WHY IS CORPORATE GOVERNANCE IMPORTANT?

We believe good corporate governance is fundamental to the success of any organisation. It looks to the future, confronts challenges, establishes strategies and priorities, monitors the organisation's development, and develops and maintains effective management structures that allow it to define and achieve its objectives taking all stakeholders' interests into account. Antofagasta plc seeks to ensure that these roles and responsibilities are clearly defined. We promote and maintain a culture of innovation and constructive challenges, recruit and motivate the best available talent, commit to regular, transparent and objective review processes, and involve shareholders and other stakeholder groups in our decisions.

CONTEXT

Antofagasta plc's shares are quoted on the London Stock Exchange and the Company complies with all applicable UK laws and regulations. However, our operations, corporate head office, senior management, and main expansion projects are in Chile. As such, we constantly strive to monitor all aspects of the country’s mining industry, and comply with its laws and regulations.

HOW DO WE ACHIEVE GOOD CORPORATE GOVERNANCE?

Our focus: We believe in the importance of maintaining effective, responsible and transparent practices. Our internal guidelines and standards represent the Group's commitment to doing business responsibly. We seek to be recognized for our honest, transparent conduct and our respect for human rights and the law.

BOARD OF DIRECTORS

Antofagasta plc is a public listed Company (PLC) registered in the United Kingdom and reports periodically to shareholders on the Group’s developments in accordance with European and UK law. The Board is collectively responsible for the Group's long-term success. In general terms, its functions are: overseeing and defining the Group’s strategy, defining its fundamental principles, mission, values, policies and priorities; monitoring the value that the Group provides to its stakeholders and its efficient use of resources; and supervising the Group’s development and risk management systems, including those relating to sustainability.

The Board delegates the implementation of strategy and financial objectives to the CEO of Antofagasta plc. It is supported by five committees, including a Sustainability and Stakeholder Management Committee1, and has eleven members, including two women. None occupies an executive position in the Company, and five are independent directors. 

SUSTAINABILITY AND STAKEHOLDER MANAGEMENT COMMITTEE

The Sustainability and Stakeholder Management Committee, comprises of four directors and supports the Board by making recommendations to the Board in relation to specific matters relating to safety and health, the environment, climate change, and social, community and human rights matters. Members of the Committee actively participate in Board decisions to ensure that the interests of the Group’s stakeholders are represented in Board deliberations. The Committee also oversees the Group’s compliance with its sustainability and other commitments to stakeholders.

THE COMMITTEE MET EIGHT TIMES DURING 2017. SOME OF THE MAIN ISSUES DISCUSSED WERE:

  • Progress on the Group’s occupational health and safety plan.
  • Progress on the Group’s sustainability policy.
  • The 2018 Sustainability Audit Plan.
  • Developments in the Group’s Environmental Management System.
  • The Group’s environmental commitments, breaches and plans to remedy them in all Group companies.
  • Carbon footprint targets, and the greenhouse gas emissions mitigation plan.
  • Plans to advance the commitments made with ICMM on water and tailings management.
  • The independent expert report on tailings storage facilities at Los Pelambres and Centinela.
  • Progress on environmental impact studies for project developments at Los Pelambres, Centinela and Zaldívar. Monitoring key performance indicators that measure the impact of community relations programmes.
  • The findings of an independent evaluation of the Somos Choapa programme.
  • Social issues arising in the Choapa Viejo sector. Plans to establish a technical institute at Los Vilos, in cooperation with an educational institution.
  • The Group’s communications strategy.
  • Review and a recommendation to the Board for approval of the Group’s 2017 Sustainability Report.

RISK MANAGEMENT

The Group uses centralised risk management and internal control systems. These include evaluations of every business activity to ensure that significant risks are identified in a timely and effective manner, and that measures are taken to control, mitigate and report them to the Board.

The Board is ultimately responsible for overseeing the nature and scope of significant risks to the Group and ensuring that appropriate internal control systems are in place. Strategic risks and the status of their respective controls are regularly reported to the Board via the Audit and Risk Committee and, when relevant, the Sustainability and Stakeholder Management Committee.

Antofagasta plc uses an appropriate and consistent methodology to identify risks that could compromise the achievement of our objectives and to establish controls, and prevention and mitigation responsibilities. This task is carried out annually by the operations' executive teams. Risks are evaluated by their probability of occurrence and potential impact, in order to define prevention and/or mitigation measures, together identifying those responsible for putting them into effect.

In 2017, we made progress on implementing the risk management system improvement programme. Our objective is to achieve greater maturity so that risk management is an integral part of the organisation’s culture and a key factor in our decision-making processes. To that end, we focus on three main areas: management, strategy and culture.

Activities in 2017 included: workshops to identify key risks at Group and individual operations; self-assessments to verify the effectiveness of critical controls; annual risk management reports submitted by managers to the Audit and Risk Committee; and risk analysis of every issue submitted to the Board for approval.

This year, we are focusing on implementing improvements based on best-practice benchmarks and continuing to implement a culture of risk awareness. Among other things, we plan to: broaden the risk self-assessment process and make risk controls more effective; carry out onsite peer reviews of key controls; improve communication and reporting of risks that materialise, use lessons learned and key performance indicators.

MAIN SUSTAINABILITY RISKS

a) Employment:
- Fatal accidents.
b) Regulatory:
- Failure to comply with Environmental Classification Resolutions and sector permits which have a business impact.
- Failure to obtain critical environmental and related permits for development projects and operating continuity.
c) Operational:
- Fire in critical installations.
- Leaks or spills in the mines, concentrate and tailings pipelines, or other plant.
d) Social and environmental:
- Decrease in and/or loss of water supply due to environmental or regulatory factors.
- Particulate emissions with business impact.
- Inadequate management of environmental liabilities and high-volume waste.
- Failure by the Mauro dam to comply with operating requirements.
- Failure to comply with social commitments.
- Involvement in situations defined as modern slavery or child labour.
- Leaks or spills into the sea from concentrate pipelines.
- Leaks or spills of hazardous waste and/or other substances.

Audits

Our corporate audit programme includes sustainability issues. Audit management is separate from general management and reports directly to the Board’s Audit and Risk Committee. The annual internal audit plan includes ethics, safety, and social and environmental development at Group and individual operations, and is based on Group and company risk matrices. Measures to correct control weaknesses are proposed as a result of the audits.

1. The other committees are: Audit and Risk, Nomination and Governance, Remuneration and Talent Management, and Projects.

Our focus: As a Group, we want to be recognised for our honest, transparent business conduct and our respect for human rights and the law. We have therefore implemented various systems that allow us to oversee our internal procedures. Our Compliance Model seeks to integrate ethics into the Group’s day-to-day operations and decisions, and there is a special reporting channel for complaints made by employees or others.

COMPLIANCE MODEL

We have implemented a series of policies, procedures and communications channels as part of our commitment to doing business in a responsible and transparent way.

This model applies to all employees and collaborators, and its results are periodically reported via internal channels. Compliance with the model is monitored regularly.

During 2017, we worked on implementing the compliance model for the UK Modern Slavery Act by developing policies and procedures. We are also continuing to update the due diligence process, which includes questions on modern slavery and people trafficking, increasing the profile of these issues in supply-chain audits, and monitoring the implementation of the supplier and contractor employment audit programme.

CODE OF ETHICS

Antofagasta plc’s code of ethics emphasises the commitment of the Board and of Group employees to doing business responsibly and transparently. As a group, we require all of our employees and contractors to display honesty, integrity, and responsibility.

Our Code of Ethics includes guidelines for identifying and managing potential conflicts of interest. It also lays down standards on a series of issues, such as respect for human rights, local traditions and values, and the rights of neighbouring communities.

Our Ethics Committee comprises senior managers1 and is responsible for developing, implementing and updating the code and monitoring its compliance. These and other subjects are included in the induction programme for all new employees.

CRIME PREVENTION MODEL

Our Crime Prevention Model complies with UK and Chilean laws on bribery and corruption. It also includes measures to prevent money laundering, financing terrorism, receiving stolen goods and other offences. The model applies to all Group executives, employees and contractors.

Since anticorruption laws transcend national borders, we have decided to adopt the strictest possible standards, regardless of the country concerned and ensure we comply with the UK Bribery Act.

WHISTLEBLOWING

We have set up whistleblowing channels that enables employees and contractors to report any irregularities they encounter during their work. They can do this via the intranet, by email, mail or telephone, or directly using the whistleblowing system which protects their anonymity if this is preferred.

The Group also has formal and informal consultation and feedback mechanisms to allow workers, contractors and local communities to express concerns and complaints about our operations, and/or to report irregularities. We investigate all reports that we receive. The conclusions are formalised by the Corporate Ethics Committee and are notified to the Audit and Risk Committee at least every three months.

In 2017, we received 112 reports, 100% of which were resolved.

COMMUNICATION AND TRAINING PLAN

All employees and contractors of the Group are given a copy of the Code of Ethics and are required to confirm in writing that they have read and understood it and will apply it in every aspect of their work.

The Group has a wide-ranging training programme to ensure that all aspects of the Compliance Model are understood and incorporated into its institutional culture. This emphasises issues such as the right to know and provides an understanding of the tools available to reinforce the skills required to implement the code.

In 2017, we held risk, compliance and internal control training workshops for different stakeholder groups. In 2018 we are continuing to develop a risk awareness culture, along with a range of management tools that have an emphasis on early warning indicators and learning from experience.

1. The committee consists of: the Vice President of Administration and Finance (responsible for crime prevention), Vice President of Human Resources, Vice President of Legal Affairs, Vice President of Corporate Affairs and Sustainability and the manager responsible for Risk, Compliance and Internal Control.

Our focus: We recognise our responsibility to our stakeholders and the environment in which we operate. Our commitment to sustainability is therefore incorporated into all our dealings with employees, investors, communities, suppliers and contractors, and we also place strong emphasis on cross-sector issues such as transparency, innovation and protecting the environment.

The Group seeks to build trusting, mutually beneficial relationships with our stakeholders, and is therefore developing ways of listening, understanding and managing their concerns and expectations more effectively while at the same time creating more value for all parties. In our relationships with communities, we are continuing to build a shared vision of the future development of the regions in which we operate.

OUR STAKEHOLDERS

Our priority stakeholders are those who may be significantly affected by our operations and whose actions affect our ability to successfully implement our strategies and objectives.

ORGANISATIONS IN WHICH WE PARTICIPATE

As Chile's leading non-State mining company, Antofagasta Minerals plays an important role in promoting a nationwide strategic agenda for the industry, and in maintaining the Valor Minero y Alta Ley public-private alliance to monitor its implementation. It also chairs the Consejo Minero and is a member of the Sociedad Nacional de Minería (Sonami), the Consejo de Innovación para la Competitividad, ICARE, AMCHAM, the British, Chinese and Australian Chambers of Commerce and the Acción Empresas foundation. Los Pelambres is a member of Red Pacto Global (Global Compact Network).

The Group is a member of the International Council on Mining and Metals, the International Copper Association, the International Molybdenum Association and other bodies.

The individual companies also belong to regional industry associations and local organisations.

  • In the Antofagasta region, these include: the Asociación de Industriales de Antofagasta, Asociación de Industriales de Mejillones, Mesa de la Minería, Mesa de Género de la Integración de la Mujer en la Minería, Creo Antofagasta Corporación de Desarrollo de la Provincia del Loa, Universidad Católica del Norte, Universidad de Antofagasta, Fundación Gaviotín Chico, Mesa de Buenos Vecinos de Sierra Gorda and Corporación Pro Antofagasta.
  • In the Coquimbo region, they include: the Corporación Industrial para el Desarrollo Regional de Coquimbo, Agencia Regional para el Desarrollo Productivo, Consejo Regional Minero Corminco, Junta de Vigilancia del Río Choapa, groups representing water channel users and drinking water associations. We also work closely with the University of La Serena.

BOARD SUPERVISION 

The Board’s Sustainability and Stakeholder Management Committee oversees and supervises programmes in these areas, and makes recommendations to ensure that all decisions take account of ethical, safety and health, environmental, social and community factors.

In terms of risk management, the Board is responsible for ensuring that the Group has appropriate internal control systems. The Audit and Risk Committee supervises strategic risks and the status of their respective controls. The corporate audit programme covers the sustainability issues affecting the Group and each individual operation.

Our Compliance Model provides mechanisms to monitor the implementation of the Code of Ethics and the Crime Prevention Model, including breaches of these, human rights, community relations, environmental violations and other matters.

SUSTAINABILITY KPIS

We use a series of indicators to measure and evaluate our commitment to sustainability. Each mining operation has its own targets, reflecting its particular context and priorities, and these are included in each operation’s performance agreements with head office and in each employee’s performance agreement.

PERFORMANCE AGREEMENTS

A Performance Agreement is a management tool that summarises Antofagasta Minerals' focuses and annual goals, monitors compliance with these and makes the necessary corrections to avoid variances. Issues directly related to sustainability (social, safety, people, and the environment) account for 25 percent of the Agreement’s targets and affect each employee's bonus. Compliance with these targets is monitored in monthly operating performance reviews and is reported to the Board monthly.

SOCIAL PROJECT IMPACT MEASUREMENT

In 2017, we continued to develop methodologies to quantify the Group’s contribution to regional development, the impact of its projects on communities in accordance with the United Nations Sustainable Development Goals, and the effectiveness of these programmes.

Reporting

Sustainability Report

Reporting

Annual Report 2017