Antofagasta plc (ANFGF) Q4 2022 Earnings Call Transcript

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Antofagasta plc (OTC:ANFGF) Q4 2022 Earnings Conference Call February 21, 2023 5:30 AM ET

Company Participants

Ivan Arriagada - Chief Executive Officer

Mauricio Ortiz - Chief Financial Officer

Rene Aguilar - Vice President, Corporate Affairs and Sustainability

Conference Call Participants

Danielle Chigumira - Credit Suisse

Dan Major - UBS

Ian Rossouw - Barclays

Jason Fairclough - Bank of America

Bob Brackett - Bernstein

Ioannis Masvoulas - Morgan Stanley

Grant Sporre - Bloomberg

Ivan Arriagada

Great. Thank you and invited to our 2022 Full Year Results. Welcome to those besides attending via nan webcast and convention call. I americium Ivan Arriagada, Chief Executive of Antofagasta. And pinch maine present today, we person our CFO, Mauricio Ortiz; and Rene Aguilar, our Vice President of Corporate Affairs and Sustainability. So, we are going to do a little position connected nan merchandise of our results coming and past we will move to questions and answers.

Okay. So fto maine commencement by pointing retired to our purpose, which is delivering mining for a amended future. I deliberation this encapsulates what motivates each of america astatine Antofagasta, and which goes beyond nan day-to-day tasks that everyone is expected to do successful their circumstantial roles. As portion of our purpose, our imagination of a amended early comprises 4 interconnected areas. So nan amended early we envisage is for nan planet, society, our organizational civilization and our group arsenic shown successful nan slide. We present this done our 5 strategical pillars and those person not changed: information and sustainability, people, competitiveness, maturation and very importantly, innovation, which we spot arsenic a cardinal enabler for our business to respond to some today’s challenges and nan challenges of nan future. And pinch this strategy, we will present worth past for each our stakeholders, some economical and social.

So fto me now return you done nan highlights of our results. Our group are cardinal to what we do and our apical privilege is and remains safety. And 2022 was a grounds year, pinch each our information indicators improving during nan period. So, this is very important and we’re very pleased to study that we had a very successful twelvemonth pinch respect to safety. And we also, some successfully achieved our accumulation and costs guidance for nan year, pinch copper accumulation of 646,200 tons astatine a nett rate costs of $1.61 per pound. Despite nan impermanent simplification successful throughput astatine Los Pelambres owed to h2o restrictions and readiness and expected little grades astatine Centinela concentrates, our EBITDA was $2.9 billion, and our EBITDA separator remained coagulated astatine 50%. Our full dividend for nan twelvemonth is $0.597 per share, which is balanced to a 100% payout ratio connected our underlying earnings.

As a group, we admit ambiance alteration arsenic 1 of nan top challenges facing nan world. Centinela stopped extracting immoderate continental h2o astatine nan extremity of December. And since April past year, each our mining operations person been utilizing 100% of renewable energy, reducing our emissions by astir 1 cardinal tons of CO2 balanced since 2020. In 2022, each our operations person achieved nan copper marketplace accreditation, which is an important independent validation process pinch respect to our sustainability practices. We proceed to activity pinch nan communities this year, making a societal finance of $57 million. We besides achieved schedule diverseness target for nan year, and now complete 1 successful 5 of our labor is women.

Looking to nan future, we are creating worth done our exploration activities, integrated maturation projects and innovation. And pursuing 2 exploration discoveries successful Chile, we person accrued our mineral resources by complete 900 cardinal tons this year. And I deliberation that’s an important accomplishment that we’re besides reporting. And each of this is underpinned by a intent of processing mining for a amended future. So fto maine beryllium a spot much circumstantial astir safety. I deliberation we prioritize safety, wellness and well-being of our workforce and communities. We had nary fatal accidents past twelvemonth and each our information indicators improved during nan year. And 2022, arsenic I mentioned was a grounds twelvemonth for wide information performance.

We proceed to trim our high-potential incidents, signaling a 35% simplification and nan lowest consequence successful caller years. High-potential incidents are starring indicators of nan effectiveness of information controls and cardinal measures of our occurrence successful strengthening them. We purpose to support our lost-time wounded wave complaint beneath a people of 1. And successful 2022, nan wide group people was 0.84, a 37% improvement. And this was owed to spot and power strategies, peculiarly for high-risk tasks. On safety, our existent attraction is to reenforce nan cardinal principles of our strategy, focusing connected empowering our group to understand and negociate nan risks of nan captious task they transportation out, ensuring competent and effecting supervision and having wished activity to fortify our committedness to zero fatalities and occupational diseases.

Now, fto maine opportunity a fewer words astir nan copper market. Copper is not only a commodity basal for our regular lives, but it besides plays an integral domiciled successful nan future, fixed its usage successful nan power modulation and decreasing electrification of nan world, particularly successful emerging economies. The copper value fluctuations during nan twelvemonth reflected nan broader volatility successful nan world economy. Higher inflation, nan Ukraine war, arsenic good arsenic nan beardown dollar negatively affected astir commodity prices early successful nan year. But signs of economical betterment fueled by China dropping its Zero-COVID argumentation led to an upturn successful nan price. However, economical and geopolitical uncertainty will stay a characteristic of world markets going guardant arsenic we know.

On nan proviso side, nan anticipation of a surplus complete nan adjacent twelvemonth aliases 2 person diminished, arsenic little accumulation has been reported wide and pinch concerns astir really nan business will germinate successful immoderate jurisdictions, which person knowledgeable governmental aliases economical deterioration. In nan longer-term, nan fundamentals for demand, maturation of urbanization, decarbonization and cleanable power targets proceed to beryllium supportive for copper request and our assurance successful copper successful nan long-term.

The longer word challenges to proviso maturation besides remain. Lower-quality deposits, expanding method complexity and higher biology and societal expectations, each of which are limiting nan expected complaint of proviso growth. At Antofagasta, we person a increasing mineral assets guidelines arsenic we’ve benignant of accrued this twelvemonth successful 1 cardinal tons. And nan expertise to unlock them and we are good positioned to proceed to grow, particularly pinch our integrated assets space.

Let maine mention concisely to Chile. In Chile, nan authorities presented a revised draught mining royalty measure to Congress successful October, which changes nan building and increases nan rates compared pinch nan existent royalty applicable successful Chile. This draught was approved by nan Senate Mining and Energy Committee successful January and has now passed to nan Senate Treasury Committee for chat and imaginable revision. So it’s now sitting successful Congress. The measure will past beryllium debated successful nan Senate earlier being passed to nan little location for its consideration, and if approved, it past would go law.

As regards to nan caller constitution, it was rejected successful a nationalist referendum successful September past twelvemonth and since past a model has been developed, which provides for definite consensual principles aliases boundaries wrong which a caller matter is to beryllium developed. A caller constitution assembly will beryllium elected successful May, which will activity pinch nan committee of experts to draught nan constitution. And this will beryllium put to a ballot successful a nationalist referendum successful December this year.

Having said this, I would for illustration now to walk complete to Mauricio, who will springiness you immoderate much item connected our financial capacity for 2022. Mauricio?

Mauricio Ortiz

Thank you, Ivan and bully greeting to everyone. Well, successful a volatile world situation pinch higher inflation, logistical constraint and ambiance alteration events specified arsenic nan drought astatine Los Pelambres, our financials remained robust, driven by nan operational and costs subject crossed each our assets. However, these factors were reflected successful our full-year financials capacity erstwhile compared pinch nan exceptional 2021.

Net rate costs successful 2022 were successful statement pinch our guidance, but higher past twelvemonth owed to nan effect of nan little copper volumes and higher power and higher input prices, on pinch wide inflation. Despite little accumulation and higher cost, our EBITDA separator remained beardown astatine 50%, 15% little than successful 2021, but chiefly reflecting nan little realized copper price, which was down 14%.

In this changing world, our robust equilibrium sheet, which has a nett indebtedness EBITDA ratio of only 0.3x is an important property of our company. It’s enabled america to make superior decisions from a position of a spot and stability. The 14.1% return connected superior employed was chiefly explained by our little net connected nan backmost of nan little revenue, but besides for that $480 cardinal we person invested during nan twelvemonth successful our description astatine Los Pelambres that has not yet travel into operation.

Our underlying net were $0.597 per share, but this year, we person an exceptional summation of $945 cardinal pursuing nan completion of nan Reko Diq transaction. This increases our earning including exceptional items to $1.555 per stock and 19% higher than successful 2021. And finally, having assessed each nan determination factors successful our superior allocation framework, our full dividend for nan twelvemonth is $0.597 per share, which is balanced to a payout ratio of 100% calculated against our underlying nett earnings.

Now, fto maine return you done a summary of our accumulation and costs. As guided, copper accumulation was conscionable supra 646,000 tons, 10% little than successful 2021, chiefly owed to nan impermanent simplification successful throughput astatine Los Pelambres because of nan drought and nan expected little people astatine Centinela Concentrates. To reside nan diminution successful grades, we are actively focused astatine enhancing our – nan operational reliability and nan utilization complaint of our scheme and equipment. We person made further advancement successful these areas pinch Centinela Concentrates and Antucoya achieving grounds throughput rates for nan year, exceeding their creation capacity. This singular accomplishment is simply a testament to nan skills and nan disciplines of our group astatine nan excavation site, arsenic good arsenic nan effective integration of our caller distant operations center.

The analyzable world situation successful 2022 pinch constrained logistic chains and nan continued inflationary pressures had a important effect connected important inputs specified arsenic diesel, sulfuric acerb and explosive, while this was mitigated by nan weaker Chilean peso. All these factors accounted for $0.25 per lb of our summation successful rate costs earlier by-products. Lower accumulation besides adversely affected costs. However, this was partially mitigated by nan use from our Cost and Competitiveness program, which helped to trim costs by $0.07 per pound. Overall, our nett rate costs for nan year, were $1.61 per pound.

Despite nan challenging world conditions, nan productivity of our people, coupled pinch nan use from our finance successful precocious technologies, delivered outstanding results successful 2022. Through nan usage of precocious analytics and instrumentality learnings, we person been capable to amended nan ratio of our depletion rates, for instance, by optimizing nan depletion of sulfuric acerb and nan grinding materials. We person been capable to amended their costs per portion of production.

Procurement and statement guidance subject remained arsenic nan main contributor to our costs and competitiveness program, wherever elaborate readying coordinating acquisition crossed our operations and observant management of nan contracts has delivered $52 cardinal of structural savings. One inaugural we are very proud of is nan Centinela concentrator operating astatine supra nan aforesaid capacity. In 2022, regular throughput reached 109,000 tons, which is 4% higher than nan design. In 2023, we expect to seizure nan use of this on pinch higher ore grades, driven by amended flotation performance.

In summary, successful 2022, we person a very bully twelvemonth for our Cost and Competitiveness program. We achieved much than double its target, yielding benefits for $124 million. For 2023, we person group ourselves a target of astatine slightest $60 cardinal of CCP benefits. Our EBITDA was $2.9 billion, and our EBITDA margin, arsenic Ivan said, was a robust 50%. The bulk of this $1.9 cardinal alteration successful EBITDA compared pinch 2021 was from little income measurement and nan little copper price. These 2 factors accounted for much than $1.6 cardinal of nan alteration and higher mining costs besides contributed to nan fall. Exploration and information accrued by $10 cardinal to $113 million, chiefly explained by our exploration activity astatine Cachorro, wherever we summation resources and our caller Encierro deposit.

Our associates and associated ventures person decreased their publication to EBITDA by $17 million. And nan carrier section accrued its publication by $11 million, chiefly owed to nan amended income arsenic contracts signed successful erstwhile play ramped up. This led to a grounds twelvemonth of tonnage carrier successful 2022. Overall, our EBITDA separator remained strong, moreover successful a challenging twelvemonth marked by ostentation and little production.

Consistent pinch our financial discipline, we person maintained our beardown equilibrium expanse pinch a nett indebtedness to EBITDA ratio astatine nan extremity of nan play of 0.3x. Net indebtedness was $886 cardinal astatine nan extremity of nan period, compared pinch nan nett rate of $541 cardinal astatine nan extremity of 2021. This activity is mostly explained by 3 factors; $2.8 cardinal of EBITDA from subsidiaries, our $1.9 cardinal finance successful excavation development, sustaining CapEx and nan Los Pelambres description project, each of which are targeted astatine securing our accumulation floor plan for nan upcoming years and much than $1.2 cardinal paid successful dividends, which bespeak our committedness to sustainable shareholder returns.

As you’re aware, our superior allocation model is basal to each our financial decisions, and which besides considers our ambiance resilience. Everything is underpinned by our beardown operating rate flow, wherever our operational subject allows america to execute our yearly accumulation and Cost and Competitiveness programme targets, and our golden and molybdenum by-product gross watercourse from our 2 largest mines, Los Pelambres and Centinela, allows america to power our costs and seizure value increases successful these products. Then we invest, done nan cycle, successful sustaining superior programs and excavation development, exposing nan ore that will beryllium mined successful nan pursuing periods.

Next, we fulfill our minimum committedness to our shareholders by paying 35% of our underlying nett net arsenic dividends. With our excess rate flows, we see nan spot of our equilibrium expanse and past measure our maturation projects, which must beryllium successful statement pinch our stringent return connected consequence criteria. If thing fits our criteria, we return this excess rate to our shareholders arsenic portion of our dividend policy. Following this disciplined model allows america to put and present accordant returns to our shareholders done nan cycle. And nan Board has recommended $0.597 per stock arsenic full dividend for 2022, which is 100% of underlying nett earnings, excluding nan Reko Diq transaction.

Now, Rene will springiness you immoderate much specifications connected our sustainability performance. Rene?

Rene Aguilar

Thank you, Mauricio, and bully greeting to everyone. Sustainability astatine Antofagasta is astir deploying strategy that improves nan lives of our labor and embraces and support nan improvement of our surrounding communities, while astatine nan aforesaid clip managing biology effect of our operations. This is why it has been important for america to instrumentality recognized sustainability standards. And this year, each 4 of our mining operations were independently assessed against 2 benchmark industry-responsible accumulation standards, The Copper Mark and ICMM capacity expectations. It is besides important that we supply reliable accusation to our stakeholders regarding our performance. And truthful past year, we started publishing online our ESG information book, which we will update quarterly. Our strategy let america to put backmost much into society, nan situation and nan world system than we return out. We do this by mounting ourselves goals and ambiance change, diverseness and inclusion by joining world challenges, protecting our employees, processing our suppliers, arsenic good arsenic really we reside our biology impact, truthful that wide we person a nett affirmative extremity consequence from nature.

The group’s diverseness and inclusion strategy, launched successful 2018, has transitioned from an awareness-raising shape astir unconscious bias and favoritism to introducing inclusive practices arsenic an integral portion of really we work. We are deepening our inclusive organizational culture, which supports nan retention of each people, immoderate their gender, title aliases intersexual orientation. In a cardinal initiative, we ran a run connected respectful behaviors and held workshops connected respectful environments. In 2022, we accrued nan proportionality of our female labor to 20.6% compared to 17.4% successful 2021, gathering our extremity for nan year. This is simply a dependable betterment since 2018, and we person much than doubled our female information since then. We person now group a caller gender diverseness extremity for women to correspond 30% of our labor by 2025.

As Ivan mentioned, we are committed to nan situation and mitigating and adapting to ambiance change. All mining operations person been utilizing 100% renewable power since April 2022, pinch an estimated emanation simplification of astir 1 cardinal tons of CO2 balanced of our Scope 2 since 2020. With this reduction, we met our 30% simplification committedness 3 years early, and we will soon group ourselves a caller medium-term emanation simplification extremity for 2030 and a Scope 3 simplification target. We person already begun moving connected decarbonization scheme for each our operations, defining nan baselines, nan replacement scheme for haul trucks, nan projection of power inputs, arsenic good arsenic agreeing nan assumptions for existent and early technologies. The last scheme will intelligibly bespeak nan steps we must travel to beryllium carbon-neutral by 2050 aliases sooner if nan disposable exertion allows it.

In 2022, h2o utilized rates of our mining operations ranged from 79% astatine Los Pelambres to 94% astatine Zaldivar. With nan completion of nan Los Pelambres desalination works this twelvemonth and pursuing its description , we are connected way for oversea and recirculated h2o to beryllium much than 90% of our full operational usage by 2025. We purpose to create societal programs and projects successful business pinch communities that lead to important improvements successful people’s value of life and expanding their entree to equipment and services. In 2022, we accrued our societal value-creation finance to $57 million, up from $48 cardinal nan erstwhile year. Although this financial publication is significant, nan existent worth lies successful nan societal effect created.

Over nan past 5 years, we person assessed nan effect of 15 societal programs successful 6 strategical areas; h2o management, productivity support and entrepreneurship, organization infrastructure, education, employability and proviso development. This year, 2 areas of attraction person stood retired successful position of programs that promoted equity and entree to basal equipment and adjacent opportunities and person nan biggest impact. We proceed to heighten entree to drinking h2o for quality depletion and irrigation successful agrarian areas adjacent our operations. And we besides intensify our EnRed programme pinch complete 20 initiatives aimed astatine addressing nan infrastructure and integer accomplishment deficits successful nan communities successful our area.

Now, I walk you to Ivan.

Ivan Arriagada

Thank you, Rene. And truthful I’m going to adjacent pinch a reference to guidance for this twelvemonth and besides advancement connected our maturation projects. So for this year, copper accumulation will beryllium successful nan scope of 670,000 tons to 710,000 tons, which reflects fundamentally nan completion of nan Los Pelambres desalination works and concentrator description during nan year, partially offset by little grades astatine Centinela Cathodes. During nan year, copper accumulation is expected to summation quarter-on-quarter, chiefly owed to nan accumulation floor plan astatine Los Pelambres, and it’s thing that we besides witnessed successful 2022.

Group rate costs successful 2023 earlier and aft by-product credits are expected to beryllium $2.20 earlier by-products and $1.65 aft by-products. As ever we stay very focused connected productivity. And connected nan backmost of what has been achieved recently, we’re now targeting savings of astatine slightest $60 cardinal nether our Cost and Competitiveness programme for 2023. We expect this will offset immoderate of nan different inflationary costs pressures we will spot during nan year.

CapEx, superior expenditure is expected to beryllium $1.9 billion, arsenic sustaining and excavation improvement expenditure increases to astir $1.5 billion. This summation reflects inflation, higher excavation improvement astatine Centinela Concentrates, elaborate engineering connected nan Los Pelambres desalination description and ore pipeline sustaining CapEx and nan description of nan tailings retention installation astatine Centinela. However, though location is immoderate pre-investment expenditure connected nan Centinela Second Concentrator project, this estimate does not see task execution expenditure connected that task for 2023.

Reliable and responsible copper shaper is what we purpose to beryllium and to achieve. And we will talk a small spot astir our pipeline portfolio. We person a assortment of exploration late-stage projects which are successful different phases, arsenic you will statement successful nan descent of information and we will make integrated maturation for nan company, including a caller new discovery, which we telephone Encierro, which we are including for nan first clip successful our reserves and assets statement, joining nan Cachorro project, which we included earlier nan first clip successful 2021.

We person a immense mineral assets guidelines of complete 19 cardinal tons, of which immoderate 7 cardinal tons are successful nan Centinela Mining District and 6 cardinal tons are astatine Los Pelambres, giving america options to create our inventory astatine a clip erstwhile copper proviso is becoming progressively constrained. We expect our Cuprochlor-T leach process will beryllium adopted astatine our operations complete nan adjacent fewer years, and this will let america to maximize nan utilization of our leach assets and processes – processing ore that mightiness different person been uneconomic. In nan meantime, we will proceed to stay alert to immoderate charismatic outer opportunity that whitethorn go available.

So to springiness you a little update connected immoderate of nan maturation projects. At nan extremity of past year, nan Los Pelambres description task was 93% complete successful position of construction, pinch some nan desalination works and concentrator works description owed to beryllium successful accumulation during nan 2nd 4th of this year. Progress continues connected nan different manus pinch nan engineering and pre-investment studies for nan Centinela Second Concentrator. And successful statement pinch a disciplined attack to superior allocation, nan task will beryllium sent to nan Board for last finance support we expect during 2023, pursuing completion of nan Los Pelambres description task and erstwhile location is capable clarity connected nan outcomes of nan ongoing discussions connected nan mining royalty and taxation reforms successful Chile.

With respect to our caller exploration occurrence during 2022, we accrued our mineral resources by complete 900 cardinal tons, pinch complete half of this coming from 2 caller exploration discoveries, Cachorro successful nan northbound of Chile, which reported its first inferred assets successful 2021, and this will summation by complete 70% past twelvemonth to 242 cardinal tons astatine 1.21% copper. This makes nan task 1 of nan astir important manto-type deposits successful nan bluish coastal loop successful Chile. Also it lies betwixt Antucoya and Centinela, and truthful whitethorn use from nan usage of their facilities.

The Encierro task connected nan different manus is successful nan Chilean High Andes, 100 kilometers East of nan metropolis of Vallenar and 600 kilometers northbound of Santiago. And it declared its maiden inferred assets successful 2022. The deposit is simply a analyzable copper-gold-moly miocene porphyry deposit pinch inferred resources of 522 cardinal tons astatine 0.65% people copper. We will proceed to drill these deposits and beforehand them done nan improvement rhythm complete nan coming years.

Now, fto maine opportunity a fewer words astir invention and technology. We are proud to study that past twelvemonth we inaugurated our first 100% autonomous cognition astatine Esperanza Sur pit pinch a fleet of 11 and 2 autonomous drillings. This autonomous task makes it imaginable to destruct nan operator’s vulnerability to consequence and increases nan ratio and extends nan equipment’s lifecycle.

The autonomous drilling instrumentality has a higher level of utilization, 10% higher than a accepted system. Also nan integrated distant cognition centers are already operating astatine Los Pelambres and Centinela. They let nan visualization of real-time information to alteration timely decisions to beryllium taken while having a world position of each nan processes. This allows a higher level of coordination and improves capacity and decreases variability.

During ‘22, arsenic I’ve mentioned, we completed nan validation of our in-house patented superior sulfide leaching technology, Cuprochlor-T, and made nan exertion disposable to our operations to incorporated successful nan semipermanent planning. The task continues advancing. An business sized 38,000-ton leaching heap was completed astatine Centinela successful 2021 and results successful 2022 confirmed recoveries of 70% aliases much aft astir 200 days. And pre-feasibility activity is now starting astatine Zaldivar for nan superior ore there. The process has nan imaginable to unlock worth from antecedently uneconomic mineral resources and is being considered arsenic an action for nan existing operations.

So fto maine decorativeness now by looking up to this twelvemonth and nan opportunities ahead. Safety is ever our apical priority. We’re committed to having zero fatalities, and we will proceed pinch a relentless attraction connected protecting nan wellness of our workers and communities. We proceed to embed our ambiance alteration and sustainability strategy successful our decision-making. On nan captious assets of water, we will proceed to return each basal actions to mitigate nan effect of nan drought connected communities and our operations. Most significantly, we will commencement accumulation astatine our desalination works astatine Los Pelambres successful 4th 2 2023.

We are accelerating nan implementation of invention arsenic coming much than ever. It plays a cardinal domiciled successful really our institution goes forward. We are committed to maintaining a financial discipline, a cardinal property of our group, pinch a attraction connected worth creation and shareholder returns. We are successful a beardown position to return advantage of nan maturation successful copper demand. We person nan embedded tons crossed our business, nan expertise to unlock them successful a sustainable measurement and pinch a responsible and reliable shaper we will present worth to each our stakeholders. 2022 represented a impermanent driblet successful our accumulation floor plan arsenic we had expected, but looking forward, we spot maturation coming successful nan short-term and nan longer-term arsenic we beforehand our task portfolio.

So, convey you for your attention. And now we will return questions starting pinch nan level and past moving to nan virtual questions.

Question-and-Answer Session

Q - Danielle Chigumira

It’s Danielle Chigumira from Credit Suisse. A mates of questions from my side. And firstly, connected taxes and royalties, what is your existent expectations astir nan timeline for which that you get visibility connected them? And are you still expecting an effective taxation complaint successful nan debased 40s? Secondly, for Rene connected sustainability, so, you’ve sewage a way grounds of surpassing nan emissions reductions targets up of time. What benignant of visibility are you still waiting connected successful bid to group targets specifically for Scope 1 and 2? And is location immoderate logic why fixed we’ve sewage accumulation increasing, why emissions won’t spell up each twelvemonth for nan adjacent 5 years? And past yet conscionable connected Zaldivar. What’s nan timeline for nan pre-feasibility study connected Cuprochlor?

Ivan Arriagada

Yes. So connected taxes and royalty, I deliberation nan – what nan authorities has indicated is their willingness to effort to adjacent that chat up of nan adjacent fund and arsenic soon arsenic possible. The adjacent fund would benignant of beryllium discussed astatine nan opening of nan 2nd half of this year. So that’s nan timeline that they person declared and that was benignant of spot them moving to. In position of wherever nan betterment lands, I mean, our position is that nan fiscal position are very important successful position of nan stableness and predictability that they supply for finance decisions. And therefore, stableness is cardinal and nan level needs to beryllium specified that Chile remains competitory erstwhile compared to different jurisdictions. And I deliberation that’s what we’ve been conveying to nan authority erstwhile it comes to nan level astatine which taxes request to beryllium set, truthful that competitiveness against different cardinal mining jurisdiction, particularly those that nutrient copper is retained. So that’s connected royalty.

I deliberation connected sustainability, yes, we’ve been successful successful achieving our target that we group ourselves. And I deliberation a batch of that has travel retired of nan conversion that we were capable to execute successful immoderate of our power proviso contracts. And now, arsenic Rene was saying, we are successful nan process of mounting our caller target for Scope 1 and Scope 2 specifically. And that depends connected nan improvements that we’re capable to place successful position of task activity connected power depletion efficiency. And that’s fundamentally what we want to get afloat visibility to america truthful that we move to a caller commitment. So, our committedness is founded connected nan visibility and certainty astir being capable to execute those improvements and changes. And we are good precocious successful those. So, I deliberation we’re successful bully style to beryllium capable to refresh our target arsenic it relates to Scope 1 and 2. Scope 1 besides involves haulage. And from that constituent of view, we cognize that nan exertion is for replacing diesel successful trucks is not yet available, but we’re really – we’re very progressive successful position of being testing some battery-assisted haulage trolleys, which we’ve been looking astatine arsenic a anticipation successful Pelambres and besides hydrogen. But we cognize that exertion has still to develop, but I deliberation precocious successful position of being capable to understand and trial circumstantial solutions successful our sites. So, a batch of activity has been done – is being done there.

And successful respect of Scope 3 which we didn’t cover, but I deliberation it’s important that we besides include. I deliberation we’re doing 2 things. I mean, 1 is that we did perpetrate pinch our suppliers past twelvemonth to activity together connected achieving reductions successful emissions successful their processes and thief them aliases assistance them successful that activity. And we’re now successful nan shape of processing nan circumstantial plans, but that committedness was made and was put successful spot past year. And I deliberation that was a very important measurement guardant for america successful position of conscionable agreeing to activity successful that direction. It’s thing that we benignant of explicitly did.

Now, that intends that we’re changing immoderate of our processes internally. For example, erstwhile we bid now for equipment and services, we look astatine nan [Technical Difficulty] and therefore, we rank them according to really they travel up pinch emissions, which is thing that we weren’t doing before. And besides what we do is that we usage and I deliberation we’ve shared this pinch you before, a protector value for c emissions astatine $100 a ton of CO2. And therefore, we besides cipher really do these alternatives rank erstwhile you facet successful that costs of emissions? So, that reference is besides disposable erstwhile decisions are made. So, we’ve sewage a very wide group of issues that we’re addressing to beryllium capable to move guardant successful Scope 3. And past arsenic we understand much and more, our anticipation is that we will beryllium capable to group a target pinch respect to Scope 3 and we’re really diligently trying to activity to execute that by nan extremity of this twelvemonth 2023. So, that’s connected nan sustainability.

And past yet connected Cuprochlor and we’re doing – we’re finalizing nan benignant of pre-feasibility astatine Zaldivar, and past we expect nan feasibility is thing that which will beryllium fundamentally undertaking betwixt nan extremity of this twelvemonth and adjacent twelvemonth and 2024. So by 2025, we fundamentally person nan feasibility ready. But I deliberation nan cardinal astir nan pre-feasibility, truthful nan viability of being capable to utilization a superior sulfide activity will beryllium completed this twelvemonth 2023, nan pre-feasibility. Okay?

Dan Major

Dan Major from UBS. Two lines of questions from my side. Firstly, connected CapEx, rather a large step-up successful sustaining and excavation improvement CapEx from $1 cardinal to $1.5 billion. Can you springiness america latest estimates of medium-term sustainable benignant of complaint of excavation improvement CapEx, including nan description of Centinela? And past secondly, connected nan dividend, will you look astatine nan proceeds from Reko Diq arsenic an opportunity for a typical distribution aliases is that benignant of included successful nan broader superior allocation discussions? And nan truth that you’ve booked nan proviso – well, write-off of $945 million, does that propose that nan taxation payable connected that’s going to beryllium reasonably limited? Yes, those are nan questions.

Ivan Arriagada

Yes. So, I’ll inquire Mauricio to remark connected nan CapEx. But I deliberation connected nan dividend, possibly conscionable to opportunity that nan ground connected which we’ve wished nan payout for this twelvemonth is nan net from past twelvemonth without including nan Reko Diq constituent because that’s benignant of an bonzer element. Now, we person yet to person – I mean we’ve sewage to person nan proceeds. We’re expecting that, that will hap successful 2023. And I deliberation nan determination astir those costs will beryllium made past astatine that clip by nan Board, according to, arsenic you say, nan benignant of a superior allocation model that we have. But we do see them to beryllium bonzer from nan constituent of position that they don’t travel from nan mean people of business arsenic nan net connected which nan dividend was calculated aliases wished successful this year. So that’s nan logic there. But Mauricio, do you want to talk astir superior expenditure and excavation development?

Mauricio Ortiz

Sure. Well, connected Capex, conscionable a little comment. Well, previously, we person a range, we were moving successful a scope betwixt 600 and $800 cardinal per year. So arsenic we announced a mates of merchandise before, we are moving up for nan adjacent 3 years that intends this twelvemonth and nan adjacent 2 years to a number astir $1 cardinal arsenic an average. That’s chiefly explained by 2 reasons. One is we’re opening phases, caller phases successful Centinela district, basically, Esperanza Sur and Esperanza. They are going done opening caller phases and these 2 unfastened pits, and besides we are undertaking applicable aliases important overhauls successful 2 things. One, expanding aliases expanding our tailing deposit capacity, either successful – some successful Los Pelambres and successful Centinela arsenic portion of nan sustaining CapEx of people and besides overhaul astatine awesome mines astatine nan waters astatine Centinela and besides included successful this guidance of $1 cardinal mean for nan adjacent 2 years, we are including besides nan basal useful to relocate nan ore pipeline connected nan further exemplary successful nan diesel works successful Los Pelambres. So basically, we are investing successful sustaining CapEx, arsenic we said, successful bid to alteration accumulation going guardant and nan consequence accumulation going forward, maintaining our capabilities to nutrient copper done nan cycle.

Dan Major

And truthful conscionable to follow-up connected nan taxation connected Reko Diq, should we presume that you received mostly nan $945 cardinal revisioned successful cash?

Mauricio Ortiz

We don’t expect taxation connected that proceeds. Of course, we request to complete nan information done nan aged jurisdiction that we’re involved, but we don’t expect tax.

Unidentified Analyst

[Technical Difficulty]. Couple of questions conscionable astir production. You did mention nan anticipation for quarter-on-quarter maturation passim nan year, but could you possibly put it successful bands, H1 versus H2? And what’s nan type of divided you’re reasoning about? Is it 45, 55, aliases thing much pronounced? And past nan 2nd 1 is astir absenteeism astatine nan mines. How has that been progressing, and what assumptions person you put underlying that ‘23 accumulation target?

Ivan Arriagada

Yes. The accumulation quarter-on-quarter is mostly driven by nan truth that nan h2o readiness for Pelambres will beryllium successful spot successful 4th two. And therefore, because nan first 3 months of nan twelvemonth are nan barren season, past we tally Pelambres erstwhile location is h2o limitation astatine a little throughput. So, we’re not really utilizing each nan capacity that we person successful position of planned capacity. And truthful it’s – erstwhile h2o becomes available, past fundamentally Pelambres is capable to tally astatine a higher throughput, which is benignant of double nan complaint astatine which it would beryllium moving successful nan first quarter. So, that’s nan benignant of quality that we have. It’s fundamentally driven by Pelambres.

And successful position of absenteeism, I deliberation what we saw, traditionally, absenteeism was astir 3% erstwhile we had COVID. And aft COVID, that went up. In immoderate locations, we witnessed successful immoderate projects, and this was besides reported crossed nan manufacture successful Chile and elsewhere that absenteeism went arsenic precocious arsenic 25% aliases 30%. Now we’re backmost down to numbers, which I would spot betwixt 6% and 8%. So, we’re still supra what’s nan business pre-COVID. And I deliberation pinch nan system now going into a slower maturation shape retired of nan power and inflation, we expect that, that will astir apt converge towards benignant of humanities levels. But yes, we are moving pinch absenteeism levels, which are higher aft COVID than what we had before. And I deliberation this besides has to do, we think, pinch nan alteration successful nan measurement of moving and expectations mostly connected group and really those person evolved, which makes it abruptly much challenging. But astatine levels betwixt 6% and 8%, it’s thing that we tin manage. And we’ve besides changed nan measurement of moving and I deliberation that’s besides having an effect successful position of being capable to pull caller group and helping to trim that further to nan levels of 3% that we would expect to spot benignant of a normal case.

Ian Rossouw

Ian Rossouw from Barclays. Three questions. Just connected – conscionable pushing you a spot connected nan sustaining CapEx, so, you said earlier, Mauricio, that it’s $1 cardinal complete nan adjacent fewer years, but this twelvemonth is $1.5 billion. Should we expect adjacent twelvemonth and nan twelvemonth aft to travel backmost to $1 cardinal aliases location successful between? Second mobility conscionable connected nan number dividends, location you only paid $80 cardinal successful nan first half and nan second-half zero. You tin spot rather a spot of rate building up astatine immoderate of nan assets, peculiarly astatine Los Pelambres. Should we expect immoderate catch-up payments connected that successful this year? And past if you could conscionable thief america deliberation really should we deliberation astir your description plans, I guess, nan remaining CapEx astatine Pelambres? Will you money that from indebtedness wrong nan assets? So you will transmission up astir of nan rate travel astatine nan plus to nan genitor company? And likewise, conscionable really we should deliberation astir that for Centinela? Sorry. And past past mobility conscionable connected Zaldivar recoveries there. Obviously, that’s still being rather disappointing pinch this, I conjecture this leaching task that’s completed, wherever should we get successful there? And what different – and I conjecture what’s nan benignant of extremity end location connected recoveries longer term?

Ivan Arriagada

Yes. So, fto maine commencement pinch that 1 and past Mauricio will reside nan financial questions. But connected Zaldivar, we implemented nan Chloride Leach arsenic nan processing way to beryllium capable to leach low-solubility secondary sulfides and that’s a proven possibly 1 processing way now. What we saw during nan years ramping up to nan levels of recoveries that we are targeting is simply a spot much extended than we had anticipated. I deliberation nan bully news I would opportunity is that nan task is operating arsenic expected from nan constituent of position of nan levels and concentrations of chloride. And nan 2nd 1 is that successful nan 4th quarter, we saw an uptick successful recoveries, which is benignant of nearing now nan benignant of levels that we expected astatine this stage. So, nan benignant of recoveries that we are getting successful nan secondary sulfides are northbound of 60% now, and therefore, that’s bully and that’s continuing successful nan people of 2023. So, we deliberation that now that process has go – this is simply a chemic process that’s go progressive and therefore, we are now heading into this type of recoveries that we expect. But it has been a spot much than we had anticipated, but we are getting there. So, we are affirmative astir wherever this is heading from that constituent of view. Mauricio, do you want to reside nan financial question?

Mauricio Ortiz

Well, successful position of sustaining CapEx, yes, this twelvemonth we are guiding $1.5 cardinal based connected nan factors that I explained conscionable a mates of minutes ago. We expect to return to thing little than that adjacent mates of – adjacent 2 years, basically, because this year, we are front-end loading immoderate useful successful this circumstantial people that I mentioned. In position of number dividends, yes, you are correct that this twelvemonth was a twelvemonth wherever we will build up rate successful our companies fundamentally because we measure that nan companies went through, of course, debased grades and little throughput astatine Pelambres. So, we were cautious astir our superior distribution aliases rate distribution from nan institution and I deliberation connected times of volatile situation was a wise decision. In position of really we want to activity nan financing of our projects going forward, of people we person nan subject to optimize nan leverage ratios successful each of our operating companies, usage their equilibrium expanse successful bid to lend to nan group robustness. And conscionable to springiness you an example, what we person successful our portfolio successful position of Centinela Second Concentrator, we are actively evaluating a task finance successful bid to optimize nan financing of that description . And successful position of Los Pelambres, Pelambres has been a very robust asset. We person plentifulness of options. Of course, we are exploring for nan 2nd desal exemplary and nan relocation of nan concentrate. That could beryllium firm aliases different benignant of debt, and of course, immoderate operation immoderate patient operation betwixt indebtedness and equity. But arsenic a main principle, Ian, summarizing to optimize nan leverage ratios successful a patient measurement of our operating institution is portion of our discipline.

Jason Fairclough

It’s Jason Fairclough from Bank of America. Two questions. One connected nan Second Concentrator project, and past nan different 1 again connected nan Cuprochlor. So, connected nan Second Concentrator, could you conscionable talk to america a small spot astir nan CapEx number? Again, really unrecorded is that fixed nan immense fluctuations we are seeing successful immoderate of nan input costs for mining CapEx? And pinch that, I conjecture really complete is nan scope, right? So, for example, is location thing extracurricular nan scope that we request to deliberation beyond nan number you published? Secondly, conscionable connected Cuprochlor, that’s an in-house technology, you guys person developed its IP. Does Barrick get it for free astatine Zaldivar?

Ivan Arriagada

Okay. So connected nan Second Concentrator, I mean arsenic you know, we person updated nan CapEx estimate recently. And successful doing so, we person included astatine this shape and because we person benignant of precocious successful nan engineering each of nan scope of nan project. And it’s besides sewage immoderate escalation components to it. So, expecting that immoderate of nan value do up and down and have, aliases are taxable to immoderate level of inflation. So, we deliberation from that constituent of view, that estimate is simply a robust expected worth of what nan superior expenditure for that task will be. Now, we are successful an environment, which is volatile and pinch changes and therefore, evidently we will look astatine what’s happening. But successful essence, what we spot is that nan ostentation is really coming down and input prices are really coming down. So, we spot constricted consequence truthful of having to restate that number connected nan ground of nan benignant of macro trends that we are witnessing for nan adjacent mates of years erstwhile we expect to beryllium capable to do nan construction. So, from our constituent of view, we deliberation it’s a adjacent estimate of wherever nan building costs will fall. And erstwhile we did nan review, we were rather keen connected including immoderate escalation constituent to it arsenic good and nan afloat scope. Remember that this is simply a task successful which we person been moving for a agelong play of clip and therefore, nan scope is rather well-defined successful position of nan construction. It’s included successful that, right? Cuprochlor-T, truthful yes, this technology, we are very excited astir it and evidently it’s portion of nan hold we deliberation whitethorn hap astatine Zaldivar. And nan nonstop commercialized position nether which this would beryllium applied and deployed is thing that we still request to benignant of activity out. But we are very keen astatine this shape and really proving that this provides nan correct solution for nan type of ore that we person astatine Zaldivar. And from that constituent of view, arsenic we mentioned before, this is being incorporated into our excavation plans and it’s nan way to turn astatine Zaldivar.

Jason Fairclough

But we do yet spot it arsenic an plus that should make a return for your technology?

Ivan Arriagada

Well, I mean we do. I deliberation our attraction is chiefly connected being capable to deploy and usage it for our ain resources. So, that’s what drives america astatine this stage, but obviously, we spot economical worth and commercialized worth successful nan long-term. But nan main exertion we spot successful our ain ore bodies, it’s been now included arsenic portion of a excavation plans for Antucoya and Centinela. We are starting to spot successful a 5-year timeframe immoderate copper coming retired of this into our Centinela and Antucoya. So, that’s what drives america and has america excited pinch respect to Cuprochlor-T, and obviously, nan hold for Zaldivar. Okay. If location are nary much questions from nan floor, past we will move to nan virtual questions.


[Operator Instructions] Our first mobility coming comes from Bob Brackett astatine Bernstein. Bob, please un-mute yourself and spell up pinch your question.

Bob Brackett

Hey. Good morning. Looking astatine nan nett rate costs, you provided a span from ‘22 to ‘23 explicitly astir FX and by-products and you mentioned that ostentation would beryllium offset by things you tin control. Can you springiness america a consciousness of what you spot arsenic that level of ostentation and therefore, what’s nan standard of nan things you power offsetting that?

Ivan Arriagada

Yes. Mauricio, do you want to return that?

Mauricio Ortiz

Well, convey you for nan question. Well, successful position of – fto maine divided nan reply successful 2 pieces. First, successful position of inflation, we person nan Chilean ostentation and nan world inflation. In position of Chilean inflation, that is mostly offset by nan speech complaint and that is what we person seen past year. However, we person nan world ostentation and that impacts our portion costs. Along that part, we besides person nan input prices. Input prices has accrued importantly since 2021 – successful comparison pinch 2021, driven fundamentally by energy, explosive, diesel and sulfuric acid. So wrapping up, really we power ostentation is, we don’t power inflation. If we could, it would beryllium great. But really we negociate ostentation is, for 1 side, our peso denominated costs base, which is providing immoderate offset to nan section inflation. And successful position of world inflation, 1 of nan characteristic aliases 1 of nan main features from Antofagasta is having a important watercourse of golden and molybdenum, which is mostly thief america to tackle that world ostentation and that is what we person seen successful 2022. So, that is beautiful overmuch really we activity retired nan inflation, Bob.

Bob Brackett

Good. Thank you for that.


Okay. Our adjacent mobility is from Ioannis astatine Morgan Stanley. Ioannis, please spell up and un-mute, and spell pinch your question.

Ioannis Masvoulas

Great. Thank you very overmuch for nan presentation. Just 3 questions near from my side. The first going backmost to nan Centinela description project, you person already fixed immoderate colors astir your thoughts connected nan timing of sanctioning, but I would for illustration to fig out, based connected nan astir caller royalty proposal, do you deliberation nan fiscal model is conducive to you going up pinch it, i.e., is location capable economical worth based connected nan existent position we person seen, aliases do you expect further betterment earlier you spell ahead? The 2nd question, going backmost to Reko Diq and nan rate proceeds. In case, location is simply a typical dividend arsenic portion of your distribution and determination astatine nan time, will this person to hold until nan full-year results successful 2023, aliases would you see distribution arsenic soon arsenic you get nan cash? And lastly connected molybdenum, we person seen nan value surge complete nan past mates of months. Would you see focusing connected high-grade areas astatine Los Pelambres and Centinela to perchance assistance moly output and amended your EBITDA, rate position, aliases are you sticking pinch your excavation scheme arsenic is crossed nan operations? Thank you.

Ivan Arriagada

Yes. So, connected nan Centinela description and what we person said is that it’s very important that we person clarity connected nan fiscal position applicable to nan project, and I deliberation that’s 1 element. And past nan different 1 is that – and successful discussing nan taxation betterment that we person benignant of made this statement that taxes are group astatine a level successful which nan manufacture remains competitive. And I deliberation that’s conscionable a broader connection pinch respect to wherever we expect taxes to extremity and to land. And I deliberation we proceed to pursue, basically, that principle. We deliberation location is still chat that needs to return spot successful Congress to beryllium capable to get to that level. With respect to Reko Diq, I conscionable want to beryllium wholly clear that nary determination has been made pinch respect to wherever nan proceeds would go. That will beryllium portion of our superior allocation review. Now, we usually do that astatine slightest doubly a twelvemonth erstwhile we salary nan interim dividend and erstwhile we salary nan last dividend. So, successful respect of half-year adjacent and successful respect of end-year close. So, this will spell into that speech and into that review, and that’s benignant of nan cycles successful which we would look astatine that position, truthful doubly a year. And pinch respect to moly, I deliberation we person been very pleased pinch really surely moly has performed successful position of nan marketplace fundamentals and price. It’s provided america an absorbing gross stream, and that utilized to beryllium nan lawsuit only of Pelambres, but now we really person operating a moly betterment works astatine Centinela. We really upgraded past twelvemonth and truthful expect to spot much revenue. But successful position of really we excavation our deposits, essentially, those decisions are governed by copper, which is nan mainstream merchandise that we will get. There could beryllium successful nan margins immoderate optimization, but that remains nan rule. So, we activity our deposits successful a series that is driven fundamentally by copper and moly is simply a by-product. So, that’s fundamentally nan norm that we person because that provides nan optimum economical worth for these deposits.

Ioannis Masvoulas

Very clear. Thank you very much.


Thank you. Our adjacent mobility is from Grant Sporre astatine Bloomberg. [Operator Instructions]

Grant Sporre

Hi. Good morning. Thanks for taking nan presentation. And conscionable a mates of follow-up questions if I may. Just connected nan molybdenum market, if you – conscionable a broader question, really sustainable do you spot nan existent value levels? If you person a position connected nan market, if you could share, that would beryllium great. And past 2 conscionable smaller questions. Just successful position of moving capital, location was a rather a large jump successful receivables. Is this conscionable impermanent and it will revert to normal, aliases person you possibly changed your position successful which you cod your receivables? And past lastly, a mini thing, but I conjecture it benignant of points to nan Reko Diq proceeds perchance arsenic you made, is that connected nan rate flow, location is simply a mini equity acquisition of astir $67 million. I don’t cognize if you are capable to stock what that pertains to. Those are my 3 questions. Thanks very much.

Ivan Arriagada

So, I will reside a mates of them and if you could talk astir nan moving capital. So, connected nan molybdenum, I deliberation that this is simply a marketplace which produces astir 300,000 tons – astir 300,000 tons, 350,000 tons a year. We nutrient 10,000 tons. So, it’s a percent of that, but it’s small, but not wholly irrelevant. And moly is utilized arsenic an alloy for very typical difficult metallic applications. So, it tends to beryllium from that constituent of view, cyclical successful position of really its value performs. And therefore, they person been immoderate bottlenecks nan measurement that we look astatine it precocious successful position of production, fundamentally associated to little accumulation arsenic a by-product successful immoderate of nan guidelines copper mines wherever this is produced. Now, we thin to deliberation that, that will benignant of easiness and therefore, immoderate of nan summation successful value is temporary. But fundamentally, we deliberation moly remains beardown successful nan consciousness that it is required and progressively much needed for nan purposes of alloys for noble uses for illustration successful craft engines and nan like. So, possibly location is an constituent of – truthful location is an constituent of cyclicality, certainly, successful nan value associated to nan business rhythm and possibly immoderate constituent of tight proviso explaining immoderate of nan summation successful value that we precocious saw and we expect to somewhat moderate. On nan – nan different mobility was connected nan – yes, nan equity, no, we do participate successful mini associated ventures from time-to-time associated to immoderate of our exploration activities and we person benignant of seen an summation of activity location arsenic we get backmost from COVID. But location is thing applicable astatine this shape for america to stock aliases disclose much broadly. It’s conscionable that. Do you want to reside nan moving capital?

Mauricio Ortiz

Well, basically, fto maine explicate nan moving superior movements successful nan pursuing way. So, basically, connected 2022, we tally flat. We person higher inventories, chiefly explained for 2 reasons, higher ore inventories successful Centinela and Antucoya, but besides higher storage inventories and supplies inventories. That was driven by nan proviso constraint that we were mentioning and tackling during nan year. So basically, successful bid to support operational continuity and sphere our reliability successful our plants, we accrued warehouses and operational stocks. That activity was chiefly offset by an summation successful creditors, chiefly owed to nan higher input prices and successful insignificant degree, debtor alteration owed to nan little copper prices. So basically, that are nan main movements that accounts for nan measurement we are moving level successful word of moving superior successful 2022.

Ivan Arriagada

Also conscionable to complement, Reko Diq is besides recorded arsenic a waste and acquisition receivable. So, that’s a large betterment – sorry, summation arsenic well, which is impermanent and associated to that, Grant.

Grant Sporre

Okay. Great. Thank you for that clarity.

Ivan Arriagada



Alright. There are nary much questions connected nan line. I will now manus complete to Ivan Arriagada for closing remarks.

Ivan Arriagada

Thank you. Okay. Well, pinch that past we will adjacent nan submission of nan results. Thank you very overmuch for those attending and we look guardant to a very breathtaking 2023. Thank you.

Editor: Naga

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