Our strategy for growing our mining business is based around three pillars:

  1. 1THE EXISTING CORE BUSINESS
    • Embed the Safety Model across all operations to acheive zero fatalities
    • Implement the Cost and Competitiveness Programme ("CCP") to improve performance and competitive position
    • Integrate Zaldivar, focusing on capturing potential synergies
    • Proactive and inclusive approach with communities and other stakeholders to strengthen sustainable development
  2. 2ORGANIC AND SUSTAINABLE GROWTH OF THE CORE BUSINESS
    • Advance projects under construction: Encuentro Oxides and the molybdenum plant at Centinela
    • Continue to advance the Group's main brownfield projects: Los Pelambres Incremental Expansion and Centinela Second Concentrator
  3. 3GROWTH BEYOND THE CORE BUSINESS
    • Work to develop the long-term growth pipeline beyond our existing operations
    • Monitor the current market environment to assess potential value accretive acquisitions or joint ventures

 

The first pillar of the strategy for the mining division is to optimise and enhance its existing core business: Los Pelambres, Centinela, Antucoya and Zaldívar.

2015 in Review

  • The Group regrets that there has been one fatality this year. The Group is convinced that the Safety Model introduced in 2014 is the right approach and will keep on working with employees, contractors and suppliers to ensure the effective implementation of the critical controls associated with this model
  • Copper production of 630,300 tonnes is approximately 10% lower than guidance issued at the beginning of 2015
  • Group net cash costs for the full year 2015 of $1.50/lb, in line with initial guidance for the year. During 2015, the Group implemented a corporate initiative to improve its competitive position and to achieve structural cost savings. The Cost and Competitiveness Programme (“CCP”) has four areas of focus: services productivity, operational & maintenance management, corporate & organisational effectiveness and energy efficiency. In 2015, the CCP achieved $150 million in cost savings
  • Michilla put on care and maintenance at the end of 2015

Objectives for 2016

  • Zero fatalities. Improve safety standards through strengthening application of the safety model
  • Copper production of 710-740,000 tonnes (including 50% of Zaldivar), while reducing cash costs before by-product credits to $1.65/lb from $1.81/lb in 2015
  • Continue working on the capture of newly identified savings, aiming to add $160 million of cost reductions this year

The second pillar of the strategy is to achieve sustainable, organic growth from further developing the areas around the Group’s existing asset base in Chile: Encuentro Oxides, Centinela Molybdenum Plant, Los Pelambres Incremental Expansion and Centinela Second Concentrator.

2015 in Review

  • Antucoya started production in September and ramp-up reached 58% of plant design capacity by the end of the year
  • Advanced Encuentro Oxides pre-stripping and commenced construction of processing facility. Started construction of the molybdenum plant at Centinela
  • Completed environmental baseline study and advanced engineering and EIA studies for the use of sea water in the Los Pelambres Incremental Expansion project
  • Completed the pre-feasibility study for the Centinela Second Concentrator and started the feasibility study. Submitted EIA for approval
  • Completed installation of secondary and tertiary crushers at Centinela Concentrator

Objectives for 2016

  • Reach design capacity and stabilise all key performance indicators to achieve 2016 production plan
  • Advance construction of Encuentro Oxides and Molybdenum Plant, but at a slower rate than originally planned, to reduce expenditure in 2016. Completion expected in 2017
  • Submission of Environmental Impact Assessment (“EIA”) for Los Pelambres Incremental Expansion project and advance feasibility study for completion in 2017
  • Advance Centinela Second Concentrator feasibility study for completion in 2017. EIA approval expected in 2016
  • Reach throughput capacity of 105,000tpd

The third pillar of the strategy is to seek growth beyond the Group’s existing operations – both in Chile and internationally. The focus is on potential acquisitions of high-quality operating assets and high-potential early-stage developments.

2015 in Review

  • The acquisition of 50% of Zaldívar is a major milestone in the history of the Group and the first acquisition of an operating company since the acquisition of Michilla in 1980
  • Continued international exploration programme with existing and new joint venture partners
  • Consolidated full ownership of the Twin Metals project and advanced optimisation studies

Objectives for 2016

  • Contribute 50–55,000 tonnes to Group production and increase thereafter. Fully integrate Zaldívar into the Group’s operating practices
  • Continue current exploration programmes. Identify potential new growth opportunities in Chile and abroad
  • Continue with optimisation of the Twin Metals project and advance the permitting process