023 or as soon as possible
thereafter. We also began applying an internal carbon price on tenders
for carbon-intensive products and in the evaluation of projects.
• In October, our Transport division signed an agreement to acquire
a 100% green hydrogen-fuelled cargo train that should start operating
in 2024.
• During 2022, we began work on a decarbonisation plan for all
our operations.
Strategic Report DELIVERING SUSTAINABLE ECONOMIC VALUE
At Antofagasta, our purpose 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 our stakeholders, distributing it as
wages to employees, purchases of goods and services to suppliers,
social investment programmes in communities, taxes to governments,
dividends to shareholders and interest payments to lenders.
This direct distribution of economic value generates indirect benefits
through spending by employees, suppliers, the government and others,
benefitting the country as a whole.
For Antofagasta, creating economic value means generating profits
responsibly and with long-term vision, incorporating unique and
innovative solutions in business decisions to address challenges
in the regions in which we operate, as well as working to tackle
today’s global challenges.
In 2022, we directly distributed a total of $7,445 million.
Suppliers
$4,620m
Payments for the purchase of utilities, goods and services
$7,445m
Total economic contribution
Communities
$57m
Social investment programmes
Lenders
$77m
Interest payments
Shareholders
$1,263m
Dividends
Subsidiaries’ non-controlling
shareholders
$80m
Dividends
Employees
$548m
Salaries, wages and incentives
Governments
$800m
Income taxes, royalties and other payments to governments
Antofagasta plc Annual Report 2022
41
/ Our approach to sustainability
We are committed to making a positive
long-term impact on society
Sustainability is a core part of our values and
is at the heart of our decision-making as we
seek to achieve our purpose of developing
mining for a better future.
Governance
At Antofagasta, our commitment to making a positive long-term impact
on society is underpinned by our values and robust policies, standards
and strategies that we constantly review and adapt in order to address
emerging and growing societal concerns.
Using this framework, we strive to engage the whole organisation in our
commitment to respect human rights, promote safety and health, deliver
strong economic returns, protect the environment, address climate
change and create social value in the regions where we operate.
Our Sustainability Policy and our Human Rights Policy establish the
principles that guide our day-to-day actions on environmental, social and
governance (ESG) matters. In 2022, we updated our Human Rights
Policy to reinforce our commitment to the rights of indigenous people
and to formally align our security practices with the Voluntary Principles
on Security and Human Rights (VPSHR). We also prepared
a Sustainable Procurement Policy that governs our management
and expectations of companies in our supply chain.
We regard climate change as one of the greatest challenges of our
times. In 2022, we approved specific Energy and Water Policies to
strengthen our Climate Change Strategy across the organisation, while
further embedding climate considerations into our working practices.
We also updated our Biodiversity Standard.
The Board is responsible for leading and monitoring sustainability
practices. The Sustainability and Stakeholder Management Committee
makes recommendations to ensure ESG issues are included in the
Board’s deliberations. At the executive level, sustainability considerations
guide decision-making across the organisation, with particular
responsibility falling upon the Corporate Affairs and Sustainability area.
In 2022, a sustainability reporting team was established to further
improve transparency and provide more detail about our interactions
with stakeholders.
In July, we published our first special Tax Report detailing our tax
payments in 2021, one of a series of recent initiatives to improve
transparency about our business. In August, we published an ESG
Databook on the Antofagasta plc website for the first time, which shows
sustainability data by site and by year since 2018. Towards the end of
the year, we began preparing our second special report, this time on
climate change and social investment, to be published in April 2023.
We communicate with and train the whole organisation to ensure that
everyone is aligned with our commitment to sustainability. Sustainability
targets associated with safety, diversity and inclusion (D&I), environment
and social performance account for 25% of annual performance
bonuses, to encourage internal buy-in and focus our employees’ efforts
on best practice.
In 2022, our CEO Iván Arriagada was named chair of both Chile’s Mining
Council and the London-based International Council on Mining and
Metals (ICMM), thanks in part to our efforts on sustainability. He is the
first Latin American to lead the ICMM, a global association which seeks
to improve the industry’s sustainable development performance. In
addition, he was named as the 2022 recipient of the prestigious Copper
Club’s Ankh Award for Copper Man of the Year in recognition of his
outstanding service to the copper mining industry, leadership, and for
promoting the benefits of copper and its critical role in shaping a more
sustainable future.
RESPONSIBLE PRODUCTION FRAMEWORK
In recent years, an important focus of our work has been to align
our policies, strategies and practices with the highest sustainability
standards and to address transparency and trust issues through
third-party validations in order to demonstrate that we produce
copper responsibly.
In 2021, Centinela and Zaldívar were among the first mining sites in
the world to be awarded the Copper Mark, an independent external
assurance of mining sites’ compliance with strict and internationally
recognised standards of sustainable production. In 2022, Antucoya
and Los Pelambres completed the same assurance process, also
obtaining the Copper Mark. Summaries of the full Copper Mark
reports are available on coppermark.org.
The Copper Mark was launched in 2020 and was inspired by the
UN’s Sustainable Development Goals (SDGs). It 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. Sites must at least
partially meet all criteria and commit to closing all identified gaps
within 12 months. As participants, we are committed to a
third-party review every three years.
As members of the International Council on Mining and Metals, our
four mining sites also underwent independent audits on compliance
with the ICMM’s Performance Expectations. The ICMM has
assessed the equivalency of its 38 Performance Expectations
against the Copper Mark and the process focused on those not
covered (six) or only partially covered (nine) by the Copper Mark.
This assurance process ensures that ICMM’s 27 member
companies are held to the same high standards and will be
repeated every three years.
Further information can be found in the Mining division’s 2022
Sustainability Report.
42
Antofagasta plc Annual Report 2022
Strategic Report Materiality analysis
In 2022, we conducted a materiality assessment to identify the
sustainability issues most critical to our business and stakeholders which
we update every two years. It was built collaboratively with inputs from
internal and external stakeholders. For the first time we used the new
Global Reporting Initiative Standard on Material Topics, which came into
effect on 1 January 2023.
The analysis has four stages:
• Diagnosing the organisation’s context: Comprehensive review
of internal and external information, and interviews with senior
management and external experts regarding existing, new and
emerging ESG topics for the copper mining industry, both in Chile
and internationally.
• Identifying actual and potential material topics: The information
obtained was used to draw up a preliminary long list of actual,
potential and positive and negative material topics.
• Assessing the significance of the impacts: The qualitative and
quantitative impacts of each topic were evaluated based on the
severity and likelihood of actual and potential impacts. The severity
assessment was based on the scale, scope and remediable nature
of the impacts.
Antofagasta plc materiality matrix
• Prioritising and defining material topics: The European Financial
Reporting Advisory Group’s scales were used to define each topic’s
level of materiality. The most significant impacts were grouped
into material topics under the categories economic, governance,
environmental and social. Each topic was reviewed and confirmed
or adjusted by Antofagasta’s sustainability team.
In total, 28 material topics were identified, of which four are new:
industrial protection, wellbeing, cyber security and, in the case of
our Transport division, soil remediation. The most significant issues
in terms of their importance to stakeholders and their potential impact
are: corporate governance; regulations and permitting; transparency,
communication and trust; safety and health culture; communities and
indigenous peoples’ engagement; and social contribution and skills
development.
The exercise ensures that we report on subjects of interest to
stakeholders in our Mining and Transport divisions’ Sustainability Reports
and will guide our focus, strategies, policies and practices in 2023.
Details of our approach and activities to address these challenges in
2022 are contained in the corresponding sections of this Stakeholder
Review or in our 2022 Sustainability Reports.
S
R
E
D
L
O
H
E
K
A
T
S
O
T
E
C
N
A
T
R
O
P
M
I
H
G
H
I
• Circular economy
• Respect for human
rights
I
H
G
H
M
U
D
E
M
I
W
O
L
M
U
D
E
M
I
W
O
L
• Corporate governance
• New regulations, regulatory
uncertainty and permits
• Transparency, communications
and trust
• Safety and health culture
• Dialogue and engagement with
community and indigenous
peoples
• Social contribution and skills
development
• Economic performance
• Site security
• Management of the operations
social and environmental impacts
• Decarbonisation
• Workforce wellbeing
• Responsible sourcing
• Contractors’ management
• Innovation
• Digital transformation
• Risk management and climate
change adaptation
• Water management
• Collaborative labour relations
• Talent attraction, retention
and development
• Local employment
• Diversity, equity, inclusion
• Tailings management
• Biodiversity
• Cyber security
• Soil remediation
• Heritage and urban
development
LOW
MEDIUM LOW
MEDIUM HIGH
HIGH
STRATEGIC IMPORTANCE FOR THE GROUP
Antofagasta plc Annual Report 2022
43
/ 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. Since 2020, we have required contractor companies to pay their employees an ethical minimum monthly wage. In 2022, it was set
at Ch$552,000, 38% higher than Chile’s legal minimum wage of Ch$400,000.
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.
The aim of our Safety and Health Strategy is to have no fatal accidents or occupational health illnesses. In 2022, we rolled out a Wellbeing Strategy
focusing on physical, emotional, financial and social welfare to complement our existing Flexitime and Work-Life Balance Guidelines that aim to enhance
employees’ work experience and life quality.
QUALITY EDUCATION
Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
We support inclusive access to good quality education in order to improve job opportunities in the regions where we operate. Initiatives range
from providing school and higher education scholarships to providing and strengthening technical-professional courses. We offer Young Graduate
programmes as well as apprenticeships and internships to give learning and work opportunities to local young people.
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. This is reflected in our recruitment
and selection strategies, in the promotion of inclusive workspaces and in our zero-tolerance policy on sexual harassment. The proportion of women
in our direct workforce has grown steadily, from 8.6% in 2018 to over 20% by the end of 2022.
CLEAN WATER AND SANITATION
Ensure access to water and sanitation for all
Our water management practices, which are aligned with the International Council on Mining and Metals’ (ICMM) Water Stewardship Framework,
aim to protect water for our operations, communities and the environment. Our strategy aims to reduce our use of continental water. We anticipate
that by 2025 raw or desalinated sea water and recirculated water will account for 90% of usage at our mining operations. We also work with local
communities to ensure water availability for human consumption and irrigation.
AFFORDABLE AND CLEAN ENERGY
Ensure access to affordable, reliable, sustainable and modern energy
Since April 2022, our four mining operations’ electricity comes solely from renewable contracts, in line with our Climate Change Strategy,
and we are piloting technology to replace the diesel used in our mining equipment. Our Transport division ordered a green hydrogen fuelled cargo
train that will begin operations in 2024. We also funded solar panels for 40 homes in Michilla to provide backup against frequent outages.
DECENT WORK AND ECONOMIC GROWTH
Promote inclusive and sustainable economic growth, employment and decent work for all
We are governed by the UK Modern Slavery Act. Our Code of Ethics, Human Rights Policy and Diversity and Inclusion Strategy aim to ensure
a harassment-free, inclusive workplace that respects human rights and diversity. We promote employee development and in 2022 spent $2.3 million
on training initiatives. We work with our suppliers to support environmental, social and governance 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, fostered through our Innovaminerals open platform
and pitch days for suppliers at our operations. As part of our Digital Transformation programme, we are training employees on digital technology
and the use of autonomous equipment and integrated remote operating centres. Our En Red programme aims to bring digital infrastructure and
skills to local communities.
REDUCED INEQUALITIES
Reduce inequality within and among countries
We aim to reduce inequality by providing help in the form of scholarships, educational support and access to Young Graduate programmes to promote
social mobility in remote and vulnerable sectors in the regions where we operate. In 2022, we provided 951 scholarships to students in the Antofagasta
Region and the Choapa Province. We also promote skills development and job opportunities for local people and businesses.
44
Antofagasta plc Annual Report 2022
Strategic Report SUSTAINABLE CITIES AND COMMUNITIES
Make cities 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 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 drives the responsible management of the Group’s activities. Each of our four mining operations has been awarded the Copper
Mark, the copper industry’s new responsible production assurance framework, and completed the ICMM’s Performance Expectations third-party
validation process. Our Suppliers for a Better Future programme aims to improve suppliers’ ESG practices through training, targets and incentives
in tender evaluations.
CLIMATE ACTION
Take urgent action to combat climate change and its impacts
We recognise climate change as one of the greatest challenges facing the world today and acknowledge that we are part of the solution. As a copper
producer we supply an input that is critical for low-carbon technologies. At the same time, we are working to decarbonise our operations. Our Climate
Change Strategy sets ambitious goals for emissions and water use, as well as the resilience of our operations and their areas of influence. We are
committed to being carbon neutral by 2050 at the latest and this year we achieved our target to cut our Scope 1 and 2 emissions by 30%.
LIFE BELOW WATER
Conserve and sustainably use the oceans, seas and marine resources
Our Biodiversity Standard is aligned with the ICMM’s position statement on Mining and Protected Areas. It aims to prevent or minimise our impact
on biodiversity, to restore or provide appropriate compensation for any impacts and to generate additional benefits for the areas in which 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. Los Pelambres supports R&D projects to repopulate the area near its marine facilities with sea urchins, abalones, red kingklip and other species.
LIFE ON LAND
Sustainably manage forests, combat desertification, halt and reverse land degradation and halt biodiversity loss
Protecting biodiversity is a key part of our climate change strategy. We seek to promote net gains in biodiversity and for nature-based solutions to
capture CO2 and help the adaptation to physical risks. We implement programmes to protect animal, bird and plant species and we administer near
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
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 our teams with higher exposure to risk on these matters. We also work with suppliers
to improve their governance models.
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, benefitting from 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 Health, People, Communities, Suppliers, Climate Change and Environment sections
of this Stakeholder review.
Antofagasta plc Annual Report 2022
45
/ How we engage with our stakeholders
We have constructive
long-term relationships
with all stakeholders
This is key to delivering our purpose.
Our engagement with stakeholders is open,
transparent and collaborative, to support the
long-term success of our business. We use
appropriate mechanisms to interact with
them, provide them with information
and learn about their interests
and concerns.
OUR PEOPLE
Approximately 31,000 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 and desalination
facilities.
SUPPLIERS
We work with on average over 1,700
suppliers, of which 91% 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. Contractors are essential for
operational continuity and, through our
engagement, 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 to grow
together 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 sustainability standards and
guidelines. We also work with suppliers to
ensure that their solutions are cost-effective
and efficient.
How we engage
We regularly engage 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 to discuss a range of topics,
including environmental, social and
governance.
How we engage
We engage with communities through different
social programmes, often implemented in
alliance with local organisations. Initiatives
are selected and designed jointly with the
community, using working groups on specific
areas of community development or concerns.
How we engage
The procurement team regularly meets with
suppliers to discuss upcoming tenders, our
sustainability requirements and other matters.
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 several different external
platforms. By prioritising local suppliers,
we seek to foster the development
of neighbouring communities.
See P48-50
for more information
See P54-56
for more information
See P67-69
for more information
46
Antofagasta plc Annual Report 2022
Strategic Report 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. In the Strategic Report we outline
how we engage with our stakeholders to
create value at our operations. Within the
Corporate Governance Report we discuss key
decisions that the Board has taken in the year,
and how stakeholders interests were
considered and how we engaged with them.
See P114-115
for more information
CUSTOMERS
We sell principally to industrial customers,
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, 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 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 cathodes and concentrate
on the spot market through traders, with
greater uncertainty about pricing and volume.
How we engage
We hold regular meetings with 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 some
of our partners and we have a marketing
office in Shanghai.
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 all treated fairly
and receive all relevant information.
How we engage
We regularly meet with institutional investors
and brokers’ analysts at industry conferences
and on roadshows, as well as at one-on-one
meetings to discuss both business and ESG
matters. 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.
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 our business.
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. In Chile, these are clearly defined
in Law N° 20.730 on lobbying.
See P70
for more information
See P71
for more information
See P72
for more information
Antofagasta plc Annual Report 2022
47
The Group’s People strategy is built around the four pillars of culture,
organisational effectiveness, labour relations and talent management,
and is aligned with the charter of values which is central to our
organisation. It seeks to promote an inclusive, innovative, motivated and
effective workforce with access to meaningful training and career
development opportunities.
Wellbeing
At Antofagasta, we believe employee wellbeing is vital to the
effectiveness and sustainability of our organisation and improving
employees’ labour experience is a key focus of our work. In 2021,
we implemented our New Ways of Working project, which introduced
a permanent hybrid system of remote and in-person working in
response to employees’ preferences.
During the year, we finished updating our Work-Life Balance Guidelines,
tailored for each mining site and designed to improve the balance of
employees’ time between work, family and recreational activities. The
guidelines were launched in 2019 and provide benefits that exceed the
requirements of Chilean legislation, such as being able to have a year off
work for health or other reasons. Our corporate offices offer employees
a flexitime system to fit working hours around their individual needs.
31,126
People
23%
Employees
20%
Women employees
77%
Contractors
77%
Unionised
employees
/ How we engage with our stakeholders continued
Our people
An inclusive culture that fosters
wellbeing is key to attracting and
retaining a diversity of talent.
48
Antofagasta plc Annual Report 2022
Strategic Report We also rolled out our Wellbeing Strategy, which focuses on our
employees’ physical, emotional, financial and social welfare. The strategy
builds on the tools we developed to help employees deal with increased
stress levels during the COVID-19 pandemic lockdowns and it aims
to promote healthy habits and closer ties among colleagues and with
wider society.
As part of the strategy, we promoted our 24-hour helpline and
encouraged in-person meetings and activities, allowing new recruits
to meet fellow workers and strengthen interpersonal relations and
teamwork. The initiative encourages healthy habits and preventive health
checks, and offers financial education to improve employees’
understanding of subjects such as health insurance.
The social pillar particularly seeks to foster a collaborative and
supportive workplace through the Volunteering Programme, now in its
second year. Employees at each mining operation and the corporate
offices are encouraged to brainstorm, select and take part in a volunteer
project in the local community. A total of 70 employees took part in our
first volunteering programme, which ended in April 2022, benefitting
261 people.
Diversity and Inclusion
Our Diversity and Inclusion (D&I) Strategy, launched in 2018, has
transitioned from an awareness-raising phase about unconscious bias
and discrimination to inclusive practices becoming an integral part
of how we work.
In 2022, we renewed our network of more than 80 D&I champions,
who act as agents of change to create an inclusive organisational
culture that supports the retention of women and people with disabilities
or different cultural origins. In a key initiative, we ran a campaign on
respectful behaviours and held workshops on respectful environments.
Other activities included webinars on Chile’s same-sex marriage and
gender equality laws and, using a protocol approved in 2021, supporting
any employees in the process of gender transition.
Gender balance
In 2022, we increased the proportion of our female employees to
20.4%, compared to 17.2% in 2021, meeting our goal for the year.
This continues our steady improvement since 2018, when we set
a target to double women’s participation by the end of 2022, compared
to a baseline of 8.6% in 2017. We met that target a year early in 2021,
and have now set a new gender diversity goal for women to represent
30% of employees by 2025. By comparison, women comprise 15.2%
of the mining industry workforce in Chile.
Women as a percentage of employees1
Year
Total number
of employees
Women
2018
2019
2020
2021
2022
6,663
6,481
6,760
7,494
8.8% 10.4% 14.7% 17.2% 20.4%
7,081
1. As at year end
Female representation in management
Executive
Committee
9
2
82%
18%
Directly reports
to the Executive
Committee
57
14
80%
20%
Senior
Management1
19
3
86%
14%
Male
Female
1. Includes directors of subsidiaries as defined in The Companies Act 2006 (Strategic
Report and Directors’ Report) Regulations 2013
We use many different ways to attract, select and retain women in the
workforce. For example, if a woman is on the shortlist for a position
and a male candidate is selected, the decision must be justified. We have
strong alliances with universities, aiming to encourage women studying
science, technology, engineering and maths (STEM) subjects to join the
Group and increase female participation in STEM subjects through our
scholarship programmes.
Our apprenticeship programmes provide an important entry route for
women from local communities to obtain technical qualifications and,
in most cases, lead to a highly prized permanent job. In 2022, our
Transport division and mining operations selected 233 new apprentices,
of whom 81% were women, mainly from communities close to our
operations.
People with disabilities
In 2022, people with disabilities accounted for 1.3% of our employees,
above the level required by Chile’s Workplace Inclusion Law.
We continued to lead the Mining Council’s technical working group
on universal access for people with disabilities to mine sites and
a regulation on the topic was updated during the year.
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/ How we engage with our stakeholders continued
Building human capital
At Antofagasta, we seek to develop our employees as well as potential
candidates in the local communities where we focus our recruitment
efforts. In 2022, 72% of our employees lived in the Antofagasta and
Coquimbo Regions where our operations are located.
We invested $2.3 million in training in 2022, providing an average
of 45 hours of training per employee.
Leadership skills
We trained shift leaders, providing information and tools to improve their
leadership skills, to learn about labour law and to think more flexibly.
Their positions are pivotal operational roles, overseeing up to 100 people,
and by the end of the year, 65% of them had participated in the
programme.
As part of our D&I strategy, a total of 70 women from executive,
supervisor and operator positions continued with career development
and leadership programmes during the year. In November, we began
a new programme to strengthen the leadership skills of 30 deputy
managers and superintendents in line with our Leadership
Competencies Model.
Digital transformation
More than 40 operators and supervisors were retrained to operate
Centinela’s Integrated Remote Operations Centre (IROC), which went live
in December 2021, and the Los Pelambres IROC, where a small group
began working in August 2022. Employees at these mining operations
also received training on the use of autonomous equipment such as drill
rigs and, in the case of Centinela, a fleet of trucks at the new Esperanza
Sur pit.
In 2022, 673 employees took courses on data-based decision-making
and basic digital literacy as part of our Digital Academy, which aims to
develop the skills necessary for our Digital Transformation programme.
Developing new talent
In 2022, Los Pelambres and Antucoya ran Relevos (Relief Workers)
programmes, training local people unable to work full shifts due to family
or other reasons to drive mine haulage trucks to cover lunch breaks.
We also run graduate programmes to provide a talent pool for executive
positions. In 2022, we expanded the criteria and the number of places to
give opportunities to young people in the Choapa Province. Similarly, we
offer openings for local technical school pupils and university students to
do internships or professional work placements at our operations.
Labour relations
At Antofagasta, we recognise employees’ rights to union membership
and collective bargaining. In total, 77% of our employees are represented
by 16 unions: 11 in the Mining division and five in the Transport division.
In 2022, we successfully negotiated four three-year labour agreements
in a climate of respect and without disruptions. Agreements were
reached with the supervisors’ unions at Los Pelambres and Zaldívar,
and the supervisors’ and operators’ unions at Antucoya.
Chilean legislation protects freedom of association. It also prohibits
forced and child labour, sets a minimum wage, limits working hours,
and enforces a minimum of 15 days of annual paid leave.
Our employees and contractors can make complaints or raise issues
on our confidential Tu Voz (Your Voice) reporting line. The contact
details are available on our website as well as directly at the
operations. We have reinforced our contractors’ awareness of this
whistleblowing channel.
In 2022, our Mining division conducted an Engagement and Perception
Survey at Los Pelambres, Centinela and Zaldívar to assess employee
satisfaction, thus completing a process that started in 2021 at Antucoya
and our corporate offices. In total 91% of employees responded,
expressing high levels of satisfaction with the organisation’s safety and
health and D&I strategies. Action plans have been developed to address
gaps, such as the need for more collaborative environments.
Contractors
Contractors represent 77% of our workforce and are crucial to
operational continuity. In 2022, we required contractors to pay their
employees an ethical gross monthly minimum wage, 38% higher than
the minimum wage established by Chilean law, and to provide them with
health and life insurance. Los Pelambres and Centinela also support the
further education of contractor workers’ children.
In 2022, the human resources area began an audit of contractors’
compliance with minimum and legal labour standards, including
meeting Antofagasta’s ethical minimum wage. The process will be
completed in 2023.
See P67-69 in Suppliers
for more information
50
Antofagasta plc Annual Report 2022
Strategic Report Safety and
occupational health
The safety and health of our employees,
contractors and nearby communities are
non-negotiable and our number one priority.
35%
fewer High Potential Incidents than in 2021
We continuously seek to improve our performance in this area,
with a particular focus on the early identification of risks and the
permanent elimination of fatalities and occupational illnesses at
all our operations.
Strategy
Our Safety and Occupational Health Strategy is based on four pillars:
safety and occupational health risk management; reporting, investigating
and learning from our accidents; leadership; and contractor
management. The robust management of safety and occupational health
underlies all our activities, through which we are committed to
continuous improvement, controlling risks and monitoring performance.
We seek to be recognised as a leading Company in safety and
occupational health whose employees and contractors promote and
maintain a safe and healthy work environment.
Safety performance
In 2022, there were no fatalities in the Group.
We continued to reduce the number of High Potential Incidents (HPIs),
recording 35% less than in 2021, due to improvements at our Mining
and Transport divisions. We focus on HPIs as leading indicators of the
effectiveness of safety controls to continuously strengthen critical
controls. HPI targets are included as a key performance indicator
in employees’ Performance Agreements to promote and reinforce
a preventive and resilient safety culture.
Antofagasta plc Annual Report 2022
51
/ How we engage with our stakeholders continued
We seek to keep our Group Lost Time Injury Frequency Rate (LTIFR)
below a score of 1. In 2022, the Mining division achieved 0.76, 32%
better than 2021, while the overall Group scored 0.84, a 37%
improvement. This was due to strengthened Control Strategies
for high-risk tasks (see “Critical Controls” section below).
In 2022, we investigated deviations to critical controls and implemented
corrective measures, building on previous campaigns to raise awareness
on the use of control strategies and understanding of how critical
controls are verified. This focus will continue into 2023 to ensure that
corrective measures are taken every time a Yo Digo No is activated.
Safety risk management
Critical controls
20 July 2021 marked one year since the death of contractor worker
Fernando Silva López at Los Pelambres. As a mark of respect,
safety-related reflection breaks were held at all our operations
to reinforce the lessons learned.
Following the detailed analysis of that tragic incident, we focused on
improving our planning, analysis and supervision of critical tasks. We
implemented programmes for supervisors to better understand their
roles and responsibilities with regard to planning, shift changes, work
crews and their obligation to confirm that tasks are executed according
to plan, particularly high-risk and critical ones. We also defined and
deployed the task risk analysis system, Planned Task Risk Assessment
(PTRA), to plan high-risk and critical tasks. This tool has been design
to ensure supervisors and crews are always planning and executing
safe working practices of routine and non routine high risk tasks. The
PTRA, ensures the key tools and equipment, standard and critical
controls are always present and describes the step by step
standardised working practice.
The PTRA system emphasises a preventative culture, including
operational continuity without fatal accidents, the reduction of
occupational illness and the minimising of workers’ exposure to high-risk
situations. It also emphasises self-care. If at any point workers perceive
that adequate working conditions, as outlined in the PTRA, are not being
met, they should employ the “Yo Digo No” (I Say No) tool and stop
working until the proper conditions can be verified.
There are now 13 critical activities addressed by the PRTA in the Safety
and Occupational Health’s digital library.
In 2022, the Mining division began to install the latest generation collision
avoidance system in its transport equipment, as well as in that of its
contractors and subcontractors. Full implementation is expected by the
first quarter of 2023, with the system alerting the driver of the vehicle or
equipment when it detects imminent danger.
Visible leadership
Leadership is a key driver for improving safety performance and the
Executive Committee conducts regular on-site safety and health reviews
to engage with employees and contractors. Action plans are followed by
every site on each of four key areas: safety culture, safety management
systems and processes, available safety tools and contractor
management. In 2022, we focused on in-field controls.
Supervision of occupational health is embedded within the operating
model and throughout the whole system of controls.
Investigations
Investigation teams independent of the area involved in the incident,
often involving representatives from other sites, look into all HPI
incidents. Findings are shared across the entire organisation and used
to close any identified risk management gaps.
Occupational health risk management
Antofagasta is committed to providing a healthy workplace and
contributing to the physical and mental wellbeing of everyone who
works for us. In 2022, we continued to improve the application of critical
controls for health risks and high potential health events and registered
an occupational illness frequency rate of 2.09 per million hours worked.
During the pandemic, our efforts to control the spread of COVID-19
allowed us to maintain operational continuity while protecting the health
of our workers.
Once COVID was contained, we were able to reassign resources to
implement a Surveillance Programme to protect our workforce against
other health risks. In cases of early detection of hearing loss, for
example, corrective action is taken and the worker is removed from the
risk, with job reassignment to prevent further decline. Additionally, as a
continuous improvement initiative, we study the origin of the risk and
implement mitigation measures to prevent other workers from exposure.
Psychosocial risks
In 2022, we launched our Control Strategy for psychosocial risks, which
increased during the COVID-19 pandemic. Thanks to this strategy, we
identified five employees with temporary mental health issues and
provided treatment for them to prevent the illness from becoming a
chronic condition.
We have a confidential 24x7 helpline for employees and contractors
seeking help for mental health issues.
Threats to security
In 2022, there were seven cases of copper theft from our Transport
division’s trains and trucks, three more than in 2021. There has been an
increase in the violence used in the robberies, which are now more
confrontational, with the use of weapons and threats that put our
employees’ physical and psychological safety at risk.
As a result, our Transport division has strengthened measures to protect
its personnel, equipment and cargo. A senior industrial protection expert
has developed a preventative strategy, involving local authorities and the
police, to address the new security situation. The division also takes part
in a new intersectoral industrial safety working group that has been
established to focus on these challenges. It is important to note the role
that the government has played in working together with the industry to
address this issue.
Contractor management
Our contractors and subcontractors are included in our safety and
health performance data and must fully comply with our standards and
procedures. In 2022, we placed special emphasis on the effectiveness
of our Special Corporate Health and Safety Regulation for Contractor
and Subcontractor Companies (RECSS), continuing to embed this
updated contractor management manual across the organisation to
ensure an adequate understanding of our requirements and supervision
of contractor tasks.
52
Antofagasta plc Annual Report 2022
Strategic Report Safety Indicators
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
2022
N/A4
0
0
0
N/A4
0.76
2.15
0.84
0.37
1.00
0.41
2.26
1.40
2.09
2021
N/A4
1
0
1
N/A4
1.12
4.60
1.34
0.46
1.45
0.52
0.18
0.00
0.14
2020
2019
2018
13
0
0
0
1.41
0.73
2.37
0.86
0.55
1.51
0.63
0.00
0.00
0.00
14
0
0
0
1.54
0.75
4.03
1.01
0.54
1.71
0.63
0.29
1.30
0.52
16
1
0
1
1.65
1.10
6.66
1.59
0.39
0.34
0.38
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. Amended method of calculation. All prior years adjusted for consistency. Our OIFR increased
significantly in 2022 as we identified those whose medical conditions had changed or had developed occupational illnesses during the two years of the pandemic that was not
adequately treated.
4. Not available.
Antofagasta plc Annual Report 2022
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Communities
We seek to foster economic and social
development in local communities through
proactive engagement and investment,
and in collaboration with local people,
organisations and authorities.
At Antofagasta, we aim to contribute to social value creation in the
regions where we operate through education and training initiatives,
job creation and social investment that addresses the needs of local
communities. A commitment to respect human rights underlines
our interactions.
Social management model
Our Social Management Model is designed to ensure that our
engagement principles, methodologies and practices are applied
consistently across our operations. It has four components: Engagement,
Initiative Management, Impact Measurement and Socio-Territorial Alert
Management, each with a corresponding standard.
Impact measurement
In 2022, in partnership with external impact advisers, we dedicated
extra resources to measuring the impact of our investments in our areas
of influence, as we strive to evaluate our programmes and improve their
performance.
$57.4 m
Economic Social
Investment in 2022
54
Antofagasta plc Annual Report 2022
Strategic Report “We launched a LinkedIn Learning
platform to teach digital skills to
60 students, entrepreneurs and
suppliers in our areas of influence.”
We measured the impact of six programmes, two in the Antofagasta
Region and four in the Choapa Province, using the Change Theory and
Social Return on Investment (SROI) tools. In addition, we measured the
process to initiate the Caimanes Development Fund. All showed a
positive SROI, indicating that they create social value.
The Adolfo Ibañez University updated its Territorial Human Wellbeing
Matrix, measuring the impact of Los Pelambres’ social investment
initiatives in the Choapa Province. The study measured 22 indicators,
such as access to green areas, sports, education and health services, and
found that 75 of the initiatives improved urban and rural living conditions
by providing better access to services and reaching more recipients.
In 2023, we expect to complete a study that maps all our social
investment projects against the UN Sustainable Development Goals.
For further information, see our 2022 Sustainability Report.
Grievance mechanism
In March, we launched a new community grievance mechanism to
report concerns, complaints or grievances caused by our operations in
neighbouring communities. Grievances can be expressed confidentially
and tracked on the community grievance channel to monitor progress
on their resolution. There is a 30-day deadline to answer grievances,
except in unusually complex cases.
Indigenous Peoples
In 2022, we updated our Human Rights Policy to strengthen our explicit
recognition and commitment to respect indigenous peoples’ rights,
culture and traditions and we approved an Indigenous Peoples
Engagement Standard. Relations with indigenous peoples are aligned
with local legislation, ILO Convention 169 and the guidelines of the
International Council on Mining and Metals (ICMM).
Social investment
We use a multi-stakeholder, open dialogue engagement 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. Projects and programmes are usually implemented in
alliance with third parties, such as organisations and state institutions.
In 2022, following the Somos Choapa model, we increased our social
investment budget to cover new agreements with communities in the
Choapa Province to address specific operational incidents (see page 58
Environment) and the 2022 Sustainability Report).
Mining division
Transport division
Total social investment
2022
$56.8m
$0.6m
$57.4m
Digital transformation
In 2022, we ramped up our En Red-Digital Community programme,
comprising more than 20 initiatives to address the deficit of digital
infrastructure and skills in rural and underprivileged communities near
our operations.
One of the year’s highlights was the installation of fibre-optic cables to
the Caimanes and Limahuida communities in Choapa, allowing over 500
families the opportunity to connect to the internet. Both communities
also received digital literacy training from partners in the programme.
In September, in alliance with La Serena University, we launched a
30-month project to digitalise the 80 Rural Sanitary Services (SSRs)
that provide water to homes in the Choapa Province. The initiative
involves designing a telemetry and big data system to automate and
optimise water management, enabling the integrated management of the
water basin in this drought-stricken area. The local volunteers who run
the SSRs will be trained to use the technology.
Similarly, in October we opened a pharmacy in María Elena in the
Antofagasta Region, in alliance with the pharmacy startup Fracción and
the municipality. It serves as a distribution centre for the surrounding
area and allows locals to buy low-cost medicine in person or online,
without travelling long distances to the nearest cities. The aim is to
follow up with a telemedicine centre, an initiative we are also developing
for Chillepín’s primary health centre in Choapa.
En Red is underpinned by a focus on digital literacy and in 2022 we
launched a LinkedIn Learning platform to teach digital skills to 60
scholarship students, entrepreneurs and suppliers in our areas of
influence. Likewise, 80 small businesses in the tourism sector in Choapa
benefited from a pilot programme to use platforms such as booking.com
to grow their business.
Combatting drought
In 2022, we stepped up efforts to ensure continuous water availability
for human consumption and irrigation in the drought stricken Choapa
Province, through our Aproxima and Confluye programmes. Among
other measures, we took advantage of heavier than usual snowfall to
fund the construction of two artificial ponds to capture snowmelt in the
Spring and relined 54.9 km of irrigation canals to reduce water losses
(see En Red programme above).
Economic development
Centinela’s “new way of operating” plan seeks to reduce contractors’
use of mine camps and to house them in the near-by town of Sierra
Gorda. This builds on the success of our Safe Return Plan that allowed
the town’s hospitality sector to reopen after the COVID-19 pandemic.
Almost 50 hostels have met the required safety standards, enabling up
to 1,000 contractor employees to stay in Sierra Gorda, significantly
boosting the local services sector.
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55
/ How we engage with our stakeholders continued
160+
young people from
Choapa were offered
apprenticeships in 2022
In the Choapa Province, we run various programmes to support local
entrepreneurs, micro and small businesses, and farmers. Among 2022’s
highlights was the Integral Support for Agriculture (AIA) programme,
which awarded 360 grants to farmers in the Salamanca area to
increase yields and improve irrigation. In addition, the Cosecha initiative
provided training and funding to boost the competitiveness of 129 small
farmers, craftworkers and tourism entrepreneurs in Salamanca and
Canela districts.
Cultural heritage
Our Transport division owns some of the city of Antofagasta’s most
historic buildings and is keen to preserve the city’s cultural heritage,
support local tourism and improve the city’s life quality. In 2022, as part
of these efforts, the disused railway station Estación Valdivia was
declared a national heritage site and the adjoining railyard a “typical
area” by the National Heritage Council and we are working with the
council and community on a restoration plan.
We also began planning the conversion of a nine-hectare railyard, the
administration offices and the former colonial homes of the division’s
executives into a heritage neighbourhood area, with green spaces and
a pedestrian walkway. The project forms part of a broader plan to
vacate all the division’s railyards in the city and prepare them for urban
development.
Building local skills
We seek to stimulate the generation of economic, social and human
capital in the regions where we operate by promoting local employment,
supporting local suppliers and offering education and training
opportunities. In 2022, 72% of our employees were from the
Antofagasta and Coquimbo Regions, where our operations are based.
The apprenticeship programmes offered by our Transport division and
four mining operations are a key vehicle for this commitment. In 2022,
over 230 young people from these regions, mainly women, were
accepted as apprentice engine drivers, maintenance workers and truck
drivers, or in plant, tailings and port roles. Most apprentices will be
offered permanent jobs at the end of the programme.
Antucoya and Los Pelambres also initiated Relevos (Relief Workers),
a programme under which people who live near the operations are
trained to drive mine trucks to cover breaks during shifts. It is aimed
at people who cannot work a full shift, frequently for family reasons.
In another example, 35 technical secondary school pupils did their
internships at Antucoya under the Eleva programme, a public-private
partnership that seeks to improve technical training and young people’s
job prospects.
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Antofagasta plc Annual Report 2022
In the Antofagasta Region, these efforts form part of the Antofagasta
Mining Cluster Corporation, a public-private initiative that seeks to
stimulate the region’s economic development and through which we have
committed to building human capital and developing innovative suppliers.
Under this framework, we provided over 800 scholarships for local
school and university students in 2022, among other education
initiatives.
We also work with local suppliers to enhance their capabilities and
opportunities to provide us with goods and services (see page 67-69
Suppliers). Likewise, we encourage national and international suppliers
to post jobs on the new regional job portal in order to boost local
employment.
In the Choapa Province, we awarded 887 scholarships to young people
undertaking technical or university studies in 2022, almost twice as
many as those given in 2021. Work also continued with Education 2020,
an NGO, to support 18 schools to implement project-based learning
techniques, benefitting 192 teachers and 2,158 pupils. We also support
the province’s five technical-professional schools to strengthen links
with local companies and higher education centres.
Los Pelambres’ employment programme has trained 2,885 people
from Choapa since 2015, mainly in mining trades but also in the services
sector and in self-employment. The programme has a jobs’ portal for
contractor companies to post vacancies and, in 2022, 48% of their
employees came from the province.
In 2022, we opened places on our young graduates’ programme to
university leavers from Choapa Province. Two were accepted onto
Antofagasta’s corporate programme in December 2022 and eight
took on roles at Los Pelambres in January 2023.
Strategic Report Environment
At Antofagasta, we recognise that we have
a responsibility towards our stakeholders
and the environment in which we operate.
We believe it is possible to mine sustainably
by prioritising environmental protection
and the efficient use of natural resources.
48,000
native trees being planted
by Los Pelambres
Our Environmental Management Model covers leadership, operational
events reporting, operating risk management and regulatory risk
management. It seeks to prevent, control and mitigate the impacts we
may have on the environment and, if there is an impact, to compensate
for it appropriately. In 2022, we focused on regulatory risk, reviewing
environmental requirements and auditing our operations. We report our
environmental performance monthly to the Executive Committee and
twice a year to the Board’s Sustainability and Stakeholder Management
Committee.
The Internal Audit area performed environmental audits on all our
operations in 2022. These were to verify their state of compliance with
environmental requirements and the measures committed to by our
operations within the framework of their environmental permits. No
significant negative findings were reported.
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
the prevention and mitigation of the project’s impact on the environment
and any necessary compensation measures. Compliance with
commitments is verified by the Superintendency for the
Environment (SMA).
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Antofagasta has a total of 77 RCAs, which include over 10,000
commitments on matters such as water use, air quality, biodiversity
and the projects’ construction, operation and closure. In 2022, the
Group obtained no new RCAs. The SEA is currently reviewing the
Environmental Impact Assessment (EIA) for the second phase of the
Los Pelambres Expansion project, which includes doubling the capacity
of the desalination plant near Los Vilos to 800 l/s, and the installation
of a new concentrate transportation system, which will avoid
populated areas.
In 2022, the Transport division received all the permits and completed
engineering studies to allow it to remediate 48 hectares of soil in its
railyard in the city of Antofagasta. Work is scheduled to start in the
second half of 2023 and is an important step in the division’s plans
to move its operations out of the city centre.
Reporting on operational events with environmental consequences
Operational events with environmental consequences are classified
as Actual (high, medium or low) or Potential (high or low) if they could
have caused an incident. Actual high or medium severity incidents are
investigated by a committee established specifically for this purpose.
Under the criteria established in the environmental assessment of
each operation or project, 29 events with no severe environmental
consequences were reported to the SMA. Of those events, two were
high-profile operational incidents:
• On 31 May, a leak was detected from the Los Pelambres concentrate
pipeline in the Llimpo sector in the Salamanca municipal district.
A thorough review detected no material environmental impact and
the pipeline resumed operations on 26 June after approval from the
relevant local regulator.
• On 15 August, unusually high sea swells overturned a construction
platform at the marine works of Los Pelambres’ desalination plant
project, and marine works were temporarily halted pending the
recovery of lost equipment and materials from the seabed. Since the
event, to date the SMA-accredited laboratory has found no trace of
contamination. The marine works resumed on 4 October and are
expected to be completed in the first half of 2023.
Responsible production
Sustainability practices at our four mining operations have been assured
by the Copper Mark, a global standard which demonstrates that the
operation produces copper according to the best international
sustainability standards – in 2021 at Centinela and Zaldívar, and in 2022
at Antucoya and Los Pelambres. Under the Copper Mark, operations
commit to renew the assurance process every three years.
In 2022, we also submitted updated information to renew our
registration with LMEpassport, the sustainability credentials register
of the London Metal Exchange (LME), including an executive summary
of the Copper Mark, which is recognised by the LME.
As members of the International Council on Mining and Metals (ICMM),
our four mining sites underwent independent audits on their compliance
with the ICMM’s Mining Principles Performance Expectations. The ICMM
has assessed the equivalency of its 38 Performance Expectations
against the Copper Mark and, therefore, the process focused on those
not covered (six) or only partially covered (nine) by the Copper Mark.
All our sites complied with the Performance Expectations.
The assurance process ensures that ICMM’s 27 member companies
are being held to the same high standards and will be repeated every
three years.
58
Antofagasta plc Annual Report 2022
Tailings
Our mining operations have three main tailings storage facilities (TSFs):
Los Pelambres’ conventional tailings dams at El Mauro and Los Quillayes
(no longer in regular use) and a thickened tailings deposit at Centinela.
Zaldívar has a small TSF as it produces a small amount of concentrates.
We have an Independent Tailings Review Board for the three main TSFs
and their stability and compliance were once again confirmed under
international criteria in 2022.
During 2022, we continued with our implementation of the Global
Industry Standard on Tailings Management (GISTM) and are on schedule
to complete it at Los Pelambres by August 2023 at Centinela by
December 2023 and Zaldívar by August 2025. We are strengthening
our governance of TSF management and are also reinforcing our social
and environmental controls to comply with the standard’s main focus of
zero environmental and social damage.
Consistent with the GISTM’s focus on transparency, El Mauro continued
to serve 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, with an end-goal of applying this
monitoring to all TSFs in Chile. The pilot is scheduled for completion
in 2023.
We have also improved production rates and compaction of sand in the
El Mauro TSF wall. In 2021, rates were approximately 300,000 tonnes
per month and, in 2022, this was raised to 450,000 tonnes, further
increasing the TSF’s stability.
At Centinela’s TSF, we began increasing the height of the raise, with
completion expected during the first half of 2024. We also improved the
stability of the tailings thickening process, where the percentage of solids
sent to the TSF remained above 66%. Each percentage point of solids
represents a saving of some 30–40 l/s of water.
In 2022, we completed the feasibility studies for an innovative project
to store tailings in abandoned mine pits at Centinela, which would
complement the operation’s thickened tailings deposit. The Declaration
of Environmental Impact (DIA) was approved in 2021 and further
engineering studies are underway. In-pit storage has safety and
environmental advantages compared to conventional TSFs and would
extend the life of Centinela’s current TSF.
Strategic Report Air quality
All our 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
regularly reported to the regional authorities.
In 2022 there were no incidents of dust visibility or expressions of
concern from communities near Los Pelambres regarding dust from the
mine itself or the El Mauro TSF. Coupled with more favourable climatic
conditions, this was the result of a series of additional voluntary controls
implemented at the TSF. These measures have been verified on site by
a committee representing the neighbouring Caimanes community.
At the mine, an interdisciplinary working group examined the
phenomenon of climate change (including drought and wind pattern
intensification) to produce hard data with which to review existing
measures and consider others that could be implemented, and to adjust
our preventive model accordingly.
At the Quillayes TSF, Los Pelambres is planting 48,000 native trees and
shrubs on the 300 hectares site, of which 120 hectares have been
planted so far. The vegetation requires little irrigation, easily adapts to
extreme environments and serves to control particulate material events
while blending the dam with its surroundings.
Biodiversity
Our Sustainability Policy provides the framework to position biodiversity
stewardship throughout the mining cycle.
In 2022, we updated our Biodiversity Standard as part of the
implementation of our Climate Change Strategy and to improve its
alignment with the position statement from the ICMM on Mining and
Protected Areas. Under this standard, we seek to promote the
generation of net gains in biodiversity. This includes avoiding and
minimising our impact on biodiversity and mitigating and compensating
for any impact that does occur to ensure a net zero loss of biodiversity.
In addition to managing four nature sanctuaries and other extensive
protected areas, our activities encompass protecting species and
outreach and research initiatives.
SMART ROAD INITIATIVE
In 2022, Centinela piloted an initiative to reduce dust levels at the
Esperanza Sur pit, leading to a 30% reduction in particulate matter
emissions and better management of water resources. Levels of
particulate matter are monitored online using dust control devices
installed on haulage trucks and a centralised system identifies
where the most critical areas are and assigns tanker trucks to
irrigate them.
Circular economy
We have approved our new Circular Economy Strategy which will be
implemented in 2023. The Strategy has three pillars: reduction in the
use of resources, expanding the lifecycle of material and equipment, and
conversion of waste into new resources. For the Procurement area, this
will involve issues such as packaging, pallets and the logistics of goods
transportation, as well as the potential reuse of products such as tyres
and steel.
Mine closure
As required under Chilean law, all our operations have closure plans
approved by the Chilean government’s National Geology and Mining
Service (SERNAGEOMIN). In addition, we have our own more
demanding Integrated Mine Closure Standard. In 2022, we updated this
standard to incorporate guidelines from our Biodiversity and Climate
Change Standards as well as our Tailings Policy, all of which are aligned
with the ICMM’s Integrated Mine Closure–Good Practice Guide.
In 2022, SERNAGEOMIN approved Antucoya’s five-year update of its
closure plan and the update of Centinela’s closure plan, which
incorporates new facilities installed at the operation.
Antofagasta plc Annual Report 2022
59
/ How we engage with our stakeholders continued
Climate change
Our Climate Change Strategy sets ambitious
goals not only for emissions and water use,
but also to build the resilience of our
operations and their areas of influence.
As a Group, we recognise climate change as one of the world’s greatest
challenges and acknowledge that we are 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 is central to our overall Group Strategy.
It sets the framework to co-ordinate and realise synergies among the
Group’s many initiatives to mitigate and adapt to a changing climate,
according to its five pillars: development of resilience to climate change,
reduction of greenhouse gas 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 Board of Directors has ultimate responsibility for the Group’s
climate-related objectives and strategy, integrating a deeper awareness
of climate change into our decision-making processes. It has recognised
climate change as one of the principal risks facing the Group and defined
its risk appetite accordingly. 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. A corporate Climate Change Committee,
formed in 2021, advises the Environment team and meets fortnightly
to review advances and consider issues that may be adopted for
future implementation, such as nature-based solutions.
Carbon emissions are linked to a proportion of our executives’
long- and short-term performance incentives, as well as to the
annual performance incentive for employees (see pages 156 and 158).
In 2019, we committed to implementing the recommendations of the
Task Force on Climate-related Financial Disclosures (TCFD), and
disclosed against these recommendations for the first time in our 2021
Annual Report.
Our metrics and targets are aligned with the TCFD’s seven cross-
industry climate-related metric categories, including for GHG emissions
and internal carbon prices. We also report in our Climate Scenario
Analysis the potential financial impact of the transition and physical risks
(see page 66), and our investment related to mitigation and adaptation,
which includes the construction of a desalination plant at Los Pelambres.
We are also considering how to reflect the benefits that come from
copper’s use in applications, such as renewable power and electric
vehicles, that make a significant contribution to reducing global GHG
emissions, and which are also expected to be reflected in an increase
in the copper price. However, the correlation between decarbonisation
and the copper price is difficult to model.
Climate change scenario analysis
In 2022, Antofagasta enhanced its understanding of the financial impact
of the physical risks of climate change by considering a ‘middle of the
road’ climate change scenario analysis known as SSP2-4.5.1 This
scenario takes advantage of the latest generation climate models
(CMIP-6) and is considered an intermediate scenario where emissions
peak in around 2040 and then decline, leading to warming by 2100 of
2.5 to 3°C compared to pre-industrial temperatures. This scenario aligns
with the path implied by current policies that are in place.
To better understand how physical climate changes could impact our
business, we have focused on particular climate change vectors such
as higher temperatures, water stress, extreme rainfall events, conditions
that generate particulate matter, storm surges and wave events.
Each of our operations analysed the potential effect of these factors
on their production, cost performance, and the cost of adaptation
measures and control options.
To understand the financial impact of transition risks, we continue
to use the International Energy Agency’s Sustainable Development
Scenario (IEA’s SDS), an ambitious and widely recognised scenario
that provides a global view and context on 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 encourage
the low-carbon transition. In alignment with this scenario, we have
quantified the financial impact of the introduction of a carbon tax,
including an analysis of core measures to decarbonise our mining
operations and identifying cost efficient opportunities.
To align the potential impact of both physical and transition risks 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.
Once the risks and opportunities were identified the most material risks
and opportunities were screened and quantified at an operational level,
their financial impact was estimated using assumptions from these
scenarios. 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 66.
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. In 2023 we plan to improve our climate
change risk management by determining the levels at which particular
climate risks would trigger us taking preventative actions.
1. A Shared Socioeconomic Pathway scenario used by the Intergovernmental Panel on Climate Change (IPCC) in its 2021 Sixth Assessment Report.
60
Antofagasta plc Annual Report 2022
Strategic Report 42%
reduction in Scope 1 and 2 emissions since 2020
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 diesel consumption. We also track and
monitor several other environmental indicators, the most important of
which is measuring our water withdrawal. This helps us manage water
security risks at our operations and in our local communities, and drives
us to reduce our reliance on continental sources.
Greenhouse gas emissions and climate metrics
At Antofagasta, we recognise our responsibility for upstream and
downstream emissions and have proactively adopted measures to
mitigate the carbon footprint of our operations. We achieved our first
Scope 1 and 2 emissions reduction target set in 2018 two years early
in 2020.
In 2021, we set more ambitious targets: to reduce our Scope 1 and 2
emissions by 30% by 2025 compared to the 2020 baseline, equivalent
to a reduction of 730,000 tCO2e, and to achieve carbon neutrality by
2050 or earlier, technology permitting. However, since April 2022 all
our electricity contracts have been for renewable energy, reducing our
Scope 2 emissions to almost zero and allowing us to achieve our 30%
reduction commitment three years earlier than anticipated. During 2023,
we will establish a new medium-term emission reduction goal for 2030.
In 2022, we began working on a decarbonisation plan for all our
operations, defining the baselines, the truck replacement plan, energy
input projections and the assumptions for current and future
technologies. The final plan will set out the steps needed to achieve
carbon neutrality by 2050.
Operational CO2e emissions (tCO2e)1, 2
Scope 1
Direct emissions
2022
2021
2020
Scope 23, 4
Indirect emissions
2022
2021
2020
Total emissions
(Scope 1 and Scope 2)
2022
2021
2020
CO2e emissions
tCO2e/t5
2022
2021
2020
Los Pelambres
Centinela
Zaldívar
Antucoya
Corporate Offices
(Santiago and
London)
Mining
division
Transport
division
(FCAB)
Total
250,545
226,199
257,801
529,075
439,484
492,496
128,440
156,500
152,340
205,332
165,641
152,577
93,142
286,848
334,376
1,634
556,616
542,020
0
0
86,563
0
124,467
120,087
189
124
108
460
894
603
1,113,581
987,948
1,055,322
91,068
90,778
88,936
1,204,649
1,078,726
1,144,258
95,236
968,825
1,083,649
717
823
858
95,953
969,648
1,084,507
343,687
513,047
592,177
530,709
996,100
1,034,516
128,440
156,500
238,903
205,332
290,108
272,664
649
1,018
711
1,208,817
1,956,773
2,138,971
91,785
91,601
89,794
1,300,602
2,048,374
2,228,765
1.25
1.58
1.65
2.14
3.63
4.19
1.44
1.78
1.79
2.59
3.69
3.44
–
–
–
1.75
2.56
2.79
12.91
13.67
13.93
–
–
–
1. 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. All Scope 2 figures have been independently verified.
4. Scope 2 figures for 2020 and 2021 have been restated applying the market-based method of reporting acording to the GHG Protocol. This method reports Scope 2 emissions
specific to each individual operation and is considered by the Company to be a more accurate method of reporting. Under the previously used method, average emission factors for
the whole of Chile were used. Emissions using both methods of reporting are included in our Sustainability Report.
5. Tonnes of CO2 equivalent per tonne of copper produced or per tonne transported in the case of the Transport division.
Antofagasta plc Annual Report 2022
61
/ How we engage with our stakeholders continued
Energy supply
In 2022, we implemented our new Energy Policy, recognising energy
as a strategic resource whose management must ensure a safe,
economic, efficient and sustainable supply for our operations. We are
committed to implementing, maintaining, operating and continuously
improving our Energy Management System to incorporate technological
innovation and clean energy to reduce GHG emissions. During the year,
we completed our alignment of the system, which is based on the ISO
50001:2018 energy management standard, to the requirements of
Chile’s Energy Efficiency Law.
Our conversion of all electricity supply to our mining sites to renewable
contracts was led by Zaldívar in 2020. It was followed by Antucoya and
Centinela in January 2022 and Los Pelambres in April 2022, leading to
a reduction of 873.695 tCO2e in our Scope 2 emissions in 2022
compared to 2021.
At the end of 2022 a renewable energy supplier informed Los
Pelambres of an issue at its hydroelectric generation facility that would
temporarily prevent it from supplying energy from the facility. The
supplier is continuing to provide energy from other sources, including
third parties, but these may not always be renewable. As a result,
Scope 2 emissions from Los Pelambres may increase in 2023.
Mine haulage and transport
In 2022, approximately two-thirds of our Scope 1 emissions were
attributable to diesel combustion in our mine haulage trucks. We are
positioning ourselves to be early adopters of technology, including
electric-powered and hydrogen-fuelled machinery, that will drastically
reduce these emissions or possibly eliminate them altogether.
In 2022, Antofagasta participated in pilot projects to develop electric-
powered haulage trucks at Antucoya and electric-powered trolleys to
assist haulage trucks at Los Pelambres. Pilot tests were also undertaken
on electric buses and pickup trucks for the transport of employees at
Los Pelambres. In addition, Antofagasta is a sponsor of Charge On,
an international open innovation challenge for suppliers to develop
solutions to safely, sustainably and quickly recharge battery-powered
mining trucks.
As part of Hydra, a consortium that includes French utility Engie
and Australian technology think tank Mining 3, we tested a prototype
hydrogen fuel cell and battery propulsion system designed to simulate
the operation of a hydrogen-fuelled mine haulage truck. The testing took
place at Centinela, the first time at a Chilean mine, to see how this fuel
would perform at high altitudes and under extreme temperatures. It
showed that altitude, low temperatures and low humidity all affect
performance and these factors will be considered when developing
this technology.
In October 2022, our Transport division agreed to purchase a 100%
hydrogen-fuelled cargo train locomotive, the first in Chile. It is expected
to start operating in 2024 and, if successful, the division plans to convert
its existing fleet to hydrogen.
Scope 3 emissions
Besides our focus on Scope 1 and 2 emissions, we have worked over
the last two years to improve our understanding of our Scope 3
emissions. These are indirect emissions related to our activities but
generated by upstream (suppliers) and downstream processes that we
do not control or own. These represent about 75% of the Group’s
carbon footprint.
In 2022, we made a preliminary calculation of our 2021 Scope 3
emissions, which indicated that nearly 60% were from purchased goods
and services. This calculation is being refined and in 2023 we expect to
report our 2022 Scope 3 emissions. We expect to set a reduction target
as soon as possible.
An important challenge faced by the mining industry globally is to define
a consistent methodology to calculate Scope 3 emissions. In this context,
we are working with ICMM member companies to develop a guide to
measure and report the industry’s Scope 3 emissions with a view to
having a common standard to define our own reduction goals.
While all Scope 3 action depends on the combined efforts of producers,
suppliers and customers, some commodities face greater technological
and collaborative barriers than others. We will work to overcome these
barriers, mainly through collaborative partnerships across the value
chain.
ESG in the supply chain
Antofagasta requires improved sustainability practices from suppliers as
a key part of its purpose to develop mining for a better future. This will
gradually bring suppliers into line with our own internal standards on
environmental, social and governance (ESG) matters. Our priority is that
suppliers reduce their GHG emissions in line with our Climate Change
Strategy, but we are also focused on their governance, local hiring and
diversity and inclusion practices.
ESG criteria are used to evaluate bids for contracts worth over $10
million, complementing the energy efficiency and safety criteria we
already apply. In the environmental area, we also now favour companies
with robust emission reduction strategies and targets.
The GHG emission calculations included in bids are checked by applying
an internal carbon price, thus assigning a cost to the emissions for the
first time. Internally, we use the carbon price in capital allocation
decisions and growth project evaluation, as well as incorporating it into
our financial planning cycles.
Additionally, as climate-related risks and opportunities have impacted
our supply chain and with the increasing severity of sea swells which
have delayed the delivery of some critical resources, Antofagasta has
decided to strengthen its resilience by increasing its storage capacity
and revising some of its supply chain strategies, particularly for diesel
and acid.
See P68 in Suppliers
for more information
62
Antofagasta plc Annual Report 2022
Strategic Report Water management
Water management and efficiency have long been at the forefront of
our Mining division’s concerns. Three of our four mining operations
are located in the Atacama Desert and the fourth, Los Pelambres, is in
an area that has been suffering a severe drought for the past 13 years,
which, according to various climate scenarios, is expected to continue.
Consistent with these concerns, our Climate Change Strategy supports
our operations’ reduced dependence on continental water sources
through improved water use efficiency and the increased use of sea
water. With the completion of the Los Pelambres desalination plant
in 2023, the proportion of continental water used will decrease
even further.
Our total water withdrawal in 2022 was 73 Gigalitres of which 45.4%
was sea water. Total water withdrawal increased by 5.4% as
precipitation tripled in 2022 from the low levels in 2021, and Centinela
Concentrates and Antucoya achieved record annual throughput.
In 2022, we approved a new Water Policy to have a water position
statement as a Group and launched a Water Management Standard in
August. The Policy recognises water as a strategic resource and as an
essential element for life on our planet. We are committed to
safeguarding the availability of water resources for our operations,
communities and the environment, under practices aligned with the
ICMM’s Water Management Framework.
We will also progressively reduce water withdrawal, seek multiple
alternative sources of supply and implement innovative technological
solutions to improve water efficiency and recirculation. These
alternatives include Centinela’s complete cessation of water extraction
45%
of water withdrawals were sea water
from wells in December 2022 and the expected reduction of continental
water extraction by 50% when Phase 2 of the desalination plant at Los
Pelambres is complete.
Phase 1 (400l/s) of the Los Pelambres desalination plant will be
completed in 2023 and an expansion to 800 l/s is expected to be
completed in 2026, subject to permitting. This will allow Los Pelambres
to stop using water from the Choapa River for operational purposes.
Zaldívar extracts continental water from wells located some 100 km
from the mine. These withdrawal permits will expire in 2025, and we
are looking to extend them and move to alternative water sources
towards the end of the decade as part of the plans to extend the
operation's life.
Antofagasta has been a pioneer of the use of sea water in the Chilean
mining industry since the 1990s. In 2022, sea water accounted for
45.4% of our Mining division’s water withdrawal, led by Antucoya (97%)
and Centinela (87%).
In 2022, water reuse rates at our mining operations ranged from 79%
at Los Pelambres to 94% at Zaldívar. Our target is for sea water and
reused or recycled water to supply more than 90% of the division’s
operational water withdrawal by 2025.
Operational water1 withdrawals by source, 2019-22, Mining division
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
2022
29,350
20,0932
9,249
9
30,902
26,7622
4,140
–
6,521
6,2992
221
5,993
5,993
72,766
33,061
20,093
19,603
9
45%
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%
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. Water withdrawal increased as precipitation in Los Pelambres tripled in 2022 from the low levels in 2021, and Centinela Concentrates and Antucoya achieved record annual
throughput.
Antofagasta plc Annual Report 2022
63
/ How we engage with our stakeholders continued
Task Force on Climate-related
Financial Disclosures (TCFD)
The Group’s Task Force on Climate-related Financial Disclosures
(TCFD) recommendations are integrated into this report in accordance
with the Financial Conduct Authority Listing Rule LR.9.8.6(8). Progress
against the recommendations is summarised below, together with an
index showing where more detailed disclosures can be found.
We are not yet fully consistent with three areas of the TCFD
recommendations, which we will progress during 2023.
• Strategy, impact on business – Decarbonisation Plan: We have
assessed how our emission reduction plans will achieve our
decarbonisation targets and further evaluation is underway on the
feasibility and implementation of the planned measures at all our
operations. Completion is expected during 2023.
• Metrics & Targets, climate-related metrics – Climate Metrics
& Targets: Our climate change analysis is helping us to define additional
metrics to the ones we already use (mainly to measure and manage
emission targets), such as the amount of capital that will be required
to mitigate and adapt to climate change. We continue to improve our
climate change risk management by determining the levels at which
particular climate risks would trigger us taking preventative actions.
• Metrics & Targets, GHG emissions and related risks – Scope 3:
Over the last two years we have improved our understanding of our
Scope 3 emissions and calculated our 2021 Scope 3 emissions in
2022. However, we need to further improve our methodology before
we set our Scope 3 reduction targets, which we expect to do and
disclose in 2023 or as soon as possible thereafter.
TCFD RECOMMENDATIONS AND PROGRESS IN 2022
GOVERNANCE
Recommendations
• Board oversight
• Management’s role
STRATEGY
Recommendations
• Identified risks and opportunities
• Impact on business
• Business resilience
Progress
• Climate change scenario analysis (scenarios SSP2-4.51 for physical risk analysis and IEA’s SDS
for transition risk analysis) was presented to the Board and incorporated into the annual
long-term financial planning process for the first time.
• We have separately reported on Board members’ experience relating to climate change issues.
• Since the establishment of the corporate Climate Change Committee in 2021, it has continued to
enhance the understanding and appreciation of the importance of our Climate Change Strategy
within the organisation and provide advice to our Executive Committee.
Progress
• We reviewed the impact of climate change risks and opportunities as part of our 2022
long-term financial planning process and this allowed us to assess the impact of climate change
risks during the life of each mining operation (LOM).
• In 2022 Los Pelambres and Antucoya were awarded the Copper Mark, the copper industry’s
new responsible production assurance framework, joining Centinela and Zaldívar who were
awarded the Mark in 2021.
• Following our evaluation of climate change issues that could affect our supply chain, we have
strengthened the resilience of our supply chains for some of our critical resources, such as
diesel and acid.
• This year, to improve our understanding of the financial impact of the physical risks of climate
change, we analysed a “middle of the road” climate change scenario (SSP2-4.51), rather than
the worst case scenario we used in our 2021 analysis (RCP8.52).
1. Shared Socioeconomic Pathway in which CO2 emissions hover around current levels before starting to fall mid-century, but do not reach net-zero by 2100. Used by the
Intergovernmental Panel on Climate Change (IPCC) in its 2021 Sixth Assessment Report.
2. Representative Concentration Pathway 8.5 assumes emissions continue to increase for the rest of the 21st century. Considered as a very unlikely and worst-case scenario.
64
Antofagasta plc Annual Report 2022
Strategic Report RISK MANAGEMENT
Recommendations
• Identifying and assessing risks
and opportunities
• Managing risks and opportunities
• Integrating climate change into overall
risk management
METRICS AND TARGETS
Recommendations
• Climate-related metrics
• GHG emissions and related risks
• Targets and performance
Progress
• The Board has assessed the Company’s risk appetite for climate change as medium.
• Control metrics for measuring climate change risks were monitored during the year and the
owners of the risks at each operation were identified.
• Climate change physical risks were assessed using the SSP2-4.5 “middle of the road” scenario.
The estimated financial impact on operating costs and capital expenditure was calculated for
three situations: no mitigation or adaptation; controls already in place; and plans and actions
implemented in the future.
Progress
• We continue to use Scope 1 and 2 emissions and emission intensity (tCO2e/tCu) to monitor
our exposure to transition risks.
• In 2022, we calculated our 2021 Scope 3 emissions and are refining our methodology with
a view to setting reduction targets in 2023 or as soon as possible thereafter.
• In April 2022, the last of our mining operations started using power solely from renewable
sources, reducing our Scope 2 emissions by over 95% since 2021 and achieving our 2025
30%-reduction target three years early.
• From the beginning of the year, we have been using an internal carbon price in the economic
evaluation of bids from suppliers for specific goods and services.
TCFD INDEX
The Company has considered the relevant sections of the TCFD all-sector guidance and additional information relating to the required disclosures
can be found on the pages indicated in the table below:
Pillar
Disclosure
Governance
Description of the Board’s oversight of climate-related risks and opportunities.
Description of management’s role in assessing and managing climate-related risks and opportunities.
Strategy
Description of the climate-related risks and opportunities the Company has identified over the short,
medium and long term.
Description of the impact of climate-related risks and opportunities on the Company’s businesses,
strategy and financial planning
Description of the resilience of the Company’s strategy, taking into consideration different climate-related
scenarios, including a 2°C or lower scenario.
Risk
Management
Description of the Company’s processes for identifying and assessing climate-related risks
Description of the Company’s processes for managing climate-related risks.
Description of how processes for identifying, assessing and managing climate-related risks are integrated
into the Company’s overall risk management.
Metrics
and Targets
Disclosure of the metrics used by the Company to assess climate-related risks and opportunities consistent
with its strategy and risk management process.
Disclosure of Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG) emissions
and the related risks.
Description of the targets used by the Company to manage climate-related risks and opportunities
and performance against targets.
Page
107
60
60 and 66
58, 60, 62
and 63
66
30
60
30
60 and 65
61
61 and 63
Antofagasta plc Annual Report 2022
65
/ How we engage with our stakeholders continued
RESULTS OF CLIMATE SCENARIO ANALYSIS, EXCLUDING COPPER MARKET BENEFIT
Impact calculated over operations’ Life-of-Mines (LOMs)
To improve our understanding of how climate risks may develop and impact our operations, we carried out a new climate scenario analysis
exercise in 2022. This also helped us develop our investment plans and enhance our prevention and recovery control measures.
In general, our 2022 analysis showed that the potential exposure of our business under the physical warming scenario decreased compared
to the analysis done in 2021. This was mainly due to the change of modelling scenario used, and our improved understanding of the physical
impact of climate change on our operations that we learned from the 2021 analysis.
The increased financial impact of transition risk, compared with 2021, is mainly due to the better-quality information used in the 2022 analysis
and the longer LOMs incorporated in the modelling. Although the likelihood of value-at-risk is uncertain, the analysis provides a useful reference
point against which to assess and prioritise the mitigation and adaptation measures we need to reduce our exposure and strengthen our
resilience.
The analysis below does not include an estimate of the potential impact of climate change on copper demand or the copper price, which
is expected to be positive but is difficult to quantify.
Transition risks and
opportunities have been
identified over the short,
medium and long term
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. Examples of adaptation
to the short-term impact of physical risks are shown in the section on “Water consumption” (desalination plant), and “ESG in the supply chain” (increase in acid
and diesel autonomy).
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Antofagasta plc Annual Report 2022
$50-100m$0-50m$50 - 100m$50 - 100mPhysical2:IPCC’s SSP2-4.5Decrease and/or loss of water supply===Compared with 2021 analysisRisktimelineExtreme rainfall eventsHigh and/or sustained temperaturesParticulate matterLogistics disruption $0-50m$0 - 50m$0 - 50m$0 - 50mRisktimelineCompared with 2021 analysis=$100 - 200m$0 - 50m=Net Present Value Positive ExposureNet Present Value Negative ExposureTransition1: IEA’s SDSInvestmentin mitigation $1,000 - 1,500mChange in energy costs due to mitigation$50 - 100m$50 - 100mCarbon tax avoidedby mitigation$500 - 100mCarbon tax $1,000 - 1,500m$1,000 - 1,500mNorthern Zone (Centinela, Antucoya, Zaldívar, FCAB)AntofagastaSierra GordaSan Pedro de AtacamaCalamaTocopillaMaría ElenaMejillonesZaldívar AntofagastaCentinelaAntucoya BoliviaArgentinaCentinela PortFCABCentral Zone (Los Pelambres)Los Vilos municipal districtIllapel municipal districtCanela municipal district Choapa ProvinceLos VilosLos PelambresPunta Chungo portArgentinaEl Mauro tailings storage facilitiesSalamanca municipal districtShort andmedium termMedium andlong termShort andmedium termMedium andlong termMediumtermMediumtermMediumtermMediumtermShort andmedium termShort andmedium termStrategic Report Suppliers
Responsible supply through the robust
oversight of suppliers’ ESG practices
is vital for the successful management
of our long-term relationship.
26%
Increase in purchases from SMEs ($510m)
Suppliers provide a range of goods and services from heavy equipment
to catering and are vital to our ability to operate continuously, safely and
efficiently. In 2022, our Mining and Transport divisions purchased $4.6
billion of goods and services from 3,982 companies of which 91% were
based in Chile. Contractor workers, employed by some of our suppliers,
make up 77% of our workforce.
In December 2022, we launched our Suppliers for a Better Future
programme, seeking to align contractor companies’ practices with our
Purpose of developing mining for a better future. The programme
provides support and sets targets on local recruitment, hiring women
and reducing emissions for suppliers to achieve by 2025. It also aims to
strengthen the development of local suppliers and their use of innovation
and, in alliance with the Catholic University of the North (UCN), to
develop the capabilities of local small and medium-sized
companies (SMEs).
Governance
We use a digital sourcing platform (Ariba) for all procurement in order to
make acquisition processes traceable, transparent and fair. We require
a minimum number of companies to participate in large tenders to
ensure a competitive process.
Antofagasta plc Annual Report 2022
67
As part of our Suppliers for a Better Future programme, we also began
working with supply chain sustainability rating consultants EcoVadis,
in a trial to determine the ESG ratings of our suppliers. Following the
evaluation, a scorecard is prepared that highlights areas for the suppliers
to improve and monitor. By the end of the year, around 50 of our largest
suppliers, based on spending, were participating and more will be added
in 2023.
We continued to address Scope 3 emissions, which are indirect
emissions related to our activities caused by upstream (suppliers) or
downstream processes that we do not control or own. During the year,
we worked on specific supplier categories, such as explosives, grinding
balls and linings, to further refine our Scope 3 emissions calculation for
2021. We plan to set a Scope 3 emissions reduction target in 2023 or as
soon as possible thereafter, and include reduction targets in contracts
for specific categories of suppliers.
We agreed Greenhouse Gas Agreements with mining equipment
suppliers Komatsu and Caterpillar to advance the development of
zero-emission vehicles and machinery, which currently account
for approximately 50% of our Scope 1 emissions.
In addition, we worked on long-term strategies to reduce Scope 3
emissions in nine categories and began collaboration initiatives with
15 suppliers. We also signed agreements to pilot four types of electric
battery vehicles in 2023 at our operations (excavators, front-end
loaders, dump trucks and pickup trucks).
As a member of the International Council on Mining and Metals (ICMM),
we helped design ICMM’s Scope 3 self-assessment tool and used it to
measure our emissions. It placed us in the top three of the 26 ICMM
member companies that undertook the evaluation with regard to the
completeness and quality of our measurement of Scope 3 emissions.
For more information, see our 2022 Sustainability Report, our
2022 Climate Change Report and antofagasta.co.uk/suppliers22
Strategic Report
/ How we engage with our stakeholders continued
Due diligence is conducted on all potential suppliers prior to awarding
a contract. We assess Company ownership, participation of politically
exposed persons, antitrust issues, commercial behaviour, legal cases,
conflicts of interest, compliance models and procedures for the
prevention of slavery and human trafficking. We have in place control
and management systems covering the procurement of minerals which
we use to manufacture our products, in line with the OECD’s due
diligence guidance for responsible supply chains for minerals.
Antofagasta’s 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 2022, we increased the frequency of financial evaluations and
introduced several measures, such as shorter payment times, to
address greater insolvency rates among suppliers.
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 anonymous complaints. We have raised
awareness of this mechanism in meetings and in written
communications with our contractor workers.
For more information, see our
Crime Prevention Manual
For more information, see our
2022 UK Modern Slavery Act Statement
Suppliers ESG
In 2022, we began applying additional environmental, social and
governance (ESG) criteria to evaluate bids for contracts worth over
$10 million, in order to complement the energy efficiency and safety
considerations already in place. Extra points are assigned to bids from
companies with robust governance, local recruitment, diversity and
inclusion, as well as carbon emission reduction strategies and targets.
We also started applying an internal carbon price in tenders for specific
goods and services, such as explosives, mine haulage trucks and
transporting personnel.
Our strategy involves training small and medium-sized (SMEs), local
suppliers and service providers in the Antofagasta and Coquimbo
Regions on ESG concepts to help them adopt sustainable practices
and to meet the ESG goals set in our Suppliers for a Better Future
programme. In 2022, we held two training sessions on ESG matters
directed at SMEs in the Antofagasta Region and another four aimed
at suppliers from other regions. More than 200 national and regional
suppliers took part.
68
Antofagasta plc Annual Report 2022
Fostering local employment
We encourage contractor companies to recruit employees from the
Antofagasta and Coquimbo Regions and in 2022 an average of 35% of
their employees were from these regions. During the year, we set a
target for suppliers to hire 45% of their workforce locally by 2030.
In the Choapa Province, Los Pelambres has an employment programme
for contractor companies that includes a skills training programme, a job
portal aimed at locals and a KPI for suppliers of labour-intensive services
to recruit at least 30% of their employees locally. Since being launched
in 2014, the programme has increased the proportion of people from the
province hired by contractors from 15% to 48.3% in 2022.
In the Antofagasta Region, we have trialled similar efforts and are
encouraging contractors to publish local jobs on the new regional
employment portal, rather than bringing in workers from other parts
of the country.
We reinforce these efforts by building human capacity in the regions
where we operate through scholarships and other local training
initiatives.
For more information,
see P56 in Communities
ETHICAL MINIMUM WAGE
Since 2020 we have required contractor companies to pay their
employees an ethical wage that supports minimum living standards.
In 2022, we increased the ethical minimum wage to Ch$552,000,
38% higher than Chile’s legal minimum wage of Ch$400,000 at the
end of 2022.
Supporting local growth
At Antofagasta, we seek to foster economic development in the
Antofagasta and Coquimbo Regions, where our operations are
based, through sourcing and promoting local goods and services.
In line with our objectives, the Mining division increased the number of
tender invitations to suppliers headquartered in these regions in 2022.
In total, the number and value of tenders awarded by our Mining division
to local suppliers increased by 49% to 7,139 and 10% to $374m
respectively against 2021. On average, these local suppliers were paid
within eight days or less. Due to our policy, purchases from SMEs have
continued to grow to $510 million and represented 26% of increase
compared to 2021.
At the end of 2022, we updated our guidelines on regional procurement
and recruitment that seek to promote local purchases by reducing
administrative and financial barriers for SMEs in the Antofagasta and
Coquimbo Regions. In response to feedback from contractor companies,
we changed the guidelines to give more scope to award contracts
to local companies even if they do not submit the lowest-priced
bid and enable closed tenders for regional suppliers for specific
contract categories.
Accessing opportunities
We continued to hold business roundtables to launch and discuss
tenders as part of our efforts to help local suppliers access opportunities
to bid for contracts. In November, we presented 10 tenders in a meeting
with over 150 suppliers in the Antofagasta Region. In December, over
250 suppliers from the Coquimbo Region joined a meeting to discuss
upcoming tenders and requirements. We also held in-person forums to
get feedback on our tender processes and requirements from suppliers
in the Antofagasta Region.
As part of the Suppliers for a better Future programme, Los Pelambres
worked with 150 suppliers over the year to improve the ability of local
businesses in the Choapa Province to bid in tenders. A key component
of the initiative is the one-on-one business coaching provided to
participants.
We also have an agreement with the Antofagasta Industrialists’
Association (AIA) to use its digital database of certified suppliers (known
as SICEP) to publicise upcoming tenders and update our register of
potential local suppliers.
PROMOTING INNOVATIVE SUPPLIERS
Our open innovation model encourages partners and potential
suppliers to understand the requirements and participate in finding
solutions for our main operational challenges.
A key initiative is the Pitch Days our mining operations organise in
alliance with Expande, a Fundación Chile initiative that seeks to
solve specific mining operation challenges with innovative solutions.
In 2022, we hosted 24 Pitch Days, which led to us doing further
work with the proposers on 13 of the suggested solutions.
The Group’s main operational challenges are also published on our
Innovaminerals open platform to capture original ideas from inside
and outside the Company.
Antofagasta plc Annual Report 2022
69
/ How we engage with our stakeholders continued
Customers
Successful management of our relationships
with our customers contributes to our
long-term success.
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.
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.
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.
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.
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.
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 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
18%
NORTH
AMERICA
5%
SOUTH
AMERICA
10%
JAPAN
28%
REST OF
ASIA PACIFIC
39%
Copper
Molybdenum
Gold
Transport
Silver
84%
7%
5%
3%
1%
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Antofagasta plc Annual Report 2022
Strategic Report Shareholders
The Company is listed on the main market
of the London Stock Exchange and is
a constituent of the FTSE100 index.
As explained in the Directors’ Report
on page 168, the controlling shareholders of
the Company hold approximately 65% of the
Company’s total capital. The majority of
the Company’s ordinary shares not held
by the controlling shareholder 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.
As the travel restrictions imposed by the COVID-19 pandemic lifted
during 2022, we held an increasing number of in-person meetings with
institutional investors and sell-side analysts, including during international
investor roadshows, at industry conferences and panel events and with
banks’ equity sales teams. These were attended by the CEO and/or
various members of the senior management team, including the CFO,
the Vice President of Corporate Affairs and Sustainability and the Vice
President of Strategy and Innovation. We also visited major shareholders
and proxy voting agencies as part of a corporate governance roadshow
led by our Senior Independent Director and the Chair of our
Remuneration and Talent Management Committee.
We publish quarterly production figures as well as half-year and full-year
financial results. Copies of our production reports, financial results,
presentations and other ad-hoc press releases are available on our
website. During 2022 we also published Sustainability Reports for our
Mining and Transport divisions, as well as a Tax Report, all of which are
available on our website.
What investors focused on most in 2022
• Our ability to achieve our full-year production and cost guidance
• The drought in central Chile and its impact on the Company
• The progress and potential impact of the planned revisions
to the Chilean mining royalty and tax legislation and the rewriting
of the Chilean constitution
• ESG issues, particularly water availability and emissions,
and our response to climate change
• Progress on the Los Pelambres Expansion project, including
the Desalination Plant
• Free cash flow generation and capital allocation
• Our capital expenditure programme and the potential of our
longer-term growth projects
• Supply and demand factors in the world copper market
• Labour negotiations at our operations
2022 Shareholder engagement calendar
Q1 CEO presented at an industry conference for institutional
investors in the US
In-person and virtual one-on-one and small group meetings with
some 100 investors, of which senior management participated
in 69%
Virtual presentation of full-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
Investor relations team attended two virtual investor conferences
Q2 CEO presented at an industry conference for institutional
investors in the US
Video conference question and answer call open to all investors
by the CEO, CFO and Vice President of Corporate Affairs and
Sustainability, following the release of the Q1 production report
Virtual one-on-one and small group meetings with some 125
investors, of which senior management participated in 65%
Annual General Meeting in London
Investor relations team attended four virtual investor conferences
and two in-person conferences in the US
Q3 Virtual presentation of half-year 2022 results by the CEO,
CFO and Vice President of Corporate Affairs and Sustainability,
followed by a question and answer session open to all investors
London (in-person) and Frankfurt (virtual) roadshow
US East Coast roadshow
Virtual one-on-one and small group meetings with some 100
investors, of which senior management participated in 63%
Investor relations team attended two virtual investor conferences
Q4 Video conference question and answer call open to all investors
by the CEO and CFO following the release of the Q3
production report
Virtual one-on-one and small group meetings with some
60 investors, of which senior management participated in 27%
Corporate Governance roadshow with our Senior Independent
Director and Chair of the Remuneration and Talent
Management Committee
Investor relations team attended one investor conference
in London
Antofagasta plc Annual Report 2022
71
/ 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 2022 totalled $800 million of which
over 99% was paid in Chile.
Chilean law allows political donations to be made subject to certain
requirements, but Antofagasta made no political donations in 2022.
However, we often contribute towards the financing of projects
benefitting 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 was conducted
through a Constitutional Assembly of 155 members elected in a national
vote in May 2021.
The Constitutional Assembly proposed the text of a new constitution,
which was rejected in a national referendum in September 2022.
Congress has now adopted a new plan for drafting the constitution
which includes specific boundaries for the scope of the drafting process
with the election of a Constitutional Council in May 2023 and the
appointment of a Committee of Experts. The new constitution will be put
to a vote in a national referendum in December 2023.
Proposed mining royalty
The Government presented a revised draft mining royalty bill to
Congress in October 2022 which changes the structure and increases
the rates compared with the current royalty.
This draft was approved by the Senate Mining and Energy Committee
in January 2023 and passed to the Senate Treasury Committee for
discussion. The bill will then be debated in the full Senate before being
passed to the lower house for its consideration.
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Antofagasta plc Annual Report 2022
Strategic Report 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.
How we engage with our
stakeholders
Sustainability and Stakeholder
Management Committee
Safety risk management
Performance
Climate change
Carbon footprint
Energy management
Water management
TCFD
Labour relations
Aligning contractors
Open social innovation
Culture and heritage
Local jobs
Engagement mechanisms
Local alliances
Supplier development
Page
46
137
52
53
60
61
62
63
64
50
50
55
56
56, 61
56
69
69
Respectful, diverse and inclusive
49
work culture
Compliance management
36
Reporting
requirement
Relevant policies and standards
Content
Page
Sustainability
Value Chart
Sustainability Policy
ICMM Guidelines
Safety and health
Safety and Occupational Health Strategy
Special Corporate Safety and Health
Regulation for Contractors and
Subcontractors (RECCS)
Fatal Risk Standard (ERFT)
Occupational Health Standard (ESO)
Letter from the Chairman
Letter from the CEO
Our approach to sustainability
Safety and Occupational Health
Strategy
Occupational health risk
management
Environmental
matters
Environmental Management Model
Environmental management
Integral closure of mining operations
standard
Climate change standard
Water management standard
Biodiversity standard
Tailings policy
Global Industry Standard on Tailings
Management
Environmental compliance
Responsible production
Circular economy
Biodiversity
Air quality
Mine closure
Our people
People Strategy
Employee wellbeing
Diversity and Inclusion Strategy
Inclusive culture
Social matters
Social Management Model
Engagement Standard
Building human capital
Social Management Model
Addressing social concerns
Management of initiatives standard
Flagship programmes
Suppliers
Code of Ethics
Impact measurement
Suppliers
Purchase and contracts guidelines
Suppliers ESG
Direct award procedure
Local suppliers
Material management policy
Human Rights69
Code of Ethics
Modern Slavery Act
Human Rights Policy
Anti-corruption and
anti-bribery
Code of Ethics
Compliance Model
Anti-Corruption Model
Antitrust Protocol
Description of
principal risks and
impact on business
activity
Description of the
business model
Non-financial Key
Performance
Indicators
Business integrity and compliance
Code of Ethics
Risk Management Framework
Principal risks
The mining life cycle
2022 highlights
Key Performance Indicators
Total economic contribution
6
9
42
51
52
57
57
58
59
59
59
59
48
49
50
54
54
55
55
67
68
69
36
36
36
24
26
16
2
22
41
Antofagasta plc Annual Report 2022
73
“Our financials remain robust,
driven by operational and cost
discipline across our assets.
However, the continuing drought
in Chile and increasing inflation is
reflected in our full year financial
performance compared to the
exceptional 2021.”
Mauricio Ortiz
Chief Financial Officer
Operating
and Financial
Review
Operating review
Mining division
Los Pelambres
Centinela
Antucoya
Zaldívar
Transport division
Growth projects and opportunities
Exploration activities
Key costs
Operating excellence and innovation
Financial review
76
78
80
82
83
84
86
89
90
92
94
74
Antofagasta plc Annual Report 2022
Strategic Report Antofagasta plc Annual Report 2022
75
/ 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.
“Our operational reliability and
utilisation rates continue to improve
with Centinela and Antucoya
reporting record throughput rates
for the year.”
Mauricio Larraín
Vice President of Northern Operations
Production highlights
646.2k tonnes
of copper produced
770.0
725.3
733.9
721.5
646.2
176.8k ounces
of gold produced
670-710
282.3
252.2
220-240
210.1
204.1
176.8
2018
2019
2020
2021
2022
2023
Forecast
2018
2019
2020
2021
2022
2023
Forecast
9.7k tonnes
of molybdenum produced
13.6
12.6
11.6
$1.61/lb
Net cash costs
10.0-11.5
1.61
1.65
10.5
9.7
1.29
1.22
1.14
1.20
2018
2019
2020
2021
2022
2023
Forecast
2018
2019
2020
2021
2022
2023
Forecast
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Antofagasta plc Annual Report 2022
Strategic Report 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 2022
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/ 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
275.0k tonnes
Gold production
43.1k ounces
359.6
324.7
275.0
320-335
60.3
45-55
53.2
43.1
Revenue
$2,559m
-29.3%
EBITDA
$1,473m
-41.7%
2020
2021
2022
2023
Forecast
2020
2021
2022
2023
Forecast
Molybdenum production
7.2k tonnes
Net cash costs
$1.10/lb
10.9
9.2
7.5-8.5
1.10
7.2
0.89
0.81
Lifecycle of the mine
1.25
MINE LIFE
23 years
2000
12 years
2023
2035
2020
2021
2022
2023
Forecast
2020
2021
2022
2023
Forecast
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Antofagasta plc Annual Report 2022
Strategic Report Capital expenditure
Capital expenditure during 2022 was $890 million, including $251 million
on sustaining capital expenditure and $496 million on growth projects.
As at the end of 2022, the Los Pelambres Desalination Plant and
Concentrator Expansion projects, including design, procurement and
construction, were 93% complete, and both are due to be in production
during the second quarter of 2023.
Outlook for 2023
The forecast production for 2023 is 320–335,000 tonnes of copper,
7.5–8,500 tonnes of molybdenum and 45–55,000 ounces of gold.
Higher production is due to higher throughput, as the desalination and
concentrator expansion are expected to be in production by the end
of Q2 2023.
Cash costs before by-product credits are forecast to be approximately
$1.85/lb and net cash costs $1.25/lb, reflecting higher production and
decreased input costs, offset by inflation and a stronger Chilean peso.
2022 Performance
Operating performance
As expected, the prolonged drought at Los Pelambres impacted copper
production, which was also affected by the concentrate pipeline incident.
EBITDA was $1,473 million, compared with $2,526 million in 2021,
reflecting lower copper realised prices, lower sales volumes and higher
operating costs.
Production
Copper production for the year decreased by 15.3% to 275,000
tonnes, to mainly due to the lower throughput due the expected
restrictions on water availability during 2022 as a result of the
accumulated impact of the long-running drought conditions in the
Los Pelambres area, and the pipeline incident. Molybdenum production
in 2022 was 7,200 tonnes, 21.7% lower than in 2021 due to a decline
in throughput and grades. Gold production was 43,100 ounces,
19.0% lower than the previous year.
Cash costs
Cash costs before by-product credits were $1.84/lb, 15.7% higher than
in 2021. This was due to the lower production, higher input prices
(mainly diesel, explosives and energy) and general inflation, partially
offset by the weaker Chilean peso.
By-product credits increased from $0.70/lb in 2021 to $0.74/lb in 2022
due to higher realised by-product prices despite lower production.
Net cash costs were $1.10/lb, 21c/lb higher than in 2021, reflecting
the increase in cash costs before by-product credits, partially offset
by higher by-product credits.
Antofagasta plc Annual Report 2022
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/ 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
247.5k tonnes
Gold production
133.7k ounces
274.2
235-250
199.0
175-185
246.8
247.5
143.7
133.7
Revenue
$2,406m
-19.3%
EBITDA
$1,157m
-39.7%
2020
2021
2022
2023
Forecast
2020
2021
2022
2023
Forecast
Molybdenum production
2.4k tonnes
Net cash costs
$1.75/lb
Lifecycle of the mine
2.5-3.0
1.75
1.70
MINE LIFE
2.4
1.27
1.13
1.7
1.3
2020
2021
2022
2023
Forecast
2020
2021
2022
2023
Forecast
22 years
43 years
2001
2023
2066
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Antofagasta plc Annual Report 2022
Strategic Report Capital expenditure
Capital expenditure was $857 million, including $431 million on mine
development, $252 million of sustaining capital expenditure and
$174 million on development capital expenditure.
Outlook for 2023
Production is forecast at 235–250,000 tonnes of copper,
175–185,000 ounces of gold and 2.5–3,000 tonnes of molybdenum.
Copper production will decrease compared with 2022 as grades fall
at Centinela Cathodes.
Cash costs before by-product credits are forecast to be approximately
$2.55/lb and net cash costs $1.70/lb.
2022 Performance
Operating performance
Centinela Concentrates’ grades declined in 2022. However, operational
reliability continued to improve and throughput averaged above design
capacity for the year as a whole.
EBITDA at Centinela was $1,157 million, compared with $1,919 million
in 2021, on lower copper and gold sales volumes, lower copper realised
prices and higher unit costs.
Production
Copper production was 247,500 tonnes, 9.7% lower than last year due
to expected lower ore grades at Centinela Concentrates, partially offset
by higher throughput.
Production of copper in concentrate was 149,300 tonnes, 19.5% lower
than in 2021, reflecting expected lower ore grades (18.3%), partially
offset by throughput above the design capacity of 105,000 tonnes of ore
per day. Copper cathode production was 98,200 tonnes, 10.6% higher
than in 2021 mainly due to expected higher grades and recoveries,
despite lower throughput.
Gold production was 133,700 ounces, 32.8% lower than in 2021,
as grades, which are correlated to copper grades, and recoveries
decreased. Molybdenum production was 2,400 tonnes on increased
grades.
Cash costs
Cash costs before by-product credits in 2022 were $2.44/lb, 30.5%
higher than in 2021 due to the impact of lower copper production and
higher input costs.
By-product credits were $0.69/lb, 5c/lb lower than in 2021 due to
lower gold production partially offset by higher molybdenum production
and price.
Net cash costs were $1.75/lb, 62c/lb higher than 2021.
Antofagasta plc Annual Report 2022
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/ 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.
Copper production
79.2k tonnes
Net cash costs
$2.50/lb
Revenue
$704m
+0.8%
EBITDA
$261m
-22.5%
Lifecycle of the mine
79.3
78.6
79.2
70-75
2.50
2.45
MINE LIFE
2.04
1.82
7 years
21 years
2016
2023
2044
2020
2021
2022
2023
Forecast
2020
2021
2022
2023
Forecast
2022 Performance
Operating performance
Antucoya continued to improve its operational reliability and consistency
during the year with throughput increasing by 4.6% compared
with 2021.
EBITDA was $261 million compared with $337 million in 2021, reflecting
higher operating costs and the lower realised copper price.
Production
Antucoya produced 79,200 tonnes, 0.8% higher than last year due to
higher throughput, which averaged 89,400 tonnes per day for the year,
the plant's design capacity.
Cash costs
Cash costs for 2022 were $2.50/lb, 22.5% higher than in 2021 due
to increased input costs, particularly for sulphuric acid, diesel and
explosives.
Capital expenditure
Capital expenditure was $67 million, including $58 million on sustaining
capital expenditure.
Outlook for 2023
Production is forecast to be 70–75,000 tonnes of copper and cash costs
are expected to be approximately $2.45/lb.
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Antofagasta plc Annual Report 2022
Strategic Report 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.
EBITDA
$147m
-14.8%
Copper production
44.5k tonnes
Net cash costs
$2.39/lb
48.2
44.0
44.5
45-50
2.70
2.39
2.39
1.80
Lifecycle of the mine
MINE LIFE
28 years
1995
13 years
2023
2036
2020
2021
2022
2023
Forecast
2020
2021
2022
2023
Forecast
2022 Performance
Operating performance
During 2022, Zaldívar completed construction of its Chloride leach
project, which is being ramped up in 2023.
Attributable EBITDA was $147 million compared with $173 million
in 2021.
Production
Attributable copper production was 44,500 tonnes, 1.1% higher than
in 2021 mainly due to higher grades, partially offset by lower throughput.
Cash costs
Cash costs were $2.39/lb, unchanged from the previous year. The long
leach cycle of approximately 210 days generates a time lag in costs, so
the full effect of higher input prices is not fully reflected.
Capital expenditure
Attributable capital expenditure in 2022 was $55 million, of which
$44 million was sustaining capital expenditure.
Outlook for 2023
Attributable copper production is forecast to be 45–50,000 tonnes
at a cash cost of approximately $2.70/lb.
Other matters
Zaldívar submitted an Environmental Impact Assessment (EIA) in 2018
which included an application to extend its water extraction and mining
permits to 2029 (with decreasing activity levels in 2030-2031).
Currently, Zaldívar is permitted to extract water and mine into 2025 and
2024, respectively. Zaldívar continues to work diligently with the
authorities and consult with the local indigenous community.
To ensure the continuity of the operation, in March 2023 Zaldívar
submitted a DIA (Declaration of Environmental Impact), a more limited
scope and simplified procedure than an EIA, requesting that the mining
permit be extended from 2024 to 2025 so as to expire at the same date
as the current water permit. At the same time Zaldívar withdrew the
2018 EIA application. It is expected that an alternative and updated EIA
application to extend the water and mining permits beyond 2025 will be
submitted which will also include a plan for a transition from the current
continental water source on completion of the extended water permit, to
either procuring water from a third party or using raw sea water.
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.
Antofagasta plc Annual Report 2022
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/ 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.
2022 Tonnage transported
7,108k tonnes
6,533
6,444
6,702
7,108
2019
2020
2021
2022
Revenue
$193m
+13.8%
EBITDA
$80m
+17.3%
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Antofagasta plc Annual Report 2022
Tocopilla
María Elena
Calama
Sierra Gorda
Antofagasta Region
Mejillones
Antofagasta
Taltal
Customer map
Road route
Rail route
FCAB customers
Strategic Report 2022 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 2022 increased by 6.1% to an all-time record
7.1 million tonnes as new transport contracts have ramped up during
the year.
EBITDA was $80 million, 17% higher than in 2021, reflecting the higher
revenue from increased volumes and better contracted sales prices.
Costs and operating efficiency
The division has implemented several operational efficiency
improvements this year with positive results that led to increased
volumes and cost optimisation which will ensure its long-term
competitiveness. In addition, it continued its Cost and Competitiveness
Programme to improve its cost structure, revenue stream and operating
standards, achieving benefits of some $9 million during the year.
Sustainability
The maturity of the safety processes applied at the division continued to
show improvement, with the division recording its sixth 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.
Also, in line with the Group’s Diversity and Inclusion Policy, the number
of women and people with disabilities in the division increased to 19.9%
and 1.4% of the total workforce respectively.
Outlook for 2023
The division has won or renewed nine contracts in 2022 and will
continue with the same focus in 2023. Over the coming years, the
division has a portfolio of projects that will allow it to increase its bulk
materials transport volumes, mainly for the copper and lithium
industries.
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. Remediation work will start in 2023.
Antofagasta plc Annual Report 2022
85
/ Operating review continued
Growth projects
and opportunities
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.
The Zaldívar Chloride Leach project was completed on time and on
budget early in the year, pre-stripping of the Esperanza Sur pit was
completed in July, the Los Pelambres desalination plant started its
pre-commissioning in November and the concentrator expansion
at Los Pelambres will be completed by the end of March 2023.
Los Pelambres Expansion
This expansion project is divided into two phases. Phase 1 is expected to
be in production in the second quarter of 2023 and Phase 2 by the end
of 2025.
Phase 1
This phase is designed to optimise throughput within the limits of the
existing operating, environmental and water extraction permits.
As mining progresses at Los Pelambres, ore hardness will increase.
The expansion is designed to compensate for this, increasing plant
throughput from its current capacity of 175,000 tonnes of ore per day
to an average of 190,000 tonnes of ore per day. The expansion is divided
into two sub-projects, the construction of a desalination plant and water
pipeline from the coast to the El Mauro tailings storage facility, and the
expansion of the concentrator plant, which includes the installation
of an additional SAG mill and ball mill, and six additional flotation cells.
Annual copper production will be increased 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 per
year for the rest of the period as the hardness of the ore increases and
the benefit of the higher milling capacity is fully realised.
In 2020, the decision was made to change the scope of the project and
double the planned capacity of the desalination plant from 400 l/s to
800 l/s. However, the additional work on this expansion that can be
carried out during Phase 1 is limited by what is allowed under the
permits that have already been issued so the remaining work will be
treated as a separate project subject to the receipt of the necessary
permits. The cost of the additional work is included in the Phase 1
capital cost.
By the end of 2022, the desalination plant and the water pipeline were
95.7% complete and commissioning was under way, with production
expected in the second quarter of 2023. At the concentrator plant
expansion site, progress was 91.0% with production also expected in the
second quarter of 2023.
A detailed review of the project schedule and costs in early 2022
resulted in the capital cost estimate for Phase 1 being increased to $2.2
billion (from $1.7 billion). Of this increase, approximately $220 million
was related to the impact of COVID-19 on costs and the construction
schedule, and $170 million was related to general inflation, including
increased input prices, wages, labour incentives and logistics costs, with
the balance reflecting other adjustments to implementation plans and an
updated contingency provision.
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Antofagasta plc Annual Report 2022
Strategic Report Esperanza Sur pit
The Esperanza Sur pit is 4 km south of the Esperanza pit, close to
Centinela’s concentrator plant. The deposit contains 1.4 billion tonnes
of reserves with a grade of 0.4% copper, 0.13g/t of gold and 0.012%
of molybdenum.
Pre-stripping by a contractor was completed in July and Centinela has
taken over the operation of the pit using a fleet of 11 autonomous trucks,
the first to be used by the Group. Ore from the pit is now being
processed at the Centinela concentrator.
The opening of the Esperanza Sur pit improves Centinela’s flexibility in
supplying its concentrator and, 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 with production levels if the material was
supplied solely from 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.
Phase 2 – Future expansion
Following the decision in 2020 to increase the size of the desalination
plant, Phase 2 of the expansion now requires two separate
Environmental Impact Assessment (EIA) applications; one for the
expansion of the desalination plant and one for the extension of the mine
life of Los Pelambres through an increase in the size of the El Mauro
tailings storage facility. The latter EIA will also provide the option to
further increase the throughput capacity of the concentrator plant.
Desalination plant expansion
This project will protect Los Pelambres from the future impact of climate
change and the deteriorating availability of water in the region. The
project cost will be reported as part of the Group’s sustaining capital
expenditure.
The project includes 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. In 2021 Los Pelambres submitted the
EIA required for this project, which includes the desalination plant
expansion and two other sustaining capital infrastructure projects, the
replacement of the concentrate pipeline and the construction of certain
planned enclosures at the El Mauro tailings storage facility. EIA approval
is expected in time for the project to be completed in 2025/26, by which
time over 95% of Los Pelambres’s water needs will be fulfilled by
desalinated or recirculated water.
Mine life extension
The current mine life of Los Pelambres is 12 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 and
the mine waste storage. This will extend the mine’s life by a minimum of
15 years, accessing a larger portion of Los Pelambres’s six billion tonnes
of mineral resources. The EIA will also provide for the option to increase
throughput to 205,000 tonnes of ore per day, increasing copper
production by 35,000 tonnes per year.
The capital expenditure to extend the mine life was estimated at
approximately $500 million in a 2014 pre-feasibility study, with most of
the expenditure on mining equipment and increasing the capacity of the
concentrator and the El Mauro tailings facility. Key studies on tailings and
waste storage capacity have advanced and community consultation is
under way. The environmental and social studies are being prepared
and should be submitted to the authorities during 2023/24 as part of the
EIA application.
Zaldívar Chloride Leach
This project is expected to increase copper recoveries by approximately
10 percentage points, with further upside in recoveries 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.
The project was completed in early 2022 at a total capital cost
of $190 million. The project included an upgrade of the Solvent
Extraction (SX) plant, new reagents facilities and the construction
of additional washing ponds for controlling the chlorine levels.
Ramp-up is currently underway to achieve the full
improvement in recoveries and will extend into 2023.
As the Group equity accounts for its interest in Zaldívar,
capital expenditure at the operation is not included
in Group total capital expenditure amounts.
Antofagasta plc Annual Report 2022
87
/ Operating review continued
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. The EIA for both phases was approved in 2016.
Detailed engineering plans and costings have recently been updated for
Phase 1 of the project and key contracts finalised, subject to Board
approval of the project. The capacity of the new concentrator will be
95,000 tonnes of ore per day, producing on average approximately
170,000 tonnes of copper equivalent (copper, gold and molybdenum)
a year over the first ten years of operation. This will move Centinela into
the first cost quartile of global producers.
The Phase 1 capital cost is estimated at $3.7 billion, including the cost of
the new water supply system. The increase on the previously quoted
2015 pre-feasibility estimate of $2.7 billion reflects inflation, design
improvements, heightened environmental and other regulatory
requirements, and the results of advanced engineering and a more
detailed execution plan. The estimate includes a concentrator plant,
capitalised stripping, mining equipment, a new tailings storage facility,
a water pipeline and other infrastructure, pre-commercial production
operating costs, and owner’s and other costs.
The decision by the Board on whether to proceed with the project is
expected in 2023, with timing dependent on the outcome of ongoing
discussions on the tax reform and mining royalty bills and the rewriting
of Chile’s constitution. Work on Phase 2 would only start once
construction of Phase 1 is completed and it is operating successfully.
The second concentrator and its potential further expansion to
150,000 tonnes of ore per day will source ore initially from the
recently opened Esperanza Sur pit and later from the Encuentro pit.
The sulphide ore in the Encuentro pit lies under the Encuentro Oxides
reserves, which are expected to be depleted by 2026. These
expansions will further progress maximising the potential of
Centinela's large mineral resource base.
During 2022, the Company continued the tender process inviting third
parties to provide water for Centinela's current and future operations by
acquiring the existing water supply system and building the new water
pipeline. This process is expected to be completed in 2023. The
outsourcing of the water supply will only proceed if it improves the net
present value of the project.
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 and PGM deposits in north-eastern
Minnesota, US. The planned project is over a portion of the total
resource and envisages mining and processing 18,000 tonnes of ore per
day for 25 years and producing three separate concentrates – copper,
nickel/cobalt and PGM.
In 2019, Twin Metals submitted its Mine Plan of Operations (MPO) and
Scoping Environmental Assessment Worksheet Data Submittal, to the
US Bureau of Land Management (BLM, a bureau in the Department of
Interior) and the Minnesota Department of Natural Resources (DNR),
respectively. However, over the past two years, while the Twin Metals
project was advancing its environmental review, several actions were
taken by the federal government that have changed the potential
outcomes for the project.
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Antofagasta plc Annual Report 2022
In 2021, the BLM rejected advancing Twin Metals’ preference right lease
applications (PRLAs) and prospecting permit applications (PPAs).
In early 2022, the Department of Interior (DOI) took an additional action
through a legal opinion issued by the Office of the Solicitor (M-Opinion).
This action arbitrarily cancelled Twin Metals’ federal mining leases 1352
and 1353, citing concerns with the reinstatement and renewal process.
Also in early 2022, the BLM stopped its evaluation of Twin Metals’
MPO and an administrative court dismissed Twin Metals’ appeal of that
decision.
In August 2022, Twin Metals filed a claim in federal court challenging
the administrative actions resulting in the rejection of the PRLAs, the
cancellation of its federal leases 1352 and 1353, the rejection of its MPO
and the dismissal of the administrative appeal of the MPO rejection.
Twin Metals considers the actions of the government to be arbitrary
and capricious, contrary to the law and in violation of its rights. This
action is pending.
In January 2023, the DOI issued an order effectively banning mining in
approximately 225,000 acres of the Superior National Forest for 20
years, subject to valid existing rights. This action alone does not prevent
Twin Metals from proceeding with the project since it does not affect its
pre-existing rights.
Reko Diq project
In 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 (“Barrick”), 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.
In March 2022, the Company reached an agreement in principle with
Barrick and the Governments of Pakistan and Balochistan on a
framework that provided for the reconstitution of the Reko Diq project,
and a pathway for the Company to exit the Reko Diq project.
In December 2022, the parties entered into definitive agreements under
which the project was reconstituted under Tethyan and a consortium
of Pakistani state-owned enterprises acquired shares in the Tethyan
subsidiary which holds the project, and the ICSID award was resolved.
The proceeds from the acquisition of the shares of Tethyan’s subsidiary
will be held by Tethyan until they are distributed to the Company before
the end of 2023. An exceptional gain of $945 million has been
recognised in 2022 and is subject to final payment during 2023.
For more information please see Note 17 to the financial statements.
Strategic Report Exploration activities
The project is jointly held with Barrick Gold, with Antofagasta the
majority shareholder and operator.
In addition, we advanced drilling evaluation at several projects in the
Centinela Mining District, maintaining our focus on identifying new
high-quality projects with leachable oxide mineralisation in our properties
and in ground held by third-parties.
International
Our international programme has a strong focus on Peru, including the
development of a diversified land portfolio with long-term and significant
potential in the prospective coastal and Miocene belts. As at the end of
the year, permits are being sought to test an exploration target in the
country´s southern coastal belt.
Exploration efforts in North America remain concentrated on the key
copper belts in British Columbia and Arizona/Nevada, with the GEM
team seeking joint venture opportunities with companies that have
attractive land holdings, local knowledge and resources.
Our aim is at least to replace the mineral
resources mined at our operations each year
and to ensure Antofagasta’s sustainable and
long-term growth. In 2022 our mineral
resources increased by 1 billion tonnes.
Exploration remains a key contributor to the sustainable and long-term
embedded growth of the Group´s copper business.
After the lifting of restrictions imposed during the COVID-19 pandemic,
exploration activities resumed as normal, subject to a few additional
control protocols. We remain focused on favourable jurisdictions in the
Americas, particularly in 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.
The Global Exploration Management (GEM), team based in Santiago
leads all the Group’s exploration activities with the local offices in Lima
and Toronto reporting to the GEM on progress in Peru and North
America, respectively.
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 $10 million compared
to 2021, to $113 million.
Chile
Our exploration programmes remain focused on highly prospective
areas in northern and central Chile, mainly in metallogenic belts hosting
porphyry, manto and IOCG (Iron Oxide Copper Gold) deposit types.
During the year, we did 80,000 metres of drilling, 27% more than in
2021, mainly at our two advanced projects, Cachorro and Encierro.
Cachorro is in the western Atacama Desert in northern Chile, 100 km
north-east of the city of Antofagasta and 1,100 km north of Santiago.
It reported its maiden inferred resources in 2021 and these were
increased by over 70% during 2022 to 242.4 Mt at 1.21% copper
(cut-off grade of 0.5% copper), making the project one of the most
important manto-type deposits in the northern coastal belt in Chile.
It lies between Antucoya and Centinela and may benefit from the use
of their facilities.
The Encierro project is in the Chilean High Andes, 100 km east of the
city of Vallenar and 600 km north of Santiago. The deposit is a complex
Cu-Au-Mo Miocene porphyry copper and we announced its maiden
inferred resources of 522 Mt at 0.65% copper, 0.22 g/t gold and
74 ppm molybdenum (cut-off grade of 0.5% copper) in June 2022.
Antofagasta plc Annual Report 2022
89
/ Operating review continued
Key costs
Our mining operations depend on many inputs,
from energy and labour to acid and fuel, the
most important of which are reviewed below.
Contractor services, maintenance and spare parts account for 42% of
the Mining division’s total production costs, and energy and labour are
the largest direct costs, accounting for 11% each. As concentrate
producers, Los Pelambres and Centinela require reagents and grinding
media. As cathode producers, Centinela, Antucoya and Zaldívar use
the SX-EW process and require sulphuric acid. The availability, cost and
supply reliability of these inputs are central to our cost management
strategy, which focuses on cost control and security of supply.
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.
All of our operations are on the country’s main grid, the National
Electrical System (SEN), and source power under medium- and
long-term contracts called Power Purchase Agreements (PPAs).
In recent years, renewable technologies have significantly reduced in
cost and many renewable power plants are being built in Chile, mainly in
the north of the country. The cost of renewable power is significantly
lower than power from conventional sources.
The transition to using solely renewable power, with its lower costs and
lower emissions, has been important for both the Company’s carbon
footprint and its costs. Energy accounted for 11% of our total production
costs in 2022.
“The transition to using
solely renewable power
has been important for
both the Company’s
carbon footprint and
its costs.”
Labour
Accessing a diverse and talented workforce is key to our success.
Our employees accounted for 11% of our production costs. Labour
agreements are in place with each of the unions at our operations
and generally last for a period of three years, at the end of which they
are renegotiated.
Our employees’ wages are adjusted quarterly for inflation. This means
labour costs structurally increase by more than inflation, but we aim to
compensate for this with productivity improvements.
Service contracts and key supplies
For key commercial contracts, such as mining equipment, fuels,
lubricants, critical spares, tyres, reagents, grinding balls, explosives and
mine maintenance, negotiations are managed centrally to generate
synergies and economies of scale. The significant savings this achieves
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 minimise the impact
on our margins.
We have a challenging optimisation programme at 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.
The successful management of supplier relationships contributes to our
long-term success, which is why we hold strategic meetings with our
key suppliers to address operational challenges while also taking a
long-term view. This allows us to work collaboratively on key challenges
such as developing zero-emission trucks and other initiatives linked to
our emission reduction commitments.
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, thus ensuring operational
continuity and cost containment. As disruption continues due to the war
in Ukraine, we have strengthened control of our supply chain by
adopting new technologies for the continuous monitoring of our sources
of supply.
In 2022, we had around 3,800 different suppliers of goods and services,
of which 93% are based in Chile.
90
Antofagasta plc Annual Report 2022
Strategic Report Fuel and lubricants
Fuel and lubricants represent approximately 11% of our 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 shipping rates for supplies and products,
and the cost of items such as tyres and conveyor belts, which contain
oil-based products. In June 2022 the oil price, which is the main input
for fuels, increased to levels above $100 per barrel, partly due to supply
constraints arising from the war in Ukraine and partly due to the
recovery in consumption as COVID-19 restrictions were lifted around the
world. Year-on-year, the WTI oil price has increased from an average of
$68 per barrel in 2021 to $94 per barrel in 2022. However, prices
decreased in the second half of 2022 stabilising at around $80 per
barrel by the end of the year.
Explosives
The price of explosives continued the upward trend observed in 2021, in
line with the ammonia price which was highly affected by the increase in
gas prices and supply constraints related to the war in Ukraine. In 2022
explosives prices increased on average by around 55% compared to the
previous year. At Centinela, we increased our use of non-fuel-based
explosives in certain areas of the mine to reduce carbon emissions and
contain costs.
We are evaluating the feasibility of HyEx, a project to produce green
ammonia in northern Chile, led by energy multinational Engie and a
Chilean explosives Company.
Grinding balls and mill liners
Steel is used in the grinding balls and mill liners which account for
approximately 8% of a concentrator plant’s costs and 2% of the Group’s
production costs. Steel prices showed an upward trend during the first
half of 2022 (although averages prices were lower than in 2021) and
grinding balls and liner prices also rose during 2022 before weakening
towards the end of the year.
Throughout 2022 we have implemented circular economy initiatives
focused on steel recycling to mitigate rising costs and reduce carbon
emissions.
Sulphuric acid
Sulphuric acid is one of the main inputs for the SX/EW leaching process
used to produce copper cathodes and in 2022 it accounted for
approximately 9% of the Group’s production costs.
Centinela, Antucoya and Zaldívar use a total of approximately 1.5 million
tonnes of sulphuric acid per year, mainly contracted under one-year
agreements to secure supply.
During 2022, the acid price was about $250 per tonne in Chile, an
increase of over two times compared to 2021. The spot price had an
upward trend throughout the first half of the year, reaching prices of
$280 per tonne. From August 2022 the price weakened, ending the
year at around $150 per tonne.
The high price of acid has had a significant impact on our SX-EW
operations, where it accounts for about 23% of production costs.
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 currency earnings, therefore if the copper
price strengthens so does the Chilean peso, and vice-versa, providing
a natural hedge for the Company. During 2022 the copper price
weakened and the US dollar strengthened, largely explained by
increases in interest rates by the Federal Bank in the US in response
to high inflation. The Chilean peso weakened 1.3% over the US dollar,
closing the year at CLP856/$1, in part explained by the copper price
decrease, offset by a better political environment in Chile than the
previous year.
Antofagasta plc Annual Report 2022
91
/ 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 progression 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 business growth and to develop the next
generation of mining practices, including game-changing process
technology and the reduction of our environmental footprint.
Operating excellence drives our Competitiveness strategic pillar by
embedding a continuous improvement culture in the Group to raise
the full potential of our assets and our people.
Operating excellence
During 2022, our operating excellence strategy focused on achieving
the maximum theoretical capacities of our production processes using
our Full Potential 2.0 programme.
Full Potential 2.0 is a methodology that allows the systematic and
standardised identification of bottlenecks in our production processes.
It seeks to maximise the capture value of our mining operations through
an indicator, OEE (Overall Equipment Efficiency), that measures the
overall efficiency of equipment and processes. This process has allowed
us to identify the main gaps and opportunities for process improvement
at our operations, as well as indicating initiatives that are key to
creating value. The most important of these are the use of continuous
improvement methodologies and advanced analytics to improve
data-driven decision-making. To sustain these improvements, we also
deploy Lean practices throughout the organisation to ensure that the
value of the improvements achieved is locked in.
Data analytics
During 2022, Data & Advanced Analytics focused on three main work
areas: growing our Data Governance programme by adding five new
Data Domains (corporate areas) and deepening skills in older domains
(operations); stabilising and strengthening our Data Platform – data lake
– to support current and new analytics use cases; and automating
business intelligence (BI) tools, dashboards and reports.
Operational innovation
Our open innovation model is effective in enabling our employees,
contractors and external parties such as suppliers to understand our
main operational challenges. They can propose their own ideas and
solutions through the online collaborative platform Innovaminerals and at
supplier Pitch Days. During 2022 we hosted 12 Pitch Days aiming to
solve 12 operational challenges in collaboration with our ecosystems.
Cost and Competitiveness Programme
The Cost and Competitiveness Programme (CCP) was introduced in
2014 to capture the gains from initiatives introduced to reduce our cost
base and improve our competitiveness.
The programme focuses on five areas designed 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 2022, we achieved benefits of $124 million, equivalent to $7.0c/
lb for the year.
92
Antofagasta plc Annual Report 2022
The benefits were mainly achieved through higher utilisation of our
processing facilities, such as at Centinela where the concentrator
operated at 4% above design capacity and at Antucoya, which achieved
record throughput for the year. Also, the consumption rates for some
key inputs were improved through enhanced operational practices and
the use of data analytics. These initiatives were especially beneficial this
year, partially offsetting the impact of lower production and increased
industry-wide input prices.
For 2023, the target is to achieve at least $60 million of further savings.
New ways to operate
Our digital roadmap comprises transformational strategic programmes
that draw on the adoption of new technologies to improve productivity
and safety. This helps us maintain or improve our competitive position
through continual productivity improvements that both optimise margins
and advance our growth projects and innovations portfolio.
Integrated Remote Operations Centre (IROC)
Centinela’s Integrated Remote Operations Centre (IROC) in the city of
Antofagasta went fully operational during 2022 and Los Pelambres’
IROC in Santiago was completed at the end of the year.
These projects allow not only remote operations and improved process
control, but better decision-making and greater efficiency and
productivity from the mine to the port.
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, three electric and two diesel, which have significantly improved
productivity and safety.
Meanwhile, at Centinela’s Esperanza Sur pit, we completed the
commissioning of our new autonomous fleet, with the 11 autonomous
trucks and two autonomous production drills performing as planned.
Next generation in mining technologies
We continue to advance the development and validation of new
technologies that could enable new growth and mining practices,
through the achievement of better and more sustainable mining as
shown by the examples below.
Cuprochlor®-T – our patented primary sulphide leaching technology
The Cuprochlor®-T patent was granted in Chile in 2022 and after
the successful completion of the industrial-scale trial at Centinela
new tests have been started using primary sulphides from our other
operations.
The pre-feasibility study and preparation for a semi-industrial heap
at Zaldívar is underway and we expect to complete the study by the
end of 2023.
The technology is incorporated as an option in our mine planning for
the long-term development of the mineral resources at our operations
and we expect its use to be phased in over the coming years.
Green hydrogen
In 2022 the prototype of the Hydra project, installed in the Esperanza
pit at Centinela, completed its six-week trial to test the behaviour
of hydrogen fuel cells in the demanding environmental conditions
of the mine (particularly with regard to altitude and dust). If successful,
hydrogen could replace diesel as the fuel for large mining equipment.
Strategic Report AGILE DECISIONS ASSISTANT (ADA)
LOS PELAMBRES
During 2022, Los Pelambres started using an advanced analytics tool
that provides situational awareness for integrated operations. Based
on real time data architecture, key process indicators (mine to port)
are continuously monitored in the IROC, allowing operational constraints
to be quickly detected and solved. The tool was developed in-house and
we are in process of designing and building an updated version with
additional features and an improved user experience.
SMART PLS
CENTINELA
Smart PLS is software that uses Artificial Intelligence algorithms
to optimise decision making and operational leach processes in
order to maximise copper recoveries. The online platform helps
the operating team to use control charts, irrigation simulations
and automatic reportability, to track and optimise acid and water
consumption, increase productivity and enable intelligent irrigation
based on expert judgement. We are currently working on the
implementation of this technology at our Tesoro plant.
IMPROVED HEAP LEACH RECOVERY
ENABLED BY DATA ANALYSIS
ANTUCOYA
During 2022, multivariable data analysis was developed to identify
the key variables and improve recoveries in the heap leach process.
This project allowed zones in the heap to be identified that required
permeability improvement, increasing ore recovery by over 3%.
SPENT ORE BEHAVIOUR PREDICTOR
ANTUCOYA
During 2022, a machine learning module was developed to predict
the behaviour of spent ore and to prevent delays in the mining process
by anticipating changes in the fluidity of the spent ore.
HEAP PERFORMANCE OPTIMISATION
ZALDÍVAR
We implemented multivariable data analysis at Zaldívar during 2022,
using machine learning algorithms to identify the most important
variables that impact recoveries. The analysis showed that, among other
variables, the most important variable is the height of the heap which
has a significant impact on recoveries given the variability of the ground
level below the heap and the difference in height of each strip. This
multivariable analysis allows us to identify the heap conditions and
optimise recoveries.
CATHODE CLEANING
ZALDÍVAR
The innovation project “Cathode Cleaning with Wax” was implemented
during 2022, removing wax in the cathode harvesting process via
an innovation where “edge covers” were installed, not only allowing
the adequate isolation of the material but also increasing our
workers’ safety, saving up to 20% of costs and improving the quality
of the cathodes.
Antofagasta plc Annual Report 2022
93
/ Financial review
Robust results in a year of transition
Financial review for the year ended 31 December 2022
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
Gain on disposal of investment in joint venture
Operating profit from subsidiaries, and total
profit from associates and joint ventures
Net finance expense
Profit before tax
Income tax expense
Profit from continuing operations
Profit for the year
Attributable to:
Non-controlling interests
Profit/loss attributable to the owners
of the parent
Year ended 31.12.2022
Year ended 31.12.2021
Before
exceptional items
$m
5,862.0
Exceptional
items
$m
–
Before
exceptional items
$m
Total
$m
5,862.0
7,470.1
Exceptional
Items
$m
–
2,929.7
(4,227.7)
1,634.3
48.1
–
1,682.4
(68.2)
1,614.2
(603.6)
1,010.6
1,010.6
–
–
–
2,929.7
(4,227.7)
1,634.3
–
944.7
944.7
–
944.7
–
944.7
944.7
48.1
944.7
2,627.1
(68.2)
2,558.9
(603.6)
1,955.3
1,955.3
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)
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
422.3
–
422.3
917.4
27.2
944.6
588.3
944.7
1,533.0
1,404.4
(114.2)
1,290.2
Basic earnings per share
From continuing operations
cents
59.7
cents
95.8
cents
155.5
cents
142.5
cents
(11.6)
cents
130.9
The profit for the financial year attributable to the owners of the parent (including exceptional items) increased from $1,290.2 million in 2021
to $1,533.0 million in the current year. Excluding exceptional items, the profit attributable to the owners of the parent decreased by $816.1 million
to $588.3 million.
The full reconciliation between 2021 and 2022, including exceptional items, is as follows:
1,290.2
114.2
1,404.4
(1,608.1)
944.7
1,533.0
495.1
588.3
729.3
(336.6)
(11.6)
(84.2)
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94
Antofagasta plc Annual Report 2022
Strategic Report
Revenue
The $1,608.1 million decrease in revenue from $7,470.1 million in 2021
to $5,862.0 million in the current year reflected the following factors:
7,470.1
(799.4)
(704.5)
(3.8)
(122.5)
25.9
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23.4
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Revenue from the Mining division
Revenue from the Mining division decreased by $1,631.5 million, or 22%,
to $5,668.6 million, compared with $7,300.1 million in 2021. The
decrease reflected a $1,507.7 million reduction in copper sales and
a $123.8 million decrease in by-product revenue.
Revenue from copper sales
Revenue from copper concentrate and copper cathode sales decreased
by $1,507.7 million, or 24%, to $4,905.5 million, compared with $6,413.2
million in 2021. The decrease reflected the impact of $799.4 million from
lower sales volumes, $704.5 million from lower realised prices and
$3.8 million from higher treatment and refining charges.
(i) Copper volumes
Copper sales volumes reflected within revenue decreased by 12.2%
from 681,000 tonnes in 2021 to 598,100 tonnes in 2022, decreasing
revenue by $799.4 million. This decrease was due to lower copper sales
volumes at Los Pelambres (53,300 tonnes decrease) as a result of its
decreased production due to the concentrate pipeline issue and water
shortage, and lower sales volumes at Centinela (30,000 tonnes
decrease) due to decreased production volumes reflecting expected
lower ore grades.
(ii) Realised copper price
The average realised copper price decreased by 12% to $3.84/lb in
2022 (2021 – $4.37/lb), resulting in a $704.5 million decrease in
revenue. The decrease in the realised price reflected the lower LME
average market price, which fell by 5% to $4.00/lb in 2022 (2021 –
$4.23/lb), and a negative provisional pricing adjustment of $169.7 million.
The provisional pricing adjustment mainly reflected the decrease in the
year-end mark-to-market copper price to $3.80/lb at 31 December
2022, compared with $4.42/lb at 31 December 2021. In addition, during
2022 there was no impact in respect of commodity hedging instruments
as no hedges were in place during the year, whereas the prior year
revenue included a $126.8 million negative impact in respect of hedging
instruments which matured during 2021.
Realised copper prices are determined by comparing revenue (after
adding back 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 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.
(iii) Treatment and refining charges
Treatment and refining charges (TC/RCs) for copper concentrate
increased by $3.8 million to $155.8 million in 2022, compared with
$152.0 million in 2021 reflecting higher average TC/RC rates, offset
by the decrease in concentrate sales volumes at Los Pelambres
and Centinela.
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” (TC/RC) 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 invoiced amount,
which is 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 increase in these charges has had a negative 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 decreased by $123.8 million or 14.0% to $763.1 million
in 2022, compared with $886.9 million in 2021.
Revenue from gold sales (net of treatment and refining charges) was
$313.9 million (2021 – $436.4 million), a decrease of $122.5 million
which reflected a decrease in volumes slightly offset by a higher
realised price. Gold sales volumes decreased by 28.6% from 244,700
ounces in 2021 to 174,700 ounces in 2022 as the gold grades, which
are often correlated to copper grades, decreased, as did recoveries at
Centinela. The realised gold price was $1,801/oz in 2022 compared
with $1,788/oz in 2021, reflecting the average market price for 2022
of $1,800/oz (2021 – $1,799/oz) and a positive provisional pricing
adjustment of $3.5 million.
Revenue from molybdenum sales (net of roasting charges) was
$392.3 million (2021 – $366.4 million), an increase of $25.9 million.
The increase was due to the higher realised price of $20.8/lb
(2021 – $17.4/lb), partially offset by decreased sales volumes of 9,200
tonnes (2021 – 10,400 tonnes).
Revenue from silver sales decreased by $27.2 million to $56.9 million
(2021 – $84.1 million). The decrease was due to lower sales volumes
of 2.7 million ounces (2021 – 3.4 million ounces) and the lower realised
silver price of $21.2/oz (2021 – $24.9/oz).
Antofagasta plc Annual Report 2022
95
/ Financial review continued
Revenue from the Transport division
Revenue from the Transport division (FCAB) increased by $23.4 million
or 13.8% to $193.4 million (2021 – $170.0 million), mainly due to
increased volumes and better pricing in some contracts.
Total operating costs (excluding exceptional items)
The $336.6 million increase in total operating costs (excluding
exceptional items) from $3,891.1 million in 2021 to $4,227.7 million in the
current year reflected the following factors:
252.8
6.4
9.8
(0.5)
12.8
55.3
4,227.7
3,891.1
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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 $268.5 million to
$2,965.4 million in 2022, an increase of 10.0%. Of this increase, $252.8
million was attributable to higher mine-site operating costs. This
increase in mine-site costs reflected higher key input prices and general
inflation, partly offset by the impact of the decreased sales volumes, the
weaker Chilean peso and cost savings from the Group’s Cost and
Competitiveness Programme.
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 $1.68/lb in 2021 to
$2.05/lb in 2022.
The Cost and Competitiveness Programme was implemented to reduce
the Group’s cost base and improve its competitiveness within the
industry. During 2022 the programme achieved benefits of $124.0
million in the Mining division, of which $88.0 million reflected cost
savings and $36.0 million reflected the value of productivity
improvements. Of the $88.0 million of cost savings, $55.9 million related
to Los Pelambres, Centinela and Antucoya, and therefore impacted the
Group’s operating costs, and $32.1 million related to Zaldívar (on a 100%
basis) and therefore impacted the share of results from associates and
joint ventures.
Closure provisions and other mining expenses increased by $6.4 million.
Exploration and evaluation costs increased by $9.8 million to $113.0
million (2021 – $103.2 million), reflecting increased exploration
expenditure principally in respect of the Cachorro and Encierro projects,
and also increased expenditure on geotechnical drilling at Los
Pelambres, partly offset by lower costs at Twin Metals.
Corporate costs decreased by $0.5 million.
96
Antofagasta plc Annual Report 2022
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 $12.8 million to $119.1
million (2021 – $106.3 million), mainly due to an increase in the price of
diesel used for locomotives and trucks as well as the impact of the
higher inflation rate on labour, material and contractor costs.
Depreciation, amortisation and disposals (excluding
impairments)
The expense for depreciation, amortisation and loss on disposals
increased by $55.3 million from $1,087.9 million in 2021 to $1,143.2
million. This increase is mainly due to higher amortisation of IFRIC 20
stripping costs at Centinela, offset by the impact of depreciation deferred
in inventory, also largely at Centinela.
Operating profit from subsidiaries
As a result of the above factors, operating profit from subsidiaries
decreased by $1,935.7 million or 54.1% in 2022 to $1,634.3 million
(2021 – $3,579.0 million).
Share of results from associates and joint ventures
The Group’s share of results from associates and joint ventures was
a profit of $48.1 million in 2022, compared with $59.7 million in 2021.
EBITDA
EBITDA (earnings before interest, tax, depreciation and amortisation,
and impairments) decreased by $1,906.5 million or 39.4% to $2,929.7
million (2021 – $4,836.2 million). EBITDA includes the Group’s
proportional share of EBITDA from associates and joint ventures.
EBITDA from the Mining division decreased by 40.2% from $4,768.0
million in 2021 to $2,849.7 million this year. This reflected the lower
revenue and higher mine-site costs explained above, and to a lesser
extent a lower EBITDA from associates and joint ventures.
EBITDA at the Transport division increased by $11.8 million to $80.0
million in 2022 (2021 – $68.2 million), reflecting the higher revenue
and slightly increased EBITDA from associates and joint ventures, offset
by higher operating costs, mainly due to inflation and the increased
price of diesel.
Commodity price and exchange rate sensitivities
The following sensitivities show the estimated approximate impact
on EBITDA for 2022 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.
Strategic Report
The impact of the movement in the average commodity prices reflects the estimated impact on the relevant revenues during 2022, 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 31.12.22
$4.00/lb
$18.7/lb
$1,800/oz
872
Impact of a 10% movement in
the commodity price/exchange
rate on EBITDA for the year
ended 31.12.22
$m
566
38
31
153
Net finance (expense)/income
Net finance expense of $68.2 million reflected a variance of $84.2 million compared with the $16.0 million gain in 2021.
Interest income
Interest expense
Other finance items
Net finance expense
Year ended 31.12.22
$m
Year ended 31.12.21
$m
40.2
(78.6)
(29.8)
(68.2)
5.0
(63.4)
74.4
16.0
Interest income increased from $5.0 million in 2021 to $40.2 million in 2022, mainly due to an increase in average interest rates.
Interest expense increased from $63.4 million in 2021 to $78.6 million in 2022, again mainly reflecting an increase in average interest rates, partially
offset by the decrease in the average relevant borrowing balances (after taking account of borrowings where the interest is capitalised).
Other finance items were a net loss of $29.8 million, compared with a net gain of $74.4 million in 2021, a variance of $104.2 million. This was largely
due to the foreign exchange impact of the retranslation of Chilean peso denominated assets and liabilities, which resulted in a $12.8 million loss in 2022
compared with a $49.7 million gain in 2021. In addition, there was a negative year-on-year variance of $41.7 million related to the discounting of
long-term provisions, largely driven by the increase in discount rates in 2021 resulting in a decrease in the provision balances and a corresponding
credit recognised in other finance items in the prior year.
Profit before tax
As a result of the factors set out above, profit before tax decreased by 26.4% to $2,558.9 million (2021 – $3,477.1 million).
Antofagasta plc Annual Report 2022
97
/ Financial review continued
Income tax expense
The tax charge for 2022 excluding exceptional items decreased by $729.3 million to $603.6 million (2021 – $1,332.9 million) and the effective tax rate
for the year was 37.4% (2021 – 36.5%). Including exceptional items, the tax charge for 2022 was $603.6 million and the effective tax rate was 23.6%.
The following table provides a numerical reconciliation between the accounting profit before tax multiplied by the applicable statutory tax rate and
the total tax expense (including both current and deferred tax).
Profit before tax
Profit before tax multiplied by 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 unrecognised tax losses on current tax
Recognition of previously unrecognised tax losses
on deferred tax
Provision against carrying value of assets
Gain on disposal of investment in joint venture
Tax expense and effective tax rate
for the year ended
Year ended
excluding exceptional items
31.12.2022
Year ended
including exceptional items
31.12.2022
Year ended
excluding exceptional items
31.12.2021
Year ended
including exceptional items
31.12.2021
$m
%
$m
%
$m
%
$m
%
1,614.2
2,558.9
3,654.7
3,477.1
(435.9)
(94.5)
27.0
5.8
(691.0)
(94.5)
27.0
3.7
(986.8)
(243.8)
27.0
6.7
(938.8)
(243.8)
27.0
7.0
23.1
(33.9)
(2.6)
(73.0)
13.0
0.2
–
–
–
(1.4)
2.1
0.1
4.6
(0.8)
–
–
–
–
23.1
(33.9)
(2.6)
(73.0)
13.0
0.2
–
–
255.1
(0.9)
1.3
0.1
2.9
(0.5)
–
–
–
(10.0)
67.8
(31.6)
(12.1)
(195.0)
16.1
52.5
–
–
–
(1.9)
0.9
0.3
5.3
(0.4)
(1.4)
–
–
–
67.8
(31.6)
(12.1)
(195.0)
16.1
52.5
90.6
(48.0)
–
(1.9)
0.9
0.3
5.6
(0.5)
(1.5)
(2.6)
1.4
–
(603.6)
37.4
(603.6)
23.6
(1,332.9)
36.5
(1.242.3)
35.7
Disposal of investment in Tethyan joint venture
On 15 December 2022 Antofagasta entered into definitive agreements to
exit its interest in the Tethyan joint venture. As a result, Antofagasta has
recognised a gain on disposal of its investment in the joint venture as at
15 December 2022 of $944.7 million. Full details of the agreements and
gain on disposal are set out in Note 17 to the financial statements.
2021 – Impairment of Twin Metals’ assets
In 2021 an impairment was recognised 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, reflecting the improved actual and forecast
profitability of the relevant Group entity (Antucoya).
Non-controlling interests
Profit for 2022 attributable to non-controlling interests (excluding
exceptional items) was $422.3 million, compared with $917.4 million
in 2021, a decrease of $495.1 million. This reflected the decrease in
earnings analysed above.
The effective tax rate excluding exceptional items of 37.4% varied from
the statutory rate principally due to the mining tax (royalty) (net impact of
$71.4 million/4.4% 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 $73.0 million/4.6%), items not deductible for Chilean corporate tax
purposes, principally the funding of expenses outside of Chile (impact of
$33.9 million/2.1%) and adjustments in respect of prior years (impact of
$2.6 million/0.1%), partly offset by 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 $13.0 million/0.8%).
The impact of the exceptional items on the effective tax rate including
exceptional items was $255.1 million/10.0%. Further details of the
exceptional gain on the disposal of the Group’s investment in the Tethyan
joint venture, including relevant tax aspects, are set out in Note 17 to the
financial statements.
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 underlying earnings
generated by the ongoing businesses of the Group.
98
Antofagasta plc Annual Report 2022
Strategic Report Earnings per share
Underlying earnings per share (excluding exceptional items)
Earnings per share (exceptional items)
Earnings per share (including exceptional items)
Earnings per share calculations are based on 985,856,695 ordinary shares.
Year ended 31.12.22
$ cents
Year ended 31.12.21
$ cents
59.7
95.8
155.5
142.5
(11.6)
130.9
As a result of the factors set out above, the underlying profit attributable to equity shareholders of the Company (excluding exceptional items) was
$588.3 million compared with $1,404.4 million in 2021, giving underlying earnings per share of 59.7 cents per share (2021 – 142.5 cents per share).
The profit attributable to equity shareholders (including exceptional items) was $1,533.0 million, resulting in earnings per share of 155.5 cents per
share (2021 – 130.9 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 31.12.22
$ cents
Year ended 31.12.21
$ cents
9.2
50.5
59.7
23.6
118.9
142.5
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 2022 of 50.5 cents per ordinary share, which amounts to $497.6 million and will be paid on 12 May
2023 to shareholders on the share register at the close of business on 21 April 2023.
The Board declared an interim dividend for the first half of 2022 of 9.2 cents per ordinary share, which amounted to $90.7 million.
This gives total dividends proposed in relation to 2022 (including the interim dividend) of 59.7 cents per share or $588.3 million in total (2021
– 142.5 cents per ordinary share or $1,404.8 million in total) equivalent to a payout ratio of 100% of underlying earnings.
Capital expenditure
Capital expenditure increased by $101.7 million from $1,777.5 million in 2021 to $1,879.2 million in the current year, mainly due to increased sustaining
capex at Centinela, Los Pelambres and Antucoya, increased mine development at Los Pelambres and Centinela, offset by lower expenditure on the
Esperanza Sur pit at Centinela and the Los Pelambres Expansion project.
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 2022 there were no derivative financial
instruments in place (2021 – nil).
Antofagasta plc Annual Report 2022
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
Acquisition of mining properties
Acquisition of equity investments
Dividends paid to equity holders of the Company
Dividends paid to non-controlling interests
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 cash/(net debt) at the beginning of the year
(Net debt)/net cash at the end of the year
Year ended 31.12.22
$m
Year ended 31.12.21
$m
2,738.3
(787.1)
(45.2)
–
(1,879.2)
–
(66.5)
(1,262.9)
(80.0)
50.0
0.1
(1,332.5)
(70.4)
(23.4)
(1,426.3)
540.5
(885.8)
4,507.7
(776.9)
(53.3)
(33.5)
(1,773.0)
(4.5)
–
(710.8)
(604.5)
142.5
1.4
695.1
(73.8)
1.2
622.5
(82.0)
540.5
Cash flows from continuing operations were $2,738.3 million in 2022 compared with $4,507.7 million in 2021. This reflected EBITDA from
subsidiaries for the year of $2,777.5 million (2021 – $4,666.9 million) adjusted for the negative impact of a net working capital increase of $12.7 million
(2021 – working capital increase of $140.2 million) and a non-cash decrease in provisions of $26.5 million (2021 – decrease of $19.0 million).
The working capital increase in 2022 was mainly due to the increase of work in progress inventories in the Mining division and an increase in finished
goods inventories at Centinela, partially offset by a decrease in receivables, reflecting the lower average mark-to-market price at 31 December 2022
of $3.80/lb (31 December 2021 – $4.42/lb) and lower sales volumes towards the end of the current period compared with the end of 2021, and
an increase in creditors.
The net cash outflow in respect of tax in 2022 was $787.1 million (2021 – $776.9 million). This amount differs from the current tax charge in the
consolidated income statement (including exceptional items) of $448.8 million (2021 – $1,035.5 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 $332.2 million (2021
– $30.9 million), withholding tax payments of $24.5 million, payments on account for the current year based on the prior year’s profit levels of
$435.6 million, as well as the recovery of $5.1 million relating to prior years.
Contributions and loans to associates and joint ventures were nil (2021 – $33.5 million, relating to Hornitos and Tethyan).
Capital expenditure in 2022 was $1,879.2 million compared with $1,777.5 million in 2021. This included expenditure of $889.7 million at Los Pelambres
(2021 – $880.4 million), $857.0 million at Centinela (2021 – $791.8 million), $66.9 million at Antucoya (2021 – $49.6 million), $10.8 million at the
corporate centre (2021 – $24.4 million) and $54.8 million at the Transport division (2021 – $31.3 million). The increase in sustaining capex at Centinela
and Los Pelambres, and increased mine development at Los Pelambres and Centinela, was partially offset by less expenditure on the Esperanza Sur
pit at Centinela.
Dividends paid to equity holders of the Company were $1,262.9 million (2021 – $710.8 million) of which $1,172.1 million related to the payment of the
previous year’s final dividend and $90.7 million to the interim dividend declared in respect of the current year.
Dividends paid by subsidiaries to non-controlling shareholders were $80.0 million (2021 – $604.5 million).
Dividends received from associates and joint ventures were $50.0 million for 2022 (2021 – $142.5 million).
Financial position
Cash, cash equivalents and liquid investments
Total borrowings
(Net debt)/net cash at the end of the period
100
Antofagasta plc Annual Report 2022
At 31.12.22
$m
2,391.2
(3,277.0)
(885.8)
At 31.12.21
$m
3,713.1
(3,172.6)
540.5
Strategic Report
At 31 December 2022, the Group had combined cash, cash equivalents
and liquid investments of $2,391.2 million (31 December 2021 – $3,713.1
million). Excluding the non-controlling interest share in each partly-
owned operation, the Group’s attributable share of cash, cash
equivalents and liquid investments was $1,990.9 million (31 December
2021 – $3,299.9 million).
Total Group borrowings at 31 December 2022 were $3,277.0 million,
an increase of $104.4 million on the prior year (31 December 2021
– $3,172.6 million). The increase was mainly due to the $488.5 million
from the issue of the new corporate bond, $327.4 million of additional
drawdown for the Los Pelambres Expansion project, a $50.0 million
refinancing of the senior loan at Antucoya and $51.3 million of new
finance leases, partly offset by a $686.1 million repayment of the senior
loans at Corporate ($500.0 million), Centinela ($111.1 million), Los
Pelambres ($50.0 million) and Antucoya ($25.0 million), $35.0 million
repayment of Antucoya’s short term loan and $19.6 million of
subordinated debt repayment by Antucoya.
Excluding the non-controlling interest share in each partly-owned
operation, the Group’s attributable share of the borrowings was
$2,449.7 million (31 December 2021 – $2,409.6 million).
These movements resulted in net debt at 31 December 2022 of
$885.8 million (31 December 2021 – net cash $540.5 million). Excluding
the non-controlling interest share in each partly-owned operation, the
Group had an attributable net debt position of $458.7 million
(31 December 2021 – net cash $890.3 million).
Going concern
The consolidated 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 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 and decisions relating to permitting. 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
Antofagasta plc Annual Report 2022
101
“As the impacts of the COVID-19
pandemic began to fade, I was
delighted that our entire Board
was able to meet in person for
the first time since early 2020.
Our experiences during the
pandemic have allowed us to
become more flexible while at
the same time reminding us of
the importance of human
connection and the opportunity
to share ideas and perspectives.”
Jean-Paul Luksic
Chairman
Governance
Applying the Code in 2022
Board leadership and Company purpose
Chairman’s introduction
Senior Independent
Director’s introduction
Group corporate governance overview
Board activities
Stakeholder engagement
Workforce 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
2023 Directors’ and CEO's
Remuneration Policy
2022 Directors’ and CEO's
Remuneration Report
Remuneration and Talent Management
Committee report
Implementation of the Directors’ and
CEO’s remuneration policy in 2023
Directors’ Report
Statement of Directors’
responsibilities
104
106
108
110
112
114
116
118
120
121
122
124
125
128
129
137
140
142
146
148
155
163
165
168
171
102
Antofagasta plc Annual Report 2022
Corporate Governance Antofagasta plc Annual Report 2022
103103
/ Applying the Code in 2022
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 2022.
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 2022 except for Code Provisions 9 and 19. Code Provision 9
recommends that the Chairman should be independent on appointment
when assessed against the circumstances set out in Provision 10 and
Code Provision 19 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 CEO 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, a role he has continued to hold since then.
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
ensure that the interests of shareholders, together with the interests of
other stakeholders (many of whom are based in Chile), are taken into
account to promote the long-term sustainable success of the Company
and 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 roles as Chairman of the Board and Chair of the Nomination and
Governance Committee, he has overseen the design and implementation
of succession plans to increase diversity, including gender, and
continually refresh the Board.
The Board considers that Mr Luksic continues to demonstrate objective
judgement and provide constructive challenge and leadership, and
believes that his continued appointment is appropriate without fixing a
limit to his length of service. The Company’s major shareholders were
invited by the then Senior Independent Director to discuss this subject
ahead of the 2020 AGM when Code Provision 19 was introduced 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 Provisions
9 and 19, good governance is maintained.
Further details on the composition of the Board and its Committees
are set out on page 118 and further details of the role of the Senior
Independent Director are set out on pages 108 and 121.
The UK Corporate Governance Code is available on the Financial
Reporting Council website at www.frc.org.uk.
104
Antofagasta plc Annual Report 2022
How the Code principles were applied in 2022
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 – pages 18-21 and 112.
• 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 24-35.
• The Board ensures effective engagement with, and encourages
participation from, shareholders and other stakeholders to ensure
that its responsibilities are met – pages 38-73, 106, 108, 114-115,
121, 143 and 164.
• The Board ensures that workforce policies and practices are consistent
with the Company’s purpose, vision and values and supports its
long-term sustainable success. The workforce can raise any matters
of concern anonymously through the Group’s whistleblowing channels
– pages 36, 48-50, 116-117, 134-135 and 142-167.
• The Board considers the matters set out in section 172 of the
Companies Act 2006 in Board discussions and decision-making –
pages 38-73. Detailed examples can be found on pages 114-115.
Division of responsibilities
• The Board is structured to ensure that no one individual or small
group of individuals dominates its decision-making, as demonstrated
throughout this Corporate Governance Report.
• The CEO is not a Director of the Company and is therefore not
a member of the Board – page 121.
• There is a clear division of responsibilities between the Board
and the executive leadership of the Company’s business – pages 110,
120 and 121.
• 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, all of 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 111 and 126.
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 121.
• The Board considers that the Chairman demonstrates objective
judgement and promotes a culture of openness, healthy challenge
and debate – pages 104 and 108.
• The Chairman facilitates constructive Board relations and the effective
contribution of all Directors. He is responsible for setting the Board’s
agenda and ensuring that Directors receive accurate, timely, relevant
and clear information – pages 111, 121 and 126.
Corporate Governance Non-Executive Directors
• The Non-Executive Directors provide constructive challenge
Evaluation
• Annual evaluation of the Board considers composition, diversity
and strategic guidance, offer perspectives across various specialisms
and hold management to account – pages 118-120.
and how effectively members work together to achieve objectives –
page 128.
Commitment
• All Directors have confirmed that they are able to allocate enough
time to meet the expectations of their role – page 118.
• Directors do not undertake additional external appointments without
the Board’s prior approval – page 118.
• Individual evaluation is part of the annual Board evaluation and
assesses whether each Director continues to contribute effectively
– page 128.
• An externally facilitated Board and Committee effectiveness review
was conducted in 2022 – page 128.
• Time commitment is considered during Board effectiveness reviews
and when electing and re-electing Directors – pages 125-128.
Re-election
• All Directors stand for re-election by shareholders annually.
• A review of Directors’ external directorships is carried out annually
– pages 109 and 169.
Information and support
• The Board is provided with appropriate information in a form
and of a quality to discharge its duties – page 111.
• The Board has access to independent professional advice and to the
advice and services of the Company Secretary – pages 121 and 126.
• The Board is regularly updated on the Group’s performance between
scheduled Board meetings – page 111.
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 were
independent in 2022 and five of whom continue to be independent
as at the date of this Annual Report – pages 118-121.
• 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 – pages 118-119.
• The Board and its Committees comprise Directors with the requisite
combination of skills, experience and knowledge to fulfil their roles –
pages 118-121.
• 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 120 and 125-127.
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 125-127.
• Independent external search consultancies are used for appointments
to the Board – pages 126-127.
• An effective succession plan is maintained for Board and senior
management appointments – pages 126-127 and 164.
• 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 –
page 126.
Development
• New Directors receive a thorough induction upon joining the Board
– pages 126 and 128.
• Directors are regularly updated with information and training and,
as a minimum, receive an annual briefing on legal, regulatory, market
and other developments relevant to Directors of UK-listed
companies – page 126.
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 129-136.
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 171.
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
principal risks the Company is willing to take in order to achieve its
long-term strategic objectives – pages 24-35 and 134-136.
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 118-120.
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, which is being
submitted for approval by shareholders at the 2023 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
142-143, 148-154 and 161.
• 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 142-166.
Procedure
• The Board has a formal and transparent procedure for developing
policy on executive remuneration and determining Director and senior
management remuneration – pages 142-167.
• 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 142-148.
Antofagasta plc Annual Report 2022
105
/ Chairman’s introduction
Our governance
framework
Jean-Paul Luksic
Chairman
Dear shareholders
Welcome to the Corporate Governance section of our 2022 Annual Report.
My introductory letter to this Annual Report sets out some of the Group’s
key challenges and achievements in 2022 and my reflections on the
outlook for 2023, and illustrates the Board’s ability to navigate these
scenarios supported by our strong and effective governance framework.
As the impacts of the COVID-19 pandemic began to fade, I was delighted
that our entire Board was able to meet in person for the first time since
early 2020. Our experiences during the pandemic have allowed us to
become more flexible while at the same time reminding us of the
importance of human connection and the opportunity to share ideas
and perspectives.
Shareholder engagement
We were pleased to welcome shareholders to our first hybrid AGM in
2022, opening the doors for shareholders to attend in person while also
allowing shareholders to engage from afar. Once again, we will be
hosting a hybrid AGM in 2023.
As the year progressed, our Senior Independent Director and Chair
of the Audit and Risk Committee, Tony Jensen, and our Chair of the
Remuneration and Talent Management Committee, Francisca Castro, met
with shareholders and proxy voting agencies in a mix of in-person and
virtual meetings. They discussed our approach to corporate governance
and Antofagasta’s 2023 remuneration policy, which is being tabled for
shareholder approval at the 2023 AGM, while providing shareholders
and proxy advisers with the opportunity to share their perspectives.
Details of these meetings can be found in the Senior Independent
Director’s introduction on page 108 and the Remuneration and Talent
Management Committee Chair’s introduction on page 142.
Diversity and Inclusion
An issue that was discussed with shareholders, which is important to
our Board, was diversity–particularly gender diversity. Since 2014, half
of our appointments to the Board have been female and women now
make up 30% of our Board. However, we are actively searching for
another female director to join our board and aim to meet the UK’s new
targets on gender diversity, while also continuing to build a pipeline of
female talent across the organisation.
Further information on the Board’s diversity policy can be found in the
Nomination and Governance Committee Report on page 126.
106
Antofagasta plc Annual Report 2022
Audit and Risk Management
The Board, led by the Audit and Risk Committee, conducted a tender
process for the appointment of the Group’s auditor in 2024. This was
done a year earlier than is required by regulation to give time to ensure
a smooth transition of audit and non-audit services, and in anticipation
of the implementation of UK audit and corporate governance reforms.
Deloitte will take over the external audit from PwC for the 2024 financial
year onwards and shareholders will be asked to confirm this appointment
at the 2024 AGM.
Our Commitment to Environmental, Social and Governance
(ESG) Issues
Our efforts on climate change are an integral part of our ESG strategy,
but far from the only ones. The copper we produce has a key role to play
in a net-zero world: our responsibility is to produce it sustainably, efficiently,
and with respect for local communities and the environment.
ESG considerations are integrated into our business and we are working
with our suppliers, not just in the application of our safety standards, but also
of our sustainability practices. In 2022, Antofagasta set new standards for
sustainability for our suppliers, and by doing so we plan to gradually align
their ESG capabilities with our own. Whether it’s lowering emissions or
ensuring that mining becomes more diverse and inclusive, such partnerships
will deliver progress in areas that are fundamental to our purpose:
“Developing Mining for a Better Future”.
Stakeholder engagement
With the pandemic subsiding, our Directors have been making site visits
to at least one of our operations, including to the desalination plant and
concentrator plant expansion projects, and to Los Pelambres’ tailings
dams. The insights from these visits were shared at board and committee
meetings, deepening the directors’ understanding of our activities.
External Board evaluation
We always seek for continuous improvement in all that we do, and the
Board and its governance are no exception. During 2022, Clare Chalmers
conducted an external comprehensive independent Board evaluation. Clare
attended several Board and Committee meetings, interviewed Directors,
senior management and key external advisers, and travelled to Chile to
deliver her findings to the Board.
Further details regarding Clare’s evaluation can be found on page 128.
Board changes and succession planning
Vivianne Blanlot has served on our Board with dedication for nine years
as of 27 March 2023. Although she has agreed to continue as a Director,
she is no longer considered to be “independent” according to the Board’s
tenure policy, which aligns with the Code’s guidance. As a result, she has
rotated off the Nomination and Governance Committee and Remuneration
and Talent Management Committee, and has been appointed to the
Projects Committee. She has also agreed to continue serving as Chair
of the Sustainability and Stakeholder Management Committee.
To fill these vacancies, Francisca Castro has joined the Nomination and
Governance Committee and Eugenia Parot has joined the Remuneration
and Talent Management Committee.
At its core, Antofagasta is a long-term business. Our mines operate
on decades-long timelines, and our governance structures and processes
are designed to help us achieve long-term sustainable success.
I’d like to thank you all for your ongoing engagement and look forward
to having the opportunity to meet with you at our AGM.
Jean-Paul Luksic
Chairman
Corporate Governance BOARD OVERSIGHT OF CLIMATE-RELATED
RISKS AND OPPORTUNITIES
The Board has ultimate responsibility for the Group’s climate-related
objectives and strategy. The Board’s oversight of climate-related risks
and opportunities is fully integrated within our governance structures.
This responsibility and oversight includes specific climate related
activities such as approving the Group’s Climate Change Strategy,
approving emission reduction targets, monitoring implementation
of the Climate Change Strategy and approving the Company’s TCFD
disclosures. This also includes more general approval and oversight
responsibilities which incorporate climate-related risks and
opportunities such as reviewing and approving the Group’s capital
allocation framework which includes criteria relating to climate
resilience and an internal carbon price, reviewing and approving the
Group’s base and development case models which include adjustments
for physical and transition risks associated with climate change,
approving the Group’s annual budget, reviewing the Group’s principal
and emerging risks which include climate change and approving KPIs
in the Group’s remuneration structures that reward our employees for
progress in relation to achieving the Group’s climate-related objectives.
In 2022, the Board dedicated part of its annual strategy session to
reviewing the financial implications of climate change on the Group.
The Board is supported by all of the Board’s committees in ensuring
that climate-related considerations are fully integrated into the Board’s
governance structures. For example:
• As shown on pages 125-128, the Nomination and Governance
Committee considers the Board’s skills matrix when making
appointments to the Board. This matrix includes sustainability
experience (which includes competence on climate related issues)
as a key skill and the Board ensures that there is an adequate depth
of climate change knowledge and awareness on the Board when
making new appointments. In 2022, the Board’s externally
facilitated evaluation also included a review of the Board’s ESG
focus, including in relation to climate related matters.
• As shown on pages 129-136, the Audit and Risk Committee assists
the Board in overseeing the Group’s risk management framework,
including climate change risk.
• As shown on pages 137-139, the Sustainability and Stakeholder
Management Committee considers climate change when
reviewing and monitoring relevant strategy, policies and
performance matters. In 2022, this included reviewing a progress
report on the development of an inventory of Scope 3 emissions
and next steps and reviewing the water situation in the Choapa
Valley after 13 years of lower-than-normal rainfall and Los
Pelambres’ water strategy.
• As shown on pages 140-141, the Projects Committee considers
climate change when reviewing and monitoring the Group’s major
capital projects. In 2022, this included reviewing ore transport
alternatives for the Polo Sur project taking into account the Group’s
internal carbon price.
• As shown on pages 142-167, the Remuneration and Talent
Management Committee monitors executives and managers’ short-
and long-term incentive plans which include KPIs relating to climate
change such as progress towards the achievement of climate
targets, alignment to the Copper Mark and implementation of the
Climate Change Strategy.
Antofagasta plc Annual Report 2022
107
/ Senior Independent Director’s introduction
Board balance
“The feedback we received
from our meetings
with shareholders was
reported to the Board
and is reflected in the
decisions that have been
made in the preparation
of this Corporate
Governance report.”
relating to the Board’s diversity policy and progress towards
achieving the new targets set out in the Listing Rules, the Board’s
oversight of ESG matters, including carbon emission reduction
targets, Directors’ time commitments and the role of the
controlling shareholder in the Board’s governance arrangements.
The feedback we received from these meetings was reported to
the Board and is reflected in the decisions that have been made
in the preparation of this Corporate Governance report.
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 shareholders are aligned with
theirs. They have expressed their appreciation of the members
of the Luksic 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 invaluable 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 oversee the closure of any gaps identified by
internal and externally facilitated reviews of the Board’s and the
Committees’ performance.
I discharge these responsibilities through close co-ordination with
the Chairman, Directors, Company Secretary and the management
team. I met various shareholders and proxy advisers during the
year to understand their views of the Company, Board and senior
management team. 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. Why did you meet with shareholders and proxy advisers
during the year and what issues did you discuss?
As Senior Independent Director and Chair of the Audit and Risk
Committee, I aim to meet with shareholders every one to two
years to gain a first-hand understanding of the subjects that
matter to them. This year, I joined the Chair of our Remuneration
and Talent Management Committee, Francisca Castro, in inviting
the Company’s 15 largest investors as well as the Investment
Association, Glass Lewis and Institutional Shareholder Services
to meet with us to discuss Corporate Governance matters, the
Company’s proposed 2023 remuneration policy (as explained in
more detail on pages 149-154) and to allow shareholders to raise
any concerns that they would like to discuss without the presence
of the senior management team. The feedback we received was
very positive and no major concerns were raised. Apart from the
discussion of remuneration-related matters, which is outlined in
more detail by Francisca on page 149, we engaged in discussions
108
Antofagasta plc Annual Report 2022
Tony Jensen
Senior Independent Director
Corporate 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 169.
In 2014, the Company entered into relationship agreements with 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 2022.
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 related entities to a committee of Directors independent from
the controlling shareholders, to assess whether the Company should
enter into such transactions and, if so, to oversee the 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 $40 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 handling of related party transactions 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 potential
conflicts of interest under section 175 of the Companies Act. See page 169
for more information.
Responsibility
Directors
Managing related party transactions
Process
How this is managed
Responsibility
PROPOSED
TRANSACTION
Ongoing monitoring of Directors’ interests and the Company’s related parties
provides information to determine whether a related party approval is
required for a proposed transaction.
Company Secretary,
senior management and
the Executive Committee
CONTRACT NEGOTIATION
AND VERIFICATION
APPROVAL BY
INDEPENDENT DIRECTORS
Senior management and
the Executive Committee
and, if involving a
controlling shareholder,
Independent Directors
Independent Directors
The Executive Committee seeks to ensure that the best possible terms are
achieved for a proposed transaction and that, where appropriate or
necessary, 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.
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.
All potential related party transactions over $40 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 $40 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 2022
109
/ Group corporate governance overview
Our governance framework
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.
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
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
The key responsibilities of each Committee and their focus areas
for 2022 are set out on page 124.
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.
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
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.
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 2022
Corporate Governance Board and Board Committee information flows
06
Further information
provided between
meetings
01
Chairman and Senior
Independent Director
agree agenda with
the CEO
05
Action lists prepared
and updated as key actions
are implemented
02
Papers circulated
in advance of
meetings
04
03
Minutes prepared,
circulated and approved
Board and Committee
meetings
01
Chairman and Senior Independent Director agree agenda
with the CEO and the Company Secretary
The Chairman and Senior Independent Director, in consultation with
the CEO and the Company Secretary, maintain 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.
Ad hoc Board and Committee meetings are also called, as appropriate.
02
Papers circulated in advance of meetings
Materials are sent to Board and Committee members a week
in advance of each meeting.
Presentations include a summary sheet setting out the objective,
background, proposal, justification, risk analysis and next steps
associated with that topic. 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 which includes detailed
information on the Group’s performance against key safety, health,
environmental, community, financial, workforce, project
development and organisational culture indicators.
03
Board and Committee meetings
Board and Committee meetings include regular 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.
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 meeting.
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
Further information provided between meetings
Between Board meetings, Directors receive flash reports
with monthly and year-to-date production and financial results,
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 2022
111
/ Board activities
Board oversight in 2022
During 2022, 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, while seeking to align these with the values of the Group and stakeholders’
best interests.
Our strategic framework
The Board has 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 for our operating efficiency, creation of sustainable value,
high profitability and as a preferred 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 responsibly managing our risks. To achieve this, we rely on the talent and capabilities of our workforce. Our flexible and resilient organisation
allows us to overcome current and future challenges.
Below are examples of how the Board’s activities in 2022 have furthered the Group’s strategy.
Read more about our strategic
framework on P18
Culture
• Monitored operational and projects performance and its 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.
• Monitored progress on the implementation of the Group’s
Diversity and Inclusion Strategy.
• Reviewed workforce engagement survey results.
• Received feedback on meetings with representatives of the Group’s
labour unions.
Governance and engagement
• Reviewed Board and Executive Committee succession plans.
• Interviewed potential future Board candidates.
• Reviewed Directors’ independence and skills on the Board.
• Reviewed Directors’ conflict of interest declarations.
• Reviewed requests by Directors to undertake additional external
appointments.
• Oversaw the 2022 externally facilitated Board and Committees
effectiveness review.
• Monitored feedback from investors and proxy agencies regarding
the Group’s corporate governance arrangements.
• Reviewed the results of perception studies carried out within certain
stakeholder groups in Chile.
• Reviewed and approved updates to the Group’s Sustainability and
Human Rights policies and reviewed new Water and Energy policies.
• Reviewed and approved the Company’s 2022 Modern Slavery
Act statement.
Internal controls, risk management and compliance
• Reviewed the risk management system’s maturity level.
• Reviewed the Group’s principal and emerging risks; conducted the
annual review of the Group’s risk appetite statements, which are
aligned with the Group’s strategic pillars and approved amendments
to four risk appetite declarations.
• Reviewed and updated the Group’s risk matrix, materialised risks
and risk mitigation activities.
• Reviewed budgets for initiatives designed to mitigate material
identified risks.
• Reviewed physical and transition risks associated with climate
change as part of the Base Case and Development Case review.
• Attested to the effectiveness of the Group’s risk management and
internal control systems.
• Reviewed actions planned for 2023 to prepare for the UK
Government’s audit and corporate governance reforms.
• Reviewed half-yearly compliance reports.
• Reviewed results of the Group’s whistleblowing processes.
• Reviewed Internal Audit department’s progress and 2023 audit plan.
• Selected a new External Auditor following a tender process for the
2024 audit onwards.
Financial and performance reporting
• Approved the Group’s 2021 full-year and 2022 half-year results
and corresponding announcements.
• Recommended and declared dividends paid to shareholders
during 2022.
• Reviewed and approved going concern and viability statements
and conducted stress tests related to a potential future resilience
statement.
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Antofagasta plc Annual Report 2022
Corporate Governance Our strategy is designed to enable us to achieve our Purpose. It is supported by five pillars:
safety and sustainability, people, competitiveness, innovation and growth and each has defined
short- and medium-term goals.
Safety and Sustainability
The safety and health of our employees and contractors is our first priority. 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 central to our decision-making processes.
• Monitored COVID-19 protocols aimed at protecting the Group’s workforce and
neighbouring communities and the lifting of restrictions during the year.
• Continued to monitor independent reviews of the safety of the Group’s tailings storage
facilities and assessed it versus industry best practice and the ICMM’s GISTM standard.
• Reviewed and monitored the Group’s safety and health performance.
• Reviewed the Group’s compliance with its environmental commitments.
• Monitored the Group’s implementation of its Climate Change Strategy.
• Reviewed the implementation of water conservation and efficiency measures
at Los Pelambres, addressing the water shortage generated by a 13-year drought.
• Continued to monitor progress of local community interactions at Los Pelambres,
including the execution of agreements with communities following the rupture of the
concentrate pipeline.1
• Assessed progress in the renewal of key water extraction and mining permits at Zaldívar.
• Monitored the achievement of Copper Mark certification for all the Group’s mining
operations.
People
People are central to our business. We want our employees to feel recognised and to maximise their opportunities for personal and professional
growth. We seek to generate a culture of diversity and inclusion which allows our employees to achieve their full potential. Our goal is to be the best
employer in the Chilean mining industry. To achieve this, we understand the importance of creating an environment of trust and collaboration focused
on the long term.
• Continued to oversee the implementation of the “New Ways of Working” initiatives
• Monitored progress on the implementation of the Group’s Diversity and Inclusion
to facilitate flexible on-site, home-based and hybrid working arrangements, with the
goal of creating a more flexible, adaptable and resilient organisation.
Strategy and approved a more ambitious goal for women to represent 30% of the
workforce by the end of 2025.
• Reviewed the results of employee engagement surveys conducted during the year.
• Reviewed the annual talent management exercise, including succession plans for
Directors, the CEO and the Executive Committee.
• Reviewed employee performance, including the Company’s short-term and long-term
incentive scorecards.
• Monitored labour relations at the Group’s mining and transport operations and
reviewed results of collective bargaining negotiations, which were completed
in an atmosphere of respect and trust.
• Monitored progress of the annual Human Resources plan.
• Reviewed development of the 2023 Directors’ and CEO’s Remuneration Policy,
to be submitted for shareholder approval at the 2023 AGM.
Competitiveness
Competitiveness is based on productivity gains, controlling costs and streamlining our processes.
• Monitored results of the Group’s Cost and Competitiveness Programme,
including estimated future savings.
• Approved key procurement and sales contracts.
• Reviewed and monitored the Group’s operating and financial performance.
• Reviewed and approved the Group’s copper concentrate and copper cathode sales strategy.
• Reviewed the progress of proposed tax legislation in Chile which would affect the Group.1
• Monitored proposed labour legislation.
• Reviewed actions taken to enhance cyber security.
Innovation
We innovate as a means of improving social, environmental and economic performance while delivering strong returns for our shareholders.
Innovation is key to improving productivity and efficiency and promoting growth, especially in the medium and longer term.
• Oversaw progress on the Group’s innovation portfolio, including operational
• Reviewed Centinela’s In-pit tailings deposition project which aims to allow for tailings
and data analytics initiatives.
deposition in pits no longer in use.1
• Reviewed progress on the implementation of the Group’s digital transformation
• Reviewed the potential application of the Group’s proprietary Cuprochlor®-T primary
programme.
sulphide leach technology.
• Monitored progress on Centinela’s and Los Pelambres’ integrated remote
operations centres.
Growth
We have a portfolio of growth projects that allows us to remain competitive by developing sustainable operations over the long term.
• Reviewed progress on the Los Pelambres Expansion project, Los Pelambres ore
transport system project, Zaldívar’s Chloride Leach project and Centinela’s Esperanza
Sur project.
• Reviewed progress on Phase 2 of the Los Pelambres Expansion project and approved
a funds advance to address critical path items including key acquisitions and
engineering.
• Reviewed progress on the Centinela Second Concentrator project and postponed
decision on whether to proceed with the project until there is greater clarity on mining
royalty, tax and constitutional reform.
• Monitored progress on the feasibility study for the Polo Sur project.
• Reviewed Zaldívar’s permitting strategy to extend its water extraction permit beyond 2025.
• Monitored actions to advance the Twin Metals Minnesota project and reorganised its team.
• Reviewed business development and exploration opportunities and activities.
• Approved the Group’s exit from the Reko Diq project in Pakistan.
• Reviewed progress on the Group’s material Environmental Impact Assessments.
• Reviewed and approved the acquisition and divestment of mining properties in Chile.
• Reviewed and approved the Group’s long-term price assumptions and commercial
parameters.
• Reviewed and approved the base case and development case for the Group’s assets.
• Reviewed the Group’s strategic growth plan (PEC), which is a mine production
planning exercise without restrictions, aiming to quantify the potential to transform
the Group’s mineral resources into ore reserves.
• Reviewed and approved the Group’s 2023 budget.
• Reviewed the Group’s mineral resources and ore reserves statement.
1. Further information relating to these matters and how the Board had regard to the stakeholders
and matters set out in s. 172(1) of the Companies Act 2006 are set out on pages 114-115.
Antofagasta plc Annual Report 2022
113
/ Stakeholder engagement
Engaging with stakeholders to
make decisions for a better future
The Group maintains ongoing dialogue with
stakeholders to understand their expectations
and concerns, and their views are carefully
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 38-73.
Further details on the Board’s workforce
engagement mechanisms are set out
on pages 116-117.
Three principal 2022 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. The Board took into account the different interests of
stakeholders but with an overarching focus, as required by section
172(1), on acting in a way that would be most likely to promote the
success of the Company for the benefit of its members as a whole.
The likely long-term consequences of each decision were, among other
things, key considerations for the Board.
Board oversight of mining royalty and tax reform bills 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 the corporate tax
already paid).
There is also a separate mining tax (royalty) of 5–14% of operating
profits, with the rate based on the operating margin.
In 2022, the Group incurred $604 million of taxes and invested $57
million in social projects and programmes to benefit communities that
live around our operations. The Group’s underlying net earnings after
taxes and before exceptional items amounted to $588 million. The
effective tax rate (ETR) paid by the Group was 37.4% which compares
with the ETRs calculated by the IMF for a typical Chilean mining
company of 38% and for mining OECD countries of 39%.
In May 2021, the lower house of Congress approved a proposal to establish
a new mining royalty to fund social needs, which was sent to the Senate
for consideration. The lower house’s royalty proposal included
ad-valorem (revenue-based) and profit-based royalties that would have
increased the ETR to over 75% at copper prices of over $4.00/lb,
which would be the highest rate in the world, by a significant margin.
In July 2022, the Chilean government submitted to congress a proposed
tax reform bill that aimed to increase tax collections by 4.3% of GDP
when fully implemented. As part of this tax reform bill, the Government
submitted a revised mining royalty reform proposal which superseded
the proposal by the lower house. Although the resulting ETR of the
proposed royalty was lower than the original proposal, it was still a very
significant increase on current rates.
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Antofagasta plc Annual Report 2022
In October 2022, the Government adjusted its mining royalty proposal,
reflecting in part the concerns raised by several stakeholders with
respect to the impact on Chile’s competitiveness. The new proposal
included a flat 1% ad valorem tax rate on copper sales for large copper
mines, a new variable scale profits royalty, between 8% and 26%
according to the operating margin of mining companies, and other
structural changes. Under this proposal, ETRs would range from 45%
to 50%, continuing to reduce Chile’s competitiveness in comparison with
other mining countries.
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
mining royalty would take effect after the end of the invariability period.
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 considering the likely consequences of the proposal on the
decisions that the Board makes for the long term on the interests of the
Company’s shareholders and the Group’s employees and contractors,
suppliers, customers and other business partners.
In considering the implications of the proposed royalty on these
stakeholders, the Board considered and had regard to the interests
of key stakeholders, noting that:
• Between 2013 and 2019, approximately 80% of copper industry
revenue was used to pay salaries, and for 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 generated by mining
an additional $78 is generated in other sectors of the economy.
• 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 $700 million after having spent over $4.8 billion in
salaries, and purchases of goods and services.
• The Board authorised management to engage with stakeholders on
the potential impacts of these proposals in all relevant forums to allow
for this to be considered in the development of this legislation. This
included the presentation to Congress of the impacts on stakeholders,
as relayed to management in discussions with them.
• During 2022, the Board decided to postpone the decision on whether
to proceed with the investment in Centinela’s Second Concentrator
project until there is sufficient clarity on the tax outcomes of the
ongoing discussions on the mining royalty and tax reform bills, and the
rewriting of the Chilean constitution. This is expected to be by the end
of 2023.
• The Board will continue to closely monitor the situation and oversee
engagement with stakeholders to ensure that the impacts of these
proposals are fully understood by Congress.
• The Board will continue to take the potential impacts on stakeholders
into account in its broader decision-making.
Corporate Governance How the Board considered, and had regard to, the interests of key
stakeholders and the requirements of section 172(1)
In making this decision the Board took into consideration that:
• The Company’s purpose of ‘Developing Mining for a Better Future’
that has led to its pursuit of innovative tailings disposal alternatives
that align with modern mining practices and are sustainable, and
focus on ameliorating or removing environmental challenges.
• The project is expected to deliver additional reductions on the impact
of Centinela’s operations on communities and the environment. This is
achieved by leveraging Centinela’s thickened tailings process, which
already increases the recovery of process water and lowers the
emissions of particulate matter due to the saline layer that forms on
the surface of the tailings. In addition, in-pit deposition enables the
reuse of previously condemned areas for waste disposal, leading to
significant environmental benefits and a reduction in Centinela’s
overall footprint.
• Maintaining a reputation for high standards of business conduct is
essential, particularly given the technical, environmental and risk
management advantages associated with the project. Notably, the
project offers flexibility to the operation while enabling a larger
deposition of tailings at a lower unit cost. This approach optimises
Centinela’s value by utilising more cost-effective disposition methods
earlier in the mine’s life, deferring higher capital expenditure on
raising the height of the current tailings storage facilities’ walls.
• The project will deliver economic benefits for shareholders
and reduce the environmental impact of the operations’
tailings disposal.
Overall, the Board believes that this project is in the best
interests of Centinela and its stakeholders, and will
continue to carefully consider all factors before
making a final investment decision in 2024.
Los Pelambres – Concentrate Pipeline Incident
On 31 May, Los Pelambres detected a leak near Llimpo in the
underground pipeline that transports concentrate from the concentrator
plant at the mine site to the port at Los Vilos. The pipeline was
immediately shut down and the location of the leak identified. The
pipeline was repaired, and operation of the pipeline resumed on 26
June. A full assessment of the incident found no material or irreversible
environmental impact and the pipeline was approved for reopening by
the relevant local regulator.
A review was carried out to incorporate improved safety measures into
pipeline operations ahead of the complete replacement of the pipeline,
which is expected to be completed in 2025. The Company, together with
the local authorities, successfully engaged with members of the local
communities who were concerned about the safety of the pipeline.
How the Board considered, and had regard to, the interests of key
stakeholders and the requirements of section 172(1)
The Board called a special meeting following the incident to understand
its potential impact on the environment and on Los Pelambres’
stakeholders including local communities, suppliers, customers,
government authorities, regulators, and shareholders. The Board
continued to monitor the response to the incident in subsequent
scheduled meetings and the Board’s Sustainability and Stakeholder
Management Committee reviewed Los Pelambres’ community relations
model in the context of the incident.
In monitoring Los Pelambres’ response to the incident, the Board had
regard to:
• The impact of the incident on local communities and the environment,
monitoring communications and dialogue with government authorities
and the communities, the independent investigation into the incident,
and the containment and rehabilitation of the area of the spill and
repair of the pipeline.
• Customers due to the rescheduling of shipments.
An agreement was reached with the Llimpo community addressing their
operational concerns related to the incident and for Los Pelambres to
provide support for the development of local infrastructure.
Since the incident, Los Pelambres has been applying a precautionary
conservative safety factor to ensure the safe operation of the pipeline.
Following the incident, several Directors visited the Choapa Valley with
members of the management team to understand the broader context of
the incident and to hear first-hand from employees, contractors and the
communities their perspectives on the impact that Los Pelambres
has on them.
Centinela’s in-pit tailings project
Centinela is considering using its disused open pits for the storage
of thickened tailings from its concentrator plant as an alternative
to traditional tailings disposal methods. The project has the potential to
meet Centinela’s tailings management needs for a minimum of 9 to 10
years and potentially for the life of the concentrator plant.
The Board approved the project’s Commitment Phase in 2022,
with a potential investment decision to be made by 2024.
Antofagasta plc Annual Report 2022
115
/ Workforce engagement
Fostering a collaborative dialogue
and working environment
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 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 reviewed the mechanisms 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 recommended in the UK Corporate Governance Code (a
Director appointed from the workforce, a formal workforce 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 already in place.
The Group’s workforce comprises 31,126 people. Approximately
23% of the workforce are Group employees and 77% are employees
of contractor companies. More than 99% of the Group’s employees
are in Chile and approximately 72% come from communities in the
Antofagasta and Coquimbo Regions, where the Group’s operating
companies are located.
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 key issues are raised with
and discussed by the Remuneration and Talent Management Committee
and the Board.
31,126
Total workforce
99%
Live in Chile
72%
Live in the Antofagasta
and Coquimbo Regions
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Antofagasta plc Annual Report 2022
Corporate Governance • 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 new Ways of Working, 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 significant
impact on working conditions. Recent examples include the Diversity
and Inclusion programme and the flexible work arrangements.
• 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.
During 2022, the Board applied feedback received from the
workforce to decisions related to flexible working initiatives,
the oversight of labour negotiations and the development
of the Group’s Diversity and Inclusion Strategy.
The Group has established control mechanisms to ensure that
contractor companies’, whose employees are often members of their
own labour unions, meet the Group’s standards and guidelines on
labour, environmental and social and ethical matters and adopt good
practices with regard to safe workplaces and the quality of employment.
Contractors' employees receive the same minimum protections as the
Group’s employees under Chilean labour law and the Group requires
contractors to pay their employees ethical wages – which as of
December 2022 were 55% higher than the Chilean legal minimum –
and to provide other basic benefits, including life and health insurance.
These protections are reinforced through bank guarantees and
contractors 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 and engage informally with the workforce.
Impressions and views arising from these visits are reported to the
Board and its Committees and related questions are raised with
the management team.
• Labour relations matters, proposed labour negotiation limits and
feedback from labour negotiations are reported directly to the
Remuneration and Talent Management Committee and the Board
throughout the year and typically form a key part of the CEO’s general
update to the Board.
• The CEO, Vice President of Northern Operations, Vice President of
Los Pelambres, Vice President of Human Resources, and the General
Managers and HR Managers of each relevant operation meet unions
at least twice per year 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 representatives took place during
2022, enabling the CEO to share business performance and
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 across the Mining division
during the year and the results were shared with the Remuneration
and Talent Management Committee in a designation session to review
the results of these surveys and also with the Board.
Antofagasta plc Annual Report 2022
117
/ Directors’ biographies
Members of the Board
Biographical details for each Director are set out on the following page. All Directors have
confirmed that their other commitments do not prevent them from devoting sufficient time to 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 Directors’ attendance at a significant
number of regular and ad hoc meetings held in response to the challenges arising throughout
the year demonstrated their commitment.
KEY TO COMMITTEES
ANTOFAGASTA PLC DIRECTORS’ BOARD MEETING ATTENDANCE
Number attended
Number attended
Nomination and Governance
Jean-Paul Luksic
Audit and Risk
Sustainability and Stakeholder Management
Projects
Remuneration and Talent Management
Tony Jensen
Ramón Jara
Juan Claro
Andrónico Luksic C
13/13
13/13
13/13
11/13
11/13
Vivianne Blanlot
Jorge Bande
Francisca Castro
Michael Anglin
Eugenia Parot
13/13
13/13
13/13
13/13
13/13
Committee Chair
Chairman of the Board
From left to right: Ramón Jara, Juan Claro, Vivianne Blanlot, Michael Anglin, Francisca Castro, Jean-Paul Luksic, Jorge Bande, Eugenia Parot,
Andrónico Luksic C, Tony Jensen
118
Antofagasta plc Annual Report 2022
Corporate Governance Jean-Paul Luksic
Chairman
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 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
Tony Jensen
Non-Executive Director
Independent: Yes
Appointed to the Board: 2020
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
Ramón Jara
Non-Executive Director
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)
Current positions
• 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, a
not-for-profit academic foundation in
Chile
• Member of the Board of the Centre of
Arbitration of the Chilean Chamber of
Commerce
• Chairman of the Chile Australia
Business Committee and Vice
Chairman of the Chile Japan
Business Committee of Sociedad
de Fomento Fabril (Chilean Industrial
Council)
• Member of the APEC Business
Advisory Council (ABAC)
Juan Claro
Non-Executive Director
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 Energía Coyanco SA
• 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)
Current positions
• Chairman of Coca-Cola Andina SA
• Director of Melón SA and
Agrosuper SA
• Member of the Board of Centro de
Estudios Públicos, a not-for-profit
academic foundation in Chile
• Country Adviser, Goldman Sachs
Andrónico Luksic C
Non-Executive Director
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 Compañía Cervecerías Unidas
SA, and 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 Euronext Paris and part
owned by Quiñenco SA
• 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; the Global
Board of Advisors at the Council of
Foreign Relations; and the Brookings
Institution’s International Advisory
Council.
Vivianne Blanlot
Non-Executive Director
Independent: No (since 27 March
2023)
Appointed to the Board: 2014
Economist with extensive experience
in public and private energy, mining,
water and environmental sectors
in Chile
Francisca Castro
Non-Executive Director
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
Previous roles
Previous roles
• Executive Director of the Comisión
• Strategic Business Manager
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
• Director of Empresas CMPC SA, a
pulp, paper and packaging Company
listed in Chile
• Director of Instituto Chileno
de Administración Racional de
Empresas (ICARE), a business think
tank in Chile
• Member of Consejo para la
Transparencia (Transparency
Council), the Chilean body responsible
for enforcing transparency in the
public sector
Current position
• Director of Colbún SA, an energy
Company listed in Chile
Jorge Bande
Non-Executive Director
Independent: Yes
Appointed to the Board: 2014
Economist with over 40 years’
experience in the mining, energy and
water industries in Chile
Previous roles
• 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 NEXT Minerals 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
at Codelco
• General Co-ordinator of Concessions
at Chile’s Ministry of Public Works
• 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
• Independent Director of Conexión
Kimal-Lo Aguirre S.A., a power
transmission Company in Chile
Michael Anglin
Non-Executive Director
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.
Previous roles
• Vice President Operations and Chief
Operating Officer of BHP Base Metals
• Director of EmberClear Corp
Current positions
• Chairman of SSR Mining Inc
• Adviser to IntelliSense.io
• Director of Tulla Resources, Australia
Eugenia Parot
Non-Executive Director
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 and member of the
Audit and Finance and Investments
Committees.
• Member of the Boards of Golder
South America, Chile, Peru and
Argentina.
Antofagasta plc Annual Report 2022
119
/ Board balance and skills
A balance of skills
and experience
The Board comprises ten 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
Independent
Non-Independent
Male
Female
1
5
4
7
3
1-5 years
6-10 years
10+ years
Chile
USA
3
4
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 Jorge Bande,
Francisca Castro, Michael 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.
The Board is also satisfied that Vivianne Blanlot was independent throughout 2022
and until 27 March 2023 which was the ninth anniversary of her appointment to the
Board. Further details are provided on page 121.
2. The Board’s Nomination and Governance Committee continues to work with an
independent external search consultancy to identify potential female candidates who
could contribute significantly to the Board in the future. Further details on the
Board’s diversity policy can be found on pages 126-128.
3. The Company has met the Parker Review target and in 2022 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 therefore the Board includes several
Directors from outside Chile in support of its vision and strategy.
Board skills matrix
Director
Jean-Paul Luksic
Ramón Jara
Juan Claro
Andrónico Luksic C
Vivianne Blanlot
Jorge Bande
Francisca Castro
Michael Anglin
Tony Jensen
Eugenia Parot
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1. Directors considered to have sustainability skills have self-certified that they are, or have been, responsible for sustainability as an executive or as a member of a sustainability
committee of a board. This includes competence on climate-related issues.
120
Antofagasta plc Annual Report 2022
Corporate Governance
/ Roles in the boardroom
Board and senior management’s
roles and responsibilities
The Group’s CEO, Iván Arriagada, is not a Director, reflecting the law and practice in Chile.1
Despite this, interaction between the Board and executive management is as you would expect
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 of exclusively
Non-Executive Directors; it provides a broad range of perspectives and 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 the Senior
Independent Director, CEO 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
constructive Board relations and
the effective contribution of all Directors.
• Oversees Director induction,
development and performance reviews.
• Leads relations with shareholders, including
the Group’s controlling shareholders.
Non-Executive Directors3
Juan Claro
Ramón Jara
Andrónico Luksic C
Vivianne Blanlot 4
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 Directors2
Tony Jensen
Michael Anglin
Jorge Bande
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
• Have 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.
CEO
Iván Arriagada
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 its Committees 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 available on the
Company’s website at antofagasta.co.uk.
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 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.
4. Vivianne Blanlot was an independent Non-Executive Director until 27 March 2023,
the ninth anniversary of her appointment to the Board.
Antofagasta plc Annual Report 2022
121
/ Executive Committee biographies
Members of the Executive Committee
01
04
07
10
02
05
08
11
03
06
09
12
122
Antofagasta plc Annual Report 2022
Corporate Governance Previous roles
• Civil engineer, Master’s degree in engineering
05 Georgeanne Barceló
Vice President of Human Resources
appointed in 2022
Joined the Group in 2021
09 Patricio Enei
Vice President of Legal appointed in 2014
Joined the Group in 2014
• Lawyer and MBA, with over 20 years’ experience
• Human resources specialist with a degree in Law
in mining
01 Iván Arriagada
CEO appointed in 2016
Joined the Group in 2015
• Commercial engineer and economist with more than
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 Base Metals,
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
02 Mauricio Ortiz
CFO appointed in 2020
Joined the Group in 2015
and a Master’s degree in Strategic Human Resources
Management and 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 Vice President at Komatsu
Latin America
06 Gonzalo Sánchez
Vice President of Sales appointed in 2004
Joined the Group in 1996
• Electrical engineer with two Master of Sciences
• Civil engineer with over 25 years’ experience in
degrees (Metals and Energy Finance and Electrical
Engineering) and 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
Joined the Group in 2007
• Mining engineer with over 25 years’ experience in
open pit and underground mining and engineering
• Corporate Project Manager of Antofagasta Minerals
• Project Director of Reko Diq
• Director of Codelco’s Chuquicamata underground
Joined the Group in 2017
mine project
• Head of Engineering for Codelco’s Ministro
Hales project
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
• Civil mining engineer and Master of Sciences (Mineral
Economics) with over 25 years’ experience in mining
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 at Teck Resources
• 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 at Escondida
Previous roles
• General Counsel at Codelco
• Corporate Affairs Manager at Escondida
• Senior lawyer at BHP Billiton in Chile
• Chief Legal Counsel at Collahuasi
• Lawyer at the Instituto de Normalización Previsional
and in private practice
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
11 Alan Muchnik
Vice President of Strategy
and Innovation appointed in 2021
Joined the Group in 2016
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 2022
123
/ Introduction to the Committees
Board committees
The Board’s Committees ensure that Board deliberations are focused on key issues
and that proposals are submitted after 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 2022
• Corporate governance framework
• Succession planning for the CEO and the Board
• Board and Committee composition
• Nomination to the Board
• Board effectiveness reviews
Audit and Risk Committee
Key responsibilities
• Financial reporting
• External audit
• Internal audit
• Risk management
• Internal control
• Compliance
• Succession planning for Board and Committee roles
• Board Committee composition
• Monitoring shareholder feedback on Governance
• Board and Committee evaluation
Focus areas for 2022
• Reviewing the Company’s half year and year-end financial results
• Assessing financial controls and reporting
• Monitoring risk management and compliance
• Assisting the Board with updates to the Group’s risk appetite assessment
• Assisting the Board with the 2024 external audit tender
Sustainability and Stakeholder Management Committee
Key responsibilities
• Policies and commitments
• Safety and health
• Community relations
• Environmental and social matters
• Stakeholder engagement
Projects Committee
Key responsibilities
Focus areas for 2022
• Monitoring events at Los Pelambres following the concentrate pipeline incident
• Overseeing measures to protect the safety and health of the Group’s workforce
• Endorsing key policies for the Group’s long-term sustainable success
• Reviewing climate change strategy implementation
• Receiving reports on the Group’s tailings storage facilities
Focus areas for 2022
• Oversight of project standards, guidelines
• Monitoring progress on the engineering and remaining project studies for the
and best practices
• Project development lifecycle matters
• Project reviews
• Lessons learned from completed projects
Centinela Second Concentrator project
• Monitoring progress in the execution of the Los Pelambres Expansion
and Zaldívar Chloride Leach projects
• Monitoring development of the Group’s organic growth opportunities
Remuneration and Talent Management Committee
Key responsibilities
Focus areas for 2022
• Determining the application of the Group’s executive remuneration framework
• Considering feedback from shareholders in relation to the 2022 Directors’
and CEO’s Remuneration Report and the proposed 2023 Directors’ and CEO’s
Remuneration Policy
• Monitoring Directors’ and CEO remuneration
• Reviewing employee engagement survey results
• Reviewing talent management and Executive Committee succession plans
• 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
Find out more online
antofagasta.co.uk/bc
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Antofagasta plc Annual Report 2022
Corporate Governance / Nomination and Governance Committee report
/ Nomination and Governance Committee report
Maintaining an effective Board
“The Committee helps ensure that
the Company’s long-term interests
are safeguarded by a strong and
effective Board.”
Jean-Paul Luksic
Chair of the Nomination and Governance Committee
2022 membership and meeting attendance
Number attended
Key activities in 2022
Jean-Paul Luksic (Chair)
Vivianne Blanlot
Tony Jensen
3/3
3/3
3/3
Other regular attendees included the Company Secretary.
The Committee meets as necessary and at least twice per year.
Except for the Chairman, all Committee members were independent in 2022.
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
Corporate governance
• Monitored the fulfilment of the UK Corporate Governance Code
(the Code) requirements.
• Reviewed Directors’ declarations on potential conflicts of interest.
• Reviewed the Governance section of the 2021 Annual Report and
recommended it to the Board for approval.
• Reviewed arrangements for the 2022 AGM which allowed for the
Company’s inaugural hybrid meeting and the publication of the
2022 AGM Notice.
• Reviewed feedback from investors and proxy advisers on the
shareholder resolutions tabled at the 2022 AGM.
Succession planning
• Reviewed and endorsed detailed succession plans for the Board,
its Committees and the CEO.
• 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.
• Managed the global search carried out for an independent Non-
Executive Director.
• Interviewed and considered potential Board candidates.
• Reviewed and endorsed updates to the Board’s skills matrix.
Board effectiveness reviews
• Oversaw the implementation of recommendations arising from
the 2021 internal evaluation of Board and Committees’ performance.
• Oversaw the 2022 externally-facilitated evaluation of the Board
and Committees by Clare Chalmers Limited, an external Board
evaluation consultancy.
• Requested a performance review of the Chairman by Directors,
led by the Senior Independent Director, and of individual Directors,
led by the Chairman with support from Clare Chalmers Limited.
Antofagasta plc Annual Report 2022
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/ Nomination and Governance Committee report continued
Diversity, inclusion
and succession planning
Q. What is the Committee’s role in relation to succession
planning?
The Committee oversees and develops succession plans for the
Board and the CEO. Succession planning for the Executive
Committee (excluding the CEO) and broader employee talent
management is overseen by the Remuneration and Talent
Management Committee.
The activities of the Remuneration and Talent Management
Committee are set out on page 142.
Q. How does the Committee address the process of CEO
succession?
The Committee regularly reviews succession plans for the CEO in
the case of either a planned or unplanned departure. This involves
defining the character, skills, experience and expertise required to
fulfil the role, as well as the assessment of potential internal
candidates and their development needs. The consideration of both
external and internal candidates for the role of CEO ensures a clear
assessment of relative strengths and weakness and provides a useful
international benchmark.
Q. What is the scope of the Board’s succession planning?
The Board’s succession plan is reviewed formally at least once
a 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 the appropriate 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 skills required when making new appointments to the
Board and to instruct search firms to identify candidates who fit
these criteria.
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 128, the Group’s purpose,
vision, values and strategy, as shown on pages 112-113, the Board’s
diversity policy (below) and the core competencies and areas
of expertise on the Board, as shown on page 120.
To assist with making new appointments to the Board, the Committee
appoints independent external search consultancies with no
connection to the Group. Between 2019 and 2021, the Committee
appointed Spencer Stuart, a signatory to the voluntary code of
conduct for executive search firms to address gender diversity
on corporate practices for related search processes, to assist with
the search for new independent Non-Executive Directors.
They were briefed on the skills and experience of the existing
Directors and asked to identify potential candidates who would best
meet the required criteria including their relevant experience, skills,
leadership capabilities, contribution to Board diversity and whether
they had sufficient time to devote to the role. Also important for
overall Board effectiveness is that potential candidates are proficient
in Spanish and, preferably, have relevant mining or extractive
industry experience. Members of the Committee interviewed
short-listed candidates and collectively selected Tony Jensen and
Eugenia Parot to be recommended to the Board for
appointment in 2020 and 2021, respectively.
The searches that resulted in these appointments 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). The external search consultancy was
instructed to access the widest possible talent pool and, as has been
the case for many years, to specifically identify potential female
candidates. For the 2020 appointment, a global search produced
several hundred potential candidates for consideration, from which a
shortlist of seven were interviewed, four of whom were female – and
the 2021 process resulted in the appointment of a female candidate.
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 operations.
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 Company’s Diversity and Inclusion Policy reflects the Board’s
belief in the benefits of diversity and its conviction 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.
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Antofagasta plc Annual Report 2022
Corporate Governance 50%
100%
of Board appointees since
2014 have been women
of our operating companies
have female Board members
>50%
of our Board members
identify as being from an ethnic
minority background
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 more than half
the Board members identify as being from an ethnic minority
background according to the Parker Review criteria. 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 in support of
its vision and strategy also includes Directors from outside Chile.
Gender diversity is a pillar of the Group’s diversity and inclusion
strategy. The Board supports the important work performed by the
FTSE Women Leaders’ Review in pursuing a 40% target for
women on FTSE 350 boards and on executive committees and
their direct reports.
Since 2014, three of the six Board appointees (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.
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 Committee, supported by an independent external search
consultancy, continues to seek potential female candidates who
could make an important contribution to the Board in the future and
the Board is working to achieve gender diversity targets of 40%
representation of women on the Board and of at least one woman in
the Chair, Senior Independent Director, CEO or CFO roles. These
objectives have been incorporated into the Board’s succession plans
and the Committee aims to achieve these goals by continually
searching for candidates with the required skills and methodically
preparing for ordinary Board refreshment and turnover in order to
ensure continuity and performance of the Board’s responsibilities.
We are committed to increasing the percentage of women on our
Board, as well as in senior management positions and, just as
importantly, in the Group’s workforce. We believe that such an
increase will benefit the Group, the industry and Chile.
Q. What policies are in place to promote a diverse pipeline
of talent for the future?
The Group is committed to developing a diverse pipeline of talent that
will widen the pool of female and other diverse candidates for Board
and leadership positions in the future. In this, the Group is leading the
way in Chile, particularly with female participation in the workforce,
where Chile remains well behind more developed economies.
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 Policy was approved
following an in-depth exercise to assess whether the Group’s
existing diversity and inclusion model was appropriate. This included
interviews with stakeholders, a benchmarking exercise and a
comprehensive review of the Group’s policies and processes. The
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 policy.
Metrics associated with the development of the Diversity and
Inclusion Policy 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 Policy on new appointments and their progress within
the Company, including at the level of those who report to the
Executive Committee.
As part of the Policy, female members of senior management have
been appointed to the boards of all our operating companies and we
have two women on the Executive Committee, the General Manager
of our Transport division and the Vice President of Human
Resources.
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.
Since 2017, we have more than doubled female participation to over
20% and recently set ourselves a goal of reaching 30% female
participation by 2025. The gender balance at each level of the Group
is monitored and reported monthly to the Executive Committee.
More detail on programmes we have introduced and the gender
balance within the Group is given in the Our People section on
pages 48-50.
The Board will continue to monitor developments in 2023.
Antofagasta plc Annual Report 2022
127
Our review process
2022
The external review was a comprehensive assessment of how the
Board is working, focused on evaluating the following key areas:
• Board composition and culture (composition, succession planning,
training and inductions, leadership, dynamics and decision-making)
• Board oversight (strategy, performance, risk, people and executive
succession and purpose, values and culture)
• Stakeholders (workforce engagement, shareholders, customers
and suppliers, ESG)
• Board efficiency (Board meetings, agendas and minutes and
secretariat)
• The Committees
• Board and Committee papers
2023
The Board will focus on several areas to improve effectiveness:
• More concise presentations
• Board discussions at more preliminary stages before final
decisions are required
• More proactive agenda setting
• More streamlined delivery of information to the Board that is
covered in the Committees
/ Board effectiveness
Board effectiveness review
In accordance with the Code, the Board undertakes an externally
facilitated effectiveness review at least once every three years. In 2022,
the effectiveness review was facilitated by an external consultant, led by
Clare Chalmers of Clare Chalmers Ltd, who is independent and apart
from also conducting the 2019 effectiveness review, has no other
connection with the Group.
The 2022 review process commenced with the Nomination and
Governance Committee planning the scope of the evaluation. The
Committee considered a shortlist of external evaluators for approval by
the Board. Clare Chalmers Ltd is a leading provider of board evaluations
in the UK, with strong experience in evaluating FTSE-listed Boards.
The Board found the 2019 evaluation performed by Clare Chalmers Ltd
to be insightful and agreed that it would benefit from building on this by
engaging Clare Chalmers Ltd a second time. The selected evaluator
discussed the process with the Chairman, Senior Independent Director
and the Company Secretary and agreed the interview framework
agenda to be discussed with Board members, Company Secretary,
members of the Executive Committee who regularly attend Board and
Committee meetings and the Company’s Lead External Audit Partner
and Remuneration Adviser, who all held one-on-one interviews with the
evaluator. Feedback on individuals was provided to the Chairman, for
him to provide feedback to Directors on a one-to-one basis, and the
Senior Independent Director (holding a closed session with the
Non-Executive Directors) to provide feedback to the Chairman on his
performance in the year. Ms Chalmers also observed a Board meeting,
Audit and Risk Committee meeting and Nomination and Governance
Committee meeting and conducted a review of Board and Committee
papers, terms of reference, the annual report, output of previous board
evaluations, the board’s calendar and forward-agenda planner. She
visited Chile to deliver the findings of her review in person.
The review was designed to recognise and raise key themes identified
collectively by the Directors, as well as for the evaluator to give their
own perspective from meeting observations and document review,
along with suggestions for improvement and of good practice, 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 2022. The findings of the review were discussed
by the Board and, based on Ms Chalmers’ report, the Directors were
satisfied that the Board and its Committees operated effectively in 2022.
Ms Chalmers highlighted the Board’s strengths as strong skills,
coverage of mining and a good mix of other relevant experience and
backgrounds; strong engagement from the CEO and good access to the
senior team, who get airtime in meetings; thorough NED site visits, with
high-quality feedback to the Board. Recommended opportunities for
further improvement were also highlighted. These are set out below.
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.
Jean-Paul Luksic
Chair of the Nomination and Governance Committee
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Antofagasta plc Annual Report 2022
Corporate Governance / Audit and Risk Committee report
Robust controls focused
on the business
“We focus on robust risk management
and control. During the year,
we reviewed external and internal
audit functions, internal control,
compliance and risk management
capabilities. The Group is stronger
as a result.”
Tony Jensen
Chair of the Audit and Risk Committee
2022 membership and meeting attendance
Number attended
Key activities in 2022
Financial reporting
• Reviewed the 2021 year-end and 2022 half-year financial reports,
focusing on significant accounting matters relating to the Group’s
results.
• Reviewed accounting matters likely to impact 2022 year-end results.
• Reviewed the Group’s 2021 Reserves and Resources Statement and
corresponding audits. Reviewed highlights of the 2022 statement.
Audits of reserves were carried out at all operating companies.
Resources audits will be performed during 2023.
• Assisted the Board in ensuring that the 2021 Annual Report was fair,
balanced and understandable.
• Reviewed analysis for the 2022 going concern and long-term viability
statements, including preparation for a future resilience statement.
• Implemented plans to accelerate the financial reporting cycle, which
enabled a successful earlier results announcement in February 2022.
• Reported under the Task Force on Climate-related Financial
Disclosures (TCFD) framework for the first time in the 2021 Annual
Report, with disclosures appropriately reflecting the Group’s position.
• 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 strategy and tax position, including the
effective tax rate, recovery of tax refunds, tax-disallowed expenses
and proposed changes to the tax regime and mining royalties in Chile.
Tony Jensen (Chair)
Jorge Bande
Francisca Castro
7/7
7/7
7/7
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.
The Committee meets as necessary and at least twice a year. It works within the
framework of a detailed annual work plan. Committee members participate in all other
Board Committees, allowing the Committee to consider the full spectrum of risks
faced by the Group.
All Committee members are independent and are considered to have recent and relevant
financial experience, as well as 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 to
risk management.
The Committee’s main responsibilities include:
• 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, and
• monitoring the performance of the Group’s compliance and crime
prevention models.
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/ Audit and Risk Committee report continued
External audit
• Conducted a tender process in respect of the 2024 audit, resulting
Risk and internal control
• Assisted the Board with its assessment of the Group’s key risks and
in the selection of Deloitte as the Group’s external auditor.
• Reviewed and approved the 2022 audit plan, including fees. Validated
its review of the effectiveness of the risk management and
internal control processes.
that PwC incorporated feedback from both the Committee and
management on the 2021 audit and engaged extensively with
management to align on critical success factors.
• Assessed the effectiveness of the external audit process, reviewed
PwC’s independence and approved its performance.
• Reviewed the Group’s policy in respect of auditor independence
and non-audit services.
• Reviewed the key audit findings in respect of the 2021 audit and
reviewed PwC’s progress reports in respect of the 2022 audit.
• Implemented plans which resulted in the successful acceleration
of the audit timetable for a February 2022 results announcement.
• Reviewed regulatory changes including the Department for Business,
Energy and Industrial Strategy (BEIS) review, developments in
auditing standards and the FRC’s areas of focus, including its audit
quality inspection and supervision report.
Internal audit
• Reviewed key findings from the internal audit reviews conducted
during 2022.
• Reviewed the quality, experience and expertise of the internal audit
function, confirming its suitability for the business.
• Approved an update to the internal audit mandate.
• Reviewed actions to co-ordinate audit scope with PwC to avoid
duplication or double testing.
• Agreed the scope and focus areas for the 2023 internal audit plan
including assurance approach and continuous auditing methodology.
• Assisted the Board in conducting the annual review of risk appetite
statements.
• Conducted detailed reviews with the General Managers of each of the
Group’s operations, covering the operations’ key risks, residual risks,
climate change risks, materialised risks and identified opportunities.
• Reviewed the draft of the proposed new Chilean constitution and its
potential impact on key risks. The proposal was subsequently rejected
by a national referendum.
• Reviewed the latest developments in cyber security and updated
action plans to enhance the Group’s risk management maturity in this
key area.
• Reviewed the activities undertaken during the year to further develop
the maturity of the Group’s risk management processes.
• Reviewed the steps taken to ensure that slavery and human trafficking
are not occurring in any part of the Group’s business, including in its
supply chains.
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 training on the Group’s compliance model, crime prevention
model and Modern Slavery Policy. Reviewed 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.
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Antofagasta plc Annual Report 2022
Corporate Governance Q. What were the key areas of focus for the Committee
in 2022?
We focus on robust risk management and control. During the year,
we reviewed external and internal audit functions, internal control,
compliance and risk management capabilities. We undertook a tender
process in respect of the 2024 audit, resulting in the selection of
Deloitte as the Group’s external auditor from the 2024 audit
onwards.
Financial reporting
Q. What were 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 that 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.
We monitored the implementation of detailed action plans to
accelerate the financial reporting cycle, enabling us to announce our
results in February 2022, three weeks earlier than in 2021. The
2021 Annual Report included the first report under the Task Force
on Climate-related Financial Disclosures (TCFD) framework, with
disclosures appropriately reflecting the Group’s position. It also
included additional disclosures made to address the points raised by
the Financial Reporting Council’s corporate reporting review team
(“CRRT”) following their review of our 2020 Annual Report.
We continued building our capability to prepare for new potential
regulations regarding the Board’s confirmation of the effectiveness
of internal controls over financial reporting.
The Committee assists the Board in undertaking its assessment
that the Annual Report is, when taken as a whole, fair, balanced
and understandable and that it 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 used 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 fairly reflected the financial results for the year.
We also reviewed the ore reserves and mineral resources statement
included in the Annual Report and the corresponding reserve and
resource independent audits. All recommendations stemming from
prior audits were resolved. The Committee also reviewed highlights
of the 2022 statement.
The Committee reviewed the going concern basis adopted in the
financial statements, as well as the detailed long-term viability
statement in the Annual Report and has considered tests for an
eventual future resilience statement.
The Committee reviewed the Group’s tax strategy and tax position,
including the effective tax rate, the status of the recovery of tax
refunds, tax-disallowed expenses and the impact of the proposed
changes to the tax regime and mining royalty in Chile.
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131
/ Audit and Risk Committee report continued
Q. What significant accounting issues in relation to the financial
statements were considered by the Committee during 2022?
The main accounting issues we considered were:
• Asset valuations: our analysis did not identify indicators of a
potential impairment at the 2022 year-end at the Group’s
operations. Accordingly, we have not performed any impairment
reviews. Particular focus was placed on Zaldívar, given the
importance of the ongoing permits renewal process, and
Antucoya, given the marginal level of headroom over recent years.
An indicative valuation and sensitivity analysis was performed in
order to assess the sensitivities of the Group’s mining operations
to key assumptions such as the copper price and the Chilean peso
exchange rate, and to make appropriate disclosures within the
financial statements. As part of this analysis, we considered the
appropriate copper price forecasts to use, with reference to the
forward curve as at 31 December 2022 and to 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 importance of the renewal of the
permits for water extraction and general mining activities to the
indicative valuation, and the disclosures in respect of these
aspects. We considered the marginal positive headroom for both
Zaldívar and Antucoya. We also reviewed the additional sensitivity
disclosures included in the financial statements.
• Provision for decommissioning and restoration costs at the
Group’s mining operations: we reviewed updates to the mine
closure provisions, including updates to the closure plans
reviewed and approved by Sernageomin, the Chilean regulator,
and changes to the financial parameters used in calculating
the provision balance.
• Reko Diq: we reviewed the accounting for the Reko Diq
transaction, including the conclusion that the agreements resulted
in the Group having a legally binding right to receive the exit
proceeds with no further substantive events required and no
longer had joint control over the joint venture, and it was
accordingly correct to derecognise the investment in the joint
venture and recognise the gain on disposal in the 2022 year-end
results, as well as the determination of the disposal proceeds.
• Zaldívar secondary leaching inventory balance: we reviewed
Zaldívar’s evaluation of its secondary leaching (ripios de alta ley
or RAL) inventory balance, which is a significant item in terms of
production volume and value, including the physical sampling
undertaken during the year. Our conclusion was that the inventory
balance is correctly stated.
• 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 reviewed robust down-side sensitivity analyses
which all indicated results that could be managed in the normal
course of business.
External audit
Q. What are the Committee’s responsibilities 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 Chair of
the Audit and Risk Committee, I have established an effective direct
relationship with Simon Morley, PwC’s lead audit partner.
The Committee reviews and approves the scope of the external audit,
terms of engagement and fees. The Committee 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. The Committee formally meets with PwC without
management present at least once a year. We approve the
performance of the external auditor. The Committee makes
recommendations to the Board in respect of the appointment,
reappointment, or removal of the external auditor.
Q. How do you assess the effectiveness of the external
audit process?
We work closely with PwC to ensure that external audit quality is
maintained throughout the year. PwC incorporates feedback from
both the Committee and management on the prior audit and engages
extensively with management to align on critical success factors.
For example, during the height of the COVID-19 pandemic, we
discussed in detail with PwC how to manage the external audit
process, particularly considering travel restrictions. PwC
implemented an appropriate mix of remote checks and on-site
reviews, preserving the robustness of the audit process.
The Committee considers 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, and
• the review of the FRC’s annual Quality Inspection Report on PwC.
In light of this assessment, the Committee considers it appropriate
that PwC be reappointed as external auditor for 2023.
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Corporate Governance 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 the Group’s policy in respect
of auditor independence and non-audit services, which was reviewed
in 2022.
New regulatory requirements have applied since 2020 in respect
of non-audit services. The FRC issued a “white list” of specifically-
permitted services, with all other services prohibited. Permitted
services relate to specific activities 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.
The issue of the $500 million bond in May 2022 required the Group
to engage PwC UK to act as the reporting accountant for this
transaction, work which is effectively required to be performed by
the Group’s auditor. The Committee assessed this work and
determined that it was not considered to adversely affect PwC’s
independence, taking into account the nature of the reporting
accountant work, and the level of fees relative to the Group’s total
audit fees. The fees for this work were expected to exceed 70%
of PwC UK’s average audit fees over the past three years (although
it was not expected to exceed 70% of the average total Group audit
fees paid to PwC over this period). Accordingly PwC UK requested
a waiver from the Financial Reporting Council in respect of this work
prior to performing this work, which was granted.
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 $241,000,
or 12% of the total Group fees for audit and audit-related services.
This related to the reporting accounting work by PwC UK for the
bond issuance.
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 the most suitable
provider. Pre-approval from the Committee is required before
non-audit services can be performed by the external auditor, other
than for services which are considered to be clearly trivial. 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 2022.
The UK regulatory requirements in respect of competitive audit
tendering and other related audit committee responsibilities in
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 2022.
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/ Audit and Risk Committee report continued
Q. How long has PwC been the Group’s auditor?
We carried out a tender process during 2014, which resulted in PwC
replacing Deloitte, the previous auditor, and being appointed with
effect from 2015 onwards. 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.
“In 2022, we assisted the Board with
its annual update of the Group’s risk
appetite assessment and evaluation
of emerging and principal risks.”
Q. What are the plans for external auditor rotation?
Under UK regulations the Company’s next mandatory tender would
be in respect of the 2025 audit, marking the 10-year anniversary
of the original audit rotation regulations. Other FTSE100 companies
are facing similar anniversaries, which could result in an increased
demand for audit tenders over the coming years. As previously
disclosed, it was determined that the optimum approach would be
to conduct an audit tender process during the second half of 2022
in respect of the 2024 audit to allow for a “cooling-in” period during
2023 and provide a significant transition period.
PwC, Deloitte, EY and BDO participated in the tender process.
KPMG declined. BDO meets the mid-tier “challenger” criteria that
UK regulators are seeking to promote. Tendering firms held over
50 meetings with management and in my role as Chair of the Audit
and Risk Committee, I participated in meetings with all tendering
firms in advance of their formal tender presentations.
The Committee reviewed proposals and recommended Deloitte
to the Board as first choice, along with a second choice
recommendation. The Board selected Deloitte as the next external
audit firm for the 2024 audit onwards.
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 a meeting is held without management
present at least once a 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 technical
mining experience, IT, risk, compliance, internal control, sustainability
and cyber security.
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. Internal Audit takes a risk-focused
approach when planning its work, in particular utilising the risk
registers maintained by each business to monitor and control their
key risks. We ensure the plan is flexible and has sufficient resources
to allow for special reviews that may be required during the year.
During 2022, the Committee approved an updated internal audit
mandate and approved the 2023 internal audit plan.
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.
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During 2022, Internal Audit implemented a new system to manage
its audit reports and findings. This is the system already used by the
Risk and Compliance Management Department, further increasing
the integration between the Risk and Internal Audit functions.
The Committee reviewed actions to co-ordinate internal audit scope
with PwC to avoid duplication or double testing, ensure an efficient
relationship between the internal and external audit processes, and
achieve the effective and timely sharing of findings.
During 2022, Internal Audit performed part of its work remotely
due to restrictions associated with the COVID-19 pandemic. The
Committee monitored the quality of the audit work and is comfortable
that an appropriate control environment has been maintained.
Risk management, compliance and internal control
Q. What are the Committee’s responsibilities in relation to risk
management and internal control?
The Committee plays an important role in assisting the Board
with its responsibilities regarding 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, Internal Control and Related Financial and
Business Reporting 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 2022
relating to risk management?
We continued to monitor actions designed to enhance the maturity
of our risk management processes.
We assisted the Board with its annual update of the Group’s risk
appetite assessment and evaluation 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, complemented by a
benchmarking review of emerging and principal risks that have been
identified by our peers. During 2022, the Committee and the Board
reviewed the Group’s 18 key risks, sub-risks, preventative controls
and action plans. While risk appetite levels have not changed, the
Committee reviewed and the Board approved updates to the risk
appetite statements for the principal environmental, operation and
tailings risks.
Corporate Governance Active risk identification and management took place, including: (1)
geopolitical and macroeconomic risks with a focus on the impact of
the war in Ukraine and discipline in cost management; (2) proposed
changes to legislation in Chile; (3) social risks; (4) climate change;
and (5) supply chains. Actions were taken during 2022 to simplify
the risk management methodology and verify on-site key risks, carry
out change management for the implementation of the simplified risk
management methodology, increase risk management maturity and
communicate our risk appetite. The business continuity plan was
verified. The focus in 2023 will be on implementing a new
methodology for materialised risks and reviewing financial reporting,
operational control and compliance.
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, significant materialised
risks as well as operational opportunities. The meeting served as a
forum for sharing experiences and action steps.
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 in allowing us to emphasise the importance we
attach to strong risk management processes.
We reviewed steps taken to ensure that slavery and human
trafficking are not occurring in any part of the Group’s business
including its supply chains.
The Committee held a specific review of the latest developments
in cyber security and updated action plans to enhance the Group’s
maturity in this key risk area.
Q. How does the Committee interact with the Board and
other Committees on risk-related matters?
I report to the Board following each Committee meeting,
summarising the main matters reviewed. 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
mitigating actions.
We try to ensure that the review of risk by the Board is not
compartmentalised into isolated sessions but is integrated into
everything considered by the Board. To this end, the overall report
provided by the CEO to the Board at each meeting covers any
significant materialised risks. Each proposal presented to the Board
incorporates an analysis of its impact on the principal risks.
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 principal 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,
principal and materialised risks.
RISK MANAGEMENT FUNCTION
The risk management function
provides regular presentations
covering changes in the Group’s
emerging and principal 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.
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135
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
and outlining the most significant issues and the actions resulting
from their investigation, along with plans to strengthen the function.
The Committee reviewed the process to identify and manage Group
employees’ potential conflicts of interest, and reviewed the due
diligence process conducted in respect of the Group’s suppliers.
Q. What were the Committee’s main activities in 2022 relating
to internal control?
During 2022, the Committee reviewed the Company’s internal
control framework which consists of three lines of defence.
First, business units identify and manage risks. Second, the risk
management function provides oversight and support. Third, Internal
Audit provides independent assurance. In addition to regular reviews,
a session was held to review the effectiveness of risk management,
compliance and internal control, the effectiveness of internal controls
over financial reporting, and the effectiveness of internal audit and
the relationship with external audit. We feel confident that the reviews
undertaken by the Committee during 2022 have allowed it to
perform an appropriate review of the effectiveness of the Group’s
risk management and internal control systems during the year. The
reporting of these activities by the Committee to the Board supports
the Board’s confirmation that it has undertaken a review of the
effectiveness of the Group’s risk management and internal control
systems during the year as required by the UK Corporate
Governance Code.
Tony Jensen
Chair of the Audit and Risk Committee
/ Audit and Risk Committee report continued
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 2022 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.
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 reports to the CFO, 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.
The Crime Prevention Officer presents a report directly to the Board
every six months.
Q. What were the Committee’s main activities in 2022 relating
to compliance?
The Committee monitored the functioning of the Group’s crime
prevention model, in accordance with Chilean and UK anti-
corruption legislation. Compliance activities centred on the three
pillars of prevention, detection and action. The crime prevention
model was recertified. We reviewed training on the Group’s
compliance model, crime prevention model and Modern Slavery
Policy. We reviewed activities undertaken during the year to develop
their maturity.
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Antofagasta plc Annual Report 2022
Corporate Governance / Sustainability and Stakeholder Management Committee report
Sustainability and
stakeholder management
“Committee meetings provide a
forum for the detailed discussion
of many of the key issues that
matter to our stakeholders such
as environmental matters including
climate change, the safety and
health of our workforce and
other matters that support local
communities where we operate.”
Vivianne Blanlot
Chair of the Sustainability and Stakeholder Management Committee
2022 membership and meeting attendance
Number attended
Key activities in 2022
Vivianne Blanlot (Chair)
Ramón Jara
Juan Claro
Jorge Bande
Michael Anglin
Eugenia Parot
5/5
5/5
5/5
5/5
5/5
5/5
Other regular attendees included the CEO, the Vice President of Corporate 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.
The Sustainability and Stakeholder Management Committee supports
the Board in providing guidance on the Group’s safety, health,
environmental and social responsibility strategies and policies,
in the oversight of corresponding programmes and in making
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 operational, projects and other business matters.
The material subjects and results of this engagement are reported
periodically to the Committee through standalone reports and as part
of broader Committee discussions.
Policies and commitments
• Reviewed the Group’s Sustainability Policy and new Energy and
Water policies, aligned with The Copper Mark’s ESG performance
evaluation and performance expectations according to ICMM´s
principles.
• Reviewed the implementation plan to adopt the new Global Industry
Standard on Tailings Management (GISTM), published by the ICMM in
August 2020. The Group has committed to fulfil its requirements by
August 2023 for its critical tailings’ deposits and by August 2025 for
its lower-risk ones.
• Reviewed the updated Human Rights Policy.
• Reviewed progress towards the achievement of the Copper Mark
registration which was achieved by all of the Company’s mining
operations.
Safety and health
• Reviewed the Group’s safety and occupational health strategy,
performance and plans. Reviewed the task risk analysis process,
psychosocial risk strategy and the safety plan for the new integrated
remote operating centres.
• The Board reviewed the 2022 report on the Company’s tailings
storage facilities, issued by the independent technical review Board
appointed to advise the Group on their operation.
Antofagasta plc Annual Report 2022
137
/ Sustainability and Stakeholder Management Committee report continued
Community relations
• Reviewed the water situation in the Choapa Valley after 13 years of
lower-than-normal rainfall and Los Pelambres’ water management
strategy, including operational water management initiatives in order
to best support communities.
• Reviewed the public affairs strategy for the Group’s northern
operations.
• Reviewed the Group’s communications strategy and monitored
results from the Group’s communications activities.
• Reviewed results from the Group’s perception study, carried out
every two years at a national level within the Choapa Province and
Antofagasta Region and with national opinion leaders and Mining
division suppliers.
Environment
• Reviewed environmental management reports.
• Reviewed the Group’s response to the concentrate pipeline incident
at Los Pelambres.
• Reviewed environmental reviews related to Zaldívar’s water rights
extension.
• Reviewed a progress report on the development of an inventory
of Scope 3 emissions and next steps.
Q. How was the Group’s safety performance in 2022?
This was a true highlight for 2022. We are very pleased to report
that the Group recorded its strongest safety performance on record.
During the year, there were no fatal accidents and the Group
recorded only 42 High Potential Incidents, 35% fewer than in 2021.
The Lost Time Injury Frequency Rate also improved, by 37% to 0.84.
This year’s challenge is to further improve on these results.
Q. What is the Committee’s role in respect of the Company’s
policies that relate to sustainability and stakeholder
management?
The Committee oversees the development of the Group’s policies
relating to sustainability and stakeholder management. The
Committee does not review implementation – this is a matter
for each individual operating Company.
During 2022 the Committee provided input in relation to the
proposed update to the Group’s Sustainability Policy and new Energy
and Water policies, which are aligned with the Copper Mark’s ESG
performance and expectations of the ICMM.
The Committee also provided input on the implementation plan to
adopt the new Global Industry Standard on Tailings Management
(GISTM) which was published by ICMM in August 2020 and the
Group’s operating companies have committed to fulfil its
requirements by August 2023 for critical tailings deposits and
by August 2025 for lower-risk ones.
The Committee also reviewed proposed updates to the Group’s
Human Rights Policy.
Q. How did the Committee consider climate change during
the year?
As noted by the Chairman on page 6, combatting climate change sits
at the centre of Antofagasta’s strategy. In particular, lowering
emissions and reducing continental water use remain two issues for
which we have a group-level strategy, board-level focus and
Company-wide initiatives.
The Committee assisted the Board in considering various climate
change-related initiatives during the year, including those in the
Board’s 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 Strategy, reviewed by the Committee
and approved by the Board in 2020, takes a multidisciplinary
approach to the challenges posed by climate change, focusing on
the development of climate change resilience, the reduction of
greenhouse gas emissions, the efficient use of strategic resources,
the management of the environment and biodiversity, and the
integration of stakeholders.
The Committee reviewed the community water situation in the
Choapa Valley, which has had 13 years with lower-than-normal
rainfall. As part of this, the Committee also reviewed Los Pelambres’
water management strategy and operational water management
initiatives.
The Committee reviewed a progress report on the development of an
inventory of Scope 3 emissions and next steps. The Company has
short-term and long-term Scope 1 and 2 emission reduction targets
with the goal of achieving carbon-neutrality by 2050. During 2022,
three years earlier than the target date of 2025, the Group achieved
its Scope 1 and 2 30% reduction target and will set a new near-term
goal in 2023. With respect to Scope 3 emissions, the Group has
committed to define a long-term target in 2023 or as soon as
possible thereafter.
Q. How does the Committee ensure that the Board considers
the views and interests of stakeholders?
The Committee does not interfere in the day-to-day management
and implementation of the Group’s policies and procedures.
However, meetings provide a forum to discuss key trends and
issues that matter to local communities, our workforce, national and
local governments, regulators and other stakeholders. Many of these
issues are identified as part of each operating companies’ risk
management and community engagement processes, which are
submitted by management to the Committee for their information.
Communicating with our stakeholders during difficult times has been
key to strengthening mutual trust and understanding. We work hard
to respect 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 2022
Corporate Governance “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.”
Q. What are the Committee’s priorities in 2023?
Our number one priority continues to be the safety and health of our
employees, contractors and local communities. We will continue to
provide feedback to our mining operations, encouraging them to
further improve upon our record safety performance in 2022 and
continue to reinforce the practices that resulted in the strong
performance achieved in 2022.
The Committee will continue to receive feedback from our mining
operations on the implementation of the Group’s environmental
management system and we will continue to oversee the
implementation of our Climate Change Strategy, aimed at meeting
our greenhouse gas targets for reduced carbon dioxide emissions.
The Group has successfully contracted power supply agreements
over the last few years and since April 2022 the electricity supply
contracts for all of our mining operations come from renewable
sources.
The Committee will continue to oversee the implementation of the
Group’s Climate Change Strategy during the year and to assess
whether the Group’s social programmes and the work done with
communities close to our operations is 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
storage facilities are safe?
The stability and safety of our tailings storage facilities (TSFs) is a
primary concern for us and many of our stakeholders, and the
Committee and the Board are focused on ensuring that the policies
and procedures implemented by our operating companies ensure
that the TSFs continue to be stable and safe.
Chile experiences a significant amount of seismic activity and as
a consequence there are strict regulations governing the
construction of TSFs 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 TSFs using the upstream method, which is
commonly used in other countries but can pose significant safety
risks. Current Chilean legislation also requires a stability analysis of
TSFs’ 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 TSFs: internal
teams have reporting lines not linked to the mine operation and an
independent tailings review Board (ITRB) visits our TSFs regularly,
assessing risks and making recommendations to ensure their
continued safety. The Committee and the Board review these reports
and challenge management on their recommendations.
The Committee and the Board also receive regular reports on the
operation of the Group’s TSFs. Following the Group’s adoption in
2020 of a tailings management policy aligned with the Global
Industry Standard on Tailings Management (GISTM), the Committee
has monitored operating companies’ implementation of this policy,
along with reports from management and the ITRB. The Group’s
operating companies have committed to fulfilling the GISTM
requirements by August 2023 for critical TSFs and by August 2025
for lower-risk TSFs. Operating companies have established their
own governance structures, plans, tailings management systems and
implementation timelines.
Further information on our TSFs, including the risks and the
governance measures in place, can be found on page 58.
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 this,
our operating companies 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 material subjects and results of this engagement are reported
periodically to the Committee through standalone reports and as part
of broader Committee discussions.
Antofagasta plc Annual Report 2022
139
/ Projects Committee report
Project pipeline progressed
during the year
“The Committee reviews all
aspects of major projects to be
submitted for Board approval,
highlighting key matters for the
Board’s consideration.”
• Reviewed a $179.5m advance of funds to cover critical path activities
for Los Pelambres’ Desalination Plant Expansion and Concentrator
Pipeline projects.
• Reviewed the application of the Company’s internal carbon price
in assessing alternative materials transport cases for the Polo Sur
project
• Reviewed an in-pit tailings deposition project which considers using
the Tesoro Central pit at Centinela, followed by the Tesoro North East
and Esperanza pits, to cover Centinela’s tailings management needs
for 15 years and possibly for the life-of-mine.
Project reviews – execution phase
• Monitored progress in the execution of Phase 1 of the Los Pelambres
Expansion project, including the revised capital expenditure estimate
of $2.2 billion. Reviewed the consequences of the marine works
incident.
• Reviewed the project designed to repower and technologically
upgrade Los Pelambres’ coarse ore transport system, including
updates to the project’s capital expenditure and development
programme.
• Monitored progress in the execution of the Zaldívar Chloride
Leach project.
Q. What is the Projects Committee’s 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 are following a standard, structured process using
consistent analysis, execution and evaluation practices. The
Committee oversees the full project development, 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.
Michael Anglin
Chair of the Projects Committee
2022 membership and meeting attendance
Michael Anglin (Chair)
Jorge Bande
Ramón Jara
Eugenia Parot
Number attended
4/4
4/4
4/4
4/4
Other regular attendees included the CEO, the CFO, the Vice President of Projects,
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 for the Board’s
consideration throughout the project’s development 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 Group’s projects portfolio. This
includes overseeing the establishment of project development guidelines,
drawing from best practice, industry experience and lessons learned
from other Group projects.
Key activities in 2022
Policies and commitments
• Reviewed the Group’s projects portfolio, including budgets
and schedules.
Project reviews – studies phase
• Reviewed progress with Centinela’s Second Concentrator project’s
commitment phase and amendments to the timetable for a potential
execution decision.
• Reviewed a proposal to ensure water supply for the construction
phase of Centinela’s Second Concentrator project.
• Reviewed a proposal to award the electrical power contract for
Centinela’s Second Concentrator project, subject to the project’s
investment decision.
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Antofagasta plc Annual Report 2022
Corporate Governance “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.”
Q. What tools does the Committee use?
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 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.
Q. What were the Committee’s key activities in 2022?
Execution – Phase 1 of the Los Pelambres Expansion project
A new capital estimate of $2.2 billion was endorsed by the Committee
and approved by the Board, addressing the impact of the COVID-19
pandemic, execution plan interferences, input price increases and
other deviations related to the social and geopolitical environment.
A marine works incident caused by unseasonal sea swells impacted
the project schedule, delaying the start date of the desalinated water
supply until the second quarter of 2023. The Committee discussed
the investigation and lessons learned from the incident.
See page 86 for more information on Phase 1 of the Los Pelambres
Expansion project.
Execution – Coarse ore conveyor project
The Committee reviewed developments in the execution of the
project to repower and technologically upgrade Los Pelambres’
coarse ore transport system, including updates to the project’s
capital expenditure and development programme.
Execution – Zaldívar Chloride Leach project
The Committee monitored progress following mechanical completion,
achieved in December 2021, and progress towards operational
transfer to Zaldívar in February 2022.
See page 87 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 desalination plant expansion and mine life extension, and
recommended that the Board approve funds to advance the Los
Pelambres’ rerouted concentrate pipeline and water supply pipeline
to cover critical path activities.
See page 87 for more information on Phase 2 of the Los Pelambres
Expansion project
Studies – Centinela Second Concentrator project
The Committee reviewed progress on Centinela’s Second
Concentrator project, currently in the commitment phase leading up
to a potential investment decision, in order to progress project
development with further detailed engineering, construction
permitting and risk mitigation.
The Committee reviewed the project’s ESG profile, noting that 100%
of the power will come from renewable sources, and that it will use
sea water and thickened tailings. Environmentally, the project seeks
to avoid and, if necessary, control any environmental impact
associated with its development, including air quality, archaeological
preservation and biodiversity. Socially, the project seeks to generate
positive externalities and benefits in the supply chain and manage
reputational risks. It has identified all relevant stakeholders,
established a community relations strategy and is developing
stakeholder, community and communications plans. With respect to
climate change, the objective is to facilitate early action and
adaptation in relation to risks and opportunities.
The Committee reviewed the project’s financing plan. It also reviewed
opportunities associated with the potential outsourcing of the sea
water supply system and electrical substations. The Committee
endorsed a proposal to ensure water supply for the construction
phase of the project through to August 2024 and reviewed an
electrical power contract subject to the investment decision.
In line with our disciplined approach to capital allocation, the decision
on when to submit the project to the Board for approval during 2023
will consider the completion date of the Los Pelambres Expansion
project as well as ongoing discussions on the tax reform and mining
royalty bills in Chile, and the rewriting of the Chilean constitution.
See page 88 for more information on Centinela’s Second
Concentrator project
Studies – Polo Sur project
The Committee reviewed the application of the Company’s internal
carbon price for the Polo Sur project used as part of the
determination of the relative attractiveness of alternate conveyor,
truck and road train transport cases.
Studies – In-pit tailings deposition project
The Committee reviewed an in-pit tailings deposition project which
considers using the Tesoro Central pit at Centinela for tailings
deposition, followed by the Tesoro North East and Esperanza pits,
covering Centinela’s tailings management needs for 15 years and
possibly for the Base Case life of mine of the concentrator plant.
This project would defer investment in raising the height of the
walls of the current tailings storage facility. The Committee
supported a recommendation from Centinela to start the project’s
commitment phase.
Q. What are the Committee’s priorities in 2023?
The Committee will continue to monitor the Group’s key projects.
The Committee will continue to oversee the completion of
construction of 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
Antofagasta plc Annual Report 2022
141
/ Remuneration and Talent Management Committee Chair's introduction
Enabling our strategy through pay
and talent management practices
“As a Committee, we seek to
ensure the best pay practices for
Antofagasta in order to remain
a world-class employer attracting
and retaining the best talent.”
Francisca Castro
Chair of the Remuneration and Talent Management Committee
2022 membership and meeting attendance1
Francisca Castro (Chair)
Michael Anglin
Vivianne Blanlot
Tony Jensen
Number attended
6/6
6/6
5/6
6/6
Dear shareholders
I am pleased to present the 2023 Directors’ and CEO's Remuneration
Policy and 2022 Directors’ and CEO's Remuneration Report.
• This report comprises this letter, an ‘at a glance’ section, the 2022
annual report on remuneration, which details the implementation
of our pay policy in 2022 and the 2023 Directors’ and CEO's
Remuneration Policy.
1. During the year the Committee also met with independent remuneration consultants
Willis Towers Watson 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.
• 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 in practice and at least four times a year.
• All Committee members were independent in 2022.
Key report sections:
Remuneration ‘at a glance’
Remuneration Policy
Single figure remuneration table
Remuneration for 2023
146
149
155
165
2023 Directors’ and CEO’s Remuneration Policy
The 2023 Directors’ and CEO's Remuneration Policy ("2023 Policy")
is set out on pages 149-154 and is being presented to shareholders for
approval at the 2023 AGM. Subject to approval, the policy will supersede
the 2020 Directors’ and CEO's Remuneration Policy approved by
shareholders at the 2020 Annual General Meeting ("2020 Policy").
In developing the 2023 Policy, the Committee undertook a detailed
review of the 2020 Policy, considering the impact of potential changes
on overall quantum, developments in market practice and expectations
in the UK and in Chile, the alignment between pay and performance
during the current policy period and feedback from employees,
shareholders and other stakeholders.
In proposing the 2023 Policy, the Committee has concluded that the
Group’s fundamental remuneration structures continue to be fit for
purpose. For executive pay, this includes a base salary, an annual bonus
plan that pays out in cash and an LTIP that consists of a combination of
restricted and performance awards, with the payment of LTIP awards
in cash on vesting.
While some components of these structures continue to differ from
those of companies with a significant presence, headquarters and CEO
based in the UK, the Committee believes that our remuneration
structures have worked well. We consider that our variable
remuneration arrangements are simple, easily understood and are
effective for our circumstances, while incorporating an appropriate blend
of local Chilean market practice and the expectations of a company with
a premium listing on the London Stock Exchange.
142
Antofagasta plc Annual Report 2022
Corporate Governance While we recognise that some shareholders expect senior executives to
maintain share ownership as a percentage of base salary both during
and following employment, the Committee considers that given the
Company’s controlling shareholding interest and governance structures,
there are sufficient checks and balances in the Group to ensure that
executive pay is aligned with the long-term interests of the Company.
• Despite a challenging year resulting in a decrease in revenue and
profit before tax, primarily as a result of lower copper realised
prices and lower copper sales volumes, the Group has had solid
operational results meeting its adjusted production and cost targets,
generating EBITDA of $2.9 billion, while continuing with essential
growth and innovation projects,
Although the Committee decided that no changes to core remuneration
structures were necessary, the market for executive talent for
successful companies remains competitive and therefore some changes
were required. The Committee debated extensively the most appropriate
ways to ensure that we retain and motivate our senior management
within the framework of the current pay structure. Following these
deliberations, we have proposed to change the CEO’s policy and contract
by extending the notice period and including change of control
protections and an incentive to work with a successor, whenever
necessary, in the future.
As part of the process of reviewing our 2020 Policy, I engaged with our
key shareholders and proxy advisers on behalf of the Committee to
explain these proposals and reported the feedback received to the
Committee for its consideration in finalising the 2023 Policy. I received
feedback that shareholders understood our unique circumstances and
our 2020 Policy's longstanding application and appropriateness and
were generally supportive of these proposed changes. However, the
Committee did receive feedback that a payment of 12 months was the
accepted norm for UK governance purposes for a termination payment
to an executive director in a change of control situation and we changed
our original proposal for a longer 24 months termination payment
following our engagement with shareholders. I would like to thank all our
shareholders who engaged with us and provided valuable input and
continued support.
2022 Directors’ and CEO’s Remuneration Report –
remuneration in context
The Committee considers a range of factors and KPIs when making
decisions on remuneration, including the views of stakeholders
(including shareholders and employees) and the Company’s
performance. A summary of these factors and KPIs is set out in the
“at a glance” section of the 2022 Directors’ and CEO's Remuneration
Report on page 146. However, I would like to highlight a number
of important perspectives for this report:
• Our CEO sets the standard in prioritising the safety and wellbeing
of our employees and contractors and the Group plays a major role
in supporting the Chilean economy, local communities and other
stakeholders as set out in detail on page 44 of the Annual Report,
• We maintain excellent relations with our workforce and five new
collective bargaining agreements were successfully concluded by
October 2022. These agreements are on top of the inflation linked
increases that are already built into agreements and employees'
contracts providing financial security in periods of higher inflation,
• The safety and health of people remains our top priority. In 2022, the
Group achieved record safety results, with no fatalities, a reduction
in High Potential Incidents (HPIs) and in the Lost Time Injury
Frequency Rate (LTIFR), and the implementation of a supervisors’
leadership skills training programme adding to the robust framework
already in place,
• We strive to create a diverse and inclusive workplace that stimulates
innovation and allows our employees to reach their full potential.
In 2017, the Group underwent an assessment of its diversity and
inclusion maturity level and was rated as Tier 2 – Emerging. In 2022,
thanks to the implementation of our robust Diversity and Inclusion
Strategy and action plans, the Group reached Tier 4 – Collaboration.
We are also proud to report that female direct employees' participation
reached 20.6% by the end of 2022. The Group remains committed to
driving transformational change in order to establish itself as a leader
in diversity and inclusion, which is crucial to the success of our
business strategy,
• To foster the growth and development of our workforce, our Talent
Management Strategy is centred on maintaining the critical skills and
abilities needed to overcome present and future business challenges.
This is achieved through attracting and retaining talented individuals
and providing career development opportunities within the Group,
• During 2022, the Group concluded an engagement survey across
all its group operations and, as a result, implemented action plans
to address areas such as reward, recognition and talent acquisition.
The Committee held a stand-alone session to discuss the outcomes
of this survey during the year and will consider the valuable insights
gathered from the survey in its future decision-making processes,
• By the end of 2022 we had achieved our scope 2 reduction
emissions for 2025, three years earlier than planned. All of our
mining division's energy is now sourced through renewable contracts
and during 2023 we will focus on building our decarbonisation plan
for 2030, which will be aligned with our 2050 net zero ambition.
In addition, we continue to focus on the climate related aspects
of environmental health and sustainability through our climate
roadmap, the circular economy and water efficiency.
Antofagasta plc Annual Report 2022
143
/ Remuneration and Talent Management Committee Chair's introduction continued
CEO’s performance and incentive outcomes for the year
Annual bonus outcome
The overall bonus for the CEO was 81% of the maximum.
The result for Core Business targets was 60% of the maximum, and
this reflects the challenging head winds of higher inflation and input
costs during the year. The result for the Business Development targets
was 65% and the Sustainability and Organisational Capabilities targets
was 70%, with safety being met in full. The outcome was adjusted as
there were no fatal accidents during the year. This triggered a
standalone upward adjustment to the total performance score
outcome, equal to + 10%.
As well as recording its best ever safety record, the Group also
performed well in exploration, innovation, and Digital Transformation
projects, resulting in these elements of the annual bonus paying out at
74%. Furthermore, the CEO demonstrated commitment and
perseverance in delivering against challenging individual objectives,
described on page 157. An illustration of the outcomes is shown below.
Find out more
on P156
Annual bonus for 2022
70%
60%
65%
Total bonus payout
74%
Core Business
Weighting
50%
Business Development
Weighting
25%
Sustainability and
Organisational Capabilities
Weighting
25%
LTIP outcome
The outcome of the relative total shareholder return measure of the LTIP
performance targets will not be known until after the Annual Report is
published, but it is anticipated that the overall LTIP vesting level will be
100% of the maximum. 100% of the Mineral Resources Increase target
was achieved, as well as 100% of the Social and Environmental targets
and 100% of the Projects’ performance targets. During the performance
period, the Committee amended target to remove the impact of
exceptional events (Covid-19) in respect of the Los Pelambres Expansion
project, reflecting delays outside of management control. The actual final
vesting for the LTIP will be included in next year’s report.
Mineral Resources
Increase target met
Social and Environmental
targets met
100%
100%
Projects’ performance
targets met
100%
The Committee has considered whether the overall vesting of
performance awards that were granted in 2020 could give rise to
windfall gains and is satisfied that the LTIP awards fully reflect the
achievements and shareholder value delivered during this time and
should vest in full. In reaching this conclusion, the Committee has taken
into account the relatively minor impact that the declaration of a global
pandemic had on the Company’s share price, the fact that no adjustment
was made to increase the overall vesting of 2017 performance awards
which vested in cash in March 2020, that the LTIP vesting value for
2022 is similar to the value for 2021, and the strong delivery of
shareholder value over the performance period. This strong
performance, despite market headwinds, is likely to give rise to the full
vesting of the performance awards under the LTIP.
Find out more
on P158
144
Antofagasta plc Annual Report 2022
Corporate Governance Our approach to the CEO’s remuneration in 2023
Base salary
Whilst not part of the 2020 Policy, as part of the remuneration review, the Committee acknowledged that our CEO’s total pay
has been consistently below comparable levels in the mining industry and those of our FTSE 100 peers, as competition for
talent continues to become more global and a greater risk to the business. In accordance with the CEO’s employment contract,
inflationary and exchange rate adjustments were applied to the CEO’s base salary in 2022. During 2022, this amounted to
a cumulative CPI annual increase and an exchange rate increase. The significant market movements prompted the Committee
to review the base salary positioning of the CEO.
For the implementation of the policy in 2023, we increased in January the CEO’s base salary from its December level by 20%
to $1,255,552. Despite this change, the level of our target total CEO remuneration remains in the lower quartile of FTSE 100
mining companies and our core global copper mining peer group. Together with the changes in respect of the notice payments
under the CEO’s contract, we believe these changes will effectively retain our CEO over the next policy period.
Annual bonus for 2023
Overall, our balanced scorecard for the annual bonus works well and focusses on the right KPIs. We have updated the
performance measures and targets for 2023 in response to a review of our strategic priorities for the forthcoming year.
For 2023, corporate expenditure has been removed from the core business metrics as a separate metric. The associated
metric weight was added to the EBITDA as this metric already reflects both income and expenses including corporate
expenditure. This change reduces the number of KPIs in our annual bonus plan in order to move towards a simpler and more
effective scorecard. Additionally, safety and health of our employees are our top priority, and, in addition to the continued goal
of High Potential Incidents reduction (HPIs), we have added a further element being the monitoring and reduction of
occupational hazards risks (e.g. excessive noise, pollutants, as well as physical and mental wellbeing) of our employees.
Our targets will be disclosed retrospectively in next year’s remuneration report.
In respect of our performance indicators relevant to Antofagasta’s Climate Change Strategy, we have included objectives
relating to the development of the Final Stage of the Decarbonization Plan of AMSA, the 2022 Stage of the Decarbonization
Plan in the annual mining planning process, the Goal definition of Scope 3 emissions and the definition of the Carbon Offset
Strategy. In addition to these goals, we intend to rework our roadmap, timeline and process methodologies to reach our 2030
Scope 1 and 2 goals.
Find out more
on P165
Find out more
on P165
LTIP for 2023
Our fundamental LTIP structure and KPIs remain unchanged with a balanced scorecard measuring relative returns
to shareholders, increasing resources and focusing on critical aspects of our projects portfolio, environmental and sustainability
commitments.
Find out more
on P166
Directors’ fees
No fee changes are anticipated for Directors in 2023.
Find out more
on P167
As mentioned earlier in this letter, the fundamental structure of our policy is unchanged. It is simple and aligned with delivering our business goals
and shareholder value, while reflecting practices in the international mining industry and in Chile. We must continue to reflect on where our operations
are based so that our policy and structure are aligned across the Group, the Executive Committee and throughout the organisation.
To our investors and the proxy advisers who met with us in developing the 2023 Policy, thank you for your support and constructive comments during
our engagement. We look forward to your continued support for the 2023 Policy and the Remuneration Report at the AGM in May 2023.
Francisca Castro
Chair of the Remuneration and Talent Management Committee
Antofagasta plc Annual Report 2022
145
Remuneration at a glance
Summary of business performance (strategic performance outcomes in 2022)
TSR performance
200
150
100
50
0
Dec 12
Dec 13
Dec 14
Dec 15
Dec 16
Dec 17
Dec 18
Dec 19
Dec 20
Dec 21
Dec 22
Antofagasta
FTSE All-Share
Global X Copper Miners ETF
646.2k
tonnes
$0.62/
share
0
20.6%
2050 net
zero target
Copper production
EPS performance
Fatalities
Female employee
participation
Group ESG
objective
CEO’s pay outcome
for 2022
$4,808k
Total remuneration for the CEO
100%
CEO’s individual performance
Measure
EBITDA
Production
Cash costs
Corporate expend
Growth
Exploration
Innovation
Safety
People
Environment
Social
2022 Annual Bonus
Element
Core business
Business development
Sustainability and organisational capabilities
Total outcome – pre-adjustments
Adjustment for meeting zero fatality target
Total outcome
LTIP: anticipated vesting in 2023
Weighting
Achievement (% of maximum)
12%
22%
13%
3%
15%
5%
5%
5%
5%
10%
5%
80%
50%
55%
95%
50%
85%
85%
100%
75%
50%
75%
64%
10%
74%
Element
Measure
Weighting
Achievement (% of maximum)
Relative total shareholder value
Mineral resources
Projects’ performance
Environment and social performance
Total outcome
146
Antofagasta plc Annual Report 2022
TSR v EMIX Global Mining Index
performance (estimated, see page 158)
Increase over three years
Key projects’ milestones
40% social management plan,
60% climate change and environment
50.0%
25.0%
12.5%
12.5%
100%
100%
100%
100%
100%
Corporate Governance Summary of the Policy review
Following a review of the Company’s policy, the Committee concluded that the remuneration structure remains fit for purpose and no material
changes were required.
2023 Remuneration Policy
Element
Base salary
Pension
Benefits
Annual bonus
LTIP
2023 Policy
Automatic adjustment for Chilean inflation, market review and exchange rate review, as appropriate
None – Self-funded
Market competitive
200% maximum
100% target
0% threshold
200% maximum
Exceptional limit of 325%
70% Performance Awards and 30% Restricted Awards
Malus and clawbacks
Malus on LTIP
However, as part of our proposed 2023 policy, some changes have been made to our CEO’s employment contract regarding notice periods and
termination payments in order to ensure that the contract remains aligned with industry and international market practices (more details on page 153).
These changes have been made to ensure that our contractual provisions safeguard our talent, allow time for succession planning, if needed, and
reflect industry practices and international market expectations.
Element
Notice period
Previous Policy
Change
30 days notice
6 months’ notice
Succession planning payment
No provision in 2020
Policy
6 months for a successful handover and mentoring of new CEO for any future
succession
Termination payment in
corporate Change in Control
No provision in 2020
Policy
12 months payment in respect of a corporate change of control event, if Company
terminates CEO’s employment control within 2 years of change in control.
Quantum
Our CEO’s base salary has been increased by 20% from 1 January 2023. However, the total target remuneration remains in the lower quartile
of the CEOs of both a comparator group of mining companies in the FTSE100 and a comparator group of global copper mining peers.
How the policy will be implemented in 2023
2023 Annual Bonus – performance award KPIs
Element
Pillar of strategy
Measure
Mining division’s performance (70% of bonus opportunity)
Core business
Business development
Sustainability
Competitiveness
EBITDA, Copper Production and Costs
Growth
Innovation
People
Growth, Exploration and Innovation
Safety and Health, People, Environment and Social
Individual performance (30% of bonus opportunity)
Safety and sustainability
Individual performance
The individual objectives for the CEO were based on critical
strategic areas as part of our vision for the company – organisation,
culture, people, growth, competitiveness, safety and sustainability
and innovation.
2023 Long-term incentive plan – performance award KPIs
Element
Pillar of strategy
Measure
Relative total
shareholder return
Mineral resources
increase
Project portfolio
progress
Competitiveness
Antofagasta's TSR compared to Global X Copper Miners ETF
(CopX Index) performance
Growth
Growth
Net increase of mineral resources
Progress of key projects portfolio, including Los Pelambres
Concentrate Pipeline and Desalination Plant Expansion, Centinela
Second Concentrator and Zaldivar's Operational Continuity Solution.
Sustainability
commitments
Safety and sustainability
Progress on regulatory commitments made by the mining
operations and climate change strategy implementation.
Weighting
50%
25%
25%
30%
Weighting
50.0%
25.0%
12.5%
12.5%
Antofagasta plc Annual Report 2022
147
/ 2023 Directors’ and CEO’s Remuneration Policy
Our remuneration philosophy
Our remuneration philosophy reflects local
regulations and market practices while aligning
with UK best practices and governance.
Local regulations, market practices 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 because, until recently, in Chile they were
taxable in full at the date they were granted. Considering the potential
future uncertainty on taxation and the use of real shares continues to be
uncommon in Chile, all the Company awards continue as cash awards
linked to a notional number of shares and share price performance.
Although our CEO is not a Director of the Company, we have voluntarily
disclosed his remuneration since 2014 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 implementation in 2019, these disclosures have become
mandatory and are included in this report. The final decisions in respect
of the CEO’s remuneration are always made by the Committee and the
CEO is not present for this part of the meeting, ensuring that the
Committee makes independent decisions in the best interest of
Antofagasta.
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
2023 Policy
Clarity
Remuneration arrangements are
transparent and promote effective
engagement with shareholders
and the workforce.
Our rationale for operating two long-term (performance and restricted) incentive plans is straightforward
and well communicated. The performance measures used in the Annual Bonus Plan and LTIP are used
internally and externally in tracking and communicating business performance, ensuring that participants
understand them well. The Committee Chair continues to engage with and seek the views of our
shareholders on material changes to Executive Remuneration. Feedback from shareholders on the
proposed 2023 policy update has been received and considered. Views of the workforce are taken into
account via the workforce engagement mechanisms described in more detail on page 116. Remuneration-
related topics on which employee views are sought include benefits, pay fairness, alignment between
individual performance and pay and sharing in the Company’s success.
Predictability
The range of possible values of
rewards for the CEO is identified
and explained at the time
of approving the policy.
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 (when appropriate), with only necessary changes being made so that the
plans are sufficiently predictable.
Simplicity
Remuneration structures are
uncomplicated, and their rationale
and operation are both easy to
understand and consistent for the
CEO and, where applicable, those
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.
Alignment to culture
Incentive plans drive behaviours
consistent with the Company’s
purpose, values and strategy.
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 flow down through the organisation to align the interests
of employees and senior management 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 senior management, and performance targets are aligned
with our business plan and strategy. There are clearly defined maximum opportunities, as determined in our
2023 Policy.
Incentive plan performance measures are balanced to promote the right behaviours and appropriate
safeguards are put in place, including adjustments for safety performance.
While clawback has not been introduced as such arrangements are not legally enforceable in Chile,
LTIP awards are subject to malus.
The Committee retains the discretion to adjust outcomes under the plans for variable remuneration.
Our 2023 Policy continues to be aligned with the business objectives to create sustainable value and high
profitability. We reward strong performance aligned with our business objectives, but only if the methods
used align with our safety and sustainability objectives. All Group employee performance bonuses, including
the CEO’s, include an assessment of individual performance related to the Group’s Charter of Values.
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Antofagasta plc Annual Report 2022
Corporate Governance 2023 Directors’ and CEO’s
Remuneration Policy
The Committee presents the 2023 Directors’
and CEO’s Remuneration Policy, which will be
put to a binding vote of shareholders at the
Company’s 2023 Annual General Meeting.
Subject to shareholder approval, this 2023 Policy will take effect from
the 2023 AGM and is intended to apply until the 2026 AGM. The new
2023 Policy will supersede the remuneration 2020 policy approved by
shareholders at the 2020 AGM. Once the 2023 Policy is approved, the
Company will only make remuneration payments to Directors and the
CEO, or payments for loss of office, if the payment is in line with the
2023 Policy. If the Committee wishes to change the 2023 Policy,
it will submit a revised policy for shareholders approval.
Policy table for the CEO
Policy scope
This year there has been no change to the composition of the Board
of Directors, which continues to comprise only Non-Executive Directors.
The Board has considered the pros and cons of having executives on
the Board and continues to believe that the existing structure is effective
in ensuring that the Board maintains objectivity and independence from
management. In addition, the structure is appropriate since the CEO,
Executive Committee and most senior managers are based in Chile,
where Company law prohibits the CEOs of public companies from
serving as directors of those companies.
The Company’s policy is to ensure that the fees and remuneration
of the Directors and the CEO reflect the responsibilities undertaken and
to consider comparable remuneration packages and structures in the
international mining industry, in the UK and Chile. The 2023 Policy being
tabled for shareholder approval is consistent with the previous 2020
Policy and remuneration practices already in place. The Committee
considers that the Company’s approach to remuneration for the CEO
and Non-Executive Directors is not only aligned with the Company’s
strategy but is effective and well understood.
Purpose and link
to strategy
Base salary
To retain and attract
high-calibre
executives by offering
globally competitive
salary levels.
Operation
Maximum opportunity
Performance measures
Individual and mining division performance is
considered when determining base salaries
and increases.
Typically, base salaries are
reviewed annually.
Base salaries and any
increases take into account:
• the individual’s role,
performance and
experience,
• the Company’s
performance, the external
environment and cost,
• salary increases for the
wider workforce, and
• salary levels for comparable
roles at relevant comparator
companies.
There is no prescribed maximum,
although salary increases consider
those of the wider workforce.
Chilean labour contracts are
adjusted periodically to reflect
Chilean inflation, and adjustments
may also be made due to union
labour negotiations.
In addition to the salary increases
already mentioned, there may be
additional increases when the
Committee considers it appropriate,
including (but not limited to):
• Significant increase in the scale,
market comparability or
responsibilities of the role, and
• Individuals appointed on a salary
lower than market levels, where
increases above those of the
wider workforce may be made to
recognise experience gained and
performance in the role.
Such increases will be explained
in the relevant Annual Report.
Benefits
To provide market
competitive benefits.
Benefits typically include life
and health insurance. Other
benefits may be offered where
appropriate, including, but not
limited to, car allowance,
pension contribution,
professional fees and
relocation allowances.
Benefits are reviewed periodically.
None
There is no maximum overall.
Antofagasta plc Annual Report 2022
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/ 2023 Directors’ and CEO’s Remuneration Policy continued
Maximum opportunity
Performance measures
Maximum of 200% of salary
Maximum of 200% of salary,
increased to 325% in exceptional
circumstances.
The bonus is based on financial, operational,
strategic and individual measures.
Performance measures and weightings are
reviewed annually to ensure they continue
to reflect the Company’s strategic priorities.
At least 50% of the bonus will be based on
the Mining division’s financial, operational
and strategic performance. Other metrics
include, but are not limited to, business
development, organisational capabilities,
sustainability and safety.
In addition, an automatic adjustment applies to
the Mining division’s performance score under
the Annual Bonus Plan, downwards if there is
a fatality during the year and upwards if there
is no fatality. This further aligns the Mining
division’s incentives with the core value of
safety and our goal of zero fatalities.
The Committee will consider whether this
should continue to apply annually, considering
the Mining division’s safety culture and
performance.
The Annual Bonus starts accruing at
‘threshold’ performance (0% pay-out), with
a pay-out of 50% of the ‘maximum’ when
‘on-target’ performance is achieved.
The Committee retains the discretion to adjust
bonus outcomes to ensure they reflect
underlying business performance, the impact
of the commodity price and any other
relevant factors.
Performance Awards will be based on
a combination of shareholder´s return and
strategic performance measures aligned with
the business priorities.
The targets, measures and weightings are
determined by the Committee annually.
The shareholder return measures are at least
50% of the Performance Awards.
Performance Awards begin vesting at
‘threshold’ performance, with the amount
depending on the performance metric. This
level is intended across all metrics to be 0%
at the threshold and an aggregate average
of approximately 50% of the maximum
at ‘on-target’ performance.
No performance conditions usually apply
to Restricted Awards.
The Committee retains the discretion to adjust
payments to ensure they reflect underlying
business performance, the impact of the
commodity price and any other relevant
factors.
Operation
The bonus is earned based
on achieving one-year
performance targets.
It is paid in cash.
Purpose and link
to strategy
Annual Bonus Plan
To focus on delivering
annual financial and
non-financial targets
designed to align
remuneration with the
Company’s strategy
and to create a
platform for future
sustainable
performance.
Long-Term Incentive Plan (LTIP)
To align with the
shareholders’
experience and focus
on long-term,
sustainable
performance.
Awards under the LTIP will
typically comprise:
• Performance Awards –
performance is measured
over a three-year period
with vesting thereafter,
comprising at least 70%
of the total LTIP awards.
• Restricted Awards – vest
one-third each year over
a three-year period,
comprising a maximum
of 30% of the total LTIP
awards.
Awards will usually be made
in the form of a conditional
right to receive a cash
payment by reference to the
value of a specified number
of the Company’s shares.
Malus may be applied in
exceptional circumstances,
as detailed in the notes to
this table.
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Antofagasta plc Annual Report 2022
Corporate Governance Notes to the Policy table
Benefits
Employees, including the CEO, are encouraged to save for their pension, and the Company facilitates a savings plan to which employees contribute.
For several employees, excluding the CEO, the Company makes a matching contribution to a pension plan up to a maximum amount. The Company
makes no contributions to the CEO’s pension.
Operation of incentive plans
The incentive plans are run in line with the Policy and the relevant plan’s rules, subject to several areas over which the Committee retains flexibility
as detailed below:
• Who participates in each plan.
• The timing and size of an award and/or payment are subject to Policy limits.
• The performance measures, weightings and targets that apply each year and any adjustments thereof.
• The treatment of awards in the event of a change of control, restructuring or other corporate events.
• Treatment of leavers.
• Amendments to a plan’s rules in accordance with its terms.
In the case of the CEO, any use of discretion by the Committee will be disclosed in the following annual report and may be subject to consultation
with the Company’s shareholders.
The Company reserves the right to make payments under the incentive plans to some or all participants in shares rather than cash if the regulations
and practice change in Chile to allow payment in shares without adverse additional costs, administrative burden or tax consequences. The latter is
seen as a beneficial practice by the Committee. Any further changes will be disclosed in the following annual report and shareholder approval will
be sought if required for the proposal in question.
Performance measures and targets
Awards under the Annual Bonus Plan and a significant proportion of the awards under the LTIP are subject to financial and non-financial performance
metrics determined annually by the Committee. The Committee reviews the appropriate business plans over the short, median and long-term and sets
appropriate targets with a range of achievement to align with the corporate goals and strategy.
The financial metrics align participants with the Group’s strategy and long-term sustainable shareholder value creation.
The non-financial metrics measure the development of key projects and exploration activities essential for future mining activities. Other metrics may
relate to safety and health, people, environmental and social targets, which ensure that all employees act in a way that preserves or creates social
value and considers the interests of all the Group’s stakeholders.
Restricted Awards are not subject to performance conditions; given market conditions in Chile, it is appropriate for part of the variable remuneration
to be subject only to a time condition and continued employment.
Malus and clawback
Malus provisions apply in exceptional circumstances, including:
• Actions by a participant that, in the reasonable opinion of the Committee, amount to gross misconduct that have or may have a material effect
on the value or reputation of the Company or any of its subsidiaries.
• A materially adverse error in the consolidated financial statements of the Group during the performance period.
• Any reasonable circumstances that the Committee determines in good faith to have resulted in an unfair benefit to the participant.
Clawback has not been introduced as such arrangements are not legally enforceable in Chile.
Legacy arrangements
During the term of this 2023 Policy, any payments may be made to satisfy commitments made or undertaken in respect of any LTIP award (Performance
Award or Restricted Award) granted under a previous policy or payments made to meet legacy arrangements agreed upon prior to (but not in
anticipation of) an employee (and not in contemplation of) being promoted to the position of CEO or the Board of Directors. All such outstanding
obligations may be honoured, and payment will be permitted under the 2023 Policy.
Minor amendments
The Committee may make minor amendments to the 2023 Policy (for example, taxes, regulatory, exchange rate or administrative purposes) without
obtaining shareholder approval.
The difference in CEO and employee remuneration policy
Apart from participation in the LTIP, which is limited to the Executive Committee and certain senior employees, there are no main differences between
the 2023 Policy and the general remuneration policy for employees.
Antofagasta plc Annual Report 2022
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/ 2023 Directors’ and CEO’s Remuneration Policy continued
Illustrations of the application of the Policy
The graph below illustrates estimates of the potential remuneration opportunity for the CEO under three different performance scenarios: ‘Minimum’.
‘Mid-point’, and ‘Maximum’. In line with the reporting regulations, a scenario assuming 50% share price growth over the three-year performance
period is also shown below (for the maximum performance scenario). The assumptions used for these charts are set out in the table below.
CEO total remuneration
Minimum
100.0%
$1,370k
Mid-point
Maximum
Maximum + 50%
share price growth
32.2%
29.5%
38.3%
$4,258k
21.4%
18.9%
39.3%
34.5%
39.3%
$6,393k
34.5%
12.1%
$7,271k
$0k
0
$1,000k
$2,000k
$3,000k
$4,000k
$5,000k
$6,000k
$7,000k
$8,000k
8000
Fixed pay
Annual bonus
LTIP
LTIP – share price appreciation
Minimum
performance
Mid-point
performance
Maximum
performance
• Fixed remuneration (salary and benefits) only.
• No pay-out under the Annual Bonus or LTI performance awards.
• Fixed remuneration.
• Fifty percent (50%) of the maximum pay-out under the Annual Bonus Plan.
• Under the LTIP, vesting is 50% of Performance Awards and 100% of Restricted Awards.
• Fixed remuneration.
• 100% of the maximum pay-out under the Annual Bonus Plan.
• Maximum vesting under the LTIP: 100% of Performance Awards and 100% of Restricted Awards.
Maximum
performance
+ 50% share price
growth
• Fixed remuneration.
• 100% of the maximum pay-out under the Annual Bonus Plan.
• Maximum vesting under the LTIP: 100% of Performance Awards, 100% of Restricted Awards and a 50% increase
in the share price over the three-year performance period.
Other than for the scenario ‘Maximum performance + 50% share price growth’, no increase in the share price has been assumed in the graph above.
Also, no dividend assumptions have been included in the charts above.
Letters of appointment
All Directors’ letters of appointment are available for inspection at the Company’s registered office during regular business hours and at the Annual
General Meeting (for 15 minutes before and during the meeting).
CEO
Mr Iván Arriagada is employed under a contract of employment with Antofagasta Minerals SA (AMSA), a subsidiary of the Company. His work contract
is governed by Chilean labour law. It does not have a fixed term and can be terminated by either party on six months’ notice in writing. Any payment
for termination or loss of office is provided in the table below.
Under his employment contract, Mr Arriagada is entitled to 25 working days of paid holidays per year.
As Mr Arriagada’s salary is paid in Chilean pesos and is adjusted quarterly for inflation, at the end of the year, a further adjustment is made if the
US dollar/Chilean peso exchange rate has increased by more than 5% to maintain international competitiveness.
Chairman and Non-Executive Directors
Each Non-Executive Director has a letter of appointment from the Company and from AMSA. The Company has a policy of putting all Directors
forward for re-election at each AGM, in accordance with the UK Corporate Governance Code. Under the terms of the letters, if a majority of
shareholders do not confirm a Director’s appointment, the appointment will terminate immediately. In other circumstances, either party may terminate
the position on one month’s written notice. The letters require the Directors to undertake that they have sufficient time to discharge their
responsibilities.
There is a contract between Antofagasta Minerals and Asesorías Ramón F, Jara Ltda, dated 2 November 2004, for the provision of advisory services
by Ramón Jara. This contract has no expiry date but may be terminated by either party on one month’s notice.
No other Director is a party to a service contract with the Group.
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Antofagasta plc Annual Report 2022
Corporate Governance Policy on payments for loss of office
If the Company terminates the CEO’s employment contract for reasons not attributable to the CEO, six months’ written notice must be given unless
the Company pays compensation in lieu of notice.
If the CEO resigns, he must give at least six months' written notice.
In both cases, if the CEO’s employment contract terminates for reasons not attributable to the CEO or CEO’s resignation, if requested, the CEO
will work with the Committee to appoint a suitable successor and ensure a smooth transition of responsibilities as well as providing mentoring.
If the transfer is completed successfully, the CEO will receive an additional payment equal to six months’ base salary.
If the Company terminates the CEO’s employment contract within two years of a specific corporate event, for reasons not attributable to the CEO,
or if the CEO's role or function has been changed without prior agreement within two years of a specific corporate event, the CEO shall be entitled
to an additional payment equal to 12 months’ base salary.
The treatment of any outstanding incentive awards will be determined based according to each plan’s rules, as summarised in the table below:
Annual bonus
LTIP
Employees who complete at least six months of service in a financial year are entitled to be considered for a bonus
subject to the applicable performance targets having been met. Any payment will usually be pro-rated for the period
of employment, although the Committee has the discretion to decide otherwise. If the employee’s period of employment
is less than six months, they will not usually be entitled to be considered for a bonus. However, the Committee has the
discretion to decide otherwise.
The default position is that any outstanding Performance Awards or Restricted Awards will be forfeited on cessation
of employment except if an individual is considered a good leaver e.g. their employment ends due to their death,
redundancy, ill health injury or disability, an unexpected event or force majeure, or other reason at the discretion
of the Committee.
In respect of dismissal by the Company’s decision, or the employee's resignation with at least six months’ notice,
they will be entitled to receive payment of any outstanding Restricted Awards and it will be pro-rated to the time served.
Performance Awards will usually vest based on the satisfaction of the relevant performance targets (if applicable)
and will be pro-rated to the time served. However, the Committee has the discretion to decide otherwise.
Corporate event
or change of control
In the event of a change of control or winding up of the Company, LTIP awards will vest subject to the extent the
performance targets have been satisfied (if applicable) and will be pro-rated for the period of the award elapsed, unless
the Committee decides otherwise.
In the event of an internal reorganisation, LTIP awards may (with the consent of the acquiring entity) be replaced
by equivalent awards. Alternatively, the Committee may decide that the LTIP awards will vest as in the case of a change
of control, as described above.
In the event of a demerger, special dividend or other corporate event that will materially impact the share price,
the Committee may, at its discretion, allow LTIP awards to vest on the same basis as in the case of a change of control,
as described above.
The Committee reserves the right to make other payments regarding the termination of the CEO’s employment. Any such payments may include
paying reasonable fees for outplacement assistance and legal or professional advice.
The letters of appointment for the Non-Executive Directors do not provide any compensation for loss of office beyond payments in lieu of notice;
therefore, the maximum amount payable upon termination of these letters is limited to one month’s fees.
Changes to the policy
As highlighted in the at a glance section the only changes proposed are in relation to our CEO’s employment contract regarding notice periods and
termination payments in order to ensure that the contract remains aligned with industry and international market practices. These changes have been
made to ensure that our contractual provisions safeguard our talent, allow time for succession planning, if needed, and reflect industry practices and
international market expectations.
Element
Notice period
Previous 2020 Policy
30 days' notice
Change
6 months’ notice
Succession planning payment
No provision in 2020 Policy
Termination payment in corporate
Change in Control
No provision in 2020 Policy
6 months of base salary for a successful handover
and mentoring of new CEO for any future succession
12 months of base salary payment in respect
of a corporate change of control event, if Company
terminates CEO’s employment within 2 years of
change in control.
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/ 2023 Directors’ and CEO’s Remuneration Policy continued
Policy on recruitment
When determining remuneration, the Committee will consider the new CEO’s role, experience, and other factors such as relevant market data and
internal comparisons. The Committee strives to pay competitively, but no more than necessary to attract the right talent. On appointment, the CEO’s
remuneration will generally align with the 2023 Policy, and the maximum aggregate value of incentives (excluding buyouts) will not exceed the 2023
Policy’s defined maximum limits. The recruitment approach is outlined below:
Element
Policy and operation
Base salary
Base salary will be determined based on the individual’s role and responsibilities, experience and skills, relevant market data and
internal comparisons. The starting base salary may be set below the prevailing market rate, but with the expectation of higher-
than-usual increases as the individual gains experience and performs in the role.
Benefits
Benefits in line with the 2023 Policy, including relocation benefits if appropriate.
Annual bonus
The structure described in the 2023 Policy table will generally apply for new appointees, with maximums typically pro-rated
to reflect service during the year. For the first year of appointment, the Committee may determine that the annual bonus may
be subject to modified terms considered appropriate in the context of the recruitment.
LTIP
Buyout
awards
LTIP awards will be on the same terms as described in the 2023 Policy table. However, the Committee has the discretion to make changes
in the first year of employment, including to the performance measures applied. Any change will be fully disclosed in the next Annual Report.
The Committee recognises that it may be necessary, in certain circumstances, to provide compensation for amounts forfeited
from a previous employer. Generally, any buyout awards will be made on a like-for-like basis in terms of commercial value, form,
application of performance conditions and timing of receipt to ensure they reflect the incentives they are replacing.
The approach towards an internal promotion will be consistent with the 2023 Policy outlined above. The Company will honour these legacy
arrangements if an individual has contractual commitments or outstanding awards before their promotion.
For interim positions, a cash supplement rather than a salary may be paid (for example, if a Non-Executive Director took on an executive function
on a short-term basis).
On the appointment of a new Non-Executive Director or Chairman, their remuneration will be in line with the 2023 Policy summary below.
Chairman and Non-Executive Directors Remuneration 2023 Policy Summary
Purpose and link
to strategy
Fees
To attract and retain
high calibre,
experienced Directors
by offering globally
competitive fee levels.
Benefits
To provide appropriate
benefits and reimburse
appropriate expenses
that Directors incur
in the performance
of their duties.
Operation
The Chairman receives an annual base fee.
Non-Executive Directors receive an annual base fee.
Directors may receive further fees for serving as the Senior Independent
Director, a Board Committee Chair or a Committee member.
Separate base fees are paid for serving on the Antofagasta Minerals Board
or as a Director or chair of any subsidiary or joint-venture Company.
Ramón Jara also receives a base fee (adjusted for Chilean inflation) for advisory
services provided to Antofagasta Minerals pursuant to his service agreement.
Fees are subject to review, which will take into account time commitment,
responsibilities and market practice.
Non-Executive Directors are entitled to reimbursement for reasonable
expenses incurred during the performance of their duties, including any tax
due on the reimbursements.
Benefits may include the provision of life, accident and health insurance,
professional advice and other minor benefits, including occasional spousal
travel in connection with the business.
Maximum opportunity
Total fees paid will be
within the limit stated in
the Company’s Articles
of Association.
Changes may be made
to Chilean-peso-
denominated fees
to adjust for Chilean
inflation.
Benefits are set at
a level appropriate to
the individual’s role and
circumstances. The
maximum will depend
on the type of benefit
and cost of its provision.
Performance
measures
None
None
In line with the UK Corporate Governance Code, Non-Executive Directors do not participate in incentives, share schemes, or receive a pension provision.
Consideration of employment conditions elsewhere in the Group
When the Committee reviews the remuneration of the Directors and CEO, it considers pay conditions across the Mining division. This is done in the
context of different working environments and geographies and therefore is not a mechanical process. The Committee does not currently use any
other remuneration comparison metrics when determining the quantum and structure of Director remuneration. The Directors’ and CEO’s
Remuneration Policy is well understood by employees and employees know that the CEO’s remuneration policy is substantially similar to their own.
The Chair of the Remuneration and Talent Management Committee has not therefore explained this to employees.
The Committee considers employee pay practices and experiences at each meeting to ensure Antofagasta remains a world-class employer, attracting
and retaining the best mining talent.
Consideration of shareholder views
The Company maintains a dialogue with institutional shareholders, sell-side analysts, and potential shareholders. The Investor Relations team manages
this communication, which includes announcements and a formal programme of presentations to update institutional shareholders and analysts on
developments in the Group during the year.
In addition, as part of the review of Director and CEO remuneration ahead of a new 2023 Policy being tabled for approval at the 2023 AGM, a series
of meetings was held with top shareholders and proxy agencies in December 2022. These meetings were led by the Chair of the Remuneration
and Talent Management Committee, who afterwards briefed the Committee on the feedback she received. The latter was taken into account when
determining the final 2023 Policy to be approved by shareholders.
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Antofagasta plc Annual Report 2022
Corporate Governance / 2022 Directors’ and CEO’s Remuneration Report
CEO’s single figure of remuneration
(audited)1
The table below sets out the remuneration received by the CEO in respect of the years ending 31 December 2022 and 31 December 2021.
Iván Arriagada1 2022
Iván Arriagada1 2021
Salary
$’000
833
755
Benefits
$’0002
115
36
Bonus
$’0003
1,705
1,230
Restricted
Awards
$’0004
Performance
Awards
$’0005, 6
Total
remuneration
$’000
Total fixed
remuneration
$’000
Total variable
remuneration
$’000
520
390
1,635
1,722
4,808
4,134
948
791
3,860
3,343
1. Mr Iván Arriagada’s remuneration was calculated based on amounts paid in Chilean pesos each month of the relevant year, converted into US dollars at the closing exchange rate
for the month it was paid.
2. 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 benefits, which are received in connection with fulfilling
his duties. The Company makes no pension contributions on behalf of the CEO. HMRC has deemed certain services to be taxable in the UK. The Company has agreed to
compensate the CEO for any double taxation that is not eventually recoverable from the Chilean revenue under the UK/Chile Double tax treaty. This tax equalisation benefit
in respect of 2022 is a benefit of $6,505 and in 2021 was a benefit of $4,867.
3. Mr Arriagada’s 2021 annual bonus was paid following the date of publication of the 2021 Annual Report and the exchange rate used has been updated with the rate applicable
at the date the bonus was paid. The exchange rate as of March 2022, which was used to update the 2021 annual bonus, is CLP/USD 788 vs CLP/USD 844 in January 2022.
4. Restricted Award amounts are reported in the year of the grant based on the face value of the awards on the date of the grant.
5. Performance Awards are reported in the year the performance period ends. The Total Shareholder Return (TSR) performance is an estimate based on the substantial
completion of the performance period, determined after this report's publication. The share price used to value these awards is the three-month average share price to the end
of the 31 December 2022 performance period. £13.16/share and USD/GBP 1.18. The value at the time of the grant reached $868,004 with a USD8.24/share and USD/GBP 1.18
with an increase in the value reported as $766,499. As noted on page 148, LTIP awards, including Performance Awards, are cash awards linked to a notional number of shares
and the Company’s share price performance.
6. The Performance Awards included in the 2021 total vested on 29 March 2022. 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 2019 LTIP reflects the change in share price and exchange rate at vesting. The share price and exchange rate
used to value this award are £17.11/share and USD/GBP 1.31. For the 2021 LTIP, the value attributable to an increase in the Company’s share price is $275,330. 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 up to December 2021. The value
at the time of the grant reached $944,992 with a USD12.2/share and USD/GBP 1.30 with an increase in the value reported as $777,230. There was no entitlement to dividends
or dividend equivalents.
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/ 2022 Directors’ and CEO’s Remuneration Report continued
Annual bonus
Group performance (70%)
The targets and achievements for the 2022 annual bonus are set out below. 70% of the CEO and Executive Committee’s 2022 annual bonuses were
calculated based on the Group’s performance against these criteria in 2022:
Measure
Core business
EBITDA – Mining division1 ($m)
Copper production2 (kt)
Cash costs before by-product credits3 ($/lb)
Corporate expenditure3 ($m)
Business development
Growth projects4
Exploration programmes5
Innovation and digital transformation projects6
Sustainability and organisational capabilities
Safety – Mining division7
People – Diversity and Inclusion Strategy8
Environmental performance9
Social performance10
Total outcome – pre-adjustments
Adjustment for meeting zero fatality target11
Board discretion applied12
Total outcome – postadjustments
Weighting %
Threshold
(0% vesting)
On-target
(50% vesting)
Maximum
(100% vesting)
Actual
achievement
Achievement
(% of maximum)
50%
12%
22%
13%
3%
25%
15%
5%
5%
25%
5%
5%
10%
5%
2,411
2,679
623.9 643.8-663.7
2.192
2.324
132.6
139.3
2,946
673.7
2.061
126.0
2,844
646.2
2.185
126.6
Measured according to the schedule and budget,
as described in more detail in the footnotes.
Adjustments are described in more detail
in the footnotes.
Adjustments are described in more detail
in the footnotes.
60%
80%
50%
55%
95%
65%
50%
85%
85%
70%
100%
75%
50%
75%
64%
10%
0%
74%
1. The EBITDA targets were adjusted for exchange rate, inflation and copper price fluctuations, and diesel and power price fluctuations, and the effect of one-off bonuses paid on conclusion
of labour negotiations at Los Pelambres, Antucoya and Zaldivar, which were not included in the Group’s budget. The targets for EBITDA were adjusted for the impact of the Los Pelambres
Concentrate Pipeline Incident in June when there was a temporary reduction in throughput at Los Pelambres due to the reduced concentrate pipeline availability and disruption to access
to the mine site, following the assessment by an independent expert which determined that the incident resulted from a factory defect not attributable to the operation's management.
2. 100% basis, except for Zaldívar (50%). The targets for production were adjusted for the impact of the Los Pelambres concentrate pipeline incident.
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 targets for cash cost were
adjusted for the impact of the Los Pelambres Concentrate Pipeline Incident. The figures for corporate expenditure were adjusted for the exchange rate, inflation and the difference between
budgeted annual bonus payments and actual bonus payments made to employees.
4. Split between Los Pelambres Desalination Plant (40%), Los Pelambres Concentrator Expansion (27%) and Centinela Second Concentrator (33%).
Targets for the Los Pelambres Desalination Plant were related to execution progress and ensuring that there were no material environmental incidents. The threshold (80%) is related
to mechanical completion, including pre-commissioning in Q4 2022 and (20%) is due to one serious environmental incident. Target (80%) is related to mechanical completion, including
pre-commissioning in Q3 2022, and (20%) is related to non-serious environmental incidents. The maximum (80%) is reached if early pumping is achieved in July 2022 and (20%) if compliance
with the approved budget is achieved. Targets for the Los Pelambres Concentrator Expansion were related to execution progress and ensuring that there were no material environmental
incidents. With the threshold at (80%) completion of construction in Q4 2022 and (20%) is due to one serious environmental incident. Target at (80%) of mechanical completion, including
pre-commissioning in Q4 2022 and (20%) no serious environmental incidents. The maximum (80%) if the commissioning is achieved with an advance of 70% to Q4 2022 and (20%) if
compliance with the approved budget is achieved. Targets for the Second Concentrator in Centinela were based on the progress of the engineering and pre-investment studies for the project.
With the threshold at (100%) a delay in detailed engineering is greater than or equal to three months. Target at (50%) the recommendation for outsourcing the Desalinated Water Drive System II
(SIAM II) in Q3 2022 and (50%) Second Concentrator Project prepared to submit an investment decision request in Q4 2022. The maximum additional critical milestones are reached before the
end of the year. The result was 50% of the maximum, made up of 30% of the maximum for the Los Pelambres Desalination Plant, 45% of the maximum for the Los Pelambres Concentrator
Expansion and 75% of the maximum for the Centinela Second Concentrator.
5. Includes targets to assess the progress of exploration programmes and consolidation of exploration ownership interests,. split between Cachorro deposit (60%), Encierro deposit (20%)
and international exploration (20%). All the programmes were advanced according to the plan. The result was 85% of the maximum.
6. Split between the implementation of the Integrated Remote Operations Management Centres (IROCs) for Los Pelambres and Centinela (33.3%), Data Analytics (33.3%) and continuation of the
“New Ways of Working” project (33.3%). Targets for the IROCs were related to the progress of implementation of the IROCs. For the Los Pelambres IROC, the threshold was 60% construction
progress, the target was going live in Q4 2022, and the maximum was going live in Q3 2022. Centinela’s IROC threshold was completing the infrastructure in the city of Antofagasta. The target
was implementing the integrated model in the mine, concentrator and port, and the maximum was implementing the remote operation of the cathode plant. Data Analytics targets were related
to the accumulated impact of the projects implemented in 2022, with a threshold of $32 million, a target of $45 million and a maximum of $55 million in December 2022. Targets for the "New
Ways of Working" project related to progress of the approved project plan, with a threshold of 75% progress, a target of 100% progress and a maximum of 100% progress and an evaluation
by the CEO and Vice President of Operations of the deployment and evolution of the model. The result was 85% of the maximum, made up of 100% of the maximum for the Los Pelambres and
Centinela IROCs, with the Los Pelambres IROC going live in Q3 2022 and the successful remote operation of Centinela’s cathode plant, 100% of the maximum in Data Analytics with a $66 million
impact and 50% of the maximum for the “New Ways of Working” project.
7. Performance against a reduction of the High Potential Incident (HPI) rate with a threshold of 0.19, a target of 0.17 and a maximum of 0.16. This metric considers the Lost Time Injury Frequency
Rate (LTIFR) as a trigger. If the LTIFR is higher than 1, the maximum achievable score is 50%. The result was 100% of the maximum with an HPI rate of 0.11 and 0.76 frequency rate (LTIFR).
8. Performance against targets for implementation of the Diversity and Inclusion Policy. (50%) of the target was based on the results of an evaluation of the mining division's culture. With a threshold
at stay as Tier-2 "emergent," on-target at Tier-4 "collaborative," and maximum at Tier-4 and an evaluation overseen by the CEO and Vice President of Operations. (50% ) of the target was based
on an increase in the percentage of female direct employees by the year's end, with the threshold at 17.2%, on-target at 19.3% and maximum at 20.3%. The total score was 75% of the
maximum, made up of 100% of the maximum for the percentage of female direct employees, which ended the year at 20.6%, and 50% of the maximum for the culture evaluation.
9. Split between compliance with a regulatory requirements action plan (40%), and implementation of the Climate Change Roadmap (60%).
Regulatory requirements action plan: Threshold 85% compliance with the regulatory requirements action plan or an operational event with serious environmental consequences. Target (70%)
due to 100% compliance with the regulatory requirements action plan and (30%) achievement of the Copper Mark at Los Pelambres and Antucoya by November 2022. Maximum obtaining
the Copper Mark at Los Pelambres and Antucoya by August 2022. Implementation of the Climate Change Roadmap: Threshold of less than 90% compliance with roadmap milestones and 0%
reduction in Energy Performance Indicators compared to 2021. Target 100% achievement of roadmap milestones. Maximum is a 1.5% reduction in Energy Performance Indicators compared
to 2021 and setting 2023 emissions reduction targets (Scope 3) for two mine equipment supply contracts. The result of the total target was 50% of the maximum.
10. Performance against the planned execution of social initiatives (50%) and a planned programme to measure the impact of the initiatives (50%) with no material or social incidents, with the
threshold at 70% implementation of 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 total outcome was 75% of the maximum.
11. A standalone adjustment trigger of 15% of the calculated outcome is applied to the Annual Bonus Plan, upwards if there are no fatalities during the year or downwards if there are one or more
fatalities. As there were no fatalities in 2022, the final Mining Division's outcome was increased by 10% (15% of 64%).
12. No discretion to the bonus outcome was applied, as the adjustment, resulting from the concentrate pipeline incident, was made to the core business metrics: EBITDA, Production and Costs.
156
Antofagasta plc Annual Report 2022
Corporate Governance Individual performance (30%)
The individual objectives for the CEO were based on critical strategic areas as part of our vision for the Company – organisation, leadership, culture,
people, growth, competitiveness, safety and sustainability and innovation. Based on individual feedback from Directors, the Committee assessed Iván
Arriagada’s performance against his personal objectives as 100% of the maximum for his contribution to the individual strategic business goals during
the year. All his objectives were exceeded, which count towards 30% of his annual bonus. This outcome reflects exceptional performance during
a challenging year in continuing to deliver a culture of excellence as well as develop the business across its core strategic growth areas establishing
a stronger foundation to build future value for all our stakeholders. Iván Arriagada’s performance against each of his objectives is summarised below:
Key goals
Performance
Keeping the Board well-informed and responding
to feedback received during the year.
Effective interaction throughout the year, kept the Board apprised of key developments
and responsive to feedback.
Leading the Group’s core values and developing
a culture of excellence
Strong visible leadership and commitment to the Group’s values, demonstration of desired
behaviours and effective leadership of a corporate culture of excellence.
Actively solicited Directors’ input, ensuring that the Board’s perspectives, ideas and feedback
were shared and implemented throughout the Group.
Implementing strategy including in relation
to long-term growth and the management
of environment, social and governance
(ESG) matters
Focusing on the Group’s core business
Developing talent, ensuring appropriate
succession planning and performance
management
Pursuing exploration and business development
opportunities
Promoting the Group’s reputation, working with
key stakeholders and local communities
Incorporation of a special focus on operational excellence in 2022 through the development
of revised full potential limits and aspirational targets.
Long-term strategic vision to strengthen the Group’s operations and projects.
Enhanced the Group’s ESG focus, including implementation of the climate change strategy
and accreditation of all four mining companies under the independent Copper Mark audit
certification protocols.
Strong financial performance in a challenging business environment including record plant
throughput at Centinela, the achievement of full potential at Antucoya and the progression of all
the Group’s key brownfield growth projects according to plan.
Evident personal commitment to talent management, succession planning and performance
management.
Successful restructuring of the Operations Vice Presidency and compliance with the Operating
Model.
Continued progress of the Group’s exploration programme.
Business development opportunities thoroughly evaluated and implemented throughout the
year including the Group’s exit from the Reko Diq project in Pakistan.
Outstanding stakeholder management including in response to the concentrate pipeline
incident and through the new release of the Somos Choapa community engagement
programme.
Strong contribution to the visibility and reputation of the Company including a strong profile
in the international mining industry.
Addressing business challenges, including
diversity and inclusion and innovation
Diversity and inclusion goals achieved ahead of schedule with new stretching goals set during
the year.
Strong progress in innovation including completion of Centinela’s Remote Integrated
Operations Centre in Antofagasta and Los Pelambres’ in Santiago.
Performance adjustments, discretion and CEO’s total annual bonus for 2022
Based on Iván Arriagada’s performance achieved against his 2022 targets, the Committee determined that he would receive a bonus payment
of $1,704,586. This figure was determined as follows:
Overall performance score
(70% x 74%) + (30% x 100%) = 81% of the maximum
(As a percentage of the maximum)
81% of $2,092,586
Gross annual bonus = $1,704,586
Calculated in US dollars using the exchange rate as of 31 December 2022 of $1 = Ch$855.9
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.
Antofagasta plc Annual Report 2022
157
/ 2022 Directors’ and CEO’s Remuneration Report continued
Long-term incentives
Anticipated vesting in 2023
As noted in the single-figure remuneration table on page 157, performance against the Performance Awards granted in 20201 will not be finally
determined by the Committee until after the date of this report. The performance criteria attached to these Performance Awards and the anticipated
performance against these criteria, based on estimates as of the date of this report, are as follows:
Weighting
%
50%
Measure
Relative total
shareholder
return
ESTIMATED
Threshold
On-target
Maximum
Performance
EMIX Global Mining
Index performance
% Score
Below
index
0%
Equal to
index
33%
≥5% above
index
100%
Achievement
%
Discretion
applied
100%
No
100%
No
100%
No
This KPI will vest
on or after 27
March 2023. The
estimate is based on
a performance of
18.4%2 greater than
the index as of
16 Jan 2023.
Resources
increased to 92.4
million tonnes of
contained copper
as of 31 December
2022.
The performance of
the construction of
the Los Pelambres
Expansion project
is 100%.3
The performance
for the Zaldívar
Chloride Leach
project and Phase 2
of the Los
Pelambres
Expansion project
is 100%.4, 5
Mineral
resources
increase
25%
Tonnes of contained
copper
84.6m
86.0m
87.4m
% Score
0%
50%
100%
progress
< 50%
75%
progress
100%
progress
12.5%
Project
portfolio
progress
Percentage (%) of
progress in Los
Pelambres Expansion
project commissioning
(INCO) (70%)
Percentage (%) in
commissioning for
Zaldivar Chloride
Leach project (20%)
Environmental impact
plan for Los
Pelambres Phase 2
Expansion (10%).
% Score
0%
75%
progress
< 50%
75%
progress
100%
85%
progress
All goals achieved6.
100%
No
Sustainability
commitments
12.5%
Agreements reached
with communities
near the Company’s
operations (80%)
CO2 emissions –
reduction of 300,000
tonnes and transition
away from coal power
purchase agreements
(20%)
Not met
Partial
completion
Full
completion
% Score
0%
75%
100%
Total outcome
100%7
1. The number of shares, share price used and the impact of vesting % for this award is available in the notes to the single figure table on page 155 and the table setting out long-term
incentive awards outstanding for the CEO from prior periods on page 161.
2. The TSR outcome is an estimate as the performance period ends after this report is published. The actual out-turn will be included in next year’s Annual Report.
3. During the performance period the Committee adjusted targets to remove the impact of exceptional events outside of management control. Los Pelambres Expansion project’s
construction progress target was amended for delay attributed to COVID-19 and the enabling works added to allow for the future expansion of the desalination plant from 400 l/s
to 800 l/s, approved after this target was set in 2020. Additionally, the Committee considered the level of vesting and progress of the projects at the end of the performance period
and were satisfied that the level of vesting reflected progress made given external factors that delayed progress.
4. Construction and commissioning were completed in the first quarter of 2022.
5. The project’s scope was redefined by the Board to include the Los Pelambres Mine Life Extension project. The EIA was submitted in 2021 and achieved its targets during 2022.
6. One hundred percent (100%) compliance means agreements reached with the communities near the Company’s operations, 100% compliance with commitments and agreements,
and CO2 emissions reduction following forecasts set on the grant date, and the conversion of the electricity supply contracts to 100% renewable power.
7. The impact of this vesting level on the CEO’s 2022 remuneration is set out in footnote 5 of the CEO single-figure total remuneration table on page 155.
Performance adjustments and discretion
No discretion has been applied to any of the performance calculations for the 2020 LTIP outcome. As stated in notes to the table above the Committee
adjusted the projects targets during the performance period to reflect the change in the project scope and issues outside of management control.
158
Antofagasta plc Annual Report 2022
Corporate Governance Directors’ single figure
of remuneration (audited)
The Directors’ remuneration for 2022 and 2021 is below in US dollars. Unless otherwise noted, amounts paid in Chilean pesos have been converted
at the exchange rate on the first working day of the month following the payment date. 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
Eugenia Parot (appointed 20 April 2021)
Total Board
Fees
2022
$000
2021
$000
Benefits2, 3
2022
$000
2021
$000
Total4,5
2022
$000
2021
$000
1,015
1,012
–
927
280
260
325
320
315
335
365
300
4,442
210
965
278
260
318
314
309
311
333
199
4,509
16
–
85
3
3
3
13
21
7
12
6
169
16
1
7
2
2
2
2
2
–
–
–
34
1,031
1,028
–
1,012
283
263
328
333
336
342
377
306
4,611
211
972
280
262
320
316
311
311
333
199
4,543
1. During 2022, $604,079 (2021 – $645,053) was paid to Asesorías Ramón F, Jara Ltda, for providing services. The reported decrease is due to an increase in the Ch$/USD
exchange rate, partially offset by an annual adjustment for inflation in Chile. These payments are included in the fees attributable to Ramón Jara shown above.
2. Amounts for Jean-Paul Luksic include the provision of life, health and terrorism insurance. Amounts for Ramón Jara include the provision of life and terrorism insurances.
These insurances are not in place for the other Directors.
3. Except as described in footnote 2, all “benefits” amounts included in this table arose in connection with the fulfilment of Directors’ duties and, in particular, including the cost of
attending Board meetings and the Company’s Annual General Meeting in London. These calculations have been based on what the Company believes would be deemed by HMRC
to be taxable benefits in the UK by the Non-Executive Directors or would be if the director was resident in the United Kingdom for tax purposes, alongside any personal incidental
expenses. 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
individual 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. Notes relevant to single-figure disclosures for 2021 can be found on page 152 of the 2021 annual report. These remain unchanged.
Payments to former 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.
Total pension entitlements (audited)
There were no pension contribution payments made towards any
Directors or towards the CEO.
Directors and CEO’s shareholding and share interests (audited)
The Directors who held office on 31 December 2022 had the following
interests in the ordinary shares of the Company:
Jean-Paul Luksic1
Tony Jensen
Ramón Jara2
Juan Claro
Andrónico Luksic C
Vivianne Blanlot
Jorge Bande
Francisca Castro
Michael Anglin
Eugenia Parot
Ordinary shares of 5p each
31 December
2022
1 January
2022
41,963,110
–
5,260
–
–
–
–
–
–
–
41,963,110
–
5,260
–
–
–
–
–
–
–
There have been no changes to the Directors’ interests in the shares
of the Company between 31 December 2022 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 on this page. 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-Executives.
The Chairman, Mr Jean-Paul Luksic, and Non-Executive Director,
Mr 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, taken together, holds approximately 60.66% of the Company’s
ordinary shares and approximately 94.12% of the Company’s
preference shares). In addition, Mr Jean-Paul Luksic controls the
Severe Studere Foundation, which, in turn, controls the 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.
1. Jean-Paul Luksic’s interest relates to shares held by Aureberg Establishment,
an entity he ultimately controls.
2. Ramón Jara’s interest relates to shares held by a close family member.
Antofagasta plc Annual Report 2022
159
/ 2022 Directors’ and CEO’s Remuneration Report continued
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 the Company’s share price performance.
Type of award
Date of grant
Number of shares/
options
Award as %
of salary1
Face value (market
value at date of grant)
Performance period
Vesting dates
Restricted Award
29 Mar 22
22,578
60%
$520,220
N/A
Performance
Award
29 Mar 22
52,686
140%
$1,213,848
29 Mar 2022 to
29 Mar 2025
29 Mar 23
29 Mar 24
29 Mar 25
29 Mar 25
1. The number of awards was calculated according to the base salary at the grant date on 29 March 2022 with the total face value described in the table. The share price used
to value these awards is £17.47/share, USD/GBP 1.32 and the exchange rate used to value this award is CLP/USD 792,38 all of them calculated as the average of the closing price
during a period of 5 dealing days ending with the dealing day before the grant date, according to policy.
Performance conditions attaching to long-term incentive plan awards granted to the CEO in 2022 (audited)
Objective
Weighting
Threshold
Target
Maximum
Vesting
at threshold
Vesting
at target
Vesting
at maximum
Relative total shareholder return
vs. Global X Copper Miners ETF
(CopX Index)
50%
Performance
below index
Equal
to index
≥ 5% above index
0%
33%
100%
Mineral resources increase
(contained copper)
25%
83.1m tonnes
86.4m
tonnes
87.5m tonnes
50%
completion
75%
completion
Projects portfolio:
12.5%
(1) Los Pelambres Concentrate
Pipeline (30%)
(2) Los Pelambres Desalination
Plant Expansion (40%)
(3) Centinela Second
Concentrator (30%)
Full completion of goals
(1) and (2) with an
environmental impact study
approved and under
construction.
(3) With progress in the range
(of 85% – 100%) of the
approved plan.
0%
0%
50%
100%
75%
100%
Environmental
and social
commitments
(1) Social
Management
Plan (40%)
12.5%
Greater than
50%
compliance
Greater than
75%
compliance
Greater than or equal
to 85% compliance1
0%
75%
100%
(2) Climate
change and
environment
(60%)
50%
compliance
75%
compliance
0%
75%
100%
One hundred per cent
(100%) compliance with the
emissions budget according to
the 2024 emissions reduction
target; overall reduction of one
million tonnes of Scope 1 and
Scope 2 CO2 emissions by
2024, compared to the
2021 level.
85 to 100% compliance with
the roadmap of the climate
change strategy and circular
economy strategy.
Score 75% + 100% compliance
with extreme, high and
moderate risk regulatory
requirements.
1. Compliance with initiatives in the Group’s social management plan, including initiatives existing as of 31 March 2022 and added before 31 December 2024, on time and within budget.
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.
160
Antofagasta plc Annual Report 2022
Corporate Governance 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 the grant.
Year of grant
Type of award
Date of grant
Number of awards
as at start of year
Vested during year
Lapsed during year
2020
2020
2021
2021
2022
2022
Performance
Awards
Restricted
Awards
Performance
Awards
Restricted
Awards
Performance
Awards
Restricted
Awards
27 Mar 20
105,295
N/A
27 Mar 20
30,084
15,042
29 Mar 21
29 Mar 21
39,442
16,905
29 Mar 22
52,686
29 Mar 22
22,578
N/A
5,635
N/A
0
0
0
0
0
0
0
Under award as at
31 December 2022
Vesting date
105,295
27 Mar 23
15,042
39,442
5,635
5,635
52,686
7,256
7,256
7,256
27 Mar 22
27 Mar 23
29 Mar 24
29 Mar 22
29 Mar 23
29 Mar 24
29 Mar 25
29 Mar 23
29 Mar 24
29 Mar 25
The performance conditions and face values at grant for the awards granted in 2020 and 2021 are set out in the annual reports for 2020 and 2021.
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 remuneration for the Group’s lead executive
Chairman – Jean-Paul Luksic ($000)
CEO – Diego Hernández ($000)
CEO – Iván Arriagada ($000)
Annual bonus pay-out (% of maximum)
LTIP pay-out (% of maximum)3
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%
2020
–
–
4,675
93%
99%
20214
–
–
4,134
72%
99%
2022
–
–
4,808
81%
100%
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’s remuneration from 1 September 2014. The Chairman was not eligible for variable remuneration, so the 2014 percentage figures 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’s 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 were vested to the CEO in 2016.
3. Restricted Awards do not have a performance element, so they are not included in these calculations.
4. 2021 figures have been restated to reflect actual 2021 outcomes, as explained in the CEO single-figure remuneration table on page 155.
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) have 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 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 160. Previously the Group used the EMIX Global Mining Index.
Indexed total shareholder returns
The following graph shows the value of £100 invested in Antofagasta on 31 December 2012 compared with £100 invested in the comparative indices.
200
150
100
50
0
Dec 12
Dec 13
Dec 14
Dec 15
Dec 16
Dec 17
Dec 18
Dec 19
Dec 20
Dec 21
Dec 22
Antofagasta
FTSE All-Share
Global X Copper Miners ETF
Antofagasta plc Annual Report 2022
161
/ 2022 Directors’ and CEO’s Remuneration Report continued
Change in remuneration of Directors and Employees
The table below sets out the percentage change 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
Fees/base
salary
2022
Benefits5
Annual
bonus
Fees/base
salary
N/A
-5%
0%
N/A
N/A
0%
N/A
-4% 1,054%
N/A
9%
N/A
9%
N/A
9%
N/A
452%
N/A
771%
N/A
–
N/A
–
N/A
–
218%
38.5%
2.2% -27.0%
-7.1%
1%
0%
2%
2%
2%
8%
10%
5%
10.4%
-10.3%
-5.8%4
-11.4%
1%
8%
7%
2%
0%
4%
6%
6%
9%
34%
N/A
28.3%
1.6%
7.2%
2021
Benefits5
15%
-87%
2%
-32%
-32%
-32%
-32%
-73%
–
–
N/A
51.5%
-0.3%
16.3%
Annual
bonus
Fees/base
salary
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-5.7%
19.7%
-10.6%
0%
0%
-4.3%
0%
0%
0%
0%
1%
1%
–
N/A
-8%
1.8%
-9.8%
2020
Benefits5
28%
-91%
17%
-64%
23%
-45%
-63%
-29%
-75%
–
N/A
-65%
19.9%
-10.1%
Annual
bonus
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
38.8%
7.5%
7%
1. The fee percentage change for Directors who served for only part of a comparator year has been annualised.
2. We do not consider this comparator group to be relevant, considering more than 99.9% of employees are not included. The parent Company, Antofagasta plc, has fewer than
ten employees. Reporting these figures is mandatory.
3. Mining division employees are considered a relevant comparator group, partly because the Mining division accounts for more than 97% of the Group’s revenue and partly because
the Annual Bonus Plan that applies to the Executive Committee is the same plan that applies to the Mining division employees at the management and professional levels.
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 due to the conclusion of collective bargaining agreements with labour unions.
4. Chilean employees are paid in chilean Pesos. In chilean pesos terms, the average base salary for mining division employees changed in a 8.2%. The figure reported in US dollars
is negative due to an increase in the Chilean peso/US dollar exchange rate, partially offset by an annual inflation adjustment in Chile.
5. There has been a small minor update to the methodology applied for reporting Directors’ benefits which has resulted in the restatement of the Directors’ benefits figures for 2020.
Directors’ benefits for 2020, 2021 and 2022 are all reported in accordance with footnote 3 at the Directors’ single figure of remuneration on page 159.
The relative importance of remuneration expenditure
The table below shows the total expenditure on employee remuneration, the distributions to shareholders and tax expenses in 2021 and 2022.
Employee remuneration1
Distributions to shareholders2
Taxation3
2022
$m
476.6
588.3
448.8
2021
$m
498.0
1,404.4
1,035.5
Percentage
change
-4.3%
-58.1%
-56.7%
1. Employee remuneration includes salaries and social security costs, as set out in Note 9B 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 13 to the financial statements.
3. Tax has been included because it shows the Group’s tax contribution, almost all of which is paid to the Chilean state by the Group’s operations in Chile. The tax expense represents
the current tax charge regarding corporate tax, mining tax (royalty) and withholding tax, as set out in Note 11 to the financial statements.
CEO pay ratio
Antofagasta has its main operations in Chile and has fewer than 10 employees in the UK. Consequently, whilst the Committee considers employee pay
as part of its decision making on Director and CEO pay, there is no requirement to disclose a CEO pay ratio.
162
Antofagasta plc Annual Report 2022
Corporate Governance Remuneration and Talent Management
Committee Report
Key responsibilities
• The Committee ensures that the Group’s remuneration arrangements support both the Group’s purpose and the effective implementation of its
strategy to enable the recruitment, motivation, reward and retention of talent.
• The Committee is responsible for setting remuneration for the Chairman, Directors and the CEO and 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 reviewing, assessing and implementing succession plans
for the Executive Committee.
• 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.
2022 Remuneration and Talent Management Committee activities
The critical matters considered by the Committee are set out in the table below:
Jan 22
Mar 22 (x2)
Aug 22
Oct 221
Nov 22
Directors’ and Executive Remuneration and Governance
2021 annual bonus and LTIP
2022 annual bonus and LTIP
Review of Remuneration Policy
Review of total shareholder return performance
Review of 2021 performance appraisal CEO
and Executive Committee individual performance
Directors’ Remuneration Report
Annual General Meeting season governance update
LTIP governance
Executive benefits
CEO and Executive Committee compensation benchmarks
Workforce, HR policies and talent management
Gender Pay Gap reporting
CEO to worker pay ratio
HR plan
Talent management and succession planning
Collective bargaining processes
Engagement survey results
2023 Mining division scorecard
1. The Committee held a stand-alone session to discuss the outcomes of Engagement survey.
Committee’s activities during the year
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Executive remuneration
40%
Director remuneration
Pay-related governance
Workforce
and HR policies
Talent management
and succession
7%
18%
30%
5%
Antofagasta plc Annual Report 2022
163
/ Remuneration and Talent Management Committee Report continued
In 2021, the Committee took note of the views of the workforce in
adjusting KPI weightings in the Annual Bonus Plan. It also oversaw the
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 the market practice
and considered the developing environment for talent and the needs of
the business before making proposals to the Committee across several
areas impacting the reward and talent proposition for employees. The
proposals sought to continue to maximise value, increase the overall
employee experience, and ensure that the Group remains a world-class
employer, attracting and retaining the best talent to succeed.
Consideration by the Directors of matters relating to Directors’
remuneration
During the year, the Committee reappointed Willis Towers Watson to
advise the Committee on remuneration issues. This reappointment was
based on the Committee’s satisfaction with 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 concerning these services. Willis Towers Watson’s fees
for this work were charged in accordance with time and materials and
amounted to £102,192. Willis Towers Watson also provided advice and
support to management during the year, primarily on general
remuneration issues, benchmarking, best HR practices and ad hoc
advice on topics such as equality and gender remuneration.
In determining that the advice received was independent, the Committee
took into account the fact that Willis Towers Watson is an independent
global professional services firm that adheres to the Code of Conduct for
Remuneration Consultants, to which it is a signatory. The Code of
Conduct can be found at www.remunerationconsultantsgroup.com.
During 2022, the Committee also received assistance from
the Chairman, Jean-Paul Luksic, the CEO, Iván Arriagada, the Vice
President of Human Resources, Georgeanne Barceló, and the
Company Secretary, Julian Anderson, 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.
Talent management and succession planning
Oversight of talent management and succession planning is integral to
the Committee’s responsibilities and directly relates to the Group’s ability
to achieve long-term sustainable success. The talent review is carried
out annually to update succession planning for key positions, identify
talent pools, define individual development plans and agree on
recruitment needs.
In recent years a new approach has been taken, prioritising employees’
overall experience and positioning the Group as a top-tier employer
capable of attracting and retaining top talent. Talent Management is
critical to ensuring the Group's ability to meet current and future
business demands by focusing on the attraction, retention and
development of high-potential individuals. This approach ensures the
continuous growth and success of the Company.
Engagement with colleagues
As explained in last year’s Annual Report, when the Committee reviews
the Directors’ and the CEO’s remuneration, it considers 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 broader pay policy. This 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 that of the CEO, seeking to drive the same
aligned culture, values and behaviours across the Group.
Approximately 80% of the Group’s employees are unionised, and the
number is close to 100% at the operator level. The Committee reviews
the 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 from shareholders and more general feedback from
employees on the Group’s pay policies, including 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 Antofagasta Minerals and Minera Antucoya and in July 2022 at
Centinela, Los Pelambres and Zaldívar. The results are shared with the
Committee and the Board. The Group also conducts ad hoc focused
surveys on specific issues, which in 2022 included surveys on New
Ways of Working, employee wellbeing, and diversity and inclusion.
The results of the surveys were also shared with the Committee
and the Board.
The Committee is regularly updated on workforce pay and benefits by
the senior management team, who consult with the workforce on issues
including the remuneration policy. The workforce receives regular
communications throughout the year on the Group’s performance
targets and incentive awards, while the senior management team
receives regular feedback on the performance of workforce roles and
regularly engages with employees to understand their views on
workforce remuneration policy and practices.
Directors visit Group operations throughout the year, individually
or in small groups, to listen directly to employees’ views on labour
issues, including remuneration, culture and values, as well as the
application of remuneration policy across the Group, including executive
pay. The Board's engagement with the workforce is detailed on pages
116 and 117.
Consequently, the Committee has multiple touchpoints with the
workforce for feedback on the Group’s workforce remuneration policy,
including 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. The Committee
meetings are focused on these subjects. Following each Committee
meeting, the Committee Chair reports a summary of matters considered
to the full Board.
The Committee receives regular feedback on safety performance,
community relations, the working environment, operations and critical
projects and ensures that the workforce remuneration policy (including
senior management and CEO) is fair and transparent, and its outcomes
reflect the desired culture and ensure alignment with the values and
behaviours of the organisation. 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 are applied to the whole workforce, including senior
management and the CEO.
164
Antofagasta plc Annual Report 2022
Corporate Governance / Implementation of the Directors’ and CEO’s remuneration policy in 2023
Implementation of the CEO’s
remuneration policy in 2023
Base salary
The CEO’s annual base salary will be $1,255,552 from 1 January 2023. This represents a 20% increase in his pay as at December 2022 and
represents a market and performance adjustment determined by the Committee. The Chilean peso/US dollar exchange rate will continue to be
monitored and may, if the Committee considers this appropriate, result in changes to pay during 2023.
Benefits
Benefits will be provided in line with the 2023 Policy.
Annual bonus for 2023
Assuming it is approved, the operation of the bonus for 2023 will be in line with the 2023 Policy submitted for approval at the 2023 AGM. Bonus
measures, weightings and targets have been updated for 2023 in response to a review of our strategic priorities for the forthcoming year.
The approach to calculating the targets and outcomes will reflect the 2022 bonus plan.
During 2023, in order to move towards a simpler and effective scorecard, corporate expenditure has been removed from the core business metrics
and the associated weight added to the EBITDA as the corporate expenditure directly impacts EBITDA. Also, as safety and health of our employees
is our top priority, we have added occupational hazards risks to our safety metrics.
The performance targets which are not commercially sensitive are set out below. The remaining targets will be disclosed retrospectively.
Measure
Core business
EBITDA1 – Mining division ($m)
Weighting
50%
15%
Threshold
(0% pay-out)
≤-10%
On-target
Maximum
(50% pay-out)
(100% pay-out)
The Group’s future metals price
assumptions are commercially sensitive,
therefore the target for EBITDA will not
be disclosed in advance. The Company
will reveal the 2023 target and outcome
in the 2023 Annual Report.
≥+10%
Copper production (kt)2
Cash costs before by-product credits ($/lb)3
Business development
Growth projects4
Exploration programmes5
Innovation and digital transformation projects6
Sustainability and organisational capabilities
Safety – Mining division7
People – Diversity and Inclusion Strategy8
Environmental performance9
Social performance10
22%
13%
25%
15%
5%
5%
25%
5%
5%
10%
5%
651.0
2.28
671.7-692.5
2.15
702.9
2.02
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, inflation rate, key input price deviations above 20%
and the impact of any one-off bonuses paid on the 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, inflation rate, key input price deviations above 20% and the impact of any one-off bonuses paid on conclusion
of labour negotiations.
4. Progress of growing projects according to predefined milestones. Split between Los Pelambres Expansion project (27%), Los Pelambres Desalination Plant Expansion, Concentrate
Pipeline and mine life expansion projects (13%), the Implementation of Zaldívar’s Business Continuity Strategy (27%) and the Centinela Second Concentrator Detailed Engineering
Project (33%).
5. Maximum and on-target are defined according to the progress of a planned exploration programme for one exploration target previously discovered to have potential mineralisation
and the consolidation of exploration ownership interests, including infill drilling campaigns and increasing the mineral resources inventory.
6. Split between compliance with Integrated Remote Operation Centres value levers KPIs for Centinela and Los Pelambres (50%) and Data Analytics Impact (measured as the
cumulative US dollar annual savings of all implemented data analytics projects) (50%).
7. Performance against targets for reducing high potential incidents (50%) and decrease in similar exposure group of occupational hazards (50%). This metric considers the Lost
Time Injury Frequency Rate (LTIFR) as a trigger if the LTIFR is higher than 1.
8. Performance against diversity and inclusion targets with the threshold at 20.6% female direct employees, on-target at 22% female direct employees and maximum at 23.1% female
direct employees and D&I Roadmap implementation. A 15% negative trigger applies if the overall target of 1% of people with disabilities is not met.
9. Split between environmental commitments (40%) and the implementation of the Group’s climate change roadmap (60%), this metric considers: Development of the Final Stage
of the Decarbonisation Plan of AMSA, Incorporation of the selected scenario in the 2022 Stage of the Decarbonisation Plan in the annual mining planning process, Goal definition
of Scope 3 emissions and Definition of the Offset (compensation) Strategy.
10. Compliance with critical initiatives and measurement of impact according to the defined social project portfolio.
Antofagasta plc Annual Report 2022
165
/ Implementation of the Directors' and CEO’s remuneration policy in 2023 continued
LTIP for 2023
The operation of the LTIP for 2023 will be in line with the Remuneration Policy:
• Restricted Awards (30% of the overall award) – vest one-third each year over a three-year period following the grant.
• Performance Awards (70% of the overall award) – awards subject to a three-year performance period with no subsequent holding period.
The Performance Awards measures, weightings and objectives are set out in the table below.
Weighting
Objective
Measure1
50%
Relative total shareholder
return
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
to the index and 100% vesting at performance 5% greater than the index during the three-year
period to the 2025 financial year’s end.
25%
Mineral resources increase
Maximum is 88.1 million tonnes of contained copper, with an on-target and a threshold of 86.2
and 83.6 million tonnes, respectively, as of 31 December 2025.
12.5%
Projects’ performance
The maximum is achievable if the Los Pelambres Concentrate Pipeline (20%) and Desalination Plant
Expansion (15%) and Centinela's Second Concentrator (45%) construction progress is 75% or more
of their approved plans and Zaldivar's Operational Continuity Solution (20%).
12.5%
Environmental
and social commitments
This KPI is made up of 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 of 31 March 2023 and added before 31 December 2025, on time, within budget and
impact evaluation, with an on-target at 75% and a 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
Decarbonisation Roadmap plan at 75%, the water efficiency target by 2025, 100% compliance
with the Circular Economy Strategy Roadmap and compliance with the internal plan to address
regulatory requirements.
1. The final LTIP 2023 scorecard measures will be approved after this report is published.
166
Antofagasta plc Annual Report 2022
Corporate Governance Implementation of the Directors’
remuneration policy in 2023
Chairman
Jean-Paul Luksic’s total fee for 2023 is $1,015,000, (2022 – $1,015,000) 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 reviewing
these fees from time to time, in accordance with the 2023 Policy.
Benefits that were reported for 2022 will continue to apply. Directors are not expected to receive any other remuneration in 2023.
The fees payable for Committee roles and the role of Senior Independent Director from January 2023 are set out below:
Additional Director fees payable from 1 January 2023
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
Votes for
Votes against
Votes cast as a percentage of issued share capital
Votes withheld
Additional fees
$
33,000
42,000
20,000
25,000
10,000
35,000
20,000
35,000
20,000
35,000
20,000
2021 Directors’ and CEO’s Annual Report on Remuneration
97.43%
1,059,688,617
2.57%
27,903,201
91.71%
5,663,353
Resolution to approve the 2020 Directors’ and CEO’s Remuneration Policy1
98.17%
1,062,750,494
1.83%
19,832,684
91.29%
16,811
1. Meeting dated at 16th March 2020. Results were at 20th May 2020 press release.
I hope this report demonstrates the importance that we place on the transparency of our decisions and how they are reached. I look forward to meeting
shareholders and answering questions at our AGM.
Francisca Castro
Chair of the Remuneration and Talent Management Committee
Antofagasta plc Annual Report 2022
167
/ Directors’ Report
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 118-120.
Post-balance sheet events
There have been no post-balance sheet events.
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 decreased from $3,477.1 million
in 2021 to $2,558.9 million in 2022.
The Board has recommended a final dividend of 50.5 cents per ordinary
share (2021 – 118.9 cents). An interim dividend of 9.2 cents was paid
on 30 September 2022 (2021 interim dividend – 23.6 cents). This gives
total dividends per share proposed in relation to 2022 of 59.7 cents
(2021 – 142.5 cents) equivalent to a total dividend amount of $588.3
million (2021 – $1,404.8 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 (2021 – $0.1 million).
Further information relating to dividends is set out in the Financial
Review on page 99 and in Note 13 to the financial statements.
Political contributions
The Group did not make any political donations during the year ended
31 December 2022 (2021 – 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 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.
168
Antofagasta plc Annual Report 2022
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 laws and
regulations (including 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. Except as permitted by the Company’s
remuneration policy, 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
2,000,000
5p
£1
96.10%
3.90%
Corporate Governance Authority to issue shares and authority to purchase own shares
At the AGM held on 11 May 2022, 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 10 May
2023. No shares have been issued pursuant to that authority 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.
Further special resolutions passed at the 2022 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 (representing 5% of its issued
ordinary share capital) without regard to the pre-emption provisions of
the Companies Act 2006 and for an additional aggregate nominal
amount of £2,464,641 (representing an additional 5% of its issued
ordinary share capital) in connection with the financing or refinancing
of an acquisition or specified capital investment. These authorities also
expire on the date of this year’s AGM. Since the 2022 AGM, the
Pre-Emption Group's Statement of Principles and the Investment
Association's guidance have been updated and permit companies to
each of these authorities for up to a 10% of its issued ordinary share
capital (plus, in each case, an additional 2% for the purposes of a
follow-on offer as described in the Pre-Emption Group's Statement
of Principles). Accordingly, the Directors will seek to renew these
authorities at the increased level in line with the Pre-Emption Group’s
Statement of Principles and the Investment Association’s guidance.
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 potential and actual conflict situations and decides
the steps, if any, which need to be taken to manage each situation.
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.
Substantial shareholdings
As at 31 December 2022, 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:
Shareholder
Metalinvest
Establishment
Kupferberg
Establishment
Aureberg Establishment
Ordinary share
capital
Preference
share capital
%
%
Total share
capital
%
50.72
94.12
58.04
9.94
4.26
–
–
8.27
3.54
The Company was also authorised by a shareholders’ resolution passed
at the 2022 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.
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 36 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
2022 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.
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 2022, are given in the Directors’ Remuneration Report.
No Director had any material interest in a contract of significance (other
than a service contract in respect of Ramón Jara – see page 159) with
the Company or any subsidiary of the 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.
Antofagasta plc Annual Report 2022
169
/ Directors’ Report continued
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 37.
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
40-73 of the Strategic Report and pages 102-171 of the Corporate
Governance Report.
Other statutory disclosures
The Corporate Governance Report on pages 102-171, the Statement
of Directors’ responsibilities on page 171 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
Annual Report
Pages 86-89
Page 37
Pages 74-85
Pages 48-50
Pages 61-62
Pages 61-62
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 15
to the financial statements.
See pages 142-167 and
Note 26 to the financial
statements.
Page 109
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
23 March 2023
170
Antofagasta plc Annual Report 2022
Corporate Governance / Statement of Directors’ responsibilities
Statement of Directors’ responsibilities
in respect of the financial statements
The Directors are responsible for preparing the Annual Report and Financial
Statements 2022 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
2022 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
• 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
23 March 2023
Tony Jensen
Senior Independent
Director
Antofagasta plc Annual Report 2022
171
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
174
181
182
182
183
184
185
234
172172
Antofagasta plc Annual Report 2022
Financial Statements Continuing to deliver
strong returns while
maintaining a robust
financial position.
Antofagasta plc Annual Report 2022
173
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 2022 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 as
applied in accordance with the provisions of the Companies Act 2006;
• the Parent Company financial statements have been properly
prepared in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards, including
FRS 101 “Reduced Disclosure Framework”, and applicable law); and
• the financial statements have been prepared in accordance with the
• We identified two components (2021: 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 (2021: three) where we concluded
that a full scope audit of the component financial information was
warranted.
• Taken together, the components at which audit work was performed
accounted for 97% of Group revenue.
• We also determined that specified procedures were necessary in
respect of certain balances within the corporate and other items
segment and transport division to ensure that we had sufficient
coverage from our audit work over each line of the Group’s financial
statements.
requirements of the Companies Act 2006.
Key audit matters
We have audited the financial statements, included within the Annual
Report and Financial Statements 2022 (the “Annual Report”), which
comprise: the consolidated and Parent Company balance sheets as at
31 December 2022; 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, in particular in respect of the Zaldivar
and Antucoya cash generating units (Group) and investments in
subsidiaries (Parent) (Group and Parent)
• The accounting for the disposal of the Group’s interest in the Reko Diq
project (Group)
Materiality
• Overall Group materiality: $112 million (2021: $108 million) based on
5% of the three year average of profit before tax adjusted for one-off
items.
• Overall Parent Company materiality: $20 million (2021: $26.5 million)
based on 1% of total assets.
• Performance materiality: $84 million (2021: $81 million) (Group) and
$15 million (2021: $19.875 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.
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.
The accounting for the disposal of the Group’s interest in the Reko Diq
project (Group) is a new key audit matter this year. The assessment of
indicators of impairment and impairment reversal was a key audit matter
in the prior year, albeit the specific areas of focus of our audit work
differed this year compared with last year.
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Antofagasta plc Annual Report 2022
Financial Statements Key audit matter
How our audit addressed the key audit matter
Assessment of indicators of impairment and impairment reversal for
property, plant and equipment, in particular in respect of the Zaldivar
and Antucoya cash generating units (Group) and investments in
subsidiaries (Parent) (Group and 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, in assessing
whether an indicator of impairment, or in respect of Antucoya,
impairment reversal, existed as at 31 December 2022 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 indicative estimates of movements in 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 2022 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 an area
which had a significant effect on our overall audit strategy and allocation
of resources in the planning for, and completion of, our audit. It was,
therefore, determined to be a key audit matter.
The financial statements set out the key elements of the judgements
made by the Directors, which include at Zaldivar that the ongoing
renewal of mining and water permits, currently due to expire in 2024
and 2025 respectively, will be successful.
Refer to notes 3 and 5 to the Group financial statements and the Audit
and Risk Committee’s views set out on pages 131 and 132.
As at 31 December 2022, the Parent Company holds investments in
subsidiaries amounting to $589.1 million (2021: $529.1 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 in
relation to the shares held in subsidiaries and, where triggers are
identified, to determine whether the recoverable amount is no lower
than the investment carrying value. Judgement is also required in
determining whether an expected credit loss should be recorded
against the long-term funding balances.
In assessing for impairment triggers, management considered whether
the underlying net assets of the investment support the carrying
amount, the nature of the underlying assets and whether other facts
and circumstances could also be indicative of a trigger. For the loan
balances, management 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 by
the Directors at the balance sheet date, and no expected credit loss on
the long-term funding balances was recognised.
Refer to notes 3 and 5 to the Parent Company’s financial statements.
We assessed the Directors’ conclusion that there were no indicators of
impairment or impairment reversal as at 31 December 2022.
Our procedures included evaluating management’s trigger assessment,
including its completeness by reference to both internal and external
factors, including but not limited to operational performance in the year,
potential changes in the Chilean mining royalty regime, macroeconomic
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 the case of Zaldivar, we also assessed the latest
developments in respect of the permit applications.
As well as considering whether any qualitative indicators of impairment
existed, 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.
In respect of investments in subsidiaries in the Parent Company, we
evaluated and challenged management’s assessment and judgements
in relation to the identification of impairment triggers; 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 in the Parent Company of
investments in subsidiaries; and evaluated the ability of the subsidiaries
to repay the loan balances.
As a result of our work, we were satisfied that the carrying value of
the Parent Company’s investments in subsidiaries is appropriate as at
31 December 2022.
Antofagasta plc Annual Report 2022
175
/ Independent auditors’ report to the members of Antofagasta plc continued
Key audit matter
How our audit addressed the key audit matter
The accounting for the disposal of the Group’s interest in the Reko Diq
project (Group)
On 15 December 2022 Antofagasta entered into definitive agreements
to exit its interest in the Tethyan joint venture. The Directors determined
that, as a result of the agreements, the Group no longer has joint
control of the joint venture and has, therefore, derecognised its
investment and recognised a gain on disposal of $944.7 million,
representing the proceeds of the divestment net of related adjustments.
The Directors have applied judgement in determining that, under the
agreements, the Group no longer has joint control of the Tethyan joint
venture and has an unconditional right to receive the proceeds of the
sale, currently held by Atacama. Judgement has also been applied in
estimating the probability of the sales proceeds being subject to
Australian tax.
As this is an area which had a significant effect on our overall audit
strategy and the allocation of resources in the planning for, and
completion of, our audit, this was determined to be a key audit matter.
Refer to notes 3 and 17 to the Group financial statements and the Audit
and Risk Committee’s views set out on page 132.
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 they operate.
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 offices in Chile, and
specific financial statement 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
176
Antofagasta plc Annual Report 2022
We assessed management’s analysis of the accounting for the definitive
agreements and considered potential alternative interpretations. We read
the definitive agreements and confirmed that the contractual
arrangements supported the Directors’ judgements.
We read the tax advice obtained by management in respect of the
transaction, and have assessed the independence, competence and
objectivity of management’s external tax experts. We also engaged our
internal tax experts to review the advice to help us assess the
appropriateness of management’s estimate in respect of tax.
We read the related disclosures in respect of the transaction in note 17 to
the Group financial statements and in respect of the significant estimation
uncertainty in note 3.
We identified no material issues as a result of our work.
statements. The Group engagement team also performed procedures in
respect of the gain on disposal of the investment in the Tethyan joint
venture. 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. 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 meetings, review of component auditor workpapers
and participation in audit clearance meetings. In most cases
communication was performed through video conferencing. However,
members of the Group team also visited Chile on multiple occasions
during the audit. The Group team also reviewed the component auditor
working papers and reviewed other communications dealing with
significant accounting and auditing issues.
Taken together, the components where we performed our audit work
accounted for 97% of consolidated revenue, 94% of consolidated profit
before tax and 92% of consolidated profit before tax adjusted for one-off
items. This was before considering the contribution to our audit evidence
from performing additional audit work at the Group level, including
disaggregated analytical review procedures, which covers 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.
Financial Statements The impact of climate risk on our audit
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, which
management has confirmed it has now achieved, and, in the long-term,
to achieve carbon neutrality.
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
$112 million (2021: $108 million).
Financial statements – Parent Company
$20 million (2021: $26.5 million).
5% of the three year average of profit before tax adjusted for
one-off items
1% of total assets
For the Parent Company materiality, we determined our
materiality based on total assets, which is more relevant
than a performance-related measure as the company is an
investment holding company for the Group.
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 $112 million, which equates to 6.9% of the
current year’s profit before tax adjusted for one-off items.
Antofagasta plc Annual Report 2022
177
/ Independent auditors’ report to the members of Antofagasta plc continued
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. 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 2022 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’s remuneration report
to be audited has been properly prepared in accordance with the
Companies Act 2006.
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 $10 million and
$96 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% (2021: 75%) of overall materiality,
amounting to $84 million (2021: $81 million) for the Group financial
statements and $15 million (2021: $19.875 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 $5.6 million (Group
audit) (2021: $5.4 million) and $1 million (Parent Company audit) (2021:
$1.3 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; 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.
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.
178
Antofagasta plc Annual Report 2022
Financial Statements 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.
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 and Parent Company 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.
Antofagasta plc Annual Report 2022
179
/ Independent auditors’ report to the members of Antofagasta plc continued
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 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 and the Head of Internal Audit, regarding their consideration of
known or suspected instances of non-compliance with laws and
regulation;
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
• Obtaining legal letters from the Group’s external legal advisers in
respect of litigation and claims and other such matters, where
considered necessary;
• the Parent Company financial statements and the part of the
Directors’ and CEO’s remuneration report to be audited are not in
agreement with the accounting records and returns.
• Evaluation of the design of management’s controls intended to prevent
and detect irregularities, in particular their anti-bribery controls;
• 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.
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 eight
years, covering the years ended 31 December 2015 to
31 December 2022.
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
23 March 2023
180
Antofagasta plc Annual Report 2022
Financial Statements
/ Financial statements
Consolidated income statement
For the year ended 31 December 2022
Group revenue
Total operating costs
Operating profit from subsidiaries
Net share of results from associates and joint ventures
Gain on disposal of investment in joint venture
Operating profit from subsidiaries, and total profit
from associates and joint ventures
Investment income
Interest expense
Other finance items
Net finance (expense)/income
Profit before tax
Income tax expense
Profit from continuing operations
Profit for the year
Attributable to:
Non-controlling interests
Owners of the parent
Excluding
exceptional
items
2022
$m
5,862.0
(4,227.7)
1,634.3
48.1
–
1,682.4
40.2
(78.6)
(29.8)
(68.2)
1,614.2
(603.6)
1,010.6
1,010.6
Exceptional
Items
2022
$m
2022
$m
–
–
5,862.0
(4,227.7)
–
–
944.7
944.7
–
–
–
–
944.7
–
944.7
944.7
1,634.3
48.1
944.7
2,627.1
40.2
(78.6)
(29.8)
(68.2)
2,558.9
(603.6)
1,955.3
1,955.3
Excluding
exceptional
items
2021
$m
7,470.1
(3,891.1)
3,579.0
59.7
–
3,638.7
5.0
(63.4)
74.4
16.0
3,654.7
(1,332.9)
2,321.8
2,321.8
Exceptional
Items
2021
$m
–
(177.6)
(177.6)
–
–
(177.6)
–
–
–
–
(177.6)
90.6
(87.0)
(87.0)
2021
$m
7,470.1
(4,068.7)
3,401.4
59.7
–
3,461.1
5.0
(63.4)
74.4
16.0
3,477.1
(1,242.3)
2,234.8
2,234.8
422.3
588.3
–
944.7
422.3
1,533.0
917.4
1,404.4
27.2
(114.2)
944.6
1,290.2
Note(s)
7
8
18
8
10
11
31
12
Basic earnings per share
From continuing operations
US cents
US cents
US cents
US cents
US cents
US cents
12
59.7
95.8
155.5
142.5
(11.6)
130.9
Antofagasta plc Annual Report 2022
antofagasta.co.uk
181
181
/ Financial statements continued
Consolidated statement of
comprehensive income
For the year ended 31 December 2022
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 (losses)/gains on defined benefit plans
Gains/(losses) 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
Total comprehensive income for the year
Attributable to:
Non-controlling interests
Owners of the parent
Total comprehensive income for the year - continuing operations
Consolidated Statement
of Changes in Equity
For the year ended 31 December 2022
Note(s)
2022
$m
2021
$m
1,955.3
2,234.8
–
–
(0.4)
–
(0.4)
(18.1)
15.8
5.7
3.4
(90.9)
126.8
(1.6)
(4.4)
29.9
3.1
(2.1)
(2.5)
(1.5)
3.0
1,958.3
28.4
2,263.2
27
19
31
418.1
1,540.2
952.8
1,310.4
2022
$m
1,958.3
1,958.3
2021
$m
2,263.2
2,263.2
At 1 January 2021
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Dividends
At 31 December 2021
Profit for the year
Other comprehensive income/(expense) for the year
Total comprehensive income for the year
Dividends
Share
premium
$m
Other reserves
(Note 30)
$m
Retained
earnings
(Note 30)
$m
Equity
attributable
to owners of
the parent
$m
Non-
controlling
interests
$m
Total
equity
$m
199.2
(30.6)
7,492.2
7,750.6
2,330.5
10,081.1
–
–
–
–
199.2
–
–
–
–
–
20.2
20.2
–
(10.4)
–
15.4
15.4
–
1,290.2
–
1,290.2
(710.8)
8,071.6
1,533.0
(8.2)
1,524.8
(1,262.9)
1,290.2
20.2
1,310.4
(710.8)
8,350.2
1,533.0
7.2
1,540.2
(1,262.9)
944.6
8.2
952.8
(604.5)
2,678.8
422.3
(4.2)
418.1
(80.0)
2,234.8
28.4
2,263.2
(1,315.3)
11,029.0
1,955.3
3.0
1,958.3
(1,342.9)
Share
capital
$m
89.8
–
–
–
–
89.8
–
–
–
–
At 31 December 2022
89.8
199.2
5.0
8,333.5
8,627.5
3,016.9
11,644.4
182
182
Antofagasta plc Annual Report 2022
Antofagasta Annual Report 2022
Financial Statements
Consolidated Balance sheet
As at 31 December 2022
Non-current assets
Intangible assets
Property, plant and equipment
Other non-current assets
Inventories
Investment in associates and joint ventures
Trade and other receivables
Equity investments
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Current tax assets
Liquid investments
Cash and cash equivalents
Total assets
Current liabilities
Short-term borrowings and other financial liabilities
Trade and other payables
Short-term decommissioning and restoration provisions
Current tax liabilities
Non-current liabilities
Medium and long-term borrowings and other financial liabilities
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 owners of the parent
Non-controlling interests
Total equity
Note(s)
2022
$m
2021
$m
14
15
20
18
21
19
28
20
21
22
22
23
24
29
23
24
18
27
29
28
30
30
30
30
31
–
11,543.5
1.1
347.0
904.6
51.0
90.5
78.5
13,016.2
708.1
2,087.2
35.6
1,580.8
810.4
5,222.1
18,238.3
(432.5)
(1,079.7)
(33.2)
(60.4)
(1,605.8)
(2,844.5)
(8.0)
–
(137.3)
(455.0)
(1,543.3)
(4,988.1)
(6,593.9)
11,644.4
89.8
199.2
5.0
8,333.5
8,627.5
3,016.9
11,644.4
–
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
The financial statements on pages 181 to 233 were approved by the Board of Directors on 23 March 2023 and signed on its behalf by
Jean-Paul Luksic Tony Jensen
Chairman
Senior Independent Director
Antofagasta plc Annual Report 2022
antofagasta.co.uk
183
183
/ Financial statements continued
Consolidated Cash Flow Statement
For the year ended 31 December 2022
Note(s)
32
18
18
19
22
13
13
31
32
32
32
32
32
22,32
2022
$m
2,738.3
(74.3)
(787.1)
1,876.9
–
50.0
–
(66.5)
0.2
(1,879.2)
1,388.9
29.1
(477.5)
(1,262.9)
(0.1)
(80.0)
865.9
(751.3)
(105.4)
(1,333.8)
65.6
743.4
65.6
1.4
810.4
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
Cash flow from continuing operations
Interest paid
Income tax paid
Net cash from operating activities
Investing activities
Capital contributions to associates and joint ventures
Dividends from associates and joint ventures
Acquisition of mining properties
Acquisition of equity investments
Proceeds from sale of property, plant and equipment
Purchases of property, plant and equipment
Net decrease/(increase) in liquid investments
Interest received
Net cash used in investing activities
Financing activities
Dividends paid to owners of the parent
Dividends paid to preference shareholders of the Company
Dividends paid to non-controlling interests
Proceeds from issue of new borrowings
Repayments of borrowings
Principal elements of lease payments
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Net increase/(decrease) in cash and cash equivalents
Effect of foreign exchange rate changes
Cash and cash equivalents at end of the year
184
184
Antofagasta plc Annual Report 2022
Antofagasta Annual Report 2022
Financial Statements
Notes to the financial statements
1 Basis of preparation
The consolidated financial statements of the Antofagasta plc Group have
been prepared in accordance with UK adopted international accounting
standards and with the requirements of the Companies Act 2006 as
applicable to companies reporting under those standards. The financial
statements have been prepared on the going concern basis.
Going concern
The Directors have assessed the going concern status of the Group,
considering the period to 31 December 2024.
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 2022, with combined
cash, cash equivalents and liquid investments of $2,391.2 million. Total
borrowings were $3,277.0 million, resulting in a net debt position of
$885.8 million. Of the total borrowings, only 13% is repayable within one
year, and 17% 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,
including depreciation, deferred stripping and closure provisions. 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 standalone impact of each of:
• A significant deterioration in the future copper price forecasts by 20%
throughout the going concern period.
• An even more pronounced short-term reduction of 50 c/lb in the
copper price for a period of three months, in addition to the above
deterioration of 20% in the copper price throughout the review period.
• The potential impact of the Group’s most significant individual
operational risks.
• A shut-down of any one of the Group’s operations for a period of
three months.
• Potential changes to the Chilean mining royalty, taking into account the
Group’s existing tax stability agreements.
The stability of tailings storage facilities represents a potentially significant
operational risk for mining operations globally. The Group’s tailings
storage facilities are designed to international standards, constructed
using downstream methods, subject to rigorous monitoring and
reporting, and reviewed regularly by an international panel of
independent experts. Given these standards of design, development,
operations and review, the impact of a potential tailings dam failure has
not been included in the sensitivity analysis.
The above downside sensitivity analyses indicated results which could be
managed in the normal course of business, including the aggregate
impact of a number of the above sensitivities occurring at the same time.
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 2024.
The Directors therefore consider it appropriate to adopt the going
concern basis of accounting in preparing the 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:
• Property, Plant and Equipment – Proceeds before Intended Use
(Amendments to IAS 16)
• 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)
• Reference to the Conceptual Framework (Amendments to IFRS 3)
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.
The amendment to IAS 16 Property, Plant and Equipment – Proceeds
before intended use may have significant impacts for the Group in future
periods. Previously, the Group has deducted 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 now 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. There were no relevant projects impacted by the
amendment during 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.
Antofagasta plc Annual Report 2022
antofagasta.co.uk
185
185
/ Notes to the financial statements continued
1 Basis of preparation continued
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. It is
expected that where applicable, these standards and amendments will be
adopted on each respective effective date (after 1 January, 2023). None
of these standards are expected to have a significant impact on the
Group.
• IFRS 17, Insurance Contracts
• Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (Amendments to IAS 12)
• Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS
Practice Statement 2
• Definition of Accounting Estimates – Amendments to IAS 8
The following standards are effective after 1 January, 2024 (and subject
to UK endorsement):
• Classification of Liabilities as Current or Non-Current (Amendments to
IAS 1)
• Lease Liability in a Sale and Leaseback (Amendments to IFRS16)
• Non-current Liabilities with Covenants (Amendments to IAS 1)
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
intercompany 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.
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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.
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 of which two or more parties
have joint control. Joint arrangements are accounted for 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.
Financial Statements
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 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. In these cases the customer
still gains control over the material when it has been loaded at the port of
loading, and so that remains the point of revenue recognition for the sale
of material; however, 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.
Interest received is recognised within investing activities in the
consolidated cash flow statement.
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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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.
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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.
Interest on borrowings related to the construction or development of
projects is capitalised as part of the cost of the asset. To the extent that
borrowings have been put in place specifically to fund the construction of
the asset, the capitalised amount will reflect the actual interest costs
incurred on that borrowing. If the construction is funded out of general
borrowings, the capitalised interest expense will be calculated based on
the entity’s weighted average interest rate, applied to the expenditure on
the asset (with the capitalised interest amount not exceeding the entity’s
total borrowing cost for the period). The interest costs are 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.
Financial Statements
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 hours of equipment usage, 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 15).
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 typically includes milling and concentrating,
resulting 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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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
Obligations to incur decommissioning and restoration costs can arise as
a result of the development or ongoing operation of a mining property.
Costs are estimated on the basis of a formal closure plan and are subject
to regular formal review.
Decommissioning obligations arising from the construction of property,
plant and equipment (including installation of plant and site preparation
work) are provided for at their net present value as the construction of
the asset gives rise to the obligation, and included within the property,
plant and equipment cost. These decommissioning costs are charged
against profit or loss over the life of the mine, through depreciation of the
property, plant and equipment balance (recorded within operating
expenses). The unwinding of the discount on the provision is recorded
within other finance items. Changes in the measurement of a
decommissioning provision are added to, or deducted from, the property,
plant and equipment balance in the current year.
Restoration obligations, arising from ongoing operating activities, are
provided for at their net present values and charged against operating
expenses as the obligation arises. Changes in the measurement of a
restoration provision which, relate to a change in the estimate of the
closure costs or a change in the discount rate, are charged against
operating expenses, and changes relating to 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.
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Financial Statements
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, with the fair value movements recorded within investment income.
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.
Interest paid is recognised within operating activities in the
consolidated cash flow statement.
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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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 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
2022 year-end, and accordingly no impairment tests have been
performed. However, whether or not an impairment indicator exists
is a critical judgement, in particular as at 31 December 2022 for
Zaldívar (given the ongoing permitting process and the other factors
set out in note 5) and at Antucoya (given the impairments
recognised in 2012 and 2016 and, therefore, the sensitivity of the
asset’s value to movements in macroeconomic assumptions and
other developments)
(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 2022, $231 million (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.
B) Estimates
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.
/ 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.
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Financial Statements
(i) Deferred tax liabilities in respect of undistributed earnings of
subsidiaries
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 2022 deferred withholding tax liabilities of $71.6 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
$6,430.4 million (31 December 2021 – $6,483.3 million). 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
$1,076.5 million (31 December 2021 – $1,232.1 million), depending
on the application of tax credits which may be available in particular
circumstances.
(ii) Disposal of investment in Tethyan joint venture
On 15 December 2022, Antofagasta entered into definitive
agreements to exit its interest in the Tethyan joint venture. As a
result of those agreements:
• the Reko Diq project in Pakistan (the “Project”) was reconstituted in
Reko Diq Mining Company (Private Limited) ("RDMC"). RDMC is the
Pakistani registered subsidiary of Tethyan Copper Company Pty
Limited ("TCC"), which is itself the Australian registered subsidiary of
Atacama Copper Pty Limited (“Atacama”), the joint venture company
registered in Australia and owned equally by the Company and Barrick
Gold Corporation ("Barrick");
• a consortium of various Pakistani state-owned enterprises acquired
shares in RDMC which holds the Project (the "Sale"); and
• as the International Centre for Settlement of Investment Disputes
("ICSID") award (to TCC) was resolved by reconstituting the Project,
TCC no longer has any rights or claims against the Governments of
Pakistan and Balochistan arising from the suspension of the Project in
2011.
The proceeds of the Sale which, together with accrued interest up
to 15 December 2022 totalled US$946.0 million, are currently held
by Atacama in a segregated interest-bearing account. Antofagasta
and Barrick have agreed that the proceeds of this account, including
all further interest received, less any Australian tax arising, will be
distributed to the Antofagasta Group during 2023, on a date to be
determined by Antofagasta. Atacama is seeking a binding private
ruling to confirm that the Sale proceeds and their distribution to the
Antofagasta Group will not be subject to Australian tax. The
Australian corporate tax rate is 30%. Although Antofagasta will
retain its shareholding in Atacama until the proceeds have been
distributed, it no longer has any appointees on the board of the joint
venture, is not entitled to exercise voting rights in Atacama, and is
not required to provide any funding to, or permitted to receive any
distributions from, Atacama other than the Sale proceeds.
Antofagasta has therefore ceased to have an economic interest in
Atacama and its subsidiaries as of 15 December 2022 other than
being entitled from that date to receive an amount equal to the Sale
proceeds and related interest less any Australian tax arising
(whether before or after the distribution). Accordingly, Antofagasta
has recognised a gain on disposal of its investment in the joint
venture as at 15 December 2022 of $944.7 million, reflecting the
estimate of the Sale proceeds and related interest, working capital
and other adjustments and the carrying value of the investment at
that date. A receivable balance of $943.3 million in respect of the
estimated proceeds due to Antofagasta has been recognised within
Trade and other receivables in the balance sheet.
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 2022 was $751.9 million.
If the copper spot price at 31 December 2022 (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 $130 million (on a 50%
attributable basis) at 31 December 2022. 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 $13
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.
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/ Notes to the financial statements continued
3 Critical accounting judgements and key
sources of estimation uncertainty continued
Other items of property, plant and equipment are depreciated over
their useful economic lives, on a unit of production basis, in
proportion to the volume of ore/material processed or hours of
equipment usage, or on a straight-line basis. Management reviews
the appropriateness of useful economic lives at least annually and,
again, any changes could affect prospective depreciation rates and
asset carrying values.
The operation with the most significant depreciation expense is
Centinela, with a depreciation expense of $710 million in 2022,
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 $71 million on the annual
depreciation charge.
(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 2022 was $488.2 million. As a simple high-level
sensitivity, a 10% increase in the forecast closure costs would
increase the provision balance by approximately $49 million, the
capitalised decommissioning costs asset within property, plant and
equipment by approximately $17 million and the ongoing annual
operating expenses by approximately $2 million.
(iv) Deferred tax assets in respect of tax losses
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 typically
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 $78.5 million of net
deferred tax assets as at 31 December 2022, relating to tax losses,
provisions and short-term timing differences. The deferred tax
position includes $79.7 million (2021 – $90.6 million) of deferred tax
assets in respect of tax losses available for offset against future
profits. These losses may be carried forward indefinitely.
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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.
2022 – Disposal of investment in Tethyan joint venture
On 15 December 2022, Antofagasta entered into definitive agreements to
exit its interest in the Tethyan joint venture. As a result, Antofagasta has
recognised a gain on disposal of its investment in the joint venture as at
15 December 2022 of $944.7 million. Full details of the agreements and
gain on disposal are set out in Note 17.
nickel and
2021 – Impairment of Twin Metals’ assets
Twin Metals Minnesota (“Twin Metals”) is a wholly owned copper,
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, 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 2021 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 was 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, reflecting the improved actual and forecast
profitability of the relevant Group entity (Antucoya).
Financial Statements
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$850/$1 has been used in the models considered as part of the
impairment indicator assessment. This compares with the long-term
exchange rate of CH$770/$1 used in 2021. As an additional down-side
sensitivity an indicative valuation was prepared with a 10% stronger
long-term Chilean peso exchange rate assumption. Los Pelambres and
Centinela still showed positive headroom in this alternative down-side
scenario. However, the Antucoya valuation indicated a potential deficit of
$140 million and the Zaldívar valuation indicated a potential deficit of $100
million (on a 50% basis). As noted above, historically there has often
been a correlation between movements in the copper price and the US
dollar/Chilean peso exchange rate, and so a strengthening of the Chilean
peso may often reflect a stronger copper price environment, which could
mitigate the impact of a stronger exchange rate.
Climate risks
The models incorporate estimates of the potential future costs relating to
climate risks. The Group discloses in line with the recommendations of
the Task Force on Climate-related Financial Disclosures (“TCFD”). This
process includes scenario analyses assessing the potential future impact
of transition and physical risks. The combined estimate of the potential
costs of the transition risk and physical risk scenarios, have been
incorporated into the models.
Chilean mining royalty
We have considered potential changes to the Chilean mining royalty
(taking into account the Group’s existing tax stability agreements) as part
of the impairment indicator assessment.
Other relevant assumptions
In addition to the impact of the future copper price the US dollar/Chilean
peso exchange rate, climate risks and the potential changes in the
Chilean royalty regime, the models used in the impairment indicator
assessment are sensitive to the assumptions in respect of future
production levels, operating costs, sustaining and development capital
expenditure, and the discount rate used to determine the present value of
the future cash flows.
A real post-tax discount rate of 8% (calculated using relevant market
data) has been used in determining the present value of the changes in
forecast future cash flows from the assets as part of the quantitative
analysis performed as part of the overall impairment indicator
assessment.
5 Asset sensitivities
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 2022 year-end, and accordingly no impairment
tests have been performed. The impairment indicator assessment
included consideration of the potential indicators set out in IAS 36,
‘Impairment of Assets’, which included quantitative analysis based on the
operations’ life-of-mine models as adjusted for certain assumptions
(including potential future development opportunities) (“the models”).
These models provide indicative valuations and do not represent, or
comply with, a formal impairment assessment prepared in accordance
with IAS 36. Sensitivity analyses have been performed on the models to
quantify the impact of changes in assumptions to which the models are
most sensitive and to support the overall impairment indicator
assessment.
As noted above, no qualitative indicators of potential impairment or
potential reversal of impairment were identified. Similarly, no quantitative
indicators of impairment were identified, with the models used within the
impairment indicator assessment continuing to indicate positive
headroom for all of the Group’s mining operations, including the Zaldivar
joint venture, with the indicated value of the assets in excess of their
carrying value.
Relevant aspects of this process are detailed below:
Copper price outlook
The assumption to which the value of the assets is most sensitive is the
future long-term 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 $3.50/lb (reflecting 2022
real terms) has been used in the models used in the impairment indicator
assessment, which has increased from $3.30/lb (reflecting 2021 real
terms) at the prior year-end. As an additional down-side sensitivity an
indicative valuation (based on the models) was performed with a long-
term copper price of $3.15/lb, reflecting a 10% reduction in the long-term
price forecast. Los Pelambres and Centinela still showed positive
headroom in their models in this alternative down-side scenario.
However, the Antucoya valuation indicated a potential deficit of $400
million and the Zaldívar valuation indicated a potential deficit of $170
million (on a 50% basis). This was a simple sensitivity exercise, looking at
an illustrative change in the forecast long-term copper price in isolation.
In reality, a deterioration in the long-term copper price environment is
likely to result in corresponding improvements in a range of input cost
factors. In particular, given that copper exports account for over 50% of
Chile’s exports, historically there has often been a correlation between
movements in the copper price and the US dollar/Chilean peso exchange
rate, and a decrease in the copper price may therefore result in a
weakening of the Chilean peso, with a resulting reduction in the Group’s
operating costs and capital expenditure in US$ terms. 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.
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/ Notes to the financial statements continued
5 Asset sensitivities continued
In the case of Zaldívar, in addition to the assumptions made in respect of
the factors outlined above, the conclusion that there are no impairment
indicators reflects certain assumptions about future operational
considerations to which the model considered as part of the impairment
indicator assessment is sensitive, in particular the following:
• Zaldívar submitted an Environmental Impact Assessment (EIA) in 2018
which included an application to extend its water extraction and mining
permits to 2029 (with decreasing activity levels in 2030-2031).
Currently, Zaldívar is permitted to extract water and mine into 2025
and 2024, respectively. To ensure the continuity of the operation, in
March 2023 Zaldívar submitted a DIA (Declaration of Environmental
Impact), a more limited scope and simplified procedure than an EIA,
requesting that the mining permit be extended from 2024 to 2025 so
as to expire at the same date as the current water permit. At the same
time Zaldívar withdrew the 2018 EIA application. It is expected that an
alternative and updated EIA application to extend the water and mining
permits beyond 2025 will be submitted which will also include a plan
for a transition from the current continental water source on
completion of the extended water permit, to either procuring water
from a third party or using raw sea water. The impairment indicator
assessment assumes that the mining permit will be extended to cover
the full period of the model, and the water permit can be extended, or
reasonable alternative arrangements for securing water to enable the
continued operation of the mine without interruption can be
implemented. However, if this is not the case, this is likely to be
considered an indicator of a potential impairment, requiring an IAS 36
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 (a road,
railway, power line and pipelines). The impairment indicator
assessment 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.
The carrying value of the Group’s investment in joint venture balance in
respect of Zaldívar as at 31 December 2022 was $897.3 million.
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 2022, 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.
Indicators of potential reversal of previous impairments
Antucoya recognised impairments totalling $716 million in 2012 and
2016. Of the original impairment amounts, approximately $434 million
remains in effect unamortised as at 31 December 2022. Based on an
assessment of both qualitative and quantitative factors, there were no
indicators of a potential reversal of these previous impairments at the
2022 year-end. As noted above, the indicative valuation exercise for
Antucoya at the 2022 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 $400 million; the sensitivity using a
10% stronger long-term Chilean peso exchange rate assumption
indicated a potential deficit of $140 million. Given this marginal headroom
position, reasonably possible changes in the general market environment
or the regulatory and taxation environment in Chile could result in a
potential deficit position for Antucoya and hence it was concluded that
there was no impairment reversal trigger as at 31 December 2022.
6 Segment information
The Group’s reportable segments, which are the same as its operating
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 containing gold
and silver as a by-product, and molybdenum concentrate. 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.
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Financial Statements
A) Segment revenues and results
For the year ended 31 December 2022
Revenue
Operating cost excluding depreciation and loss
on disposals
Depreciation
Loss on disposals
Operating profit/(loss)
Net share of results from associates and joint
ventures
Gain on disposal of investment in joint ventures3
Total profit from operations, associates and
joint ventures
Investment income
Interest expense
Other finance items
Profit/(loss) before tax
Tax
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
2,558.9
2,406.2
703.5
(1,086.1)
(276.1)
(0.5)
1,196.2
(1,249.0)
(710.2)
(1.0)
446.0
(442.3)
(105.6)
–
155.6
–
–
1,196.2
10.7
(3.3)
(5.2)
1,198.4
(371.8)
826.6
319.3
–
–
446.0
6.6
(10.6)
(11.3)
430.7
(130.8)
299.9
82.9
507.3
217.0
1,472.8
1,157.2
–
–
155.6
2.4
(19.9)
(6.6)
131.5
(34.9)
96.6
21.2
75.4
261.2
–
–
–
–
–
47.3
–
47.3
–
–
–
47.3
–
47.3
–
47.3
147.2
Exploration
and
evaluation2
$m
Corporate
and other
items
$m
Mining
$m
Transport
division
$m
Total
$m
–
–
5,668.6
193.4
5,862.0
(113.0)
–
–
(113.0)
(75.0)
(18.7)
(0.6)
(94.3)
(2,965.4)
(1,110.6)
(2.1)
1,590.5
(119.1)
(30.5)
–
43.8
(3,084.5)
(1,141.1)
(2.1)
1,634.3
–
–
(0.7)
944.7
46.6
944.7
1.5
–
48.1
944.7
(113.0)
–
–
–
(113.0)
–
(113.0)
–
(113.0)
(113.0)
849.7
19.8
(44.2)
(5.0)
820.3
(50.8)
769.5
(1,1)
2,581.8
39.5
(78.0)
(28.1)
2,515.2
(588.3)
1,926.9
422.3
45.3
0.7
(0.6)
(1.7)
43.7
(15.3)
28.4
–
2,627.1
40.2
(78.6)
(29.8)
2,558.9
(603.6)
1,955.3
422.3
770.6
1,504.6
(75.7)
2,849.7
28.4
80.0
1,533.0
2,929.7
965.2
889.0
75.1
–
0.5
16.4
1,946.2
55.8
2,002.0
6,786.6
–
(3,155.0)
5,922.8
–
(1,565.1)
1,708.0
–
(558.1)
–
897.3
–
–
–
–
2,504.1
–
(1,225.8)
16,921.5
897.3
(6,504.0)
412.2
7.3
(89.9)
17,333.7
904.6
(6,593.9)
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 238).
2. Operating cash outflow in the exploration and evaluation segment was $98.3 million.
3. An exceptional gain of $944.7 million has been recognised in respect of the Group’s disposal of its investment in the Tethyan joint venture (see notes 3, 4 and 17)
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197
/ Notes to the Financial statements continued
6 Segment information continued
For the year ended 31 December 2021
Los
Pelambres
$m
Centinela
$m
Antucoya
$m
Zaldívar
$m
Revenue
Operating cost excluding depreciation and loss
on disposals
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
3,621.0
2,981.3
697.8
(1,095.0)
(281.8)
(3.7)
–
2,240.5
(1,062.0)
(654.7)
(4.0)
–
1,260.6
–
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
928.3
2,526.0
637.6
1,919.3
(360.7)
(98.3)
(0.5)
–
238.3
–
0.3
(15.5)
4.9
228.0
(7.1)
90.6
311.5
84.4
227.1
337.1
Exploration
and
evaluation2
$m
Corporate
and other
items
$m
Mining
$m
Transport
division
$m
Total
$m
–
–
7,300.1
170.0
7,470.1
(103.2)
–
–
(177.6)
(280.8)
–
–
–
–
(280.8)
–
–
(280.8)
–
(76.0)
(13.0)
–
–
(89.0)
(2,696.9)
(1,047.8)
(8.2)
(177.6)
3,369.6
(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
0.2
0.1
(0.8)
(2.8)
28.5
(11.8)
–
16.7
–
(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
–
–
–
–
–
–
68.5
–
–
–
68.5
–
–
68.5
–
68.5
172.8
(280.8)
(103.2)
(307.2)
(84.0)
1,273.5
4,768.0
16.7
68.2
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
–
(1,174.5)
15,988.3
900.0
(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 238).
2. Operating cash outflow in the exploration and evaluation segment was $98.0 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.
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 $9.8 million (year ended 31 December 2021 – $8.2 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 $7.3 million (31 December 2021 – $5.8 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 16.
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Financial Statements
B) Entity-wide disclosures
Revenue by product
Copper
• Los Pelambres
• Centinela concentrate
• Centinela cathodes
• Antucoya
Provision of shipping services
• 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
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
2022
$m
2021
$m
2,107.7
1,132.7
844.4
697.5
3,097.0
1,735.4
774.1
693.3
51.9
58.5
6.7
6.0
75.4
238.4
291.4
100.8
32.5
24.7
5,668.6
193.4
5,862.0
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
2022
$m
2021
$m
71.0
753.6
1.0
140.0
96.5
369.1
179.7
54.4
1,303.7
67.6
121.5
177.4
282.0
214.7
312.3
666.5
1,668.6
1,072.0
423.8
332.2
178.2
264.0
5,862.0
1,842.3
1,236.9
726.1
322.6
217.1
237.3
7,470.1
Information about major customers
In the year ended 31 December 2022, the Group’s mining revenue included $785.5 million related to one large customer that individually accounted for
more than 10% of the Group’s revenue (year ended 31 December 2021 – one large customer representing $1,015.1 million).
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/ Notes to the Financial statements continued
6 Segment information continued
Non-current assets by location of assets
Chile
Other1
1. The comparatives have been restated to show a reclassification of $9.9 million from the “Chile” category to the “Other” category.
Non-current assets per the balance sheet
The above amounts by location reflect non-current assets per the balance sheet excluding:
• Deferred tax assets
• Account receivables
• Equity investments
Total of non-current assets above
Non-current assets by location of asset
2022
$m
12,786.1
10.1
12,796.2
2021
$m
Restated
11,705.1
10.9
11,716.0
2022
$m
2021
$m
13,016.2
11,872.7
(78.5)
(51.0)
(90.5)
(220.0)
(96.8)
(51.2)
(8.7)
(156.7)
12,796.2
11,716.0
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.
The total revenue from contracts with customers and the impact of provisional pricing adjustments in respect of concentrate and cathode sales 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
2022
$m
2021
$m
5,671.2
123.1
193.4
(125.7)
5,862.0
6,809.0
113.4
170.0
377.7
7,470.1
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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Financial Statements
–
–
–
0.4
–
0.4
0.4
–
(0.3)
5.6
0.7
3.6
3.3
(4.1)
(0.6)
1.5
0.1
(2.9)
16.5
2.7
12.6
(0.2)
29.1
3.1
–
30.6
–
311.9
(20.5)
291.4
4.0
7.6
11.6
11.7
–
110.2
(9.4)
100.8
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 following tables set 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.
For the year ended 31 December 2022
Los
Pelambres
Copper
concentrate
$m
2,313.7
51.9
Centinela
Copper
concentrate
$m
1,231.8
58.5
2,365.6
1,290.3
Centinela
Copper
cathodes
$m
851.8
6.7
858.5
Antucoya
Copper
cathodes
$m
710.6
6.0
716.6
Los
Pelambres
Gold in
concentrate
$m
Centinela
Gold in
concentrate
$m
Los
Pelambres
Molybdenum
concentrate
$m
Centinela
Molybdenum
concentrate
$m
75.1
–
75.1
235.9
–
235.9
281.3
–
281.3
98.5
–
98.5
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
(12.0)
(5.2)
(0.3)
(0.8)
10.7
23.3
(1.3)
18.1
0.5
0.2
1.0
0.2
(155.3)
(68.7)
(8.4)
(14.1)
38.0
19.9
0.8
0.8
(117.3)
(48.8)
(7.6)
(13.3)
Total pricing adjustments
Realised losses on commodity derivatives
(118.6)
–
(30.7)
–
Revenues before deducting treatment and
refining charges
Treatment and refining charges
Revenue net of tolling charges
2,247.0
(87.4)
1,259.6
(68.4)
2,159.6
1,191.2
(7.4)
–
851.1
–
851.1
(13.1)
–
703.5
–
703.5
75.5
(0.1)
75.4
239.0
(0.6)
238.4
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 6 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 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)
175.1
74.7
116.4
47.9
0.1
1.8
1.9
92.2
58.8
10.2
12.0
5.2
0.3
104.2
64.0
10.5
(0.5)
–
(0.9)
0.2
(0.3)
1.5
1.0
6.0
0.8
6.8
(1.0)
(4.0)
6.4
(1.0)
(4.9)
6.6
1.2
0.9
(1.1)
(4.1)
30.6
5.8
–
0.4
(5.7)
(0.7)
(1.1)
(3.7)
24.9
5.1
Total pricing adjustments
Realised losses on commodity derivatives
220.6
–
111.9
–
Revenues before deducting treatment and
refining charges
Treatment and refining charges
Revenue net of tolling charges
3,245.0
(90.2)
3,154.8
1,844.0
(61.8)
1,782.2
12.4
(62.6)
778.4
–
778.4
7.8
(64.2)
697.8
–
697.8
(2.1)
–
91.2
(0.2)
91.0
(8.6)
–
31.5
–
346.2
(0.8)
345.4
353.6
(24.4)
329.2
6.0
–
44.4
(7.2)
37.2
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 6 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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Antofagasta Annual Report 2022
Financial Statements
(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
2022
2021
Tonnes
$/lb
$/lb
179,000
3.80
3.65
177,900
4.41
4.37
(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
2022
2021
Tonnes
$/lb
$/lb
22,700
3.80
3.77
15,000
4.42
4.39
(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
2022
2021
Ounces
$/oz
$/oz
31,000
1,828
1,742
32,300
1,801
1,791
(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
2022
2,500
26.10
22.20
2021
2,400
18.60
19.65
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
2022
$m
38.0
12.6
19.9
7.6
2.7
0.8
0.8
82.4
2021
$m
12.0
(5.7)
5.2
(0.7)
0.4
0.3
0.8
12.3
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/ Notes to the Financial statements continued
8 Operating Profit From Subsidiaries, and Total Profit From Associates And Joint Ventures
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 profit of associates and joint ventures
Gain on disposal of investment in joint ventures
Total profit from operations, associates and joint ventures
2022
$m
2021
$m
5,862.0
7,470.1
(3,432.7)
2,429.3
(558.9)
37.9
(274.0)
1,634.3
48.1
944.7
2,627.1
(3,120.2)
4,349.9
(550.4)
31.8
(429.9)
3,401.4
59.7
–
3,461.1
1. Other operating expenses comprise $113.0 million of exploration and evaluation expenditure (2021 – $103.2 million), $19.1 million in respect of the employee severance provision (2021
– $19.8 million), $16.9 million in respect of the closure provision (2021 – $11.3 million), nil in respect of the provision against the carrying value of assets relating to the Twin Metals
project (2021 – $177.6 million) and $125.0 million of other expenses (2021 – $118.0 million).
Profit before tax is stated after (charging)/crediting:
Foreign exchange (losses)/gains
• included in net finance costs
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
2022
$m
2021
$m
(12.8)
49.9
(1,047.2)
(93.9)
(2.1)
(2,381.6)
(476.6)
(16.9)
(19.1)
(113.0)
–
(2.2)
(997.1)
(81.6)
(9.2)
(2,033.0)
(498.0)
(11.3)
(19.8)
(103.2)
(177.6)
(1.9)
1. In 2021 impairment provision recognised in respect of $27.5 million of property, plant and equipment (note 15) and $150.1 million of intangible assets (note 14) 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
2022
$000
2021
$000
1,312.5
1,242.0
549.6
98.0
241.0
415.0
200.0
–
2,201.1
1,857.0
1. The audit-related assurance services relate to the half-year review performed by the auditors.
2. The other assurance services in 2022 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 auditors.
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 130. No services were
provided pursuant to contingent fee arrangements.
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Antofagasta Annual Report 2022
Financial Statements
9 Employees
A) Average monthly number of employees
Los Pelambres
Centinela
Antucoya
Exploration and evaluation
Corporate and other employees
• Chile
• United Kingdom
• Other
Mining and Corporate
Transport division
2022
Number
1,069
2,408
852
60
582
4
1
4,976
1,383
6,359
2021
Number
959
2,226
817
71
566
4
4
4,647
1,336
5,983
(i)
(ii)
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.
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
2022
$m
(448.5)
(28.1)
(476.6)
2021
$m
(469.9)
(28.1)
(498.0)
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
2022
$m
(25.0)
(25.0)
2021
$m
(40.1)
(40.1)
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 155 to 162.
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205
/ Notes to the Financial statements continued
10 Net finance (Expense)/Income
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 (expense)/income
2022
$m
19.8
20.4
40.2
(78.6)
(78.6)
(16.9)
–
(12.8)
(0.1)
(29.8)
(68.2)
2021
$m
3.4
1.6
5.0
(63.4)
(63.4)
(6.2)
30.8
49.9
(0.1)
74.4
16.0
During 2022, amounts capitalised and consequently not included within the above table were as follows: $47.0 million at Los Pelambres (year ended 31
December 2021 – $12.1 million) and $2.0 million at Centinela (year ended 31 December 2021 – $2.1 million).
The interest expense shown above includes $7.1 million in respect of leases (2021 – $7.9 million). The interest paid in respect of leases $6.0 million
(2021 – $6.5 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
Deferred tax charge
• Corporate tax (principally first category tax in Chile)
• Mining tax (royalty)
• Withholding tax
Total tax charge
2022
$m
2021
$m
(340.4)
(83.9)
(24.5)
(448.8)
(560.8)
(250.0)
(224.7)
(1,035.5)
(96.5)
(9.8)
(48.5)
(154.8)
(237.4)
0.9
29.7
(206.8)
(603.6)
(1,242.3)
The rate of first category (ie corporate) tax in Chile is 27.0% (2021 – 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). Production from Los Pelambres, Antucoya, Encuentro (oxides), the Tesoro
North East pit and the Run-of-Mine processing at Centinela Cathodes is 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 at Centinela Cathodes is subject to a rate of 5% of taxable
operating profit.
The following table provides a numerical reconciliation between the accounting profit before tax multiplied by the applicable statutory tax rate and the
total tax expense (including both current and deferred tax).
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Antofagasta Annual Report 2022
Financial Statements
Profit before tax
Profit before tax multiplied by Chilean corporate tax rate of
27%
Mining tax (royalty)
Deduction of mining tax (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
Provision against carrying value of assets
Gain on disposal of investment in joint venture
Year ended
31 December 2022
Excluding exceptional
items
Year ended
31 December 2022
Including exceptional
items
Year ended
31 December 2021
Excluding exceptional
items
Year ended
31 December 2021
Including exceptional
items
$m
%
$m
%
$m
%%
$m
%
1,614.2
2,558.9
3,654.7
3,477.1
(435.9) 27.0
(691.0)
27.0
(986.8)
27.0
(938.8)
27.0
(94.5)
5.8
(94.5)
3.7
(243.8)
6.7
(243.8)
7.0
23.1
(1.4)
23.1
(0.9)
67.8
(1.9)
67.8
(1.9)
(33.9)
(2.6)
(73.0)
13.0
0.2
–
–
–
2.1
0.1
4.6
(0.8)
–
–
–
–
(33.9)
(2.6)
(73.0)
13.0
0.2
–
–
1.3
0.1
2.9
(31.6)
0.9
(12.1)
0.3
(31.6)
(12.1)
(195.0)
5.3
(195.0)
0.9
0.3
5.6
(0.5)
16.1
(0.4)
16.1
(0.5)
–
–
–
52.5
(1.4)
52.5
(1.5)
–
–
–
–
–
–
90.6
(2.6)
(48.0)
–
1.4
–
255.1
(10.0)
Tax expense and effective tax rate for the year
(603.6)
37.4
(603.6)
23.6
(1,332.9)
36.5
(1,242.3)
35.7
The effective tax rate excluding exceptional items of 37.4% varied from the statutory rate principally due to the mining tax (royalty) (net impact of $71.4
million/4.4% 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 $73.0 million/4.6%), items not deductible for Chilean corporate tax purposes, principally the
funding of expenses outside of Chile (impact of $33.9 million/2.1%), adjustments in respect of prior years (impact of $2.6 million/0.1%) and the impact
of previously unrecognised tax losses (impact of $0.2 million/0%), partly offset by 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 $13.0 million/0.8%).
The impact of the exceptional items on the effective tax rate including exceptional items was $255.1 million/10.0%. Further details of the exceptional gain
on the disposal of the Group’s investment in the Tethyan joint venture, including relevant tax aspects, are set out in Note 17.
The main factors which could impact the sustainability of the Group’s existing effective tax rate are:
• In October 2022, the Chilean government announced its updated proposals for a comprehensive reform of the tax system, including proposed
changes to the mining royalty. These proposals are subject to review and approval by the Chilean Congress, and so there is no certainty as to the
exact nature of changes which may finally be enacted into law.
• The level of future distributions made by the Group’s Chilean subsidiaries out of Chile, which could result in increased withholding tax charges.
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.
• The impact of expenses which are not deductible for Chilean first category tax. Some of these expenses are 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.
The implementation of the OECD BEPS Pillar 2, which would introduce a minimum effective tax rate of 15% for multinational companies, will be
applicable to the Group when brought into relevant legislation. The Group’s operations are based in Chile and therefore currently subject to the Chilean
first category (corporate) tax rate of 27%, plus withholding taxes on any remittance of profits from Chile. The Group has been assessing the potential
impact of the draft UK legislation, and will complete that assessment when the legislation has been finalised.
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 3B.
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207
/ Notes to the Financial statements continued
12 Earnings per share
Profit for the period attributable to owners of the parent (excluding exceptional items)
Exceptional Items
Profit for the period attributable to owners of the parent (including exceptional items) from operations
Ordinary shares in issue throughout each year
Basic earnings per share (excluding exceptional items) from operations
Basic earnings per share (exceptional items) from operations
Basic earnings per share (including exceptional items) from operations
2022
$m
588.3
944.7
1,533.0
2021
$m
1,404.4
(114.2)
1,290.2
2022
Number
2021
Number
985,856,695
985,856,695
2022
cents
59.7
95.8
155.5
2021
cents
142.5
(11.6)
130.9
Basic earnings per share are calculated as profit after tax and non-controlling interests, based on 985,856,695 (2021: 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 owners of the parent
Profit from continuing operations attributable to owners of the parent
Ordinary shares
Basic earnings per share from continuing operations
13 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 September
• Ordinary
$m
$m
Number
cents
2022
1,533.0
1,533.0
985,856,695
155.5
2021
1,290.2
1,290.2
985,856,695
130.9
22002222
$$mm
2021
$m
2022
cents
per share
2021
cents
per share
1,172.2
478.1
118.9
48.5
90.7
1,262.9
232.7
710.8
9.2
128.1
23.6
72.1
The recommended final dividend for each year, which is subject to approval by shareholders at the Annual General Meeting and has therefore not been
included as a liability in these financial statements, is as follows:
Final dividend proposed in relation to the year
• Ordinary
22002222
$$mm
2021
$m
2022
cents
per share
2021
cents
per share
497.6
1,172.1
50.5
118.9
Total dividends proposed in relation to 2022 (including the interim dividend) are 59.7 cents per share or $588.3 million (2021 – 142.5 cents per share
or $1,404.8 million).
In accordance with IAS 32, preference dividends have been included within net finance expense (see Note 10) and amounted to $0.1 million (2021 –
$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
(www.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 168.
208
208
Antofagasta plc Annual Report 2022
Antofagasta Annual Report 2022
Financial Statements
14 Intangible assets
At 1 January 2021
Provision against carrying value
At 31 December 2021
At 31 December 2022
Accumulated
depreciation
and
impairment
$m
–
(150.1)
(150.1)
(150.1)
Cost
$m
150.1
–
150.1
150.1
Net book value
$m
150.1
(150.1)
–
–
The intangible asset relates to Twin Metals’ mining licences assets (included within the corporate segment). As explained in note 3, a full impairment
provision was recognised in respect of the $150.1 million cost of this asset as at 31 December 2021, as a result of the US federal government’s
cancellation of certain of Twin Metals’ mining leases. Twin Metals believes it has a valid legal right to the mining leases and a strong case to defend its
legal rights. Although the Group is pursuing validation of those rights, considering the time and uncertainty related to any legal action to challenge the
government decisions, a full impairment provision has been recognised in respect of the carrying value of the asset.
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209
/ Notes to the Financial statements continued
15 Property, plant and equipment
Cost
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
At 1 January 2022
Additions
Additions – capitalised depreciation
Adjustment to capitalised decommissioning
provisions
Capitalisation of interest
Reclassifications
Asset disposals
At 31 December 2022
Accumulated depreciation and impairment
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
At 1 January 2022
Charge for the year
Depreciation capitalised in inventories
Depreciation capitalised in property, plant and
equipment
Asset disposals
At 31 December 2022
Net book value
At 31 December 2022
At 31 December 2021
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
Total
$m
61.9
–
–
–
–
–
–
–
61.9
61.9
–
–
–
–
–
–
61.9
667.5
4.5
–
2,305.0
502.5
72.0
–
–
–
–
–
672.0
672.0
–
–
–
–
–
–
672.0
–
–
–
–
–
2,879.5
2,879.5
582.5
73.3
–
–
–
–
3,535.3
–
–
–
(562.1)
(26.0)
–
(1,117.1)
(255.3)
–
–
–
(25.0)
–
(25.0)
(25.0)
–
–
–
–
–
–
–
–
–
–
(588.1)
(1,372.4)
(588.1) (1,372.4)
(352.8)
(60.1)
–
–
–
–
(25.0)
–
–
–
–
(648.2) (1,725.2)
5,928.1
–
–
(119.9)
–
–
1.4
(5.7)
5,803.9
5,803.9
–
–
173.8
–
1.4
(0.2)
5,978.9
(2,613.6)
(274.1)
–
–
–
(2.2)
–
(2,889.9)
(2,889.9)
(319.3)
–
–
0.1
(3,209.1)
108.3
–
–
–
–
–
14.5
–
122.8
122.8
–
–
–
–
11.9
–
134.7
(38.5)
(5.9)
–
–
–
–
–
(44.4)
(44.4)
(7.8)
–
–
–
(52.2)
208.0
–
–
–
–
–
5.8
(7.3)
206.5
206.5
–
–
–
–
1.5
(0.6)
207.4
(100.8)
(17.1)
–
–
–
–
6.4
(111.5)
(111.5)
(14.0)
–
–
0.6
(124.9)
7,266.9
3.9
–
–
–
0.9
4.7
(32.0)
7,244.4
7,244.4
2.0
–
–
–
4.1
(9.2)
7,241.3
(4,139.8)
(418.7)
54.1
(72.0)
–
(0.3)
36.0
(4,540.7)
(4,540.7)
(293.2)
(71.1)
(73.3)
7.6
(4,970.7)
1,666.6
1,283.2
–
–
14.2
–
(26.6)
(8.2)
2,929.2
2,929.2
1,366.2
–
–
49.0
(15.8)
(5.9)
4,322.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
458.9
61.8
–
18,671.2
1,855.9
72.0
(119.9)
–
14.2
–
0.9
–
(3.0)
(2.8)
(17.6)
(70.8)
500.3 20,420.5
500.3 20,420.5
2,002.0
73.3
51.3
–
173.8
–
49.0
–
–
(3.1)
(17.4)
(33.3)
531.1 22,685.3
(247.4)
(81.6)
–
–
1.4
–
17.6
(310.0)
(310.0)
(93.9)
–
(8,819.3)
(1,078.7)
54.1
(72.0)
1.4
(27.5)
60.0
(9,882.0)
(9,882.0)
(1,141.1)
(71.1)
–
17.4
(386.5)
(73.3)
25.7
(11,141.8)
36.9
36.9
23.8
83.9
1,810.1
1,507.1
2,769.8
2,914.0
82.5
78.4
82.5
95.0
2,270.6
2,703.7
4,322.7
2,929.2
144.6
190.3
11,543.5
10,538.5
The Group has no (2021 – nil) assets pledged as security against bank loans provided to the Group.
At 31 December 2022, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to $845.1
million (2021 – $599.3 million) of which $445.4 million was related to Los Pelambres and $326.1 million to Centinela.
The average interest rate for the amounts capitalised was 2.8% (2021 – 1.9%).
At 31 December 2022, the net book value of assets capitalised relating to the decommissioning provision was $212.1 million (2021 – $49.7 million).
Depreciation capitalised in property, plant and equipment of $73.3 million related to the depreciation of assets used in mine development (operating
stripping) at Centinela, Los Pelambres and Antucoya (2021 – $72.0 million).
The Right-of-use assets includes office lease, vehicles, machinery and equipment. Expenses related to leases of low-value assets not shown as leases
(included in operating costs) are $25.1 million for 2022 (2021 – $17.8 million).
As explained in note 4, an impairment provision was recognised in 2021 for $27.5 million of property, plant and equipment relating to the Twin
Metals project.
210
210
Antofagasta plc Annual Report 2022
Antofagasta Annual Report 2022
Financial Statements
16 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 at
2022
Economic
interest at
2021
Direct subsidiaries of the Parent Company
Antofagasta Railway Company plc
The Andes Trust Limited
Andean LFMA Investment Limited(i)
Andes Re Limited
Alfa Estates Limited
Indirect subsidiaries of the Parent Company
Minera Los Pelambres SCM
Minera Centinela SCM
Minera Antucoya SCM
Antofagasta Minerals SA
Energía Andina Geothermal SpA
MLP Transmisión SA
Sociedad Contractual Minera El Encierro(ii)
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 SA
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
UK
UK
UK
Bermuda
Jersey
Chile
Chile
Chile
Chile
Chile
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
UK
Chile
Bermuda
Jersey
Chile
Chile
Chile
Chile
Chile
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
Minera Santa Margarita de Astillas SCM
Chile
Chile
1
1
1
4
3
2
2
2
2
2
2
2
3
1
5
7
1
6
6
6
12
13
12
12
12
1
3
8
8
9
10
1
1
5
14
4
9
15
3
5
2
2
2
Railway
Investment
Investment
Insurance
Investment
Mining
Mining
Mining
Mining
Energy
Energy
Mining
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%
100%
60%
70%
70%
100%
100%
100%
56.54%
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%
100%
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%
51%
51%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
82.0%
antofagasta.co.uk
Antofagasta plc Annual Report 2022
211
211
/ Notes to the Financial statements continued
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
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 DosLimitada
Inmobiliaria Parque Estación S.A.
Emisa Antofagasta SA
Country of
incorporation
Country of
operations
Registered
office
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
11
11
11
11
11
11
11
11
11
11
11
11
Nature of business
Mining
Logistics
Investment
Mining
Community
development
Investment
Railway
Investment
Investment
Forestry
Road transport
Investment
Transport
Transport
Transport
Real Estates
Transport
Economic
interest at
2022
Economic
interest at
2021
66.6%
99.9%
90.0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
66.6%
99.9%
90.0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
(i)
(ii)
Name change from Chilean Northern Mines Limited to Andean LFMA Investment Limited
Sociedad Contractual Minera El Encierro is a newly incorporated Group entity
Registered offices:
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 Simon Bolivar 255, Antofagasta, Chile
12 6041 Earle Brown Drive, 480 Brooklyn Center, MN 55430, USA
13
14 2711 Centerville Road, Suite 400, Wilmington, DE 19808, USA
15 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.
212
212
Antofagasta plc Annual Report 2022
Antofagasta Annual Report 2022
Financial Statements
17 Disposal of investment in Tethyan joint venture
On 15 December 2022, Antofagasta entered into definitive agreements to exit its interest in the Tethyan joint venture. As a result of those agreements:
• the Reko Diq project in Pakistan (the “Project”) was reconstituted in Reko Diq Mining Company (Private Limited) ("RDMC"). RDMC is the Pakistani
registered subsidiary of Tethyan Copper Company Pty Limited ("TCC"), which is itself the Australian registered subsidiary of Atacama Copper Pty
Limited (“Atacama”), the joint venture company registered in Australia and owned equally by the Company and Barrick Gold Corporation ("Barrick");
• a consortium of various Pakistani state-owned enterprises acquired shares in RDMC which holds the Project (the "Sale"); and
• as the International Centre for Settlement of Investment Disputes ("ICSID") award (to TCC) was resolved by reconstituting the Project, TCC no longer
has any rights or claims against the Governments of Pakistan and Balochistan arising from the suspension of the Project in 2011.
The proceeds of the Sale which, together with accrued interest up to 15 December 2022 totalled US$946.0 million, are currently held by Atacama in a
segregated interest-bearing account. Antofagasta and Barrick have agreed that the proceeds of this account, including all further interest received, less
any Australian tax arising, will be distributed to the Antofagasta Group during 2023, on a date to be determined by Antofagasta. Atacama is seeking a
binding private ruling to confirm that the Sale proceeds and their distribution to the Antofagasta Group will not be subject to Australian tax. The
Australian corporate tax rate is 30%. Although Antofagasta will retain its shareholding in Atacama until the proceeds have been distributed, it no longer
has any appointees on the board of the joint venture, is not entitled to exercise voting rights in Atacama, and is not required to provide any funding to, or
permitted to receive any distributions from, Atacama other than the Sale proceeds. Antofagasta has therefore ceased to have an economic interest in
Atacama and its subsidiaries as of 15 December 2022 other than being entitled from that date to receive an amount equal to the Sale proceeds and
related interest less any Australian tax arising (whether before or after the distribution). Accordingly, Antofagasta has recognised a gain on disposal of
its investment in the joint venture as at 15 December 2022 of $944.7 million, reflecting the Sale proceeds and related interest, working capital and other
adjustments and the carrying value of the investment at that date. A receivable balance of $943.3 million in respect of the estimated proceeds due to
Antofagasta has been recognised within Trade and other receivables in the balance sheet.
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
Share of profit/(loss) before tax
Share of tax
Share of profit/(loss) from JV and associates
Dividends receivable
Disposal of investment in JV
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
Share of 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
ATI (i)
2022
$m
5.8
–
2.0
(0.5)
1.5
–
–
7.3
–
ATI (i)
2021
$m
5.6
–
–
0.2
–
0.2
–
5.8
–
Minera
Zaldívar (ii)
2022
$m
Tethyan
Copper (iii)
2022
$m
900.0
–
69.3
(22.0)
47.3
(50.0)
–
897.3
–
–
(0.6)
(0.7)
–
(0.7)
–
1.3
–
–
Minera
Zaldívar (ii)
2021
$m
Tethyan
Copper (iii)
2021
$m
909.0
–
–
99.0
(30.5)
68.5
(77.5)
900.0
–
–
(1.1)
9.5
(9.0)
–
(9.0)
–
–
(0.6)
Total
2022
$m
905.8
(0.6)
70.6
(22.5)
48.1
(50.0)
1.3
904.6
–
Total
2021
$m
914.6
(1.1)
9.5
90.2
(30.5)
59.7
(77.5)
905.8
(0.6)
The investments, which are included in the $904.6 million balances at 31 December 2022, are set out below:
Investment in associates
(i)
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
(ii) The Group’s 50% interest in Minera Zaldívar SpA (“Zaldívar”).
(iii) The Group had a 50% interest in Tethyan Copper Company Limited (“Tethyan”), which was a joint venture with Barrick Gold Corporation in
respect of the Reko Diq project in the Islamic Republic of Pakistan (“Pakistan”). As explained in Note 17, on 15 December 2022 Antofagasta
entered into definitive agreements to exit its interest in the Tethyan joint venture and is therefore no longer recognised as a joint venture by
the Group.
antofagasta.co.uk
Antofagasta plc Annual Report 2022
213
213
/ Notes to the Financial statements continued
18 Investment in associates and joint ventures continued
As the net carrying value of the interest in Tethyan was negative, it was included within non-current liabilities, as the Group was liable for its share of
the joint venture’s obligations.
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
Summarised financial information for the joint ventures is as follows:
Cash and cash equivalents
Current assets1
Non-current assets
Current financial liabilities (excluding trade, other payables and provisions)
Current liabilities
Non-current financial liabilities (excluding trade, other payables and provisions)
Non-current liabilities
Revenue
Depreciation and amortisation
Interest income
Interest expense
Income tax expense
Profit/(loss) after tax from continuing operations
Total comprehensive income/(expense)
1. The current assets include cash and cash equivalents
ATI
2022
$m
0.4
18.2
91.8
(19.3)
(69.5)
55.2
5.1
5.1
Minera
Zaldívar
2022
$m
70.1
661.8
1,658.6
(53.2)
(159.3)
(68.3)
(203.3)
783.4
(149.2)
1.5
(0.8)
(43.9)
94.6
94.6
ATI
2021
$m
1.2
13.7
99.3
(22.5)
(75.0)
47.2
1.3
1.3
Total
2022
$m
70.1
661.8
1,658.6
(53.2)
(159.3)
(68.3)
(203.3)
783.4
(149.2)
1.5
(0.8)
(43.9)
94.6
94.6
214
214
Antofagasta plc Annual Report 2022
Antofagasta Annual Report 2022
Financial Statements
Cash and cash equivalents
Current assets1
Non-current assets
Current financial liabilities (excluding trade, other payables and provisions)
Current liabilities
Non-current financial liabilities (excluding trade, other payables and provisions)
Non-current liabilities
Revenue
Depreciation and amortisation
Interest income
Interest expense
Income tax expense
Loss/(profit) after tax from continuing operations
Total comprehensive (expense)/income
1. The current assets include cash and cash equivalents
Tethyan
Copper
2021
$m
3.6
3.6
–
–
(5.1)
–
(0.1)
–
(3.0)
2.0
–
–
(18.0)
(18.0)
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
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
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
Acquisition
Movement in fair value
Foreign currency exchange differences
Balance at the end of the year
2022
$m
8.7
66.5
15.8
(0.5)
90.5
2021
$m
11.1
–
(2.1)
(0.3)
8.7
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 are based on quoted market prices.
20 Inventories
Current
Raw materials and consumables
Work-in-progress
Finished goods
Non-current
Work-in-progress
Total
2022
$m
2021
$m
221.4
404.9
81.8
708.1
347.0
1,055.1
155.6
316.5
60.7
532.8
270.4
803.2
During 2022, no net realisable value (“NRV”) adjustment has been recognised (2021 – nil). Non-current work-in-progress represents inventory
expected to be processed more than 12 months after the balance sheet date.
antofagasta.co.uk
Antofagasta plc Annual Report 2022
215
215
/ Notes to the Financial statements continued
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 receivables1
Due in one year
Due after one year
2022
$m
997.1
1,090.1
2,087.2
2021
$m
1,040.0
106.1
1,146.1
2022
$m
–
51.0
51.0
2021
$m
–
51.2
51.2
2022
$m
Total
2021
$m
997.1
1,040.0
1,141.1
2,138.2
157.3
1,197.3
1. At 31 December 2022, the Other receivables balance includes the proceeds receivable in respect of the Group’s disposal of its investment in the Tethyan joint venture. As detailed in
Note 17, the proceeds are currently held by Atacama in a segregated interest-bearing account with an A+ rated bank.
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, other than the Tethyan receivable noted above. 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 include employee loans of $49.3 million (31 December 2021 –
$42.9 million).
Movements in the expected credit loss provision 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:
2022
2021
Up to date
$m
2,098.8
1,187.1
Up to
3 months
past due
$m
36.8
8.4
3-6 months
past due
$m
1.2
0.3
2022
$m
(1.2)
0.2
–
(1.0)
More than
6 months
past due
$m
Total excluding
expected
credit loss
provision
$m
Expected
credit loss
provision
$m
2021
$m
(1.5)
0.1
0.2
(1.2)
Total
$m
2.4
2.7
2,139.2
1,198.5
(1.0)
(1.2)
2,138.2
1,197.3
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.
216
216
Antofagasta plc Annual Report 2022
Antofagasta Annual Report 2022
Financial Statements
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 2022 and 2021 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
Subtotal
Cash at bank1
Total cash, cash equivalents and liquid investments
2022
$m
810.4
1,580.8
2,391.2
2021
$m
743.4
2,969.7
3,713.1
2022
$m
2,371.1
18.8
1.0
0.3
2,391.2
2022
$m
1,476.7
–
–
36.5
303.0
484.1
2,300.3
90.9
2,391.2
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
1. Cash at bank is held with investment grade financial institutions.
There have been no impairments recognised in respect of cash or cash equivalents in the year ended 31 December 2022 (31 December 2021 – nil).
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/ Notes to the Financial statements continued
23 Borrowings and other financial liabilities
A) Analysis by type of borrowing and other financial liabilities
Borrowings and other financial liabilities may be analysed by business segment and type as follows:
Los Pelambres
• Senior loan
• Leases
Centinela
• Senior loan
• 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
2022
$m
2021
$m
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(ix)
(1,470.5)
(55.3)
(1,188.3)
(54.8)
(276.7)
(35.2)
(386.8)
(59.8)
(223.5)
(171.5)
–
(16.5)
–
(985.3)
(23.1)
(196.3)
(184.5)
(35.0)
(23.4)
(497.3)
(496.1)
(20.4)
(15.3)
(1.6)
(2.5)
(3,277.0)
(25.8)
(1.4)
(2.7)
(3,172.6)
(i) The senior loan at Los Pelambres represents a $1,491 million US dollar denominated syndicated loan divided in three tranches. The first tranche
has a remaining duration of 3 years and an interest rate of US LIBOR six-month rate plus 1.05%. The second tranche has a remaining duration of
6 years and an interest rate of US LIBOR six-month rate plus 0.85%. The third tranche has a remaining duration of 5.5 years and an interest rate
of US LIBOR six-month rate plus 1.10%. The loans are subject to financial covenants which require that specified net debt to EBITDA and EBITDA
to finance expense ratios are maintained.
(ii) The senior loan at Centinela represents a US dollar denominated syndicated loan with an amount outstanding of $278 million with a duration of 3
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.
(iii) The senior loan at Antucoya represents a US dollar denominated syndicated loan with an amount outstanding of $225 million. This loan has a
remaining duration of 4 years and has an interest rate of Term SOFR six-month rate plus 1.40%. 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 subordinated debt at Antucoya is US dollar denominated, provided to Antucoya by Marubeni Corporate with a remaining duration of 4 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.
(v) The finance 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 1.5 years.
(vi) During the year ended 31 December 2022, Antofagasta plc made a $500 million repayment of the senior loan.
(vii) The bonds at Corporate reflect two corporate bonds – a $500 million 2.375% corporate bond due in 2030 and a $500 million 5.625% corporate
bond due in 2032.
(viii) Finance leases at Corporate and other items are denominated in Unidades de Fomento (ie inflation-linked Chilean pesos) and have a remaining
duration of 4 years and are at fixed rates with an average interest rate of 5.2%.
(ix) The long-term loans at the Transport division are US dollar denominated, with an outstanding amount of $15 million and a remaining duration of 1
year and an interest rate of US LIBOR six-month rate plus 1.06%.
(x) The preference shares are Sterling-denominated and issued by Antofagasta plc. There are 2 million shares of £1 each authorised, issued and fully
paid. 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.
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Financial Statements
B) Leases
Information in respect of the Group’s leases is contained in the following notes:
• Note 15 – 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
• Note 10 – cash paid relating to interest on lease
C) Analysis of borrowings and other financial liabilities by currency
The exposure of the Group’s borrowings to currency risk is as follows:
At 31 December 2022
Corporate loans
Bond
Other loans (including short-term loans)
Leases
Preference shares
At 31 December 2021
Corporate loans
Bond
Other loans (including short-term loans)
Leases
Preference shares
D) Analysis of borrowings and other financial liabilities by type of interest rate
The exposure of the Group’s borrowings to interest rate risk is as follows:
At 31 December 2022
Corporate loans
Bond
Other loans (including short-term loans)
Leases
Preference shares
At 31 December 2021
Corporate loans
Bond
Other loans (including short-term loans)
Leases
Preference shares
Chilean
pesos
$m
(0.3)
–
–
(115.1)
–
(115.4)
Chilean
pesos
$m
-
-
-
(113.5)
-
(113.5)
Sterling
$m
–
–
–
(3.9)
(2.5)
US dollars
$m
(1,985.7)
(985.3)
(171.5)
(12.7)
–
2022
Total
$m
(1,986.0)
(985.3)
(171.5)
(131.7)
(2.5)
(6.4)
(3,155.2)
(3,277.0)
Sterling
$m
US dollars
$m
2021
Total
$m
-
-
-
(4.3)
(2.7)
(7.0)
(2,294.5)
(2,294.5)
(496.1)
(219.5)
(42.0)
-
(496.1)
(219.5)
(159.8)
(2.7)
(3,052.1)
(3,172.6)
Fixed
$m
Floating
$m
(15.5)
(985.3)
–
(125.7)
(2.5)
(1,970.5)
–
(171.5)
(6.0)
–
2022
Total
$m
(1,986.0)
(985.3)
(171.5)
(131.7)
(2.5)
(1,129.0)
(2,148.0)
(3,277.0)
Fixed
$m
–
(496.1)
–
(143.9)
(2.7)
(642.7)
Floating
$m
(2,294.5)
–
(219.5)
(15.9)
–
(2,529.9)
2021
Total
$m
(2,294.5)
(496.1)
(219.5)
(159.8)
(2.7)
(3,172.6)
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/ Notes to the Financial statements continued
23 Borrowings and other financial liabilities continued
E) Maturity profile
The maturity profile of the Group’s borrowings is as follows:
At 31 December 2022
Corporate loans
Bond
Other loans
Leases
Preference shares
At 31 December 2021
Corporate loans
Bond
Other loans
Leases
Preference shares
Within
1 year
$m
(377.4)
–
–
(55.1)
–
(432.5)
Within
1 year
$m
(233.0)
–
(35.0)
(69.9)
–
(337.9)
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
(531.7)
–
–
(39.5)
–
(571.2)
Between
1-2 years
$m
(367.0)
–
–
(38.2)
–
(405.2)
Between
1-2 years
$m
Between
2-5 years
$m
After
5 years
$m
(149.2)
(985.3)
–
(1.2)
(2.5)
2022
Total
$m
(1986.0)
(985.3)
(171.5)
(131.7)
(2.5)
(927.7)
–
(171.5)
(35.9)
–
(1,135.1)
(1,138.2)
(3.277.0)
Between
2-5 years
$m
(1,526.7)
–
(184.5)
(51.7)
–
(1,762.9)
After
5 years
$m
(167.8)
(496.1)
–
–
(2.7)
(666.6)
2021
Total
$m
(2,294.5)
(496.1)
(219.5)
(159.8)
(2.7)
(3,172.6)
2022
$m
(62.1)
(40.1)
(37.6)
(1.3)
2021
$m
(74.7)
(40.5)
(54.8)
-
(141.1)
(170.0)
9.4
(131.7)
10.2
(159.8)
All leases are on a fixed payment basis and no arrangements have been entered into for contingent rental payments.
F) Financing Facilities
On 30 December, 2022, Antofagasta plc agreed a revolving credit facility “RCF” of $500 million. This revolving credit facility has a term of three years,
which expires on 30 December, 2025.
The facility remained undrawn throughout 2022.
Revolving credit facility
24 Trade and other payables
Trade creditors
Other creditors and accruals
Facility available
2022
$m
(500.0)
(500.0)
2021
$m
–
–
2022
$m
–
–
Drawn
2021
$m
–
–
2022
$m
(500.0)
(500.0)
Undrawn
2021
$m
–
–
Due in one year
Due after one year
2022
$m
(751.5)
(328.2)
(1,079.7)
2021
$m
(579.5)
(249.6)
(829.1)
2022
$m
–
(8.0)
(8.0)
2021
$m
–
(16.8)
(16.8)
2022
$m
(751.5)
(336.2)
(1,087.7)
Total
2021
$m
(579.5)
(266.4)
(845.9)
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 18 days (2021 – 20 days).
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Financial Statements
25 Financial instruments and financial risk management
A) Categories of financial instruments
The carrying value of financial assets and financial liabilities is shown below:
At fair value
through profit
and loss
At fair value
through other
comprehensive
income
Held at
amortised cost
Financial assets
Equity investments
Trade and other receivables
Cash and cash equivalents
Liquid investments
Financial liabilities
Borrowings and leases
Trade and other payables
Financial assets
Equity investments
Trade and other receivables
Cash and cash equivalents
Liquid investments
Financial liabilities
Trade and other payables
Borrowings and leases
2022
$m
Total
90.5
1,944.7
810.4
1,580.8
4,426.4
2021
$m
Total
8.7
1,095.0
743.4
2,969.7
4,816.8
–
897.2
8.5
1,580.8
2,486.5
–
–
–
90.5
–
–
–
90.5
–
1,047.5
801.9
–
1,849.4
–
–
–
(3,277.0)
(1,067.3)
(4,344.3)
(3,277.0)
(1,067.3)
(4,344.3)
At fair value
through profit
and loss
At fair value
through other
comprehensive
income
Held at amortised
cost
–
83.3
743.4
–
826.7
–
1,011.7
–
2,969.7
3,981.4
–
–
–
8.7
–
–
–
8.7
–
–
–
(835.6)
(3,172.6)
(4,008.2)
(835.6)
(3,172.6)
(4,008.2)
The fair value of the fixed rate bonds included within the “Borrowings and leases” category was $899.4 million at 31 December 2022 compared with its
carrying value of $985.3 million. The fair value of all other financial assets and financial liabilities carried at amortised cost approximates the carrying
value presented above.
The Group has the following financial instruments:
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 trade and other 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 trade and other payables (financial liabilities)
2022
$m
2021
$m
51.0
2,087.2
2,138.2
(193.5)
1,944.7
51.2
1,146.1
1,197.3
(102.3)
1,095.0
(1,079.7)
(8.0)
(1,087.7)
20.4
(1,067.3)
(829.1)
(16.8)
(845.9)
10.3
(835.6)
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/ Notes to the Financial statements continued
25 Financial instruments and financial risk management continued
B) Fair value of financial instruments
An analysis of financial assets and financial liabilities measured at fair value is presented below:
Financial assets
Equity investments (a)
Trade and other receivables (b)
Cash and cash equivalents (c)
Liquid investment (d)
Financial assets
Equity investments (a)
Trade and other receivables (b)
Liquid investment (d)
Level 1
$m
Level 2
$m
Level 3
$m
90.5
–
8.5
–
99.0
–
897.2
1,580.8
2,478.0
–
–
–
–
Level 1
$m
Level 2
$m
Level 3
$m
Total
2022
$m
90.5
897.2
8.5
1,580.8
2,577.0
Total
2021
$m
8.7
–
–
8.7
–
1,011.7
2,969.7
3,981.4
–
–
–
–
8.7
1,011.7
2,969.7
3,990.1
Recurring fair value measurements are those that are required in the balance sheet at the end of each reporting year.
a) 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.
b) 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.
The element of cash and cash equivalents measured at fair value relates to money market funds, which are valued reflecting market prices at the
period end. These are level 1 inputs as described below.
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.
c)
d)
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 2022, there
were no transfers between levels in the hierarchy.
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 2022, sales of copper and
molybdenum concentrate and copper cathodes represented 90.4% 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.
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
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Financial Statements
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
$19.8 million (2021 – increase by $18.4 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
$19.8 million (2021 – decrease by $18.4 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 $58.7
million (2021 – $64.8 million) and earnings per share by 6.0 cents (2021 – 6.6 cents), based on production volumes in 2022, without taking into
account the effects of provisional pricing. A $1 /lb change in the average molybdenum price for the year would have affected profit attributable to the
owners of the parent by $9.5 million (2021 – $9.2 million), and earnings per share by 1.0 cents (2021 – 0.9 cents), based on production volumes in
2022, 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 $11.6 million (2021 – $11.5 million), and earnings per share by 1.2 cents (2021 – 1.2 cents), based on
production volumes in 2022, 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 182.
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 $19.1 million (2021 – increase of $6.1 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 $23.3 million (2021 – decrease of $7.4 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 23(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 $3.3 million (2021 – decrease of $6.4 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 $9.1 million (2021 – increase of
$0.9 million). There would have been no impact on the income statement.
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/ Notes to the Financial statements continued
25 Financial instruments and financial risk management continued
(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 76 to 93.
(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.
(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 2022, the Group was in a net debt position (2021 – net cash 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 2022
Corporate loans
Other loans (including short-term loans and bond)
Leases
Preference shares*
Trade and other payables
At 31 December 2021
Corporate loans
Other loans (including short-term loans and bond)
Leases
Preference shares*
Trade and other payables
Less than
1 year
$m
(475.7)
(60.5)
(62.1)
(0.1)
(1,079.8)
(1,678.2)
Less than
1 year
$m
(267.1)
(47.0)
(74.7)
(0.1)
(829.1)
Between
1-2 years
$m
(609.4)
(40.0)
(40.4)
(0.1)
(4.0)
(693.9)
Between
1-2 years
$m
(398.5)
(11.9)
(40.5)
(0.1)
(16.8)
Between
2-5 years
$m
(1,017.8)
(290.8)
(37.9)
(0.3)
(3.9)
(1,350.7)
Between
2-5 years
$m
(1,574.8)
(242.7)
(54.5)
(0.3)
–
After
5 years
$m
(163.3)
(1,176.3)
(1.3)
(2.5)
–
(1,343.4)
After
5 years
$m
(170.6)
(555.5)
–
(2.7)
–
2022
Total
$m
(2,266.2)
(1,567.6)
(141.7)
(3.0)
(1,087.7)
(5,066.2)
2021
Total
$m
(2,411.0)
(857.1)
(169.7)
(3.2)
(845.9)
(1,218.0)
(467.8)
(1,872.3)
(728.8)
(4,286.9)
* 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.
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Antofagasta Annual Report 2022
Financial Statements
(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
debt of $885.8 million at 31 December 2022 (2021 – net cash $540.5 million), as well as gross cash (defined as cash, cash equivalents and liquid
investments) which was $2,391.2 million at 31 December 2022 (2021 – $3,713.1 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 (being the net asset value less any intangible asset value)
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. All derivatives were closed in 2021 and there are none entered into in 2022.
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.
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225
/ Notes to the Financial statements continued
26 Long-term incentive plan continued
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
2022
$18.5
50.90%
3 years
6.77%
4.33%
2021
$18.0
39.23%
3 years
3.94%
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 2022
Granted during the year
Cancelled during the year
Payments during the year
Outstanding at 31 December 2022
Number of awards that have vested
Restricted
Awards
Performance
Awards
544,143
214,812
(38,330)
(282,106)
438,519
213,594
1,385,475
336,206
(128,513)
(416,221)
1,176,947
–
The Group has recorded a liability of $17.2 million at 31 December 2022, of which $4.7 million is due after more than one year (31 December 2022 –
$18.9 million of which $9.2 million was due after more than one year) and total expenses of $13.1 million for the year (2021 – expense of $9.0 million).
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 2022 was
$0.1 million (2021 – $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 2022 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:
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
2022
%
5.3%
2.2%
3.5%
2022
$m
(19.1)
(6.8)
1.5
(24.4)
2021
%
6.3%
2.3%
4.9%
2021
$m
(19.8)
(3.6)
19.6
(3.8)
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Antofagasta plc Annual Report 2022
Antofagasta Annual Report 2022
Financial Statements
Movements in the present value of severance provisions were as follows:
Balance at the beginning of the year
Current service cost
Actuarial (losses)/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
2022
$m
(107.5)
(19.1)
(18.1)
(6.8)
12.7
1.5
2021
$m
(123.2)
(19.8)
3.1
(3.6)
16.4
19.6
(137.3)
(107.5)
31 December 2022
31 December 2021
5.34%
6.50%
20 year Chilean Central Bank Bonds 20 year Chilean Central Bank Bonds
Governmental
AA–/AA+
Secondary
Chilean peso
31 October 2021
Bloomberg
Governmental
AA–/AA+
Secondary
Chilean peso
28 November 2022
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 2018 to 2022.
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 2018 to 2022.
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 $10.2 million. If the discount rate is 100 basis points
lower, the defined benefit obligation would increase by $11.7 million.
• If the expected salary growth increases by 1%, the defined benefit obligation would increase by $10.5 million. If the expected salary growth decreases
by 1%, the defined benefit obligation would decrease by $9.6 million.
• If the staff turnover increases by 1%, the defined benefit obligation would decrease by $2.5 million. If the staff turnover decreases by 1%, the defined
benefit obligation would increase by $2.5 million.
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/ Notes to the Financial statements continued
28 Deferred tax assets and liabilities
At 1 January 2021
(Charge)/credit to income
Exceptional items
Charge deferred in equity
At 31 December 2021 and 1 January 2022
(Charge)/credit to income
Reclassification
Charge deferred in equity
At 31 December 2022
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
(1,122.1)
(248.9)
–
–
(1,371.0)
(79.2)
(16.9)
–
(1,467.1)
124.6
(7.5)
–
(2.1)
115.0
1.4
7.8
4.9
129.1
(52.8)
29.7
–
–
(23.1)
(48.5)
–
–
(71.6)
42.0
(103.3)
–
–
(61.3)
(15.6)
9.1
–
(67.8)
(103.5)
1.0
–
(0.4)
(102.9)
(9.8)
–
0.8
(111.9)
5.3
31.7
90.6
–
127.6
(3.1)
–
–
124.5
0.1
(0.1)
–
–
–
–
–
–
–
Total
$m
(1,106.4)
(297.4)
90.6
(2.5)
(1,315.7)
(154.8)
–
5.7
(1,464.8)
The charge to the income statement of $154.8 million (2021 – $206.8 million) included an impact from foreign exchange differences of nil (2021 – nil).
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
2022
$m
78.5
2021
$m
96.8
(1,543.3)
(1,412.5)
(1,464.8)
(1,315.7)
At 31 December 2022, the Group had unused tax losses associated with Chilean entities (predominantly Antucoya) of $460.3 million (2021 – $472.5
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 $124.5 million has been recognised in respect of 100% of these losses as at 31 December 2022 (31 December 2021 – $127.6 million). In
addition, at 31 December 2022, the Group had unused tax losses associated with entities outside of Chile (predominantly in respect of the Twin Metals
project) of $427.0 million (2021 – $428.0 million). A portion of the Twin Metals tax losses expire in the period from 2030 – 2037, and the remainder
can be carried forward indefinitely. Deferred tax assets have not been recognised in respect of these tax losses, reflecting the fact that the relevant
entities have generated taxable losses in recent years.
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, reflecting the improved actual and forecast profitability of the relevant Group entity (Antucoya). That entity has continued to
generate taxable profits during 2022, utilising $10.9 million of the deferred tax asset during the year.
At 31 December 2022, deferred withholding tax liabilities of $71.6 million have been recognised (31 December 2021 – $23.1 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 $6,430.4 million (31 December
2021 – $6,483.3 million). 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 $1,076.5 million (31 December 2021 – $1,232.1 million), depending
on the application of tax credits which may be available in particular circumstances.
Temporary differences arising in connection with interests in associates are insignificant.
The deferred tax balance of $1,464.8 million (2021 – $1,315.7 million) includes $1,404.7 million (2021 – $1,272.6 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.
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Financial Statements
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
2022
$m
(336.1)
(15.4)
(10.1)
(1.6)
(173.8)
49.7
(0.9)
(488.2)
(33.2)
(455.0)
(488.2)
2021
$m
(520.2)
(11.3)
(2.6)
30.8
119.9
33.8
13.5
(336.1)
(33.8)
(302.3)
(336.1)
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. During
2022, the Centinela and Antucoya provisions were updated to reflect new plans approved by Sernageomin during the 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 2022, the real discount rates ranged from 1.67% to 1.73%
(31 December 2021: 2.3% to 2.5%).
It is estimated that the provision will be utilised from 2023 until 2066 based on current mine plans, with approximately 15% of the total provision
balance expected to be utilised between 2023 and 2031, approximately 49% between 2032 and 2041, approximately 10% between 2042 and 2051 and
approximately 26% between 2052 and 2066.
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. The Group
discloses in line with the recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”). This process included scenario
analyses assessing the impact of 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 possible that additional consideration of potential climate risk impacts 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.
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
2022
Number
2021
Number
2022
$m
2021
$m
1,300,000,000
1,300,000,000
118.9
118.9
2022
Number
2021
Number
2022
$m
2021
$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 2022 or 2021. 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(x).
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/ Notes to the Financial statements continued
30 Share capital and other reserves continued
(II) Other reserves and retained earnings
Details of the share premium account, hedging, fair value and translation reserves and retained earnings for both 2022 and 2021 are included within
the consolidated statement of changes in equity on page 182.
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 reserve2
At 1 January
Gains/(losses) 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 (losses)/gains 4
Total comprehensive income for the year
Dividends paid
At 31 December
2022
$m
2021
$m
199.2
199.2
–
–
–
–
–
(7.4)
15.8
8.4
(3.0)
(0.4)
(3.4)
5.0
(23.9)
(100.4)
126.8
(2.5)
–
(5.3)
(2.1)
(7.4)
(1.4)
(1.6)
(3.0)
(10.4)
8,071.6
1,484.9
48.1
(8.2)
1,524.8
7,492.2
1,230.5
59.7
–
1,290.2
(1,262.9)
(710.8)
8,333.5
8,071.6
1. The hedging reserve records 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 reserve.
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 26.
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Antofagasta Annual Report 2022
Financial Statements
31 Non-controlling interests
The non-controlling interests of the Group during 2022 and 2021 are as follows:
Los Pelambres
Centinela
Antucoya
Encierro
Total
Los Pelambres
Centinela
Antucoya
Total
Non-
controlling
Interest
%
40.0
30.0
30.0
43.5
Non-
controlling
Interest
%
40.0
30.0
30.0
Country
Chile
Chile
Chile
Chile
Country
Chile
Chile
Chile
At
1 January
2022
$m
Share of profit
for the
financial year
$m
Capital
Increase
$m
Share of
dividends
$m
Hedging and
actuarial gains
$m
1,204.5
1,275.9
198.4
–
2,678.8
At
1 January
2021
$m
1,107.3
1,113.7
109.5
2,330.5
320.4
82.9
21.2
(2.2)
422.3
Share of
profit/(losses)
for the
financial year
$m
608.0
252.2
84.4
944.6
–
–
–
–
–
Capital
Increase
$m
–
–
–
–
(80.0)
–
–
–
(80.0)
Share of
dividends
$m
(512.0)
(92.5)
–
(604.5)
At
31 December
2022
$m
1,443.0
1,356.8
219.3
(2.2)
3,016.9
(1.9)
(2.0)
(0.3)
–
(4.2)
Hedging and
actuarial
gains/(losses)
$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
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 2022 and 2021 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 from/(used in) financing activities
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
Los Pelambres
2022
$m
40.0%
249.3
1,373.2
5,413.3
(725.8)
(2,408.8)
1,060.9
(881.0)
44.8
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)
Centinela
2022
$m
30.0%
134.9
1,170.7
4,752.3
(553.3)
(1,011.8)
762.2
(879.8)
(163.2)
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)
Antucoya
2022
$m
30.0%
46.1
340.6
1,367.2
(153.1)
(405.0)
162.1
(65.1)
(174.3)
Antucoya
2021
$m
30.0%
48.4
381.4
1,354.6
(183.8)
(364.9)
295.3
(49.3)
(206.9)
Notes to the summarised financial position and cash flow
(i)
(ii)
(iii)
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.
Summarised income statement information is shown in the segment information in Note 6.
There are some subsidiaries including Encierro with a non controlling interest portion not included in this note where those portions are not
material to the Group.
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Antofagasta plc Annual Report 2022
231
231
/ Notes to the Financial statements continued
32 Notes to the consolidated cash flow statement
A) Reconciliation of profit before tax to cash flow from operations
Profit before tax
Depreciation
Net loss on disposals
Net finance expense/(income)
Net share of results of associates and joint ventures
Gain on disposal of investment in joint venture
Provision against carrying value of assets
(Increase)/decrease in inventories
Decrease/(increase) in debtors
Increase in creditors
Decrease in provisions
Cash flow generated from operations
B) Analysis of changes in net debt
2022
$m
2,558.9
1,141.1
2.1
68.2
(48.1)
(944.7)
–
(180.7)
27.0
141.0
(26.5)
2,738.3
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
Cash flow
$m
New leases
$m
Amortisation
of finance
costs
$m
Capitalisation
of interest
$m
Movement
between
maturity
categories
$m
Other
$m
Exchange
$m
At
31 December
2022
$m
At
1 January
2022
$m
743.4
2,969.7
65.6
(1,388.9)
3,713.1
(1,323.3)
(268.0)
(2,742.1)
(69.1)
(90.7)
(2.7)
(3,172.6)
540.5
373.9
(488.5)
105.4
–
–
(9.2)
(1,332.5)
–
–
–
–
–
–
(51.3)
–
(51.3)
(51.3)
–
–
–
–
(11.7)
–
–
–
(11.7)
(11.7)
–
–
–
–
(6.3)
–
–
–
(6.3)
(6.3)
At
1 January
2021
$m
1,246.8
2,426.0
3,672.8
(529.8)
(3,013.8)
(73.6)
(134.9)
(2.7)
(3,754.8)
(82.0)
Cash flow
$m
New leases
$m
Amortisation
of finance
costs
$m
Capitalisation
of interest
$m
(483.1)
543.7
60.6
545.6
–
88.9
–
–
634.5
695.1
–
–
–
–
–
–
(61.8)
–
(61.8)
(61.8)
–
–
–
–
(5.7)
–
–
–
(5.7)
(5.7)
–
–
–
–
(16.6)
–
–
–
(16.6)
(16.6)
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
C) Net (debt)/cash
–
–
–
(483.3)
483.3
(80.7)
80.7
–
–
–
Movement
between
maturity
categories
$m
–
–
–
(294.2)
294.2
(84.4)
84.4
–
–
–
–
–
–
–
(0.1)
–
(1.0)
–
(1.1)
(1.1)
1.4
–
810.4
1,580.8
1.4
2,391.2
–
–
(10.7)
(14.3)
0.2
(24.8)
(23.4)
(377.4)
(2,765.4)
(55.1)
(76.6)
(2.5)
(3,277.0)
(885.8)
Other
$m
Exchange
$m
–
–
–
10.4
–
–
–
–
10.4
10.4
(20.3)
–
(20.3)
–
(0.2)
–
21.6
–
21.4
1.1
At
31 December
2021
$m
743.4
2,969.7
3,713.1
(268.0)
(2,742.1)
(69.1)
(90.7)
(2.7)
(3,172.6)
540.5
2022
$m
2021
$m
2,391.2
3,713.1
(3,277.0)
(3,172.6)
(885.8)
540.5
Cash, cash equivalents and liquid investments
Total borrowings and other financial liabilities
Net (debt)/cash
232
232
Antofagasta plc Annual Report 2022
Antofagasta Annual Report 2022
Financial Statements
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
2022
2021
$1.2080=£1;
$1 = Ch$855.86
$1.2340=£1;
$1 = Ch$872.38
$1.3490=£1;
$1 = Ch$844.69
$1.3750=£1;
$1 = Ch$759.81
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 $309.9 million (2021 – $263.9 million). The balance due to ENEX SA
at the end of the year was $28.6 million (2021 – $20.4 million),
• the Group earned interest income of $0.8 million (2021 – $0.1 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 nil (2021 – $2.2 million),
• the Group purchased shipping services from Hapag Lloyd, an associate of Quiñenco, of $12.7 million (2021 – $8.9 million). The balance due to Hapag
Lloyd at the end of the year was $0.3 million (2021 – $0.4 million),
• the Group made purchases of technology services from ARTIKOS CHILE SA, a subsidiary of Quiñenco, of $0.2 million (2021 – $0.2 million). The
balance due to ARTIKOS CHILE SA at the end of the year was nil (2021 – nil).
B) Compañía de Inversiones Adriático SA
In 2022, 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 $0.4 million (2021 –$0.8 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 2022, the Group incurred $0.1 million (year ended 31 December 2021 – $0.1
million) of exploration expense at these properties.
D) Tethyan Copper Company Limited
On 15 December 2022 Antofagasta entered into definitive agreements to exit its interest in the Tethyan joint venture, which is therefore no longer
recognised as a joint venture by the Group. The group contributed nil (2021 - $9.5 million) to Tethyan during 2022.
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 $6.7 million (2021 – $2.5 million). During 2022, Zaldívar declared
dividends of $50.0 million to the Group (2021 – $77.5 million).
F) Directors and other key management personnel
Information relating to Directors’ remuneration and interests is given in the Remuneration Report on page 159. Information relating to the remuneration
of key management personnel including the Directors is given in Note 9.
35 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 judgements may at times
occur. The Group may incur, in the future, judgements 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. Provisions are recognised when it is probable that the Group will be required to settle an obligation arising as a result of a legal
claim against the Group.
36 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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233
Financial statements of the
Parent Company (Antofagasta plc)
Parent Company balance sheet
Non-current assets
Investment in subsidiaries
Other receivables1
Property, plant and equipment
Current assets
Other receivables1
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
Dividends
At 31 December
Total equity
Note
2022
$m
2021
$m
5
5
5
6
7
589.1
54.0
4.4
647.5
744.6
457.6
238.5
1,440.7
2,088.2
(615.7)
(9.2)
(624.9)
(992.2)
(992.2)
(1,617.1)
471.1
529.1
54.0
5.1
588.2
3.8
1,649.4
422.8
2,076.0
2,664.2
(302.2)
(15.4)
(317.6)
(993.4)
(993.4)
(1,311.0)
1,353.2
89.8
199.2
89.8
199.2
1,064.2
380.8
(1,262.9)
182.1
471.1
626.0
1,149.0
(710.8)
1,064.2
1,353.2
1. The prior period comparatives have been restated to reflect a reclassification from current other receivables to non-current other receivables of $54.0 million (see note 5).
The financial statements on pages 234 to 237 were approved by the Board of Directors on 23 March 2023 and signed on its behalf by
Jean-Paul Luksic
Chairman
Tony Jensen
Senior Independent Director
234
234
Antofagasta plc Annual Report 2022
Antofagasta Annual Report 2022
Financial Statements
Parent Company statement of changes in equity
At 1 January 2021
Comprehensive income for the year
Dividends
At 31 December 2021
Comprehensive income for the year
Dividends
At 31 December 2022
Share capital
$m
Share premium
$m
89.8
–
–
89.8
–
–
89.8
199.2
–
–
199.2
–
–
199.2
Retained
earnings
$m
626.0
1,149.0
(710.8)
1,064.2
380.8
(1,262.9)
182.1
Total equity
$m
915.0
1,149.0
(710.8)
1,353.2
380.8
(1,262.9)
471.1
The ordinary shares rank after the preference shares in entitlement to dividends 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.
1 Basis of preparation of the Parent Company financial statements
The Antofagasta plc Parent Company financial statements 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)
(ii)
(iii)
paragraph 79(a)(iv) of IAS 1, ‘Presentation of financial statements’
paragraph 73(e) of IAS 16, ‘Property, plant, and equipment’
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 $380.8 million (2021 – $1,149.0 million).
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235
/ Financial statements of the Parent Company (Antofagasta plc) continued
2 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.
I) Financing facilities
On 30 December, 2022, Antofagasta plc agreed a revolving credit facility “RCF” of $500.0 million. This revolving credit facility has a term of three
years, which expires on 30 December, 2025 (see Note 23F).
3 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, which have a total carrying value as at
31 December 2022 of $589.1 million. 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 inter-company 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 $18.4 billion at 31 December
2022, the cash and other assets held by the relevant Group companies and the level of earnings generated by the Group’s operations.
236
236
Antofagasta plc Annual Report 2022
Antofagasta Annual Report 2022
Financial Statements
4 Employee Benefit Expense
i) Average number of employees
The average monthly number of employees was 4 (2021 – 4), engaged in management and administrative activities.
ii) Aggregate remuneration
The aggregate remuneration of the employees mentioned above was as follows:
Wages and salaries
Social security costs
Other pension costs
2022
$m
2.3
0.3
0.1
2.7
2021
$m
2.3
0.3
0.1
2.7
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.
5 Subsidiaries
i)
Investment in subsidiaries
Shares in subsidiaries at cost1
Amounts owed by subsidiaries due after more than one year
1 January 2022
31 December 2022
2022
$m
120.6
468.5
589.1
Loans
$m
468.5
468.5
2021
$m
60.6
468.5
529.1
Total
$m
529.1
589.1
Shares
$m
60.6
120.6
1. The $60.0m increase in the shares in subsidiaries balance reflects the acquisition by the Company of additional shares issued by the Company’s direct subsidiary Andean LFMA
Limited during the year.
The Company has reviewed whether there are any indicators of impairment in respect of the investment balance and concluded that there are no
such indicators.
The above amount of $468.5 million (31 December 2021 – $468.5 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.
ii) Trade and other receivables – amounts owed by subsidiaries due after one year
At 31 December 2022, an amount of $54.0 million (31 December 2021 – $54.0 million) was owed to the Company by indirect subsidiaries. This amount
is not expected to be realised within twelve months after the reporting period. The prior period comparatives have been restated to reflect a
reclassification of this amount from current other receivables to non-current other receivables, again reflecting that this amount was not expected to be
realised within twelve months after the reporting period. There have been no impairments recognised in respect of subsidiary receivables as at
31 December 2022.
iii) Trade and other receivables – amounts owed by subsidiaries due within one year
At 31 December 2022, amounts owed by subsidiaries due within one year were $744.6 million (31 December 2021 – $3.8 million). These balances
principally relate to $410.0 million inter-company dividends declared but not yet paid to the Company by its immediate subsidiary companies. In addition,
there is a $328.0 million receivable balance relating to short-term intragroup funding arrangements. There have been no impairments recognised in
respect of subsidiary receivables as at 31 December 2022.
6 Amounts payable to subsidiaries
At 31 December 2022, amounts payables to subsidiaries due within one year were $615.7 million (31 December 2021 – $302.2 million). This increase in
the balance during the year reflects a $328.0 million payable balance relating to short–term intragroup funding arrangements.
7 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 2022 and 31 December 2021. 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 (x)) at any general meeting.
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237
237
Alternative performance measures
(not subject to audit or review)
This Annual Report includes a number of alternative performance measures, in addition to amounts in accordance with UK-adopted International
Accounting Standards. 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 2022
Operating profit/(loss)
Depreciation
Loss on disposal
Los
Pelambres
$m
1,196.2
276.1
0.5
446.0
710.2
1.0
EBITDA from subsidiaries
Proportional share of the EBITDA
from associates and JV
EBITDA
1,472.8
1,157.2
–
1,472.8
–
1,157.2
For the year ended 31 December 2021
155.6
105.6
–
261.2
–
261.2
Centinela
$m
Antucoya
$m
Zaldívar
$m
Exploration
and
evaluation
$m
Corporate
and other
items
$m
Mining
$m
1,590.5
1,110.6
2.1
(94.3)
18.7
0.6
(75.0)
2,703.2
Transport
division
$m
43.8
30.5
–
74.3
Total
$m
1,634.3
1,141.1
2.1
2,777.5
–
–
–
–
(113.0)
–
–
(113.0)
147.2
147.2
–
(113.0)
(0.7)
(75.7)
146.5
2,849.7
5.7
80.0
152.2
2,929.7
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
Centinela
$m
Antucoya
$m
Zaldívar
$m
Exploration
and
evaluation
$m
Corporate
and other
items
$m
Los
Pelambres
$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
238.3
98.3
0.5
–
337.1
–
337.1
–
–
–
–
–
172.8
172.8
(280.8)
–
–
177.6
(103.2)
–
(103.2)
Mining
$m
3,369.6
1,047.8
8.2
Transport
division
$m
31.8
30.9
1.0
Total
$m
3,401.4
1,078.7
9.2
(89.0)
13.0
–
–
(76.0)
177.6
4,603.2
–
63.7
177.6
4,669.9
(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.
238
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Antofagasta plc Annual Report 2022
Antofagasta Annual Report 2022
Other Information
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 (attributable basis – 50%)
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 (excluding depreciation) (Note 6)
Exploration and evaluation – Total operating cost (excluding depreciation) (Note 6)
Transport division – Total operating cost (excluding depreciation) (Note 6)
Closure provision and other expenses not included within cash costs
Inventory variation
Total cost relevant to the mining operations’ cash costs
Copper production volumes (tonnes)1
2022
$m
2021
$m
4,227.7
234.4
4,068.7
231.7
(1,141.1)
(1,078.7)
(2.1)
–
(9.2)
(177.6)
(75.0)
(113.0)
(119.1)
(97.6)
(12.0)
2,902.2
(76.0)
(103.2)
(106.3)
(90.7)
2.1
2,660.8
646,200
721,450
Cash costs excluding treatment and refining charges and by-product revenue ($/tonne)
4,491
3,688
Cash costs excluding treatment and refining charges and by-product revenue ($/lb)
2.05
1.68
Reconciliation of cash costs before deducting by-product revenue:
Treatment and refining charges – copper and by-product – Los Pelambres
Treatment and refining charges – copper and by-product – Centinela
Treatment and refining charges – copper – total
Copper production volumes (tonnes)
Treatment and refining charges ($/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)
1. The 646,200 tonnes includes 44,500 tonnes of production at Zaldívar on a 50% attributable basis.
108.5
78.8
187.3
115.4
70.4
185.8
646,200
721,450
289.9
0.14
2.05
0.14
2.19
257.5
0.11
1.68
0.11
1.79
antofagasta.co.uk
Antofagasta plc Annual Report 2022
239
239
/ Alternative performance measures continued
C) Cash costs continued
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)1
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)
2022
$m
2021
$m
75.5
239.0
311.9
110.2
33.1
25.1
794.8
91.2
346.2
353.6
44.4
46.6
38.7
920.7
646,200
721,450
1,230.0
0.58
1,276.0
0.59
2.19
(0.58)
1.61
1.79
(0.59)
1.20
1. The 646,200 tonnes includes 44,500 tonnes of production at Zaldívar on a 50% attributable basis.
The totals in the tables above may include some small apparent differences as the specific individual figures have not been rounded.
240
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Antofagasta plc Annual Report 2022
Antofagasta Annual Report 2022
Other Information
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 owners of the parent, 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 owners of the parent, 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 owners of the parent.
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)
2022
2021
Total
amount
$m
Attributable
share
Attributable
amount
$m
$m
Total
amount
$m
Attributable
share
Attributable
amount
$m
$m
655.4
348.5
111.8
1,247.0
28.5
2,391.2
(1,525.8)
(311.9)
(411.5)
(1,010.9)
(16.9)
(3,277.0)
60%
70%
70%
100%
100%
60%
70%
70%
100%
100%
393.2
244.0
78.3
427.9
625.3
181.5
1,247.0
2,436.5
28.5
41.9
1,991.0
3,713.1
(915.5)
(218.3)
(288.1)
(1,010.9)
(16.9)
(2,449.7)
(1,243.1)
(446.6)
(439.2)
(1,016.5)
(27.2)
(3,172.6)
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)
(2,409.6)
Net (debt)/cash
(885.8)
(458.7)
540.5
890.3
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241
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 owners of the parent
Non-controlling interests
Consolidated income statement
Group revenue
2022
$m
2021
$m
2020
$m
2019
$m
2018
$m
–
11,543.5
1.1
347.0
904.6
51.0
–
90.5
78.5
13,016.2
5,222.1
(1,605.8)
(4,988.1)
–
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)
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)
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)
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)
11,644.4
11,029.0
10,081.1
9,401.0
9,438.1
89.8
199.2
8,338.5
8,627.5
3,016.9
89.8
199.2
8,061.2
8,350.2
2,678.8
89.8
199.2
7,461.6
7,750.6
2,330.5
89.8
199.2
7,094.7
7,383.7
2,017.3
89.8
199.2
7,070.4
7,359.4
2,078.7
11,644.4
11,029.0
10,081.1
9,401.0
9,438.1
2022
$m
2021
$m
2020
$m
2019
$m
2018
$m
5,862.0
7,470.1
5,129.3
4,964.5
4,733.1
Total profit from operations and associates
2,627.1
3,461.1
1,516.5
1,400.2
1,367.2
Profit before tax
Income tax expense
Profit from continuing operations
Profit from discontinued operations
Profit for the year
2,558.9
(603.6)
1,955.3
3,477.1
(1,242.3)
2,234.8
1,413.1
(526.5)
886.6
1,349.2
(506.1)
843.1
1,252.7
(423.7)
829.0
–
1,955.3
–
2,234.8
7.3
893.9
–
843.1
51.3
880.3
Non-controlling interests
Net earnings (profit attributable to owners of the parent)
(422.3)
1,533.0
(944.6)
1,290.2
(387.5)
506.4
(341.7)
501.4
(336.6)
543.7
EBITDA
2,929.7
4,836.2
2,739.2
2,438.9
2,228.3
Earnings per share
Basic and diluted earnings per share
2022
cents
2021
cents
2020
cents
2019
cents
2018
cents
155.5
130.9
51.3
50.9
55.1
242
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Antofagasta plc Annual Report 2022
Antofagasta Annual Report 2022
Other Information
Dividends per share proposed in relation to the year
Ordinary dividends (interim and final)
2022
cents
59.7
59.7
2021
cents
142.5
142.5
2020
cents
54.7
54.7
2019
cents
34.1
34.1
2018
cents
43.8
43.8
Dividends per share paid in the year and deducted from equity
128.1
72.1
13.3
47.7
47.4
Consolidated cash flow statement
Cash flow from continuing operations
Interest paid
Income tax paid
Net cash from operating activities
2022
$m
2021
$m
2020
$m
2019
$m
2018
$m
2,738.3
(74.3)
(787.1)
1,876.9
4,507.7
(60.7)
(776.9)
3,670.1
2,431.1
(52.7)
(319.7)
2,570.7
(76.3)
(403.6)
2,058.7
2,090.8
1,877.0
(68.2)
(498.0)
1,310.8
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
–
50.0
1,322.4
(1,879.0)
29.1
(477.5)
–
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)
145.2
16.6
284.2
(872.2)
26.4
(399.8)
Financing activities
Dividends paid to owners of the parent
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
(1,262.9)
(80.1)
–
9.2
(710.8)
(604.6)
–
(634.5)
(1,333.8)
(1,949.9)
(131.1)
(470.3)
(466.9)
(280.1)
(400.1)
(120.1)
210.0
918.3
717.1
–
60.8
(809.6)
–
(347.1)
(934.1)
Net increase/(decrease) in cash and cash equivalents
65.6
(483.1)
588.3
(375.0)
(23.1)
Consolidated net cash
Cash, cash equivalents and liquid investments
Short-term borrowings
Medium and long-term borrowings
2022
$m
2021
$m
2020
$m
2019
$m
2018
$m
2,391.2
3,713.1
3,672.8
2,193.4
1,897.6
(432.5)
(337.1)
(603.4)
(723.9)
(2,844.5)
(2,835.5)
(3,151.4)
(2,032.9)
(3,277.0)
(3,172.6)
(3,754.8)
(2,756.8)
(646.0)
(1,847.9)
(2,493.9)
Net (debt)/cash at the year-end
(885.8)
540.5
(82.0)
(563.4)
(596.3)
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243
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
Group total
Market average price
Molybdenum
Los Pelambres
Centinela
Group total/average realised price
Market average price
PPrroodduuccttiioonn
2021
‘000
tonnes
324.7
274.2
78.6
44.0
721.5
22002222
‘‘000000
ttoonnnneess
275.0
247.5
79.2
44.5
646.2
22002222
‘‘000000
ttoonnnneess
271.2
246.1
80.8
44.4
642.5
SSaalleess
2021
‘000
tonnes
324.5
276.1
80.4
44.6
725.6
NNeett ccaasshh ccoossttss
RReeaalliisseedd pprriicceess
22002222
‘‘00$$//llbb
2021
00$/lb
22002222
$$//llbb
2021
‘0$/lb
3.76
3.89
3.95
–
3.84
4.54
4.31
3.94
–
4.37
1.10
1.75
2.50
2.39
1.61
2.05
2.19
0.89
1.13
2.04
2.39
1.20
1.68
1.79
1.84
1.59
(0.74)
1.10
(0.70)
0.89
2.44
(0.69)
1.75
1.87
(0.74)
1.13
Production
2021
‘000
ounces
53.2
199.0
252.2
2022
‘000
ounces
43.1
133.7
176.8
2022
‘000
ounces
42.3
132.3
174.6
Sales
2021
‘000
ounces
51.1
193.5
244.6
4.00
4.23
Realised prices
2022
$/oz
2021
$/oz
1,785
1,806
1,801
1,800
1,783
1,789
1,788
1,799
‘000
tonnes
‘000
tonnes
‘000
tonnes
‘000
tonnes
$/lb
$/lb
7.2
2.4
9.6
9.2
1.3
10.5
6.8
2.4
9.2
9.2
1.2
10.4
20.9
20.5
20.8
18.7
17.5
17.2
17.4
15.9
244
244
Antofagasta plc Annual Report 2022
Antofagasta Annual Report 2022
Other Information
/ Ore reserves and mineral resources estimates
Ore reserves and mineral resources
estimates
At 31 December 2022
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
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 Sofia Orellana (CP, Chile), Deputy Manager of Long-Term Mining
Planning 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
254-255. 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 ‘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 drill holes 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 drill holes. 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 drill holes. The locations
are spaced closely enough to confirm geological and grade continuity.
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
realistic consideration on modifying factors such as mining method,
metallurgical process and 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 realistic consideration on modifying factors
such as mining method, metallurgical process and 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 realistic consideration on
modifying factors such as mining method, metallurgical process and
economic, marketing, legal, environmental, social and governmental
factors. These assessments demonstrate at the time of reporting that
extraction could reasonably be justified.
Antofagasta plc Annual Report 2022
245
/ 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)
2022
2021
2022
Copper
(%)
2021
Molybdenum
(%)
Gold
(g/tonne)
Attributable Tonnage
(millions of tonnes)
2022
2021
2022
2021
2022
2021
574.8
330.6
905.5
612.3
343.8
956.1
59.1
215.4
274.5
76.4
222.9
299.3
509.2
1,203.6
1,712.8
568.3
1,418.9
1,987.2
436.2
281.4
717.6
545.6
1,138.7
1,684.3
622.0
1,361.6
1,983.6
435.9
309.6
745.5
0.60
0.57
0.59
0.50
0.33
0.37
0.44
0.38
0.40
0.45
0.38
0.40
0.33
0.29
0.31
0.60
0.57
0.59
0.54
0.34
0.39
0.45
0.39
0.41
0.46
0.38
0.40
0.33
0.30
0.32
0.020
0.020
0.020
0.020
0.019
0.020
0.05
0.05
0.05
0.05
0.05
0.05
344.9
198.4
543.3
367.4
206.3
573.7
0.012
0.012
0.012
0.012
0.013
0.012
0.17
0.12
0.13
0.17
0.12
0.14
41.4
150.8
192.1
53.5
156.1
209.5
356.5
842.5
1,198.9
397.8
993.2
1,391.1
305.3
197.0
502.3
381.9
797.1
1,179.0
435.4
953.1
1,388.5
305.1
216.7
521.9
Total Group Subsidiaries
3,610.3
3,685.3
0.43
0.43
2,436.7
2,484.1
Tonnage
(millions of tonnes)
2022
2021
2022
Copper
(%)
2021
Molybdenum
(%)
Gold
(g/tonne)
Attributable Tonnage
(millions of tonnes)
2022
2021
2022
2021
2022
2021
169.0
37.6
206.6
183.3
42.1
225.4
2,643.3
2,709.5
Group Joint Ventures
Ore reserves
Zaldívar (see note (n))
Proved
Probable
Total
337.9
75.2
413.2
366.6
84.3
450.8
0.44
0.31
0.42
0.45
0.34
0.43
Total Group
4,023.5
4,136.2
0.43
0.43
246
Antofagasta plc Annual Report 2022
Other Information Mineral resources estimates (including ore reserves)
Tonnage
(millions of tonnes)
Group Subsidiaries
2022
2021
2022
Los Pelambres (see note (a))
Copper
(%)
2021
Molybdenum
(%)
Gold
(g/tonne)
Attributable Tonnage
(millions of tonnes)
2022
2021
2022
2021
2022
2021
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
1,054
2,121
3,176
2,780
5,955
1,054
2,121
3,176
2,780
5,955
1,093
2,135
3,228
2,729
5,957
1,093
2,135
3,228
2,729
5,957
101
297
398
15
413
110
316
426
16
442
913
1,935
2,848
1,789
4,637
1,014
2,232
3,246
1,804
5,050
956
1,903
2,860
1,233
4,092
1,066
2,220
3,285
1,249
4,534
0.57
0.52
0.54
0.46
0.50
0.57
0.52
0.54
0.46
0.50
0.47
0.32
0.36
0.33
0.36
0.48
0.37
0.40
0.29
0.36
0.48
0.36
0.40
0.29
0.36
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
0.020
0.016
0.018
0.016
0.017
0.020
0.016
0.018
0.016
0.017
0.020
0.016
0.018
0.016
0.017
0.020
0.016
0.018
0.016
0.017
0.05
0.05
0.05
0.06
0.05
0.05
0.05
0.05
0.06
0.05
0.05
632.6
0.05 1,272.9
0.05 1,905.5
0.06 1,667.7
0.06 3,573.2
656.1
1,281.0
1,937.1
1,637.4
3,574.5
0.05
632.6
0.05 1,272.9
0.05 1,905.5
0.06 1,667.7
0.06 3,573.2
656.1
1,281.0
1,937.1
1,637.4
3,574.5
70.7
207.6
278.3
10.6
288.9
76.7
221.3
298.0
11.3
309.3
0.014
0.013
0.013
0.011
0.012
0.013
0.013
0.013
0.011
0.013
0.19
0.12
0.14
0.08
0.12
0.19
639.4
0.12 1,354.6
0.14 1,993.9
0.08 1,252.2
0.12 3,246.2
669.4
1,332.3
2,001.8
862.7
2,864.5
710.1
1,562.2
2,272.2
1,262.9
3,535.1
746.2
1,553.6
2,299.8
874.0
3,173.8
Antofagasta plc Annual Report 2022
247
/ Ore reserves and mineral resources estimates continued
Mineral resources estimates (including ore reserves) continued
Group Subsidiaries
2022
2021
2022
Tonnage
(millions of tonnes)
Copper
(%)
2021
Molybdenum
(%)
Gold
(g/tonne)
Attributable Tonnage
(millions of tonnes)
2022
2021
2022
2021
2022
2021
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
463.7
348.5
812.3
302.3
1,114.6
463.7
348.5
812.3
302.3
1,114.6
465.4
388.9
854.3
337.4
1,191.6
465.4
388.9
854.3
337.4
1,191.6
46.6
59.7
106.4
6.2
112.6
32.4
69.5
101.9
6.6
108.5
257.0
678.2
935.2
598.0
1,533.2
281.4
654.9
936.4
612.1
1,548.5
303.7
737.9
1,041.6
604.2
1,645.8
313.8
724.5
1,038.3
618.7
1,657.0
0.32
0.29
0.31
0.26
0.30
0.32
0.29
0.31
0.26
0.30
0.45
0.38
0.41
0.30
0.41
0.39
0.33
0.35
0.27
0.32
0.40
0.34
0.36
0.27
0.32
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
324.6
244.0
568.6
211.6
780.2
324.6
244.0
568.6
211.6
780.2
325.7
272.2
598.0
236.2
834.1
325.7
272.2
598.0
236.2
834.1
46.6
59.7
106.4
6.2
112.6
32.4
69.5
101.9
6.6
108.5
0.007
0.007
0.007
0.006
0.006
0.007
0.006
0.006
0.005
0.006
0.07
0.05
0.06
0.04
0.05
0.07
257.0
0.05
678.2
0.06
935.2
0.04
598.0
0.05 1,533.2
281.4
654.9
936.4
612.1
1,548.5
303.7
737.9
1,041.6
604.2
1,645.8
313.8
724.5
1,038.3
618.7
1,657.0
18.3
18.3
18.3
18.3
0.29
0.29
0.29
0.29
9.3
9.3
9.3
9.3
337.4
337.4
321.9
321.9
0.38
0.38
0.38
0.38
0.05
0.05
0.05
0.05
172.1
172.1
164.2
164.2
355.7
355.7
340.2
340.2
0.37
0.37
0.37
0.37
181.4
181.4
173.5
173.5
248
Antofagasta plc Annual Report 2022
Other Information
Mineral resources estimates (including ore reserves) continued
Group Subsidiaries
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
Tonnage
(millions of tonnes)
2022
2021
2022
Copper
(%)
2021
Molybdenum
(%)
Gold
(g/tonne)
Attributable Tonnage
(millions of tonnes)
2022
2021
2022
2021
2022
2021
2.5
26.8
29.2
11.1
40.3
36.0
20.7
56.7
5.0
61.8
38.5
47.5
86.0
16.1
102.1
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
0.28
0.27
0.27
0.26
0.27
0.33
0.28
0.31
0.25
0.31
0.33
0.27
0.30
0.26
0.29
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
0.006
0.008
0.007
0.008
0.007
0.006
0.008
0.007
0.008
0.007
0.12
0.07
0.10
0.05
0.10
0.12
0.07
0.11
0.06
0.10
1.8
20.2
22.0
8.9
30.8
36.0
20.7
56.7
5.0
61.8
37.8
40.9
78.7
13.9
92.6
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
Antofagasta plc Annual Report 2022
249
/ Ore reserves and mineral resources estimates continued
Mineral resources estimates (including ore reserves) continued
Group Subsidiaries
Los Volcanes (see note (g))
Tonnage
(millions of tonnes)
2022
2021
2022
Copper
(%)
2021
Molybdenum
(%)
Gold
(g/tonne)
Attributable Tonnage
(millions of tonnes)
2022
2021
2022
2021
2022
2021
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
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
Encierro (see note (j))
Sulphides
Measured
Indicated
Measured + Indicated
Inferred
Subtotal
Encierro total
Measured
Indicated
Measured + Indicated
Inferred
Total
30.8
30.8
30.8
30.8
0.31
0.31
0.31
0.31
15.7
15.7
15.7
15.7
1,880.0
1,880.0
1,873.4
1,873.4
0.50
0.50
0.50
0.50
0.011
0.011
0.011
0.011
958.8
958.8
955.4
955.4
1,910.8
1,910.8
1,904.2
1,904.2
0.50
0.50
0.50
0.50
974.5
974.5
971.1
971.1
88.0
88.0
87.2
87.2
0.49
0.49
0.49
0.49
88.0
88.0
87.2
87.2
0.49
0.49
0.49
0.49
52.3
52.3
52.0
52.0
0.68
0.68
0.69
0.69
52.3
52.3
52.0
52.0
0.68
0.68
0.69
0.69
44.9
44.9
44.5
44.5
44.9
44.9
44.5
44.5
52.3
52.3
52.0
52.0
52.3
52.3
52.0
52.0
522.3
522.3
522.3
522.3
0.65
0.65
0.65
0.65
0.007
0.007
0.007
0.007
0.22
0.22
0.22
0.22
295.3
295.3
295.3
295.3
250
Antofagasta plc Annual Report 2022
Other Information Mineral resources estimates (including ore reserves) continued
Group Subsidiaries
2022
2021
2022
Tonnage
(millions of tonnes)
Copper
(%)
2021
Molybdenum
(%)
Silver
(g/tonne)
Attributable Tonnage
(millions of tonnes)
2022
2021
2022
2021
2022
2021
Cachorro (see note (k))
Oxides
Measured
Indicated
Measured + Indicated
Inferred
Subtotal
Sulphides
Measured
Indicated
Measured + Indicated
Inferred
Subtotal
Cachorro total
Measured
Indicated
Measured + Indicated
Inferred
Total
12.7
12.7
24.8
37.6
36.7
36.7
168.2
204.9
49.4
49.4
193.0
242.5
12.4
12.4
129.2
129.2
141.6
141.6
1.15
1.15
0.92
1.00
1.54
1.54
1.19
1.25
1.44
1.44
1.15
1.21
1.23
1.23
1.21
1.21
1.21
1.21
6.21
6.21
3.49
3.98
12.7
12.7
24.8
37.6
36.7
36.7
168.2
204.9
49.4
49.4
193.0
242.5
12.4
12.4
129.2
129.2
141.6
141.6
Antofagasta plc Annual Report 2022
251
/ Ore reserves and mineral resources estimates continued
Mineral resources estimates (including ore reserves) continued
Group Subsidiaries
2022
2021
2022
Twin Metals (see note (m))
Tonnage
(millions of tonnes)
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
Group Subsidiaries total
291.4
818.3
1,109.7
534.1
1,643.8
291.4
818.3
1,109.7
534.1
1,643.8
93.1
93.1
29.3
122.4
90.4
90.4
217.0
307.4
93.1
93.1
29.3
122.4
90.4
90.4
217.0
307.4
435.5
435.5
435.5
435.5
291.4
1,001.8
1,293.2
1,215.9
2,509.1
291.4
1,001.8
1,293.2
1,215.9
2,509.1
9,779.4
9,704.3
8,688.5
9,844.2
19,548.6 18,467.8
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
Nickel
(%)
2021
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
2022
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
Copper
(%)
2021
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
TPM
(g/tonne Au+Pt+Pd)
Attributable Tonnage
(millions of tonnes)
2022
2021
2022
2021
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
0.57
0.57
0.31
0.31
0.26
0.30
0.87
0.87
0.64
0.70
224.6
771.6
996.1
483.2
1,479.3
224.6
771.6
996.1
483.2
1,479.3
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
0.47
0.57
224.6
0.57
900.0
0.57
1,124.6
0.37
960.4
0.47 2,085.0
224.6
900.0
1,124.6
960.4
2,085.0
7,124.9
7,072.2
5,656.3
5,720.9
12,793.2 12,781.2
252
Antofagasta plc Annual Report 2022
Other Information Mineral resources estimates (including ore reserves) continued
Group Join Ventures
Zaldivar (see note (n))
Oxides & Secondary Sulphides
Measured
Indicated
Measured + Indicated
Inferred
Total
Primary Sulphides
Measured
Indicated
Measured + Indicated
Inferred
Subtotal
Zaldívar total
Measured
Indicated
Measured + Indicated
Inferred
Group Joint Ventures total
Total Group
Measured + Indicated
Inferred
Total
Tonnage
(millions of tonnes)
2022
2021
2022
606.8
124.8
731.6
14.0
745.6
113.8
265.6
379.4
25.2
404.6
660.5
168.7
829.2
23.0
852.2
119.5
309.8
429.3
28.3
457.6
720.6
390.4
1,111.0
39.2
1,150.2
780.0
478.5
1,258.5
51.3
1,309.9
Tonnage
(millions of tonnes)
2022
2021
10,815.3
9,883.4
11,037.9
8,739.8
20,698.8 19,777.7
0.40
0.29
0.38
0.35
0.38
0.41
0.40
0.41
0.37
0.40
0.40
0.37
0.39
0.37
0.39
2022
0.45
0.44
0.45
Copper
(%)
2021
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
Copper
(%)
2021
0.45
0.44
0.44
Molybdenum
(%)
Gold
(g/tonne)
Attributable Tonnage
(millions of tonnes)
2022
2021
2022
2021
2022
2021
303.4
62.4
365.8
7.0
372.8
56.9
132.8
189.7
12.6
202.3
360.3
195.2
555.5
19.6
575.1
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
Molybdenum
(%)
Gold
(g/tonne)
Attributable Tonnage
(millions of tonnes)
2022
2021
2022
2021
2022
2021
7,596.2
6,481.7
7,701.5
5,746.7
14,077.9 13,448.0
Antofagasta plc Annual Report 2022
253
/ Ore reserves and mineral resources estimates continued
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 $3.30/lb ($3.10/lb in 2021), $13.00/lb molybdenum ($9.50/lb in 2021) and $1,600/oz gold ($1,500/oz in 2021), 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 $3.75/lb ($3.60/lb in 2021). 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 resource and reserve estimates have been audited as per Group
policy, with audits carried out during 2022 on the Cachorro and Polo Sur resource models. All resource and reserve estimates have been found
to comply with the JORC Code (2012).
a) Los Pelambres
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 ore reserves is variable over 0.35% copper. Ore Reserves decreased in 51 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 2 million tonnes, including depletion, higher mineral prices and stockpiles.
b) Centinela (Concentrates and Cathodes)
Centinela is 70% owned by the Group and consists of Centinela Concentrates (Esperanza + Esperanza Sur and Encuentro Sulphide) 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 Concentrates ore reserves have increased by a net 28 million tonnes, due mainly to the increase in metal prices. Centinela Concentrates
mineral resources increased by a net 495 million tonnes, incorporating ore material that connects former Esperanza and Esperanza Sur resources,
due mainly to higher product and by-product prices. The Centinela Cathodes ore reserves have decreased by a net 25 million tonnes, due mainly to
depletion in the period. Centinela Cathodes ore reserves are made up of 160 million tonnes at 0.45% copper of heap leach ore and 114 million tonnes
at 0.26% copper of ROM ore. Centinela Cathodes mineral resources decreased by a net 29 million tonnes, due mainly to depletion and higher mining
and processing costs.
c) Antucoya
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.
Ore reserves have decreased by a net 28 million tonnes, due mainly to depletion in the period, partially compensated by an increase in ore stockpiles.
For 2022 the mineral resource model has been updated with 51 drill holes for a total of 10,000 metres. Mineral resources have decreased by a net
77 million tonnes, due mostly to depletion, new drilling data and higher mining costs.
d) Polo Sur
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 2022 resource model has been updated with 105 drill holes for a total of 17,000 metres. Mineral resources have decreased by a net
11 million tonnes, due to the resource model update and the use of higher mining and processing costs in pit optimisation.
e) Penacho Blanco
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 2022 the resource model has not been updated. The mineral resources have increased by a net 15 million tonnes, due mainly
to the increase in metal prices.
f) Mirador
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 the mineral resources for oxides is 0.15% copper and for sulphides is 0.20% copper. The mineral resources have
increased by a net 9 million tonnes, due mainly to the increase in metal prices.
g) Los Volcanes
Los Volcanes is 51% owned by the Group. The cut-off grade applied to the determination of mineral resources is 0.20% copper. For 2022 the mineral
resource model has not been updated. The mineral resources have increased by a net 7 million tonnes, due mainly to the increase in metal prices.
h) Brujulina
Brujulina is 51% owned by the Group. The cut-off grade applied to the determination of mineral resources is 0.30% copper. For 2022 the mineral
resource model has not been updated. The mineral resources have increased by a net 1 million tonnes, due mainly to the increase in metal prices.
i) Sierra
Sierra is 100% owned by the Group. The cut-off grade applied to the determination of mineral resources is 0.30% copper. For 2022 the mineral
resource model has not been updated. The mineral resources have increased by a net 0.3 million tonnes, due mainly to the increase in metal prices.
j) Encierro
Encierro is 56.55% owned by the Group. This is Encierro´s maiden mineral resource report, supported by 60,800 metres of drilling from 60 drill
holes. In order to ensure that the stated mineral resources represent mineralisation that have “reasonable prospects for eventual economic extraction”
(JORC code), Encierro’s mineral resources are stated above cut-offs of 0.50% copper for sulphides. All reported mineral resources have been defined
as inferred. Mineralisation estimated below a 0.5% cut-off is not included in the mineral resource figures.
254
Antofagasta plc Annual Report 2022
Other Information k) Cachorro
Cachorro is 100% owned by the Group. The cut-off grade applied to the determination of mineral resources for both oxides and sulphides is 0.50%
copper. The 2022 resource model has been updated included new drilling data and two newly discovered areas, adding 170 drill holes for a total
of 108,000 metres. Mineral resources have increased by a net 100 million tonnes, due to the resource model update. Resources have been defined
as indicated and inferred material and considering a copper price of $3.75.
m) Twin Metals Minnesota LLC
Twin Metals Minnesota LLC (“Twin Metals”) is 100% owned 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 mineral resource. For 2022 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 mineral 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 mineral 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 mineral 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 mineral 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 mineral resource estimate does not include
TPM values as they were not assayed for TPMs.
In August 2022, Twin Metals filed a claim in federal court challenging the administrative actions resulting in the rejection of the preference right lease
applications (“PRLAs”), the cancellation of its federal leases 1352 and 1353, the rejection of its Mine Plan of Operations (“MPO”) and the dismissal
of the administrative appeal of the MPO rejection. That action is currently pending. 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 having the decisions on the federal leases 1352
and 1353 and the PRLAs reversed through litigation, it will not have entitlement to the mineral resources associated with those mineral licences.
n) Zaldívar
Zaldívar is 50% owned by the Group. Heap leaching (HL) and dump leaching (DL) materials are defined based on total copper cut-off grades.
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. Ore reserves have decreased by a net 38 million tonnes, due mainly to depletion in the period. For mineral resources the cut-off
grade is 0.18% copper for HL and 0.10% copper for DL, throughout the life of mine period. The cut-off grade applied to the primary sulphide mineral
resources is 0.3% copper. The mineral resources decreased in 160 million tonnes because of the combined effects of depletion and increased 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 Phase 13 is subject to agreements or easements to access these areas and relocate
the infrastructure. Phase 13 represents 22% of the Zaldívar ore reserve.
Zaldívar submitted an Environmental Impact Assessment (EIA) in 2018 which included an application to extend its water extraction and mining permits
to 2029 (with decreasing activity levels in 2030-2031). Currently, Zaldívar is permitted to extract water and mine into 2025 and 2024, respectively.
To ensure the continuity of the operation, in March 2023 Zaldívar submitted a DIA (Declaration of Environmental Impact), a more limited scope and
simplified procedure than an EIA, requesting that the mining permit be extended from 2024 to 2025 so as to expire at the same date as the current
water permit. At the same time Zaldívar withdrew the 2018 EIA application. It is expected that an alternative and updated EIA application to extend the
water and mining permits beyond 2025 will be submitted which will also include a plan for a transition from the current continental water source on
completion of the extended water permit, to either procuring water from a third party or using raw sea water. The ore reserves estimate assumes that
the requested permits will be extended to allow for the extraction of all of Zaldívar’s ore reserves. The details of the future permits or alternative water
supply arrangements could lead to a review of and, eventually, an update to, Zaldívar’s mine plan.
o) Antomin 2 and Antomin Investors
The Group has a 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 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.
Antofagasta plc Annual Report 2022
255
Glossary and definitions
Asset Delivery System.
Concentrate
ADS
AMSA
Annual Report
Antucoya
Banco de Chile
Barrick Gold
Brownfield
project
By-products
(credits in
copper
concentrates)
Capex
Cash costs
CDP
Centinela
Antofagasta Minerals SA, a wholly-owned
subsidiary of the Group incorporated in Chile,
which acts as the corporate centre for the
Mining division.
The Annual Report and Financial Statements
of Antofagasta plc.
Minera Antucoya, a 70%-owned subsidiary
incorporated in Chile.
A commercial bank that is a subsidiary
of Quiñenco.
Barrick Gold Corporation, incorporated
in Canada and our joint venture partner
in Zaldívar.
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.
Centinela Mining
District
Copper district located in the Antofagasta
region of Chile, where Centinela is located.
Chilean peso
CO2e
Companies Act
2006
Chilean currency.
Carbon dioxide equivalent.
Principal legislation for United Kingdom
Company law.
Company
Antofagasta plc.
256
Antofagasta plc Annual Report 2022
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.
Contained copper The proportion or quantity of copper contained
Continental
water
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
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.
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.
Earnings Before Interest, Tax, Depreciation
and Amortisation.
Environmental Impact Assessment.
Copper oxide and sulphide deposit in the
Centinela Mining District.
EPS
Earnings per share.
Esperanza Sur
Copper deposit in the Centinela Mining District.
FCAB
Flotation
FTSE All-Share
Index
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.
Other Information FTSE100 and
FTSE350 Index
GAAP
A share index of the 100 or 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.
Government
The Government of the Republic of Chile.
Grade A copper
cathode
Greenfield
project
Group
Heap-leaching
or leaching
HPI
ICMM
IFRIC
IFRS
JORC
KPI
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 a (gravity fed)
chemical solution through the heaps to
collection ponds. The metal is then recovered
from the solution through the SX-EW process.
High Potential Incident. An event that, under
different circumstances, might easily have
resulted in a serious injury or fatality.
International Council on Mining and Metals.
International Financial Reporting Standards
Interpretations Committee.
International Financial Reporting Standards.
The Australasian Joint Ore Reserves
Committee.
Key performance indicator.
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 ore reserves).
LME
London Metal Exchange.
Los Pelambres
Minera Los Pelambres, a 60%-owned
subsidiary incorporated in Chile.
LTIFR
LTIP
Lost Time Injury Frequency Rate. The number
of accidents with lost time during the year per
million hours worked.
Long Term Incentive Plan in which the Group’s
CEO, Executive Committee members and other
senior managers participate.
Mineral
resources
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.
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 copper cathodes.
Payable copper
The proportion or quantity of contained
copper for which payment is received
after metallurgical deduction.
Platts
Porphyry
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.
Antofagasta plc Annual Report 2022
257
Tailings dam or
tailings storage
facility (TSF)
TC/RCs
TCFD
Tonne
TSR
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.
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.
Metric tonne.
Total Shareholder Return, being the movement
in the Company’s share price plus any
dividends paid by the Company.
Twin Metals
Minnesota
Project
A copper, nickel and platinum group metals
underground-mining project located in
Minnesota, US.
UK
United Kingdom.
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.
/ Glossary and definitions continued
Provisional
pricing
Quiñenco
RCA
Realised prices
Reko Diq
Run-of-Mine
(“ROM”)
SDGs
SERNAGEOMIN
SONAMI
Sterling
Stockpile
SX-EW
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.
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.
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.
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.
258
Antofagasta plc Annual Report 2022
Other Information Shareholder information
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
Dividends
Details of dividends proposed in relation to the year are given in the
Directors’ Report on page 168, and in Note 13 to the Financial Statements.
If approved at the Annual General Meeting, the final dividend of 50.5
cents per share will be paid on 12 May 2023 to ordinary shareholders
that are on the register at the close of business on 21 April 2023.
Shareholders can elect (on or before 24 April 2023) 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 27 April 2023.
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 Westminster, Dean’s Yard, London SW1P 3NZ
and electronically by live broadcast using the Summit platform
(meetnow.global/AFGAGM2023) at 2:00 pm on Wednesday 10 May
2023. 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.
Antofagasta plc Annual Report 2022
259
/ Shareholder information continued
Shareholder calendar 2023
18 January 2023
Q4 2022 Production Report
21 February 2023
Full Year 2022 Results Announcement
19 April 2023
Q1 2023 Production Report
20 April 2023
2022 Final Dividend – Ex Dividend date
21 April 2023
24 April 2023
27 April 2023
10 May 2023
12 May 2023
19 July 2023
2022 Final Dividend – Record date
2022 Final Dividend – Final date for receipt
of Currency Elections
2022 Final Dividend – Pound sterling/
Euro Rate set
Annual General Meeting
2022 Final Dividend – Payment date
Q2 2023 Production Report
10 August 2023
Half Year 2023 Results Announcement
31 August 2023
2023 Interim Dividend – Ex Dividend date
01 September 2023
2023 Interim Dividend – Record date
04 September 2023
2023 Interim Dividend – Final date
for receipt of Currency Elections
07 September 2023
2023 Interim Dividend – Pound sterling/
Euro Rate set
29 September 2023 2023 Interim Dividend – Payment date
18 October 2023
Q3 2023 Production Report
17 January 2024
Q4 2023 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
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Antofagasta plc
103 Mount Street
London
W1K 2TJ
United Kingdom
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