TRANSPORT

This division, known as Ferrocarril de Antofagasta a Bolivia (FCAB), provides rail and truck services to the mining industry in the Antofagasta Region.

The transport division operates its own railway network, with access to Bolivia and the two largest ports in the region, Mejillones and the city of Antofagasta. The port at Antofagasta is managed by Antofagasta Terminal Internacional (ATI), which is minority owned by the Group.

2018 PERFORMANCE

During the year, the transport division continued to improve its operations through the application of its Management Model, which is based on the three key areas of sustainability, productivity and cost management. Tonnage transported was 6.1 million, 3% down on the previous year as some existing customers’ cathode production fell and others’ operations were disrupted.

As production from existing customers has fallen it has become more important that the division expands its customer base and it has been successful in winning two important rail contracts from mining clients during the year. Both contracts are large tonnage, long-term, take or pay contracts. New locomotives, for the first of these contracts, were commissioned during the second half of the year as the first stage of modernising the current fleet and generating long-term operating benefits. Seven additional new locomotives will be commissioned in 2019, which will service new contracts as well as extensions of the current ones.

In 2018 the FCAB celebrated 130 years of continuous operation in Chile since its incorporation in the UK in 1888. This important milestone was commemorated with local stakeholders.

OPERATING PERFORMANCE

The division’s EBITDA was $88.9 million in 2018, which was better than expected, but 9% lower than the previous year, mainly due to lower volumes and increased costs, including the cost of upgrading the safety standards at all of the division’s sites and improving the safety features of the light vehicle fleet.

TRANSPORT TONNAGE

During 2018 the division transported 6.1 million tonnes, slightly lower than in 2017, mainly due to lower production levels from some of the company’s customers.

Looking ahead, the company will transport an increasing amount of bulk materials, particularly copper concentrates.

COSTS

Cost management was focused on optimising the division’s business processes to ensure long-term competitiveness. The Group’s Cost and Competitiveness Programme has been applied at the division to reshape its cost structure and to improve operating standards. The programme achieved benefits of $4.5 million in 2018, through increased revenues and lower costs. The main areas of improvement were in organisational effectiveness, lower prices in selected contracts, and improved operating and maintenance management. During the year, fleet reliability and availability improved compared with previous years, with a significant increase in the amount of preventive, as opposed to corrective, maintenance.

OUTLOOK

The division will continue to develop new business opportunities and expects significant future growth from the award of new contracts. Improvements are expected in maintenance, using knowledge gained from the mining division and best practices in the railway industry, and benefiting from the new locomotives and higher fleet availability. Diversification of cargo will be an area of focus in the short and medium term, with bulk cargoes such as lime, explosives, diesel and concentrates being targeted.

SUSTAINABILITY

The division’s sustainability activities are aligned with those of the mining division’s operations in the region, facilitating the exchange of best practices and experiences within the Group. No fatalities or accidents with serious consequences to people were reported in 2018 and the Lost Time Injury Frequency Rate (LTIFR) fell 7% to 6.7 compared with 7.2 in 2017, as the maturity level of safety processes increased during the year.

In 2019 the focus will be on consolidating the application of the various sustainability programmes and implementing a new programme on Critical Behaviours. In the health area, a new occupational health unit will be created and controls over contractors will be improved through the implementation of a new programme.

In community matters, 2018 was marked by a number of high-profile activities to commemorate the FCAB’s 130th anniversary and highlight the long relationship between the Company and the Antofagasta Region and its inhabitants.

Finally, looking to the future, FCAB plans to convert its real estate in the centre of Antofagasta city from industrial to urban use, in harmony with the gradual redevelopment of the city.

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