Antofagasta AR 22
Antofagasta AR 22
Antofagasta AR 22
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
/ 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
73 GL 1.3 million
100%
tCO2e
of which 45.4% was sea water.
completed in 2022.
Decreased by 37% since 2021. Esperanza Sur Pit project
93%
of our employees are women. We generate economic value for all our
stakeholders, 4% higher than last year.
More information
on P41 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.
Underlying earnings per share Earnings per share including Total dividend
excluding exceptional items4 exceptional items per share
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.
/ At a glance
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.
Employees2
Copper production Net cash costs 1
Gender diversity
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.
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
Los Pelambres
third-party validation process.
Santiago
Revenue EBITDA4
$5,862m $2,930m
FUTURE GROWTH
The Group has a pipeline of growth projects sent to the Board for final investment approval
to develop our significant mineral resource during 2023 following completion of the Los
base which we are currently advancing through Pelambres Expansion project and once there is
a disciplined process of project evaluation. sufficient clarity on the outcomes of the ongoing
We also have a portfolio of growth opportunities discussions on the mining royalty and tax reform
located mainly in Chile. 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.
Transport division Vivianne joined the Board in 2014 and since then, half of our Board
It was a strong year for our Transport division, which had a record year appointments have been female, with women currently comprising 30%
for both safety and the tonnage transported. of our Board. However, we aim to increase female representation to
40%, and we are actively working towards this target.
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 Outlook for 2023
facilities and workshops are now in the city centre, providing a The IMF forecasts that global growth will slow in 2023 affected by
long-term opportunity to repurpose the area and fully integrate it into the a number of issues, particularly the war in Ukraine, China’s economic
future urban development of the city. We have therefore made the performance, the rate of economic growth in the US and Europe, and
decision to relocate the facilities and workshop 40 miles north to an the energy crisis. In addition, Chile’s political and economic environment
industrial area near the town of Mejillones. further complicates the outlook.
We have been making progress and in 2022, prior to beginning the Uncertainty clouds the short-term picture, yet important features of the
urban redevelopment, we started the process of converting the former long-term are clearer. The world is moving towards net-zero. That
railyard into a historic neighbourhood. This involved us working closely journey will demand more copper, according to some forecasters almost
with the local community and authorities to ensure the project meets the 10 million more tonnes over the next decade alone, at a time when the
needs of the area and is environmentally sustainable. global copper supply is constrained by declining resource quality and
Governance update long lead times for project development and permitting. Our focus
This year saw our entire board meet in person for the first time since remains on being a leading, responsible producer of the copper that the
early 2020. It also saw our directors make site visits to at least one of low-carbon world requires.
our operations, including to the desalination plant and concentrator plant We know that in any environment, the diversity, safety and health of our
expansion projects, and to Los Pelambres’ tailings dams. The insights people matter. So do the vibrancy of our culture and the discipline with
from these visits were shared at board and committee meetings, which we manage costs. Such steps not only strengthen the core of our
deepening the directors’ understanding of our activities. business but position us so that 2023 is not defined by the challenges
By the date of our 2023 AGM, Vivianne Blanlot will have served on our we face, but by our responses to them.
Board for nine years and, although she has agreed to continue on the Jean-Paul Luksic
Board, she will no longer be considered ‘independent’. She has therefore
Chairman
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.
Water management
The evidence of climate change is clear in central Chile, where a severe “We are committed
to supplying the
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.
copper required for
In parallel, we work closely with communities near Los Pelambres in the
Choapa Province, a farming area, to strengthen water management and
the energy transition.”
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.
The Transport division had a good year with total transport volume up
We already only use sea water for our Antucoya and Centinela by 6% to an all-time record of 7.1 million tonnes, as we increased share
operations in northern Chile, the latter fully transitioning from continental of the transport market for mining. We expect the planned renewal of
water at the end of 2022. By 2025, we expect 90% of our mining our fleet to low-carbon technologies to maintain this positive trend.
operations’ water consumption will be recirculated or sea water.
For our mining operations, it was a challenging year in terms of unit
Responsible production costs due to general inflationary pressures, particularly for diesel and
As a copper producer, we supply a key metal to address climate change sulphuric acid in global markets, as well as the temporary decrease in
through its use in low-carbon technologies, such as electric vehicles and production. We were successful in partially offsetting this trend through
the generation of renewable energy and are committed to its responsible our continuous focus on productivity and cost containment, together
and reliable production. In 2022, Los Pelambres and Antucoya were with the contributions from our gold and molybdenum by-products.
awarded the Copper Mark, an independent external verification of their Full-year net cash costs came in within guidance at $1.61/lb, compared
sustainable practices. Zaldívar and Centinela completed the same to $1.20/lb in 2021.
assurance process in 2021.
It is worth noting that we are implementing important structural changes
Operating results to contain costs. As an example, our new renewable energy supply
As expected, 2022 was a transition year for the Group with the impact contracts are lower cost than the previous fossil-fuel agreements.
of the drought while the desalination plant at Los Pelambres was being
Our innovation and technology programme is also bearing fruit in this
completed, which will be in 2023 paving the way for strong growth.
sense. Centinela’s and Los Pelambres’ new remote operating centres
We produced 646,200 tonnes of copper, 10% less than in 2021 with the
in Antofagasta and Santiago, respectively, are designed to streamline
decrease primarily due to expected lower throughput as a result of the
processes from mine to port and reduce transport and mine camp
drought and planned lower grades at Centinela.
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.
Looking ahead, the prospects for copper demand in the near-term will bind and connect the batteries, motors and electrical networks that will
partly depend on how rapidly the Chinese economy recovers following help limit the rise in global temperature. Furthermore, the pressure on
the removal of its zero COVID-19 measures. The pace at which interest the world’s resources to achieve this structural change will be
rates will rise and subsequently fall, and economic growth rates in transformational.
North America and Europe will also be key factors. Visible inventories
Electric vehicles are expected to be by far the largest single sector
were at historically low levels at the beginning of 2023, and this will
contributing to the boost in green demand for copper over the next two
sustain price volatility.
decades, with global EV sales growing three-fold in three years.
Potentially, the stronger growth in mine production forecast over the Government subsidies in China, the US and Europe have helped to
next two years could alleviate the current market tightness. However, support greater market penetration. The plants that will provide the
there are ongoing risks of disruption and the operating environment in copper foil for batteries are being developed apace across Asia, North
major producing countries remains uncertain. Beyond the middle of the America and Europe (and close to the battery hubs) and further copper
decade, the rapid uptake of copper-intensive clean technologies will foil manufacturing capacity is scheduled for completion over the next
underpin future copper demand as the world looks to a greener and few years to meet anticipated demand.
more sustainable future.
As with the automobile market, the decarbonisation of power generation
Copper’s critical role in a net-zero pathway is well underway. Global wind power generation capacity has increased
To put the world on a Paris Agreement net-zero pathway, a very by over 40% in the last three years. Cable makers are expanding
significant build out of low-carbon electric vehicles (EVs) and renewable capacity in North America and Europe to meet the necessary growth
power generating capacity will be needed. As the world reduces its in electrical networks. Rising offshore wind generation developments
dependence on hydrocarbons, metals will provide the foundation for are in turn supporting copper wire rod demand. The use of copper
a zero-carbon economy. Copper in the form of wire, cable and foil will in solar power generation is also just as impactful as wind.
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
2.5 10,000
2.0 8,000
1.5 6,000
1.0 4,000
0.5 2,000
0.0 0
2007 2010 2013 2016 2019 2022
Mtpa Cu LME Copper Price
There are limitations to the speed at which scrap can be delivered back One important source of future copper production will be expanding
into the product cycle in large volumes, especially as the world looks to existing mining operations. These brownfield projects are usually less
manufacture products that are made to last and that can be repaired and capital intensive than greenfield projects and require less capital
shifts away from the throwaway culture of recent years. The mismatch investment. All mines strive to optimise their unit operating costs and
between the requirement for new supply and the need to meet the this is often achieved through productivity improvements, with
challenges of a decarbonised world will lead to considerable pressures investment in debottlenecking and expansions. These increases in
in the copper sector over the next decade. production are an important source of future production.
Estimates of total identified global mineral resources appear sufficient to Assuming the average capital intensity of the project pipeline, and taking
satisfy future demand but in practice the conversion of these resources into account the volume of copper required to achieve zero-carbon
to operating mines is uncertain and slow. Many were identified decades climate targets, one leading forecaster estimates that the level of
ago and still have little likelihood of being developed. The better quality, investment needed to deliver new projects over the next 30 years will
easier to develop deposits have mostly been built. Current mineral have to be at a rate only previously achieved between 2012 and 2016,
resources tend to be of lower quality and smaller than those already at the back end of the China-induced commodity super cycle.
developed. Some have not been developed because of poor economics.
In view of this challenging backdrop, mining project approval rates have
But even those that can offer an attractive return on investment often
fallen to cyclical lows. In 2022, the volume of committed copper projects
have other hurdles to overcome before they can be developed.
was well below the level needed to meet the requirements of an
One of the key characteristics of a deposit is its grade, or the accelerated energy transition, despite copper prices having been close
concentration of copper in the deposit. Average grades have been to their highest level for a decade.
declining for decades, not just for new mining operations but existing
The implication is that more projects need to be advanced along the
ones as well. The grade declines at existing mines because grade often
pipeline and quickly, or there will be insufficient copper available to meet
declines with depth for geological reasons. The grades of new mines
demand, even under a base case pathway.
decline as higher-grade deposits are mined first.
Demand for copper is growing and the industry’s ability to satisfy this
For a new mine, obtaining the necessary social and environmental
growth is stretched. Considerable efforts are required to overcome
permits can take a significant time, even in major producing countries.
these challenges including those to boost productivity through innovation
Many sites are remote and require substantial investment in
and investment while continuing to satisfy social and environmental
infrastructure, including power, water and transport. Project lead times
requirements about how mines are developed.
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 The industry will continue to strive to satisfy demand while being
to be developed, from the identification of a resource to development. responsible producers for a changing world.
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 pathway to net zero
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 In March 2023 the International
the list of potential developers to those that can afford multi-billion-dollar Copper Association published
upfront costs. 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
Copper’s price fluctuations reflected the broader volatility in the global In February 2022, gold prices increased to near-record levels of
economy. Though the details differed in important ways for each major $2,000/oz as Russia invaded Ukraine, but a strong US dollar and
economy, their growth was similarly dampened in 2022. Driving the aggressive interest rate increases by central banks led to a fall of over
slowdown were headwinds that dominated headlines for much of the 20% by September 2022. However, from late 2022 to early 2023, gold
year: Russia’s invasion of Ukraine and the economic shockwaves and saw a trend reversal with the gold price rising by 14% since November
energy crisis it sparked; rising inflation and interest rates; the lingering 2022, supported by a less hawkish tone from the US Federal Bank and
effects of COVID-19; China’s reduced economic activity; and the ongoing the reopening of China's economy.
supply shortages and strained global supply chains. The market price of gold averaged $1,800/oz in 2022, compared with
Over the year the LME copper price averaged $4.00/lb, 5% lower than $1,799/oz in 2021.
in 2021. The average realised copper price for 2022 was $3.84/lb. Molybdenum
The copper market started 2023 strongly but faded as economic and The molybdenum price started 2022 at historically high levels and was
geopolitical uncertainty increased. Looking forward, the strength of the initially stable, in a balanced market. As the year progressed,
market will depend on the recovery of the Chinese market and whether consumption in China grew steadily and production declined moving
there are any disruptions to global trade. 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
LME Copper average price a price of $30/lb in the last days of December.
$4.00/lb
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.
Gold average price
$1,800/oz
Molybdenum average price
$18.7/lb
/ Business model
WHAT WE NEED
Our products
Copper
646,200 tonnes
Gold
176,800 ounces
Exploration / Acquisition Extraction and processing Molybdenum
We undertake exploration activities in Chile and
abroad, with particular focus on the Americas.
Safety and health, operating efficiency
and innovation are all key elements of how 9,700 tonnes
we run our operations.
Silver
Our footprint
CO2e emissions intensity
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
Construction Mine closure and rehabilitation to suppliers, social investment programmes
This stage requires significant input of capital At the end of a mine’s life, it must be closed in communities, taxes to governments,
and resources as well as effective project and remediated according to the international dividends to shareholders and interest
management and cost control to maximise the standards and national regulations in force payments to lenders.
project’s return on investment. at the time.
For more information on our
outcomes see P41
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.
Planet
Developing mining We recognise that climate change is one of the greatest
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.
Our strategy is built around five pillars, each of which has defined long-term objectives
with short- and medium-term goals.
Performance Performance
• Inaugurated our first fully autonomous • At the end of 2022 the Los Pelambres
operation at the Esperanza Sur pit Expansion project was 93% complete
• New integrated remote operations centres • Following two exploration discoveries in
for Los Pelambres and Centinela Chile our mineral resources have increased For further information on the risks
by 1 billion tonnes associated with each strategic pillar,
• Validated our proprietary primary sulphides
please see P26-35
leaching technology (Cuprochlor®-T)
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 Profit before tax Net debt/(Net cash)1
886
2,559
2,739 2,930
2,439 596 563
2,228
1,349 1,413
1,253
82
2018 2019 2020 2021 2022 2018 2019 2020 2021 2022
Why it is important Why it is important
This is a measure of our underlying This is a measure of our profitability before (541)
profitability. the deduction of taxes. 2018 2019 2020 2021 2022
Performance in 2022 Performance in 2022 Why it is important
EBITDA decreased by 39% and an EBITDA Profit before tax decreased by 26%. This measure reflects our financial liquidity.
margin of 50%, reflecting the decrease in Performance in 2022
copper sales, lower copper price, higher Strong balance sheet with net debt of $886
inflation and higher input prices. million at the end of 2022 and a Net debt/
EBITDA ratio of 0.3x.
1. Non-IFRS measures, refer to the alternative Underlying earnings per share2 Earnings per share3
performance measures section on page 238.
2. From continuing operations excluding
exceptional items.
3. From continuing and discontinued operations
$59.7¢ $155.5¢
including exceptional items. 142.5 155.5
4. 100% of Los Pelambres, Centinela and Antucoya,
and 50% of Zaldívar’s production. 130.9
5. Mineral resources (including ore reserves)
relating to the Group’s subsidiaries on a 100%
basis and Zaldívar on a 50% basis. 59.7
51.5 50.9 54.7 55.1
6. The Lost Time Injury Frequency Rate is the 50.9 51.3
number of accidents with lost time during the
year per million hours worked.
7. Scope 1 and 2, Mining division only. 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022
8. Tonnes of CO2 equivalent per tonne of copper
produced.
Why it is important Why it is important
These are measures of the profit attributable These are measures of the profit attributable
to shareholders before exceptional items. to shareholders after exceptional items.
Performance in 2022 Performance in 2022
Underlying earnings per share were Earnings per share including exceptional items
59.7 cents, a decrease of 82.8 cents or 58% for the year were 155.5 cents, reflecting the
compared with 2021 on lower EBITDA. impact of an exceptional gain of 95.8 cents,
and were 19% higher than in 2021.
2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022
Why it is important Why it is important Why it is important
Copper is our main product and largest source This is a key indicator of operating efficiency Our mineral resource base supports our
of revenue. and profitability. strong organic growth pipeline.
Performance in 2022 Performance in 2022 Performance in 2022
Copper production decreased by 10% mainly Net cash costs were 34% higher than last Total mineral resources increased by 1 billion
due to the temporary reduction in throughput year mainly due to the impact of the drought, tonnes during the year, including a maiden
at Los Pelambres as a result of the drought inflation and higher input prices during the inferred resource at Encierro and additional
and the reduced concentrate pipeline period, partly offset by the weaker Chilean resources at Cachorro, both of which are
availability in June, and expected lower grades peso and the savings coming from our Cost in northern Chile.
at Centinela Concentrates. and Competitiveness Programme.
Find out more Find out more Find out more
P76 P76 P245
Sustainability KPIs
2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022
Why it is important Why it is important Why it is important
Safety is our top priority, with fatalities Water is a precious resource and we are We recognise the risks and opportunities
and the LTIFR6 being two of our principal focused on using the most sustainable sources arising from climate change and the need
measures of performance. and maximising its efficient use. to measure and mitigate greenhouse
gas (GHG) emissions.
Performance in 2022 Performance in 2022
Record safety performance with no Total water withdrawals increased by 5.4% as Performance in 2022
fatalities and the LTIFR improving by 37% precipitation tripled at Los Pelambres in 2022 CO2e emissions intensity decreased as Scope
due to strengthened control strategies for from the low levels in 2021, and Centinela 1 and 2 emissions fell by 37%.
high-risk tasks. Concentrates and Antucoya achieved record
annual throughput.
Find out more Find out more Find out more
P53 P63 P61
/ Risk management
Effective risk management is an essential • Updated the Company’s risk appetite statement, including the sections
relating to Environmental Management, Operations and Tailings
part of our culture and strategy. Storage, and the Project Execution risk section was expanded to
The accurate and timely identification, incorporate the conversion of mineral resources to ore reserves.
The updated statement was approved by the Board and the level
assessment and management of principal risks of risk appetite for all risk areas was unchanged
give us a clear understanding of the actions • Reported monthly to the Executive Committee to identify and manage
required to achieve our objectives. any deviation from expected performance
• Defined and implemented lessons learned from the COVID-19
Key elements of integrated risk management pandemic
We recognise that risks are inherent to our business
• Tested and validated the Business Continuity Plan
Only through adequate risk management can internal stakeholders
be supported in making key decisions and implementing our strategy • Introduced new controls identified during the assessment of
the impact of the conflict in Ukraine
Exposure to risks must be consistent with our risk appetite • Participated in the review of the FQAR (Functional Quality Assurance
The Board defines and regularly reviews the acceptable level of Review) project
exposure to emerging and principal risks. Risks are aligned with our
• Continued training risk owners and main users
risk appetite, taking into consideration the balance between threats
and opportunities • Updated and monitored critical controls and action plans
• Prepared new action plans to maintain risk exposure within
We are all responsible for managing risks acceptable limits
Each business activity carries out risk evaluations to ensure the sound
• Embedded timely and comprehensive risk analysis into each
identification, management, monitoring and reporting of risks that could
relevant decision-making process
impact the achievement of our goals
• Shared best practices across our operating companies
Risk is analysed using a consistent framework
Our risk management methodology is applied to all our operating Governance
companies, projects, exploration activities and support areas so that we The Board has overall responsibility for risk management and
have a comprehensive view of the uncertainties that could affect the determines the nature and extent of the principal and emerging risks
achievement of our strategic goals. The framework is based on that we will accept in order to achieve our strategic objectives.
ISO 31000 and COSO ERM.1 The Board receives detailed analysis of key matters in advance of Board
We are committed to continuous improvement meetings. This includes: reports on our operating performance including
Lessons learned and best practices are incorporated into our safety and health, financial, environmental, legal and social matters;
procedures to protect and unlock value sustainably key developments in our exploration, project and business development
activities; and information on the commodity markets, updates on talent
Areas of focus and development during 2022 management and analysis of financial investments.
Our main focus in 2022 was in the socio-political environment, as
a result of the armed conflict in Europe and political uncertainty in The provision of this information allows the early identification of
Chile. The latter continued following the rejection of the proposed potential issues and the assessment of any necessary preventive
new constitution in September and will extend into 2023 as a second and mitigating actions.
rewrite is carried out. However, lessons learned during previous social The Audit and Risk Committee assists the Board by reviewing the
contingencies in Chile meant the impact on our operations was minor. effectiveness of the risk management process and monitoring principal
The war in Ukraine affected the sourcing of some of our strategic and emerging risks, preventive and mitigation procedures, and action
supplies and it remains a concern, although our risk analysis of the plans. The Chairman of the Committee reports to the Board following
war allowed us to mitigate its impact on our business. each Committee meeting and if necessary the Board discusses the
matters raised in more detail.
Other risks during the year included those arising from the reform
of the mining royalty and tax bills proposed by the government, expected These processes allow the Board to effectively monitor Antofagasta’s
to be implemented during 2023. major risks and preventive and mitigating procedures, and to assess
whether actual exposure is consistent with the defined risk appetite.
We maintained our commitment to review and update our principal If a gap is identified, an action plan is prepared to fill it.
risks according to our risk methodology. These are some of the actions
that our Risk and Compliance Management Department undertook The Risk and Compliance Management Department is responsible
during the year: for the Group’s risk management systems. It implements the Company’s
risk management policy, vision and purpose to ensure there is a strong
• Implemented on-site risk reviews of certain selected risk areas risk management culture at all levels of the organisation.
accompanied by senior management, increasing the risk maturity
level of the Group The Department supports business areas in analysing their risks,
identifying existing preventive and mitigating controls and defining
• Co-coordinated contingency committees in line with our risk
further action plans. It maintains and regularly updates the Company’s
management process
risk register.
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.
Principal risks
Any identified new or emerging risks that could impact our long-term 9. Operations
strategic objectives are included in the principal risk analysis and are 10. Tailings storage
reviewed and monitored periodically by the Board. As new information 11. Strategic resources
becomes available, based on research, expert analysis and internal
12. Cyber security
investigations, suitable controls and action plans are defined and
13. Liquidity
incorporated into the Company’s risk matrix.
14. Commodity prices
We identify, assess and manage the risks critical to the Company’s and exchange rate
success. Overseeing such risks protects our business, people and
Growth
reputation. The risk management process provides reasonable
15. Growth of mineral resource
assurance that the relevant risks are recognised and controlled, allowing
base and opportunities
the Company to achieve its strategic objectives and create value.
Because risks are periodically re-evaluated, the risk map shown here 16. Project development
represents the position and controls in place at a specific point in time, and execution
as well as showing the changes that have taken place since 2021.
Innovation
Throughout the year, the Board carried out a robust assessment of
the Company’s emerging and principal risks, which are set out on the 17. Innovation and digitalisation
following pages with related preventive and mitigation measures. Transversal
During 2022, the probability of the External Risks principal risk (18) 18. External risks
was lowered from “Possible” to “Unlikely” following the reduction of
risks related to the COVID-19 pandemic. The impact of the Political, Key
Legal and Regulatory principal risk (7) was reduced from “Significant”
Risk appetite Risk level
to “Moderate” following the rejection of the proposed new constitution
and the improved clarity on the outcome of the mining royalty reform. Low
Medium
High
Very high
Strategic pillars
Safety and Sustainability
Competitiveness
Innovation
Growth
8 10 9 11
Significant
14 6 3
12 13 4 15
Moderate
IMPACT
5 7
18 16 17
1 2
Low
Very low
Movement since
previous year
The risk impact scale rating has five levels of Probability and Impact:
Probability
Likely Once a month or more Could happen easily and has occurred under similar conditions
Possible Once or twice a year Could happen and has happened in similar conditions
Unlikely Once or twice every 10 years Has not happened yet, but could happen
Impact
Defining risk appetite is key in embedding The principal risks, together with related prevention and mitigation
measures, have been presented to the Board and are grouped in line
the risk management system into our with our strategic pillars: People, Safety and Sustainability,
organisational culture. Competitiveness, Growth and Innovation. These pillars are supported
by our corporate governance structures.
The Company’s risk appetite statement helps
The principal risks are outlined in the risk heat map and table on the
to align our strategy with the objectives of previous two pages, and in more detail below.
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.
Managing talent and We develop the talents of our employees through training and Our methodology for identifying and managing
maintaining a high-quality career development, invest in initiatives to widen the talent pool talent to look for the competencies we require to
labour force in a fast- and are committed to our diversity and inclusion policy. ensure the sustainability of our business, allows
changing technological and us to identify the key people for our talent pool.
Through these actions we aim to increase employee retention
cultural environment is a key We embedded our New Ways of Working model
and add to the number of women, people with disabilities and
priority for us. Any failures (hybrid), which was introduced in 2021 to
employees with international experience in the workplace.
could have a negative impact facilitate business continuity and attract and
on the performance of our Our Employee Performance Management System is designed
retain talent.
existing operations and to attract and retain key employees by creating suitable and
prospects for growth. competitive reward and remuneration structures and providing This year, our Diversity and Inclusion Strategy
personal development opportunities. We have a talent has increased the proportion of our female
management system to identify and develop internal candidates employees to 20.4%, 3.2 percentage points
for key management positions, as well as selecting suitable higher than in 2021.
external candidates when appropriate.
Our highly-skilled workforce We maintain good relations with our employees and unions, Three-year labour agreements were
and experienced management founded on trust, regular dialogue and good working conditions. successfully negotiated with two of the unions
team are critical to our We are committed to safety, non-discrimination, diversity and at Antucoya, one at Los Pelambres and one at
current operations, inclusion, and comply with Chile’s strict labour regulations. Zaldívar, all of them in a climate of mutual
implementing development respect.
There are long-term labour agreements (usually three years)
projects and achieving
in place with all the unions at our operations, which helps
long-term growth without
ensure labour stability.
major disruption.
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.
Safety and health incidents Our Safety and Occupational Health Strategy is based We had no fatalities during 2022.
could result in harm to our on four pillars: Our lagging indicators continue to fall and were
employees, contractors and below our targets for the year.
1. Safety and health risk management: workers at all levels are
local communities. Ensuring
trained to identify hazards and controls, so that all jobs are This year we put extra effort into promoting the
their safety and wellbeing is
carried out safely. correct use of our Job Safety Analysis tool, to
our ethical obligation, and one
2. Leadership: all employees and contractors are health and help supervisors and operators standardise safe
of our core values.
safety leaders and we demonstrate our commitment through working practices for high-risk tasks.
A poor safety record or each individual’s responsible behaviour.
a serious accident could have After dealing with the COVID-19 aftermath, we
3. Contractor management: our contractors are an integral part
a long-term impact on morale refocused on occupational health and updated
of our safety team and safety culture, which we work
and on our reputation and our medical surveillance programmes. This
together to improve.
productivity. included putting more preventative controls
4. Reporting, research and learning from our accidents: in place to reduce exposure to our main
we share good practices and learn from our mistakes. occupational health risks-noise and dust.
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.
An operating incident that We have a comprehensive approach to incident prevention. We have strengthened our environmental
impacts the environment Risks are assessed, monitored and controlled to achieve our management model, updating it monthly with
could affect our relationship goal of zero incidents with significant environmental impact. new or revised environmental regulations.
with local stakeholders and We work to raise awareness in our employees and contractors We also implemented the regular monitoring
our reputation, reducing the by providing training to promote operating excellence related of Environmental Authority inspection processes
social value we generate. to the environment in which we operate. The potential to assure compliance with our environmental
environmental impact of a project is a key consideration when commitments and action plans.
We operate in challenging
assessing its viability, and we encourage the integration of
environments, including the
innovative technology in the project design to mitigate such
largely agricultural Choapa
impacts.
Valley and the Atacama
Desert, where water scarcity We prioritise the efficient use of natural resources by using sea
is a key issue. water, favouring the use of renewable power, and achieving
higher rates of reuse and recovery of water by using thickened
Environmental issues directly
tailings technology.
related to climate change are
considered under our specific We recognise that environmental performance is key to our
Climate Change principal risk. 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.
The effects of climate change We recognise that climate change is a threat to human life and Our Climate Change Strategy seeks to
have had an increasing the planet as we know it today. strengthen our capacity to adapt to and mitigate
impact on our operations. climate change. This enables us to take early
We measure and report our Scope 1 and 2 greenhouse gas
The drought in central Chile is action to manage the resulting risks and
emissions and have committed to realistic reduction targets.
affecting water availability at opportunities in such a way as to mitigate the
Los Pelambres, while higher As regards water scarcity, we are reducing our dependence effects of climate change and adapt to new
than expected rainfall in the on continental water through more efficient water use and scenarios.
northern part of the country the increased use of sea water as a proportion of our total
By 2025 we aim to reduce our Scope 1 and 2
is impacting the infrastructure water consumption. As each phase of the Los Pelambres
emissions by 30% compared to 2020. We are
in the region. In addition, the desalination plant construction is completed, the proportion
also committed to achieving carbon neutrality
increasing severity of sea of continental water used will decrease, particularly after
by 2050, or sooner if technology permits.
swells leads to delays in the Phase 2 of the project, significantly lowering the potential
delivery of key supply impact of water scarcity on the Group while freeing up water Since April 2022, all our mining operations use
materials and the export for local communities. only renewable power, significantly reducing our
of our concentrates and Scope 2 emissions.
We seek constantly to identify risks associated with climate
cathodes. change and to implement actions to adapt to and mitigate their
The Chilean government’s potential impact. For each risk evaluated as “High” or “Extreme”
increased climate ambitions we produce specific action plans and strategies.
may result in higher We continue to seek ways to decarbonise our operations and
compliance and operating. this requires greater investment in innovative solutions,
We are committed to including in developing low-carbon technology, and can
contributing to the reduction increase operating costs.
of greenhouse gas emissions As part of our regular communication with local stakeholders
and water scarcity. We do we discuss the material risks and our controls, action plans and
this by increasing the amount related strategies.
of power and water we obtain
from renewable and
sustainable sources.
Failure to identify and manage We have a dedicated team that establishes and maintains We reinforced community programmes related
local concerns and relations with local communities. These relationships are based to water for human consumption and irrigation
expectations could negatively on trust and mutual benefit throughout the mining lifecycle, to mitigate the impact of the drought in the
impact the Company. from exploration to final remediation on closure. We seek to Province of Choapa.
Relations with local anticipate any potentially negative operating impacts and We seek to stimulate the generation of economic,
communities and minimise these through responsible behaviour. This means social and human capital in the regions where
stakeholders affect our acting transparently and ethically, prioritising the safety and we operate by promoting local employment,
reputation and impede our health of our employees and contractors, avoiding fostering local suppliers and offering education
ability to grow and generate environmental incidents, promoting dialogue, complying with and training opportunities. We run various
social value. our commitments to stakeholders and establishing mechanisms programmes to support local entrepreneurs and
to prevent or address a crisis. These steps are undertaken in micro and small businesses.
the early stages of each project and continue throughout the
life of each operation. We have launched a community concerns
management system to report any issues caused
We contribute to the development of communities in the areas by our operations on neighbouring communities.
in which we operate, starting with an assessment, undertaken Concerns can be made confidentially and tracked
together with the communities, of the existing situation and to monitor their progress.
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.
Political instability could affect We constantly monitor political, legal and regulatory There is currently a heightened level of political
our operations, projects and developments affecting our operations and projects. uncertainty in Chile that has been somewhat
exploration activities in the reduced by the rejection of the proposed new
We comply fully with existing laws, regulations, licences,
countries in which we constitution and the advancement of the mining
permits and rights in each of the countries in which we
operate. Issues regarding the royalty reform.
operate.
granting of permits, or The Group is supporting the Chilean industry
amendments to permits We assess political risk as part of our evaluation of potential
associations, particularly the Consejo Minero
already granted, and changes projects, including the nature of any foreign investment
(Mining Council) in its representations and
to the legal environment agreements.
responses on the proposed legislation to the
or regulations, could also We monitor proposed changes in government policies and government on behalf of the industry.
adversely affect our regulations, particularly in Chile, and belong to several
operations and development associations that engage with governments on these matters.
projects. This helps to improve our internal processes and means that
we are prepared to meet any new regulatory requirements.
Our operations or projects We have zero tolerance for any activity that would contravene In 2022 cyber crime was included as a new
around the world could be anti-bribery and corruption legislation. We maintain a robust offence in the Chilean anti-bribery and
affected by risks related to governance regime, open channels of communication, employment protection laws. The Group’s
corruption or bribery, Group-wide training programmes, and multiple layers of controls were updated accordingly.
including operating controls at all our operations, projects and exploration activities, The Crime Prevention Model was recertified until
disruptions or delays resulting as well as in our third-party relationships using enhanced due mid-2023 by an expert third party.
from a refusal to make diligence procedures.
“facilitation payments”. Following a compliance risk assessment carried
Our Compliance Model is set to prevent actions which may out by external auditors, our risk matrix was
The level of such risks
involve us directly or indirectly in any potential irregularities updated to ensure we have a robust and
depends, in part, on the
(including any kind of bribery), detect possible risks in a timely transparent control framework.
economic or political stability
fashion and respond to any misconduct in an adequate manner.
of the country in which During the year, all our employees completed
Internal policies, procedures and controls have been
we are operating. an online Code of Ethics course as part of our
implemented to prevent corruption.
preventative measures programme.
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.
Our operations are subject to Principal risks relating to each operation are identified as part Lessons learned from previous cases of
a number of circumstances of the regular risk review processes they undertake. This community concern has improved the resilience
not wholly within our control. process also identifies mitigation measures for such risks. of our operations and minimised the impact of
These include damage to or incidents this year.
Monthly reports to the Board provide variance analysis of
breakdown of equipment or Many years of drought at Los Pelambres has
operating and financial performance, allowing potential issues
infrastructure, unexpected reduced production in 2021 and in 2022. This
to be identified in good time and any necessary monitoring or
geological variations, or climate change impact will be mitigated by the
control activities to be implemented to prevent unplanned
technical issues, any of which completion of the desalination plant in the first
downtime.
could adversely affect half of 2023.
production and/or costs. Our focus is on maximising the availability of equipment and
infrastructure and ensuring the effective use of our assets in The Los Pelambres concentrate pipeline incident
line with their design capability and technical limits. We keep the was quickly and appropriately mitigated and a
variation of processes within defined tolerance limits. project to assess the entire pipeline
implemented.
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.
Ensuring the stability of our We manage our TSFs to allow the effectiveness of their design, The Global Industry Standard on Tailings
tailings storage facilities operation and closure to be monitored at the highest level of the Management (GISTM) was published in 2020.
(TSFs) during their entire Company. All our TSFs are built using the downstream We are implementing this standard at all our
lifecycle is central to how we construction method and are designed to withstand operations.
operate. A failure or collapse earthquakes and extreme weather. Our 2021 tailings policy sets out the guiding
of any of our TSFs could principles for the management of our TSFs and
Catastrophic failures of TSFs are unacceptable. Their potential
result in fatalities, damage to any potential or actual impact on the
for failure is evaluated and addressed throughout the life of
the environment, regulatory environment, using sound governance and open
each facility. Our TSFs are constantly monitored, and all
violations, reputational communication with stakeholders.
relevant information is provided to the authorities, regulating
damage and disruption of the
bodies and the communities that could be affected. In accordance with this standard, we continue to
quality of life of neighbouring
communities as well as the We manage our TSFs using data, modelling, and construction update our risk assessment methods, focusing
running of our operations. and operating methods validated and recorded by qualified on more detailed risk identification, failure modes
technical teams and reviewed by independent international and controls in order to avoid catastrophic
experts, whose recommendations we implement to strengthen failures.
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.
Disruption or restriction of Contingency plans are in place to address any short-term During the year, some transport interruptions
the supply of any of our key disruptions to strategic resources and maintain our security and the war in Ukraine threatened the supply of
strategic inputs, such as of supply. We negotiate early with suppliers of key inputs to some key inputs. However, the impact was
electricity, water, fuel, ensure continuity. Certain key supplies are purchased from either prevented or mitigated through constant
sulphuric acid or mining several sources to mitigate potential disruption arising from monitoring, contingency planning and actions
equipment, could negatively exposure to a single supplier. taken to improve our supply alternatives, such
impact production. as inventory management and increase the
To achieve cost competitiveness, we endeavour to buy the
stockpile capacity.
In the longer term, highest possible proportion of our key inputs, such as fuel and
restrictions to the availability tyres, on as variable a price basis as possible and to link costs The main exposure during the year was related
of key strategic resources to underlying commodity indices where this option exists. to water scarcity at Los Pelambres due to the
such as water and electricity drought. By the year end the desalination plant
We maintain a rigorous, risk-based supplier management
could also affect our growth was 93% complete and will be in production
framework to ensure that we engage solely with reputable
opportunities. in 2023.
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.
Breaches in, or failures of, Our Information Security Management Model provides We have further strengthened our protective
our information security defensive structural controls to prevent cyber risks and mitigate controls and regularly communicate with users
management could adversely their effects. It employs a set of rules and procedures, including to prevent cyber attacks.
impact our business activities. a Disaster Recovery Plan, to restore critical IT functions in the To reinforce our controls we organised “ethical
event of an attack.
Malicious interventions phishing” and “ethical hacking” exercises during
(hacking) of our information Our systems are regularly audited to identify any potential the year.
or operations’ networks could weaknesses or threats to our assets, and specific systems are
affect our reputation and/or in place to protect them and our data.
operational continuity.
Restrictions in financing Security, liquidity and return are the order of priorities for our We maintained our solid balance sheet and
sources available for future treasury investment strategy. We maintain a strong and flexible financing ratios, safeguarding our capability
growth could prevent us from balance sheet, consistently returning capital to shareholders to raise debt.
taking advantage of growth while leaving sufficient funds to progress our short-, medium- We have focused on diversifying our funding
or other opportunities in the and long-term growth plans. This gives us the financial flexibility sources, retaining a high level of interest from
market. to take advantage of opportunities as they may arise. financial institutions offering to provide finance
We have a risk-averse investment strategy, managing our on competitive terms.
liquidity by maintaining adequate cash reserves and financing During 2022 we issued our second $500 million
facilities through the periodic review of forecast and actual cash corporate bond and we agreed a Revolving
flows. We choose to hold surplus cash in demand or term Credit Facility (RCF) for $500 million, diversifying
deposits or highly liquid investments. the sources and term of our debt financing.
14. COMMODITY PRICES AND EXCHANGE RATES Risk appetite Risk level Outlook
Our results are heavily We consider exposure to commodity price fluctuations an The impact of the political uncertainty during
dependent on commodity integral part of our business and our usual policy is to sell our the year often outweighed the usual
prices – principally those of products at prevailing market prices. We monitor commodity correlation between the US dollar/Chilean
copper and, to a lesser extent, markets closely to determine the effect of price fluctuations on peso exchange rate.
gold and molybdenum. earnings, capital expenditure and cash flows. Very occasionally, No new hedging positions were entered into
The prices of these when we feel it is appropriate, we use derivative instruments during 2022.
commodities are influenced to manage our exposure to commodity price fluctuations.
by many external factors,
We run our business plans under various commodity price
including world economic
scenarios and develop contingency plans as required.
growth, inventory balances,
industry supply and demand, As copper exports account for over 50% of Chile’s exports,
possible substitution, etc. there is a correlation between the copper price and the US
dollar/Chilean peso exchange rate. This natural hedge partly
Our sales are mainly
mitigates our foreign exchange exposure. However, we monitor
denominated in US dollars,
the foreign exchange markets and the macroeconomic
although some of our
variables that affect them and occasionally implement a focused
operating costs are in Chilean
currency-hedging programme to reduce short-term exposure
pesos. Thus any
to fluctuations in the US dollar against the Chilean peso.
strengthening of the Chilean
peso may negatively affect
our financial results.
15. GROWTH OF MINERAL RESOURCE BASE AND OPPORTUNITIES Risk appetite Risk level Outlook
We need to identify new Our exploration and investment strategy prioritises Our exploration activities continued to be focused
mineral resources to ensure exploration and investment in the Americas. To reduce our on the Americas and our risk exposure level was
continued future growth. We risk exposure, we focus on growth opportunities in stable unchanged.
do this through exploration and secure countries. The Company has discovered a significant
and acquisition. greenfield copper/gold deposit in the Chilean
Our rigorous assessment processes evaluate and determine
We may fail to identify the risks associated with all potential business acquisitions High Andes. The initial inferred resource of the
attractive acquisition and exploration opportunities, including stress-test scenarios Encierro deposit is 522 million tonnes, with
opportunities or select conducted for sensitivity analysis. Each assessment includes a copper grade of 0.65%.
inappropriate targets. The a country risk analysis (including corruption) and analysis of Two of Twin Metals’ federal mining leases were
long-term commodity price our ability to operate in a new jurisdiction. cancelled during 2022. In August 2022 Twin
forecast, and other Metals filed a federal claim challenging these
At the very least, all joint ventures must operate in line with,
assumptions used when actions.
or to the equivalent level of, our policies and technical
assessing potential projects
standards.
and other investment
opportunities, will influence Our Business Development Committee reviews potential
the forecast return of opportunities and transactions, approving or recommending
investments. Incorrect them within authority levels set by the Board.
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 Risk appetite Risk level Outlook
Failure to effectively manage We have a project management system to ensure that best Our projects are developed in accordance with
our development projects or practices are applied at each phase of a project’s development. the practices set out in our Asset Delivery
transform our resources into The project management system provides a common language System (ADS), including the Functional Quality
reserves could result in and standards to support the decision-making process by Assurance Review (FQAR), and are reviewed
delays to the start of balancing risk with the benefits of growth. In addition, all by external experts.
production and cost overruns. geometallurgical models are reviewed by independent experts. Project risks are proactively managed and
Delays on information capture During the project development lifecycle, quality checks for frequently evaluated to minimise their impact
and/or not achieving required each of the standards applied are carried out by a panel of on costs.
enablers could limit the experts from within the Company. This panel reviews each Project estimates include a contingency
conversion of resources into completed feasibility study to assess the technical and provision, calculated using a probability-based
reserves. commercial viability of the project. It also assesses how the method that considers the systemic and specific
project can be developed safely and considers any relevant risks of each project.
risks or opportunities that could potentially impact the schedule,
cost or future performance of the project. The risks associated with converting mineral
resources to reserves are properly identified
Detailed progress reports on current projects are regularly and managed by the teams to ensure accurate
reviewed and include assessments of progress against key conversion.
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.
Our ability to deliver on our We seek value-capturing innovations that realise cost savings During 2022, various automation projects were
strategy and our performance and/or improve the efficiency, reliability and safety of our progressed. These included the use of
targets may be undermined processes while supporting our corporate strategic pillars. autonomous drills and autonomous trucks at
by missed opportunities or We evaluate the potential of all ideas using our stage-gate Centinela and the commissioning of its new
delays in adopting new approval process and Innovation Board. Integrated Remote Operations Centre (IROC).
technologies or innovations. The IROC for Los Pelambres will be
We maintain partnerships with academic institutions and
commissioned in 2023.
companies specialising in technology and engineering –
including peers, when there is no competitive barrier – to Advanced data analytics are used at our
maximise the potential for improvements in our processes and operations to increase throughput and ore
systems. A dedicated team monitors, identifies and analyses recovery and to improve predictive maintenance.
external innovation trends that have potential applications in our During the year our Data Governance
business, including those in non-operational areas such as Programme and Data Platform were deployed
product sales and purchasing. The team also maintains and across the organisation to improve data access,
manages a portfolio of ongoing innovation projects. consistency and quality, thus accelerating our
Advanced Analytics capabilities.
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.
We must develop the ability Changes in the global or Chilean economic or political The controls for this risk were updated to
to manage external threats environment can impact the Group’s strategy. incorporate lessons learned during the year,
that are complex to predict such as the geographic diversification of our
We maintain our good practices and adopt lessons learned
and can significantly impact suppliers and actions taken to guarantee the
during periods of crisis.
the Group’s strategic safety and health of our employees during a
objectives and its operational We recognise the volatility of the markets and proactively seek pandemic.
continuity. new business models and work to expand our client base.
We also increased our stocks of strategic
We regularly review our Business Continuity Plan. resources to improve our supply resilience.
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.
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 Impact
New tax regulations During 2022, each of our mining operations had tax stability agreements
Wide-ranging Chilean tax reform is expected during 2023. in place and the future financial impact on them will be assessed if the
reforms become law.
Geopolitical The potential impact may include lower revenue, longer lead times
Global political and economic uncertainty is affecting short-term for critical supplies and increased input costs.
demand for copper and other metals, as well as trade flows
and our supply chains.
The above risks are closely monitored and actively managed to minimise their threat.
How we achieve our objectives is crucial We actively promote open communication with all our employees,
contractors and local communities. This helps ensure that our corporate
to the sustainable long-term development and value creation objectives are achieved in an ethical and honest way.
of the Company. We have zero tolerance for The Compliance Model is reviewed regularly, both internally and by third
bribery and corruption and are committed parties, and on corruption-related matters it is certified in accordance
to working with integrity and transparency. with Chilean anti-corruption legislation.
We comply with all applicable anti-corruption The Model has three pillars:
and anti-bribery legislation and ensure that Prevention: The main focus of the Compliance Model is to prevent
necessary controls are in place to prevent the occurrence of any irregular or illegal situations. We provide a series
of tools and training opportunities to all employees and contractors
any unethical behaviour. to support appropriate behaviour through:
Areas of focus and development during 2022 • Internal policies and procedures
• Whistleblowing investigations, performed by a group of experts, • Anti-trust guidelines
were centralised and standardised, guaranteeing independence • The management and update of our Compliance Risk Matrix
to the process
• Our robust due diligence processes
• A robust due diligence process is in place
• Anti-corruption clauses in suppliers’ and employees’ contracts
• The Company’s Crime Prevention Model was recertified by an
• Compliance training and communication
independent expert
• Access Control and Governance, Risk and Compliance (GRC)
• All of the Group’s employees completed online Code of Ethics training
tools are used as part of the segregation of duties control
during the year
• Employees in high-risk areas completed more in-depth training Detection: We have several tools to detect any potentially irregular
on ethics and compliance or illegal situations, including:
• New employees were trained in the Compliance Model as part • Robust whistleblowing channels
of their induction programme • Data analysis
• All employees updated their conflict-of-interest disclosures • Anti-corruption internal controls
• An “Integrity Week” event was held for all employees during which • Normative Instruments, such as internal policies, procedures
the value of respect in the workplace was discussed 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
Action: If an irregular or illegal situation is detected, it is investigated
• The Compliance team was included as part of the approval process
according to our internal procedures using fact-based, objective and
for social contributions, to strengthen monitoring and governance
professional standards. Each of our operations has an Ethics Committee
• A communication campaign was carried out as part of our focus which reviews the findings of every investigation and suggests
on Prevention in our Compliance Model remediation plans to the Corporate Ethics Committee. The performance
• Compliance was included as a topic in the “Antofagasta Supplier Day” of the compliance programme is reported twice a year to the Audit and
event, with a particular focus on local suppliers Risk Committee and to the Board. The anonymity of the whistleblowing
• Our Compliance Risk Matrix and all the controls related channels is guaranteed to safeguard individuals and so achieve greater
to it were reviewed transparency and bolster our non-retaliation policy.
• All allegations regarding ethical and non-ethical concerns During the year we received 624 allegations. Of these 245 (39%) were
are presented to the Ethics Committee. ethics related and 379 (61%) were non-ethical concerns. The ethical
Code of Ethics allegations were classified as: 73% (180) harassment, abuse and
Our Code of Ethics sets out our commitment to conducting business mistreatment, 11% (28) fraud or misuse of property, 5% (10) conflicts of
in a responsible and sustainable manner. The Code requires honesty, interest, 2% (4) bribery and corruption, 0% (0) modern slavery and 9%
integrity and accountability from all employees and contractors and (23) other. Remediation action were defined and implemented for all
includes guidelines for identifying and managing potential conflicts substantiated allegations.
of interest. It is the core of our Compliance Model and supports the Our Crime Prevention Model ensures compliance with anti-bribery
implementation of all other related activities. and anti-corruption laws in the United Kingdom and Chile and is certified
Our Code is available on our website. by an external entity.
Compliance Model Due diligence highlights
Our Compliance Model applies to both our employees and contractors. During the year 6,612 suppliers were reviewed, of which 1.6% were
It is clearly defined and is communicated regularly through internal rejected. Of these 97% were Chilean suppliers and 3% were
channels as well as being available on our website. All contracts include international. The reasons for rejection were mainly due to high financial
clauses relating to ethics, modern slavery and crime prevention or tax risk, non-compliance with Law 20.393 (Criminal Responsibility
to ensure contractors’ adherence to our Model. of Legal Entities) or non-compliance with Group guidelines.
To address the requirements of provision 31 The stability of tailings storage facilities represents a potentially
significant operational risk for mining operations globally. The Group’s
of the 2018 UK Corporate Governance Code, tailings storage facilities are designed to international standards,
the Directors have assessed the prospects constructed using downstream methods, subject to rigorous monitoring
of the Group over a period of five years. and reporting, and reviewed regularly by an international panel of
independent experts. Given these standards of design, development,
Mining is a long-term business and timescales can run into decades. operations and review, the impact of a potential tailings dam failure has
The Group maintains Life-of-Mine model covering the full remaining not been included in the sensitivity analysis.
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 The above downside sensitivity analyses indicated results which could
budgets). Accordingly, five years has been selected as the appropriate be managed in the normal course of business, including the aggregate
period over which to assess the prospects of the Group. impact of a number of the above sensitivities occurring at the same time.
The analysis indicated that the Group is expected to remain in
When taking account of the impact of the Group’s current position compliance with all of the covenant requirements of its borrowings
on this viability assessment, the Directors have considered in particular throughout the review period and retain sufficient liquidity. Based on
its financial position, including its significant balance of cash, cash their assessment of the Group’s prospects and viability, the Directors
equivalents and liquid investments and the terms and remaining confirm that they have a reasonable expectation that the Group will
durations of the borrowing facilities in place. The Group had a strong be able to continue in operation and meet its liabilities as they fall
financial position as at 31 December 2022, with combined cash, cash due over the next five years.
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.
Stakeholder
Review
Highlights 40
Our approach to sustainability 42
How we engage with our stakeholders 46
Our people 48
Safety and occupational health 51
Communities 54
Environment 57
Climate Change 60
Task Force on Climate-related
Financial Disclosures (TCFD) 64
Suppliers 67
Customers 70
Shareholders 71
Governments and regulators 72
Non-financial information statement 73
/ Highlights
We had record safety performance, and • We signed Greenhouse Gas Agreements with mining equipment
suppliers Komatsu and Caterpillar in a step towards developing
achieved our female participation and zero-emission vehicles and machinery, which currently account for
emissions reduction goals. approximately two-thirds of our Scope 1 emissions.
• In December, we launched our Suppliers for a Better Future
Sustainability-related governance programme, which sets targets for suppliers on environmental, social
• In August and December respectively, our Antucoya and Los and governance (ESG) matters, to be achieved by 2025.
Pelambres operations were awarded the Copper Mark, the copper
industry’s responsible production assurance framework. Zaldívar and Community
Centinela received this recognition in 2021. • In March, we launched a new community grievances management
• Our four mining operations completed the independent audits required system to report concerns, complaints or grievances caused by our
to validate their performance against the International Council on operations.
Mining and Metals’ (ICMM) Performance Expectations. • We dedicated extra resources to measuring the impact of our
• We updated our Human Rights Policy to strengthen our explicit investments in our areas of influence, as we continue to evaluate our
commitment to respect the rights, culture and traditions of indigenous programmes and improve our performance.
peoples and approved an Indigenous Peoples Engagement Standard. • In 2022, we ramped up our En Red (Connected) digital connectivity
• We prepared a Sustainable Procurement Policy to govern both programme, comprising over 20 initiatives to address the deficit of
our management and our expectations of the companies in our digital infrastructure and skills in the rural and vulnerable communities
supply chain. near our operations.
• In September, as part of our efforts to combat the acute drought in
Safety and health the Choapa Province, we launched a 30-month project to digitalise
• In 2022, there were no fatalities in the Group. and automate the 80 Rural Sanitary Services (SSRs) that provide
water to people’s homes.
• 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. Environment
• The Mining division began installing the latest generation collision • In 2022, we updated our Biodiversity Standard as part of the
avoidance system in its transport equipment, and also in the transport implementation of our Climate Change Strategy, improving its
equipment of its contractors and subcontractors. 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
People Management at Los Pelambres and at Centinela and Zaldívar,
• In 2022, we rolled out our Wellbeing Strategy, focusing on physical,
aiming to finish by the prescribed deadlines of August 2023 and
emotional, financial and social welfare.
August 2025.
• We increased the proportion of our female employees to 20.4%,
• Los Pelambres is planting some 48,000 native trees and shrubs
compared to 17.2% in 2021, continuing the steady improvement
across 300 hectares at the Quillayes tailings dam. This will help
achieved since 2018 and meeting our target for the year.
control particulate material events while blending the dam in with its
• As our digital transformation plan advanced, we trained employees
surrounding environment.
at Centinela and Los Pelambres to work in our integrated remote
operations centres (IROCs) and use autonomous equipment such
as trucks and drill rigs. Climate change
• Our Transport and Mining divisions launched new apprenticeship • We approved new Water and Energy Policies to improve our
programmes, accepting 233 candidates, of whom 81% are women, management of these critical resources in the fight against climate
mainly from communities close to our operations. 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
Suppliers sites to renewable contracts, leading to a reduction of 873,695 tCO2e
• In 2022, we began applying ESG criteria to evaluate bids for contracts
in our Scope 2 emissions compared to 2021.
worth over $10 million. These criteria included the contractors’
• We continued to refine our calculation of Scope 3 emissions with the
emissions, D&I, local recruitment and governance strategies
aim of setting a reduction target in 2023 or as soon as possible
and practices.
thereafter. We also began applying an internal carbon price on tenders
• The number and value of tenders awarded by our Mining division
for carbon-intensive products and in the evaluation of projects.
to local suppliers increased by 49% to 7,139 and 10% to $374m
• In October, our Transport division signed an agreement to acquire
respectively as part of our commitment to foster economic
a 100% green hydrogen-fuelled cargo train that should start operating
development in the regions where we operate.
in 2024.
• During 2022, we began work on a decarbonisation plan for all
our operations.
Suppliers
$4,620m
Payments for the purchase of utilities, goods and services
Communities
$57m
Social investment programmes
Lenders
$77m
Interest payments
Shareholders
$7,445m
$1,263m Total economic contribution
Dividends
Subsidiaries’ non-controlling
shareholders
$80m
Dividends
Employees
$548m
Salaries, wages and incentives
Governments
$800m
Income taxes, royalties and other payments to governments
change adaptation
• Water management
• Collaborative labour relations
• Talent attraction, retention
and development
• Local employment
• Diversity, equity, inclusion
• Tailings management
• Biodiversity
MEDIUM LOW
• Cyber security
• Soil remediation
• Heritage and urban
LOW
development
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.
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.
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.
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 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.
For more information on these initiatives, see the Safety and Health, People, Communities, Suppliers, Climate Change and Environment sections
of this Stakeholder review.
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
An inclusive culture that fosters The Group’s People strategy is built around the four pillars of culture,
organisational effectiveness, labour relations and talent management,
wellbeing is key to attracting and and is aligned with the charter of values which is central to our
retaining a diversity of talent. 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 23%
Employees
People
20%
Women employees
77%
Contractors
77%
Unionised
employees
We seek to keep our Group Lost Time Injury Frequency Rate (LTIFR) In 2022, we investigated deviations to critical controls and implemented
below a score of 1. In 2022, the Mining division achieved 0.76, 32% corrective measures, building on previous campaigns to raise awareness
better than 2021, while the overall Group scored 0.84, a 37% on the use of control strategies and understanding of how critical
improvement. This was due to strengthened Control Strategies controls are verified. This focus will continue into 2023 to ensure that
for high-risk tasks (see “Critical Controls” section below). corrective measures are taken every time a Yo Digo No is activated.
Safety risk management Occupational health risk management
Critical controls Antofagasta is committed to providing a healthy workplace and
20 July 2021 marked one year since the death of contractor worker contributing to the physical and mental wellbeing of everyone who
Fernando Silva López at Los Pelambres. As a mark of respect, works for us. In 2022, we continued to improve the application of critical
safety-related reflection breaks were held at all our operations controls for health risks and high potential health events and registered
to reinforce the lessons learned. an occupational illness frequency rate of 2.09 per million hours worked.
Following the detailed analysis of that tragic incident, we focused on During the pandemic, our efforts to control the spread of COVID-19
improving our planning, analysis and supervision of critical tasks. We allowed us to maintain operational continuity while protecting the health
implemented programmes for supervisors to better understand their of our workers.
roles and responsibilities with regard to planning, shift changes, work
Once COVID was contained, we were able to reassign resources to
crews and their obligation to confirm that tasks are executed according
implement a Surveillance Programme to protect our workforce against
to plan, particularly high-risk and critical ones. We also defined and
other health risks. In cases of early detection of hearing loss, for
deployed the task risk analysis system, Planned Task Risk Assessment
example, corrective action is taken and the worker is removed from the
(PTRA), to plan high-risk and critical tasks. This tool has been design
risk, with job reassignment to prevent further decline. Additionally, as a
to ensure supervisors and crews are always planning and executing
continuous improvement initiative, we study the origin of the risk and
safe working practices of routine and non routine high risk tasks. The
implement mitigation measures to prevent other workers from exposure.
PTRA, ensures the key tools and equipment, standard and critical
controls are always present and describes the step by step Psychosocial risks
standardised working practice. In 2022, we launched our Control Strategy for psychosocial risks, which
increased during the COVID-19 pandemic. Thanks to this strategy, we
The PTRA system emphasises a preventative culture, including
identified five employees with temporary mental health issues and
operational continuity without fatal accidents, the reduction of
provided treatment for them to prevent the illness from becoming a
occupational illness and the minimising of workers’ exposure to high-risk
chronic condition.
situations. It also emphasises self-care. If at any point workers perceive
that adequate working conditions, as outlined in the PTRA, are not being We have a confidential 24x7 helpline for employees and contractors
met, they should employ the “Yo Digo No” (I Say No) tool and stop seeking help for mental health issues.
working until the proper conditions can be verified.
Threats to security
There are now 13 critical activities addressed by the PRTA in the Safety In 2022, there were seven cases of copper theft from our Transport
and Occupational Health’s digital library. division’s trains and trucks, three more than in 2021. There has been an
In 2022, the Mining division began to install the latest generation collision increase in the violence used in the robberies, which are now more
avoidance system in its transport equipment, as well as in that of its confrontational, with the use of weapons and threats that put our
contractors and subcontractors. Full implementation is expected by the employees’ physical and psychological safety at risk.
first quarter of 2023, with the system alerting the driver of the vehicle or As a result, our Transport division has strengthened measures to protect
equipment when it detects imminent danger. its personnel, equipment and cargo. A senior industrial protection expert
Visible leadership has developed a preventative strategy, involving local authorities and the
Leadership is a key driver for improving safety performance and the police, to address the new security situation. The division also takes part
Executive Committee conducts regular on-site safety and health reviews in a new intersectoral industrial safety working group that has been
to engage with employees and contractors. Action plans are followed by established to focus on these challenges. It is important to note the role
every site on each of four key areas: safety culture, safety management that the government has played in working together with the industry to
systems and processes, available safety tools and contractor address this issue.
management. In 2022, we focused on in-field controls. Contractor management
Supervision of occupational health is embedded within the operating Our contractors and subcontractors are included in our safety and
model and throughout the whole system of controls. health performance data and must fully comply with our standards and
procedures. In 2022, we placed special emphasis on the effectiveness
Investigations
of our Special Corporate Health and Safety Regulation for Contractor
Investigation teams independent of the area involved in the incident,
and Subcontractor Companies (RECSS), continuing to embed this
often involving representatives from other sites, look into all HPI
updated contractor management manual across the organisation to
incidents. Findings are shared across the entire organisation and used
ensure an adequate understanding of our requirements and supervision
to close any identified risk management gaps.
of contractor tasks.
Communities
We seek to foster economic and social At Antofagasta, we aim to contribute to social value creation in the
regions where we operate through education and training initiatives,
development in local communities through job creation and social investment that addresses the needs of local
proactive engagement and investment, communities. A commitment to respect human rights underlines
and in collaboration with local people, our interactions.
organisations and authorities. 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
160+
young people from
Choapa were offered
apprenticeships in 2022
Building local skills In the Choapa Province, we awarded 887 scholarships to young people
We seek to stimulate the generation of economic, social and human undertaking technical or university studies in 2022, almost twice as
capital in the regions where we operate by promoting local employment, many as those given in 2021. Work also continued with Education 2020,
supporting local suppliers and offering education and training an NGO, to support 18 schools to implement project-based learning
opportunities. In 2022, 72% of our employees were from the techniques, benefitting 192 teachers and 2,158 pupils. We also support
Antofagasta and Coquimbo Regions, where our operations are based. the province’s five technical-professional schools to strengthen links
with local companies and higher education centres.
The apprenticeship programmes offered by our Transport division and
four mining operations are a key vehicle for this commitment. In 2022, Los Pelambres’ employment programme has trained 2,885 people
over 230 young people from these regions, mainly women, were from Choapa since 2015, mainly in mining trades but also in the services
accepted as apprentice engine drivers, maintenance workers and truck sector and in self-employment. The programme has a jobs’ portal for
drivers, or in plant, tailings and port roles. Most apprentices will be contractor companies to post vacancies and, in 2022, 48% of their
offered permanent jobs at the end of the programme. employees came from the province.
Antucoya and Los Pelambres also initiated Relevos (Relief Workers), In 2022, we opened places on our young graduates’ programme to
a programme under which people who live near the operations are university leavers from Choapa Province. Two were accepted onto
trained to drive mine trucks to cover breaks during shifts. It is aimed Antofagasta’s corporate programme in December 2022 and eight
at people who cannot work a full shift, frequently for family reasons. took on roles at Los Pelambres in January 2023.
Climate change
Our Climate Change Strategy sets ambitious Climate change scenario analysis
In 2022, Antofagasta enhanced its understanding of the financial impact
goals not only for emissions and water use, of the physical risks of climate change by considering a ‘middle of the
but also to build the resilience of our road’ climate change scenario analysis known as SSP2-4.5.1 This
operations and their areas of influence. scenario takes advantage of the latest generation climate models
(CMIP-6) and is considered an intermediate scenario where emissions
As a Group, we recognise climate change as one of the world’s greatest peak in around 2040 and then decline, leading to warming by 2100 of
challenges and acknowledge that we are part of the solution. As a 2.5 to 3°C compared to pre-industrial temperatures. This scenario aligns
copper producer, we supply an input that is critical for low-carbon with the path implied by current policies that are in place.
technologies and, at the same time, we are working to decarbonise our
operations, putting climate change at the heart of how we manage To better understand how physical climate changes could impact our
our business. business, we have focused on particular climate change vectors such
as higher temperatures, water stress, extreme rainfall events, conditions
Our Climate Change Strategy is central to our overall Group Strategy. that generate particulate matter, storm surges and wave events.
It sets the framework to co-ordinate and realise synergies among the Each of our operations analysed the potential effect of these factors
Group’s many initiatives to mitigate and adapt to a changing climate, on their production, cost performance, and the cost of adaptation
according to its five pillars: development of resilience to climate change, measures and control options.
reduction of greenhouse gas emissions, efficient use of strategic
resources, management of the environment and biodiversity, and To understand the financial impact of transition risks, we continue
integration of stakeholders. For each pillar, different areas of action to use the International Energy Agency’s Sustainable Development
have been identified, accompanied by a plan of short-medium-and Scenario (IEA’s SDS), an ambitious and widely recognised scenario
long-term measures. 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
The Board of Directors has ultimate responsibility for the Group’s lower costs are offset by the introduction of carbon taxes to encourage
climate-related objectives and strategy, integrating a deeper awareness the low-carbon transition. In alignment with this scenario, we have
of climate change into our decision-making processes. It has recognised quantified the financial impact of the introduction of a carbon tax,
climate change as one of the principal risks facing the Group and defined including an analysis of core measures to decarbonise our mining
its risk appetite accordingly. In its oversight of climate-related matters, operations and identifying cost efficient opportunities.
the Board is assisted by its Sustainability and Stakeholder Management
Committee, Audit and Risk Committee and Remuneration and Talent To align the potential impact of both physical and transition risks to the
Management Committee. A corporate Climate Change Committee, lifetime and planning cycle of our mining operations, we defined short
formed in 2021, advises the Environment team and meets fortnightly term as 0–5 years, medium term as 5–15 years and long term as
to review advances and consider issues that may be adopted for 15–50 years.
future implementation, such as nature-based solutions. Once the risks and opportunities were identified the most material risks
Carbon emissions are linked to a proportion of our executives’ and opportunities were screened and quantified at an operational level,
long- and short-term performance incentives, as well as to the their financial impact was estimated using assumptions from these
annual performance incentive for employees (see pages 156 and 158). scenarios. We also assessed the financial impact of climate change
across the lifetime of each mine and for a 25-year period for the
In 2019, we committed to implementing the recommendations of the Transport division see page 66.
Task Force on Climate-related Financial Disclosures (TCFD), and
disclosed against these recommendations for the first time in our 2021 Climate scenario analysis was used to better understand and assess the
Annual Report. likelihood and impact of risks and opportunities and was integrated into
our risk assessment processes using ISO 31000 and best practice
Our metrics and targets are aligned with the TCFD’s seven cross- methodology (Bow Tie which considers cause, consequences and
industry climate-related metric categories, including for GHG emissions controls). The estimated financial impact on operating costs and capital
and internal carbon prices. We also report in our Climate Scenario expenditure was calculated against three views: 1) no mitigation or
Analysis the potential financial impact of the transition and physical risks adaptation, 2) controls already in place, and 3) plans and actions
(see page 66), and our investment related to mitigation and adaptation, implemented in the future. In 2023 we plan to improve our climate
which includes the construction of a desalination plant at Los Pelambres. change risk management by determining the levels at which particular
We are also considering how to reflect the benefits that come from climate risks would trigger us taking preventative actions.
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.
1. A Shared Socioeconomic Pathway scenario used by the Intergovernmental Panel on Climate Change (IPCC) in its 2021 Sixth Assessment Report.
Scope 1
Direct emissions
2022 250,545 529,075 128,440 205,332 189 1,113,581 91,068 1,204,649
2021 226,199 439,484 156,500 165,641 124 987,948 90,778 1,078,726
2020 257,801 492,496 152,340 152,577 108 1,055,322 88,936 1,144,258
Scope 23, 4
Indirect emissions
2022 93,142 1,634 0 0 460 95,236 717 95,953
2021 286,848 556,616 0 124,467 894 968,825 823 969,648
2020 334,376 542,020 86,563 120,087 603 1,083,649 858 1,084,507
Total emissions
(Scope 1 and Scope 2)
2022 343,687 530,709 128,440 205,332 649 1,208,817 91,785 1,300,602
2021 513,047 996,100 156,500 290,108 1,018 1,956,773 91,601 2,048,374
2020 592,177 1,034,516 238,903 272,664 711 2,138,971 89,794 2,228,765
CO2e emissions
tCO2e/t5
2022 1.25 2.14 1.44 2.59 – 1.75 12.91 –
2021 1.58 3.63 1.78 3.69 – 2.56 13.67 –
2020 1.65 4.19 1.79 3.44 – 2.79 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.
The Group’s Task Force on Climate-related Financial Disclosures • Metrics & Targets, climate-related metrics – Climate Metrics
(TCFD) recommendations are integrated into this report in accordance & Targets: Our climate change analysis is helping us to define additional
with the Financial Conduct Authority Listing Rule LR.9.8.6(8). Progress metrics to the ones we already use (mainly to measure and manage
against the recommendations is summarised below, together with an emission targets), such as the amount of capital that will be required
index showing where more detailed disclosures can be found. to mitigate and adapt to climate change. We continue to improve our
climate change risk management by determining the levels at which
We are not yet fully consistent with three areas of the TCFD
particular climate risks would trigger us taking preventative actions.
recommendations, which we will progress during 2023.
• Metrics & Targets, GHG emissions and related risks – Scope 3:
• Strategy, impact on business – Decarbonisation Plan: We have Over the last two years we have improved our understanding of our
assessed how our emission reduction plans will achieve our Scope 3 emissions and calculated our 2021 Scope 3 emissions in
decarbonisation targets and further evaluation is underway on the 2022. However, we need to further improve our methodology before
feasibility and implementation of the planned measures at all our we set our Scope 3 reduction targets, which we expect to do and
operations. Completion is expected during 2023. disclose in 2023 or as soon as possible thereafter.
STRATEGY
Recommendations Progress
• Identified risks and opportunities • We reviewed the impact of climate change risks and opportunities as part of our 2022
• Impact on business long-term financial planning process and this allowed us to assess the impact of climate change
• Business resilience 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.
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:
Governance Description of the Board’s oversight of climate-related risks and opportunities. 107
Description of management’s role in assessing and managing climate-related risks and opportunities. 60
Strategy Description of the climate-related risks and opportunities the Company has identified over the short, 60 and 66
medium and long term.
Description of the impact of climate-related risks and opportunities on the Company’s businesses, 58, 60, 62
strategy and financial planning and 63
Description of the resilience of the Company’s strategy, taking into consideration different climate-related 66
scenarios, including a 2°C or lower scenario.
Risk Description of the Company’s processes for identifying and assessing climate-related risks 30
Management Description of the Company’s processes for managing climate-related risks. 60
Description of how processes for identifying, assessing and managing climate-related risks are integrated 30
into the Company’s overall risk management.
Metrics Disclosure of the metrics used by the Company to assess climate-related risks and opportunities consistent 60 and 65
and Targets with its strategy and risk management process.
Disclosure of Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG) emissions 61
and the related risks.
Description of the targets used by the Company to manage climate-related risks and opportunities 61 and 63
and performance against targets.
Choapa Province
María Elena
Bolivia
Tocopilla
Calama
Argentina
Canela municipal district
Illapel municipal district
Centinela Port
Antucoya
Antofagasta
Los Vilos
Salamanca municipal district
Los Vilos
municipal district El Mauro
Argentina
Medium Medium
Extreme rainfall events
$50-100m term $0-50m term
Net Present Value Positive Exposure Net Present Value Negative Exposure
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).
Due diligence is conducted on all potential suppliers prior to awarding As part of our Suppliers for a Better Future programme, we also began
a contract. We assess Company ownership, participation of politically working with supply chain sustainability rating consultants EcoVadis,
exposed persons, antitrust issues, commercial behaviour, legal cases, in a trial to determine the ESG ratings of our suppliers. Following the
conflicts of interest, compliance models and procedures for the evaluation, a scorecard is prepared that highlights areas for the suppliers
prevention of slavery and human trafficking. We have in place control to improve and monitor. By the end of the year, around 50 of our largest
and management systems covering the procurement of minerals which suppliers, based on spending, were participating and more will be added
we use to manufacture our products, in line with the OECD’s due in 2023.
diligence guidance for responsible supply chains for minerals.
We continued to address Scope 3 emissions, which are indirect
Antofagasta’s Compliance Model applies to both employees and emissions related to our activities caused by upstream (suppliers) or
contractors. It is clearly defined and is communicated regularly through downstream processes that we do not control or own. During the year,
internal channels, as well as being described in our Crime Prevention we worked on specific supplier categories, such as explosives, grinding
Manual. All contracts include clauses relating to ethics, Chilean Law balls and linings, to further refine our Scope 3 emissions calculation for
N° 20.393 on bribery and asset laundering and the UK’s Bribery 2021. We plan to set a Scope 3 emissions reduction target in 2023 or as
Act and Modern Slavery Act. soon as possible thereafter, and include reduction targets in contracts
for specific categories of suppliers.
We conduct audits to ensure compliance with our requirements.
In 2022, we increased the frequency of financial evaluations and We agreed Greenhouse Gas Agreements with mining equipment
introduced several measures, such as shorter payment times, to suppliers Komatsu and Caterpillar to advance the development of
address greater insolvency rates among suppliers. zero-emission vehicles and machinery, which currently account
for approximately 50% of our Scope 1 emissions.
Our Procurement team received annual refresher training on the
Group’s Compliance Model, Code of Ethics and Crime Prevention Manual In addition, we worked on long-term strategies to reduce Scope 3
and updated their declaration of Conflicts of Interest. emissions in nine categories and began collaboration initiatives with
15 suppliers. We also signed agreements to pilot four types of electric
Suppliers can use the Tu Voz (Your Voice) whistleblowing channel on
battery vehicles in 2023 at our operations (excavators, front-end
the Group’s website to make anonymous complaints. We have raised
loaders, dump trucks and pickup trucks).
awareness of this mechanism in meetings and in written
communications with our contractor workers. As a member of the International Council on Mining and Metals (ICMM),
For more information, see our we helped design ICMM’s Scope 3 self-assessment tool and used it to
Crime Prevention Manual measure our emissions. It placed us in the top three of the 26 ICMM
member companies that undertook the evaluation with regard to the
For more information, see our completeness and quality of our measurement of Scope 3 emissions.
2022 UK Modern Slavery Act Statement
For more information, see our 2022 Sustainability Report, our
Suppliers ESG 2022 Climate Change Report and antofagasta.co.uk/suppliers22
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.
Customers
Successful management of our relationships In the case of copper cathode transactions, a premium, or in some
cases a discount, on the LME price is negotiated to reflect differences
with our customers contributes to our in quality, logistics and financing compared with the metal exchange’s
long-term success. standard copper contract specifications.
Customers Similarly, our molybdenum contracts are made under medium- and
Most copper and molybdenum sales are made under annual contracts or long-term framework agreements, with pricing usually based on Platts’
longer-term framework agreements, with sales volumes agreed for the average prices for Technical Molybdenum Oxide with a deduction to
coming year. Gold and silver are contained in the copper concentrates reflect the cost of converting molybdenum sulphide concentrate into
and are therefore part of copper concentrates sales. molybdenum oxide.
Most sales are to industrial customers who further process the copper Across the industry, neither copper producers nor consumers tend
into more value-added products – smelters, in the case of copper to make annual commitments for 100% of their respective sales or
concentrate production, and copper fabricators and trading companies purchases, and normally retain a portion to be sold or purchased
in the case of cathode production. We build long-term relationships on the spot market during the year.
with these key smelters and fabricators, while ensuring customer In line with industry practice, our sales agreements generally provide
diversification. We also maintain relationships with trading companies for provisional pricing at the time of shipment, with final pricing based on
that participate in shorter-term sales agreements, or in the spot market. the average market price in the month in which settlement takes place.
About 70% of our mining sales are under contracts of a year or longer For copper concentrates, the final price remains open until settlement
and metals sales pricing is generally based on prevailing market prices. occurs, on average four months from the shipment month. Settlement
Structure of sales contracts for the gold and silver contained in the copper concentrates occurs
Typically, our sales contracts set out the annual volumes to be supplied approximately one month after shipment. Copper cathode sales remain
and the main terms for the sale of each payable metal, with the pricing open for an average of one month from the month of shipment.
of the contained copper in line with LME prices. Settlement for copper in concentrate sales is later than for copper
cathode sales, as copper in concentrate requires more processing to
In the case of concentrates, a deduction is made from LME prices produce refined copper for sale. Molybdenum sales generally remain
to reflect TC/RCs, the smelting and refining costs to process the open for two or three months after the month of shipment.
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.
EUROPE
18%
NORTH
AMERICA
JAPAN
Copper
Molybdenum
84%
7%
5% 28%
Gold 5%
Transport 3%
REST OF
Silver 1% ASIA PACIFIC
SOUTH 39%
AMERICA
10%
The Company is listed on the main market 2022 Shareholder engagement calendar
of the London Stock Exchange and is Q1 CEO presented at an industry conference for institutional
a constituent of the FTSE100 index. investors in the US
As explained in the Directors’ Report In-person and virtual one-on-one and small group meetings with
on page 168, the controlling shareholders of some 100 investors, of which senior management participated
in 69%
the Company hold approximately 65% of the
Virtual presentation of full-year 2021 results by the CEO, CFO and
Company’s total capital. The majority of Vice President of Corporate Affairs and Sustainability, followed by
the Company’s ordinary shares not held a question and answer session open to all investors, and a virtual
by the controlling shareholder are held by roadshow with investors in Europe and the US
institutional investors, mainly based in the Investor relations team attended two virtual investor conferences
UK and North America. Q2 CEO presented at an industry conference for institutional
investors in the US
We maintain an active dialogue with institutional shareholders and
sell-side analysts, as well as with potential shareholders. This Video conference question and answer call open to all investors
communication is managed by our investor relations team in London and by the CEO, CFO and Vice President of Corporate Affairs and
includes a formal programme of presentations and roadshows to update Sustainability, following the release of the Q1 production report
institutional shareholders and analysts on developments at Antofagasta. Virtual one-on-one and small group meetings with some 125
As the travel restrictions imposed by the COVID-19 pandemic lifted investors, of which senior management participated in 65%
during 2022, we held an increasing number of in-person meetings with Annual General Meeting in London
institutional investors and sell-side analysts, including during international
investor roadshows, at industry conferences and panel events and with Investor relations team attended four virtual investor conferences
banks’ equity sales teams. These were attended by the CEO and/or and two in-person conferences in the US
various members of the senior management team, including the CFO, Q3 Virtual presentation of half-year 2022 results by the CEO,
the Vice President of Corporate Affairs and Sustainability and the Vice CFO and Vice President of Corporate Affairs and Sustainability,
President of Strategy and Innovation. We also visited major shareholders followed by a question and answer session open to all investors
and proxy voting agencies as part of a corporate governance roadshow London (in-person) and Frankfurt (virtual) roadshow
led by our Senior Independent Director and the Chair of our
Remuneration and Talent Management Committee. US East Coast roadshow
We publish quarterly production figures as well as half-year and full-year Virtual one-on-one and small group meetings with some 100
financial results. Copies of our production reports, financial results, investors, of which senior management participated in 63%
presentations and other ad-hoc press releases are available on our Investor relations team attended two virtual investor conferences
website. During 2022 we also published Sustainability Reports for our
Q4 Video conference question and answer call open to all investors
Mining and Transport divisions, as well as a Tax Report, all of which are
by the CEO and CFO following the release of the Q3
available on our website.
production report
What investors focused on most in 2022 Virtual one-on-one and small group meetings with some
• Our ability to achieve our full-year production and cost guidance 60 investors, of which senior management participated in 27%
• The drought in central Chile and its impact on the Company
Corporate Governance roadshow with our Senior Independent
• The progress and potential impact of the planned revisions
Director and Chair of the Remuneration and Talent
to the Chilean mining royalty and tax legislation and the rewriting
Management Committee
of the Chilean constitution
• ESG issues, particularly water availability and emissions, Investor relations team attended one investor conference
and our response to climate change in London
• 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
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.
Reporting
requirement Relevant policies and standards Content Page Page
Sustainability Value Chart Letter from the Chairman 6 How we engage with our 46
Sustainability Policy Letter from the CEO 9 stakeholders
ICMM Guidelines Our approach to sustainability 42 Sustainability and Stakeholder 137
Management Committee
Safety and health Safety and Occupational Health Strategy Safety and Occupational Health 51 Safety risk management 52
Special Corporate Safety and Health Strategy Performance 53
Regulation for Contractors and Occupational health risk 52
Subcontractors (RECCS) management
Fatal Risk Standard (ERFT)
Occupational Health Standard (ESO)
Environmental Environmental Management Model Environmental management 57 Climate change 60
matters Integral closure of mining operations Environmental compliance 57 Carbon footprint 61
standard Responsible production 58 Energy management 62
Climate change standard Circular economy 59 Water management 63
Water management standard Biodiversity 59 TCFD 64
Biodiversity standard Air quality 59
Tailings policy Mine closure 59
Global Industry Standard on Tailings
Management
/ Operating review
Mining division
Antofagasta owns and operates four mines. “Our operational reliability and
Los Pelambres is located in the Coquimbo
Region of central Chile and Centinela,
utilisation rates continue to improve
Antucoya and Zaldívar are in the with Centinela and Antucoya
Antofagasta Region of northern Chile. reporting record throughput rates
for the year.”
Mauricio Larraín
Vice President of Northern Operations
Production highlights
176.8
2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023
Forecast Forecast
2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023
Forecast Forecast
BOLIVIA
ANTOFAGASTA
REGION
CENTINELA
PORT ANTUCOYA
MEJILLONES CENTINELA
ANTOFAGASTA
ZALDÍVAR
SANTIAGO
COQUIMBO
REGION
ARGENTINA
LA SERENA
ILLAPEL
LOS
PUNTA PELAMBRES
CHUNGO PORT LOS VILOS
Los Pelambres
Centinela
Antucoya
Zaldívar
Capital city
Cities and town centres
Ports
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.
275.0k tonnes
359.6
320-335
43.1k ounces
60.3 45-55
$2,559m
-29.3%
324.7 53.2
275.0
EBITDA
$1,473m
43.1
-41.7%
0.89
7.2 0.81
23 years 12 years
Production
Copper production for the year decreased by 15.3% to 275,000
Outlook for 2023
The forecast production for 2023 is 320–335,000 tonnes of copper,
tonnes, to mainly due to the lower throughput due the expected
7.5–8,500 tonnes of molybdenum and 45–55,000 ounces of gold.
restrictions on water availability during 2022 as a result of the
Higher production is due to higher throughput, as the desalination and
accumulated impact of the long-running drought conditions in the
concentrator expansion are expected to be in production by the end
Los Pelambres area, and the pipeline incident. Molybdenum production
of Q2 2023.
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, Cash costs before by-product credits are forecast to be approximately
19.0% lower than the previous year. $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.
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.
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.
247.5k tonnes
274.2 235-250
133.7k ounces
199.0
175-185
$2,406m
-19.3%
246.8 247.5
EBITDA
$1,157m
143.7
133.7
-39.7%
2.4 1.27
1.13
1.7
1.3
22 years 43 years
Mining division:
Antucoya
Revenue
$704m
Antucoya is approximately 1,400 km north
of Santiago and 125 km north-east of the city
of Antofagasta. Antucoya mines and leaches +0.8%
oxide ore to produce copper cathodes using
the solvent extraction and electrowinning EBITDA
$261m
(SX-EW) process.
-22.5%
2.04
1.82
7 years 21 years
Production
Antucoya produced 79,200 tonnes, 0.8% higher than last year due to Outlook for 2023
higher throughput, which averaged 89,400 tonnes per day for the year, Production is forecast to be 70–75,000 tonnes of copper and cash costs
the plant's design capacity. are expected to be approximately $2.45/lb.
$147m
mine which produces copper cathodes using
the solvent extraction and electrowinning
(SX-EW) process. The mine is 3,000 metres -14.8%
above sea level, approximately 1,400 km north
of Santiago and 175 km south-east of the city
of Antofagasta.
1.80
28 years 13 years
Transport division
7,108k tonnes
7,108
6,533 6,702
6,444 Tocopilla
María Elena
Calama
Sierra Gorda
2019 2020 2021 2022
Mejillones
Antofagasta Region
Revenue
$193m Antofagasta
+13.8%
EBITDA
$80m
+17.3%
Taltal
Customer map
Road route
Rail route
FCAB customers
Growth projects
and opportunities
Our approach to considered growth means that Annual copper production will be increased by an average of 60,000
tonnes per year over 15 years, starting at approximately 40,000 tonnes
we focus on value, which includes controlling per year for the first four to five years and rising to 70,000 tonnes per
capital costs and optimising production at our year for the rest of the period as the hardness of the ore increases and
existing operations, and the development of the benefit of the higher milling capacity is fully realised.
new mining operations to deliver replacement 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
and new production in the future. We achieve 800 l/s. However, the additional work on this expansion that can be
this through careful project management and carried out during Phase 1 is limited by what is allowed under the
constant monitoring of the efficiency of our permits that have already been issued so the remaining work will be
treated as a separate project subject to the receipt of the necessary
mines, plants and transport infrastructure. permits. The cost of the additional work is included in the Phase 1
The Zaldívar Chloride Leach project was completed on time and on capital cost.
budget early in the year, pre-stripping of the Esperanza Sur pit was
By the end of 2022, the desalination plant and the water pipeline were
completed in July, the Los Pelambres desalination plant started its
95.7% complete and commissioning was under way, with production
pre-commissioning in November and the concentrator expansion
expected in the second quarter of 2023. At the concentrator plant
at Los Pelambres will be completed by the end of March 2023.
expansion site, progress was 91.0% with production also expected in the
Los Pelambres Expansion second quarter of 2023.
This expansion project is divided into two phases. Phase 1 is expected to A detailed review of the project schedule and costs in early 2022
be in production in the second quarter of 2023 and Phase 2 by the end resulted in the capital cost estimate for Phase 1 being increased to $2.2
of 2025. billion (from $1.7 billion). Of this increase, approximately $220 million
Phase 1 was related to the impact of COVID-19 on costs and the construction
This phase is designed to optimise throughput within the limits of the schedule, and $170 million was related to general inflation, including
existing operating, environmental and water extraction permits. increased input prices, wages, labour incentives and logistics costs, with
the balance reflecting other adjustments to implementation plans and an
As mining progresses at Los Pelambres, ore hardness will increase.
updated contingency provision.
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.
Centinela Second Concentrator In 2021, the BLM rejected advancing Twin Metals’ preference right lease
We are currently evaluating the construction of a second concentrator applications (PRLAs) and prospecting permit applications (PPAs).
and tailings deposit some 7 km from the existing concentrator, to take In early 2022, the Department of Interior (DOI) took an additional action
place in two phases. The EIA for both phases was approved in 2016. through a legal opinion issued by the Office of the Solicitor (M-Opinion).
Detailed engineering plans and costings have recently been updated for This action arbitrarily cancelled Twin Metals’ federal mining leases 1352
Phase 1 of the project and key contracts finalised, subject to Board and 1353, citing concerns with the reinstatement and renewal process.
approval of the project. The capacity of the new concentrator will be
95,000 tonnes of ore per day, producing on average approximately Also in early 2022, the BLM stopped its evaluation of Twin Metals’
170,000 tonnes of copper equivalent (copper, gold and molybdenum) MPO and an administrative court dismissed Twin Metals’ appeal of that
a year over the first ten years of operation. This will move Centinela into decision.
the first cost quartile of global producers. In August 2022, Twin Metals filed a claim in federal court challenging
The Phase 1 capital cost is estimated at $3.7 billion, including the cost of the administrative actions resulting in the rejection of the PRLAs, the
the new water supply system. The increase on the previously quoted cancellation of its federal leases 1352 and 1353, the rejection of its MPO
2015 pre-feasibility estimate of $2.7 billion reflects inflation, design and the dismissal of the administrative appeal of the MPO rejection.
improvements, heightened environmental and other regulatory Twin Metals considers the actions of the government to be arbitrary
requirements, and the results of advanced engineering and a more and capricious, contrary to the law and in violation of its rights. This
detailed execution plan. The estimate includes a concentrator plant, action is pending.
capitalised stripping, mining equipment, a new tailings storage facility, In January 2023, the DOI issued an order effectively banning mining in
a water pipeline and other infrastructure, pre-commercial production approximately 225,000 acres of the Superior National Forest for 20
operating costs, and owner’s and other costs. years, subject to valid existing rights. This action alone does not prevent
The decision by the Board on whether to proceed with the project is Twin Metals from proceeding with the project since it does not affect its
expected in 2023, with timing dependent on the outcome of ongoing pre-existing rights.
discussions on the tax reform and mining royalty bills and the rewriting Reko Diq project
of Chile’s constitution. Work on Phase 2 would only start once In 2019, the World Bank Group’s International Centre for Settlement of
construction of Phase 1 is completed and it is operating successfully. Investment Disputes (“ICSID”) awarded $5.84 billion in damages
The second concentrator and its potential further expansion to (compensation and accumulated interest as at the date of the award) to
150,000 tonnes of ore per day will source ore initially from the Tethyan Copper Company Pty Limited (“Tethyan”), the joint venture held
recently opened Esperanza Sur pit and later from the Encuentro pit. equally by the Company and Barrick Gold Corporation (“Barrick”), in
The sulphide ore in the Encuentro pit lies under the Encuentro Oxides relation to an arbitration claim filed against the Islamic Republic of
reserves, which are expected to be depleted by 2026. These Pakistan (“Pakistan”) following the unlawful denial of a mining lease for
expansions will further progress maximising the potential of the Reko Diq project in Pakistan in 2011.
Centinela's large mineral resource base. In March 2022, the Company reached an agreement in principle with
During 2022, the Company continued the tender process inviting third Barrick and the Governments of Pakistan and Balochistan on a
parties to provide water for Centinela's current and future operations by framework that provided for the reconstitution of the Reko Diq project,
acquiring the existing water supply system and building the new water and a pathway for the Company to exit the Reko Diq project.
pipeline. This process is expected to be completed in 2023. The In December 2022, the parties entered into definitive agreements under
outsourcing of the water supply will only proceed if it improves the net which the project was reconstituted under Tethyan and a consortium
present value of the project. of Pakistani state-owned enterprises acquired shares in the Tethyan
Twin Metals Minnesota subsidiary which holds the project, and the ICSID award was resolved.
Twin Metals Minnesota (Twin Metals) is a wholly owned copper, nickel The proceeds from the acquisition of the shares of Tethyan’s subsidiary
and platinum group metals (PGM) underground mining project, which will be held by Tethyan until they are distributed to the Company before
holds copper, nickel/cobalt and PGM deposits in north-eastern the end of 2023. An exceptional gain of $945 million has been
Minnesota, US. The planned project is over a portion of the total recognised in 2022 and is subject to final payment during 2023.
resource and envisages mining and processing 18,000 tonnes of ore per For more information please see Note 17 to the financial statements.
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.
Our aim is at least to replace the mineral The project is jointly held with Barrick Gold, with Antofagasta the
majority shareholder and operator.
resources mined at our operations each year
In addition, we advanced drilling evaluation at several projects in the
and to ensure Antofagasta’s sustainable and Centinela Mining District, maintaining our focus on identifying new
long-term growth. In 2022 our mineral high-quality projects with leachable oxide mineralisation in our properties
resources increased by 1 billion tonnes. and in ground held by third-parties.
Exploration remains a key contributor to the sustainable and long-term International
embedded growth of the Group´s copper business. Our international programme has a strong focus on Peru, including the
After the lifting of restrictions imposed during the COVID-19 pandemic, development of a diversified land portfolio with long-term and significant
exploration activities resumed as normal, subject to a few additional potential in the prospective coastal and Miocene belts. As at the end of
control protocols. We remain focused on favourable jurisdictions in the the year, permits are being sought to test an exploration target in the
Americas, particularly in Chile, Peru, Canada and the USA. country´s southern coastal belt.
In Chile, we are pursuing brownfield and greenfield projects and in the Exploration efforts in North America remain concentrated on the key
other countries we have generative programmes, identifying early-stage copper belts in British Columbia and Arizona/Nevada, with the GEM
projects while remaining open to M&A opportunities. team seeking joint venture opportunities with companies that have
attractive land holdings, local knowledge and resources.
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.
Key costs
has been important for implemented contingency plans to maintain the quality and timely
delivery of spare parts and materials, thus ensuring operational
both the Company’s 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
carbon footprint and of supply.
its costs.”
In 2022, we had around 3,800 different suppliers of goods and services,
of which 93% are based in Chile.
Operating excellence
and innovation
Innovation is one of our five strategic pillars, The benefits were mainly achieved through higher utilisation of our
processing facilities, such as at Centinela where the concentrator
designed to create and add value across the operated at 4% above design capacity and at Antucoya, which achieved
Group by enabling the progression and record throughput for the year. Also, the consumption rates for some
fulfilment of our strategic priorities. key inputs were improved through enhanced operational practices and
the use of data analytics. These initiatives were especially beneficial this
Our innovation programme has two key objectives. The first is to year, partially offsetting the impact of lower production and increased
improve and achieve the full potential of our operations by seeking new industry-wide input prices.
ways of using best-in-class digital technology. We are doing this through
the integration of data with advanced analytics and by improving For 2023, the target is to achieve at least $60 million of further savings.
operational performance with automation and robotics. The second is a New ways to operate
longer-term objective; to enable business growth and to develop the next Our digital roadmap comprises transformational strategic programmes
generation of mining practices, including game-changing process that draw on the adoption of new technologies to improve productivity
technology and the reduction of our environmental footprint. and safety. This helps us maintain or improve our competitive position
Operating excellence drives our Competitiveness strategic pillar by through continual productivity improvements that both optimise margins
embedding a continuous improvement culture in the Group to raise and advance our growth projects and innovations portfolio.
the full potential of our assets and our people. Integrated Remote Operations Centre (IROC)
Operating excellence Centinela’s Integrated Remote Operations Centre (IROC) in the city of
During 2022, our operating excellence strategy focused on achieving Antofagasta went fully operational during 2022 and Los Pelambres’
the maximum theoretical capacities of our production processes using IROC in Santiago was completed at the end of the year.
our Full Potential 2.0 programme. These projects allow not only remote operations and improved process
Full Potential 2.0 is a methodology that allows the systematic and control, but better decision-making and greater efficiency and
standardised identification of bottlenecks in our production processes. productivity from the mine to the port.
It seeks to maximise the capture value of our mining operations through Autonomous systems
an indicator, OEE (Overall Equipment Efficiency), that measures the The increasing use of autonomous equipment at Los Pelambres
overall efficiency of equipment and processes. This process has allowed and at Centinela’s Esperanza Sur pit continued during the year.
us to identify the main gaps and opportunities for process improvement
Los Pelambres has successfully deployed five autonomous production
at our operations, as well as indicating initiatives that are key to
drill rigs, three electric and two diesel, which have significantly improved
creating value. The most important of these are the use of continuous
productivity and safety.
improvement methodologies and advanced analytics to improve
data-driven decision-making. To sustain these improvements, we also Meanwhile, at Centinela’s Esperanza Sur pit, we completed the
deploy Lean practices throughout the organisation to ensure that the commissioning of our new autonomous fleet, with the 11 autonomous
value of the improvements achieved is locked in. trucks and two autonomous production drills performing as planned.
Data analytics Next generation in mining technologies
During 2022, Data & Advanced Analytics focused on three main work We continue to advance the development and validation of new
areas: growing our Data Governance programme by adding five new technologies that could enable new growth and mining practices,
Data Domains (corporate areas) and deepening skills in older domains through the achievement of better and more sustainable mining as
(operations); stabilising and strengthening our Data Platform – data lake shown by the examples below.
– to support current and new analytics use cases; and automating
Cuprochlor®-T – our patented primary sulphide leaching technology
business intelligence (BI) tools, dashboards and reports.
The Cuprochlor®-T patent was granted in Chile in 2022 and after
Operational innovation the successful completion of the industrial-scale trial at Centinela
Our open innovation model is effective in enabling our employees, new tests have been started using primary sulphides from our other
contractors and external parties such as suppliers to understand our operations.
main operational challenges. They can propose their own ideas and
The pre-feasibility study and preparation for a semi-industrial heap
solutions through the online collaborative platform Innovaminerals and at
at Zaldívar is underway and we expect to complete the study by the
supplier Pitch Days. During 2022 we hosted 12 Pitch Days aiming to
end of 2023.
solve 12 operational challenges in collaboration with our ecosystems.
The technology is incorporated as an option in our mine planning for
Cost and Competitiveness Programme
the long-term development of the mineral resources at our operations
The Cost and Competitiveness Programme (CCP) was introduced in
and we expect its use to be phased in over the coming years.
2014 to capture the gains from initiatives introduced to reduce our cost
base and improve our competitiveness. Green hydrogen
In 2022 the prototype of the Hydra project, installed in the Esperanza
The programme focuses on five areas designed to deliver sustainable
pit at Centinela, completed its six-week trial to test the behaviour
cost reductions and productivity increases: streamlining goods and
of hydrogen fuel cells in the demanding environmental conditions
services procurement; improving operating efficiency and asset
of the mine (particularly with regard to altitude and dust). If successful,
reliability; energy efficiency; corporate and organisational effectiveness;
hydrogen could replace diesel as the fuel for large mining equipment.
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
AGILE DECISIONS ASSISTANT (ADA) SMART PLS
LOS PELAMBRES CENTINELA
During 2022, Los Pelambres started using an advanced analytics tool Smart PLS is software that uses Artificial Intelligence algorithms
that provides situational awareness for integrated operations. Based to optimise decision making and operational leach processes in
on real time data architecture, key process indicators (mine to port) order to maximise copper recoveries. The online platform helps
are continuously monitored in the IROC, allowing operational constraints the operating team to use control charts, irrigation simulations
to be quickly detected and solved. The tool was developed in-house and and automatic reportability, to track and optimise acid and water
we are in process of designing and building an updated version with consumption, increase productivity and enable intelligent irrigation
additional features and an improved user experience. based on expert judgement. We are currently working on the
implementation of this technology at our Tesoro plant.
/ Financial review
Basic earnings per share cents cents cents cents cents cents
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:
944.7 1,533.0
114.2 1,404.4 (1,608.1)
1,290.2
495.1 588.3
729.3
(336.6)
(11.6) (84.2)
Profit attributable
to the owners of the
parent in 2021
Decrease in revenue
Decrease in
non-controlling interests
Exceptional items
– 2022
Profit attributable
to the owners of the
parent in 2022
Decrease in
copper sales
volumes
Decrease in
realised copper
price
Increase in
treatment and
refining charges
Decrease in gold
revenue
Increase in
molybdenum
revenue
Decrease in
silver revenue
Increase in
Transport
division revenue
Revenue
in 2022
Revenue from the Transport division Operating costs (excluding depreciation, amortisation and loss
Revenue from the Transport division (FCAB) increased by $23.4 million on disposals) at the Transport division
or 13.8% to $193.4 million (2021 – $170.0 million), mainly due to Operating costs (excluding depreciation, amortisation and loss on
increased volumes and better pricing in some contracts. 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
Total operating costs (excluding exceptional items) diesel used for locomotives and trucks as well as the impact of the
The $336.6 million increase in total operating costs (excluding higher inflation rate on labour, material and contractor costs.
exceptional items) from $3,891.1 million in 2021 to $4,227.7 million in the
current year reflected the following factors: Depreciation, amortisation and disposals (excluding
impairments)
252.8 6.4 9.8 (0.5) 12.8 55.3 4,227.7 The expense for depreciation, amortisation and loss on disposals
3,891.1
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).
Total operating
costs in 2021
(excluding
exceptional
items)
Increase in
mine-site
operating costs
Increase in
closure provision
and other mining
expenses
Increase in
exploration and
evaluation costs
Decrease in
corporate costs
Increase in
Transport
division operating
costs
Increase in
depreciation,
amortisation and
loss on disposals
Total operating
costs in 2022
(excluding
exceptional
items)
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).
The effective tax rate excluding exceptional items of 37.4% varied from Disposal of investment in Tethyan joint venture
the statutory rate principally due to the mining tax (royalty) (net impact of On 15 December 2022 Antofagasta entered into definitive agreements to
$71.4 million/4.4% including the deduction of the mining tax (royalty) as exit its interest in the Tethyan joint venture. As a result, Antofagasta has
an allowable expense in the determination of first category tax), the recognised a gain on disposal of its investment in the joint venture as at
withholding tax relating to the remittance of profits from Chile (impact 15 December 2022 of $944.7 million. Full details of the agreements and
of $73.0 million/4.6%), items not deductible for Chilean corporate tax gain on disposal are set out in Note 17 to the financial statements.
purposes, principally the funding of expenses outside of Chile (impact of 2021 – Impairment of Twin Metals’ assets
$33.9 million/2.1%) and adjustments in respect of prior years (impact of In 2021 an impairment was recognised in respect of the $177.6 million of
$2.6 million/0.1%), partly offset by the impact of the recognition of the intangible assets and property, plant and equipment relating to the Twin
Group’s share of profit from associates and joint ventures, which are Metals project.
included in the Group’s profit before tax net of their respective tax
charges (impact of $13.0 million/0.8%). 2021 – Recognition of previously unrecognised deferred tax assets
At 31 December 2021, the Group recognised $90.6 million of previously
The impact of the exceptional items on the effective tax rate including unrecognised deferred tax assets relating to tax losses available for
exceptional items was $255.1 million/10.0%. Further details of the offset against future profits, reflecting the improved actual and forecast
exceptional gain on the disposal of the Group’s investment in the Tethyan profitability of the relevant Group entity (Antucoya).
joint venture, including relevant tax aspects, are set out in Note 17 to the
financial statements. Non-controlling interests
Profit for 2022 attributable to non-controlling interests (excluding
Exceptional items exceptional items) was $422.3 million, compared with $917.4 million
Exceptional items are material items of income and expense which are in 2021, a decrease of $495.1 million. This reflected the decrease in
non-regular or non-operating and typically non-cash, including earnings analysed above.
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.
Ordinary dividends:
Interim 9.2 23.6
Final 50.5 118.9
Total dividends to ordinary shareholders 59.7 142.5
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).
Cash flows
The key features of the cash flow statement are summarised in the following table.
Year ended 31.12.22 Year ended 31.12.21
$m $m
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
At 31.12.22 At 31.12.21
$m $m
The Strategic Report has been approved by the Board and signed
on its behalf by:
UK Corporate Governance Code How the Code principles were applied in 2022
compliance statement Board leadership and Company purpose
The UK Corporate Governance Code issued by the Financial Reporting The role of the Board
Council in July 2018 sets out the governance principles and provisions • The Company is led by an effective and entrepreneurial Board, which
that applied to the Company during 2022. is collectively responsible for promoting the Company’s long-term
sustainable success, generating value for shareholders and
The Code is not a rigid set of rules, it consists of principles and
contributing to wider society as shown throughout this Corporate
provisions. The Listing Rules require companies to apply the principles
Governance Report.
and report to shareholders on how they have done so. This Corporate
Governance Report shows how these principles have been considered • The Board has adopted and actively promotes the Group’s purpose,
and applied to the Company’s specific circumstances. vision, values and strategy and has satisfied itself that they are aligned
with its culture – pages 18-21 and 112.
The Company complied with all the principles and detailed provisions of • The Board has ensured that the necessary resources are in place for
the Code in 2022 except for Code Provisions 9 and 19. Code Provision 9 the Company to meet its objectives and measure performance against
recommends that the Chairman should be independent on appointment them. It has established both its risk appetite and a framework of
when assessed against the circumstances set out in Provision 10 and prudent and effective controls, which enable risk to be appropriately
Code Provision 19 recommends that the Chairman should not remain in assessed and managed – pages 24-35.
post beyond nine years from the date of first appointment to the Board.
• The Board ensures effective engagement with, and encourages
The Company’s Chairman, Jean-Paul Luksic, was appointed to the participation from, shareholders and other stakeholders to ensure
Board in 1990. He served as CEO of the Group’s Mining division from that its responsibilities are met – pages 38-73, 106, 108, 114-115,
1998 until 2004 and was appointed Executive Chairman in 2004. 121, 143 and 164.
In 2014, he stepped back from executive responsibilities to become • The Board ensures that workforce policies and practices are consistent
Non-Executive Chairman, a role he has continued to hold since then. with the Company’s purpose, vision and values and supports its
Mr Luksic’s longstanding UK corporate governance and Chilean mining long-term sustainable success. The workforce can raise any matters
and business experience, coupled with his knowledge of the Group’s of concern anonymously through the Group’s whistleblowing channels
businesses have been for many years, and continue to be, a cornerstone – pages 36, 48-50, 116-117, 134-135 and 142-167.
of the Company’s continuing growth and success. • The Board considers the matters set out in section 172 of the
Mr Luksic is also a member of the family that is interested in the Companies Act 2006 in Board discussions and decision-making –
E. Abaroa Foundation, a controlling shareholder of the Company for the pages 38-73. Detailed examples can be found on pages 114-115.
purposes of the UK Listing Rules and is therefore uniquely positioned to
Division of responsibilities
ensure that the interests of shareholders, together with the interests of
• The Board is structured to ensure that no one individual or small
other stakeholders (many of whom are based in Chile), are taken into
group of individuals dominates its decision-making, as demonstrated
account to promote the long-term sustainable success of the Company
throughout this Corporate Governance Report.
and to promote governance that the Board is convinced is best for the
Company’s particular circumstances in the long term. • The CEO is not a Director of the Company and is therefore not
a member of the Board – page 121.
Mr Luksic is committed to wider succession and diversity planning and, • There is a clear division of responsibilities between the Board
in his roles as Chairman of the Board and Chair of the Nomination and and the executive leadership of the Company’s business – pages 110,
Governance Committee, he has overseen the design and implementation 120 and 121.
of succession plans to increase diversity, including gender, and
• The division of responsibilities between the Chairman, the CEO and
continually refresh the Board.
the Senior Independent Director is recorded in writing and is available
The Board considers that Mr Luksic continues to demonstrate objective on the Company’s website at antofagasta.co.uk.
judgement and provide constructive challenge and leadership, and • The roles of the Board and the Board Committees are recorded
believes that his continued appointment is appropriate without fixing a in the Schedule of Matters Reserved for the Board and the Terms
limit to his length of service. The Company’s major shareholders were of Reference for each of the Board’s Committees, all of which are
invited by the then Senior Independent Director to discuss this subject available on the Company’s website at antofagasta.co.uk.
ahead of the 2020 AGM when Code Provision 19 was introduced and • The Board, supported by the Company Secretary, has the policies,
unanimously expressed their support for Mr Luksic’s continued service processes, information, time and resources it needs in order to
as Chairman of the Board. function effectively and efficiently – pages 111 and 126.
The composition of the Board and its Committees is entirely in line with The Chairman
the Code provisions and the Chairman is fully supported by the Board, • The Chairman leads the Board and is responsible for its overall
the Nomination and Governance Committee and the Senior Independent effectiveness in directing the Company. His responsibilities
Director in ensuring that, despite non-compliance with Code Provisions are set out on page 121.
9 and 19, good governance is maintained.
• The Board considers that the Chairman demonstrates objective
Further details on the composition of the Board and its Committees judgement and promotes a culture of openness, healthy challenge
are set out on page 118 and further details of the role of the Senior and debate – pages 104 and 108.
Independent Director are set out on pages 108 and 121. • The Chairman facilitates constructive Board relations and the effective
The UK Corporate Governance Code is available on the Financial contribution of all Directors. He is responsible for setting the Board’s
Reporting Council website at www.frc.org.uk. agenda and ensuring that Directors receive accurate, timely, relevant
and clear information – pages 111, 121 and 126.
104 Antofagasta plc Annual Report 2022
Non-Executive Directors Evaluation
• The Non-Executive Directors provide constructive challenge • Annual evaluation of the Board considers composition, diversity
and strategic guidance, offer perspectives across various specialisms and how effectively members work together to achieve objectives –
and hold management to account – pages 118-120. page 128.
Commitment • Individual evaluation is part of the annual Board evaluation and
• All Directors have confirmed that they are able to allocate enough assesses whether each Director continues to contribute effectively
time to meet the expectations of their role – page 118. – page 128.
• Directors do not undertake additional external appointments without • An externally facilitated Board and Committee effectiveness review
the Board’s prior approval – page 118. was conducted in 2022 – page 128.
• Time commitment is considered during Board effectiveness reviews Re-election
and when electing and re-electing Directors – pages 125-128. • All Directors stand for re-election by shareholders annually.
• A review of Directors’ external directorships is carried out annually
Audit, risk and internal control
– pages 109 and 169.
Governance
Information and support • The Board has established formal and transparent policies and
• The Board is provided with appropriate information in a form procedures to ensure the independence and effectiveness of internal
and of a quality to discharge its duties – page 111. and external audit functions and to satisfy itself on the integrity of
• The Board has access to independent professional advice and to the financial and narrative statements – pages 129-136.
advice and services of the Company Secretary – pages 121 and 126. Financial and business reporting
• The Board is regularly updated on the Group’s performance between • The Board considers that the Annual Report presents a fair, balanced
scheduled Board meetings – page 111. and understandable assessment of the Company’s position and
prospects – page 171.
Composition, succession and evaluation
Composition of the Board and Committees Risk and internal control
• The Board has 10 Directors, comprising a Non-Executive Chairman • The Board has established procedures to manage risk, oversee the
and nine other Non-Executive Directors, six of whom were internal control framework and determine the nature and extent of the
independent in 2022 and five of whom continue to be independent principal risks the Company is willing to take in order to achieve its
as at the date of this Annual Report – pages 118-121. long-term strategic objectives – pages 24-35 and 134-136.
• All members of the Audit and Risk and Remuneration and Talent Experience and competence
Management Committees are independent and two • All Audit and Risk Committee members are considered to have recent
of the three Nomination and Governance Committee members and relevant financial experience and have competence relevant to
are independent – pages 118-119. the mining industry – pages 118-120.
• The Board and its Committees comprise Directors with the requisite
combination of skills, experience and knowledge to fulfil their roles – Remuneration
pages 118-121. Policy
• There is a diverse pipeline for succession. Consideration is given • The Company has no executive Directors; however, the CEO’s
to the length of service of the Board as a whole and membership remuneration is disclosed as if he were a director.
is regularly refreshed – pages 120 and 125-127. • The Directors’ and CEO’s Remuneration Policy, which is being
submitted for approval by shareholders at the 2023 AGM, is aligned to
Appointments to the Board and succession planning the Company’s purpose, vision and values and is clearly linked to the
• There is a formal, rigorous and transparent process, led by the successful delivery of the Company’s long-term strategy – pages
Nomination and Governance Committee, to identify and appoint new 142-143, 148-154 and 161.
Directors – pages 125-127.
• The Remuneration and Talent Management Committee Chair,
• Independent external search consultancies are used for appointments Francisca Castro, served as a member of the Committee for more
to the Board – pages 126-127. than 12 months before being appointed as Chair.
• An effective succession plan is maintained for Board and senior • The CEO’s remuneration includes transparent, stretching and
management appointments – pages 126-127 and 164. rigorously applied performance-related elements designed to promote
• Appointments and succession plans are based on merit and the Company’s long-term sustainable success – pages 142-166.
objective criteria and promote diversity of gender, social and ethnic
backgrounds, cognitive and personal strengths and experience – Procedure
page 126. • The Board has a formal and transparent procedure for developing
policy on executive remuneration and determining Director and senior
Development management remuneration – pages 142-167.
• New Directors receive a thorough induction upon joining the Board • No Director, nor the CEO, is involved in deciding his or her own
– pages 126 and 128. remuneration.
• Directors are regularly updated with information and training and, • Directors exercise independent judgement and discretion when
as a minimum, receive an annual briefing on legal, regulatory, market authorising remuneration outcomes, taking account of Company
and other developments relevant to Directors of UK-listed and individual performance and wider circumstances including
companies – page 126. internal and external factors – pages 142-148.
/ Chairman’s introduction
Our governance
framework
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.
Jean-Paul Luksic ESG considerations are integrated into our business and we are working
Chairman 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
Dear shareholders sustainability for our suppliers, and by doing so we plan to gradually align
Welcome to the Corporate Governance section of our 2022 Annual Report. their ESG capabilities with our own. Whether it’s lowering emissions or
My introductory letter to this Annual Report sets out some of the Group’s ensuring that mining becomes more diverse and inclusive, such partnerships
key challenges and achievements in 2022 and my reflections on the will deliver progress in areas that are fundamental to our purpose:
outlook for 2023, and illustrates the Board’s ability to navigate these “Developing Mining for a Better Future”.
scenarios supported by our strong and effective governance framework. Stakeholder engagement
As the impacts of the COVID-19 pandemic began to fade, I was delighted With the pandemic subsiding, our Directors have been making site visits
that our entire Board was able to meet in person for the first time since to at least one of our operations, including to the desalination plant and
early 2020. Our experiences during the pandemic have allowed us to concentrator plant expansion projects, and to Los Pelambres’ tailings
become more flexible while at the same time reminding us of the dams. The insights from these visits were shared at board and committee
importance of human connection and the opportunity to share ideas meetings, deepening the directors’ understanding of our activities.
and perspectives.
External Board evaluation
Shareholder engagement We always seek for continuous improvement in all that we do, and the
We were pleased to welcome shareholders to our first hybrid AGM in Board and its governance are no exception. During 2022, Clare Chalmers
2022, opening the doors for shareholders to attend in person while also conducted an external comprehensive independent Board evaluation. Clare
allowing shareholders to engage from afar. Once again, we will be attended several Board and Committee meetings, interviewed Directors,
hosting a hybrid AGM in 2023. senior management and key external advisers, and travelled to Chile to
deliver her findings to the Board.
As the year progressed, our Senior Independent Director and Chair
of the Audit and Risk Committee, Tony Jensen, and our Chair of the Further details regarding Clare’s evaluation can be found on page 128.
Remuneration and Talent Management Committee, Francisca Castro, met
Board changes and succession planning
with shareholders and proxy voting agencies in a mix of in-person and
Vivianne Blanlot has served on our Board with dedication for nine years
virtual meetings. They discussed our approach to corporate governance
as of 27 March 2023. Although she has agreed to continue as a Director,
and Antofagasta’s 2023 remuneration policy, which is being tabled for
she is no longer considered to be “independent” according to the Board’s
shareholder approval at the 2023 AGM, while providing shareholders
tenure policy, which aligns with the Code’s guidance. As a result, she has
and proxy advisers with the opportunity to share their perspectives.
rotated off the Nomination and Governance Committee and Remuneration
Details of these meetings can be found in the Senior Independent and Talent Management Committee, and has been appointed to the
Director’s introduction on page 108 and the Remuneration and Talent Projects Committee. She has also agreed to continue serving as Chair
Management Committee Chair’s introduction on page 142. of the Sustainability and Stakeholder Management Committee.
Diversity and Inclusion To fill these vacancies, Francisca Castro has joined the Nomination and
An issue that was discussed with shareholders, which is important to Governance Committee and Eugenia Parot has joined the Remuneration
our Board, was diversity–particularly gender diversity. Since 2014, half and Talent Management Committee.
of our appointments to the Board have been female and women now At its core, Antofagasta is a long-term business. Our mines operate
make up 30% of our Board. However, we are actively searching for on decades-long timelines, and our governance structures and processes
another female director to join our board and aim to meet the UK’s new are designed to help us achieve long-term sustainable success.
targets on gender diversity, while also continuing to build a pipeline of
female talent across the organisation. 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.
Further information on the Board’s diversity policy can be found in the
Nomination and Governance Committee Report on page 126. Jean-Paul Luksic
Chairman
Board balance
Governance report.”
Q. What are your responsibilities as Senior relating to the Board’s diversity policy and progress towards
Independent Director? achieving the new targets set out in the Listing Rules, the Board’s
I have three main responsibilities as Senior Independent Director. oversight of ESG matters, including carbon emission reduction
First, I must be available to shareholders to ensure that the Board targets, Directors’ time commitments and the role of the
considers their views, interests and concerns. Second, I provide controlling shareholder in the Board’s governance arrangements.
support to the Chairman, ranging from advice on corporate The feedback we received from these meetings was reported to
governance matters to presiding over potential conflict of interest the Board and is reflected in the decisions that have been made
decisions by the Board, and making sure that the views of the in the preparation of this Corporate Governance report.
other Directors are conveyed to him and reflected in Board
discussions. Third, I lead the annual review of the Chairman’s
Q. What impact does the controlling shareholding have on
performance and oversee the closure of any gaps identified by
Company decisions?
Members of the Luksic family have been involved in the Company
internal and externally facilitated reviews of the Board’s and the
for over 40 years. During this time, the Company has
Committees’ performance.
demonstrated an excellent track record in terms of safety,
I discharge these responsibilities through close co-ordination with operational performance and financial strength.
the Chairman, Directors, Company Secretary and the management
I have discussed the role of the controlling shareholders with other
team. I met various shareholders and proxy advisers during the
shareholders. The widely held view is that the substantial
year to understand their views of the Company, Board and senior
controlling interest is positive, with shareholders satisfied that
management team. This has helped me ensure that the Chairman,
the interests of the controlling shareholders are aligned with
the Board and the management team receive a balanced view
theirs. They have expressed their appreciation of the members
of issues that are relevant and important for our shareholders.
of the Luksic family who serve on the Board, commending their
Q. Why did you meet with shareholders and proxy advisers long-term vision, which has contributed to the Company’s prudent
during the year and what issues did you discuss? operating, financial and growth strategy, as well as its stability.
As Senior Independent Director and Chair of the Audit and Risk Shareholder support is, of course, conditional on the strength of
Committee, I aim to meet with shareholders every one to two the current corporate governance framework, which rigorously
years to gain a first-hand understanding of the subjects that protects the interests of all shareholders equally.
matter to them. This year, I joined the Chair of our Remuneration
and Talent Management Committee, Francisca Castro, in inviting I, and all the other Independent Directors, guard our independence
the Company’s 15 largest investors as well as the Investment and place a strong emphasis on maintaining this governance and
Association, Glass Lewis and Institutional Shareholder Services protection regime. We are supported and encouraged by the other
to meet with us to discuss Corporate Governance matters, the Directors who – like the Independent Directors – bring their own
Company’s proposed 2023 remuneration policy (as explained in perspectives and opinions and are committed to the long-term
more detail on pages 149-154) and to allow shareholders to raise sustainable success of the Company.
any concerns that they would like to discuss without the presence The controlling shareholders and the members of the Luksic
of the senior management team. The feedback we received was family who serve on the Board (including the Chairman), actively
very positive and no major concerns were raised. Apart from the support this framework and encourage the Independent Directors
discussion of remuneration-related matters, which is outlined in to provide the independent input and challenge that, we are
more detail by Francisca on page 149, we engaged in discussions convinced, proves invaluable in Board decision-making.
Tony Jensen
108 Antofagasta plc Annual Report 2022 Senior Independent Director
Relationship agreement transactions between the Company and the controlling shareholders
The E. Abaroa Foundation is a controlling shareholder of the Company or their related entities to a committee of Directors independent from
for the purposes of the Listing Rules and certain other shareholders the controlling shareholders, to assess whether the Company should
of the Company (including Aureberg Establishment) are also treated enter into such transactions and, if so, to oversee the negotiation
as controlling shareholders. Details of the Company’s substantial process. In most cases, transactions of this nature will also be subject
shareholders are set out on page 169. to independent review by third-party shareholders in each of the
Group’s mining operations.
In 2014, the Company entered into relationship agreements with each
controlling shareholder, which contain the mandatory independence Any proposed related party transaction over $40 million, whether
provisions required by the Listing Rules. The Company complied with or not in the ordinary course of business, is also tabled for Board
and, so far as the Directors are aware, each controlling shareholder approval. Any Director with a potential conflict or connection with
and its associates (including Metalinvest Establishment and Kupferberg the related party does not take part in the decision on that transaction.
Establishment) also complied with the mandatory independence
provisions throughout 2022.
Related party governance in practice
There are several checks and balances to ensure that there is full
Related party transactions transparency in the handling of related party transactions by the
Certain related party transactions outside the ordinary course of Board. The following diagram summarises the approach taken to
business must be subject to independent assessment and approval. identify and manage related party transactions and actual or potential
The Company has for many years presented all such related party conflicts of interest.
MONITORING If a Director has an interest in any other entity, the Board will normally Directors
OF DIRECTORS’ consider that interest under its arrangements for authorising potential
INTERESTS conflicts of interest under section 175 of the Companies Act. See page 169
for more information.
PROPOSED Ongoing monitoring of Directors’ interests and the Company’s related parties Company Secretary,
TRANSACTION provides information to determine whether a related party approval is senior management and
required for a proposed transaction. the Executive Committee
CONTRACT NEGOTIATION The Executive Committee seeks to ensure that the best possible terms are Senior management and
AND VERIFICATION achieved for a proposed transaction and that, where appropriate or the Executive Committee
necessary, they are verified by industry benchmarking reports or independent and, if involving a
third-party valuation or assessment. controlling shareholder,
Independent Directors
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.
APPROVAL BY Potential related party transactions outside the ordinary course of Independent Directors
INDEPENDENT DIRECTORS 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.
SUSTAINABILITY
NOMINATION AUDIT REMUNERATION AND
AND STAKEHOLDER PROJECTS
AND GOVERNANCE AND RISK TALENT MANAGEMENT
MANAGEMENT
01
06
Chairman and Senior
Further information Independent Director
provided between agree agenda with
meetings the CEO
05 02
Action lists prepared Papers circulated
and updated as key actions in advance of
are implemented meetings
04 03
Minutes prepared, Board and Committee
circulated and approved meetings
01 04
Chairman and Senior Independent Director agree agenda Minutes prepared, circulated and approved
with the CEO and the Company Secretary The Company Secretary minutes all Board and Committee
The Chairman and Senior Independent Director, in consultation with meetings, which are circulated and reviewed by the Board and
the CEO and the Company Secretary, maintain an agenda of standing management, updated as necessary and tabled for approval
topics to be considered by the Board and Committees each year, at the following meeting.
which is then supplemented, during the year, with agreed key topics
and events requiring consideration. 05
Action lists prepared and updated as key actions
Ad hoc Board and Committee meetings are also called, as appropriate.
are implemented
02 The Board and each Committee maintain an action list that is
reviewed at the beginning of each meeting to ensure that Directors’
Papers circulated in advance of meetings
enquiries and concerns are clearly identified and timely addressed.
Materials are sent to Board and Committee members a week
in advance of each meeting. 06
Presentations include a summary sheet setting out the objective, Further information provided between meetings
background, proposal, justification, risk analysis and next steps Between Board meetings, Directors receive flash reports
associated with that topic. Materials include the CEO’s report, with monthly and year-to-date production and financial results,
which is an open and candid summary of his views on evolving ensuring that the Board is regularly updated on the Group’s progress.
strategic challenges, changes in risk assessments and emerging
Where appropriate, Directors may receive general information
issues, as well as the management report which includes detailed
on the commodity markets and additional reports highlighting key
information on the Group’s performance against key safety, health,
developments in the Group’s exploration, projects, business
environmental, community, financial, workforce, project
development and innovation activities.
development and organisational culture indicators.
The Group’s management team, led by Iván Arriagada, performs
03 an essential role in ensuring that the Board has the information
Board and Committee meetings required to make effective decisions, reporting in real time on the
Board and Committee meetings include regular in-camera sessions implementation of the Group’s strategy and the Company’s
without management present to allow Directors to set expectations performance.
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.
/ Board activities
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.
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 Strategy and approved a more ambitious goal for women to represent 30% of the
goal of creating a more flexible, adaptable and resilient organisation. workforce by the end of 2025.
• Reviewed the results of employee engagement surveys conducted during the year. • Monitored labour relations at the Group’s mining and transport operations and
• Reviewed the annual talent management exercise, including succession plans for reviewed results of collective bargaining negotiations, which were completed
Directors, the CEO and the Executive Committee. in an atmosphere of respect and trust.
• Reviewed employee performance, including the Company’s short-term and long-term • Monitored progress of the annual Human Resources plan.
incentive scorecards. • 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, • Reviewed and approved the Group’s copper concentrate and copper cathode sales strategy.
including estimated future savings. • Reviewed the progress of proposed tax legislation in Chile which would affect the Group.1
• Approved key procurement and sales contracts. • Monitored proposed labour legislation.
• Reviewed and monitored the Group’s operating and financial performance. • 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 • Approved the Group’s exit from the Reko Diq project in Pakistan.
transport system project, Zaldívar’s Chloride Leach project and Centinela’s Esperanza • Reviewed progress on the Group’s material Environmental Impact Assessments.
Sur project. • Reviewed and approved the acquisition and divestment of mining properties in Chile.
• Reviewed progress on Phase 2 of the Los Pelambres Expansion project and approved • Reviewed and approved the Group’s long-term price assumptions and commercial
a funds advance to address critical path items including key acquisitions and parameters.
engineering.
• Reviewed and approved the base case and development case for the Group’s assets.
• Reviewed progress on the Centinela Second Concentrator project and postponed
• Reviewed the Group’s strategic growth plan (PEC), which is a mine production
decision on whether to proceed with the project until there is greater clarity on mining
planning exercise without restrictions, aiming to quantify the potential to transform
royalty, tax and constitutional reform.
the Group’s mineral resources into ore reserves.
• Monitored progress on the feasibility study for the Polo Sur project.
• Reviewed and approved the Group’s 2023 budget.
• Reviewed Zaldívar’s permitting strategy to extend its water extraction permit beyond 2025.
• Reviewed the Group’s mineral resources and ore reserves statement.
• Monitored actions to advance the Twin Metals Minnesota project and reorganised its team.
• Reviewed business development and exploration opportunities and activities.
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
Corporate Governance
/ Stakeholder engagement
/ Workforce engagement
72%
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, Live in the Antofagasta
structured and formal combination of mechanisms already in place.
and Coquimbo Regions
/ Directors’ biographies
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.
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
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
1. The Board reviews the independence of Directors annually. The Board has carefully 3. The Company has met the Parker Review target and in 2022 more than half the
considered the independence of all Directors and is satisfied that Jorge Bande, Board identified as being from an ethnic minority background according to the
Francisca Castro, Michael Anglin, Tony Jensen and Eugenia Parot continue to be criteria in the Parker Review survey. As noted throughout this Annual Report, the
independent in character and judgement and that there are no relationships or Group’s footprint is primarily in Chile, where ethnicity profiles and representation in
circumstances that are likely to affect, or could appear to affect, their judgement. society differ significantly from those in the UK. Nevertheless, the Board recognises
The Board is also satisfied that Vivianne Blanlot was independent throughout 2022 that the mining industry is international and therefore the Board includes several
and until 27 March 2023 which was the ninth anniversary of her appointment to the Directors from outside Chile in support of its vision and strategy.
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.
Mining industry
Communication
Latin American
Sustainability1
compensation
Independence
management
Government
experience
experience
experience
UK market
Executive
Financial
relations
Project
Legal
Director
Jean-Paul Luksic
Ramón Jara
Juan Claro
Andrónico Luksic C
Vivianne Blanlot
Jorge Bande
Francisca Castro
Michael Anglin
Tony Jensen
Eugenia Parot
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.
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 3. Ramón Jara provides advisory services to the Group. Andrónico Luksic C is the
companies. The CEO and CFO are invited to attend all Board meetings. The CEO brother of Jean-Paul Luksic, the Chairman of the Company, and is Chairman of
is also invited to attend all Board Committee meetings and there is regular formal Quiñenco SA and Chairman or Director of Quiñenco’s other listed subsidiaries.
and informal dialogue between management and the Board. Jean-Paul Luksic is also a Non-Executive Director of Quiñenco and some of its listed
2. The Board reviews the independence of Directors annually. The Board has carefully subsidiaries. Like Antofagasta plc, Quiñenco is controlled by a foundation in which
considered the independence of all Directors and is satisfied that Jorge Bande, members of the Luksic family are interested. Ramón Jara and Juan Claro have served
Francisca Castro, Mike Anglin, Tony Jensen and Eugenia Parot continue to be on the Board for more than nine years from the date of their first election.
independent in character and judgement and that there are no relationships or 4. Vivianne Blanlot was an independent Non-Executive Director until 27 March 2023,
circumstances that are likely to affect, or could appear to affect, their judgement. the ninth anniversary of her appointment to the Board.
01 02 03
04 05 06
07 08 09
10 11 12
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.
Projects Committee
Key responsibilities Focus areas for 2022
• Oversight of project standards, guidelines • Monitoring progress on the engineering and remaining project studies for the
and best practices Centinela Second Concentrator project
• Project development lifecycle matters • Monitoring progress in the execution of the Los Pelambres Expansion
• Project reviews and Zaldívar Chloride Leach projects
• Lessons learned from completed projects • Monitoring development of the Group’s organic growth opportunities
Jean-Paul Luksic
Chair of the Nomination and Governance Committee
Diversity, inclusion
and succession planning
Q. What is the Committee’s role in relation to succession They were briefed on the skills and experience of the existing
planning? Directors and asked to identify potential candidates who would best
The Committee oversees and develops succession plans for the meet the required criteria including their relevant experience, skills,
Board and the CEO. Succession planning for the Executive leadership capabilities, contribution to Board diversity and whether
Committee (excluding the CEO) and broader employee talent they had sufficient time to devote to the role. Also important for
management is overseen by the Remuneration and Talent overall Board effectiveness is that potential candidates are proficient
Management Committee. in Spanish and, preferably, have relevant mining or extractive
industry experience. Members of the Committee interviewed
The activities of the Remuneration and Talent Management
short-listed candidates and collectively selected Tony Jensen and
Committee are set out on page 142.
Eugenia Parot to be recommended to the Board for
Q. How does the Committee address the process of CEO appointment in 2020 and 2021, respectively.
succession? The searches that resulted in these appointments aimed to identify
The Committee regularly reviews succession plans for the CEO in candidates with mining operations experience (to cover the valuable
the case of either a planned or unplanned departure. This involves skill set of a departing Director) and recent and relevant financial
defining the character, skills, experience and expertise required to experience (as part of the succession plan for the role of chair of the
fulfil the role, as well as the assessment of potential internal Audit and Risk Committee). The external search consultancy was
candidates and their development needs. The consideration of both instructed to access the widest possible talent pool and, as has been
external and internal candidates for the role of CEO ensures a clear the case for many years, to specifically identify potential female
assessment of relative strengths and weakness and provides a useful candidates. For the 2020 appointment, a global search produced
international benchmark. several hundred potential candidates for consideration, from which a
Q. What is the scope of the Board’s succession planning? shortlist of seven were interviewed, four of whom were female – and
The Board’s succession plan is reviewed formally at least once the 2021 process resulted in the appointment of a female candidate.
a year and addresses Board size, Committee structure and Q. What support does the Company provide to facilitate
composition, skills on the Board, Board and Committee members’ induction and assist with professional development?
tenure, independence of Directors, diversity (including gender),
Board roles, Board policies and individual succession plans for all Induction
Board and Committee positions. Succession plans include New Directors receive a thorough induction on joining the Board.
contingency plans in the event of an unexpected departure, This includes meetings with the Chairman, other Directors, the CEO
medium-term plans for orderly replacement of current Board and Executive Committee members; briefings on the Group’s
members and long-term plans linking strategy with the skills needed strategy, UK corporate governance, operations, projects and
on the Board in the future. exploration activities; and visits to the Group’s operations.
Q. How does the Board identify the appropriate skills for new Continuing personal development
Board candidates? Directors receive an annual briefing on governance, legal, regulatory
The Board maintains a Board skills matrix and the Committee and market developments that are relevant to Directors of UK-listed
reviews the balance of skills, experience and expertise at least companies, complemented by discussions on Board-related matters.
annually. This process enables the Board and the Committee to Directors have access to, and are encouraged to regularly attend,
identify the skills required when making new appointments to the round-table discussions, seminars and other events that cover topics
Board and to instruct search firms to identify candidates who fit relevant to the Group and their roles.
these criteria.
Resources
Q. What steps does the Committee take to identify and appoint
The Company provides Directors with the necessary resources
new Directors?
to maintain and enhance their knowledge and capabilities.
The Committee discusses relevant profiles for future appointments
and potential candidates, taking into account the results of Board All Directors have access to management and to such information
effectiveness reviews, as shown on page 128, the Group’s purpose, as they need to discharge their duties and responsibilities
vision, values and strategy, as shown on pages 112-113, the Board’s fully and effectively.
diversity policy (below) and the core competencies and areas Directors are also entitled to seek independent professional advice
of expertise on the Board, as shown on page 120. concerning the affairs of the Group at the Company’s expense.
To assist with making new appointments to the Board, the Committee
appoints independent external search consultancies with no
Q. What is the Board’s position in relation to diversity?
The Company’s Diversity and Inclusion Policy reflects the Board’s
connection to the Group. Between 2019 and 2021, the Committee
belief in the benefits of diversity and its conviction that more diverse
appointed Spencer Stuart, a signatory to the voluntary code of
companies attract and maintain the best talent and achieve stronger
conduct for executive search firms to address gender diversity
overall performance. The Board considers a broad definition of
on corporate practices for related search processes, to assist with
diversity when setting policies and appointing Directors, including
the search for new independent Non-Executive Directors.
gender, disability, nationality, educational and professional experience,
personality type, culture and perspective.
The Committee has worked hard to ensure that the Board is suitably In 2019, we sponsored the creation of a Chilean chapter of the 30%
diverse according to these criteria. The Board reviews its Club, the campaign launched in the UK in 2010 to foster gender
effectiveness in meeting diversity goals each year as part of the balance on companies’ boards and in senior management positions.
annual Board and Committees’ evaluation process. To further promote diversity at the Executive Committee level and
below, the current Diversity and Inclusion Policy was approved
The Company has met the Parker Review target and more than half
following an in-depth exercise to assess whether the Group’s
the Board members identify as being from an ethnic minority
existing diversity and inclusion model was appropriate. This included
background according to the Parker Review criteria. As noted
interviews with stakeholders, a benchmarking exercise and a
throughout this Annual Report, the Group’s activities are focused in
comprehensive review of the Group’s policies and processes. The
Chile where ethnicity profiles and representation in society differ
review identified structural impediments that needed to be addressed
significantly from those in the UK. Nevertheless, the Board
to achieve a sustained improvement in the Group’s diversity and
recognises that the mining industry is international, and in support of
inclusion model and these issues were addressed in the first years
its vision and strategy also includes Directors from outside Chile.
following approval of the new policy.
Gender diversity is a pillar of the Group’s diversity and inclusion
Metrics associated with the development of the Diversity and
strategy. The Board supports the important work performed by the
Inclusion Policy form part of the Group’s Annual Bonus Plan and
FTSE Women Leaders’ Review in pursuing a 40% target for
formal talent management and succession planning exercise, and
women on FTSE 350 boards and on executive committees and
performance is assessed by the Remuneration and Talent
their direct reports.
Management Committee at the end of each year.
Since 2014, three of the six Board appointees (50%) have been
The Remuneration and Talent Management Committee is also
women and the Board actively seeks to increase female
responsible for succession planning for the Executive Committee,
representation beyond the current level, while ensuring that
which allows for ongoing monitoring of the impact of the Diversity
appointments continue to be made on merit.
and Inclusion Policy on new appointments and their progress within
At the date of this report, there are three women on our Board of ten the Company, including at the level of those who report to the
Directors (30%). Vivianne Blanlot joined the Board in 2014 and has Executive Committee.
chaired the Board’s Sustainability and Stakeholder Management
As part of the Policy, female members of senior management have
Committee since January 2017. Francisca Castro joined the Board in
been appointed to the boards of all our operating companies and we
2016 and has chaired the Board’s Remuneration and Talent
have two women on the Executive Committee, the General Manager
Management Committee since May 2019. Eugenia Parot joined the
of our Transport division and the Vice President of Human
Board in 2021 and sits on the Sustainability and Stakeholder
Resources.
Management Committee and the Projects Committee.
It is important to acknowledge that culture plays a key role in this and
The Committee, supported by an independent external search
we have therefore implemented actions and programmes to
consultancy, continues to seek potential female candidates who
strengthen an inclusive culture, encompassing unconscious bias
could make an important contribution to the Board in the future and
training, work-life balance measures, sexual harassment and
the Board is working to achieve gender diversity targets of 40%
domestic violence prevention, and information campaigns. Human
representation of women on the Board and of at least one woman in
resources processes, such as recruitment and the individual
the Chair, Senior Independent Director, CEO or CFO roles. These
performance management system, have been reviewed and adjusted
objectives have been incorporated into the Board’s succession plans
to assure their inclusiveness and lack of bias.
and the Committee aims to achieve these goals by continually
searching for candidates with the required skills and methodically Since 2017, we have more than doubled female participation to over
preparing for ordinary Board refreshment and turnover in order to 20% and recently set ourselves a goal of reaching 30% female
ensure continuity and performance of the Board’s responsibilities. participation by 2025. The gender balance at each level of the Group
is monitored and reported monthly to the Executive Committee.
We are committed to increasing the percentage of women on our
Board, as well as in senior management positions and, just as More detail on programmes we have introduced and the gender
importantly, in the Group’s workforce. We believe that such an balance within the Group is given in the Our People section on
increase will benefit the Group, the industry and Chile. pages 48-50.
Q. What policies are in place to promote a diverse pipeline The Board will continue to monitor developments in 2023.
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.
/ Board effectiveness
Tony Jensen
Chair of the Audit and Risk Committee
Audit and Risk Committee, Board, and risk management function interaction
These processes have assisted the Board in carrying out a robust The Committee reviewed the Group’s whistleblowing arrangements,
assessment of the emerging and principal risks facing the Company, which encourage employees and contractors to raise concerns in
including those that could threaten its business model, future confidence about possible improprieties or non-compliance with the
performance, solvency, or liquidity and to assess the acceptability Group’s Code of Ethics. We received regular reports on reported
of the level of risks that arise from the Group’s operations and whistleblowing incidents, detailing the number and type of incidents
development activities. and outlining the most significant issues and the actions resulting
from their investigation, along with plans to strengthen the function.
Each year the Board, with the support of the Committee, reviews the
The Committee reviewed the process to identify and manage Group
effectiveness of the Group’s risk management and internal control
employees’ potential conflicts of interest, and reviewed the due
systems. The review covers all material controls, including financial,
diligence process conducted in respect of the Group’s suppliers.
operating and compliance controls. The 2022 review confirmed the
effectiveness of the Group’s risk management and internal control Q. What were the Committee’s main activities in 2022 relating
systems, with no significant failures or weaknesses being identified. to internal control?
Members of the Audit and Risk Committee participate on all the other During 2022, the Committee reviewed the Company’s internal
Board Committees, allowing the Committee a good understanding control framework which consists of three lines of defence.
of risks being considered by these Committees and the full spectrum First, business units identify and manage risks. Second, the risk
of risks faced by the Group. management function provides oversight and support. Third, Internal
Audit provides independent assurance. In addition to regular reviews,
Compliance a session was held to review the effectiveness of risk management,
Q. What are the Committee’s main responsibilities relating compliance and internal control, the effectiveness of internal controls
to compliance? over financial reporting, and the effectiveness of internal audit and
The Committee ensures that appropriate compliance policies and the relationship with external audit. We feel confident that the reviews
procedures are observed throughout the Group. The risk, compliance undertaken by the Committee during 2022 have allowed it to
and internal control function makes regular presentations to the perform an appropriate review of the effectiveness of the Group’s
Committee covering developments in the Group’s compliance risk management and internal control systems during the year. The
processes and significant compliance issues. Chilean law requires reporting of these activities by the Committee to the Board supports
the Mining division’s holding Company, Antofagasta Minerals SA, the Board’s confirmation that it has undertaken a review of the
and each of the operations, to appoint a Crime Prevention Officer. effectiveness of the Group’s risk management and internal control
The Committee makes recommendations regarding these systems during the year as required by the UK Corporate
appointments as well as monitoring and overseeing the performance Governance Code.
of these roles. The Crime Prevention Officer for Antofagasta Minerals
SA is currently Patricio Enei, the Vice President of Legal. As the Tony Jensen
compliance function reports to the CFO, this arrangement provides Chair of the Audit and Risk Committee
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.
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
Community relations Q. How did the Committee consider climate change during
• Reviewed the water situation in the Choapa Valley after 13 years of the year?
lower-than-normal rainfall and Los Pelambres’ water management As noted by the Chairman on page 6, combatting climate change sits
strategy, including operational water management initiatives in order at the centre of Antofagasta’s strategy. In particular, lowering
to best support communities. emissions and reducing continental water use remain two issues for
• Reviewed the public affairs strategy for the Group’s northern which we have a group-level strategy, board-level focus and
operations. Company-wide initiatives.
• Reviewed the Group’s communications strategy and monitored The Committee assisted the Board in considering various climate
results from the Group’s communications activities. change-related initiatives during the year, including those in the
• Reviewed results from the Group’s perception study, carried out Board’s assessment of the physical and transition risks of climate
every two years at a national level within the Choapa Province and change and their impact on the net present value of the Group.
Antofagasta Region and with national opinion leaders and Mining The Group’s Climate Change Strategy, reviewed by the Committee
division suppliers. and approved by the Board in 2020, takes a multidisciplinary
Environment approach to the challenges posed by climate change, focusing on
• Reviewed environmental management reports. the development of climate change resilience, the reduction of
greenhouse gas emissions, the efficient use of strategic resources,
• Reviewed the Group’s response to the concentrate pipeline incident
the management of the environment and biodiversity, and the
at Los Pelambres.
integration of stakeholders.
• Reviewed environmental reviews related to Zaldívar’s water rights
extension. The Committee reviewed the community water situation in the
• Reviewed a progress report on the development of an inventory Choapa Valley, which has had 13 years with lower-than-normal
of Scope 3 emissions and next steps. rainfall. As part of this, the Committee also reviewed Los Pelambres’
water management strategy and operational water management
Q. How was the Group’s safety performance in 2022? initiatives.
This was a true highlight for 2022. We are very pleased to report
The Committee reviewed a progress report on the development of an
that the Group recorded its strongest safety performance on record.
inventory of Scope 3 emissions and next steps. The Company has
During the year, there were no fatal accidents and the Group
short-term and long-term Scope 1 and 2 emission reduction targets
recorded only 42 High Potential Incidents, 35% fewer than in 2021.
with the goal of achieving carbon-neutrality by 2050. During 2022,
The Lost Time Injury Frequency Rate also improved, by 37% to 0.84.
three years earlier than the target date of 2025, the Group achieved
This year’s challenge is to further improve on these results.
its Scope 1 and 2 30% reduction target and will set a new near-term
Q. What is the Committee’s role in respect of the Company’s goal in 2023. With respect to Scope 3 emissions, the Group has
policies that relate to sustainability and stakeholder committed to define a long-term target in 2023 or as soon as
management? possible thereafter.
The Committee oversees the development of the Group’s policies
Q. How does the Committee ensure that the Board considers
relating to sustainability and stakeholder management. The
the views and interests of stakeholders?
Committee does not review implementation – this is a matter
The Committee does not interfere in the day-to-day management
for each individual operating Company.
and implementation of the Group’s policies and procedures.
During 2022 the Committee provided input in relation to the However, meetings provide a forum to discuss key trends and
proposed update to the Group’s Sustainability Policy and new Energy issues that matter to local communities, our workforce, national and
and Water policies, which are aligned with the Copper Mark’s ESG local governments, regulators and other stakeholders. Many of these
performance and expectations of the ICMM. issues are identified as part of each operating companies’ risk
The Committee also provided input on the implementation plan to management and community engagement processes, which are
adopt the new Global Industry Standard on Tailings Management submitted by management to the Committee for their information.
(GISTM) which was published by ICMM in August 2020 and the Communicating with our stakeholders during difficult times has been
Group’s operating companies have committed to fulfil its key to strengthening mutual trust and understanding. We work hard
requirements by August 2023 for critical tailings deposits and to respect their interests and ensure that they understand our
by August 2025 for lower-risk ones. ambitious safety, occupational health, environmental and social
commitments.
The Committee also reviewed proposed updates to the Group’s
Human Rights Policy. As Chair of the Committee, I report to the Board following each
Committee meeting, summarising the main matters reviewed by the
Committee.
Michael Anglin
Chair of the Projects Committee
2022 membership and meeting attendance • Reviewed a $179.5m advance of funds to cover critical path activities
Number attended for Los Pelambres’ Desalination Plant Expansion and Concentrator
Michael Anglin (Chair) 4/4 Pipeline projects.
Jorge Bande 4/4 • Reviewed the application of the Company’s internal carbon price
Ramón Jara 4/4 in assessing alternative materials transport cases for the Polo Sur
project
Eugenia Parot 4/4
• Reviewed an in-pit tailings deposition project which considers using
Other regular attendees included the CEO, the CFO, the Vice President of Projects, the Tesoro Central pit at Centinela, followed by the Tesoro North East
the Projects Finance Manager and the Company Secretary.
and Esperanza pits, to cover Centinela’s tailings management needs
Sessions were also regularly attended by Directors who were not Committee members.
The Committee meets as necessary and at least twice per year.
for 15 years and possibly for the life-of-mine.
Project reviews – execution phase
Key responsibilities • Monitored progress in the execution of Phase 1 of the Los Pelambres
Expansion project, including the revised capital expenditure estimate
The Projects Committee reviews all aspects of projects to be submitted of $2.2 billion. Reviewed the consequences of the marine works
for Board approval, highlighting key matters for the Board’s incident.
consideration throughout the project’s development and making • Reviewed the project designed to repower and technologically
recommendations to management to ensure that all projects submitted upgrade Los Pelambres’ coarse ore transport system, including
to the Board are aligned with the Group’s strategy and risk appetite. updates to the project’s capital expenditure and development
programme.
The Committee adds an important level of governance and control to the
• Monitored progress in the execution of the Zaldívar Chloride
evaluation of the Group’s projects and plays a key role in providing the
Leach project.
Board with additional oversight of the Group’s projects portfolio. This
includes overseeing the establishment of project development guidelines, Q. What is the Projects Committee’s approval authority?
drawing from best practice, industry experience and lessons learned The Committee is not responsible for approving projects – that is for
from other Group projects. the Board to decide. Our role is to assist the Board by ensuring that
projects are following a standard, structured process using
Key activities in 2022
consistent analysis, execution and evaluation practices. The
Committee oversees the full project development, from the early
Policies and commitments stages to the start of operations, carefully assessing and robustly
• Reviewed the Group’s projects portfolio, including budgets challenging investment proposals prior to submission to the Board,
and schedules. monitoring development and construction progress and ensuring
Project reviews – studies phase lessons learned are applied to future proposals. The Committee
• Reviewed progress with Centinela’s Second Concentrator project’s invites management to consider different perspectives, ideas and
commitment phase and amendments to the timetable for a potential improvements to enhance the value of the Group’s projects, enabling
execution decision. focused deliberation when the project is presented to the Board.
• 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.
Francisca Castro
Chair of the Remuneration and Talent Management Committee
CEO’s performance and incentive outcomes for the year LTIP outcome
Annual bonus outcome The outcome of the relative total shareholder return measure of the LTIP
The overall bonus for the CEO was 81% of the maximum. 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
The result for Core Business targets was 60% of the maximum, and 100% of the maximum. 100% of the Mineral Resources Increase target
this reflects the challenging head winds of higher inflation and input was achieved, as well as 100% of the Social and Environmental targets
costs during the year. The result for the Business Development targets and 100% of the Projects’ performance targets. During the performance
was 65% and the Sustainability and Organisational Capabilities targets period, the Committee amended target to remove the impact of
was 70%, with safety being met in full. The outcome was adjusted as exceptional events (Covid-19) in respect of the Los Pelambres Expansion
there were no fatal accidents during the year. This triggered a project, reflecting delays outside of management control. The actual final
standalone upward adjustment to the total performance score vesting for the LTIP will be included in next year’s report.
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. Mineral Resources Social and Environmental
Find out more Increase target met targets met
on P156
100% 100%
Annual bonus for 2022
Projects’ performance
targets met
100%
Core Business
Weighting 50%
70% 60%
Business Development
Weighting 25%
Sustainability and The Committee has considered whether the overall vesting of
65% Organisational Capabilities performance awards that were granted in 2020 could give rise to
Weighting 25% 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
Total bonus payout was made to increase the overall vesting of 2017 performance awards
which vested in cash in March 2020, that the LTIP vesting value for
74% 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
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
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
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 Previous Policy Change
Notice period 30 days notice 6 months’ notice
Succession planning payment No provision in 2020 6 months for a successful handover and mentoring of new CEO for any future
Policy succession
Termination payment in No provision in 2020 12 months payment in respect of a corporate change of control event, if Company
corporate Change in Control Policy 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.
Our remuneration philosophy reflects local Although our CEO is not a Director of the Company, we have voluntarily
disclosed his remuneration since 2014 and provided details throughout
regulations and market practices while aligning the Remuneration Report to allow shareholders to understand how
with UK best practices and governance. these structures support the strategy and promote long-term sustainable
Local regulations, market practices and remuneration structures success. Since the implementation of the European Shareholders’ Rights
available in Chile are a central consideration when structuring the CEO’s Directive II implementation in 2019, these disclosures have become
remuneration. Real share awards have not been part of the executive mandatory and are included in this report. The final decisions in respect
remuneration structure for employees since the LTIP was first of the CEO’s remuneration are always made by the Committee and the
implemented a decade ago because, until recently, in Chile they were CEO is not present for this part of the meeting, ensuring that the
taxable in full at the date they were granted. Considering the potential Committee makes independent decisions in the best interest of
future uncertainty on taxation and the use of real shares continues to be Antofagasta.
uncommon in Chile, all the Company awards continue as cash awards The Committee follows the UK Corporate Governance Code. The table
linked to a notional number of shares and share price performance. below summarises how we have considered Code provision 40 when
developing and implementing our remuneration strategy.
Base salary
To retain and attract Typically, base salaries are There is no prescribed maximum, Individual and mining division performance is
high-calibre reviewed annually. although salary increases consider considered when determining base salaries
executives by offering those of the wider workforce. and increases.
Base salaries and any
globally competitive Chilean labour contracts are
increases take into account:
salary levels. adjusted periodically to reflect
• the individual’s role, Chilean inflation, and adjustments
performance and may also be made due to union
experience, labour negotiations.
• the Company’s
In addition to the salary increases
performance, the external
already mentioned, there may be
environment and cost,
additional increases when the
• salary increases for the Committee considers it appropriate,
wider workforce, and including (but not limited to):
• salary levels for comparable
• Significant increase in the scale,
roles at relevant comparator
market comparability or
companies.
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 Benefits typically include life Benefits are reviewed periodically. None
competitive benefits. and health insurance. Other There is no maximum overall.
benefits may be offered where
appropriate, including, but not
limited to, car allowance,
pension contribution,
professional fees and
relocation allowances.
$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
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.
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 Previous 2020 Policy Change
Notice period 30 days' notice 6 months’ notice
Succession planning payment No provision in 2020 Policy 6 months of base salary for a successful handover
and mentoring of new CEO for any future succession
Termination payment in corporate No provision in 2020 Policy 12 months of base salary payment in respect
Change in Control of a corporate change of control event, if Company
terminates CEO’s employment within 2 years of
change in control.
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 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.
Buyout The Committee recognises that it may be necessary, in certain circumstances, to provide compensation for amounts forfeited
awards 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 Performance
to strategy Operation Maximum opportunity measures
Fees The Chairman receives an annual base fee. Total fees paid will be None
To attract and retain Non-Executive Directors receive an annual base fee. within the limit stated in
high calibre, the Company’s Articles
Directors may receive further fees for serving as the Senior Independent
experienced Directors of Association.
Director, a Board Committee Chair or a Committee member.
by offering globally Changes may be made
competitive fee levels. Separate base fees are paid for serving on the Antofagasta Minerals Board
to Chilean-peso-
or as a Director or chair of any subsidiary or joint-venture Company.
denominated fees
Ramón Jara also receives a base fee (adjusted for Chilean inflation) for advisory to adjust for Chilean
services provided to Antofagasta Minerals pursuant to his service agreement. inflation.
Fees are subject to review, which will take into account time commitment,
responsibilities and market practice.
Benefits Non-Executive Directors are entitled to reimbursement for reasonable Benefits are set at None
To provide appropriate expenses incurred during the performance of their duties, including any tax a level appropriate to
benefits and reimburse due on the reimbursements. the individual’s role and
appropriate expenses Benefits may include the provision of life, accident and health insurance, circumstances. The
that Directors incur professional advice and other minor benefits, including occasional spousal maximum will depend
in the performance travel in connection with the business. on the type of benefit
of their duties. and cost of its provision.
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.
Iván Arriagada1 2022 833 115 1,705 520 1,635 4,808 948 3,860
Iván Arriagada1 2021 755 36 1,230 390 1,722 4,134 791 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.
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:
Threshold On-target Maximum Actual Achievement
Measure Weighting % (0% vesting) (50% vesting) (100% vesting) achievement (% of maximum)
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.
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 Achievement Discretion
Measure % Threshold On-target Maximum Performance % applied
Relative total 50% EMIX Global Mining Below Equal to ≥5% above This KPI will vest 100% No
shareholder Index performance index index index on or after 27
return % Score 0% 33% 100% March 2023. The
ESTIMATED estimate is based on
a performance of
18.4%2 greater than
the index as of
16 Jan 2023.
Mineral 25% Tonnes of contained 84.6m 86.0m 87.4m Resources 100% No
resources copper increased to 92.4
increase % Score 0% 50% 100% million tonnes of
contained copper
as of 31 December
2022.
Project 12.5% Percentage (%) of progress 75% 100% The performance of 100% No
portfolio progress in Los < 50% progress progress the construction of
progress Pelambres Expansion the Los Pelambres
project commissioning Expansion project
(INCO) (70%) is 100%.3
Percentage (%) in The performance
commissioning for for the Zaldívar
Zaldivar Chloride Chloride Leach
Leach project (20%) project and Phase 2
of the Los
Environmental impact Pelambres
plan for Los Expansion project
Pelambres Phase 2 is 100%.4, 5
Expansion (10%).
% Score 0% 75% 100%
Sustainability 12.5% Agreements reached progress 75% 85% All goals achieved6. 100% No
commitments with communities < 50% progress progress
near the Company’s
operations (80%)
CO2 emissions – Not met Partial Full
reduction of 300,000 completion completion
tonnes and transition
away from coal power
purchase agreements
(20%)
% 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.
Chairman
Jean-Paul Luksic 1,015 1,012 16 16 1,031 1,028
Non-Executive Directors
Ollie Oliveira (departed 31 July 2021) – 210 – 1 – 211
Ramón Jara1 927 965 85 7 1,012 972
Juan Claro 280 278 3 2 283 280
Andrónico Luksic C 260 260 3 2 263 262
Vivianne Blanlot 325 318 3 2 328 320
Jorge Bande 320 314 13 2 333 316
Francisca Castro 315 309 21 2 336 311
Michael Anglin 335 311 7 – 342 311
Tony Jensen 365 333 12 – 377 333
Eugenia Parot (appointed 20 April 2021) 300 199 6 – 306 199
Total Board 4,442 4,509 169 34 4,611 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 have been no changes to the Directors’ interests in the shares
There were no payments made to past Directors. of the Company between 31 December 2022 and the date of this report.
Payments for loss of office (audited) The Directors and CEO had no interests in the shares of the Company
There were no payments made for loss of office. 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
Total pension entitlements (audited) case of Ramón Jara) with the Company or its subsidiary undertakings
There were no pension contribution payments made towards any during the year other than in the ordinary course of business.
Directors or towards the CEO.
The Group does not have shareholding guidelines or requirements
Directors and CEO’s shareholding and share interests (audited) for Directors, all of whom are Non-Executives.
The Directors who held office on 31 December 2022 had the following The Chairman, Mr Jean-Paul Luksic, and Non-Executive Director,
interests in the ordinary shares of the Company: Mr Andrónico Luksic C, are members of the Luksic family. Members
Ordinary shares of 5p each of the Luksic family are interested in the E. Abaroa Foundation, which
31 December 1 January controls Metalinvest Establishment and Kupferberg Establishment
2022 2022
(which, taken together, holds approximately 60.66% of the Company’s
Jean-Paul Luksic1 41,963,110 41,963,110 ordinary shares and approximately 94.12% of the Company’s
Tony Jensen – – preference shares). In addition, Mr Jean-Paul Luksic controls the
Ramón Jara2 5,260 5,260 Severe Studere Foundation, which, in turn, controls the Aureberg
Juan Claro – – Establishment (which holds approximately 4.26% of the Company’s
Andrónico Luksic C – – ordinary shares). This creates significant alignment between these
members of the Board and shareholders.
Vivianne Blanlot – –
Jorge Bande – – During the period, no Non-Executive Director was eligible for any
short-term or long-term incentive awards, and no Non-Executive
Francisca Castro – –
Director owns any shares as a result of the achievement of performance
Michael Anglin – – conditions.
Eugenia Parot – –
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
Corporate Governance
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.
Number of shares/ Award as % Face value (market
Type of award Date of grant options of salary1 value at date of grant) Performance period Vesting dates
Performance conditions attaching to long-term incentive plan awards granted to the CEO in 2022 (audited)
Vesting Vesting Vesting
Objective Weighting Threshold Target Maximum at threshold at target at maximum
Relative total shareholder return 50% Performance Equal ≥ 5% above index 0% 33% 100%
vs. Global X Copper Miners ETF below index to index
(CopX Index)
Mineral resources increase 25% 83.1m tonnes 86.4m 87.5m tonnes 0% 50% 100%
(contained copper) tonnes
Projects portfolio: 12.5% 50% 75% Full completion of goals 0% 75% 100%
completion completion
(1) Los Pelambres Concentrate (1) and (2) with an
Pipeline (30%) environmental impact study
approved and under
(2) Los Pelambres Desalination
construction.
Plant Expansion (40%)
(3) With progress in the range
(3) Centinela Second
(of 85% – 100%) of the
Concentrator (30%)
approved plan.
Environmental (1) Social 12.5% Greater than Greater than Greater than or equal 0% 75% 100%
and social Management 50% 75% to 85% compliance1
commitments Plan (40%) compliance compliance
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 2013 20141 2015 20162 2017 2018 2019 2020 20214 2022
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
Non-Executive Directors1
Jean-Paul Luksic 0% -5% N/A 1% 15% N/A 0% 28% N/A
Ollie Oliveira (departed 31 July 2021) N/A 0% N/A 8% -87% N/A 0% -91% N/A
Ramón Jara -4% 1,054% N/A 7% 2% N/A -4.3% 17% N/A
Juan Claro 1% 9% N/A 2% -32% N/A 0% -64% N/A
Andrónico Luksic C 0% 9% N/A 0% -32% N/A 0% 23% N/A
Vivianne Blanlot 2% 9% N/A 4% -32% N/A 0% -45% N/A
Jorge Bande 2% 452% N/A 6% -32% N/A 0% -63% N/A
Francisca Castro 2% 771% N/A 6% -73% N/A 1% -29% N/A
Michael Anglin5 8% – N/A 9% – N/A 1% -75% N/A
Tony Jensen6 (appointed 13 March 2020) 10% – N/A 34% – N/A – – N/A
Eugenia Parot7 (appointed 20 April 2021) 5% – N/A N/A N/A N/A N/A N/A N/A
CEO 10.4% 218% 38.5% 28.3% 51.5% -5.7% -8% -65% 38.8%
Company employees2 -10.3% 2.2% -27.0% 1.6% -0.3% 19.7% 1.8% 19.9% 7.5%
Mining division employees3 -5.8%4 -11.4% -7.1% 7.2% 16.3% -10.6% -9.8% -10.1% 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 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
1. The Committee held a stand-alone session to discuss the outcomes of Engagement survey.
Engagement with colleagues In 2021, the Committee took note of the views of the workforce in
As explained in last year’s Annual Report, when the Committee reviews adjusting KPI weightings in the Annual Bonus Plan. It also oversaw the
the Directors’ and the CEO’s remuneration, it considers pay conditions implementation of ‘New Ways of Working’ for employees, providing more
across the Group. This is set in the context of different working flexibility and adaptability after extensive engagement with the workforce.
environments and geographies and therefore is not a mechanical This policy applies to the CEO, senior management and employees.
process. The Company does not have any executive directors, and the Additionally, with its advisers, the Group reviewed the market practice
executive pay policy that applies to the CEO (who is not a Director) is the and considered the developing environment for talent and the needs of
same as the Group’s broader pay policy. This policy includes access the business before making proposals to the Committee across several
to the same benefits and participation in the same Annual Bonus Plan. areas impacting the reward and talent proposition for employees. The
Members of the Executive Committee and certain key executives proposals sought to continue to maximise value, increase the overall
participate in the LTIP, and this plan is the same for the CEO as for employee experience, and ensure that the Group remains a world-class
the other participants. The same principles apply to our workforce employer, attracting and retaining the best talent to succeed.
remuneration plans as to that of the CEO, seeking to drive the same
aligned culture, values and behaviours across the Group. Consideration by the Directors of matters relating to Directors’
Approximately 80% of the Group’s employees are unionised, and the
remuneration
During the year, the Committee reappointed Willis Towers Watson to
number is close to 100% at the operator level. The Committee reviews
advise the Committee on remuneration issues. This reappointment was
the gender pay gap, CEO pay ratio figures and a range of other internal
based on the Committee’s satisfaction with advice provided in previous
and external remuneration comparison metrics and benchmarks when
years. The Committee is satisfied that the advice provided by Willis
determining the quantum and structure of the CEO’s remuneration. This
Towers Watson was objective and independent and that no conflict
includes feedback from shareholders and more general feedback from
of interest arose concerning these services. Willis Towers Watson’s fees
employees on the Group’s pay policies, including regular engagement
for this work were charged in accordance with time and materials and
with union representatives and oversight of the parameters for collective
amounted to £102,192. Willis Towers Watson also provided advice and
bargaining negotiations.
support to management during the year, primarily on general
The Committee communicates with and receives feedback from the remuneration issues, benchmarking, best HR practices and ad hoc
workforce through a variety of channels, including employee advice on topics such as equality and gender remuneration.
engagement surveys carried out during October and November 2021
In determining that the advice received was independent, the Committee
at Antofagasta Minerals and Minera Antucoya and in July 2022 at
took into account the fact that Willis Towers Watson is an independent
Centinela, Los Pelambres and Zaldívar. The results are shared with the
global professional services firm that adheres to the Code of Conduct for
Committee and the Board. The Group also conducts ad hoc focused
Remuneration Consultants, to which it is a signatory. The Code of
surveys on specific issues, which in 2022 included surveys on New
Conduct can be found at www.remunerationconsultantsgroup.com.
Ways of Working, employee wellbeing, and diversity and inclusion.
The results of the surveys were also shared with the Committee During 2022, the Committee also received assistance from
and the Board. the Chairman, Jean-Paul Luksic, the CEO, Iván Arriagada, the Vice
President of Human Resources, Georgeanne Barceló, and the
The Committee is regularly updated on workforce pay and benefits by
Company Secretary, Julian Anderson, none of whom participated
the senior management team, who consult with the workforce on issues
in discussions relating to their own remuneration. Additionally, part
including the remuneration policy. The workforce receives regular
of each Committee meeting is held without management present to
communications throughout the year on the Group’s performance
ensure that individual views or areas of concern can be debated
targets and incentive awards, while the senior management team
between Committee members.
receives regular feedback on the performance of workforce roles and
regularly engages with employees to understand their views on The responsibilities of the Committee are defined by its Terms
workforce remuneration policy and practices. of Reference, which can be found on the Company’s website.
Directors visit Group operations throughout the year, individually Talent management and succession planning
or in small groups, to listen directly to employees’ views on labour Oversight of talent management and succession planning is integral to
issues, including remuneration, culture and values, as well as the the Committee’s responsibilities and directly relates to the Group’s ability
application of remuneration policy across the Group, including executive to achieve long-term sustainable success. The talent review is carried
pay. The Board's engagement with the workforce is detailed on pages out annually to update succession planning for key positions, identify
116 and 117. talent pools, define individual development plans and agree on
Consequently, the Committee has multiple touchpoints with the recruitment needs.
workforce for feedback on the Group’s workforce remuneration policy, In recent years a new approach has been taken, prioritising employees’
including senior management and the CEO. At the beginning of every overall experience and positioning the Group as a top-tier employer
Committee meeting, the CEO provides an update to the Committee on capable of attracting and retaining top talent. Talent Management is
key workforce issues relating to remuneration and talent. The Committee critical to ensuring the Group's ability to meet current and future
meetings are focused on these subjects. Following each Committee business demands by focusing on the attraction, retention and
meeting, the Committee Chair reports a summary of matters considered development of high-potential individuals. This approach ensures the
to the full Board. continuous growth and success of the Company.
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.
97.43%
Votes for 1,059,688,617
2.57%
Votes against 27,903,201
Votes cast as a percentage of issued share capital 91.71%
Votes withheld 5,663,353
98.17%
Votes for 1,062,750,494
1.83%
Votes against 19,832,684
Votes cast as a percentage of issued share capital 91.29%
Votes withheld 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
Corporate Governance
/ Directors’ Report
Directors’ Report
Ordinary shares
of 5p each 985,856,695 5p 96.10%
Preference shares
of £1.00 each 2,000,000 £1 3.90%
The Company was also authorised by a shareholders’ resolution passed Metalinvest Establishment and Kupferberg Establishment are both
at the 2022 AGM to purchase up to 10% of its issued ordinary share controlled by the E. Abaroa Foundation (“Abaroa”), in which members of
capital. Any shares bought back may be held as treasury shares or, the Luksic family are interested. As explained in Note 36 to the financial
if not so held, must be cancelled immediately upon completion of the statements, Metalinvest Establishment is the immediate Parent Company
purchase, thereby reducing the amount of the Company’s issued and of the Group and the E. Abaroa Foundation is the Ultimate Parent
authorised share capital. This authority will expire at this year’s AGM and Company. Aureberg Establishment is controlled by the Severe Studere
a resolution to renew the authority for a further year will be proposed. Foundation that, in turn, is controlled by Jean-Paul Luksic, the Chairman
No shares were purchased by the Company during the year. of the Company.
Directors’ interests and indemnities No interests have been disclosed to the Company between 31 December
Details of Directors’ contracts and letters of appointment, remuneration 2022 and the date of this report.
and emoluments and their interests in the shares of the Company as at Exploration and research and development
31 December 2022, are given in the Directors’ Remuneration Report. The Group’s subsidiaries carry out exploration and research and
No Director had any material interest in a contract of significance (other development activities that are necessary to support and expand the
than a service contract in respect of Ramón Jara – see page 159) with Group’s operations.
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.
Going concern Other information can be found in the following sections of the Strategic
The Directors, having made appropriate enquiries, have satisfied Report:
themselves that it is appropriate to adopt the going concern basis of
accounting in preparing the financial statements, as detailed in Note 1 Location in
Annual Report
to the financial statements. Additionally, the Directors have considered
the Company’s longer-term viability, as described in their statement Future developments in the business of the Group Pages 86-89
on page 37. Viability statement Page 37
Subsidiaries, associates and joint ventures Pages 74-85
Business relationships with suppliers, customers and others
Employee engagement Pages 48-50
A statement of how the Directors have had regard to the need to
foster the Company’s business relationships with suppliers, customers Greenhouse gas emissions Pages 61-62
and others and the effect of that regard, including on the principal Streamlined energy and carbon reporting Pages 61-62
decisions made by the Company during the year, are set out on pages
Disclosures required pursuant to Listing Rule 9.8.4R can be found
40-73 of the Strategic Report and pages 102-171 of the Corporate
on the following pages of the Annual Report:
Governance Report.
Other statutory disclosures Location in
Annual Report
The Corporate Governance Report on pages 102-171, the Statement
Statement of interest capitalised See Notes 10 and 15
of Directors’ responsibilities on page 171 and Note 25 to the financial
by the Group (LR 9.8.4(1)) to the financial statements.
statements are incorporated into this Directors’ Report by reference.
See pages 142-167 and
Long-term Incentive Plan Note 26 to the financial
(LR 9.8.4(7)) statements.
Relationship agreement (LR 9.8.4(14)) Page 109
Julian Anderson
Company Secretary
23 March 2023
Financial
Performance
Independent auditors’ report 174
Consolidated income statement 181
Consolidated statement
of comprehensive income 182
Consolidated statement
of changes in equity 182
Consolidated balance sheet 183
Consolidated cash flow statement 184
Notes to the financial statements 185
Parent Company
financial statements 234
• Antofagasta plc’s Group financial statements and Parent Company • We identified two components (2021: two) as individually financially
financial statements (the “financial statements”) give a true and fair significant components, which required an audit of their complete
view of the state of the Group’s and of the Parent Company’s affairs financial information due to their financial significance to the Group,
as at 31 December 2022 and of the Group’s profit and the Group’s and a further three components (2021: three) where we concluded
cash flows for the year then ended; that a full scope audit of the component financial information was
warranted.
• the Group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards as • Taken together, the components at which audit work was performed
applied in accordance with the provisions of the Companies Act 2006; accounted for 97% of Group revenue.
• the Parent Company financial statements have been properly • We also determined that specified procedures were necessary in
prepared in accordance with United Kingdom Generally Accepted respect of certain balances within the corporate and other items
Accounting Practice (United Kingdom Accounting Standards, including segment and transport division to ensure that we had sufficient
FRS 101 “Reduced Disclosure Framework”, and applicable law); and coverage from our audit work over each line of the Group’s financial
statements.
• the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006. Key audit matters
We have audited the financial statements, included within the Annual • Assessment of indicators of impairment and impairment reversal for
Report and Financial Statements 2022 (the “Annual Report”), which property, plant and equipment, in particular in respect of the Zaldivar
comprise: the consolidated and Parent Company balance sheets as at and Antucoya cash generating units (Group) and investments in
31 December 2022; the consolidated income statement, the consolidated subsidiaries (Parent) (Group and Parent)
statement of comprehensive income, the consolidated cash flow • The accounting for the disposal of the Group’s interest in the Reko Diq
statement, and the consolidated and Parent Company statements of project (Group)
changes in equity for the year then ended; and the notes to the financial
Materiality
statements, which include a description of the significant accounting
policies. • Overall Group materiality: $112 million (2021: $108 million) based on
5% of the three year average of profit before tax adjusted for one-off
Our opinion is consistent with our reporting to the Audit and Risk
items.
Committee.
• Overall Parent Company materiality: $20 million (2021: $26.5 million)
Basis for opinion based on 1% of total assets.
We conducted our audit in accordance with International Standards on • Performance materiality: $84 million (2021: $81 million) (Group) and
Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities $15 million (2021: $19.875 million) (Parent Company).
under ISAs (UK) are further described in the Auditors’ responsibilities
The scope of our audit
for the audit of the financial statements section of our report. We believe
As part of designing our audit, we determined materiality and assessed
that the audit evidence we have obtained is sufficient and appropriate to
the risks of material misstatement in the financial statements.
provide a basis for our opinion.
Key audit matters
Independence
Key audit matters are those matters that, in the auditors’ professional
We remained independent of the Group in accordance with the ethical
judgement, were of most significance in the audit of the financial
requirements that are relevant to our audit of the financial statements in
statements of the current period and include the most significant
the UK, which includes the FRC’s Ethical Standard, as applicable to listed
assessed risks of material misstatement (whether or not due to fraud)
public interest entities, and we have fulfilled our other ethical
identified by the auditors, including those which had the greatest effect
responsibilities in accordance with these requirements.
on: the overall audit strategy; the allocation of resources in the audit; and
To the best of our knowledge and belief, we declare that non-audit directing the efforts of the engagement team. These matters, and any
services prohibited by the FRC’s Ethical Standard were not provided. comments we make on the results of our procedures thereon, were
Other than those disclosed in note 8 to the Group financial statements, addressed in the context of our audit of the financial statements as a
we have provided no non-audit services to the Parent Company or its whole, and in forming our opinion thereon, and we do not provide a
controlled undertakings in the period under audit. 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.
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 We assessed management’s analysis of the accounting for the definitive
project (Group) agreements and considered potential alternative interpretations. We read
the definitive agreements and confirmed that the contractual
On 15 December 2022 Antofagasta entered into definitive agreements
arrangements supported the Directors’ judgements.
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 We read the tax advice obtained by management in respect of the
control of the joint venture and has, therefore, derecognised its transaction, and have assessed the independence, competence and
investment and recognised a gain on disposal of $944.7 million, objectivity of management’s external tax experts. We also engaged our
representing the proceeds of the divestment net of related adjustments. internal tax experts to review the advice to help us assess the
appropriateness of management’s estimate in respect of tax.
The Directors have applied judgement in determining that, under the
agreements, the Group no longer has joint control of the Tethyan joint We read the related disclosures in respect of the transaction in note 17 to
venture and has an unconditional right to receive the proceeds of the the Group financial statements and in respect of the significant estimation
sale, currently held by Atacama. Judgement has also been applied in uncertainty in note 3.
estimating the probability of the sales proceeds being subject to We identified no material issues as a result of our work.
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 statements. The Group engagement team also performed procedures in
We tailored the scope of our audit to ensure that we performed enough respect of the gain on disposal of the investment in the Tethyan joint
work to be able to give an opinion on the financial statements as a venture. For all other components, the Group team performed analytical
whole, taking into account the structure of the Group and the Parent review procedures.
Company, the accounting processes and controls, and the industry in Where work was performed by component auditors, we determined the
which they operate. level of involvement we needed to have in the audit work to be able to
The core mining business comprises four mining operations: Los conclude whether sufficient appropriate audit evidence had been
Pelambres; Centinela; Antucoya; and Zaldívar, a joint venture with obtained as a basis for our opinion on the Group financial statements as
Barrick Gold Corporation operated by the Group. These mines produce a whole. Our oversight procedures included the issuance of formal,
copper cathodes, copper concentrates and significant volumes of written instructions to the component auditors setting out the work to be
by-products. performed, regular communication throughout the audit cycle including
regular component meetings, review of component auditor workpapers
In addition to mining, the Group has a transport division that provides rail
and participation in audit clearance meetings. In most cases
and road cargo services in northern Chile, predominantly to mining
communication was performed through video conferencing. However,
customers, including to the Group’s own operations.
members of the Group team also visited Chile on multiple occasions
All of the above operations are located in Chile. In addition, the Group during the audit. The Group team also reviewed the component auditor
has corporate head offices located in both Santiago, Chile (Antofagasta working papers and reviewed other communications dealing with
Minerals S.A.) and London, UK (Antofagasta plc). The Group also has significant accounting and auditing issues.
exploration projects in various countries.
Taken together, the components where we performed our audit work
In establishing the overall approach to the Group audit, we determined accounted for 97% of consolidated revenue, 94% of consolidated profit
the type of work that needed to be performed at each of the four mine before tax and 92% of consolidated profit before tax adjusted for one-off
sites and the corporate offices in Chile, by us, as the Group engagement items. This was before considering the contribution to our audit evidence
team and by component auditors from PwC Chile operating under our from performing additional audit work at the Group level, including
instruction. Los Pelambres and Centinela were considered to be disaggregated analytical review procedures, which covers a significant
financially significant components of the Group, due to their contribution portion of the Group’s smaller and lower risk components that were not
towards Group profit before tax, and so required audits of their complete directly included in our Group audit scope.
financial information. Antucoya and Zaldívar, as well as the Parent
The Parent Company financial statements are prepared in the corporate
Company Antofagasta plc, were also subject to an audit of their complete
head office in Santiago, with oversight from the Group Financial
financial information. We also requested that component auditors
Controller based in London, and are ultimately reviewed and approved
perform specified procedures over the corporate offices in Chile, and
by the Directors alongside the Group financial statements. The Parent
specific financial statement line items of other entities within the Group
Company financial statements were audited by the Group engagement
(including the transport division) to ensure that we had sufficient
team.
coverage from our audit work over each line of the Group’s financial
For each component in the scope of our Group audit, we allocated a In relation to the Directors’ reporting on how they have applied the UK
materiality that is less than our overall Group materiality. The range of Corporate Governance Code, we have nothing material to add or draw
materiality allocated across components was between $10 million and attention to in relation to the Directors’ statement in the financial
$96 million. statements about whether the Directors considered it appropriate to
adopt the going concern basis of accounting.
We use performance materiality to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected Our responsibilities and the responsibilities of the Directors with respect
misstatements exceeds overall materiality. Specifically, we use to going concern are described in the relevant sections of this report.
performance materiality in determining the scope of our audit and the
nature and extent of our testing of account balances, classes of Reporting on other information
transactions and disclosures, for example in determining sample sizes. The other information comprises all of the information in the Annual
Our performance materiality was 75% (2021: 75%) of overall materiality, Report other than the financial statements and our auditors’ report
amounting to $84 million (2021: $81 million) for the Group financial thereon. The Directors are responsible for the other information. Our
statements and $15 million (2021: $19.875 million) for the Parent opinion on the financial statements does not cover the other information
Company financial statements. and, accordingly, we do not express an audit opinion or, except to the
extent otherwise explicitly stated in this report, any form of assurance
In determining the performance materiality, we considered a number of thereon.
factors – the history of misstatements, risk assessment and aggregation
risk and the effectiveness of controls – and concluded that an amount at In connection with our audit of the financial statements, our responsibility
the upper end of our normal range was appropriate. is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements
We agreed with the Audit and Risk Committee that we would report to or our knowledge obtained in the audit, or otherwise appears to be
them misstatements identified during our audit above $5.6 million (Group materially misstated. If we identify an apparent material inconsistency or
audit) (2021: $5.4 million) and $1 million (Parent Company audit) (2021: material misstatement, we are required to perform procedures to
$1.3 million) as well as misstatements below those amounts that, in our conclude whether there is a material misstatement of the financial
view, warranted reporting for qualitative reasons. statements or a material misstatement of the other information. If, based
on the work we have performed, we conclude that there is a material
Conclusions relating to going concern
misstatement of this other information, we are required to report that
Our evaluation of the Directors’ assessment of the Group’s and the
fact. We have nothing to report based on these responsibilities.
Parent Company’s ability to continue to adopt the going concern basis of
accounting included: With respect to the Strategic Report and Directors’ Report, we also
considered whether the disclosures required by the UK Companies Act
• Obtaining and examining management’s base case forecasts and
2006 have been included.
downside scenarios, checking that the forecasts had been subject to
board review and, in the case of the base case, approval; Based on our work undertaken in the course of the audit, the Companies
• Considering the historical reliability of management forecasting by Act 2006 requires us also to report certain opinions and matters as
comparing budgeted results with actual performance; described below.
• Assessing the future cash flows included in the base case to ensure Strategic Report and Directors’ Report
that these were consistent with our understanding from work In our opinion, based on the work undertaken in the course of the audit,
performed over other key accounting estimates in the financial the information given in the Strategic Report and Directors’ Report for
statements such as the impairment indicator assessment; the year ended 31 December 2022 is consistent with the financial
• Performing our own sensitivity analysis to understand the impact of statements and has been prepared in accordance with applicable legal
changes in cash flows and net debt on the resources available to the requirements.
Group; and In light of the knowledge and understanding of the Group and Parent
• Reading management’s paper to the Audit and Risk Committee in Company and their environment obtained in the course of the audit, we
respect of going concern, and agreeing the forecasts set out in this did not identify any material misstatements in the Strategic Report and
paper to the underlying base case cash flow model. Directors’ Report.
Based on the work we have performed, we have not identified any Directors’ Remuneration
material uncertainties relating to events or conditions that, individually or In our opinion, the part of the Directors’ and CEO’s remuneration report
collectively, may cast significant doubt on the Group’s and the Parent to be audited has been properly prepared in accordance with the
Company’s ability to continue as a going concern for a period of at least Companies Act 2006.
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.
Based on our understanding of the Group and industry, we identified that Use of this report
the principal risks of non-compliance with laws and regulations related This report, including the opinions, has been prepared for and only for
to breaches of environmental regulations, health and safety regulations, the Parent Company’s members as a body in accordance with Chapter 3
and unethical and prohibited business practices, and we considered the of Part 16 of the Companies Act 2006 and for no other purpose. We do
extent to which non-compliance might have a material effect on the not, in giving these opinions, accept or assume responsibility for any
financial statements. We also considered those laws and regulations that other purpose or to any other person to whom this report is shown or
have a direct impact on the financial statements such as the Companies into whose hands it may come save where expressly agreed by our
Act 2006 and tax law in the jurisdictions in which the Group operates. prior consent in writing.
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
Other required reporting
posting of inappropriate journal entries to increase revenue or reduce Companies Act 2006 exception reporting
expenditure, and management bias in accounting estimates. The Group Under the Companies Act 2006 we are required to report to you if, in
engagement team shared this risk assessment with the component our opinion:
auditors so that they could include appropriate audit procedures in • we have not obtained all the information and explanations we require
response to such risks in their work. Audit procedures performed by the for our audit; or
Group engagement team and/or component auditors included: • adequate accounting records have not been kept by the Parent
• Inquiries with management, including the Group’s Vice President of Company, or returns adequate for our audit have not been received
Legal and the Head of Internal Audit, regarding their consideration of from branches not visited by us; or
known or suspected instances of non-compliance with laws and • certain disclosures of Directors’ remuneration specified by law are
regulation; not made; or
• Obtaining legal letters from the Group’s external legal advisers in • the Parent Company financial statements and the part of the
respect of litigation and claims and other such matters, where Directors’ and CEO’s remuneration report to be audited are not in
considered necessary; agreement with the accounting records and returns.
• Evaluation of the design of management’s controls intended to prevent We have no exceptions to report arising from this responsibility.
and detect irregularities, in particular their anti-bribery controls;
• Challenging assumptions and judgements made by management in Appointment
respect of critical accounting judgements and significant accounting Following the recommendation of the Audit and Risk Committee, we
estimates; and were appointed by the members on 20 May 2015 to audit the financial
• Identifying and testing journal entries, in particular any journal entries statements for the year ended 31 December 2015 and subsequent
posted with certain unusual account combinations. financial periods. The period of total uninterrupted engagement is eight
years, covering the years ended 31 December 2015 to
There are inherent limitations in the audit procedures described above. 31 December 2022.
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 Other matter
detecting a material misstatement due to fraud is higher than the risk of In due course, as required by the Financial Conduct Authority Disclosure
not detecting one resulting from error, as fraud may involve deliberate Guidance and Transparency Rule 4.1.14R, these financial statements will
concealment by, for example, forgery or intentional misrepresentations, form part of the ESEF-prepared annual financial report filed on the
or through collusion. National Storage Mechanism of the Financial Conduct Authority in
accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’).
Our audit testing might include testing complete populations of certain This auditors’ report provides no assurance over whether the annual
transactions and balances, possibly using data auditing techniques. financial report will be prepared using the single electronic format
However, it typically involves selecting a limited number of items for specified in the ESEF RTS.
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 Simon Morley (Senior Statutory Auditor)
draw a conclusion about the population from which the sample is
for and on behalf of PricewaterhouseCoopers LLP
selected.
Chartered Accountants and Statutory Auditors
A further description of our responsibilities for the audit of the financial London
statements is located on the FRC’s website at: www.frc.org.uk/
23 March 2023
auditorsresponsibilities. This description forms part of our auditors’
report.
Excluding Excluding
exceptional Exceptional exceptional Exceptional
items Items items Items
2022 2022 2022 2021 2021 2021
Note(s) $m $m $m $m $m $m
antofagasta.co.uk
Antofagasta plc Annual Report 2022 181
181
Financial Statements
Consolidated statement of
comprehensive income
For the year ended 31 December 2022
2022 2021
Note(s) $m $m
Attributable to:
Non-controlling interests 31 418.1 952.8
Owners of the parent 1,540.2 1,310.4
2022 2021
$m $m
Total comprehensive income for the year - continuing operations 1,958.3 2,263.2
1,958.3 2,263.2
Consolidated Statement
of Changes in Equity
For the year ended 31 December 2022
Equity
Retained attributable Non-
Share Share Other reserves earnings to owners of controlling Total
capital premium (Note 30) (Note 30) the parent interests equity
$m $m $m $m $m $m $m
182
182 Antofagasta
Antofagasta plc Annual Annual
Report 2022Report 2022
Consolidated Balance sheet
As at 31 December 2022
2022 2021
Note(s) $m $m
Non-current assets
Intangible assets 14 – –
Property, plant and equipment 15 11,543.5 10,538.5
Other non-current assets 1.1 1.3
Inventories 20 347.0 270.4
Investment in associates and joint ventures 18 904.6 905.8
Trade and other receivables 21 51.0 51.2
Equity investments 19 90.5 8.7
Deferred tax assets 28 78.5 96.8
13,016.2 11,872.7
Current assets
Inventories 20 708.1 532.8
Trade and other receivables 21 2,087.2 1,146.1
Current tax assets 35.6 13.7
Liquid investments 22 1,580.8 2,969.7
Cash and cash equivalents 22 810.4 743.4
5,222.1 5,405.7
Total assets 18,238.3 17,278.4
Current liabilities
Short-term borrowings and other financial liabilities 23 (432.5) (337.1)
Trade and other payables 24 (1,079.7) (829.1)
Short-term decommissioning and restoration provisions 29 (33.2) (33.8)
Current tax liabilities (60.4) (374.2)
(1,605.8) (1,574.2)
Non-current liabilities
Medium and long-term borrowings and other financial liabilities 23 (2,844.5) (2,835.5)
Trade and other payables 24 (8.0) (16.8)
Liabilities in relation to joint ventures 18 – (0.6)
Post-employment benefit obligations 27 (137.3) (107.5)
Decommissioning and restoration provisions 29 (455.0) (302.3)
Deferred tax liabilities 28 (1,543.3) (1,412.5)
(4,988.1) (4,675.2)
Total liabilities (6,593.9) (6,249.4)
Net assets 11,644.4 11,029.0
Equity
Share capital 30 89.8 89.8
Share premium 30 199.2 199.2
Other reserves 30 5.0 (10.4)
Retained earnings 30 8,333.5 8,071.6
Equity attributable to owners of the parent 8,627.5 8,350.2
Non-controlling interests 31 3,016.9 2,678.8
Total equity 11,644.4 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.co.uk
Antofagasta plc Annual Report 2022 183
183
Financial Statements
2022 2021
Note(s) $m $m
184
184 Antofagasta
Antofagasta plc Annual Annual
Report 2022Report 2022
Notes to the financial statements
1 Basis of preparation The stability of tailings storage facilities represents a potentially significant
The consolidated financial statements of the Antofagasta plc Group have operational risk for mining operations globally. The Group’s tailings
been prepared in accordance with UK adopted international accounting storage facilities are designed to international standards, constructed
standards and with the requirements of the Companies Act 2006 as using downstream methods, subject to rigorous monitoring and
applicable to companies reporting under those standards. The financial reporting, and reviewed regularly by an international panel of
statements have been prepared on the going concern basis. independent experts. Given these standards of design, development,
operations and review, the impact of a potential tailings dam failure has
Going concern not been included in the sensitivity analysis.
The Directors have assessed the going concern status of the Group,
considering the period to 31 December 2024. The above downside sensitivity analyses indicated results which could be
managed in the normal course of business, including the aggregate
The Group’s business activities, together with those factors likely to impact of a number of the above sensitivities occurring at the same time.
affect its future performance, are set out in the Strategic Report, and in The analysis indicated that the Group is expected to remain in
particular within the Operating Review. Details of the cash flows of the compliance with all of the covenant requirements of its borrowings
Group during the period, along with its financial position at the period- throughout the review period and retain sufficient liquidity. Based on their
end, are set out in the Financial Review. The consolidated financial assessment of the Group’s prospects and viability, the Directors have
statements include details of the Group’s cash, cash equivalents and formed a judgement, at the time of approving the financial statements,
liquid investment balances in Note 22, and details of borrowings are set that there are no material uncertainties that the Directors are aware of
out in Note 23. that cast doubt on the Group’s going concern status and that there is a
When assessing the going concern status of the Group, the Directors reasonable expectation that the Group has adequate resources to
have considered in particular its financial position, including its significant continue in operational existence for the period to 31 December 2024.
balance of cash, cash equivalents and liquid investments and the terms The Directors therefore consider it appropriate to adopt the going
and remaining durations of the borrowing facilities in place. The Group concern basis of accounting in preparing the financial statements.
had a strong financial position as at 31 December 2022, with combined Company structure
cash, cash equivalents and liquid investments of $2,391.2 million. Total Antofagasta plc is a company limited by shares, incorporated and
borrowings were $3,277.0 million, resulting in a net debt position of domiciled in the United Kingdom at 103 Mount Street, London W1K
$885.8 million. Of the total borrowings, only 13% is repayable within one 2TJ.The immediate parent of the Group is Metalinvest Establishment,
year, and 17% repayable between one and two years. which is controlled by the E. Abaroa Foundation, in which members of
When assessing the prospects of the Group, the Directors have the Luksic family are interested.
considered the Group’s copper price forecasts, the Group’s expected The nature of the Group’s operations is mining and exploration activities
production levels, operating cost profile and capital expenditure. These and the transport of rail and road cargo.
forecasts are based on the Group’s budgets and life-of-mine models,
which are also used when assessing relevant accounting estimates, A) Adoption of new accounting standards
including depreciation, deferred stripping and closure provisions. This The following accounting standards, amendments and interpretations
analysis has focused on the existing asset base of the Group, without became effective in the current reporting period:
factoring in potential development projects, which is considered • Property, Plant and Equipment – Proceeds before Intended Use
appropriate for an assessment of the Group’s ability to manage the (Amendments to IAS 16)
impact of a depressed economic environment. The analysis has only • Onerous Contracts – Cost of Fulfilling a Contract (Amendments to
included the draw-down of existing committed borrowing facilities, and IAS 37)
has not assumed that any new borrowing facilities will be put in place. • Annual Improvements to IFRS Standards 2018–2020 (Amendments
The Directors have assessed the key risks which could impact the to IFRS 1, IFRS 9, IFRS 16 and IAS 41)
prospects of the Group over the going concern period and consider the • Reference to the Conceptual Framework (Amendments to IFRS 3)
most relevant to be risks to the copper price outlook, as this is the factor
The application of these standards and interpretations effective for the
most likely to result in significant volatility in earnings and cash
first time in the current year has had no significant impact on the
generation. Robust down-side sensitivity analyses have been performed,
amounts reported in these financial statements.
assessing the standalone impact of each of:
The amendment to IAS 16 Property, Plant and Equipment – Proceeds
• A significant deterioration in the future copper price forecasts by 20%
before intended use may have significant impacts for the Group in future
throughout the going concern period.
periods. Previously, the Group has deducted amounts received from the
• An even more pronounced short-term reduction of 50 c/lb in the
sale of products during the initial ramp-up of new projects, before
copper price for a period of three months, in addition to the above
commercial production is achieved, from the capital cost of the project.
deterioration of 20% in the copper price throughout the review period.
Under the amendment to IAS 16, such amounts will now instead be
• The potential impact of the Group’s most significant individual
recognised as revenue in the income statement along with a
operational risks.
corresponding allocation of related operating expenses, which is likely to
• A shut-down of any one of the Group’s operations for a period of
result in increased revenue and operating expenses and a higher initial
three months.
capitalised amount. There were no relevant projects impacted by the
• Potential changes to the Chilean mining royalty, taking into account the
amendment during 2022. The amendment would apply retrospectively
Group’s existing tax stability agreements.
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.co.uk
Antofagasta plc Annual Report 2022 185
185
Financial Statements
1 Basis of preparation continued Changes in the Group’s ownership interests in subsidiaries that do not
result in the Group losing control over the subsidiaries are accounted for
B) Accounting standards issued but not yet effective
as equity transactions. The carrying amounts of the Group’s interests
At the date of authorisation of these financial statements, the following
and the non-controlling interests are adjusted to reflect the changes in
standards and interpretations, which have not been applied in
their relative interests in the subsidiaries. Any difference between the
these financial statements, were in issue but not yet effective. It is
amount by which the non-controlling interests are adjusted and the fair
expected that where applicable, these standards and amendments will be
value of the consideration paid or received is recognised directly in equity
adopted on each respective effective date (after 1 January, 2023). None
and attributed to owners of the Company.
of these standards are expected to have a significant impact on the
Group. 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
• IFRS 17, Insurance Contracts
aggregate of the fair value of the consideration received and the fair
• Deferred Tax related to Assets and Liabilities arising from a Single
value of any retained interest and (ii) the previous carrying amount of the
Transaction (Amendments to IAS 12)
assets (including goodwill), and liabilities of the subsidiary and any non-
• Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS
controlling interests. When assets of the subsidiary are carried at
Practice Statement 2
revalued amounts or fair values and the related cumulative gain or loss
• Definition of Accounting Estimates – Amendments to IAS 8
has been recognised in other comprehensive income and accumulated in
The following standards are effective after 1 January, 2024 (and subject equity, the amounts previously recognised in other comprehensive
to UK endorsement): income and accumulated in equity are accounted for as if the Group had
• Classification of Liabilities as Current or Non-Current (Amendments to directly disposed of the relevant assets (ie reclassified to profit or loss or
IAS 1) transferred directly to retained earnings as specified by applicable
• Lease Liability in a Sale and Leaseback (Amendments to IFRS16) IFRSs). The fair value of any investment retained in the former subsidiary
• Non-current Liabilities with Covenants (Amendments to IAS 1) 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
2 Principal accounting policies on initial recognition of an investment in an associate or a joint venture.
A) Accounting convention
These financial statements have been prepared under the historical cost Acquisitions and disposals are treated as explained in Note 2(G) relating
convention as modified by the use of fair values to measure certain to business combinations and goodwill.
financial instruments, principally provisionally priced sales as explained in C) Investments in associates
Note 2(F) and financial derivative contracts as explained in Note 2(W). An associate is an entity over which the Group is in a position to
B) Basis of consolidation exercise significant influence, but not control or joint control, through
The financial statements comprise the consolidated financial statements the power to participate in the financial and operating policy decisions of
of Antofagasta plc (“the Company” or “the Parent” or “the Parent that entity. The results and assets and liabilities of associates are
Company”) and its subsidiaries (collectively “the Group”). incorporated in these consolidated financial statements using the equity
method of accounting.
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, This requires recording the investment initially at cost to the Group and
variable returns from its involvement with the entity and has the ability to then, in subsequent periods, adjusting the carrying amount of the
affect those returns through its power over the entity. The consolidated investment to reflect the Group’s share of the associate’s results less any
financial statements include all the assets, liabilities, revenues, expenses impairment and any other changes to the associate’s net assets such as
and cash flows of the Company and its subsidiaries after eliminating dividends. When the Group loses control of a former subsidiary but
intercompany balances and transactions. For partly-owned subsidiaries, retains an investment in associate in that entity, the initial carrying value
the net assets and profit attributable to non-controlling shareholders are of the investment in associate is recorded at its fair value at that point.
presented as “Non-controlling interests” in the consolidated balance When the Group’s share of losses of an associate exceeds the Group’s
sheet and consolidated income statement. interest in that associate, the Group discontinues recognising its share of
further losses. Additional losses are recognised only to the extent that the
Non-controlling interests that are present ownership interests and entitle Group has incurred legal or constructive obligations or made payments
their holders to a proportionate share of the entity’s net assets in the on behalf of the associate.
event of liquidation may be initially measured either at fair value or at the
non-controlling interests’ proportionate share of the recognised amounts D) Joint arrangements
of the acquiree’s identifiable net assets. The choice of measurement A joint arrangement is an arrangement of which two or more parties
basis is made on an acquisition-by-acquisition basis. Other types of non- have joint control. Joint arrangements are accounted for depending on
controlling interests are measured at fair value or, when applicable, on the nature of the arrangement.
the basis specified in another IFRS. Subsequent to acquisition, the i) Joint ventures – are accounted for using the equity method in
carrying amount of non-controlling interests is the amount of those accordance with IAS 28 Investment in Associates and Joint Ventures
interests at initial recognition plus the non-controlling interests’ share of as described in Note 18.
subsequent changes in equity. Total comprehensive income is attributed
ii) Joint operations – are accounted for recognising directly the assets,
to non-controlling interests even if this results in the non-controlling
obligations, revenues and expenses of the joint operator in the joint
interests having a deficit balance.
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.
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E) Currency translation Copper and molybdenum concentrate sale agreements and copper
The functional currency for each entity in the Group is determined as the cathode sale agreements generally provide for provisional pricing of
currency of the primary economic environment in which it operates. sales at the time of shipment, with final pricing based on the monthly
Transactions in currencies other than the functional currency of the average London Metal Exchange (“LME”) copper price or the monthly
entity are translated at the exchange rate ruling at the date of the average market molybdenum price for specified future periods. This
transaction. Monetary assets and liabilities denominated in currencies normally ranges from one to four months after delivery to the customer.
other than the functional currency are retranslated at year end exchange For sales contracts which contain provisional pricing mechanisms, the
rates. Gains and losses on retranslation are included in net profit or loss initial invoice typically reflects the month-average market price for the
for the period within other finance items. metal in the month of shipment, with the associated receivable balance
subsequently measured at fair value through profit or loss. Gains and
The presentational currency of the Group and the functional currency of losses from the marking-to market of the receivable balance in relation to
the Company is the US dollar. On consolidation, income statement items open sales are recognised through adjustments to other income
for entities with a functional currency other than the US dollar are presented within revenue in the income statement and to trade
translated into US dollars at average rates of exchange. Balance sheet receivables in the balance sheet. The fair value calculations are based on
items are translated at period-end exchange rates. Exchange differences forward prices at the period end for copper concentrate and cathode
on translation of the net assets of such entities are taken to equity and sales, and period-end average prices for molybdenum concentrate sales
recorded in a separate currency translation reserve. Cumulative due to the absence of a futures market for this product.
translation differences arising after the transition date to IFRS are
recognised as income or as expenses in the income statement in the For the Transport division, revenue in respect of its transportation and
period in which an operation is disposed of. ancillary services are recognised over time in line with the performance
of those services.
On consolidation, exchange gains and losses which arise on balances
between Group entities are taken to reserves where that balance is, in Interest income
substance, part of the net investment in a foreign operation, ie where Interest income is accrued on a time basis, by reference to the principal
settlement is neither planned nor likely to occur in the foreseeable future. outstanding and the effective interest rate applicable, which is the rate
All other exchange gains and losses on Group balances are recognised in that exactly discounts estimated future cash receipts through the
the income statement within other finance items. expected life of the financial asset to that asset’s net carrying amount.
Fair value adjustments and any goodwill arising on the acquisition of a Interest received is recognised within investing activities in the
foreign entity are treated as assets of the foreign entity and translated consolidated cash flow statement.
at the period-end rate. Dividend income
F) Revenue recognition and other income Dividend income from equity investments, associates and joint ventures
Revenue represents the value of goods and services supplied to third is recognised when the shareholders’ right to receive payment has been
parties during the year. Revenue is measured at the fair value of established. For associates and joint ventures, it is recorded as a
consideration received or receivable, and excludes any applicable decrease of the investment.
sales tax. G) Business combinations and goodwill
Revenue is recognised when the Group satisfies a performance Acquisitions of businesses are accounted for using the acquisition
obligation by transferring a promised good or service to a customer. method. The consideration transferred in a business combination is
An asset is transferred when (or as) the customer obtains control of measured at fair value, which is calculated as the sum of the acquisition-
that asset. 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
For the Group’s mining products, the customer generally gains control interests issued by the Group in exchange for control of the acquiree.
over the material when it has been loaded at the port of loading, and so The results of businesses acquired during the year are brought into the
this is the point of revenue recognition. The Group sells a significant consolidated financial statements from the effective date of acquisition.
proportion of its products on Cost, Insurance & Freight (CIF) Incoterms, The identifiable assets, liabilities and contingent liabilities of a business,
which means that the Group is responsible for shipping the product to a which can be measured reliably, are recorded at their provisional fair
destination port specified by the customer. In these cases the customer values at the date of acquisition. Provisional fair values are finalised
still gains control over the material when it has been loaded at the port of within 12 months of the acquisition date. Acquisition-related costs are
loading, and so that remains the point of revenue recognition for the sale expensed as incurred.
of material; however, the shipping service represents a separate
performance obligation, and revenue in relation to such services is When the consideration transferred by the Group in a business
recognised separately from the sale of the material over time as the combination includes assets or liabilities resulting from a contingent
shipping service is provided, along with the associated costs. Shipment consideration arrangement, the contingent consideration is measured at
revenue is recognised at the contracted price to the Group as this its acquisition-date fair value and included as part of the consideration
reflects the standalone selling price. transferred in a business combination. Changes in the fair value of the
contingent consideration that qualify as measurement period adjustments
Revenue from mining activities is recorded at the invoiced amounts with are adjusted retrospectively, with corresponding adjustments against
an adjustment for provisional pricing at each reporting date, as explained goodwill. Measurement period adjustments are adjustments that arise
below. For copper and molybdenum concentrates, which are sold to from additional information obtained during the “measurement period”
smelters and roasting plants for further processing into fully refined (which cannot exceed one year from the acquisition date) about facts
metal, the price of the concentrate invoiced to the customer reflects the and circumstances that existed at the acquisition date.
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.
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2 Principal accounting policies continued Costs incurred in acquiring exploration and mining licences are classified
The subsequent accounting for changes in the fair value of the as intangible assets when construction of the related mining operation
contingent consideration that do not qualify as “measurement period” has not yet commenced. When construction commences the licences are
adjustments depends on how the contingent consideration is classified. transferred from intangible assets to the mining properties category
Contingent consideration that is classified as equity is not remeasured at within property, plant and equipment.
subsequent reporting dates and its subsequent settlement is accounted I) Stripping costs
for within equity. Contingent consideration that is classified as an asset or Pre-stripping and operating stripping costs are incurred in the course of
a liability is remeasured at subsequent reporting dates in accordance the development and operation of open-pit mining operations.
with IFRS 9.
Pre-stripping costs relate to the removal of waste material as part of the
When a business combination is achieved in stages, the Group’s initial development of an open-pit, in order to allow access to the ore
previously held equity interest in the acquiree is remeasured to fair value body. The capitalised costs are depreciated once production commences
at the acquisition date (ie the date when the Group obtains control) and on a unit of production basis, in proportion to the volume of ore extracted
the resulting gain or loss, if any, is recognised in profit or loss. Amounts in the year compared with total proven and probable reserves for that pit
arising from interests in the acquiree prior to the acquisition date that at the beginning of the year.
have previously been recognised in other comprehensive income are
Operating stripping costs relate to the costs of extracting waste material
reclassified to profit or loss where such treatment would be appropriate
as part of the ongoing mining process. The ongoing mining and
if that interest were disposed of.
development of the Group’s open-pit mines is generally performed via a
If the initial accounting for a business combination is incomplete by the succession of individual phases. The costs of extracting material from an
end of the reporting period in which the combination occurs, the Group open-pit mine are generally allocated between ore and waste stripping in
reports provisional amounts for the items for which the accounting is proportion to the tonnes of material extracted. The waste stripping costs
incomplete. Those provisional amounts are adjusted during the are generally absorbed into inventory and expensed as that inventory is
measurement period (see above), or additional assets or liabilities are processed and sold. Where the stripping costs relate to a significant
recognised, to reflect new information obtained about facts and stripping campaign which is expected to provide improved access to an
circumstances which existed at the acquisition date that, if known, would identifiable component of the ore body (typically an individual phase
have affected the amounts recognised at that date. within the overall mine plan), the costs of removing waste in order to
Goodwill arising in a business combination is measured as the excess of improve access to that part of the ore body will be capitalised within
the sum of the consideration transferred, the amount of any non- property, plant and equipment. The capitalised costs will then be
controlling interest in the acquiree and the fair value of the acquirer’s amortised on a unit of production basis, in proportion to the volume of
previously held equity interest in the acquiree (if any) over the net ore extracted compared with the total ore contained in the component of
identifiable assets acquired and liabilities assumed. Any goodwill on the the pit to which the stripping campaign relates.
acquisition of subsidiaries is separately disclosed, while any goodwill on J) Intangible assets
the acquisition of associates and joint ventures is included within Exploration and mining licences are classified as intangible assets when
investments in equity accounted entities. Internally generated goodwill is construction of the related mining operation has not yet commenced. When
not recognised. Where the fair values of the identifiable net assets construction commences, the licences are transferred from intangible assets
acquired exceed the sum of the consideration transferred, the surplus is to the mining properties category within property, plant and equipment.
credited to the profit or loss in the period of acquisition as a bargain
K) Property, plant and equipment
purchase gain.
The costs of mining properties and leases, which include the costs of
The Group sometimes enters into earn-in arrangements whereby the acquiring and developing mining properties and mineral rights, are
Group acquires an interest in a project company in exchange for funding capitalised as property, plant and equipment in the year in which they are
exploration and evaluation expenditure up to a specified level of incurred, when a mining project is considered to be commercially viable
expenditure or a specified stage in the life of the project. Funding is (normally when the project has completed a pre-feasibility study, and the
usually conditional on the achievement of key milestones by the partner. start of a feasibility study has been approved). The cost of property, plant
Typically there is no consideration transferred or funding liability on the and equipment comprises the purchase price and any costs directly
effective date of acquisition of the interest in the project company and no attributable to bringing the asset to the location and condition necessary
goodwill is recognised on this type of transaction. for it to be capable of operating in the manner intended. Once a project
The results of businesses sold during the year are included in the has been established as commercially viable, related development
consolidated financial statements for the period up to the effective date of expenditure is capitalised. This includes costs incurred in preparing the
disposal. Gains or losses on disposal are calculated as the difference site for mining operations, including pre-stripping costs. Capitalisation
between the sales´ proceeds (net of expenses) and the net assets ceases when the mine is capable of commercial production, with the
attributable to the interest which has been sold. Where a disposal exception of development costs which give rise to a future benefit.
represents a separate major line of business or geographical area of Interest on borrowings related to the construction or development of
operations, the net results attributable to the disposed entity are shown projects is capitalised as part of the cost of the asset. To the extent that
separately in the income statement as a discontinued operation. borrowings have been put in place specifically to fund the construction of
H) Exploration and evaluation expenditure the asset, the capitalised amount will reflect the actual interest costs
Exploration and evaluation costs, other than those incurred in acquiring incurred on that borrowing. If the construction is funded out of general
exploration licences, are expensed in the year in which they are incurred. borrowings, the capitalised interest expense will be calculated based on
When a mining project is considered to be commercially viable (normally the entity’s weighted average interest rate, applied to the expenditure on
when the project has completed a pre-feasibility study, and the start of a the asset (with the capitalised interest amount not exceeding the entity’s
feasibility study has been approved) all further directly attributable pre- total borrowing cost for the period). The interest costs are capitalised,
production expenditure is capitalised. Capitalisation of pre-production until such time as the assets are substantially ready for their intended
expenditure ceases when commercial levels of production are achieved. use or sale which, in the case of mining properties, is when they are
capable of commercial production.
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L) Depreciation of property, plant and equipment mining operations typically requires further capital expenditure and
Depreciation of an asset begins when it is available for use, ie when it is ongoing mine development, and accordingly the Group typically applies
in the location and condition necessary for it to be capable of operating in this valuation estimate in its impairment assessments, unless indicated
the manner intended. otherwise. Details of the valuations and sensitivities of the Group’s mining
operations considered as part of the impairment trigger assessment are
Property, plant and equipment is depreciated over its useful life, or over
included in Note 5.
the remaining life of the operation if shorter, to residual value. The major
categories of property, plant and equipment are depreciated as follows: If the recoverable amount of an asset or cash-generating unit is
estimated to be less than its carrying amount, the carrying amount is
(i) Land – freehold land is not depreciated unless the value of the land
reduced to the recoverable amount. An impairment charge is recognised
is considered to relate directly to a particular mining operation, in
in the income statement immediately. Where an impairment subsequently
which case the land is depreciated on a straight-line basis over the
reverses, the carrying amount is increased to the revised estimate of
expected mine life.
recoverable amount, but so that the increased carrying amount does not
(ii) Mining properties – mining properties, including capitalised exceed the carrying value that would have been determined if no
financing costs, are depreciated on a unit of production basis, in impairment had previously been recognised after taking into account the
proportion to the volume of ore extracted in the year compared with depreciation and/or amortisation that would otherwise have been
total proven and probable reserves at the beginning of the year. recorded in the intervening period. A reversal is recognised in the
(iii) Buildings and infrastructure – straight-line basis over 10 to 25 income statement immediately.
years. N) Inventory
(iv) Railway track (including trackside equipment) – straight-line basis Inventory consists of raw materials and consumables, work-in-progress
over 20 to 25 years. and finished goods. Work-in-progress represents material that is in the
process of being converted into finished goods. The conversion process
(v) Wagons and rolling stock – straight-line basis over 10 to 20 years. for mining operations depends on the nature of the copper ore. For
(vi) Machinery, equipment and other assets – are depreciated on a sulphide ores, processing typically includes milling and concentrating,
unit of production basis, in proportion to the volume of ore/material resulting in the production of copper concentrate. For oxide ores,
processed or hours of equipment usage, or on a straight-line basis processing includes leaching of stockpiles, solvent extraction and
over 5 to 20 years. electrowinning and results in the production of copper cathodes. Finished
goods consist of copper concentrate containing gold and silver at Los
(vii) Assets under construction – no depreciation until asset is
Pelambres and Centinela and copper cathodes at Centinela and
available for use.
Antucoya. Los Pelambres and Centinela also produce molybdenum as a
(viii) Lease right-of-use assets – depreciated over the shorter of the by-product.
asset’s useful life and the lease term on a straight-line basis.
Inventory is valued at the lower of cost, on a weighted average basis, and
(ix) Stripping cost – capitalised costs are amortised on a unit of net realisable value. Net realisable value represents estimated selling
production basis, in proportion to the volume of ore extracted price less all estimated costs of completion and costs to be incurred in
compared with the total ore contained in the component of the pit to marketing, selling and distribution. Cost of finished goods and work-in-
which the stripping campaign relates (Note 15). progress is production cost and for raw materials and consumables it is
Residual values and useful lives are reviewed, and adjusted if purchase price. Production cost includes:
appropriate, at least annually, and changes to residual values and useful • labour costs, raw material costs and other costs directly attributable to
lives are accounted for prospectively. the extraction and processing of ore,
M) Impairment of property, plant and equipment and • depreciation of plant, equipment and mining properties directly
intangible assets involved in the production process, and
Property, plant and equipment and intangible assets relating to • an appropriate allocation of production overheads.
exploration and mining licences are reviewed for impairment if there is Stockpiles represent ore that is extracted and is available for further
any indication that the carrying amount may not be recoverable. In processing. Costs directly attributable to the extraction of ore are
respect of historical impairments recognised in prior years, the Group generally allocated as part of production costs in proportion to the tonnes
assesses whether there is any indication that impairment may no longer of material extracted. Operating stripping costs are generally absorbed
exist or may have decreased. into inventory, and therefore expensed as that inventory is processed
If any such indications exist, the recoverable amount of the asset is and sold. If ore is not expected to be processed within 12 months of the
estimated in order to determine the extent of the impairment or reversal balance sheet date it is included within non-current assets. If there is
(if any). Where the asset does not generate cash flows that are largely significant uncertainty as to when any stockpiled ore will be processed it
independent from other assets, the Group estimates the recoverable is expensed as incurred.
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
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2 Principal accounting policies continued Q) Provisions for decommissioning and restoration costs
Obligations to incur decommissioning and restoration costs can arise as
O) Taxation
a result of the development or ongoing operation of a mining property.
Tax expense comprises the charges or credits for the year relating to
Costs are estimated on the basis of a formal closure plan and are subject
both current and deferred tax.
to regular formal review.
Current tax is based on taxable profit for the year. Taxable profit may
Decommissioning obligations arising from the construction of property,
differ from net profit as reported in the income statement because it
plant and equipment (including installation of plant and site preparation
excludes items of income or expense that are taxable and deductible in
work) are provided for at their net present value as the construction of
different years and also excludes items that are not taxable or deductible.
the asset gives rise to the obligation, and included within the property,
The liability for current tax is calculated using tax rates for each entity in
plant and equipment cost. These decommissioning costs are charged
the consolidated financial statements which have been enacted or
against profit or loss over the life of the mine, through depreciation of the
substantively enacted at the balance sheet date.
property, plant and equipment balance (recorded within operating
Deferred tax is the tax expected to be payable or recoverable on expenses). The unwinding of the discount on the provision is recorded
temporary differences (ie differences between the carrying amount of within other finance items. Changes in the measurement of a
assets and liabilities in the financial statements and the corresponding tax decommissioning provision are added to, or deducted from, the property,
basis used in the computation of taxable profit). Deferred tax is plant and equipment balance in the current year.
accounted for using the balance sheet liability method and is provided on
Restoration obligations, arising from ongoing operating activities, are
all temporary differences with certain limited exceptions as follows:
provided for at their net present values and charged against operating
(i) tax payable on undistributed earnings of subsidiaries, associates expenses as the obligation arises. Changes in the measurement of a
and joint ventures is provided except where the Group is able to restoration provision which, relate to a change in the estimate of the
control the remittance of profits and it is probable that there will be closure costs or a change in the discount rate, are charged against
no remittance of past profits earned in the foreseeable future, operating expenses, and changes relating to foreign exchange are
(ii) deferred tax is not provided on the initial recognition of an asset or recorded within other finance items.
liability in a transaction that does not affect accounting profit or R) Share-based payments
taxable profit and is not a business combination; nor is deferred tax For cash-settled share-based payments, a liability is recognised for the
provided on subsequent changes in the carrying value of such goods or services acquired, measured initially at the fair value of the
assets and liabilities, for example where they are depreciated, and liability. At the end of each reporting period until the liability is settled, and
(iii) the initial recognition of any goodwill. 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
Deferred tax assets are recognised only to the extent that it is probable Group currently does not have any equity settled share-based payments
that they will be recovered through sufficient future taxable profit. to employees or third parties.
The carrying amount of deferred tax assets is reviewed at each balance
sheet date. S) Post-employment benefits
The Group operates defined contribution schemes for a limited number
Deferred tax is calculated at the tax rates that are expected to apply in of employees. For such schemes, the amount charged to the income
the period when the liability is settled or the asset is realised. Deferred statement is the contributions paid or payable in the year.
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 Employment terms may also provide for payment of a severance
tax is also taken directly to equity. 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
P) Provisions most cases to a cap as to the number of qualifying years of service) and
Provisions are recognised when the Group has a present obligation (legal based on final salary level. The severance indemnity obligation is treated
or constructive) as a result of a past event, it is probable that the Group as an unfunded defined benefit plan, and the calculation is based on
will be required to settle the obligation and a reliable estimate can be valuations performed by an independent actuary using the projected unit
made of the amount of the obligation. credit method, which are regularly updated.
The amount recognised as a provision is the best estimate of the The obligation recognised in the balance sheet represents the present
consideration required to settle the present obligation at the end of the value of the severance indemnity obligation. Actuarial gains and losses
reporting period, taking into account the risks and uncertainties are immediately recognised in other comprehensive income.
surrounding the obligation. When a provision is measured using the cash
flows estimated to settle the present obligation, its carrying amount is the T) Cash and cash equivalents
present value of those cash flows (when the effect of the time value of Cash and cash equivalents comprise cash on hand, deposits held on call
money is material). with banks, highly liquid investments that are readily convertible into
known amounts of cash, are subject to insignificant risk of changes in
When some or all of the economic benefits required to settle a provision value and are held for the purpose of meeting short-term cash
are expected to be recovered from a third party, a receivable is commitments rather than for investment or other purposes. The cash
recognised as an asset if it is virtually certain that reimbursement will be balance is presented net of bank overdrafts which are repayable on
received and the amount of the receivable can be measured reliably. demand. Cash and cash equivalents have a maturity period of 90 days
or less.
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U) Liquid investments (iii) Trade and other payables – Trade and other payables are
Liquid investments represent highly liquid current asset investments generally not interest-bearing and are normally stated at their
such as term deposits and managed funds invested in high quality fixed nominal value.
income instruments. They do not meet the IAS 7 definition of cash and (iv) Borrowings (loans and preference shares) – Interest-bearing
cash equivalents, normally because even if readily accessible, the loans and bank overdrafts are initially recorded at fair value which is
underlying investments have an average maturity profile greater than 90 typically equal to the proceeds received, net of direct issue costs.
days from the date first entered into, or because they are held primarily They are subsequently measured at amortised cost using the
for investment purposes rather than meeting short-term cash effective interest method, with interest expense recognised on an
commitments. These assets are designated as fair value through profit or effective yield basis. The effective interest method is a method of
loss, with the fair value movements recorded within investment income. calculating the amortised cost of a financial liability and of allocating
V) Leases interest expense over the relevant period. The effective interest rate
Leases are recognised as a right-of-use asset and a corresponding is the rate that exactly discounts estimated future cash payments
liability at the date at which the leased asset is available for use by the through the expected life of the financial liability, or, where
Group. Each lease payment is allocated between the liability and finance appropriate, a shorter period. Finance charges, including premiums
cost. The finance cost is charged to profit or loss over the lease period payable on settlement or redemption and direct issue costs, are
so as to produce a constant periodic rate of interest on the remaining accounted for on an accruals basis using the effective interest rate
balance of the liability for each period. The right-of-use asset is method. Amounts are either recorded as financing costs in profit or
depreciated over the shorter of the asset's useful life and the lease term loss or capitalised in accordance with the accounting policy set out
on a straight-line basis. 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
Assets and liabilities arising from a lease are initially measured on a
which they arise.
present value basis. Lease liabilities include the net present value of the
following lease payments: Interest paid is recognised within operating activities in the
consolidated cash flow statement.
• fixed payments (including in-substance fixed payments), less any lease
incentives receivable The Sterling-denominated preference shares issued by the
• variable lease payments that are based on an index or a rate Company carry a fixed rate of return without the right to participate
• amounts expected to be payable by the lessee under residual value in any surplus. They are accordingly classified within borrowings
guarantees and translated into US dollars at period-end rates of exchange.
• the exercise price of a purchase option if the lessee is reasonably Preference share dividends are included within other finance items
certain to exercise that option, and within net finance expense in the income statement.
• payments of penalties for terminating the lease, if the lease term (v) Equity instruments – Equity instruments issued are recorded at
reflects the lessee exercising that option. the proceeds received, net of direct issue costs. Equity instruments
The lease payments are discounted using the interest rate implicit in the of the Company comprise its Sterling-denominated issued ordinary
lease. If that rate cannot be readily determined, the lessee’s incremental share capital and related share premium. As explained in Note 2(E),
borrowing rate is used, being the rate that the lessee would have to pay the presentational currency of the Group and the functional
to borrow the funds necessary to obtain an asset of similar value in a currency of the Company is US dollars, and ordinary share capital
similar economic environment with similar terms and conditions. and share premium are translated into US dollars at historical rates
of exchange based on dates of issue.
Right-of-use assets are measured at cost comprising the following:
(vi) Derivative financial instruments – As explained in Note 25(D), the
• the amount of the initial measurement of the lease liability
Group periodically uses derivative financial instruments to reduce
• any lease payments made at or before the commencement date less
exposure to foreign exchange, interest rate and commodity price
any lease incentives received
movements. The Group does not use such derivative instruments
• any initial direct costs, and
for trading purposes. The Group has applied the hedge accounting
• restoration costs.
provisions of IFRS 9 Financial Instruments. The effective portion of
W) Other financial instruments changes in the fair value of derivative financial instruments that are
Financial assets and financial liabilities are recognised on the Group’s designated and qualify as hedges of future cash flows have been
balance sheet when the Group becomes a party to the contractual recognised directly in equity, with such amounts subsequently
provisions of the instrument. Financial assets are derecognised when the recognised in profit or loss in the period when the hedged item
contractual rights to the cash flows from the financial asset expire or the affects profit or loss. Any ineffective portion is recognised
Group has transferred the asset to another party. Financial liabilities are immediately in profit or loss. Realised gains and losses on
removed from the Group’s balance sheet when they are extinguished – commodity derivatives recognised in profit or loss are recorded
ie when the obligation specified in the contract has been discharged, within revenue. The time value element of changes in the fair value
cancelled or expired. of derivative options is recognised within other comprehensive
(i) Investments – Equity investments which are not subsidiaries, income.
associates or joint ventures are recognised at fair value. The Group Financial assets with embedded derivatives are considered in their
generally applies an irrevocable election for each equity investment entirety when determining the appropriate classification and
to designate them as Fair Value through Other Comprehensive measurement. The treatment of embedded derivatives arising from
Income (FVOCI). Dividends from equity investments are recognised provisionally priced commodity sales contracts is set out in further
in the income statement when the right to receive payment is detail in Note 2(F) relating to revenue. Derivatives embedded in
established. financial liabilities are treated as separate derivatives when their
(ii) Trade and other receivables – As explained above, for sales risks and characteristics are not closely related to those of the host
contracts which contain provisional pricing mechanisms the total contract and the host contract is not measured at fair value.
receivable balance is measured at fair value through profit or loss. Changes in fair value are reported in profit or loss for the year.
Other receivable balances are recognised at amortised cost.
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2 Principal accounting policies continued When an impairment test is performed, management necessarily
(vii) Impairment of financial assets – The Group applies the forward- applies its judgement in allocating assets to CGUs, in estimating the
looking expected credit loss model to its financial assets, other than probability, timing and value of underlying cash flows and in
those measured at fair value through profit or loss. The Group selecting appropriate discount rates to be applied within the fair
applies the IFRS 9 “simplified approach” to its trade receivables, value less costs of disposal calculation. The key assumptions are set
measuring the loss allowance at the lifetime expected credit loss. out in Note 2(M). Subsequent changes to CGU allocation, licensing
For other financial assets, where the credit risk has not increased status, reserves and resources, price assumptions or other
significantly since initial recognition, the loss allowance is measured estimates and assumptions in the fair value less costs of disposal
at the 12 month expected credit loss. If there has been a significant calculation could impact the carrying value of the respective assets.
increase in credit risk, the loss allowance is measured at the lifetime As explained in Note 5, based on an assessment of both qualitative
expected credit loss. Increases or decreases to the credit loss and quantitative factors, there were no indicators of potential
allowance are recognised immediately in profit or loss. impairment, or reversal of previous impairments, for the Group’s
X) Exceptional items non-current assets associated with its mining operations at the
Exceptional items are material items of income and expense which are 2022 year-end, and accordingly no impairment tests have been
non-regular or non-operating and typically non-cash, including performed. However, whether or not an impairment indicator exists
impairments and profits or losses on disposals. The tax effect of items is a critical judgement, in particular as at 31 December 2022 for
presented as exceptional is also classified as exceptional, as are material Zaldívar (given the ongoing permitting process and the other factors
deferred tax adjustments that relate to more than one reporting period. set out in note 5) and at Antucoya (given the impairments
recognised in 2012 and 2016 and, therefore, the sensitivity of the
Y) Rounding asset’s value to movements in macroeconomic assumptions and
All amounts disclosed in the financial statements and notes have been other developments)
rounded to the nearest million dollars unless otherwise stated.
(ii) Capitalisation of project costs within property, plant
These policies have been consistently applied to all the years presented, and equipment
unless otherwise stated. As explained in Note 2(K) the costs of developing mining properties
are capitalised as property, plant and equipment when the mining
3 Critical accounting judgements and key project is considered to be commercially viable. Commercial viability
sources of estimation uncertainty is normally considered to be demonstrable when the project has
Determining many of the amounts included in the financial statements completed a pre-feasibility study, and the start of a feasibility study
involves the use of judgement and/or estimation. These judgements and has been approved. Management reviews amounts capitalised to
estimates are based on management’s best knowledge of the relevant ensure that the treatment of that expenditure as capital rather than
facts and circumstances having regard to prior experience, but actual operating expenditure is reasonable, in particular in respect of the
results may differ from the amounts included in the financial statements. commercial viability of the project.
Information about such judgements and estimates is included in the As at 31 December 2022, $231 million (2021 – $180 million) of
principal accounting policies in Note 2 or the other notes to the financial feasibility study costs relating to the Centinela Second Concentrator
statements, and the key areas are set out below. project, which is still under evaluation and has not yet received final
A) Judgements Board approval, were capitalised within property, plant and
The following are the critical judgements, apart from those involving equipment. Should the Group ultimately take the decision not to
estimations (which are dealt with separately), that have been made in the proceed with the development of this project, then it is likely that the
process of applying the Group’s accounting policies and that have the corresponding element of the capitalised feasibility study costs
most significant effect on the amounts recognised in the financial would need to be impaired.
statements. B) Estimates
(i) Non-financial assets impairment The Group makes estimates and assumptions concerning the
As explained in Note 2(M), the Group reviews the carrying value of future. The resulting accounting estimates will, by definition, seldom
its intangible assets and property, plant and equipment to determine equal the related actual results. The estimates and assumptions that
whether there is any indication that those assets are impaired. In have a significant risk of causing a material adjustment to the
performing assessments for impairment triggers, assets that do not carrying amounts of assets and liabilities within the next financial
generate largely independent cash inflows are allocated to an year are addressed below.
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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(i) Deferred tax liabilities in respect of undistributed earnings of venture as at 15 December 2022 of $944.7 million, reflecting the
subsidiaries estimate of the Sale proceeds and related interest, working capital
No deferred tax liability is recognised in respect of the undistributed and other adjustments and the carrying value of the investment at
earnings of subsidiaries where it is not likely that those profits will that date. A receivable balance of $943.3 million in respect of the
be distributed in the foreseeable future. When determining whether estimated proceeds due to Antofagasta has been recognised within
it is likely that distributions will be made in the foreseeable future, Trade and other receivables in the balance sheet.
and what is the appropriate foreseeable future period for this In addition to the above estimates and assumptions that have a significant
purpose, the Group considers factors such as the predictability of risk of causing a material adjustment to the carrying amounts of assets
the likely future Group dividends, taking into account the Group’s and liabilities, we have also set out the following additional estimates and
dividend policy and the level of potential volatility of the Group’s assumptions which have a significant impact on the financial statements,
future earnings, as well as the current level of distributable reserves but which are not considered to be key sources of estimation uncertainty
at the Antofagasta plc entity level. As set out in Note 28, at 31 as defined in IAS 1.
December 2022 deferred withholding tax liabilities of $71.6 million
have been recognised, which relate to undistributed earnings of (i) Inventory valuation
subsidiaries where it is considered likely that the corresponding The valuation of work in progress inventories involves a number of
profits will be distributed in the foreseeable future. The value of the estimates, including the average ore grade, volume and density of
remaining undistributed earnings of subsidiaries, for which deferred ore stockpiles, and the recoveries in respect of material on the
tax liabilities have not been recognised, because the Group is in a leach piles. Evaluating the net realisable value of the inventories also
position to control the timing of the distributions and it is likely that requires an estimate of the likely future copper price for the periods
distributions will not be made in the foreseeable future, was when it is expected that the inventories will be completed and sold.
$6,430.4 million (31 December 2021 – $6,483.3 million). If deferred As set out in Note 20, the value of work in progress inventories at
withholding tax liabilities were recognised in respect of all of these 31 December 2022 was $751.9 million.
remaining undistributed earnings of subsidiaries this would result in If the copper spot price at 31 December 2022 (used for forecasting
an additional deferred tax liability and expense of approximately the likely sales price of short-term inventories) had been 10% lower,
$1,076.5 million (31 December 2021 – $1,232.1 million), depending this would not have resulted in any net realisable value provision.
on the application of tax credits which may be available in particular
circumstances. The valuation of leachpile inventories can be particularly complex,
given the required estimates including in respect of the total
(ii) Disposal of investment in Tethyan joint venture recoveries and the speed of recovery in relation to the material on
On 15 December 2022, Antofagasta entered into definitive the piles. This is particularly the case with leachpiles with a long
agreements to exit its interest in the Tethyan joint venture. As a leaching cycle, where material may remain on the pile for several
result of those agreements: years before it has been fully leached. The operation with the most
• the Reko Diq project in Pakistan (the “Project”) was reconstituted in significant long-term leachpile inventory is Zaldívar, with a long-
Reko Diq Mining Company (Private Limited) ("RDMC"). RDMC is the term leachpile with a value of approximately $130 million (on a 50%
Pakistani registered subsidiary of Tethyan Copper Company Pty attributable basis) at 31 December 2022. This balance is forecast to
Limited ("TCC"), which is itself the Australian registered subsidiary of be consumed over the operation's remaining 14 year mine life and
Atacama Copper Pty Limited (“Atacama”), the joint venture company its recoverability is based on the same assumptions about future
registered in Australia and owned equally by the Company and Barrick operational considerations as detailed in note 5. As a simple, high-
Gold Corporation ("Barrick"); level sensitivity if this balance were reduced by 10% (due to
• a consortium of various Pakistani state-owned enterprises acquired changes in recovery estimates for example), this would result in a
shares in RDMC which holds the Project (the "Sale"); and reduction in Zaldívar’s inventory balance of approximately $13
• as the International Centre for Settlement of Investment Disputes million (on a 50% attributable basis).
("ICSID") award (to TCC) was resolved by reconstituting the Project, (ii) Useful economic lives of property, plant and equipment and
TCC no longer has any rights or claims against the Governments of ore reserves estimates
Pakistan and Balochistan arising from the suspension of the Project in As explained in Note 2(L), mining properties, including capitalised
2011. financing costs, are depreciated in proportion to the volume of ore
The proceeds of the Sale which, together with accrued interest up extracted in the year compared with total proven and probable
to 15 December 2022 totalled US$946.0 million, are currently held reserves at the beginning of the year.
by Atacama in a segregated interest-bearing account. Antofagasta There are numerous uncertainties inherent in estimating ore reserves,
and Barrick have agreed that the proceeds of this account, including and assumptions that were valid at the time of estimation may change
all further interest received, less any Australian tax arising, will be when new information becomes available. These include assumptions
distributed to the Antofagasta Group during 2023, on a date to be as to grade estimates and cut-off grades, recovery rates, commodity
determined by Antofagasta. Atacama is seeking a binding private prices, exchange rates, production costs, capital costs, processing and
ruling to confirm that the Sale proceeds and their distribution to the reclamation costs and discount rates. The actual volume of ore
Antofagasta Group will not be subject to Australian tax. The extracted and any changes in these assumptions could affect
Australian corporate tax rate is 30%. Although Antofagasta will prospective depreciation rates and carrying values.
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
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The operation with the most significant depreciation expense is 2022 – Disposal of investment in Tethyan joint venture
Centinela, with a depreciation expense of $710 million in 2022, On 15 December 2022, Antofagasta entered into definitive agreements to
representing approximately 60% of the total Group depreciation exit its interest in the Tethyan joint venture. As a result, Antofagasta has
charge. As a simple high-level sensitivity, a 10% adjustment to the recognised a gain on disposal of its investment in the joint venture as at
useful economic lives of Centinela’s property, plant and equipment 15 December 2022 of $944.7 million. Full details of the agreements and
would result in an impact of approximately $71 million on the annual gain on disposal are set out in Note 17.
depreciation charge. 2021 – Impairment of Twin Metals’ assets
(iii) Provisions for decommissioning and site restoration costs Twin Metals Minnesota (“Twin Metals”) is a wholly owned copper, nickel and
As explained in Note 2(Q), provision is made, based on net present platinum group metals (PGM) underground mining project, which holds
values, for decommissioning and site rehabilitation costs as soon as copper, nickel, cobalt-PGM deposits in north-eastern Minnesota, US. In
the obligation arises following the development or ongoing recent years, Twin Metals has been progressing its Mine Plan of Operations
production of a mining property. The provision is based on a closure (MPO) and Scoping Environmental Assessment Worksheet Data Submittal,
plan prepared with the assistance of external consultants. submitted in December 2019 to the US Bureau of Land Management (BLM)
and Minnesota Department of Natural Resources (DNR), respectively.
Management uses its judgement and experience to provide for and However, while the Twin Metals project was advancing through
(in the case of capitalised decommissioning costs) amortise these environmental review, several actions were taken by the federal government
estimated costs over the life of the mine. The ultimate cost of that have changed the potential scenarios for the project.
decommissioning and site rehabilitation is uncertain and cost
estimates can vary in response to many factors including changes In September 2021, the United States Forest Service (USFS) submitted an
to relevant legal requirements, the emergence of new restoration application to withdraw approximately 225,000 acres of land in the Superior
techniques or experience at other mine sites. National Forest from the scope of federal mineral leasing laws, subject to
valid existing rights. In October 2021, the United States Bureau of Land
The expected timing and extent of expenditure can also change, for Management (BLM) rejected Twin Metals’ Preference Right Lease
example in response to changes in ore reserves or processing Applications (PRLAs) and Prospecting Permit Applications (PPAs). In
levels. As a result, there could be significant adjustments to the January 2022, the United States Department of the Interior cancelled Twin
provisions established which would affect future financial results. Metals’ MNES-1352 and MNES-1353 federal mineral leases. The PRLAs and
Details of the decommissioning and restoration provisions are set federal mineral leases form a significant proportion of the mineral resources
out in Note 29. The total value of these provisions as at 31 contained within Twin Metals’ current project plan and, accordingly, it was
December 2022 was $488.2 million. As a simple high-level determined that these events collectively represented an impairment trigger
sensitivity, a 10% increase in the forecast closure costs would as at the 2021 balance sheet date.
increase the provision balance by approximately $49 million, the Prior to the resulting impairment assessment being performed, as at
capitalised decommissioning costs asset within property, plant and 31 December 2021, the Group had recognised an intangible asset of
equipment by approximately $17 million and the ongoing annual $150.1 million and property, plant and equipment of $27.5 million relating
operating expenses by approximately $2 million. to the Twin Metals project. The intangible asset arose upon the
(iv) Deferred tax assets in respect of tax losses acquisition in 2015 of Duluth Metals, which owned a 60% stake in the
As explained in Note 2(O), deferred tax assets are recognised only Twin Metals project, with the carrying value of the intangible asset
to the extent that it is probable that they will be recovered through reflecting the consideration paid for that acquisition. The property, plant
sufficient future taxable profits. When assessing the probable future and equipment balances reflected the historical cost of acquiring those
taxable profits, the Group considers whether the relevant Group assets. These carrying values prior to the impairment did not, therefore,
entity has sufficient taxable temporary differences which will result reflect an estimate of the commercial potential of the project as at
in taxable amounts against which the unused tax losses can be 31 December 2021.
utilised. The Group believes that Twin Metals has a valid legal right to the mining
Generally under Chilean tax law most tax losses can be carried leases and a strong case to defend its legal rights. Although the Group
forward indefinitely, and so the expiry of tax losses is not typically intends to pursue validation of those rights, considering the time and
an issue. The key assumptions to which the forecasts of the uncertainty related to any legal action to challenge the government
probable level of future taxable profits are most sensitive are future decisions, an impairment was recognised as at 31 December 2021 in
commodity prices, production levels and operating costs. respect of the $177.6 million of intangible assets and property, plant and
equipment relating to the Twin Metals project.
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, 2021 – Recognition of previously unrecognised deferred tax assets
provisions and short-term timing differences. The deferred tax At 31 December 2021, the Group recognised $90.6 million of previously
position includes $79.7 million (2021 – $90.6 million) of deferred tax unrecognised deferred tax assets relating to tax losses available for
assets in respect of tax losses available for offset against future offset against future profits, reflecting the improved actual and forecast
profits. These losses may be carried forward indefinitely. profitability of the relevant Group entity (Antucoya).
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5 Asset sensitivities The US dollar/Chilean peso exchange rate
There were no indicators of potential impairment, or reversal of previous The value of the assets is also sensitive to movements in the US
impairments, for the Group’s non-current assets associated with its dollar/Chilean peso exchange rate. A long-term exchange rate of
mining operations at the 2022 year-end, and accordingly no impairment Ch$850/$1 has been used in the models considered as part of the
tests have been performed. The impairment indicator assessment impairment indicator assessment. This compares with the long-term
included consideration of the potential indicators set out in IAS 36, exchange rate of CH$770/$1 used in 2021. As an additional down-side
‘Impairment of Assets’, which included quantitative analysis based on the sensitivity an indicative valuation was prepared with a 10% stronger
operations’ life-of-mine models as adjusted for certain assumptions long-term Chilean peso exchange rate assumption. Los Pelambres and
(including potential future development opportunities) (“the models”). Centinela still showed positive headroom in this alternative down-side
These models provide indicative valuations and do not represent, or scenario. However, the Antucoya valuation indicated a potential deficit of
comply with, a formal impairment assessment prepared in accordance $140 million and the Zaldívar valuation indicated a potential deficit of $100
with IAS 36. Sensitivity analyses have been performed on the models to million (on a 50% basis). As noted above, historically there has often
quantify the impact of changes in assumptions to which the models are been a correlation between movements in the copper price and the US
most sensitive and to support the overall impairment indicator dollar/Chilean peso exchange rate, and so a strengthening of the Chilean
assessment. peso may often reflect a stronger copper price environment, which could
mitigate the impact of a stronger exchange rate.
As noted above, no qualitative indicators of potential impairment or
potential reversal of impairment were identified. Similarly, no quantitative Climate risks
indicators of impairment were identified, with the models used within the The models incorporate estimates of the potential future costs relating to
impairment indicator assessment continuing to indicate positive climate risks. The Group discloses in line with the recommendations of
headroom for all of the Group’s mining operations, including the Zaldivar the Task Force on Climate-related Financial Disclosures (“TCFD”). This
joint venture, with the indicated value of the assets in excess of their process includes scenario analyses assessing the potential future impact
carrying value. of transition and physical risks. The combined estimate of the potential
costs of the transition risk and physical risk scenarios, have been
Relevant aspects of this process are detailed below: incorporated into the models.
Copper price outlook Chilean mining royalty
The assumption to which the value of the assets is most sensitive is the We have considered potential changes to the Chilean mining royalty
future long-term copper price. The copper price forecasts (representing (taking into account the Group’s existing tax stability agreements) as part
the Group’s estimates of the assumptions that would be used by of the impairment indicator assessment.
independent market participants in valuing the assets) are based on the
forward curve for the short term and consensus analyst forecasts for Other relevant assumptions
the longer term. A long-term copper price of $3.50/lb (reflecting 2022 In addition to the impact of the future copper price the US dollar/Chilean
real terms) has been used in the models used in the impairment indicator peso exchange rate, climate risks and the potential changes in the
assessment, which has increased from $3.30/lb (reflecting 2021 real Chilean royalty regime, the models used in the impairment indicator
terms) at the prior year-end. As an additional down-side sensitivity an assessment are sensitive to the assumptions in respect of future
indicative valuation (based on the models) was performed with a long- production levels, operating costs, sustaining and development capital
term copper price of $3.15/lb, reflecting a 10% reduction in the long-term expenditure, and the discount rate used to determine the present value of
price forecast. Los Pelambres and Centinela still showed positive the future cash flows.
headroom in their models in this alternative down-side scenario. A real post-tax discount rate of 8% (calculated using relevant market
However, the Antucoya valuation indicated a potential deficit of $400 data) has been used in determining the present value of the changes in
million and the Zaldívar valuation indicated a potential deficit of $170 forecast future cash flows from the assets as part of the quantitative
million (on a 50% basis). This was a simple sensitivity exercise, looking at analysis performed as part of the overall impairment indicator
an illustrative change in the forecast long-term copper price in isolation. assessment.
In reality, a deterioration in the long-term copper price environment is
likely to result in corresponding improvements in a range of input cost
factors. In particular, given that copper exports account for over 50% of
Chile’s exports, historically there has often been a correlation between
movements in the copper price and the US dollar/Chilean peso exchange
rate, and a decrease in the copper price may therefore result in a
weakening of the Chilean peso, with a resulting reduction in the Group’s
operating costs and capital expenditure in US$ 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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A) Segment revenues and results
For the year ended 31 December 2022
Exploration Corporate
Los and and other Transport
Pelambres Centinela Antucoya Zaldívar evaluation2 items Mining division Total
$m $m $m $m $m $m $m $m $m
Revenue 2,558.9 2,406.2 703.5 – – – 5,668.6 193.4 5,862.0
Operating cost excluding depreciation and loss
on disposals (1,086.1) (1,249.0) (442.3) – (113.0) (75.0) (2,965.4) (119.1) (3,084.5)
Depreciation (276.1) (710.2) (105.6) – – (18.7) (1,110.6) (30.5) (1,141.1)
Loss on disposals (0.5) (1.0) – – – (0.6) (2.1) – (2.1)
Operating profit/(loss) 1,196.2 446.0 155.6 – (113.0) (94.3) 1,590.5 43.8 1,634.3
Net share of results from associates and joint
ventures – – – 47.3 – (0.7) 46.6 1.5 48.1
Gain on disposal of investment in joint ventures3 – – – – – 944.7 944.7 – 944.7
Total profit from operations, associates and
joint ventures 1,196.2 446.0 155.6 47.3 (113.0) 849.7 2,581.8 45.3 2,627.1
Investment income 10.7 6.6 2.4 – – 19.8 39.5 0.7 40.2
Interest expense (3.3) (10.6) (19.9) – – (44.2) (78.0) (0.6) (78.6)
Other finance items (5.2) (11.3) (6.6) – – (5.0) (28.1) (1.7) (29.8)
Profit/(loss) before tax 1,198.4 430.7 131.5 47.3 (113.0) 820.3 2,515.2 43.7 2,558.9
Tax (371.8) (130.8) (34.9) – – (50.8) (588.3) (15.3) (603.6)
Profit/(loss) for the year 826.6 299.9 96.6 47.3 (113.0) 769.5 1,926.9 28.4 1,955.3
Non-controlling interests 319.3 82.9 21.2 – – (1,1) 422.3 – 422.3
Profit/(losses) attributable to the owners of
the parent 507.3 217.0 75.4 47.3 (113.0) 770.6 1,504.6 28.4 1,533.0
EBITDA1 1,472.8 1,157.2 261.2 147.2 (113.0) (75.7) 2,849.7 80.0 2,929.7
Additions to non-current assets
Additions to property, plant and equipment 965.2 889.0 75.1 – 0.5 16.4 1,946.2 55.8 2,002.0
Segment assets and liabilities
Segment assets 6,786.6 5,922.8 1,708.0 – – 2,504.1 16,921.5 412.2 17,333.7
Investment in associates and joint ventures – – – 897.3 – – 897.3 7.3 904.6
Segment liabilities (3,155.0) (1,565.1) (558.1) – – (1,225.8) (6,504.0) (89.9) (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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B) Entity-wide disclosures
Revenue by product
2022 2021
$m $m
Copper
• Los Pelambres 2,107.7 3,097.0
• Centinela concentrate 1,132.7 1,735.4
• Centinela cathodes 844.4 774.1
• Antucoya 697.5 693.3
Provision of shipping services
• Los Pelambres 51.9 57.8
• Centinela concentrate 58.5 46.8
• Centinela cathodes 6.7 4.3
• Antucoya 6.0 4.5
Gold
• Los Pelambres 75.4 91.0
• Centinela concentrate 238.4 345.4
Molybdenum
• Los Pelambres 291.4 329.2
• Centinela concentrate 100.8 37.2
Silver
• Los Pelambres 32.5 46.0
• Centinela concentrate 24.7 38.1
Total 5,668.6 7,300.1
Transport division 193.4 170.0
5,862.0 7,470.1
Europe
• United Kingdom 71.0 54.4
• Switzerland 753.6 1,303.7
• Spain 1.0 67.6
• Germany 140.0 121.5
• Rest of Europe 96.5 177.4
Latin America
• Chile 369.1 282.0
• Rest of Latin America 179.7 214.7
North America
• United States 312.3 666.5
Asia
• Japan 1,668.6 1,842.3
• China 1,072.0 1,236.9
• Singapore 423.8 726.1
• South Korea 332.2 322.6
• Hong Kong 178.2 217.1
• Rest of Asia 264.0 237.3
5,862.0 7,470.1
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2022 2021
$m $m
The above amounts by location reflect non-current assets per the balance sheet excluding:
• Deferred tax assets (78.5) (96.8)
• Account receivables (51.0) (51.2)
• Equity investments (90.5) (8.7)
Total of non-current assets above (220.0) (156.7)
Non-current assets by location of asset 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:
2022 2021
$m $m
200
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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 Los Los
Pelambres Centinela Centinela Antucoya Pelambres Centinela Pelambres Centinela
Copper Copper Copper Copper Gold in Gold in Molybdenum Molybdenum
concentrate concentrate cathodes cathodes concentrate concentrate concentrate concentrate
$m $m $m $m $m $m $m $m
Provisionally priced sales of products 2,313.7 1,231.8 851.8 710.6 75.1 235.9 281.3 98.5
Revenue from freight services 51.9 58.5 6.7 6.0 – – – –
2,365.6 1,290.3 858.5 716.6 75.1 235.9 281.3 98.5
Effects of pricing adjustments to
previous year invoices
Reversal of mark-to-market adjustments at
the end of the previous year (12.0) (5.2) (0.3) (0.8) – (0.3) 5.6 0.7
Settlement of sales invoiced in the
previous year 10.7 23.3 0.5 1.0 – 3.6 (4.1) (0.6)
Total effect of adjustments to previous
year invoices in the current year (1.3) 18.1 0.2 0.2 – 3.3 1.5 0.1
Effects of pricing adjustments to
current year invoices
Settlement of sales invoiced in the current year (155.3) (68.7) (8.4) (14.1) 0.4 (2.9) 16.5 4.0
Mark-to-market adjustments at the end of
the current year 38.0 19.9 0.8 0.8 – 2.7 12.6 7.6
Total effect of adjustments to
current year invoices (117.3) (48.8) (7.6) (13.3) 0.4 (0.2) 29.1 11.6
Total pricing adjustments (118.6) (30.7) (7.4) (13.1) 0.4 3.1 30.6 11.7
Realised losses on commodity derivatives – – – – – – – –
Revenues before deducting treatment and
refining charges 2,247.0 1,259.6 851.1 703.5 75.5 239.0 311.9 110.2
Treatment and refining charges (87.4) (68.4) – – (0.1) (0.6) (20.5) (9.4)
Revenue net of tolling charges 2,159.6 1,191.2 851.1 703.5 75.4 238.4 291.4 100.8
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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Financial Statements
Provisionally priced sales of products 2,966.6 1,685.3 824.3 749.7 93.3 354.8 322.1 38.4
Revenue from freight services 57.8 46.8 4.3 4.5 – – – –
3,024.4 1,732.1 828.6 754.2 93.3 354.8 322.1 38.4
Effects of pricing adjustments to
previous year invoices
Reversal of mark-to-market adjustments at
the end of the previous year (58.7) (26.8) 0.1 (0.5) – (0.9) 0.2 (0.3)
Settlement of sales invoiced in the
previous year 175.1 74.7 1.8 1.5 (1.0) (4.0) 6.4 1.2
Total effect of adjustments to previous
year invoices in the current year 116.4 47.9 1.9 1.0 (1.0) (4.9) 6.6 0.9
Effects of pricing adjustments to
current year invoices
Settlement of sales invoiced in the current year 92.2 58.8 10.2 6.0 (1.1) (4.1) 30.6 5.8
Mark-to-market adjustments at the end of
the current year 12.0 5.2 0.3 0.8 – 0.4 (5.7) (0.7)
Total effect of adjustments to
current year invoices 104.2 64.0 10.5 6.8 (1.1) (3.7) 24.9 5.1
Total pricing adjustments 220.6 111.9 12.4 7.8 (2.1) (8.6) 31.5 6.0
Realised losses on commodity derivatives – – (62.6) (64.2) – – – –
Revenues before deducting treatment and
refining charges 3,245.0 1,844.0 778.4 697.8 91.2 346.2 353.6 44.4
Treatment and refining charges (90.2) (61.8) – – (0.2) (0.8) (24.4) (7.2)
Revenue net of tolling charges 3,154.8 1,782.2 778.4 697.8 91.0 345.4 329.2 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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(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.
2022 2021
Sales provisionally priced at the balance sheet date Tonnes 179,000 177,900
Average mark-to-market price $/lb 3.80 4.41
Average provisional invoice price $/lb 3.65 4.37
Sales provisionally priced at the balance sheet date Tonnes 22,700 15,000
Average mark-to-market price $/lb 3.80 4.42
Average provisional invoice price $/lb 3.77 4.39
Sales provisionally priced at the balance sheet date Ounces 31,000 32,300
Average mark-to-market price $/oz 1,828 1,801
Average provisional invoice price $/oz 1,742 1,791
Sales provisionally priced at the balance sheet date Tonnes 2,500 2,400
Average mark-to-market price $/lb 26.10 18.60
Average provisional invoice price $/lb 22.20 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:
Effect on debtors of year end mark-
to-market adjustments
2022 2021
$m $m
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Financial Statements
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:
2022 2021
$m $m
Fees payable to the Company´s auditors and its associates for the audit of the Parent Company and consolidated
financial statements 1,312.5 1,242.0
Fees payable to the Company´s auditors and its associates for other services:
• The audit of the Company’s subsidiaries 549.6 415.0
• Audit-related assurance services1 98.0 200.0
• Other assurance services2 241.0 –
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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9 Employees
A) Average monthly number of employees
2022 2021
Number Number
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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Financial Statements
Investment income
Interest income 19.8 3.4
Gains on liquid investments held at fair value through profit or loss 20.4 1.6
40.2 5.0
Interest expense
Interest expense (78.6) (63.4)
(78.6) (63.4)
Other finance items
Unwinding of discount on provisions (16.9) (6.2)
Adjustment to provision discount rates – 30.8
Effects of changes in foreign exchange rates (12.8) 49.9
Preference dividends (0.1) (0.1)
(29.8) 74.4
Net finance (expense)/income (68.2) 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).
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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Year ended Year ended Year ended Year ended
31 December 2022 31 December 2022 31 December 2021 31 December 2021
Excluding exceptional Including exceptional Excluding exceptional Including exceptional
items items items items
$m % $m % $m % $m %
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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Financial Statements
Profit for the period attributable to owners of the parent (excluding exceptional items) 588.3 1,404.4
Exceptional Items 944.7 (114.2)
Profit for the period attributable to owners of the parent (including exceptional items) from operations 1,533.0 1,290.2
2022 2021
Number Number
2022 2021
cents cents
Basic earnings per share (excluding exceptional items) from operations 59.7 142.5
Basic earnings per share (exceptional items) from operations 95.8 (11.6)
Basic earnings per share (including exceptional items) from operations 155.5 130.9
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:
2022 2021
Profit for the year attributable to owners of the parent $m 1,533.0 1,290.2
Profit from continuing operations attributable to owners of the parent $m 1,533.0 1,290.2
Ordinary shares Number 985,856,695 985,856,695
Basic earnings per share from continuing operations cents 155.5 130.9
13 Dividends
Amounts recognised as distributions to equity holders in the year:
2022 2021
2 02 2 2021 cents cents
$m $m per share per share
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:
2022 2021
2 02 2 2021 cents cents
$m $m per share per share
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.
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14 Intangible assets
Accumulated
depreciation
and
Cost impairment Net book value
$m $m $m
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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Financial Statements
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.
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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.
Economic Economic
Country of Country of Registered interest at interest at
incorporation operations office Nature of business 2022 2021
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Financial Statements
Economic Economic
Country of Country of Registered interest at interest at
incorporation operations office Nature of business 2022 2021
Registered offices:
1 103 Mount Street, London, W1K 2TJ, UK
2 Avenida Apoquindo N° 4001, Piso 18, Las Condes, Santiago, Chile
3 22 Grenville Street, St Helier, Jersey, JE4 8PX3, Channel Islands
4 Crawford House, 50 Cedar Avenue, Hamilton HM 11, Bermuda
5 1209 Orange Street, Wilmington, DE 19801, USA
6 6040 Earle Brown Drive, 480 Brooklyn Center, MN 55430, USA
7 161 Bay Street, Suite 4320, Toronto, Ontario, M5J 2S1, Canada
8 PO Box 958, Road Town, Tortola VG1110, British Virgin Islands
9 Riparian Plaza, Level 28, 71 Eagle Street, Brisbane, Qld 4001, Australia
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 1010 Dale Street N, St Paul, MN 55117-5603, USA
14 2711 Centerville Road, Suite 400, Wilmington, DE 19808, USA
15 Unit 3309, IFC 2, 8 Century Avenue, Shanghai, China
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.
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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.
Minera Tethyan
ATI (i) Zaldívar (ii) Copper (iii) Total
2021 2021 2021 2021
$m $m $m $m
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.
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Financial Statements
214
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Tethyan Minera
Copper Zaldívar Total
2021 2021 2021
$m $m $m
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
2022 2021
$m $m
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
2022 2021
$m $m
Current
Raw materials and consumables 221.4 155.6
Work-in-progress 404.9 316.5
Finished goods 81.8 60.7
708.1 532.8
Non-current
Work-in-progress 347.0 270.4
Total 1,055.1 803.2
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.
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Financial Statements
The ageing analysis of the trade and other receivables balance is as follows:
Total excluding
Up to More than expected Expected
3 months 3-6 months 6 months credit loss credit loss
Up to date past due past due past due provision provision Total
$m $m $m $m $m $m $m
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.
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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:
2022 2021
$m $m
The credit quality of cash, cash equivalents and liquid investments are as follow:
2022 2021
$m $m
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Financial Statements
Los Pelambres
• Senior loan (i) (1,470.5) (1,188.3)
• Leases (55.3) (54.8)
Centinela
• Senior loan (ii) (276.7) (386.8)
• Leases (35.2) (59.8)
Antucoya
• Senior loan (iii) (223.5) (196.3)
• Subordinated debt (iv) (171.5) (184.5)
• Short-term loan – (35.0)
• Leases (v) (16.5) (23.4)
Corporate and other items
• Senior loan (vi) – (497.3)
• Bond (vii) (985.3) (496.1)
• Leases (viii) (23.1) (20.4)
Transport division
• Senior loan (ix) (15.3) (25.8)
• Leases (1.6) (1.4)
Preference shares (ix) (2.5) (2.7)
Total (3,277.0) (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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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:
Chilean 2022
pesos Sterling US dollars Total
At 31 December 2022 $m $m $m $m
Chilean 2021
pesos Sterling US dollars Total
At 31 December 2021 $m $m $m $m
2021
Fixed Floating Total
At 31 December 2021 $m $m $m
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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:
2022 2021
$m $m
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.
Facility available Drawn Undrawn
2022 2021 2022 2021 2022 2021
$m $m $m $m $m $m
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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25 Financial instruments and financial risk management
A) Categories of financial instruments
The carrying value of financial assets and financial liabilities is shown below:
2022
$m
At fair value
At fair value through other
through profit comprehensive Held at
and loss income amortised cost Total
Financial assets
Equity investments – 90.5 – 90.5
Trade and other receivables 897.2 – 1,047.5 1,944.7
Cash and cash equivalents 8.5 – 801.9 810.4
Liquid investments 1,580.8 – – 1,580.8
2,486.5 90.5 1,849.4 4,426.4
Financial liabilities
Borrowings and leases – – (3,277.0) (3,277.0)
Trade and other payables – – (1,067.3) (1,067.3)
– – (4,344.3) (4,344.3)
2021
$m
At fair value
At fair value through other
through profit comprehensive Held at amortised
and loss income cost Total
Financial assets
Equity investments – 8.7 – 8.7
Trade and other receivables 1,011.7 – 83.3 1,095.0
Cash and cash equivalents – – 743.4 743.4
Liquid investments 2,969.7 – – 2,969.7
3,981.4 8.7 826.7 4,816.8
Financial liabilities
Trade and other payables – – (835.6) (835.6)
Borrowings and leases – – (3,172.6) (3,172.6)
– – (4,008.2) (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:
2022 2021
$m $m
Financial assets
Trade and other receivables (non-current) per balance sheet 51.0 51.2
Trade and other receivables (current) per balance sheet 2,087.2 1,146.1
Total trade and other receivables per balance sheet 2,138.2 1,197.3
Less: non-financial assets (including prepayments and VAT receivables) (193.5) (102.3)
Total trade and other receivables (financial assets) 1,944.7 1,095.0
Financial liabilities
Trade and other payables (current) per balance sheet (1,079.7) (829.1)
Trade and other payables (non-current) per balance sheet (8.0) (16.8)
Total trade and other payables per balance sheet (1,087.7) (845.9)
Less: non-financial liabilities (including VAT payables) 20.4 10.3
Total trade and other payables (financial liabilities) (1,067.3) (835.6)
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Financial Statements
Financial assets
Equity investments (a) 90.5 – – 90.5
Trade and other receivables (b) – 897.2 – 897.2
Cash and cash equivalents (c) 8.5 8.5
Liquid investment (d) – 1,580.8 – 1,580.8
99.0 2,478.0 – 2,577.0
Total
Level 1 Level 2 Level 3 2021
$m $m $m $m
Financial assets
Equity investments (a) 8.7 – – 8.7
Trade and other receivables (b) – 1,011.7 – 1,011.7
Liquid investment (d) – 2,969.7 – 2,969.7
8.7 3,981.4 – 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.
c) 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.
d) Liquid investments are highly liquid current asset investments that are valued reflecting market prices at the period end. These are level 2 inputs
as described below.
The 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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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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(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.
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Financial Statements
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:
Restricted Performance
Awards Awards
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).
Amounts included in the income statement in respect of severance provisions are as follows:
2022 2021
$m $m
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Movements in the present value of severance provisions were as follows:
2022 2021
$m $m
Assumptions description
Discount rate
31 December 2022 31 December 2021
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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Financial Statements
At 1 January 2021 (1,122.1) 124.6 (52.8) 42.0 (103.5) 5.3 0.1 (1,106.4)
(Charge)/credit to income (248.9) (7.5) 29.7 (103.3) 1.0 31.7 (0.1) (297.4)
Exceptional items – – – – – 90.6 – 90.6
Charge deferred in equity – (2.1) – – (0.4) – – (2.5)
At 31 December 2021 and 1 January 2022 (1,371.0) 115.0 (23.1) (61.3) (102.9) 127.6 – (1,315.7)
(Charge)/credit to income (79.2) 1.4 (48.5) (15.6) (9.8) (3.1) – (154.8)
Reclassification (16.9) 7.8 – 9.1 – – – –
Charge deferred in equity – 4.9 – – 0.8 – – 5.7
At 31 December 2022 (1,467.1) 129.1 (71.6) (67.8) (111.9) 124.5 – (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):
2022 2021
$m $m
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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29 Decommissioning and restoration provisions
2022 2021
$m $m
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.
Authorised
Ordinary shares of 5p each 1,300,000,000 1,300,000,000 118.9 118.9
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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Financial Statements
Share premium
At 1 January and 31 December 199.2 199.2
Hedging reserves1
At 1 January – (23.9)
Parent and subsidiaries net cash flow hedge fair value losses – (100.4)
Parent and subsidiaries net cash flow hedge losses transferred to the income statement – 126.8
Tax on the above – (2.5)
At 31 December – –
Equity investment revaluation reserve2
At 1 January (7.4) (5.3)
Gains/(losses) on equity investment 15.8 (2.1)
At 31 December 8.4 (7.4)
Foreign currency translation reserves3
At 1 January (3.0) (1.4)
Currency translation adjustment (0.4) (1.6)
At 31 December (3.4) (3.0)
Total other reserves per balance sheet 5.0 (10.4)
Retained earnings
At 1 January 8,071.6 7,492.2
Parent and subsidiaries’ profit for the period 1,484.9 1,230.5
Equity accounted units’ profit after tax for the period 48.1 59.7
Actuarial (losses)/gains 4 (8.2) –
Total comprehensive income for the year 1,524.8 1,290.2
Dividends paid (1,262.9) (710.8)
At 31 December 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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31 Non-controlling interests
The non-controlling interests of the Group during 2022 and 2021 are as follows:
Non- At Share of profit At
controlling 1 January for the Capital Share of Hedging and 31 December
Interest 2022 financial year Increase dividends actuarial gains 2022
% Country $m $m $m $m $m $m
Share of
Non- At profit/(losses) Hedging and At
controlling 1 January for the Capital Share of actuarial 31 December
Interest 2021 financial year Increase dividends gains/(losses) 2021
% Country $m $m $m $m $m $m
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:
Los Pelambres Centinela Antucoya
2022 2022 2022
$m $m $m
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Financial Statements
Movement
At Amortisation between At
1 January of finance Capitalisation maturity 31 December
2021 Cash flow New leases costs of interest categories Other Exchange 2021
$m $m $m $m $m $m $m $m $m
Cash and cash equivalents 1,246.8 (483.1) – – – – – (20.3) 743.4
Liquid investments 2,426.0 543.7 – – – – – – 2,969.7
Total cash and cash equivalents and liquid
investments 3,672.8 60.6 – – – – – (20.3) 3,713.1
Borrowings due within one year (529.8) 545.6 – – – (294.2) 10.4 – (268.0)
Borrowings due after one year (3,013.8) – – (5.7) (16.6) 294.2 – (0.2) (2,742.1)
Leases due within one year (73.6) 88.9 – – – (84.4) – – (69.1)
Leases due after one year (134.9) – (61.8) – – 84.4 – 21.6 (90.7)
Preference shares (2.7) – – – – – – – (2.7)
Total borrowings (3,754.8) 634.5 (61.8) (5.7) (16.6) – 10.4 21.4 (3,172.6)
Net debt (82.0) 695.1 (61.8) (5.7) (16.6) – 10.4 1.1 540.5
C) Net (debt)/cash
2022 2021
$m $m
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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.
2022 2021
$1.2080=£1; $1.3490=£1;
Year-end rates $1 = Ch$855.86 $1 = Ch$844.69
$1.2340=£1; $1.3750=£1;
Average rates $1 = Ch$872.38 $1 = Ch$759.81
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Financial Statements
Non-current assets
Investment in subsidiaries 5 589.1 529.1
Other receivables1 5 54.0 54.0
Property, plant and equipment 4.4 5.1
647.5 588.2
Current assets
Other receivables1 5 744.6 3.8
Liquid investments 457.6 1,649.4
Cash and cash equivalents 238.5 422.8
1,440.7 2,076.0
Total assets 2,088.2 2,664.2
Current liabilities
Amounts payable to subsidiaries 6 (615.7) (302.2)
Other payables (9.2) (15.4)
(624.9) (317.6)
Non-current liabilities
Medium and long-term borrowings 7 (992.2) (993.4)
(992.2) (993.4)
Total liabilities (1,617.1) (1,311.0)
Net assets 471.1 1,353.2
Equity
Share capital 89.8 89.8
Share premium 199.2 199.2
Retained earnings
At 1 January 1,064.2 626.0
Profit for the year attributable to the owners 380.8 1,149.0
Dividends (1,262.9) (710.8)
At 31 December 182.1 1,064.2
Total equity 471.1 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
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Parent Company statement of changes in equity
Retained
Share capital Share premium earnings Total equity
$m $m $m $m
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.
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Financial Statements
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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:
2022 2021
$m $m
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
2022 2021
$m $m
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Other Information
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
Exploration Corporate
Los and and other Transport
Pelambres Centinela Antucoya Zaldívar evaluation items Mining division Total
$m $m $m $m $m $m $m $m $m
Operating profit/(loss) 1,196.2 446.0 155.6 – (113.0) (94.3) 1,590.5 43.8 1,634.3
Depreciation 276.1 710.2 105.6 – – 18.7 1,110.6 30.5 1,141.1
Loss on disposal 0.5 1.0 – – – 0.6 2.1 – 2.1
EBITDA from subsidiaries 1,472.8 1,157.2 261.2 – (113.0) (75.0) 2,703.2 74.3 2,777.5
Proportional share of the EBITDA
from associates and JV – – – 147.2 – (0.7) 146.5 5.7 152.2
EBITDA 1,472.8 1,157.2 261.2 147.2 (113.0) (75.7) 2,849.7 80.0 2,929.7
Operating profit/(loss) 2,240.5 1,260.6 238.3 – (280.8) (89.0) 3,369.6 31.8 3,401.4
Depreciation 281.8 654.7 98.3 – – 13.0 1,047.8 30.9 1,078.7
Loss on disposals 3.7 4.0 0.5 – – – 8.2 1.0 9.2
Provision against the carrying value
of assets1 – – – – 177.6 – 177.6 – 177.6
EBITDA from subsidiaries 2,526.0 1,919.3 337.1 – (103.2) (76.0) 4,603.2 63.7 4,669.9
Proportional share of the EBITDA
from associates and JV – – – 172.8 – (8.0) 164.8 4.5 169.3
EBITDA 2,526.0 1,919.3 337.1 172.8 (103.2) (84.0) 4,768.0 68.2 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.
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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.
2022 2021
$m $m
Reconciliation of cash costs excluding treatment and refining charges and by-product revenue:
Total Group operating cost (Note 6) 4,227.7 4,068.7
Zaldívar operating costs (attributable basis – 50%) 234.4 231.7
Less:
Depreciation (Note 6) (1,141.1) (1,078.7)
Loss on disposal (Note 6) (2.1) (9.2)
Provision against the carrying value of assets – (177.6)
Elimination of non-mining operations:
Corporate and other items – Total operating cost (excluding depreciation) (Note 6) (75.0) (76.0)
Exploration and evaluation – Total operating cost (excluding depreciation) (Note 6) (113.0) (103.2)
Transport division – Total operating cost (excluding depreciation) (Note 6) (119.1) (106.3)
Closure provision and other expenses not included within cash costs (97.6) (90.7)
Inventory variation (12.0) 2.1
Total cost relevant to the mining operations’ cash costs 2,902.2 2,660.8
Cash costs excluding treatment and refining charges and by-product revenue ($/tonne) 4,491 3,688
Cash costs excluding treatment and refining charges and by-product revenue ($/lb) 2.05 1.68
Cash costs excluding treatment and refining charges and by-product revenue ($/lb) 2.05 1.68
Treatment and refining charges ($/lb) 0.14 0.11
Cash costs before deducting by-product revenue ($/lb) 2.19 1.79
1. The 646,200 tonnes includes 44,500 tonnes of production at Zaldívar on a 50% attributable basis.
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Other Information
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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.
2022 2021
Total Attributable Attributable Total Attributable Attributable
amount share amount amount share amount
$m $m $m $m $m $m
Borrowings:
Los Pelambres (Note 23) (1,525.8) 60% (915.5) (1,243.1) 60% (745.9)
Centinela (Note 23) (311.9) 70% (218.3) (446.6) 70% (312.6)
Antucoya (Note 23) (411.5) 70% (288.1) (439.2) 70% (307.5)
Corporate (Note 23) (1,010.9) 100% (1,010.9) (1,016.5) 100% (1,016.4)
Transport division (Note 23) (16.9) 100% (16.9) (27.2) 100% (27.2)
Total (Notes 23 and 32) (3,277.0) (2,449.7) (3,172.6) (2,409.6)
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Other Information
Total profit from operations and associates 2,627.1 3,461.1 1,516.5 1,400.2 1,367.2
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2022 2021 2020 2019 2018
cents cents cents cents cents
Dividends per share paid in the year and deducted from equity 128.1 72.1 13.3 47.7 47.4
Investing activities
Acquisition and disposal of subsidiaries, joint venture and associates – – – – 145.2
Dividends from associates 50.0 142.5 – 58.0 16.6
Equity investments, investing activities and recovery of VAT 1,322.4 (577.2) (893.5) (678.3) 284.2
Purchases and disposals of intangible assets, property, plant and equipment (1,879.0) (1,776.0) (1,306.6) (1,076.9) (872.2)
Interest received 29.1 7.4 12.6 41.0 26.4
Net cash used in investing activities (477.5) (2,203.3) (2,187.5) (1,656.2) (399.8)
Financing activities
Dividends paid to owners of the parent (1,262.9) (710.8) (131.1) (470.3) (466.9)
Dividends paid to preference holders and non-controlling interests (80.1) (604.6) (280.1) (400.1) (120.1)
Capital increase from non-controlling interest – – 210.0 – –
New borrowings less repayment of borrowings and leases 9.2 (634.5) 918.3 60.8 (347.1)
Net cash (used in)/generated from financing activities (1,333.8) (1,949.9) 717.1 (809.6) (934.1)
Net increase/(decrease) in cash and cash equivalents 65.6 (483.1) 588.3 (375.0) (23.1)
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Other Information
Production statistics
Copper
Los Pelambres 275.0 324.7 271.2 324.5 1.10 0.89 3.76 4.54
Centinela 247.5 274.2 246.1 276.1 1.75 1.13 3.89 4.31
Antucoya 79.2 78.6 80.8 80.4 2.50 2.04 3.95 3.94
Zaldívar (attributable basis – 50%) 44.5 44.0 44.4 44.6 2.39 2.39 – –
Group total 646.2 721.5 642.5 725.6 1.61 1.20 3.84 4.37
Group weighted average (net cash costs)
Group weighted average (excluding treatment
and refining charges and before by-products) 2.05 1.68
Group weighted average (before by-product credits) 2.19 1.79
Gold
Los Pelambres 43.1 53.2 42.3 51.1 1,785 1,783
Centinela 133.7 199.0 132.3 193.5 1,806 1,789
Group total 176.8 252.2 174.6 244.6 1,801 1,788
Market average price 1,800 1,799
Molybdenum
Los Pelambres 7.2 9.2 6.8 9.2 20.9 17.5
Centinela 2.4 1.3 2.4 1.2 20.5 17.2
Group total/average realised price 9.6 10.5 9.2 10.4 20.8 17.4
Market average price 18.7 15.9
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/ Ore reserves and mineral resources estimates
Ore reserves
Ore reserves
Provisional A sales term in several copper and Tailings dam or Construction used to deposit the rock waste
pricing molybdenum concentrate sale agreements tailings storage which remains as a result of the concentrating
and cathodes sale agreements that provides facility (TSF) process after the recoverable minerals have
for provisional pricing of sales at the time of been extracted in concentrate form.
shipment, with final pricing being based on the TC/RCs Treatment and refining charges, being terms
monthly average LME copper price or monthly used to set the smelting and refining charge or
average molybdenum price for specific future margin for processing copper concentrate and
periods, normally ranging from 30 to 180 normally set on either an annual or spot basis.
days after delivery to the customer.
TCFD Task Force on Climate-related Financial
Quiñenco Quiñenco SA, a Chilean financial and industrial Disclosures.
group listed on the Santiago Stock Exchange
and controlled by a foundation in which Tonne Metric tonne.
members of the Luksic family are interested. TSR Total Shareholder Return, being the movement
RCA Resolución de Calificación Ambiental, in the Company’s share price plus any
Environmental Approval Resolution. dividends paid by the Company.
Realised prices Effective sale price achieved comparing Twin Metals A copper, nickel and platinum group metals
revenues (grossed up for treatment and Minnesota underground-mining project located in
refining charges for concentrate) with sales Project Minnesota, US.
volumes. UK United Kingdom.
Reko Diq A copper-gold deposit in Pakistan, previously Underground Natural or man-made excavation under
a subsidiary of Tethyan. mine the surface of the ground.
Run-of-Mine A process for the recovery of copper from ore, US United States.
(“ROM”) typically used for low-grade ores. The mined, US dollar United States currency.
uncrushed ore is leached with a chemical
Zaldívar Compañía Minera Zaldívar SpA is a 50-50 joint
solution. The metal is then recovered from
venture with Barrick Gold and is operated by
the solution through the SX-EW process.
the Company.
SDGs The United Nations’ Sustainable Development
Goals, which were adopted by all member
states in 2015.
SERNAGEOMIN Servicio Nacional de Geología y Minería,
a government agency that provides geological
and technical advice and regulates the mining
industry in Chile.
SONAMI Sociedad Nacional de Minería. Institution that
represents the mining industry in Chile, for
large, medium and small scale, metallic and
non-metallic mining companies.
Sterling Pounds sterling, UK currency.
Stockpile Material extracted and piled for future use.
SX-EW 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.
Chemical symbols
Cu Copper
Mo Molybdenum
Au Gold
Ag Silver