Delivering
performance
and growth
Annual Report and Financial Statements 2023
Corporate Governance
Applying the Code in 2023 118
Board leadership and
Company purpose
120
Division of responsibilities 132
Composition, succession
and evaluation
140
Audit, risk and internal control 144
Remuneration
Remuneration and Talent Management
Committee Chair’s introduction 156
Remuneration at a glance 160
2023 Directors’ and CEO’s
Remuneration Policy 162
2023 Directors’ and CEO’s
Remuneration Report 166
Remuneration and Talent Management
Committee Report 174
Implementation of the Directors’ and
CEO’s Remuneration Policy in 2024 176
Directors’ Report 179
Statement of Directors’
responsibilities
181
Financial Statements
Financial performance
Independent auditors’ report 184
Consolidated income statement 190
Consolidated statement of
comprehensive income 191
Consolidated statement of changes
inequity 191
Consolidated balance sheet 192
Consolidated cash flow statement 193
Notes to the financial statements 194
Parent Company financial statements 235
Other Information
Alternative performance measures 239
Five-year summary 242
Production statistics 244
Ore reserves and mineral
resourcesestimates 245
Glossary and definitions 256
Shareholder information 259
Strategic Report
Overview
Our purpose 1
Performance highlights 2
At a glance 4
Letter from the Chairman 8
Letter from the Chief Executive Officer 11
The copper market 16
Business model 20
Our strategic framework 22
Key Performance Indicators 26
Sustainability review
2023 performance 31
Our approach to sustainability 32
How we engage with our stakeholders 38
Social
Our people 40
Our occupational health and safety 44
Fostering communities 48
Our suppliers 52
Environmental
Sustainable production 54
Our climate change approach 57
Water stewardship 65
Biodiversity protection 68
Governance
Governments and regulators 70
Shareholders 71
Customers 72
Non-financial and sustainability
information statement 73
Risk management 74
Operating review
Mining division 90
Transport division 98
Growth projects and opportunities 100
Exploration activities 102
Key costs 103
Operating excellence and innovation 105
Financial Review 108
Sustainability Report
antofagasta.co.uk/sr23
Tax Progress Report
antofagasta.co.uk/tax22
Climate Change Report
antofagasta.co.uk/ccr22
Social Value Report
antofagasta.co.uk/svr22
Sustainability Databook
antofagasta.co.uk/sdb
Climate Action Plan
antofagasta.co.uk/CAP
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.
Delivering our
potential in a
sustainable way
Sustainability Report 2023
Contents
Our reporting suite
256
Gender diversity
23.6%
of our employees are women
(2022: 20.4%).
More information on P40
Total economic contribution
$7.2bn
We generate economic value for all our
stakeholders, 3% lower than last year
(2022: $7.4bn).
More information on P32
Performance highlights
NON-FINANCIAL HIGHLIGHTS
Key performance
highlights in 2023
Growth projects
Los Pelambres Phase 1
Expansion
100%
Construction completed in 2023.
Centinela Second Concentrator
170kt
CuEq
Approval announced December 2023.
Los Pelambres Desalination
Plant Expansion EIA
Approved
Environmental Impact Assessment
approved in Q4 2023.
Water withdrawals
from sea water
60%
Increasing from 45.4% in 2022.
More information on P65
Scope 1 and 2 emissions
(per tonne copper)
1.69
tCO
2
e/tCu
Copper emissions per tonne decreased
by 3%, reflecting increased production and
greater efficiencies (2022: 1.75tCO
2
e/tCu).
More information on P57
Mineral resources
3
20.5bn
tonnes
The Company’s total mineral resources
increased by 345 million tonnes during
the year (2022: 20.1bn tonnes).
More information on P102
Copper production
2
660,600
tonnes
Copper production increased by 2% in 2023,
following the commissioning of the Company’s
desalination plant and increased water
availability at Los Pelambres.
More information on P90
Strong performance across safety metrics,
with no fatal accidents and a 25% decrease
in LTIFR during the year.
More information on P44
Safety
0
Fatalities
(2022: 0)
0.63
LTIFR
1
(2022: 0.84)
Antofagasta plc Annual Report 20232
STRATEGIC REPORT
Net cash costs
4
$1.61/lb
In line year-on-year (2022: $1.61/lb),
reflecting a balance of higher underlying cash
costs before by-products, alongside higher
production and pricing for by-products,
in addition to savings coming from our
Cost and Competitiveness Programme.
Profit before tax
$1,966m
Profit before tax decreased by 23%
(2022: $2,559m), with this year-on-year
movement principally related to the
recognition in 2022 of an exceptional
gain relating to the disposal of the
Reko Diq project.
EBITDA
4
$3,087m
Increased by 5% with an EBITDA margin
of 49%, reflecting a higher copper production
and by-products (2022 EBITDA and EBITDA
margin: $2,930m and 50%).
Earnings per share including
exceptional items
84.7 cents
Earnings per share including exceptional
items decreased by 46% year-on-year as
the result of an exceptional gain recognised
during 2022 (2022: 155.5cents).
Underlying earnings per share
excluding exceptional items
4
72.0 cents
Underlying earnings per share excluding
exceptional items for the year, 21% higher
than in 2022 (2022: 59.7 cents).
Total dividend
per share
36.0 cents
Equivalent to a payout ratio of 50%
of underlying net earnings
(2022: 59.7 cents, equivalent to 100%).
FINANCIAL HIGHLIGHTS
Completing major investment projects to deliver a strong recovery in production at Los
Pelambres, and pivoting to the next phase of growth across our portfolio – including announcing
the approval of the Centinela Second Concentrator in December 2023.
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 239.
View of the existing concentrator
at Centinela.
Antofagasta plc Annual Report 2023 3
LOS PELAMBRES
60% owned
11-year mine life
Produces copper concentrates containing
gold and silver and a separate
molybdenum concentrate
300,300 tonnes
2023 (2022: 275,000 tonnes)
$1.14/lb
2023 (2022: $1.10/lb)
1,212
2023 (2022: 1,144)
25.3% women
2023 (2022: 22.2%)
CENTINELA
70% owned
36-year mine life
Produces copper cathodes and copper
concentrates containing gold and silver
and a separate molybdenum concentrate
242,000 tonnes
2023 (2022: 247,500 tonnes)
$1.63/lb
2023 (2022: $1.75/lb)
2,602
2023 (2022: 2,484)
24.1% women
2023 (2022: 20.9%)
40,500 tonnes
3
2023 (2022: 44,500 tonnes
3
)
$2.95/lb
2023 (2022: $2.39/lb)
928
2023 (2022: 932)
14.9% women
2023 (2022: 12.8%)
77,800 tonnes
2023 (2022: 79,200 tonnes)
$2.63/lb
2023 (2022: $2.50/lb)
949
2023 (2022: 894)
18.4% women
2023 (2022: 15.2%)
ANTUCOYA
70% owned
20-year mine life
Produces copper cathodes
TRANSPORT
Cargo transport system in
the Antofagasta Region of Chile
900 km rail network
7.1m tonnes
transported
2023 (2022: 7.1m tonnes)
1,387
2023 (2022: 1,410)
23.1% women
2023 (2022: 19.9%)
1. Non-IFRS measure, refer to the alternative performance measures section on page 239.
2. Employees, excludes contractors as at 31 December 2023.
3. Reflects Antofagasta’s 50% holding in Zaldívar.
4. Group includes 675 employees in our corporate offices, 38.4% of them are women (2022: 35.2%).
GROUP
660,600 tonnes
2023 (2022: 646,200 tonnes)
$1.61/lb
2023 (2022: $1.61/lb)
7,753
4
2023 (2022: 7,494)
23.6%
4
women
2023 (2022: 20.4%)
Copper production Net cash costs
1
Employees
2
gender diversity
ZALDÍVAR
50% owned (and operated)
13-year mine life
Produces copper cathodes
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.
A portfolio focused on copper
Antofagasta plc Annual Report 20234
STRATEGIC REPORT
BOLIVIA
ARGENTINA
Antucoya
Centinela
Zaldívar
Los Pelambres
Santiago
Transport Division
Transport Network
Who we are
We are a copper producer focused on the responsible
production of copper through our purpose: developing
mining for a better future.
We operate four copper mines in Chile, with associated
by-products of gold and molybdenum, and we are listed
on the London Stock Exchange.
Our vision
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.
65%
owned by the Luksic
Group
Top 10
global copper
producer
660,600 t
Copper production
11,000 t
Molybdenum
production
Focus on copper
production in the
Americas.
$1.61/lb
Net cash costs
209,100 oz
Gold production
High-quality assets
with significant
potential for
production growth
$21.0 bn
Market cap
(31 December 2023)
FTSE 100
35%
free float
Group
Mining division
Transport division
7.1 Mt
Total tonnage
transported
Provides rail and
road cargo services
in Chile’s Antofagasta
Region
Road route
Rail route
Mine
Antofagasta plc Annual Report 2023 5
At a glance continued
The Group has a pipeline of growth projects to develop our significant mineral resource
base which we are currently advancing through a disciplined process of project evaluation.
We also have a portfolio of growth opportunities located mainly in Chile.
Underpinned by our approach to sustainability
Each of our four mining operations has been awarded the Copper Mark, the copper industry’s responsible production
assurance framework, and completed the ICMM’s Performance Expectations third-party validation process.
Sustainability is at the heart of our decision-making as we seek to achieve our purpose
of developing mining for a better future.
7,753
Total employees (2023)
23.6%
Female representation
within employees
Read more on P40
0
Fatalities
25%
Reduction in lost time
injury rate
Read more on P44
94%
Suppliers based in Chile
$709m
Value generated with
small and medium-sized
enterprises (SMEs)
Read more on P52
60%
Water withdrawals from
sea water
GISTM
Compliance
1
announced
with Global International
Standard on Tailings
Management (GISTM)
1. In compliance with commitments
under the GISTM.
Read more on P65
Employees and gender
diversity
Safety first culture Suppliers and local
communities
Sustainable mining
Future growth
Los Pelambres Phase 1
Expansion
Construction of the Los Pelambres
Phase 1 Expansion, comprising
of a desalination plant with a capacity
of 400 litres per second and an
additional (fourth) concentrator line,
was completed in 2023.
Centinela Second
Concentrator
Approval of the Centinela Second
Concentrator, which will add 170,000
tonnes of additional copper-equivalent
production per annum
1
, with critical
path works commencing immediately
following announcement.
Primary sulphide leaching
Work continues on developing a
method of leaching primary sulphide
copper ores, with industrial scale tests
of Cuprochlor®-T at the Company’s
leaching operations at Centinela,
Antucoya and Zaldívar. A successful
heap heating pilot was conducted
during 2023 at Zaldívar.
1. 10-year average for the Centinela District
following ramp up of the Second Concentrator.
Read more about the completion of
the desalination plant on P29
Read more about the Centinela
Second Concentrator on P15
Read more about leaching sulphide
copper ores on P106
Antofagasta plc Annual Report 20236
STRATEGIC REPORT
$1,725m
$1,219m
$215m
$87m
$82m
Los Pelambres
Centinela
Antucoya
Zaldívar
Transport
$2,924m
$2,533m
$672m
$196m
Los Pelambres
Centinela
Antucoya
Transport
1. Above chart excludes $240 million of corporate costs, exploration and evaluation,
and other non-operating income and expenses. See Note 6 to the financial statements.
Revenue
$6,325m
EBITDA
1
$3,087m
Consistent approach to capital allocation
Operating cash flow
Strong balance sheet
Growth Capex Excess Cash Dividend
Sustaining capex & mine development
Committed dividends (35% payout)
Decision factors
Capital outflow
Capital outflow
Financial
position
Macro
perspective
Value
optimisation
Climate
resilience
202320222021202020192018
0.27
0.23
0.03
-0.11
0.30
0.38
202320222021202020192018
100% 100% 100%
50%
65%
35%
Investments and shareholder returns
Net debt/EBITDA ratio
Dividend payout ratio (2023 proposed)
Creating sustainable value and shareholder returns over the long term
Copper cathodes awaiting shipment.
Antofagasta plc Annual Report 2023 7
We have delivered progress
on a number of projects in 2023,
and we have reasons to look
forward to a positive outlook
for the year ahead.
Dear shareholders,
In 2023, we marked our 40th year of operating copper mines. Since
the start of the Michilla mine in the north of Chile, and through careful
planning, dedication, a clear vision and investment, we have grown
to become one of the world’s leading copper producers. As a business
focused on creating value for our employees, local communities,
partners and shareholders, we are proud to reflect on the strong
performance that was delivered in a safe and sustainable manner
over the course of the year.
2023 highlights
We delivered strong performance in 2023, with record safety
performance and higher copper production following construction
of the expansion at Los Pelambres. We have successfully protected
profit margins during the recent period of high inflation, and we
have continued to exceed the minimum payout ratio according
to our dividend policy, proposing a full year dividend equal to 50%
of underlying net earnings.
Investment is key to maintaining our competitiveness, and we made
important decisions during the year to further develop our two
principal mining districts – Los Pelambres and Centinela. Mining
is a long-term business, and the decisions that we have taken have
been carefully planned in order to create maximum long-term value
for all our stakeholders.
We have recently completed construction of an expansion at Los
Pelambres, which included building a desalination plant to increase
water availability, as well as additional processing capacity at the mine.
Also, we have approved the plan to double the capacity of our
desalination plant and to build a new concentrate pipeline by the end
of 2027, thereby securing the long-term future of Los Pelambres.
At Centinela, we approved the Second Concentrator Project, which
will be another transformational project for the Company, adding
an additional 170,000 tonnes of copper-equivalent production by 2027.
1
In December, we announced the expansion of our footprint outside
Chile through an investment in Compañía de Minas Buenaventura
S.A.A., Peru’s largest publicly traded mining company. This opportunity
complements our exploration activities in recent years and significantly
increases our exposure to Peru’s highly prospective geology. We will
continue to evaluate opportunities to deliver value to all stakeholders.
Letter from the Chairman
JEAN-PAUL LUKSIC
Chairman
Reflecting
on a year
ofprogress
Positive outlook in global copper markets
The copper price showed increased stability in 2023, with the energy
transition helping to drive global demand for copper as a critical
mineral across a broader range of industries. We remain confident
in copper’s medium- to long-term fundamentals, with global copper
supply unlikely to be able to sufficiently increase within the required
timescale to meet this rising demand.
A focus on responsibly produced copper
The environment, climate change and the energy transition all play
a critical role in our business model. Water availability affects our
ability to produce copper consistently, which is the underlying reason
for investing in desalination.
Having achieved our targeted emissions reduction in 2022, we have
set ambitious new goals. We are aiming for a 50% reduction in Scope
1 and 2 emissions by 2035 – all while continuing to expand production.
The Board has also approved our first Scope 3 emissions reduction target.
Collaborating with our suppliers in Chile by incentivising improvements
to their business practices will be key to achieving this target.
With a safe, responsible and sustainable approach to copper
production, we believe that we are well positioned to help countries
and regions around the world in their efforts to pivot towards
electrification and economies based on low-carbon technologies.
Delivering on our strategy
In growing and developing our business, we remain focused on our
five strategic pillars, which are outlined below. With a clearly defined
strategy, we are confident that we can deliver on our purpose of
developing mining for a better future. While we remain committed
to copper, and we are positive on its long-term outlook, a prudent
and consistent approach to capital allocation is required to generate
shareholder returns.
1. Average over an initial 10-year period.
Antofagasta plc Annual Report 20238
STRATEGIC REPORT
With our business model, which also focuses on sustainability,
prioritising strong safety standards, collaboration with local
communities, and efforts to limit our environmental footprint –
we aim to deliver value for all stakeholders. This is an integral
part of our purpose and will help us operate with the support of
communities, governments and other stakeholders for the duration
of our long-life assets.
Safety and sustainability
Safety is at the heart of our culture, and we are pleased to look back
on a year of strong safety performance, with another year without
fatalities and injury frequency rates falling by 25% to 0.63 lost time
injuries occurring per 1 million hours worked, which is a new record
for our business. To build a safety-first culture, a clear understanding
of the risks and how to mitigate them is essential.
I am particularly proud of the safety performance of the expansion
project at Los Pelambres, a project that required more than 39 million
hours of work and several thousand contractors. In addition, we are
proud of the progress made in our Transport division, where injury
frequency rates fell by more than half during 2023 following the
implementation of several safety initiatives.
Sustainability is an integral part of our strategy and is a fundamental
driver behind demand for critical minerals, which will continue to be
the case going forward. As a result, it is integrated into our business
model and capital allocation framework.
People and culture
We have a workforce of over 29,000 people, spread across our
four mines, Transport division, corporate offices and projects under
construction. We couldn’t achieve our goals without an engaged
and diverse workforce operating in a safe and inclusive environment.
I am pleased we are continuing to develop and invest in our
employees, increasing diversity and maintaining high levels of training.
The level of gender diversity across our business is progressing
towards our goal of 30% by 2025, as our initiatives continue to
increase female employment at each of our operations. We remain
committed to diversity because of the benefits that this brings
to our culture and leadership team.
Competitiveness
Our success depends on being competitive and continuing to maintain
our margins to deliver strong shareholder returns. Los Pelambres
is a large, low-cost operation, and the construction of the Centinela
Second Concentrator will improve Centinela’s competitiveness on the
global cash cost curve. With these two large low-cost mining districts,
which allow us to continue to grow into the future with an increased
share of lower-cost concentrate volume in our portfolio, we are well
placed to continue to deliver consistently strong financial performance
and value to all our stakeholders.
Innovation
In order to maintain or grow our output, we will continue to invest
according to evolving social expectations and environmental standards.
With the inauguration of our second Integrated Remote Operations
Centre in 2023 in Santiago for Los Pelambres, following the opening
of the Centinela facility in Antofagasta in 2021, we have seen
productivity benefits while offering opportunities for personal
development in the next generation of roles in mining.
Primary sulphide leaching continues to be a key focus area for the
industry, with the potential to add new supply at lower capital intensity
for lower grade ores. We continued to progress our proprietary
Cuprochlor®-T technology, and we are pleased to report positive
results in 2023.
Growth
With the investment in the Centinela Second Concentrator Project
mentioned above, we will add 170,000 tonnes of copper-equivalent
production to our portfolio. Through this project, the desalination plant
and fourth concentrator line at Los Pelambres, we continue to develop
our large resource base towards our target of producing up to
900,000 tonnes of copper per year in the near future.
These investments will provide a strong platform for growth in the
coming years. The mining industry has a limited ability to meet rising
copper demand from industries such as the energy, infrastructure
and automotive sectors, among others. As a pure-play copper
producer, we are well positioned thanks to our high-quality assets,
track record of performance, and our pipeline of medium to long-term
growth projects.
Our capital allocation framework guides all of our decisions.
The capital needed for the investments planned at Centinela and
Los Pelambres will see an increase in capital spend, peaking in 2025
and falling thereafter.
Board changes
In 2023, we saw several changes to the Board of Directors and Board
Committees, which continued to refresh our thinking and bring new
skill sets and perspectives as we embark on a new phase of growth.
We have rotated the role of Senior Independent Director, which has
been taken up by Francisca Castro, a member of our Board since 2016.
I would like to thank Tony Jensen, who continues to be a valuable
member of our Board, for his tenure in this role.
We have also welcomed two new Independent Non-Executive
Directors. Heather Lawrence joined the Board in April 2023,
and Tracey Kerr joined the Board in January 2024. Heather is
qualified as a Chartered Accountant and has strong financial
experience and Tracey brings extensive global mining experience in
areas including safety, sustainability, operations and exploration. Both
Heather and Tracey have London listed company Board experience.
Following these appointments, female representation at Board level
increased to 45%.
I would like to thank Jorge Bande, who retired from the Board at the
end of 2023 after serving for nine years, the tenure for independence
recommended by the UK Corporate Governance Code, during which
time he contributed significantly to the Company’s success.
Chile’s economic, social and political environment
Over the year, Chile concluded key debates on amendments to Chile’s
mining royalty tax and a second proposal for a new constitution.
The new mining royalty has increased the tax burden for mining
companies operating in Chile at a time when the mining industry
requires additional capital to tackle declining grades and rising
ore hardness, making it less attractive for companies to develop
opportunities in Chile’s mining sector.
In December 2023, the people of Chile voted against the second
proposal for a new Constitution. The government has said that
they will not be seeking a third process to change the Constitution.
Throughout this process, the population continued to focus on
key concerns such as public order and safety, economic growth
and employment.
We hope that having completed these two processes, Chile will take
this opportunity to enter an era of common understanding and political
consensus to achieve higher levels of economic and social prosperity
that will allow for the advancement of important social reforms, such
as those relating to pensions, health and education.
Antofagasta plc Annual Report 2023 9
On the economic front, the International Monetary Fund forecasts
that Chile’s economy will return to growth in 2024, following a
contraction in 2023.
2
Inflation rates appear to have passed the peak
seen in 2022 and early 2023, which exceeded 13% for several months,
putting an excessive strain on both individuals and businesses. This
outlook is consistent with the broader global trend, with increasing signs
of economic activity across key markets for copper in 2024.
Outlook
As a business, we remain optimistic and realistic about the year ahead.
Significant investment decisions, such as those at Centinela and Los
Pelambres, bring with them execution risks that naturally accompany
construction projects of this scale. While we are confident in the level
of engineering and the studies that have supported these decisions,
we are mindful of the challenges in the construction of major mining
projects in Chile. These challenges include lessons learned from the
recent expansion at Los Pelambres, where we experienced delays
to critical path works and cost inflation. Although this was caused
in part by external events such as the disruption of global supply
chains relating to the Covid-19 pandemic and the war in Ukraine,
there are also local challenges including in relation to productivity.
Letter from the Chairman continued
As a responsible and profitable copper producer with sustainable
growth, we are in a position to respond to global macroeconomic
trends. The energy transition is driven by electrification, which
demands increasing amounts of copper for the global economy.
Antofagasta has the track record of performance and creating value
for all our stakeholders. We have two world class mining districts,
a strong balance sheet and a dedicated workforce, which are all
key enablers for achieving our purpose of developing mining for
a better future.
JEAN-PAUL LUKSIC
Chairman
Investing in Chile
+$2 billion
Los Pelambres: Phase 1 Expansion completed
Investing in future growth
170kt CuEq
Centinela Second Concentrator approval announced
Shareholder returns in respect of 2023
1
36.0¢/share
(2022: 59.7¢/share)
Female representation at Board level
(as at 29.1.2024)
45%
(2022: 30%)
1. Shareholder returns shown represent interim dividend of 11.7 cents
and proposed final dividend of 24.3 cents.
2. IMF Report: ‘Chile: IMF Staff Concluding Statement of the 2023 Article IV Mission’,
dated November 2023.
Chairman Jean-Paul Luksic visiting the Los Pelambres Integrated Remote Operations Centre (January 2023).
Antofagasta plc Annual Report 202310
STRATEGIC REPORT
Dear shareholders,
At Antofagasta, we are building a strong foundation for growth and
delivering on our purpose of developing mining for a better future.
In 2023, we made progress on safety, production and cost control,
which enabled us to deliver a robust set of financial results. We have
completed the construction of the first phase of the Los Pelambres
Expansion Project, a $2 billion investment that will not only provide
operational stability and increased processing capacity, but will help
us advance towards our medium-term target of achieving 90% of our
water use from sea water or recirculated water sources. In addition,
we recently announced the approval of the Centinela Second
Concentrator Project, which will move us significantly towards our
ambition of 900,000 tonnes of profitable copper production and push
the Centinela District as a whole towards the first quartile of the global
cost curve. At the peak of construction, this $4.4 billion investment will
create nearly 13,000 jobs in Chile and will generate significant social
and economic benefits for the country.
More information on these two key growth projects can be found
on pages 15 and 29 of this report.
These landmark projects are significant steps along our path to
creating value for all our stakeholders – including our workforce,
local communities and investors – and along with our strong
operational performance, set the stage for our next phase of growth.
Health and safety
Most importantly, we registered our strongest performance ever
in terms of safety; the culmination of many years of developing and
implementing policies to promote a safety-first mindset across our
workforce. Over the course of the last ten years, our injury frequency
rates have consistently decreased, and our performance is now ahead
of many of our global peers in the wider mining industry.
People and communities
It is also vital that we have the right culture and working environment.
We are confident that our talent management programme, training
initiatives and diversity and inclusion efforts will ensure that we enter
our next chapter of growth with the best team to deliver our goals.
We are also proud to reflect on several three-year labour agreements
signed during the year. In a number of cases, we reached those
agreements before the previous contracts expired, underscoring
our proactive engagement with our workforce.
Delivering
performance
and growth
IVÁN ARRIAGADA
Chief Executive Officer
We continue to expand our diversity initiatives, increasing female
representation in our workforce to 23.6% (2022: 20.4%), and moving
us closer to our goal of 30% female representation by 2025.
Furthermore, gender diversity on our Board of Directors has increased
to 45% as of February 2024 thanks to new appointments in the past
12 months, broadening the Board’s skill set at a critical time of growth
for the business.
By recruiting the right people and building dedicated project teams,
we are successfully ramping up both our desalination plant and fourth
concentrator line for Los Pelambres. Looking forward, we are now
well positioned to begin work on our portfolio of future projects,
at both Los Pelambres and Centinela.
In our engagement with local communities, we continued to develop
social programmes that support families living near our operations
in 2023. In the Central region of Chile, close to Los Pelambres, we are
focused on water, healthcare and education projects. One programme,
Somos Choapa, helps to promote effective community engagement,
while another, Confluye, focuses on responsible water use, as this is
a key topic after more than 12 years of drought in the area. In the
north of Chile, our focus continues to be on preserving the traditions
and cultures of indigenous peoples, while also supporting local schools.
In 2023, we undertook formal assessments of 18 of our social
programmes and the results confirmed that all yielded a positive social
return for our communities. It is important to local stakeholders that
we support businesses and provide jobs in our local communities.
We are committed to providing opportunities for local stakeholders,
and we continue to maintain high levels of employment in the regions
where we operate, with the majority of our personnel based either
in the Antofagasta or Coquimbo regions of Chile.
In addition, we were proud to be a lead sponsor of the Pan American
and Parapan American Games in 2023, which were held in Santiago
for the first time, helping to promote Chile on a global stage and
providing the copper that sits in the heart of all the medals.
As part of our broader reporting, during the year we published a series
of standalone reports on our tax contribution, social value creation and
Letter from the Chief Executive Officer
Our strong financial performance
in 2023 demonstrated the
resilience and strength of our
portfolio of operations.
Antofagasta plc Annual Report 2023 11
strategy to address climate change, in addition to the Sustainability
Report that was published alongside this Annual Report (available
at www.antofagasta.co.uk).
Tailings management and external accreditation
Ensuring the stability and safety of our tailings storage facilities
is crucial. In August 2023, we announced full compliance with the
Global Industry Standard on Tailings Management (GISTM) at our
main storage facilities. The process was completed at El Mauro
(Los Pelambres) and Centinela in 2023, while Los Quillayes (Los
Pelambres) and Zaldívar are expected to be fully compliant by the
deadline of August 2025. Antucoya does not have a tailings facility,
since it is a SX-EW operation, and therefore does not have a
requirement to comply with the GISTM.
As part of the process associated with The Copper Mark, a framework
to promote responsible practices at mining operations and across
value chains, both Antucoya and Los Pelambres received accreditation
in 2023 for the implementation of their action plans. This accreditation
lasts until 2025 and reaffirms our approach to producing copper
in accordance with United Nations Sustainable Development Goals
(SDGs). All companies in our Mining division hold this certification.
Responsible water use
In line with our purpose of developing mining for a better future, we
are focused on ensuring that we have a sustainable business model.
That means active community engagement, responsible water
sourcing, ambitious emissions reduction targets and the protection
of habitats and biodiversity.
The successful completion of our desalination plant in 2023 has
enabled Los Pelambres to reduce the use of continental water
sources, which have been impacted through the ongoing drought.
Group-level water extraction from sea water sources increased in
2023, with water from our new desalination plant already representing
a third of Los Pelambres’ water supply, despite only commencing
its ramp up in the middle of the year. Both Centinela and Antucoya
in the north of Chile operate on 100% sea water or recirculated water,
following the closure of the Calama wells in 2022. At Zaldívar, with
the submission of an Environmental Impact Assessment (EIA) in 2023,
we plan to convert this operation to sea water (or water from third
parties), after an extension of the water permit for a transitional period
between 2025 and 2028, which will allow us to extend the mine life
of this operation to 2051, with a long-term water solution to replace
the current extraction of continental water. In early 2024, approval
was received from the authorities for the separate DIA (Declaration
of Environmental Impact) to extend the mining permit and, therefore,
align the water and mining permits at Zaldívar.
The initiatives mentioned previously, driven by our plan to double
the capacity of our existing desalination plant at Los Pelambres,
are helping us move towards our medium-term ambition of achieving
90% of our water from sea water or recirculated water sources.
Climate change: updated targets set
We continue to make progress in reducing our Scope 1 and 2
emissions. Having achieved our previous targets in 2022, we have
focused on developing updated goals for our decarbonisation
programme. As a result, we were proud to announce in early 2024
our updated emissions reduction targets, including a 50% target
to reduce Scope 1 and 2 emissions by 2035, based on absolute tonnes
of emissions and taking into account our planned increase in production
during this time.
1
We have also taken the important step of publishing
our first Scope 3 target, with the goal of achieving a 10% reduction
in emissions by 2030.
2
1. This is on a combined basis and refers to a reduction in the absolute number of tonnes
relative to a baseline year of 2020.
2. Scope 3 emissions target set on a projected basis relative to a baseline year of 2022.
A key part of achieving our Scope 1 and 2 emissions reduction targets
will be to reduce diesel consumption in our haul trucks, which represents
approximately 60% of our Scope 1 emissions. To do this, we are
focused on the continuing search for replacement fuel alternatives,
in combination with the competitive electrification of our mining
haulage fleet, which contemplates the potential use of trolley-assist
technology, with initial pilot tests to be implemented at selected sites.
Following this, we anticipate supplementing this technology with
battery electric vehicles, as this particular technology develops over
time and becomes more widely available and cost effective. In parallel,
we are implementing a range of modern technologies across our
portfolio, such as fleet automation at our mines, which will serve
to further enable electrification and decarbonisation in the future.
Regarding Scope 3, over 50% of these emissions come from our
suppliers of goods and services. Through positive engagement with
our suppliers via our Suppliers for a Better Future Programme, which
was launched in December 2022, we aim to achieve our goal of
a 10% reduction in Scope 3 emissions by 2030.
Operating results
We recorded a strong year of operational results in 2023, with our
Mining division producing 660,600 tonnes of copper, representing a
2% increase year-on-year. Performance improved at our largest mine,
Los Pelambres, with ore processing rates increasing by 11% and our
newly completed desalination plant helping to ensure a greater degree
of water availability. At Centinela, we registered another year of
consistent concentrate and cathodes plant performance, with
production and costs broadly in line year-on-year despite industry-
wide cost inflation. At Antucoya, our continued discipline has helped
manage costs, with this operation demonstrating effectiveness in
low-grade copper mining. At Zaldívar, costs increased year-on-year
in 2023, and the Company is continuing to implement its strategy
of increasing throughput to ensure that this operation performs
at its design capacity, with an appropriate cost base.
Our Transport division continued to deliver robust performance, with
a second successive year of shipments in excess of 7 million tonnes,
marginally beating the record set in 2022. Amid rising forecasts
for copper and lithium production from the northern region of Chile
in the coming years, we have a positive outlook for this segment
of our business.
Net cash costs in 2023 were $1.61/lb, in line with the prior year,
as increasing production of copper and by-products helped maintain
our position on the global cost curve.
With industry-wide inflation in 2023 and perennial challenges related
to grade decline and ore hardness, effective cost control is essential
for modern copper producers to remain competitive. Our cost and
competitiveness programme drives our efforts to control costs,
delivering a total of $135 million of savings and productivity
improvements in 2023. This was substantially above our internal
target of at least $42 million for the year and in light of this progress,
our ambition for cost savings in 2024 has increased significantly
to $200 million.
Financial performance
Our strong financial performance in 2023 demonstrated the resilience
and strength of our portfolio of operations. We recorded an 8%
increase in revenues and a 5% increase EBITDA. Through consistent
investment throughout the cycle, we have maintained our EBITDA
margins at 49% in 2023 (2022: 50%).
Following the decision in 2022 to exit from our participation in the
Reko Diq exploration project, proceeds of $946 million were received
during the year, in line with expectations.
Finally in our financial position – through our robust margins and
conservative balance sheet management, we have maintained our
Letter from the Chief Executive Officer continued
Antofagasta plc Annual Report 202312
STRATEGIC REPORT
net debt to EBITDA at a low level of 0.38, providing a platform
on which to enter the next phase of development.
Growth and innovation
We are at an important juncture as we conclude one phase of
profitable growth and investment, and prepare for the next one.
Following completion of the first stage of the expansion at Los
Pelambres, we can look forward to consistent operating performance
and higher throughput rates. Furthermore, in late 2023, we received
approval from the environmental authority to double the desalination
plant at Los Pelambres (to reach 800 litres per second) and develop
future critical infrastructure. It includes a new concentrate pipeline
to replace the existing one, following a route that runs along a less
populated route, and reduce the risk of unplanned downtime with
the existing pipeline which as now been in operations for more than
20 years. Once this expansion of the desalination plant is complete,
the Company will approach its target of at least 90% of water use
coming from either the sea or recirculated water, helping to release
water previously obtained from continental sources, in line with
our environmental and social commitments.
At Centinela, we announced approval of the Second Concentrator,
which will add 170,000 tonnes of copper-equivalent production to
our portfolio. Through this $4.4 billion investment, we will significantly
expand our utilisation of modern technologies and output of by-
products – helping the Centinela District move towards the first
quartile on the industry cost curve.
At our leaching operations, we continue to innovate and work towards
a solution to leaching primary sulphides. Cuprochlor®-T, our in-house,
patented technology, delivered positive progress in 2023, a successful
heap heating pilot was conducted at Zaldívar, enhancing its operational
readiness. We are now evaluating an expansion of this programme
to incorporate other mining operations, including third parties.
In 2023, we made progress with the Cachorro exploration project,
where exploration work has continued in the central and main zones
of the deposit, with this project having a mineral resource estimate
of 250 million tonnes with a copper grade of 1.27%. Through
exploration projects like Cachorro, we are working hard to ensure
the future availability of new mining resources.
During the year, we also announced agreements to acquire 19%
of Compañía de Minas Buenaventura S.A.A. (Buenaventura),
Peru’s largest publicly traded precious and base metals company
with a pipeline of potential copper projects. This investment is
consistent with our strategy of prioritising investment in the Americas.
We look forward to developing this relationship, looking to identify
opportunities to deliver value for all stakeholders.
On innovation, we continue to implement our digital roadmap,
increasing the use of artificial intelligence and advanced analytics
in areas such as the leaching of ore at our SX-EW operations, while
increasing the efficiency of fleet management at Centinela. We also
inaugurated our Integrated Remote Operations Centre (IROC) for Los
Pelambres in 2023, alongside Centinela’s IROC, which opened in 2021,
we are rolling out additional remote-operated equipment at both
operations to improve both safety and productivity.
Outlook for 2024
We believe that the strong performance we have achieved and
the strategic investments we have made over the past year has put
the Company on a solid platform for the next phase of growth.
The completion of the first phase of expansion at Los Pelambres and
the start of construction at the Centinela Second Concentrator project
are significant milestones. But they are only part of the story. Our
exploration programme in Chile is advancing as we develop further
copper resources, and we are building a footprint in Peru. In addition,
we have updated our emissions reduction targets, setting ambitious
goals for the next decade while working closely with suppliers and
customers to tackle the rising threat of climate change. We are also
optimistic that we have moved into a more stable environment in Chile.
These decisions mean we are strongly positioned to supply the much
needed copper that plays an integral role in the world’s transition
to a low-carbon economy. We endeavour to meet that demand in
a responsible and sustainable way, ensuring that we create value
not just for our shareholders, but also for our employees, our
communities, our partners, and our planet as a whole.
IVÁN ARRIAGADA
Chief Executive Officer
Health and safety
25%
Reduction in lost time injury frequency rates in 2023.
Strong financial performance
8%
Increase in revenue to $6.3 billion in 2023, reflecting
strong demand for copper and a 2% increase in
production during the year.
Resilient margins
49%
Maintaining EBITDA margin at 49% despite industry-wide
cost inflation in 2023 (2022: 50%).
New emissions targets
50%
Reduction in Scope 1 and 2 emissions combined, on
the basis of absolute tonnes, by 2035 (relative to baseline
year of 2020). Targets have been updated following
successfully achieving the previous target in 2022.
2023
Highlights
Antofagasta plc Annual Report 2023 13
DELIVERING NEW OPPORTUNITIES
The expansion will
leverage over two
decades of operational
experience and
understanding, utilise
existing infrastructure,
and build on long-
established
relationships with
our local
communities.
Operators at Centinela’s existing concentrator.
Antofagasta plc Annual Report 202314
STRATEGIC REPORT
Centinela Second Concentrator
A new phase of growth
In December 2023, the Company announced
the approval of the Centinela Second
Concentrator Project, which will add 170,000
tonnes of copper-equivalent production,
comprising 144,000 tonnes of annual
copper production and associated gold
and molybdenum by-products.
1
Through
a brownfield expansion of an existing copper
mine in the Company’s portfolio, it is expected
that this project will increase Antofagasta’s
copper production. Through this expansion,
it is expected that the Centinela District as
a whole will move towards the first quartile
on the global cash cost curve for copper
production, through an increased focus
on concentrator capacity that incorporates
modern technologies, increased by-products
and greater economies of scale.
The scope of the project is to construct
a second concentrator to process sulphide
ores using modern technologies, overseen
by Centinela’s existing management team,
which has more than 20 years of handling
copper ores in the Centinela District. Through
developing a brownfield project, the Company
intends to reduce the execution risk typically
associated with major greenfield construction
projects, and the project has all the relevant
permits approved by the authorities in Chile
for the project to proceed into the
construction phase.
The Centinela Second Concentrator has
an associated capital cost of $4.4 billion
2
,
and comprises of a number of workstreams
to mine sufficient ore to supply a new 95,000
tonne per day concentrator plant, in addition
to ancillary infrastructure to supply water
and electricity to the project, as well as port
handling facilities. In addition, the project
includes a new tailings storage facility, the
expansion of outbound logistics networks,
such as the concentrate transport system
and additional loading equipment, autonomous
hauling equipment and a truck shop for the
mine expansion at Esperanza Sur. Also
included are camps, and ancillary civil
infrastructure, which have been designed
to fully integrate into the existing Centinela
operation, to avoid any redundancy.
The project is to be financed by Centinela
through a combination of direct funding from
Centinela’s shareholders (Antofagasta plc
and Marubeni Corporation representing
approximately 40% of total funding), and
project finance provided by lenders.
The timeline for development is three years,
with first copper production expected
in 2027. Critical path works commenced
immediately following announcement,
with full construction activities commencing
following the execution of definitive project
finance documents in Q1 2024.
Ore for the new concentrator will be sourced
from two existing open pit mining operations
– the Esperanza Sur mine, and an expansion
into higher-grade sulphide ores that lie below
the Encuentro Oxides ore reserves.
In parallel to the announcement to construct
the Centinela Second Concentrator,
the Company announced a review of the
opportunity to outsource Centinela’s water
supply through a third party acquiring the
existing water supply system and building
the new water pipeline expansion, and
an agreement to proceed with this process
was announced in March 2024.
Further details of the Centinela Second
Concentrator Project and the process
to review outsourcing of Centinela’s water
sourcing are available in the Company’s
announcement dated 20 December 2023
(www.antofagasta.co.uk).
170,000
Tonnes of copper-equivalent
production per annum.
1
36 years
Brownfield expansion with a 36-year mine life
based on Centinela’s significant ore reserves.
1. Production figures represent the average over
aninitial10-year period.
2. Capital cost estimate to be lowered by $380 million
through the decision to proceed with theoutsourcing
of Centinela’s water supply, which wasadecision
that was announced in March 2024. Completion of this
process is expected during 2024.
View of Centinela’s covered stockpiles.
Antofagasta plc Annual Report 2023 15
While copper prices remained relatively stable in 2023 compared with
2022, the global market is seeing significant change both in the supply
of copper and in demand from key industries. Factors such as grade
decline and rising ore hardness are affecting production from existing
mines and for various reasons a number of the world’s largest copper
producers cut guidance during the year. In China, several factors have
created a market in transition in 2023, including a slower than
expected post-Covid recovery, with decreased demand from traditional
sectors such as property, and emerging demand for sectors linked
to decarbonisation.
Why is copper essential?
Copper is a widely used metal for carrying electricity, due to its high
conductivity, and is generally the most economical metal for use
in electrical components. As modern technology is heavily dependent
on electricity and its associated infrastructure, copper is essential
for modern living and in particular for the ongoing energy transition
to low-carbon economies. Copper also benefits from being a metal
resistant to corrosion and with high malleability, meaning it can
be crafted into a range of forms for manufacturing different types
of products, such as wires, rods, tubes and bars. Thanks to these
properties, copper is used in a broad range of industries, including
construction, infrastructure, transport and consumer goods.
Global copper consumption fits into three main categories: wire,
other forms – such as tubes, rods and plates – and alloys. Of the
industries that use copper, 40% of consumption is for electrical
purposes in construction, infrastructure and industry, followed
by 23% of consumption in the manufacturing of white goods and
other appliances.
1
Given the wide range of industries using copper, it has traditionally
been seen as a barometer of health for the global economy: when
global economic activity grows, manufacturing output tends to increase
and demand for key inputs (such as copper) rises. The copper price
has long been a leading economic indicator, preceding lagging
indicators, such as employment and inflation data. The copper price is
influenced by other factors, including the global mine supply of primary
copper, the recycling rates of scrap copper, and artificial impacts such
as trade tariffs. In recent years, demand shifting towards sectors
associated with the energy transition has bolstered the copper price,
lowering the correlation with phases of economic growth.
There was greater market stability in copper prices in 2023, with rising demand from
industries associated with the energy transition.
Global copper demand in 2023
Global refined copper demand is estimated to have been approximately
25 million tonnes in 2023, representing a 3% increase year on year.
China continues to be the main consumer, representing 55% of the
total with nearly 14million tonnes.
2
To put this in perspective, the
second largest source of copper demand is Europe, with a 12% market
share of approximately three million tonnes.
3
Another major end-user
of copper is the United States, which has remained stable at 1.8–1.9
million tonnes of copper demand for the past five years, according
to the United States Geological Survey.
Key factor: China
Given China’s prominence in global copper demand, its economic
outlook is a key predictor for the overall global balance of supply and
demand. Data from the International Monetary Fund (IMF) published
in Q4 2023 indicated an expectation that the Chinese economy grew
by 5.4% in 2023, slowing to 4.6% in 2024.
4
Drivers for this growth
in 2023 are cited by the IMF as an initial rebound in economic activity
following the easing of post Covid-19 measures in early 2023, followed
by a series of broad-based and pro-market structural reforms aimed
at boosting productivity, which helped to accelerate growth from the
2–3% seen in 2022.
5
However, a key factor for the expected slowing
of the Chinese economy going into 2024 is the property sector,
with several large-scale domestic property developers facing financial
constraints, reduced local demand and distressed balance sheets.
This continues to be a factor to monitor in 2024, as well as the efforts
made by the Chinese government to manage this risk and promote
economic growth.
As a result of continued economic growth, copper demand in China
is also expected to increase by a further 2% in 2024.
2
The copper market
Copper:
Essential for electrification
1. International Copper Association, 2023 Global View Semis End Use Dataset, published
August 2023.
2. International Wrought Copper Council, Short-Term Forecasts for Copper,
published October 2023.
3. Defined by the IWCC as EU27 plus UK.
4. Release: “IMF Staff Completes 2023 Article IV Mission to the People’s Republic
of China”, dated November 2023.
5. Release: “IMF Executive Board Concludes 2022 Article IV Consultation with the People’s
Republic of China”, dated February 2023.
Antofagasta plc Annual Report 202316
STRATEGIC REPORT
Key factor: Decarbonisation and emerging technologies
The energy transition and other technological advances continue
to spur changes in copper demand in both China and the rest of the
world. Examples of emerging technologies that are heavily dependent
on copper are battery electric vehicles (BEVs), which can require two
to three times as much copper as a typical combustion engine vehicle.
1
Copper is also key to renewable power generation, with solar power
units using copper in thermal heat exchange units and electrical wiring,
with a requirement of approximately 5.5 tonnes per megawatt
generated. Offshore wind installations are even more copper intensive
due to lengthy cabling requirements, needing approximately 9.5 tonnes
per megawatt generated.
2
As government legislation encourages decarbonisation, BEVs are
forecast to represent more than half of global car sales by 2040, an
industry of more than 100 million units a year. The volume of copper
required by the automotive industry is expected to rise by 143%
between 2020 and 2040, growing to six million tonnes of annual
copper consumption.
3
Historically, the property sector has been the major consumer of
copper in China. However, demand slowed in 2023 for the reasons
stated previously. Rising investment during 2023 in China’s grid and
decarbonisation in the automotive sector (with emissions controls in
major cities, and government incentives promoting sales of BEVs),
resulted in robust growth for sales of electric vehicles during the year,
helping to bolster overall demand for copper and keep prices relatively
stable during the year.
With governments increasing efforts to decarbonise economies through
legislation and emerging technologies, it is expected that overall copper
demand will grow, and across a broader range of sectors than before.
The dominance of China is a continuing risk to the copper market,
particularly if its market share increases in the coming years.
Additional risk factors relating to higher prices are the threat of
substitution, further technological innovation and falling demand, all
factors that may limit the potential for demand growth in the medium
to long term. Research suggests that substitution and miniaturisation
of copper components has remained stationary at approximately
400–500kt per annum for the past ten years, and this may moderate
future copper demand growth and mitigate against substantially higher
prices in the long-term
7
.
Scrap recycling rates are a further factor in respect of the copper
supply-demand balance, as discussed in the following section.
Global copper supply in 2023
The production of copper is not straightforward. Key considerations
in producing primary copper (mined copper in the form of concentrates
or cathodes) include the following: the permitting process for new
and existing mines, capital requirements and other barriers for entry,
grade decline and rising ore hardness once operational, risks relating
to ongoing support from local stakeholders, and closure considerations.
Primary copper supply represents approximately 22 million tonnes per
annum,
4
around 84% of total global refined copper.
5
The balance
comes from secondary copper (recycling and reclaimed copper).
Mine supply (primary copper)
According to the United States Geological Survey, Chile, Peru and the
Democratic Republic of the Congo (DRC) represented a combined total
of 46% of the 22 million tonnes of global mined copper supply in 2023,
with a further 35–40% coming from the next ten countries, including
Australia, the United States, China, Indonesia and Russia. With such
a large proportion of primary copper supply concentrated in three
countries, it is important to understand the trends emerging in these
three jurisdictions, as well as in other emerging copper supply regions
and countries.
Chile remains the main global producer, consistently producing
between five and six million tonnes of primary copper for the past
20 years, with concentrates representing 74% of the 5.3 million
tonnes produced in 2023.
6
While Chile is home to six of the world's
top 20 mines by capacity, more than any other country, these mines
all commenced operations more than 20 years ago and are mature
assets facing issues such as grade decline and increasing ore hardness.
1. IEA (2021), “The Role of Critical Minerals in Clean Energy Transitions”, IEA, Paris (link),
License: CC BY 4.0.
2. Source: Copper Development Association.
3. Source: International Copper Association report: “Automotive copper demand to
increase”, dated March 2022.
4. Source: United States Geological Survey.
5. Source: International Copper Study Group, World Refined Copper Production and Usage
Trends dataset.
6. Source: Chilean Copper Commission (Cochilco).
7. Source: Copper Alliance, Copper Substitution Survey 2022
Copper cathodes awaiting shipment.
Antofagasta plc Annual Report 2023 17
In other jurisdictions, Peru has a number of large-scale copper mines,
and contributed 2.6 million tonnes of copper supply in 2023. While
Peru's copper supply remained largely flat between 2016 and 2022,
it has shown increasing output in 2023 following the recent construction
of a large-scale mining project and the country as a whole has
a high degree of prospectivity for copper-bearing deposits, with the
third-highest estimated ore reserves in the world behind Chile and
Australia. The DRC contains an emerging district for large-scale copper
production, with several new mines entering production in recent
years and doubling mined copper output in the five years to 2023.
1
Recycling (secondary copper)
The advantage of copper is that it can be recycled without loss
of quality, therefore secondary copper is an important resource,
representing a major component of global supply. Unlike those of steel,
copper’s qualities do not degrade over time, and with the increasing
lifespan of copper components, the re-use of copper can take decades
to occur, tying up more copper in global in-use inventories. While recycling
rates are expected to increase, with designs beginning to incorporate
circular economy principles, it is expected that primary copper supply
will continue to meet the majority of long-term global demand.
Smelting and refining
Copper smelting converts copper concentrates to metal. China
operates approximately 50% of the world’s smelting capacity, with
recent investments expected to increase this figure. The refining
process produces high grade copper cathodes. Treatment charges
and refining charges (TC/RCs) represent the costs associated with
producing refined copper from concentrates, and fluctuations in TC/
RCs are often viewed as a proxy for the global trade balance of copper
concentrates. Globally reported TC/RCs fell in the second half of 2023
following a tightening of the global copper concentrate supply, and
rising smelter capacity in China is expected to put further downward
pressure on TC/RC pricing in the coming years.
Consensus pricing estimates
Based on 21 contributing banks, the consensus estimates for copper
pricing in 2024 and 2025 are $3.90/lb and $4.00/lb.
2
In comparison,
the current spot price of copper was $3.84/lb as of December 2023.
3
The copper market continued
1. Source: United States Geological Survey.
2. Source: Data provided by JPMorgan Chase & Co., with consensus compiled
as of December 2023.
3. Source: LME, cash basis. Pricing as of 21 December 2023.
Worker inspecting copper-bearing drill core at Antucoya.
Antofagasta plc Annual Report 202318
STRATEGIC REPORT
The year in review
Copper
Following market tightness in early 2023, when copper prices rose by 12% in
January to a peak of $4.23 per pound, prices gradually trended down to $3.80/lb
as of the end of the year. This downwards trend was largely seen in H1 2023.
A degree of stability was seen in H2 2023, with more than 50% of the daily prices
seen in H2 2023 sitting between $3.60/lb and $3.80/lb. Over the course of the
year, the average market copper price was 4% lower year-on-year at $3.85/lb,
with a minimum price of $3.55/lb (2022 minimum: $3.25/lb) and a maximum price
of $4.23/lb (2022 maximum: $4.85/lb).
Prices in 2023 reflected a significantly lower level of volatility than in 2022. While
macro-economic factors saw a decline in global demand during 2023, supply-side
disruption and guidance cuts have helped to balance the market.
Copper prices in 2024 will depend on a range of factors, including growth rates
in the Chinese economy, in particular the continued stabilisation of the property
sector, as well as the outlook for recently disrupted mine supply and global
copper inventories.
Average copper market price (2023)
$3.85/lb
(2022: $4.00/lb)
Gold
The average gold price rose by 8% to $1,942/oz in 2023, reflecting persistently
high global inflation and geopolitical instability. Prices in early April recorded
all-time highs, reaching a maximum of $2,050/oz, reflecting concerns at the time
relating to bond market volatility and instability in the banking and tech sectors.
Since April, gold prices have largely remained between $1,900/oz and $2,000/oz,
briefly declining below $1,900/oz during late Q3 and early Q4 as a result of rising
bond yields and a strengthening dollar, before the outbreak of the conflict in the
Middle East pushed prices back up during Q4.
Average gold market price (2023)
$1,942/oz
(2022: $1,800/oz)
Molybdenum
Molybdenum prices started the year at approximately $30/lb, rising to exceed
$38/lb during Q1, the highest level seen since 2005. Prices subsequently retreated
to $17/lb by mid-April and have remained between $15 and $25/lb since April.
The market volatility and record pricing seen in early 2023 is attributable to
a market that has been in deficit since 2022, with low existing stockpiles, resulting
in relatively small transactions having a strong effect on global pricing. A delay
to additional production from new projects in Chile in 2023, in addition to delays
in Chinese supply, helped to contribute to the spike in pricing seen in early 2023.
Whilst these factors stabilised in the second half of the year, with more consistent
pricing, it is expected that the overall market for molybdenum will remain constrained,
which is expected to provide pricing support going forward.
Molybdenum average market price (2023)
$24.2/lb
(2022: $18.7/lb)
Copper price 2023
3.2
3.5
3.8
4.1
4.4
Dec 22 Dec 23Feb 23 Apr 23 Jun 23 Aug 23 Oct 23
Copper price ($/lb)
Gold price 2023
1,600
1,700
1,800
1,900
2,000
2,100
Dec 22 Dec 23Feb 23 Apr 23 Jun 23 Aug 23 Oct 23
Gold price ($/oz)
Molybdenum price 2023
15
20
25
30
35
40
Jan 23 Dec 23Mar 23 May 23 Jul 23 Sep 23 Nov 23
Molybdenum price ($/lb)
Antofagasta plc Annual Report 2023 19
Delivering value for our
stakeholders through the
mining lifecycle
Business model
We believe in developing mining for a better future. As custodians of natural resources,
we have a responsibility not only to manage these resources efficiently and responsibly,
but also to harness copper’s potential to contribute to the development of a greener
and more sustainable world.
Exploration / Acquisition
We undertake exploration activities in
Chile and abroad, with a particular focus
on the Americas.
WHAT WE DO
Evaluation
We integrate sustainability criteria into the
design process and project evaluation phase,
developing innovative solutions for challenges
such as water availability, long-term energy
supply and community relations.
Construction
This stage requires significant input of capital
and resources, as well as effective project
management and cost control to maximise
the project’s return on investment.
Extraction and processing
Health and safety, operating efficiency and
innovation are all key elements of how we
run our operations.
Sales and marketing
We build long-term relationships with
the smelters and fabricators who purchase
our products, with approximately 75%
of output by value going to Asian markets.
Mine closure and rehabilitation
At the end of a mine’s life, it must be closed
and remediated according to the international
standards and national regulations in force
at the time.
Antofagasta plc Annual Report 202320
STRATEGIC REPORT
WHAT WE NEED
WHAT WE GENERATE
Our products
Copper
660,600 t
2022: 646,200 t
Gold
209,100 oz
2022: 176,800 oz
Molybdenum
11,000 t
2022: 9,700 t
Silver
3.1 million oz
2022: 2.8 million oz
For more information on our production,
see P90
Our footprint
CO
2
e emissions intensity
1.69 tCO
2
e/tCu
emissions per tonne of copper produced,
representing a 3% reduction year-on-year
(2022: 1.75 tCO
2
e/tCu).
60%
Increasing sea water sources to 60% of total
water withdrawals, following construction of
the Los Pelambres’ desalination plant in 2023,
and marking the first year whereby sea water
withdrawals exceed withdrawals from
continental sources (2022: 45%).
For more information on our footprint,
see P57
Our outcomes
Total economic contribution
$7,249m
We generate economic value for all our
stakeholders, distributing it as wages to
employees, purchases of goods and services
to suppliers, social investment programmes in
communities, taxes to governments, dividends
to shareholders and interest payments to
lenders (2022: $7,445m).
For more information on our total
economic contribution, see P32
Long-term relationships
Responsible miningResources
Our people
Over 29,000 employees,
permanent contractors and
temporary contractors related
to projects. Constructive
relationships, anchored in mutual
respect and transparency,
are crucial for a good working
environment and talent retention,
as well as for productivity
and efficiency.
Communities
The wellbeing of our neighbours
is directly related to the
sustainable development and
success of our business.
Suppliers
We work with over 1,700
suppliers, who provide a broad
range of products and services,
from large mining equipment to
catering and transport. They are
vital to our ability to operate
continuously, safely and
efficiently.
Customers
Most sales are made under
long-term framework
agreements or annual contracts,
with sales volumes agreed for the
following year.
Shareholders
We maintain fluent and
transparent dialogue with our
shareholders to ensure that they
are all treated fairly and receive
all relevant information.
Governments and regulators
We work alongside mining
associations and other industry-
related bodies to engage with
governments on public policy,
laws, regulations and procedures
that may affect our business.
For more information on our
stakeholders see P38
World-class assets
We have a portfolio of large,
predominantly high-quality, low
cost assets in our two main
mining districts. We are investing
in technology to improve
productivity and drive sustainable
growth across our operations.
Inputs
Our mining operations depend on
a range of key inputs, such as
energy, water, labour, sulphuric
acid and fuel.
Financial resources
We have a strong balance sheet,
an undrawn credit facility
andaccess to other sources
ofcapital.
For more information on our
operations see P90
We believe it is possible to mine
sustainably by prioritising
environmental protection and the
efficient use of natural resources.
Antofagasta plc Annual Report 2023 21
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.
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.
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.
Planet
We recognise that climate change is one of the
greatest challenges faced by humanity. Our vision of
a better future reflects the quest for a more
sustainable planet, with copper playing a central role
in the energy transition, economic progress and
improved livelihoods.
Developing
mining
for a better
future
OUR PURPOSE FOR WHOM WE WANT TO
ACHIEVE 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.
How we deliver
our purpose
Our strategic framework
Antofagasta plc Annual Report 202322
STRATEGIC REPORT
Centinela’s digital training facilities
for operating mining equipment.
Respect for others
We respect people and care about their opinions, which is why we
engage in an open, transparent and collaborative way. We trust them
and have a genuine interest in their wellbeing. We promote a work
environment that fosters diversity and inclusion.
Responsibility for health and safety
We are responsible for our own health and safety, as well as for that
of others. We identify and control our risks, and we are aware of the
impacts of our actions.
Committed to sustainability
We operate responsibly and efficiently, with long-term vision.
We maximise the economic value of our assets, contribute to social
development and minimise our environmental impacts.
Excellence in our performance
We continually seek to achieve the best possible results through
operational discipline. We look after our resources, and we build trust
by fulfilling our commitments.
Innovation as a permanent practice
We recognise and promote new ideas that improve our work practices
and the way we relate to others. We aim to create value for the
organisation, people and the environment.
Forward thinking
Our business strategy aims to generate value with a long-term vision
for shareholders and other stakeholders. We learn from our mistakes
and have the flexibility and courage to face new challenges.
Safety and
Sustainability
to enhance our current
operations, while aiming
to future-proof our
business model
Competitiveness
is key to us achieving
excellence and creating
long-term value
People and culture
to cultivate the
talent necessary
for a better future
Growth
to keep contributing
to the development
of a better future
Innovation
to constantly push back
boundaries and
exploring new ways
of advancing
HOW WE WILL ACHIEVE THIS
Through our five strategic pillars
For more information on our strategic pillars see P24
Underpinned by our values
Antofagasta plc Annual Report 2023 23
People
and culture
Competitiveness
Safety and
Sustainability
Our strategic pillars
Our strategy is built around five pillars, each of which has defined long-term objectives
with short- and medium-term goals.
Description
We aim to create value and growth
throughout the mining lifecycle, from
exploration to mine closure. Our goal is to be
a Company known for its ethical and
transparent conduct, respectful of human
rights and the law. To achieve this, we are
determined to continue to develop a
comprehensive and long-term commitment to
all our stakeholders, particularly our
communities and workers.
We align ourselves with the UN Sustainable
Development Goals (SDG), developing
responsible mining practices that are certified
by the Copper Mark and ICMM’s Performance
Expectations. We prioritise the efficient use of
renewable natural resources and the
reduction of our greenhouse gas (GHG)
emissions by using sea water and energy
from cleaner sources.
All of this is done while ensuring the
occupational health and safety of all our
employees and contractors. We do this
through the active leadership of our workers,
who by their responsible behaviour and
proactive management of risks and critical
controls ensure a safe and healthy working
environment for all.
Key initiatives
•
Climate Change Strategy
•
Social contribution
•
Health and Safety Control Strategy
Performance
•
Zero fatal accidents in 2023 (2022: zero)
•
25% reduction of Company’s lost time
injury frequency rate
•
3% reduction in emissions per tonne of
production (Scope 1 and 2).
•
100% renewable energy (Mining division)
Description
Our goal is to create and nurture a working
environment that incorporates new ways of
thinking, with innovation at the forefront, to
tackle current and future challenges. We
strive to inspire people to tackle more
complex and dynamic problems, and to
develop new management approaches to
solve them. The demands of today’s and
tomorrow’s adaptive challenges require us to
collaborate and excel while developing new
skills.
We aim to truly understand what our people
value, to treat them fairly, and to engage and
inspire them based on their personal
motivations and unique qualities as individuals.
This is a challenge that requires us to change
the understanding of the traditional
employment relationship with the Company.
We will continue to drive forward our cultural
transformation, promoting the organisation as
a safe and supportive space that actively
listens, empathises, connects and builds
strong relationships with our people.
Key initiatives
•
Diversity and Inclusion Strategy
•
Leadership brand competencies framework
•
Digital Academy
Performance
•
Wellbeing Strategy rolled out
•
23.6% of our employees are women
•
Inclusive practices are an integral part
of how we work
Description
Competitiveness is essential as it ensures
resilience and makes the business viable.
By producing copper efficiently we are able to
grow and contribute to the development of
mining while promoting the energy transition.
We aim to maintain our strong financial
position through efficient capital allocation,
the proper execution of our projects and the
renewal of our asset portfolio, allowing us
to continue operating and growing as we
address increasingly complex challenges.
We strive to be one of the most cost-
competitive companies in the industry, and
towards that end, we are dedicated to
achieving excellence in our work and seeking
new and efficient ways to manage our
operations.
Additionally, we are undergoing a process of
operational transformation that allows us to
integrate technology and innovation, utilise
data analytics and promote efficient resource
management by strengthening key operational
processes that will enable us to achieve the
full potential of our assets’ performance.
Key initiatives
•
Cost and Competitiveness Programme
•
Operational excellence
Performance
•
Copper production of 660,600 tonnes
at a net cash cost of $1.61/lb
•
EBITDA margin remains strong at 49%
•
Our Cost and Competitiveness Programme
achieved more than double its target,
yielding benefits of $135 million
To read more on our efforts in respect of
safety and sustainability, please see pages
44 and 38 respectively
To read more on our efforts in respect of
our people and culture, please see pages
40 to 43
To read more on our efforts in respect of
competitiveness, please see pages 103 to
104
Our strategic framework continued
Emphasising safety and sustainability
to enhance our current operations,
and looking to the future.
Investing in people and fostering a positive
culture to cultivate the talent necessary
for a better future.
Our competitiveness is key to us achieving
excellence and creating long-term value.
Antofagasta plc Annual Report 202324
STRATEGIC REPORT
Operator at Centinela’s Integrated
Remote Operations Centre.
Innovation Growth
Description
We aim to create new ways of operating and
using existing technology more effectively,
incorporating our own and others’ learning
to improve performance.
We further aim to discover new ways of
advancing our operations through the early
adoption of modern technology. With our
experience we are convinced that we can
contribute to the development of new
solutions, such as Cuprochlor
®
-T, integrated
remote operations centres (IROCs),
autonomous haulage and drilling, advanced
analytics and data management for decision-
making, robotics for tailings and water
management, decarbonisation of our
processes and dust suppression.
Our Innovation Roadmap serves as a guide
for the Group to achieve our operational
vision for the future. This allows our
operations to become smart, integrated and
sustainable, optimising the use of strategic
resources such as water and energy.
Description
Growth enables us to maintain our viability
and fulfil our purpose. It allows us to realise
the full potential of our resources and assets,
creating additional value and diversifying risk.
To accomplish this, we aim to:
•
Expand and increase the Group’s
production capabilities by building projects
such as Los Pelambres Expansion Phase 1
and the Centinela Second Concentrator
project.
•
Increase our mineral resource base
through the exploration for new resources
and/or the development of new ore
deposits.
Our strategy for growth beyond our existing
operations is focused on producing copper
and its by-products in the Americas
(particularly Chile, Peru, the United States and
Canada), a region that is highly attractive due
to its geological potential, mining activity,
relative proximity to our existing portfolio of
operating assets, political and administrative
similarities, culture and language.
Key initiatives
•
Integrated Remote Operations Centres
•
Autonomous trucks and drilling
•
Cuprochlor
®
-T
Performance
•
Inauguration of the Los Pelambres IROC in
January 2023.
•
Further advancing work on our proprietary
primary sulphides leaching technology
(Cuprochlor
®
-T), conducting a successful
heap heating pilot at Zaldívar.
Key initiatives
•
Los Pelambres Expansion Phase 1
•
Centinela Second Concentrator
•
Projects to enable further growth at Los
Pelambres (including desalination plant
expansion to 800 l/s and a new
concentrate pipeline).
Performance
•
Completion of construction of the
Los Pelambres Phase 1 Expansion Project
•
Agreements to acquire 19% ownership
of Buenaventura.
To read more on our efforts in respect of
innovation, please see pages 105 to 107
To read more on our efforts in respect of
growth, please see pages 100 to 101
For further information on the risks
associated with each strategic pillar,
please see P76
For more information on how we
align our strategic performance with
remuneration, please see our
Remuneration report on P156
Through innovation we are committed to
constantly pushing back boundaries
and exploring new ways of advancing.
Growth to continue contributing
to the development of a better future.
Antofagasta plc Annual Report 2023 25
0.0
20232022202120202019
50.9
54.7
142.5
59.7
72.0
20232022202120202019
50.9
51.3
130.9
155.5
84.7
Key Performance Indicators
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:
20232022202120202019
3,477
2,559
1,966
1,413
1,349
20232022202120202019
563
886
1,160
(541)
82
20232022202120202019
2,439
2,739
4,836
2,930
3,087
FINANCIAL KPIs
EBITDA
1
$3,087m
Profit before tax
$1,966m
Underlying earnings per share
2
72.0 cents
Earnings per share
3
84.7 cents
Net debt/(Net cash)
1
$1,160m
Measuring our performance
Read more on P108 Read more on P108
Read more on P113 Read more on P113
Read more on P114
Remuneration performance criteria P166
Dividend payout ratio
4
50%
This is a measure of our profitability
before the deduction of taxes.
Profit before tax (including exceptional items)
fell by 23%, as a result of the recognition in
2022 of an exceptional gain relating to the
disposal of the Reko Diq project, which was
offset by increases in both sales and pricing,
partially offset by a rise in cash costs.
This is a measure of our financial liquidity.
Strong balance sheet with net debt of $1,160
million at the end of 2023 and a Net debt/
EBITDA ratio of 0.38x (2022: 0.30x).
This is a measure of our underlying
profitability.
EBITDA increased by 5%, driven by increases
in both sales and pricing, with EBITDA
margins maintained at 49%.
These are measures of the profit
attributable to shareholders before
exceptional items.
Underlying earnings per share excluding
exceptional items increased by 21%
to 72 cents.
These are measures of the profit
attributable to shareholders after
exceptional items.
Earnings per share including exceptional
items for the year were 46% lower at 84.7
cents, relating to the recognition in 2022 of
an exceptional gain relating to the disposal of
the Reko Diq project.
20232022202120202019
35%
100% 100% 100%
50%
1. Non-IFRS measures, refer to the alternative
performance measures section on page 239.
2. From continuing operations excluding exceptional items.
3. From continuing and discontinued operations including
exceptional items.
4. 2023 payout ratio shown includes proposed final dividend.
5. 100% of Los Pelambres, Centinela and Antucoya,
and 50% of Zaldívar’s production.
6. Mineral resources (including ore reserves) relating
to the Group’s subsidiaries on a 100% basis and Zaldívar
on a 50% basis.
7. The Lost Time Injury Frequency Rate is the number of
accidents with lost time during the year per million hours
worked.
8. Scope 1 and 2, Mining division only.
9. Tonnes of CO
2
equivalent per tonne of copper produced.
Antofagasta plc Annual Report 202326
STRATEGIC REPORT
OPERATING KPIs
SUSTAINABILITY KPIs
Copper production
5
660.6kt
Net cash costs
1
$1.61/lb
Mineral resources
6
20.5bn t
20232022202120202019
19.1
19.2
19.1
20.1
20.5
20232022202120202019
770.0
733.9
721.5
646.2
660.6
20232022202120202019
1.22
1.14
1.20
1.61 1.61
Read more on P90 Read more on P90
Continental water
Sea water
20232022202120202019
32.6
38.9
28.2
29.0
37.7
31.3
39.7
33.1
33.1
48.8
Read more on P65
Safety
0
Fatalities
Water withdrawals
82 GL
CO
2
e emissions intensity
8,9
1.69 tC0
2
e/tCu
20232022202120202019
0 0 0 0
1
1.0
0.9
1.3
0.84
0.63
20232022202120202019
3.10
2.79
2.56
1.75
1.69
Read more on P44 Read more on P57
Read more on P245
This is a key indicator of operating
efficiency and profitability.
Net cash costs for 2023 were $1.61/lb, in line
with 2022 and ahead of guidance for the
year, reflecting a balance of higher underlying
cash costs before by-products, alongside
higher production and pricing for by-products.
Our mineral resource base supports our
strong organic growth pipeline.
Total mineral resources increased by 345
million tonnes during the year, following work
at Los Pelambres.
Copper is our main product and largest
source of revenue.
Copper production increased by 2% to
660,600 tonnes, with an increasing
contribution from Los Pelambres, as the
Phase 1 Expansion Project ramps up.
Water is a precious resource and we are
focused on using the most sustainable
sources and maximising its efficient use.
The use of sea water as a proportion of total
water withdrawals increased to 60% (2022:
45%), with the recently opened desalination
plant helping to increase sea water
withdrawals by 48% during the year.
We recognise the risks and opportunities
arising from climate change and the need
to measure and mitigate greenhouse gas
(GHG) emissions.
CO
2
e emissions intensity decreased
by 3% in 2023.
Safety is our top priority, with fatalities
and the LTIFR
7
being two of our principal
measures of performance.
Record safety performance with no fatalities
and the LTIFR improving by 25% as the
Company continues to embed a safety-first
culture, with improvements in leading and
lagging indicators of safety.
0.63 LTIFR
6
Antofagasta plc Annual Report 2023 27
SECURING THE FUTURE OF LOS PELAMBRES
The positive impacts
are already being
seen through the
completion of
construction of the
desalination plant
mid-year, increasing
ore processing rates
and helping to reduce
our reliance on
continental sources of
water. We will see
further benefits in
2024 as the fourth
concentrator line adds
additional capacity.
Operator at the Los Pelambres desalination plant,
located on the Pacific Coast at Los Vilos.
Antofagasta plc Annual Report 202328
STRATEGIC REPORT
Desalination plant
33%
Approximately one-third of Los
Pelambres’ water withdrawals were sea
water following construction and ramp
up of the desalination plant.
Fourth Concentrator Line
+2Mt
Of additional ore processing during
2023, with nameplate capacity
increasing to 190ktpd.
Desalination plant: An investment in
sustainable copper production
In 2023, the Company completed construction
of its first desalination plant for the supply of
water to Los Pelambres in the Central Region
of Chile. Representing a major investment in
the future of Los Pelambres, and reinforcing
our commitment to Chile, the desalination
plant will help to reduce continental water
consumption in a region that has experienced
a severe shortage of rainfall for more than a
decade. This positive impact has already
begun, with Los Pelambres able to increase
ore throughput rates by 11% in 2023 as a
result of increased water availability. In 2023,
the desalination plant contributed
approximately a third of this operation’s total
water withdrawals during the year, despite
only commencing its commissioning and ramp
up in the middle of the year.
The desalination plant sources water from
the Pacific Ocean and producing desalinated
water through a dedicated facility. A series
of pumps then transfer water from the coast
to the location of the mine, for a continuous
supply of water. As is the case with all of
the Company’s operations within its Mining
division, the desalination plant is contracted
to operate with renewable power, helping
to maintain the progress made in reducing
the Company’s carbon footprint.
Mechanical construction of the desalination
plant was completed in Q2 2023, with the
plant approaching a successful completion
of its ramp up to design capacity as of the end
of the year. Water availability is an important
consideration in the local communities where
Los Pelambres is located, with many farms
operating in the same low-rainfall conditions
that the Company has experienced for many
years. Through the newly completed
desalination plant and a reduced reliance by
Los Pelambres on continental water sources,
it is expected that water availability will
improve as a result, benefiting a wide range
of local stakeholders.
Following construction of the first phase of
the desalination plant, approval has already
been granted for an expansion of this facility
to 800 litres per second, which would largely
cover the current water requirement for
Los Pelambres. Following completion of this
project, construction of which is envisaged to
take approximately three years, the Company
aims to achieve its target of increasing water
use from sea water or recirculated sources
to more than 90%.
Fourth concentrator line: Developing
processing capacity
The fourth concentrator line at the Los
Pelambres processing plant increases the ore
processing capacity to 190,000 tonnes per
day, which will serve to mitigate the effects of
ore hardness as mining operations progress
towards lower sections of the orebody. The
geology of porphyry copper deposits typically
exhibits increasing ore hardness with depth,
as the ores being mined are further from the
surface and less exposed to weathering and
faulting that might weaken the rock over time.
Through an investment to increase the ore
processing capacity of Los Pelambres, the
Company is able to mitigate this impact and
maintain production levels in line with
historical levels of output. This brownfield
expansion utilises existing knowledge and
understanding of the orebody characteristics
to help reduce project execution risk.
Over time, a further expansion of processing
capacity to 205,000 tonnes per day is
envisaged to secure the long-term future of
Los Pelambres, which has sufficient
resources to maintain production for many
years to come.
Los Pelambres Phase 1:
Construction completed
Pumps at the Los Pelambres desalination plant.
Antofagasta plc Annual Report 2023 29
Sustainability
review
“Sustainability is at the core of what
we do. We take a holistic approach
to tackling the main social and
environmental challenges facing
our industry, where innovation and
safe production are key drivers.
As a company, we are in a strong
position to continue addressing the
global challenge of climate change.
Our priority is to generate value
for all our stakeholders through
sustainable production, efficient use
of water, conservation of biodiversity
and commitment to communities.”
RENÉ AGUILAR
Vice President of Corporate Affairs and Sustainability
Sustainability review
2023 performance 31
Our approach to sustainability 32
How we engage with our stakeholders 38
Social
Our people 40
Our occupational health and safety 44
Fostering communities 48
Our suppliers 52
Environmental
Sustainable production 54
Our climate change approach 57
Water stewardship 65
Biodiversity protection 68
Governance
Governments and regulators 70
Shareholders 71
Customers 72
Non-financial and sustainability
information statement 73
See P28 in the Sustainability Report for an overview of the various
sustainability awards received in 2023.
Antofagasta plc Annual Report 202330
STRATEGIC REPORT
Water management
60%
of water withdrawals from sea water during the year, with 2023
representing the first year whereby sea water overtook continental
water as the main source of withdrawals.
400 l/s
instantaneous capacity of the recently constructed desalination plant
at Los Vilos, built to supply Los Pelambres with water, and which
began operation in 2023. Environmental approval was also given
in 2023 to the project to double this plant’s capacity to 800 l/s.
Biodiversity
+27,000 hectares
under protection in the
Coquimbo Region
(LosPelambres): an area
morethan six times larger
thanthat occupied by
LosPelambres
Decarbonisation
Scope 1 & Scope 2
2035 goal
50%
emissions reduction with 2020 as baseline
Health and safety
0
fatalities
34
High Potential Incidents (HPIs)
(42 in 2022)
0.63
Lost Time Injury Frequency (LTIFR)
(0.84 in 2022)
Communities
Our relationship with
indigenous communities
5
areas
2
regions
19
agreements
Water management
+64,000
residents benefitting from
management of water
for human consumption
Our progress in 2023
Our people
Female employment
23.6%
(20.4% in 2022)
Type of contract
96%
of our employees have a
permanent employment contract
Local employment
61%
of our employees are based
in the Antofagasta and Coquimbo
Regions of Chile where our
operations are located
Local suppliers
91%
of our suppliers are located
in Chile.
Internet connectivity
250
additional homes connected
to fibre-optic network
Education and employment
+1,300
students supported in local
educational facilities, through
scholarships and grants
Scope 3
2030 goal
10%
emissions reduction with industry engagement
Circular economy
20+
partnerships
44
initiatives
Antofagasta plc Annual Report 2023 31
2023 performance
How is this sustainable economic value distributed among
our stakeholders?
•
Employee salaries
•
Social investment programmes in communities
•
Purchase of goods and services from suppliers
•
Long-term or annual client sales contracts
•
Shareholder dividends
•
Interest payments to lenders
•
Taxes paid to governments
Sustainable economic value is at the core of our long-term vision,
and we operate best practices to optimise management of the
environmental, social and governance aspects of our activities.
Innovation is the engine that drives our contribution to tackling the
sustainability challenges inherent to our business, and we are careful
to account for the reality of the regions in which we operate.
At Antofagasta, we work consistently to
fulfil our purpose of developing mining for
a better future. As such, we are committed
to generating economic, social and
environmental value for all our stakeholders.
Delivering
sustainable
economic value
Through innovation and
incorporation of new
technologies, we enhance long-
term competitiveness, improve
industrial processes and operate
our climate change strategy.
This requires us to direct
resources towards employee
preparation and adaptation to
new forms of training and
knowledge assimilation.
Our approach to sustainability
Suppliers
$4,822m
Payments for the purchase of utilities,
goods and services
Communities
$49m
Social investment programmes
Lenders
$171m
Interest payments
Shareholders
$613m
Dividends
$7,249m
Our total economic contribution to society
(2022 – $7,445m)
Subsidiaries’ non-
controlling shareholders
$388m
Dividends
Employees
$668m
Salaries, wages and incentives
Governments
$538m
Income taxes, royalties and other
payments to governments
For further information on economic value, please refer to our Sustainability Databook
for 2023, which is available on our website (www.antofagasta.co.uk).
Newly restored church in the town of Camar,
in the Antofagasta Region of Chile.
Antofagasta plc Annual Report 202332
STRATEGIC REPORT
Sustainability governance
At Antofagasta, we seek to achieve and enhance a positive long-term impact on society, based
on our values, corporate policies and standards, by reviewing risks and opportunities that could
have an impact on our business. The Board is responsible for analysing, leading and monitoring
sustainability policies and best practices.
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The Sustainability and Stakeholder Management Committee and
the Audit and Risk Committee primarily support the role of the Board.
The Sustainability and Stakeholder Management Committee makes
recommendations to ensure that sustainability topics are included
in the Board’s ongoing decision-making.
This Committee also supervises the community and environmental
dimensions of our sustainability and human rights policies, in addition
to providing guidance on how the Group should reflect the visions
and interests of its various stakeholders. In 2023, the Committee
met seven times to assess the organisation’s priorities.
Our
Sustainability
Policy
Conduct more efficient,
sustainable and
inclusive mining
Antofagasta plc Annual Report 2023 33
At the executive level, sustainability permeates and guides
management of the organisation. The Vice Presidency of Corporate
Affairs and Sustainability is responsible for the execution of our
sustainability policy and for ensuring that all our employees share
our commitment.
Through the day-to-day management of this department, the Company
aims to deliver a strategic and consistent approach to each mining
Our approach to sustainability continued
25%
of annual performance bonuses are associated with sustainability
targets for safety, diversity, inclusion, and environment and
social performance.
The Company’s management team reports to the Sustainability
and Stakeholder Management Committee every time it convenes
(six or more times a year), and as required by the Audit and Risk
Committee, with a minimum of two meetings a year.
Risk management
Risks associated with sustainability – which, with health and safety,
is one of our five strategic pillars – are monitored to identify degrees
of uncertainty and allow us to adopt measures in a timely fashion.
Growing levels of risk, particularly in relation to climate change,
impose new challenges that require an integrated approach. In 2023,
we updated our sustainability and safety risks matrix, incorporating
relevant changes according to the new challenges.
At Antofagasta, we conduct rigorous evaluations of the possible risks
that could affect our long-term sustainability. The Board examines
each one thoroughly to assess its impact and probability
of occurrence.
“Sustainability and safety” strategic pillar Level of risk
Occupational health
Environmental management
Climate change
Community relations
Political, legal and regulatory areas
Corruption
Low Medium High Very high
Reports and information released in 2023
2022 Report on Payments to Governments
2022 Sustainability Databook
2022 Sustainability Report
2022 Social Value Report
2022 Tax Report
Second Climate Change Report
Other policies and models
Social Management Model
•
Commit to the sustainable development of the communities present in our areas of influence.
Human Rights Policy
•
Define how to connect with employees, contractors, suppliers, business partners, communities
and other actors directly related to our operations.
•
Reinforce our commitment to the rights of indigenous peoples.
•
Align our security practices with the Voluntary Principles on Security and Human Rights
(VPSHR).
Compliance Model
•
Establish a clear compliance framework for both employees and contractors in relation to ethics,
integrity and transparency.
Environmental Management Model
•
Prevent, monitor and mitigate issues relating to the environment.
Sustainable Procurement
•
Govern the management and expectations of companies that interact with our supply chain.
Energy and Water Policies
•
Strengthen our Climate Change Strategy.
Tailings Policy
•
Ensure tailings stability and compliance with Global Industry Standard on Tailings Management
(GISTM).
International Responsible Mining Standards
Copper Mark
•
Promote responsible practices at copper-producing sites.
•
Our four mining companies have obtained the Copper Mark seal, as verified by external assurance
agents.
International Council on Mining and
Metals (ICMM) Performance
Expectations
•
Define best-practice environmental, social and governance requirements for the mining
and metals industry.
Global Industry Standard on Tailings
Management (GISTM)
•
Achieve strong social, environmental and technical results in tailings management, with
an emphasis on accountability and disclosure.
company within the Group, and ensure work is conducted in
a coordinated manner, to achieve proposed objectives in different
areas, such as the health and safety of workers and the environmental
performance of the companies.
Each of our mining companies are responsible for designing,
co-ordinating and executing of our social management and
performance strategies in the territories where we operate.
Antofagasta plc Annual Report 202334
STRATEGIC REPORT
As an essential part of our sustainability targets and policy, we conduct
a materiality assessment every two years to identify and prioritise
relevant topics that might have an impact on our strategy and
stakeholders. Based on this analysis, we also define risks to our
strategic business planning and practices for the new term. In 2024,
we will conduct a double materiality assessment, reporting not only
on sustainability issues that are material to the Company’s financial
performance, but also on those that impact the wider world.
Following the application of a four-stage methodology in 2022,
we identified 28 material topics, four of which were new to our matrix.
These four topics are industrial protection, wellbeing, cyber security,
and soil remediation (Transport division). Material topics were
organised according to their potential impact on Antofagasta’s strategic
topics and issues relating to our stakeholders.
Six topics were of the highest importance for both Antofagasta’s
strategy and the stakeholders: corporate governance; new regulations,
regulatory uncertainty and permits; transparency, communications
and trust; health and safety culture; dialogue and engagement with
community and indigenous peoples; and social contribution and
skills development.
HIGH
•
Decarbonisation
•
Workforce wellbeing
•
Corporate governance
•
New regulations, regulatory uncertainty
and permits
•
Transparency, communications and
trust
•
Health and safety culture
•
Dialogue and engagement with
community and indigenous peoples
•
Social contribution and skills
development
MEDIUM HIGH
•
Circular
economy
•
Respect for
human rights
•
Responsible sourcing
•
Contractor management
•
Innovation
•
Digital transformation
•
Risk management and climate change
adaptation
•
Water management
•
Collaborative labour relations
•
Talent attraction, retention and development
•
Local employment
•
Diversity, equity and inclusion
•
Tailings management
•
Economic performance
•
Site security
•
Management of social and
environmental impacts of operations
MEDIUM
LOW
•
Biodiversity
•
Cyber security
LOW
•
Soil remediation
•
Heritage and urban development
LOW MEDIUM LOW MEDIUM HIGH HIGH
Materiality analysis
IMPORTANCE TO STAKEHOLDERS
Antofagasta plc materiality matrix
STRATEGIC IMPORTANCE FOR THE GROUP
Antofagasta plc Annual Report 2023 35
Our approach to sustainability continued
Our 2023 analysis required inputs from internal and external stakeholders and was conducted in four stages.
Prioritising and defining
material topics
Within the framework
of the European Financial
Reporting Advisory Group’s
scales, we defined each
topic’s materiality level.
The most significant impacts
were grouped into material
topics under the economic,
governance, environmental
and social categories.
Antofagasta’s sustainability
performance team reviewed
each topic.
Assessing the significance
of the impacts
We evaluated the qualitative
and quantitative impacts
of each topic based on the
severity and likelihood of
actual and potential impacts.
The severity assessment
was based on the scale,
scope and remediable
nature of the impacts.
Identifying actual and
potential material topics
We used the information
obtained to define a
preliminary list of relevant
topics and the actual
and potential impacts
of each topic.
Diagnosing the
organisation’s context
We carried out a
comprehensive review
of internal and external
information and conducted
interviews with senior
management and external
experts regarding existing,
new and emerging
sustainability topics for
the copper mining industry,
both in Chile and abroad.
Local residents visiting Laguna Conchalí,
Los Vilos, Coquimbo region.
Antofagasta plc Annual Report 202336
STRATEGIC REPORT
The United Nations Sustainable Development Goals (SDGs) are at the core of our sustainability
policy. We seek to create long-term value for our stakeholders, and are therefore committed
to achieving targets and operating programmes that contribute to the sustainable goals in
our regions of operation.
Prioritisation of Sustainable
Development Goals
3
4
5
8
8
9
12
6
7
9
12
13
14
15
4
9
11
17
Approved in 2015, the 2030 UN Agenda consists of 17 SDGs covering
a range of interrelated aspects and seeks to support the development
of a sustainable society in areas such as economic growth, social
inclusion and environmental protection. At Antofagasta, we have been
working on these targets since 2018 as part of our strategic vision.
In 2023, we identified 13 SDGs to which our Company makes
arelevant contribution. We also assessed the scope and applicability
ofeach SDG from a strategic perspective and in terms of our level
of influence regarding capacity and resources.
SDGs
and our
Sustainability
Policy
Antofagasta plc Annual Report 2023 37
In 2023, we hosted strategic communications initiatives and meetings with executives, employees and communities, in order to share relevant
information and future projects with our stakeholders, and to listen to their concerns. We keep our stakeholders informed through regular reports
on our operational, sustainable and financial performance (which are available on our website, www.antofagasta.co.uk).
As part of our approach, we are continually working to develop strong, long-term relationships with stakeholders, through mechanisms that
foster proximity and constant dialogue with each of the six main stakeholders involved in what we do. This relationship requires a comprehensive
approach in which we integrate the vision of the different corporate areas.
Likewise, we address issues that are material to our organisation, such as climate change, responsible production, the protection of biodiversity,
and the development of a culture of occupational safety, among others.
How we engage with our stakeholders
Our approach to sustainability
Why we engage
Our people are central to our business.
We strive to develop a good working
environment to boost talent and retain human
capital. In addition, contractors are key
to ensuring operational continuity according
to the best health and safety standards.
Why we engage
We care about the wellbeing of local
communities in the regions where we
operate. We practice a bottom-up approach to
engagement, with the aim of working together
in a sustainable environment. We also strive
to prevent, mitigate and compensate for any
adverse impact our activities may have.
Why we engage
Suppliers are key players in our quest for
sustainable and safe operations. We work
with them to improve sustainability
performance and ensure that they comply
with our standards and guidelines. We work
together to make sure that their solutions
are cost-effective and efficient.
How we engage
•
Site visits by senior management
•
On-site reviews
•
Surveys of the working environment
•
Individual performance evaluations
•
Regular meetings with union
representatives
•
Regular meetings with the managers
of our contractors
How we engage
•
Social programmes
•
Partnerships with local organisations
and government
•
Community working groups on specific
areas of development or concern
How we engage
•
Regular meetings between the
procurement team and suppliers
•
Online tender platform to guarantee
fairness and transparency
•
Automated invitation system and external
platforms for tenders
OUR PEOPLE
More than 29,000 employees and
contractors, including contractors
associated with construction projects,
the majority of which are based in Chile.
COMMUNITIES
Nearly 50 communities related to
our mines and transportation business
in Chile’s Antofagasta and Coquimbo
Regions.
SUPPLIERS
Over 1,700 suppliers, of which 91%
are based in Chile.
For more information, see P40 For more information, see P48 For more information, see P52
Sustainability is one of the five strategic pillars that support our purpose. We aim to manage
all aspects of sustainability through a holistic approach aligned with our strategy and with
a permanent dialogue with our stakeholders, to analyse, define and manage priorities in the
short, medium and long term.
Antofagasta plc Annual Report 202338
STRATEGIC REPORT
Why we engage
Long-term framework agreements or annual
contracts are a feature of most of our sales.
This gives us greater certainty regarding
pricing and volume of our products.
Why we engage
We regularly share comprehensive and
relevant information about our strategy,
projects and performance, keeping our
shareholders and investors informed
in a timely manner.
Why we engage
Policy, legislation and regulations can have
a major impact on our business. We monitor
parliamentary discussions and engage with
decision-makers to identify any changes that
might have an impact on our operations.
How we engage
•
Regular contact with customers around
the world
•
Frequent contact with holders of equity
in our mining operations
•
Yearly visits to Japan by our Chair
and several Directors to meet some
of our partners
•
Marketing office in Shanghai
How we engage
•
Regular meetings with institutional
investors and broker analysts at:
−
Industry conferences
−
Roadshows
−
One-on-one investor meetings
−
Annual General Meeting
−
Regular delivery of financial reports
and relevant information
How we engage
•
Close contact with mining associations
and other industry-related bodies to engage
with governments on public policy, laws,
regulations and procedures relevant
to our business.
•
Interaction with governments and
regulators within their engagement
mechanisms (defined in Chilean Law
No. 20,730 on lobbying)
CUSTOMERS
Buyers of our products, comprising
of companies that are located around
the world, in a variety of jurisdictions.
FINANCIAL STAKEHOLDERS
Participants in financial markets, including:
equity investors, fixed income investors,
providers of capital, analysts and other
market participants.
GOVERNMENTS AND
REGULATORS
National, regional and local governments,
and regulators define the framework
within which we operate.
For more information, see P72 For more information, see P71 For more information, see P70
Duty to promote the success of the Company
According to Section 172(1) of the Companies Act, a framework that applies
to companies based in the UK, as in our case, states that all Company
directors must consider a range of issues when fulfilling their duty to
promote the success of the Company, taking into account the interests
of a variety of stakeholders. Decisions made by the Antofagasta plc Board
throughout the year have included responding to stakeholder concerns
and establishing effective forms of stakeholder engagement.
The Directors of Antofagasta plc have taken into consideration the following
elements when performing their duties, making decisions and addressing
other matters:
a. The likely consequences of any decision in the long term
b. The interests of the Company’s employees
c. The need to foster the Company’s business relationships with suppliers,
customers and others
d. The impact of the Company’s operations on the community and
the environment
e. The desirability of the Company to maintain a reputation for high
standards of business conduct
f. The need for all stakeholders to be treated fairly
Antofagasta plc Annual Report 2023 39
Interpersonal relationships
Organisational capabilities
Organisational effectiveness
In 2023, we focused on mapping the profile of our personnel
in terms of their interests, work purpose, understanding and
needs, in order to design new policies and programmes
accordingly. This is a continuation of the plan we defined in
2022 for Organisational Effectiveness Management and is
aligned with decisions made by the Board to strengthen our
pillars and drive towards cultural change. The People and
Organisation managers at all our companies are deploying
our initiatives to evaluate and measure indicators accordingly.
In order to solicit the opinions of our personnel, we promote
their participation in engagement surveys, psychosocial risk
surveys and opinion surveys on activities in which they have
participated. This allows us to collect feedback, review our
communication tools, and revise and update our programmes
to maintain an appropriate and effective level of workforce
engagement.
Our people are the essence of our
achievements and the key to a
sustainable business. We promote
diversity and, in particular, the
participation of women throughout
our Company. We strive to create
a working environment aligned with
our organisational purpose, fostering
wellbeing, skills development and
talent retention.
Our people
How we engage with our stakeholders / Social
29,705
workforce in total
1
25%
employees as proportion
of workforce (7,541)
75%
contractors as proportion
of workforce (22,164)
61%
of our workforce are based
in the Antofagasta and
Coquimbo regions
2
96%
of our workforce have a
permanent employment contract
79%
of our workforce are
unionised (16 unions)
16%
Los
Pelambres
18%
Transport division
34%
Centinela
12%
Antucoya
12%
Zaldívar
9%
Corporate offices
Distribution of employee workforce
The following are the supporting pillars of our
People and Culture Vice Presidency:
1. Workforce figure includes employees, permanent contractors and temporary
contractors associated with projects. Annual average.
2. Figure presented in 2022 Annual Report was incorrect and should have
stated 58%
Antofagasta plc Annual Report 202340
STRATEGIC REPORT
7,753
employees (as at 31.12.2023),
comprising of 1,827 women and5,926 men.
Benefits provided to full-time employees
Physical
•
Health and dental insurance
•
Preventive occupational examinations free of
charge
•
Regular health check-ups
•
Preventive programmes for potential
associated risks (silicosis, hypobaria, sleep
hygiene)
•
Annual immunisation campaign against
influenza
Mental
•
Psychological support
•
Tailored individual
programmes
Financial
•
Financial education
•
Life insurance
Social
•
Volunteering
•
Celebrations as
corporate events
For further information, visit “Above and beyond: Employee well-being to drive diversity and engagement” on the Company’s website (www.antofagasta.co.uk).
of newborns, clinical guidance on sleep disorders, emotional support,
nutritional guidance, sports advice and a veterinary programme.
The Invest in Yourself (Invierte en ti) programme at Antucoya has
benefitted more than 500 people, including employees, contractors
and subcontractors, and is aimed at improving quality of life through
healthy eating, exercise, and balanced living both inside and outside
work. Additionally, we provide legal consultancy in matters relating
to family, inheritance, contracts and municipal permits, while the
benefits programme offers significant discounts on banking services.
Diversity and Inclusion Strategy
Our focuses
Gender diversity
Promote balanced, bias-free teams where
talents are made visible, and co-operation
and co-responsibility are promoted.
People with disabilities
Create working environments that provide
equal opportunities for people with
disabilities, allowing them to develop their
full potential.
Global profiles and interculturality
Manage inclusive environments for all
people, regardless of origin, ethnicity
or nationality, incorporating talents from
our local community.
Wellbeing: our priority
Workplace wellbeing is one of our priorities. Beyond the salaries paid,
we safeguard the physical, emotional, financial and social wellbeing
of our workforce through an array of initiatives. Our goal is to maintain
a healthy working environment that explicitly recognises the value of
work, generating a positive impact on families and their social
wellbeing.
In 2023, we maintained a hybrid system of remote and in-person
working, designed in accordance with the Company’s operational
needs. We kept in force our Work-Life Balance Guidelines, which
are tailored to each mining site and designed to improve the division
of employees’ time between work, family and recreational activities.
In addition to these benefits, we operate a remote support channel
focused on the comprehensive wellbeing of personnel, offering a 24/7
telemedicine programme, health guidance, medical advice for parents
Employment of women
Launched in 2018, Antofagasta’s Diversity and Inclusion (D&I) Strategy has driven our objective of increasing the number of women employed
by the Company. In this traditionally male-dominated industry, female representation in our workforce has risen from 8.6% in 2018 to 23.6% today.
Our 2025 target What we achieved in 2023 Board diversity
30%
of personnel to be women
23.6%
of personnel are women
568
women hired in 2023,
representing 52% of the total.
45%
of Board members are women
(as of 29.1.2024)
Female representation in management
Executive Committee Direct reports to the Executive Committee Senior management*
n.° % n.° % n.° %
Male 9 82 59 81% 14 88%
Female 2 18 14 19% 2 12%
* Includes directors of subsidiaries as defined in The Companies Act 2006 (Strategic Report and Director’s Report) Regulations 2013
Antofagasta plc Annual Report 2023 41
In 2023, we prioritised initiatives to boost our female talent retention,
including the women maintenance apprentices programme to train
young mining maintenance operatives, and specific programmes to
strengthen the skills of female supervisors.
Our programmes
•
Women’s mentoring
•
Training supervisors and Shift leaders: both involve attracting,
training and mentoring women until they are fully installed
in their role
•
Respectful environment workshops deployed in all companies
(1,500+ participants)
We operate long-term partnerships with universities that are strong
on science, technology, engineering and mathematics (STEM),
in order to increase female participation through our scholarship
programmes. In addition, we attract women from local communities
through our apprentices programmes and encourage them to obtain
technical qualifications. In most cases, this training leads
to apermanent position.
In 2023, our Transport division (FCAB) achieved the greatest
increase in the number of female employees within the Group,
with women accounting for 17% of maintenance operatives, and
38% of executives.
FCAB’s efforts to boost female inclusion in the sector saw them
awarded third place in the transportation category in the IMAD –
Women in Senior Management 2023 ranking. In addition, the General
Manager of FCAB, Katharina Jenny, received the Women in Mining
(WIM) Inspiring Women 2023 award for her achievements and
leadership. Furthermore, the Company was recognised by WIM as
a leading company in gender parity, and the third Women Railway
Apprentices programme was launched to incorporate more women
into operational roles and maintenance of wagons, locomotives, track,
and water resources.
As part of our D&I strategy, a total of 75 women, including executives,
supervisors and operators, continued to participate in professional
development initiatives and in our Female Leadership Programme
during 2023. This programme focuses on management enhancement,
communication, and empowerment to promote effective female
leadership and improve team performance.
Case study
Relevos Mining Shift programme
The Relevos Programme gives the women of the town of
María Elena in the Antofagasta Region and the Choapa Valley
the chance to work part-time and return home daily, enabling
them to balance work and family life. This initiative, set up in
conjunction with the Municipality of María Elena, does not
require previous mining experience, reinforcing our
commitment to employability and improving the quality of life
of people in neighbouring communities.
How we engage with our stakeholders / Social continued
People with disabilities
In 2023, people with disabilities accounted for 1.4% of our employees
(2022: 1.3%) – above the minimum figure of 1% required by Chile’s
Workplace Inclusion Law.
Prioritising training and internal mobility
In 2023, we reorganised our learning and development structure
with the aim of strengthening our leadership, diversity and inclusion,
maintenance, and data decision-making academies.
124
executives participated
in leadership courses
54
average hours of training per
employee
We offer a formal Career Development process to boost our operator’s
training, focusing on the technical, behavioural, management and other
skills required for their current roles, and with future development in
mind. The process varies according to the requirements of each position.
Operators progress by achieving accreditation for the minimum skills
required to perform their job function adequately and in alignment with
the needs of the business and the qualification framework established
by the Consejo de Competencias Mineras (CCM) or Mining Skills
Council. The Competence Accreditation process is a periodic
assessment during which the operator is evaluated and accredited
at a development level relevant for their role. This tool supports
internal mobility.
At Antofagasta, we always seek to develop our internal talent.
Through the various stages of our Apprenticeship Programme,
we aim to develop skills for people with limited industry experience.
This guarantees operational continuity and encourages internal
mobility, ensuring that future vacancies are filled swiftly and effectively.
Collective bargain agreements and labour
relations
At Antofagasta, we promote a relationship with the Company’s unions
based on constant dialogue and mutual trust. We recognise and
respect the unionisation and collective bargaining rights of our direct
employees and contractors.
In 2023, we agreed 13 additional three-year collective contracts,
negotiated in a respectful environment and without disruptions.
Agreements were reached with the Centinela’s workers and
supervisors unions, workers’ unions at Zaldívar and Los Pelambres,
and a number of unions within the Transport division.
For further information on labour practices, please refer to our
Sustainability Databook for 2023, which is available on our website
(www.antofagasta.co.uk).
Antofagasta plc Annual Report 202342
STRATEGIC REPORT
Operators in Centinela’s maintenance workshops.
Antofagasta plc Annual Report 2023 43
Our
occupational
health
and safety
culture
How we engage with our stakeholders / Social continued
0
fatalities in 2023
19%
reduction in High Potential
Incidents in 2023
25%
reduction in the Lost Time Injury
Frequency Rate (LTIFR) in 2023
11%
reduction in total recordable
injury frequency rate (TRIFR)
in 2023
Safe production based on a sustainable
internal culture is our main asset.
We have been making steady progress
in spreading this approach at our
Company’s grassroots level, supported
by trust, planning and the principles of
roles and responsibilities. As one of our
five strategic pillars, health and safety
is at the centre of our daily activities.
Case study
Innovation supports our safety
– an example from Antucoya
With the acquisition of exoskeletons, technology
and innovation are helping our personnel to mitigate
potential musculoskeletal injuries. The equipment,
made of carbon fibre, provides support to staff in
the Haul Truck Maintenance area, when loading,
and in tasks associated with the upper body.
The units are harness-like structures fitted to people’s
backs, arms, waist, hips and legs. Exoskeletons support
personnel as they handle heavy loads and reduce their
exposure to possible musculoskeletal disorders of the
upper extremities.
The test plan operates with the support of the
Company’s Innovation and Occupational Health and
Safety teams.
Antofagasta plc Annual Report 202344
STRATEGIC REPORT
The four pillars of our Occupational Health and Safety Strategy
At Antofagasta, we strive to be a leader in occupational health and safety, where our own employees and collaborators promote and maintain
a safe and healthy working environment. Robust health and safety management provides the foundations for our activities, and we are committed
to continuous improvement through risk control and performance monitoring.
In 2023, we advanced the consolidation of our management system by incorporating occupational health and safety planning into our operational
model, with the aim of ensuring the implementation of controls to prevent unwanted events. This framework is applicable to 100% of operations
and to both our internal workforce and contractors.
Occupational health and safety: Our action plan
In 2023, we continued with our five-year working plan, which was launched in 2022 and focused on boosting a health and safety supervisory
leadership programme. We prioritised planning and effective supervision by standardising high-risk task working practices using our Planned
Task Risk Assessment tool (levels 3 and 4), integrating them into our Operating Model and ultimately making them part of our operational
excellence management system.
We intend to combine planning-based production and safety according to deadlines and allocated resources. Planning is becoming a key part
ofthis framework, and we are integrating health and safety into our operational excellence.
The objective is to standardise working practices at all our mining sites. Minera Antucoya in Antofagasta has become a leading example of
implementing this process through the health and safety supervisory leadership programme. Antucoya’s high levels of production in 2023 are
the result of appropriate and timely risk management based on planning and empowered supervision. This achievement promotes safer jobs
and operational stability, enabling sustained improvement in all dimensions of our mining business.
In addition, we designed a four-tool culture transformation programme to enhance supervisor skills:
•
Planned task risk assessment incorporated into the operating model.
•
Working shift change to ensure effective transfer of information.
•
Role confirmation to shape expected practices or behaviours.
•
Process confirmation to identify opportunities for improvement in key areas of occupational health and safety, and to ensure the closure
of the task execution process.
In addition, we made significant progress with occupational health risk management processes, isolating or eliminating exposure of our personnel
to occupational health risks in 2023. Each operation presented and implemented a project that contributed to a reduction in the exposure of
personnel to health risks.
Contractor management
Our health and safety
performance data includes
contractors and
subcontractors, who must
all comply fully with our
standards and procedures.
In 2023, we implemented
a digital platform to evaluate
compliance on the part of
our Special Regulations for
Contractor Companies and
Subcontractors (RECSS).
Leadership
The "Visible Leadership"
initiative has continued,
where the Executive
Committee visits the
different sites to observe
the health and safety
performance of its workers
and contractors.
During 2023, three activities
were carried out and more
than 20 Antofagasta
Minerals executives
participated.
Reporting, investigating
and learning from our
accidents
To prevent the repetition of
unwanted health and safety
events, the “Learning from
Accidents” tool promotes
collective learning from
accident investigations and
preventive implementation
of crosscutting corrective
actions. In 2023, we
updated the parameters
for the reportability of
health events.
Occupational health and
safety risk management
There are four interrelated
layers:
a. baseline definition
(WRAC): identifies,
analyses and evaluates
occupational health
and safety risks
b. control strategy:
evaluates high- and
critical-risk activities
using the BowTie
analysis tool
c. Planned Task Risk
Assessment (PTRA):
assesses tasks involved
in high- and critical-risk
activities.
d. “I say No”: a slogan
that promotes refusal
to execute a task based
on the PTRA.
Antofagasta plc Annual Report 2023 45
How we engage with our stakeholders / Social continued
Safety briefing with operators at Centinela.
Antofagasta plc Annual Report 202346
STRATEGIC REPORT
Our focus on security issues
The real and potential negative impacts of external criminality perpetrated against our facilities, possibly with the threat of violence, can affect
personnel both physically and psychologically. Strengthening the protection of our personnel will help to mitigate or prevent any serious impact.
At the administrative level, our recently created Industrial Protection Deputy Management team has had a productive year. Following stringent
diagnosis of risks at each mining site and on our railways, wehave begun to apply a range of measures focused on protecting our personnel and
infrastructure.
Health and safety Indicators
2023 2022 2021 2020 2019
Number of fatalities
Chilean mining industry N/A
4
N/A
4
13 14
Mining division 0 0 1 0 0
Transport division 0 0 0 0 0
Group 0 0 1 0 0
Lost Time Injury Frequency Rate (LTIFR)
1
Chilean mining industry N/A
4
N/A
4
1.41 1.54
Antofagasta – Mining division 0.61 0.76 1.12 0.73 0.75
Antofagasta – Transport division 0.90 2.15 4.60 2.37 4.03
Antofagasta – Group 0.63 0.84 1.34 0.86 1.01
Total Recordable Injury Frequency Rate (TRIFR)
2
Antofagasta – Mining division 1.74 1.86 2.29 2.77 2.71
Antofagasta – Transport division 2.94 5.01 7.26 7.57 8.53
Antofagasta – Group 1.81 2.04 2.61 3.14 3.17
Occupational Illness Frequency Rate (OIFR)
3
Mining division 0.91 2.26 0.18 0.00 0.29
Transport division 0.35 1.40 0.00 0.00 1.30
Group 0.80 2.09 0.14 0.00 0.52
1. Number of accidents with lost time during the year per million hours worked.
2. Number of accidents in the year with and without lost time per million hours worked (note: figures in previous Annual Report provided on basis of 200,000 hours worked).
3. Number of occupational illnesses during the year per million hours worked, these figures only take into account employees. Our OIFR increased significantly in 2022 as we identified those
whose medical conditions had changed or who had developed occupational illnesses during the two years of the pandemic that were not adequately treated.
4. Not available.
Health and safety training
We have developed training courses on occupational health and safety
for our employees, contractors and subcontractors, covering potential
risks associated with particular working environments or the execution
of certain tasks, and other issues. As part of the training cycle, we
identify the needs of supervisors and executives through the DNA
process (Learning Needs Detection).
Alignment and definition of the training plan is carried out by the
appropriate area in conjunction with the organisation’s various
management bodies, based on legal and regulatory requirements,
and on local challenges in occupational health and safety issues.
In parallel with this model, we provided our employees with in-person
training in control strategies, drawing on knowledge available for all
companies, including our collaborating entities. Other topics that we
have taught both in-person and remotely are the ODI (Obligation to
Inform) specific to each area, and the New Person Induction, available
for all internal staff and collaborators.
Within the framework of the OHS Leadership Programme for
Supervision, we imparted training on the Planned Task Risk
Assessment (PTRA) tool. This deployment was carried out in all
companies during 2023 through in-person training conducted on site
and in virtual classrooms.
We then worked on digitising the content on our platforms to make
it available to the entire organisation. This digital training material is
part of the Training Plan on mandatory transversal topics, which were
defined by the Mining Group as a whole.
In line with our continuous improvement process at Antofagasta,
we have implemented Collision Avoidance Systems (CAS) in all mobile
equipment at our mines. CAS is capable of detecting objects in a
defined collision risk zone and warns equipment operators to avoid
unwanted interactions.
Antofagasta plc Annual Report 2023 47
In 2023, we focused on defining a 2024 strategy that marks
a new cycle of community relations programmes at Los
Pelambres, Somos Choapa (We are Choapa), and across our
three companies in the Antofagasta region, Diálogos para el
Desarrollo (Dialogues for Development), in order to ensure
compliance with the standards we defined as a Group for the
development of a productive and long-term relationship with
the neighbouring communities..
Social investment
We use a multi-stakeholder, open dialogue engagement
approach to ensure that local communities participate in the
selection of our social investment projects through our Somos
Choapa (We are Choapa) and Diálogos para el Desarrollo
(Dialogues for Development) engagement mechanisms in
the Choapa Province and the Antofagasta Region respectively.
Projects and programmes are usually implemented in alliance
with third parties, such as organisations and state institutions.
We have two relationship programmes. Somos Choapa (We
are Choapa) is a public-private strategic partnership between
Los Pelambres and the Choapa province’s four municipal
districts – Salamanca, Illapel, Canela and Los Vilos – through
which we seek to contribute to the area’s sustainable
development. The programme focuses on four main areas
of social investment: water management, education and
culture, economic development, and community infrastructure.
Diálogos para el Desarrollo (Dialogues for Development) is
the engagement framework to work with the communities
and local authorities of María Elena, Sierra Gorda and Michilla,
the neighbours’ communities of Antucoya and Centinela,
respectively, and other strategic partners to foster local
peoples’ social and economic quality of life. Community
members actively participate in the selection of initiatives
to develop jointly between companies and neighbours, as well
as in working groups to oversee their implementation.
2023
Mining division $47.9m
Transport division $0.6m
Total social investment $48.5m
How we engage with our stakeholders / Social continued
64,000+
residents benefitting from management
of water for human consumption
(Coquimbo Region)
1,300+
students benefitting from our education
programmes
250+
homes connected via fibre-optic cables
in the town of Sierra Gorda
5
localities where we work with indigenous
communities (Peine, Socaire, Camar and
Talabre in the Antofagasta Region, and
Illapel in the Coquimbo Region)
19
active agreements signed with Human
Groups Belonging to Indigenous People
in the Choapa Valley
Fostering
communities
Shared social value is key to our
sustainable approach. We seek to
contribute to social and economic
development in the local communities
in which we operate through
proactive engagement based on
trust, transparency, respect and
diversity, and in collaboration with
local organisations and authorities.
Antofagasta plc Annual Report 202348
STRATEGIC REPORT
Case study
Recovering Lickanantay heritage
In June 2023, the school in the town of Peine in the Antofagasta Region became the focus
of an unprecedented initiative to recover the heritage and native language of the Lickanantay
people (atacameños).
Titled “Let’s talk in Ckunsa”, the project seeks to highlight the efforts that the educational
community of this town in the Salar de Atacama is making to bring about a revival of their
traditions and mother tongue through art.
This project, one of the key activities led by Minera Zaldívar in relation to local identity, took
place over the course of five months and was captured through the painting of a mural by the
students in conjunction with the New York-based Chilean artist, Sebastián Gross. The artwork
was included in a retrospective exhibition of his work at the Centro Cultural Gabriela Mistral
(GAM) in Santiago.
1. SROI allows the measurement of values that are not traditionally reflected in financial statements, including social, economic and environmental elements. This method provides
an indication of how effectively a company uses its capital and other tools to create value for its stakeholders, and the community in particular. Theory of Change measures the way
in which a desired change is expected to occur in a given context.
Our relationship with indigenous peoples
Our relationship with the communities of the Salar de Atacama,
in the Antofagasta region, applies the methodology of dialogue and
participation established by ILO Convention 169 on Indigenous and
Tribal Peoples. Based on this, we signed social investment agreements
with the communities in the Salar de Atacama (Peine, Socaire, Camar
and Talabre) in 2023, and these are currently being implemented.
We apply an Indigenous Peoples Engagement Standard to ensure
that all of Antofagasta Minerals’ operations and projects consistently
employ development processes and practices that fully respect the
human rights of indigenous peoples. At Zaldívar, we are working
with communities around the Salar de Atacama, within the extension
project’s EIA module, which aims to replace our use of continental
water with other sources by 2028.
In 2023, we strengthened the Los Pelambres community relations
team with professionals experienced in indigenous community
relations, bolstering our commitment to respecting these communities’
identity, traditions and interests. Los Pelambres has been working
closely with indigenous communities to settle formal joint working
agreements, primarily with the Chango people, but also with other
communities in the Choapa Valley, such as the Diaguita Taucán
and Mapuche peoples.
Human Groups Belonging to Indigenous Peoples at Los Pelambres
19
agreements in total
10
signed
4
in
negotiation
1
inactive
2
unavailable
to discuss
2
recently
formed
In 2023, the ICMM updated its Human Rights Due Diligence Guidance,
an important resource that helps member mining companies to better
integrate human rights into existing risk management approaches.
The guide stresses the fact that every person deserves to be treated
with dignity and respect, and that all businesses, regardless of where
they operate, have a responsibility to respect human rights.
Our main input for development of our human rights policy hinges
on the first Due Diligence exercise implemented in 2018 at all our
companies. We are currently working on our second Due Diligence
exercise, which we expect to complete in 2024, in order to bridge the
gaps we identified in our first process and establish new action plans.
Grievance mechanism
In 2023, we worked on an improvement plan for management of the
Community Grievances Channel, its investigation process, governance
and external disclosure. The channel was updated in 2022 for the
reporting of concerns, complaints and grievances linked to our
operations in neighbouring communities. Grievances can be presented
confidentially and are monitored until a resolution is reached, usually
within a 30-day period.
Number and classification of community grievances
Submitted Transferred
Addressed
Administrative
Addressed
Coexistence
Addressed
Environmental
Addressed
Others
179 8 125 36 3 7
Community members without internet access can submit their
complaints by letter or in person to the operation in question or to the
local community relations co-ordinator. Complaints are then entered
into the complaints system to allow follow-up and progress monitoring.
The mechanism was designed in line with the United Nations Guiding
Principles on Business and Human Rights (UNGP) and the ICMM’s
Good Practice Guide for the Handling and Resolving Local-level
Concerns and Grievances.
Measuring our social investment programmes
Since 2018, as part of our Impact Ecosystem, we have regularly
measured the impact of our social programmes in our territories of
operation in the Antofagasta Region and Choapa Province. For this,
we use tools from the Theory of Change and the Social Return on
Investment (SROI).
1
At the Group level, we have so far measured
the impact of 18 initiatives and three relationship processes.
During 2023, we carried out impact evaluations for the APRoxima
(water for human consumption in Choapa) and Minera Los Pelambres
scholarship programmes. In the northern zone, we measured the
community relationship process, evaluating the Dialogues for
Development (Diálogos para el Desarrollo, the main mechanism
for dialogue and participation) programme in the towns of María
Elena and Sierra Gorda. In all cases, we identified a positive SROI,
meaning `that the social return on investment was greater than 1,
thus qualifying interventions as successful. In addition, based on the
results obtained from the Theory of Change and the SROI evaluation,
improvement plans have been developed for each programme
that will allow us to monitor and continuously improve the initiatives
deployed in the territories examined.
Antofagasta plc Annual Report 2023 49
En Red digital transformation
Our “En Red – Digital Community” programme consists of more than 20 initiatives and aims to address the digital infrastructure and skills deficit
in rural and vulnerable communities located in the vicinity of our operations, through close co-operation with companies and local organisations.
1. For further Information, please visit our Climate Change Strategy and Water Stewardship
sections.
Community infrastructure delivery
•
Inauguration of the Los Vilos stadium.
•
Financial contribution to set up the Chillepín Family Health
Centre (Cesfam), a development covering an area of 1,450m
2
that will meet the needs of approximately 6,700 residents
from surrounding towns.
•
Inauguration of the Zapallar sewage works and the Lord
Willow and Uno Sur steps down to the seafront in Los Vilos.
•
Shade structure at Abastos Square in Illapel.
•
Purchase of land for the Quilimarí Cesfam.
•
Inauguration of the Conservation and Research Centre at the
Archaeological Museum of La Serena. The project includes
a building covering 450m
2
to contain quarantine, preservation
and conservation areas, laboratories, a warehouse, toilet
facilities, a research office, and a residential complex for
receiving research interns. The new facilities will protect
the 1,462 boxes of archaeological material recovered from
the El Mauro sector, which remain under the custody and
administration of the heritage site.
How we engage with our stakeholders / Social continued
Improving water stewardship
Climate change adaptation is key to what we do with respect to
water stewardship. In line with our Climate Change Strategy and our
Water Policy,
1
we support our neighbouring communities in adjusting
to climate change through water stewardship. Water has become
critical not only operationally but in terms of its key social value.
In 2023, we further expanded our efforts through our APRoxima and
Confluye programmes to ensure continuous availability of water for
human consumption and irrigation in the severely drought-hit Choapa
Province. Managed by Minera Los Pelambres and its Foundation,
and with technical support from Universidad de La Serena, APRoxima
seeks to contribute to the development of rural drinking water systems.
Confluye looks to promote projects with the Water Users’ Boards of
towns and public services in Choapa. The programme has supported
the improvement of 102.23 km of irrigation canals that ensure the
availability of over 200,000 m
3
of water to irrigate 508 productive
hectares, benefitting over 4,300 farmers.
Objective
To promote – through digitalisation and technology adoption –
the development of new possible life trajectories linked to the
cultural, productive and identity vocations of the territories in
which we operate.
Main targets
•
Connectivity in rural areas
•
Telemetry for water management
•
Telemedicine in rural healthcare
•
Digital literacy in communities
Update on key community engagement programmes
Fibre-optic cables in Sierra Gorda “APRoxima en red” initiative Digital platform training for local suppliers
•
Connection of Sierra Gorda district
with fibre-optic cables and
installation of 6 free Wi-Fi access
points through a partnership
between the municipality and
Mundo TV.
•
2-year flat-rate telephone, internet
and TV service plan.
•
250+ homes connected.
•
Telemetry (monitoring, transmission) and Big Data
(storage, visualisation and analysis) to optimise the
management of the 80 Rural Sanitary Services (RSSs)
in Choapa province and allow integrated basin
monitoring.
•
Focus on water management for human consumption.
64,000+ residents benefited.
•
115 RSSs operators received digital training and 80
tablets were distributed, covering 95% of all systems
in the programme (76).
•
Training of local suppliers to promote
commercial links with Antofagasta
according to the Suppliers for
a Better Future programme.
•
Digital platform providing courses on
general and company-specific topics.
•
500 potential supplier beneficiaries.
Education
We foster education opportunities through scholarships and grants to cover the costs of higher education. In 2023, more than 1,300 students
benefitted directly from our education programmes in the Antofagasta and Coquimbo regions.
In 2023, nearly 2,500 students in communities close to our sites of operation benefitted indirectly or directly from local employment and business
development programmes.
Los Pelambres
Scholarships
1,271
Number of enrolled students in Centre for technical education
CEDUC UCN, Choapa Campus (Los Vilos)
591
Antofagasta plc Annual Report 202350
STRATEGIC REPORT
Comprehensive agricultural support
Focused on peasant family farming, the Apoyo Integral a la Agricultura
or Comprehensive Support for Agriculture programme, launched in
the municipality of Salamanca in 2014, has contributed to the financing
of 504 agricultural input projects and works to achieve efficient use
of available irrigation water (accumulation and distribution) in 2023.
The Programa de Fortalecimiento Agrícola (PFA) or Agricultural
Strengthening Programme has been focused on water efficiency
(technology-based irrigation, photovoltaic drive and intra-farm dams)
and the Cooperativa Tres Ríos production chain. This initiative has
enabled the modernisation of more than 145 hectares, including the
collection of over 75m
3
of water.
Boosting local economic development
Minera Los Pelambres, through its Foundation in Choapa province,
runs the Cosecha and Emprende local economic development
programmes to improve the productive conditions of small-scale
entrepreneurs and rural producers, helping to reduce gaps in relation
to the quality of products and services and highlighting the productive
tradition of the territory.
674
micro and small businesses benefitted from
the Cosecha and Emprende programmes
These initiatives provide financial and training support to improve
business management, and we have created partnerships with
regional universities, public services and the four local governments
to implement these programmes effectively.
Additional efforts have been made during 2022 and 2023 to
strengthen female entrepreneurship, with initiatives focused on
boosting capabilities and the creation of collaboration networks and
marketing programmes that have allowed us to open new growth
spaces for the territory.
Supporting the Pan American
and Parapan American Games
In line with our values and the community’s participation
in sport, we were proud to become sponsors of the Pan
American and Parapan American Games, which were
held for the first time in Chile. This is one of the largest
multidisciplinary international sporting events in which
athletes from all over the Americas participate, second
only to the Olympic Games.
We supplied 3,000 medals, each with a solid core of
copper from our mining sites, representing this key
element of our Chilean identity. The medals were
unveiled at Centinela last August.
As a sponsor of the Pan American and Parapan
American Games, Antofagasta Minerals was given the
opportunity to bring the flame to Antucoya, Los
Pelambres and the towns of María Elena and
Salamanca in an open community activity that became
a milestone in the localities and in our companies.
For further information, please visit “Copper is at the
heart of the Pan American and Parapan American
Games medals” on the Company’s website
(www.antofagasta.co.uk).
Land reconversion in Antofagasta
In November, Ferrocarril de Antofagasta (FCAB), our Transport
division, began the first stage of a 48-hectare land reconversion
plan. The scheme will focus on the rail yards in central
Antofagasta and consist of three projects: Land Rehabilitation,
Progressive Relocation of Operations and Urban Development.
The plan will improve connectivity, create new residential and
commercial spaces, enhance railway heritage and generate
more safe, public spaces for the community.
‘Heart of Copper’ medals for Pan American
and Parapan American games, 2023.’
Antofagasta plc Annual Report 2023 51
Our suppliers are at the heart of our
sustainable business. They are a driver
of continuous improvement to our high-
quality service and products. We support
them collaboratively through mechanisms
that comply with the highest standards
in relation to their performance and
respect for human rights.
Our suppliers
How we engage with our stakeholders / Social continued
75%
of our workforce
are contractors
1,716
Supplier companies
13%
Of payments made to SMEs
20,000+
contract personnel
$678 million
supply chain value in Coquimbo and Antofagasta
15 days
invoice payment term for c.90% of SMEs
At Antofagasta, we have a close relationship with a wide
range of suppliers. We interact with local suppliers from
our communities, global suppliers, banks (in relation to our
asset development strategy), investors, and many others.
Prior to signing contracts, we conduct due diligence on all
potential suppliers in areas such as company ownership,
involvement of politically exposed persons, antitrust issues,
commercial behaviour, legal cases, conflicts of interest,
compliance models and procedures for the prevention
of slavery and human trafficking.
All contracts include clauses relating to ethics, bribery,
asset laundering, and compliance with Chilean Law No.
20,393 on the criminal liabilities of legal entities, and with
the UK’s Bribery Act and Modern Slavery Act. Continuing
with the process initiated in 2022, we carried out an audit
to verify compliance with minimum and general standards
on the part of contractor companies. The results will be
available in 2024.
Since 2022, we have applied sustainability criteria to
evaluate bids for contracts with a value in excess of $10
million, complementing our existing energy efficiency and
safety standards. Higher scores are awarded to companies
with clear carbon emission reduction strategies and
targets, robust governance, local recruitment, and diversity
and inclusion.
At Antofagasta, we have been developing specific strategies,
consistent with our Climate Change Strategy, to support our
larger suppliers in tackling, for example, Scope 3 emissions
reduction (indirect carbon emissions that occur within
a company’s value chain), in line with the ICMM Scope 3
Emissions Accounting and Reporting Guidance, published
inSeptember 2023.
We launched the sustainability criteria application guide
for tenders made to our Mining division, consolidating the
application guidelines on energy efficiency, internal carbon
price and sustainability performance evaluation. The guide
also expands the scope of application to new categories
and amounts.
Additionally, as climate-related risks and opportunities have
impacted our supply chain and with the increasing severity
of sea swells, which have delayed the delivery of some
critical resources, Antofagasta has decided to strengthen
its resilience by increasing its storage capacity and revising
some of its supply chain strategies, particularly for diesel
and acid.
Antofagasta plc Annual Report 202352
STRATEGIC REPORT
Case study
Collaborative emission reduction
initiatives with our suppliers
•
New explosives contract, which made available 25,000
tonnes of certified blue ammonium nitrate in 2023.
This material undergoes an additional manufacturing step
that internalises the CO
2
emitted in gas wells, generating
a reduction of carbon emissions in the raw material and
in the final product (explosives).
•
Operation of electric vans and electrical auxiliary equipment
for soil movement.
•
Within the framework of the agreement signed with OEM
in 2022, a formal assessment of the model required for
the decarbonisation transformation at Minera Los Pelambres
was carried out in 2023.
Case study
Our tools
•
A supplier academy to explain the relevance of sustainability
through training and skills development.
•
Aprende En Red: a digital learning platform where local suppliers
can access training on general and company-specific topics
to enhance their skills and expand their knowledge to become
more competitive when participating in bids.
•
Business roundtables to connect supply and demand between
our Mining division and potential suppliers.
•
Forums to present our Group initiatives and improvement
opportunities for suppliers.
•
Regional supplier development project Suppliers for
a Better Future.
Suppliers for a Better Future programme
progress
In 2023, we implemented our Suppliers for a Better Future
programme. Launched in December 2022, the initiative seeks to
align contractor best practices with our main purpose and standards.
This is a collaborative project with a focus on the development of
people, communities, sustainability, competitiveness and innovation.
Our programme’s priorities
•
Promote local
employability and
hiring of women,
enhance diversity
and inclusion
(D&I) and respect
of human and
labour rights.
•
Reduce carbon
footprint and
promote circular
economy
solutions.
•
Strengthen
the culture
of productivity
and integrity
in our suppliers’
processes.
The programme has given suppliers the tools to become world-class
companies, to increase competitiveness and their capacity of
growth, and to incorporate themselves into the industry in an
effective and efficient manner. This is particularly the case for local
small and medium-sized companies (SMEs) in the Antofagasta and
Coquimbo regions.
2025 goals
18%
Spent on local
suppliers
45%
Local employment
25%
Female employment
by suppliers
Progress in 2023:
14%
Progress in 2023:
50%
Progress in 2023:
13%
We defined targets for 2025 in the categories of regional suppliers,
market development for regional suppliers, and expenditure and
regional supplier recruitment. We have also been working with
Universidad Católica del Norte (UCN) on a competitiveness study
and a plan to bridge existing gaps in sustainability. In December,
UCN gave training to over 50 suppliers on sustainability and associated
strategic topics.
2023 regional suppliers programme
50
SMEs companies in the
Antofagasta and Coquimbo
Regions
100%
progress on plans to bridge
existing gaps in sustainability
In 2023, we carried out a risk screening of more than 2,500 suppliers
based on their type of industry and geographical location. We invited
those with a “high” or “very high” sustainability risk to complete a 360°
evaluation of categories, such as water, biodiversity, local pollution,
materials, chemical products and waste, safety, energy consumption,
GHG emissions, diversity and inclusion, and corruption.
21 criteria
4 topics
Environment Human and
labour rights
Ethics Sustainable
purchases
As part of our strategy, and before sharing any compliance goals
with our suppliers, we approach entrepreneurial organisations in
the Coquimbo and Antofagasta Regions, such as the Asociación de
Industriales de Antofagasta (AIA) or Antofagasta Industrial Association
and the Sistema de Calificación de Empresas Proveedoras de Bienes
y Servicios (SICEP) or Supplier Qualification System, in order
to evaluate the feasibility of our programmes, particularly at
regional level.
In 2023, we required contractors to pay their employees an ethical
gross monthly minimum wage of $741.4, 35% higher than the
minimum wage established by Chilean law, and to provide them
with health and life insurance. Los Pelambres and Centinela also
support the further education of contractors’ children.
For further information on suppliers, please refer to our Sustainability
Databook for 2023, available on our website (www.antofagasta.co.uk).
Antofagasta plc Annual Report 2023 53
Sustainable
production
How we engage with our stakeholders / Environmental
46%
Increase in the recovery of industrial waste by
the Mining division in 2023
310 tonnes
of anodes recycled by Antucoya in 2023
0
operational events with significant
environmental consequences
The Copper Mark
validation seal
currently held by all our mines
400 l/s
Capacity of the newly-constructed desalination
plant for Los Pelambres, helping to substantially
increase water availability in 2023.
We strive to produce in a sustainable way
based on a long-term vision. Our priority
is to prevent, minimise and mitigate any
impact on the environment in which we
operate. Through regular reports and
reviews, we periodically evaluate our
performance and make improvements as
required. Our four operations meet all the
criteria of The Copper Mark and the
ICMM Performance Expectations
standards for responsible mining.
We seek to support each of our operations in the effective
implementation of the Environmental Management Model,
with a focus on the identification and mitigation of risks, and
in order to ensure compliance with the relevant
environmental regulations across the Group, including our
current operations, development and exploration projects. As
part of this process, the Company aims to identify learning
opportunities centrally, which are shared across the Group.
In addition, we work towards standardising the process to
initiate each project’s design, to deliver environmental and
sustainability improvements, particularly regarding early
dialogue with local communities close to each project.
Through this approach, the Company aims to facilitate the
processes to apply for environmental permits.
Finally, we have a focus on biodiversity and the circular
economy.
Our environmental performance is reported on a monthly
basis to the Executive Committee, and twice a year to the
Sustainability and Stakeholder Management Committee.
Based on an Annual Audit Plan, the Company’s Internal Audit
function performed environmental audits on all of our
operations in 2023 to verify the effectiveness of our internal
controls and governance, compliance with environmental
requirements, and the measures committed to by our
operations within the framework of their environmental
permits. No significant audit findings were reported during
2023.
Electric buses for transporting mine workers at Centinela.
Antofagasta plc Annual Report 202354
STRATEGIC REPORT
Environmental compliance in Chile
In Chile, large-scale projects must be assessed by the Servicio de
Evaluación Ambiental (SEA) or Environmental Evaluation Service and
awarded an environmental permit called a Resolución de Calificación
Ambiental (RCA) or Resolution of Environmental Qualification. These
RCAs include legally binding commitments on matters relating to the
prevention and mitigation of the projects on any significant impacts
on the environment and communities, and if applicable any necessary
compensation actions.
78
RCAs
(environmental
permit), including
our Transport
division
10,000+
commitments
4
main areas (water
use, air quality,
biodiversity, and
project construction,
operation and
closure)
Operational incidents with environmental consequences are classified
asActual (high, medium or low) or Potential (high or low) according
tothe specific features of each. A dedicated internal committee
investigates actual high- or medium-severity incidents. According
tothe criteria established in the environmental assessment of each
operation or project, we had zero operational incidents with significant
environmental consequences. A total of 28 incidents with no severe
environmental consequences were reported to the SMA.
In 2023, the Transport division (FCAB) obtained a new environmental
permit to move part of its operations from the city of Antofagasta tothe
nearby port of Mejillones. The work, which commenced in November,
includes the development of a 48-hectare urbanisation project in the
city. This is an important step in the Transport division’s plans to
update its facilities, increase its capacity, and boost quality oflife in the
city (see the Fostering Communities chapter).
Tailings management
Tailings deposits are a key factor in our environmental policy, and
accountability for them lies at the highest levels of the Company’s
management. We have four main tailings storage facilities (TSFs): the
El Mauro and Los Quillayes conventional dams at Los Pelambres, a
thickened tailings deposit at Centinela, and a small thickened tailings
deposit at Zaldívar.
Our Tailings Policy is aligned with the Global Industry Standard on
Tailings Management (GISTM), and we prioritise the health and safety
of our personnel, our neighbouring communities and the environment.
In August 2023, we announced compliance with the GISTM at our
main tailings storage facilities. The process was completed at El Mauro
(Los Pelambres) and Centinela in 2023. The remaining facilities – Los
Quillayes (Los Pelambres) and Zaldívar, will be finished within the
August 2025 compliance deadline.
GISTM framework Areas covered
The GISTM provides a framework
for safe management of tailings
facilities. The standard is
classified by topic, covering
various areas that together
require assignment of
responsibilities and prioritisation
of the safety of each tailings
facility throughout all phases of
the project lifecycle, including
closure and post-closure.
•
communities
•
knowledge base
•
design
•
construction, operation,
monitoring and closure
•
management and
governance
•
emergency response
•
public disclosure
•
principles and criteria
Implementation of the standard requires collaboration between various
areas of the companies, which must conduct studies and update
information on each tailings facility, as well as stronger relationships
with communities through the transparency and sharing of
information. Currently, the El Mauro dam and the Centinela thickened
tailings deposit comply with the GISTM based on a self-assessment,
which will undergo third-party validation as soon as reasonably
practicable.
Centinela has also worked on a preventive emergency plan with the
community of Sierra Gorda, the first municipality to engage in a natural
hazard emergency simulation.
Environmental Management Model
Leadership Reportability of
operational events and
environmental findings
Operational risk
management
Regulatory risk
management
Antofagasta plc Annual Report 2023 55
How we engage with our stakeholders / Environmental continued
Circular economy initiatives
•
Los Pelambres recovers steel from haul truck tyres for recycling
into grinding balls that are reintroduced into the mine’s
production process. This initiative – carried out in conjunction
with tyre disposal company Atlas Morgan and grinding ball
supplier Magotteaux – aims to produce 97 tonnes of steel balls
from 156 haul truck tyres during the test project.
•
Antucoya is working on the recovery of lead waste (anodes) and
in 2023 recovered 309 tonnes of material. The company also
signed a contract for the recovery of 600 tonnes of rubber
waste (conveyor belts) and is working with mining tyre suppliers
to manage end-of-use tyres, recycling around 150 tonnes of this
waste. The three initiatives together captured more than 1,000
tonnes of waste in 2023.
•
FCAB sold 1,794 tonnes of parts and pieces of locomotives,
engines, bogies, and rails as scrap in 2023. In addition, they
donated wooden sleepers that have reached the end of their
lifecycle for reuse in parks, urban squares and social venues in
Antofagasta, Calama and Ollagüe, and installed 25 recycling
points for the collection and recycling of plastic bottles,
aluminium cans and office paper.
Monitoring air quality
Each of our mines operates comprehensive programmes to control
dust emissions (PM10 and 2.5). These emissions are subject to
periodic surveillance, in some cases involving the local community. Air
quality data is regularly reported to the regional authorities to ensure
compliance with environmental regulations.
Los Pelambres is under way with a project to plant 96,000 native
trees and shrubs on a 300-hectare site at the Los Quillayes tailings
storage facility. So far 120 hectares have been planted, with vegetation
selected on the basis that it requires little irrigation, can easily adapt to
extreme environments, and serves to control particulate material
events while blending the dam with its surroundings.
For further information on the flora in the surrounding areas, please
visit the Biodiversity section on page 68.
Implementing our Circular Economy Strategy
Pillars
Reducing resource
usage
Expanding the
lifecycle of material
and equipment
Converting waste
into new resources
+21
initiatives in progress
In 2023, each operation within the Mining division was requested to
share solutions and proposals to co-ordinate the environmental, supply
and innovation areas within the Company, with a goal of increasing the
visibility of what we do and promoting new initiatives within the
circular economy. Through this initiative, the Company’s aim is to
facilitate the implementation of solutions, projects and partnerships
according to the features and capabilities of our operations.
For further information on sustainable production, please refer to the
Environmental Excel sheet in the Company’s Sustainability Databook.
Responsible Mining Standard
At Antofagasta, we have worked to achieve the highest
sustainability standards by consistently updating our policies,
strategies and practices. We address transparency and reliability
through third-party accreditation of responsible copper
production at our four mining sites.
In 2023, for example, Antucoya and Los Pelambres received
accreditation for implementation of the action plans to which
they committed in 2022 and obtained The Copper Mark
validation seal. The latter lasts until 2025, demonstrating and
reaffirming our approach to producing copper in accordance
with the UN’s sustainable development criteria. All our
companies hold this certification. The Copper Mark is an
independent external assurance of mining site compliance with
strict and internationally recognised standards of sustainable
production. Sites must partially meet all criteria and commit to
tackling any existing gaps within 12 months. As participants, we
are committed to conducting a third-party review every three
years. Centinela and Zaldívar must carry out the assurance
process again in 2024.
As members of the International Council on Mining and Metals
(ICMM), our four mining sites also underwent independent
audits on compliance with the ICMM’s Performance
Expectations. All our sites complied with the ICMM’s
Performance Expectations.
In 2023, we also submitted updated information to renew our
registration with LMEpassport, the sustainability credentials
register at the London Metal Exchange (LME), including an
executive summary of The Copper Mark, which is recognised by
the LME. Our subsidiaries Minera Centinela and Minera Zaldívar
are registered with the LME.
Antofagasta plc Annual Report 202356
STRATEGIC REPORT
Our Climate
Change
Approach
Scope 1 and Scope 2
2035 goal
50%
emissions reduction with 2020 as
baseline
Scope 3
2030 goal
10%
emissions reduction using 2022 as a
baseline for projecting 2030 emissions.
43%
Reduction in absolute Scope 1 and 2
emissions since baseline year of 2020.
Our long-term Climate Change Strategy
Integration of stakeholders
Management of the environment
and biodiversity
Development of climate change
resilience
Reduction of GHG emissions
Efficient use of strategic resources
Through innovation, planning and
resilience, we are transforming our
production processes and managing risks
associated with climate change. As a
copper producer, we provide a raw
material critical for low-carbon
technologies and have proactively
adopted measures to mitigate the carbon
footprint of our operations.
To strengthen the
Group’s capacity to
mitigate and adapt
to climate change
El Arrayán Wind Farm, the largest such facility in Chile.
Antofagasta plc Annual Report 2023 57
How we engage with our stakeholders / Environmental continued
At Antofagasta, in line with the objectives of the Paris Agreement,
wehave the ambition of reducing our Greenhouse Gas (GHG) emissions
in the short- and medium-term and to achieving carbon neutrality
inScope 1 & 2 emissions by 2050 (or sooner, if technology allows).
Since 2019, we have been implementing the recommendations of the
Task Force on Climate-related Financial Disclosures (TCFD) and
aligning our metrics and targets with the TCFD’s seven cross-industry
climate-related metric categories, including GHG emissions and
internal carbon prices.
We give special priority to the potential financial impact of the transition
and the physical risks involved, as well as to mitigation and adaptation
measures, such as the opening of a desalination plant at Los
Pelambres, which has become the first mining operation in central
Chile to use sea water.
Climate-related governance
SUSTAINABILITY AND STAKEHOLDER
MANAGEMENT COMMITTEE
AUDIT AND RISK COMMITTEE
REMUNERATION AND TALENT
MANAGEMENT COMMITTEE
Board of Directors
Climate change is an intrinsic element of our risk management and decision-making. Our Board of Directors has ultimate responsibility
for our climate-related goals and strategy.
As one of the main threats facing the Company, there is greater and more profound awareness of the need to compensate for its
ramifications in our decision-making processes.
Our corporate Climate Change Committee, formed in 2021, is responsible for supporting the implementation, monitoring and continuous
improvement of the Strategy. One of the Committee’s objectives is to maximise the participation of the different areas and levels of the
organisation.
At the executive level, Climate Change Strategy responsibilities are assigned to specific positions. The Chief Executive Officer (CEO)
is responsible for approving targets and monitoring their progress. The Vice President of Corporate Affairs and Sustainability,
the Chief Financial Officer (CFO), and the Vice President of Strategy and Innovation are responsible for proposing targets and reporting
on adaptation and mitigation issues.
The Board’s Remuneration and Talent Management Committee, among other functions, ensures that the Group’s remuneration
provisions are aligned with its strategic priorities. Using the Climate Change Strategy as a framework, it evaluates the short- and
long-term incentive scorecards of the Group’s employee bonus plans, among which the Key Performance Indicators (KPIs) related to
climate change have had greater weight in recent years. In 2023, climate-related KPIs for the Short Term Incentive at the Group level
had a weight of 7.5%. In the case of the CEO, the environment category – which includes climate change – has a weighting of 10% in
the annual bonus.
Antofagasta plc Annual Report 202358
STRATEGIC REPORT
Mining industry power consumption Our energy consumption Our bill % of our operational cost
25%
of Chile’s total energy
4.5%
of Chile’s total energy
consumption
$0.5 billion
(annually)
c.21%
Scope 1 (Direct emissions)
Direct CO
2
emissions from diesel or
petroleum consumption across our
operations
90%
of our Scope 1 emissions come from
our mining equipment
New 2035 reduction goal for
Scopes 1 and 2 emissions:
50%
reduction (with the year 2020
as a baseline)
Scope 2 (Indirect emissions)
Indirect emissions from energy
consumption across our
productive processes
100%
all of our mining operations are
contracted to use energy from
renewable sources.
Scope 3 (Value chain emissions)
2
Other indirect emissions from our suppliers,
such as ships transporting our product, the
smelting process, and manufacturing serving
our production processes
Represents around
75%
of the Group’s carbon footprint,
1
with an
inaugural Scope 3 estimate published in 2023
New 2030 reduction goal for Scope 3:
reduce our emissions by
10%
with 2022 as baseline
Our decarbonisation approach
At Antofagasta, our holistic approach to decarbonisation involves both
our mining site operational teams and our corporate teams, who
together deploy measures that aim to reduce GHG emissions from our
productive processes.
Given the importance and relevance of our decarbonisation approach,
in July 2023 we created the Decarbonisation Project Management
area within the Vice Presidency of Strategy and Innovation.
In accordance with our Energy Policy framework, implemented in
2022, we have incorporated the role of Energy Administrator at each
mining site. The role consists of leading and ensuring the
implementation and improvement of the Energy Management System
according to Chilean Law No. 21,305 on Energy Efficiency. In addition,
Energy Administrators supervise the achievement of decarbonisation
and energy targets through energy efficiency plans and GHG
reduction.
Since April 2022, all our mining operations have operated exclusively
under renewable energy power supply contracts, reducing our
Scope2 emissions to zero.
During 2023, we have worked with the Communication and Supply
teams to incorporate suppliers into our decarbonisation target
(Scope3) with the aim of formulating a joint emissions mitigation plan.
2
A pioneering joint effort to measure Scope 3
emissions
In August 2023, our Mining division, together with other major mining companies operating
in Chile, formed the first Scope 3 Emissions Traceability Roundtable. This is a pioneering
initiative in the mining industry in Chile and seeks to unify efforts concerning the
measurement of emissions within the value chain.
One of the main objectives of this initiative is to advance the homologation of existing
standards and methodologies and to promote capacity building through collaborative work
between mining companies and their suppliers.
In 2023, we continued work to incorporate carbon emission indicators
into our large project decisions, thus integrating the entire organisation
into our decarbonisation plan. We conduct thorough analyses to
establish whether a given purchase may have a positive or negative
impact on our path to decarbonisation or in relation to bank credits.
Decarbonisation initiatives are becoming an increasingly relevant
aspect of financial evaluation packages.
1. This percentage encompasses Scope 2 location-based emissions.
2. Information available in our Second Climate Change Report, p. 42, including a breakdown of 15 categories of this type of emissions.
We strive to reduce our carbon footprint. As part of these efforts, we
have worked with:
−
Equipment manufacturers to incorporate technology solutions
within the Group, targeting a reduction in our direct emissions;
and
−
Our suppliers within Scope 3 to include sustainability and carbon
footprint reduction in their processes.
Antofagasta plc Annual Report 2023 59
2020
2021
2022
2023
2030
2035
2050
TARGET MET
early with a reduction of
581,355 tCO
2
e.
The target defined in 2018
was to reduce emissions by
300,000 tCO
2
e in 2022
TARGET MET
The goal of reducing GHG
emissions by 30% compared
to 2020 was met, before
2025, the date for which the
goal was set
CARBON PRICE
is incorporated into
supply chain decision
making
1
TARGET DEFINED
to reduce emissions by 30% by
2025, in other words, a reduction
of 730,000 tCO
2
e
CALCULATION
Scope 3 emissions categories
according to the GHG
Protocol
DEFINE NEW
MEDIUM-TERM TARGETS
NEW MID-TERM TARGET
reducing scope 3
emissions by 10%
2
CARBON
NEUTRALITY
NEW MID-TERM TARGET
reducing scope 1 & 2
emissions by 50%
3
Scopes 1 and 2 emissions
Scopes 1, 2 and 3 emissions
Scope 3 emissions
Electromobility for decarbonisation
In 2023, we made progress in one of the next five years’ most
innovative decarbonisation projects: electromobility at mining sites and
our haul truck replacement plan.
In June 2023, Centinela put into operation the largest fleet of electric
pickup trucks in Chile. A total of 50 vehicles began work on the site
using energy from 100% renewable sources
1
. In addition, we acquired
eight units of electric mining equipment for ancillary activity, which will
operate in the Esperanza Sur autonomous pit. This equipment will
reduce emissions by a further 5,200 tonnes of CO
2
annually.
The initiative is part of Centinela and Antofagasta’s Climate Change
Strategy, which has contributed to a 30% reduction in total direct and
indirect GHG emissions (combined basis) ahead of the original deadline
of 2025, and has become a driver to achieve the new 2035 goal of a
50% reduction in scope 1 and 2 emissions. Implementation of this
electric fleet involves the construction of 12 electric charging stations,
with more than 50 fast charging points.
In addition, FCAB incorporated a new fleet of 100% electric vehicles as
part of their strategy to reduce the environmental footprint. These
vehicles, which will operate under lease, are more compact and
efficient, considerably quieter, and can be charged via a household
socket or wall charger at the company’s premises.
During 2023, the Mining division has been reviewing the suitability of
our four companies’ energy nodes for electrification of our vehicles
and distribution centres, in an attempt to establish whether network
and distribution points in northern Chile are prepared for this
simultaneous demand. At the national level, infrastructure availability is
critical to a timely energy transition.
Even though we do have the capacity for energy transition at
Antofagasta, energy cost in the mining industry is becoming an issue.
Within the Latin American region, we have very competitive costs that
combine the price of the energy itself with capacity and transmission.
In 2023, following the three-fold drop in the cost of green energy over
the past decade, we began the manufacturing and pilot implementation
of electric-powered trolleys, and will commence testing dynamic
charging solutions for haul trucks at Los Pelambres. The initiative was
approved by the Board, and consequently, we have begun to
implement this project.
1. See our Second Climate Change Report on our website for further details.
2. Against 2022 no action scenario projection.
3. Against 2020 baseline.
Antofagasta emissions targets
1. Centinela is contracted to receive 100% renewable energy.
How we engage with our stakeholders / Environmental continued
Antofagasta plc Annual Report 202360
STRATEGIC REPORT
Operational CO
2
e emissions (tCO
2
e)
1
Los Pelambres Centinela Zaldívar Antucoya
Corporate Offices
(Santiago and
London)
Mining
division
Transport
division
(FCAB) Total
Scope 1
Direct emissions
2023 271,281 551,766 132,813 232,316 210 1,188,386 87,962 1,276,348
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 2
Indirect emissions
2023 0 0 0 0 16 16 514 530
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)
2023 271,281 551,766 132,813 232,316 226 1,188,402 88,476 1,276,878
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
CO
2
e emissions
tCO
2
e/t
2
2023 0.90 2.28 1.64 2.99 – 1.69 0.01 –
2022 1.25 2.14 1.44 2.59 – 1.75 0.01 –
2021 1.58 3.63 1.78 3.69 – 2.56 0.01 –
2020 1.65 4.19 1.79 3.44 – 2.79 0.01 –
1. Tonnes of carbon dioxide equivalent.
2. Tonnes of CO
2
equivalent per tonne of copper produced or per tonne transported in the case of the Transport division. Re-expressed intensity indicator. Corrections were made to the unit
of measure of the denominator. Previously, the unit was in thousands of transported tonnes, and now the value is expressed in transported tonnes directly.
Scope 3 Emissions
In November 2023, the Company published its Second Climate Change Report, covering 2022, which included an inaugural estimate of Scope 3
emissions. This report includes a breakdown of the 15 categories of Scope 3 emissions and is available on the Company’s website at the
following location:
www.antofagasta.co.uk/media/4601/climate-change-report_fv3-1.pdf
As detailed on page 42 of the above report, total Scope 3 emissions for 2022 were 5,692,874 tonnes CO
2
e (2021: 5,242,777 tonnes CO
2
e). A full
breakdown of these totals is provided on the same page of this report. The Scope 3 totals include all material/relevant categories of emissions.
An estimated Scope 3 emissions in 2023 is not available as of the date of this report due to the complexity of data collection, validation and
analysis required for this category of emissions. The Company expects to be able to publish an estimate for Scope 3 emissions for 2023 later in
2024, once the relevant data is available and fully validated.
Antofagasta plc Annual Report 2023 61
Our TCFD progress
The Group’s Task Force on Climate-related Financial Disclosures
(TCFD) recommendations are integrated into this report in accordance
with the Financial Conduct Authority Listing Rule LR.9.8.6(8). Progress
against the recommendations is summarised below, together with an
index showing where more detailed disclosures can be found. In 2023
our disclosures are fully consistent with all the TCFD recommended
disclosures, following progress on Strategy and Metrics & Targets,
which has meant that the Group is consistent with the TCFD
recommendations in all areas, including the following areas where we
completed the recommendations during the year:
•
Strategy, impact on business – Decarbonisation Plan: We
have assessed and reported in our Climate Change Report for
2022 which was published in November 2023, how our
emission reduction plans aim to achieve our decarbonisation
targets at our operations. In addition, our climate action plan
considers our path towards decarbonisation.
•
Metrics and Targets, climate-related metrics – Climate Metrics
& Targets: We have estimated the capital expenditure we expect
will be required to mitigate and adapt to climate change. As part of
the necessary engineering studies, this figure will be refined
throughout the cycle until final investment decision.
•
Metrics and Targets, GHG emissions and related risks –
Scope 3: We disclosed in our Climate Change Report for 2022,
which was published in November 2023, our Scope 3 emissions
and breakdown split in 15 categories and the main areas of work
to achieve our goal of a 10% reduction by 2030 (against a
baseline year of 2022). Our Climate Change Report and Climate
Action Plan also outlines key ways in which we aim to work with
suppliers. The 2023 Scope 3 emissions figure is not yet available
due to the time delay in collecting data/updating the estimate.
This report integrates the Group’s Task Force on Climate-related Financial Disclosures (TCFD) recommendations in accordance with
the Financial Conduct Authority Listing Rule LR.9.8.6(8). The Company has provided a summary of its decarbonisation plan in this Annual Report,
and the Climate Change Report for 2022 is complementary to this summary.
Governance
Recommended
disclosures
•
Board oversight
•
Management role
Progress
•
We created the Decarbonisation Project Management area as part of the Vice Presidency of Strategy and Innovation.
•
Climate change scenario analysis (scenarios SSP5-8.5
1
“fossil-fuelled development” for physical risk analysis and IEA’s NZE
by 2050
2
for transition risk analysis) was presented to the Board and the results of this analysis informed the annual long-term
financial planning process. We have separately reported on Board members’ experience relating to climate change issues.
•
Since the establishment of the corporate Climate Change Committee in 2021, it has continued to enhance the understanding and
appreciation of the importance of our Climate Change Strategy within the organisation and provide advice to our Executive Committee.
Strategy
Recommended
disclosures
•
Identified risks and
opportunities
•
Impact on business
•
Business resilience
Progress
•
Minera Los Pelambres: Los Vilos desalination plant operation start (400 l/s water capacity) and environmental approval to double
its capacity to 800 l/s).
•
Communities’ activities related to resilience have been in place during 2023, mainly working in an infrastructure plan and
emergency programme.
•
In transition risk analysis this year, we incorporated the valuation of a new decarbonisation plan, and the analysis of energy
efficiency measures. An improvement in the analysis was to explore the potential benefit brought by a higher copper price driven
by the energy transition.
•
We reviewed the impact of climate change risks and opportunities as part of our 2023 long-term financial planning process
allowing us to assess the impact of climate change risks during the life-of-mine (LOM) of each operation.
•
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 used the “fossil-fuelled
development” climate change scenario (SSP5-8.5
1
), rather than the scenario we used in our 2022 analysis (SSP2-4.5
2
). For
transition risk, we used the “net zero emission by 2050” scenario from the IEA.
Risk management
Recommended
disclosures
•
Identifying and
assessing risks and
opportunities
•
Managing risks and
opportunities
•
Integrating climate
change into overall
risk management
Progress
•
Climate change physical risks were assessed using the SSP5-8.5 scenario.
1
The estimated financial impact on operating costs
and capital expenditure was calculated for three situations: no mitigation or adaptation; controls already in place; and plans and
actions implemented in the future.
•
Climate change transition risks were assessed using the “net zero emission by 2050” scenario. The estimated financial impact on
operating costs and capital expenditure was calculated for three situations: no mitigation or adaptation; controls already in place;
and plans and actions implemented in the future.
•
Controls and action plans for transition risks were updated. The risk of carbon tax was assessed using the “net zero emission by
2050” scenario, considering our decarbonisation plan as an input for this analysis.
•
The impact of physical risks on the communities was reviewed, and action and control plans were established.
Metrics and targets
Recommended
disclosures
•
Climate-related
metrics
•
GHG emissions and
related risks
•
Targets and
performance
Progress
•
During 2023, the Board approved a new Scope 1 and Scope 2 reduction target: To reduce our Scope 1 and 2 emissions by 50%
by 2035, with the year 2020 as a baseline. Our Scope 3 reduction target, which will be achieved through collaboration with
industry, is to achieve a 10% reduction in Scope 3 emissions by 2030, with the year 2022 as a baseline.
•
We have estimated the amount of capital that we anticipate will be required to achieve these targets, assuming trolley and battery
based technologies, understanding these technologies may change and/or evolve before we achieve our decarbonisation goals. As
part of the necessary engineering studies, this figure will be refined throughout the cycle until final investment decision. In 2024, we
are planning to complete prefeasibility studies as part of our ongoing evaluation of decarbonisation technologies and key enablers.
1. Shared Socioeconomic Pathway in which CO
2
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.
Antofagasta plc Annual Report 202362
STRATEGIC REPORT
How we engage with our stakeholders / Environmental continued
TCFD index
The Company has considered the relevant sections of the TCFD all-sector guidance. Additional information relating to the required disclosures
can be found on the pages indicated in the table below:
Pillar Disclosure Page
Governance Description of the Board’s oversight of climate-related risks and opportunities. 121
Description of management’s role in assessing and managing climate-related risks and opportunities. 57
Strategy Description of the climate-related risks and opportunities the Company has identified over the short-,
medium- and long-term.
57 and 64
Description of the impact of climate-related risks and opportunities on the Company’s businesses,
strategy and financial planning.
29-31, 57-64
and 80
Description of the resilience of the Company’s strategy, taking into consideration different climate-
related scenarios, including a 2°C or lower scenario.
63-64
Risk Management Description of the Company’s processes for identifying and assessing climate-related risks. 63 and 80
Description of the Company’s processes for managing climate-related risks. 57-64
Description of how processes for identifying, assessing and managing climate-related risks are
integrated into the Company’s overall risk management.
80
Metrics
and Targets
Disclosure of the metrics used by the Company to assess climate-related risks and opportunities
consistent with its strategy and risk management process.
57-62
Disclosure of Scope 1, Scope 2 and, if appropriate, Scope 3 Greenhouse Gas (GHG) emissions and the
related risks.
61
Description of the targets used by the Company to manage climate-related risks and opportunities and
performance against targets.
57 and 61
Climate change scenario analysis
In 2023, Antofagasta enhanced its understanding of the financial
impact of the physical risks of climate change by considering a
“fossil-fuelled development” climate change scenario (SSP5-8.5).
Thisscenario takes advantage of the latest generation climate models
(CMIP-6) and is considered an extreme scenario , leading to warming
by 2100 of 3.6 to 6.2 °C compared to pre-industrial temperatures.
Tobetter understand how physical climate changes could impact
ourbusiness, we have focused on particular climate change vectors,
such as higher temperatures, water stress, extreme rainfall events,
conditions that generate particulate matter, storm surges and wave
events. Each of our operations analysed the potential effect of these
factors on their production, cost performance, and the cost of
adaptation measures and control options.
To understand the financial impact of transition risks, we used the new
International Energy Agency’s “Net Zero Emission by 2050” or IEA’s
NZE scenario (2 degrees or lower scenario), an ambitious and widely
recognised scenario that provides a global view and context on a
low-carbon transition. In the IEA’s NZE , fossil fuel prices decline due
to low demand and lower costs are offset by the introduction of carbon
taxes to encourage the low-carbon transition. In alignment with this
scenario, we have quantified the potential financial impact of the
introduction of a carbon tax, including an analysis of our decarbonisation
plan and identifying opportunities such as higher copper price.
To align the potential impact of both physical and transition risks to the
lifetime and planning cycle of our mining operations, we defined short
term as 0–5 years, medium term as 5–15 years and long term as
15–50 years. Once the risks and opportunities were identified, the
most material risks and opportunities were screened and quantified at
an operational level, and their financial impact was estimated using
assumptions from these scenarios. We also assessed the financial
impact of climate change across the lifetime of each mine and for a
25-year period for the Transport division (see page 98). Climate
scenario analysis was used to better understand and assess the
likelihood and impact of risks and opportunities and was integrated into
our risk assessment processes using ISO 31000 and best practice
methodology (Bow Tie which considers cause, consequences and
controls). The estimated financial impact on operating costs and capital
expenditure was calculated against three views: 1) no mitigation or
adaptation, 2) controls already in place, and 3) plans and actions
implemented in the future. We will continue to improve our maturity
through the studies necessary to refine capital deployments in
mitigation and adaptation. For further information regarding Climate
Change risk descriptions, please see pages 24 and 25 of our Climate
Change Report for 2022, which was published in November 2023 and
in the Company’s Climate Action Plan.
Results of climate scenario analysis, excluding
copper market benefit
Impact calculated over operations’ Life-of-Mines (LOMs)
To improve our understanding of how climate risks may develop and
impact our operations, we carried out a new climate scenario analysis
exercise in 2023. This also helped us develop our investment plans
and enhance our prevention and recovery control measures.
In general, our 2023 analysis showed that the potential exposure
of our business under the physical risks scenario does not have major
changes compared to the analysis done in 2022, despite carrying out
the 2023 analysis using the more extreme scenario. The changes
in relation to the 2022 analysis are based on a better understanding
of the impacts of climate change, and the absence of major differences
between the scenarios can be explained by the fact that the changes
in the climate variables occur after the end of the LOM of each
operation. In addition, the investments in the closure works already
consider potential impacts due to adverse weather conditions.
To analyse the potential financial impact of transition risks we have
considered the following factors: Carbon Tax to be paid if investment
in mitigation is not made, then investment in mitigation necessary
tomeet our targets (aligned with our Climate Action Plan), Change
inthe price of Diesel delivered by the NZE by 2050 transition
scenario (2 degrees or lower scenario), Change of Energy Source
due to investments in mitigation, Carbon Tax avoided that represents
one of the benefits after investing in mitigation measures and finally
operational costs associated with the different operational costs
Antofagasta plc Annual Report 2023 63
How we engage with our stakeholders / Environmental continued
that green technologies bring. Finally, a higher copper price
opportunity, associated with the energy transition is analysed,
and energy efficiency considerations were also included.
The change in the financial impact of transition risk, compared with
2022, is mainly due to the better-quality information used in the 2023
analysis and the longer LOM plans incorporated into the modelling.
Although the likelihood of value-at-risk is uncertain, the analysis
provides a useful reference point against which to assess and
prioritise the mitigation and adaptation measures we need to reduce
our exposure and strengthen our resilience. This year we included
concepts of operating costs to reflect the positive benefits of the use
of new technologies and the analysis of energy efficiency measures.
Currently, long-term investment in mitigations is estimated in the range
of $1,000 – 1,500 million, including the decarbonisation plan, and the
For further information on climate change, please refer to the Environment Excel sheet in our Sustainability Databook for 2023, available on our website (www.antofagasta.co.uk)..
investment required to support the energy transition, however, we
expect that as technologies develop and our understanding of their
implementation grows with trials, thisestimate will evolve. Investment
in decarbonisation will be part of our sustaining capex as we move
forward with our plan. The estimated impact reflects incremental costs
of enabling technologies to be evaluated as part of the normal renewal
cycle of our fleets of haul trucks, and potential improvements to the
in-pit electrical systems, among others.
It is anticipated that some of the actions and investments envisaged
by the Climate Action Plan may in future lead to cost savings.
Forexample, a potential reduction in operational costs, such as diesel
consumption and maintenance costs, may offset some or all
oftheinvestments, as well.
Transition:
IEA NZE by 2050
1,500-2,000
1,000-1,500
500-1,000
1,000-1,500
1,000-1,500
Carbon Tax Investment
in mitigation
Change in diesel
price
Change in energy costs
due to mitigation
Carbon tax avoided
by mitigation
0-500
0-500
0-500
2,000-3,000
Operating costs Investment in
energy efficiency
Energy
efficiency cost
Copper price
opportunity
Physical:
1
IPCC’s SSP2-4.5
Northern Zone
(Centinela, Antucoya, Zaldívar, FCAB)
Anto f aga s ta
Si e r r a Gor d a
San P e dro d e Atacama
Ca l ama
Tocopilla
María E l ena
Me j illones
Zaldívar
Antofagasta
Centinela
Antucoya
Bolivi
a
Arge ntina
Centinela Port
FCAB
Central Zone
(Los Pelambres)
Lo s Vilos
municipal di stric t
Illape l muni cipal di stric t
Cane la municipal dist r i ct
Choapa P r ov inc e
Los Vilos
Los Pelambres
Punta Chungo port
Arge nt ina
El Mauro
tailings storage facilities
Sa l amanc a municipal di s t rict
Transition risks and
opportunities have
been identified over
the short, medium
and long term
Compared with
2022 analysis
Risk timeline
Compared with
2022 analysis
Risk timeline
Decrease and/or loss
of water supply
0-50
Medium term
100-200
Medium and
long term
Extreme rainfall events
50-100
Short and
medium term
0-50
Medium and
long term
High and/or sustained
temperatures
0-50
Short term
0-50
Medium and
long term
Particulate matter
50-100
Short term
0-50
Long term
Logistics disruption
50-100
Short term
0-50
Medium and
long term
Net Present Value Positive Exposure Net Present Value Negative Exposure. All figures presented are in millions of US dollars.
1. 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).
Antofagasta plc Annual Report 202364
STRATEGIC REPORT
As part of the third pillar of our Climate
Change Strategy, water stewardship has
become a critical aspect of our
operations due to the nature and
geographical location of our mining
activities. Three of our four mining
operations are in the Atacama Desert,
and the fourth, Los Pelambres is located
in the Choapa Valley.
Water
stewardship
60%
of Group water withdrawals coming
from sea water in 2023.
48%
Increase in sea water withdrawals
following construction of the Company’s
desalination plant in 2023.
81.9GL
Total water withdrawals in 2023.
With the aim of safeguarding the availability of water
resources across our operations, communities and the
environment, we apply practices aligned with the Water
Stewardship Framework of the International Council on
Mining and Metals (ICMM). The creation of dedicated roles for
the management of water use at each company was in
response to a steady development of skills and governance
over the last two years.
In 2023, in acknowledgement of the strategic value of water
for our Company, we created the Water Resources
Management area within the Vice Presidency of Planning and
Technical Services to improve technical advice and our role
in planning. We assigned a water lead at each mining site to
increase water efficiency.
Considered a milestone in our water management policy, this
new structure allows the incorporation of decisions on water
use into new projects and the standardisation of processes.
Our water leads are promoting a cultural change based on
water stewardship at each company. Improving upon our
annual water report, we now report monthly with the support
of skilled professionals and in accordance with regulations.
Our objective is to keep working to strengthen the Group’s
expertise in water management.
We promote transparency through quantitative information in
our Sustainability Databook, sustainable and responsible
environmental water management, and the water safety of
our communities. As a company, we are intensifying efforts
to protect limited freshwater resources in the communities in
which we operate. We work hard alongside the community
and the authorities to define the future use of their water
rights with the objective of sustainability (see Fostering
Communities section).
Test work on pumps at the Company’s
desalination plant, Los Vilos.
Antofagasta plc Annual Report 2023 65
Our pillars
Water Policy
Increase water efficiency
in our operations
We aim to progressively reduce
water use per tonne of copper
produced and are seeking
multiple alternative sources of
water supply.
Apply robust and transparent
water governance
We use consistent industry
metrics and widely accepted
approaches to report our water
management performance.
Co-operate to achieve
environmentally responsible,
sustainable water
management
We work with local
communities to co-operate in
the management of their water
needs, contributing to
enhanced water security.
How we engage with our stakeholders / Environmental continued
Our approach
Evolution of the
water matrix
Efficiency,
recirculation and
reuse measures
Procedure
Strengthen the
strategy for
reducing use of
continental water in
areas where water
is scarce,
establishing targets
and actions based
on climate scenario
analysis results.
Strengthen
efficiency in the use
of water and other
strategic resources,
improving their
recirculation,
recovery, reuse
and protection in
the Company’s
areas of influence.
Guidance for
compliance with the
Water Policy’s
commitments and
the requirements
established in the
Water Management
Standard.
According to our Water Policy and Climate Change Strategy, each
Company must have a Water Efficiency and Implementation of New
Technologies Plan in place. The objective is to promote the efficient
use of water resources from continental sources, sea water or other
alternative sources, analysing water use indicators and promoting the
implementation of industry best practices. Since 2022, all of our
mining sites have a water efficiency plan.
In 2023, we set a policy that all Group companies should achieve at
least 70% of the water management standard goals. By the end of
2023, the Mining division’s progress in implementing the standard had
reached 80%.
In addition, two water efficiency projects were approved to increase
water recovery from tailings. We understand that protection of the
environment and biodiversity is an essential element of climate action.
As such, we focus on the role of nature-based solutions in climate
change mitigation and adaptation to its impacts.
Water Management Standard
Water Resources Procedure
Water Policy
2022 20252023 20262024 2027 2028 2029 2030+
Centinela
100% sea water
(Closure of Calama
Poniente wells)
Los Pelambres
FIRST STAGE
Desalination plant
(400 l/s)
SECOND STAGE
Desalination plant (800 l/s)
Zaldívar
EIA SUBMITTED
Conversion to sea water or water
provided by third parties by 2028
Antucoya
100% sea water
(from 2017)
Water Management Standard
Defines the minimum
requirements that allow
Antofagasta Minerals and its
mining operations to ensure a
safe, economical, efficient and
sustainable water supply
throughout the entire lifecycle of
a site. It covers the exploration,
design, operation and closure
phases, along with development
projects.
Water Resources Procedure
Technical reference document
detailing best practices and
recommendations.
Provides guidance for
compliance with Water Policy
commitments and the
requirements established in the
Water Management Standard.
Antofagasta plc Annual Report 202366
STRATEGIC REPORT
CHOAPA PROVINCE
Canela
Illapel
Los Vilos
Salamanca
Limahuida
Quelén Alto
Quelén
Tranquila
Cuncumén
Choapa Viejo
Pupío
Caimanes
Increase desalination capacity
Achieves 800 L/S
Underground pipe
El Mauro works
Change of concentrate pipeline route
Los Pelambres facilities
Chipellín
Choapa river
Future Los
Pelambres' works
Actual concentrate pipeline
New concentrate pipeline
Los Pelambres
Mining Operation
Leading sea water use
Our 2023 achievement Our goal
60%
2023 represented the year when sea water use has overtaken
continental sources of water for the Company, a first in our history.
+90%
of the water used by our operations should be sea water or
recirculated once our desalination plant at Los Pelambres reaches its
expanded capacity of 800 l/s.
We are moving away from dependence on continental water
sources and increasing sea water use. In 2023, we achieved
two milestones: completion of the Los Pelambres desalination
plant as the first of its type in central Chile, and operations at
Centinela are now using 100% sea water.
The Los Pelambres desalination plant has a production capacity of
400 l/s of industrial-quality desalinated water. The plant is located at
the Los Pelambres industrial facilities at the Port of Punta Chungo in
Los Vilos district, Coquimbo Region. It includes marine works for
capturing sea water and discharging brine, and an underground
system stretching approximately 61 km to convey desalinated water
between the pumping station and the existing recirculation station at
the El Mauro Tailings industrial area, before continuing to the mining
site in Chacay.
The EIA to expand the Los Pelambres desalination plant to 800 l/s, in
addition to the replacement of the concentrate pipeline and enclosures
at the El Mauro tailings dam, was approved by the environmental
authority in October 2023.
At Centinela, following two years of work, operations began to function
with 100% sea water in 2023, following the closure of the water wells
in Calama. It was the result of various projects, investment in which
totalled approximately $130 million. In a challenging operation, the
water is transported along a 145-kilometre aqueduct to the mining site,
located at 2,200 metres above sea level in the Sierra Gorda district,
Antofagasta Region. In total, Centinela requires approximately 900 l/s
of water supply, which is now sourced entirely from sea water.
For further information on operational water extraction by source (2019-23), Mining division, please refer to our Sustainability Databook (2023).
Antofagasta plc Annual Report 2023 67
Both Centinela and Los Pelambres monitor the marine
environment near their port facilities, regularly analysing the
water column, sediments and marine fauna. Los Pelambres
supports R&D projects to repopulate the area near its marine
facilities with sea urchins, abalones, red kingklip and other
species. In addition, we periodically implement programmes
to protect animal, bird and plant species.
Centinela operates an initiative to safeguard the Gaviotín
Chico, a species endemic to Chile and Peru and classified as
endangered. Zaldívar is developing the Desierto Verde project
to increase knowledge of species that might be adaptable to
desert living conditions.
Our Climate Change Strategy’s fourth pillar defines two
priorities in relation to biodiversity: nature-based solutions for
CO
2
capture and to address adaptation to acute and chronic
physical risks. Nature-based solutions seek to use nature’s
own resources to address environmental challenges such as
the protection and replanting of woodland and the restoration
of wetlands.
In 2023, we began to implement the first stage of our
biodiversity standard. Its primary objective is to provide the
necessary guidelines for the proper management of
biodiversity throughout the different phases of the mining
cycle (exploration, projects, operations and closure) and in
relation to transport.
Los Pelambres
27,440
hectares
Los Pelambres protected area
in the Coquimbo Region
6
times larger than the area
used by the mine
4
nature sanctuaries
Laguna Conchalí
Monte Aranda
Quebrada Llau-Llau
Cerro Santa Inés
Biodiversity protection is part of our
long-term sustainability approach and
policy. In accordance with our
Biodiversity Standard and aligned with
the ICMM’s position statement on Mining
and Protected Areas, we seek to protect
wildlife around our mining sites. We
ensure a net zero loss of biodiversity by
minimising our impact and mitigating and
compensating for any potential negative
effects. We operate in accordance with
the mitigation hierarchy established by
The Copper Mark.
Biodiversity
protection
How we engage with our stakeholders / Environmental continued
Antofagasta plc Annual Report 202368
STRATEGIC REPORT
As part of our initial implementation efforts, we conducted a
comprehensive site coverage analysis, along with spatial
mapping to delineate operational zones and identify areas of
high biodiversity value, along with their principal conservation
attributes. To safeguard this vital biodiversity value, we are
committed to specific courses of action, including ongoing
monitoring, verification and reporting activities.
We focused on the analysis of a base line across the Group as a whole,
in order to make the necessary adjustments and move forward in
2024. We also continued to define our conceptual nature-based
solution framework, in addition to identifying potential tests to be
implemented in the short and medium term.
Only Los Pelambres has mining operations near nature sanctuaries.
Laguna Conchalí and Quebrada Llau-Llau have specific management
plans in place. The sustainable closure plan for the Los Quillayes
tailings dam at Los Pelambres includes a process of phytostabilisation
1
through the planting of native trees and shrubs over an area of
300 hectares.
120 hectares are already planted with more than 20 native species,
which are closely monitored to review their behaviour and survival. In
2023, we planted 96,000 individual shrubs and native trees. The
phytostabilisation process is a pioneering initiative in the large-scale
mining industry in Chile. We plan to continue planting different species
on the tailings wall during 2024.
In addition to our work on species and ecosystem protection, we
conduct research and provide education. In northern Chile, we have
worked on the educational potential of the Morro Moreno National Park
near Mejillones, in a joint initiative with Universidad Católica del Norte
(UCN) and the National Forest Corporation (CONAF).
1. Phytostabilisation is the use of plant species that help to immobilise contaminants in soil,
sediments and sludge; prevent and reduce the mobility and migration of contaminants
through erosion; and reduce the bioavailability of metals.
Antofagasta plc Annual Report 2023 69
Our operations, projects and exploration are mainly located in Chile,
where we interact with both the central government and the
governments of the Antofagasta and Coquimbo Regions, as well as
with the municipalities that are part of our areas of direct influence.
The relationship with governments and regulators is subject to their
strict engagement mechanisms, which in Chile are clearly defined
under Lobby Law No. 20.730. This law seeks to regulate the activity of
lobbying and other efforts to represent particular interests, in order to
strengthen transparency and honesty. It applies to the officials of
central and local administrations who regulate activities such as the
issue, modification and repeal of administrative acts and laws, and the
decisions of the authorities and officials.
Outside Chile, we comply with our own policies and with the laws and
regulations of the host countries, at all times maintaining high
standards of engagement.
Payments to governments
Antofagasta makes payments to governments relating to our activities
involving the exploration, discovery, development and extraction of
minerals, and our Transport division. These payments are primarily
taxes paid to the Chilean government and mineral licence fees, which
in 2023 totalled $538 million, of which over 99% was paid in Chile.
Chilean law allows political donations to be made subject to certain
requirements, but Antofagasta made no political donations in 2023.
However, we often contribute towards the financing of projects
benefitting local communities, in alliance with local municipalities and
the government. These contributions are regulated by specific laws
and are reviewed by the Chilean Internal Revenue Service (SII).
Public-private alliances
Since mining is a long-term business, we seek to contribute to Chile’s
development and prosperity, including through public-private alliances
with local government. Examples include our active participation in a
workshop jointly organised by the Mining Ministry and the Women and
Gender Equality Ministry to encourage female participation in the
mining industry, and our commitment to the Mining Cluster in northern
Chile, a public-private alliance to promote local employment,
technology and skills development.
Governments
and regulators
Mining is a long-term business in which
timescales can run into decades. Political
cycles are typically far shorter and material
developments and changes to policy,
legislation or regulations can have a major
impact on our business.
Another example of our active participation in a public-private alliance
is the Provincial Water Working Group, organised by the Coquimbo
Region government to identify and implement collective solutions that
can contribute to the area’s water security in the short, medium and
long term.
Chilean constitutional reform process
In December 2023, Chileans voted to reject a proposed constitution,
and as a result the country will now continue with the existing
constitution, which has been in place for several decades.
Mining royalty
In May 2023, both the Chilean Senate and lower house of Congress
approved the proposed revision to Chile’s mining royalty bill, with
Presidential approval confirmed in August 2023. The terms include a
1% ad valorem royalty on copper sales, and a royalty ranging from 8%
to 26% on operating profits depending on each mining operation’s
level of profitability, combined with a provision establishing that total
taxation (including corporate income, the new royalty tax and tax on
dividends) should not exceed 46.5% of profitability.
This new law came into effect at the beginning of 2024. Since
Centinela and Antucoya have tax stability agreements, the new royalty
rates will only apply from 2030. As a result of the approval of the new
mining royalty, a one-off adjustment has been recognised to the
deferred tax balances of the Group’s mining operations, resulting in an
increase in the deferred tax liability balance of $34.3 million, with a
corresponding deferred tax expense.
View of our operations at Centinela.
Antofagasta plc Annual Report 202370
STRATEGIC REPORT
How we engage with our stakeholders / Governance
As explained on page 179 of the Directors’ Report, the controlling
shareholder of the Company holds approximately 65% of the
Company’s total capital. The majority of the Company’s ordinary
shares not held by the controlling shareholder are held by institutional
investors based in the UK, Continental Europe and North America.
We actively engage with the investment community as a key
stakeholder in our business, including institutional investors, sell-side
analysts and retail investors. As a modern business, engagement is
conducted via a range of activities. At the Company’s Annual General
Meeting, the Board of Directors can engage directly with shareholders.
During financial roadshows related to the reporting of financial results,
senior management conduct a series of face-to-face meetings and
calls with investors and sell-side analysts. Investor engagement
The Company is listed on the main
market of the London Stock Exchange
and is included in the FTSE100 and
FTSE4Good indexes.
activities are conducted principally in London, North America and
Santiago, reflecting the Company’s shareholder base.
Engagement with shareholders is increasingly conducted via a more
diverse and proactive range of channels, ranging from direct
engagement through calls and meetings, to engagement via the
Company’s suite of reporting, website and social media platforms.
Through an active engagement programme, the Company’s
management team can liaise directly with existing shareholders and
broader engagement is conducted through industry conferences and
other events that help to improve the profile of our business within the
investor community.
In addition, roadshows were held with the investment community on
topics other than our financial results: our Vice President of Corporate
Affairs and Sustainability hosted a series of meetings with investors
and ratings agencies to discuss the Company’s recent progress on
issues of sustainability. In line with previous years, the Board’s Senior
Independent Director (SID), Francisca Castro, hosted a series of
meetings with the Company’s largest shareholders to provide an
update on corporate governance and to facilitate direct engagement
between the Board of Directors and shareholders.
As a modern business, we understand the need for detailed
engagement on a broad range of topics, ranging from financial results
to sustainability topics and corporate governance. Our annual reporting
suite includes standalone reports on sustainability, climate change, our
tax contribution, and activities supporting local communities. These are
available in both English (www.antofagasta.co.uk) and Spanish (www.
aminerals.cl), enabling a broad level engagement across our investor
base and with other stakeholder groups.
What did investors focus on most in 2023?
•
Production levels and cash costs at each of our operations.
•
The construction and ramp-up of our Phase 1 Expansion at Los
Pelambres, which includes a 400 l/s desalination plant and fourth
concentrator line.
•
The Second Concentrator Project at Centinela.
•
The progress and potential impact of the planned revisions to the
Chilean mining royalty and tax legislation, and proposals to amend
the Chilean constitution.
•
The Company’s capital allocation framework and plans following the
receipt of funds relating to our exit from the Reko Diq project in
Pakistan.
•
Sustainability topics, including water availability and greenhouse gas
emissions.
•
Our pipeline of growth projects, with a particular focus on the
Company’s suite of exploration projects in Chile.
2023 Shareholder engagement calendar
Q1
Presentation of full-year 2022 results by the CEO, CFO and Vice
President of Corporate Affairs and Sustainability (VPACS),
followed by a question and answer session open to all investors,
and a roadshow with investors in the UK and the US.
Publication of our Annual Report and Accounts and
Sustainability Report.
Attendance at a mining-focused investor conference
in North America by the CEO, CFO and VPACS.
Additional attendance at investor conferences in London.
Numerous direct engagement meetings (in person and virtual)
with investors, prospective investors and sell-side analysts.
Q2
Annual General Meeting held in London.
CEO presented at an industry conference for institutional
investors.
Attendance of a mining-focused investor conference in Continental
Europe, including the CEO, CFO and VPACS, with a presentation
by the CEO to delegates.
Additional attendance by the CFO at an investor conference in
Miami.
Q3
Virtual presentation of half-year 2023 results by the CEO, CFO
and VPACS, followed by a question and answer session.
Results roadshows hosted with investors and other stakeholders
in London (CEO) and North America (CFO).
Roadshow hosted in London to discuss sustainability topics with
our VPACS.
Publication of the Company’s latest standalone reports on Tax and
Social Value Generation.
Q4
Corporate Governance roadshow with the Company’s Senior
Independent Director (Francisca Castro).
Publication of Second Climate Change Report
The Investor relations team attended one investor conference
in London
Centinela Second Concentrator announcement: Presentation
hosted by the CEO and CFO.
Shareholders
Antofagasta plc Annual Report 2023 71
Most copper and molybdenum sales are made under annual contracts
or longer-term framework agreements, with sales volumes agreed
for the coming year. Gold and silver are contained in the copper
concentrates and are therefore part of copper concentrates sales.
Most sales are to industrial customers who further process the
copper into more value-added products – smelters, in the case of
copper concentrate production, and copper fabricators and trading
companies in the case of cathode production. We build long-term
relationships with these key smelters and fabricators, while ensuring
customer diversification. We also maintain relationships with trading
companies that participate in shorter-term sales agreements, or in the
spot market.
About 70% of our mining sales are under contracts of a year or longer
and metals sales pricing is generally based on prevailing market prices.
Structure of sales contracts
Typically, our sales contracts set out the annual volumes to be supplied
and the main terms for the sale of each payable metal, with the pricing
of the contained copper in line with LME prices. In the case of
concentrates, a deduction is made from LME prices to reflect TC/RCs,
the smelting and refining costs to process the concentrate into refined
copper. These TC/RCs are typically determined annually, in line with
market developments and the parties’ assessments of the copper
concentrate market at the time of the negotiation of the terms.
In the case of copper cathode transactions, a premium, or in some
cases a discount, on the LME price is negotiated to reflect differences
in quality, logistics and financing compared with the metal exchange’s
standard copper contract specifications.
Similarly, our molybdenum contracts are made under medium- and
long-term framework agreements, with pricing usually based on Platts’
average prices for Technical Molybdenum Oxide, with a deduction to
reflect the cost of converting molybdenum sulphide concentrate into
molybdenum oxide.
Across the industry, neither copper producers nor consumers tend to
make annual commitments for 100% of their respective sales or
purchases, and normally retain a portion to be sold or purchased on
the spot market during the year.
In line with industry practice, our sales agreements generally provide
for provisional pricing at the time of shipment, with final pricing based
on the average market price in the month in which settlement takes
place.
For copper concentrates, the final price remains open until settlement
occurs, on average four months from the shipment month. Settlement
for the gold and silver contained in the copper concentrates occurs
approximately one month after shipment. Copper cathode sales remain
open for an average of one month from the month of shipment.
Settlement for copper in concentrate sales is later than for copper
cathode sales, as copper in concentrate requires more processing to
produce refined copper for sale. Molybdenum sales generally remain
open for two or three months after the month of shipment.
Customers
Revenue by product and customer location
REST OF
ASIA PACIFIC
42%
JAPAN
31%
NORTH
AMERICA
7%
SOUTH
AMERICA
8%
EUROPE
11%
81%
8%
6%
3%
1%
Copper
Molybdenum
Gold
Transport
Silver
Successful management of our relationships
with our customers contributes to our long-
term success
Note: Percentages shown here in the chart and map above are rounded.
Antofagasta plc Annual Report 202372
STRATEGIC REPORT
At Antofagasta, we have been working to prepare for the
implementation of the UK Corporate Governance Code, a set of
principles of good corporate governance aimed at companies listed
onthe London Stock Exchange.
The Code is divided into five sections:
•
Board Leadership and Company Purpose
•
Division of Responsibilities
•
Composition, Succession and Evaluation
•
Audit, Risk and Internal Control
•
Remuneration
The table below classifies non-financial information in this Strategic
Report as required by the Non-Financial Reporting Directive. As
indicated in this report, the effective application of these Policies and
Standards underpins the Group’s management of the risks and
opportunities associated with these matters.
Climate-related financial disclosures
•
Our TCFD disclosures can be found on page 62
•
Our Sustainability framework and governance can be found
on page 151
•
Our Sustainability and Stakeholder Management Committee has
Terms of Reference which have been approved by the Board and
are reviewed annually
Non-financial and sustainability
information statement
Reporting
requirement
Relevant policies and
standards
Content Page
Sustainability Value Chart
Sustainability Policy
ICMM Guidelines
Letter from the Chair
Letter from the CEO
Our approach to
sustainability
How we engage
withour stakeholders
Sustainability
andStakeholder
Management
Committee
8
11
32
38
151
Environmental matters
Environmental
matters
Environmental
Management Model
Climate change standard
Water management
standard
Biodiversity standard
Tailings policy
Global Industry Standard
on Tailings Management
Environmental
management
Environmental
compliance
Sustainable production
Circular economy
Biodiversity
Air quality
Climate change
Carbon footprint
Energy management
Water management
TCFD
54
54
54
56
68
56
57
61
59
65
62
Social and employee issues
Our people People Strategy Employee wellbeing
Building human capital
Labour relations
41
42
42
Social matters Social Management
Model
Engagement Standard
Management of
Initiatives Standard
Social Management
Model
Addressing social
concerns
Flagship programmes
Impact measurement
Open social innovation
Culture and heritage
Local jobs
Engagement
mechanisms
48
49
50
49
50
49
40
49
Reporting
requirement
Relevant policies and
standards
Content Page
Health and
Safety
Occupational Health and
Safety Strategy
Special Corporate Health
and Safety
Regulation for
Contractors and
Subcontractors (RECCS)
Fatal Risk Standard
(ERFT)
Occupational Health
Standard (ESO)
Occupational Health
and Safety Strategy
Occupational health risk
management
Safety risk
management
Performance
45
45
79
47
Suppliers Purchase and contracts
guidelines
Direct award procedure
Material management
policy
Sustainability
Local suppliers
Local partnerships
Supplier development
Respectful, diverse and
inclusive work culture
52
52
53
53
53
Anti-bribery and anti-corruption issues
Anti-
corruption and
anti-bribery
Code of Ethics
Compliance Model
Anti-Corruption Model
Antitrust Protocol
Business integrity and
compliance
Code of Ethics
Compliance
management
86
86
86
Description of
principal risks
and impact on
business
activity
Risk Management
Framework
Principal risks
74
76
Description of
the business
model
The mining lifecycle 20
Non-financial
Key
Performance
Indicators
2023 performance
Key Performance
Indicators
Total economic
contribution
2
26
32
Diversity
Our people Diversity and Inclusion
Strategy
Women in the workforce
Inclusive culture 41
41
Respect for human rights
Human Rights Code of Ethics
Human Rights Policy
Modern Slavery Act 86
Antofagasta plc Annual Report 2023 73
Key elements of integrated risk management
We recognise that risks are inherent to our business
Only through adequate risk management can internal stakeholders be
supported in making key decisions and implementing our strategy.
Exposure to risks must be consistent with our risk appetite
The Board defines and regularly reviews the acceptable level of exposure
to emerging and principal risks. Risks are aligned with our risk appetite,
taking into consideration the balance between threats and opportunities.
We are all responsible for managing risks
Each business activity carries out risk evaluations, to ensure the sound
identification, management, monitoring and reporting of risks that
could impact the achievement of our goals.
Risk is analysed using a consistent framework
Our risk management methodology is applied to all of our operating
companies, projects, exploration activities and support areas, so that
we have a comprehensive view of the uncertainties that could affect
the achievement of our strategic goals. The framework is based on
ISO 31000 and COSO ERM.
1
We are committed to continuous improvement
Lessons learned and best practices are incorporated into our
procedures to protect and unlock value sustainably.
Areas of focus and development during 2023
Our main focus in 2023 was on the sociopolitical environment,
monitoring conflicts in Europe and the Middle East, as well as the
political situation in Chile. Following the rejection of the proposed draft
constitution in December 2023, it is understood that the Government
of Chile will not seek a third process to draft a revised Constitution,
providing a greater degree of certainty in the short term.
The war in Ukraine has affected the sourcing of some of our strategic
supplies, which remains a concern, although our risk analysis of the
war allowed us to mitigate the impact of this factor on our business.
During the year, the Chilean mining royalty bill was approved; through
continuous monitoring of this process, we have been sufficiently
informed to be able to make strategic decisions.
In August, the “Ley de Delitos Económicos” (Economic Crimes Law)
was published in Chile. This new legislation, which will come into force
in September 2024, establishes a new legal regime applicable to natural
persons (individuals) and another to legal entities (companies). Although
we are confident that we have robust controls in place, we have reassessed
and are updating our risk matrix in order to identify any improvement
in our controls with a greater focus on the environmental areas whereby
new offences have been included in the updated legislation.
We have maintained our commitment to review and update our principal
risks according to our risk methodology. The following represent
a number of the actions that our Risk and Compliance Management
Department undertook during 2023:
•
Defined the methodology for identifying and updating our emerging
risks, which will assist with the continuous monitoring process.
•
Continuation of on-site risk reviews of selected risk areas whilst
accompanied by senior management, increasing the Company’s risk
maturity level.
•
Co-coordinated Contingency Committees in line with our risk
management process.
•
Updated the Company’s risk appetite statement, including the sections
relating to Environmental Management, Corruption and Political, Legal and
Regulatory. The updated statement was approved by the Board in November,
with the level of risk appetite for all risk areas remaining unchanged.
•
Reported monthly to both the Company’s Executive Committee and
individual risk owners, in order to identify and manage any deviation
from expected performance.
•
Updated the Business Continuity Plan for each operating company,
with considerations made for any new challenges encountered during
2023, and ensuring the incorporation of the lessons learned.
•
Continued monitoring of controls identified during the assessment of
the impact of the conflict in Ukraine, with additional monitoring of the
conflict in the Middle East.
•
Participated in the review of the FQAR (Functional Quality Assurance
Review) project.
•
Continued training of risk owners and main users.
•
Updated and monitored critical controls and action plans.
•
Prepared new action plans to maintain risk exposure within
acceptable limits.
•
Embedded timely and comprehensive risk analysis into each relevant
decision-making process.
•
Shared best practices across our operating companies.
Governance
The Board has overall responsibility for risk management and
determines the nature and extent of the principal and emerging risks
that we will accept to achieve our strategic objectives.
The Board receives a detailed analysis of each key matter in advance of
Board meetings. This includes reports on our operating performance
including health and safety, financial, environmental, legal and social
matters; key developments in our exploration, project and business
development activities; and information on the commodity markets,
updates on talent management and analysis of financial investments.
The provision of this information allows for the early identification of
potential issues and the assessment of any necessary preventive and
mitigating actions.
The Audit and Risk Committee assists the Board by reviewing the
effectiveness of the risk management process and monitoring principal
and emerging risks, preventive and mitigation procedures, and action
plans. The Chair of the Committee reports to the Board following each
Committee meeting and, if necessary, the Board discusses the matters
raised in more detail.
These processes allow the Board to effectively monitor Antofagasta’s major
risks, any preventive and mitigating procedures, and to assess whether the
level of actual risk exposure is consistent with the Company’s defined risk
appetite. If a gap is identified, an action plan is prepared to fill it.
Risk management
Risk management framework
Effective risk management is an essential part of our culture and strategy.
The accurate and timely identification, assessment and management of principal risks give
us a clear understanding of the actions required to achieve our objectives.
1. The Committee of Sponsoring Organisations of the Treadway Commission Enterprise Risk Management framework.
Antofagasta plc Annual Report 202374
STRATEGIC REPORT
The Risk and Compliance Management Department is responsible
for the Company’s risk management systems. It implements the
Company’s risk management policy, vision and purpose, to ensure
there is a strong risk management culture at all levels of the
organisation.
The Risk and Compliance Management Department supports business
areas in analysing their risks, identifying existing preventive and
mitigating controls and defining further action plans. It maintains and
regularly updates the Company’s risk register.
The General Manager, with the Risk and Compliance Management
Department support, reports twice a year to the Audit and Risk
Committee on the overall risk management process, with detailed
updates on principal risks, mitigation activities and actions taken in
each subsidiary of the Company.
The General Manager of each operation has overall responsibility for
leading and supporting risk management. Risk owners within each
operation have direct responsibility for the risk management processes
and for regularly updating individual business risk registers, including
relevant mitigation activities. The individual owners of the risks and
controls at each business unit are identified, in order to provide
effective and direct risk management.
Each operation holds an annual workshop on risk, at which the
business unit’s risks and mitigation activities are reviewed in detail and
updated as necessary. Workshops are used to assess principal risks
that may affect relationships with stakeholders, limit resources,
interrupt operations and/or negatively affect potential future growth.
Our risk management structure
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.
R
i
s
k
A
p
p
e
t
i
t
e
4. Follow Up
1. Identify
3. Treat
2. Assess
Mitigation techniques for significant strategic and business unit risks
are reviewed quarterly by the Risk and Compliance Management
Department.
We promote a consistent risk management process across our
different business units, ensuring risk is considered at all levels of the
organisation. Risk information flows from the business units to the
centre and from the Board back to the business units.
Risk Management Cycle
Risk appetite is the expression of the acceptable exposure to
uncertainties that the organisation is willing to assume in the pursuit
of its objectives. Our risk management cycle has four stages, and
is designed to identify, assess, manage and follow up our risks.
Antofagasta plc Annual Report 2023 75
Risk management
We are aware that not all risks can be eliminated and that exposure
to some risk is necessary in the pursuit of our corporate objectives.
Mining is a long-term business and, as part of the principal risks
update and evaluation process, we identify new or emerging risks
which could impact the Company’s sustainability in the long run, even
if there is only limited information available at the time of the
evaluation.
Any identified new or emerging risks that could impact our long-term
strategic objectives are included in the principal risk analysis and are
reviewed and monitored periodically by the Board. As new information
becomes available, based on research, expert analysis and internal
investigations, suitable controls and action plans are defined and
incorporated into the Company’s risk matrix.
We identify, assess and manage the risks critical to the Company’s
success. Overseeing such risks protects our business, people and
reputation. The risk management process provides reasonable
assurance that the relevant risks are recognised and monitored,
allowing the Company to achieve its strategic objectives and create
value.
Because risks are periodically re-evaluated, the risk map shown here
represents the position and controls in place at a specific point in time,
as well as showing the changes that have taken place since 2022.
Throughout the year, the Board carried out an assessment of the
Company’s emerging and principal risks, which are set out on the
following pages with related preventive and mitigation measures.
During 2023, the probability of the Health and Safety principal risk (3)
was lowered from “Likely” to “Possible” following the decrease in the
probability of occurrence of a fatal event in relation to the history of
the last five years. The impact of the Strategic Resources principal risk
(11) was reduced from “Severe” to “Significant” following the
commissioning of the Los Pelambres desalination plant, which came
into operation in 2023. The probability of the Political, Legal and
Regulatory principal risk (7) was reduced from “Likely” to “Unlikely”
following reduced uncertainty of the constitutional process, compared
to last year. Furthermore, the impact of this risk was increased in
2023 from “Moderate” to “Significant” following significant adverse
effects that could result from decisions by administrative or judicial
authorities due to the new “Ley de Delitos Económicos” (Economic
Crimes Law).
Principal risks
We maintain a risk register through a robust assessment of the potential principal risks that
could affect the Company’s performance. This register ensures that principal risks are identified
in a thorough and systematic way and that agreed definitions of risk are used.
Risk management continued
Risk area Appetite
Risk
level
Change in
risk level
vs 2022 Outlook
People
1. Talent management
2. Labour relations
Safety and sustainability
3. Health and safety
4. Environmental management
5. Climate change
6. Community relations
7. Political, legal and regulatory
8. Corruption
Competitiveness
9. Operations
10. Tailings storage
11. Strategic resources
12. Cyber security
13. Liquidity
14. Commodity prices and
exchange rate
Growth
15. Growth of mineral resource
base and opportunities
16. Project development and
execution
Innovation
17. Innovation and digitalisation
Transversal
18. External risks
Key
Risk appetite Risk level
Low
Medium
High
Very high
Strategic pillars
Safety and Sustainability
People and culture
Competitiveness
Innovation
Growth
Antofagasta plc Annual Report 202376
STRATEGIC REPORT
The risk impact scale rating has five levels of Probability and Impact:
Probability
Level Quantitative Qualitative
Almost certain Once a week Happens often
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
Very unlikely Once or twice every 50 years Only in extreme circumstances
Impact
Level EBITDA / Health and Safety / Environment / Communities / Legal / Reputation
Severe
•
Any incident with an impact of more than 50% of EBITDA.
•
Accident that causes multiple fatalities or permanent disabilities.
•
Irreversible environmental damage or serious incident that impacts a community, with long-term effects.
•
Regulatory breaches which may lead to a revocation of operating permits or a financial impact exceeding 20% of EBITDA.
•
Severe impact on Company’s international reputation with long-term effects.
Significant
•
Any incident with an impact of between 20% and 50% of EBITDA.
•
Accident that causes a single fatality or permanent disability.
•
Reversible environmental damage or major incident affecting a community, with medium-term effects.
•
Regulatory breaches which may lead to a criminal conviction or a financial impact of more than 20% of EBITDA.
•
High impact on the Company’s national reputation with medium-term effects.
Moderate
•
Any incident with an impact of between 10% and 20% of EBITDA.
•
Accident resulting in lost time.
•
Moderate environmental impact or small incident that affects a community, with short-term effects.
•
Regulatory breaches which may lead to criminal charges or a financial impact of between 0.05% and 3% of EBITDA.
•
Moderate adverse claims and in the national news for a medium-term period.
Low
•
Any incident with an impact of between 5% and 10% of EBITDA.
•
Accident without lost time.
•
Minor environmental or community impact.
•
Regulatory breaches that may result in a financial impact of less than 0.05% of EBITDA.
•
Moderate claims and in national news for a short-term period.
Very low
•
Any incident with an impact of less than 5% of EBITDA.
•
Minor occupational accident.
•
Very minor environmental or community impact, easily resolved.
•
Regulatory breaches that will not result in a financial penalty.
•
Claims that do not reach the formal media.
Risk Heat Map
PROBABILITY
Very unlikely Unlikely Possible Likely Almost certain
IMPACT
SevereSignificantModerateLowVery low
Movement since
previous year
14
6
1
2
3
16
17
4
15
8
10
9
11
7
5
18
12 13
Legend
Risk level
Low
Medium
High
Very high
Antofagasta plc Annual Report 2023 77
Defining risk appetite is key in embedding the risk management system into our organisational
culture.
The Company’s risk appetite statement helps to align our strategy with the objectives of each
business unit, clarifying which risk levels are, or are not, acceptable. It promotes consistent
decision-making on risk, allied to the strategic focus and risk/reward balance approved by
the Board.
The principal risks, together with related prevention and mitigation
measures, have been presented to the Board and are grouped in line
with our strategic pillars: People and Culture, Safety and Sustainability,
Competitiveness, Growth and Innovation. These pillars are supported
by our corporate governance structures.
Description Preventive and mitigation measures Highlights
1. TALENT MANAGEMENT
Risk appetite
Risk level
Outlook
Managing talent and
maintaining a high-quality
labour force in a fast-
changing technological
and cultural environment
is a key priority for us.
Any failures could have
a negative impact on the
performance of our
existing operations and
prospects for growth.
We develop the talents of our employees through
training and career development, invest in initiatives
to widen the talent pool and are committed to our
diversity and inclusion policy.
Through these actions we aim to increase employee
retention and add to the number of women, people with
disabilities and employees with international experience
in the workplace.
Our Employee Performance Management System
is designed to attract and retain key employees by
creating suitable and competitive reward and
remuneration structures and providing personal
development opportunities. We have a talent
management system to identify and develop internal
candidates for key management positions, as well as
selecting suitable external candidates when
appropriate.
Difficulties in finding and retaining talent have
become a challenge and a cross-cutting risk, which
is increasing as companies adopt new technologies
and growth strategies are affected by these new
competencies, as is the case of Antofagasta.
Therefore, our strategic talent identification and
management methodology is designed to identify the
key competencies essential for ensuring the
sustainability of our business. By identifying and
developing people, we are empowered to fortify our
workforce, ensuring they are well-equipped to meet
and exceed our business goals.
Due to the “40 hours” approval, to understand the
effect of the reduced working hours on the
organisation, a pilot was launched to evaluate the
effectiveness of tasks and processes, team
experience, workload and work dynamics. Based on
the lessons learned from the pilot, change
management will be defined for the organisation.
This year, our Diversity and Inclusion Strategy has
increased the proportion of our female employees to
23.6%, 3.2 percentage points higher than in 2022.
2. LABOUR RELATIONS
Risk appetite
Risk level
Outlook
Our highly-skilled workforce
and experienced
management team are
critical to our current
operations, implementing
development projects and
achieving long-term growth
without major disruption.
We maintain good relations with our employees and
unions, founded on trust, regular dialogue and good
working conditions. We are committed to safety,
non-discrimination, diversity and inclusion, and comply
with Chile’s strict labour regulations. There are
long-term labour agreements (usually three years) in
place with all the unions at our operations, which helps
ensure labour stability. We seek to identify and address
any labour issues that may arise during the period
covered by the labour agreements and to anticipate any
potential issues in good time. Employees of our
contractor companies are an important part of our
workforce, and under Chilean law fulfil the same duties
and are subject to the same responsibilities as our own
employees. We treat contractors as strategic associates
and build long-term, mutually beneficial relationships
with them. We maintain constructive relationships with
our employees and their unions through regular
communication and consultation. Union representatives
are regularly involved in discussions about the future
of the workforce.
Three-year labour agreements were successfully
negotiated with a supervisor union at Centinela,
a workers union at Zaldívar, two workers unions at
Los Pelambres and two workers unions at
Centinela, all of them in a climate of mutual respect.
In the case of contractor companies, the settlement
of collective bargaining agreements were also
carried out within the expected agreements and
without conflict or impact for the Antofagasta
Minerals companies, except for a contractor
company in Antucoya who held a brief strike but it
had no impact on operational continuity. In 2023,
the psychosocial risks survey was carried out in all
the companies, which is a legal obligation and is
applied by the Superintendency of Social Security
of the Ministry of Health. In all companies the
survey result was “low risk”, which corresponds to
the best evaluation category of
the survey.
The principal risks are outlined in the risk heat map and table on
the previous two pages, and in more detail below.
Risk management continued
Antofagasta plc Annual Report 202378
STRATEGIC REPORT
Description Preventive and mitigation measures Highlights
3. HEALTH AND SAFETY
Risk appetite
Risk level
Outlook
Health and safety incidents
could result in harm to our
employees, contractors and
local communities. Ensuring
their safety and wellbeing is
our ethical obligation, and
one of our core values.
A poor safety record or a
serious accident could have
a long-term impact on
morale and on our
reputation and productivity.
Our Safety and Occupational Health Strategy is based
on four pillars:
1. Health and safety risk management: workers at all
levels are trained to identify hazards and controls, so
that all jobs are carried out safely.
2. Leadership: all employees and contractors are health
and safety leaders and we demonstrate our
commitment through each individual’s responsible
behaviour.
3. Contractor management: our contractors are an
integral part of our safety team and safety culture,
which we work together to improve.
4. Reporting, research and learning from our accidents:
we share good practices and learn from our
mistakes.
The Strategy strives to achieve our four main goals:
zero fatalities, zero occupational illnesses, the
development of a resilient culture; and the automation
of hazardous processes.
Leadership visibility and strong use of Job Safety
Analysis and Yo Digo No (I Say No) tools are part of
our safety performance.
Critical controls and verification tools are constantly
strengthened through the verification programme and
regular audits of critical controls for potential high-risk
activities.
We had no fatalities during 2023.
Our lagging indicators continue to fall and were
below our targets for the year.
This year we began the implementation of the
"Leadership Programme for Supervisors" with the
objective of strengthening leadership
competencies, emphasising the planning process
and standardisation of critical tasks.
We developed more than 500 Planned Job Safety
Analyses for our main high risk activities.
Based on our Occupational Health Strategy, we
strengthened our medical surveillance programme
with a rigorous follow-up of workers exposed to
health risk agents and also implemented
engineering projects to reduce the exposure of
workers to these agents.
4. ENVIRONMENTAL MANAGEMENT
Risk appetite
Risk level
Outlook
An operating incident that
impacts the environment
could affect our relationship
with local stakeholders and
our reputation, reducing the
social value we generate.
We operate in challenging
environments, including the
largely agricultural Choapa
Valley and the Atacama
Desert, where water
scarcity is a key issue.
Environmental issues
directly related to climate
change are considered
under our specific Climate
Change principal risk.
We have a comprehensive approach to incident
prevention, aligned with the environmental
management model applied by our operations and
projects in progress. Risks are assessed, monitored
and controlled to achieve our goal of zero events with
significant environmental impact. We work to raise
awareness in our employees and contractors by
providing training to promote operating excellence
related to the environment in which we operate.
The potential environmental impact of a project is a
key consideration when assessing its viability, and we
encourage the integration of innovative technology
in the project design to mitigate such impacts.
We prioritise the efficient use of natural resources
by using sea water, favouring the use of renewable
power, and achieving higher rates of reuse and
recovery of water by using thickened tailings
technology.
We recognise that environmental performance is key
to our ability to generate social value and we 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,
complying with current legislation and applicable
international guidelines. In the event of an
environmental operational event, all appropriate
control, containment or corrective measures shall
be taken immediately.
We have continued to strengthen the environmental
management model, with a deployment plan that
considers engagement, learning and recognition
activities for prominent workers or groups within
the organisation, highlighting the execution of
threecycles of cross-visible leadership. They
review the strategic environmental risk among
operations and the learning cycles established after
environmental operational events, in order to
articulate preventive environmental management.
Antofagasta plc Annual Report 2023 79
Description Preventive and mitigation measures Highlights
5. CLIMATE CHANGE
Risk appetite
Risk level
Outlook
The effects of climate
change have had an
increasing impact on our
operations. The drought in
central Chile is affecting
water availability at Los
Pelambres, while higher
than expected rainfall in the
northern part of the country
is impacting the
infrastructure in the region.
In addition, the increasing
severity of sea swells leads
to delays in the delivery of
key supply materials and
the export of our
concentrates and cathodes.
The Chilean government’s
increased climate ambitions
may result in higher
requirements for
compliance and operating
costs.
We are committed to
contributing to the reduction
of greenhouse gas
emissions and water
scarcity. We do this by
increasing the amount of
power and water we obtain
from renewable and
sustainable sources.
We recognise that climate change is a threat to human
life and the planet as we know it today.
We measure and report our Scope 1, 2 and 3
greenhouse gas emissions and have committed to
realistic reduction targets through a cost-effective
decarbonisation roadmap. We continue to seek ways to
decarbonise our operations and this requires greater
investment in innovative solutions, including developing
low-carbon technology, which can increase operating
costs.
Recognising water scarcity, we are reducing our
dependence on continental water through more
efficient water use and the increased use of sea water
as a proportion of our total water consumption. As
each phase of the Los Pelambres desalination plant
construction is completed, the proportion of continental
water used will decrease, particularly after Phase 2 of
the project, significantly lowering the potential impact of
water scarcity on the Group while freeing up water for
local communities.
We constantly seek to identify risks associated with
climate change and to implement actions to adapt to
and mitigate their potential impact, such as increasing
our stocks of strategic resources. For each risk
evaluated as “High” or “Extreme” we produce specific
action plans and strategies.
As part of our regular communication with local
stakeholders, we discuss the material risks and our
controls, action plans and related strategies.
Our Climate Change Strategy seeks to strengthen
our capacity to adapt to and mitigate climate
change. This enables us to take early action to
manage the resulting risks and opportunities in
such a way as to mitigate the effects of climate
change and adapt to new scenarios.
Since April 2022, all our power supply contracts for
our mining operations are from renewable sources.
This allowed us to meet the target early of reducing
Scope 1 and 2 emissions by 30% by 2025
compared with 2020, equivalent to 730,000 tCO
2
e.
We also have an ambition of achieving carbon
neutrality by 2050, or sooner if technology permits.
In 2023, we established new targets: reducing
Scope 1 and 2 emissions by 50% by 2035
compared with 2020, and engaging with the
industry to achieve a 10% reduction in Scope 3
emissions by 2030.
6. COMMUNITY RELATIONS
Risk appetite
Risk level
Outlook
Failure to identify and
manage local concerns and
expectations could
negatively impact the
Company. Relations with
local communities and
stakeholders affect our
reputation and impede our
ability to grow and generate
social value.
We have a dedicated team that establishes and
maintains relations with local communities. These
relationships are based on trust and mutual benefit
throughout the mining lifecycle, from exploration to final
remediation on closure. We seek to anticipate any
potentially negative operating impacts and minimise
these through responsible behaviour. This means
acting transparently and ethically, prioritising the health
and safety of our employees and contractors, avoiding
environmental incidents, promoting dialogue, complying
with our commitments to stakeholders and establishing
mechanisms to prevent or address a crisis. These
steps are undertaken in the early stages of each project
and continue throughout the life of each operation.
We contribute to the development of communities in
the areas in which we operate, starting with an
assessment, undertaken together with the
communities, of the existing situation and their specific
needs, while looking to develop long-term, sustainable
relations and evaluating the impact of our
contributions. We also focus on developing the
potential of members of local communities through
education, training and employment.
We work to communicate clearly and transparently
with local communities in line with our Community
Relations Plan. This includes a grievance management
process, local perception surveys, and local media and
community engagement.
We reinforced community programmes related to
water for human consumption and irrigation to
mitigate the impact of the drought in the Province
of Choapa. We seek to stimulate the generation of
economic, social and human capital in the regions
where we operate by promoting local employment,
fostering local suppliers and offering education and
training opportunities. We run various programmes
to support local entrepreneurs and micro and small
businesses. We have launched a community
grievance mechanism management system to
report any issues caused by our operations on
neighbouring communities. Concerns can be made
confidentially and are tracked to monitor their
progress. We made progress in measuring the
impact of our social programmes deployed in the
territory. With the measurements carried out, we
have addressed the most relevant projects and
programmes of all the Group's companies, which
has allowed us to develop improvement plans
aimed at optimising the performance of the
initiatives and the social value of our operations
in the territory.
Risk management continued
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Description Preventive and mitigation measures Highlights
7. POLITICAL, LEGAL AND REGULATORY
Risk appetite
Risk level
Outlook
Political instability could
affect our operations,
projects and exploration
activities in the countries in
which we operate. Issues
regarding the granting of
permits, or amendments to
permits already granted,
and changes to the legal
environment or regulations,
could also adversely affect
our operations and
development projects.
We constantly monitor political, legal and regulatory
developments affecting our operations and projects.
We comply fully with existing laws, regulations,
licences, permits and rights in each of the countries
in which we operate.
We assess political risk as part of our evaluation of
potential projects, including the nature of any foreign
investment agreements.
We monitor proposed changes in government policies
and regulations, particularly in Chile, and belong to
several associations that engage with governments
on these matters. This helps to improve our internal
processes and means that we are prepared to meet
any new regulatory requirements.
We see a lower degree of political uncertainty in
Chile. After the rejection of the new constitution
draft proposed last December, the current
constitution will remain in force. Government has
announced that it will not pursue new constitutional
reform within its term.
During 2023, the new Chilean mining royalty bill
was enacted, providing certainty on the new royalty
tax framework. Companies without tax stability
agreements start their new royalty payments
during 2024. Those payments will increase the
Group’s consolidated effective tax rate by c.5
percentage points.
In August, a new “Ley de Delitos Económicos”
(Economic Crimes Law) was enacted in Chile. This
new law establishes a new legal regime applicable
to individuals and legal entities (companies);
however, changes applicable to legal entities will
come into force in September 2024. Although we
are confident that we have robust controls in place
we have reassessed and are updating our risk
matrix, in order to identify any improvement we
can make in our controls, with the main focus
being on new environmental crimes.
The Group continues supporting some Chilean
industry associations, particularly the Consejo
Minero (Mining Council) and SONAMI in its
representation of the mining industry and its
responses to proposed new regulations.
8. CORRUPTION
Risk appetite
Risk level
Outlook
Our operations or projects
around the world could be
affected by risks related to
corruption or bribery,
including operating
disruptions or delays
resulting from a refusal to
make “facilitation
payments”. The level of
such risks depends, in part,
on the economic or political
stability of the country in
which we are operating.
We have zero tolerance for any activity that would
contravene anti-bribery and corruption legislation.
We maintain a robust governance regime, open
channels of communication, Group-wide training
programmes, and multiple layers of controls at all our
operations, projects and exploration activities, as well
as in our third-party relationships using enhanced due
diligence procedures.
A strong, appropriate culture is one of the key aspects
of the Group’s strategic framework. This is
emphasised by messaging from the Board downwards
that inappropriate, corrupt, illegal or unethical
behaviour is totally unacceptable. The Group’s Code
of Ethics sets out the Group’s commitment to
conducting business in a responsible and sustainable
manner. The Code requires honesty, integrity and
accountability from all employees and contractors.
Our Compliance Model is set to prevent actions which
may involve us directly or indirectly in any potential
irregularities (including any kind of bribery), detect
possible risks in a timely fashion and respond to any
misconduct in an adequate manner. Internal policies,
procedures and controls have been implemented
to prevent corruption.
An anonymous whistleblowing hotline is available
to employees and external parties to report
compliance-related concerns, which are investigated
and followed-up by an expert team and reviewed
by a senior management Ethics Committee.
The Group’s Compliance Model applies to both
employees and contractors. It is clearly defined and
is communicated regularly through internal
channels, as well as being available on the Group’s
website. New employees are trained in the
Compliance Model as part of their induction
programme. The Group’s Crime Prevention Model
ensures compliance with anti-bribery and
anti-corruption laws in the United Kingdom and
Chile and is certified by an external entity. In
August, a new "Ley de Delitos Económicos"
(Economic Crimes Law) was enacted and will
come into force in September 2024. Although we
are confident that we have effective controls in
place, we have reassessed our risk matrix and the
Compliance Model and they are being updated
considering the new risk matrix.
Antofagasta plc Annual Report 2023 81
Description Preventive and mitigation measures Highlights
9. OPERATIONS
Risk appetite
Risk level
Outlook
Our operations are subject
to a number of
circumstances not wholly
within our control. These
include damage to or
breakdown of equipment
or infrastructure,
unexpected geological
variations, or technical
issues, any of which could
adversely affect production
and/or costs.
Principal risks relating to each operation are identified as
part of the regular risk review processes they undertake.
This process also identifies mitigation measures for such
risks. Monthly reports to the Board provide variance
analysis of operating and financial performance, allowing
potential issues to be identified in good time and any
necessary monitoring or control activities to be
implemented to prevent unplanned downtime. Our focus is
on maximising the availability of equipment and
infrastructure and ensuring the effective use of our assets
in line with their design capability and technical limits. We
keep the variation of processes within defined tolerance
limits, and 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.
Lessons learned from previous cases of community
concern have improved the resilience of our
operations and minimised the impact of incidents this
year. Many years of drought at Los Pelambres has
reduced production in recent years. This climate
change impact is being mitigated with the
desalination plant in Los Pelambres, which came into
operation with its commissioning during 2023. The
fourth concentrator line at Los Pelambres is
successfully completing its commissioning phase,
with an additional two million tonnes of ore
processed as of the end of the year.
10. TAILINGS STORAGE
Risk appetite
Risk level
Outlook
Ensuring the stability of our
tailings storage facilities
(TSFs) during their entire
lifecycle is central to how
we operate. A failure or
collapse of any of our TSFs
could result in fatalities,
damage to the environment,
regulatory violations,
reputational damage and
disruption of the quality of
life of neighbouring
communities, as well as the
running of our operations.
We manage our TSFs to allow the effectiveness of their
design, operation and closure to be monitored at the
highest level of the Company. All our TSFs are built using
the downstream construction method and are designed
to withstand earthquakes and extreme weather.
Catastrophic failures of TSFs are unacceptable. Their
potential for failure is evaluated and addressed
throughout the life of each facility. Our TSFs are
constantly monitored, and all relevant information is
provided to the authorities, regulating bodies and the
communities that could be affected. We manage our TSFs
using data, modelling, and construction and operating
methods validated and recorded by qualified technical
teams and reviewed by independent international experts,
whose recommendations we implement to strengthen the
control environment. Risk management includes timely
risk identification, control definition and verification. Our
controls are based on the consequences of the potential
failure of the tailings facilities.
The Global Industry Standard on Tailings
Management (GISTM) was published in 2020. We
are implementing this standard at all our
operations. Our El Mauro and Centinela TSFs are
in compliance with this standard (based on
self-assessment) since August 2023. Our 2021
tailings policy sets out the guiding principles for
the management of our TSFs and any potential or
actual impact on the environment, using sound
governance and open communication with
stakeholders. In accordance with this standard, we
continue to update our risk assessment methods,
focusing on more detailed risk identification,
failure modes and controls, in order to avoid
catastrophic failures.
11. STRATEGIC RESOURCES
Risk appetite
Risk level
Outlook
Disruption or restriction
of the supply of any of our
key strategic inputs, such
as electricity, water, fuel,
sulphuric acid or mining
equipment, could
negatively impact
production.
In the longer term,
restrictions to the
availability of key strategic
resources, such as water
and electricity could also
affect our growth
opportunities.
Contingency plans are in place to address any short-term
disruptions to strategic resources and maintain our
security of supply. We negotiate early with suppliers of
key inputs to ensure continuity. Certain key supplies are
purchased from several sources to mitigate potential
disruption arising from exposure to a single supplier.
To achieve cost competitiveness, we endeavour to buy
the highest possible proportion of our key inputs, such as
fuel and tyres, on as variable a price basis as possible and
to link costs to underlying commodity indices where this
option exists.
We maintain a rigorous, risk-based supplier management
framework to ensure that we engage solely with
reputable product and service providers, keeping in place
the controls necessary to ensure the traceability of all
supplies (including the avoidance of any conduct related
to modern slavery).
We are committed to incorporating sustainable
technological and innovative solutions, such as the use of
sea water and renewable power when economically
viable, to mitigate exposure to potentially scarce
resources.
The war in Ukraine is an issue that currently has
no material impact on the supply of our key inputs,
however, it is something that must continue to be
monitored.
Thanks to our stock policy and that of our suppliers,
the impact of the issues in the navigation channels
(“Canal de Panamá” and “Canal de Suez”) was
prevented or mitigated, resulting in almost no impact.
The exposure related to water scarcity at Los
Pelambres due to the drought is being mitigated with
the desalination plant that came into operation with
its commissioning during 2023.
We worked closely with the Vigilance Board for the
Choapa River to establish a water redistribution
agreement that is now awaiting approval by the
General Directorate of Water of the Ministry of Public
Works. Our joint approach has focused on avoiding
disputes and conflicts around this vital resource.
Minera Zaldívar submitted an EIA application that
includes a plan to change the mine’s water source
from the local aquifer to either sea water or water
provided by third parties by 2028.
Risk management continued
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Description Preventive and mitigation measures Highlights
12. CYBER SECURITY
Risk appetite
Risk level
Outlook
Breaches in, or failures of,
our information security
management could
adversely impact our
business activities.
Malicious interventions
(hacking) of our information
or operations’ networks
could affect our reputation
and/or operational
continuity.
Our Information Security Management Model provides
defensive structural controls to prevent cyber risks and
mitigate their effects. It employs a set of rules and
procedures, including a Disaster Recovery Plan, to
restore critical IT functions in the event of an attack.
Our systems are regularly audited to identify any
potential weaknesses or threats to our assets, and
specific systems are in place to protect them and our
data.
We have further strengthened our protective
controls and regularly communicate with users to
prevent cyber attacks.
To reinforce our controls we organised “ethical
phishing” and “ethical hacking” exercises during
the year. A cyber security e-learning was launched
for all employees, and some prevention activities
were also implemented in operating companies.
13. LIQUIDITY
Risk appetite
Risk level
Outlook
Restrictions in financing
sources available for future
growth could prevent us
from taking advantage of
growth or other
opportunities in the market.
Security, liquidity and return are the order of priorities
for our treasury investment strategy. We maintain a
strong and flexible balance sheet, consistently returning
capital to shareholders while leaving sufficient funds to
progress our short-, medium- and long-term growth
plans. This gives us the financial flexibility to take
advantage of opportunities as they may arise.
We have a risk-averse investment strategy, managing
our liquidity by maintaining adequate cash reserves and
a revolving credit facilities through the periodic review
of forecast and actual cash flows. We choose to hold
surplus cash in demand or term deposits or highly
liquid investments.
We maintained our solid balance sheet and
financing ratios, safeguarding our capability to raise
debt.
We have focused on diversifying our sources of
funding, retaining a high level of interest from
financial institutions offering to provide finance on
competitive terms.
During 2023, we executed debt transactions and
included new lenders, diversifying the sources and
term of our debt financing.
14. COMMODITY PRICES AND EXCHANGE RATES
Risk appetite
Risk level
Outlook
Our results are heavily
dependent on commodity
prices – principally those of
copper and, to a lesser
extent, gold and
molybdenum. The prices of
these commodities are
influenced by many external
factors, including world
economic growth, inventory
balances, industry supply
and demand, possible
substitution, etc. Our sales
are mainly denominated in
US dollars, although some
of our operating costs are
in Chilean pesos, and any
strengthening of the Chilean
peso may negatively affect
our financial results.
We consider exposure to commodity price fluctuations
an integral part of our business and our usual policy is
to sell our products at prevailing market prices. We
monitor commodity markets closely to determine the
effect of price fluctuations on earnings, capital
expenditure and cash flows. Very occasionally, when
we feel it is appropriate, we use derivative instruments
to manage our exposure to commodity price
fluctuations.
We run our business plans under various commodity
price scenarios and develop contingency plans as
required. As copper exports account for near 50% of
Chile’s exports, there is a strong correlation between
the copper price and the US dollar/Chilean peso
exchange rate. This natural hedge partly mitigates our
foreign exchange exposure. However, we monitor the
foreign exchange markets and the macroeconomic
variables that affect them and occasionally implement a
focused currency-hedging programme to reduce short-
term exposure to fluctuations in the US dollar against
the Chilean peso.
The divergence in the management of monetary
policies between Chile and the US during the year,
as well as the expectation of interest rate
differentials between the two countries, often
outweighed the typical correlation between the
copper price and the US dollar/Chilean peso
exchange rate.
No new hedging positions were entered into during
2023.
Antofagasta plc Annual Report 2023 83
Description Preventive and mitigation measures Highlights
15. GROWTH OF MINERAL RESOURCE BASE AND OPPORTUNITIES
Risk appetite
Risk level
Outlook
We need to identify new
mineral resources to
ensure continued future
growth. We do this through
exploration and acquisition.
We may fail to identify
attractive acquisition
opportunities or select
inappropriate targets. The
long-term commodity price
forecast, and other
assumptions used when
assessing potential projects
and other investment
opportunities, will influence
the forecast return of
investments. Incorrect
estimates could cause poor
decision-making. Regarding
exploration, there is a risk
that we may not identify
sufficient viable mineral
resources.
Our exploration and investment strategy prioritises
exploration and investment in the Americas. To reduce
our risk exposure, we focus on growth opportunities
in stable and secure countries.
Our rigorous assessment processes evaluate and
determine the risks associated with all potential
business acquisitions and exploration opportunities,
including stress-test scenarios conducted for sensitivity
analysis. Each assessment includes a country risk
analysis (including corruption) and analysis of our
ability to operate in a new jurisdiction.
At the very least, all joint ventures must operate in line
with, or to the equivalent level of, our policies and
technical standards.
Our Business Development Committee reviews
potential opportunities and transactions, approving or
recommending them within authority levels set by the
Board.
Our exploration activities continued to be focused
on the Americas and our risk exposure level was
unchanged. During 2023, three new exploration
joint ventures with companies with interests
in Peru were signed.
The Company announced in December 2023 that,
through a wholly owned subsidiary, it had entered
into transactions in the secondary market to
acquire beneficial ownership of approximately 19%
of the outstanding shares of Compañía de Minas
Buenaventura S.A.A. (“Buenaventura”).
Buenaventura is Peru’s largest, publicly traded
precious and base metals company and a major
holder of mining rights in Peru.
Twin Metals’ exploration plan obtained all
necessary state approvals in October 2023.
The goal of this exploration activity is to better
understand our mineral resources and our
potential to contribute critical minerals to support
the transition to a clean energy future. For further
information on Twin Metals, please see page 101
of this report.
16. PROJECT DEVELOPMENT AND EXECUTION
Risk appetite
Risk level
Outlook
Failure to effectively
manage our development
projects or transform our
resources into reserves
could result in delays to the
start of production and cost
overruns.
Delays on information
capture and/or not
achieving required enablers
could limit the conversion of
resources into reserves.
We have a project management system to ensure that
best practices are applied at each phase of a project’s
development. The project management system
provides a common language and standards to support
the decision-making process by balancing risk with the
benefits of growth. In addition, all geometallurgical
models are reviewed by independent experts.
During the project development lifecycle, quality checks
for each of the standards applied are carried out by a
panel of experts from within the Company. This panel
reviews each completed feasibility study to assess the
technical and commercial viability of the project. It also
assesses how the project can be developed safely and
considers any relevant risks or opportunities that could
potentially impact the schedule, cost or future
performance of the project.
Detailed progress reports on current projects are
regularly reviewed and include assessments of
progress against key project milestones and
performance against budget.
Project robustness is stress-tested under a range of
copper price scenarios. Joint project/operation teams
are established early in a project’s development to
ensure a smooth transition into the operating phase
once construction is completed.
All new reserves and growth projects must comply
with our internal procedures and all applicable
environmental and social laws and regulations.
Our projects are developed in accordance with
the practices set out in our Asset Delivery
System (ADS), including the Functional Quality
Assurance Review (FQAR), and are reviewed by
external experts.
Project risks are proactively managed and
frequently evaluated to minimise their impact on
costs.
Project estimates include a contingency provision,
calculated using a probability-based method that
considers the systemic and specific risks of each
project.
The risks associated with converting mineral
resources to reserves are properly identified and
managed by the teams to ensure accurate
conversion.
Risk management continued
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Description Preventive and mitigation measures Highlights
17. INNOVATION AND DIGITALISATION
Risk appetite
Risk level
Outlook
Our ability to deliver on our
strategy and our
performance targets may
be undermined by missed
opportunities or delays in
adopting new technologies
or innovations.
We seek value-capturing innovations that realise cost
savings and/or improve the efficiency, reliability and
safety of our processes while supporting our corporate
strategic pillars. We evaluate the potential of all ideas
using our stage-gate approval process and Innovation
Board.
We maintain partnerships with academic institutions
and companies specialising in technology and
engineering – including peers, when there is no
competitive barrier – to maximise the potential for
improvements in our processes and systems. A
dedicated team monitors, identifies and analyses
external innovation trends that have potential
applications in our business, including those in
non-operational areas such as product sales and
purchasing. The team also maintains and manages a
portfolio of ongoing innovation projects.
We have a recognition and incentives programme to
encourage all staff to suggest innovative improvements
to our day-to-day operating systems. We also dedicate
resources to evaluating and implementing innovations
which have the potential to positively impact our
business and growth options.
As part of our Remote Operating and Autonomy
Roadmap, Antucoya has successfully concluded the
execution phase and deployed into production the
remote operation of their spreader, currently
operating the system. In Zaldívar, the last testing
stage was concluded for the teleoperation in Line of
Sight mode of their drilling rigs, and we are
currently processing the permit to operate with
Sernageomin. Los Pelambres will deploy a robotic
solution in performing the liner replacement of their
SAG mill, with the corresponding equipment
expected to be on site by March next year.
Centinela's Integrated Remote Operations Centre
(IROC) in the city of Antofagasta has run effectively
in its second year of operation. It enables
management of the plant and the mine remotely,
with real-time information and optimisation of all
processes. Los Pelambres' IROC is located in
Santiago and has been operating for one year,
completing critical milestones for remote and
integrated operation along the entire value chain.
A successful heap heating pilot was conducted
during 2023 in Zaldívar, enhancing the operational
readiness of our Cuprochlor®-T technology.
We are currently engaged in a range of operational
recommendation and optimisation initiatives,
complementing previously developed and
successfully deployed solutions across the
production value chain, as part of our SIRO
programme, to enable better and data driven
automated decision making. Some of the tools
developed to date cover Flotation Optimisers, Milling
Recommendations, Mineral Tracking and Advanced
Maintenance.
18. EXTERNAL RISKS
Risk appetite
Risk level
Outlook
We must develop the ability
to manage external threats
that are complex to predict
and can significantly impact
the Group’s strategic
objectives and its
operational continuity.
Changes in the global or Chilean economic or political
environment can impact the Group’s strategy.
We maintain good practices and adopt lessons learned
during periods of crisis.
We recognise the volatility of the markets and proactively
seek new business models and work to expand our
client base.
We regularly review our Business Continuity Plan.
We use scenario analysis to challenge the principles on
which we base our financial planning, identifying
potential risks, costs and benefits of feasible action plans.
The controls for this risk were updated to
incorporate lessons learned during the year, such as
the geographical diversification of our suppliers, and
the increase in our stocks of strategic resources,
where the contingencies we had during 2023 were
mitigated without having major impacts on the
operation.
During 2023, our Business Continuity Plan was
updated in the Mining and Transport division.
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
Geoeconomic confrontation
Geoeconomic confrontation with impact on the logistics chain and Commodities market.
Commodity substitution
Lower demand for copper producing sustained oversupply in the medium-long term
due, to a substitute product impacting the business strategy to date.
Widespread cyber crime and cyber security
Global or regional cyber crime with critical infrastructure breakdown impacting
operational continuity.
The above risks are closely monitored and actively managed to minimise their threat.
Antofagasta plc Annual Report 2023 85
Areas of focus and development during 2023
•
In August, the “Ley de Delitos Económicos” (Economic Crimes Law)
was published. This legislation, which establishes a new legal
regime applicable to natural persons (individuals) and another to
legal entities (companies), will come into force in September 2024.
Although we have robust controls in place, we will reassess the
group risk matrix in order to identify the need for any new controls
or adjustments in current controls, with more focus on
environmental areas.
•
A proven due diligence process is in place, based on a risk analysis
approach.
•
The Company’s Crime Prevention Model was recertified by an
independent expert.
•
Employees in high-risk areas completed additional in-depth training
on ethics and compliance.
•
New employees were trained in the Compliance Model and Code of
Ethics as part of their induction programme.
•
All employees updated their conflict-of-interest disclosures.
•
A campaign “let’s talk about integrity” was launched with a
large-scale communication related to respect, health and safety, and
environmental management.
•
Anti-corruption events took place at all our operations to reinforce
compliance with our integrity values.
•
The Compliance team have been part of the approval process for
social contributions, to strengthen monitoring and governance.
•
The Compliance and Supply teams have started to invite their
vendors to self-assess on the external platform and identify
improvement opportunities from a sustainability perspective.
•
A communication campaign was carried out as part of our focus on
Prevention in our Compliance Model.
•
As part of the “Suppliers for a Better Future” initiative, the
Compliance team trained 150+ supplier representatives on
respectful workplaces and sound compliance practices.
•
Whistleblowing investigations, undertaken by a group of experts,
were centralised and standardised, guaranteeing an independent
process.
•
The consultation process for revisions to the UK Corporate
Governance Code was closely monitored. The updated Code, which
was published in January 2024, introduces a new requirement
(applicable from 2026 onwards) for the Board to make an annual
declaration as to the effectiveness of the Group’s material internal
controls. A readiness assessment was undertaken and action plans
were established in respect of the anticipated changes.
Code of Ethics
This sets out our commitment to conducting business in a responsible
and sustainable manner. The Code requires honesty, integrity and
accountability from all employees and contractors, and includes
guidelines for identifying and managing potential conflicts of interest.
Itis at the core of our Compliance Model and supports the
implementation of all related activities.
Our Code of Ethics is available on our website.
Compliance Model
The Compliance Model applies to both our employees and our
contractors. It is clearly defined and is communicated regularly
through internal channels as well as being available on our website. All
contracts include clauses relating to ethics, modern slavery and crime
prevention to ensure contractors’ adherence to our Compliance Model.
We actively promote open communication with all our employees,
contractors and local communities. This helps ensure that our
corporate and value creation objectives are achieved in an ethical and
honest way.
Risk management continued
How we achieve our objectives is crucial
to the sustainable long-term development
of the Company. We have zero tolerance
for bribery and corruption, and are
committed to working with integrity and
transparency. We comply with all
applicable anti-corruption and anti-
bribery legislation, and ensure that
necessary controls are in place to
prevent any unethical behaviour.
Compliance and
internal controls
Accommodation units at Antucoya.
Antofagasta plc Annual Report 202386
STRATEGIC REPORT
The Compliance Model is reviewed regularly, both internally and by
third parties, and on corruption-related matters it is certified in
accordance with Chilean anti-corruption legislation.
The Model has three pillars:
Prevention: Its main focus is to prevent the occurrence of any
irregular or illegal situations. We provide a series of tools and training
opportunities to all employees and contractors to support appropriate
behaviour through:
•
Internal policies and procedures
•
Anti-trust guidelines
•
The management and update of our Compliance Risk Matrix
•
Our robust due diligence processes
•
Anti-corruption clauses in suppliers’ and employees’ contracts
•
Compliance training and communication
•
Access Control and Governance, Risk and Compliance (GRC) tools
are used as part of our segregation of duties controls
Detection: Detection of any potentially irregular or illegal situation is
boosted by:
•
Robust and open whistleblowing channels where individuals can
present complaints and grievances anonymously in a context of our
non-retaliation policy
•
Data analysis
•
Anti-corruption internal controls
•
Normative instruments, such as internal policies, procedures or
guidelines, which are continually reviewed
•
Internal audit
Action: Immediate action is taken if an irregular or illegal situation is
detected, and we investigate according to our internal procedures
using fact-based, objective and professional standards. An Ethics
Committee, which includes members of the senior management team,
reviews the findings of every investigation and suggests remediation
plans. The performance of the compliance programme is reported
twice a year to the Audit and Risk Committee and to the Board. The
anonymity of the whistleblowing channels is guaranteed to safeguard
individuals and so achieve greater transparency and bolster our
non-retaliation policy.
During the year, we received 609 allegations. Of these, 186 (31%)
were ethics related and 423 (69%) were non-ethical concerns. The
ethical allegations were classified as: 77.5% (144) fraud; conflicts of
interest, and other misconduct; 22% (41) workplace and sexual
harassment; 0.5% (1) regulatory non-compliance; and 0% (0) modern
slavery. Remediation actions were defined and implemented for all
substantiated allegations.
Our Crime Prevention Model ensures compliance with anti-bribery
and anti-corruption laws in the United Kingdom and Chile, and is
certified by an external entity.
Due diligence highlights
During the year, 6,110 suppliers were reviewed, of which 1.3% were
rejected. Of these 97% were Chilean suppliers and 3% were
international. The reasons for rejection were mainly due to high
financial or tax risk, non-compliance with Group guidelines or
non-compliance with Law 20.393 (Criminal Responsibility
of Legal Entities).
Antofagasta plc Annual Report 2023 87
Viability statement
To address the requirements of provision 31 of the 2018 UK Corporate Governance Code,
the Directors have assessed the prospects of the Group over a period of five years.
Mining is a long-term business and timescales can run into decades.
The Group maintains Life-of-Mine models covering the full
remaining mine life for each mining operation. More detailed
medium-term planning is completed for a five-year time horizon
(as well as very detailed annual budgets). Accordingly, five years
has been selected as the appropriate period over which to assess
the prospects of the Group.
When taking account of the impact of the Group’s current position
on this viability assessment, the Directors have considered in particular
its financial position, including its significant balance of cash, cash
equivalents and liquid investments and the terms and remaining
durations of the borrowing facilities in place. The Group had a strong
financial position as at 31 December 2023, with combined cash, cash
equivalents and liquid investments of $2,919.4 million. Total borrowings
were $4,079.2 million, resulting in a net debt position of $1,159.8
million. Of the total borrowings, only 22% is repayable within one year,
and 16% repayable between one and two years. 25% 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, and
accounting judgements including potential indicators of impairment.
The copper price forecasts are based on consensus analyst forecasts,
and include a long-term copper price forecast of $3.70/lb.
One scenario analysed as part of this assessment has only considered
existing committed borrowing facilities in place as of 31 December
2023, and has not assumed that any new borrowing facilities will be
put in place. Given the planned financing for the Centinela Second
Concentrator project was not in place as at 31 December 2023, we
have not included the planned development of that project within this
scenario. As an additional scenario, we have forecast the impact of the
development of this project, which assumes a typical financing
environment which allows us to put in place our planned financing for
the project. In addition, we have also modelled sensitivities reflecting
the impact of potential overruns in the project costs.
The forecasts have assumed distributions in line with the Group’s
policy that the total annual dividend for each year would represent
a payout ratio based on underlying net earnings (as defined in the
Alternative Performance Measures section) for that year of at
least 35%.
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 in relation to the scenarios described above, assessing
the standalone impact of each of:
•
A significant deterioration in the future copper price forecasts by
an average of approximately 15% 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 general deterioration in the copper price throughout the
review period.
•
The potential impact of the Group’s most significant individual
operational risks materialising.
•
A shutdown of any one of the Group’s operations for a period of
three months, or a shutdown of all of the Group’s operations for
a period of one month.
The stability of tailings storage facilities represents a potentially
significant operational risk for mining operations globally. The Group’s
tailings storage facilities are designed to international standards,
constructed using downstream methods, subject to rigorous
monitoring and reporting, and reviewed regularly by an international
panel of independent experts. Given these standards of design,
development, operations and review, the impact of a potential tailings
dam failure has not been included in the sensitivity analysis.
The above downside sensitivity analyses indicated results which could
be managed in the normal course of business, including the aggregate
impact of a number of the above sensitivities occurring at the same
time. The analysis indicated that the Group is expected to remain in
compliance with all of the covenant requirements of its borrowings
throughout the review period and retain sufficient liquidity. Based on
their assessment of the Group’s prospects and viability, the Directors
confirm that they have a reasonable expectation that the Group will be
able to continue in operation and meet its liabilities as they fall due over
the next five years.
Risk management continued
Antofagasta plc Annual Report 202388
STRATEGIC REPORT
Drill rig at Centinela.
Antofagasta plc Annual Report 2023 89
Antofagasta owns and operates four mines. Los Pelambres is located in
the Coquimbo Region of central Chile and Centinela, Antucoya and
Zaldívar are in the Antofagasta Region of northern Chile.
“ Our operations delivered strong operational performance
in 2023. Copper production rose by 2% to 660,600
tonnes, with increasing water availability and throughput
rates at Los Pelambres, and costs remaining in line year-
on-year despite industry-wide cost inflation.”
OCTAVIO ARANEDA
Chief Operating Officer
Operating review
660.6kt
of copper produced
209.1k oz
of gold produced
Production highlights
$1.61/lb
Net cash costs
11.0kt
of molybdenum produced
20232022202120202019 2024
Forecast
670-710
770.0
733.9
721.5
646.2
660.6
20232022202120202019
11.0-12.5
2024
Forecast
11.6
12.6
10.5
9.7
11.0
20232022202120202019
195-215
2024
Forecast
282.3
204.1
252.2
176.8
209.1
20232022202120202019 2024
Forecast
1.22
1.14
1.20
1.61 1.61
1.60
Mining division
Antofagasta plc Annual Report 202390
STRATEGIC REPORT
BOLIVIA
ARGENTINA
PERU
BOLIVIA
ARGENTINA
SANTIAGO
COQUIMBO
REGION
ANTOFAGASTA
REGION
Mines
Capital city
Cities and town centres
Ports
ARGENTINA
LOS
PELAMBRES
LA SERENA
PUNTA
CHUNGO PORT
ILLAPEL
LOS VILOS
CENTINELA
ZALDÍVAR
ANTUCOYA
ANTOFAGASTA
MEJILLONES
CENTINELA PORT
Antofagasta plc Annual Report 2023 91
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.
Net cash costs
$1.14/lb
Molybdenum production
8.1k tonnes
Gold production
43.3k ounces
Copper production
300.3k tonnes
Lifecycle of the mine
Revenue
$2,924m
+14%
EBITDA
$1,725m
+17%
202320222021
335-350
324.7
275.0
300.3
2024
Forecast
202320222021
45-55
53.2
43.1
43.3
2024
Forecast
202320222021
8.5-9.5
9.2
7.2
8.1
2024
Forecast
202320222021
0.89
1.10
1.14
1.35
2024
Forecast
24 years
MINE LIFE
11 years
20352000 2024
Mining Operations at Los Pelambres.
Antofagasta plc Annual Report 202392
STRATEGIC REPORT
Operating review continued
2023 Performance
Operating performance
Production at Los Pelambres increased in 2023 as a result of
increased water availability following the completion of construction of
the Company’s desalination plant during the year, and subsequent
ramp up.
EBITDA was $1,725 million, compared with $1,473 million in 2022,
reflecting higher production and sales volumes, and higher realised
prices for copper and by-products.
Production
Copper production for 2023 was 300,300 tonnes, 9% higher than the
prior year. This increase was driven by increased throughput rates in
2023, which resulted from increasing availability of water from the
Company’s desalination plant as it successfully progresses its ramp up,
and additional ore processing capacity provided by the fourth
concentrator line. Molybdenum production in 2023 was 8,100 tonnes,
representing a 13% increase year-on-year, which was the result of
higher throughput rates. Gold production in 2023 rose by 0.5%,
reflecting a balance of lower gold grades and higher ore processing
rates.
Cash costs
For the full year, cash costs before by-product credits were $1.92/lb,
4% higher than in 2022. The key drivers behind this increase in 2023
are appreciation of the Chilean peso, local inflation, and the conclusion
of 3-year labour agreements, partially offset by higher production and
lower input costs.
Net cash costs were $1.14/lb for the full year, 4% higher than in 2022,
reflecting a similar increase in the underlying cash costs and higher
production and pricing for molybdenum.
Capital expenditure
Capital expenditure was $897 million, including $193 million of mine
development, $361 million of sustaining capital expenditure and $344
million of development capital expenditure.
Outlook for 2024
The forecast production for 2024 is 335–350,000 tonnes of copper,
8,5–9,500 tonnes of molybdenum and 45–55,000 ounces of gold.
Higher production is expected due to higher throughput, with
increased water availability and ore processing capacity with the Los
Pelambres Phase 1 Expansion ramping up.
Cash costs before by-product credits are forecast to be approximately
$2.05/lb and net cash costs $1.35/lb, reflecting higher production,
offset by lower expected grades.
Antofagasta plc Annual Report 2023 93
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.
Net cash costs
$1.63/lb
Molybdenum production
2.9k tonnes
Gold production
165.8k ounces
Copper production
242.0k tonnes
Lifecycle of the mine
Revenue
$2,533m
+5%
EBITDA
$1,219m
+5%
225-240
202320222021
274.2
247.5
242.0
2024
Forecast
150-160
202320222021
199.0
133.7
165.8
2024
Forecast
2.5-3.0
202320222021
1.3
2.4
2.9
2024
Forecast
202320222021
1.13
1.75
1.63
1.45
2024
Forecast
23 years
MINE LIFE
36 years
20602001 2024
View of the Esperanza Sur pit, Centinela.
Antofagasta plc Annual Report 202394
STRATEGIC REPORT
Operating review continued
2023 Performance
Operating performance
Ore throughput remained consistent in 2023 with levels seen in the
previous year, with operations maintaining a strong level of operational
performance in line with the plant’s design capacity for the entire year.
Higher production at Centinela Concentrates, driven by improved ore
grade, was counterbalanced by lower ore grades at Centinela
Cathodes.
EBITDA at Centinela was $1,219 million in 2023, compared with $1,157
million in 2022, on higher copper, molybdenum and gold sales volumes
and higher molybdenum and gold realised prices partially offset by
higher unit costs.
Production
In 2023, copper production was 242,000 tonnes, 2% lower than last
year. This reduction in output reflects lower ore grades at Centinela
Cathodes, which was partially offset by higher ore grades at Centinela
Concentrates.
Production of copper in concentrate was 162,700 tonnes, 9% higher
than in 2022, reflecting a combination of higher ore grades and copper
recoveries, with the concentrator operating in line with its design
capacity. Copper cathode production was 79,300 tonnes, 19% lower
than in 2022 due to lower copper grades, offset by higher throughput
rates. Gold production during the year was 165,800 ounces, 24%
higher than in 2022 due to higher gold grades (which are positively
correlated to copper grades). Molybdenum production in 2023 reached
2,900 tonnes – a record for Centinela, with this year-on-year increase
of 21% reflecting higher molybdenum recoveries during the year.
Cash costs
Cash costs before by-product credits in 2023 were $2.57/lb, 5.3%
higher than in 2022 due to lower copper production, the conclusion of
3-year labour agreements and higher contractor costs related to
mining.
By-product credits were $0.94/lb, 25c/lb higher than in 2022 due to
higher production and pricing of both gold and molybdenum.
During the full year, net cash costs were $1.63/lb, 12c/lb lower than
2022 due to higher by-product credits.
Capital expenditure
Capital expenditure was $1,045 million, including $569 million of mine
development, $310 million of sustaining capital expenditure and $166
million of development capital expenditure.
Outlook for 2024
Production is forecast at 225–240,000 tonnes of copper, 150–
160,000 ounces of gold and 2.5–3,000 tonnes of molybdenum. Copper
production is expected to decrease compared with 2023 as a result of
lower grades at Centinela Concentrates during the year.
Cash costs before by-product credits are forecast to be approximately
$2.30/lb, with net cash costs of $1.45/lb.
Antofagasta plc Annual Report 2023 95
Mining division:
Antucoya
Antucoya is approximately 1,400 km north of Santiago
and 125 km north-east of the city of Antofagasta.
Antucoya mines and leaches oxide ore to produce copper
cathodes using the solvent extraction and electrowinning
(SX-EW) process.
2023 Performance
Operating performance
Antucoya continues to operate in line with its design throughput,
sustaining the consistent performance and improved reliability that
was achieved in the previous period.
EBITDA was $215 million in 2023, compared with $261 million in
2022, reflecting higher operating costs and the lower realised copper
price.
Production
Production for the full year was 77,800 tonnes, 1.8% lower than last
year due to a combination of marginally lower ore grades and
recoveries.
Cash costs
Costs during the full year were 5% higher at $2.63/lb, reflecting local
inflation, appreciation of the Chilean peso, higher consumption rates of
sulphuric acid in line with expectations, with lower input costs serving
to partially offset these effects.
Capital expenditure
Capital expenditure was $122 million, including $88 million on
sustaining capital expenditure.
Outlook for 2024
Production is forecast to be 75–80,000 tonnes of copper and cash
costs are expected to be approximately $2.50/lb.
Revenue
$672m
-4%
EBITDA
$215m
-18%
75-80
202320222021
78.6
79.2
77.8
2024
Forecast
202320222021
2.04
2.50
2.63
2.50
2024
Forecast
8 years
MINE LIFE
20 years
20442016 2024
Net cash costs
$2.63/lb
Copper production
77.8k tonnes
Lifecycle of the mine
Mining operations at Antucoya.
Antofagasta plc Annual Report 202396
STRATEGIC REPORT
Operating review continued
Mining division:
Zaldívar
Zaldívar is an open-pit, heap-leach copper mine which
produces copper cathodes using the solvent extraction
and electrowinning (SX-EW) process. The mine is
3,000 metres above sea level, approximately 1,400 km
north of Santiago and 175 km south-east of the city of
Antofagasta.
2023 Performance
Operating performance
During the year, a range of operational initiatives continued to be
implemented, in light of the operational challenges faced in 2022, with an
improvement in copper recoveries seen during 2023 as a result. The
Company’s operating teams are implementing an operational improvement
programme aimed at increasing productivity and throughput rates at
Zaldívar, given throughput levels were lower than expected in 2023,
which are expected to lower cash costs over time. Attributable EBITDA
1
was $87 million compared with $147 million in 2022.
Production
Attributable copper production for the year was 40,500 tonnes, 9%
lower than in 2022 mainly due to lower ore processing rates, which
were partially mitigated by improved recoveries during the year.
Cash costs
Cash costs for the full year were $2.95/lb, 23% higher than the
previous year’s costs due to lower production, local inflation, increased
costs for maintenance and utilisation of stocks from the prior period.
Capital expenditure
Attributable capital expenditure in 2023 was $46 million, of which
$34 million was sustaining capital expenditure.
Outlook for 2024
Attributable copper production is forecast to be 35–40,000 tonnes
at a cash cost of approximately $2.95/lb.
Other matters
In June 2023, Zaldívar submitted an EIA application to extend its mining
and water environmental permits through to 2051. This includes a
proposal to develop the primary sulphide ore deposit and extend the
current life-of-mine at an estimated investment over the mine life of $1.2
billion. It also includes a plan to change the mine’s water source from
the local aquifer to either sea water or water provided by third parties.
This is proposed to follow a transition period during which the current
continental water extraction permit is extended from 2025 to 2028.
In early 2024, approval was received from the authorities for the separate
DIA (Declaration of Environmental Impact) to extend the mining permit
and, therefore, align the water and mining permits at Zaldívar. This approval
ensures that this operation has rights to mine ore and extract water until
2025. The mine life after 2025 is, therefore, subject to the approval of the EIA.
Zaldívar’s final pit phase, which represents approximately 20% of
current ore reserves, impacts a portion of Minera Escondida’s mine
property, as well as infrastructure owned by third parties. Mining of the
phase will be subject to agreements or easements to access these areas
and relocate the infrastructure, and related permits. In 2023, Zaldívar
reached an agreement with Escondida in respect to mining matters and
certain cost sharing. The current mine plan assumes that the additional
necessary agreements, easements and permits will be obtained to allow
the mining of the final pit phase.
Net cash costs
$2.95/lb
Copper production
40.5k tonnes
35-40
202320222021
44.0
44.5
40.5
2024
Forecast
202320222021
2.39 2.39
2.95 2.95
2024
Forecast
Lifecycle of the mine
29 years
MINE LIFE
12 years
20361995 2024
EBITDA
$87m
-41%
1. Attributable EBITDA reflects the Company’s 50% ownership
Haul truck at Zaldívar.
Antofagasta plc Annual Report 2023 97
Transport division
2023 Performance
The Transport division has continued to refine
its operational activities through the
implementation of its Management Model,
based on five fundamental pillars: operational
excellence, growth, transformation,
community, and urban development.
Operating performance
Total transportation volumes in 2023
remained broadly consistent with those of
2022, with the 7.1 million tonnes of
transported material marginally ahead of the
record set in 2022. EBITDA reached $82
million, a 2% increase versus 2022, primarily
due to improvements in the pricing of some
contracts.
Costs and operating efficiency
The division has implemented various
operational efficiency improvements,
optimising costs to ensure long-term
competitiveness with a continuation of the
Transport division’s Cost and Competitiveness
Programme. Through this, we achieved
significant improvements in cost structure,
cash flow, and operational standards, with
cumulative benefits of approximately $6.6
million over the year.
Sustainability
The Transport division made significant progress
in its safety performance in 2023, reducing the
Lost Time Injury Frequency rate across its
operations by more than half to 0.9 in 2023
(2022: 2.2).
In respect of diversity and inclusion, the
Transport division made further progress in
2024, with gender diversity in the workforce
increasing to 23.1% (2022: 19.9%), and the
percentage of people with disabilities employed
continues to exceed the legislative requirement
for 1%, with a figure of 1.4% in 2023 (2022:
1.4%).
Outlook for 2024
In 2024, the division intends to maintain the
progress made in 2023, when a number of
contracts were either awarded or renewed.
Looking ahead, the division has a robust portfolio
of projects that we expect will facilitate an
increase in bulk material transportation volumes.
Concurrently, the division continues to advance
its strategy to transform its lands, located in the
centre of Antofagasta city, from industrial to
urban use. Remediation works began at the end
of 2023, marking a significant milestone in this
development process. Another important
milestone for 2024 is the arrival of the first
hydrogen locomotive, which will allow for a
reduction in CO
2
emissions in the coming years.
Revenue
$196m
+1%
EBITDA
$82m
+2%
2023202220212020
6,702
7,108 7,110
6,444
2023 Tonnage transported
7,110k tonnes
Our Transport division is known as Ferrocarril de Antofagasta a
Bolivia (FCAB) and provides rail and truck services to the mining
industry in the Antofagasta Region, including our own mining
operations.
Antofagasta plc Annual Report 202398
STRATEGIC REPORT
Operating review continued
BOLIVIA
ARGENTINA
Customer map
Road route
Rail route
FCAB customers
Antofagasta Region
María Elena
Antofagasta
Taltal
Tocopilla
Mejillones
Sierra Gorda
Calama
Antofagasta plc Annual Report 2023 99
The Los Pelambres desalination plant and concentrator expansion
were completed in 2023 and moved forward to operational ramp up,
contributing to water supply and ore treatment. After an extensive
review, the construction of the Centinela Second Concentrator Project
was approved by the end of 2023. Critical path works began
immediately after announcement, with full construction commencing
after the execution of definitive project finance documentation during
Q1 2024.
Los Pelambres Expansion Phase 1
This phase of work was designed to optimise throughput within the
limits of the existing operating, environmental and water extraction
permits.
As mining progresses at Los Pelambres, ore hardness will increase.
The expansion aims 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 Phase 1
Expansion was 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.
As of the end of 2023, the desalination plant and the water pipeline
continued to successfully ramp up, with four million cubic metres
delivered to the Company’s operations at Los Pelambres. At the
processing plant, mechanical completion of the concentrator plant
expansion was successfully achieved in October 2023. As at year end,
commissioning work is under way with results being consistently
ahead of schedule and with two million tonnes of additional material
processed.
Los Pelambres Expansion – Desalination plant expansion
The desalination plant expansion to 800l/s, which is part of the Los
Pelambres water strategy, required a separate Environmental Impact
Assessment (EIA).
This project is designed to contribute to enhancing the resilience
of Los Pelambres from the future impact of climate change and the
deteriorating availability of water in the region. The project includes
the expansion of the desalination plant and the construction of a new
water pipeline from the El Mauro tailings storage facility to the
concentrator plant. The project cost will be reported as part of the
Group’s sustaining capital expenditure. Construction is due to start
in early 2024 and is expected to be completed in 2027.
In 2021, Los Pelambres submitted the EIA required for this project,
which includes the desalination plant expansion and two other
sustaining capital infrastructure projects:
1. The replacement of the concentrate pipeline. The new pipeline will
follow the route taken by the existing water pipeline from the
desalination plant to the mine. This revised route for the concentrate
pipeline will avoid interactions with communities along the Choapa
Valley, and reduce the risk of unplanned downtime from the existing
pipeline which has been in operations over 20 years, and is planned
to be in operation from 2027; and
2. Construction of certain planned enclosures at the El Mauro tailings
storage facility.
The Company received approval of the EIA for the above projects in
late 2023.
The sustaining capital infrastructure projects indicated above will
commence construction in 2024, which will provide a platform for the
Phase 2 projects that are outlined below.
Los Pelambres Expansion Phase 2 – Mine life extension
The current mine life of Los Pelambres is limited by the capacity of the
El Mauro tailings storage facility, with sufficient storage capacity for a
further 12 years. This project will require an EIA, with a scope that will
include increasing the capacity of the El Mauro tailings storage facility,
additional storage capacity for mine waste at Los Pelambres and any
water requirement for the enlarged capacity of this operation. This will
extend the mine’s life by a minimum of 15 additional years, accessing a
larger portion of Los Pelambres’ six billion tonnes of mineral
resources. This EIA will also provide for the option to increase
throughput to 205,000 tonnes of ore per day (from the current
capacity of 190,000 tonnes of ore per day).
Key studies on tailings and waste storage capacity have advanced and
a community consultation is under way. The environmental and social
studies associated with this project are being prepared, including the
voluntary public consultation with communities and informative
engagement with key authorities, which should be submitted to
evaluation by the relevant authorities in Chile during 2024 as part of
the EIA application.
Growth projects
and opportunities
Our approach to considered growth means that we focus on value, controlling capital costs and
optimising production at our existing operations and developing new mining operations to deliver
production in the future. We achieve this through careful project management and constant
monitoring of the efficiency of our mines, plants and transport infrastructure.
Operating review continued
Antofagasta plc Annual Report 2023100
STRATEGIC REPORT
Centinela Second Concentrator
After an extensive review, approval of the construction of the Centinela
Second Concentrator Project was announced at the end of 2023.
Following announcement, critical path works began immediately, with
full construction commencing after the execution of definitive project
finance documents during Q1 2024.
The project includes the construction of a second concentrator and
tailings deposit, approximately 7 km from the existing concentrator, to
take place in two phases. The EIA for both phases was approved by
the authorities in 2016. Detailed engineering plans and costings were
updated for Phase 1 of the project and key contracts finalised.
Following Phase 1, the capacity of the new concentrator will be 95,000
tonnes of ore per day, producing on average approximately 170,000
tonnes of copper equivalent (copper, gold and molybdenum) a year
over the first ten years of operation. This is expected to move
Centinela towards the first cost quartile of global producers.
The Phase 1 capital cost is $4.4 billion, including the cost of the new
water supply system. This updated and approved capital cost estimate
(previously $3.7 billion – announced in August 2022) is based on
advanced detailed engineering and includes escalation for inflation
during construction, the estimate of a stronger local currency against
the US dollar, updates to local labour regulations and additional
contingency provisions. The phasing of the project’s capital
expenditure is expected to be weighted towards 2025, with similar
expenditures in adjacent years. The estimate includes a concentrator
plant, capitalised stripping, mining equipment, a new tailings storage
facility, a water pipeline and other infrastructure, pre-commercial
production operating costs, and owner’s and other costs.
Phase 2 is an optional growth step and work on this phase will only
start once construction of Phase 1 is completed and it is operating
successfully.
The second concentrator (and its potential Phase 2 expansion to
150,000 tonnes of ore per day) will source ore initially from the
recently opened Esperanza Sur pit and later also from the Encuentro
pit. The sulphide ore in the Encuentro pit lies under the Encuentro
Oxides reserves. Fully exposing the sulphide ore in the optimal
sequence required to initiate feed to the second concentrator from the
Encuentro Pit is expected to require separate investments in
infrastructure, mining equipment and mine development activities,
which will materially commence half-way through the construction
phase of the second concentrator and will span a period of 3-4 years.
As announced in December 2023, the combined investment in mine
development and sustaining capital for the expansion of the Encuentro
pit is estimated to be approximately $1 billion. This expansion in mining
activities will further enable Centinela to achieve the development
potential of its extensive mineral resource base.
Detailed terms and conditions have been substantially completed for
the option to provide water for Centinela's current and future
operations, with a third party potentially acquiring the existing water
supply system and building the new water pipeline expansion.
A decision to proceed with the planned outsourcing of the water
supply was announced alongside the execution of definitive project
finance documents during Q1 2024, subject to the acquiring
consortium closing its financing.
Twin Metals Minnesota
Twin Metals Minnesota (Twin Metals) is a wholly owned copper, nickel,
and platinum group metals (PGM) underground mining project, which
holds copper, nickel/cobalt, and PGM deposits in north-eastern
Minnesota, United States (US). The planned project is over a portion of
the total resource and envisages mining and processing 18,000 tonnes
of ore per day for 25 years to produce three separate concentrates –
copper, nickel/cobalt and PGM. However, further development of the
current project, as configured, is on hold while litigation takes place to
challenge several actions taken by the US federal government to deter
its development.
In 2022, Twin Metals filed a lawsuit in the US District Court for the
District of Columbia (District Court) challenging the administrative
actions resulting in the rejection of Twin Metals’ preference right lease
applications (PRLAs), the cancellation of its federal mining leases 1352
and 1353, the rejection of its Mine Plan of Operation (MPO), and the
dismissal of the administrative appeal of the MPO rejection.
Twin Metals claimed that the government’s actions were arbitrary and
capricious, contrary to the law, and in violation of its rights. In
September 2023, following a motion to dismiss filed by the
government, the District Court dismissed Twin Metals’ claims. In
November 2023, Twin Metals appealed the District Court’s order to the
US Court of Appeals for the District of Columbia Circuit. This action is
pending.
View of the existing concentrator at Centinela.
Antofagasta plc Annual Report 2023 101
Exploration remains a key contributor to the sustainable and long-term
embedded growth of the Group´s copper business.
This year all exploration activities have been executed as normal. We
remain focused on favourable jurisdictions in the Americas, particularly
in Chile, Peru, Canada and the USA.
In Chile, we are pursuing brownfield and greenfield projects, and in the
other countries we have generative programmes, identifying early-
stage projects, while remaining open to M&A opportunities.
The Global Exploration Management (GEM) team, which is based in
Santiago, Chile, leads all of the Group’s exploration activities with the
local offices in Lima (Peru) and Toronto (Canada) reporting to the GEM
team on progress in Peru and North America respectively.
Exploration was conducted using in-house teams, with work
completed on a well-balanced portfolio of land holdings in Chile, Peru
and Canada, while also 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 $28 million to $141
million, reflecting geotechnical drilling at Centinela and evaluation work
at Los Pelambres. Overall expenditures across the Company’s
exploration projects remained in line year-on-year.
Chile
Our exploration programme in Chile remains 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, the Company completed a total of 77,000 metres of
drilling, 3% less than in 2022, with work primarily focused at two
advanced projects: Cachorro and Encierro.
The Cachorro project is located in the western Atacama Desert in
northern Chile, 100 km north-east of the city of Antofagasta and
1,100km north of Santiago. Work at Cachorro in 2023 has enabled the
Company to report a second inferred mineral resource estimate,
increasing by 8% to 250 Mt, with a copper grade of 1.26% (using an
unchanged cut-off grade of 0.5% copper). This increase in size and
grade is attributable to an increase in the number of holes drilled, with
work in 2023 being a combination of step out and infill drilling. The
results reported to date by the Company make this project one of the
most important manto-type deposits in the northern coastal belt in
Chile. Cachorro lies between Antucoya and Centinela, which may
enable the project to benefit from the use of existing 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 the Company
announced an inaugural inferred mineral resource estimate in June
2022 of 522 Mt at 0.65% copper, 0.22 g/t gold and 74 ppm
molybdenum (using a cut-off grade of 0.5% copper). During the year,
new targets were identified within the property, along with additional
drilling of potential new targets located close to the main ore body,
with preparatory administrative work completed ahead of the next
phase of exploration at Encierro.
Americas
In line with our strategy to focus on exploration within the Americas
during 2023, additional joint venture exploration agreements were
signed with a Peruvian company. These agreements will provide
access to properties with high exploration potential, with exploration
work to be controlled and led by the GEM team, starting in 2024.
Exploration activities
Our aim is at least to replace the mineral resources mined at our operations each year, and to
help provide a platform for Antofagasta’s sustainable and long-term growth. In 2023, we
continued our efforts to make progress in consolidating our latest discoveries and adding new
targets to our portfolio, maintaining our pipeline of exploration opportunities for the coming years.
Operating review continued
Drilling activity at the Cachorro exploration project, Chile.
Antofagasta plc Annual Report 2023102
STRATEGIC REPORT
Contractor services, maintenance and spare parts account for 44% of
the Mining division’s total production costs, and energy and labour are
the largest direct costs, each accounting for 11%. As concentrate
producers, Los Pelambres and Centinela require reagents and grinding
media. As cathode producers, Centinela, Antucoya and Zaldívar use
the SX-EW process that requires the consumption of sulphuric acid.
The availability, cost and supply reliability of these inputs are central to
our cost management strategy, which focuses on cost control
and security of supply.
Energy
Energy is a strategic resource for our Group and supply is maintained
through a strategy that considers four factors: safety, cost, efficiency
and source. For this reason, in addition to reducing the cost of our
electricity, we are working on improving our energy consumption
efficiency and reducing our emissions.
All of our operations are on the country’s main grid, the National
Electrical System (Sistema Eléctrico Nacional, SEN), and source
power under medium- and long-term contracts called Power
Purchase Agreements (PPAs).
In recent years, renewable technologies have significantly reduced in
cost and many renewable power plants are being built in Chile, mainly
in the north of the country, alongside a significant improvement in
Chile’s transmission network. The cost of renewable power is
significantly lower than power from conventional sources.
The transition to using solely renewable power was completed in
2022, with lower costs and emissions, and has been important for
both the Company’s carbon footprint and its costs. Energy accounted
for 11% of our total production costs in 2023.
In accordance with our Energy Policy framework that was
implemented in 2022, as of 2023 we have now incorporated the role
of Energy Administrator at each mining site. The role consists of
leading and ensuring the implementation and improvement of the
Energy Management System according to Chilean Law No. 21,305 on
Energy Efficiency.
Labour
Accessing a diverse and talented workforce is key to our success.
Our employees accounted for 11% of our production costs in 2023.
Labour agreements are in place with each of the unions at our
operations and generally last for a period of three years, at the end of
which they are renegotiated.
Our employees’ wages are adjusted quarterly for inflation. As a result,
labour costs typically increase by more than inflation (once labour
agreements are considered), but we aim to compensate for this with
productivity improvements.
Service contracts and key supplies
For key commercial contracts, such as mining equipment, fuels,
lubricants, tyres, grinding balls, explosives and mine maintenance,
negotiations are managed centrally to generate synergies and
economies of scale. The significant savings achieved allow us to
implement new controls that improve competitiveness and productivity
from our contractor companies. We have linked our supply prices to
the respective underlying commodity, to minimise the impact on our
margins.
We have an optimisation programme that aims to improve the
administration, control, and risk management of our service contracts.
The procurement team, using standardised work methods and
considerable technical knowledge, has developed effective approaches
to managing the purchase of goods and services. Depending on the
strategic position of the supplier, these range from pure price
competition with e-auctions to long-term Group-wide agreements with
mechanisms and incentives that provide benefits for both parties.
The successful management of supplier relationships contributes to
our long-term success, which is why we hold strategic meetings with
our key suppliers to address operational challenges, while also taking a
long-term view.
Key costs
Our mining operations depend on a number of key inputs, including energy, labour, sulphuric acid
and fuel, the most important of which are reviewed below.
Scheduling maintenance
activities at Los Pelambres.
Antofagasta plc Annual Report 2023 103
In 2023, we continued to implement plans to maintain the quality and
timely delivery of spare parts and materials, thus ensuring operational
continuity and cost containment. As disruptions continue as a result of
the war in Ukraine, we have strengthened the control of our supply
chains by adopting new technologies for the continuous monitoring of
our sources of supply.
In 2023, we had approximately 3,700 different suppliers of goods and
services, of which 93% are based in Chile.
Fuel and lubricants
Fuel and lubricants represent approximately 9% of our production costs
and are used mainly by mine haulage trucks. Oil prices depend on
international market prices, based on supply and demand, and affect other
oil-based products, such as freight, the cost of rubber and chemicals.
Due to the Russia-Ukraine war, diesel prices rose in 2022 and brought
the annual WTI average to $95 per barrel and diesel prices even higher
than in other periods with similar WTI values. This situation has
stabilised during the second quarter of 2023, reaching a WTI 2023 of
$78 per barrel, representing a price level 17.5% lower than in 2022,
which includes lower refining costs and other diesel import factors
that directly impact the diesel price.
Explosives
Prices for explosives primarily depend on international market prices
for ammonia and overall availability. Ammonia is produced by natural
gas, and therefore the Russia-Ukraine war significantly impacted
prices in 2022, whereby ammonia pricing reached historically high
levels. During 2023, prices have trended lower, reaching a low of
$287 per tonne in June 2023, before returning to a level of around
$600 per tonne, similar to the average price seen in 2021.
A modified form of ammonia – blue ammonia – which includes an
extra process to capture CO
2
emissions in gas wells, is being
introduced into the global market, but with an added associated cost.
Ongoing assessments are under way for the feasibility of HyEx, a
project led by a multinational energy company and a Chilean explosives
company, aimed at producing green ammonia in northern Chile. This is
intended to be a low-carbon approach to ammonia production, using
renewable energy to source nitrogen from air.
Grinding balls and mill liners
Steel is used in the manufacture of grinding balls and of some mill
liners, which accounts for approximately 7% of a concentrator plant’s
costs and 2% of the Group’s production costs. Steel prices showed a
downward trend during 2023, after the peak that was reached in
2022. The market for mill liners is moving from steel to steel-rubber
mill liners, which will provide incremental benefits in the form of
increased safety, diminished maintenance hours and increased
availability of mills.
The Group continues to work on the implementation of circular
economy initiatives, with a focus on steel recycling, in order to mitigate
rising costs and reduce carbon emissions.
Tyres
Tyre prices depend on international market prices and are based on
the supply and demand of key input materials such as natural rubber,
synthetic rubber, steel and black carbon. During the second half of
2023, prices rose by 4% compared to the second half of 2022.
Sulphuric acid
Sulphuric acid is one of the main inputs for the SX-EW leaching
process used to produce copper cathodes, and in 2023, this cost
accounted for approximately 6% of the Company’s overall production
costs.
Each year, Centinela, Antucoya and Zaldívar use a combined total of
approximately 1.5 million tonnes of sulphuric acid, mainly contracted
under one-year agreements to secure supply.
During 2023, the annual acid price was approximately $183 per tonne,
while spot prices ranged from $90 to $148 per tonne, compared to an
annual price $245 per tonne in 2022 and spot range of between $115
and $290 per tonne.
Mining equipment
During 2023, we signed important agreements with Caterpillar and
Finning, which will enable us to remain competitive during the coming
years.
Exchange rate
The Chilean peso/US dollar exchange rate generally has a strong
correlation with the copper price as copper exports generate nearly
50% of Chile´s foreign currency earnings, therefore if the copper
price strengthens so does the Chilean peso, and vice-versa, providing
a natural hedge for the Company. During 2023, the market price for
copper price weakened, and the US dollar strengthened, largely
explained by decreases in the Chilean interest rate by Central Bank in
response to lower inflation, decreasing the spread with the US Fed
Fund Rate. The Chilean peso weakened 2.5% over the US dollar,
closing the year at Ch$877/$1, in part explained by the decrease in
copper price, offset by less political uncertainty in Chile than the
previous year.
Cost and Competitiveness
The Cost and Competitiveness Programme (CCP) was introduced in
2014 to capture the gains from initiatives introduced to reduce our
cost base and improve our competitiveness. The programme focuses
on five areas designed to deliver sustainable cost reductions and
productivity increases: streamlining goods and services procurement;
improving operating efficiency and asset reliability; energy efficiency;
corporate and organisational effectiveness; and working capital, capital
expenditure and services efficiency. During 2023, we achieved
benefits of $135 million, equivalent to $9c/lb for the year.
In 2023, the Company has developed an expanded approach to costs
and competitiveness, with the Competitiveness Programme being an
evolution of the existing CCP. Through the application of an Operational
Excellence Management System (OEMS), in tandem with lean
management principals, the Competitiveness Programme is expected
to deliver our next phase of savings and efficiencies. The
Competitiveness Programme is based on multiple improvement
initiatives with a focus on continuous improvement, process
automation and new technologies implementation, covering areas of
the business such as labour productivity, mining and processing.
Through a focus on production, costs and adding value, the
Competitiveness Programme is designed to competitively position the
Company on the global cash cost curve.
Operating review continued
Antofagasta plc Annual Report 2023104
STRATEGIC REPORT
Our innovation programme remains focused on two key objectives.
The first is to achieve the full potential of our operations by seeking
new ways of using the best digital technology. We are doing this
through the integration of data with advanced analytics and by
improving operational performance with automation and robotics.
Thesecond objective is longer-term: to enable business growth and
todevelop the next generation of mining practices, including modern
technologies and advances to reduce our environmental footprint.
Digital roadmap
Our digital roadmap covers the adoption of new technologies to
improve safety and productivity, with focus on the advanced analytics
and transformational initiatives needed to progress with our integrated
managed operations and automation programme.
During 2023, the use of advanced analytics solutions added $12.7
million in incremental value by developing the required vision and
strategy and a corporate roadmap tailored to each mine's operational
challenges.
Achievements to date with respect to our Digital Roadmap include the
successful deployment of an Agile Decision Assistant (ADA) in our
operations at Los Pelambres, AI-assisted fleet management at
Centinela (referred to as Project Octopus), and mineral tracking to
optimise acid consumption management at Antucoya. The Agile
Decision Assistant (ADA) is an analytical solution integration system
designed to identify and resolve operational bottlenecks. It aids
decision-making by offering recommendations for efficient problem-
solving, enhancing productivity and managing day-to-day challenges in
various operational scenarios.
Future efforts on advanced analytics will be focused mainly on
deploying existing and new technologies, such as the Integrated
System of Operational Recommendations (SIRO), Agile Decision
Assistant (ADA) and Predictive Maintenance tools into each of our
operations, reinforcing our leading position in the integration of
advanced data analytics in the mining industry. At one of our 2024
automation projects, Los Pelambres will employ a robotic solution to
perform the replacement of a SAG mill liner, improving safety by
eliminating workers' exposure to this hazardous task.
In Remote Operations, Centinela’s Integrated Remote Operations
Centre (IROC), which is located in the city of Antofagasta, had a
successful second year of operation. The work at Centinela’s IROC
allows the remote management of the plant and the mine, with
real-time information and optimisation of all processes. As of 2023,
Los Pelambres also now has an IROC, which is located in Santiago.
Since inauguration in early 2023, this facility has achieved several
critical milestones for remote and integrated operation throughout Los
Pelambres’ value chain. Finally, Antucoya has initiated a feasibility
study to review the options for remote operations at this mine.
In 2023, we continued to execute our “Teleoperation Roadmap”,
designed to assess the implementation of this technology in auxiliary
mining equipment, which is set to take place between 2023 and 2025.
Also, with the safety of our operators in mind, we installed anti-
collision technology in all mining equipment and vehicles entering each
mining area across the Group.
Finally, on the subject of autonomy, the recently approved Centinela
Second Concentrator Project includes a 100% autonomous operation,
with the newly built concentrator expected to be receiving ore feed
from 2027.
Operational innovation
Our open innovation model enables our employees, contractors, and
external parties, such as suppliers, to understand our main operational
challenges. They can propose ideas and solutions promoting effective
connection with the ecosystem through the online collaborative
platform Innovaminerals and events, such as our “Supplier Pitch
Days”.
During 2023, as part of our participation in the MIT Industrial Liaison
Program, we held the first international Innovation Symposium with
sessions in Santiago and Antofagasta. Attendees participated both in
person and online, showcasing 20 technology startups that have
scaled and implemented their solutions to work with the Company’s
Mining division.
Initiatives previously implemented from this portfolio provided an
impact of $19.4 million in incremental value during 2023.
Further recognition of our continuous efforts to develop mining for a
better future came during 2023, when we were named “Most
Innovative Mining Company” for our outstanding effectiveness for
incremental value creation from innovation projects, recognised as
part of Chile's “Circulo Da Vinci” by the ESE Business School at the
Universidad de los Andes.
Strategic innovation
Our strategic innovation programme remains focused on adding
alternative technologies to existing methods of tailings management,
material handling, dust management and primary sulphide leaching,
and gradually progressing towards the electrification of our operations.
This strategic programme supports the adoption of new technologies
to improve safety and productivity. A number of projects within the
Company’s Strategic Innovation work stream are presented below.
Tailings management
As part of our commitment to learning from previous industry
experience and contributing to more sustainable mining practices, we
began laboratory-scale testing of filtered tailings technologies in 2023.
During 2024, we intend to conduct studies on the best approach to
final disposal of filtered material.
Material handling
Innovation is a driver for competitiveness and sustainable production,
and through this, we are incorporating new technologies to make the
movement of materials more efficient and taking advantage of existing
infrastructure by developing satellite deposits. This is particularly the
case at Centinela, where testing of the first prioritised technology to
improve ore sorting (as part of the material handling programme) is
expected to complete by Q2 2024.
Operating excellence
and innovation
Innovation is one of our five strategic pillars, designed to create and add value across the Group
by constantly challenging ourselves to develop new techniques and a more effective
operatingmodel.
Antofagasta plc Annual Report 2023 105
Operating review continued
Cuprochlor®-T – our patented primary sulphide leaching
technology
Cuprochlor®-T is our proprietary technology, designed to extract
copper from primary sulphides, with recoveries of 70% or more after
approximately 220 days. It has the potential to unlock value from
previously uneconomic mineral resources and its technical maturity
level indicates that it is ready to deploy in an operational environment.
Thus, Cuprochlor®-T is included in our long-term planning as the best
solution to extending the life of our SX-EW plants.
As part of this programme, a pilot project to study heap heating was
carried out during 2023 at Zaldívar, with promising results, further
strengthening the operational readiness of the Cuprochlor®-T
technology.
Patents have been granted to Antofagasta Minerals, a subsidiary of
Antofagasta plc, in all jurisdictions of interest in 2023. During 2024,
we will continue with an exploration phase with a view to also
commercially validating Cuprochlor®-T in the wider market.
Decarbonisation
In line with our 2035 decarbonisation targets and ambition to achieve
carbon neutrality by 2050, we are preparing to conduct a pre-
feasibility study for the electrification of our main pits (Los Pelambres,
Centinela, and Antucoya) during 2024.
We are also pleased to report that we have attained the ISO 50001
Energy Efficiency standards at all sites.
Drone survey, Los Pelambres.
Antofagasta plc Annual Report 2023106
STRATEGIC REPORT
Machine learning algorithms to optimise mineral
recoveries
Zaldívar
A key finding at Zaldívar in 2023 was the impact of heap height on
recovery rates. Building on technical advances made through work at
Antucoya, Zaldívar’s management team initiated the development of
the Integrated System of Operational Recommendations (SIRO) for its
leaching process, starting with the traceability of minerals from the
mine to the crushers. Looking ahead to 2024, the focus at Zaldívar will
be on using this data to improve our understanding and processing of
minerals in the leaching process, in order to develop better methods,
including advancements in the stacking module, acid consumption, and
a recovery recommendation system, showcasing Zaldívar's
commitment to innovation and efficiency through advanced data
analytics.
Artificial intelligence applications
Antucoya
In 2023, Antucoya made good progress in intelligent leaching
operations by developing technology to provide advanced mineral
tracking, a stacking module, and initiating tests for optimising acid
consumption. Future plans include the fine-tuning of the mineral
tracker to align with new plant configurations and developing the
Integrated System of Operational Recommendations (SIRO) for the
recovery process. These efforts showcase Antucoya's commitment to
enhancing operational efficiency and advancing sustainable,
technologically-driven mining practices.
Advanced analytics
Los Pelambres
In 2023, Los Pelambres achieved notable success through the use of
advanced analytics. Key accomplishments included the implementation
of predictive maintenance for SAG mills, enhancing equipment
availability, and the successful deployment of the Agile Decision
Assistant (ADA) in the production environment – an analytical solution
integration system specifically designed to identify and resolve dynamic
operational bottlenecks. This transition to productive environments
marks a significant step in ensuring higher reliability, cyber security,
quality, and support, reinforcing Los Pelambres’ commitment to
operational excellence and technological innovation in mining. It is
anticipated that the ADA's transfer will streamline operations, enhance
efficiency, and provide robust support in operational decision-making
processes.
Project Octopus
Centinela
A standout project at Centinela in 2023 was 'Project Octopus', which
is an innovative optimisation model for shovel assignments. This model
notably increased the material movement efficiency within the mine.
Following its success, 'Project Octopus' has now been approved to be
transferred for testing at our other mining operations, demonstrating
our commitment to expanding and applying successful innovations
across different operations.
Antofagasta plc Annual Report 2023 107
Financial Review
Financial review of 2023
Strong performance with higher year-on-year EBITDA
Year ended 31.12.2023 (Audited) Year ended 31.12.2022 (Audited)
Before
exceptional items
Exceptional
items
Total Before
exceptional items
Exceptional
Items
Total
$m $m $m $m $m $m
Revenue 6,324.5 - 6,324.5 5,862.0 - 5,862.0
EBITDA (including share of EBITDA from associates
and joint ventures)
1
3,087.2 - 3,087.2 2,929.7 - 2,929.7
Total operating costs (4,541.7) - (4,541.7) (4,227.7) - (4,227.7)
Operating profit from subsidiaries 1,782.8 - 1,782.8 1,634.3 - 1,634.3
Net share of results from associates
and joint ventures (13.5) - (13.5) 48.1 - 48.1
Gain on disposal of investment in joint venture - - - - 944.7 944.7
Operating profit from subsidiaries, and share of
total results from associates and joint ventures 1,769.3 - 1,769.3 1,682.4 944.7 2,627.1
Net finance income/(expense) 29.1 167.1 196.2 (68.2) - (68.2)
Profit before tax 1,798.4 167.1 1,965.5 1,614.2 944.7 2,558.9
Income tax expense (624.3) (41.8) (666.1) (603.6) - (603.6)
Profit from continuing operations 1,174.1 125.3 1,299.4 1,010.6 944.7 1,955.3
Profit for the year 1,174.1 125.3 1,299.4 1,010.6 944.7 1,955.3
Attributable to:
Non-controlling interests 464.3 - 464.3 422.3 - 422.3
Profit attributable to the owners of the parent 709.8 125.3 835.1 588.3 944.7 1,533.0
Basic earnings per share
Cents Cents Cents Cents Cents Cents
From continuing operations 72.0 12.7 84.7 59.7 95.8 155.5
The profit for the financial year attributable to the owners of the parent (including exceptional items) decreased from $1,533.0 million in 2022 to
$835.1 million in the current year. Excluding exceptional items, the profit attributable to the owners of the parent increased by $121.5 million to
$709.8 million.
“Following an 8% increase in revenue, the Company was
able to deliver 5% higher EBITDA and a 21% increase in
underlying net earnings. Our balance sheet remains
strong, providing a platform for our projects and growth.”
MAURICIO ORTIZ
Chief Financial Officer
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.
Antofagasta plc Annual Report 2023
STRATEGIC REPORT
108
Revenue
The $462.5 million increase in revenue from $5,862.0 million in 2022
to $6,324.5 million in the current year reflected the following factors:
(All figures $, millions)
Revenue
in 2022
Increase in
copper sales
volumes
Increase in
realised copper
price
Increase in
treatment and
refining charges
Increase in gold
revenue
Increase in
molybdenum
revenue
Increase in silver
revenue
Increase in
Transport
division revenue
Revenue
in 2023
12.9
112.0
93.1
(57.8)69.0
230.7
5,862.0
2.6
6,324.5
Revenue from the Mining division
Revenue from the Mining division increased by $460.0 million, or 8%,
to $6,128.6 million, compared with $5,668.6 million in 2022. The
increase reflected a $241.9 million increase in copper sales and a
$218.1 million increase in by-product revenue.
Revenue from copper sales
Revenue from copper concentrate and copper cathode sales increased
by $241.9 million, or 5%, to $5,147.4 million, compared with $4,905.5
million in 2022. The increase reflected the impact of $230.7 million
from higher sales volumes and $69.0 million from higher realised
prices, partly offset by $57.8 million due to the impact of higher
treatment and refining charges on the prices invoiced.
(i) Copper volumes
Copper sales volumes reflected within revenue increased by 4.5%
from 598,100 tonnes in 2022 to 625,300 tonnes in 2023, increasing
revenue by $230.7 million. This increase was due to higher copper
sales volumes at Los Pelambres (27,800 tonnes increase), reflecting
higher throughput in the current year, which resulted from increasing
availability of water from the operation’s desalination plant as it
successfully completes its ramp up, and additional ore processing
capacity provided by the fourth concentrator line that is nearing the
end of its commissioning phase.
(ii) Realised copper price
The average realised copper price increased by 1.3% to $3.89/lb in
2023 (2022 – $3.84/lb), resulting in a $69.0 million increase in
revenue. The LME average market price decreased by 3.8% to
$3.85/lb in 2023 (2022 – $4.00/lb). In 2023, there was a $81.3 million
positive impact from provisional pricing adjustments, mainly as a result
of a positive net impact in the settlement of sales invoiced and by the
increase in the period end mark to market price to $3.87/lb at 31
December 2023, compared with $3.80/lb at 31 December 2022.
Conversely, there had been a $169.7 million negative impact from
provisional pricing adjustments in 2022, which mainly reflected the
decrease in the year-end mark-to-market copper price to $3.80/lb at
31 December 2022, compared with $4.42/lb at 31 December 2021.
Realised copper prices are determined by comparing revenue (after
adding back treatment and refining charges for concentrate sales) with
sales volumes in the period. Realised copper prices differ from market
prices mainly because, in line with industry practice, concentrate and
cathode sales agreements generally provide for provisional pricing at
the time of shipment with final pricing based on the average market
price in future periods (normally around one month after delivery to
the customer in the case of cathode sales and four months after
delivery to the customer in the case of concentrate sales).
Further details of provisional pricing adjustments are given in Note 7 to
the financial statements.
(iii) Treatment and refining charges
Treatment and refining charges (TC/RCs) for copper concentrate
increased by $57.8 million to $213.6 million in 2023, compared with
$155.8 million in 2022 reflecting higher average TC/RC rates and the
increase in concentrate sales volumes mainly at Los Pelambres.
With sales of concentrates at Los Pelambres and Centinela, which are
sold to smelters and roasting plants for further processing into fully
refined metal, the price of the concentrate invoiced to the customer
reflects the market value of the fully refined metal less a “treatment
and refining charge” deduction, to reflect the lower value of this
partially processed material compared with the fully refined metal. For
accounting purposes, the revenue amount reflects the invoiced price
(which reflects the net of the market value of fully refined metal less
the treatment and refining charges). However, under the standard
industry definition of unit cash costs, treatment and refining charges
are regarded as part of cash costs.
Accordingly, the increase in these charges has had a negative impact
on revenue in the year.
Revenue from molybdenum, gold and other by-product sales
Revenue from by-product sales at Los Pelambres and Centinela relate
mainly to molybdenum and gold and, to a lesser extent, silver. Revenue
from by-products increased by $218.0 million or 28.6% to $981.2
million in 2023, compared with $763.2 million in 2022. This increase
was mainly due to the higher molybdenum and gold sales volumes and
realised prices.
97.3 (20.7)
(61.6)
(314.0)462.5
588.3
(944.7)1,533.0
(42.0)
709.8
835.1125.3
Profit attributable
to the owners of the
parent in 2022
Less: exceptional
items – 2022
Profit attributable to the
owners of the parent in
2022 (excluding
exceptional items)
Increase in revenue
Increase in total
operating costs
Decrease in net share of
results from associates and
joint ventures (excluding
exceptional items)
Decrease in net finance
expenses (excluding
exceptional items)
Increase in income tax
expense (excluding
exceptional items)
Increase in
non-controlling interests
Profit attributable to the
owners of the parent in
2023 (excluding
exceptional items)
Exceptional items
– 2023 (post tax)
Profit attributable
to the owners of the
parent in 2023
(All figures $, millions)
The full reconciliation of the profit attributable to the owners of the parent between 2022 and 2023, including exceptional items, is as follows:
Antofagasta plc Annual Report 2023 109
On a unit cost basis, weighted average cash costs excluding
treatmentand refining charges and by-product revenues increased
from $2.05/lb in 2022 to $2.14/lb in 2023. As detailed in the
alternative performance measures section on page 239, for accounting
purposes by-product credits and treatment and refining charges both
impact revenue and don’t therefore affect operating expenses. This
increase largely reflected general inflation and the stronger Chilean
peso, partially offset by the cost savings from the Group’s Cost and
Competitiveness Programme and lower key input prices and shipping
costs.
The Cost and Competitiveness Programme was implemented to
reduce the Group’s cost base and improve its competitiveness within
the industry. During 2023, the programme achieved benefits of $134.7
million in the Mining division, of which $106.5 million reflected cost
savings and $28.2 million reflected the value of productivity
improvements. Of the $106.5 million of cost savings, $101.2 million
related to Los Pelambres, Centinela and Antucoya, and therefore
impacted the Group’s operating costs, and $5.4 million related to
Zaldívar (on a 100% basis) and therefore impacted the share of results
from associates and joint ventures.
Closure provisions and other mining expenses increased by $5.1
million. Exploration and evaluation costs increased by $28.1 million to
$141.1 million (2022 – $113.0 million), principally in respect of
geotechnical drilling at Centinela and evaluation expenditure at Los
Pelambres.
Operating costs (excluding depreciation, amortisation and loss
on disposals) at the Transport division
Operating costs (excluding depreciation, amortisation and loss on
disposals) at the Transport division increased by $1.6 million to $120.7
million (2022 – $119.1 million), mainly due to general inflation and the
stronger Chilean peso.
Depreciation, amortisation and disposals
The expense for depreciation, amortisation and loss on disposals
increased by $68.1 million from $1,143.2 million in 2022 to $1,211.3
million. This increase is mainly due to higher depreciation of new
assets at Centinela and Los Pelambres.
Operating profit from subsidiaries
As a result of the above factors, operating profit from subsidiaries
increased by $148.4 million or 9.1% in 2023 to $1,782.8 million (2022
– $1,634.3 million).
Share of results from associates and joint ventures (excluding
exceptional items)
The Group’s share of results from associates and joint ventures
(excluding exceptional items) decreased by $61.6 million to a loss of
$13.5 million in 2023, compared with a profit of $48.1 million in 2022.
Of this decrease, $62.7 million was due to the lower profit from
Zaldívar, reflecting decreased copper sales volumes, due to lower
copper production (reflecting lower ore processing rates, which were
partially mitigated by improved recoveries during the year), a lower
realised copper price and higher cash costs.
Financial Review continued
Revenue from molybdenum sales (net of roasting charges) was
$504.2 million (2022 – $392.2 million), an increase of $112.0 million.
The increase was due to both the higher sales volumes of 11,100
tonnes (2022 – 9,200 tonnes) reflecting the higher production
volumes mainly at Los Pelambres, as well as the 5.8% higher realised
price of $22.0/lb (2022 – $20.8/lb).
Revenue from gold sales (net of treatment and refining charges) was
$406.9 million (2022 – $313.8 million), an increase of $93.1 million
which reflected an increase in volumes and a higher realised price.
Gold sales volumes increased by 17.3% from 174,700 ounces in 2022
to 204,900 ounces in 2023, mainly due to higher gold grades at
Centinela. The realised gold price was $1,989.5/oz in 2023 compared
with $1,800.4/oz in 2022, reflecting the average market price for
2023 of $1,943.1/oz (2022 – $1,800.4/oz) and a positive provisional
pricing adjustment of $9.2 million.
Revenue from silver sales increased by $12.9 million to $70.1 million
(2022 – $57.2 million). The increase was due to higher sales volumes
of 3.0 million ounces (2022 – 2.7 million ounces) and a 13.2% higher
realised silver price of $24.0/oz (2022 – $21.2/oz).
Revenue from the Transport division
Revenue from the Transport division (FCAB) increased by $2.6 million
or 1.3% to $195.9 million (2022 – $193.4 million), mainly due to
increased pricing in some contracts.
Total operating costs
The $314.0 million increase in total operating costs from $4,227.7
million in 2022 to $4,541.7 million in the current year reflected the
following factors:
(All figures $, millions)
Total operating
costs in 2022
(excluding
exceptional items)
Increase in
mine-site
operating costs
Increase in
closure provision
and other mining
expenses
Increase in
exploration and
evaluation costs
Increase in
corporate costs
Increase in
Transport division
operating costs
Increase in
depreciation,
amortisation and
loss on disposals
Total operating
costs in 2023
(excluding
exceptional items)
1.6
23.7
28.1
5.1
187.4
4,227.7
68.1
4,541.7
Operating costs (excluding depreciation, amortisation and
disposals) at the Mining division
Operating costs (excluding depreciation, amortisation, loss on disposals
and impairments) at the Mining division increased by $244.3 million to
$3,209.7 million in 2023, an increase of 8.2%.
Of this increase, $187.4 million was attributable to higher mine-site
operating costs, reflecting higher unit costs and increased sales
volumes.
Antofagasta plc Annual Report 2023110
STRATEGIC REPORT
EBITDA
EBITDA (earnings before interest, tax, depreciation and amortisation, and impairments) increased by $157.5 million or 5.4% to $3,087.2 million
(2022 – $2,929.7 million). EBITDA includes the Group’s proportional share of EBITDA from associates and joint ventures.
EBITDA from the Mining division increased by $156.0 million or 5.5% from $2,849.7 million in 2022 to $3,005.7 million this year. This reflected
the higher revenue, partially offset by the higher mine-site costs, exploration and evaluation expenditure, and corporate costs, as well as lower
EBITDA from associates and joint ventures.
EBITDA at the Transport division increased by $1.5 million to $81.5 million in 2023 ($80.0 million – 2022), reflecting the higher revenue and
slightly increased EBITDA from associates, partly offset by the higher operating costs.
Commodity price and exchange rate sensitivities
The following sensitivities show the estimated approximate impact on EBITDA for 2023 of a 10% movement in the average copper, molybdenum
and gold prices and a 10% movement in the average US dollar/Chilean peso exchange rate.
The impact of the movement in the average commodity prices reflects the estimated impact on the relevant revenues during 2023, and the
impact of the movement in the average exchange rate reflects the estimated impact on Chilean peso denominated operating costs during the
year. These estimates do not reflect any impact in respect of provisional pricing or hedging instruments, any potential inter-relationship between
commodity price and exchange rate movements, or any impact from the retranslation or changes in valuations of assets or liabilities held on the
balance sheet at the year-end.
Average market commodity
price/average exchange rate
during the year ended
31.12.23
Impact of a 10% movement in the
commodity price/exchange rate on
EBITDA for the year ended 31.12.23
$m
Copper price $3.85/lb 566
Molybdenum price $24.1/lb 59
Gold price $1,943/oz 40
US dollar/Chilean peso exchange rate 839 161
Net finance income/(expense) (excluding exceptional items)
Net finance income (excluding exceptional items) of $29.1 million reflected a variance of $97.3 million compared with the $68.2 million expense
in 2022.
Year ended 31.12.23
$m
Year ended 31.12.22
$m
Investment income 138.1 40.2
Interest expense (105.6) (78.6)
Other finance items (3.4) (29.8)
Net finance income/(expense) 29.1 (68.2)
Investment income increased from $40.2 million in 2022 to $138.1 million in 2023, largely due to an increase in average interest rates.
Interest expense increased from $78.6 million in 2022 to $105.6 million in 2023, again mainly reflecting an increase in average interest rates and
an increase in the average relevant borrowing balances (after taking account of borrowings where the interest is capitalised).
Other finance items were a net loss of $3.4 million, compared with a net loss of $29.8 million in 2022, a variance of $26.4 million. This was
mainly due to the foreign exchange impact of the retranslation of Chilean peso denominated assets and liabilities, which resulted in a $12.5 million
gain in 2023 compared with a $12.8 million loss in 2022. In addition, there was an expense of $15.8 million in respect of the unwinding of the
discounting of provisions (2022 – expense of $16.9 million).
Profit before tax (excluding exceptional items)
As a result of the factors set out above, profit before tax (excluding exceptional items) increased by 11.4% to $1,798.4 million (2022 –
$1,614.2 million).
Antofagasta plc Annual Report 2023 111
The effective tax rate (excluding exceptional items) of 34.7% varied
from the statutory rate principally due to the mining tax (royalty) (net
impact of $80.2 million/4.5% including the deduction of the mining tax
(royalty) as an allowable expense in the determination of first category
tax), the one-off effect of the increase in future royalty tax rates on
deferred tax balances (impact of $34.3 million/1.9%), items not
deductible for Chilean corporate tax purposes, principally the funding
of expenses outside of Chile (impact of $21.4 million/1.2%), the impact
of the recognition of the Group’s share of results from associates and
joint ventures, which are included in the Group’s profit before tax net
of their respective tax charges (impact of $3.6 million/0.2%), the
impact of unrecognised tax losses (impact of $2.3 million/0.1%) and
the withholding tax relating to the remittance of profits from Chile
(impact of $1.4 million/0.1%), partly offset by adjustments in respect of
prior years (impact of $4.5 million/0.3%).
Exceptional items
Exceptional items are material items of income and expense which are
non-regular or non-operating and typically non-cash, including
impairments and profits or losses on disposals. The classification of
these types of items as exceptional is considered to be useful as it
provides an indication of the earnings generated by the ongoing
businesses of the Group.
Compañia de Minas Buenaventura S.A.A.
As detailed in Note 22, during 2023 the Group entered into an
agreement to acquire up to an additional 30 million shares in Compañia
de Minas Buenaventura S.A.A. Subsequent to the year-end, in March
2024, the agreement completed. An exceptional fair value pre-tax gain
of $167.1 million ($125.3 million post tax) has been recognised during
2023 in respect of this agreement.
Disposal of investment in Tethyan joint venture
On 15 December 2022, Antofagasta entered into definitive agreements
to exit its interest in the Tethyan joint venture. As a result, Antofagasta
recognised a gain on disposal of its investment in the joint venture as
at 15 December 2022 of $944.7 million. Full details of the agreements
and gain on disposal are set out in Note 17 to the financial statements.
Non-controlling interests
Profit for 2023 attributable to non-controlling interests was $464.3
million, compared with $422.3 million in 2022, an increase of $42.0
million. This reflected the increase in earnings analysed above.
Financial Review continued
Income tax expense
The tax charge for 2023 excluding exceptional items increased by $20.7 million to $624.3 million (2022 – $603.6 million) and the effective tax
rate for the year was 34.7% (2022 – 37.4%). Including exceptional items, the tax charge for 2023 was $666.1 million and the effective tax rate
was 33.9%.
As a result of the approval of the new mining royalty during 2023, a one-off adjustment has been recognised to the deferred tax balances of the
Group’s mining operations, resulting in an increase in the deferred tax liability balance of $34.3 million, with a corresponding deferred tax
expense. Also, the withholding tax charge in the current period reflected a one-off adjustment to the provision for deferred withholding tax, as a
result of an intra-group restructuring of intercompany balances, reducing the provision balance by $34.7 million, with a corresponding reduction
in the deferred tax expense. The net impact of these two one-off items was therefore a reduction in the tax expense of $0.4 million.
Year ended
excluding exceptional items
31.12.2023
Year ended
including exceptional items
31.12.2023
Year ended
excluding exceptional items
31.12.2022
Year ended
including exceptional items
31.12.2022
$m % $m % $m % $m %
Profit before tax 1,798.4 1,965.5 1,614.2 2,558.9
Profit before tax multiplied by Chilean corporate
tax rate of 27% (485.6) 27.0 (530.7) 27.0 (435.9) 27.0 (691.0) 27.0
Mining Tax (royalty) (109.7) 6.1 (109.7) 5.6 (94.5) 5.8 (94.5) 3.7
Deduction of mining royalty as an allowable
expense in determination of first category tax 29.5 (1.6) 29.5 (1.5) 23.1 (1.4) 23.1 (0.9)
Effect of increase in future royalty tax on deferred
tax balances (34.3) 1.9 (34.3) 1.7 – – – –
Items not deductible from first category tax (21.4) 1.2 (21.4) 1.1 (33.9) 2.1 (33.9) 1.3
Adjustment in respect of prior years 4.5 (0.3) 4.5 (0.2) (2.6) 0.1 (2.6) 0.1
Withholding tax (1.4) 0.1 (1.4) 0.1 (73.0) 4.6 (73.0) 2.9
Tax effect of share of results of associates and
joint ventures (3.6) 0.2 (3.6) 0.2 13.0 (0.8) 13.0 (0.5)
Impact of unrecognised tax losses on current tax (2.3) 0.1 (2.3) 0.1 0.2 – 0.2 –
Gain on disposal of investment in joint venture – – – – – – 255.1 (10.0)
Difference in overseas tax rate – – 3.3 (0.2) – – – –
Tax expense and effective tax rate
for the year ended (624.3) 34.7 (666.1) 33.9 (603.6) 37.4 (603.6) 23.6
Antofagasta plc Annual Report 2023112
STRATEGIC REPORT
Earnings per share
Year ended 31.12.23 Year ended 31.12.22
$ cents $ cents
Underlying earnings per share (excluding exceptional items) 72.0 59.7
Earnings per share (exceptional items) 12.7 95.8
Earnings per share (including exceptional items) 84.7 155.5
Earnings per share calculations are based on 985,856,695 ordinary shares.
As a result of the factors set out above, the underlying profit attributable to equity shareholders of the Company (excluding exceptional items)
was $709.8 million compared with $588.3 million in 2022, giving underlying earnings per share of 72.0 cents per share (2022 – 59.7 cents per
share). The profit attributable to equity shareholders (including exceptional items) was $835.1 million (2022 – $1,533.0 million), resulting in
earnings per share of 84.7 cents per share (2022 – 155.5 cents per share).
Dividends
Dividends per share proposed in relation to the period are as follows:
Year ended 31.12.23 Year ended 31.12.22
$ cents $ cents
Ordinary dividends:
Interim 11.7 9.2
Final 24.3 50.5
Total dividends to ordinary shareholders 36.0 59.7
The Board determines the appropriate dividend each year based on consideration of the Group’s cash balance, the level of free cash flow and
underlying earnings generated during the year and significant known or expected funding commitments. It is expected that the total annual
dividend for each year would represent a payout ratio based on underlying net earnings for that year of at least 35%.
The Board has recommended a final dividend for 2023 of 24.3 cents per ordinary share, which amounts to $239.6 million and will be paid on 10
May 2024 to shareholders on the share register at the close of business on 19 April 2024.
The Board declared an interim dividend for the first half of 2023 of 11.7 cents per ordinary share, which amounted to $115.3 million.
This gives total dividends proposed in relation to 2023 (including the interim dividend) of 36.0 cents per share or $354.9 million (2022 – 59.7
cents per ordinary share or $588.3 million in total) equivalent to a payout ratio of 50% of underlying earnings.
Capital expenditure
Capital expenditure increased by $250.0 million from $1,879.2 million in 2022 to $2,129.2 million in the current year, mainly due to increased
mine development at Centinela, Los Pelambres and Antucoya, and higher sustaining capex at Los Pelambres and Centinela, partly offset by lower
expenditure on the INCO project at Los Pelambres.
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 2023, there were no
derivative financial instruments in place (2022 – nil).
Antofagasta plc Annual Report 2023 113
Cash flows
The key features of the cash flow statement are summarised in the following table.
Year ended 31.12.23 Year ended 31.12.22
$m $m
Cash flows from continuing operations 3,027.1 2,738.3
Income tax paid (528.1) (787.1)
Net interest paid (48.8) (45.2)
Purchases of property, plant and equipment (2,129.2) (1,879.2)
Dividends paid to equity holders of the Company (613.2) (1,262.9)
Dividends paid to non-controlling interests (388.0) (80.0)
Dividends from associates and joint ventures – 50.0
Disposal of JV 944.7 –
Investment in other financial assets (290.1) –
Acquisition of equity investments (60.7) (66.5)
Other items (0.8) 0.1
Changes in net debt relating to cash flows (87.1) (1,332.5)
Other non-cash movements (187.6) (70.4)
Effects of changes in foreign exchange rates 0.7 (23.4)
Movement in net debt in the period (274.0) (1,426.3)
(Net debt)/net cash at the beginning of the year (885.8) 540.5
Net debt at the end of the year (1,159.8) (885.8)
Cash flows from continuing operations were $3,027.1 million in 2023 compared with $2,738.3 million in 2022. This reflected EBITDA from
subsidiaries for the year of $2,994.1 million (2022 – $2,777.5 million) adjusted for the positive impact of a net working capital decrease of
$14.3million (2022 – working capital increase of $12.7 million) and a non-cash increase in provisions of $18.7 million (2022 – decrease of
$26.5million).
The net cash outflow in respect of tax in 2023 was $528.1 million (2022 – $787.1 million). This amount differs from the current tax charge in the
consolidated income statement (including exceptional items) of $586.8 million (2022 – $448.8 million) as the cash tax payments reflect payments
on account for the current year based on prior periods’ profit levels of $544.3 million (2022 – $435.6 million), the settlement of outstanding
balances in respect of the previous year’s tax charge of $14.7 million (2022 – $332.1 million) and withholding tax payments of $2.1 million
(2022– $24.5 million), partly offset by the recovery of $33.0 million relating to prior years (2022 – $5.1 million).
Contributions and loans to associates and joint ventures were $0.7 million (2022 – nil).
Capital expenditure in 2023 was $2,129.2 million compared with $1,879.2 million in 2022. This included expenditure of $1,044.6 million at
Centinela (2022 – $857.0 million), $897.1 million at Los Pelambres (2022 – $889.7 million), $121.6 million at Antucoya (2022 – $66.9 million),
$15.5 million at the corporate centre (2022 – $10.8 million) and $50.4 million at the Transport division (2022 – $54.8 million). The higher total
capex compared with the prior year reflects increased mine development at Centinela, Los Pelambres and Antucoya, and higher sustaining capex
at Los Pelambres and Centinela, partly offset by lower expenditure on the INCO project at Los Pelambres.
As detailed in Note 17, in December 2022 Antofagasta completed its disposal of its 50% interest in the Tethyan joint venture. It was agreed that
the disposal proceeds would be distributed to Antofagasta during 2023. In May 2023, the disposal proceeds of $944.7 million, plus interest of
$11.6 million, were received by the Group.
There was a cash outflow of $290.1 million in respect of investment in other financial assets in 2023 (2022 – nil).
Acquisitions of equity investments were $60.7 million in 2023 (2022 – $66.5 million).
Dividends paid to equity holders of the Company were $613.2 million (2022 – $1,262.9 million) of which $497.9 million related to the payment of
the previous year’s final dividend and $115.3 million to the interim dividend declared in respect of the current year.
Dividends paid by subsidiaries to non-controlling shareholders were $388.0 million (2022 – $80.0 million).
Dividends received from associates and joint ventures were nil for 2023 (2022 – $50.0 million).
Financial position
At 31.12.23 At 31.12.22
$m $m
Cash, cash equivalents and liquid investments 2,919.4 2,391.2
Total borrowings and other financial liabilities (4,079.2) (3,277.0)
Net debt at the end of the period (1,159.8) (885.8)
Financial Review continued
Antofagasta plc Annual Report 2023114
STRATEGIC REPORT
At 31 December 2023, the Group had combined cash, cash equivalents
and liquid investments of $2,919.4 million (31 December 2022 –
$2,391.2 million). Excluding the non-controlling interest share in each
partly-owned operation, the Group’s attributable share of cash, cash
equivalents and liquid investments was $2,490.5 million (31 December
2022 – $1,991.0 million).
Total Group borrowings and other financial liabilities at 31 December
2023 were $4,079.2 million, an increase of $802.2 million on the prior
year (31 December 2022 – $3,277.0 million). The increase was mainly
due to $1,062.2 million of additional senior loans at Los Pelambres
($797.2 million) and Centinela ($265.0 million) and $178.6 million of
new finance leases, partly offset by a $381.7 million repayment of the
senior loans at Los Pelambres ($210.3 million), Centinela ($111.1
million), Antucoya ($50.0 million), and the Transport division ($10.3
million). Excluding the non-controlling interest share in each partly-
owned operation, the Group’s attributable share of the borrowings was
$2,948.3 million (31 December 2022 – $2,449.7 million).
These movements resulted in net debt at 31 December 2023 of
$1,159.8 million (31 December 2022 – net debt $885.8 million).
Excluding the non-controlling interest share in each partly-owned
operation, the Group had an attributable net debt position of $457.8
million (31 December 2022 – net cash $458.7 million).
Going concern
The consolidated financial information contained in the financial
statements has been prepared on the going concern basis. Details of
the factors which have been taken into account in assessing the
Group’s going concern status are set out in Note 1 to the financial
statements.
Cautionary statement about forward-looking statements
This Annual Report contains certain forward-looking statements. All
statements other than historical facts are forward-looking statements.
Examples of forward-looking statements include those regarding the
Group’s strategy, plans, objectives or future operating or financial
performance, reserve and resource estimates, commodity demand and
trends in commodity prices, growth opportunities, and any
assumptions underlying or relating to any of the foregoing. Words such
as “intend”, “aim”, “project”, “anticipate”, “estimate”, “plan”, “believe”,
“expect”, “may”, “should”, “will”, “continue” and similar expressions
identify forward-looking statements.
Forward-looking statements involve known and unknown risks,
uncertainties, assumptions and other factors that are beyond the
Group’s control. Given these risks, uncertainties and assumptions,
actual results could differ materially from any future results expressed
or implied by these forward-looking statements, which apply only as at
the date of this report. Important factors that could cause actual
results to differ from those in the forward-looking statements include:
global economic conditions, demand, supply and prices for copper and
other long-term commodity price assumptions (as they materially
affect the timing and feasibility of future projects and developments),
trends in the copper mining industry and conditions of the international
copper markets, the effect of currency exchange rates on commodity
prices and operating costs, the availability and costs associated with
mining inputs and labour, operating or technical difficulties in
connection with mining or development activities, employee relations,
litigation, and actions and activities of governmental authorities,
including changes in laws, regulations or taxation. Except as required
by applicable law, rule or regulation, the Group does not undertake any
obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
Past performance cannot be relied on as a guide to future
performance.
The Strategic Report has been approved by the Board and signed
on its behalf by:
JEAN-PAUL LUKSIC
Chairman
FRANCISCA CASTRO
Senior Independent Director
Antofagasta plc Annual Report 2023 115
Applying the Code in 2023 118
Board leadership and Company purpose
Chairman’s introduction 120
Senior Independent Director’s
introduction 122
Group corporate governance overview 124
Board activities 126
Stakeholder engagement 128
Workforce engagement 130
Division of responsibilities
Directors’ biographies 132
Board balance and skills 134
Roles in the boardroom 135
Executive Committee biographies 136
Introduction to the Committees 138
Composition, succession and evaluation
Nomination and Governance
Committee report 140
Board effectiveness 143
Audit, risk and internal control
Audit and Risk Committee report 144
Sustainability and Stakeholder
Management Committee report 151
Projects Committee report 154
Remuneration
Remuneration and Talent Management
Committee Chair’s introduction 156
Remuneration at a glance 160
2023 Directors’ and CEO’s
Remuneration Policy Summary 162
2023 Directors’ and CEO’s
Remuneration Report 166
Remuneration and Talent Management
Committee Report 174
Implementation of the Directors’ and
CEO’s Remuneration Policy in 2024 176
Directors’ Report 179
Statement of Directors’
responsibilities 181
“Reflecting on our 40
th
year of
operating copper mines, we are
proud of our strong performance
during the year, which included
record safety performance and the
successful delivery of key
development projects and key
investment decisions that will secure
the long-term future of our business.”
JEAN-PAUL LUKSIC
Chairman
Governance
Copper cathodes ready for shipment.
Antofagasta plc Annual Report 2023116
CORPORATE GOVERNANCE
Antofagasta plc Annual Report 2023 117
UK Corporate Governance Code compliance
statement
The UK Corporate Governance Code issued by the Financial Reporting
Council in July 2018 sets out the governance principles and provisions
that applied to the Company during 2023.
The Code is not a rigid set of rules, it consists of principles and
provisions. The Listing Rules require companies to apply the principles
and report to shareholders on how they have done so. This Corporate
Governance Report shows how these principles have been considered
and applied to the Company’s specific circumstances.
The Company complied with all the principles and detailed provisions
of the Code in 2023 except for Code Provisions 9 and 19. Code
Provision 9 recommends that the Chairman should be independent on
appointment when assessed against the circumstances set out in
Provision 10 and Code Provision 19 recommends that the Chairman
should not remain in post beyond nine years from the date of first
appointment to the Board.
The Company’s Chairman, Jean-Paul Luksic, was appointed to the
Board in 1990. He served as CEO of the Group’s Mining division from
1998 until 2004 and was appointed Executive Chairman in 2004. In
2014, he stepped back from executive responsibilities to become
Non-Executive Chairman, a role he has continued to hold since then.
Mr Luksic’s longstanding UK corporate governance and Chilean mining
and business experience, coupled with his knowledge of the Group’s
businesses have been for many years, and continue to be, a
cornerstone of the Company’s continuing growth and success.
Mr Luksic is also a member of the family that is interested in the
E.Abaroa Foundation, a controlling shareholder of the Company for the
purposes of the UK Listing Rules and is therefore uniquely positioned
to ensure that the interests of shareholders, together with the interests
of other stakeholders (many of whom are based in Chile), are taken
into account to promote the long-term sustainable success of the
Company and to promote governance that the Board is convinced
isbest for the Company’s particular circumstances in the long term.
Mr Luksic is committed to wider succession and diversity planning and,
in his roles as Chairman of the Board and Chair of the Nomination and
Governance Committee, he has overseen the design and
implementation of succession plans to increase diversity, including
gender, and continually refresh the Board. The Board and its
Committees meet or exceed the Code’s recommendations for
independent composition and the Company complies with the new
UK Listing Rules regarding diversity with 45% of the Board comprising
women and a female Senior Independent Director. There is a Board
approved succession plan for the Chairman in the event of an
unforeseen departure.
The Board considers that Mr Luksic continues to demonstrate
objective judgement and provide constructive challenge and leadership,
and believes that his continued appointment is appropriate without
fixing a limit to his length of service. The Company’s major
shareholders are regularly consulted on this subject, and in meetings
with the Senior Independent Director in November 2023, continued to
unanimously express their support for Mr Luksic’s continued service
as Chairman of the Board.
The composition of the Board and its Committees is entirely in line
with the Code provisions and the Chairman is fully supported by the
Board, the Nomination and Governance Committee and the Senior
Independent Director in ensuring that, despite non-compliance with
Code Provisions 9 and 19, good governance is maintained.
Further details on the composition of the Board and its Committees
are set out on page 132 and further details of the role of the Senior
Independent Director are set out on pages 122 and 135.
The UK Corporate Governance Code is available on the Financial
Reporting Council website at www.frc.org.uk.
The Board has been monitoring developments culminating in the
revised UK Corporate Governance Code issued by the Financial
Reporting Council in January 2024, and plans to report against the
relevant Principles and Provisions of this new version of the Code
from 1 January 2025.
How the Code principles were applied in 2023
Board leadership and Company purpose
The role of the Board
•
The Company is led by an effective and entrepreneurial Board,
which is collectively responsible for promoting the Company’s
long-term sustainable success, generating value for shareholders
and contributing to wider society as shown throughout this
Corporate Governance Report.
•
The Board has adopted and actively promotes the Group’s purpose,
vision, values and strategy, and has satisfied itself that they are
aligned with its culture – pages 22-25 and 126.
•
The Board has ensured that the necessary resources are in place
for the Company to meet its objectives and measure performance
against them. It has established both its risk appetite and a
framework of prudent and effective controls, which enable risk
to be appropriately assessed and managed – pages 74-85.
•
The Board ensures effective engagement with, and encourages
participation from, shareholders and other stakeholders to ensure
that its responsibilities are met – pages 30-73, 120, 122, 128-129,
135, 157 and 174.
•
The Board ensures that workforce policies and practices are consistent
with the Company’s purpose, vision and values and supports its
long-term sustainable success. The workforce can raise any matters
of concern anonymously through the Group’s whistleblowing channels
– pages 40-42, 86, 130, 149, 156-178.
•
The Board considers the matters set out in section 172 of the
Companies Act 2006 in Board discussions and decision-making –
pages 40-73. Detailed examples can be found on pages 128-129.
Division of responsibilities
•
The Board is structured to ensure that no one individual or small
group of individuals dominates its decision-making, as demonstrated
throughout this Corporate Governance Report.
•
The CEO is not a Director of the Company and is therefore not
a member of the Board – page 135.
•
There is a clear division of responsibilities between the Board and the
executive leadership of the Company’s business – pages 124, 134-135.
•
The division of responsibilities between the Chairman, the CEO and
the Senior Independent Director is recorded in writing, and is
available on the Company’s website at antofagasta.co.uk.
•
The roles of the Board and the Board Committees are recorded in the
Schedule of Matters Reserved for the Board and the Terms of
Reference for each of the Board’s Committees, all of which are
available on the Company’s website at antofagasta.co.uk.
•
The Board, supported by the Company Secretary, has the policies,
processes, information, time and resources it needs in order to
function effectively and efficiently – pages 125 and 141.
How we apply the Code
Applying the Code in 2023
Antofagasta plc Annual Report 2023118
CORPORATE GOVERNANCE
The Chairman
•
The Chairman leads the Board and is responsible for its overall
effectiveness in directing the Company. His responsibilities are set
out on page 135.
•
The Board considers that the Chairman demonstrates objective
judgements and promotes a culture of openness, healthy challenge
and debate – pages 118 and 122.
•
The Chairman facilitates constructive Board relations and the
effective contribution of all Directors. He is responsible for setting
the Board’s agenda and ensuring that Directors receive accurate,
timely, relevant and clear information – pages 125, 135 and 141.
Non-Executive Directors
•
The Non-Executive Directors provide constructive challenge and
strategic guidance, offer perspectives across various specialisms
and hold management to account – pages 132-134.
Commitment
•
All Directors have confirmed that they are able to allocate enough
time to meet the expectations of their role – page 132.
•
Directors do not undertake additional external appointments without
the Board’s prior approval – page 132.
•
Time commitment is considered during Board effectiveness reviews
and when electing and re-electing Directors – pages 140-143.
•
A review of Directors’ external directorships is carried out annually
– pages 123 and 180.
Information and support
•
The Board is provided with appropriate information in a form and
of a quality to discharge its duties – page 125.
•
The Board has access to independent professional advice and to the
advice and services of the Company Secretary – pages 135 and 141.
•
The Board is regularly updated on the Group’s performance
between scheduled Board meetings – page 125.
Composition, succession and evaluation
Composition of the Board and Committees
•
The Board has 11 Directors, comprising a Non-Executive Chairman
and ten other Non-Executive Directors, six of whom are
independent – page 132-135.
•
All members of the Audit and Risk and Remuneration and Talent
Management Committees are independent and two of the three
Nomination and Governance Committee members are independent
– page 132-133.
•
The Board and its Committees comprise Directors with the requisite
combination of skills, experience and knowledge to fulfil their roles
– page 132-135.
•
There is a diverse pipeline for succession. Consideration is given to
the length of service of the Board as a whole and membership is
regularly refreshed – page 134 and 140-143.
Appointments to the Board and succession planning
•
There is a formal, rigorous and transparent process, led by the
Nomination and Governance Committee, to identify and appoint new
Directors – page 140-142.
•
Independent external search consultancies are used for
appointments to the Board – pages 141-142.
•
An effective succession plan is maintained for Board and senior
management appointments – pages 142-143 and 175.
•
Appointments and succession plans are based on merit and objective
criteria and promote diversity of gender, social and ethnic backgrounds,
cognitive and personal strengths and experience – page 141.
Development
•
New Directors receive a thorough induction upon joining the Board
– pages 140-143.
•
Directors are regularly updated with information and training and,
as a minimum, receive an annual briefing on legal, regulatory,
market and other developments relevant to Directors of UK-listed
companies – page 141.
Evaluation
•
An annual evaluation of the Board considers composition, diversity
and how effectively members work together to achieve objectives
– page 143.
•
Individual evaluation is part of the annual Board evaluation and
assesses whether each Director continues to contribute effectively
– page 143.
•
An internal Board and Committee effectiveness review was
conducted in 2023 – page 143.
Re-election
•
All Directors stand for re-election by shareholders annually.
Audit, risk and internal control
Governance
•
The Board has established formal and transparent policies and
procedures to ensure the independence and effectiveness of
internal and external audit functions and to satisfy itself on the
integrity of financial and narrative statements – page 144-149.
Financial and business reporting
•
The Board considers that the Annual Report presents a fair,
balanced and understandable assessment of the Company’s position
and prospects – page 181.
Risk and internal control
•
The Board has established procedures to manage risk, oversee the
internal control framework and determine the nature and extent of
the principal risks the Company is willing to take in order to achieve
its long-term strategic objectives – pages 74-85 and 148-149.
Experience and competence
•
All Audit and Risk Committee members are considered to have
recent and relevant financial experience and have competence
relevant to the mining industry and one member is a Chartered
Accountant – page 132-134.
Remuneration
Policy
•
The Company has no executive Directors; however, the CEO’s
remuneration is disclosed as if he were a director.
•
The Directors’ and CEO’s Remuneration Policy, which was approved
by shareholders at the 2023 AGM, is aligned to the Company’s purpose,
vision and values and is clearly linked to the successful delivery of
the Company’s long-term strategy – pages 162-165 and 172.
•
The Remuneration and Talent Management Committee Chair,
Francisca Castro, served as a member of the Committee for more
than 12 months before being appointed as Chair.
•
The CEO’s remuneration includes transparent, stretching and
rigorously applied performance-related elements designed to promote
the Company’s long-term sustainable success – pages 156-177.
Procedure
•
The Board has a formal and transparent procedure for developing
policy on executive remuneration and determining Director and
senior management remuneration – pages 156-178.
•
No Director, nor the CEO, is involved in deciding his or her own
remuneration.
•
Directors exercise independent judgement and discretion when
authorising remuneration outcomes, taking account of Company and
individual performance and wider circumstances including internal
and external factors – pages 156-165.
Antofagasta plc Annual Report 2023 119
Our Commitment to Sustainability Issues
Our efforts on climate change are an integral part of our Sustainability
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.
Having achieved our emissions reduction target in 2022, efforts in 2023
were focused on developing a detailed decarbonisation strategy and
associated emissions reduction targets that would guide the next phase of
our development. Following this work, we were able to publish updated
targets covering Scope 1, 2 and 3 emissions in early 2024.
Stakeholder engagement
Our Directors visited our operations, including the desalination plant and
concentrator plant expansion projects throughout the year. The insights
from these visits were shared at Board and Committee meetings, deepening
the Directors’ understanding of our activities and providing direct feedback
to the Board from our stakeholders at site. These insights were particularly
important in monitoring progress towards completion of the Los
Pelambres expansion project and the integration between project and
operations teams and relations with our stakeholders in the Choapa Valley.
Board evaluation
We always seek continuous improvement in all that we do, and the Board
and its governance are no exception. During 2023, we carried out an
internal evaluation of the Board and Committees which followed on from
the 2022 external comprehensive independent Board evaluation.
Further details regarding the evaluation and our progress can be found
on page 143.
Board changes and succession planning
Jorge Bande reached nine years of service in December 2023 and has
retired from the Board. We appreciate Jorge’s contribution to the Company
over these years and thank him for his continued support of our vision.
Heather Lawrence and Tracey Kerr joined the Board in April 2023 and
January 2024, respectively. We are delighted with the skills, experience and
additional diversity of perspective that they bring to the Board. Heather is a
qualified chartered accountant with corporate finance and investment banking
experience and Tracey brings extensive experience in safety, sustainability,
operations and exploration in global mining businesses. Both Heather
andTracey have strong governance experience in UK listed companies.
At its core, Antofagasta is a long-term business. Our mines operate on
decades-long timelines, and our governance structures and processes
are designed to help us achieve long-term sustainable success.
Thank you for your ongoing engagement. I look forward to having
theopportunity to meet with you at our AGM.
JEAN-PAUL LUKSIC
Chairman
JEAN-PAUL LUKSIC
Chairman
Dear shareholders
Welcome to the Corporate Governance section of our 2023 Annual
Report.
My introductory letter on pages 8-10 of this Annual Report sets out
some of the Group’s key challenges and achievements in 2023 and my
reflections on the outlook for 2024 and illustrates the Board’s ability to
navigate these scenarios supported by our strong and effective
governance framework.
Reflecting on our 40th year of operating copper mines, we are proud
of our strong performance during the year, which included record
safety performance and the successful delivery of key development
projects and key investment decisions that will secure the long-term
future of our business.
Shareholder engagement
We were pleased to engage with shareholders at our AGM in 2023,
with a return to normality following the pandemic years.
As the year progressed, our Senior Independent Director and Chair of
the Remuneration and Talent Management Committee, Francisca
Castro, met with shareholders and proxy advisers in a mix of
in-person and virtual meetings. In the meetings, discussions centred
on our approach to corporate governance and provided an opportunity
for shareholders and proxy advisers to share their perspectives on the
Company, with a particular focus on corporate governance.
Details of these meetings can be found in the Senior Independent
Director’s introduction on page 122 and the Remuneration and Talent
Management Committee Chair’s introduction on page 156.
Diversity and Inclusion
An issue that was discussed with shareholders, which is important to
our Board, was diversity – particularly gender diversity. Since 2014,
more than half of our appointments to the Board have been female and
women now make up 45% of our Board. We were delighted that
Francisca Castro took on the role of Senior Independent Director
during the year. Francisca has been a Director since 2016 and has
Chaired the Remuneration and Talent Management Committee since
2017. She has a strong understanding of shareholder corporate
governance expectations and close connection with the Group’s
businesses in Chile. We aim to continue to meet the UK’s targets on
gender diversity, while also continuing to build a pipeline of female
talent across the organisation, particularly at the Group’s mining
operations where the recruitment of female talent has historically been
particularly difficult.
Further information on the Board’s diversity policy can be found in the
Nomination and Governance Committee Report on page 140.
Audit and Risk Management
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. The Board, led by the Audit and Risk
Committee, conducted a tender process for the appointment of the
Group’s auditor in 2022 and has continued to oversee the transition
plans and progress during 2023. I would like to thank Simon Morley and
the PwC teams in the UK and Chile for their excellent performance over
the last nine years and we look forward to working with Chris Thomas
and the Deloitte teams in the UK and Chile in the coming years.
Effective Board
leadership
Chairman’s introduction
Antofagasta plc Annual Report 2023120
CORPORATE GOVERNANCE
Board oversight of climate-related risks
and opportunities
The Board has ultimate responsibility for the Group’s climate-
related objectives and strategy. The Board’s oversight of climate-
related risks and opportunities is fully integrated within our
governance structures. This responsibility and oversight includes
specific climate related activities such as approving the Group’s
Climate Change Strategy, approving emission reduction targets,
monitoring implementation of the Climate Change Strategy and
approving the Company’s TCFD disclosures. This also includes
more general approval and oversight responsibilities which
incorporate climate-related risks and opportunities such as
reviewing and approving the Group’s capital allocation framework
which includes criteria relating to climate resilience and an internal
carbon price, reviewing and approving the Group’s base and
development case models which include adjustments for physical
and transition risks associated with climate change, approving the
Group’s annual budget, reviewing the Group’s principal and
emerging risks which include climate change and approving KPIs in
the Group’s remuneration structures that reward our employees
for progress in achieving the Group’s climate-related objectives.
In 2023, the Board allocated time to specifically review the financial
implications of climate change on the Group using the TCFD
framework, considering a detailed and updated evaluation of the
costs of mitigation and adaptation as well as opportunities. Further
details are set out on page 144.
During 2023, the Board approved the Company’s second climate
change report which provided a detailed overview of the
Company’s efforts and progress in addressing climate change and
reducing its environmental footprint. The report includes the
Company’s inaugural summary of Scope 3 emissions which was
reviewed by the Board and which followed a two-year process to
improve the understanding of the emissions that relate to the
Company’s value chain. The report is available on the Company’s
website at www.antofagasta.co.uk.
The Board also approved new carbon emissions reduction targets
to: (1) reduce the Group’s Scope 1 and Scope 2 emissions by 50%
by 2035 considering 2020 emissions as a baseline; and (2) engage
with the industry to achieve a 10% reduction in Scope 3 emissions
by 2030. The Board also agreed that decarbonisation targets will
be revisited in 2025.
The Board is supported by all of the Board’s committees in
ensuring that climate-related considerations are fully integrated into
the Board’s governance structures. For example:
•
As shown on pages 140-143, the Nomination and Governance
Committee considers the Board’s skills matrix when making
appointments to the Board. This matrix includes sustainability
experience (which includes competence on climate-related
issues) as a key skill and the Board ensures that there is an
adequate depth of climate change knowledge and awareness on
the Board when making new appointments.
•
As shown on pages 144-149, the Audit and Risk Committee
assists the Board in overseeing the Group’s risk management
framework, including climate change risk and the financial
implications of climate change.
•
As shown on pages 151-153, the Sustainability and Stakeholder
Management Committee considers climate change when
reviewing and monitoring relevant strategy, policies and
performance matters. In 2023, this included reviewing a
progress report on the development of an inventory of Scope 3
emissions and next steps and reviewing a proposal that was
approved by the Board to incorporate all of the Group’s operating
companies to the UN Global Compact, reviewing the Group’s
environmental Management Model and Organisation, including in
relation to climate change and reviewing the water situation in
the Choapa Valley after 14 years of lower-than-normal rainfall
and Los Pelambres’ water strategy.
•
As shown on page 154-155, the Projects Committee considers
climate change when reviewing and monitoring the Group’s
major capital projects.
•
As shown on page 156-177, the Remuneration and Talent
Management Committee monitors executives and managers’
short- and long-term incentive plans which include KPIs relating
to climate change such as the implementation of the Company’s
Decarbonisation Plan, which was created following studies
completed during 2023.
Winter at Los Pelambres.
Antofagasta plc Annual Report 2023 121
Q. What are your responsibilities as Senior Independent
Director?
I am delighted to have taken on the role of Senior Independent Director
following my appointment in August 2023.
I have three main responsibilities as Senior Independent Director. First,
I must be available to shareholders to ensure that the Board considers
their views, interests and concerns. Second, I provide support to the
Chairman, ranging from advice on corporate governance matters to
presiding over potential conflict of interest decisions by the Board, and
making sure that the views of the other Directors are conveyed to him
and reflected in Board discussions. Third, I lead the annual review of
the Chairman’s performance and oversee the closure of any gaps
identified by internal and externally facilitated reviews of the Board’s
and the Committees’ performance.
I discharge these responsibilities through close co-ordination with the
Chairman, Directors, Company Secretary and the management team. I
met with various shareholders and proxy advisers during the year to
understand their views of the Company. This has helped me ensure
that the Chairman, the Board and the management team receive a
balanced view of issues that are relevant and important for our
shareholders.
Q. Why did you meet with shareholders and proxy advisers
during the year and what issues were discussed?
As Senior Independent Director and Chair of the Remuneration and
Talent Management Committee, I aim to meet with shareholders every
year to gain a first-hand understanding of the subjects that matter to
them. This year I invited the Company’s 20 largest investors as well as
the Investment Association, Glass Lewis and Institutional Shareholder
Services to meet to discuss Corporate Governance matters and to
allow shareholders to raise any concerns that they would like to
discuss without the presence of the senior management team. The
feedback I received was very positive and no major concerns were
raised. We engaged in discussions relating to the Board’s
independence and the role of the controlling shareholder in the
Board’s governance arrangements, the key issues and risks
considered by the Board to be relevant, the Board’s diversity policy
and progress towards achieving the new targets set out in the Listing
Rules, and the Board’s oversight of other sustainability matters, such
as carbon emission reduction targets. The feedback I received from
shareholders was reported to the Board and is reflected in the
decisions that have been made in the preparation of this Corporate
Governance report.
Q. What impact does the controlling shareholding have on
Company decisions?
Members of the Luksic family have been involved in the Company for
over 40 years. During this time, the Company has demonstrated an
excellent track record in terms of safety, operational performance and
financial strength.
I have discussed the role of the controlling shareholders with
shareholders. The widely held view is that the substantial controlling
interest is positive, with shareholders satisfied that the interests of the
controlling shareholders are aligned with theirs, many having invested
based on this interest. They have expressed their appreciation of the
members of the Luksic family who serve on the Board, commending
their long-term vision, which has contributed to the Company’s
prudent operating, financial and growth strategy, as well as its stability.
Shareholder support is, of course, conditional on the strength of the
current corporate governance framework, which rigorously protects
the interests of all shareholders equally.
I, and all the other Independent Directors, guard our independence and
place a strong emphasis on maintaining this governance and protection
regime. We are supported and encouraged by the other Directors who
– like the Independent Directors – bring their own perspectives and
opinions and are committed to the long-term sustainable success of
the Company.
The controlling shareholders and the members of the Luksic family
who serve on the Board (including the Chairman), actively support this
framework and encourage the Independent Directors to provide the
independent input and challenge that, we are convinced, proves
invaluable in Board decision-making.
FRANCISCA CASTRO
Senior Independent Director
“The feedback I received from
shareholders was reported to the
Board and is reflected in the
decisions that have been made in
the preparation of this Corporate
Governance report.”
FRANCISCA CASTRO
Senior Independent Director
Senior Independent Director’s introduction
Board balance
Antofagasta plc Annual Report 2023122
CORPORATE GOVERNANCE
Process How this is managed Responsibility
Monitoring
of directors’ interests
If a Director has an interest in any other entity, the Board will normally
consider that interest under its arrangements for authorising potential
conflicts of interest under section 175 of the Companies Act. See page 180
for more information.
Directors
Relationship agreement
The E. Abaroa Foundation is a controlling shareholder of the Company
for the purposes of the Listing Rules and certain other shareholders of
the Company (including Aureberg Establishment) are also treated as
controlling shareholders. Details of the Company’s substantial
shareholders are set out on page 180.
In 2014, the Company entered into relationship agreements with each
controlling shareholder, which contain the mandatory independence
provisions required by the Listing Rules. The Company complied with
and, so far as the Directors are aware, each controlling shareholder
and its associates (including Metalinvest Establishment and Kupferberg
Establishment) also complied with the mandatory independence
provisions throughout 2023.
Related party transactions
Certain related party transactions outside the ordinary course of
business must be subject to independent assessment and approval.
The Company has for many years presented all such related party
transactions between the Company and the controlling shareholders or
their related entities to a committee of Directors independent from the
controlling shareholders, to assess whether the Company should enter
into such transactions and, if so, to oversee the negotiation process. In
most cases, transactions of this nature will also be subject to
independent review by third-party shareholders in each of the Group’s
mining operations.
Any proposed related party transaction over $40 million, whether or
not in the ordinary course of business, is also tabled for Board
approval. Any Director with a potential conflict or connection with the
related party does not take part in the decision on that transaction.
Related party governance in practice
There are several checks and balances to ensure that there is full
transparency in the handling of related party transactions by the
Board. The following table summarises the approach taken to identify
and manage related party transactions and actual or potential conflicts
of interest.
Process How this is managed Responsibility
Proposed transaction Ongoing monitoring of Directors’ interests and the Company’s related parties
provides information to determine whether a related party approval is
required for a proposed transaction.
Company Secretary, senior
management and the
Executive Committee
Contract negotiation
and verification
The Executive Committee seeks to ensure that the best possible terms are
achieved for a proposed transaction and that, where appropriate or
necessary, they are verified by industry benchmarking reports or
independent third-party valuation or assessment.
If the potential transaction is between the Group and a controlling
shareholder or its associates and is a transaction to which the UK Listing
Rules related party transaction rules apply, a committee of Directors
independent from the controlling shareholder and its associates is formed to
oversee and support management with this process and to ensure
compliance with the corresponding Relationship Agreement.
Senior management and
the Executive Committee
and, if involving a
controlling shareholder,
Independent Directors
Approval
by independent directors
Potential related party transactions outside the ordinary course of business
that involve a controlling shareholder, or its associates, are reviewed and if
appropriate, approved by Directors independent from the controlling
shareholders.
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.
Independent Directors
Identifying Directors’ interests
Managing related party transactions
Antofagasta plc Annual Report 2023 123
Antofagasta plc Board
The Board’s role is to promote the long-term, sustainable success of
the Company, generating value for shareholders and contributing to
wider society. The Board has established the Company’s purpose,
values, strategy and risk appetite and monitors the culture of the
Group as well as its performance against defined measures.
The schedule of matters reserved for the Board is available on the
Company’s website at antofagasta.co.uk.
Key responsibilities
•
Culture
•
Strategy and management
•
Governance
•
Shareholder engagement
•
Internal controls, risk management and compliance
•
Financial and performance reporting
•
Structure and capital
•
Approving material transactions
Board Committees
The Board is assisted in discharging its responsibilities by five Board
Committees.
The Board has delegated authority to these Committees to perform
certain activities as set out in their terms of reference, which are
available on the Company’s website at antofagasta.co.uk.
The Chair of each Committee reports to the Board following each
Committee meeting, allowing the Board to understand and, if
necessary, discuss matters in detail and to consider the Committee’s
recommendations.
Key responsibilities
The key responsibilities of each Committee and their focus areas for
2023 are set out on page 138.
Audit
and Risk
Projects
Nomination
and Governance
Sustainability
and Stakeholder
Management
Remuneration and Talent
Management
Disclosure
Operating
performance
review
Ethics Project steeringClimate change
Water, energy &
emissions
management
Business
development
Our governance framework
The Board has delegated day-to-day responsibility for implementing
the Group’s strategy and fostering the corresponding organisational
culture to the Company’s CEO, Iván Arriagada.
Mr Arriagada is not a Director of the Company but attends all Board
meetings and Board Committee meetings, and is supported by the
members of the Executive Committee, each of whom has executive
responsibility for his or her respective function.
Mr Arriagada chairs the Executive Committee.
The Executive Committee reviews significant matters and approves
expenditure within designated authority levels.
The Executive Committee leads the annual budgeting and planning
processes, monitors the performance of the Group’s operations and
investments, evaluates risk and establishes internal controls, promoting
the sharing of best practices across the Group.
Members of the Executive Committee also sit on the boards of the
Group’s operating companies and report on the activities of those
companies to the Board, Mr Arriagada and the Executive Committee.
The Board has delegated to the Disclosure Committee primary internal
responsibility for identifying information that may need to be disclosed
to the market and for managing its disclosure in line with the Group’s
current Disclosure Procedures Manual.
The Executive Committee is assisted in its responsibilities by the
following Subcommittees:
CEO and Executive Committee
Subcommittees of the Executive Committee
Group corporate governance overview
Antofagasta plc Annual Report 2023124
CORPORATE GOVERNANCE
01
Chairman and Senior Independent Director agree agenda
with the CEO and the Company Secretary
The Chairman and Senior Independent Director, in consultation with
the CEO and the Company Secretary, maintain an agenda of standing
topics to be considered by the Board and Committees each year,
which is then supplemented, during the year, with agreed key topics
and events requiring consideration.
Ad hoc Board and Committee meetings are also called, as appropriate.
02
Papers circulated in advance of meetings
Materials are sent to Board and Committee members a week in
advance of each meeting.
Presentations include a summary of the objective, background,
proposal, justification, risk analysis and next steps associated with that
topic. Materials include the CEO’s report, which is an open and candid
summary of his views on evolving strategic challenges, changes in risk
assessments and emerging issues, as well as the management report
which includes detailed information on the Group’s performance
against key safety, health, environmental, community, financial,
workforce, project development and organisational culture indicators.
03
Board and Committee meetings
Board and Committee meetings include regular in-camera sessions
without management present to allow Directors to set expectations for
the meeting and to reflect on and evaluate the meeting’s progress. The
CEO provides timely updates to the Board on emerging issues, while
executives present to the Board and its Committees on operating and
development matters, allowing close interaction between Directors and
a wide range of executive management.
04
Minutes prepared, circulated and approved
The Company Secretary minutes all Board and Committee meetings,
which are circulated and reviewed by the Board and management,
updated as necessary and tabled for approval at the following meeting.
05
Action lists prepared and updated as key actions are implemented
The Board and each Committee maintain an action list that is reviewed
at the beginning of each meeting to ensure that Directors’ enquiries
and concerns are clearly identified and timely addressed.
06
Further information provided between meetings
Between Board meetings, Directors receive flash reports with monthly
and year-to-date production and financial results, ensuring that the
Board is regularly updated on the Group’s progress. The Board also
receives a detailed operations report every six months which provides
a detailed explanation of the Group’s health and safety and operational
performance in the different areas within the business.
Where appropriate, Directors may receive general information on the
commodity markets and additional reports highlighting key
developments in the Group’s exploration, projects, business
development and innovation activities.
The Group’s management team, led by Iván Arriagada, performs an
essential role in ensuring that the Board has the information required
to make effective decisions, reporting in real time on the
implementation of the Group’s strategy and the Company’s
performance.
01
Chairman and Senior
Independent Director
agree agenda with the
CEO
02
Papers circulated
in advance of
meetings
03
Board and Committee
meetings
04
Minutes prepared,
circulated and approved
05
Action lists prepared and
updated as key actions are
implemented
06
Further information
provided between
meetings
Board and Board Committee information flows
Antofagasta plc Annual Report 2023 125
Culture
•
Monitored operational and projects performance and its link with the
Group’s culture, particularly concerning health and safety.
•
Oversaw the continued implementation of the Group’s strategic
framework, including the Group’s purpose, vision, values and
culture.
•
Monitored progress on the implementation of the Group’s Diversity
and Inclusion Strategy.
•
Reviewed workforce engagement survey results.
•
Received feedback on meetings with representatives of the Group’s
labour unions.
Governance and engagement
•
Reviewed Board and Executive Committee succession plans.
•
Interviewed potential future Board candidates.
•
Reviewed Directors’ independence and skills on the Board.
•
Reviewed Directors’ conflict of interest declarations.
•
Oversaw the 2023 Board and Committees internal effectiveness
review.
•
Monitored feedback from investors and proxy agencies regarding
the Group’s corporate governance arrangements.
•
Reviewed and approved the Company’s Modern Slavery Act
statement.
Board oversight in 2023
During 2023, 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.
Internal controls, risk management and compliance
•
Reviewed the Group’s principal and emerging risks; conducted the
annual review of the Group’s risk appetite statements, which are
aligned with the Group’s strategic pillars and approved amendments
to risk appetite declarations.
•
Reviewed and updated the Group’s risk matrix, materialised risks
and risk mitigation activities.
•
Reviewed budgets for initiatives designed to mitigate material
identified risks.
•
Reviewed physical and transition risks associated with climate
change and incorporated their impact as a sensitivity to the Group’s
Base Case and Development Case.
•
Attested to the effectiveness of the Group’s risk management and
internal control systems.
•
Reviewed actions planned for 2024 to prepare for the UK
Government’s corporate governance reforms.
•
Reviewed half-yearly compliance reports.
•
Reviewed results of the Group’s whistleblowing processes.
•
Reviewed Internal Audit’s progress on audits planned for 2023 and
approved the 2024 audit plan.
•
Oversaw plans designed to ensure a smooth transition from PwC to
Deloitte as the new external auditor for the 2024 financial year
onwards.
Financial and performance reporting
•
Approved the Group’s 2022 full-year and 2023 half-year results
and corresponding announcements.
•
Recommended and declared dividends paid to shareholders during
2023.
•
Reviewed and approved going concern and viability statements,
including stress tests.
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 128-129.
Board activities
Our strategic framework
The Board has strengthened our commitment to Developing Mining for a Better Future as the purpose that mobilises us and gives meaning to
everything we do.
We are an international mining Company focused on copper and its by-products, known for our operating efficiency, creation of sustainable value,
high profitability and as a preferred partner in the global mining industry.
We want to generate a diverse and inclusive culture, with key values shared by all. We have a Code of Ethics and our own way of doing things,
while responsibly managing our risks. To achieve this, we rely on the talent and capabilities of our workforce. Our flexible and resilient
organisation allows us to overcome current and future challenges.
Below are examples of how the Board’s activities in 2023 have furthered the Group’s strategy.
Read more about our strategic
framework on page 22.
Antofagasta plc Annual Report 2023126
CORPORATE GOVERNANCE
Our strategy is designed to enable us to achieve our purpose. It is supported by five pillars: safety
and sustainability, people, competitiveness, innovation and growth and each has defined short-
and medium-term goals.
Safety and Sustainability
The health and safety of our employees and contractors is our first priority. We are committed to achieving zero fatalities at our operations
and continuing to reduce the number and seriousness of accidents and occupational health issues. We view sustainability as a source of value
creation that is central to our decision-making processes.
•
Reviewed and monitored the Group’s health and safety performance.
•
Reviewed the Group’s compliance with its environmental commitments.
•
Monitored the Group’s implementation of its Climate Change Strategy.
•
Reviewed the implementation of water conservation and efficiency measures at
Los Pelambres, addressing the water shortage generated by a 14-year drought.
•
Continued to monitor independent reviews of the safety of the Group’s tailings
storage facilities and assessed it versus industry best practice and the ICMM’s
GISTM standard.
•
Continued to monitor the Group’s community engagement model including the
Somos Choapa programme at Los Pelambres.
•
Assessed progress in the renewal of key water extraction and mining permits at
Zaldívar.
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 to facilitate flexible on-site, home-based and hybrid working
arrangements, with the goal of creating a more flexible, adaptable and resilient
organisation.
•
Reviewed the results of employee engagement surveys.
•
Reviewed the annual talent management exercise, including succession plans for
Directors, the CEO and the Executive Committee.
•
Reviewed employee performance, including the Company’s short-term and
long-term incentive scorecards.
•
Monitored progress on the implementation of the Group’s Diversity and Inclusion
Strategy with the goal for women to represent 30% of the workforce by the end
of 2025.
•
Monitored labour relations at the Group’s mining and transport operations and
reviewed results of collective bargaining negotiations, which were completed in
an atmosphere of respect and trust.
•
Monitored progress of the annual Human Resources plan.
•
Reviewed development of the 2023 Directors’ and CEO’s Remuneration Policy,
which was approved by shareholders at the 2023 AGM.
Competitiveness
Competitiveness is based on productivity gains, controlling costs and streamlining our processes.
•
Monitored results of the Group’s Cost and Competitiveness Programme,
including estimated future savings.
•
Approved key procurement and sales contracts.
•
Reviewed and monitored the Group’s operating and financial performance.
•
Reviewed the impact of the new mining royalty in Chile.
•
Monitored the impact of the new Chilean law on economic and environmental
crimes.
•
Reviewed actions taken to enhance cyber security.
•
Reviewed and approved the Group’s 2024 budget.
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 and
data analytics initiatives.
•
Reviewed progress on the implementation of the Group’s digital transformation
programme.
•
Monitored progress on Centinela’s and Los Pelambres’ integrated remote
operations centres.
•
Reviewed and approved Centinela’s in-pit tailings deposition project which aims
to allow for tailings deposition in pits no longer in use.
•
Reviewed the potential application of the Group’s proprietary Cuprochlor®-T
primary sulphide leach technology.
•
Reviewed an independent assessment of the Group’s innovation maturity,
evaluating strategy, governance, impact, innovation and visibility.
Growth
We have a portfolio of growth projects that allows us to remain competitive by developing sustainable operations over the long term.
•
Approved the acquisition of a 19% interest in Compañía de Minas Buenaventura
S.A.A., Peru’s largest publicly traded precious and base metals company.
•
Reviewed progress on the Los Pelambres Expansion project.
•
Reviewed progress on Phase 2 of the Los Pelambres Expansion project.
•
Approved the execution of the Centinela Second Concentrator project.
•
Reviewed Zaldívar’s permitting strategy to extend its water extraction permit
beyond 2025.
•
Monitored actions to advance alternatives at the Twin Metals project in
Minnesota.
•
Reviewed business development and exploration opportunities and activities.
•
Reviewed progress on the Group’s material Environmental Impact Assessments.
•
Reviewed and approved the divestment of mining properties in Chile that are not
considered sufficiently prospective for future exploitation by the Company.
•
Reviewed and approved the Group’s long-term price assumptions and
commercial parameters.
•
Reviewed and approved the base case and development case for the Group’s
assets, including a sensitivity for climate change effects.
•
Reviewed the Group’s mineral resources and ore reserves statement.
Antofagasta plc Annual Report 2023 127
Examples of key Board decisions in 2023 are provided here as
examples of how stakeholder considerations, and the factors set out
in section 172(1) of the Companies Act 2006, were central to the
decision-making processes. The Board took into account the different
interests of stakeholders but with an overarching focus, as required by
section 172(1), on acting in a way that would be most likely to promote
the success of the Company for the benefit of its members as a whole.
The likely long-term consequences of each decision were, among
other things, key considerations for the Board.
Centinela Second Concentrator Project
The Board has ultimate responsibility for the Group’s growth strategy
and objectives. The pursuit of robust economic growth options
embedded in the large mineral resources of our first-tier sites is a key
pillar of this strategy. In December 2023, after extensive review, the
Board approved the Company’s investment in the Centinela Second
Concentrator Project.
This brownfield expansion project is an investment of $4.4 billion to
construct an additional concentrator at Centinela, which will effectively
double the sulphide ore processing capacity at this operation, adding
an average of 170,000 tonnes of copper-equivalent production to the
Company’s portfolio.
1
It is envisaged that construction will take
approximately three years, and the Board has overseen the
arrangement of a financing package that comprises a direct funding
component from the project’s shareholders (being Antofagasta plc
and Marubeni Corporation) and project finance provided by lenders.
Critical path activities commenced following the project’s approval,
with full construction commencing after the execution of definitive
project finance documents during Q1 2024.
How the Board considered, and had regard to, the interests
of key stakeholders and the requirements of section 172(1)
The Board has monitored closely the advancement of this project,
considering the likely consequences of this decision on the long-term
interests of the Company’s shareholders and the Group’s employees
and contractors, suppliers, customers and other business partners.
•
In making this decision, the Board had regard to the need to foster
the Group’s business relationships with the workforce that will work
to construct the project, the local and international suppliers from
who will deliver the products required for construction, customers,
including off-takers who have committed to acquire the copper
concentrate that will be produced once the project has been
completed and the group of international lenders who have signed
a $2.5bn term loan to facilitate the construction of this project.
•
The Board also had regard to the impact of the project on the
community and the environment, securing a long term power
contract that ensures 100% electricity supply from renewable
sources, committing to the use of raw sea water and overseeing
the decision to use high-pressure grinding rolls which are
expected to reduce energy consumption. The project will leverage
more than 20 years of operational experience, utilizing existing
infrastructure and building on long-established relationships with
Centinela’s local communities.
Updated decarbonisation strategy and emissions
reduction targets
The Company met its previous emissions reduction target in 2022.
This was predominantly achieved by contracting renewable power
at all of the Group’s operations and facilitating a material reduction
in Scope 2 emissions. Following this achievement, the Board oversaw
work to develop a detailed decarbonisation pathway in 2023.
This work included the establishment of the relevant team within
the organisation, to review the Group’s existing emissions footprint,
understand modern technologies that may be relevant in reducing
emissions, and mapping a pathway to carbon neutrality.
As a result of the work carried out in 2023, the Board approved new
carbon emission reduction targets that were published in February
2024, with the Company’s detailed decarbonisation plan expected to
be announced in the first half of 2024.
The new targets set cover Scope 1, 2 and 3 emissions of greenhouse
gases, and the publication of updated targets follows the publication of
the Company’s inaugural Scope 3 emissions estimate in 2023. For
Scope 1 and 2 emissions combined, the Company is targeting a 50%
reduction in its absolute emissions by 2035, which factor into account
the Company’s planned increase in production during this time and
using 2020 as the baseline year. In relation to Scope 3 emissions, the
Company has set a target of a 10% reduction by 2030, with this
reduction on a projected basis.
How the Board considered, and had regard to, the interests of key
stakeholders and the requirements of section 172(1)
Combatting climate change is an integrated part of Antofagasta’s
strategy and the decision to approve new emissions reduction targets
considered the broad impact that climate change could have on the
long-term success of the Company. The effects of climate change on
the environment in Chile are clear, with changing environmental
conditions and water availability key concerns, and therefore the Board
understands the need to continue to build climate resilience into its
business model and activities.
Stakeholder engagement to
ensure delivery of our purpose
Stakeholder engagement
The Group maintains ongoing dialogue with stakeholders to understand their expectations and
concerns, and their views are carefully considered in the Board’s deliberations. A description of
the Group’s key stakeholders, their importance to the Group’s long-term sustainable success and
the key initiatives that are in place to recognise their interests and concerns, is set out in detail
within the Strategic Report on pages 1-117.
Further details on the Board’s workforce engagement mechanisms are set out on pages 130-131.
1. Average over the first ten years of production.
Antofagasta plc Annual Report 2023128
CORPORATE GOVERNANCE
•
In developing these targets, the Board was regularly updated on the
views, expectations and challenges facing the local communities
near our operations, suppliers and customers to understand the
current and future impact of climate change on these stakeholders
and their own capabilities, objectives, capacity and and ambitions
to address this global challenge.
•
The Board considered the specific actions that would allow these
emissions reduction targets to be achieved and the impact on
stakeholders including suppliers.
•
The Senior Independent Director (SID) of the Company hosts a
roadshow on an annual basis to understand the key concerns
relating to the governance and strategy of the Company. In 2023,
the Company’s SID, Francisca Castro, hosted a series of meetings
in both the United Kingdom and the Republic of Ireland, with
shareholders and proxy advisers. Feedback from these meetings
included a clear interest in the Company’s decarbonisation strategy
and future emissions targets, which was duly reported to the Board.
•
In setting the strategy of the Company relating to climate change,
and therefore the scale and scope of emissions targets that are
selected, the Board considers the expectations of different
stakeholder groups, with different levels of ambition shown by
individuals and groups. This is assessed against the practical
aspects of delivering emissions reduction targets, such as the
associated costs, availability (and affordability) of relevant
technologies and relevance in the settings where the Company’s
operations are located, with a suitable balance required to ensure
that the Company is responding appropriately to climate change,
but while also setting itself deliverable goals.
Board oversight of mining royalty and tax reform
bills in Chile
The Board continued to monitor government proposals relating to the
mining royalty in Chile, which concluded in August 2023 following
Presidential approval.
As announced by the Company in August 2023, the terms of the
revised royalty include a 1% ad valorem royalty on copper sales, and
a royalty ranging from 8% to 26% on operating profits depending on
each mining operation’s level of profitability, combined with a provision
establishing that total taxation (including corporate income, the new
royalty tax and tax on dividends) should not exceed 46.5% of
profitability. This new law came into effect at the beginning of 2024.
Since Centinela and Antucoya have tax stability agreements, the new
royalty rates will only apply to those operations from 2030.
How the Board considered, and had regard to, the interests
of key stakeholders and the requirements of section 172(1)
Throughout the process to review and amend the mining royalty
in Chile, the Board has closely monitored the progress of each
legislative proposal, with consideration of the likely consequences
of each proposal on the decisions that the Board makes for the
long term on the interests of the Company’s shareholders and the
Group’s employees and contractors, suppliers, customers and other
business partners.
Following the implementation of the new mining royalty in 2024, and
the associated increase in the financial burden imposed on mining
companies in Chile, the Board is continuing to review the fiscal impacts
of this legislation on the business environment in Chile.
The Board will continue to take the potential impacts on stakeholders
into account in its broader decision-making.
Investment in Compañía de Minas Buenaventura
S.A.A. (“Buenaventura”)
During 2023, the Board oversaw the approval by a wholly owned
subsidiary of the acquisition of a 19% interest in Compañía de Minas
Buenaventura S.A.A. (“Buenaventura”). Buenaventura is Peru’s
largest, publicly traded precious and base metals company and a major
holder of mining rights in Peru.
This investment, which complements the Group’s exploration
activities in recent years and significantly increases the Company’s
exposure to Peru’s highly prospective geology, was made in line with
the Company’s strategy of prioritising exploration and investment in
the Americas.
How the Board considered, and had regard to, the interests
of key stakeholders and the requirements of section 172(1)
The Board has ultimate responsibility for the Group’s growth strategy
and objectives. This strategy considers both organic and inorganic
growth opportunities. Growth is understood to be a key priority of
a number of stakeholders, with value accretive growth an enabler
for the Company to achieve its purpose.
Inorganic growth, which is growth in the Company’s asset base through
investments outside of the existing portfolio of assets, is considered on
a case by case basis as to whether it would provide additional value,
either financial or strategic, over the cost of acquisition.
The Company’s strategy has been to consider opportunities focused
on copper (and its by-products) in the Americas, with a particular
focus on Chile, Peru, the United States and Canada, as these are
locations that are highly attractive due to their geological potential,
mining activity, relative proximity, political and administrative
similarities, culture and language. The Board’s oversight of this
decision involved a close consideration of the likely consequences in
the long term. It was considered that this investment would help
deliver value to the Company’s stakeholders through geographical
diversification, an increase in the Company’s footprint in Peru’s
prospective geology, and exposure to a range of prospective projects
at different development stages.
The Board will continue to evaluate opportunities to deliver value
to all stakeholders.
Antofagasta plc Annual Report 2023 129
The Group maintains strong relations with its workforce, based on
trust, continuous dialogue and favourable working conditions. The
Board has carefully considered and reviewed the mechanisms in place
to allow the Board to understand the views of the Group’s workforce.
Ultimately, the Board has decided not to adopt any of the three
workforce engagement mechanisms recommended in the UK
Corporate Governance Code (a Director appointed from the workforce,
a formal workforce advisory panel or a designated non-executive
director). The Board considers that adopting any of these mechanisms
would interfere with the effective, structured and formal combination
of mechanisms already in place with a highly unionised workforce.
The Group’s workforce comprises 29,705 people, including employees,
permanent contractors and temporary contractors associated with
projects. Approximately 25% of the workforce are Group employees
and 75% are employees of contractor companies. More than 99% of
the Group’s employees are in Chile, and approximately 61% are based
in the Antofagasta and Coquimbo Regions of Chile, where the Group’s
operating companies are located.
Approximately 79% of the Group’s employees are unionised. This
number is close to 100% at the operator level. The Group maintains
ongoing dialogue with labour unions and key issues are raised with,
and discussed by, the Remuneration and Talent Management
Committee and the Board.
The Group has established control mechanisms to ensure that
contractor companies’, whose employees are often members of their
own labour unions, meet the Group’s standards and guidelines on
labour, environmental and social and ethical matters and adopt good
practices with regard to safe workplaces and the quality of
employment. Contractors’ employees receive the same minimum
protections as the Group’s employees under Chilean labour law and
the Group requires contractors to pay their employees ethical wages
– which as of December 2023 were 35% higher than the Chilean
legal minimum – and to provide other basic benefits, including life
and health insurance. These protections are subject to regular audits
by independent third parties to ensure full compliance with these
standards.
Below is a selection of the workforce engagement mechanisms that
the Board currently has in place:
•
Directors regularly visit the Group’s operations either individually or
in small groups throughout the year and engage informally with the
workforce and other parties to gauge overall workforce culture.
Impressions and views arising from these visits are reported to the
Board and its Committees, and related questions are raised with the
management team.
•
Labour relations matters, proposed labour negotiation limits and
feedback from labour negotiations are reported directly to the
Remuneration and Talent Management Committee and the Board
throughout the year as a key part of the CEO’s general updates to
the Board.
•
The CEO, the Chief Operations Officer, Vice President of Los
Pelambres, Vice President of Human Resources, and the General
Managers and HR Managers of each relevant operation meet with
union representatives during the year to share relevant information
and listen to concerns and suggestions, the results of which are
shared with the Remuneration and Talent Management Committee
and the Board.
•
The CEO met with union representatives during 2023, enabling the
CEO to share business performance and challenges associated with
the Group’s strategic framework, reinforce shared culture and
values and listen to concerns and ideas. The purpose of these
meetings is to foster a collaborative dialogue and working
environment.
•
Group-wide employee engagement surveys are conducted every
two or three years. These surveys are conducted by independent
third parties on behalf of the Group, and the results are reported to
the Remuneration and Talent Management Committee and the
Board. Engagement surveys were conducted across the Mining
Division in 2022, and the results were reviewed with the
Remuneration and Talent Management Committee and the Board.
During 2023, the Group conducted a psychosocial survey for all
employees and the results were reviewed with the Remuneration
and Talent Management Committee, and in general the risks
reported for Group employees were considered to be low. The
results of these activities are overseen by the Executive Committee
and reported to the Remuneration and Talent Management
Committee and the Board.
•
The Group’s workforce is encouraged to report any concerns to the
Ethics Committee through the confidential whistleblowing hotline.
Reports may be made anonymously. All reports are investigated and
reported to the Audit and Risk Committee and the Board.
During 2023, the Board applied feedback received from the workforce
to decisions related to talent retention initiatives, the oversight of
labour negotiations and the development of the Group’s Diversity and
Inclusion Strategy.
Fostering a positive culture
Mining is a long-term business with decades-long timescales. Our relationships with our
stakeholders are central to our long-term success and to our purpose of developing mining for
a better future. The Group’s governance structures ensure that the views and interests of
stakeholders, including our employees and contractors, are discussed in the boardroom and
considered as part of the Board’s deliberations.
Workforce engagement
Antofagasta plc Annual Report 2023130
CORPORATE GOVERNANCE
29,705
Total workforce
99%
Live in Chile
61%
Live in the Antofagasta
and Coquimbo Regions
Antofagasta plc Annual Report 2023 131
Board of Directors
ANTOFAGASTA PLC DIRECTORS’ BOARD MEETING ATTENDANCEKEY TO COMMITTEES
Number attended
Jean-Paul Luksic 10/10
Francisca Castro 10/10
Ramón Jara 10/10
Juan Claro 10/10
Andrónico Luksic C 7/10
Vivianne Blanlot 10/10
Jorge Bande 10/10
Nomination and Governance
Audit and Risk
Sustainability and Stakeholder
Management
Projects
Remuneration and Talent Management
Committee Chair
Chairman of the Board
1
6
2
7
3
8
4
9
5
10
11
Directors’ biographies
Biographical details for each Director are set out on the following pages. 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 regular and
ad hoc meetings held throughout the year demonstrated their commitment.
Number attended
Michael Anglin 10/10
Tony Jensen 10/10
Eugenia Parot 10/10
Heather Lawrence 6/6
Heather Lawrence joined the Board on 18 April 2023.
Jorge Bande retired from the Board on 31 December 2023.
Tracey Kerr joined the Board on 29 January 2024.
Antofagasta plc Annual Report 2023132
CORPORATE GOVERNANCE
1
Jean-Paul Luksic
Chairman
Independent: No
Appointed to the Board: 1990
Appointed Chairman: 2004
(Non-Executive since 2014)
Over 30 years’ experience with
Antofagasta, including responsibility for
overseeing development of the Los
Pelambres and El Tesoro (Centinela
Cathodes) mines
Current positions
•
Member of the Board of Consejo
Minero
•
Non-Executive Director of Quiñenco
SA and Quiñenco group listed
companies Banco de Chile and
Sociedad Matriz SAAM SA
•
Member of the Board of Centro de
Estudios Públicos, a not-for-profit
academic foundation in Chile
Previous roles
•
Chairman of Consejo Minero, the
industry body representing the largest
mining companies in Chile
•
CEO of the Group’s Mining division
2
Francisca Castro
Non-Executive Director
Independent: Yes
Appointed to the Board: 2016
Commercial engineer with over 25
years’ experience in industry, including
mining, energy, finance and public/
private infrastructure projects in the
United States and Chile
Current positions
•
Member of the Chilean Pension Funds
Risk Classification Committee
•
Director of SalfaCorp SA
•
Director of the Fraunhofer Chile
Research Foundation
•
Independent Director of Conexión
Kimal-Lo Aguirre S.A., a power
transmission Company in Chile
Previous roles
•
Executive Vice-President of Business
and Subsidiaries at Codelco
•
General Co-ordinator of Concessions
at Chile’s Ministry of Public Works
•
Various roles within Chile’s Finance
Ministry and the World Bank,
Washington DC
•
Member of the independent Technical
Panel of Chile’s Public Works
Concessions
3
Ramón Jara
Non-Executive Director
Independent: No
Appointed to the Board: 2003
Lawyer with considerable legal and
commercial experience in Chile
Current positions
•
Chairman of Fundación Minera Los
Pelambres (charitable foundation)
•
Director of Fundación Educacional
Luksic (charitable foundation)
•
Member of the Advisory Council of
Centro de Estudios Públicos, a
not-for-profit academic foundation in
Chile
•
Member of the Board of the Centre of
Arbitration of the Chilean Chamber of
Commerce
•
Chairman of the Chile Australia
Business Committee and Vice
Chairman of the Chile Japan Business
Committee of Sociedad de Fomento
Fabril (Chilean Industrial Council)
•
Member of the APEC Business
Advisory Council (ABAC)
Previous roles
•
Partner, Jara del Favero Abogados
•
Director of Empresa Nacional del
Petróleo (ENAP)
•
Vice President, SONAMI (National
Mining Association)
4
Juan Claro
Non-Executive Director
Independent: No
Appointed to the Board: 2005
Extensive industrial experience in Chile,
including an active role representing
Chilean industrial interests nationally
and internationally
Current positions
•
Chairman of Coca-Cola Andina SA
•
Director of Melón SA and
AgrosuperSA
•
Member of the Board of Centro de
Estudios Públicos, a not-for-profit
academic foundation in Chile
•
Country Adviser, Goldman Sachs
Previous roles
•
Chairman of Energía Coyanco SA
•
Chairman of the Sociedad de
Fomento Fabril (Chilean Industrial
Council)
•
Chairman of the Confederación de la
Producción y del Comercio (Chilean
Business Confederation)
•
Chairman of the Consejo Binacional
de Negocios Chile-China (Council for
Bilateral Chile-China Business)
5
Andrónico Luksic C
Non-Executive Director
Independent: No
Appointed to the Board: 2013
Extensive experience across a range of
business sectors throughout Chile,
Latin America and Europe
Current positions
•
Member of the International Business
Leaders’ Advisory Council for the
Mayor of Shanghai; the Chairman’s
International Advisory Council at the
Council of the Americas; the Global
Board of Advisors at the Council of
Foreign Relations; and the Brookings
Institution’s International Advisory
Council
Previous roles
•
Director of Nexans SA, a Company
listed on Euronext Paris and part
owned by Quiñenco SA
•
Chairman of Quiñenco SA and
Compañía Cervecerías Unidas SA,
and Vice Chairman of Banco de Chile
and Compañía Sudamericana de
Vapores SA, all of which are listed
companies in the Quiñenco group
6
Vivianne Blanlot
Non-Executive Director
Independent: No (since 27 March
2023)
Appointed to the Board: 2014
Economist with extensive experience
in public and private energy, mining,
water and environmental sectors in
Chile
Current position
•
Director of Colbún SA, an energy
company listed in Chile
Previous roles
•
Executive Director of the Comisión
Nacional de Medio Ambiente (Chile’s
Environmental Agency)
•
Undersecretary of the Comisión
Nacional de Energía (Chile’s National
Energy Commission)
•
Chile’s Minister of Defence
•
Director of Scotiabank Chile
•
Director of Empresas CMPC SA, a
pulp, paper and packaging Company
listed in Chile
•
Director of Instituto Chileno de
Administración Racional de Empresas
(ICARE), a business think tank in Chile
•
Member of Consejo para la
Transparencia (Transparency
Council), the Chilean body responsible
for enforcing transparency in the
public sector
7
Michael Anglin
Non-Executive Director
Independent: Yes
Appointed to the Board: 2019
Mining engineer with over 30 years’
experience in base metals, including
the development, construction and
operation of large-scale mining
operations in the Americas.
Current positions
•
Lead Independent Director of
SSR Mining Inc
•
Adviser to IntelliSense.io
Previous roles
•
Vice President Operations and Chief
Operating Officer of BHP Base Metals
•
Director of EmberClear Corp
•
Director of Tulla Resources, Australia
8
Tony Jensen
Non-Executive Director
Independent: Yes
Appointed to the Board: 2020
Mining engineer with over 35 years’
mining experience in the United States
and Chile in operational, financial,
business development and
management roles.
Current positions
•
Director of Black Hills Corporation
Previous roles
•
Director of Golden Star Resources
Limited
•
President, CEO and Director of Royal
Gold Inc
•
Mine General Manager of the Cortez
joint venture in Nevada and in
treasury, business development and a
wide range of other operating roles
with Placer Dome in the USA and
Chile
•
Member of the University Advisory
Board for the South Dakota School of
Mines and Technology
9
Eugenia Parot
Non-Executive Director
Independent: Yes
Appointed to the Board: 2021
Civil biochemical engineer with over 35
years’ experience, working for leading
engineering and consulting companies
providing services to some of the
largest mining projects in Latin
America in the areas of environment,
sustainability and mine waste
management.
Previous roles
•
Vice President of Latin America,
Regional President for South America
and Managing Director for Chile,
Golder Associates
•
Director on Golder’s holding Company
board and member of the Audit and
Finance and Investments Committees.
•
Member of the Boards of Golder
South America, Chile, Peru and
Argentina.
10
Heather Lawrence
Non-Executive Director
Independent: Yes
Appointed to the Board: 2023
Qualified chartered accountant with
over a decade working in senior roles
within corporate finance and
investment banking, with particular
experience across industrial and
transportation businesses.
Current positions
•
Non-executive director and audit
committee chair of Melrose
Industries plc
Previous roles
•
Non-executive director of Wizz Air
Holdings
•
Non-executive director and audit
committee chair of FlyBe Group plc
11
Tracey Kerr
Non-Executive Director
Independent: Yes
Appointed to the Board: 2024
Geophysicist with extensive experience
in safety, sustainability, operations and
exploration in global mining businesses.
Current positions
•
Non-executive director at Hochschild
Mining plc
•
Non-executive director at Jubilee
Metals Group plc
•
Non-executive director at Weir
Group plc
Previous roles
•
Non-executive director at Polymetal
International Plc
•
Senior Executive at major mining
companies including Anglo American,
Vale and BHP
Antofagasta plc Annual Report 2023 133
The Board comprises 11 Directors with a broad and complementary set of technical skills,
educational and professional experience, nationalities, personalities, cultures and perspectives.
Board balance and skills
Director
1
Independence
CEO experience
Mining industry
experience
Mining operations
Board governance
Financial
Legal or
Accounting
2
Executive
compensation
Latin American
experience
UK market
Project
management
Sustainability
3
Energy experience
Government
relations
Communication
Jean-Paul Luksic
Francisca Castro
Ramón Jara
Juan Claro
Andrónico Luksic C
Vivianne Blanlot
Michael Anglin
Tony Jensen
Eugenia Parot
Heather Lawrence
Tracey Kerr
1. Heather Lawrence joined the Board in April 2023, Jorge Bande retired from the Board in December 2023 and Tracey Kerr joined the Board in January 2024.
2. Ramón Jara is a Lawyer. Heather Lawrence is a Chartered Accountant.
3. 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.
Board balance
Board skills matrix
1
6
4
Chairman
Independent
Non-Independent
6
5
Male
Female
5
3
3
0-5 years
6-10 years
11+ years
1
1
2
7
UK
Australia
USA
Chile
Independence
1
Gender diversity
2
Tenure Nationality
3
A balance of skills
and experience
1. The Board reviews the independence of Directors annually. The Board has carefully
considered the independence of all Directors and is satisfied that Francisca Castro,
Michael Anglin, Tony Jensen, Eugenia Parot, Heather Lawrence and Tracey Kerr
continue to be independent in character and judgement and that there are no
relationships or circumstances that are likely to affect, or could appear to affect, their
judgement. Further details are provided on page 135.
2. Further details on the Board’s diversity policy can be found on pages 141-143.
3. The Company has met the Parker Review target and in 2023 more than half the Board
identified as being from an ethnic minority background according to the criteria in the
Parker Review survey, as shown on page 143. As noted throughout this Annual Report,
the Group’s footprint is primarily in Chile, where ethnicity profiles and representation in
society differ significantly from those in the UK. Nevertheless, the Board recognises that
the mining industry is international, and therefore the Board includes several Directors
from outside Chile in support of its vision and strategy.
Antofagasta plc Annual Report 2023134
CORPORATE GOVERNANCE
Roles in the boardroom
Non-Executive Chairman
Jean-Paul Luksic
Leads the Board and ensures its
effectiveness overall.
•
Promotes the highest standards of integrity,
probity and corporate governance.
•
Sets the agenda for Board meetings in
consultation with the Senior Independent
Director, CEO and the Company Secretary.
•
Chairs meetings and ensures that there is
adequate time for discussion of all agenda
items, focusing on strategic, rather than
routine, issues.
•
Promotes a culture of openness and debate
within the Board by facilitating constructive
Board relations and the effective
contribution of all Directors.
•
Oversees Director induction, development
and performance reviews.
•
Leads relations with shareholders, including
the Group’s controlling shareholders.
Independent Non-Executive
Directors
2
Francisca Castro
Michael Anglin
Tony Jensen
Eugenia Parot
Heather Lawrence
Tracey Kerr
Ensure that no individual or small group of
individuals can dominate the Board’s
decision-making.
•
Meet the independence criteria set out in
the UK Corporate Governance Code.
2
•
Have no connection with the Group or any
other Director which could be perceived to
compromise independence.
•
Provide a range of outside perspectives to
the Group and encourage robust debate
with, and challenge of, the Group’s
executive management.
CEO
Iván Arriagada
Leads the implementation of the Group’s
strategy set by the Board.
•
Manages the overall operations and
resources of the Group.
•
Leads the Executive Committee and
ensures its effectiveness in all aspects
ofitsduties.
•
Provides information and makes
recommendations to the Board regarding
the Group’s day-to-day activities and
long-term plans.
Executive Committee members
Present proposals, recommendations and
information to the Board within their areas
of responsibility.
•
Support the CEO in the implementation of
the Group’s strategy set by the Board.
The Group’s CEO, Iván Arriagada, is not a Director, reflecting the law and practice in Chile.
1
Despite this, interaction between the
Board and executive management is as you would expect between Non-Executive Directors and management in a typical UK-listed
Company. The Board considers that there are considerable benefits associated with having a Board of exclusively Non-Executive
Directors; it provides a broad range of perspectives and encourages robust debate with, and independent oversight of, the Group’s
executive management.
Non-Executive Directors
3
Ramón Jara
Juan Claro
Andrónico Luksic C
Vivianne Blanlot
4
Provide a range of outside perspectives to
the Group and encourage robust debate
with, and challenge of, the Group’s
executive management.
•
The Board does not consider these
Directors to be independent because they
do not meet one or more of the
independence criteria set out in the UK
Corporate Governance Code.
•
Ensure that no individual or small group of
individuals can dominate the Board’s
decision-making.
Senior Independent Director
Francisca Castro
Provides a sounding Board for the Chairman
and supports the Chairman in the delivery of
his objectives as required.
•
Where necessary, acts as an intermediary
between the Chairman and the other
members of the Board or the CEO.
•
Acts as an additional point of contact for
shareholders, focusing on the Group’s
governance and strategy, and gives
shareholders an alternative means of
raising concerns other than with the
Chairman or senior management.
Company Secretary
Julian Anderson
Ensures that Directors have access to the
information they need to perform their
roles.
•
Provides a conduit between Board and its
Committees and a link between the Board
and management.
•
Advises the Board on corporate
governance and supports the Board in
applying the UK Corporate Governance
Code and complying with the UK listing
regime and obligations.
1. Chilean law prohibits CEOs of listed companies from being Directors of those companies.
The CEO and CFO attend all Board meetings. The CEO also attends all Board Committee
meetings and there is regular formal and informal dialogue between management and
the Board.
2. The Board reviews the independence of Directors annually. The Board has carefully
considered the independence of all Directors and is satisfied that Francisca Castro,
Mike Anglin, Tony Jensen, Eugenia Parot, Heather Lawrence and Tracey Kerr continue
to be independent in character and judgement and that there are no relationships
or circumstances that are likely to affect, or could appear to affect, their judgement.
3. Ramón Jara provides advisory services to the Group. Andrónico Luksic C is the brother
of Jean-Paul Luksic, the Chairman of the Company, and until 31 December 2023 served
as Chairman of Quiñenco SA and Chairman or Director of certain of Quiñenco’s other
listed subsidiaries. Jean-Paul Luksic is a Non-Executive Director of Quiñenco and some
of its listed subsidiaries. Like Antofagasta plc, Quiñenco is controlled by a foundation in
which members of the Luksic family are interested. Ramón Jara, Juan Claro and Vivianne
Blanlot have served on the Board for more than nine years from the date of their first
election.
4. Vivianne Blanlot was an independent Non-Executive Director until 27 March 2023, the
ninth anniversary of her appointment to the Board.
The division of responsibilities between the Chairman, the CEO, and the Senior Independent Director is available on the Company’s website at antofagasta.co.uk.
Board and senior management’s
roles and responsibilities
Antofagasta plc Annual Report 2023 135
Executive Committee biographies
Members of the Executive
Committee
IVÁN ARRIAGADA
CEO appointed in 2016
Joined the Group in 2015
•
Commercial engineer and
economist with more than 30
years’ international experience in
the mining and oil and gas
industries
Previous roles
•
Chief Financial Officer of Codelco
•
Various positions over six years at
BHP Base Metals, including
President of Pampa Norte (Spence
and Cerro Colorado), Vice President
Operations and Chief Financial
Officer of the Base Metals division
•
Almost 15 years’ experience with
Shell in Chile, the United Kingdom,
Argentina and the United States
GONZALO SÁNCHEZ
Vice President of Sales
appointed in 2004
Joined the Group in 1996
•
Civil engineer with over 25 years’
experience in marketing and metals
hedging
Previous roles
•
Deputy Commercial Director of
Antofagasta Minerals
•
Copper sales at Codelco
MAURICIO LARRAÍN
Vice President of Planning and
Technical Services appointed in
2023
Joined the Group in 2017
•
Civil mining engineer and Master of
Sciences (Mineral Economics) with
over 25 years’ experience in mining
Previous roles
•
Vice President of Northern
Operations
•
General Manager of Los Pelambres
•
General Manager at Codelco’s El
Teniente Division
•
Operations Manager at El Teniente
•
Mine Planning Corporate Manager
of Codelco
•
Various positions at Codelco and
Los Pelambres
OCTAVIO ARANEDA
COO appointed in 2023
Joined the Group in 2023
•
Mining engineer with a Master’s
Degree in Minerals Economics with
more than 30 years’ experience in
the mining industry
Previous roles
•
CEO of Codelco
•
Operations Vice President
(Center-South and North) at
Codelco, General Manager El
Teniente Division of Codelco
JORGE BERMÚDEZ
Vice President of Projects
appointed in 2024
Joined the Group in 2024
•
Mining engineer with over 40
years’ experience in open pit and
underground mining and
engineering
Previous roles
•
COO Latin America & Caribbean at
Canadian consulting firm WSP
Global
•
VP & GM M&M Americas at
American international technical
professional services firm Jacobs
•
Numerous roles over 20 years at
Fluor Corporation
MAURICIO ORTIZ
CFO appointed in 2020
Joined the Group in 2015
•
Electrical engineer with two Master
of Sciences degrees (Metals and
Energy Finance and Electrical
Engineering) and 15 years’
experience in the energy, mining
and railway industries
Previous roles
•
General Manager of FCAB
(Transport division)
•
Business Development Manager
of Antofagasta Minerals
•
Finance Manager at Codelco –
Chuquicamata
•
Business Development Principal
at Rio Tinto plc, London
•
Various operating project roles at BHP
GEORGEANNE BARCELÓ
Vice President of People and
Organisation appointed in 2022
Joined the Group in 2021
•
Human resources specialist with a
degree in Law and a Master’s
degree in Strategic Human
Resources Management and more
than 20 years’ experience in
international and national companies
across a range of sectors, including
insurance and industry
Previous roles
•
Labour Relations Manager of
Antofagasta Minerals
•
Corporate Director of People at
Bupa Chile
•
Human Resources Vice President
at Komatsu Latin America
KATHARINA JENNY
General Manager – FCAB
(Transport division) appointed
in 2019
Joined the Group in 2016
•
Mining engineer and MBA, with
over 15 years’ experience in mining
Previous roles
•
Health and safety Manager at
Antofagasta Minerals
•
Productivity and Costs Manager,
and Safety Manager at Codelco
•
Various roles at BHP, including
mine planning, health and safety
and environment
Antofagasta plc Annual Report 2023136
CORPORATE GOVERNANCE
PATRICIO ENEI
Vice President of Legal
appointed in 2014
Joined the Group in 2014
•
Lawyer and MBA, with over 20
years’ experience in mining
Previous roles
•
General Counsel at Codelco
•
Corporate Affairs Manager at
Escondida
•
Senior lawyer at BHP Billiton in
Chile
•
Chief Legal Counsel at Collahuasi
•
Lawyer at the Instituto de
Normalización Previsional and in
private practice
ALEJANDRO VÁSQUEZ
Vice President of Los
Pelambres Operations
appointed in 2022
Joined the Group in 2022
•
Civil mining engineer with over
30 years’ experience in mining
Previous roles
•
Vice President, South America at
Teck Resources
•
President of Pampa Norte (BHP’s
Spence and Cerro Colorado
operations)
•
General Manager of the Yandi iron
ore operation in Australia
•
Vice President of Operations at
Escondida
CARLOS ESPINOZA
General Manager – Centinela
appointed in 2020
Joined the Group in 2010
•
Civil mining engineer and MBA,
with over 25 years’ experience in
mining
Previous roles
•
Planning and Development
Manager at Centinela
•
Head of Mining Operations at
Centinela
•
Operations Manager at Michilla
•
Planning positions at Minera
Escondida and Minera Spence
IVO FADIC
General Manager – Antucoya
appointed in 2023
Joined the Group in 2016
•
Mechanical engineer and Master in
Asset Management and
Maintenance, with nearly 20 years’
experience in mining
Previous roles
•
Operations Manager at Los
Pelambres
•
Maintenance Manager at Los
Pelambres
•
Maintenance Manager –
Concentrator Plants at Minera
Escondida
•
Engineering Manager –
Concentrador Plants at Minera
Escondida
LEONARDO GONZÁLEZ
General Manager – Zaldívar
appointed in 2023
Joined the Group in 2015
•
Civil mining engineer and MBA,
with 25 years’ experience in
mining
Previous roles
•
General Manager at Antucoya
•
General Manager at Zaldívar
•
Operations Manager at Zaldívar
•
Mining Superintendent at Minera
Doña Inés de Collahuasi
ANDRÓNICO LUKSIC L
Vice President of Development
appointed in 2015
Joined the Group in 2006
•
Business administrator with broad
mining experience in sales,
exploration, business development
and general management
Previous roles
•
Corporate Manager in the Mining
division
•
Director, Antofagasta Minerals,
Toronto Office
•
Various positions at Banco de Chile
RENÉ AGUILAR
Vice President of Corporate
Affairs and Sustainability
appointed in 2017
Joined the Group in 2017
•
Industrial psychologist with 20
years’ experience in mining,
including in sustainability, safety,
human resources and corporate
affairs
Previous roles
•
Group Head of Safety at Anglo
American, London
•
Vice President of Corporate Affairs
and Sustainability at Codelco
•
Health and Safety Director of the
International Council on Mining and
Metals (ICMM), London
ALAN MUCHNIK
Vice President of Strategy and
Innovation appointed in 2021
Joined the Group in 2016
•
Civil engineer, Master’s degree in
engineering and MBA
Previous roles
•
Group Innovation and Energy
Manager, and Growth Assets,
Energy and Innovation Portfolio
Manager of Antofagasta Minerals
•
Several positions in strategy,
planning, studies and business
development over 10 years at BHP
(Chile and the USA)
Members of the Executive Committee that do not report directly to the CEO
Antofagasta plc Annual Report 2023 137
The Board’s Committees ensure that Board deliberations are focused on key issues and that
proposals are submitted after thorough debate and rigorous challenge.
Each Committee provides a forum to allow the views and perspectives of stakeholders to be discussed so that they are represented in the
Board’s deliberations.
Nomination and Governance Committee
Key responsibilities
•
Corporate governance framework
•
Succession planning for the CEO and the Board
•
Board and Committee composition
•
Board nominations
•
Board effectiveness reviews
Focus areas for 2023
•
Monitoring shareholder and proxy adviser feedback on Governance
•
Reviewing succession planning for Board and Committee roles
•
Reviewing Board and Committee composition
•
Reviewing Directors’ conflict of interest disclosures
•
Reviewing Board and Committee evaluations
•
Reviewing Governance reporting
Audit and Risk Committee
Key responsibilities
•
Financial reporting
•
External audit
•
Internal audit
•
Risk management
•
Internal control
•
Compliance
Focus areas for 2023
•
Monitoring proposed regulatory changes relating to internal controls
•
Reviewing the Company’s half-year and year-end financial results
•
Reviewing accounting and tax matters
•
Assessing financial controls and reporting
•
Monitoring risk management and compliance
•
Assisting the Board with updates to the Group’s risk appetite assessment
•
Monitoring Internal Audit and the external auditor
•
Overseeing plans for a smooth transition from PwC to Deloitte as external auditor
for the 2024 financial year
Sustainability and Stakeholder Management Committee
Key responsibilities
•
Policies and commitments
•
Health and safety
•
Community relations
•
Environmental and social matters
•
Stakeholder engagement
Focus areas for 2023
•
Reviewing key policies for the Group’s long-term sustainable success
•
Monitoring overall environmental compliance
•
Reviewing social and territorial strategies
•
Overseeing measures to protect the health and safety of the Group’s workforce
•
Reviewing climate change strategy implementation
•
Reviewing the Group’s water strategy
•
Reviewing the Group’s implementation of the Global Tailings Standard and reports
on the Group’s tailings storage facilities
•
Reviewing sustainability reporting
Projects Committee
Key responsibilities
•
Oversight of project standards, guidelines and best
practices
•
Project development lifecycle matters
•
Project reviews
•
Lessons learned from completed projects
Focus areas for 2023
•
Monitoring preparations for the Centinela Second Concentrator project investment
decision, including the final investment proposal
•
Monitoring progress in the execution of the Los Pelambres Expansion Project and
lessons learned
•
Reviewing Centinela’s in-pit tailings project
•
Reviewing projects for the future growth of Los Pelambres
Board committees
Find out more online at antofagasta.co.uk/bc
Introduction to the Committees
Antofagasta plc Annual Report 2023138
CORPORATE GOVERNANCE
Remuneration and Talent Management Committee
Key responsibilities
•
Remuneration governance
•
Directors’ remuneration
•
Executive remuneration
•
Group pay structures
•
Talent management and succession planning for the
Executive Committee
•
Employee engagement
•
Talent retention
•
Diversity and inclusion
•
HR Planning
Focus areas for 2023
•
Monitoring remuneration-related regulatory changes
•
Reviewing and approving the 2023 Directors’ and CEO’s Remuneration Policy and
2022 Directors’ and CEO’s Remuneration Report
•
Monitoring Directors’ and CEO’s remuneration and reviewing proposed changes
•
Applying the Group’s executive remuneration framework including reviewing
short-term and long-term incentive plans and market benchmark surveys
•
Reviewing employee engagement survey results
•
Reviewing talent management, retention mechanisms and Executive Committee
succession plans
•
Reviewing performance appraisals for the CEO and Executive Committee
•
Reviewing the 2023 HR Plan
•
Reviewing gender pay gap and CEO pay ratio
Maintenance workshops at Los Pelambres.
Antofagasta plc Annual Report 2023 139
Maintaining an
effective Board
2023 membership and meeting attendance
Number attended
Jean-Paul Luksic (Chair) 4/4
Vivianne Blanlot 2/2
Tony Jensen 4/4
Francisca Castro 2/2
Vivianne Blanlot rotated off the Committee and Francisca Castro joined the
Committee on 14 March 2023.
Other regular attendees included the Company Secretary.
The Committee meets as necessary and at least twice per year.
Except for the Chairman, all Committee members were independent while serving
on the Committee in 2023.
Key responsibilities
The Nomination and Governance Committee supports the Board in
ensuring that the Group has effective governance structures in place,
and that the Board and its Committees are appropriately staffed and
operate effectively. The Committee identifies qualified individuals to join
the Board, recommends any changes to the composition of the Board
and its Committees and monitors an annual process to assess Board
effectiveness.
This involves:
•
monitoring trends, initiatives and proposals in relation to corporate
governance
•
overseeing and facilitating annual reviews of the Chairman, the
Board, its Committees and individual Directors, including externally
facilitated reviews
•
evaluating and overseeing the balance of skills, knowledge and
experience on the Board and its Committees
•
monitoring the independence of Directors
•
overseeing Board succession plans and leading the process to
identify suitable candidates to fill vacancies, nominating such
candidates for approval by the Board and ensuring that
appointments are made on merit and against objective criteria,
including gender
We are committed to promoting
the participation of women on our
Board, as well as in senior
management positions and, just
as importantly, in the Group’s
workforce. We believe that such
an increase will benefit the
Group, the industry and Chile.
JEAN-PAUL LUKSIC
Chair of the Nomination
and Governance Committee
•
overseeing the induction of new Directors and the development
of all Directors
•
overseeing CEO succession plans
•
reviewing the Group’s governance reporting
Key activities in 2023
Corporate governance
•
Monitored the fulfilment of the UK Corporate Governance Code (the
Code) requirements.
•
Monitored potential changes to the UK Corporate Governance Code.
•
Reviewed Directors’ declarations on potential conflicts of interest.
•
Reviewed the Governance section of the 2022 Annual Report and
recommended it to the Board for approval.
•
Reviewed arrangements for the 2023 AGM and publication of the
2023 AGM Notice.
•
Reviewed feedback from investors and proxy advisers on the
shareholder resolutions tabled at the 2023 AGM.
•
Reviewed shareholder and proxy adviser feedback on governance.
Succession planning
•
Reviewed and endorsed detailed succession plans for the Board,
the Senior Independent Director, the Committees, and the CEO.
•
Continued to provide input to the Remuneration and Talent
Management Committee in relation to succession plans for
the Executive Committee (excluding the CEO).
Board and Committee composition
•
Reviewed the independence of all Directors, making
recommendations to the Board.
•
Managed the global search carried out for two independent
Non-Executive Directors.
•
Interviewed and considered potential Board candidates and
proposed the appointment of Heather Lawrence.
•
Reviewed and proposed changes to Committees’ composition.
•
Reviewed and proposed the nomination of Francisca Castro
as Senior Independent Director.
•
Reviewed and endorsed updates to the Board’s skills matrix.
Board effectiveness reviews
•
Oversaw the implementation of recommendations arising from the
2022 external evaluation of Board and Committees’ performance by
Clare Chalmers Limited, an external Board evaluation consultancy.
•
Oversaw the 2023 internal evaluation of the Board and Committees.
•
Requested a performance review of the Chairman by Directors,
led by the Senior Independent Director, and of individual Directors,
led by the Chairman.
Antofagasta plc Annual Report 2023140
CORPORATE GOVERNANCE
Nomination and Governance Committee report
Q.What is the Committee’s role in relation to succession planning?
The Committee oversees and develops succession plans for the
Board and the CEO. Succession planning for the Executive
Committee (excluding the CEO) and broader employee talent
management is overseen by the Remuneration and Talent
Management Committee.
The activities of the Remuneration and Talent Management
Committee are set out on page 156-178.
During 2023, the Committee reviewed the Board’s succession plan
and recommended changes to Committee memberships, the
appointment of independent Non-Executive Director Heather
Lawrence, the appointment of Francisca Castro to the position of
Senior Independent Director and advanced with the process for the
selection of Tracey Kerr to be appointed as an independent
Non-Executive Director in 2024.
Q.How does the Committee address the process of CEO
succession?
The Committee regularly reviews succession plans for the CEO in
the case of either a planned or unplanned departure. This involves
defining the character, skills, experience and expertise required to
fulfil the role, as well as the assessment of potential internal
candidates and their development needs. The consideration of both
external and internal candidates for the role of CEO ensures a clear
assessment of relative strengths and weaknesses and provides a
useful international benchmark.
Q.What is the scope of the Board’s succession planning?
The Board’s succession plan is reviewed formally at least once a
year and addresses Board size, Committee structure and
composition, skills on the Board, Board and Committee members’
tenure, independence of Directors, diversity (including gender),
Board roles, Board policies and individual succession plans for all
Board and Committee positions. Succession plans include
contingency plans in the event of an unexpected departure, medium-
term plans for orderly replacement of current Board members and
long-term plans linking strategy with the skills needed on the Board
in the future.
There is a Board approved succession plan for my Board roles in
the event of an unexpected departure.
Q.How does the Board identify the appropriate skills for new Board
candidates?
The Board maintains a Board skills matrix and the Committee
reviews the balance of skills, experience and expertise on the Board
at least annually. This process enables the Board and the Committee
to identify the skills required when making new appointments to the
Board and to instruct search firms to identify candidates who fit
these criteria.
Q.What steps does the Committee take to identify and appoint new
Directors?
The Committee discusses relevant profiles for future appointments
and potential candidates, taking into account the results of Board
effectiveness reviews, as shown on page 143, the Group’s purpose,
vision, values and strategy, as shown on page 126-127, the Board’s
diversity policy (below) and the core competencies and areas of
expertise on the Board, as shown on page 134.
To assist with making new appointments to the Board, the
Committee appoints independent external search consultancies with
no connection to the Group. In 2023, the Committee appointed
Spencer Stuart, a signatory to the voluntary code of conduct for
executive search firms to address gender diversity on corporate
practices for related search processes, to assist with the searches
that resulted in the appointment of independent Non-Executive
Directors Heather Lawrence and Tracey Kerr.
Spencer Stuart were briefed on the skills and experience of the
existing Directors and asked to identify potential candidates who
would best meet the required criteria including their relevant
experience, skills, leadership capabilities, contribution to Board
diversity and whether they had sufficient time to devote to the role.
Also important for overall Board effectiveness is that potential
candidates are proficient in Spanish and, preferably, have relevant
mining or extractive industry experience.
The searches that resulted in these appointments aimed to identify
candidates with UK market experience, recent and relevant financial
experience, mining experience and sustainability experience. The
external search consultancy was instructed to access the widest
possible talent pool and, as has been the case for many years, to
specifically identify potential female candidates.
Q.What support does the Company provide to facilitate induction
and assist with professional development?
Induction
New Directors receive a thorough induction on joining the Board.
This includes meetings with the Chairman, other Directors, the CEO
and Executive Committee members; briefings on the Group’s
strategy, UK corporate governance, operations, projects and
exploration activities; and visits to the Group’s operations.
Continuing personal development
Directors receive an annual briefing on governance, legal, regulatory
and market developments that are relevant to Directors of UK-listed
companies, complemented by discussions on Board-related matters.
Directors have access to, and are encouraged to regularly attend,
round-table discussions, seminars and other events that cover
topics relevant to the Group and their roles.
Resources
The Company provides Directors with the necessary resources to
maintain and enhance their knowledge and capabilities.
All Directors have access to management and to such information
as they need to discharge their duties and responsibilities fully and
effectively.
Directors are also entitled to seek independent professional advice
concerning the affairs of the Group at the Company’s expense.
Q.What is the Board’s position in relation to diversity?
The Company’s Diversity and Inclusion Policy reflects the Board’s
belief in the benefits of diversity and its conviction that more diverse
companies attract and maintain the best talent and achieve stronger
overall performance. The Board considers a broad definition of
diversity when setting policies, and appointing Directors and staffing
its Committees (including the Nomination and Governance, Audit and
Risk and Remuneration and Talent Management Committees),
including gender, disability, nationality, educational and professional
experience, personality type, culture and perspective.
Diversity, inclusion and succession
planning
Antofagasta plc Annual Report 2023 141
The Committee has worked hard to ensure that the Board and its
Committees are suitably diverse according to these criteria. The
Board reviews its effectiveness in meeting diversity goals each year
as part of the annual Board and Committees’ evaluation process.
The Company has met the Parker Review target and more than half
the Board members identify as being from an ethnic minority
background according to the Parker Review and UK Listing Rules
criteria as shown in the diversity tables on page 143. As noted
throughout this Annual Report, the Group’s activities are focused in
Chile where ethnicity profiles and representation in society differ
significantly from those in the UK. Nevertheless, the Board
recognises that the mining industry is international, and in support of
its vision and strategy also includes Directors from the United
Kingdom, United States and Australia.
Gender diversity is a pillar of the Group’s diversity and inclusion
strategy. The Board supports the important work performed by the
FTSE Women Leaders’ Review in pursuing a 40% target for women
on FTSE 350 boards and on executive committees and their direct
reports and has met the Listing Rule targets for at least 40% of
women on the Board and of at least one woman in the Chair, Senior
Independent Director, CEO or CFO roles, as shown in the diversity
tables on page 143.
Since 2014, five of the eight Board appointees (63%) have been women,
while ensuring that appointments continue to be made on merit.
At the date of this report, there are five women on our Board of 11
Directors (45%).
Each of the Nomination and Governance, Audit and Risk and
Remuneration and Talent Management Committees include female
Directors and Directors from ethnic minority backgrounds and more
than 50% of the members of the Audit and Risk and Remuneration
and Talent Management Committees are female.
We are committed to promoting the participation of women on our
Board, as well as in senior management positions and, just as
importantly, in the Group’s workforce. We believe that such an
increase will benefit the Group, the industry and Chile.
Q.What policies are in place to promote a diverse pipeline of talent
for the future?
The Group is committed to developing a diverse pipeline of talent
that will widen the pool of female and other diverse candidates for
Board and leadership positions in the future. In this, the Group is
leading the way in Chile, particularly with female participation in the
workforce, where Chile remains behind more developed economies
despite considerable progress in recent years.
In 2019, we sponsored the creation of a Chilean chapter of the 30%
Club, the campaign launched in the UK in 2010 to foster gender
balance on companies’ boards and in senior management positions.
To further promote diversity at the Executive Committee level and
below, the current Diversity and Inclusion Policy was approved
following an in-depth exercise to assess whether the Group’s
existing diversity and inclusion model was appropriate. This included
interviews with stakeholders, a benchmarking exercise and a
comprehensive review of the Group’s policies and processes.
The review identified structural impediments that needed to be
addressed to achieve a sustained improvement in the Group’s
diversity and inclusion model and these issues were addressed in
the first years following approval of the new policy. A Diversity and
Inclusion roadmap was developed to provide guidelines, best
practices and objectives, seeking to integrate diversity and inclusion
principles and values into the Company’s practices. The roadmap
includes alliances with relevant educational institutions and
organisations that promote diversity and inclusion.
Metrics associated with the development of the Diversity and Inclusion
Policy form part of the Group’s Annual Bonus Plan and formal talent
management and succession planning exercise, and performance
is assessed by the Remuneration and Talent Management Committee
at the end of each year. In 2023, Management recommended,
the Committee endorsed, and the Board approved that the
short-term incentive include a key performance indicator on the
number of women in leadership positions versus a baseline.
The Remuneration and Talent Management Committee is also
responsible for succession planning for the Executive Committee,
which allows for ongoing monitoring of the impact of the Diversity
and Inclusion Policy on new appointments and their progress within
the Company, including at the level of those who report to the
Executive Committee.
As part of the Policy, female members of senior management have
served on the boards of all our operating companies for many years
and we have two women on the Executive Committee, the General
Manager of our Transport division and the Vice President of Human
Resources.
It is important to acknowledge that culture plays a key role in this
and we have therefore implemented actions and programmes to
strengthen an inclusive culture, encompassing unconscious bias
training, work-life balance measures, sexual harassment and
domestic violence prevention, and information campaigns. Human
resources processes, such as recruitment and the individual
performance management system, have been reviewed and
adjusted to ensure their inclusiveness and lack of bias.
Since 2017, we have more than doubled female participation to over
20% and recently set ourselves a goal of reaching 30% female
participation by 2025. The gender balance at each level of the Group
is monitored and reported monthly to the Executive Committee.
In 2023, women represent 29% of the executive and supervisory
workforce; 56% of them are in operational roles.
The Suppliers for a Better Future Programme, which seeks to align
contractor companies’ practices with Antofagasta, includes targets
on hiring women. Currently, only 13% of contractor employees are
women, with 80% of them concentrated in 25 specific roles within
the supplier network.
More detail on programmes we have introduced and the gender
balance within the Group is given in the Our People section on page 40.
The Board will continue to monitor developments in 2024.
>40%
of Board members
are women
100%
of our operating companies
have female Board members
>50%
of our Board members identify as being
from an ethnic minority background
Antofagasta plc Annual Report 2023142
CORPORATE GOVERNANCE
Nomination and Governance Committee report continued
Our review process
2022
The external review was a comprehensive assessment of how
the Board is working, focused on evaluating the following key
areas:
•
Board composition and culture (composition, succession
planning, training and inductions, leadership, dynamics and
decision-making)
•
Board oversight (strategy, performance, risk, people and
executive succession and purpose, values and culture)
•
Stakeholders (workforce engagement, shareholders,
customers and suppliers, sustainability)
•
Board efficiency (Board meetings, agendas and minutes and
secretariat)
•
The Committees
•
Board and Committee papers
2023
The internal review was based on a thorough anonymous
questionnaire completed by Directors that included specific
questions relating to improvement opportunities identified in the
2022 external review to measure progress as well as
fundamental questions to assure Directors’ perceptions of the
Board and Committee’s culture, governance and performance.
•
Internal evaluation of the Board and its Committees
•
Individual evaluation of Directors
•
Closure of gaps identified in the 2022 external evaluation
•
Identification of further opportunities to improve in 2024
Diversity tables
1
as at 31 December 2023
2
Ethnic group
Number of
board
members
Percentage
of the board
Number of senior positions
on the board (CEO, CFO,
SID and Chair)
3
Number in
executive
management
Percentage
of executive
management
White British or other White (including minority-white groups) 3 30% – 5 45.5%
Mixed/Multiple Ethnic Groups 5 50% 2 5 45.5%
Asian/Asian British – – – – –
Black/African/Caribbean/Black British – – – – –
Other ethnic group, including Arab 1 10% – 1 9.1%
Not specified/prefer not to say 1 10% – – –
Gender
Number of
board
members
Percentage
of the board
Number of senior positions
on the board (CEO, CFO,
SID and Chair)
2
Number in
executive
management
Percentage
of executive
management
Men 6 60% 1 9 81.8%
Women 4 40% 1 2 18.2%
Non-binary – – – – –
Not specified/prefer not to say – – – – –
1. Data collected via questionnaire.
2. Jorge Bande retired from the Board on 31 December 2023 and Tracey Kerr joined the Board in January 2024, and therefore neither of these directors are considered for the purposes of these tables.
3. The CEO and CFO are not Directors and therefore are also not considered for the purposes of this category.
Board effectiveness review
In accordance with the Code, the Board undertakes an annual effectiveness
review which is externally facilitated at least once every three years.
In 2022, the effectiveness review was facilitated by an external
consultant, led by Clare Chalmers of Clare Chalmers Ltd, who is
independent and, apart from also conducting the 2019 effectiveness
review, has no other connection with the Group.
Ms Chalmers highlighted the Board’s strengths in skills, coverage of
mining and a good mix of other relevant experience and backgrounds;
strong engagement from the CEO and good access to the senior team,
who get airtime in meetings; thorough NED site visits, with high-quality
feedback to the Board.
In 2023, an internal evaluation of the Board and its Committees was carried
out to monitor progress against recommendations made in the external
review and to identify further opportunities for improvement, using thorough
anonymous questionnaires that were completed by the Directors. The survey
results demonstrated how recommendations made in the 2022 external
review had been addressed. Strengths that were highlighted included the
Chairman’s commitment to the Board, the Board’s effective leadership and
strong support framework and the effectiveness of, and value added by, the
Board’s Committees. Further opportunities for improvement centred on
continuing to focus on balancing strategy and core business oversight
discussions and continuing to improve presentations and pre-reading materials.
The annual effectiveness review is designed to recognise and raise key
themes identified collectively by the Directors, along with suggestions
for improvement and of good practice, and for the Directors to reflect
on how these themes should be addressed going forward. Based on
this review, the Directors were satisfied that the Board and its
Committees operated effectively in 2023.
JEAN-PAUL LUKSIC
Chair of the Nomination and Governance Committee
Antofagasta plc Annual Report 2023 143
Board effectiveness
Robust monitoring
of financial
processes and
risks
2023 membership and meeting attendance
Number attended
Tony Jensen (Chair) 6/6
Jorge Bande 6/6
Francisca Castro 6/6
Heather Lawrence 4/4
Heather Lawrence joined the Board and the Committee on 18 April 2023.
Jorge Bande retired from the Board on 31 December 2023.
Other regular attendees included representatives from PricewaterhouseCoopers
(PwC), the Group’s external auditor, the CEO, the CFO, the Group Financial
Controller, the Head of Internal Audit, the Head of Risk, Compliance and Internal
Control and the Company Secretary.
The Committee meets as necessary and at least twice a year. It works within the
framework of a detailed annual work plan. Committee members participate in all
other Board Committees, allowing the Committee to consider the full spectrum of
risks faced by the Group.
All Committee members are independent and are considered to have recent and
relevant financial experience; a majority of Committee members have significant
experience relevant to the mining sector.
The Committee assists the Board
in undertaking its assessment
that the Annual Report is, when
taken as a whole, fair, balanced
and understandable and that it
provides the necessary
information to allow shareholders
to assess the Group’s position
and performance, business model
and strategy.
TONY JENSEN
Chair of the Audit
and Risk Committee
Key responsibilities
The Audit and Risk Committee assists the Board in meeting its
responsibilities relating to financial reporting and control, and to risk
management.
The Committee’s main responsibilities include:
•
monitoring the overall financial reporting process, which includes
responsibility for reviewing the year-end and half-year financial
reports,
•
overseeing the external audit process and managing the relationship
with PwC, the Group’s external auditor,
•
reviewing and monitoring PwC’s independence and objectivity,
•
overseeing internal audit, including monitoring and reviewing the
effectiveness of the Group’s internal audit function, plans, processes
and findings,
•
assisting the Board with its responsibilities in respect of risk
management, including reviews of the Group’s risk appetite and key
risks, and
•
monitoring the performance of the Group’s compliance and crime
prevention models.
Key activities in 2023
Financial reporting
•
Reviewed the 2022 year-end and 2023 half-year financial reports,
focusing on significant accounting matters relating to the Group’s
results.
•
Reviewed accounting matters likely to impact the 2023 year-end
results.
•
Reviewed the Group’s 2022 Reserves and Resources Statement
and highlights of the 2023 statement.
•
Assisted the Board in ensuring that the 2022 Annual Report
was fair, balanced and understandable.
•
Reviewed analysis for the 2023 going concern and long-term
viability statements.
•
Reviewed reporting under the Task Force on Climate-related
Financial Disclosures (TCFD) framework, with disclosures
appropriately reflecting the Group’s position.
•
Reviewed the Group’s tax strategy and tax position, including the
effective tax rate, and the impact of the new mining royalty in Chile.
•
Reviewed regulatory changes including FRC guidance on accounting
and reporting matters.
External audit
•
Reviewed and approved the 2023 audit plan, including fees.
Validated that PricewaterhouseCoopers (PwC) incorporated
feedback from both the Committee and management on the 2022
audit and engaged extensively with management to align on critical
success factors.
•
Assessed the effectiveness of the external audit process, reviewed
PwC’s independence and performance. Reviewed non-audit
services provided by PwC.
Antofagasta plc Annual Report 2023144
CORPORATE GOVERNANCE
Audit and Risk Committee report
•
Reviewed the key audit findings in respect of the 2022 audit and
reviewed PwC’s progress reports in respect of the 2023 audit.
•
Monitored Deloitte’s audit transition activities, to ensure a smooth
transition from PwC to Deloitte as external auditor for the 2024
financial year.
•
Reviewed the results of the FRC’s Audit Quality Review. PwC’s audit of
Antofagasta plc for the year ended 31 December 2022 was selected for
review by the FRC’s Audit Quality Review Team.
Internal audit
•
Reviewed key findings from the internal audit reviews conducted
during 2023.
•
Reviewed the quality, experience and expertise of the internal audit
function, confirming its suitability for the business.
•
Reviewed actions to co-ordinate audit scope with PwC to avoid
duplication or double testing.
•
Agreed the scope and focus areas for the 2024 internal audit plan
including new audit methodologies such as cross-organisational
audits to test internal controls over all relevant entities
simultaneously and continuous audits of capital projects.
Risk and internal control
•
Monitored the consultation process for the revisions to the UK
Corporate Governance Code.
•
Reviewed a readiness assessment and action plans to prepare
for the future requirement for the Board to confirm the
effectiveness of internal controls.
•
Assisted the Board with its assessment of the Group’s key risks and
its review of the effectiveness of the risk management and internal
control processes.
•
Assisted the Board in conducting the annual review of risk appetite
statements.
•
Conducted detailed reviews with the General Managers of each of
the Group’s operations, covering the operations’ key risks, risk
matrix and residual risks. Reviewed climate change and the financial
impact of physical and transition risks and opportunities.
•
Reviewed the potential impact of the proposed new Chilean
constitution on key risks. In December 2023, Chile voted to reject
the proposed constitution, and as a result the country will now
continue with the existing constitution, which has been in place for
several decades.
•
Reviewed the latest developments in cyber security and updated
action plans to enhance the Group’s risk management maturity in
this key area.
•
Reviewed the activities undertaken during the year to further
develop the maturity of the Group’s risk management processes.
•
Reviewed the steps taken to ensure that slavery and human
trafficking are not occurring in any part of the Group’s business,
including in its supply chains.
Compliance
•
Reviewed the Group’s whistleblowing arrangements, including
details of the most significant reports and actions taken, along with
plans to strengthen the function.
•
Reviewed the process to identify and manage Group employees’
potential conflicts of interest.
•
Reviewed the due diligence process conducted in respect of the
Group’s suppliers.
•
Reviewed training on the Group’s compliance model, crime
prevention model and Modern Slavery Policy. Reviewed activities
undertaken during the year to develop their maturity.
•
Monitored the functioning of the Group’s crime prevention model,
considering upcoming changes in the UK Corporate Governance
Code and the new Chilean law on economic and environmental
crimes.
Q.What were the key areas of focus for the Committee in 2023?
The Committee focused its work on internal controls, risk
management and financial reporting. In preparation for changes in
the UK Corporate Governance Code and following the
implementation of a new law in Chile on economic and
environmental crimes, the Committee reviewed a high-level
readiness assessment on risk management and internal control
processes. At the same time, the Committee reviewed plans
designed to ensure a smooth transition from PwC to Deloitte as
external auditor.
Financial reporting
Q.What were the Committee’s main activities in respect of the
Group’s financial reporting?
The Committee reviews the year-end financial statements and
half-year financial reports and ensures that the key accounting
policies, estimates and judgements applied in those financial
statements are reasonable. We also monitor the overall financial
reporting process to ensure that it is robust and well-controlled.
This includes ensuring that the Group’s accounting and finance
function is adequately resourced, with the appropriate segregation
of duties and internal review processes, that the Group’s accounting
policies and procedures are appropriate and clearly communicated,
and that the Group’s accounting and consolidation systems operate
effectively.
The 2023 Annual Report includes the third report under the Task
Force on Climate-related Financial Disclosures (TCFD) framework,
with disclosures appropriately reflecting the Group’s position.
We continued building our capability to prepare for new potential
regulations regarding the Board’s confirmation of the effectiveness
of internal controls over financial reporting.
The Committee assists the Board in undertaking its assessment that
the Annual Report is, when taken as a whole, fair, balanced and
understandable and that it provides the necessary information to
allow shareholders to assess the Group’s position and performance,
business model and strategy. As part of this assessment, we used
our detailed knowledge of the Company, its financial results and the
key accounting judgements applied in the financial statements to
ensure that the tone and content of the narrative fairly reflected the
financial results for the year.
We also reviewed the ore reserves and mineral resources statement
included in the Annual Report and the corresponding reserve and
resource independent audits.
The Committee reviewed the going concern basis adopted in the
financial statements, as well as the detailed long-term viability
statement in the Annual Report.
The Committee reviewed the Group’s tax strategy and tax position,
including the effective tax rate, tax claims, the status of the recovery
of tax refunds, tax-disallowed expenses and the impact of the new
mining royalty in Chile.
Antofagasta plc Annual Report 2023 145
Q.What significant accounting issues in relation to the financial
statements were considered by the Committee during 2023?
The main accounting issues we considered were:
•
Asset valuations: The Committee’s analysis did not identify indicators
of a potential impairment at the 2023 year-end at the Group’s
operations. Accordingly, we have not performed any impairment
reviews. Particular focus was placed on Zaldívar, given the
importance of the ongoing permits renewal process, and the
operational challenges in 2023. An indicative valuation and
sensitivity analysis was performed in order to assess the
sensitivities of the Group’s mining operations to key assumptions
such as the copper price and the Chilean peso exchange rate, and to
make appropriate disclosures within the financial statements. As
part of this analysis, we considered the appropriate copper price
forecasts to use, with reference to consensus analyst forecasts of
the long-term copper price. We have also reviewed the key
operating assumptions in the indicative valuation models. In the case
of Zaldívar, we considered the importance of the renewal of the
permits for water extraction and general mining activities to the
indicative valuation, and the disclosures in respect of these aspects.
We also reviewed the additional sensitivity disclosures included in
the financial statements, including in relation to operational
performance.
•
Accounting for transactions in the secondary market to acquire
beneficial ownership of approximately 19% of the outstanding shares
of Compañía de Minas Buenaventura S.A.A.
•
Reviewing the position in respect of the claims and queries with
Minera Centinela in respect of approximately $85 million of tax
deductions recognised in relation to the amortisation of start-up
costs relating to the Encuentro pit.
•
Impact of new mining royalty: the new mining royalty was approved
in August 2023. Los Pelambres and Zaldívar’s tax invariability
agreements expire in 2023, so the new royalty will apply from 2024
onwards. The new royalty will apply to Antucoya from 2030
onwards. Centinela has a number of tax invariability agreements,
most expiring in 2029, and the Encuentro invariability agreement
expires in 2031. Accounting regulations require that deferred tax
balances be calculated using the tax rates which are expected to
apply in the period in which the temporary differences are expected
to reverse. This has resulted in an overall increase in the Group’s
consolidated deferred tax liabilities as at 31 December 2023, with a
corresponding deferred tax expense reflected in the 2023 results.
•
Distributable reserves and related withholding tax provisioning: the
withholding tax charge in the current period reflected a one-off
adjustment of $34.7 million to the provision for deferred withholding
tax, as a result of an intra-group restructuring of intercompany
balances, essentially offsetting the increase in deferred tax liabilities
resulting from the approval of the new royalty.
•
Going concern and viability: we reviewed the going concern and
viability assessments and related disclosures. In particular, we
considered the Group’s current strong financial position, its forecast
future performance, the key risks which could impact the future
results and reviewed robust down-side sensitivity analyses which all
indicated outcomes that could be managed in the normal course of
business.
External audit
Q.What are the Committee’s responsibilities in respect of the
external audit process?
The Committee is responsible for overseeing the Company’s
relationship with PwC, the Group’s external auditor. As the Chair of
the Audit and Risk Committee, I have established an effective direct
relationship with Simon Morley, PwC’s lead audit partner.
The Committee reviews and approves the scope of the external
audit, terms of engagement and fees. The Committee monitors the
effectiveness of the audit process and is responsible for ensuring
the independence of the external auditor. The Committee informs
the Board of the outcome of the external audit and explains how the
external audit contributes to the integrity of the Group’s financial
reporting. The Committee formally meets with PwC without
management present at least once a year. We oversee the
performance of the external auditor. The Committee makes
recommendations to the Board in respect of the appointment,
reappointment, or removal of the external auditor.
Following a tender process, the Committee recommended to the
Board that, in respect of the 2024 financial year audit, Deloitte
becomes the external auditor. Plans are well progressed to enable a
smooth transition from PwC to Deloitte.
Q.How do you assess the effectiveness of the external audit
process?
We work closely with PwC to ensure that external audit quality is
maintained throughout the year. PwC incorporates feedback from
both the Committee and management on the prior audit and
engages extensively with management to align on critical success
factors.
The Committee considers the following factors as part of its review
of the effectiveness of the external audit process during the year:
•
the appropriateness of the proposed audit plan, the significant risk
areas and areas of focus, and the effective performance of the
audit
•
the technical skills and industry experience of the audit
engagement partner and the wider audit team
•
the quality of the external auditor’s reporting to the Committee
•
the effectiveness of the co-ordination between the UK and
Chilean audit teams
•
the effectiveness of the interaction and relationship between
the Group’s management and the external auditor
•
feedback from management in respect of the effectiveness
of the audit processes for the individual operations and the
Group overall
•
the review of reports from the external auditor detailing its own
internal quality control procedures, as well as its annual
transparency report, and
•
the review of the FRC’s annual Quality Inspection Report on PwC.
In light of this assessment, the Committee considered it appropriate
that PwC be reappointed as external auditor for 2023. However,
as noted on page 120, 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.
Antofagasta plc Annual Report 2023146
CORPORATE GOVERNANCE
Audit and Risk Committee report continued
Q.How do you assess the independence and objectivity of the
external auditor?
The Committee regularly monitors the external auditor’s
independence and objectivity in line with the Group’s policy in
respect of auditor independence and non-audit services.
New regulatory requirements have applied since 2020 in respect of
non-audit services. The FRC issued a “white list” of specifically-
permitted services, with all other services prohibited. Permitted
services relate to specific activities required by law or regulation
and a limited number of types of review or verification work, such
as half-year reviews, verification of additional information contained
within the Annual Report or cross-referenced from the Annual
Report, and work as a reporting accountant on transactions or debt
issuances. The provision of non-audit services is also subject to a
cap, so that the total annual fees from non-audit services may not
exceed 70% of the average audit fee over the prior three years.
A breakdown of the audit and non-audit fees is disclosed in Note 8
to the financial statements. PwC did not provide any non-audit
services (excluding audit-related services) during 2023.
In general, where the external auditor is selected to provide
non-audit services, it is because it has specific expertise or
experience in the relevant area and is considered the most suitable
provider. Pre-approval from the Committee is required before
non-audit services can be performed by the external auditor, other
than for services which are considered to be clearly trivial. The
Committee has reviewed the level of these services over the year
and is confident that the objectivity and independence of the auditor
are not impaired by such non-audit work.
The external auditor provides a report to the Committee at least
once a year, setting out its firm’s policies and procedures for
maintaining its independence.
The Committee considers that PwC remained independent and
objective throughout 2023.
The UK regulatory requirements in respect of competitive audit
tendering and other related audit committee responsibilities in
respect of the external auditor are set out in the Competition &
Markets Authority´s “The Statutory Audit Services for Large
Companies Market Investigation (Mandatory Use of Competitive
Tender Processes and Audit Committee Responsibilities) Order
2014” (“the Order”). The Company complied with the provisions of
the Order during 2023.
Q.How long has PwC been the Group’s auditor?
We carried out a tender process during 2014, which resulted in
PwC replacing Deloitte, the previous auditor, and being appointed
with effect from 2015 onwards. Jason Burkitt was the lead audit
partner at PwC for five years from 2015 to 2019 and, in line with
normal regulatory requirements rotated off the engagement, with
Simon Morley assuming the role as lead audit partner from 2020
onwards.
Q.What are the plans for external auditor rotation?
Under UK regulations the Company’s next mandatory tender would
have been in respect of the 2025 audit, marking the 10-year
anniversary of the original audit rotation regulations. Other FTSE
100 companies are facing similar anniversaries, which could result
in an increased demand for audit tenders over the coming years. As
previously disclosed, it was therefore determined that the optimum
approach was to conduct an audit tender process during the second
half of 2022 in respect of the 2024 audit to allow for a “cooling-in”
period during 2023 and to provide a significant transition period.
PwC, Deloitte, EY and BDO participated in the tender process.
KPMG declined our invitation to participate. BDO met the mid-tier
“challenger” criteria that UK regulators are seeking to promote.
Tendering firms held over 50 meetings with management and in my
role as Chair of the Audit and Risk Committee, I participated in
meetings with all tendering firms in advance of their formal tender
presentations.
The Committee reviewed proposals and recommended Deloitte to
the Board as first choice, along with a second-choice
recommendation. The Board selected Deloitte as the next external
audit firm for the 2024 audit onwards.
Internal audit
Q.What are the Committee’s main activities in relation to internal
audit?
The Committee monitors and reviews the effectiveness of the
Group’s internal audit function. The Head of Internal Audit reports
directly to the Committee and a meeting is held without management
present at least once a year.
We also monitor succession planning and the resources available to
the Internal Audit team so that it has an appropriate mix of skills and
experience for the Group’s businesses. Internal Audit utilises a mix
of permanent team members, temporary secondees from elsewhere
in the Group and third parties, particularly for areas such as
IT-related reviews. The permanent team includes members with
specific expertise in some of the most relevant areas for the Group,
including technical mining experience, IT, risk, compliance, internal
control, sustainability and cyber security.
The Committee reviews and approves Internal Audit’s work plan for
the coming year, including its focus areas as well as budget,
headcount, methodology and other resources. Internal Audit takes a
risk-focused approach when planning its work, using the risk
registers maintained by each business to monitor and control their
key risks. We ensure the plan is flexible and has sufficient resources
to allow for special reviews that may be required during the year.
During 2023, the Committee stewarded the completion of planned
audits and approved the 2024 internal audit plan.
Internal Audit presents to the Committee summaries of the key
findings from the reviews conducted during the year and any
actions that have been taken or proposed. All Internal Audit reports,
when finalised, are distributed to Committee members.
The Committee reviewed actions to co-ordinate internal audit scope
with PwC to avoid duplication or double testing, to ensure an
efficient relationship between the internal and external audit
processes, and achieve the effective and timely sharing of findings.
“In 2023, we assisted the Board
with its annual update of the
Group’s risk appetite assessment
and evaluation of emerging and
principal risks.”
Antofagasta plc Annual Report 2023 147
Risk management, compliance and internal control
Q.What are the Committee’s responsibilities in relation to risk
management and internal control?
The Committee plays an important role in assisting the Board with
its responsibilities regarding risk management and related controls.
The Board has ultimate responsibility for overseeing the Group’s
emerging and principal risks and its risk appetite, as well as
maintaining adequate control systems which were in place
throughout the year and up to the date of this report. The
Committee’s terms of reference incorporate the FRC’s Guidance on
Risk Management, Internal Control and Related Financial and
Business Reporting and the Board is satisfied that the Company’s
risk management and internal control systems accord with this
guidance. In order to achieve our business objectives, internal
control systems are designed to identify and manage, rather than
eliminate, the risk of failure, but can only provide reasonable, not
absolute, assurance against material misstatement or loss.
Q.What were the Committee’s main activities in 2023 relating to
risk management?
We continued to monitor actions designed to enhance the maturity
of our risk management processes.
We assisted the Board with its annual update of the Group’s risk
appetite assessment and evaluation of emerging and principal risks.
Emerging risks are identified through the reporting of events that
have had an impact on the Group’s operations and budgets during
the year and whether and by how much the risk has impeded the
budget for each risk mitigation objective, complemented by a
benchmarking review of emerging and principal risks that have been
identified by our peers. During 2023, the Committee and the Board
reviewed the Group’s 18 key risks, sub-risks, preventative controls
and action plans. While risk appetite levels have not changed, the
Committee reviewed and the Board approved updates to the risk
appetite statements for the principal environmental; political, legal
and regulatory; and corruption risks and approved a wording
change on tailings risk.
Active risk identification and management took place. Actions were
taken during 2023 to strengthen the Group’s risk management
culture including simplifying the risk management methodology,
carrying out on-site verification, identifying new risks, updating
business continuity plans, and implementing a methodology to
monitor emerging risks. The focus in 2024 will be on the
effectiveness of critical controls, in partnership with Internal Audit.
The risk, compliance and internal control function presented to the
Committee several times during the year on developments in the
Group’s risk management processes and Group-level strategic risks.
The General Managers of the Group’s operations presented to the
Committee their assessments of their respective operations’ top
three risks, risk matrix and residual risks. The meeting served as a
forum for sharing experiences and action steps.
The analysis of emerging and principal risks includes an assessment
of the significance of the risks based on the probability of the risk
materialising and the potential impact of the risk, as well as an
evaluation of the quality of the controls in place in respect of those
specific risks. The evaluation of the potential impact is not limited to
economic factors but includes issues such as safety, health,
environmental, regulatory, community and reputational issues. We
also examine whether those risks have been increasing or
decreasing in significance and the budget for each risk mitigation
objective to assist with the identification of emerging risks. The
General Managers present their forecasts of any expected change in
principal risks over the coming 12 months. If there is a specific issue
at one of the operations that requires more detailed understanding,
we ask the General Manager to attend the next meeting to discuss
that issue. This direct interaction between the Committee and the
General Managers is extremely valuable – not just in terms of the
direct insight into each operation it affords the Committee, but in
allowing us to emphasise the importance we attach to strong risk
management processes.
The Committee reviewed climate change and the financial impact of
physical and transition risks and opportunities.
We reviewed steps taken to ensure that slavery and human
trafficking are not occurring in any part of the Group’s business
including its supply chains.
The Committee held a specific review of the latest developments in
cyber security and updated action plans to enhance the Group’s
maturity in this key risk area.
Q.How does the Committee interact with the Board and other
Committees on risk-related matters?
I report to the Board following each Committee meeting,
summarising the main matters reviewed. These regular reports
allow Directors to understand the main issues under consideration
and, when relevant, to discuss them in more detail with the Board.
The Risk Management function presents directly to the Board,
providing updates of the analysis of the Group’s principal risks and
mitigating actions.
We try to ensure that the review of risk by the Board is not
compartmentalised into isolated sessions but is integrated into
everything considered by the Board. To this end, the overall report
provided by the CEO to the Board at each meeting covers any
significant materialised risks. Each proposal presented to the Board
incorporates an analysis of its impact on the principal risks.
These processes have assisted the Board in carrying out a robust
assessment of the emerging and principal risks facing the Company,
including those that could threaten its business model, future
performance, solvency, or liquidity and to assess the acceptability of
the level of risks that arise from the Group’s operations and
development activities.
The Board, with the support of the Committee, reviews the
effectiveness of the Group’s risk management and internal control
systems each year. The review covers all material controls, including
financial, operating and compliance controls. The 2023 review
considered a readiness assessment in preparation for changes in the
UK Corporate Governance Code in respect of risk management and
internal control processes which included: (1) the control framework
and systems in place across the Group; (2) the nature of risk and
control documentation currently in place and the processes for their
regular review and update; (3) internal testing of the effectiveness of
the relevant internal controls; and (4) integration of Internal Audit with
risk management processes. The review concluded that there is a
robust three line of defence model implemented which ensures
several layers of internal responsibility and verification; there are
standardised frameworks and systems used consistently across the
Group’s operations; there is an appropriate analysis and
documentation of key risks and controls, with regular reviews and
updates; internal verification is performed across all areas on a
regular basis; and Internal Audit is highly integrated into the Group’s
risk management and internal control processes. Nevertheless, the
Committee will continue to oversee specific areas of focus so that the
Antofagasta plc Annual Report 2023148
CORPORATE GOVERNANCE
Audit and Risk Committee report continued
Board is in a strong position to consider the effectiveness of the
Group's management and internal control systems in relation to the
new Code requirements that will apply in 2026.
Members of the Audit and Risk Committee participate on all the
other Board Committees, allowing the Committee a good
understanding of risks being considered by these Committees and
the full spectrum of risks faced by the Group.
Compliance
Q.What are the Committee’s main responsibilities relating to
compliance?
The Committee ensures that appropriate compliance policies and
procedures are observed throughout the Group. The risk,
compliance and internal control function makes regular
presentations to the Committee covering developments in the
Group’s compliance processes and significant compliance issues.
Chilean law requires the Mining division’s holding Company,
Antofagasta Minerals SA, and each of the operations, to appoint a
Crime Prevention Officer. The Committee makes recommendations
regarding these appointments as well as monitoring and overseeing
the performance of these roles. The Crime Prevention Officer for
Antofagasta Minerals SA is currently Patricio Enei, the Vice
President of Legal. As the compliance function reports to the CFO,
this arrangement provides for the appropriate segregation of duties.
The Committee receives reports from the risk, compliance and
internal control function in respect of the Group’s crime prevention
model, in accordance with Chilean and UK anti-corruption legislation.
The Crime Prevention Officer presents a report directly to the Board
every six months.
Q.What were the Committee’s main activities in 2023 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 and communications
on the Group’s compliance model, crime prevention model and
Modern Slavery Policy. We reviewed activities undertaken during the
year to develop compliance maturity.
The Committee reviewed the Group’s whistleblowing arrangements,
which encourage employees and contractors to raise concerns in
confidence about possible improprieties or non-compliance with the
Group’s Code of Ethics. We received regular reports on reported
whistleblowing incidents, detailing the number and type of incidents
and outlining the most significant issues and the actions resulting
from their investigation, along with plans to strengthen the function.
The Committee reviewed the process to identify and manage Group
employees’ potential conflicts of interest and reviewed the due
diligence process conducted in respect of the Group’s suppliers.
Q.What were the Committee’s main activities in 2023 relating to
internal control?
During 2023, the Committee reviewed the Company’s internal
control framework which consists of three lines of defence.
First, business units identify and manage risks. Second, the risk
management function provides oversight and support. Third, Internal
Audit provides independent assurance. In addition to regular
reviews, a session was held to review the effectiveness of risk
management, compliance and internal control, the effectiveness of
internal controls over financial reporting, and the effectiveness of
internal audit and the relationship with external audit. We feel
confident that the reviews undertaken by the Committee during
2023 have allowed it to perform an appropriate review of the
effectiveness of the Group’s risk management and internal control
systems during the year. The reporting of these activities by the
Committee to the Board supports the Board’s confirmation that it
has undertaken a review of the effectiveness of the Group’s risk
management and internal control systems during the year as
required by the UK Corporate Governance Code.
TONY JENSEN
Chair of the Audit and Risk Committee
Audit and Risk Committee, Board, and risk management function interaction
BOARD
The Chair of the Audit and Risk Committee reports to the Board following each Committee meeting,
allowing a wider discussion of the risk and compliance issues reviewed in detail by the Committee. The
Board also provides feedback on the analysis of emerging and principal risks for Board agenda items
which is incorporated into the Board’s review of the effectiveness of the Group’s risk management and
internal control systems. Every presentation to the Board includes a risk analysis.
AUDIT AND RISK COMMITTEE
The Committee supports the Board in its review of the effectiveness of the Group’s risk management
and internal control systems.
GENERAL MANAGERS OF THE OPERATIONS
General Managers are responsible for the risks relating to their operation and give detailed
presentations to the Committee at least once a year, including on each operation’s emerging, principal
and materialised risks.
RISK MANAGEMENT
FUNCTION
The risk management function
provides regular presentations
covering changes in the
Group’s emerging and
principal risks, major
materialised risks and updates
on risk management and
compliance processes.
There are detailed
presentations at each
Committee meeting covering
the risk management process,
significant whistleblowing
reports and updates on
compliance processes and
activities.
Antofagasta plc Annual Report 2023 149
Mining operations at Antucoya
Antofagasta plc Annual Report 2023150
CORPORATE GOVERNANCE
Sustainability
andstakeholder
management
2023 membership and meeting attendance
Number attended
Vivianne Blanlot (Chair) 6/7
Ramón Jara 5/7
Juan Claro 6/7
Jorge Bande 7/7
Michael Anglin 7/7
Eugenia Parot 7/7
Jorge Bande retired from the Board on 31 December 2023.
Other regular attendees included the CEO, the COO, the Vice President of Corporate
Affairs and Sustainability and the Company Secretary.
Sessions were also regularly attended by Directors who were not Committee
members.
The Committee meets as necessary and at least twice per year.
“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 health and
safety of our workforce and other
matters that support local
communities where we operate.”
VIVIANNE BLANLOT
Chair of the Sustainability and
Stakeholder Management Committee
Key activities in 2023
Policies and commitments
•
Reviewed the implementation plan to adopt the new Global Industry
Standard on Tailings Management (GISTM), published by the ICMM
in August 2020.
•
Reviewed and endorsed a proposal to incorporate all Mining
Operating Companies to the UN Global Compact whose principles
cover human rights, labour relations, environmental and anti-
corruption matters.
•
Reviewed the Group’s Sustainability, Social Value, and Climate
Change (TCFD) reports, including the Sustainability Databook.
Health and safety
•
Reviewed the Group’s safety and occupational health strategy,
performance in 2022, and 2023 plans covering risk management;
learning; leadership; and contractors.
•
Reviewed the results of the psychosocial risk analysis questionnaire
which are being analysed by over 20 focus groups.
•
Reviewed the 2023 report on the Company’s tailings storage
facilities, issued by the independent technical review board (ITRB)
appointed to advise the Group on their operation.
Community relations
•
Reviewed Los Pelambres’ social strategy.
•
Reviewed activities and initiatives carried out by Fundación Minera
Los Pelambres, a strategic ally for the execution of relevant social
management programmes and projects in line with Los Pelambres’
social strategy.
•
Reviewed the water situation in the Choapa Valley and Los
Pelambres’ water management strategy, including operational water
management initiatives in order to best support operational,
environmental and community requirements.
•
Reviewed the early community participation initiative on
Los Pelambres Phase 2 Expansion Project (Mine life extension).
•
Reviewed Centinela’s second concentrator project’s social
enablement strategy, community relations plan and social strategy
action plan.
•
Reviewed the results of community information sessions and site
visits co-ordinated on safety and emergency preparedness in
The Sustainability and Stakeholder Management Committee supports
the Board in providing guidance on the Group’s safety, health,
environmental and social responsibility strategies and policies, in the
oversight of corresponding programmes and in making
recommendations to the Board to ensure the views and interests of
the Group’s stakeholders are considered in the Board’s deliberations.
The Committee reviews the Group’s framework of safety, health,
environmental, human rights and social policies, monitors the Group’s
performance in setting and meeting environmental, social, safety and
occupational health commitments and provides guidance on how the
Company should reflect the views and interests of stakeholders in
relation to operational, projects and other business matters. The
material subjects and results of this engagement are reported
periodically to the Committee through standalone reports and as part
of broader Committee discussions.
Antofagasta plc Annual Report 2023 151
Sustainability and Stakeholder Management
Committee report
relation to the Company’s tailings facilities in line with GISTM
requirements.
Environment
•
Reviewed the EIA for Los Pelambres’ desalination plant expansion
and additional critical infrastructure projects, which was approved
in October 2023.
•
Reviewed proposals in relation to Zaldívar’s water rights extension.
Q.How was the Group’s safety performance in 2023?
This was a true highlight for 2023. We are very pleased to report
that the Group recorded its strongest safety performance on record.
During the year, there were no fatal accidents and the Group
recorded only 34 High Potential Incidents, 19% fewer than in 2022.
The Lost Time Injury Frequency Rate also improved by 25% to 0.63.
The challenge in 2024 is to further improve on these results.
Q.What is the Committee’s role in respect of the Company’s policies
that relate to sustainability and stakeholder management?
The Committee oversees the development of the Group’s policies
relating to sustainability and stakeholder management. The
Committee does not review implementation – this is a matter
foreach individual Operating Company.
During 2023 the Committee provided input on the policy relating
tothe adoption of the new Global Industry Standard on Tailings
Management (GISTM) which was published by ICMM in August 2020.
Q.How did the Committee consider climate change during the year?
As noted by the Chairman on pages 120-121, combating climate
change sits at the centre of Antofagasta’s strategy. In particular,
lowering emissions and reducing continental water use remain two
issues for which we have a Group-level strategy, Board-level focus
and Company-wide initiatives.
The Committee assisted the Board in considering various climate
change-related initiatives during the year, including those in the
Board’s assessment of the physical and transition risks of climate
change and their impact on the net present value of the Group. The
Group’s Climate Change Strategy, reviewed by the Committee and
approved by the Board in 2020, takes a multidisciplinary approach
to the challenges posed by climate change, focusing on the
development of climate change resilience, the reduction of
greenhouse gas emissions, the efficient use of strategic resources,
the management of the environment and biodiversity, and the
integration of stakeholders.
The Committee reviewed the community water situation in the
Choapa Valley, Los Pelambres’ water management strategy and
operational water management initiatives.
The Board reviewed the Company’s carbon footprint, approved the
Company’s decarbonisation plan, set emissions reduction targets
and committed to revisiting them in 2025.
Q.How does the Committee ensure that the Board considers the
views and interests of stakeholders?
The Committee does not get involved in the day-to-day management
and implementation of the Group’s policies and procedures.
However, meetings provide a forum to discuss key trends and
issues that matter to local communities, our workforce, national and
local governments, regulators and other stakeholders. Many of these
issues are identified as part of each operating companies’ risk
management and community engagement processes, which are
submitted by management to the Committee for their information.
Communicating with our stakeholders during difficult times has been
key to strengthening mutual trust and understanding. We work hard
to respect their interests and ensure that they understand our
ambitious safety, occupational health, environmental and social
commitments.
As Chair of the Committee, I report to the Board following each
Committee meeting, summarising the main matters reviewed by the
Committee.
Q.How does the Committee ensure that the Group’s tailings storage
facilities are safe?
The stability and safety of our tailings storage facilities (TSFs) is a
primary concern for us and many of our stakeholders, and the
Committee and the Board are focused on ensuring that the policies
and procedures implemented by our operating companies ensure
that the TSFs continue to be stable and safe.
Chile experiences a significant amount of seismic activity and as a
consequence there are strict regulations governing the construction
of TSFs in the country. These regulations apply to all mining and
other construction, including the storage facilities where tailings are
deposited. Chilean standards have prohibited the construction of
TSFs using the upstream method, which is commonly used in other
countries but can pose significant safety risks. Current Chilean
legislation also requires a stability analysis of TSFs’ walls, a review
of safety measures and the development of detailed emergency
plans in the event of a major incident.
The Group’s governance structures are designed to encourage the
independent management and monitoring of our TSFs: internal
teams have reporting lines not linked to the mine operation and an
independent tailings review board (ITRB) visits our TSFs regularly,
assessing risks and making recommendations to ensure their
continued safety. The Committee and the Board review these
reports and challenge management on their recommendations.
The Committee and the Board also receive regular reports on the
operation of the Group’s TSFs. Following the Group’s adoption in
2020 of a tailings management policy aligned with the Global
Industry Standard on Tailings Management (GISTM), the Committee
has monitored operating companies’ policies, along with reports
from management and the ITRB. Operating companies have
established their own governance structures, plans, tailings
management systems and implementation timelines.
The Group committed to fulfil GISTM requirements by August 2023
for its critical tailings’ deposits and by August 2025 for its lower-
risk ones. On 5 August 2023, companies in the Group announced
that they had complied with GISTM requirements for El Mauro, its
only critical tailings deposit and for Centinela, classified as
significant, two years ahead of the commitment. Dam safety
reviews, required by GISTM, were conducted prior to the GISTM
fulfilment declaration in August 2023. The Committee reviews
executives’ reports on an annual basis.
Further information on our TSFs, including the risks and the
governance measures in place, can be found on page 55.
Q.How are community relations managed throughout the Group?
Dialogue with local communities is crucial for aligning views,
preventing disputes and addressing concerns. To strengthen this,
our operating companies use various engagement mechanisms,
including conversations with members of the community, round
tables, community meetings, participatory environmental monitoring
Antofagasta plc Annual Report 2023152
CORPORATE GOVERNANCE
Sustainability and Stakeholder Management Committee report continued
with the community and site visits to our operations, as well as
communicating through the media and on websites and social
networks.
The material subjects and results of this engagement are reported
periodically to the Committee through standalone reports and as
part of broader Committee discussions.
Q.What are the Committee’s priorities in 2024?
Our number one priority continues to be the health and safety of our
employees, contractors and local communities. We will continue to
provide feedback to our mining operations, encouraging them to
further improve upon the Company’s record safety performance in
2023 and continue to reinforce the practices that resulted in this
strong performance.
The Committee will continue to receive feedback from our mining
operations on the implementation of the Group’s environmental
management system and we will continue to oversee the
implementation of our Climate Change Strategy, aimed at meeting
our greenhouse gas targets for reduced carbon dioxide emissions.
The Committee will continue to oversee the progress towards
obtaining material environmental permits for the Group’s major
development projects during the year and will monitor whether the
Group’s social programmes and the work done with communities
close to our operations is in accordance with the Group’s Social
Management Model.
VIVIANNE BLANLOT
Chair of the Sustainability and Stakeholder Management
Committee
“The Committee makes
recommendations to the Board to
ensure the views and interests of
the Group’s stakeholders are
considered in the Board’s
deliberations.”
Antofagasta plc Annual Report 2023 153
Facilitating
disciplined growth
2023 membership and meeting attendance
Number attended
Michael Anglin (Chair) 6/6
Jorge Bande 6/6
Ramón Jara 6/6
Eugenia Parot 6/6
Vivianne Blanlot 3/4
Vivianne Blanlot joined the Committee on 14 March 2023.
Jorge Bande retired from the Board on 31 December 2023.
Other regular attendees included the CEO, the CFO, the Vice President of Projects,
the Corporate Projects Manager and the Company Secretary.
Sessions were also regularly attended by Directors who were not Committee
members.
The Committee meets as necessary and at least twice per year.
“The Committee monitors projects
in execution, ensuring that lessons
learned are applied from previous
projects and that the relevant
considerations are tabled for
discussion by the Board.”
MICHAEL ANGLIN
Chair of the Projects Committee
Key activities in 2023
Policies and commitments
•
Reviewed the Group’s projects portfolio, including budgets and
schedules.
Project reviews – studies phase
•
Reviewed an update on Los Pelambres’ plans to further expand the
Company’s desalination plant, in addition to a new concentrate pipeline
and work to develop enclosures at the El Mauro tailings facility.
•
Reviewed an update on Los Pelambres’ Phase 2 Expansion Project.
•
Monitored steps leading up to the Board’s consideration of the
Centinela Second Concentrator project investment decision.
•
Reviewed Centinela’s in-pit tailings deposition project.
Project reviews – execution phase
•
Monitored progress in the execution of the Los Pelambres Phase 1
Expansion Project.
Q.What is the Projects Committee’s approval authority?
The Committee is not responsible for approving projects – that is
for the Board to decide. Our role is to assist the Board by ensuring
that projects are following a standard, structured process using
consistent analysis, execution and evaluation practices. The
Committee oversees the full project development, from the early
stages to the start of operations, carefully assessing and robustly
challenging investment proposals prior to submission to the Board,
monitoring development and construction progress and ensuring
lessons learned are applied to future proposals. The Committee
invites management to consider different perspectives, ideas
andimprovements to enhance the value of the Group’s projects,
enabling focused deliberation when the project is presented
totheBoard.
Key responsibilities
The Projects Committee reviews all aspects of major projects to be
submitted for Board approval, highlighting key matters for the Board’s
consideration throughout the project’s development and making
recommendations to management to ensure that all projects submitted
to the Board are aligned with the Group’s strategy and risk appetite.
The Committee adds an important level of governance and control to
the evaluation of the Group’s projects and plays a key role in providing
the Board with additional oversight of the Group’s projects portfolio.
This includes overseeing the establishment of project development
guidelines, drawing from best practice, industry experience and
lessons learned from other Group projects.
Antofagasta plc Annual Report 2023154
CORPORATE GOVERNANCE
Projects Committee report
Q.What tools does the Committee use?
The Committee provides guidance to each project manager, from
the early stages of project planning through to completion, to ensure
that policies, strategies and the Group’s Asset Delivery System
(ADS) implementation framework are applied.
ADS is a project management system whose processes and
practices are widely used in the mining industry. ADS sets
standards and common criteria, including governance by a steering
committee, functional quality assurance reviews and risk
management.
In some cases, the Committee may recommend additional
measures, including independent peer reviews, trade-off studies or
further analysis in relation to the incorporation of potential new
technologies or processes.
Q.What were the Committee’s key activities in 2023?
Execution – Phase 1 of the Los Pelambres Expansion project
The Committee monitored progress in the execution of the Los
Pelambres Expansion, including a detailed review of issues
associated with the closing of the project and lessons learned.
See page 29 for more information on Phase 1 of the Los Pelambres
Expansion project.
Studies – Future development of Los Pelambres
The Committee reviewed an update on Los Pelambres’ planned
expansion of its desalination plant, which seeks to fulfil production
commitments by ensuring water supply through an expansion
of the desalination plant to 800 l/s, in addition to the construction
of a new concentrate pipeline. The project was approved at the
beginning of 2024.
The Committee also reviewed an update on the next phase of
investment at Los Pelambres which included early community
participation to enable the submission of the EIA.
See page 100 for more information on further development of Los
Pelambres.
Studies – Centinela Second Concentrator project
The Committee reviewed progress in the commitment phase of
Centinela’s Second Concentrator project.
The Committee reviewed the project’s sustainability profile, noting
that 100% of the power will come from renewable sources, and that
it will use sea water and thickened tailings. Environmentally, the
project seeks to avoid and, if necessary, control any environmental
impact associated with its development, including air quality,
archaeological preservation and biodiversity. Socially, the project
seeks to generate positive externalities and benefits in the supply
chain and manage reputational risks. It has identified all relevant
stakeholders, established a community relations strategy and is
developing stakeholder, community and communications plans. With
respect to climate change, the objective is to facilitate early action
and adaptation in relation to risks and opportunities.
The Committee monitored preparation for the Centinela Second
Concentrator project including reviewing progress on engineering,
contracting, and financing. The Committee reviewed the partial
cancellation of mining easements, fulfilling the project’s
environmental resolution (RCA). The Committee also reviewed the
awarding of contracts for the project and a potential build-own-
operate-transfer (BOOT) contract for Centinela’s current and future
water infrastructure.
The Board approved the investment decision in December 2023.
See page 15 for more information on Centinela’s Second
Concentrator project.
Studies – In-pit tailings deposition project
The Committee reviewed Centinela’s in-pit tailings deposition
project, which considers using the Tesoro Central pit to cover
Centinela’s tailings management needs for 9–10 years; to be
followed by the Tesoro North East and Esperanza pits, to cover
Centinela’s tailings management needs for 15 years and possibly for
the life-of-mine. This project would defer investment in raising the
height of the walls of the current tailings storage facility.
Q.What are the Committee’s priorities in 2024?
The Committee will continue to monitor the Group’s key projects.
The Committee will oversee the ramp up of Phase 1 of the Los
Pelambres Expansion project.
The Committee plans to monitor the progress of Centinela’s Second
Concentrator project and the next phase of investment at Los
Pelambres, including monitoring progress of the licencing
application process for the Los Pelambres’ Phase 2 Expansion
Project (Mine Life Extension).
MICHAEL ANGLIN
Chair of the Projects Committee
“The Committee supports the Board
by ensuring that the Group’s
projects portfolio follows approved
and consistent guidelines and that
project execution decisions have
been thoroughly reviewed before
being put forward for Board
approval.”
Antofagasta plc Annual Report 2023 155
Rewarding and
empowering
management to
strengthen the
organisational
capabilities needed
to deliver our
strategy
2023 Membership and meeting attendance
Number attended
Francisca Castro (Chair) 5/5
Michael Anglin 5/5
Vivianne Blanlot 2/2
Tony Jensen 5/5
Eugenia Parot 3/3
Dear shareholders
I am pleased to present the Directors’ and CEO’s Remuneration Report
for the year ended 31 December 2023.
This report comprises:
•
this letter
•
an ‘at a glance’ section, and
•
the Annual Report on remuneration. This details the implementation
of our pay policy in 2023 and the proposed implementation of our
pay policy for 2024. This section also contains a summary of the
2023 Directors’ and CEO’s Remuneration Policy as approved by
shareholders at the AGM in 2023. Details of the full policy are
available on our website (www.antofagasta.co.uk).
I would like to thank shareholders for their support at the 2023 AGM
where our remuneration policy received 94.33% votes in favour, and
the Directors’ remuneration report received 95.17% votes in favour.
We continue to seek to engage shareholders for their views and
feedback on Antofagasta’s remuneration arrangements.
CEO and Directors’ remuneration in context
The Committee considers a range of factors and KPIs when making
decisions on remuneration, including the views of stakeholders
(including shareholders and employees) and the Company’s
performance. A summary of these factors and KPIs is set out in the
“ata glance” section on page 160. However, I would like to highlight a
number of important aspects of this report:
•
Despite challenging headwinds, 2023 was a year of significant
progress, and we are pleased to be moving forward into the next
phase of development and growth. Financial performance in 2023
was solid, revenue was 8% higher than 2022, EBITDA grew 5%,
cash flow from operations increased 11% and net cash costs were
consistent year-on-year. Operational performance highlights include
a 2% increase in Group copper production and finalising the delivery
of the Phase 1 Expansion Project at Los Pelambres, which will help
to maintain this asset’s future production. The financial and
operational performance of the Group was carefully considered
when reviewing the incentive outturns in respect of 2023.
“The Committee seeks to ensure
that pay practices are fair and
appropriate, taking into account
the experience of key
stakeholders and the wider
economic environment.”
Key report sections:
Remuneration ‘at a glance.’ 160
Summary of remuneration policy 162
Single figure remuneration table 166
Remuneration for 2024 176
On 14 March, 2023 Vivianne Blanlot rotated off the Committee and Eugenia Parot
joined the Committee.
Other regular attendees include the CEO, the Vice President of Human Resources and
the Company Secretary.
At least one Committee member serves on each of the other Board Committees,
which allows the Committee to consider strategic priorities and the views of all
stakeholders in its deliberations.
The Committee meets as necessary in practice and at least four times a year.
All Committee members were independent throughout 2023.
FRANCISCA CASTRO
Chair of the Remuneration and
Talent Management Committee
Antofagasta plc Annual Report 2023156
CORPORATE GOVERNANCE
Remuneration and Talent Management Committee
Chair’s introduction
•
The health and safety of people remains our top priority and our
Board sets the standard in prioritising the safety and wellbeing of
our employees and contractors. In 2023, we recorded another
strong year of safety performance, with no fatalities and a Lost Time
Injury Frequency Rate of 0.63, a 25% reduction year-on-year. In
2023 management focused on strengthening risk monitoring and
targeting safety initiatives in high-risk areas. We also monitored and
targeted reduction of occupational hazard risks (e.g. excessive
noise, pollutants), as well as addressing physical and mental
wellbeing.
•
We are committed to creating a diverse and inclusive culture that
fosters wellbeing and supports retention and development of a
range of talents. In 2023, the proportion of women employed
increased to 23.6%, exceeding our target for the year. Our
apprenticeship scheme accepted a total of 247 candidates, mostly
from local communities, 83% of whom were women. We continue to
focus on increasing the number of employees with disabilities and in
2023 disabled employees represented 1.4% of the workforce, a 15%
increase on last year.
•
We maintain excellent relations with our workforce and six new
collective bargaining agreements were successfully concluded by
the end of December 2023. These agreements are on top of the
inflation linked increases that are already built into agreements and
employees' contracts providing financial security in periods of higher
inflation.
•
During 2023, in my capacity as the Senior Independent Director
andChair of the Remuneration and Talent Management Committee,
Itravelled to our operations at Los Pelambres, Centinela and Zaldívar
with other members of the Board to speak with employees and
contractors of the Group to understand their day-to-day experiences
and to hear their views and ideas. I met with groups of female
employees to understand the challenges they face, working in a
predominantly male dominated industry and working environment.
Iam grateful for the valuable insights shared by all those we met
with and have reported these back to the rest of the Board. The
Remuneration Committee will keep these insights in mind through
2024 when decision-making.
•
During 2023 we developed a decarbonisation strategy, and through
this work, the Company has been able to publish updated emissions
reduction targets.
•
We are strongly positioned to supply the much-needed copper that
plays an integral role in the world’s transition to a low carbon
economy. We endeavour to meet that demand in a responsible and
sustainable way, ensuring we create value not just for our
shareholders, but also for our employees, our communities, our
partners, and our planet as a whole.
Core Business
Weighting 50%
Business Development
Weighting 25%
Sustainability and
Organisational Capabilities
Weighting 25%
45%
65%
90%
Annual bonus for 2023
The total bonus payout in relation to Group performance was therefore
70% of the maximum.
Individual performance (30% of bonus)
The CEO met 100% of his individual performance objectives.
Find out more on page 168.
LTIP outcome
The anticipated vesting level for the 2021 LTIP awards is 81.3% of the
maximum. The outcome of the relative total shareholder return
measure of the LTIP performance targets will not be known until after
the Annual Report is published, but it is anticipated that the
achievement will be 62.6% of the maximum. 100% of the Mineral
Resources Increase target was achieved, as well as 100% of the
Environmental and Social commitments targets and 100% of the
Projects’ portfolio performance targets. The actual final vesting for the
LTIP will be included in next year’s report.
Find out more on page 169.
Mineral Resources
Increase
target met
Environmental and
Social commitments
targets met
Projects’ portfolio
performance
targets met
100% 100% 100%
CEO’s performance and incentive outcomes
for the year
Overall, the Committee is comfortable that the range of incentive
outcomes described below adequately reflects the performance of the
Group and CEO and demonstrates the balanced nature of the incentive
plan measures and targets in operation.
Annual bonus outcome
The overall bonus for the CEO was 78.7% of the maximum.
Group performance (70% of bonus)
The result for Core Business targets was 45% of the maximum target,
recognising the challenging headwinds of higher inflation and input
costs during the year, as well as water scarcity due to the delay in the
desalination plant impacting copper production. Despite these
challenges, copper production increased 2% year-on-year and EBITDA
results were solid, between target and maximum of our original STI
(short term incentive) targeted performance supported by the higher
commodity prices of our secondary metals. The result for the Business
Development targets was 65% of maximum, and the Sustainability and
Organisational Capabilities targets was 90% of maximum, with safety
being met in full. The outcome of 60% of maximum was automatically
adjusted upwards in line with our remuneration policy, as there were
no fatal accidents during the year. This safety adjustment to the
performance score outcome was equal to +10 percentage points.
Antofagasta plc Annual Report 2023 157
Our approach to the CEO’s remuneration in 2024
Base salary
The CEO’s annual base salary is paid in Chilean pesos, and presented in this report in US dollars. The CEO's annual
base salary will be $1,284,017 from 1 January 2024. During 2023, the CEO’s base salary was periodically reviewed
and adjusted for inflation, in line with our remuneration policy and the CEO’s employment contract. The CEO’s base
salary is also periodically reviewed and adjusted to reflect exchange rate adjustments, however, the exchange rate
hurdle of 5% was not met in November 2023, therefore no related adjustment was made. The Chilean peso/US dollar
exchange rate will continue to be monitored during 2024. The Committee continues to monitor the value of the overall
remuneration package of the CEO in comparison to peers in the FTSE 100 mining industry and our core global copper
mining peer group.
Find out more on
page 176.
Annual bonus
The Committee continues to agree that the annual bonus balanced scorecard works well and focuses on the right
KPIs for the business.
The scorecard for 2024 reflects the scorecard for 2023, with some minor changes that are intended to optimise
performance assessment and focus management on our key goals. Core Business objective weightings have been
adjusted to allow for the inclusion of Innovation. Innovation was previously part of the Business Development
objectives; however, the Committee believe that Innovation is key to our day-to-day operations and success, and
henceforth should be a Core Business focus.
Find out more on
page 176.
LTIP
Our fundamental LTIP structure and KPIs remain unchanged with a balanced scorecard measuring relative returns
to shareholders, focusing on critical aspects of our projects portfolio, environmental and sustainability commitments.
For 2024 we have adjusted the weightings associated with Mineral resources (formerly 25%, reduced to 12.5%)
and Projects’ performance (formerly 12.5%, increased to 25%) to enhance the focus on, and visibility of, Projects’
performance, as we strive to meet the challenges set out in our Group strategy over the next 3 years.
In addition, for 2024, to reflect the importance of safe environmental practices to the Group, we have introduced
compliance with the Global Industry Standard on Tailings Management as a target in the sustainability commitments.
Under our remuneration policy the Committee has the ability exceptionally to make an LTI award up to 325% of base
pay. The Committee has decided to award the CEO an LTIP award of 300% for 2024, to maintain the competitiveness
of our CEO remuneration package and ensure continued leadership stability of the organisation at this time of growth.
Our company is a world leading copper company and we have a world leading CEO, recognised in many markets for
his expertise and experience and we compete for talent on a global stage including companies in the US, UK, Australia
and local companies in South America and Chile. The Committee is conscious of increasing pressure on levels of pay
for top talent in the global mining market and recent changes and proposals in the UK FTSE 100 market. Retaining
our CEO and leadership team is essential to the delivery of our long term goals and delivery of shareholder value.
Even with this increased exceptional award and the 2024 base pay, the level of total target remuneration, using 2023
comparative peer pay data, remains below the lower quartile of both the FTSE 100 mining peer group and our global
copper mining peers.
Find out more on
page 177.
Directors’ fees
No fee changes are anticipated for Directors in 2024.
Find out more on page 178.
The remuneration policy operated as intended for 2023 and no changes to the policy are considered necessary for 2024. The implementation of
the remuneration policy in 2024 will be in line with the remuneration policy approved by shareholders at the AGM in 2023.
FRANCISCA CASTRO
Chair of the Remuneration and Talent Management Committee
Antofagasta plc Annual Report 2023158
CORPORATE GOVERNANCE
Remuneration and Talent Management Committee Chair’s introduction continued
Antofagasta plc Annual Report 2023 159
Remuneration at a glance
Summary of business performance (strategic performance outcomes in 2023)
2023 Annual Bonus
2023 Annual Bonus
Element Measure
Weighting Level required for
maximum vesting
Actual
achievement
Achievement (%
of STI maximum)
Core business EBITDA ($m) 15% 3,108 3,009 85%
Production 22% 702.9 660.6 25%
Cash Costs 13% 211.6 230.7 30%
Business
development
Growth 15%
*Further details provided on page 166
55%
Exploration 5% 80%
Innovation and digital transformation projects 5% 95%
Sustainability and
organisational
capabilities
Safety 5% 100%
People 5% 90%
Environment 10% 75%
Social 5% 100%
Total outcome – pre-adjustments 60%
Adjustment for meeting zero fatality target 10%
Total Group Performance (70% of Annual Bonus) 70%
Individual Performance (30% of Annual Bonus) 100%
Total Annual Bonus Outcome 78.7%
660.6k tonnes
Copper production
$0.72/share
EPS performance
Zero fatalities
Safety record
for the year
23.6%
Female direct
employee
participation
2050
carbon neutral
Group sustainability
objective
CEO’s pay outcome
for 2023
$4,836k
Total remuneration for the CEO
100%
CEO’s individual performance
0
50
100
150
200
250
300
Dec 23Dec 22Dec 21Dec 20Dec 19Dec 18Dec 17Dec 16Dec 15Dec 14Dec 13
Antofagasta FTSE All-Share Global X Copper Miners ETF
TSR performance
Antofagasta plc Annual Report 2023160
CORPORATE GOVERNANCE
LTIP: vesting in 2024
Element Measure
Weighting Achievement (% of maximum)
Relative total shareholder value TSR v Global X Copper Miners ETF over three years
(estimated)
50.0% 62.6%
Mineral resources Increase over three years 25.0% 100%
Projects’ performance Key projects’ milestones 12.5% 100%
Sustainability commitments Compliance with social management plan initiatives,
and climate change and environment commitments
12.5% 100%
Total outcome 81.3%
How the Policy will be implemented in 2024
2024 Annual Bonus
Element Pillar of strategy Measure Weighting
(as % of
total bonus)
Mining division’s performance (70% of bonus opportunity)
Core Business
Competitiveness
EBITDA, Copper Production, cash costs
and innovation
35%
Business Development
Growth
Growth and Exploration
17.5%
Sustainability and
organisational capabilities
Safety and sustainability
Safety and Health, People, Environment
and Social
17.5%
Individual Performance (30% of bonus opportunity)
Individual performance
People
Safety and sustainability
Competitiveness
Growth
Innovation
The individual objectives for the CEO are based on
critical strategic areas as part of our vision for the
company – talent, culture, core business, growth,
competitiveness, safety & sustainability and innovation.
30%
2024 Long-term incentive plan – performance award KPIs
The Committee has decided to award the CEO an increased exceptional award of 300% for 2024.
Element Pillar of strategy Measure Weighting
Relative total shareholder
return
Competitiveness
Antofagasta’s Total Shareholders Return (TSR)
compared to Global X Copper Miners ETF (CopX Index)
over three year period.
50.0%
Project portfolio progress
Growth
Progress of key projects portfolio, including Los
Pelambres Concentrate Pipeline and Desalination Plant
Expansion, Los Pelambres Expansion Phase 2 – Future
expansion, Centinela Second Concentrator and
Zaldívar's Primary Sulphide Project.
25.0%
Mineral resources
Growth
Mineral resources at the end of the performance period
12.5%
Sustainability Commitments
Safety and sustainability
Social agreements commitments (40%)
Climate change & Environment (60%)
•
Water Efficiency Strategy
•
Circular Economy Strategy
•
Decarbonisation Plan Implementation
•
Global tailings standard (new this year)
12.5%
Antofagasta plc Annual Report 2023 161
Summary of the 2023 Directors’
and CEO’s remuneration policy
The tables below set out a summary of the Remuneration Policy that was approved by shareholders at the Company’s AGM that took place
on10May 2023. The full Policy is available on the Company’s website (www.antofagasta.co.uk).
Policy table for the CEO
Purpose and link
to strategy
Operation Maximum opportunity Performance measures
Base salary
To retain and attract
high-calibre executives
by offering globally
competitive salary
levels.
Typically, base salaries
are reviewed annually.
Base salaries and any
increases take into
account:
•
the individual’s role,
performance and
experience,
•
the Company’s
performance, the
external environment
and cost,
•
salary increases for
the wider workforce,
and
•
salary levels for
comparable roles at
relevant comparator
companies.
There is no prescribed
maximum, although salary
increases consider those of the
wider workforce. Chilean labour
contracts are adjusted
periodically to reflect Chilean
inflation, and adjustments may
also be made due to union
labour negotiations.
In addition to the salary
increases already mentioned,
there may be additional
increases when the Committee
considers it appropriate,
including (but not limited to):
•
a significant increase in the
scale, market comparability
or responsibilities of the role,
and
•
individuals appointed on a
salary lower than market
levels, where increases
above those of the wider
workforce may be made to
recognise experience gained
and performance in the role.
Such increases will be explained
in the relevant Annual Report.
Individual and mining division performance is
considered when determining base salaries and
increases.
Benefits
To provide market
competitive benefits.
Benefits typically include
life and health insurance.
Other benefits may be
offered where
appropriate, including,
but not limited to, car
allowance, pension
contribution,
professional fees and
relocation allowances.
Benefits are reviewed
periodically.
There is no maximum overall.
None
Antofagasta plc Annual Report 2023162
CORPORATE GOVERNANCE
2023 Directors’ and CEO’s Remuneration Policy
Purpose and link
to strategy
Operation Maximum opportunity Performance measures
Annual Bonus Plan
To focus on delivering
annual financial and
non-financial targets
designed to align
remuneration with the
Company’s strategy
and to create a
platform for future
sustainable
performance.
The bonus is earned
based on achieving
one-year performance
targets. It is paid in cash.
Maximum of 200% of salary The bonus is based on financial, operational,
strategic and individual measures.
Performance measures and weightings are
reviewed annually to ensure they continue to
reflect the Company’s strategic priorities. At least
50% of the bonus will be based on the Mining
division’s financial, operational and strategic
performance. Other metrics include, but are not
limited to, business development, organisational
capabilities, sustainability and safety.
In addition, an automatic adjustment applies to the
Mining division’s performance score under the
Annual Bonus Plan, downwards if there is a fatality
during the year and upwards if there is no fatality.
This further aligns the Mining division’s incentives
with the core value of safety and our goal of zero
fatalities. The Committee will consider whether this
should continue to apply annually, considering the
Mining division’s safety culture and performance.
The annual bonus starts accruing at ‘threshold’
performance (0% payout), with a payout of 50% of
the ‘maximum’ when ‘on-target’ performance is
achieved.
The Committee retains the discretion to adjust
bonus outcomes to ensure they reflect underlying
business performance, the impact of the
commodity price and any other relevant factors.
Long-Term Incentive Plan (LTIP)
To align with the
shareholders’
experience and focus
on long-term,
sustainable
performance.
Awards under the LTIP
will typically comprise:
•
Performance Awards
– performance is
measured over a
three-year period with
vesting, thereafter,
comprising at least
70% of the total LTIP
awards.
•
Restricted Awards
– vest one-third each
year over a three-
year period,
comprising a
maximum of 30% of
the total LTIP awards.
Awards will usually be
made in the form of a
conditional right to
receive a cash payment
by reference to the value
of a specified number of
the Company’s shares.
Malus may be applied in
exceptional
circumstances, as
detailed in the notes to
the Policy table in the
2022 Annual Report.
Maximum of 200% of salary,
increased to 325% in
exceptional circumstances.
Performance Awards will be based on a
combination of shareholder return and strategic
performance measures aligned with the business
priorities.
The targets, measures and weightings are
determined by the Committee annually. The
shareholder return measures are at least 50% of
the Performance Awards.
Performance Awards begin vesting at ‘threshold’
performance, with the amount depending on the
performance metric. This level is intended across
all metrics to be 0% at the threshold and an
aggregate average of approximately 50% of the
maximum at ‘on-target’ performance.
No performance conditions usually apply to
Restricted Awards.
The Committee retains the discretion to adjust
payments to ensure they reflect underlying
business performance, the impact of the
commodity price and any other relevant factors.
Antofagasta plc Annual Report 2023 163
Policy table for the Chair and Non-Executive Directors
Purpose and link
to strategy
Operation Maximum opportunity Performance measures
Fees
To attract and retain
high calibre,
experienced Directors
by offering globally
competitive fee levels.
The Chair receives an annual base fee.
Non-Executive Directors receive an annual base
fee.
Directors may receive further fees for serving as
Senior Independent Director, a Board Committee
Chair or a Committee member.
Separate base fees are paid for serving on the
Antofagasta Minerals Board or as a Director or
Chair of any subsidiary or joint-venture
company.
Ramón Jara also receives a base fee (adjusted
for Chilean inflation) for advisory services
provided to Antofagasta Minerals pursuant to his
service agreement.
Fees are subject to review, which will take into
account time commitment, responsibilities and
market practice.
Total fees paid will be within
the limit stated in the
Company’s articles of
association.
Changes may be made to
Chilean-peso-denominated
fees to adjust for Chilean
inflation.
None
Benefits
To provide appropriate
benefits and reimburse
appropriate expenses
that Directors incur in
the performance of
their duties.
Non-Executive Directors are entitled to
reimbursement for reasonable expenses
incurred during the performance of their duties,
including any tax due on the reimbursements.
Benefits may include the provision of life,
accident and health insurance, professional
advice and other minor benefits, including
occasional spousal travel in connection with the
business.
Benefits are set at a level
appropriate to the individual’s
role and circumstances. The
maximum will depend on the
type of benefit and cost of its
provision.
None
Antofagasta plc Annual Report 2023164
CORPORATE GOVERNANCE
2023 Directors’ and CEO’s Remuneration Policy continued
Factor How the Committee addresses the factor
Clarity
Remuneration arrangements are
transparent and promote effective
engagement with shareholders
and the workforce.
Our rationale for operating two long-term (performance and restricted) incentive awards is straightforward
and well-communicated. The performance measures used in the Annual Bonus Plan and LTIP are used
internally and externally in tracking and communicating business performance, ensuring that participants
understand them well. We are careful not to make unnecessary changes to the executive remuneration
policy; we seek year-on-year consistency which enhances the policy’s simplicity and effectiveness. The
Committee Chair engages with and seeks the views of our shareholders on material changes to executive
remuneration. Shareholder views were obtained and are reflected in the current remuneration policy. Views
of the workforce are considered via the Company’s workforce engagement mechanisms described in more
detail on page 165. Remuneration-related topics on which employee views are sought include benefits, pay
fairness, alignment between individual performance and pay and sharing in the Company’s success.
Predictability
The range of possible values of
rewards for the CEO is identified
and explained at the time of
approving the policy.
Target ranges and potential payout levels are disclosed in advance, allowing shareholders and participants
to understand the potential value of the package in different performance scenarios.
The Committee carefully considers the performance measures for the annual bonus and LTIP each year
and seeks to achieve consistency (when appropriate), with only necessary changes being made so that the
plans are sufficiently predictable.
When setting performance targets, the Committee considers the same range of internal and external factors
each year. This provides consistency in policy implementation.
Simplicity
Remuneration structures are
uncomplicated, and their rationale
and operation are both easy to
understand and consistent for the
CEO and, where applicable, those
below him.
Each element of pay is clearly communicated.
Our incentive plans are market typical designs, making it easier for participants to understand.
Where appropriate, incentive arrangements flow down through the organisation to align the interests of
employees and senior management with those of our shareholders and to encourage and share value
creation.
Proportionality
The link between individual
awards, the delivery of strategy
and the long-term performance
of the Company is clear.
Performance conditions in the annual bonus and performance share awards require a minimum level of
performance before any payment is made to senior management, and performance targets are aligned with
our business plan and strategy. Remuneration is considered in the context of the wider employee
population, including pay gap information, to assess its appropriateness.
Truly stretching performance is required for the maximum to payout under our incentive plans. This
ensures that executive rewards align with the experience of shareholders.
There are clearly defined maximum opportunities, as set out in our 2023 Policy.
Risk
Reputational and other risks from
excessive rewards, and
behavioural risks that can arise
from target-based incentive plans,
are identified and mitigated.
Incentive plan performance measures are balanced to promote the right behaviours and appropriate
safeguards are put in place, including adjustments for safety performance.
While clawback has not been introduced due to uncertainty around its legal validity in Chile, LTIP awards are
subject to malus.
The Committee retains the discretion to adjust outcomes under the plans for variable remuneration.
Alignment to culture
Incentive plans drive behaviours
consistent with the Company’s
purpose, values and strategy.
Our 2023 Policy continues to be aligned with the business objectives to create sustainable value and high
profitability. We reward strong performance aligned with our business objectives, but only if the methods used
align with our safety and sustainability objectives. In 2024, all executive and supervisor performance bonuses,
including the CEO’s, include an assessment of individual performance related to the Group’s Leadership Model
which defines the behaviours that we require all employees to demonstrate, and is intended to connect and
enhance our excellence management system and the strength of inclusive leadership.
Our remuneration philosophy reflects local
regulations and market practices while aligning
with UK best practices and governance.
Local regulations, market practices and remuneration structures
available in Chile are a central consideration when structuring the
CEO’s remuneration. Real share awards have not been part of the
executive remuneration structure for employees since the LTIP was
first implemented a decade ago because, until recently, in Chile they
were taxable in full at the date they were granted. Considering the
potential future uncertainty on taxation and as the use of real shares
continues to be uncommon in Chile, all the Company awards continue
as cash awards linked to a notional number of shares and share price
performance.
Although our CEO is not a Director of the Company, we have
voluntarily disclosed his remuneration since 2014 and provided details
throughout the remuneration report to allow shareholders to
understand how these structures support the strategy and promote
long-term sustainable success. Since the implementation of the
European Shareholders’ Rights Directive II in 2019, these disclosures
have become mandatory and are included in this report. The final
decisions in respect of the CEO’s remuneration are always made by
the Committee and the CEO is not present for this part of the meeting,
ensuring that the Committee makes independent decisions in the best
interest of Antofagasta.
The Committee follows the UK Corporate Governance Code. The table
below summarises how we have considered Code provision 40 when
developing and implementing our remuneration strategy.
Our remuneration philosophy
Antofagasta plc Annual Report 2023 165
The table below sets out the remuneration received by the CEO in respect of the years ended 31 December 2023 and 31 December 2022.
Salary/Fees
$’000
2
Benefits
$’000
3
Bonus
$’000
4
Restricted
Awards
$’000
5
Performance
Awards
$’000
6,7
Total
remuneration
$’000
Total fixed
remuneration
$’000
Total variable
remuneration
$’000
Iván Arriagada
1
2023 1,307 136 2,020 802 571 4,836 1,443 3,393
Iván Arriagada
1
2022 833 115 1,846 520 1,978 5,292 948 4,344
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. As explained in last year’s annual report there were a number of increases to the CEO’s base salary during 2022 and 2023, impacting the 2023 salary figure shown. Firstly in accordance
with the CEO’s contract there was a 17.6% exchange rate increase, plus a 2.8% inflation increase in 2022. Secondly, at the start of 2023 as disclosed in the 2022 annual report, the
CEO’s base salary increased by a further 20% from January 2023. During 2023 an inflationary increase of 4.8% has been applied in December 2023.
3. 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. These principally
relate to the cost of attending Board and other meetings and the Company’s Annual General Meeting in London (which comprise $93,000 of the total expenses shown above, including the
related tax effect). 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 2023 is a benefit of $9,892 and in 2022 was a benefit of $6,505.
4. Mr Arriagada's bonus is paid in Chilean pesos and reported in US dollars. The 2022 annual bonus was paid following the date of publication of the 2022 Annual Report and the exchange
rate used has been updated with the rate applicable at the date the bonus was paid. The exchange rate as of March 2023, which was used to update the 2022 annual bonus, is Ch$/USD
790.41 vs Ch$/USD 855.86 in January 2023.
5. 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.
6. 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 2023
performance period of £14.36/share and USD/GBP 1.24. Performance awards are cash awards linked to a notional number of shares (39,442) and the Company’s share price
performance. There was no entitlement to dividends or dividend equivalents.
7. The Performance Awards included in the 2022 total vested on 27 March 2023. 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 100% of the
maximum. The increase in the value reported for the 2020 LTIP reflects the change in share price and exchange rate at vesting. The share price and exchange rate used to value this
award are £15.31/share and USD/GBP 1.23. For the 2020 LTIP, the value attributable to an increase in the Company’s share price is $343,767. The value at the time of the grant reached
based on $868,000 with a £6.98/share and USD/GBP 1.18 with an increase in the value reported as $1,110,271. The notional number of shares over which the performance awards were
granted was 105,295. There was no entitlement to dividends or dividend equivalents.
Annual bonus – audited
Group performance (70%)
The targets and achievements for the 2023 annual bonus are set out below. 70% of the CEO and Executive Committee’s 2023 annual bonuses
were calculated based on the Group’s performance against these criteria in 2023:
Measure
Weighting
%
Threshold
(0% vesting)
On-target
(50% vesting)
Maximum
(100% vesting)
Actual
achievement
Achievement
(% of maximum)
Core business 50% 45%
EBITDA – Mining division
1
($m) 15% 2,543 2,825 3,108 3,009 85%
Copper production
2
(kt) 22% 650.9 671.7-692.5 702.9 660.6 25%
Cash costs before by-product credits
3
(c/lb) 13% 238.6 225.1 211.6 230.7 30%
Business development 25% 65%
Growth projects
4
15%
Measured according to the schedule and budget,
as described in more detail in the footnotes.
55%
Exploration programmes
5
5% 80%
Innovation and digital transformation projects
6
5% 95%
Sustainability and organisational capabilities 25% 90%
Safety – Mining division
7
5%
Measured according to the KPIs and milestones as
described in more detail in the footnotes.
100%
People – Diversity and Inclusion Strategy
8
5% 90%
Environmental performance
9
10% 75%
Social performance
10
5% 100%
Total outcome – pre-adjustments
Adjustments are described in more detail
in the footnotes.
60%
Adjustment for meeting zero fatality target
11
10%
Board discretion applied
12
0%
Total outcome – post-adjustments 70%
13
CEO’s single figure of
remuneration (audited)
Antofagasta plc Annual Report 2023166
CORPORATE GOVERNANCE
2023 Directors’ and CEO’s Remuneration Report
1. The EBITDA targets were adjusted for exchange rate, inflation and copper price
fluctuations, and explosives price fluctuations, and the effect of one-off bonuses paid on
conclusion of labour negotiations at Minera Centinela, Los Pelambres, and Zaldívar, which
were not included in the Group’s budget.
2. The copper production outturn level (which includes 50% of Zaldívar) reflects the
stretching targets set at the beginning of the year in line with expectations of greater
water availability through our desalination plant. As the desalination plant was delayed
beyond the original schedule this impacted production, but despite this our Mining
Division successfully produced 660,600 tonnes of copper, representing a 2% increase
year-on-year.
3. The cash cost targets were adjusted for the same factors as the EBITDA targets (except
for copper price fluctuations, which do not impact this measure).
4. Split between: Los Pelambres Phase 1 Expansion Project (4%), Los Pelambres critical
infrastructure projects, including desalination plant increase, concentrate pipeline and El
Mauro enclosures (collectively PAO), and Los Pelambres – mine life extension (EVU)
(2%), Centinela: Second Concentrator Detailed Engineering (5%), Zaldívar: CMZ II
Enablers (2%) and Permission Strategy Zaldívar (2%). The overall result for this measure
was 55% of the maximum. The underlying performance targets and outcomes are set out
below.
• Los Pelambres Phase 1 Expansion Project: the result was that the threshold target was
not achieved. Threshold (50%) beginning production less than 30 days late and (50%)
beginning production on 400 lt/s less than 60 days late.
• PAO/EVU: The result was between threshold and target performance. Threshold
(100%) presenting the investment for approval within 120 days of approval from the
PAO EIA. Target (70%) at least 85% progress of the approved PAO programme, (30%)
finalising the processing strategy for entry to the EVU with reference to the PAO EIA.
• Centinela Second Concentrator Detailed Engineering: The result was between target and
maximum performance. Target (100%) progress according to the approved programme
(investment decision during 2023). Maximum (50%) renegotiation of Purchase Orders
for critical equipment due to deadline extension to 2023 with no impact on the execution
of the project, and (50%) negotiations for the term extensions of the vertical packages of
work not impacting capex by more than 2.5%.
• Zaldívar II Enablers: The result was between target and maximum performance.
Target (50%) documentation is ready to start bidding for the design and construction
of the Pioneer Camp at Zaldívar in Q4 2023 and (50%) documentation is ready for
a tender process in Q4 2023 for the Engineering, Procurement and Construction
(EPC) of Zaldivar’s conversion to either sea water or third party water sources.
Maximum (100%) all critical milestones met in 2023.
• Zaldívar permission strategy: Maximum (100%) approval for the DIA bridge in Q4
2023. Management completed all works required for approval of the DIA bridge and
submitted for final approval in Q4 2023. The government finalised this approval in
January 2024. The Board therefore determined the result was maximum performance.
5. Includes targets to assess the progress of exploration programmes and consolidation of
exploration ownership interests, split between Cachorro deposit (60%), Encierro deposit
(20%) and international exploration (20%). All the programmes were advanced according
to the plan. The result was 80% of the maximum.
6. Split between compliance with the Innovation Roadmap (50%) and Data Analytics (50%).
Milestones for the Innovation Roadmap measure at target was 50% based on IROC
Minera Los Pelambres and 50% based on IROC Centinela. The overall result for
Innovation and digital transformation projects was 95% of maximum, made up of 85% of
maximum achievement for the Innovation Roadmap measure and 100% of maximum
achievement for the Data Analytics measure.
• IROC Minera Los Pelambres: (50%) Operating with a 85% value capture in 2023 and
(50%) achievement by Q2 of 200l/s then 400l/s at the desalination plant for target
achievement.
• IROC Centinela: becoming compliant with Value Levers in Budget for Concentrator
Plant – copper recovery 85.98%, mineral ore processed 107 Ktpd, and Hydrometallurgy
Plants – copper recovery 62.31%, for target achievement.
• To achieve maximum payout on the Innovation Roadmap measure, milestones were
25% based on IROC Minera Los Pelambres: (50%) Operating with value capture over
105% of expected 2023 and (50%) Q3 – 2023 start of fourth milling line from IROC.
25% based on North Zone: approval to advance to feasibility stage and incorporation into
2024 budget of next phase. 25% based in IROC Centinela: Fulfilment of Value Levers
2023 budget: Concentrator Plant (1/3) Cu Recovery: > 85.98%. (1/3) Ore Processed:
> 107 Ktpd Hydrometallurgy Plants (1/3) Cu Recovery: > 62.31%, and Autonomy Control
Room transfer to IROC. 25% Standardisation of IROC development model.
• Milestones for the Data Analytics measure were related to the level of materialisation
of active advanced analytics tools, requiring $11.5 million for maximum achievement.
7. Split between performance against targets for reducing high potential incidents (50%)
and decrease in similar exposure group (SEG) of occupational hazards (50%). These
metrics were met in full, and the Lost Time Injury Frequency Rate (LTIFR) trigger which
applied for a LTIFR of higher than 1 was not triggered.
• Reduction in High Potential Incident (HPI) rate targets were: maximum: 0.09.
• The SEG targets were: maximum: 10% or more.
8. Performance against targets for implementation of the Diversity and Inclusion Policy.
(50%) of the target was based on the D&I Roadmap implementation and (50%) was
based on an increase in the percentage of female direct employees by the year's end.
Performance was between target and maximum for this measure with 90% of objectives
being met. A 15% negative trigger would apply if the overall target of 1% of people with
disabilities is not met, however, this target was met during the year and so no negative
trigger applies.
• On-target: implementation of roadmap by April 2023 and 22.0% female direct
employees.
• Maximum: meet all implementation objectives and at 23.1% female direct employees.
9. Split between compliance with a regulatory requirements action plan (40%), and
implementation of the Climate Change Roadmap (60%). This metric was met 75%.
• Regulatory requirements action plan: This measure was achieved in full with 100%
payout. Maximum: obtaining the Copper Mark ratification at Antucoya by June 2023
and at Los Pelambres by August 2023; and the internal evaluation for Centinela and
Zaldívar by December 2023.
• Implementation of the Climate Change Roadmap: This measure was partially achieved
at 60% of the maximum. Target: (25%) Pillar 1: Implementation of Circular Economy
Strategy, (25%) Pillar 2: (25%) Comply with the Energy Performance Indicators of the
2023 budget, (25%) Incorporate into the Climate Change scenario, of the 2023 annual
planning process, the action to implement energy efficiency measures, for each
Company, (25%) Incorporation of the 2022 Decarbonisation Plan in the annual
planning process and incorporation of the scenario in the 2024 Budget and
development of the Second Stage of the Plan. (25%) Target definition of Scope 3 (% to
be defined during 2023), (25%) Pillar 3: (34%) Increase the water efficiency of the
Mining Group by 0.25%, which is equivalent to decreasing the consumption at ~35 l/s
as a whole for the Group. (33%) Develop a pre-feasibility study of a technological
initiative in all Mining Group Companies. (33%) Achieve an average of 70% compliance
with the Water Management Standard by 2023 for the global GM Companies. (25%)
Pillar 4: Climate Change Standard Approval in H1. Maximum: (25%) Pillar 1:
Implementation of Circular Economy Strategy, (25%) Pillar 2: (50%) Compensation
Strategy Definition, (50%) Reduction of 1.5% with the implicit Energy Performance
Indicators of the 2023 budget, (25%) Pillar 3: (50%) Increase the water efficiency of
the GM by 0.5%, which is equivalent to reducing consumption at ~70 l/s as a whole for
the Group. (50%) Achieve by 2023 an average of 75% compliance with the Water
Management Standard for the global Mining Group Companies, (25%) Pillar 4:
Definition of Baseline for implementation of the Climate Change Standard (identification
of gaps and definition of an action plan).
10. Performance against the planned execution of social initiatives. This metric was met in
full. Maximum: (40%) 3% savings in Social Initiatives budget, (40%) Minera Los
Pelambres/North District measurement tools implementation, (20%) Positive results in
the application of the reputation perception tool defined in 2023.
11. A standalone adjustment trigger of 15% of the calculated outcome is applied to the Annual
Bonus Plan, upwards if there are no fatalities during the year or downwards if there are
one or more fatalities. As there were no fatalities in 2023, the final Mining division’s
outcome was increased by 10% (from 60% of maximum to 70% of maximum).
12. The Board did not make any discretionary adjustments to the bonus.
13. For the purposes of calculation of outturn results, one decimal place has been used,
but for simplicity in reporting, above figures have been shown as rounded to the nearest
whole figure. Performance objectives are evaluated on a twenty-point scale with the
minimum (90), target (100) and maximum (110), each point from 90 to 110 corresponding
to 5% of the maximum objective.
Antofagasta plc Annual Report 2023 167
Individual performance (30%)
The individual objectives for the CEO were based on critical strategic areas as part of our vision for the Company – organisation, leadership,
culture, people, growth, competitiveness, safety and sustainability and innovation. Based on individual feedback from Directors, the Committee
assessed Iván Arriagada’s performance against his personal objectives as 100% of the maximum for his contribution to the individual strategic
business goals during the year. All his objectives were exceeded, which count towards 30% of his annual bonus. This outcome reflects
exceptional performance during a challenging year in continuing to deliver a culture of excellence as well as develop the business across its core
strategic growth areas establishing a stronger foundation to build future value for all our stakeholders. Iván Arriagada’s performance against
each of his objectives is summarised below:
Key Goals Performance
Keeping the Board well-informed
and responding to feedback
received during the year.
Kept the Board well-informed of key issues and developments, demonstrating a strong professional
working relationship, patience, respect and responsiveness to ideas, suggestions and feedback,
ensuring that the Board’s perspectives were incorporated in decision-making throughout the Group.
Leading the Group’s core values
and developing a culture of
excellence.
Strong visible and proactive leadership, exemplifying the Group’s core values, with effective
leadership continuing to foster a corporate culture of excellence.
Outstanding 2023 safety performance supported by strong environmental performance and people
and organisation initiatives.
Implementing strategy including in
relation to long-term growth
Demonstrated strategic vision to strengthen the Group’s operations, projects and project capabilities
to support the advancement of key projects at Los Pelambres and Centinela during the year.
Focusing on the Group’s core
business
Maintained focus on the core business in a year with significant activity in various areas.
This included the successful implementation of projects that continue to improve operational
performance
Developing talent, ensuring
appropriate succession planning
and performance management.
Demonstrated continued improvements in succession planning and talent initiatives with a consistent
and more diverse talent pool across the business.
Successfully restructured the Executive Committee and senior management positions with the
promotion of internal talent and by attracting internally diverse talent to prepare the business for
current challenges.
Pursuing exploration and business
development opportunities.
Promoted and executed a growth strategy that balanced brownfield growth and internationalisation.
This included completion of the Desalination Plant project at Los Pelambres, the approval of
Centinela’s Second Concentrator and Minera Los Pelambres’ key infrastructure projects and the
Group’s investment in exploration and Buenaventura in Peru.
Promoting the Group’s reputation,
working with key stakeholders and
local communities
Outstanding contribution to the visibility and reputation of the Group in Chile, with stakeholders,
investors and in the international mining industry.
Performance adjustments, discretion and CEO’s total annual bonus for 2023
Based on Iván Arriagada’s performance achieved against his 2023 targets, the Committee determined that he would receive a bonus payment
of $2,020k. This figure was determined as follows:
Overall performance score (70% x 70%) + (30% x 100%) = 78.7% of the maximum
(As a percentage of the maximum) 78.7% of $2,568k
Gross annual bonus = $2,020k
Calculated in US dollars using the exchange rate as of 31 December 2023 of $1 = Ch$877.12
Because the annual bonus is calculated and paid in Chilean pesos, it is subject to exchange rate movements when reported in US dollars.
The amount of bonus paid was not linked to share price appreciation.
Antofagasta plc Annual Report 2023168
CORPORATE GOVERNANCE
2023 Directors’ and CEO’s Remuneration Report continued
Long-term incentive – audited
Anticipated vesting in 2024
As noted in the single-figure remuneration table on page 166, performance against the Performance Awards granted in 2021
1
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:
Measure Weighting
%
Threshold On-target Maximum Performance Achievement
%
Discretion
applied
Relative total
shareholder
return over
three year
period
ESTIMATED
50% Global X Copper
Miners ETF
(CopX Index)
Below index Equal to index ≥5% above
index
This KPI will vest
on or after 29
March 2024. The
estimate is based
on a performance
of 2.21%
2
higher
than the index as of
23 February 2024.
62.6% No
% Score 0% 33% 100%
Mineral
resources
increase
25% Tonnes of
contained copper
82.6m 85.6m 86.6m Resources
increased to 92.1
million tonnes of
contained copper
as of 31 December
2023.
100% No
% Score 0% 50% 100%
Projects’
performance
3
12.5% (1) Los
Pelambres
pipeline
(2) Desalination
plant expansion
(3) Centinela
Second
Concentrator
(1) and (2) feasibility
study not started
(3) Not submitted
for Board approval
(1) and (2)
feasibility study
75% complete.
(3) Submitted for
Board approval
and construction
underway
(1) and (2) feasibility
study 100% complete.
(3) Construction
progress in
accordance with the
approved plan
All goals achieved 100% No
% Score 0% 75% 100%
Sustainability
commitments
4
12.5% Choapa Valley
(30%)
North District
(10%)
50% compliance with
the social
management plan
initiatives. Final
compliance is
calculated as the
average compliance
of all initiatives.
75% compliance > =85% compliance.
Considers existing
initiatives as of 31
March 2021 and those
that may be added by
31 December 2023.
100% includes
compliance with the
implementation
timelines and budget
All goals achieved. 100% No
Climate change
& environment
(60%)
50% compliance with
the emissions budget.
50% compliance with
the climate change
strategy roadmap.
50% compliance with
the internal plan for
extreme, high and
moderate risk
regulatory
requirements.
75% compliance. 100% compliance
% Score 0% 100%
Total outcome 81.3%
5
1. The number of shares and share price used and the impact of vesting % for this award is available in the notes to the single figure table on page 166 and the table setting out long-term
incentive awards outstanding for the CEO from prior periods on page 172.
2. The TSR outcome is an estimate as the performance period ends after this report is published. The actual outturn will be included in next year’s Annual Report.
3. The Los Pelambres pipeline and desalination plant expansion feasibility study is 100% complete. The PAO project had Basic Engineering completed in Nov 2022 for the piping systems and
made significant progress in engineering and construction works carried out for the 800 lt/s desalination plant by the Los Pelambres Phase 1 Expansion Project. Additionally, in December
2022 the budget was approved to commence activities of the execution stage, corresponding to detailed engineering, critical purchases (long lead), some early works, bidding of main
contracts and training of the project team, which has been taking during 2023. Finally, in October 2023, environmental approval was obtained for the project with a favourable RCA,
a milestone that enables the start of definitive construction, whose request for an investment decision is expected to be submitted to the Board of Directors in the first quarter of 2024.
Centinela Second Concentrator project was approved on 19 December 2023 with a three-year construction schedule, with critical path works commencing immediately in Q4 2023 and
full construction to commence after definitive project finance documents have been executed during Q1 2024. The Board approved plan was updated based on the Board’s decision to
postpone the approval decision until certain national regulatory conditions were met in 2023.
4. One hundred percent (100%) compliance means agreements reached with the communities near the Company’s operations, CO
2
emissions reduction following forecasts set on the grant
date equivalent to 928,163 tCO
2
e, 100% compliance with the climate change strategy roadmap and 100% compliance with the internal plan to address regulatory requirements.
5. The impact of this vesting level on the CEO’s 2023 remuneration is set out in footnote 6 of the CEO single-figure total remuneration table on page 166.
Performance adjustments and discretion
No discretion has been applied to any of the performance calculations for the 2021 LTIP outcome.
Antofagasta plc Annual Report 2023 169
The Directors’ remuneration for 2023 and 2022 is below in US dollars. Unless otherwise noted, amounts paid in Chilean pesos have been
converted at the exchange rate on the first working day of the month following the payment date. Any additional fees payable for serving on
subsidiary and joint venture company boards are also included in the amounts below.
Fees Benefits
2,3
Total
4,5
2023
$000
2022
$000
2023
$000
2022
$000
2023
$000
2022
$000
Chairman
Jean-Paul Luksic 1,015 1,015 19 16 1,034 1,031
Non-Executive Directors
Ramón Jara
1
1,133 927 99 85 1,232 1,014
Juan Claro 280 280 17 3 297 283
Andrónico Luksic C 260 260 6 3 266 263
Vivianne Blanlot 317 325 18 3 335 328
Jorge Bande (departed 31 December 2023) 320 320 18 13 338 333
Francisca Castro 337 315 35 21 372 336
Michael Anglin 335 335 7 7 342 342
Tony Jensen 353 365 21 12 374 377
Maria Eugenia Parot 316 300 17 6 333 306
Heather Lawrence (joined 18 April 2023) 196 - 6 - 202 -
Total Board 4,862 4,442 263 169 5,125 4,611
1. During 2023, $832,582 (2022 – $604,079) was paid to Asesorías Ramón F. Jara Ltda. for providing services. The increase is due to an inflation adjustment, a change in the Chilean
service provision law and decrease in the Ch$/USD exchange rate. These payments are included in the fees attributable to Ramón Jara shown above.
2. Amounts for Jean-Paul Luksic include the provision of life and health insurance. Amounts for Ramón Jara include the provision of life insurance. No such insurance is provided 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 and other meetings and the Company’s Annual General Meeting in London (which comprise $189,000 of the total expenses shown above, including the related tax effect, of which
$92,000 relates to Ramon Jara) . 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 2022 can be found on page 159 of the 2022 annual report. These remain unchanged.
Directors’ single figure
of remuneration (audited)
Payments to former directors (audited)
There were no payments made to past directors.
Payments for loss of office (audited)
There were no payments made for loss of office.
Directors and CEO’s shareholding and share interests
(audited)
The Directors who held office on 31 December 2023 had the following
interests in the ordinary shares of the Company:
Ordinary shares of 5p each
31 December 2023 1 January 2023
Jean-Paul Luksic
1
41,963,110 41,963,110
Tony Jensen – –
Ramón Jara
2
– 5,260
Juan Claro – –
Andrónico Luksic C – –
Vivianne Blanlot – –
Jorge Bande – –
Francisca Castro – –
Michael Anglin – –
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 that were held by a close family member.
There have been no changes to the Directors’ interests in the shares
of the Company between 31 December 2023 and the date of this
report.
The Directors and CEO had no interests in the shares of the Company
during the year other than those set out on this page. No Director had
any material interest in any contract (other than a service contract in
the case of Ramón Jara) with the Company or its subsidiary
undertakings during the year other than in the ordinary course of
business.
The Group does not have shareholding guidelines or requirements for
Directors, all of whom are Non-Executives.
The Chairman, Mr. Jean-Paul Luksic, and Non-Executive Director, Mr.
Andrónico Luksic C., are members of the Luksic family. Members of
the Luksic family are interested in the E. Abaroa Foundation, which
controls Metalinvest Establishment and Kupferberg Establishment,
which, taken together, hold approximately 60.66% of the Company’s
ordinary shares and approximately 94.12% of the Company’s
preference shares. In addition, Mr. Jean-Paul Luksic controls the
Severe Studere Foundation, which, in turn, controls the Aureberg
Establishment (which holds approximately 4.26% of the Company’s
ordinary shares as mentioned above). This creates significant
alignment between these members of the Board and shareholders.
During the period, no Non-Executive Director was eligible for any
short-term or long-term incentive awards, and no Non-Executive
Director owns any shares as a result of the achievement of
performance conditions.
Antofagasta plc Annual Report 2023170
CORPORATE GOVERNANCE
2023 Directors’ and CEO’s Remuneration Report continued
Long-term incentive plan awards made to the CEO during the financial year (audited)
As stated earlier in this report, all LTIP awards are cash awards linked to a notional number of shares and the Company’s share price
performance.
Type of award Date of grant Number of
shares/options
Award as
% of salary
1
Face value (market
value at date of grant)
Performance period Vesting dates
Restricted Award 29 Mar 2023 42,567 60% $801,490 N/A 29 Mar 2024
29 Mar 2025
29 Mar 2026
Performance Award 29 Mar 2023 99,321 140% $1,870,142 29 Mar 2023 to 29 Mar 2026 29 Mar 2026
1. The number of awards was calculated according to the base salary at the grant date on 29 March 2023 with the total face value described in the table. The share price used to value
these awards is £15.33/share and USD/GBP 1.23 as an average of the 5 last working days according to policy.
Performance conditions attaching to long-term incentive plan awards granted to the CEO in 2023 (audited)
Objective Weighting Threshold Target Maximum Vesting at
threshold
Vesting
at target
Vesting at
maximum
Relative total shareholder return
vs. Global X Copper Miners ETF
over three years. (CopX Index)
50% Performance below
index
Equal to index ≥ 5% above index 0% 33% 100%
Mineral resources
(contained copper)
25% 83.6m tonnes 86.2m tonnes 88.1m tonnes 0% 50% 100%
Projects performance:
(1) Los Pelambres Concentrate
Pipeline (15%)
(2) Los Pelambres Desalination
Plant Expansion (15%)
(3) Los Pelambres – Mine Life
Extension (10%)
(4) Zaldívar’s Operational
Continuity Solution (20%)
(5) Centinela Second Concentrator
(40%)
12.5% (1), (2) and (5) progress
of 40%.
(3) Addendum 2
(Document that provides
consolidated answers to
the authority’s
questions) not started as
of December 2025.
Tailings filter tests not
started as of December
2024.
(4) Definition and
approval of Zaldívar’s
operational continuity
solution: 75%
compliance with the
roadmap defined as of
December 2025.
(1), (2) and (5) progress
of 74%
(3) Addendum 2 in
preparation with 50%
progress as of
December 2025 and
tailings tests filtered
with 50% progress as
of December 2024.
(4) Definition and
approval of the Zaldívar
operational continuity
solution: 85%
compliance with the
roadmap defined as of
December 2025.
75% completion of (1),
(2) and (5)
(3) Addendum 2 entry as
of December 2025 and
filtered tailings tests
performed as of
December 2024
(4) Definition and
approval of Zaldívar
operational continuity
solution: 100%
compliance with defined
roadmap as of December
2025.
(4) Progress in the
feasibility of the Primary
Sulphides Project >= 85%
of the approved plan.
0% 75% 100%
Environmental
and social
commitments
(1) Social
Management
Plan (40%)
12.5% Greater than 50%
compliance
Greater than 75%
compliance
Greater than or equal
to 85% compliance
1
0% 75% 100%
(2) Climate
change and
environment
(60%)
50% compliance. 75% compliance. Maximum is achievable
for compliance with
Decarbonisation Roadmap
plan at 75%.
95% compliance with the
water efficiency target.
100% for implementation
of targets relating to the
Circular Economy
Strategy.
Score 75% + 95%
compliance with extreme,
high and moderate risk
regulatory requirements.
0% 75% 100%
1. Compliance with initiatives in the Group’s social management plan, including initiatives existing as of 31 March 2023 and added before 31 December 2025, on time and within the budget.
The Committee set stretching targets which incentivise the CEO and Executive Committee members to deliver exceptional performance and to
drive sustainable results. The Committee ensures that targets are appropriately stretching in the context of the business plan and prior year
achievements and that there is an appropriate balance between incentivising the CEO to meet financial targets and to deliver specific non-
financial goals.
Other relevant information
Antofagasta plc Annual Report 2023 171
0
50
100
150
200
250
300
Dec 23Dec 22Dec 21Dec 20Dec 19Dec 18Dec 17Dec 16Dec 15Dec 14Dec 13
Antofagasta FTSE All-Share Global X Copper Miners ETF
The following LTIP awards with one or more outstanding tranches have been granted to Mr. Arriagada. The number of shares to which each grant
relates is determined based on the limits set out in the LTIP rules, consideration around retention, and the share price at the time of the grant.
Year
of grant
Type of award Date of grant Number
of awards
as at start of year
Vested during
year
Lapsed during
year
Under award
as at 31
December 2023
Vesting date
2021 Performance Awards 29 Mar 21 39,442 N/A 0 39,442 29 Mar 24
2021 Restricted Awards 29 Mar 21 11,270 5,635 0
5,635
29 Mar 23
29 Mar 24
2022 Performance Awards 29 Mar 22 52,686 N/A 0 52,686 29 Mar 25
2022 Restricted Awards 29 Mar 22 22,578 7,526
1
0
7,526
1
7,526
1
29 Mar 23
29 Mar 24
29 Mar 25
2023 Performance Awards 29 Mar 23 99,321 N/A 0 99,321 29 Mar 26
2023 Restricted Awards 29 Mar 23 42,567 0 0 14,189
14,189
14,189
29 Mar 24
29 Mar 25
29 Mar 26
The performance conditions and face values at grant for the awards granted in 2021 and 2022 are set out in the Annual Reports for 2021
and 2022. No variations to the original terms of the awards have been made.
Restricted Awards are not subject to performance conditions.
1. The number of restricted awards granted in 2022 that are under award at 7,526, has been updated due to an error in last year’s report showing this figure as 7,256.
CEO pay history and Company performance
The total remuneration of the lead executives in the Group for the past ten years is as follows:
Single figure of remuneration
for the Group’s lead executive $000 2013 2014
1
2015 2016
2
2017 2018 2019 2020 2021 2022
4
2023
Chairman – Jean-Paul Luksic 3,615 2,196 – – – – – – – – -
CEO – Diego Hernández – 688 2,445 1,525 – – – – – – -
CEO – Iván Arriagada – – – 681 1,790 2,513 2,458 4,675 4,134 5,292 4,836
Annual bonus payout (% of maximum) – 69% 39% 61% 79% 66% 83% 93% 72% 81% 78.7%
LTIP payout (% of maximum)
3
– 76% 16% – 85% 60% 65% 99% 99% 100% 81.3%
1. The single figure remuneration for the Group’s lead executive in 2014 comprises Jean-Paul Luksic’s remuneration until 1 September 2014 (when he became Non-Executive Chairman)
and Diego Hernández’s remuneration from 1 September 2014. The Chairman was not eligible for variable remuneration, so the 2014 percentage figures only relate to the 2014 annual
bonus and LTIP awards vesting to the CEO.
2. The single figure remuneration for the Group’s lead executive in 2016 comprises Diego Hernández’s remuneration until 8 April 2016 (when he stepped down as CEO) and Iván Arriagada’s
remuneration from 8 April 2016 (when he became CEO). No Performance Awards were vested to the CEO in 2016.
3. Restricted Awards do not have a performance element, so they are not included in these calculations.
4. 2022 figures have been restated to reflect actual 2022 outcomes, as explained in the CEO single-figure remuneration table on page 166.
Relative TSR performance
The chart below sets out the TSR performance of the Company over the past ten years. The FTSE All-Share Index and the Global X Copper
Miners ETF (CopX Index) have also been shown over the same period. The FTSE All-Share Index has been selected as an appropriate broad
equity market index benchmark as it is the most broadly-based index to which the Company belongs and relates to the London Stock Exchange,
where the Company’s ordinary shares are traded. The Global X Copper Miners ETF is also shown because this index has been determined to be
the most appropriate specific comparator group for the Company, and the Global X Copper Miners is one of the peer groups used in the Group’s
LTIP as set out on page 171. Previously the Group used the EMIX Global Mining Index.
Indexed total shareholder returns
The following graph shows the value of £100 invested in Antofagasta on 31 December 2013 compared with £100 invested in the comparative indices.
Antofagasta plc Annual Report 2023172
CORPORATE GOVERNANCE
2023 Directors’ and CEO’s Remuneration Report continued
Change in remuneration of Directors and Employees
The table below sets out the percentage change in key elements of the remuneration of the directors, the CEO and employees.
2023 2022 2021 2020
Percentage
change in
fees/base
salary
Percentage
change in
benefits
4
Percentage
change in
annual
bonus
Percentage
change in
fees/base
salary
Percentage
change in
benefits
4
Percentage
change in
annual
bonus
Percentage
change in
fees/base
salary
Percentage
change in
benefits
4
Percentage
change in
annual
bonus
Percentage
change in
fees/base
salary
Percentage
change in
benefits
4
Percentage
change in
annual
bonus
Non-Executive
Directors
1
Jean-Paul Luksic 0% 21% N/A 0% -5% N/A 1% 15% N/A 0% 28% N/A
Ramón Jara 22% 17% N/A -4% 1,054% N/A 7% 2% N/A -4.3% 17% N/A
Juan Claro 0% 548% N/A 1% 9% N/A 2% -32% N/A 0% -64% N/A
Andrónico Luksic C 0% 129% N/A 0% 9% N/A 0% -32% N/A 0% 23% N/A
Vivianne Blanlot -2% 586% N/A 2% 9% N/A 4% -32% N/A 0% -45% N/A
Francisca Castro 7% 67% N/A 2% 771% N/A 6% -73% N/A 1% -29% N/A
Michael Anglin 0% 7% N/A 8% - N/A 9% - N/A 1% -75% N/A
Tony Jensen -3% 74% N/A 10% - N/A 34% - N/A - - N/A
Maria Eugenia
Parot (appointed
20 April 2021) 5% 182% N/A 5% - N/A N/A N/A N/A N/A N/A N/A
CEO
4
57% 18% 9% 10.4% 218% 38.5% 28.3% 51.5% -5.7% -8% -65% 38.8%
Company
employees
2
1.7% -26.6% 17.1% -10.3% 2.2% -20.3% 1.6% -0.3% 19.7% 1.8% 19.9% 7.5%
Mining division
employees
3
15.7% 22.2% 22.1% -5.8% -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. Jorge Bande has not been included in the table as he departed 31 December
2023. Ollie Oliviera has not been included in the table as he left the Board on 31 July 2021. Heather Lawrence has not been included in the table as she was appointed on 18 April 2023.
2. The parent company, Antofagasta plc, has fewer than ten employees. Reporting these figures is mandatory, and the parent company is not considered to be an appropriate comparator
group.
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. The reported increases on 2023 are due to a decrease in the Ch$/USD exchange rate, partially offset by an annual adjustment for
inflation in Chile.
4. Directors’ benefits for 2020, 2021, 2022 and 2023 are all reported in accordance with footnote 3 at the Directors’ single figure of remuneration on page 170.
5. Antofagasta has fewer than 10 employees in the UK, and therefore there is not a requirement to disclose a CEO pay ratio.
The relative importance of remuneration expenditure
The table below shows the total expenditure on employee remuneration, the distributions to shareholders and tax expenses in 2022 and 2023.
2023 $m 2022 $m Percentage change
Employee remuneration
1
619.9 476.6 30%
Distributions to shareholders
2
354.9 588.3 -40%
Taxation
3
586.8 448.8 31%
1. Employee remuneration includes salaries and social security costs, as set out in Note 9B to the financial statements. The percentage change in employee remuneration reflects several
factors including exchange rate, inflation and headcount changes. There were significant increases in bonus levels and salary levels (beyond normal inflationary increases). Increased
bonuses largely reflect the impact of the one-off bonuses paid in respect of the completion of the labour negotiation at Centinela.
2. Distributions to shareholders represent the dividends proposed and approved for payment in relation to the year as set out in Note 13 to the financial statements.
3. Tax has been included because it shows the Group’s tax contribution, almost all of which is paid to the Chilean state by the Group’s operations in Chile. The tax expense represents the
current tax charge regarding corporate tax, mining tax (royalty) and withholding tax, as set out in Note 11 to the financial statements.
Antofagasta plc Annual Report 2023 173
Key responsibilities
•
The Committee ensures that the Group’s remuneration arrangements support both the Group’s purpose and the effective implementation of its
strategy to enable the recruitment, motivation, reward and retention of talent.
•
The Committee is responsible for setting remuneration for the Chairman, Directors and the CEO and monitoring the compensation strategy,
level, structure and reward outcomes for Executive Committee members.
•
The Committee actively participates in the Group’s talent management strategy, including reviewing, assessing and implementing succession
plans for the Executive Committee.
•
The Committee also reviews workforce remuneration and related policies, including the Diversity and Inclusion Policy, the alignment of
incentives and rewards with the Group’s culture, the terms and limits of collective negotiations with the Company’s unions and the
implementation of policy changes that affect the workforce as a whole.
2023 Remuneration and Talent Management Committee activities
The critical matters considered by the Committee are set out in the table below:
Jan 23 Mar 23 (x2) Aug 23 Nov 23
Directors’ and Executive Remuneration and Governance
2022 annual bonus and LTIP
•
2023 annual bonus and LTIP • • •
Review of remuneration policy
• •
Review of 2022 performance appraisal CEO and Executive Committee individual performance •
Directors’ Remuneration Report • •
Annual General Meeting season governance update •
UK governance update •
CEO and Executive Committee compensation benchmarks • •
Workforce, HR policies and talent management
Gender Pay Gap reporting
•
CEO to worker pay ratio •
HR plan • •
Talent management and succession planning • •
Collective bargaining processes
Staff engagement plan status
•
2024 Mining division scorecard •
Engagement with colleagues
As explained in last year’s Annual Report, when the Committee
reviews the Directors’ and the CEO’s remuneration, it considers pay
conditions across the Group. This is set in the context of different
working environments and geographies and therefore is not a
mechanical process. The Company does not have any executive
directors, and the executive pay policy that applies to the CEO
(whoisnot a Director) is the same as the Group’s broader pay policy.
Thispolicy includes access to the same benefits and participation in the
same Annual Bonus Plan. Members of the Executive Committee and
certain key executives participate in the LTIP, and this plan is the same
for the CEO as for the other participants. The same principles apply
toour workforce remuneration plans as to that of the CEO, seeking
todrive the same aligned culture, values and behaviours across
theGroup.
Remuneration and Talent Management
Committee Report
58%
6%
11%
18%
7%
Executive remuneration
Directors' remuneration
Pay-related governance
Workforce and HR policies
Talent management
and succession
Activities during the year
Antofagasta plc Annual Report 2023174
CORPORATE GOVERNANCE
Remuneration and Talent Management Committee Report
Consideration by the Directors of matters relating to
Directors’ remuneration
The Committee engages Willis Towers Watson for advice on
remuneration issues. Willis Towers Watson was selected through an
independent and competitive process in 2019. Willis Towers Watson’s
fees for this work were charged in accordance on a time and materials
basis and amounted to £87,715. The Committee is satisfied that the
advice provided by Willis Towers Watson was objective and
independent and that no conflict of interest arose concerning these
services. Willis Towers Watson also provided advice and support to
management during the year, primarily on general remuneration
issues, benchmarking, HR best practices and ad hoc advice on topics
such as equality and gender related pay disclosures.
In determining that the advice received was independent, the Committee
took into account the fact that Willis Towers Watson is an independent
global professional services firm that adheres to the Code of Conduct for
Remuneration Consultants, to which it is a signatory. The Code of
Conduct can be found at www.remunerationconsultantsgroup.com.
During 2023, the Committee also received assistance from the
Chairman, Jean-Paul Luksic, the CEO, Iván Arriagada, the Vice
President of Human Resources, Georgeanne Barcelo, and the
Company Secretary, Julian Anderson, none of whom participated in
discussions relating to their own remuneration. Additionally, part of
each Committee meeting is held without management present to
ensure that individual views or areas of concern can be debated
between Committee members.
The responsibilities of the Committee are defined by its Terms of
Reference, which can be found on the Company’s website.
Talent management and succession planning
Oversight of talent management and succession planning is integral to
the Committee’s responsibilities and directly relates to the Group’s
ability to achieve long-term sustainable success. The talent review is
carried out annually to update succession planning for key positions,
identify talent pools, define individual development plans and agree on
recruitment needs.
In recent years a new approach has been taken, prioritising
employees’ overall experience and positioning the Group as a top-tier
employer capable of attracting and retaining top talent. Talent
management is critical to ensuring the Group’s ability to meet current
and future business demands by focusing on the attraction, retention
and development of high-potential individuals. This approach ensures
the continuous growth and success of the Company.
Approximately 79% of the Group’s employees are unionised, and the
number is close to 100% at the operator level. The Committee reviews
the gender pay gap, CEO pay ratio figures and a range of other internal
and external remuneration comparison metrics and benchmarks when
determining the quantum and structure of the CEO’s remuneration.
This includes feedback from shareholders and more general feedback
from employees on the Group’s pay policies, including regular
engagement with union representatives and oversight of the
parameters for collective bargaining negotiations.
The Committee communicates with and receives feedback from
employees through various channels, such as employee engagement
surveys, and the results are reported to the Committee and the Board.
During 2023, in my capacity as the Senior Independent Director
andChair of the Remuneration and Talent Management Committee,
Itravelled to our Los Pelambres, Centinela and Zaldívar mine sites with
other members of the Board to speak with employees and contractors
of the Group to understand their day-to-day experiences and to hear
their views and ideas. I met with groups of female employees to
understand the challenges they face, working in a predominantly
male-dominated industry and working environment. I am grateful
forthe valuable insights shared by all those we met with and have
reported these back to the rest of the Board. The Remuneration
Committee will keep these insights in mind through 2024 when
decision-making.
In addition to our visits to the mines as noted above, the Directors visit
Group operations throughout the year, individually or in small groups,
to listen directly to employees’ views on labour issues, including
remuneration, culture and values, as well as the application of
remuneration policy across the Group, including executive pay. The
Board’s engagement with the workforce is detailed on pages 130 and
131.
The Committee is regularly updated on workforce pay and benefits by
the senior management team, who consult with the workforce on
issues including the remuneration policy. The workforce receives
regular communications throughout the year on the Group’s
performance targets and incentive awards, while the senior
management team receives regular feedback on the performance of
workforce roles and regularly engages with employees to understand
their views on workforce remuneration policy and practices.
Consequently, the Committee has multiple touchpoints with the
workforce for feedback on the Group’s workforce remuneration policy,
including that of senior management and the CEO. At the beginning of
every Committee meeting, the CEO provides an update to the
Committee on key workforce issues relating to remuneration and
talent. The Committee meetings are focused on these subjects.
Following each Committee meeting, the Committee Chair reports a
summary of matters considered to the full Board.
The Committee receives regular feedback on safety performance,
community relations, the working environment, operations and critical
projects and ensures that the workforce remuneration policy (including
senior management and CEO) is fair and transparent, and its outcomes
reflect the desired culture and ensure alignment with the values and
behaviours of the organisation. The Committee also ensures that the
process for setting pay and establishing KPIs and performance
outcomes across the workforce reflects the governance and outcomes
for senior management and the CEO. The Committee ensures these
principles are applied to the whole workforce, including senior
management and the CEO.
Antofagasta plc Annual Report 2023 175
Base salary
The CEO’s annual base salary is paid in Chilean pesos, and presented in this report in US dollars. The CEO’s annual base salary will be
$1,284,017 from 1 January 2024, increased from $1,255,552 as at 1 January 2023 as explained in last year´s report. The CEO’s base salary
continues to be periodically reviewed and adjusted to reflect exchange rate adjustments, however, the exchange rate hurdle of 5% was not met
in November 2023, and therefore no exchange rate adjustment was made. The Chilean peso/US dollar exchange rate will continue to be
monitored during 2024. The Committee continues to monitor the overall remuneration package value of the CEO in comparison to peers in the
FTSE 100 mining industry and our core global copper mining peer group.
Benefits will be provided in line with the remuneration policy and prior years.
Annual bonus for 2024
The approach to calculating the targets and outcomes will reflect the 2024 bonus plan, with a maximum of 200% of salary.
The performance targets which are not commercially sensitive are set out below. The remaining targets will be disclosed retrospectively.
Measure Weighting Threshold
(0% payout)
On-target
(50% payout)
Maximum
(100%
payout)
Core business 50%
EBITDA
1
– Mining division ($m) 15% ≤-10% The Group’s future metals price
assumptions are commercially
sensitive, therefore the target for
EBITDA will not be disclosed in
advance. The Company will reveal
the 2024 target and outcome in
the 2024 Annual Report.
≤+10%
Copper production (kt)
2
20% 657.5 678.5-699.5 710.0
Cash costs before by-product credits (c/lb)
3
10% 234.2 220.9 207.6
Innovation
4
5%
Business development 25%
Growth projects
5
20%
Measured according to the schedule and budget as described
in more detail in the footnotes.
Exploration programmes
6
5%
Sustainability and organisational capabilities 25%
Health and Safety
7
5%
Measured according to the schedule and budget as described
in more detail in the footnotes.
People
8
5%
Environmental performance
9
10%
Social performance
10
5%
1. The EBITDA targets will be adjusted for exchange rate changes, the impact of hedging arrangements, copper price fluctuations, inflation rate, key input price deviations above 20% and the
impact of any one-off bonuses paid on the conclusion of labour negotiations during the year.
2. 100% basis, except for Zaldívar (50%).
3. The cash cost targets will be adjusted for exchange rate changes, inflation rate, key input price deviations above 20% and the impact of any one-off bonuses paid on conclusion of labour
negotiations.
4. Performance against targets for compliance with the Innovation Roadmap (50%): Cuprochlor T and Innovation in Tailings; and Data Analytics (50%): measured as the cumulative US dollar
annual savings of all implemented data analytics projects.
5. Progress of growing projects according to predefined milestones. Split between Los Pelambres Desalination plant expansion and the replacement of the concentrate pipeline (3%), Los
Pelambres Expansion Phase 2 – Mine life extensión (2%), Centinela´s second Concentrator project (10%), and Zaldívar implementation of the business continuity strategy and water
supply continuity (5%).
6. Maximum and on-target are defined according to the progress of planned exploration programmes for Cachorro and an International exploration project.
7. Performance against targets for reducing high potential incidents (50%) and decrease in similar exposure group of occupational hazards (50%). This metric considers the Lost Time Injury
Frequency Rate (LTIFR) as a trigger if the LTIFR is higher than 1.
8. Performance against diversity and inclusion targets with the threshold at 23,7% female direct employees, on-target at 27,1% female direct employees and maximum at 28.1% female direct
employees. In addition, a measure of women in leadership positions as of December 2024 is incorporated and it is included as part of the D&I KPI reaching 2% of people with disabilities
as of October 2024.
9. Split between environmental commitments (40%) and the implementation of the Group’s Decarbonisation Plan (60%).
10. Compliance with critical initiatives and measurement of impact according to the defined social project portfolio.
Implementation of the CEO’s
Remuneration Policy in 2024
Antofagasta plc Annual Report 2023176
CORPORATE GOVERNANCE
Implementation of the Directors’ and CEO’s remuneration policy in 2024
LTIP for 2024
The Committee has decided to award the CEO an increased exceptional award of 300% for 2024. The operation of the LTIP and maximum
opportunity of 300% for 2024 will be in line with the policy:
•
Restricted Awards (30% of the overall award) – vest one-third each year over a three-year period following the grant.
•
Performance Awards (70% of the overall award) – awards subject to a three-year performance period with no subsequent holding period.
The final LTIP 2024 scorecard measures will be approved after this report is published. The Performance Awards measures, weightings and
objectives are set out in the table below:
Weighting Objective Measure
50% Relative total
shareholder
return
Comparison against Global X Copper Miners ETF (CopX Index) with 0% vesting if the Company’s
performance is below the index during the three-year period, 33% vesting at equal performance to the
index and 100% vesting at performance 5% greater than the index during the three-year period to the 2026
financial year’s end.
25% Projects’
performance
The maximum is achievable if the Los Pelambres Concentrate Pipeline (12.5%) and Desalination Plant
Expansion (12.5%) construction progress is 85% or more of their approved plans, Los Pelambres
Expansion Phase 2 (14%) environmental assessment of the project in Addendum 1 completed by December
2026, and (6%) tailings solution beyond Mauro conceptually defined by December 2026, Los Centinela's
Second Concentrator (50%) construction progress is 85% or more of their approved plan and 75% or more
progress on the feasibility of the Zaldívar's Primary Sulphide Project (5%).
12.5% Mineral resources Maximum is 91,317 million tonnes of contained copper, with an on-target and a threshold of 90,558 and
88,920 million tonnes, respectively, as of 31 December 2026.
12.5% Environmental
and social
commitments
This KPI is made up of two parts:
1. Social Management Plan (40%). Maximum is achievable for equal or greater than 85% compliance with
the initiatives included in the Group’s social management plan, including initiatives existing as of 31 March
2024 and added before 31 December 2026, on time, within budget and impact evaluation, with an
on-target at 75% and a threshold at 50%. The final score is calculated as the weighted average score of
all initiatives.
2. Climate change and environment (60%). Maximum is achievable for compliance with the Decarbonisation
Roadmap plan, Water Efficiency Strategy, Circular Economy Strategy and compliance with the
International Tailings Standard.
Antofagasta plc Annual Report 2023 177
Chairman
Jean-Paul Luksic’s total fee for 2024 is $1,015,000 (2023 – $1,015,000) comprising:
•
$730,000 per annum for his services as Chairman of the Board;
•
$25,000 per annum for his services as Chairman of the Nomination and Governance Committee; and
•
$260,000 per annum for his services as Chairman of the Antofagasta Minerals board.
This fee level reflects his responsibility, experience and time commitment to the role.
Non-Executive Directors
There has been no change to Non-Executive Director base fees of $130,000 since 2012. Given the core role which Antofagasta Minerals plays in
the management of the mining operations and projects, all Directors also serve as directors of Antofagasta Minerals. The annual fee payable to
directors of Antofagasta Minerals remains $130,000 (as it has since 2012). Therefore, the combined base fees payable to Non-Executive
Directors amount to $260,000 per annum. The Board periodically reviews both the structure and levels of fees paid to Non-Executive Directors
and will continue reviewing these fees from time to time, in accordance with the policy.
Benefits that were reported for 2023 will continue to apply. Directors are not expected to receive any other remuneration in 2024.
The fees payable for Committee roles and the role of Senior Independent Director from January 2024 are set out below:
Additional Director fees payable from 1 January 2024
Role Additional fees USD
Senior Independent Director 33,000
Audit and Risk Committee Chair 42,000
Audit and Risk Committee member 20,000
Nomination and Governance Committee Chair 25,000
Nomination and Governance Committee member 10,000
Projects Committee Chair 35,000
Projects Committee member 20,000
Remuneration and Talent Management Committee Chair 35,000
Remuneration and Talent Management Committee member 20,000
Sustainability and Stakeholder Management Committee Chair 35,000
Sustainability and Stakeholder Management Committee member 20,000
2023 AGM voting history
2022 Directors’ and CEO Annual Report on Remuneration
Votes for
95.17%
1,043,582,371
Votes against
4.83%
53,013,212
Votes cast as a percentage of issued share capital 92.47%
Votes withheld 2,127,429
Resolution to approve the 2023 Directors’ and CEO’s Remuneration Policy
Votes for
94.33%
1,036,351,144
Votes against
5.67 %
62,339,995
Votes cast as a percentage of issued share capital 92.65%
Votes withheld 31,873
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
Implementation of the Directors’
Remuneration Policy in 2024
Antofagasta plc Annual Report 2023178
CORPORATE GOVERNANCE
Implementation of the Directors’ and CEO’s Remuneration Policy in 2024 continued
Directors’ Report
Directors
Directors who have served during the year and summaries of current
Directors’ key skills and experience are set out in the Corporate
Governance Report on pages 132-134.
Post-balance sheet events
During 2023 the Group entered into an agreement to acquire up
to an additional 30 million shares in Compañía de Minas Buenaventura
S.A.A. (“Buenaventura”), representing approximately 12% of
Buenaventura’s issued share capital. Subsequent to the year-end,
in March 2024, the agreement completed. Further details are set out
in Note 22 to the financial statements.
Financial risk management
Details of the Company’s policies on financial risk management are set
out in Note 26 to the financial statements.
Results and dividends
The consolidated profit before tax has decreased from $2,558.9 million
in 2022 to $1,965.5 million in 2023.
The Board has recommended a final dividend of 24.3 cents per
ordinary share (2022 – 50.5 cents). An interim dividend of 11.7 cents
was paid on 29 September 2023 (2022 interim dividend – 9.2 cents).
This gives total dividends per share proposed in relation to 2023 of
36.0 cents (2022 – 59.7 cents) equivalent to a total dividend amount of
$354.9 million (2022 – $588.3 million).
Preference shares carry the right to a fixed cumulative dividend of 5%
per annum. The preference shares are classified within borrowings
and preference dividends are included within finance costs. The total
cost of dividends paid on preference shares and recognised as an
expense in the income statement was $0.1 million (2022 –
$0.1 million). Further information relating to dividends is set out in the
Financial Review on page 113 and in Note 13 to the financial statements.
Political contributions
The Group did not make any political donations during the year ended
31 December 2023 (2022 – nil).
Auditor
Following a tender process in 2022, Deloitte LLP has indicated
its willingness to be appointed as the Company’s auditor from 2024
and a resolution seeking its appointment will be proposed at the
Annual General Meeting.
Disclosure of information to auditors
The Directors in office at the date of this report have each confirmed that:
•
so far as they are aware, there is no relevant audit information
of which the Group’s auditor is unaware, and
•
they have taken all the steps they ought to have taken as Directors
in order to make themselves aware of any relevant audit information
and to establish that the Group’s auditor is aware of that information.
Capital structure
Details of the authorised and issued ordinary share capital are shown
in Note 31 to the financial statements. The Company has one class
of ordinary shares, which carry no right to fixed income. Each ordinary
share carries one vote at any general meeting of the Company.
Details of the preference share capital are shown in Note 24 to the
financial statements. The preference shares are non-redeemable and are
entitled to a fixed cumulative dividend of 5% of their nominal value of £1
per share per annum. Each preference share carries 100 votes on a poll
at any general meeting of the Company.
When the preference shares were issued, they each carried one vote
at any general meeting of the Company in parity with the ordinary
shares in issue at that time. The number of ordinary shares in issue
has increased since then through stock splits and bonus issues and
the preference shares were not split at the same time as the ordinary
shares. Therefore, in order to maintain proportionate voting rights
attaching to the preference shares, the voting rights attaching to
preference shares have increased to 100 votes on a poll at any general
meeting of the Company.
There are no specific restrictions on the transfer of shares or on their
voting rights beyond those standard provisions set out in the
Company’s Articles of Association and other provisions of applicable
laws and regulations (including following a failure to provide the
Company with information about interests in shares as required by the
Companies Act 2006). The Company is not aware of any agreements
between holders of the Company’s shares that may result in
restrictions on the transfer of securities or on voting rights.
With regard to the appointment and replacement of Directors, the
Company is governed by, and has regard to, its Articles of Association,
the UK Corporate Governance Code 2018, the Companies Act 2006
and related legislation. The Articles of Association may be amended by
special resolution of the shareholders. There are no significant
agreements in place that take effect, alter or terminate upon a change
of control of the Company. Except as permitted by the Company’s
remuneration policy, there are no agreements in place between the
Company and its Directors or employees that provide for
compensation for loss of office or employment resulting from a change
of control of the Company.
The percentages of the total nominal share capital of the Company
represented by each class of share are:
Class
Number
in issue
Nominal value
per share
Percentage
of capital
Ordinary shares
of 5p each 985,856,695 5p 96.10%
Preference shares
of £1.00 each 2,000,000 £1 3.90%
Authority to issue shares and authority to purchase
own shares
At the AGM held on 10 May 2023, authority was given to the Directors
to allot unissued relevant securities in the Company up to a maximum
amount equivalent to two-thirds of the ordinary shares in issue (of
which one-third may only be offered by way of rights issue). This
authority expires on the date of this year’s AGM, scheduled to be held
on 8 May 2024. No shares have been issued pursuant to that authority
as at the date of this report or during the year. The Directors propose
to seek renewal of this authority at this year’s AGM. However, in line
with the Investment Association's most recent Share Capital
Management Guidance, this year's proposed authority will authorise
the Directors to allot one-third only by way of any fully pre-emptive
offer (rather than by way of rights issue only).
Further special resolutions passed at the 2023 AGM granted authority
to the Directors to allot equity securities in the Company for cash up to
an aggregate nominal amount of £4,929,283 (representing slightly less
than 10% of its issued ordinary share capital) without regard to the
Antofagasta plc Annual Report 2023 179
Directors’ Report
pre-emption provisions of the Companies Act 2006 and for an
additional aggregate nominal amount of £4,929,283 (representing an
additional 10% of its issued ordinary share capital) in connection with
the financing or refinancing of an acquisition or specified capital
investment (plus, in each case, an additional 2% for the purposes of a
follow-on offer as described in the Pre-Emption Group's Statement
of Principles). These authorities also expire on the date of this year’s
AGM. Accordingly, the Directors will seek to renew these authorities in
line with the Pre-Emption Group’s Statement of Principles and the
Investment Association’s guidance.
The Company was also authorised by a shareholders’ resolution
passed at the 2023 AGM to purchase up to 10% of its issued ordinary
share capital. Any shares bought back may be held as treasury shares
or, if not so held, must be cancelled immediately upon completion of
the purchase, thereby reducing the amount of the Company’s issued
and authorised share capital. This authority will expire at this year’s
AGM and a resolution to renew the authority for a further year will be
proposed. No shares were purchased by the Company during the year.
Directors’ interests and indemnities
Details of Directors’ contracts and letters of appointment,
remuneration and emoluments and their interests in the shares of the
Company as at 31 December 2023, are given in the Directors’
Remuneration Report. No Director had any material interest in a
contract of significance (other than a service contract in respect of
Ramón Jara – see page 170) with the Company or any subsidiary of
the Company during the year.
In accordance with the Company’s Articles of Association and to the
extent permitted by the laws of England and Wales, Directors are
granted an indemnity from the Company in respect of liabilities
personally incurred as a result of their office. The Company also
maintained a Directors’ and Officers’ liability insurance policy
throughout the financial year. A new policy has been entered into for
the current financial year.
Conflicts of interest
Each year, the Directors complete a form identifying interests that may
constitute a conflict of interest, including, for example, directorships in
other companies. Directors are also required to notify the Company
during the year of any relevant changes in those positions or situations.
The Board, with assistance from the Nomination and Governance
Committee, considers potential and actual conflict situations and decides
the steps, if any, which need to be taken to manage each situation.
The authorisation process is not regarded as a substitute for managing
an actual conflict of interest if one arises and the monitoring and, if
appropriate, authorisation of actual and potential conflicts of interest is
an ongoing process.
Substantial shareholdings
As at 31 December 2023, the following significant holdings of voting
rights in the share capital of the Company had been disclosed to the
Company under Disclosure and Transparency Rule 5:
Shareholder
Ordinary share
capital
%
Preference
share capital
%
Total share
capital
%
Metalinvest
Establishment 50.72 94.12 58.04
Kupferberg
Establishment 9.94 – 8.27
Aureberg Establishment 4.26 – 3.54
Metalinvest Establishment and Kupferberg Establishment are both controlled
by the E. Abaroa Foundation (“Abaroa”), in which members of the Luksic
family are interested. As explained in Note 37 to the financial statements,
Metalinvest Establishment is the immediate Parent Company of the Group
and the E. Abaroa Foundation is the Ultimate Parent Company. Aureberg
Establishment is controlled by the Severe Studere Foundation that, in
turn, is controlled by Jean-Paul Luksic, the Chairman of the Company.
Exploration and research and development
The Group’s subsidiaries carry out exploration and research and
development activities that are necessary to support and expand the
Group’s operations.
Going concern
The Directors, having made appropriate enquiries, have satisfied themselves
that it is appropriate to adopt the going concern basis of accounting in
preparing the financial statements, as detailed in Note 1 to the financial
statements. Additionally, the Directors have considered the Company’s
longer-term viability, as described in their statement on page 88.
Business relationships with suppliers, customers and others
A statement of how the Directors have had regard to the need to foster
the Company’s business relationships with suppliers, customers and
others and the effect of that regard, including on the principal decisions
made by the Company during the year, are set out on pages 30-72 of the
Strategic Report and pages 118-182 of the Corporate Governance Report.
Other statutory disclosures
The Corporate Governance Report on pages 118-180, the Statement
of Directors’ responsibilities on page 181 and Note 26 to the financial
statements are incorporated into this Directors’ Report by reference.
Other information can be found in the following sections of the
Strategic Report:
Location in
Annual Report
Future developments in the business of the Group Pages
100-102
Viability statement Page 88
Subsidiaries, associates and joint ventures Pages 90-99
Employee engagement Pages 40-43
Greenhouse gas emissions Pages 57-61
Streamlined energy and carbon reporting Pages 57-61
Disclosures required pursuant to Listing Rule 9.8.4R can be found
on the following pages of the Annual Report:
Location in
Annual Report
Statement of interest capitalised
by the Group (LR 9.8.4(1))
See Notes 10 and 15
to the financial statements.
Long-term Incentive Plan
(LR 9.8.4(7))
See pages 156-178 and
Note 27 to the financial
statements.
Relationship agreement (LR 9.8.4(14)) Page 123
By order of the Board
JULIAN ANDERSON
Company Secretary
20 March 2024
Antofagasta plc Annual Report 2023180
CORPORATE GOVERNANCE
Directors’ Report continued
Statement of Directors’ responsibilities
in respect of the financial statements
The Directors are responsible for preparing the Annual Report and
Financial Statements 2023 in accordance with applicable law and
regulation.
Company law requires the Directors to prepare financial statements
for each financial year. Under that law the Directors have prepared the
Group financial statements in accordance with UK-adopted
international accounting standards and the Parent Company financial
statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 101 “Reduced Disclosure Framework”, and applicable
law).
Under Company law, Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and Parent Company and of the
profit or loss of the Group for that period. In preparing the financial
statements, the Directors are required to:
•
select suitable accounting policies and then apply them consistently;
•
state whether applicable UK-adopted international accounting
standards have been followed for the Group financial statements
and United Kingdom Accounting Standards, comprising FRS 101,
have been followed for the Parent Company financial statements,
subject to any material departures disclosed and explained in the
financial statements;
•
make judgements and accounting estimates that are reasonable
and prudent; and
•
prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the Group and Parent Company
will continue in business.
The Directors are responsible for safeguarding the assets of the Group
and Parent Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are also responsible for keeping adequate accounting
records that are sufficient to show and explain the Group’s and Parent
Company’s transactions and disclose with reasonable accuracy at any
time the financial position of the Group and Parent Company and
enable them to ensure that the financial statements and the Directors’
Remuneration Report comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the
Parent Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Directors’ confirmations
The Directors consider that the Annual Report and Financial
Statements 2023 and accounts, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group’s and Parent Company’s position
and performance, business model and strategy.
Each of the Directors, whose names and functions are listed in the
Corporate Governance Report confirm that, to the best of their
knowledge:
•
the Group financial statements, which have been prepared in
accordance with UK-adopted international accounting standards,
give a true and fair view of the assets, liabilities, financial position
and profit of the Group;
•
the Parent Company financial statements, which have been
prepared in accordance with United Kingdom Accounting Standards,
comprising FRS 101, give a true and fair view of the assets, liabilities
and financial position of the Parent Company; and
•
the Strategic Report includes a fair review of the development and
performance of the business and the position of the Group and
Parent Company, together with a description of the principal risks
and uncertainties that it faces.
In the case of each director in office at the date the directors’ report
is approved:
•
so far as the Director is aware, there is no relevant audit information
of which the Group and Parent Company’s auditors are unaware;
and
•
they have taken all the steps that they ought to have taken as a
director in order to make themselves aware of any relevant audit
information and to establish that the Group and Parent Company’s
auditors are aware of that information.
By order of the Board
JEAN-PAUL
LUKSIC
Chairman
FRANCISCA
CASTRO
Senior Independent
Director
20 March 2024
Antofagasta plc Annual Report 2023 181
Statement of Directors’ responsibilities
Financial
Performance
Financial review
Independent auditors’ report 184
Consolidated income statement 190
Consolidated statement of comprehensive income 191
Consolidated statement of changes in equity 191
Consolidated balance sheet 192
Consolidated cash flow statement 193
Notes to the financial statements 194
Parent Company financial statements 235
Continuing to deliver strong
returns while maintaining a
robust financial position.
Haul truck at Centinela.
Antofagasta plc Annual Report 2023182
FINANCIAL STATEMENTS
Antofagasta plc Annual Report 2023 183
Report on the audit of the financial statements
Opinion
In our opinion:
•
Antofagasta plc’s Group financial statements and Parent Company
financial statements (the “financial statements”) give a true and fair
view of the state of the Group’s and of the Parent Company’s affairs
as at 31 December 2023 and of the Group’s profit and the Group’s
cash flows for the year then ended;
•
the Group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards as
applied in accordance with the provisions of the Companies Act
2006;
•
the Parent Company financial statements have been properly
prepared in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards,
including FRS 101 “Reduced Disclosure Framework”, and applicable
law); and
•
the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual
Report and Financial Statements 2023 (the “Annual Report”), which
comprise: the consolidated and Parent Company balance sheets as at
31 December 2023; the consolidated income statement, the
consolidated statement of comprehensive income, the consolidated
cash flow statement, and the consolidated and Parent Company
statements of changes in equity for the year then ended; and the notes
to the financial statements, comprising material accounting policy
information and other explanatory information.
Our opinion is consistent with our reporting to the Audit and Risk
Committee.
Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
under ISAs (UK) are further described in the Auditors’ responsibilities
for the audit of the financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical
requirements that are relevant to our audit of the financial statements
in the UK, which includes the FRC’s Ethical Standard, as applicable to
listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit
services prohibited by the FRC’s Ethical Standard were not provided.
Other than those disclosed in note 8 to the Group financial statements,
we have provided no non-audit services to the Parent Company or its
controlled undertakings in the period under audit.
Our audit approach
Overview
Audit scope
•
We identified two components (2022: two) as individually financially
significant components, which required an audit of their complete
financial information due to their financial significance to the Group,
and a further three components (2022: three) where we concluded
that a full scope audit of the component financial information was
warranted.
•
Taken together, the components at which audit work was performed
accounted for 97% of Group revenue.
•
We also determined that specified procedures were necessary in
respect of certain balances within the corporate segment and
transport division to ensure that we had sufficient coverage from
our audit work over each line of the Group’s financial statements.
Key audit matters
•
Assessment of indicators of impairment and impairment reversal for
property, plant and equipment, in particular in respect of the
Zaldívar and Antucoya cash generating units (Group) and
investments in subsidiaries (Parent Company)
Materiality
•
Overall Group materiality: $117 million (2022: $112 million) based on
5% of the three year average of profit before tax adjusted for
one-off items.
•
Overall Parent Company materiality: $21 million (2022: $20 million)
based on 1% of total assets.
•
Performance materiality: $87.75 million (2022: $84 million) (Group)
and $15.75 million (2022: $15 million) (Parent Company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed
the risks of material misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional
judgement, were of most significance in the audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had the greatest effect
on: the overall audit strategy; the allocation of resources in the audit;
and directing the efforts of the engagement team. These matters, and
any comments we make on the results of our procedures thereon,
were addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
The accounting for the disposal of the Group’s interest in the Reko Diq
project (Group), which was a key audit matter last year, is no longer
included as a key audit matter because of the fact that the gain on
disposal was fully recognised within the 2022 financial year, and the
Group has subsequently, in 2023, received a private ruling from the
Australian Tax Office to confirm that the disposal proceeds would not
be subject to Australian tax. Otherwise, the key audit matters below
are consistent with last year.
Independent auditors’ report to the
members of Antofagasta plc
Antofagasta plc Annual Report 2023184
FINANCIAL STATEMENTS
Independent auditors’ report to the members of Antofagasta plc
Key audit matter How our audit addressed the key audit matter
Assessment of indicators of impairment and impairment reversal for
property, plant and equipment, in particular in respect of the Zaldívar
and Antucoya cash generating units (Group) and investments in
subsidiaries (Parent Company)
In accordance with IAS 36 ‘Impairment of assets’, the Directors are
required to perform an impairment assessment of long-lived assets at
any time an indicator of impairment exists. The Directors considered
various external and internal factors, as set out in IAS 36, in assessing
whether an indicator of impairment, or in respect of Antucoya,
impairment reversal, existed as at 31 December 2023 in respect of the
operating mine cash-generating units (‘CGUs’), such as short- and
long-term forecast copper prices, the operational performance of
these mines and indicative estimates of movements in value during the
year based on the latest Life of Mine plans. This assessment included
consideration of the impact of climate risks, including scenario analysis,
as detailed in note 5 to the Group financial statements. The Directors
concluded that no indicators of impairment or impairment reversal
existed as at 31 December 2023 in respect of these CGUs and,
therefore, no detailed impairment tests were performed.
This assessment required judgement on the part of the Directors in
determining whether an impairment indicator existed and was an area
which had a significant effect on our overall audit strategy and
allocation of resources in the planning for, and completion of, our audit.
It was, therefore, determined to be a key audit matter.
The financial statements set out the key elements of the judgements
made by the Directors, which include at Zaldívar that the ongoing
renewal of mining and water permits, currently due to expire in 2025,
will be successful, and that production issues experienced in the year
are short-term in nature.
Refer to notes 3 and 5 to the Group financial statements and the Audit
and Risk Committee’s views set out on page 146.
As at 31 December 2023, the Parent Company holds investments in
subsidiaries amounting to $938.3 million (2022: $589.1 million),
comprising shares and long-term funding balances that the Directors
do not intend to demand repayment of in the foreseeable future.
Judgement is required to assess whether impairment indicators exist
in relation to the shares held in subsidiaries and, where indicators are
identified, to determine whether the recoverable amount is no lower
than the investment carrying value. Judgement is also required in
determining whether an expected credit loss should be recorded
against the long-term funding balances.
In assessing for impairment indicators, management considered
whether the underlying net assets of the investment support the
carrying amount, the nature of the underlying assets and whether
other facts and circumstances could also be an indicator of
impairment. For the loan balances, management considered whether
the relevant subsidiary could repay the loans if they were demanded
at the balance sheet date.
Based on management’s assessment, no impairment indicators in
respect of the carrying value of investments in subsidiaries were
identified by the Directors at the balance sheet date, and no expected
credit loss on the long-term funding balances was recognised.
Refer to notes 3 and 5 to the Parent Company’s financial statements.
We, supported by our component team, assessed the Directors’
conclusion that there were no indicators of impairment or impairment
reversal as at 31 December 2023 in respect of the operating mine
CGUs. In performing this assessment, the following procedures were
performed by the Group team, or, where appropriate, by our component
team in Chile with oversight from the Group audit team in the UK.
Our procedures included evaluating management’s impairment
indicator assessments, including its completeness by reference to both
internal and external factors, including but not limited to operational
performance in the year, macroeconomic factors including forecast
copper prices, foreign currency exchange rates and market interest
rates, climate change, and expected future production profiles and
capital expenditure as included in the latest Life of Mine plan for each
operation. In the case of Zaldívar, we also assessed the latest
developments in respect of the permit applications.
As well as considering whether any qualitative indicators of
impairment existed, we evaluated management’s quantitative
impairment indicator assessments, and the process by which the
indicative valuations were determined, including verifying the
mathematical accuracy of the cash flow models and agreeing future
capital and operating expenditure to the latest Board approved budgets
and the latest approved Life of Mine plans. We assessed the
reasonableness of the expected capital and operating expenses in light
of their historical levels and recent operational performance, and
considered the competence and objectivity of management’s internal
technical experts who prepared the Life of Mine plans. We evaluated
the appropriateness of key market related assumptions in the indicative
valuation models, including the copper prices, discount rates and
foreign currency exchange rates, with the support of our valuation
experts. We also performed sensitivity analysis around the key
assumptions within the cash flow forecasts, using both lower
long-term copper prices and a stronger Chilean peso. In addition, we
considered management’s impairment indicator assessments in the
context of the Task Force on Climate-related Financial Disclosures
(“TCFD”) scenario analyses prepared by management during the year.
In light of the above, we assessed the appropriateness of the related
disclosures in note 5 to the Group financial statements, including the
sensitivities provided. Overall, we identified no material issues in
our work.
In respect of investments in subsidiaries in the Parent Company, we
evaluated and challenged management’s assessment and judgements
in relation to the identification of impairment indicators; independently
performed an assessment of other potential internal and external
impairment indicators, including considering the market capitalisation
of the Group with reference to the carrying value in the Parent
Company of investments in subsidiaries; and evaluated the ability
of the subsidiaries to repay the loan balances.
Based on the procedures performed, we noted no material issues
arising from our work.
Antofagasta plc Annual Report 2023 185
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial statements
as a whole, taking into account the structure of the Group and the
Parent Company, the accounting processes and controls, and the
industry in which they operate.
The core mining business comprises four mining operations: Los
Pelambres; Centinela; Antucoya; and Zaldívar, a joint venture with
Barrick Gold Corporation operated by the Group. These mines produce
copper cathodes, copper concentrates and significant volumes of
by-products.
In addition to mining, the Group has a transport division that provides
rail and road cargo services in northern Chile, predominantly to mining
customers, including to the Group’s own mining operations.
All of the above operations are located in Chile. In addition, the Group
has corporate head offices located in both Santiago, Chile (Antofagasta
Minerals S.A.) and London, UK (Antofagasta plc). The Group also has
exploration projects in various countries.
In establishing the overall approach to the Group audit, we determined
the type of work that needed to be performed at each of the four mine
sites and the corporate offices in Chile, by us, as the Group
engagement team and by component auditors from PwC Chile
operating under our instruction. Los Pelambres and Centinela were
considered to be financially significant components of the Group, due
to their contribution towards Group profit before tax, and so required
audits of their complete financial information. Antucoya and Zaldívar,
as well as the Parent Company Antofagasta plc, were also subject to
an audit of their complete financial information. We also requested that
component auditors perform specified procedures over the corporate
offices in Chile, and specific line items of other entities within the
Group (including the transport division) to ensure that we had
sufficient coverage from our audit work over each line of the Group’s
financial statements. The Group engagement team also performed
testing of the Group’s equity investment in Compañía de Minas
Buenaventura S.A.A. and the related other financial asset, and the
associated other comprehensive income and profit that has been
recognised. For all other components, the Group team performed
analytical review procedures.
Where work was performed by component auditors, we determined
the level of involvement we needed to have in the audit work to be able
to conclude whether sufficient appropriate audit evidence had been
obtained as a basis for our opinion on the Group financial statements
as a whole. Our oversight procedures included the issuance of formal,
written instructions to the component auditors setting out the work to
be performed, regular communication throughout the audit cycle
including frequent meetings, the review of certain component auditor
workpapers and participation in certain audit clearance meetings. In
most cases, communication was performed through video
conferencing. However, members of the Group team, including the
senior statutory auditor, also visited Chile on multiple occasions during
the audit.
Taken together, the components where we performed our audit work
accounted for 97% of consolidated revenue, 89% of consolidated profit
before tax and 88% of consolidated profit before tax adjusted for
one-off items. This was before considering the contribution to our
audit evidence from performing audit work at the Group level, including
disaggregated analytical review procedures, which covers a significant
portion of the Group’s smaller and lower risk components that were
not directly included in our Group audit scope.
The Parent Company financial statements are prepared in the
corporate head office in Santiago, with oversight from the Group
Financial Controller based in London, and are ultimately reviewed and
approved by the Directors alongside the Group financial statements.
The Parent Company financial statements were audited by the Group
engagement team.
The impact of climate risk on our audit
In planning our work, including identifying areas of audit risk and
determining an appropriate audit response, we were mindful of the
increased focus on the impact of climate change risk on companies
and their financial reporting, and also that the Group has identified
climate change as a principal risk. As part of our audit, we made
enquiries of management to understand its processes to assess
the extent of the potential impact of climate change risks on the Group
and its financial statements. This included consideration of the Group’s
Climate Change Strategy and newly published targets to reduce Scope
1 and 2 emissions by 50% by 2035 relative to the 2020 baseline,
to reduce Scope 3 emissions by 10% by 2030, and, in the long-term,
to achieve carbon neutrality.
Materiality
The scope of our audit was influenced by our application of materiality.
We set certain quantitative thresholds for materiality. These, together
with qualitative considerations, helped us to determine the scope of
our audit and the nature, timing and extent of our audit procedures
on the individual financial statement line items and disclosures and in
evaluating the effect of misstatements, both individually and in
aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements – Group Financial statements – Parent Company
Overall
materiality
$117 million (2022: $112 million). $21 million (2022: $20 million).
How we
determined it
5% of the three year average of profit before tax adjusted for
one-off items
1% of total assets
Rationale for
benchmark
applied
For overall Group materiality, we chose to use an underlying
earnings measure as the benchmark because an underlying
measure removes the impact of material items that do not
recur from year-to-year or otherwise significantly affect the
underlying trend of performance from continuing operations.
The adoption of a multi-year average benchmark for
materiality responds to longer term trends in commodity
markets and reduces volatility in the measure year-on-year.
Using our professional judgement, we determined materiality
for this year at $117 million, which equates to approximately 6.5%
of the current year’s profit before tax adjusted for one-off items.
For the Parent Company materiality, we determined our
materiality based on total assets, which is considered more
relevant than a performance-related measure as the
company is an investment holding company for the Group.
Antofagasta plc Annual Report 2023186
FINANCIAL STATEMENTS
Independent auditors’ report to the members of Antofagasta plc continued
For each component in the scope of our Group audit, we allocated
a materiality that is less than our overall Group materiality. The range
of materiality allocated across components was between $10 million
and $94 million.
We use performance materiality to reduce to an appropriately low
level the probability that the aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically, we use
performance materiality in determining the scope of our audit and the
nature and extent of our testing of account balances, classes of
transactions and disclosures, for example in determining sample
sizes. Our performance materiality was 75% (2022: 75%) of overall
materiality, amounting to $87.75 million (2022: $84 million) for the
Group financial statements and $15.75 million (2022: $15 million) for
the Parent Company financial statements.
In determining the performance materiality, we considered a number
of factors – the history of misstatements, risk assessment and
aggregation risk and the effectiveness of controls – and concluded that
an amount at the upper end of our normal range was appropriate.
We agreed with the Audit and Risk Committee that we would report
to them misstatements identified during our audit above $5.8 million
(Group audit) (2022: $5.6 million) and $1.05 million (Parent Company
audit) (2022: $1 million) as well as misstatements below those
amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the Directors’ assessment of the Group’s and the
Parent Company’s ability to continue to adopt the going concern basis
of accounting included:
•
Obtaining and examining management’s base case forecasts and
downside scenarios, checking that the forecasts had been subject
to board review and, in the case of the base case, approval;
•
Considering the historical reliability of management forecasting by
comparing budgeted results with actual performance;
•
Assessing the future cash flows included in the base case to ensure
that these were consistent with our understanding from work
performed over other key accounting estimates in the financial
statements such as the impairment indicator assessment;
•
Confirming that the downside scenarios applied by management
represent severe but plausible downside scenarios in the context of
our understanding of the business, and performing our own
sensitivity analysis to understand the impact of changes in cash
flows and net debt on the resources available to the Group; and
•
Reading management’s papers to the Audit and Risk Committee in
respect of going concern, and agreeing the forecasts set out in
these papers to the underlying base case cash flow model.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group’s and the
Parent Company’s ability to continue as a going concern for a period of
at least twelve months from when the financial statements are
authorised for issue.
In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted,
this conclusion is not a guarantee as to the Group’s and the Parent
Company’s ability to continue as a going concern.
In relation to the Directors’ reporting on how they have applied the
UK Corporate Governance Code, we have nothing material to add or
draw attention to in relation to the Directors’ statement in the financial
statements about whether the Directors considered it appropriate to
adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections of this
report.
Reporting on other information
The other information comprises all of the information in the Annual
Report other than the financial statements and our auditors’ report
thereon. The Directors are responsible for the other information.
Our opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion or,
except to the extent otherwise explicitly stated in this report, any form
of assurance thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. If we identify an
apparent material inconsistency or material misstatement, we are
required to perform procedures to conclude whether there is a
material misstatement of the financial statements or a material
misstatement of the other information. If, based on the work we have
performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing
to report based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also
considered whether the disclosures required by the UK Companies
Act 2006 have been included.
Based on our work undertaken in the course of the audit, the
Companies Act 2006 requires us also to report certain opinions
and matters as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the
audit, the information given in the Strategic Report and Directors’
Report for the year ended 31 December 2023 is consistent with the
financial statements and has been prepared in accordance with
applicable legal requirements.
In light of the knowledge and understanding of the Group and Parent
Company and their environment obtained in the course of the audit,
we did not identify any material misstatements in the Strategic Report
and Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Directors’ and CEO’s Remuneration
Report to be audited has been properly prepared in accordance with
the Companies Act 2006.
Antofagasta plc Annual Report 2023 187
UK Corporate Governance Code compliance statement
(the “corporate governance statement”)
The Listing Rules require us to review the Directors’ statements in
relation to going concern, longer-term viability and that part of the
corporate governance statement relating to the Parent Company’s
compliance with the provisions of the UK Corporate Governance Code
specified for our review. Our additional responsibilities with respect to
the corporate governance statement as other information are
described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded
that each of the following elements of the corporate governance
statement is materially consistent with the financial statements and
our knowledge obtained during the audit, and we have nothing material
to add or draw attention to in relation to:
•
The Directors’ confirmation that they have carried out a robust
assessment of the emerging and principal risks;
•
The disclosures in the Annual Report that describe those principal
risks, what procedures are in place to identify emerging risks and
an explanation of how these are being managed or mitigated;
•
The Directors’ statement in the financial statements about whether
they considered it appropriate to adopt the going concern basis of
accounting in preparing them, and their identification of any material
uncertainties to the Group’s and Parent Company’s ability to
continue to do so over a period of at least twelve months from the
date of approval of the financial statements;
•
The Directors’ explanation as to their assessment of the Group’s
and Parent Company’s prospects, the period this assessment covers
and why the period is appropriate; and
•
The Directors’ statement as to whether they have a reasonable
expectation that the Parent Company will be able to continue in
operation and meet its liabilities as they fall due over the period of its
assessment, including any related disclosures drawing attention to
any necessary qualifications or assumptions.
Our review of the Directors’ statement regarding the longer-term
viability of the Group and Parent Company was substantially less in
scope than an audit and only consisted of making inquiries and
considering the Directors’ process supporting their statement;
checking that the statement is in alignment with the relevant provisions
of the UK Corporate Governance Code; and considering whether the
statement is consistent with the financial statements and our
knowledge and understanding of the Group and Parent company and
their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we
have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial
statements and our knowledge obtained during the audit:
•
The Directors’ statement that they consider the Annual Report,
taken as a whole, is fair, balanced and understandable, and provides
the information necessary for the members to assess the Group’s
and Parent Company’s position, performance, business model and
strategy;
•
The section of the Annual Report that describes the review of
effectiveness of risk management and internal control systems; and
•
The section of the Annual Report describing the work of the Audit
and Risk Committee.
We have nothing to report in respect of our responsibility to report
when the Directors’ statement relating to the Parent Company’s
compliance with the Code does not properly disclose a departure from
a relevant provision of the Code specified under the Listing Rules for
review by the auditors.
Responsibilities for the financial statements and the audit
Responsibilities of the Directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities,
the Directors are responsible for the preparation of the financial
statements in accordance with the applicable framework and for being
satisfied that they give a true and fair view. The Directors are also
responsible for such internal control as they determine is necessary
to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for
assessing the Group’s and the Parent Company’s ability to continue as
a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Parent Company
or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditors’ report that
includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud,
is detailed below.
Based on our understanding of the Group and industry, we identified
that the principal risks of non-compliance with laws and regulations
related to breaches of environmental regulations and health and safety
regulations, and we considered the extent to which non-compliance
might have a material effect on the financial statements. We also
considered those laws and regulations that have a direct impact on the
financial statements such as the Companies Act 2006 and tax law in
the jurisdictions in which the Group operates. We evaluated
management’s incentives and opportunities for fraudulent manipulation
of the financial statements (including the risk of override of controls),
and determined that the principal risks were related to the posting of
inappropriate journal entries to increase revenue or reduce
expenditure, and management bias in accounting estimates. The Group
engagement team shared this risk assessment with the component
auditors so that they could include appropriate audit procedures in
response to such risks in their work. Audit procedures performed by
the Group engagement team and/or component auditors included:
•
Inquiries with management, including the Group’s Vice President of
Legal and the Head of Internal Audit, regarding their consideration
of known or suspected instances of non-compliance with laws and
regulation;
•
Obtaining legal letters from the Group’s external legal advisers in
respect of litigation and claims and other such matters, where
considered necessary;
•
Evaluation of management’s controls designed to prevent and detect
irregularities;
•
Challenging assumptions and judgements made by management in
respect of critical accounting judgements and significant accounting
estimates; and
•
Identifying and testing journal entries, in particular any journal
entries posted with certain unusual account combinations.
Antofagasta plc Annual Report 2023188
FINANCIAL STATEMENTS
Independent auditors’ report to the members of Antofagasta plc continued
There are inherent limitations in the audit procedures described above.
We are less likely to become aware of instances of non-compliance
with laws and regulations that are not closely related to events and
transactions reflected in the financial statements. Also, the risk of not
detecting a material misstatement due to fraud is higher than the risk
of not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
Our audit testing might include testing complete populations of
certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number
of items for testing, rather than testing complete populations. We will
often seek to target particular items for testing based on their size or
risk characteristics. In other cases, we will use audit sampling to
enable us to draw a conclusion about the population from which the
sample is selected.
A further description of our responsibilities for the audit of the
financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for
the Parent Company’s members as a body in accordance with Chapter
3 of Part 16 of the Companies Act 2006 and for no other purpose. We
do not, in giving these opinions, accept or assume responsibility for
any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if,
in our opinion:
•
we have not obtained all the information and explanations we
require for our audit; or
•
adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
•
certain disclosures of Directors’ remuneration specified by law
arenot made; or
•
the Parent Company financial statements and the part of the
Directors’ and CEO’s Remuneration Report to be audited are
not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit and Risk Committee,
we were appointed by the members on 20 May 2015 to audit the
financial statements for the year ended 31 December 2015 and
subsequent financial periods. The period of total uninterrupted
engagement is nine years, covering the years ended 31 December
2015 to 31 December 2023.
Other matter
In due course, as required by the Financial Conduct Authority
Disclosure Guidance and Transparency Rule 4.1.14R, these financial
statements will form part of the ESEF-prepared annual financial report
filed on the National Storage Mechanism of the Financial Conduct
Authority in accordance with the ESEF Regulatory Technical Standard
(‘ESEF RTS’). This auditors’ report provides no assurance over
whether the annual financial report will be prepared using the single
electronic format specified in the ESEF RTS.
SIMON MORLEY (SENIOR STATUTORY AUDITOR)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
20 March 2024
Antofagasta plc Annual Report 2023 189
Antofagasta plc Annual Report 2023190
FINANCIAL STATEMENTS
Financial statements
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For the year ended 31 December 2023
| Excluding | Excluding | ||||||
| exceptional | Exceptional | exceptional | Exceptional | ||||
| items | Items | items | Items | ||||
| 2023 | 2023 | 2023 | 2022 | 2022 | 2022 | ||
| Note(s) | $m | $m | $m | $m | $m | $m | |
| Group revenue | 6, 7 | ||||||
| Total operating costs | ( | ( | ( | ( | |||
| Operating profit from subsidiaries | 8 | ||||||
| Net share of results from associates and joint | |||||||
| ventures | 18 | ( | ( | ||||
Gain on dis p osal of investment in j oint venture | 17 | ||||||
Operating profit from subsidiaries and share of total results from associates and joint ventures | 8 | ||||||
Investment income | 10 | ||||||
Interest ex p ense | 10 | ( | ( | ( | ( | ||
Other finance items | 4,10 | ( | ( | ( | |||
| Net finance income/(expense) | 10 | ( | ( | ||||
| Profit before tax | |||||||
Income tax ex p ense | 11 | ( | ( | ( | ( | ( | |
| Profit from continuing operations | |||||||
| Profit for the year | |||||||
| Attributable to: | |||||||
Non-controlling interests | 32 | ||||||
| Owners of the parent | 12 | ||||||
US cents | US cents | US cents | US cents | US cents | US cents | ||
| Basic earnings per share | |||||||
From continuing o p erations | 12 |
119900 AAnnttooffaaggaassttaa ppllcc Annual Report 2023
Antofagasta plc Annual Report 2023 191
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For the year ended 31 December 2023
Note
| 2023 | 2022 | ||
| $m | $m | ||
| Profit for the year | |||
| Items that may be or were subsequently reclassified to profit or loss: | |||
Currenc y translation ad j ustment | ( | ( | |
| Total items that may be or were subsequently reclassified to profit or loss | ( | ( | |
| Items that will not be subsequently reclassified to profit or loss: | |||
Actuarial gains /(losses) on defined benefit p lans | 28 | ( | |
Gains in fair value of e q uit y investments | 19 | ||
Tax on items recognised directl y in e q uit y that will not be reclassified | 29 | ( | |
Share of other com p rehensive losses of associates and j oint ventures, net of tax | 18 | ( | |
| Total items that will not be subsequently reclassified to profit or loss | |||
| Total other comprehensive income | |||
| Total comprehensive income for the year | |||
| Attributable to: | |||
Non-controlling interests | 32 | ||
Owners of the p arent | |||
| 2023 | 2022 | ||
| $m | $m | ||
Total com p rehensive income for the y ear − continuing o p erations |
For the year ended 31 December 2023
| Equity | |||||||
| Retained | attributable | Non-controlling | |||||
| Share | Share | Other reserves | earnings | to owners of | interests | Total | |
| capital | premium | (Note 31) | (Note 31) | the parent | (Note 32) | equity | |
| $m | $m | $m | $m | $m | $m | $m | |
At 1 January 2022 | ( | ||||||
Profit for the y ear | |||||||
Other com p rehensive income for the y ear | ( | ( | |||||
Total com p rehensive income for the y ear | |||||||
Dividends | ( | ( | ( | ( | |||
| At 31 December 2022 | |||||||
Profit for the y ear | |||||||
Other com p rehensive income for the y ear | |||||||
Total comprehensive income for the year | |||||||
Dividends | ( | ( | ( | ( | |||
At 31 December 2023 |
AAnnttooffaaggaassttaa ppllcc
Annual Report 2023 119911
Antofagasta plc Annual Report 2023192
FINANCIAL STATEMENTS
Financial statements continued
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At as 31 December 2023
| 2023 | 2022 | ||
| Note | $m | $m | |
| Non-current assets | |||
Pro p ert y , p lant and e q ui p ment | 15 | ||
| Other non-current assets | |||
Inventories | 20 | ||
Investment in associates and j oint ventures | 18 | ||
Trade and other receivables | 21 | ||
E q uit y investments | 19 | ||
Deferred tax assets | 29 | ||
| Current assets | |||
Inventories | 20 | ||
Trade and other receivables | 21 | ||
Other financial asset | 22 | ||
| Current tax assets | |||
Li q uid investments | 23 | ||
Cash and cash e q uivalents | 23 | ||
Total assets | |||
| Current liabilities | |||
Short-term borrowings and other financial liabilities | 24 | ( | ( |
Trade and other p a y ables | 25 | ( | ( |
Short-term decommissioning and restoration p rovisions | 30 | ( | ( |
| Current tax liabilities | ( | ( | |
| ( | ( | ||
| Non-current liabilities | |||
Medium and long-term borrowings and other financial liabilities | 24 | ( | ( |
Trade and other p a y ables | 25 | ( | ( |
Post-em p lo y ment benefit obligations | 28 | ( | ( |
Decommissioning and restoration p rovisions | 30 | ( | ( |
Deferred tax liabilities | 29 | ( | ( |
| ( | ( | ||
Total liabilities | ( | ( | |
Net assets | |||
| Equity | |||
Share ca p ital | 31 | ||
Share p remium | 31 | ||
Other reserves | 31 | ||
Retained earnings | 31 | ||
Equity attributable to owners of the parent | |||
Non-controlling interests | 32 | ||
Total equity |
119922 AAnnttooffaaggaassttaa ppllcc Annual Report 2023
Antofagasta plc Annual Report 2023 193
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For the year ended 31 December 2023
| 2023 | 2022 | ||
| Note(s) | $m | $m | |
| Cash flow from continuing operations | 33 | ||
Interest p aid | ( | ( | |
Income tax p aid | ( | ( | |
| Net cash from operating activities | |||
| Investing activities | |||
Ca p ital contributions to associates and j oint ventures | 18 | ( | |
Dividends from associates and j oint ventures | 18 | ||
Investment in other financial assets | 22 | ( | |
Ac q uisition of e q uit y investments | 19 | ( | ( |
Proceeds from dis p osal of investment in j oint venture | 17 | ||
Proceeds from sale of p ro p ert y , p lant and e q ui p ment | |||
Purchases of p ro p ert y , p lant and e q ui p ment | ( | ( | |
Net (increase)/decrease in li q uid investments | 23 | ( | |
| Interest received | |||
| Net cash used in investing activities | ( | ( | |
| Financing activities | |||
Dividends p aid to owners of the p arent | 13 | ( | ( |
Dividends p aid to p reference shareholders of the Com p an y | 13 | ( | ( |
Dividends p aid to non-controlling interests | 32 | ( | ( |
Proceeds from issue of new borrowings | 33 | ||
Re p a y ments of borrowings | 33 | ( | ( |
Princi p al elements of lease p a y ments | 33 | ( | ( |
| Net cash used in financing activities | ( | ( | |
| Net (decrease) /increase in cash and cash equivalents | ( | ||
Cash and cash e q uivalents at beginning of the y ear | |||
| Net (decrease) /increase in cash and cash equivalents | 33 | ( | |
Effect of foreign exchange rate changes | 33 | ( | |
Cash and cash e q uivalents at end of the y ear | 23,33 |
AAnnttooffaaggaassttaa ppllcc
Annual Report 2023 119933
Antofagasta plc Annual Report 2023194
FINANCIAL STATEMENTS
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119944
AAnnttooffaaggaassttaa ppllcc
Annual Report 2023
Antofagasta plc Annual Report 2023 195
AAnnttooffaaggaassttaa ppllcc
Annual Report 2023 119955
Antofagasta plc Annual Report 2023196
FINANCIAL STATEMENTS
Financial statements continued
2 Material accounting policies continued
119966
AAnnttooffaaggaassttaa ppllcc
Annual Report 2023
Antofagasta plc Annual Report 2023 197
AAnnttooffaaggaassttaa ppllcc
Annual Report 2023 119977
Antofagasta plc Annual Report 2023198
FINANCIAL STATEMENTS
Financial statements continued
2 Material accounting policies continued
119988
AAnnttooffaaggaassttaa ppllcc
Annual Report 2023
Antofagasta plc Annual Report 2023 199
AAnnttooffaaggaassttaa ppllcc
Annual Report 2023 119999
Antofagasta plc Annual Report 2023200
FINANCIAL STATEMENTS
Financial statements continued
3 Critical accounting judgements and key sources of
estimation uncertainty continued
220000
AAnnttooffaaggaassttaa ppllcc
Annual Report 2023
Antofagasta plc Annual Report 2023 201
AAnnttooffaaggaassttaa ppllcc
Annual Report 2023 220011
Antofagasta plc Annual Report 2023202
FINANCIAL STATEMENTS
Financial statements continued
6 Segment information continued
| Exploration | Corporate | ||||||||
| Los | and | and other | Transport | ||||||
| Pelambres | Centinela | Antucoya | Zaldívar | evaluation 2 | items | Mining | division | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Revenue | 2,923.8 | 2,532.5 | 672.3 | − | − | − | 6,128.6 | 195.9 | 6,324.5 |
Operating cost excluding depreciation and loss on disposals | (1,199.2) | (1,313.5) | (457 .2) | − | (141.1) | (98.7) | (3,209.7) | (120.7) | (3,330.4) |
| Depreciation | (318.6) | (727.3) | (109.4) | − | − | (24.3) | (1,179.6) | (31.7) | (1,211.3) |
| Operating profit/(loss) | 1,406.0 | 491.7 | 105.7 | − | (141.1) | (123.0) | 1,739.3 | 43.5 | 1,782.8 |
Net share of results from associates and joint ventures | − | − | − | (15.4) | − | − | (15.4) | 1.9 | (13.5) |
Total operating profit from subsidiaries, and share of total results from associates and joint ventures | 1,406.0 | 491.7 | 105.7 | (15.4) | (141.1) | (123.0) | 1,723.9 | 45.4 | 1,769.3 |
| Investment income | 38.0 | 20.3 | 6.8 | − | − | 72.2 | 137.3 | 0.8 | 138.1 |
| Interest expense | (4.3) | (20.3) | (30.7) | − | − | (49.2) | (104.5) | (1.1) | (105.6) |
| Other finance items | |||||||||
| (excluding exceptional items) | (0.2) | (0.2) | (0.4) | − | − | (1.9) | (2.7) | (0.7) | (3.4) |
Fair value gain on other financial assets -- exceptional items | − | − | − | − | − | 167.1 | 167.1 | − | 167.1 |
| Profit/(loss) before tax | 1,439.5 | 491.5 | 81.4 | (15.4) | (141.1) | 65.2 | 1,921.1 | 44.4 | 1,965.5 |
| Tax | (465.2) | (143.1) | (14.6) | − | − | 13.7 | (609.2) | (15.1) | (624.3) |
| Tax -- exceptional items | − | − | − | − | − | (41.8) | (41.8) | − | (41.8) |
| Profit/(loss) for the year | 974.3 | 348.4 | 66.8 | (15.4) | (141.1) | 37.1 | 1,270.1 | 29.3 | 1,299.4 |
| Non-controlling interests | 372.5 | 89.5 | 5.5 | − | − | (3.2) | 464.3 | − | 464.3 |
| Profit/(losses) attributable to the owners | |||||||||
| of the parent | 601.8 | 258.9 | 61.3 | (15.4) | (141.1) | 40.3 | 805.8 | 29.3 | 835.1 |
| EBITDA | 1,724.6 | 1,219.0 | 215.1 | 86.8 | (141.1) | (98.7) | 3,005.7 | 81.5 | 3,087.2 |
| Additions to non-current assets | |||||||||
| Additions to property, plant and equipment | 914.3 | 1,182.4 | 140.7 | − | − | 19.0 | 2,256.4 | 51.5 | 2,307.9 |
| Segment assets and liabilities Segment | |||||||||
| assets | 7,414.0 | 6,533.6 | 1,732.7 | − | − | 2,657.6 | 18,337.9 | 418.2 | 18,756.1 |
| Investment in associates and joint ventures | − | − | − | 881.3 | − | − | 881.3 | 9.8 | 891.1 |
| Segment liabilities | (3,829.1) | (1,857.0) | (535.2) | − | − | (1,304.7) | (7,526.0) | (72.8) | (7,598.8) |
220022 AAnnttooffaaggaassttaa ppllcc Annual Report 2023
Antofagasta plc Annual Report 2023 203
| 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 | |
| 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 | |||||||||
| ventures | − | − | − | − | − | 944.7 | 944.7 | − | 944.7 |
Total operating profit from subsidiaries, and share of total results from 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 |
| EBITDA | 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) |
AAnnttooffaaggaassttaa ppllcc Annual Report 2023 220033
Antofagasta plc Annual Report 2023204
FINANCIAL STATEMENTS
Financial statements continued
6 Segment information continued
| 2023 | 2022 | ||
| $m | $m | ||
| Copper | |||
| – | Los Pelambres | 2,381.1 | 2,107.7 |
| – | Centinela concentrate | 1,309.8 | 1,132.7 |
| – | Centinela cathodes | 692.6 | 844.4 |
| – | Antucoya | 666.1 | 697.5 |
| Provision of shipping services | |||
| – | Los Pelambres | 50.3 | 51.9 |
| – | Centinela concentrate | 35.3 | 58.5 |
| – | Centinela cathodes | 6.0 | 6.7 |
| – | Antucoya | 6.2 | 6.0 |
| Gold | |||
| – | Los Pelambres | 83.5 | 75.4 |
| – | Centinela concentrate | 323.4 | 238.4 |
| Molybdenum | |||
| – | Los Pelambres | 373.2 | 291.4 |
| – | Centinela concentrate | 131.0 | 100.8 |
| Silver | |||
| – | Los Pelambres | 35.7 | 32.5 |
| – | Centinela concentrate | 34.4 | 24.7 |
Total | 6,128.6 | 5,668.6 | |
Transport division | 195.9 | 193.4 | |
| 6,324.5 | 5,862.0 | ||
| 2023 | 2022 | |||
| $m | $m | |||
| Europe | United Kingdom | 22.8 | 71.0 | |
| Switzerland | 386.5 | 753.6 | ||
| Spain | − | 1.0 | ||
| Germany | 200.0 | 140.0 | ||
| Rest of Europe | 89.9 | 96.5 | ||
| Latin America | ||||
– | Chile | 399.5 | 369.1 | |
– | Rest of Latin America | 133.0 | 179.7 | |
| North America | United States | 441.7 | 312.3 | |
| Asia | Japan | 1,989.6 | 1,668.6 | |
| China | 1,417.3 | 1,072.0 | ||
| Singapore | 450.2 | 423.8 | ||
| South Korea | 391.1 | 332.2 | ||
| Hong Kong | 204.7 | 178.2 | ||
| Rest of Asia | 198.2 | 264.0 | ||
| 6,324.5 | 5,862.0 | |||
220044 AAnnttooffaaggaassttaa ppllcc Annual Report 2023
Antofagasta plc Annual Report 2023 205
| 2023 | 2022 | |
| $m | $m | |
| Chile | 14,017.3 | 12,786.1 |
| Other | 9.5 | 10.1 |
| 14,026.8 | 12,796.2 |
| 2023 | 2022 | |
| $m | $m | |
| Non-current assets per the balance sheet | 14,455.9 | 13,016.2 |
| The above amounts by location reflect non-current assets per the balance sheet excluding: | ||
| Deferred tax assets | (72.0) | (78.5) |
| Account receivables | (68.5) | (51.0) |
| Equity investments | (288.6) | (90.5) |
| Total of non-current assets above | (429.1) | (220.0) |
| Non-current assets by location of asset | 14,026.8 | 12,796.2 |
| 2023 | 2022 | |
| $m | $m | |
| Revenue from contracts with customers | ||
| Sale of products | 6,016.2 | 5,671. 2 |
| Provision of shipping services associated with the sale of products | 97.8 | 123.1 |
| Transport division | 195.9 | 193.4 |
| Provisional pricing adjustments in respect of copper, gold and molybdenum | 14.6 | (125.7) |
| Total revenue | 6,324.5 | 5,862.0 |
AAnnttooffaaggaassttaa ppllcc Annual Report 2023 220055
Antofagasta plc Annual Report 2023206
FINANCIAL STATEMENTS
Financial statements continued
7 Group revenue continued
| Los Pelambres | Centinela | Centinela | Antucoya | Los Pelambres | Centinela | Los 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 | 2,465.4 | 1,363.1 | 689.5 | 663.9 | 79.2 | 319.3 | 455.4 | 161.1 |
| Revenue from freight services | 50.3 | 35.3 | 6.0 | 6.2 | − | − | − | − |
Effects of pricing adjustments to previous year invoices | 2,515.7 | 1,398.4 | 695.5 | 670.1 | 79.2 | 319.3 | 455.4 | 161.1 |
| Reversal of mark-to-market | ||||||||
adjustments at the end of the previous year | (38.0) | (19.9) | (0.8) | (0.8) | − | (2.7) | (12.6) | (7.6) |
Settlement of sales invoiced in the previous year | 90.9 | 52.9 | 10.3 | 7.7 | 2.9 | 1.0 | 40.0 | 15.9 |
| Total effect of adjustments to previous | ||||||||
| year invoices in the current year | 52.9 | 33.0 | 9.5 | 6.9 | 2.9 | (1.7) | 27.4 | 8.3 |
Effects of pricing adjustments to current year invoices | ||||||||
Settlement of sales invoiced in the current year | (52.2) | (19.0) | (6.7 ) | (4.9) | 1.5 | 3.9 | (84.1) | (27.3) |
| Mark-to-market adjustments at the end | ||||||||
| of the current year | 45.1 | 16.2 | 0.3 | 0.2 | − | 2.6 | (1.0) | (0.4) |
Total effect of adjustments to current year invoices | (7.1) | (2.8) | (6.4) | (4.7) | 1.5 | 6.5 | (85.1) | (27.7) |
| Total pricing adjustments | 45.8 | 30.2 | 3.1 | 2.2 | 4.4 | 4.8 | (57.7) | (19.4) |
| Realised losses on commodity | ||||||||
| derivatives | − | − | − | − | − | − | − | − |
| Revenues before deducting treatment | ||||||||
| and refining charges | 2,561.5 | 1,428.6 | 698.6 | 672.3 | 83.6 | 324.1 | 397.7 | 141.7 |
| Treatment and refining charges | (130.1) | (83.5) | − | − | (0.1) | (0.7) | (24.5) | (10.7) |
| Revenue net of tolling charges | 2,431.4 | 1,345.1 | 698.6 | 672.3 | 83.5 | 323.4 | 373.2 | 131.0 |
220066 AAnnttooffaaggaassttaa ppllcc Annual Report 2023
Antofagasta plc Annual Report 2023 207
| Los Pelambres | Centinela | Centinela | Antucoya | Los Pelambres | Centinela | Los 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 |
AAnnttooffaaggaassttaa ppllcc Annual Report 2023 220077
Antofagasta plc Annual Report 2023208
FINANCIAL STATEMENTS
Financial statements continued
7 Group revenue continued
2023 | 2022 | ||
| Sales provisionally priced at the balance sheet date | Tonnes | 181,400 | 179,000 |
| Average mark-to-market price | $/lb | 3.87 | 3.8 0 |
| Average provisional invoice price | $/lb | 3.72 | 3.65 |
2023 | 2022 | ||
| Sales provisionally priced at the balance sheet date | Tonnes | 16,400 | 22,700 |
| Average mark-to-market price | $/lb | 3.85 | 3.8 0 |
| Average provisional invoice price | $/lb | 3.84 | 3.77 |
2023 | 2022 | ||
| Sales provisionally priced at the balance sheet date | Ounces | 32,400 | 31,000 |
| Average mark-to-market price | $/oz | 2,072 | 1,828 |
| Average provisional invoice price | $/oz | 1,992 | 1,742 |
2023 | 2022 | ||
| Sales provisionally priced at the balance sheet date | Tonnes | 2,600 | 2,500 |
| Average mark-to-market price | $/lb | 18.50 | 26.10 |
| Average provisional invoice price | $/lb | 18.80 | 22.20 |
| Effect on debtors of year end | ||
| mark-to-market adjustments | ||
| 2023 | 2022 | |
| $m | $m | |
| Los Pelambres - copper concentrate Los | 45.1 | 38 .0 |
| Pelambres - molybdenum concentrate | (1.0) | 12.6 |
| Centinela - copper concentrate | 16.2 | 19.9 |
| Centinela - molybdenum concentrate | (0.4) | 7.6 |
| Centinela - gold in concentrate | 2.6 | 2.7 |
| Centinela - copper cathodes | 0.3 | 0.8 |
| Antucoya - copper cathodes | 0.2 | 0.8 |
| 63.0 | 82.4 |
220088 AAnnttooffaaggaassttaa ppllcc Annual Report 2023
Antofagasta plc Annual Report 2023 209
| 2023 | 2022 | |
| $m | $m | |
| Group revenue | 6,324.5 | 5,862.0 |
| Cost of sales | (3,666.4) | (3,432.7) |
| Gross profit | 2,658.1 | 2,429.3 |
| Administrative and distribution expenses | (618.5) | (55 8.9) |
| Other operating income | 50.8 | 3 7.9 |
| Other operating expenses | (307.6) | (274.0) |
| Operating profit from subsidiaries | 1,782.8 | 1,634.3 |
| Net share of results from associates and joint ventures | (13.5) | 48.1 |
| Gain on disposal of investment in joint ventures | − | 944.7 |
Total operating profit from subsidiaries, and share of total results from associates and joint ventures | 1,769.3 | 2,627.1 |
| 2022 | |||
| 2023 | Restated | ||
| $m | $m | ||
| Foreign exchange losses | |||
– | included in net finance expense | (12.5) | (12.8) |
| Depreciation of property, plant and equipment | owned assets | (1,127.7) | (1,047.2) |
| leased assets | (83.6) | (93.9) | |
| Loss on disposal of property, plant and equipment Cost | − | (2.1) | |
| of inventories recognised as an expense Employee | (2,457 .8) | (2,381.6) | |
| benefit expense | (619.9) | (476. 6) | |
| Decommissioning and restoration (operating expenses) | (12.8) | (15.4) | |
| Severance charges | (25.7 ) | (19.1) | |
| Exploration and evaluation expense | (141.1) | (113.0) | |
| Auditors´ remuneration | (2.4) | (2.2) |
| 2023 | 2022 | ||
| Group | $000 | $000 | |
| Fees payable to the Company´s auditors and their associates for the audit of the Parent Company and consolidated | |||
| financial statements | 1,685.0 | 1,312.5 | |
| Fees payable to the Company´s auditors and their associates for other services: | |||
– | The audit of the Company’s subsidiaries | 598.0 | 549.6 |
– | Audit-related assurance services | 109.0 | 98.0 |
| Other assurance services | − | 241.0 | |
| 2,392.0 | 2,201.1 |
AAnnttooffaaggaassttaa ppllcc Annual Report 2023 220099
Antofagasta plc Annual Report 2023210
FINANCIAL STATEMENTS
Financial statements continued
| 2022 | ||
| 2023 | Restated | |
| Number | Number | |
| Los Pelambres | 1,154 | 1,069 |
| Centinela | 2,503 | 2,408 |
| Antucoya | 914 | 852 |
| Exploration and evaluation | 58 | 60 |
| Corporate and other employees | ||
| Chile | 591 | 582 |
| United Kingdom | 4 | 4 |
| Other | 4 | 4 |
Mining and Corporate | 5,228 | 4,979 |
Transport division | 1,402 | 1,383 |
| 6,630 | 6,362 |
| 2023 | 2022 | |
| $m | $m | |
| Wages and salaries | (589.4) | (448.5) |
| Social security costs | (30.5) | (28.1) |
| (619.9) | (476.6) |
| 2023 | 2022 | |
| $m | $m | |
| Salaries and short-term employee benefits | (27.1) | (25.0) |
| (27.1) | (25.0) |
221100 AAnnttooffaaggaassttaa ppllcc Annual Report 2023
Antofagasta plc Annual Report 2023 211
| 2023 | 2022 | |
| $m | $m | |
| Investment income | ||
| Interest income | 43.1 | 19.8 |
| Gains on liquid investments held at fair value through profit or loss | 95.0 | 20.4 |
| 138.1 | 40.2 | |
| Interest expense | ||
| Interest expense | (105.6) | (78.6) |
| (105.6) | (78.6) | |
| Other finance items | ||
| Unwinding of discount on provisions | ( 15.8) | (16.9) |
| Exceptional fair value gains | 167.1 | − |
| Effects of changes in foreign exchange rates | 12.5 | (12.8) |
| Preference dividends | (0.1) | (0.1) |
| 163.7 | (29.8) | |
Net finance income/(expense) | 196.2 | (68.2) |
| 2023 | 2022 | |
| $m | $m | |
| Current tax charge | ||
| Corporate tax (principally first category tax in Chile) | (47 2.8) | (340.4) |
| Mining tax (royalty) | (109.3) | (83.9) |
| Withholding tax | (4.5) | (24.5) |
| Exchange rate | (0.2) | − |
| (586.8) | (448.8) | |
| Deferred tax charge | ||
| Corporate tax (principally first category tax in Chile) | (3.7 ) | (96.5) |
| Mining tax (royalty) | (2.7 ) | (9.8) |
| Adjustment to deferred tax due to introduction of new royalty | (34.3) | − |
| Exceptional items | (41.8) | − |
| Withholding tax | 3.2 | (48.5) |
| (79.3) | (154.8) | |
Total tax charge | (666.1) | (603.6) |
AAnnttooffaaggaassttaa ppllcc Annual Report 2023 221111
Antofagasta plc Annual Report 2023212
FINANCIAL STATEMENTS
Financial statements continued
11 Income tax expense continued
| Year ended | Year ended | Year ended | Year ended | |||||
| 31 December 2023 | 31 December 2023 | 31 December 2022 | 31 December 2022 Including | |||||
| Excluding exceptional items | Including exceptional items | Excluding exceptional items | exceptional items | |||||
$m | % | $m | % | $m | % | $m | % | |
| Profit before tax | 1,798.4 | 1,965.5 | 1,614.2 | 2,558.9 | ||||
| Profit before tax multiplied by Chilean | ||||||||
| corporate tax rate of 27% | (485.6) | 27.0 | (530.7) | 27.0 | (435.9) | 27.0 | (691.0) | 27.0 |
| Mining tax (royalty) | (109.7 ) | 6.1 | (109.7) | 5.6 | (94.5) | 5.8 | (94.5) | 3.7 |
Deduction of mining tax (royalty) as an allowable expense in determination of first category tax | 29.5 | (1.6) | 29.5 | (1.5) | 2 3.1 | (1.4) | 23.1 | (0.9) |
| Items not deductible from first category | ||||||||
| tax | (21.4) | 1 .2 | (21.4) | 1.1 | (33.9) | 2.1 | (33.9) | 1.3 |
| Adjustment in respect of prior years | 4.5 | (0.3) | 4.5 | (0.2) | (2.6) | 0.1 | (2.6) | 0.1 |
| Effect of increase in future royalty tax | ||||||||
| on deferred tax balances | (34.3) | 1.9 | (34.3) | 1.7 | − | − | − | − |
| Withholding tax | (1.4) | 0.1 | (1.4) | 0.1 | (73.0) | 4.6 | (73.0) | 2.9 |
| Tax effect of (loss)/profit of associates | ||||||||
| and joint ventures | (3.6) | 0.2 | (3.6) | 0.2 | 13.0 | (0.8) | 13.0 | (0.5) |
| Impact of previously unrecognised tax | ||||||||
| losses on current tax | (2.3) | 0.1 | (2.3) | 0.1 | 0.2 | − | 0.2 | − |
| Gain on disposal of investment in joint | ||||||||
| venture | − | − | − | − | − | − | 255.1 | (10.0) |
| Difference in overseas tax rates | − | − | 3.3 | (0.2) | − | − | − | − |
| Tax expense and effective tax rate | ||||||||
for the year | (624.3) | 34.7 | (666.1) | 33.9 | (603.6) | 37.4 | (603.6) | 23.6 |
221122 AAnnttooffaaggaassttaa ppllcc Annual Report 2023
Antofagasta plc Annual Report 2023 213
| 2023 | 2022 | |
| $m | $m | |
| Profit for the period attributable to owners of the parent (excluding exceptional items) | 709. 8 | 588.3 |
| Exceptional Items | 1 25.3 | 944.7 |
| Profit for the period attributable to owners of the parent (including exceptional items) from operations | 835.1 | 1,533.0 |
| 2023 | 2022 | |
| Number | Number | |
| Ordinary shares in issue throughout each year | 985,856,695 | 985,856,695 |
| 2023 | 2022 | |
| cents | cents | |
| Basic earnings per share (excluding exceptional items) from operations | 72. 0 | 59.7 |
| Basic earnings per share (exceptional items) from operations | 12.7 | 95.8 |
| Basic earnings per share (including exceptional items) from operations | 84.7 | 155.5 |
2023 | 2022 | ||
| Profit for the year attributable to owners of the parent | $m | 835.1 | 1,533.0 |
| Profit from continuing operations attributable to owners of the parent | $m | 835.1 | 1,533.0 |
| Ordinary shares | Number | 985,856,695 | 985,856,695 |
| Basic earnings per share from continuing operations | cents | 84.7 | 155.5 |
| 2023 | 2022 | ||||
| 2023 | 2022 | cents | cents | ||
| $m | $m | per share | per share | ||
| Final dividend paid in June (proposed in relation to the previous year) | |||||
– | Ordinary | 497.9 | 1,172.2 | 118.9 | |
| Interim dividend paid in September | Ordinary | 115.3 | 90.7 | 11.7 | |
| 613.2 | 1,262.9 | 62.2 | 128.1 |
| 2023 | 2022 | ||||
| 2023 | 2022 | cents | cents | ||
| $m | $m | per share | per share | ||
| Final dividend proposed in relation to the year | |||||
– | Ordinary | 239.6 | 497.9 | 24.3 | 50.5 |
| Accumulated | |||
| depreciation | |||
| Cost | and impairment | Net book value | |
| $m | $m | $m | |
| At 1 January 2021 | 150.1 | − | 150.1 |
| Provision against carrying value | − | (150.1) | (150.1) |
| At 31 December 2021 | 150.1 | (150.1) | − |
| At 31 December 2022 | 150.1 | (150.1) | − |
| At 31 December 2023 | 150.1 | (150.1) | − |
AAnnttooffaaggaassttaa ppllcc Annual Report 2023 221133
Antofagasta plc Annual Report 2023214
FINANCIAL STATEMENTS
Financial statements continued
14 Intangible assets continued
| Wagons | Machinery, | Right- | ||||||||
| Mining | Stripping | Buildings and | Railway | and rolling | equipment | Assets under | of-use | |||
| Land | properties | costs | infrastructure | track | stock | and others | construction | assets | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Cost | ||||||||||
| At 1 January 2022 | 61.9 | 672.0 | 2,879.5 | 5,803.9 | 122.8 | 206.5 | 7,244.4 | 2,929.2 | 500.3 | 20,420.5 |
| Additions | − | − | 582.5 | − | − | − | 2.0 | 1,366.2 | 51.3 | 2,002.0 |
| Additions - capitalised depreciation | − | − | 73.3 | − | − | − | − | − | − | 73.3 |
| Adjustment to capitalised | ||||||||||
| decommissioning provisions | − | − | − | 173.8 | − | − | − | − | − | 173.8 |
| Capitalisation of interest | − | − | − | − | − | − | − | 49.0 | − | 49.0 |
| Reclassifications | − | − | − | 1.4 | 11.9 | 1.5 | 4.1 | (15.8) | (3.1) | − |
| Asset disposals | − | − | − | (0.2) | − | (0.6) | (9.2) | (5.9) | (17.4) | (33.3) |
| At 31 December 2022 | 61.9 | 672.0 | 3,535.3 | 5,978.9 | 134.7 | 207.4 | 7,241.3 | 4,322.7 | 531.1 | 22,685.3 |
| At 1 January 2023 | 61.9 | 672.0 | 3,535.3 | 5,978.9 | 134.7 | 207.4 | 7,241.3 | 4,322.7 | 531.1 | 22,685.3 |
| Additions | 11.9 | − | 792.5 | 1.5 | 12.2 | 13.6 | 5.3 | 1,293.2 | 177.7 | 2,307.9 |
| Additions - capitalised depreciation | − | − | 90.3 | − | − | − | − | − | − | 90.3 |
| Adjustment to capitalised | ||||||||||
| decommissioning provisions | − | − | − | (27.2) | − | − | (4.7) | − | − | (31.9) |
| Capitalisation of interest | − | − | − | − | − | − | − | 112.1 | − | 112.1 |
| Reclassifications | (0.4) | − | − | 10.7 | − | − | (10.6) | (0.1) | − | (0.4) |
| Asset disposals | − | − | − | − | − | − | (1.9) | − | (0.7) | (2.6) |
| At 31 December 2023 | 73.4 | 672.0 | 4,418.1 | 5,963.9 | 146.9 | 221.0 | 7,229.4 | 5,727.9 | 708.1 | 25,160.7 |
Accumulated depreciation and impairment | ||||||||||
| At 1 January 2022 | (25.0) | (588.1) | (1,372.4) | (2,889.9) | (44.4) | (111.5) | (4,540.7) | − | (310.0) | (9,882.0) |
| Charge for the year | − | (60.1) | (352.8) | (319.3) | (7.8) | (14.0) | (293.2) | − | (93.9) | (1,141.1) |
Depreciation capitalised in inventories | − | − | − | − | − | − | (71.1) | − | − | (71.1) |
| Depreciation capitalised in property, | − | − | − | − | − | − | (73.3) | − | − | (73.3) |
| plant and equipment | − | − | − | 0.1 | − | 0.6 | 7.6 | − | 17.4 | 25.7 |
Asset disposals At 31 December 2022 | (25.0) | (648.2) | (1,725.2) | (3,209.1) | (52.2) | (124.9) | (4,970.7) | − | (386.5) | (11,141.8) |
| At 1 January 2023 | (25.0) | (648.2) | (1,725.2) | (3,209.1) | (52.2) | (124.9) | (4,970.7) | − | (386.5) | (11,141.8) |
| Charge for the year | − | (13.7) | (366.1) | (342.1) | (8.7) | (16.8) | (380.3) | − | (83.6) | (1,211.3) |
| Depreciation capitalised in inventories | − | − | − | − | − | − | (41.2) | − | − | (41.2) |
Depreciation capitalised in property, plant and equipment | − | − | − | − | − | − | (90.3) | − | − | (90.3) |
| Asset disposals | − | − | − | − | − | − | 1.9 | − | 0.7 | 2.6 |
| At 31 December 2023 | (25.0) | (661.9) | (2,091.3) | (3,551.2) | (60.9) | (141.7) | (5,480.6) | − | (469.4) | (12,482.0) |
| Net book value | ||||||||||
| At 31 December 2023 | 48.4 | 10.1 | 2,326.8 | 2,412.7 | 86.0 | 79.3 | 1,748.8 | 5,727.9 | 238.7 | 12,678.7 |
| At 31 December 2022 | 36.9 | 23.8 | 1,810.1 | 2,769.8 | 82.5 | 82.5 | 2,270.6 | 4,322.7 | 144.6 | 11,543.5 |
221144 AAnnttooffaaggaassttaa ppllcc Annual Report 2023
Antofagasta plc Annual Report 2023 215
| Economic | Economic | |||||
| Country of | Country of | Registered | Nature of | interest at | interest at | |
| incorporation | operations | office | business | 2023 | 2022 | |
| Direct subsidiaries of the Parent Company | ||||||
| Antofagasta Railway Company plc | UK | Chile | 1 | Railwa y | 100% | 100% |
| Andes Trust Limited (The) | UK | UK | 1 | Investment | 100% | 100% |
| Andean LFMA Investment Limited | UK | Chile | 1 | Investment | 100% | 100% |
| Alfa Estates Limited | Jerse y | Jerse y | 3 | Investment | 100% | 100% |
Andes Re Limited | Bermuda | Bermuda | 4 | Insurance | 100% | 100% |
| Indirect subsidiaries of the Parent Company | ||||||
| Minera Los Pelambres SCM | Chile | Chile | 2 | Mining | 60% | 60% |
| Minera Centinela SCM | Chile | Chile | 2 | Mining | 70% | 70% |
| Minera Antucoya SCM | Chile | Chile | 2 | Mining | 70% | 70% |
| Antofagasta Minerals S.A. | Chile | Chile | 2 | Mining | 100% | 100% |
| Energía Andina Geothermal SpA | Chile | Chile | 2 | Energ y | 100% | 100% |
| MLP Transmisión S.A. | Chile | Chile | 2 | Energ y | 100% | 100% |
| Sociedad Contractual Minera El Encierro | Chile | Chile | 2 | Mining | 57.17% | 56.54% |
| Northern Minerals Investment (Jersey) Limited | Jer se y | Jerse y | 3 | Investment | 100% | 100% |
| Northern Metals (UK) Limited | UK | UK | 1 | Investment | 100% | 100% |
| Northern Minerals Holding Co | USA | USA | 5 | Investment | 100% | 100% |
| Duluth Metals Limited | Canada | Canada | 7 | Investment | 100% | 100% |
| Twin Metals (UK) Limited | UK | UK | 1 | Investment | 100% | 100% |
| Twin Metals (USA) Inc | USA | USA | 6 | Investment | 100% | 100% |
| Twin Metals Minnesota LLC | USA | USA | 6 | Mining | 100% | 100% |
| Franconia Minerals (US) LLC | USA | USA | 6 | Mining | 100% | 100% |
| Duluth Metals Holdings (USA) Inc | USA | USA | 13 | Investment | 100% | 100% |
| Duluth Exploration (USA) Inc | USA | USA | 14 | Investment | 100% | 100% |
| DMC LLC (Minnesota) | USA | USA | 13 | Investment | 100% | 100% |
| DMC (USA) LLC (Delaware) | USA | USA | 13 | Investment | 100% | 100% |
| DMC (USA) Corporation | USA | USA | 13 | Investment | 100% | 100% |
| Antofagasta Investment Company Limited | UK | UK | 1 | Investment | 100% | 100% |
| Minprop Limited | J erse y | Jerse y | 3 | Mining | 100% | 100% |
| Antomin 2 Limited | BVI | BVI | 8 | Mining | 51% | 51% |
| Antomin Investors Limited | BVI | BVI | 8 | Mining | 51% | 51% |
| Antofagasta Minerals Australia Pty Limited | A ustralia | Australia | 9 | Mining | 100% | 100% |
| Minera Anaconda Peru S.A. | Peru | Peru | 10 | Mining | 100% | 100% |
| Los Pelambres Holding Company Limited | UK | UK | 1 | Investment | 100% | 100% |
| Los Pelambres Investment Company Limited | UK | UK | 1 | Investment | 100% | 100% |
| Lamborn Land Co | USA | USA | 5 | Investment | 100% | 100% |
| Anaconda South America Inc | USA | USA | 15 | Investment | 100% | 100% |
| El Tesoro (SPV Bermuda) Limited Antofagasta | Bermuda | Bermuda | 4 | Investment | 100% | 100% |
| Minerals Canada | Canada | Canada | 9 | Agenc y | 100% | 100% |
| Antofagasta Minerals (Shanghai) Co. Limited | China | China | 16 | Agenc y | 100% | 100% |
| Andes Investments Company (Jersey) Limited | J erse y | Jerse y | 3 | Investment | 100% | 100% |
| Bolivian Rail Investors Co Inc | USA | USA | 5 | Investment | 100% | 100% |
| Inversiones Los Pelambres Chile Limitada | Chile | Chile | 2 | Investment | 100% | 100% |
| Equatorial Resources SpA | Chile | Chile | 2 | Investment | 100% | 100% |
| Minera Santa Margarita de Astillas SCM | Chile | Chile | 2 | Mining | 82.0% | 82.0% |
AAnnttooffaaggaassttaa ppllcc Annual Report 2023 221155
Antofagasta plc Annual Report 2023216
FINANCIAL STATEMENTS
Financial statements continued
16 Investments in subsidiaries continued
| Economic | Economic | |||||
| Country of | Country of | Registered | Nature of | interest at | interest at | |
| incorporation | operations | office | business | 2023 | 2022 | |
| Minera Penacho Blanco SA | Chile | Chile | 2 | Mining | 66.6% | 66.6% |
| Michilla Costa SpA | Chile | Chile | 2 | Logistics | 99.9% | 99.9% |
| Minera Pampa Fenix SCM | Chile | Chile | 2 | Investment | 90.0% | 90.0% |
| Minera Mulpun Limitada | Chile | Chile | 2 | Mining | 100% | 100% |
| Fundación Minera Los Pelambres | Chile | Chile | 2 | Communit y | 100% | 100% |
| development | ||||||
| Inversiones Punta de Rieles Limitada | Chile | Chile | 12 | Investment | 100% | 100% |
| Ferrocarril Antofagasta a Bolivia | Chile | Chile | 12 | Railwa y | 100% | 100% |
| Inversiones Chilean Northern Mines Limitada | Chile | Chile | 12 | Investment | 100% | 100% |
| The Andes Trust Chile SA | Chile | Chile | 12 | Investment | 100% | 100% |
| Forestal S.A. | Chile | Chile | 12 | Forestr y | 100% | 100% |
| Servicios de Transportes Integrados Limitada | Chile | Chile | 12 | Road trans p ort | 100% | 100% |
| Inversiones Train Limitada | Chile | Chile | 12 | Investment | 100% | 100% |
| Servicios Logisticos Capricornio Limitada | Chile | Chile | 12 | Trans p ort | 100% | 100% |
| Embarcadores Limitada | Chile | Chile | 12 | Trans p ort | 100% | 100% |
| FCAB Ingenieria y Servicios DOS Limitada | Chile | Chile | 12 | Trans p ort | 100% | 100% |
| Inmobiliaria Parque Estación S.A. | Chile | Chile | 12 | Real Estates | 100% | 100% |
| Emisa Antofagasta SA | Chile | Chile | 12 | Trans p ort | 100% | 100% |
221166 AAnnttooffaaggaassttaa ppllcc Annual Report 2023
Antofagasta plc Annual Report 2023 217
| Minera | |||
| ATI (i) | Zaldívar (ii) | Total | |
| 2023 | 2023 | 2023 | |
| $m | $m | $m | |
| Balance at the beginning of the year | 7. 3 | 897.3 | 904.6 |
| Obligations on behalf of JV and associates at the beginning of the year | − | − | − |
| Capital contribution | 0.6 | − | 0.6 |
| Share of profit/(loss) before tax | 2.6 | (1.2) | 1.4 |
| Share of tax | (0.7) | (14.2) | (14.9) |
| Share of profit/(loss) from JV and associates | 1.9 | (15.4) | (13.5) |
| Share of other comprehensive loss of associates and joint ventures, net of tax | − | (0.6) | (0.6) |
| Balance at the end of the year | 9.8 | 881.3 | 891.1 |
| Minera | Tethyan | |||
| ATI (i) | Zaldívar (ii) | Copper (iii) | Total | |
| 2022 | 2022 | 2022 | 2022 | |
| $m | $m | $m | $m | |
| Balance at the beginning of the year | 5.8 | 900.0 | − | 905.8 |
| Obligations on behalf of JV and associates at the beginning of the year | − | − | (0.6) | (0.6) |
| Share of profit/(loss) before tax | 2.0 | 69.3 | (0.7) | 70.6 |
| Share of tax | (0.5) | (22.0) | − | (22.5) |
| Share of profit/(loss) from JV and associates | 1.5 | 47.3 | (0.7) | 48.1 |
| Dividends receivable | − | (50.0) | − | (50.0) |
| Disposal of investment in JV | − | − | 1.3 | 1.3 |
| Balance at the end of the year | 7.3 | 897.3 | − | 904.6 |
| ATI | ATI | |
| 2023 | 2022 | |
| $m | $m | |
| Cash and cash equivalents | 5.9 | 0.4 |
| Current assets | 21.6 | 18.2 |
| Non-current assets | 84.3 | 91.8 |
| Current liabilities | (13.6) | (19.3) |
| Non-current liabilities | (62.1) | (69.5) |
| Revenue | 65.9 | 55.2 |
| Profit from continuing operations | 6.2 | 5.1 |
| Total comprehensive income | 6.2 | 5.1 |
AAnnttooffaaggaassttaa ppllcc Annual Report 2023 221177
Antofagasta plc Annual Report 2023218
FINANCIAL STATEMENTS
Financial statements continued
18 Investment in associates and joint ventures continued
| Minera | Minera | |
| Zaldívar | Zaldívar | |
| 2023 | 2022 | |
| $m | $m | |
| Cash and cash equivalents | 38.4 | 70.1 |
| Current assets | 664.5 | 661.8 |
| Non-current assets | 1,628.6 | 1,658.6 |
| Current financial liabilities (excluding trade, other payables and provisions) | (57 .8) | (53.2) |
| Current liabilities | (171.3) | (159.3) |
| Non-current financial liabilities (excluding trade, other payables and provisions) | (10.8) | (68.3) |
| Non-current liabilities | (230.0) | (203.3) |
| Revenue | 718.6 | 783.4 |
| Depreciation and amortisation | (164.4) | (149.2) |
| Interest income | 2.0 | 1 .5 |
| Interest expense | (11.3) | (0.8) |
| Income tax expense | (28.4) | (43.9) |
| (Loss)/profit after tax from continuing operations | (2.1) | 94.6 |
| Total comprehensive (expense)/income | (2.1) | 94.6 |
| 2023 | 2022 | |
| $m | $m | |
| Balance at the beginning of the year | 9 0.5 | 8.7 |
| Acquisition | 60.7 | 66.5 |
| Movements in fair value | 137.0 | 15.8 |
| Foreign currency exchange differences | 0.4 | (0.5) |
Balance at the end of the year | 288.6 | 90.5 |
| 2023 | 2022 | |
| $m | $m | |
| Current | ||
| Raw materials and consumables | 231.0 | 221.4 |
| Work-in-progress | 375.4 | 404.9 |
| Finished goods | 64.6 | 81.8 |
| 671.0 | 708.1 | |
| Non-current | ||
| Work-in-progress | 457.0 | 347.0 |
| Total | 1,128.0 | 1,055.1 |
221188 AAnnttooffaaggaassttaa ppllcc Annual Report 2023
Antofagasta plc Annual Report 2023 219
Due in one year | Due after one year | Total | ||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
| $m | $m | $m | $m | $m | $m | |
| Trade receivables | 950.1 | 997.1 | − | − | 950.1 | 997.1 |
| Other receivables | 167.7 | 1,090.1 | 68.5 | 51.0 | 236.2 | 1,141.1 |
| 1,117.8 | 2,087.2 | 68.5 | 51.0 | 1,186.3 | 2,138.2 |
| 2023 | 2022 | |
| $m | $m | |
| Balance at the beginning of the year | (1.0) | (1.2) |
| Utilised in year | (0.3) | 0.2 |
| Foreign currency exchange difference | 0.1 | − |
| Balance at the end of the year | (1.2) | (1.0) |
| 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 | |
2023 | 1,168.9 | 13.9 | 0.5 | 4.2 | 1,187.5 | (1.2) | 1,186.3 |
2022 | 2,098.8 | 36.8 | 1.2 | 2.4 | 2,139.2 | (1.0) | 2,138.2 |
| 2023 | 2022 | |
| $m | $m | |
| Cash and cash equivalents | 644.7 | 810.4 |
| Liquid investments | 2,274.7 | 1,580.8 |
| 2,919.4 | 2,391.2 |
| 2023 | 2022 | |
| $m | $m | |
| US dollars | 2,895.3 | 2,371.1 |
| Chilean pesos | 22.3 | 18.8 |
| Sterling | 1.2 | 1.0 |
| Other | 0.6 | 0.3 |
| 2,919.4 | 2,391.2 |
AAnnttooffaaggaassttaa ppllcc Annual Report 2023 221199
Antofagasta plc Annual Report 2023220
FINANCIAL STATEMENTS
Financial statements continued
23 Cash and cash equivalents, and liquid investments continued
The credit quality of cash, cash equivalents and liquid investments are as follow:
| 2023 | 2022 | |
| $m | $m | |
| AAA | 2,075.1 | 1,476.7 |
| AA+ | − | − |
| AA | − | − |
| AA- | 110.0 | 36.5 |
| A+ | 223.4 | 303.0 |
| A | 405.4 | 484.1 |
| Subtotal | 2,813.9 | 2,300.3 |
| Cash at bank | 105.5 | 90.9 |
| Total cash, cash equivalents and liquid investments | 2,919.4 | 2,391.2 |
1
1. Cash at bank is held with investment grade financial institutions.
There have been no impairments recognised in respect of cash or cash equivalents in the year ended 31 December 2023 (year ended 31 December
2022: nil).
| 2023 | 2022 | ||
| Note | $m | $m | |
| Los Pelambres | |||
| Senior loan | (i) | (2,067 .2) | (1,470.5) |
| Leases | (45.2) | (55.3) | |
| Centinela | |||
| Senior loan | (ii) | (166.3) | (276. 7) |
Other loans | (ii) | (265.0) | − |
| Leases | (142.8) | (35.2) | |
| Antucoya | |||
Senior loan | (iii) | (174 .1) | (223.5) |
Subordin ated debt | (iv) | ( 187.6) | (171.5) |
| Leases | (v) | (17 . 4) | (16.5) |
Corporat e and other items | |||
| Bond | (vi) | (986.8) | (985.3) |
Le ases | (vii) | (18.4) | (23.1) |
| Transport division | |||
| Senior loan | (viii) | (5.0) | (15.3) |
Le ases | (0.9) | (1.6) | |
| Preference shares | (ix) | (2.5) | (2.5) |
| Total | (4,079.2) | (3,277.0) |
222200 AAnnttooffaaggaassttaa ppllcc Annual Report 2023
Antofagasta plc Annual Report 2023 221
| Chilean | 2023 | |||
| pesos | Sterling | US dollars | Total | |
| At 31 December 2023 | $m | $m | $m | $m |
| Corporate loans | − | − | (2,412.6) | (2,412.6) |
| Bond | − | − | (986.8) | (986.8) |
| Other loans (including short-term loans) | − | − | (452.6) | (452.6) |
| Leases | (174.8) | (3.5) | (46.4) | (224.7) |
| Preference shares | − | (2.5) | − | (2.5) |
(174.8) | (6.0) | (3,898.4) | (4,079.2) |
| Chilean | 2022 | |||
| pesos | Sterling | US dollars | Total | |
| $m | $m | $m | $m | |
| Corporate loans | (0.3) | − | (1,985.7) | (1,986.0) |
| Bond | − | − | (985.3) | (985.3) |
| Other loans (including short-term loans) | − | − | (171.5) | (171.5) |
| Leases | (115.1) | (3.9) | (12.7) | (131.7) |
| Preference shares | − | (2.5) | − | (2.5) |
(115.4) | (6.4) | (3,155.2) | (3,277.0) |
| 2023 | |||
| Fixed | Floating | Total | |
| At 31 December 2023 | $m | $m | $m |
| Corporate loans | (5.0) | (2,407.6) | (2,412.6) |
| Bond | (986.8) | − | (986.8) |
| Other loans (including short-term loans) | − | (452.6) | (452.6) |
| Leases | (224.7) | − | (224.7) |
| Preference shares | (2.5) | − | (2.5) |
(1,219.0) | (2,860.2) | (4,079.2) |
| 2022 | |||
| Fixed | Floating | Total | |
| At 31 December 2022 | $m | $m | $m |
| Corporate loans | (15.5) | (1,970.5) | (1,986.0) |
| Bond | (985.3) | − | (985.3) |
| Other loans (including short-term loans) | − | (171.5) | (171.5) |
Leases | (125.7) | (6.0) | (131.7) |
Preference shares | (2.5) | − | (2.5) |
(1,129.0) | (2,148.0) | (3,277.0) |
AAnnttooffaaggaassttaa ppllcc Annual Report 2023 222211
Antofagasta plc Annual Report 2023222
FINANCIAL STATEMENTS
Financial statements continued
24 Borrowings and other financial liabilities continued
| Within | Between | Between | After | 2023 | |
| 1 year | 1-2 years | 2-5 years | 5 years | Total | |
| At 31 December 2023 | $m | $m | $m | $m | $m |
| Corporate loans | (529.1) | (570.9) | (1,287.6) | (25.0) | (2,412.6) |
| Bond | − | − | − | (986.8) | (986.8) |
| Other loans | (265.0) | − | (187.6) | − | (452.6) |
| Leases | (107.8) | (73.0) | (42.6) | (1.3) | (224.7) |
| Preference shares | − | − | − | (2.5) | (2.5) |
(901.9) | (643.9) | (1,517.8) | (1,015.6) | (4,079.2) |
| Within | Between | Between | After | 2022 | |
| 1 year | 1-2 years | 2-5 years | 5 years | Total | |
| $m | $m | $m | $m | $m | |
| Corporate loans | (377.4) | (531.7) | (927.7) | (149.2) | (1,986.0) |
| Bond | − | − | − | (985.3) | (985.3) |
| Other loans | − | − | (171.5) | − | (171.5) |
| Leases | (55.1) | (39.5) | (35.9) | (1.2) | (131.7) |
| Preference shares | − | − | − | (2.5) | (2.5) |
(432.5) | (571.2) | (1,135.1) | (1,138.2) | (3,277.0) |
| 2023 | 2022 | |
| $m | $m | |
Within 1 y ear | (121.0) | (62.1) |
Between 1 -- 2 y ears | (79.0) | (40.1) |
Between 2 -- 5 y ears | (47.4) | (37.6) |
After 5 y ears | − | (1.3) |
Total minimum lease p a y ments | (247.4) | (141.1) |
Less amounts re p resenting finance charges | 22.7 | 9.4 |
Present value of minimum lease p a y ments | (224.7) | (131.7) |
Facility available | Drawn | Undrawn | ||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
| $m | $m | $m | $m | $m | $m | |
Revolving credit facilit y | (500.0) | (500.0) | − | − | (500.0) | (500.0) |
| (500.0) | (500.0) | − | − | (500.0) | (500.0) |
Due in one year | Due after one year | Total | ||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
| $m | $m | $m | $m | $m | $m | |
| Trade creditors | (788.1) | (751.5) | − | − | (788.1) | (751.5) |
| Other creditors and accruals | (383.4) | (328.2) | (9.8) | (8.0) | (393.2) | (336.2) |
| (1,171.5) | (1,079.7) | (9.8) | (8.0) | (1,181.3) | (1,087.7) |
222222 AAnnttooffaaggaassttaa ppllcc Annual Report 2023
Antofagasta plc Annual Report 2023 223
| 2023 | ||||
| $m | ||||
At fair value | ||||
At fair value through other | Held at | |||
through profit | comprehensive | amortised | ||
and loss | income | cost | Total | |
− | 288.6 | − | 288.6 | |
916.5 | − | 157.1 | 1,073.6 | |
457.2 | − | − | 457.2 | |
1.1 | − | 643.6 | 644.7 | |
2,27 4.7 | − | − | 2,274.7 | |
3,649.5 | 288.6 | 800.7 | 4,738.8 | |
| Financial liabilities | ||||
| Borrowings and leases | − | − | (4,079.2) | (4,079.2) |
| Trade and other payables | − | − | (1,154.3) | (1,154.3) |
− | − | (5,233.5) | (5,233.5) |
| 2022 | ||||
| $m | ||||
At fair value | ||||
At fair value through other | Held at | |||
through profit | comprehensive | amortised | ||
and loss | income | cost | Total | |
− | 90.5 | − | 90.5 | |
897.2 | − | 1,047.5 | 1,944.7 | |
8.5 | − | 801.9 | 8 10.4 | |
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) |
| 2023 | 2022 | |
| $m | $m | |
| Financial assets | ||
| Trade and other receivables (non-current) per balance sheet | 68.5 | 51.0 |
| Trade and other receivables (current) per balance sheet | 1,117.8 | 2,087.2 |
| Total trade and other receivables per balance sheet | 1,186.3 | 2,138.2 |
| Less: non-financial assets (including prepayments and VAT receivables) | (112.7) | (193.5) |
| Total trade and other receivables (financial assets) | 1,073.6 | 1,944.7 |
| Financial liabilities | ||
| Trade and other payables (current) per balance sheet | (1,17 1.5) | (1,079.7) |
| Trade and other payables (non-current) per balance sheet | (9.8) | (8.0) |
| Total trade and other payables per balance sheet | (1,181.3) | (1,087.7) |
| Less: non-financial liabilities (including VAT payables) | 27.0 | 20.4 |
| Total trade and other payables (financial liabilities) | (1,154.3) | (1,067.3) |
AAnnttooffaaggaassttaa ppllcc Annual Report 2023 222233
Antofagasta plc Annual Report 2023224
FINANCIAL STATEMENTS
Financial statements continued
26 Financial instruments and financial risk management continued
| Total | ||||
| Level 1 | Level 2 | Level 3 | 2023 | |
| $m | $m | $m | $m | |
| Financial assets | ||||
| Equity investments (a) | 288.6 | − | − | 288.6 |
| Trade and other receivables (b) | − | 916.5 | − | 916.5 |
| Other financial assets (c) | − | 457.2 | − | 457.2 |
| Cash and cash equivalents (d) | 1.1 | − | − | 1.1 |
| Liquid investment (e) | − | 2,274.7 | − | 2,274.7 |
289.7 | 3,648.4 | − | 3,938.1 |
| Total | ||||
| Level 1 | Level 2 | Level 3 | 2022 | |
| $m | $m | $m | $m | |
| Financial assets | ||||
| Equity investments (a) | 90.5 | − | − | 90.5 |
| Trade and other receivables (b) | − | 897.2 | − | 897.2 |
| Cash and cash equivalents (d) | 8 .5 | − | − | 8.5 |
| Liquid investment (e) | − | 1,580.8 | − | 1,580.8 |
99.0 | 2,478.0 | − | 2,577.0 |
222244 AAnnttooffaaggaassttaa ppllcc Annual Report 2023
Antofagasta plc Annual Report 2023 225
AAnnttooffaaggaassttaa ppllcc Annual Report 2023 222255
Antofagasta plc Annual Report 2023226
FINANCIAL STATEMENTS
Financial statements continued
26 Financial instruments and financial risk management continued
| | |||||
| C | |||||
| O | |||||
| L | |||||
| P | |||||
| T | |||||
| A | |||||
| C | |||||
| O | |||||
| L | |||||
| P | |||||
| T | |||||
222266 AAnnttooffaaggaassttaa ppllcc Annual Report 2023
Antofagasta plc Annual Report 2023 227
2023 | 2022 | |
| Weighted average forecast share price at vesting date | $ 21.6 | $18.5 |
| Expected volatility | 37.21% | 5 0.90% |
| Expected life of awards | 3 years | 3 y ears |
| Expected dividend yields | 2.93% | 6.77% |
| Discount rate | 5.32% | 4.33% |
AAnnttooffaaggaassttaa ppllcc Annual Report 2023 222277
Antofagasta plc Annual Report 2023228
FINANCIAL STATEMENTS
Financial statements continued
27 Long-term incentive plan continued
| Restricted | Performance | |
| Awards | Awards | |
| Number | Number | |
| Outstanding at 1 January 2023 | 438,519 | 1,176,947 |
| Granted during the year | 291,060 | 468,967 |
| Cancelled during the year | (25,17 8) | (49,510) |
| Payments during the year | (244,893) | (599,386) |
| Outstanding at 31 December 2023 | 459,508 | 997,018 |
| Number of awards that have vested | 171,803 | − |
| 2023 | 2022 | |
| % | % | |
| Average nominal discount rate | 6.2% | 5.3% |
| Average rate of increase in salaries | 1.9% | 2.2% |
| Average staff turnover | 3.2% | 3.5% |
| 2023 | 2022 | |
| $m | $m | |
| Current service cost (charge to operating profit) | (25.7) | (19.1) |
| Interest cost (charge to other finance items) | (7.2) | (6.8) |
| Foreign exchange credit to other finance items | 3.6 | 1.5 |
Total charge to income statement | (29.3) | (24.4) |
| 2023 | 2022 | |
| $m | $m | |
| Balance at the beginning of the year | (137 .3) | (107.5) |
| Current service cost | (25.7) | (19.1) |
| Actuarial gains/(losses) | 10.7 | (18.1) |
| Unwinding of discount on provisions | (7 .2) | (6.8) |
| Paid in the year | 16.0 | 12.7 |
| Foreign currency exchange difference | 3.6 | 1.5 |
Balance at the end of the year | (139.9) | (137.3) |
| 31 December 2023 | 31 December 2022 | |
| Nominal discount rate | 6.52% | 5.34% |
| Reference rate name | 20 year Chilean Central Bank Bonds | 20 year Chilean Central Bank Bonds |
| Governmental or corporate rate | Governmental | Governmental |
| Reference rating | AA--/AA+ | AA--/AA+ |
| Corresponds to an Issuance market (primary) or secondary market | Secondary | Secondary |
| Issuance currency associated to the reference rate | Chilean peso | Chilean peso |
| Date of determination of the reference interest rate | 31 October 2023 | 28 November 2022 |
| Source of the reference interest rate | Bloomberg | Bloomberg |
222288 AAnnttooffaaggaassttaa ppllcc Annual Report 2023
Antofagasta plc Annual Report 2023 229
| Accelerated | Temporary | |||||||
| capital | differences | Withholding | Short-term | Mining tax | ||||
| allowances | on provisions | tax | differences | (Royalty) | Tax losses | Disposal | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | |
| At 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 | − | − | − | − |
| Credit deferred in equity | − | 4.9 | − | − | 0.8 | − | − | 5.7 |
| At 31 December 2022 and 1 January | ||||||||
| 2023 | (1,467.1) | 129.1 | (71.6) | (67.8) | (111.9) | 124.5 | − | (1,464.8) |
| (Charge)/credit to income | (34.4) | 14.0 | 3.2 | (1.1) | (2.6) | 18.0 | − | (2.9) |
| Adjustment due to introduction of new | ||||||||
| royalty | − | − | − | 50.8 | (85.1) | − | − | (34.3) |
| Tax on exceptional items | − | − | − | (41.8) | − | − | − | (41.8) |
| Reclassification | 95.3 | (77.1) | 1.8 | (30.0) | 11.3 | (1.3) | − | − |
| Charge deferred in equity | − | (2.9) | − | (37.0) | (0.9) | − | − | (40.8) |
| At 31 December 2023 | (1,406.2) | 63.1 | (66.6) | (126.9) | (189.2) | 141.2 | − | (1,584.6) |
| 2023 | 2022 | |
| $m | $m | |
| Net deferred tax assets | 72.0 | 78.5 |
| Net deferred tax liabilities | (1,656.6) | (1,543.3) |
| Net deferred tax balances | (1,584.6) | (1,464.8) |
AAnnttooffaaggaassttaa ppllcc Annual Report 2023 222299
Antofagasta plc Annual Report 2023230
FINANCIAL STATEMENTS
Financial statements continued
29 Deferred tax assets and liabilities continued
| 2023 | 2022 | |
| $m | $m | |
| Balance at the beginning of the year | (488.2) | (336.1) |
| Charge to operating profit in the year | (12.8) | (15.4) |
| Unwind of discount to net interest in the year | (10.2) | (10.1) |
| Adjustment to provision discount rates | 1.6 | (1.6) |
| Capitalised adjustment to provision | 31.9 | (173.8) |
| Utilised in year | 36.8 | 49.7 |
| Foreign currency exchange difference | (0.2) | (0.9) |
Balance at the end of the year | (441.1) | (488.2) |
| Short-term provisions | (15.2) | (33.2) |
| Long-term provisions | (425.9) | (455.0) |
Total | (441.1) | (488.2) |
| 2023 | 2022 | 2023 | 2022 | |
| Number | Number | $m | $m | |
| Authorised | ||||
| Ordinary shares of 5p each | 1,300,000,000 | 1,300,000,000 | 118.9 | 118.9 |
| 2022 | 2023 | 2022 | ||
| Number | Number | $m | $m | |
| Issued and fully paid | ||||
| Ordinary shares of 5p each | 985,856,695 | 985,856,695 | 89.8 | 89.8 |
223300 AAnnttooffaaggaassttaa ppllcc Annual Report 2023
Antofagasta plc Annual Report 2023 231
| 2023 | 2022 | |
| $m | $m | |
| Share premium | ||
| At 1 January and 31 December | 199.2 | 199.2 |
| Equity investment revaluation reserve | ||
| At 1 January | 8.4 | (7.4) |
| Gains on equity investment | 100.0 | 15.8 |
| At 31 December | 108.4 | 8.4 |
| Foreign currency translation reserves | ||
| At 1 January | (3.4) | (3.0) |
| Currency translation adjustment | (0.5) | (0.4) |
| At 31 December | (3.9) | (3.4) |
| Total other reserves per balance sheet | 104.5 | 5.0 |
| Retained earnings | ||
| At 1 January | 8,333.5 | 8,071.6 |
| Parent and subsidiaries’ profit for the period | 848.6 | 1 ,484.9 |
| Equity accounted units’ (loss)/profit after tax for the period | (13.5) | 48.1 |
| Actuarial gains/(losses) | 3.0 | (8.2) |
| Total comprehensive income for the year | 838.1 | 1,524.8 |
| Dividends paid | (613.2) | (1,262.9) |
| At 31 December | 8,558.4 | 8,333.5 |
| Share of | |||||||
| Non- | At | profit/(loss) | At | ||||
| controlling | 1 January | for the | Share of | Hedging and | 31 December | ||
| Interest | 2023 | financial year | dividends | actuarial gains | 2023 | ||
% | Country | $m | $m | $m | $m | $m | |
| Minera Los Pelambres SCM | 40.0 | Chile | 1,443.0 | 373.4 | (388.0) | 1.2 | 1,429.6 |
| Minera Centinela SCM | 30.0 | Chile | 1,356.8 | 89.5 | − | 2.0 | 1,448.3 |
| Minera Antucoya SCM | 30.0 | Chile | 219.3 | 5.5 | − | 0.1 | 224.9 |
| Sociedad Contractual Minera El Encierro | 42.8 | Chile | (2.2) | (4.1) | − | − | (6.3) |
| Total | 3,016.9 | 464.3 | (388.0) | 3.3 | 3,096.5 |
| Share of | |||||||
| At | profit/(loss) | Hedging and | At | ||||
| controlling | 1 January | for the | Share of | actuarial | 31 December | ||
| Interest | 2022 | financial year | dividends | losses | 2022 | ||
| % | Country | $m | $m | $m | $m | $m | |
| Minera Los Pelambres SCM | 40.0 | Chile | 1,204.5 | 320.4 | (80.0) | (1.9) | 1,443.0 |
| Minera Centinela SCM | 30.0 | Chile | 1,275.9 | 82.9 | − | (2.0) | 1,356.8 |
| Minera Antucoya SCM | 30.0 | Chile | 198.4 | 21.2 | − | (0.3) | 219.3 |
| Sociedad Contractual Minera El Encierro | 43.5 | Chile | − | (2.2) | − | − | (2.2) |
| Total | 2,678.8 | 422.3 | (80.0) | (4.2) | 3,016.9 |
AAnnttooffaaggaassttaa ppllcc Annual Report 2023 223311
Antofagasta plc Annual Report 2023232
FINANCIAL STATEMENTS
Financial statements continued
32 Non-controlling interests continued
| Los Pelambres | Centinela | Antucoya | |
| 2023 | 2023 | 2023 | |
| $m | $m | $m | |
| Non-controlling interest (%) | 40.0% | 30.0% | 30.0% |
| Cash and cash equivalents | 222.2 | 156.5 | 52.0 |
| Current assets | 1,320.8 | 1,256.7 | 340.2 |
| Non-current assets | 6,093.2 | 5,276.8 | 1,392.8 |
| Current liabilities | (970.8) | (926.8) | (160.1) |
| Non-current liabilities | (2,858.4) | (930.3) | (375.1) |
| Net cash from operating activities | 1,206.8 | 1,069.1 | 209.7 |
| Net cash used in investing activities | (862.4) | (1,031.6) | (117.0) |
| Net cash (used in)/from financing activities | (409.0) | 124.1 | (67.8) |
| Los Pelambres | Centinela | Antucoya | |
| 2022 | 2022 | 2022 | |
| $m | $m | $m | |
| Non-controlling interest (%) | 40.0% | 30.0% | 30.0% |
| Cash and cash equivalents | 249.3 | 134.9 | 46.1 |
| Current assets | 1,373.2 | 1,170.7 | 340.6 |
| Non-current assets | 5,413.3 | 4,752.3 | 1,367.2 |
| Current liabilities | (725.8) | (553.3) | (153.1) |
| Non-current liabilities | (2,408.8) | (1,011.8) | (405.0) |
| Net cash from operating activities | 1,060.9 | 762.2 | 162.1 |
| Net cash used in investing activities | (881.0) | (879.8) | (65.1) |
Net cash from/(used in) financing activities | 44.8 | (163.2) | (174.3) |
| 2023 | 2022 | |
| $m | $m | |
| Profit before tax | 1,965.5 | 2,558.9 |
| Depreciation | 1,211.3 | 1,141.1 |
| Net loss on disposals | − | 2.1 |
| Net finance (income)/expense -- excluding exceptional items | (29.1) | 68.2 |
| Net share of loss/(profit) of associates and joint ventures | 13.5 | ( 48.1) |
| Exceptional fair value gain in respect of other financial asset | (167 .1) | − |
| Gain on disposal of investment in joint venture | − | (944.7) |
| Increase in inventories | (31.6) | (180.7) |
| (Increase)/decrease in debtors | (57.9) | 27.0 |
| Increase in creditors | 137.0 | 141.0 |
| Decrease in provisions | (14.5) | (26.5) |
| Cash flow generated from operations | 3,027.1 | 2,738.3 |
223322 AAnnttooffaaggaassttaa ppllcc Annual Report 2023
Antofagasta plc Annual Report 2023 233
| Movement | |||||||||
| At | Amortisation | between | At | ||||||
| 1 January | of finance | Capitalisation | maturity | Fair value | 31 December | ||||
| 2023 | Cash flow | New leases | costs | of interest | categories | gains | Exchange | 2023 | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Cash and cash equivalents | 810.4 | (162.0) | − | − | − | − | − | (3.7) | 644.7 |
| Liquid investments | 1,580.8 | 674.2 | − | − | − | − | 19.7 | − | 2,274.7 |
| Total cash and cash equivalents | |||||||||
| and liquid investments | 2,391.2 | 512.2 | − | − | − | − | 19.7 | (3.7) | 2,919.4 |
| Borrowings due within one year | ( 377.4) | 116.7 | − | − | − | (533.4) | − | − | (794.1) |
| Borrowings due after one year | (2,7 65.4) | (797.2) | − | (12.7) | (16.0) | 533.4 | − | − | (3,057.9) |
| Leases due within one year | (55.1) | 81.2 | − | − | − | (133.9) | − | − | (107.8) |
| Leases due after one year | (76.6) | − | (178.6) | − | − | 133.9 | − | 4.4 | (116.9) |
| Preference shares | (2.5) | − | − | − | − | − | − | − | (2.5) |
| Total borrowings | (3,277.0) | (599.3) | (178.6) | (12.7) | (16.0) | − | − | 4.4 | (4,079.2) |
(885.8) | (87.1) | (178.6) | (12.7) | (16.0) | − | 19.7 | 0.7 | (1,159.8) |
| Movement | |||||||||
| At | Amortisation | between | At | ||||||
| 1 January | of finance | Capitalisation | maturity | 31 December | |||||
| 2022 | Cash flow | New leases | costs | of interest | categories | Other | Exchange | 2022 | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Cash and cash equivalents | 743.4 | 65.6 | − | − | − | − | − | 1.4 | 810.4 |
| Liquid investments | 2,969.7 | (1,388.9) | − | − | − | − | − | − | 1,580.8 |
| Total cash and cash equivalents | |||||||||
| and liquid investments | 3,713.1 | (1,323.3) | − | − | − | − | − | 1.4 | 2,391.2 |
| Borrowings due within one year | (268.0) | 373.9 | − | − | − | (483.3) | − | − | (377.4) |
| Borrowings due after one year | (2,742.1) | (488.5) | − | (11.7) | (6.3) | 483.3 | (0.1) | − | (2,765.4) |
| Leases due within one year | (69.1) | 105.4 | − | − | − | (80.7) | − | (10.7) | (55.1) |
| Leases due after one year | (90.7) | − | (51.3) | − | − | 80.7 | (1.0) | (14.3) | (76.6) |
| Preference shares | (2.7) | − | − | − | − | − | − | 0.2 | (2.5) |
| Total borrowings | (3,172.6) | (9.2) | (51.3) | (11.7) | (6.3) | − | (1.1) | (24.8) | (3,277.0) |
| Net cash/(debt) | 540.5 | (1,332.5) | (51.3) | (11.7) | (6.3) | − | (1.1) | (23.4) | (885.8) |
| 2023 | 2022 | |
| $m | $m | |
| Cash, cash equivalents and liquid investments | 2,919.4 | 2,391.2 |
| Total borrowings and other financial liabilities | (4,079.2) | (3,277.0) |
| Net debt | (1,159.8) | (885.8) |
2023 | 2022 | |
| Year-end rates | $1.2750=£1; | $1.2080=£1; |
| $1 = Ch$877.12 | $1 = Ch$855.86 | |
| Average rates | $1.2440=£1; | $1.2340=£1; |
| $1 = Ch$839.16 | $1 = Ch$872.38 |
AAnnttooffaaggaassttaa ppllcc Annual Report 2023 223333
Antofagasta plc Annual Report 2023234
FINANCIAL STATEMENTS
Financial statements continued
223344
AAnnttooffaaggaassttaa ppllcc
Annual Report 2023
Antofagasta plc Annual Report 2023 235
Financial statements of the parent company (Antofagasta plc)
F
F
i
i
n
n
a
a
n
n
c
c
i
i
a
a
l
l
s
s
t
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m
m
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s
o
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)
)
Parent Company balance sheet
Jean-Paul Luksic Francisca Castro
As at 31 December 2023
Note
2023
$m
2022
$m
Non-current assets
Investment in subsidiaries 5
938.3
589.1
Other receivables 5
53.6
54.0
Pro
p
ert
y
,
p
lant and e
q
ui
p
ment
3.8
4.4
995.7
647.5
Current assets
Other receivables 5
311.7
744.6
Li
q
uid investments
773.3
457.6
Cash and cash e
q
uivalents
61.0
238.5
1,146.0
1,440.7
Total assets
2,141.7
2,088.2
Current liabilities
Amounts
p
a
y
able to subsidiaries 6
(345.2)
(615.7)
Other
p
a
y
ables
(10.4)
(9.2)
(355.6)
(624.9)
Non-current liabilities
Medium and long-term borrowings 7
(992.5)
(992.2)
(992.5)
(992.2)
Total liabilities
(1,348.1)
(1,617.1)
Net assets
793.6
471.1
Equity
Share ca
p
ital
89.8
89.8
Share
p
remium
199.2
199.2
Retained earnings
At 1 Januar
y
182.1
1,064.2
Profit for the
y
ear attributable to the owners
935.7
380.8
Dividends
(613.2)
(1,262.9)
At 31 December
504.6
182.1
Total equity
793.6
471.1
The financial statements on pages 235 to 238 were approved by the Board of Directors on 20 March 2024 and signed on its behalf by
Chairman Senior Independent Director
AAnnttooffaaggaassttaa ppllcc
Annual Report 2023 223355
Antofagasta plc Annual Report 2023236
FINANCIAL STATEMENTS
Financial statements of the parent company (Antofagasta plc) continued
Parent Company statement of changes in equity
1 Basis of preparation of the Parent Company financial statements
o
o
o
o
o
•
•
•
•
•
•
•
•
o
o
o
o
Share capital
$m
Share premium
$m
Retained earnings
$m
Total equity
$m
At 1 January 2022
89.8 199.2 1,064.2 1,353.2
Com
p
rehensive income for the
y
ear − − 380.8 380.8
Dividends − − (1,262.9) (1,262.9)
At 31 December 2022
89.8 199.2 182.1 471.1
Com
p
rehensive income for the
y
ear
− − 935.7 935.7
Dividends
− − (613.2) (613.2)
At 31 December 2023 89.8 199.2 504.6 793.6
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.
The Antofagasta plc Parent Company financial statements have been prepared in accordance with the Companies Act 2006 applicable to companies using
FRS 101, which applies the recognition and measurement bases of IFRS with reduced disclosure requirements. The financial information has been
prepared on an historical cost basis. The financial statements have been prepared on a going concern basis. The functional currency of the Company
and the presentation currency adopted is US dollars.
The following exemptions from the requirements of IFRS have been applied in the preparation of these financial statements, in accordance with FRS 101:
Paragraphs 45(b) and 46 to 52 of IFRS 2, ‘Share-based payment’ (details of the number and weighted-average exercise prices of share options and
how the fair value of goods or services received was determined)
IFRS 7, ‘Financial Instruments: Disclosures’
Paragraphs 91 to 99 of IFRS 13, ‘Fair value measurement’ (disclosure of valuation techniques and inputs used for fair value measurement of assets
and liabilities)
Paragraph 38 of IAS 1, ‘Presentation of financial statements’ comparative information requirements in respect of:
(i) paragraph 79(a)(iv) of IAS 1, ‘Presentation of financial statements’
(ii) paragraph 73(e) of IAS 16, ‘Property, plant, and equipment’
(iii) paragraph 118(e) of IAS 38, Intangible assets (reconciliations between the carrying amount at the beginning and end of the period)
The following paragraphs of IAS 1, ‘Presentation of financial statements’:
10(d) (statement of cash flows)
10(f) (a statement of financial position as at the beginning of the preceding period when an entity applies an accounting policy retrospectively or
makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements)
16 (statement of compliance with all IFRS)
38A (requirement for minimum of two primary statements, including cash flow statements)
38B-D (additional comparative information)
40A-D (requirements for a third statement of financial position)
111 (cash flow statement information), and
134-136 (capital management disclosures)
IAS 7, ‘Statement of cash flows’
Paragraphs 30 and 31 of IAS 8 ‘Accounting policies, changes in accounting estimates and errors’ (requirement for the disclosure of information when
an entity has not applied a new IFRS that has been issued but is not yet effective)
Paragraph 17 of IAS 24, ‘Related party disclosures’ (key management compensation)
The requirements in IAS 24, ‘Related party disclosures’ to disclose related party transactions entered into between two or more members of a group.
All of the Parent Company’s intercompany transactions and balances are with wholly-owned subsidiaries of the Group.
As permitted by section 408 of the Companies Act 2006, the profit and loss account of the Parent Company is not presented as part of these financial
statements. The profit after tax for the year of the Parent Company amounted to $935.7 million (2022 -- $380.8 million).
223366
AAnnttooffaaggaassttaa ppllcc
Annual Report 2023
Antofagasta plc Annual Report 2023 237
2 Principal accounting policies of the Parent Company
A) Currency translation
B) Income recognition
C) Dividends payable
D) Investments in subsidiaries
E) Liquid investments and cash and cash equivalents
F) Borrowings
G) Borrowings – preference shares
H) Equity instruments – ordinary share capital and share premium
I) Financing facilities
3 Significant accounting estimates and judgements
A summary of the principal accounting policies is set out below. These accounting policies have been applied consistently.
The Company’s functional currency is the US dollar. Transactions in currencies other than the functional currency are translated at the exchange rate
ruling at the date of the transaction. Monetary assets and liabilities, including amounts due from or to subsidiaries, denominated in currencies other than
the functional currency (being US dollars) are retranslated at year-end exchange rates. Gains and losses on retranslation are included in net profit or loss
for the year.
Dividends proposed by subsidiaries are recognised as income by the Company when they represent a present obligation of the subsidiaries, in the period
in which they are formally approved for payment.
Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable, which is the rate that exactly
discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.
Dividends proposed are recognised when they represent a present obligation, in the period in which they are formally approved for payment. Accordingly,
an interim dividend is recognised when paid and a final dividend is recognised when approved by shareholders.
Investments in subsidiaries represent equity holdings in subsidiaries and long-term amounts owed by subsidiaries. Such investments are valued at cost
less any impairment provisions. Investments relating to equity holdings in subsidiaries are reviewed for impairment if events or changes in circumstances
indicate that the carrying amount may not be recoverable; the recoverable amount of the investment is the higher of fair value less costs of disposal and
value in use. Investments relating to long-term amounts owed by subsidiaries are reviewed to assess if a material expected credit loss provision is
required in respect of these balances.
Liquid investments represent highly liquid current asset investments such as term deposits and managed funds invested in high quality fixed income
instruments. They do not meet the IAS 7 definition of cash and cash equivalents, normally because even if readily accessible, the underlying investments
have an average maturity profile greater than 90 days from the date first entered into, or because they are held primarily for investment purposes rather
than meeting short-term cash commitments. Cash and cash equivalents comprise cash on hand, deposits held on call with banks, highly liquid investments
that are readily convertible into known amounts of cash, and which are subject to insignificant risk of changes in value and are held for the purpose of
meeting short-term cash commitments rather than for investment or other purposes. The cash balance is presented net of bank overdrafts which are
repayable on demand. Cash and cash equivalents have a maturity period of 90 days or less.
Interest-bearing loans and bank overdrafts are initially recorded at the proceeds received, net of direct issue costs. They are subsequently measured at
amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method
of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that
exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. Finance
charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis using the effective
interest rate method.
The sterling-denominated preference shares issued by the Company carry a fixed rate of return without the right to participate in any surplus. They are
accordingly classified as borrowings and translated into US dollars at year-end rates of exchange. Preference share dividends are included within finance
costs.
Equity instruments issued are recorded at the proceeds received, net of direct issue costs. Equity instruments of the Company comprise its sterling-
denominated issued ordinary share capital and related share premium.
The presentational and the functional currency of the Company is US dollars, and ordinary share capital and share premium are translated into US dollars
at historical rates of exchange based on dates of issue.
On 30 December, 2023, Antofagasta plc agreed a revolving credit facility ‘‘RCF’’ of $500.0 million. This revolving credit facility has a term of three years,
which expires on 30 December, 2025 (see Note 24F).
We do not consider there to be critical accounting judgements or key sources of estimation uncertainty which could have a significant risk of causing a
material adjustment to the carrying amounts of the Company’s assets and liabilities within the next financial year. We have set out below the most
significant judgements and estimates applied in the preparation of the Company’s balance sheet. The most significant accounting judgement is whether
there are impairment indicators in respect of the carrying value of the Company’s investments in subsidiaries, which have a total carrying value as at
31 December 2023 of $938.3 million. The most significant accounting estimate is whether a credit loss provision is required in respect of any of the
Company’s receivable balances. Over 99% of the receivable balances relate to intercompany balances, primarily with Group holding companies which
hold the Group’s investments in the operating companies. There is not considered to be any significant risk of a material overstatement of these carrying
values. In assessing this, the Group has considered the overall market capitalisation of the Group, which was $21.1 billion at 31 December 2023, the cash
and other assets held by the relevant Group companies and the level of earnings generated by the Group’s operations.
AAnnttooffaaggaassttaa ppllcc
Annual Report 2023 223377
Antofagasta plc Annual Report 2023238
FINANCIAL STATEMENTS
Financial statements of the parent company (Antofagasta plc) continued
4 Employee Benefit Expense
i) Average number of employees
ii) Aggregate remuneration
5 Subsidiaries
i) Investment in subsidiaries
ii) Trade and other receivables – amounts owed by subsidiaries due after one year
iii) Trade and other receivables – amounts owed by subsidiaries due within one year
6 Amounts payable to subsidiaries
7 Borrowings – preference shares
The average monthly number of employees was 4 (2022 -- 4), engaged in management and administrative activities.
The aggregate remuneration of the employees mentioned above was as follows:
2023
$m
2022
$m
Wages and salaries
2.7
2.3
Social securit
y
costs
0.3
0.3
Other
p
ension costs
0.1
0.1
3.1
2.7
The above employee figures exclude Directors who receive Directors’ fees from Antofagasta plc. Details of fees payable to Directors are set out in the
Remuneration Report.
2023
$m
2022
$m
Shares in subsidiaries at cost
1
469.8
120.6
Amounts owed by subsidiaries due after more than one year
468.5
468.5
938.3
589.1
Shares
$m
Loans
$m
Total
$m
1 Januar
y
2023 120.6 468.5 589.1
31 December 2023 469.8 468.5 938.3
1. The $349.2 million increase in the shares in subsidiaries balance reflects the acquisition by the Company of additional shares issued by the Company’s direct subsidiary
Andean LFMA Limited during the year.
The above amount of $468.5 million (31 December 2022 -- $468.5 million) in respect of amounts owed by subsidiaries due after more than one year
relates to long-term funding balances for which the Company does not expect to demand repayment in the foreseeable future and which form an integral
part of the Company’s long-term investment in those subsidiary companies.
The Company has reviewed whether there are any indicators of impairment in respect of the equity investment balance and concluded that there are no
such indicators. The expected credit loss risk for the element of the investment balance relating to amounts owed by subsidiaries due after more than one
year is considered to be immaterial to the Company.
At 31 December 2023, an amount of $53.6 million (31 December 2022 -- $54.0 million) was owed to the Company by indirect subsidiaries. This amount is
not expected to be realised within 12 months after the reporting period. The expected credit loss risk for the amounts owed by subsidiaries is considered
to be immaterial to the Company.
At 31 December 2023, amounts owed by subsidiaries due within one year were $311.7 million (31 December 2022 -- $744.6 million). These balances
principally relate to $308.3 million of intercompany dividends declared but not yet paid to the Company by its immediate subsidiary companies. The
expected credit loss risk for the amounts owed by subsidiaries is considered to be immaterial to the Company.
At 31 December 2023, amounts payable to subsidiaries due within one year were $345.2 million (31 December 2022 -- $615.7 million). The decrease in
this balance during the year mainly reflects the repayment of a $281.7 million balance as a result of an intra-group restructuring of intercompany
balances.
The authorised, issued and fully paid preference share capital of the Company comprised 2,000,000 5% cumulative preference shares of £1 each at both
31 December 2023 and 31 December 2022. As explained in Note 24C, the preference shares are recorded in the balance sheet in US dollars at period-
end rates of exchange.
The preference shares are non-redeemable and are entitled to a fixed 5% cumulative dividend, payable in equal instalments in June and December of
each year. On a winding-up, the preference shares are entitled to repayment and any arrears of dividend in priority to ordinary shareholders, but are not
entitled to participate further in any surplus. Each preference share carries 100 votes (see Note 24A (ix)) at any general meeting.
223388
AAnnttooffaaggaassttaa ppllcc
Annual Report 2023
Antofagasta plc Annual Report 2023 239
Alternative performance measures
A
A
l
l
t
t
e
e
r
r
n
n
a
a
t
t
i
i
v
v
e
e
p
p
e
e
r
r
f
f
o
o
r
r
m
m
a
a
n
n
c
c
e
e
m
m
e
e
a
a
s
s
u
u
r
r
e
e
s
s
A) Underlying earnings per share
B) EBITDA
(not subject to audit or review)
This Annual Report includes a number of alternative performance measures, in addition to amounts in accordance with UK-adopted International
Accounting Standards. These measures are included because they are considered to provide relevant and useful additional information to users of the
financial statements. Set out below are definitions of these alternative performance measures, explanations as to why they are considered to be relevant
and useful, and reconciliations to the IFRS figures.
Underlying earnings per share is earnings per share from continuing operations, excluding exceptional items. This measure is reconciled to earnings per
share from continuing 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.
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 2023
Los
Pelambres
$m
Centinela
$m
Antucoya
$m
Zaldívar
$m
Exploration
and evaluation
$m
Corporate and
other items
$m
Mining
$m
Transport
division
$m
Total
$m
O
p
erating
p
rofit/(loss)
1,406.0 491.7 105.7 − (141.1) (123.0) 1,739.3 43.5 1,782.8
De
p
reciation
318.6 727.3 109.4 − − 24.3 1,179.6 31.7 1,211.3
EBITDA from subsidiaries 1,724.6 1,219.0 215.1 − (141.1) (98.7) 2,918.9 75.2 2,994.1
Proportional share of the
EBITDA from associates and
JV − − − 86.8 − − 86.8 6.3 93.1
EBITDA 1,724.6 1,219.0 215.1 86.8 (141.1) (98.7) 3,005.7 81.5 3,087.2
For the year ended 31 December 2022
Los Pelambres
$m
Centinela
$m
Antucoya
$m
Zaldívar
$m
Exploration
and evaluation
$m
Corporate and
other items
$m
Mining
$m
Transport
division
$m
Total
$m
O
p
erating
p
rofit/(loss) 1,196.2 446.0 155.6 − (113.0) (94.3) 1,590.5 43.8 1,634.3
De
p
reciation 276.1 710.2 105.6 − − 18.7 1,110.6 30.5 1,141.1
Loss on dis
p
osal 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
AAnnttooffaaggaassttaa ppllcc
Annual Report 2023 223399
Antofagasta plc Annual Report 2023240
OTHER INFORMATION
Alternative performance measures continued
C) Cash costs
Cash costs are a measure of the cost of operating production expressed in terms of cents per pound of payable copper produced.
This is considered to be a useful and relevant measure as it is a standard industry measure applied by most major copper mining companies which
reflects the direct costs involved in producing each pound of copper. It therefore allows a straightforward comparison of the unit production cost of
different mines, and allows an assessment of the position of a mine on the industry cost curve. It also provides a simple indication of the profitability of a
mine when compared against the price of copper (per lb).
With sales of concentrates at Los Pelambres and Centinela, which are sold to smelters and roasting plants for further processing into fully refined metal,
the price of the concentrate invoiced to the customer reflects the market value of the fully refined metal less a ‘‘treatment and refining charge’’ deduction,
to reflect the lower value of this partially processed material compared with the fully refined metal. For accounting purposes, the revenue amount is the
net of the market value of fully refined metal less the treatment and refining charges. Under the standard industry definition of cash costs, treatment and
refining charges are regarded as an expense and part of the total cash cost figure.
2023
$m
2022
$m
Reconciliation of cash costs excluding treatment and refining charges and by-product revenue:
Total Grou
p
o
p
erating cost (Note 6)
4,541.7
4,227.7
Zaldívar o
p
erating costs (attributable basis -- 50%)
263.1
234.4
Less:
De
p
reciation (Note 6)
(1,211.3)
(1,141.1)
Loss on dis
p
osal (Note 6)
−
(2.1)
Elimination of non-mining o
p
erations:
Cor
p
orate and other items -- Total o
p
erating cost (excluding de
p
reciation) (Note 6)
(98.7)
(75.0)
Ex
p
loration and evaluation -- Total o
p
erating cost (excluding de
p
reciation) (Note 6)
(141.1)
(113.0)
Trans
p
ort division -- Total o
p
erating cost (excluding de
p
reciation) (Note 6)
(120.7)
(119.1)
Closure
p
rovision and other ex
p
enses not included within cash costs
(102.7)
(97.6)
Inventories variation
(13.6)
(12.0)
Total cost relevant to the mining operations’ cash costs 3,116.7
2,902.2
Co
pp
er
p
roduction volumes (tonnes)
1
660,600
646,200
Cash costs excluding treatment and refining charges and by-product revenue ($/tonne) 4,718
4,491
Cash costs excluding treatment and refining charges and b
y
-
p
roduct revenue ($/lb)
2.14
2.05
Reconciliation of cash costs before deducting b
y
-
p
roduct revenue:
Treatment and refining charges -- co
pp
er and b
y
-
p
roduct -- Los Pelambres
155.3
108.5
Treatment and refining charges -- co
pp
er and b
y
-
p
roduct -- Centinela
95.4
78.8
Treatment and refining charges -- co
pp
er -- total
250.7
187.3
Co
pp
er
p
roduction volumes (tonnes)
1
660,600
646,200
Treatment and refining charges ($/tonne)
379.4
289.9
Treatment and refining charges ($/lb)
0.17
0.14
Cash costs excluding treatment and refining charges and b
y
-
p
roduct revenue ($/lb)
2.14
2.05
Treatment and refining charges ($/lb)
0.17
0.14
Cash costs before deducting b
y
-
p
roduct revenue ($/lb)
2.31
2.19
1. The 660,600 tonnes includes 40,500 tonnes of production at Zaldívar on a 50% attributable basis.
224400
AAnnttooffaaggaassttaa ppllcc
Annual Report 2023
Antofagasta plc Annual Report 2023 241
D) Attributable cash, cash equivalents and liquid investments, borrowings and net debt
2023
$m
2022
$m
Reconciliation of cash costs (net of by-product revenue):
Gold revenue -- Los Pelambres
83.6
75.5
Gold revenue -- Centinela
324.2
239.0
Mol
y
bdenum revenue -- Los Pelambres
397.6
311.9
Mol
y
bdenum revenue − Centinela
141.7
110.2
Silver revenue -- Los Pelambres
36.2
33.1
Silver revenue -- Centinela
34.9
25.1
Total b
y
-
p
roduct revenue
1,018.2
794.8
Co
pp
er
p
roduction volumes (tonnes)
2
660,600
646,200
B
y
-
p
roduct revenues ($/tonne)
1,541.3
1,230.0
B
y
-
p
roduct revenues ($/lb)
0.70
0.58
Cash costs before deducting b
y
-
p
roduct revenue ($/lb)
2.31
2.19
B
y
-
p
roduct revenue ($/lb)
(0.70)
(0.58)
Cash costs (net of b
y
-
p
roduct revenue) ($/lb)
1.61
1.61
1. The 660,600 tonnes includes 40,500 tonnes of production at Zaldívar on a 50% attributable basis.
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.
2023 2022
Total
amount
$m
Attributable
share
$m
Attributable
amount
$m
Total
amount
$m
Attributable
share
$m
Attributable
amount
$m
Cash, cash e
q
uivalents and li
q
uid investments:
Los Pelambres
587.0
60%
352.2
655.4 60% 393.2
Centinela
516.9
70%
361.8
348.5 70% 244.0
Antuco
y
a
129.9
70%
90.9
111.8 70% 78.3
Cor
p
orate
1,668.3
100%
1,668.3
1,247.0 100% 1,247.0
Trans
p
ort division
17.3
100%
17.3
28.5 100% 28.5
Total (Note 23)
2,919.4 2,490.5
2,391.2 1,991.0
Borrowings:
Los Pelambres (Note 24)
(2,112.4)
60%
(1,267.4)
(1,525.8) 60% (915.5)
Centinela (Note 24)
(574.1)
70%
(401.9)
(311.9) 70% (218.3)
Antuco
y
a (Note 24)
(379.1)
70%
(265.4)
(411.5) 70% (288.1)
Cor
p
orate (Note 24)
(1,007.7)
100%
(1,007.7)
(1,010.9) 100% (1,010.9)
Trans
p
ort division (Note 24)
(5.9)
100%
(5.9)
(16.9) 100% (16.9)
Total (Notes 24 and 33)
(4,079.2) (2,948.3)
(3,277.0) (2,449.7)
Net debt
(1,159.8) (457.8)
(885.8) (458.7)
AAnnttooffaaggaassttaa ppllcc
Annual Report 2023 224411
Antofagasta plc Annual Report 2023242
OTHER INFORMATION
Five Year Summary
F
F
i
i
v
v
e
e
Y
Y
e
e
a
a
r
r
S
S
u
u
m
m
m
m
a
a
r
r
y
y
2023
$m
2022
$m
2021
$m
2020
$m
2019
$m
Consolidated balance sheet
Intangible asset
−
− − 150.1 150.1
Pro
p
ert
y
p
lant and e
q
ui
p
ment
12,678.7
11,543.5 10,538.5 9,851.9 9,556.7
Other non-current assets
−
1.1 1.3 2.6 2.1
Inventories
457.0
347.0 270.4 278.1 208.0
Investment in associates and
j
oint ventures
891.1
904.6 905.8 914.6 1,024.8
Trade and other receivables
68.5
51.0 51.2 55.9 48.2
Derivative financial instruments
−
− − 0.3 1.7
E
q
uit
y
investments
288.6
90.5 8.7 11.1 5.1
Deferred tax assets
72.0
78.5 96.8 6.4 8.2
Non-current assets
14,455.9
13,016.2 11,872.7 11,271.0 11,004.9
Current assets
5,191.3
5,222.1 5,405.7 5,333.3 3,605.5
Current liabilities
(2,189.3)
(1,605.8) (1,574.2) (1,625.7) (1,548.9)
Non-current liabilities
(5,409.5)
(4,988.1) (4,675.2) (4,897.5) (3,660.5)
12,048.4
11,644.4 11,029.0 10,081.1 9,401.0
Share ca
p
ital
89.8
89.8 89.8 89.8 89.8
Share
p
remium
199.2
199.2 199.2 199.2 199.2
Reserves (retained earnings and hedging, translation and fair value reserves)
8,662.9
8,338.5 8,061.2 7,461.6 7,094.7
E
q
uit
y
attributable to owners of the
p
arent
8,951.9
8,627.5 8,350.2 7,750.6 7,383.7
Non-controlling interests
3,096.5
3,016.9 2,678.8 2,330.5 2,017.3
12,048.4
11,644.4 11,029.0 10,081.1 9,401.0
2023
$m
2022
$m
2021
$m
2020
$m
2019
$m
Consolidated income statement
Grou
p
revenue
6,324.5
5,862.0 7,470.1 5,129.3 4,964.5
Total
p
rofit from o
p
erations and associates
1,769.3
2,627.1 3,461.1 1,516.5 1,400.2
Profit before tax
1,965.5
2,558.9 3,477.1 1,413.1 1,349.2
Income tax ex
p
ense
(666.1)
(603.6) (1,242.3) (526.5) (506.1)
Profit from continuing o
p
erations
1,299.4
1,955.3 2,234.8 886.6 843.1
Profit from discontinued o
p
erations
−
− − 7.3 −
Profit for the
y
ear
1,299.4
1,955.3 2,234.8 893.9 843.1
Non-controlling interests
(464.3)
(422.3) (944.6) (387.5) (341.7)
Net earnings (
p
rofit attributable to owners of the
p
arent)
835.1
1,533.0 1,290.2 506.4 501.4
EBITDA
3,087.2
2,929.7 4,836.2 2,739.2 2,438.9
2023
cents
2022
cents
2021
cents
2020
cents
2019
cents
Earnings per share
Basic and diluted earnings
p
er share
84.7
155.5 130.9 51.3 50.9
224422
AAnnttooffaaggaassttaa ppllcc
Annual Report 2023
Antofagasta plc Annual Report 2023 243
2023
cents
2022
cents
2021
cents
2020
cents
2019
cents
Dividends per share proposed in relation to the year
Ordinar
y
dividends (interim and final)
36.0
59.7 142.5 54.7 34.1
36.0 59.7 142.5 54.7 34.1
Dividends
p
er share
p
aid in the
y
ear and deducted from e
q
uit
y
62.2 128.1 72.1 13.3 47.7
2023
$m
2022
$m
2021
$m
2020
$m
2019
$m
Consolidated cash flow statement
Cash flow from continuing o
p
erations
3,027.1
2,738.3 4,507.7 2,431.1 2,570.7
Interest
p
aid
(166.0)
(74.3) (60.7) (52.7) (76.3)
Income tax
p
aid
(528.1)
(787.1) (776.9) (319.7) (403.6)
Net cash from o
p
erating activities
2,333.0
1,876.9 3,670.1 2,058.7 2,090.8
Investing activities
Ca
p
ital contributions to associates and
j
oint ventures
(0.7)
50.0 142.5 − 58.0
E
q
uit
y
investments, investing activities and recover
y
of VAT
(80.3)
1,322.4 (577.2) (893.5) (678.3)
Purchases and dis
p
osals of intangible assets,
p
ro
p
ert
y
,
p
lant and e
q
ui
p
ment
(2,129.2)
(1,879.0) (1,776.0) (1,306.6) (1,076.9)
Interest received
117.2
29.1 7.4 12.6 41.0
Net cash used in investing activities
(2,093.0)
(477.5) (2,203.3) (2,187.5) (1,656.2)
Financing activities
Dividends
p
aid to owners of the
p
arent
(613.2)
(1,262.9) (710.8) (131.1) (470.3)
Dividends
p
aid to
p
reference holders and non-controlling interests
(388.1)
(80.1) (604.6) (280.1) (400.1)
Ca
p
ital increase from non-controlling interest
−
− − 210.0 −
New borrowings less re
p
a
y
ment of borrowings and leases
599.3
9.2 (634.5) 918.3 60.8
Net cash (used in)/generated from financing activities
(402.0)
(1,333.8) (1,949.9) 717.1 (809.6)
Net (decrease)/increase in cash and cash e
q
uivalents
(162.0)
65.6 (483.1) 588.3 (375.0)
2023
$m
2022
$m
2021
$m
2020
$m
2019
$m
Consolidated net cash
Cash, cash e
q
uivalents and li
q
uid investments
2,919.4
2,391.2 3,713.1 3,672.8 2,193.4
Short-term borrowings
(901.9)
(432.5) (337.1) (603.4) (723.9)
Medium and long-term borrowings
(3,177.3)
(2,844.5) (2,835.5) (3,151.4) (2,032.9)
(4,079.2)
(3,277.0) (3,172.6) (3,754.8) (2,756.8)
Net (debt)/cash at the
y
ear-end
(1,159.8)
(885.8) 540.5 (82.0) (563.4)
AAnnttooffaaggaassttaa ppllcc
Annual Report 2023 224433
Antofagasta plc Annual Report 2023244
OTHER INFORMATION
Production statistics
P
P
r
r
o
o
d
d
u
u
c
c
t
t
i
i
o
o
n
n
s
s
t
t
a
a
t
t
i
i
s
s
t
t
i
i
c
c
s
s
Production Sales Net cash costs Realised prices
Production and sales volumes, realised prices and
cash costs by mine
2023
‘000
tonnes
2022
‘000
tonnes
2023
‘000
tonnes
2022
‘000
tonnes
2023
$/lb
2022
$/lb
2023
$/lb
2022
$/lb
Copper
Los Pelambres
300.3
275.0
299.0
271.2
1.14
1.10
3.89
3.76
Centinela
242.0
247.5
247.9
246.1
1.63
1.75
3.89
3.89
Antuco
y
a
77.8
79.2
78.4
80.8
2.63
2.50
3.89
3.95
Zaldívar (attributable basis -- 50%)
40.5
44.5
41.9
44.4
2.95
2.39
−
−
Group total 660.6
646.2
667.2
642.5
1.61
1.61
3.89
3.84
Grou
p
weighted average (net cash
costs)
Grou
p
weighted average (excluding
treatment and refining charges and
before by-products)
2.14
2.05
Grou
p
weighted average (before b
y
-
product credits)
2.31
2.19
Cash costs at Los Pelambres
comprises
Cash costs before b
y
-
p
roduct credits
1.92
1.84
B
y
-
p
roduct credits (
p
rinci
p
all
y
molybdenum and gold)
(0.78)
(0.74)
Net cash costs
1.14
1.10
Cash cost at Centinela comprises
Cash costs before b
y
-
p
roduct credits
2.57
2.44
B
y
-
p
roduct credits (
p
rinci
p
all
y
gold)
(0.94)
(0.69)
Net cash costs
1.63
1.75
LME average
3.85
4.00
Production Sales Realised prices
2023
‘000
ounces
2022
‘000
ounces
2023
‘000
ounces
2022
‘000
ounces
2023
$/oz
2022
$/oz
Gold
Los Pelambres
43.3
43.1
42.1
42.3
1,983
1,785
Centinela
165.8
133.7
162.8
132.3
1,991
1,806
Group total 209.1
176.8
204.9
174.6
1,990
1,801
Market average
p
rice
1,943
1,800
2023
‘000
tonnes
2022
‘000
tonnes
2023
‘000
tonnes
2022
‘000
tonnes
2023
$/lb
2022
$/lb
Molybdenum
Los Pelambres
8.1
7.2
8.1
6.8
22.0
20.9
Centinela
2.9
2.4
3.0
2.4
21.7
20.5
Group total/average realised price 11.0
9.6
11.1
9.2
22.0
20.8
Market average price
24.1
18.7
224444
AAnnttooffaaggaassttaa ppllcc
Annual Report 2023
Introduction
The ore reserves and mineral resources estimates, presented in this
report, comply with the requirements of the Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves
2012 edition (the JORC Code) which has been used by the Group as
minimum standard for the preparation and disclosure of the
information contained herein. The definitions and categories of ore
reserves, and mineral resources are set out below.
The information on ore reserves and mineral resources was prepared
by or under the supervision of Competent Persons as defined in the
JORC Code. The Competent Persons have sufficient experience
relevant to the style of mineralisation and type of deposit under
consideration and to the activity which they are undertaking. The
Competent Persons consent to the inclusion in this report of the
matters based on their information in the form and context in which it
appears. The Competent Person for Exploration Results and Mineral
Resources is Osvaldo Galvez (CP, Chile), Mineral Resource Evaluation
Deputy Manager for Antofagasta Minerals SA. The Competent Person
for Ore Reserves is Sofia Orellana (CP, Chile), Long-Term Mine
Planning Deputy Manager for Antofagasta Minerals SA.
The Group’s operations and projects are subject to a comprehensive
programme of audits aimed at providing assurance in respect of ore
reserves and mineral resource estimates. The audits are conducted by
suitably qualified Competent Persons from within an operation, another
operation of the Company or from independent consultants. The ore
reserves and mineral resource estimates are the total reserves and
resources, with the Group’s attributable share for each mine shown in
the ‘Attributable Tonnage’ column. The Group’s economic interest in
each mine is disclosed in the notes following the estimates on pages
254 to 255. The totals in the table may include some small apparent
differences due to rounding.
Definitions and categories of ore reserves
and mineral resources
A ‘Mineral Resource’ is a concentration or occurrence of material of
intrinsic economic interest in or on the Earth’s crust in such form,
quality and quantity that there are reasonable prospects for eventual
economic extraction. The location, quantity, grade, geological
characteristics, and continuity of a Mineral Resource are known,
estimated or interpreted from specific geological evidence and
knowledge. Mineral Resources are sub-divided, in order of increasing
geological confidence, into Inferred, Indicated and Measured
categories.
An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for
which tonnage, grade and mineral content can be estimated with a low
level of confidence. It is inferred from geological evidence and
assumed but not verified geological and/or grade continuity. It is based
on information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drillholes which may be
limited or of uncertain quality and reliability.
An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for
which tonnage, densities, shape, physical characteristics, grade and
mineral content can be estimated with a reasonable level of
confidence. It is based on exploration, sampling and testing information
gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drillholes. The locations are too
widely or inappropriately spaced to confirm geological and/or grade
continuity but are spaced closely enough for continuity to be assumed.
A ‘Measured Mineral Resource’ is that part of a Mineral Resource for
which tonnage, densities, shape, physical characteristics, grade and
mineral content can be estimated with a high level of confidence. It is
based on detailed and reliable exploration, sampling and testing
information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drillholes. The locations
are spaced closely enough to confirm geological and grade continuity.
An ‘Ore Reserve’ is the economically mineable part of a Measured
and/or Indicated Mineral Resource. It includes diluting materials and
allowances for losses, which may occur when the material is mined.
Appropriate assessments and studies have been carried out and
include realistic consideration on modifying factors such as mining
methods, metallurgical process and economic, marketing, legal,
environmental, social and governmental factors. These assessments
demonstrate at the time of reporting that extraction could be
reasonably justified. Ore Reserves are sub-divided in order of
increasing confidence into Probable Ore Reserves and Proved Ore
Reserves.
A ‘Probable Ore Reserve’ is the economically mineable part of an
Indicated, and in some circumstances, a Measured Mineral Resource. It
includes diluting materials and allowances for losses which may occur
when the material is mined. Appropriate assessments and studies
have been carried out and include realistic consideration on modifying
factors such as mining methods, metallurgical process and economic,
marketing, legal, environmental, social and governmental factors.
These assessments demonstrate at the time of reporting that
extraction could reasonably be justified.
A ‘Proved Ore Reserve’ is the economically mineable part of a
Measured Mineral Resource. It includes diluting materials and
allowances for losses which may occur when the material is mined.
Appropriate assessments and studies have been carried out and
include realistic consideration on modifying factors such as mining
methods, metallurgical processes and economic, marketing, legal,
environmental, social and governmental factors. These assessments
demonstrate at the time of reporting that extraction could reasonably
be justified.
Ore reserves and mineral
resources estimates
At 31 December 2023
Antofagasta plc Annual Report 2023 245
Ore reserves and mineral resources estimates
Ore reserves estimates
Group Subsidiaries
Tonnage
(millions of tonnes)
Copper
(%)
Molybdenum
(%)
Gold
(g/tonne)
Attributable tonnage
(millions of tonnes)
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Ore Reserves
Los Pelambres (see note (a))
Proved 574.0 574.8 0.59 0.60 0.020 0.020 0.05 0.05 344.4 344.9
Probable 274.6 330.6 0.55 0.57 0.020 0.020 0.05 0.05 164.8 198.4
Total 848.6 905.5 0.58 0.59 0.020 0.020 0.05 0.05 509.2 543.3
Centinela (see note (b))
Centinela Cathodes (oxides)
Proved 34.7 59.1 0.55 0.50 24.3 41.4
Probable 157.2 215.4 0.33 0.33 110.0 150.8
Subtotal 191.9 274.5 0.37 0.37 134.3 192.1
Centinela Concentrates
(sulphides)
Proved 542.5 509.2 0.43 0.44 0.012 0.012 0.17 0.17 379.8 356.5
Probable 1,163.5 1,203.6 0.38 0.38 0.012 0.012 0.12 0.12 814.4 842.5
Subtotal 1,706.0 1,712.8 0.40 0.40 0.012 0.012 0.13 0.13 1,194.2 1,198.9
Proved 577.2 568.3 0.44 0.45 404.0 397.8
Probable 1,320.7 1,418.9 0.37 0.38 924.5 993.2
Total 1,897.9 1,987.2 0.39 0.40 1,328.5 1,391.1
Antucoya (see note (c))
Proved 438.9 436.2 0.32 0.33 307.2 305.3
Probable 287.7 281.4 0.28 0.29 201.4 197.0
Total 726.5 717.6 0.31 0.31 508.6 502.3
Total Group Subsidiaries 3,473.0 3,610.3 0.42 0.43 2,346.3 2,436.7
Group Joint Ventures
Tonnage
(millions of tonnes)
Copper
(%)
Molybdenum
(%)
Gold
(g/tonne)
Attributable tonnage
(millions of tonnes)
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Ore reserves
Zaldívar (see note (n))
Proved 199.8 337.9 0.45 0.44 99.9 169.0
Probable 153.1 75.2 0.38 0.31 76.5 37.6
Total 352.9 413.2 0.42 0.42 176.4 206.6
Total Group 3,825.9 4,023.5 0.42 0.43 2,522.7
2,643.3
Antofagasta plc Annual Report 2023246
OTHER INFORMATION
Ore reserves and mineral resources estimates continued
Mineral resources estimates (including ore reserves)
Group Subsidiaries
Tonnage
(millions of tonnes)
Copper
(%)
Molybdenum
(%)
Gold
(g/tonne)
Attributable tonnage
(millions of tonnes)
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Los Pelambres (see note (a))
Sulphides
Measured 1,142 1,054 0.56 0.57 0.020 0.020 0.04 0.05 685.4 632.6
Indicated 2,282 2,121 0.49 0.52 0.016 0.016 0.05 0.05 1,369.4 1,272.9
Measured + Indicated 3,425 3,176 0.51 0.54 0.017 0.018 0.05 0.05 2,054.9 1,905.5
Inferred 2,704 2,780 0.43 0.46 0.016 0.016 0.05 0.06 1,622.5 1,667.7
Total 6,129 5,955 0.48 0.50 0.017 0.017 0.05 0.05 3,677.4 3,573.2
Los Pelambres total
Measured 1,142 1,054 0.56 0.57 0.020 0.020 0.04 0.05 685.4 632.6
Indicated 2,282 2,121 0.49 0.52 0.016 0.016 0.05 0.05 1,369.4 1,272.9
Measured + Indicated 3,425 3,176 0.51 0.54 0.017 0.018 0.05 0.05 2,054.9 1,905.5
Inferred 2,704 2,780 0.43 0.46 0.016 0.016 0.05 0.06 1,622.5 1,667.7
Total 6,129 5,955 0.48 0.50 0.017 0.017 0.05 0.05 3,677.4 3,573.2
Centinela (see note (b))
Oxides
Measured 63 101 0.50 0.47 – – – – 44.2 70.7
Indicated 240 297 0.31 0.32 – – – – 168.0 207.6
Measured + Indicated 303 398 0.35 0.36 – – – – 212.3 278.3
Inferred 14 15 0.30 0.33 – – – – 9.8 10.6
Subtotal 317 413 0.35 0.36 – – – – 222.1 288.9
Sulphides
Measured 943 913 0.47 0.48 0.014 0.014 0.18 0.19 659.8 639.4
Indicated 1,880 1,935 0.36 0.37 0.013 0.013 0.12 0.12 1,315.7 1,354.6
Measured + Indicated 2,822 2,848 0.40 0.40 0.013 0.013 0.14 0.14 1,975.5 1,993.9
Inferred 1,912 1,789 0.29 0.29 0.011 0.011 0.08 0.08 1,338.5 1,252.2
Subtotal 4,734 4,637 0.36 0.36 0.012 0.012 0.11 0.12 3,314.0 3,246.2
Centinela total
Measured 1,006 1,014 0.48 0.48 – – – – 704.0 710.1
Indicated 2,120 2,232 0.36 0.36 – – – – 1,483.8 1,562.2
Measured + Indicated 3,125 3,246 0.40 0.40 – – – – 2,187.7 2,272.2
Inferred 1,926 1,804 0.29 0.29 – – – – 1,348.3 1,262.9
Total 5,052 5,050 0.35 0.36 – – – – 3,536.1 3,535.1
Antofagasta plc Annual Report 2023 247
Mineral resources estimates (including ore reserves) continued
Group Subsidiaries
Tonnage
(millions of tonnes)
Copper
(%)
Molybdenum
(%)
Gold
(g/tonne)
Attributable tonnage
(millions of tonnes)
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Antucoya (see note (c))
Oxides
Measured 460.0 463.7 0.32 0.32 – – – – 322.0 324.6
Indicated 360.7 348.5 0.28 0.29 – – – – 252.5 244.0
Measured + Indicated 820.8 812.3 0.30 0.31 – – – – 574.5 568.6
Inferred 280.5 302.3 0.25 0.26 – – – – 196.3 211.6
Total 1,101.2 1,114.6 0.29 0.30 – – – – 770.9 780.2
Antucoya total
Measured 460.0 463.7 0.32 0.32 – – – – 322.0 324.6
Indicated 360.7 348.5 0.28 0.29 – – – – 252.5 244.0
Measured + Indicated 820.8 812.3 0.30 0.31 – – – – 574.5 568.6
Inferred 280.5 302.3 0.25 0.26 – – – – 196.3 211.6
Total 1,101.2 1,114.6 0.29 0.30 – – – – 770.9 780.2
Polo Sur (see note (d))
Oxides
Measured 61.0 46.6 0.47 0.45 – – – – 61.0 46.6
Indicated 45.4 59.7 0.37 0.38 – – – – 45.4 59.7
Measured + Indicated 106.4 106.4 0.43 0.41 – – – – 106.4 106.4
Inferred 6.5 6.2 0.34 0.30 – – – – 6.5 6.2
Subtotal 112.8 112.6 0.42 0.41 – – – – 112.8 112.6
Sulphides
Measured 258.9 257.0 0.40 0.39 0.007 0.007 0.07 0.07 258.9 257.0
Indicated 675.9 678.2 0.33 0.33 0.007 0.007 0.05 0.05 675.9 678.2
Measured + Indicated 934.7 935.2 0.35 0.35 0.007 0.007 0.06 0.06 934.7 935.2
Inferred 621.7 598.0 0.27 0.27 0.006 0.006 0.04 0.04 621.7 598.0
Subtotal 1,556.4 1,533.2 0.32 0.32 0.006 0.006 0.05 0.05 1,556.4 1,533.2
Polo Sur total
Measured 319.9 303.7 0.41 0.40 – – – – 319.9 303.7
Indicated 721.2 737.9 0.34 0.34 – – – – 721.2 737.9
Measured + Indicated 1,041.1 1,041.6 0.36 0.36 – – – – 1,041.1 1,041.6
Inferred 628.2 604.2 0.27 0.27 – – – – 628.2 604.2
Total 1,669.3 1,645.8 0.33 0.32 – – – – 1,669.3 1,645.8
Penacho Blanco (see note (e))
Oxides
Measured – – – – – – – – – –
Indicated – – – – – – – – – –
Measured + Indicated – – – – – – – – – –
Inferred 18.3 18.3 0.29 0.29 –
– – – 9.3 9.3
Subtotal 18.3 18.3 0.29 0.29 – – – – 9.3 9.3
Sulphides
Measured – – – – – – – – – –
Indicated – – – – – – – – – –
Measured + Indicated – – – – – – – – – –
Inferred 452.3 337.4 0.35 0.38 – – 0.05 0.05 230.7 172.1
Subtotal 452.3 337.4 0.35 0.38 – – 0.05 0.05 230.7 172.1
Penacho Blanco total
Measured – – – – – – – – – –
Indicated – – – – – – – – – –
Measured + Indicated – – – – – – – – – –
Inferred 470.6 355.7 0.35 0.37 – – – – 240.0 181.4
Total 470.6 355.7 0.35 0.37 – – – – 240.0 181.4
Antofagasta plc Annual Report 2023248
OTHER INFORMATION
Ore reserves and mineral resources estimates continued
Group Subsidiaries
Tonnage
(millions of tonnes)
Copper
(%)
Molybdenum
(%)
Gold
(g/tonne)
Attributable tonnage
(millions of tonnes)
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Mirador (see note (f))
Oxides
Measured 2.0 2.5 0.28 0.28 – – – – 1.4 1.8
Indicated 26.0 26.8 0.27 0.27 – – – – 19.3 20.2
Measured + Indicated 28.0 29.2 0.27 0.27 – – – – 20.7 22.0
Inferred 14.2 11.1 0.25 0.26 – – – – 10.2 8.9
Subtotal 42.2 40.3 0.26 0.27 – – – – 30.9 30.8
Sulphides
Measured 40.0 36.0 0.33 0.33 0.006 0.006 0.12 0.12 40.0 36.0
Indicated 25.7 20.7 0.27 0.28 0.008 0.008 0.07 0.07 25.7 20.7
Measured + Indicated 65.7 56.7 0.31 0.31 0.007 0.007 0.10 0.10 65.7 56.7
Inferred 8.5 5.0 0.24 0.25 0.009 0.008 0.05 0.05 8.5 5.0
Subtotal 74.2 61.8 0.30 0.31 0.007 0.007 0.10 0.10 74.2 61.8
Mirador total
Measured 42.0 38.5 0.32 0.33 – – – – 41.5 37.8
Indicated 51.6 47.5 0.27 0.27 – – – – 45.0 40.9
Measured + Indicated 93.6 86.0 0.29 0.30 – – – – 86.4 78.7
Inferred 22.7 16.1 0.25 0.26 – – – – 18.7 13.9
Total 116.4 102.1 0.29 0.29 – – – – 105.1 92.6
Los Volcanes (see note (g))
Oxides
Measured – – – – – – – – – –
Indicated – – – – – – – – – –
Measured + Indicated – – – – – – – – – –
Inferred 30.8 30.8 0.31 0.31 – – – – 15.7 15.7
Subtotal 30.8 30.8 0.31 0.31 – – – – 15.7 15.7
Sulphides
Measured – – – – – – – – – –
Indicated – – – – – – – – – –
Measured + Indicated – – – – – – – – – –
Inferred 1,902.3 1,880.0 0.50 0.50 0.011 0.011 – – 970.2 958.8
Subtotal 1,902.3 1,880.0 0.50 0.50 0.011 0.011 – – 970.2 958.8
Los Volcanes total
Measured – – – – – – – – – –
Indicated – – – – – – – – – –
Measured + Indicated – – – – – – – – – –
Inferred 1,933.1 1,910.8 0.49 0.50 – – – – 985.9 974.5
Total 1,933.1 1,910.8
0.49 0.50 – – – – 985.9 974.5
Mineral resources estimates (including ore reserves) continued
Antofagasta plc Annual Report 2023 249
Group Subsidiaries
Tonnage
(millions of tonnes)
Copper
(%)
Molybdenum
(%)
Gold
(g/tonne)
Attributable tonnage
(millions of tonnes)
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Brujulina (see note (h))
Oxides
Measured – – – – – – – – – –
Indicated – – – – – – – – – –
Measured + Indicated – – – – – – – – – –
Inferred 88.5 88.0 0.49 0.49 – – – – 45.1 44.9
Total 88.5 88.0 0.49 0.49 – – – – 45.1 44.9
Brujulina total
Measured – – – – – – – – – –
Indicated – – – – – – – – – –
Measured + Indicated – – – – – – – – – –
Inferred 88.5 88.0 0.49 0.49 – – – – 45.1 44.9
Total 88.5 88.0 0.49 0.49 – – – – 45.1 44.9
Sierra (see note (i))
Oxides
Measured – – – – – – – – – –
Indicated – – – – – – – – – –
Measured + Indicated – – – – – – – – – –
Inferred 54.7 52.3 0.68 0.68 – – – – 54.7 52.3
Total 54.7 52.3 0.68 0.68 – – – – 54.7 52.3
Sierra total
Measured – – – – – – – – – –
Indicated – – – – – – – – – –
Measured + Indicated – – – – – – – – – –
Inferred 54.7 52.3 0.68 0.68 – – – – 54.7 52.3
Total 54.7 52.3 0.68 0.68 – – – – 54.7 52.3
Encierro (see note (j))
Sulphides
Measured – – – – – – – – – –
Indicated – – – – – – – – – –
Measured + Indicated – – – – – – – – – –
Inferred 522.3 522.3 0.65 0.65 0.007 0.007 0.22 0.22 298.6 295.3
Subtotal 522.3 522.3 0.65 0.65 0.007 0.007 0.22 0.22 298.6 295.3
Encierro total
Measured – – – – – – – – – –
Indicated – – – – – – – – – –
Measured + Indicated – – – – – – – – – –
Inferred 522.3 522.3 0.65 0.65
0.007 0.007 0.22 0.22 298.6 295.3
Total 522.3 522.3 0.65 0.65 0.007 0.007 0.22 0.22 298.6 295.3
Mineral resources estimates (including ore reserves) continued
Antofagasta plc Annual Report 2023250
OTHER INFORMATION
Ore reserves and mineral resources estimates continued
Group Subsidiaries
Tonnage
(millions of tonnes)
Copper
(%)
Molybdenum
(%)
Silver
(g/tonne)
Attributable tonnage
(millions of tonnes)
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Cachorro (see note (k))
Oxides
Measured – – – – – – – – – –
Indicated 10.9 12.7 1.15 1.15 – – – – 10.9 12.7
Measured + Indicated 10.9 12.7 1.15 1.15 – – – – 10.9 12.7
Inferred 17.8 24.8 0.87 0.92 – – – – 17.8 24.8
Subtotal 28.7 37.6 0.98 1.00 – – – – 28.7 37.6
Sulphides
Measured – – – – – – – – – –
Indicated 40.4 36.7 1.61 1.54 – – 6.24 6.21 40.4 36.7
Measured + Indicated 40.4 36.7 1.61 1.54 – – 6.24 6.21 40.4 36.7
Inferred 180.7 168.2 1.23 1.19 – – 3.96 3.49 180.7 168.2
Subtotal 221.1 204.9 1.30 1.25 – – 4.37 3.98 221.1 204.9
Cachorro total
Measured – – – – – – – – – –
Indicated 51.4 49.4 1.51 1.44 – – – – 51.4 49.4
Measured + Indicated 51.4 49.4 1.51 1.44 – – – – 51.4 49.4
Inferred 198.5 193.0 1.20 1.15 – – – – 198.5 193.0
Total 249.8 242.5 1.27 1.21 – – – – 249.8 242.5
Mineral resources estimates (including ore reserves) continued
Antofagasta plc Annual Report 2023 251
Group Subsidiaries
Tonnage
(millions of tonnes)
Copper
(%)
Nickel
(%)
TPM
(g/tonne Au+Pt+Pd)
Attributable tonnage
(millions of tonnes)
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Twin Metals (see note (m))
Maturi
Measured 291.4 291.4 0.63 0.63 0.20 0.20 0.57 0.57 224.6 224.6
Indicated 818.3 818.3 0.57 0.57 0.18 0.18 0.57 0.57 771.6 771.6
Measured + Indicated 1,109.7 1,109.7 0.59 0.59 0.19 0.19 0.57 0.57 996.1 996.1
Inferred 534.1 534.1 0.50 0.50 0.16 0.16 0.57 0.57 483.2 483.2
Subtotal 1,643.8 1,643.8 0.56 0.56 0.18 0.18 0.57 0.57 1,479.3 1,479.3
Maturi South West
Measured – – – – – – – – – –
Indicated 93.1 93.1 0.48 0.48 0.17 0.17 0.31 0.31 65.2 65.2
Measured + Indicated 93.1 93.1 0.48 0.48 0.17 0.17 0.31 0.31 65.2 65.2
Inferred 29.3 29.3 0.43 0.43 0.15 0.15 0.26 0.26 20.5 20.5
Subtotal 122.4 122.4 0.47 0.47 0.17 0.17 0.30 0.30 85.7 85.7
Birch Lake
Measured – – – – – – – – – –
Indicated 90.4 90.4 0.52 0.52 0.16 0.16 0.87 0.87 63.3 63.3
Measured + Indicated 90.4 90.4 0.52 0.52 0.16 0.16 0.87 0.87 63.3 63.3
Inferred 217.0 217.0 0.46 0.46 0.15 0.15 0.64 0.64 151.9 151.9
Subtotal 307.4 307.4 0.48 0.48 0.15 0.15 0.70 0.70 215.2 215.2
Spruce Road
Measured – – – – – – – – – –
Indicated – – – – – – – – – –
Measured + Indicated – – – – – – – – – –
Inferred 435.5 435.5 0.43 0.43 0.16 0.16 – – 304.8 304.8
Subtotal 435.5 435.5 0.43 0.43 0.16 0.16 – – 304.8 304.8
Twin Metals total
Measured 291.4 291.4 0.63 0.63 0.20 0.20 0.57 0.57 224.6 224.6
Indicated 1,001.8 1,001.8 0.56 0.56 0.18 0.18 0.57 0.57 900.0 900.0
Measured + Indicated 1,293.2 1,293.2 0.57 0.57 0.18 0.18 0.57 0.57 1,124.6 1,124.6
Inferred 1,215.9 1,215.9 0.47 0.47 0.16 0.16 0.37 0.37 960.4 960.4
Total 2,509.1 2,509.1 0.52 0.52 0.17 0.17 0.47 0.47 2,085.0 2,085.0
Group Subsidiaries
Measured + Indicated 9,850.2 9,704.3 0.45 0.46 – – – – 7,120.6 7,072.2
Inferred 10,045.3 9,844.2 0.43 0.44 – – – – 6,597.2 5,720.9
Total Group Subsidiaries 19,895.4 19,548.6 0.44 0.45 – – – – 13,717.8 12,793.2
Mineral resources estimates (including ore reserves) continued
Antofagasta plc Annual Report 2023252
OTHER INFORMATION
Ore reserves and mineral resources estimates continued
Group Subsidiaries
Tonnage
(millions of tonnes)
Copper
(%)
Molybdenum
(%)
Gold
(g/tonne)
Attributable tonnage
(millions of tonnes)
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Zaldívar (see note (n))
Oxides & Secondary Sulphides
Measured 343.9 606.8 0.40 0.40 – – – – 172.0 303.4
Indicated 336.3 124.8 0.33 0.29 – – – – 168.2 62.4
Measured + Indicated 680.3 731.6 0.38 0.38 – – – – 340.1 365.8
Inferred 12.8 14.0 0.26 0.35 – – – – 6.4 7.0
Total 693.1 745.6 0.38 0.38 – – – – 346.5 372.8
Primary Sulphides
Measured 105.4 113.8 0.40 0.41 – – – – 52.7 56.9
Indicated 319.9 265.6 0.38 0.40 – – – – 159.9 132.8
Measured + Indicated 425.3 379.4 0.39 0.41 – – – – 212.6 189.7
Inferred 29.9 25.2 0.36 0.37 – – – – 14.9 12.6
Subtotal 455.2 404.6 0.39 0.40 – – – – 227.6 202.3
Zaldívar total
Measured 449.3 720.6 0.40 0.40 – – – – 224.7 360.3
Indicated 656.2 390.4 0.36 0.37 – – – – 328.1 195.2
Measured + Indicated 1,105.6 1,111.0 0.39 0.39 – – – – 552.8 555.5
Inferred 42.7 39.2 0.33 0.37 – – – – 21.3 19.6
Total Group Joint Ventures 1,148.2 1,150.2 0.38 0.39 – – – – 574.1 575.1
Group Subsidiaries
Tonnage
(millions of tonnes)
Copper
(%)
Molybdenum
(%)
Gold
(g/tonne)
Attributable tonnage
(millions of tonnes)
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Measured + Indicated 10,955.7 10,815.3 0.45 0.45 – – – – 7,673.4 7,596.2
Inferred 10,087.9 9,883.4 0.43 0.44 – – – – 6,618.5 6,481.7
Total 21,043.7 20,698.8 0.44 0.45 – – – – 14,291.9 14,077.9
Mineral resources estimates (including ore reserves) continued
Antofagasta plc Annual Report 2023 253
Notes to ore reserves and mineral
resources estimates
The ore reserves mentioned in this report were determined
considering specific copper cut-off grades for each mine and using a
long-term copper price of $3.50/lb ($3.30/lb in 2022), $13.00/lb
molybdenum ($13.00/lb in 2022) and $1,600/oz gold ($1,600/oz in
2022), unless otherwise noted. These same values have been used for
copper equivalent (CuEq) estimates, where appropriate.
In order to ensure that the stated resources represent mineralisation
that has “reasonable prospects for eventual economic extraction”
(JORC Code) the resources are enclosed within pit shells that were
optimised based on measured, indicated and inferred resources and
considering a copper price of $4.20/lb ($3.75/lb in 2022).
Mineralisation estimated outside these pit shells is not included in the
resource figures.
Group policy on auditing of resource and reserve estimates is that
prior to first publication, an independent external audit is done. External
audits are also done on resources and reserves for any material
changes (incorporation of a significant amount of drillhole information,
for instance) or every three to five years, whichever comes first. All
the resource models that support the resource and reserve estimates
have been audited as per Group policy. All resource and reserve
estimates have been found to comply with the JORC Code (2012).
a) Los Pelambres
Los Pelambres is 60% owned by the Group. The cut-off grade applied
to the determination of mineral resources is 0.30% copper, while the
cut-off grade applied for ore reserves is variable over 0.35% copper.
Ore Reserves decreased by 57 million tonnes due principally to
depletion in the period and reflects the remaining capacity of the
existing tailing dams, limiting the amount of mineral resource that can
be converted into ore reserves. Mineral resources have increased
overall by a net 174 million tonnes, including depletion, due to higher
mineral prices and a decrease in the cut-off grade from 0.35%Cu to
0.30%Cu.
b) Centinela (Concentrates and Cathodes)
Centinela is 70% owned by the Group and consists of Centinela
Concentrates (Esperanza, Esperanza Sur and Encuentro Sulphide) and
Centinela Cathodes (Encuentro and Llano deposits, including the oxide
portion of the Mirador). The cut-off grade applied to the determination
of ore reserves for Centinela Concentrates is 0.15% equivalent copper,
with 0.15% copper used as a cut-off grade for mineral resources. The
cut-off grades used at Centinela Cathodes are 0.20% copper for ore
reserves and 0.15% copper for mineral resources.
The Centinela Concentrates ore reserves have decreased by a net
7million tonnes, due mainly to depletion in the period, partially
compensated by an increase associated with higher metal prices.
Centinela sulphides mineral resources increased by a net 97 million
tonnes, incorporating ore material that connects former Esperanza and
Esperanza Sur resources, due mainly to higher product prices. The
Centinela Cathodes ore reserves have decreased by a net 83 million
tonnes, due mainly to depletion in the period and the ending of the
leaching cycle in some sectors of the ROM pad. Centinela Cathodes
ore reserves are made up of 131 million tonnes at 0.43% copper of
heap leach ore and 61 million tonnes at 0.23% copper of ROM ore.
Centinela oxides mineral resources decreased by a net 95 million
tonnes, due mainly to the removal of ROM materials that ended their
leaching cycle, depletion and higher mining and processing costs.
c) Antucoya
Antucoya is 70% owned by the Group. The ore reserve cut-off grade
is 0.16% copper, while the cut-off grade for mineral resources is
0.15% copper. Ore reserves have increased by a net 9 million tonnes
due to the resource model update, including in-fill drilling data, which
compensated depletion. For 2023, the mineral resource model has
been updated with 52 drillholes for a total of 11,650 metres. Mineral
resources have decreased by a net 14 million tonnes, due mostly to
depletion, and new drilling data.
d) Polo Sur
Polo Sur is 100% owned by the Group. The cut-off grade applied to the
determination of mineral resources for both oxides and sulphides is
0.20% copper. The 2023 resource model has been updated with 89
drillholes for a total of 14,400 metres. Mineral resources have
increased by a net 23 million tonnes, due mainly to the increase in
metal prices.
e) Penacho Blanco
Penacho Blanco is 51% owned by the Group. The cut-off grade applied
to the determination of mineral resources for both oxides and
sulphides is 0.20% copper. For 2023, the resource model has not
been updated. The mineral resources have increased by a net 115
million tonnes, due mainly to the increase in metal prices.
f) Mirador
Mirador is 100% owned by the Group. A portion of Mirador Oxides is
subject to an agreement between the Group and Centinela, whereby
Centinela purchased the rights to mine the oxide ore reserves within
an identified area. The mineral resources for Mirador Oxides subject to
the agreement with Centinela are included in the Centinela Cathodes
section. The resources not subject to the agreement are reported in
this section. The cut-off grade applied to the determination of the
mineral resources for oxides is 0.15% copper and for sulphides is
0.20% copper. The mineral resources have increased by a net 14
million tonnes, due mainly to the increase in metal prices.
g) Los Volcanes
Los Volcanes is 51% owned by the Group. The cut-off grade applied to
the determination of mineral resources is 0.20% copper. For 2023,
the mineral resource model has not been updated. The mineral
resources have increased by a net 22 million tonnes, due mainly to the
increase in metal prices.
h) Brujulina
Brujulina is 51% owned by the Group. The cut-off grade applied to the
determination of mineral resources is 0.30% copper. For 2023, the
mineral resource model has not been updated. The mineral resources
have increased by a net 0.5 million tonnes, due mainly to the increase
in metal prices.
i) Sierra
Sierra is 100% owned by the Group. The cut-off grade applied to the
determination of mineral resources is 0.30% copper. For 2023, the
mineral resource model has not been updated. The mineral resources
have increased by a net 2 million tonnes, due mainly to the increase in
metal prices.
j) Encierro
Encierro is 57.17% owned by the Group. For 2023, the mineral
resource model has not been updated. Encierro’s mineral resources
are stated above cut-offs of 0.50% copper for sulphides. All reported
mineral resources have been defined as inferred. Mineralisation
estimated below a 0.5% cut-off is not included in the mineral resource
figures.
Antofagasta plc Annual Report 2023254
OTHER INFORMATION
Ore reserves and mineral resources estimates continued
k) Cachorro
Cachorro is 100% owned by the Group. The cut-off grade applied to
the determination of mineral resources for both oxides and sulphides
is 0.50% copper. The 2023 resource model has been updated
including new drilling data, adding 63 drillholes for a total of 37,000
metres. Mineral resources have increased by a net 7 million tonnes,
due to the resource model update. Resources have been defined as
indicated and inferred material. Mineralisation estimated below a 0.5%
cut-off is not included in the mineral resource figures.
m) Twin Metals Minnesota LLC
Twin Metals Minnesota LLC (“Twin Metals”) is 100% owned by the
Group. Twin Metals has a 70% interest in the Birch Lake Joint Venture
(“BLJV”), which holds the Birch Lake, Spruce Road and Maturi
Southwest deposits, as well as a main portion of the Maturi deposit.
With these interests taken into consideration, Twin Metals owns 83.1%
of the mineral resource. For 2023, the mineral resource model has
not been updated. The cut-off grade applied to the determination of
mineral resources is 0.3% copper, which when combined with credits
from nickel, platinum, palladium and gold, is deemed appropriate for an
underground operation. In the mineral resource table ‘TPM’ (Total
Precious Metals) refers to the sum of platinum, palladium and gold
values in grammes per tonne. The TPM value of 0.57 g/tonne for the
Maturi mineral resource estimate is made up of 0.15 g/tonne platinum,
0.34 g/tonne palladium and 0.08 g/tonne gold. The TPM value of 0.30
g/tonne for the Maturi Southwest mineral resource estimate is made
up of 0.08 g/tonne platinum, 0.17 g/tonne palladium and 0.05 g/tonne
gold. The TPM value of 0.70 g/tonne for the Birch Lake mineral
resource estimate is made up of 0.19 g/tonne platinum, 0.41 g/tonne
palladium and 0.10 g/tonne gold. The Spruce Road mineral resource
estimate does not include TPM values as they were not assayed for
TPMs.
In 2022, Twin Metals filed a lawsuit in the US District Court for the
District of Columbia (District Court) challenging the administrative
actions resulting in the rejection of Twin Metals’ preference right lease
applications (PRLAs), the cancellation of its federal mining leases 1352
and 1353, the rejection of its Mine Plan of Operation (MPO), and the
dismissal of the administrative appeal of the MPO rejection. Twin
Metals claimed that the government’s actions were arbitrary and
capricious, contrary to the law, and in violation of its rights. In
September 2023, following a motion to dismiss filed by the
government, the District Court dismissed Twin Metals’ claims. In
November 2023, Twin Metals appealed the District Court’s order to the
US Court of Appeals for the District of Columbia Circuit. This action is
pending. If TMM is unsuccessful in having the decisions on the federal
leases 1352 and 1353 and the PRLAs reversed through litigation, it will
not have entitlement to the mineral resources associated with those
mineral rights.
n) Zaldívar
Zaldívar is 50% owned by the Group. Heap leaching (HL) and dump
leaching (DL) materials are defined based on total copper cut-off
grades. The cut-off grade applied to the determination of ore reserves
for Heap Leach ore is 0.31% copper, while the cut-off grade for Dump
Leach material is 0.20% copper. Ore reserves have decreased by a
net 60 million tonnes, due mainly to depletion in the period and higher
mining and processing costs used for in pit optimisation. For mineral
resources, the cut-off grade is 0.25% copper for HL and 0.10% copper
for DL, throughout the life-of-mine period. The cut-off grade applied to
the primary sulphide mineral resources is 0.3% copper. The mineral
resources decreased by 2 million tonnes because of the combined
effects of depletion and increase in metal prices.
In the southern part of the deposit (Phase 13), the final pit impacts
aportion of the Minera Escondida mining property, for which there is
an agreement for development. In parallel, agreements are pending
with third parties to relocate additional infrastructure.
Currently, Zaldívar is permitted to extract water and mine until 2025,
following the approval of the Declaration of Environmental Impact
(“DIA”) in early 2024 to align both the permits for mining and water
extraction. The mine life after 2025 is based on an EIA application
which was filed in June 2023 to extend mining and water
environmental permits. This EIA includes a proposal to develop the
primary sulphide ore deposit and a conversion of the water source for
Zaldívar to either sea water or water from third parties, following a
transition period during which the current continental water extraction
permit is extended. The current ore reserves estimate assumes that
the requested permit will be extended to allow for the extraction of all
of Zaldívar’s ore reserves, through continuous operation of the mine
without interruption. The details of the future permits or alternative
water supply arrangements could lead to a review of and, eventually,
an update to, Zaldívar’s mine plan.
o) Antomin 2 and Antomin investors
The Group has a 51% interest in two indirect subsidiaries, Antomin 2
Limited (“Antomin 2”) and Antomin Investors Limited (“Antomin
Investors”), which own several copper exploration properties in Chile’s
Antofagasta Region and Coquimbo Region. These include, among
others, Penacho Blanco, Los Volcanes and Brujulina. The remaining
49% of Antomin 2 and Antomin Investors is owned by Mineralinvest
Establishment (“Mineralinvest”), a company controlled by E. Abaroa
Foundation, in which members of the Luksic family are interested.
Further details are set out in Note 35(c) to the financial statements.
Antofagasta plc Annual Report 2023 255
Glossary and definitions
ADS Asset Delivery System.
AMSA Antofagasta Minerals SA, a wholly-owned
subsidiary of the Group incorporated in Chile,
which acts as the corporate centre for the
Mining division.
Annual Report The Annual Report and Financial Statements
of Antofagasta plc.
Antucoya Minera Antucoya, a 70%-owned subsidiary
incorporated in Chile.
Banco de Chile A commercial bank that is a subsidiary
of Quiñenco.
Barrick Gold Barrick Gold Corporation, incorporated
in Canada and our joint venture partner
in Zaldívar.
Brownfield
project
A development or exploration project in the
vicinity of an existing operation.
Buenaventura Compañía de Minas Buenaventura S.A.A., Peru’s
largest, publicly traded precious and base metals
company and a major holder of mining rights in
Peru.
By-products
(credits in
copper
concentrates)
Products obtained as a result of copper
processing. Los Pelambres and Centinela
Concentrates receive credit for the gold and
silver content in the copper concentrate sold.
Los Pelambres and Centinela also produce
molybdenum concentrate.
Capex Capital expenditure.
Cash costs A measure of the cost of operating production
expressed in terms of US dollars per pound of
payable copper produced. Cash costs are stated
net of by-product credits and include treatment
and refining charges for concentrates for Los
Pelambres and Centinela. Cash costs exclude
depreciation, financial income and expenses,
hedging gains and losses, exchange gains and
losses, and corporation tax.
CDP Carbon Disclosure Project.
Centinela Minera Centinela SA, a 70%-owned subsidiary
incorporated in Chile that holds the Centinela
Concentrates and Centinela Cathodes
operations.
Centinela Mining
District
Copper district located in the Antofagasta region
of Chile, where Centinela is located.
Chilean peso Chilean currency.
CO
2
e Carbon dioxide equivalent.
Companies Act
2006
Principal legislation for United Kingdom
Company law.
Company Antofagasta plc.
Concentrate The product of a physical concentration process,
such as flotation or gravity concentration, which
involves separating ore minerals from unwanted
waste rock. Concentrates require subsequent
processing (such as smelting or leaching) to
break down or dissolve the ore minerals and
obtain the desired elements, usually metals.
Contained copper The proportion or quantity of copper contained
in a given quantity of ore or concentrate.
Continental
water
Water that comes from the interior of land
masses including rain, snow, streams, rivers,
lakes and groundwater.
Copper cathode Refined copper produced by electrolytic refining
of impure copper by electrowinning.
Corporate
Governance
Code
The UK Corporate Governance Code is a set of
principles of good corporate governance, most
of which have their own more detailed
provisions published by the Financial Reporting
Council, most recently updated in 2018.
Cut-off grade The lowest grade of mineralised material
considered economic to process and used in the
calculation of ore reserves and mineral
resources.
Directors The Directors of the Company.
EBITDA Earnings Before Interest, Tax, Depreciation
and Amortisation.
EIA Environmental Impact Assessment.
Encuentro Copper oxide and sulphide deposit in the
Centinela Mining District.
EPS Earnings per share.
Esperanza Sur Copper deposit in the Centinela Mining District.
FCAB Ferrocarril de Antofagasta a Bolivia, the
corporate name of our Transport division.
Flotation A process of separation by which chemicals in
solution are added to finely crushed materials,
some of which are attracted to bubbles and
float, while others sink, which results in the
production of concentrate.
FTSE All-Share
Index
A market-capitalisation weighted index
representing the performance of all eligible
companies listed on the London Stock
Exchange’s main market.
FTSE100 and
FTSE350 Index
A share index of the 100 or 350 companies
listed on the London Stock Exchange with the
highest market capitalisation.
GAAP Generally Accepted Accounting Practice or
Generally Accepted Accounting Principles,
a collection of commonly-followed accounting
rules and standards for financial reporting.
GHG Greenhouse Gas.
Government The Government of the Republic of Chile.
Grade A copper
cathode
Highest-quality copper cathode, 99.99% pure.
Greenfield
project
The development or exploration of a new project
at a previously undeveloped site.
Group Antofagasta plc and its subsidiary companies
and share of joint ventures.
Antofagasta plc Annual Report 2023256
OTHER INFORMATION
Glossary and definitions
Heap-leaching
or leaching
A process for the recovery of copper from ore,
generally oxides. The crushed material is laid on
a slightly sloping, impermeable pad and leached
by uniformly trickling a (gravity fed) chemical
solution through the heaps to collection ponds.
The metal is then recovered from the solution
through the SX-EW process.
HPI High Potential Incident. An event that, under
different circumstances, might easily have
resulted in a serious injury or fatality.
ICMM International Council on Mining and Metals.
IFRIC International Financial Reporting Standards
Interpretations Committee.
IFRS International Financial Reporting Standards.
JORC The Australasian Joint Ore Reserves Committee.
KPI Key performance indicator.
Life-of-Mine
(“LOM”)
The remaining life of a mine expressed in years,
calculated by reference to scheduled production
rates (ie comparing the rate at which ore is
expected to be extracted from the mine to
current ore reserves).
LME London Metal Exchange.
Los Pelambres Minera Los Pelambres, a 60%-owned subsidiary
incorporated in Chile.
LTIFR Lost Time Injury Frequency Rate. The number
of accidents with lost time during the year per
million hours worked.
LTIP Long Term Incentive Plan in which the Group’s
CEO, Executive Committee members and other
senior managers participate.
Mineral
resources
Material of intrinsic economic interest occurring
in such form and quantity that there are
reasonable prospects for eventual economic
extraction. Mineral resources are stated
inclusive of ore reserves, as defined by JORC.
Net cash cost Gross cash costs less by-product credits.
Open pit Mine working or excavation that is open to
the surface.
Ore Rock from which metal(s) or mineral(s) can be
economically and legally extracted.
Ore grade The relative quantity, or percentage, of
metal content in an ore body or quantity
of processed ore.
Ore reserves Part of mineral resources for which appropriate
assessments have been carried out to
demonstrate that at a given date extraction
could be reasonably justified. These include
consideration of and modification by realistically
assumed mining, metallurgical, economic,
marketing, legal, environmental, social and
governmental factors.
Oxide and
sulphide ores
Different kinds of ore containing copper. Oxide
ore occurs on the weathered surface of ore-rich
lodes and normally results in the production of
cathode copper through a heap-leaching
process. Sulphide ore is an unweathered parent
ore normally treated using a flotation process to
produce concentrate which then requires
smelting and refining to produce copper
cathodes.
Payable copper The proportion or quantity of contained copper
for which payment is received after
metallurgical deduction.
Platts A provider of energy and metals information and
source of benchmark price assessments.
Porphyry A large body of rock which contains
disseminated chalcopyrite and other sulphide
minerals. Such a deposit is mined in bulk on a
large scale, generally in open pits, for copper
and its by-products.
Provisional
pricing
A sales term in several copper and molybdenum
concentrate sale agreements and cathodes sale
agreements that provides for provisional pricing
of sales at the time of shipment, with final
pricing being based on the monthly average
LME copper price or monthly average
molybdenum price for specific future periods,
normally ranging from 30 to 180 days after
delivery to the customer.
Quiñenco Quiñenco SA, a Chilean financial and industrial
group listed on the Santiago Stock Exchange
and controlled by a foundation in which
members of the Luksic family are interested.
RCA Resolución de Calificación Ambiental,
Environmental Approval Resolution.
Realised prices Effective sale price achieved comparing
revenues (grossed up for treatment and refining
charges for concentrate) with sales volumes.
Reko Diq A copper-gold deposit in Pakistan, previously
a subsidiary of Tethyan.
Run-of-Mine
(“ROM”)
A process for the recovery of copper from ore,
typically used for low-grade ores. The mined,
uncrushed ore is leached with a chemical
solution. The metal is then recovered from
the solution through the SX-EW process.
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.
Antofagasta plc Annual Report 2023 257
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.
Tailings dam or
tailings storage
facility (TSF)
Construction used to deposit the rock waste
which remains as a result of the concentrating
process after the recoverable minerals have
been extracted in concentrate form.
TC/RCs Treatment and refining charges, being terms
used to set the smelting and refining charge or
margin for processing copper concentrate and
normally set on either an annual or spot basis.
TCFD Task Force on Climate-related Financial
Disclosures.
Tonne Metric tonne.
TSR Total Shareholder Return, being the movement
in the Company’s share price plus any dividends
paid by the Company.
Twin Metals
Minnesota
Project
A copper, nickel and platinum group metals
underground-mining project located in
Minnesota, US.
UK United Kingdom.
Underground
mine
Natural or man-made excavation under the
surface of the ground.
US United States.
US dollar United States currency.
Zaldívar Compañía Minera Zaldívar SpA is a 50-50 joint
venture with Barrick Gold and is operated by the
Company.
Antofagasta plc Annual Report 2023258
OTHER INFORMATION
Glossary and definitions continued
Currency abbreviations
$ US dollar
$000 Thousand US dollars
$m Million US dollars
£ Pound sterling
£000 Thousand pounds sterling
£m Million pounds sterling
P Pence sterling
C$ Canadian dollar
C$m Million Canadian dollars
Ch$ Chilean peso
Ch$000 Thousand Chilean pesos
Ch$m Million Chilean pesos
Definitions and conversion of weights
and measures
Lb Pound
Oz A troy ounce
1 troy ounce 31.1 grammes
’000 m3 Thousand cubic metres
1 kilogramme 2.2046 pounds
1 tonne 2,204.6 pounds or 1,000 kilogrammes
’000 tonnes Thousand metric tonnes
1 kilometre 0.6214 miles
GL Gigalitre
1 megalitre Thousand cubic metres
1 GL Thousand megalitres
Chemical symbols
Cu Copper
Mo Molybdenum
Au Gold
Ag Silver
Dividends
Details of dividends proposed in relation to the year are given in the
Directors’ Report on page 179, and in Note 13 to the Financial
Statements.
If approved at the Annual General Meeting, the final dividend of 24.3
cents per share will be paid on 10 May 2024 to ordinary shareholders
that are on the register at the close of business on 19 April 2024.
Shareholders can elect (on or before 22 April 2024) to receive this
final dividend in US dollars, Sterling or Euro, and the exchange rate,
which will be applied to final dividends to be paid in Sterling or Euro,
will be set as soon as reasonably practicable after that date, which is
currently anticipated to be on 25 April 2024.
Further details of the currency election timing and process (including
the default currency of payment) are available on the Antofagasta plc
website (antofagasta.co.uk) or from the Company’s registrar,
Computershare Investor Services PLC on +44 37 0702 0159.
Dividends are paid gross without deduction of United Kingdom income
tax. Antofagasta plc is a resident in the United Kingdom for tax
purposes.
Annual General Meeting
The Annual General Meeting will be held as an in-person meeting at
Church House Westminster, Dean’s Yard, London SW1P 3NZ at
10:00am on Wednesday 8 May 2024. The formal notice of the Annual
General Meeting and resolutions to be proposed are set out in the
Notice of Annual General Meeting.
London Stock Exchange listing and share price
The Company’s shares are listed on the London Stock Exchange.
Share capital
Details of the Company’s ordinary share capital are given in Note 31 to
the Financial Statements.
Shareholder information
Antofagasta plc Annual Report 2023 259
Shareholder calendar 2024
17 January 2024 Q4 2023 Production Report
20 February 2024 Full Year 2023 Results Announcement
17 April 2024 Q1 2024 Production Report
18 April 2024 2023 Final Dividend – Ex Dividend date
19 April 2024 2023 Final Dividend – Record date
22 April 2024 2023 Final Dividend – Final date for receipt
of Currency Elections
25 April 2024 2023 Final Dividend – Pound sterling/
Euro Rate set
8 May 2024 Annual General Meeting
10 May 2024 2023 Final Dividend – Payment date
17 July 2024 Q2 2024 Production Report
20 August 2024 Half Year 2024 Results Announcement
5 September 2024 2024 Interim Dividend – Ex Dividend date
6 September 2024 2024 Interim Dividend – Record date
9 September 2024 2024 Interim Dividend – Final date for
receipt of Currency Elections
12 September 2024 2024 Interim Dividend – Pound sterling/
Euro Rate set
30 September 2024 2024 Interim Dividend – Payment date
16 October 2024 Q3 2024 Production Report
16 January 2025 Q4 2024 Production Report
Dates are provisional and subject to change.
Registrars
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS99 6ZY
United Kingdom
Tel: +44 370 702 0159
www.computershare.com
Website
www.antofagasta.co.uk
Registered office
103 Mount Street
London
W1K 2TJ
United Kingdom
Tel: +44 20 7808 0988
Santiago office
Antofagasta Minerals SA
Av. Apoquindo 4001 – Piso 18
Las Condes
Santiago
Chile
Tel: +56 2 2798 7000
Registered number
1627889
Antofagasta plc Annual Report 2023260
OTHER INFORMATION
Shareholder information continued
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Antofagasta plc
103 Mount Street
London
W1K 2TJ
United Kingdom
antofagasta.co.uk
Annual Report and Financial Statements 2023